As filed with the Securities and Exchange
Commission on July 30, 2010
Registration No. 333-167645
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Amendment No. 1
to
Form S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
Booz Allen Hamilton Holding
Corporation
(Exact name of registrant as
specified in its charter)
|
Delaware
|
7373 | 26-2634160 | ||
|
(State or other jurisdiction
of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
8283 Greensboro Drive
McLean, Virginia 22102
(703) 902-5000
(Address, including Zip Code,
and Telephone Number, including Area Code, of Registrant’s
Principal Executive Offices)
CG Appleby
Executive Vice President and
General Counsel
8283 Greensboro Drive
McLean, Virginia 22102
(703) 902-5000
(Name, Address, including Zip
Code, and Telephone Number, including Area Code, of Agent for
Service)
Copies to:
|
Matthew E. Kaplan Debevoise & Plimpton LLP 919 Third Avenue New York, New York 10022 (212) 909-6000 |
Douglas S. Manya Booz Allen Hamilton Inc. 8283 Greensboro Drive McLean, Virginia 22102 (703) 902-5000 |
Rachel W. Sheridan Jason M. Licht Latham & Watkins LLP 555 Eleventh Street, NW Suite 1000 Washington, D.C. 20004 (202) 637-2200 |
Approximate date of commencement of proposed sale to the
public: As soon as practicable after the
effective date hereof.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, check the
following
box. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration number of the
earlier effective registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration number of the
earlier effective registration statement for the same
offering. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated
filer” and “smaller reporting company” in
Rule 12b-2
of the Exchange Act. (Check one):
|
Large accelerated filer o
|
Accelerated filer o | Non-accelerated filer x | Smaller reporting company o |
| (Do not check if a smaller reporting company) |
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may
determine.
|
The
information in this prospectus is not complete and may be
changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these
securities in any state or jurisdiction where the offer or sale
is not permitted. |
SUBJECT TO COMPLETION, DATED
JULY 30, 2010
Shares
Class A Common
Stock
This is an initial public offering of Class A common stock
of Booz Allen Hamilton Holding Corporation. We are
offering shares of Class A common
stock to be sold in this offering. No public market currently
exists for our Class A common stock. The initial public
offering price of our Class A common stock is expected to
be between $ and
$ per share.
We will apply to list our Class A common stock
on under the symbol “BAH.”
Investing in our Class A common stock involves risks.
See “Risk Factors” beginning on page 17 of this
prospectus.
| Per Share | Total | |||||||
|
Initial public offering price
|
$ | $ | ||||||
|
Underwriting discounts and commissions
|
$ | $ | ||||||
|
Proceeds, before expenses, to us
|
$ | $ | ||||||
The underwriters also may purchase up
to additional shares from us at the
initial offering price less the underwriting discounts and
commissions to cover over-allotments, if any.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The underwriters expect to deliver the shares to purchasers on
or about , 2010.
| Morgan Stanley | Barclays Capital |
| BofA Merrill Lynch | Credit Suisse |
Stifel Nicolaus
| BB&T Capital Markets | Lazard Capital Markets | Raymond James |
, 2010.
TABLE OF
CONTENTS
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| F-1 |
You should rely only on the information contained in this
prospectus or any free writing prospectus prepared by or on
behalf of us or to which we have referred you. Neither we nor
the underwriters have authorized anyone to provide you with
additional or different information. Neither this prospectus nor
any free writing prospectus is an offer to sell anywhere or to
anyone where or to whom we are not permitted to offer or to sell
securities under applicable law. The information in this
prospectus or any free writing prospectus is accurate only as of
the date of this prospectus or such free writing prospectus, as
applicable.
i
MARKET
AND INDUSTRY DATA
Information in this prospectus about each of the
U.S. government defense, intelligence and civil markets,
including our general expectations concerning those markets, our
position within those markets and the amount of spending by the
U.S. government on private contractors in any of those
markets, is based on estimates prepared using data from
independent industry publications, reports by market research
firms, other published independent sources, including the
U.S. government, and our good faith estimates and
assumptions, which are derived from such data and our knowledge
of and experience in these markets. Data provided by Bloomberg
Finance L.P. cited in this prospectus is based on data from the
Federal Procurement Data System, or FPDS. Although we believe
these sources are credible, we have not verified the data or
information obtained from these sources. By including such
market data and industry information, we do not undertake a duty
to provide such data in the future or to update such data if it
is updated. Our estimates, in particular as they relate to our
general expectations concerning the U.S. government
defense, intelligence and civil markets, have not been verified
by any independent source and involve risks and uncertainties
and are subject to change based on various factors, including
those discussed under the caption “Risk Factors.”
SUPPLEMENTAL
INFORMATION
Unless the context otherwise indicates or requires, as used
in this prospectus, references to: (i) “we,”
“us,” “our” or our “company” refer
to Booz Allen Hamilton Holding Corporation, its consolidated
subsidiaries and predecessors; (ii) “Booz Allen
Holding” or “issuer” refers to Booz Allen
Hamilton Holding Corporation exclusive of its subsidiaries;
(iii) “Booz Allen Investor” refers to Booz Allen
Hamilton Investor Corporation, a wholly-owned subsidiary of Booz
Allen Holding; (iv) “Booz Allen Hamilton” refers
to Booz Allen Hamilton Inc., our primary operating company and a
wholly-owned subsidiary of Booz Allen Holding;
(v) “The Carlyle Group” or “Carlyle”
refers to The Carlyle Group and its affiliated investment funds;
(vi) “clients,” when used in the context of the
U.S. government, refers to organizations at all levels of
the U.S. government, ranging from executive departments to
independent agencies and offices, with whom we contract for the
provision of services; (vii) “fiscal,” when used
in reference to any twelve-month period ended March 31,
refers to our fiscal years ended March 31; and
(viii) “pro forma 2009” refers to our unaudited
pro forma results for the twelve months ended March 31,
2009, assuming the acquisition had been completed as of
April 1, 2008.
We are organized and operate as a corporation. Our use of the
term “partnership” in this prospectus reflects our
collaborative culture, and our use of the term
“partner” in this prospectus refers to our Chairman
and our Executive and Senior Vice Presidents. The use of the
terms “partnership” and “partner” is not
meant to create any implication that we operate our company as,
or have any intention to create a legal entity that is, a
partnership.
Booz Allen
Hamilton®,
Transformation Life
Cycletm,
the Booz Allen Hamilton logo, and other trademarks or service
marks of Booz Allen Hamilton Inc. appearing in this prospectus
are property of Booz Allen Hamilton Inc. Trade names, trademarks
and service marks of other companies appearing in this
prospectus are the property of their respective owners.
We have made rounding adjustments to reach some of the
figures included in this prospectus and, unless otherwise
indicated, percentages presented in this prospectus are
approximate.
ii
PROSPECTUS
SUMMARY
This summary highlights information contained elsewhere in
this prospectus. This summary does not contain all of the
information that you should consider before investing in our
Class A common stock. You should read the entire prospectus
carefully, including the “Risk Factors” section and
our consolidated financial statements and the notes to those
statements, before making an investment decision. Some of the
statements in this summary constitute forward-looking
statements. See “Special Note Regarding
Forward-Looking
Statements.”
Overview
We are a leading provider of management and technology
consulting services to the U.S. government in the defense,
intelligence and civil markets. Founded in 1914 by Edwin Booz,
we have expanded beyond our management consulting foundation to
develop deep expertise in technology, engineering and analytics.
We began serving the U.S. government in 1940 by advising
the Secretary of the Navy in preparation for World War II.
Today, our approximately 23,300 people serve substantially all
of the cabinet-level departments of the U.S. government and
have strong and longstanding relationships with a diverse group
of other organizations at all levels of the
U.S. government. We support our clients in addressing
complex and pressing challenges such as combating global
terrorism, improving cyber capabilities, transforming the
healthcare system, improving efficiency and managing change
within the government and protecting the environment. We have
grown our revenue organically, without relying on acquisitions,
at an 18% compound annual growth rate, or CAGR, over the 15-year
period ended March 31, 2010, reaching $5.1 billion in
revenue in fiscal 2010.
We derived 98% of our revenue in fiscal 2010 from services
provided to over 1,300 clients across the U.S. government
under more than 4,900 contracts and task orders. We have served
our top ten clients, or their predecessor organizations, for an
average of over 20 years. We derived 86% of our revenue in
fiscal 2010 from engagements for which we acted as the prime
contractor. Also during fiscal 2010, we achieved an overall win
rate of 57% on new contracts and task orders for which we
competed and a win rate of more than 92% on re-competed
contracts and task orders for existing or related business. As
of March 31, 2010, our total backlog, including funded,
unfunded, and priced options, was $9.0 billion, an increase
of 24% over March 31, 2009.
We attribute the strength of our client relationships, the
commitment of our people, and our resulting growth to our
management consulting heritage and culture, which instills our
relentless focus on delivering value and enduring results to our
clients. We operate our business as a single profit center,
which drives our ability to collaborate internally and compete
externally. Our operating model is built on (1) our
dedication to client service, which focuses on leveraging our
experience and knowledge to provide differentiated insights,
(2) our
partnership-style
culture and compensation system, which fosters collaboration and
the efficient allocation of our people across markets, clients
and opportunities (3) our professional development and
360-degree
assessment system, which ensures that our people are aligned
with our collaborative culture, core values and ethics and
(4) our approach to the market, which leverages our matrix
of deep domain expertise in the defense, intelligence and civil
markets and our strong capabilities in strategy and organization
analytics, technology and operations.
1
Deployment
of Capabilities to Serve Clients
The diagram below illustrates the way we deploy our four
capability areas, including specified areas of expertise, to
serve our defense, intelligence and civil clients. Our dynamic
matrix of functional capabilities and domain expertise plays a
critical role in our efforts to deliver proven results to our
clients.
Market
Opportunity
Large
Addressable Markets
We believe that the U.S. government is the world’s largest
consumer of management and technology consulting services. Based
on data from Bloomberg Finance L.P., approximately
$513 billion of the U.S. government fiscal year 2009
discretionary outlays of $1 trillion were for
non-intelligence agency and non-ARRA (American Recovery and
Reinstatement Act) funding-related products and services
procured from private contractors. We estimate that
$93 billion of the spending directed towards private
contractors in U.S. government fiscal year 2009 was for
management and technology consulting services, with
$56 billion spent by the Department of Defense and
$37 billion spent by civil agencies. The agencies of the
U.S. Intelligence Community that we serve represent an
additional market.
Focus
on Efficiency and Transforming Procurement
Practices
There is pressure across the U.S. government to control
spending while also improving services for citizens and
aggressively pursuing numerous important policy initiatives.
This has led to an increased focus on accomplishing more with
fewer resources, streamlining information services and
processes, reducing fraud, waste and abuse, and improving
productivity. In order to efficiently implement these
initiatives, we believe that the U.S. government will
require support in the form of the services that we provide,
such as strategy and change management and organization and
process improvement. Economic pressure has also driven an
emphasis on greater accountability, transparency and spending
effectiveness in U.S. government procurement
2
practices. Recent efforts to reform procurement practices have
focused on decreasing the use of lead system integrators, which
are contractors that have historically been hired to execute
large, complex and often defense-related acquisition programs,
the unbundling of outsourced projects and the mitigation of
specific organizational conflicts of interest issues, which
typically arise when a contractor has impaired objectivity,
unfair access to non-public information, or the ability to set
the ground rules for another procurement for which the
contractor competes.
Complex
Defense, Intelligence and Civil Agency
Requirements
The U.S. government continually reassesses and updates its
long-term priorities and develops new strategies to address the
rapidly evolving issues it faces. In order to deliver effective
advice in this environment, service providers must possess a
comprehensive knowledge of, and experience with, the
participants, systems and technology employed by the
U.S. government, and must also have an ability to
facilitate knowledge sharing while managing varying objectives.
For example, within the Department of Defense, the 2010
Quadrennial Defense Review, or the 2010 QDR, prioritizes support
for the war fighter and integrating intelligence, surveillance
and reconnaissance systems with weapons and ground operations.
Within the U.S. Intelligence Community and across the
U.S. government generally, the current priority is
enhancing cyber-capabilities. Within the civil agencies of the
U.S. government, there has been an increased focus on
financial regulation, energy and environmental issues,
healthcare reform and infrastructure-related challenges. We
believe that the initiatives resulting from these new priorities
will result in increased demand for management and technology
consulting services.
Major
Changes Create Demand
Major changes in the government, political and overall economic
landscape drive demand for objective management and technology
consulting services and advice. Certain of these changes, such
as the inauguration of a new presidential administration, are
recurring in nature. Other changes are more sudden and
unexpected, as was the case with the attacks of
September 11, 2001 and the recent financial crisis and
economic downturn. To effectively help clients develop and
implement new policies and respond to evolving priorities under
such circumstances, service providers must have the flexibility
to rapidly redeploy intellectual capital, resources and
capabilities.
Our Value
Proposition to Our Clients
As a leading provider of management and technology consulting
services to the U.S. government, we believe that we are
well positioned to grow across markets characterized by
increasing and rapid change.
Our
People
Our success as a management and technology consulting firm is
highly dependent upon the quality, integrity and dedication of
our people.
Superior Talent Base. We have a highly
educated talent base of approximately 23,300 people. Many
of the U.S. government contracts for which we compete
require contractors to have high-level security clearances, and
our large pool of cleared employees allows us to meet these
needs. Through our recruiting efforts, we are able to
successfully renew and grow our talent base, and we believe that
our ability to attract top level talent is significantly
enhanced by our commitment to professional development, our
position as a leader in our markets, the high quality of our
work and the appeal of our culture.
Focus on Talent Development. We develop our
talent base by providing our people with the opportunity to work
on important and complex problems, encouraging and acknowledging
contributions of our people at all levels of seniority, and
facilitating broad, inclusive and insightful leadership.
Assessment System that Promotes
Collaboration. We use our
360-degree
assessment process to help promote and enforce the consistency
of our collaborative culture, core values and ethics. Each of
our people receives an annual assessment and also participates
in the assessment of other company personnel.
3
Core Values. Our core values, which are a key
component of our success, are: client service, diversity,
excellence, entrepreneurship, teamwork, professionalism,
fairness, integrity, respect and trust. All new hires receive
extensive training that emphasizes our core values, facilitates
their integration into our collaborative, client-oriented
culture and helps to ensure the delivery of consistent and
exceptional client service.
Our
Management Consulting Heritage
Our Approach to Client Service. Over the
70 years that we have been serving the
U.S. government, we have cultivated relationships of trust
with, and developed a comprehensive understanding of, our
clients. This insight regarding our clients, together with our
deep domain knowledge and capabilities, enable us to anticipate,
identify and address the specific needs of our clients.
Partnership-Style Culture and Compensation
System. A commitment to teamwork is deeply
ingrained in our company, and our partnership-style culture is
critical to maintaining this component of our operating model.
We manage our company as a single profit center with a
partner-style compensation system that focuses on the success of
the institution over the success of the individual.
Our
Client-Oriented Matrix Approach
We are able to address the complex and evolving needs of our
clients and grow our business through the application of our
matrix of deep domain knowledge and market-leading capabilities.
Through this approach, we deploy our four key capabilities,
strategy and organization, analytics, technology, and
operations, across our client base. This approach enables us to
quickly assemble and deploy client-focused teams comprised of
people with the expertise needed to address the challenges
facing our clients. We believe that our growth and significant
win rates on new and re-competed contracts demonstrate the
strength of our matrix approach as well as our industry-leading
reputation and our proven track record.
Our
Strategy for Continued Growth
To serve our clients and grow our business, we intend to execute
the following strategies:
Expand Our Business Base. We believe that
significant growth opportunities exist in our markets, and we
intend to:
| • | Deepen Our Existing Client Relationships. Our approach to client service and our collaborative culture enable us to effectively cross-sell and deploy multiple services to existing clients. We plan to leverage our comprehensive understanding of our clients’ needs and our track record of successful performance to grow our client relationships and expand the scope of the services we provide to our existing clients. | |
| • | Help Clients Rapidly Respond to Change. We will continue to help our clients formulate rapid and dynamic responses to the frequent and sometimes sudden changes that they face by leveraging: the scope and scale of our domain expertise, our broad capabilities, and our one-firm culture. | |
| • | Broaden Our Client Base. We believe that growing demand for the types of services we provide and our ongoing business initiatives will enable us to leverage our reputation as a trusted partner and industry leader to cultivate new client relationships across all agencies and departments of the U.S. government. We will also continue to build on our current cyber-security related opportunities in the commercial market. |
Capitalize on Our Strengths in Emerging
Areas. We will continue to leverage our deep
domain expertise and broad capabilities to help our clients
address emerging issues, including:
| • | Cyber. Network-enabled technology now forms the backbone of our economy, infrastructure and national security, and recent national policies and governmental initiatives are creating new cyber-related opportunities. We are currently involved in numerous cyber-related initiatives for our defense, intelligence and civil clients and cyber-security initiatives for commercial clients. |
4
| • | Government Efficiency and Procurement. We are focused on helping the U.S. government achieve operating and budgetary efficiencies while simultaneously pursuing numerous policy initiatives. In addition, recent U.S. government reforms in the procurement area may allow us to leverage our status as a large, objective service provider with deep domain knowledge and technical expertise to win additional assignments to the extent that we are able to address organizational conflicts of interest and similar concerns more easily than our competitors. | |
| • | Ongoing Healthcare Transformation. We expect recent and ongoing developments in the healthcare market, such as the passage of the Affordable Care Act of 2010 and the Health Information Technology for Economic and Clinical Health Act of 2009, to increase demand for our healthcare consulting capabilities. We have been serving healthcare-oriented clients in the U.S. government since the late 1980’s. | |
| • | Systems Engineering & Integration, or SE&I. Our clients are increasingly utilizing SE&I services to help them manage every phase of the development and integration of increasingly sophisticated information technology, communications and mission systems — ranging from satellite and space systems to air traffic control and naval systems. Through the application of our matrix, we have developed deep cross-market SE&I capabilities combining engineering, acquisition, management and prime contracting expertise. We plan to leverage this knowledge and expertise to bid on large-scale SE&I contract awards. |
Continue to Innovate. We will continue to
invest significant resources in our efforts to identify
near-term
developments and long-term trends that may present significant
challenges or opportunities for our clients. Our single profit
center and one-firm culture provide the flexibility to devote
company-wide resources and key intellectual capital to
developing the functional capabilities and expertise needed to
address new and emerging challenges. We have regularly allocated
significant resources to these business development efforts and
have successfully transitioned several such initiatives into
meaningful contributors to our business. We continue to invest
in many initiatives at various stages of development, and are
currently focused on cloud computing, advanced analytics, and
the deployment of specialized services and capabilities in the
financial sector, among others.
5
Our
Corporate Structure
The following chart illustrates our corporate structure,
including Class A common stock ownership percentages, after
giving effect to this offering.
| (1) | Represents %, % and % of the total voting power in our company, respectively. | |
| (2) | Guarantor of the senior credit facilities and mezzanine credit facility. | |
| (3) | Refers to our senior secured loan facilities providing for a $125.0 million Tranche A term facility, $585.0 million Tranche B term facility, $350.0 million Tranche C term facility and $245.0 million revolving credit facility. As of March 31, 2010, we had $1.0 billion outstanding under our senior credit facilities. | |
| (4) | Refers to our $550.0 million mezzanine term loan facility. As of March 31, 2010, on a pro forma basis after giving effect to this offering and the use of the net proceeds therefrom, which is based on the midpoint of the price range set forth on the cover page of this prospectus, we would have had $ million of debt outstanding under our mezzanine credit facility. |
Our
Principal Stockholder
Our principal stockholder is Explorer Coinvest LLC, or Coinvest,
an entity controlled by Carlyle. Coinvest became our principal
stockholder in our July 2008 merger transaction, which, together
with the spin off of our commercial and international business
and the related transactions, is referred to in this prospectus
as the acquisition. See “The Acquisition and
Recapitalization Transaction.”
The Carlyle Group is a global alternative asset manager with
$90.5 billion under management committed to 67 funds as of
March 31, 2010. Carlyle invests in buyouts, growth capital,
real estate and leveraged finance in North America, Europe,
Asia, Australia, the Middle East and North Africa, and Latin
America focusing on aerospace and defense, automotive and
transportation, consumer and retail, energy and power, financial
services, healthcare, industrial, infrastructure, technology and
business services and telecommunications and media. Since 1987,
the firm has invested $60.6 billion of equity in 969
transactions for a total purchase price of $233.4 billion.
Carlyle employs 880 people in 27 offices throughout the
world.
6
As of March 31, 2010, Carlyle, through Coinvest, owned 79%
of our outstanding common stock, representing 81% of the total
voting power in our company. Following the completion of this
offering and assuming that the underwriters do not exercise
their option to purchase additional shares of Class A
common stock, Carlyle will continue to
own % of our outstanding common
stock, representing % of the total
voting power in our company. Because of certain voting and other
provisions of the current stockholders agreement, Carlyle may be
deemed to share beneficial ownership over shares of common stock
held by other stockholders. Of the seven members currently
serving on our board of directors, or the Board, four were
designated by Carlyle. Under the terms of an amended and
restated stockholders agreement to be entered into among Booz
Allen Holding and Coinvest in connection with this offering.
Carlyle will continue to have the right to designate a majority
of the Board nominees for election and the voting power to elect
such nominees following the completion of the offering. In
addition, the amended and restated stockholders agreement will
continue to provide rights and restrictions with respect to
certain transactions in our securities entered into by Coinvest
or certain other stockholders. See “Certain Relationships
and Related Party Transactions — Related Person
Transactions — Stockholders Agreement.”
Company
Information
We are incorporated under the laws of the state of Delaware. Our
principal executive office is located at 8283 Greensboro Drive,
McLean, Virginia 22102, and our telephone number is
(703) 902-5000.
Our website is www.boozallen.com and is included in this
prospectus as an inactive textual reference only. The
information contained on, or that may be accessed through, our
website is not part of, and is not incorporated into, this
prospectus.
7
The
Offering
| Class A common stock offered by us | shares | |
|
Class A common stock outstanding after the offering
|
shares | |
|
Option to purchase additional shares of Class A common stock
|
The underwriters have a 30-day option to purchase an additional shares of Class A common stock from us. | |
| Proposed stock exchange symbol | “BAH” | |
| Use of proceeds | We estimate that our net proceeds from the offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $ million, based on the midpoint of the price range set forth on the cover page of this prospectus. We intend to use the net proceeds from this offering to repay $ million of indebtedness outstanding under our mezzanine credit facility and pay an associated prepayment penalty of $ million. See “Use of Proceeds.” Certain of the underwriters of this offering or their affiliates are lenders under our senior credit facilities and mezzanine credit facility. Accordingly, certain of the underwriters may receive net proceeds from this offering in connection with the repayment of our mezzanine credit facility. See “Underwriting.” | |
| Risk factors | See “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding whether to invest in shares of our Class A common stock. | |
| Dividend policy | We do not expect to pay dividends on our Class A common stock for the foreseeable future. | |
| Conflicts of interest | We intend to use certain of the net proceeds of this offering to retire a portion of the mezzanine credit facility under which an affiliate of Credit Suisse Securities (USA) LLC is a lender. Since Credit Suisse Securities (USA) LLC’s affiliate will receive at least 5% of the net proceeds of this offering in connection with this repayment, Credit Suisse Securities (USA) LLC, a member of the Financial Industry Regulatory Authority, or FINRA, may be deemed to have a “conflict of interest” with us under FINRA’s NASD Conduct Rule 2720. Accordingly, this offering will be conducted in compliance with the requirements of such rule. See “Underwriting — Conflicts of Interest.” |
Following this offering, we will have four classes of authorized
common stock: Class A common stock, Class B non-voting
common stock, Class C restricted common stock and
Class E special voting common stock. As
of ,
2010, ,
and shares of
our Class B non-voting common stock, Class C
restricted common stock and Class E special voting common
stock were outstanding. The rights of the holders of
Class A common stock, Class C restricted common stock
and Class E special voting common stock are identical,
except with respect to participation in dividends and other
distributions, vesting and conversion. Class A common
stock, Class C restricted common stock and Class E
special voting common stock are entitled to one vote per share
on all matters voted on by our stockholders. The Class B
common stock is non-voting common stock. When stock options
related to our Class E common stock are exercised, we will
8
repurchase the underlying share of Class E common stock and
issue a share of Class A common stock to the option holder.
See “Description of Capital Stock.”
The number of shares of our Class A common stock to be
outstanding immediately after the offering is based on the
number of shares of Class A common stock outstanding as
of , 2010. Such number excludes:
| • | shares of Class A common stock reserved for issuance under our Equity Incentive Plan, including shares issuable upon the exercise of outstanding stock options; | |
| • | shares of Class A common stock reserved for issuance under our Officers’ Rollover Stock Plan upon the exercise of outstanding stock options related to outstanding shares of our Class E special voting common stock and our mandatory repurchase of those shares in connection with such exercise; and | |
| • | shares of Class A common stock issuable upon transfer of outstanding Class B non-voting common stock and Class C restricted common stock. |
Unless we indicate otherwise, the information in this prospectus:
| • | reflects a -for-1 split of our outstanding common stock to be effected prior to the completion of this offering. The stock split will be effected to reduce the per share price of our Class A common stock to a more customary level for an initial public offering and an initial listing on a national securities exchange; | |
| • | gives effect to amendments to our certificate of incorporation and bylaws to be adopted prior to the completion of this offering and the related elimination of our Class D merger rolling common stock and Class F non-voting restricted common stock prior to the completion of this offering; | |
| • | assumes the issuance of shares of Class A common stock in this offering; | |
| • | assumes that the initial public offering price of our Class A common stock will be $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus; | |
| • | assumes that the underwriters will not exercise their over-allotment option; and | |
| • | presents indebtedness outstanding under our senior credit facilities and our mezzanine credit facility as of any particular date net of unamortized discount. |
9
SUMMARY
OF HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
The following tables provide a summary of our historical
consolidated financial and other data for the periods indicated.
The summary consolidated financial data for fiscal 2008 and
fiscal 2010 have been derived from our audited consolidated
financial statements included elsewhere in this prospectus. Our
historical results are not necessarily indicative of the results
that may be expected for any future period. The information
below should be read in conjunction with
“Capitalization,” “Selected Historical
Consolidated Financial and Other Data,”
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” and the consolidated
financial statements and notes thereto included in this
prospectus.
As discussed in more detail under “The Acquisition and
Recapitalization Transaction,” Booz Allen Hamilton was
indirectly acquired by Carlyle on July 31, 2008.
Immediately prior to the acquisition, Booz Allen Hamilton
spun-off its commercial and international business and retained
its U.S. government business. The accompanying consolidated
financial statements included elsewhere in this prospectus are
presented for (1) the “Predecessor,” which are
the financial statements of Booz Allen Hamilton and its
consolidated subsidiaries for the period preceding the
acquisition, and (2) the “Company,” which are the
financial statements of Booz Allen Holding and its consolidated
subsidiaries for the period following the acquisition. Prior to
the acquisition, Booz Allen Hamilton’s U.S. government
business is presented as the continuing operations of the
Predecessor. The Predecessor’s consolidated financial
statements have been presented for the twelve months ended
March 31, 2008 and the four months ended July 31,
2008. The operating results of the commercial and international
business that was spun off by Booz Allen Hamilton effective
July 31, 2008 have been presented as discontinued
operations in the Predecessor consolidated financial statements
and the related notes included in this prospectus. The
Company’s consolidated financial statements for periods
subsequent to the acquisition have been presented from
August 1, 2008 through March 31, 2009 and for the
twelve months ended March 31, 2010. The Predecessor’s
financial statements may not necessarily be indicative of the
cost structure or results of operations that would have existed
if the U.S. government business operated as a stand-alone,
independent business. The acquisition was accounted for as a
business combination, which resulted in a new basis of
accounting. The Predecessor’s and the Company’s
financial statements are not comparable as a result of applying
a new basis of accounting. See Notes 1, 4, and 24 to our
consolidated financial statements for additional information
regarding the accounting treatment of the acquisition and
discontinued operations.
The results of operations for fiscal 2008 are presented “as
adjusted” to reflect the change in accounting principle
related to our revenue recognition policies as described in
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Critical
Accounting Estimates and Policies.”
Included in the table below are unaudited pro forma results of
operations for the twelve months ended March 31, 2009, or
“pro forma 2009,” assuming the acquisition had been
completed as of April 1, 2008. The unaudited pro forma
condensed consolidated results of operations for fiscal 2009 are
based on our historical audited consolidated financial
statements included elsewhere in this prospectus, adjusted to
give pro forma effect to the acquisition. The unaudited pro
forma condensed consolidated results of operations for fiscal
2009 are presented because management believes it provides a
meaningful comparison of operating results enabling twelve
months of fiscal 2009, adjusted for the impact of the
acquisition, to be compared with fiscal 2010. The unaudited pro
forma condensed consolidated financial statements are for
informational purposes only and do not purport to represent what
our actual results of operations would have been if the
acquisition had been completed as of April 1, 2008 or that
may be achieved in the future. The unaudited pro forma condensed
consolidated financial information and the accompanying notes
should be read in conjunction with our historical audited
consolidated financial statements and related notes appearing
elsewhere in this prospectus and other financial information
contained in “Risk Factors,” “The Acquisition and
Recapitalization Transaction,” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in this prospectus. See “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations — Results of Operations” for a
description of the pro forma adjustments attributable to the
acquisition.
10
The pro forma as adjusted (i) earnings per share and
weighted average shares outstanding set forth in the table below
give effect to the net proceeds to us from the sale
of shares of our Class A
common stock in this offering at an assumed initial public
offering price of $ , the midpoint
of the range set forth on the cover page of this prospectus, and
the use of our net proceeds from this offering to repay
borrowings under our mezzanine credit facility and the
associated prepayment penalty as described in “Use of
Proceeds,” as if each had occurred on April 1, 2009,
and (ii) balance sheet data set forth in the table below
gives effect to the net proceeds to us from the sale
of shares of our Class A
common stock in this offering at an assumed initial public
offering price of $ per share, the
midpoint of the range set forth on the cover of this prospectus,
and the use of our net proceeds from this offering to repay
borrowings under our mezzanine credit facility and the
associated prepayment penalty as described in “Use of
Proceeds,” as if each had occurred on March 31, 2010.
| Predecessor | The Company | ||||||||||||
|
Pro Forma |
|||||||||||||
|
Fiscal Year Ended |
Fiscal Year Ended |
Fiscal Year Ended |
|||||||||||
| March 31, 2008 | March 31, 2009(1) | March 31, 2010 | |||||||||||
| (As adjusted) | |||||||||||||
| (In thousands, except share and per share data) | |||||||||||||
|
Consolidated Statement of Operations Data:
|
|||||||||||||
|
Revenue
|
$ | 3,625,055 | $ | 4,351,218 | $ | 5,122,633 | |||||||
|
Operating costs and expenses:
|
|||||||||||||
|
Compensation and other costs
|
2,028,848 | 2,296,335 | 2,654,143 | ||||||||||
|
Billable expenses
|
935,459 | 1,158,320 | 1,361,229 | ||||||||||
|
General and administrative expenses
|
474,188 | 723,827 | 811,944 | ||||||||||
|
Depreciation and amortization
|
33,079 | 106,335 | 95,763 | ||||||||||
|
Total operating costs and expenses
|
3,471,574 | 4,284,817 | 4,923,079 | ||||||||||
|
Operating income
|
153,481 | 66,401 | 199,554 | ||||||||||
|
Interest income
|
2,442 | 5,312 | 1,466 | ||||||||||
|
Interest expense
|
(2,319 | ) | (146,803 | ) | (150,734 | ) | |||||||
|
Other expense, net
|
(1,931 | ) | (182 | ) | (1,292 | ) | |||||||
|
Income (loss) from continuing operations before income taxes
|
151,673 | (75,272 | ) | 48,994 | |||||||||
|
Income tax (benefit) expense from continuing operations
|
62,693 | (25,831 | ) | 23,575 | |||||||||
|
Income (loss) from continuing operations
|
88,980 | $ | (49,441 | ) | 25,419 | ||||||||
|
Loss from discontinued operations
|
(71,106 | ) | — | ||||||||||
|
Net income
|
$ | 17,874 | $ | 25,419 | |||||||||
|
Weighted average common shares
outstanding(2)(3):
|
|||||||||||||
|
Basic
|
|||||||||||||
|
Diluted
|
|||||||||||||
|
Earnings per share from continuing
operations(2)(3):
|
|||||||||||||
|
Basic
|
$ | $ | $ | ||||||||||
|
Diluted
|
|||||||||||||
|
Pro forma as adjusted weighted average shares outstanding(3)(4):
|
|||||||||||||
|
Basic
|
|||||||||||||
|
Diluted
|
|||||||||||||
|
Pro forma as adjusted earnings per share from continuing
operations(3)(4):
|
|||||||||||||
|
Basic
|
$ | ||||||||||||
|
Diluted
|
|||||||||||||
|
Dividends per share (unaudited)
|
$ | $ | $ | (5) | |||||||||
|
Consolidated Statement of Cash Flow Data:
|
|||||||||||||
|
Net cash provided by operating activities of continuing
operations
|
$ | 270,484 | |||||||||||
|
Net cash used in investing activities of continuing operations
|
(10,991 | ) | |||||||||||
|
Net cash used in financing activities of continuing operations
|
(372,560 | ) | |||||||||||
11
| Predecessor | The Company | ||||||||||||
|
Pro Forma |
|||||||||||||
|
Fiscal Year Ended |
Fiscal Year Ended |
Fiscal Year Ended |
|||||||||||
| March 31, 2008 | March 31, 2009(1) | March 31, 2010 | |||||||||||
| (As adjusted) | |||||||||||||
| (In thousands, except share and per share data) | |||||||||||||
|
Other Financial Data (unaudited):
|
|||||||||||||
|
Adjusted EBITDA(6)
|
$ | 226,874 | $ | 277,344 | $ | 368,323 | |||||||
|
Adjusted Net Income(6)
|
$ | 97,001 | |||||||||||
|
Free Cash Flow(6)
|
$ | 221,213 | |||||||||||
| Predecessor | The Company | ||||||||||||
| As of March 31, | As of March 31 | ||||||||||||
| 2008 | 2009 | 2010 | |||||||||||
|
Other Data (unaudited):
|
|||||||||||||
|
Backlog (in thousands)(7)
|
N/A | (8) | $ | 7,278,782 | $ | 9,012,923 | |||||||
|
Employees
|
18,822 | 21,614 | 23,315 | ||||||||||
| The Company | ||||||||
| As of March 31, 2010 | ||||||||
|
Pro Forma as |
||||||||
| Actual | Adjusted(9) | |||||||
| (In thousands) | ||||||||
|
Consolidated Balance Sheet Data:
|
||||||||
|
Cash and cash equivalents
|
$ | 307,835 | ||||||
|
Working capital
|
584,248 | |||||||
|
Total assets
|
3,062,223 | |||||||
|
Long-term debt, net of current portion
|
1,546,782 | |||||||
|
Stockholders’ equity
|
509,583 | |||||||
| (1) | See “Selected Historical Consolidated Financial and Other Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Results of Operations” for further information regarding our unaudited pro forma condensed consolidated results of operations. | |
| (2) | Basic earnings per share for the Company has been computed using the weighted average number of shares of Class A common stock, Class B non-voting common stock and Class C restricted common stock outstanding during the period. The Company’s diluted earnings per share has been computed using the weighted average number of shares of Class A common stock, Class B non-voting common stock and Class C restricted common stock including the dilutive effect of outstanding common stock options and other stock-based awards. The weighted average number of Class E special voting common stock has not been included in the calculation of either basic earnings per share or diluted earnings per share due to the terms of such common stock. | |
| Basic earnings per share for the Predecessor has been computed using the weighted average number of shares of Class A common stock outstanding during the period. The Predecessor’s diluted earnings per share has been computed using the weighted average number of shares of Class A common stock including the dilutive effect of outstanding stock-based awards. | ||
| (3) | Reflects a - for-1 split of our outstanding common stock to be effected prior to the completion of this offering. | |
| (4) | Includes shares of Class A common stock offered by us in this offering. Pro forma as adjusted earnings per share data also gives effect to the reduction in interest expense related to the use of the net proceeds from this offering to repay a portion of our mezzanine credit facility. | |
| (5) | Reflects the payment of special dividends in the aggregate amount of $114.9 million and $497.5 million to holders of record of our Class A common stock, Class B non-voting common stock, and Class C restricted common stock as of July 29, 2009 and December 8, 2009, respectively. |
12
| (6) | “Adjusted EBITDA” represents net income before income taxes, net interest and other expense and depreciation and amortization and before certain other items, including: (i) certain stock option-based and other equity-based compensation expenses, (ii) transaction costs, fees, losses and expenses, (iii) the impact of the application of purchase accounting and (iv) any extraordinary, unusual or non-recurring items. We prepare Adjusted EBITDA to eliminate the impact of items we do not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary or non-recurring nature or because they result from an event of a similar nature. | |
| We utilize and discuss Adjusted EBITDA because our management uses this measure for business planning purposes, including to manage the business against internal projected results of operations and measure the performance of the business generally. We view Adjusted EBITDA as a measure of our core operating business because it excludes the impact of the items described above on our results of operations as these items are generally not operational in nature. Adjusted EBITDA also provides another basis for comparing period to period results by excluding potential differences caused by non-operational and unusual, extraordinary or non-recurring items. We also present Adjusted EBITDA in this prospectus as a supplemental performance measure because we believe that this measure provides investors and securities analysts with important supplemental information with which to evaluate our performance and to enable them to assess our performance on the same basis as management. | ||
| Adjusted EBITDA as discussed in this prospectus may vary from and may not be comparable to similarly titled measures presented by other companies in our industry. Adjusted EBITDA is different from the term “EBITDA” as it is commonly used, and Adjusted EBITDA also varies from (i) the measure “Consolidated EBITDA” discussed in this prospectus under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Indebtedness” and (ii) the measures “EBITDA” and “Bonus EBITDA” discussed in this prospectus under “Executive Compensation.” Adjusted EBITDA is not a recognized measurement under U.S. Generally Accepted Accounting Principles, or GAAP, and when analyzing our performance, investors should (i) evaluate each adjustment in our reconciliation of net income to Adjusted EBITDA and the explanatory footnotes regarding those adjustments and (ii) use Adjusted EBITDA in addition to, and not as an alternative to, operating income or net income as a measure of operating results, each as defined under GAAP. |
The following table reconciles net income to Adjusted EBITDA:
| Predecessor | The Company | ||||||||||||
|
|
Pro Forma |
||||||||||||
|
Fiscal Year Ended |
Fiscal Year Ended |
Fiscal Year Ended |
|||||||||||
| March 31, 2008 | March 31, 2009 | March 31, 2010 | |||||||||||
| (As adjusted) | |||||||||||||
| (In thousands) | |||||||||||||
|
Net income (loss)
|
$ | 17,874 | $ | (49,441 | )(a) | $ | 25,419 | ||||||
|
Income tax (benefit) expense
|
62,693 | (25,831 | ) | 23,575 | |||||||||
|
Interest and other expense, net
|
1,808 | 141,673 | 150,560 | ||||||||||
|
Depreciation and amortization(b)
|
33,079 | 106,335 | 95,763 | ||||||||||
|
Certain stock-based compensation expense(c)
|
35,013 | 82,019 | 68,517 | ||||||||||
|
Transaction expenses(d)
|
5,301 | 19,512 | 3,415 | ||||||||||
|
Purchase accounting adjustments(e)
|
— | 3,077 | 1,074 | ||||||||||
|
Non-recurring items(f)
|
71,106 | — | — | ||||||||||
|
Adjusted EBITDA
|
$ | 226,874 | $ | 277,344 | $ | 368,323 | |||||||
| (a) | Represents loss from continuing operations. | |
| (b) | Includes $57.8 million and $40.6 million in pro forma 2009 and fiscal 2010, respectively, of amortization of intangible assets resulting from the acquisition. |
13
| (c) | Reflects (i) $35.0 million of expense in fiscal 2008 for stock rights under the Predecessor’s Officer Stock Rights Plan, which were accounted for as liability awards, and (ii), $70.5 million and $49.3 million of stock-based compensation expense for pro forma 2009 and fiscal 2010, respectively, for new options for Class A common stock and restricted shares, in each case, issued in connection with the acquisition under the Officers’ Rollover Stock Plan established in connection with the acquisition. Expense is based on vesting schedules from three to five years, which is dependent on whether officers were classified as retirement or non-retirement eligible at the time of the acquisition. Also reflects $11.5 million and $19.2 million for pro forma 2009 and fiscal 2010, respectively, of stock-based compensation expense for Equity Incentive Plan Class A common stock options issued in connection with the acquisition under the Equity Incentive Plan established in connection with the acquisition. | |
| (d) | Fiscal 2008 and pro forma 2009 reflect charges related to the acquisition, including legal, tax and accounting expenses. Fiscal 2010 reflects costs related to the modification of our credit facilities, the establishment of the Tranche C term loan facility under our senior credit facilities and the related payment of special dividends. See “Acquisition and Recapitalization Transaction”. | |
| (e) | Reflects adjustments resulting from the application of purchase accounting in connection with the acquisition not otherwise included in depreciation and amortization. | |
| (f) | Reflects loss from discontinued operations. |
| “Adjusted Net Income” represents net income before: (i) certain stock option-based and other equity-based compensation expenses, (ii) transaction costs, fees, losses and expenses, (iii) the impact of the application of purchase accounting, (iv) adjustments related to the amortization of intangible assets, (v) amortization or write-off of debt issuance costs and write-off of original issue discount, or OID, and (vi) any extraordinary, unusual or non-recurring items, in each case net of the tax effect calculated using an assumed effective tax rate. We prepare Adjusted Net Income to eliminate the impact of items, net of tax, we do not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary or non-recurring nature or because they result from an event of a similar nature. | ||
| We utilize and discuss Adjusted Net Income because our management uses this measure for business planning purposes, including to manage the business against internal projected results of operations and measure the performance of the business generally. We view Adjusted Net Income as a measure of our core operating business because it excludes the items described above, net of tax, which are generally not operational in nature. We also present Adjusted Net Income in this prospectus as a supplemental performance measure because we believe that this measure provides investors and securities analysts with important supplemental information with which to evaluate our performance, long-term earnings potential and to enable them to assess our performance on the same basis as management. | ||
| Adjusted Net Income as discussed in this prospectus may vary from and may not be comparable to similarly titled measures presented by other companies in our industry. Adjusted Net Income is not a recognized measurement under GAAP and when analyzing our performance, investors should (i) evaluate each adjustment in our reconciliation of net income to Adjusted Net Income and the explanatory footnotes regarding those adjustments and (ii) use Adjusted Net Income in addition to, and not as an alternative to, operating income or net income as a measure of operating results, each as defined under GAAP. |
14
The following table reconciles net income to Adjusted Net Income:
| The Company | ||||
|
Fiscal Year Ended |
||||
| March 31, 2010 | ||||
| (In thousands) | ||||
|
Net income (loss)
|
$ | 25,419 | ||
|
Certain stock-based compensation expense(a)
|
68,517 | |||
|
Transaction expenses(b)
|
3,415 | |||
|
Purchase accounting adjustments(c)
|
1,074 | |||
|
Amortization of intangible assets(d)
|
40,597 | |||
|
Amortization or write-off of debt issuance costs and write-off
of OID
|
5,700 | |||
|
Adjustments for tax effect(e)
|
(47,721 | ) | ||
|
Adjusted Net Income
|
$ | 97,001 | ||
| (a) | Reflects $49.3 million of stock-based compensation expense for new options for Class A common stock and restricted shares, in each case issued in connection with the acquisition under the Officers’ Rollover Stock Plan established in connection with the acquisition. Expense is based on vesting schedules from three to five years, which is dependent on whether officers were classified as retirement or non-retirement eligible at the time of the acquisition. Also reflects $19.2 million of stock-based compensation expense for Equity Incentive Plan Class A common stock options issued in connection with the acquisition under the Equity Incentive Plan established in connection with the acquisition. | |
| (b) | Reflects costs related to the modification of our credit facilities, the establishment of the Tranche C term loan facility under our senior credit facilities and the related payment of special dividends. See “Acquisition and Recapitalization Transaction”. | |
| (c) | Reflects adjustments resulting from the application of purchase accounting in connection with the acquisition. | |
| (d) | Reflects amortization of intangible assets resulting from the acquisition. | |
| (e) | Reflects taxes on adjustments at an assumed marginal effective tax rate of 40%. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors and Trends Affecting Our Results of Operations — Income Taxes” and our consolidated financial statements and related footnotes included in this prospectus. |
| “Free Cash Flow” represents (i) net cash provided by operating activities of continuing operations after (ii) purchases of property and equipment, each as presented in our consolidated statements of cash flows. We utilize and discuss Free Cash Flow because our management uses this measure for business planning purposes, to measure the cash generating ability of our operating business after the impact of cash used to purchase property and equipment, and to measure our liquidity generally. We also present Free Cash Flow in this prospectus as a supplemental liquidity measure because we believe that this measure provides investors and securities analysts with important supplemental information with which to evaluate our liquidity and to enable them to assess our liquidity on the same basis as management. | ||
| Free Cash Flow as discussed in this prospectus may vary from and may not be comparable to similarly titled measures presented by other companies in our industry. Free Cash Flow is not a recognized measurement under GAAP and when analyzing our liquidity, investors should use Free Cash Flow in addition to, and not as an alternative to, cash flows, as defined under GAAP, as a measure of liquidity. |
15
| The following table reconciles net cash provided by operating activities of continuing operations to Free Cash Flow: |
| The Company | ||||
|
Fiscal Year Ended |
||||
| March 31, 2010 | ||||
| (In thousands) | ||||
|
Net cash provided by operating activities of continuing
operations
|
$ | 270,484 | ||
|
Purchases of property and equipment
|
(49,271 | ) | ||
|
Free Cash Flow
|
$ | 221,213 | ||
| (7) | We define backlog to include funded backlog, unfunded backlog and priced options. Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on those contracts. Unfunded backlog represents the revenue value of orders for services under existing contracts for which funding has not been appropriated or otherwise authorized. Priced contract options represent 100% of the revenue value of all future contract option periods under existing contracts that may be exercised at our clients’ option and for which funding has not been appropriated or otherwise authorized. Backlog is given as of the end of each period presented. See “Risk Factors — Risks Relating to Our Business — We may not realize the full value of our backlog, which may result in lower than expected revenue,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors and Trends Affecting Our Results of Operations — Sources of Revenue — Contract Backlog” and “Business — Backlog.” | |
| (8) | Not available because we began to separately track information on priced options on April 1, 2008. | |
| (9) | Each $1.00 increase (decrease) in the assumed public offering price of $ per share would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets, long-term debt, net of current portion and stockholders’ equity by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. Each increase of 1.0 million shares in the number of shares offered by us, together with a concomitant $1.00 increase in the assumed offering price of $ per share, would increase the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets, long-term debt, net of current portion, and stockholders’ equity by approximately $ million. Similarly, each decrease of 1.0 million shares in the number of shares offered by us, together with a concomitant $1.00 decrease in the assumed offering price of $ per share, would decrease the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets, long-term debt, net of current portion, and stockholders’ equity by approximately $ million. The information discussed above is illustrative only and will adjust based on the actual public offering price and other terms of this offering determined at pricing. |
16
RISK
FACTORS
Investing in our common stock involves a high degree of risk.
You should consider and read carefully all of the risks and
uncertainties described below, as well as other information
included in this prospectus, including our consolidated
financial statements and related notes appearing at the end of
this prospectus, before making an investment decision. The risks
described below are not the only ones facing us. The occurrence
of any of the following risks or additional risks and
uncertainties not presently known to us or that we currently
believe to be immaterial could materially and adversely affect
our business, financial condition or results of operations. In
such case, the trading price of our common stock could decline,
and you may lose all or part of your original investment. This
prospectus also contains forward-looking statements and
estimates that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in the
forward-looking statements as a result of specific factors,
including the risks and uncertainties described below.
Risks
Related to Our Business
We
depend on contracts with U.S. government agencies for
substantially all of our revenue. If our relationships with such
agencies are harmed, our future revenue and operating profits
would decline.
The U.S. government is our primary client, with revenue
from contracts and task orders, either as a prime or a
subcontractor, with U.S. government agencies accounting for
98% of our revenue for fiscal 2010. Our belief is that the
successful future growth of our business will continue to depend
primarily on our ability to be awarded work under
U.S. government contracts, as we expect this will be the
primary source of all of our revenue in the foreseeable future.
For this reason, any issue that compromises our relationship
with the U.S. government generally or any
U.S. government agency that we serve would cause our
revenue to decline. Among the key factors in maintaining our
relationship with U.S. government agencies are our
performance on contracts and task orders, the strength of our
professional reputation, compliance with applicable laws and
regulations, and the strength of our relationships with client
personnel. In addition, the mishandling or the perception of
mishandling of sensitive information, such as our failure to
maintain the confidentiality of the existence of our business
relationships with certain of our clients, could harm our
relationship with U.S. government agencies. If a client is not
satisfied with the quality or type of work performed by us, a
subcontractor or other third parties who provide services or
products for a specific project, clients might seek to terminate
the contract prior to its scheduled expiration date, provide a
negative assessment of our performance to government-maintained
contractor past-performance data repositories, fail to award us
additional business under existing contracts or otherwise and
direct future business to our competitors. Furthermore, we may
incur additional costs to address any such situation and the
profitability of that work might be impaired. To the extent that
our performance does not meet client expectations, or our
reputation or relationships with any of our clients is impaired,
our revenue and operating profits could materially decline.
U.S.
government spending and mission priorities could change in a
manner that adversely affects our future revenue and limits our
growth prospects.
Our business depends upon continued U.S. government
expenditures on defense, intelligence and civil programs for
which we provide support. These expenditures have not remained
constant over time and have been reduced in certain periods. Our
business, prospects, financial condition or operating results
could be materially harmed among other causes by the following:
| • | budgetary constraints affecting U.S. government spending generally, or specific agencies in particular, and changes in available funding; | |
| • | a shift in expenditures away from agencies or programs that we support; | |
| • | reduced U.S. government outsourcing of functions that we are currently contracted to provide, including as a result of increased insourcing; | |
| • | changes in U.S. government programs that we support or related requirements; |
17
| • | U.S. government shutdowns (such as that which occurred during government fiscal year 1996) or weather-related closures in the Washington, DC area (such as that which occurred in February 2010) and other potential delays in the appropriations process; | |
| • | U.S. government agencies awarding contracts on a technically acceptable/lowest cost basis in order to reduce expenditures; | |
| • | delays in the payment of our invoices by government payment offices; and | |
| • | changes in the political climate and general economic conditions, including a slowdown or unstable economic conditions and responses to conditions, such as emergency spending, that reduce funds available for other government priorities. |
In particular, insourcing has become a major initiative for the
Department of Defense. The Department of Defense is one of our
significant clients and a reduction in the amount of services
that we are contracted to provide to the Department of Defense
as a result of this initiative or otherwise could have a
material adverse effect on our business and results of
operations.
These or other factors could cause U.S. government agencies
to decrease the number of new contracts awarded generally and
fail to award us new contracts, reduce their purchases under our
existing contracts, exercise their right to terminate our
contracts, or not exercise options to renew our contracts, any
of which could cause a material decline in our revenue.
We are
required to comply with numerous laws and regulations, some of
which are highly complex, and our failure to comply could result
in fines or civil or criminal penalties or suspension or
debarment by the U.S. government that could result in our
inability to receive U.S. government contracts, which could
materially and adversely affect our results of
operations.
As a U.S. government contractor, we must comply with laws
and regulations relating to the formation, administration and
performance of U.S. government contracts, which affect how
we do business with our clients. Such laws and regulations may
potentially impose added costs on our business and our failure
to comply with them may lead to civil or criminal penalties,
termination of our U.S. government contracts
and/or
suspension or debarment from contracting with federal agencies.
Some significant laws and regulations that affect us include:
| • | the Federal Acquisition Regulation, or the FAR, and agency regulations supplemental to the FAR, which regulate the formation, administration and performance of U.S. government contracts. Specifically, FAR 52.203-13 requires contractors to establish a Code of Business Ethics and Conduct, implement a comprehensive internal control system, and report to the government when the contractor has credible evidence that a principal, employee, agent, or subcontractor, in connection with a government contract, has violated certain federal criminal law, violated the civil False Claims Act or has received a significant overpayment; | |
| • | the False Claims Act and False Statements Act, which impose civil and criminal liability for presenting false or fraudulent claims for payments or reimbursement, and making false statements to the U.S. government, respectively; | |
| • | the Truth in Negotiations Act, which requires certification and disclosure of cost and pricing data in connection with the negotiation of a contract, modification or task order; | |
| • | laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the export of certain products, services and technical data; and | |
| • | the Cost Accounting Standards and Cost Principles, which impose accounting requirements that govern our right to reimbursement under certain cost-based U.S. government contracts and require consistency of accounting practices over time. |
In addition, the U.S. government adopts new laws, rules and
regulations from time to time that could have a material impact
on our results of operations.
18
Our performance under our U.S. government contracts and our
compliance with the terms of those contracts and applicable laws
and regulations are subject to periodic audit, review and
investigation by various agencies of the U.S. government.
If such an audit, review or investigation uncovers a violation
of a law or regulation, or improper or illegal activities
relating to our U.S. government contracts, we may be
subject to civil or criminal penalties or administrative
sanctions, including the termination of contracts, forfeiture of
profits, the triggering of price reduction clauses, suspension
of payments, fines and suspension or debarment from contracting
with U.S. government agencies. Such penalties and sanctions
are not uncommon in the industry and there is inherent
uncertainty as to the outcome of any particular audit, review or
investigation. If we incur a material penalty or administrative
sanction or otherwise suffer harm to our reputation, our
profitability, cash position and future prospects could be
materially and adversely affected. Further, if the
U.S. government were to initiate suspension or debarment
proceedings against us or if we are indicted for or convicted of
illegal activities relating to our U.S. government
contracts following an audit, review or investigation, we may
lose our ability to be awarded contracts in the future or
receive renewals of existing contracts for a period of time
which could materially and adversely affect our results of
operations or financial condition. We could also suffer harm to
our reputation if allegations of impropriety were made against
us, which would impair our ability to win awards of contracts in
the future or receive renewals of existing contracts.
We
derive a majority of our revenue from contracts awarded through
a competitive bidding process, and our revenue and profitability
may be adversely affected if we are unable to compete
effectively in the process or if there are delays caused by our
competitors protesting major contract awards received by
us.
We derive a majority of our revenue from U.S. government
contracts awarded though competitive bidding processes. We do
not expect this to change for the foreseeable future. Our
failure to compete effectively in this procurement environment
would have a material adverse effect on our revenue and
profitability.
The competitive bidding process involves risk and significant
costs to businesses operating in this environment, including:
| • | the necessity to expend resources, make financial commitments (such as procuring leased premises) and bid on engagements in advance of the completion of their design, which may result in unforeseen difficulties in execution, cost overruns and, in the case of an unsuccessful competition, the loss of committed costs; | |
| • | the substantial cost and managerial time and effort spent to prepare bids and proposals for contracts that may not be awarded to us; | |
| • | the ability to accurately estimate the resources and costs that will be required to service any contract we are awarded; | |
| • | the expense and delay that may arise if our competitors protest or challenge contract awards made to us pursuant to competitive bidding, and the risk that any such protest or challenge could result in the resubmission of bids on modified specifications, or in termination, reduction, or modification of the awarded contract; and | |
| • | any opportunity cost of bidding and winning other contracts we might otherwise pursue. |
In circumstances where contracts are held by other companies and
are scheduled to expire, we still may not be provided the
opportunity to bid on those contracts if the
U.S. government determines to extend the existing contract.
If we are unable to win particular contracts that are awarded
through the competitive bidding process, we may not be able to
operate in the market for services that are provided under those
contracts for the duration of those contracts to the extent that
there is no additional demand for such services. An inability to
consistently win new contract awards over any extended period
would have a material adverse effect on our business and results
of operations.
It can take many months for the relevant U.S. government
agency to resolve protests by one or more of our competitors of
contract awards we receive. The resulting delay in the start up
and funding of the work under these contracts may cause our
actual results to differ materially and adversely from those
anticipated.
19
We may
lose GSA schedules or our position as a prime contractor on one
or more of our GWACs.
We believe that one of the key elements of our success is our
position as the holder of 11 General Services
Administration Multiple Award schedule contracts, or GSA
schedules, and as a prime contractor under
four government-wide acquisition contract vehicles, or
GWACs, as of March 31, 2010. GSA schedules are administered
by the General Services Administration and support a wide range
of products and services. GWACs are used to procure IT products
and services and are administered by the agency soliciting the
services or products. Our ability to maintain our existing
business and win new business depends on our ability to maintain
our position as a GSA schedule contractor and a prime contractor
on GWACs. The loss of any of our GSA schedules or our prime
contractor position on any of our contracts could have a
material adverse effect on our ability to win new business and
our operating results. In addition, if the U.S. government
elects to use a contract vehicle that we do not hold, we will
not be able to compete for work under that contract vehicle as a
prime contractor.
We may
earn less revenue than projected, or no revenue, under certain
of our contracts.
Many of our contracts with our clients are indefinite delivery,
indefinite quantity, or ID/IQ, contracts, including GSA
schedules and GWACs. ID/IQ contracts provide for the issuance by
the client of orders for services or products under the
contract, and often contain multi-year terms and unfunded
ceiling amounts, which allow but do not commit the
U.S. government to purchase products and services from
contractors. Our ability to generate revenue under each of these
types of contracts depends upon our ability to be awarded task
orders for specific services by the client. ID/IQ contracts may
be awarded to one contractor (single award) or several
contractors (multiple award). Multiple contractors must compete
under multiple award ID/IQ contracts for task orders to provide
particular services, and contractors earn revenue only to the
extent that they successfully compete for these task orders. In
fiscal 2008, pro forma 2009 and fiscal 2010, our revenue under
our GSA schedules and GWACs accounted for 29%, 27% and 23%,
respectively, of our total revenue. A failure to be awarded task
orders under such contracts would have a material adverse effect
on our results of operations and financial condition.
Our
earnings and profitability may vary based on the mix of our
contracts and may be adversely affected by our failure to
accurately estimate or otherwise recover the expenses, time and
resources for our contracts.
We enter into three general types of U.S. government
contracts for our services:
cost-reimbursable,
time-and-materials
and fixed-price. For fiscal 2010, we derived 50% of our revenue
from cost-reimbursable contracts, 38% from time-and-materials
contracts and 12% from fixed-price contracts.
Each of these types of contracts, to varying degrees, involves
the risk that we could underestimate our cost of fulfilling the
contract, which may reduce the profit we earn or lead to a
financial loss on the contract and adversely affect our
operating results.
Under cost-reimbursable contracts, we are reimbursed for
allowable costs up to a ceiling and paid a fee, which may be
fixed or performance-based. If our actual costs exceed the
contract ceiling or are not allowable under the terms of the
contract or applicable regulations, we may not be able to
recover those costs. In particular, there is increasing focus by
the U.S. government on the extent to which government
contractors, including us, are able to receive reimbursement for
employee compensation.
Under
time-and-materials
contracts, we are reimbursed for labor at negotiated hourly
billing rates and for certain allowable expenses. We assume
financial risk on
time-and-materials
contracts because our costs of performance may exceed these
negotiated hourly rates.
Under fixed-price contracts, we perform specific tasks for a
pre-determined price. Compared to
time-and-materials
and cost-reimbursable contracts, fixed-price contracts generally
offer higher margin opportunities because we receive the
benefits of any cost savings, but involve greater financial risk
because we bear the impact of any cost overruns. The
U.S. government has indicated that it intends to increase
its use of fixed price contract procurements. Because we assume
the risk for cost overruns and contingent losses on
20
fixed-price contracts, an increase in the percentage of
fixed-price contracts in our contract mix would increase our
risk of suffering losses.
Additionally, our profits could be adversely affected if our
costs under any of these contracts exceed the assumptions we
used in bidding for the contract. We have recorded provisions in
our consolidated financial statements for losses on our
contracts, as required under GAAP, but our contract loss
provisions may not be adequate to cover all actual losses that
we may incur in the future.
Our
professional reputation is critical to our business, and any
harm to our reputation could decrease the amount of business the
U.S. government does with us, which could have a material
adverse effect on our future revenue and growth
prospects.
We depend on our contracts with U.S. government agencies
for substantially all of our revenue and if our reputation or
relationships with these agencies were harmed, our future
revenue and growth prospects would be materially and adversely
affected. Our reputation and relationship with the
U.S. government is a key factor in maintaining and growing
revenue under contracts with the U.S. government. Negative
press reports regarding poor contract performance, employee
misconduct, information security breaches or other aspects of
our business, or regarding government contractors generally,
could harm our reputation. If our reputation with these agencies
is negatively affected, or if we are suspended or debarred from
contracting with government agencies for any reason, such
actions would decrease the amount of business that the
U.S. government does with us, which would have a material
adverse effect on our future revenue and growth prospects.
We use
estimates in recognizing revenue and if we make changes to
estimates used in recognizing revenue, our profitability may be
adversely affected.
Revenue from our fixed-price contracts is primarily recognized
using the
percentage-of-completion
method with progress toward completion of a particular contract
based on actual costs incurred relative to total estimated costs
to be incurred over the life of the contract. Revenue from our
cost-plus-award-fee contracts are based on our estimation of
award fees over the life of the contract. Estimating costs at
completion and award fees on our long-term contracts is complex
and involves significant judgment. Adjustments to original
estimates are often required as work progresses, experience is
gained and additional information becomes known, even though the
scope of the work required under the contract may not change.
Any adjustment as a result of a change in estimate is recognized
as events become known.
In the event updated estimates indicate that we will experience
a loss on the contract, we recognize the estimated loss at the
time it is determined. Additional information may subsequently
indicate that the loss is more or less than initially
recognized, which requires further adjustments in our
consolidated financial statements. Changes in the underlying
assumptions, circumstances or estimates could result in
adjustments that could have a material adverse effect on our
future results of operations.
We may
not realize the full value of our backlog, which may result in
lower than expected revenue.
As of March 31, 2010, our total backlog was
$9.0 billion, of which $2.5 billion was funded. We
define backlog to include the following three components:
| • | Funded Backlog. Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts. | |
| • | Unfunded Backlog. Unfunded backlog represents the revenue value of orders for services under existing contracts for which funding has not been appropriated or otherwise authorized. | |
| • | Priced Options. Priced contract options represent 100% of the revenue value of all future contract option periods under existing contracts that may be exercised at our clients’ option and for which funding has not been appropriated or otherwise authorized. |
21
Backlog does not include any task orders under ID/IQ contracts,
including GWACs and GSA schedules, except to the extent that
task orders have been awarded to us under those contracts.
We historically have not realized all of the revenue included in
our total backlog, and we may not realize all of the revenue
included in our total backlog in the future. There is a somewhat
higher degree of risk in this regard with respect to unfunded
backlog and priced options. In addition, there can be no
assurance that our backlog will result in actual revenue in any
particular period. This is because the actual receipt, timing
and amount of revenue under contracts included in backlog are
subject to various contingencies, including congressional
appropriations, many of which are beyond our control. For
example, the actual receipt of revenue from contracts included
in backlog may never occur or may be delayed because a program
schedule could change or the program could be canceled, or a
contract could be reduced, modified or terminated early,
including as a result of a lack of appropriated funds. In
addition, headcount growth is the primary means by which we are
able to recognize revenue growth. To the extent that we are able
to hire additional people and deploy them against funded
backlog, we recognize increased revenue. Any inability to hire
additional appropriately qualified personnel or failure to
effectively deploy such additional personnel against funded
backlog could negatively affect our ability to grow our revenue.
Furthermore, even if our backlog results in revenue, the
contracts may not be profitable.
We may
fail to attract, train and retain skilled and qualified
employees with appropriate security clearances, which may impair
our ability to generate revenue, effectively service our clients
and execute our growth strategy.
Our business depends in large part upon our ability to attract
and retain sufficient numbers of highly qualified individuals
who may have advanced degrees in areas such as information
technology as well as appropriate security clearances. We
compete for such qualified personnel with other
U.S. government contractors, the U.S. government and
private industry, and such competition is intense. Personnel
with the requisites skills, qualifications or security clearance
may be in short supply or generally unavailable. In addition,
our ability to recruit, hire and internally deploy former
employees of the U.S. government is subject to complex laws
and regulations, which may serve as an impediment to our ability
to attract such former employees, and failure to comply with
these laws and regulations may expose us and our employees to
civil or criminal penalties. If we are unable to recruit and
retain a sufficient number of qualified employees, our ability
to maintain and grow our business and to effectively service our
clients could be limited and our future revenue and results of
operations could be materially and adversely affected.
Furthermore, to the extent that we are unable to make necessary
permanent hires to appropriately service our clients, we could
be required to engage larger numbers of contracted personnel,
which could reduce our profit margins.
If we are able to attract sufficient numbers of qualified new
hires, training and retention costs may place significant
demands on our resources. In addition, to the extent that we
experience attrition in our employee ranks, we may realize only
a limited or no return on such invested resources, and we would
have to expend additional resources to hire and train
replacement employees. The loss of services of key personnel
could also impair our ability to perform required services under
some of our contracts and to retain such contracts, as well as
our ability to win new business.
We may
fail to obtain and maintain necessary security clearances which
may adversely affect our ability to perform on certain
contracts.
Many U.S. government programs require contractors to have
security clearances. Depending on the level of required
clearance, security clearances can be difficult and
time-consuming to obtain. If we or our employees are unable to
obtain or retain necessary security clearances, we may not be
able to win new business, and our existing clients could
terminate their contracts with us or decide not to renew them.
To the extent we are not able to obtain and maintain facility
security clearances or engage employees with the required
security clearances for a particular contract, we may not be
able to bid on or win new contracts, or effectively rebid on
expiring contracts, as well as lose existing contracts, which
may adversely affect our operating results and inhibit the
execution of our growth strategy.
22
Our
profitability could suffer if we are not able to effectively
utilize our professionals.
The cost of providing our services, including the utilization
rate of our professionals, affects our profitability. Our
utilization rate is affected by a number of factors, including:
| • | our ability to transition employees from completed projects to new assignments and to hire and assimilate new employees; | |
| • | our ability to forecast demand for our services and thereby maintain headcount that is aligned with demand; | |
| • | our ability to manage attrition; and | |
| • | our need to devote time and resources to training, business development and other non-chargeable activities. |
If our utilization rate is too low, our profit margin and
profitability could suffer. Additionally, if our utilization
rate is too high, it could have a material adverse effect on
employee engagement and attrition, which would in turn have a
material adverse impact on our business.
We may
lose one or more members of our senior management team or fail
to develop new leaders which could cause the disruption of the
management of our business.
We believe that the future success of our business and our
ability to operate profitably depends on the continued
contributions of the members of our senior management and the
continued development of new members of senior management. We
rely on our senior management to generate business and execute
programs successfully. In addition, the relationships and
reputation that many members of our senior management team have
established and maintain with our clients are important to our
business and our ability to identify new business opportunities.
We do not have any employment agreements providing for a
specific term of employment with any member of our senior
management. The loss of any member of our senior management or
our failure to continue to develop new members could impair our
ability to identify and secure new contracts, to maintain good
client relations and to otherwise manage our business.
Our
employees or subcontractors may engage in misconduct or other
improper activities which could harm our ability to conduct
business with the U.S. government.
We are exposed to the risk that employee or subcontractor fraud
or other misconduct could occur. Misconduct by employees or
subcontractors could include intentional or unintentional
failures to comply with U.S. government procurement
regulations, engaging in unauthorized activities or falsifying
time records. Employee or subcontractor misconduct could also
involve the improper use of our clients’ sensitive or
classified information or the failure to comply with legislation
or regulations regarding the protection of sensitive or
classified information. It is not always possible to deter
employee or subcontractor misconduct, and the precautions we
take to prevent and detect this activity may not be effective in
controlling unknown or unmanaged risks or losses, which could
materially harm our business. As a result of such misconduct,
our employees could lose their security clearance and we could
face fines and civil or criminal penalties, loss of facility
clearance accreditation and suspension or debarment from
contracting with the U.S. government, as well as
reputational harm, which would materially and adversely affect
our results of operations and financial condition.
We
face intense competition from many competitors, which could
cause us to lose business, lower prices and suffer employee
departures.
Our business operates in a highly competitive industry and we
generally compete with a wide variety of U.S. government
contractors, including large defense contractors, diversified
service providers and small businesses. We also face competition
from entrants into our markets including companies divested by
large prime contractors in response to increasing scrutiny of
organizational conflicts of interest issues. Some of
23
these companies possess greater financial resources and larger
technical staffs, and others that have smaller and more
specialized staffs. These competitors could, among other things:
| • | divert sales from us by winning very large-scale government contracts, a risk that is enhanced by the recent trend in government procurement practices to bundle services into larger contracts; | |
| • | force us to charge lower prices in order to win or maintain contracts; | |
| • | seek to hire our employees; or | |
| • | adversely affect our relationships with current clients, including our ability to continue to win competitively awarded engagements where we are the incumbent. |
If we lose business to our competitors or are forced to lower
our prices or suffer employee departures, our revenue and our
operating profits could decline. In addition, we may face
competition from our subcontractors who, from time to time, seek
to obtain prime contractor status on contracts for which they
currently serve as a subcontractor to us. If one or more of our
current subcontractors are awarded prime contractor status on
such contracts in the future, it could divert sales from us and
could force us to charge lower prices, which could have a
material adverse effect on our revenue and profitability.
Our
failure to maintain strong relationships with other contractors,
or the failure of contractors with which we have entered into a
sub- or
prime contractor relationship to meet their obligations to us or
our clients, could have a material adverse effect on our
business and results of operations.
Maintaining strong relationships with other U.S. government
contractors, who may also be our competitors, is important to
our business and our failure to do so could have a material
adverse effect on our business, prospects, financial condition
and operating results. To the extent that we fail to maintain
good relations with our subcontractors or other prime
contractors due to either perceived or actual performance
failures or other conduct, they may refuse to hire us as a
subcontractor in the future or to work with us as our
subcontractor. In addition, other contractors may choose not to
use us as a subcontractor or choose not to perform work for us
as a subcontractor for any number of additional reasons,
including because they choose to establish relationships with
our competitors or because they choose to directly offer
services that compete with our business.
As a prime contractor, we often rely on other companies to
perform some of the work under a contract, and we expect to
continue to depend on relationships with other contractors for
portions of our delivery of services and revenue in the
foreseeable future. If our subcontractors fail to perform their
contractual obligations, our operating results and future growth
prospects could be impaired. There is a risk that we may have
disputes with our subcontractors arising from, among other
things, the quality and timeliness of work performed by the
subcontractor, client concerns about the subcontractor, our
failure to extend existing task orders or issue new task orders
under a subcontract, or our hiring of a subcontractor’s
personnel. In addition, if any of our subcontractors fail to
deliver the
agreed-upon
supplies or perform the
agreed-upon
services on a timely basis, our ability to fulfill our
obligations as a prime contractor may be jeopardized. Material
losses could arise in future periods and subcontractor
performance deficiencies could result in a client terminating a
contract for default. A termination for default could expose us
to liability and have an adverse effect on our ability to
compete for future contracts and orders.
We estimate that revenue derived from contracts in which we
acted as a subcontractor to other companies represented 13% of
our revenue for fiscal 2010. As a subcontractor, we often lack
control over fulfillment of a contract, and poor performance on
the contract could tarnish our reputation, even when we perform
as required, and could cause other contractors to choose not to
hire us as a subcontractor in the future. In addition, if the
U.S. government terminates or reduces other prime
contractors’ programs or does not award them new contracts,
subcontracting opportunities available to us could decrease,
which would have a material adverse effect on our financial
condition and results of operations.
24
Adverse
judgments or settlements in legal disputes could result in
materially adverse monetary damages or injunctive relief and
damage our reputation.
We are subject to, and may become a party to, a variety of
litigation or other claims and suits that arise from time to
time in the ordinary course of our business. For example, over
time, we have had disputes with current and former employees
involving alleged violations of civil rights, wage and hour, and
worker’s compensation laws. Further, as more fully
described under “Business — Legal
Proceedings,” six former officers and stockholders of the
Predecessor who had departed the firm prior to the acquisition
have filed suits against our company and certain of our current
and former directors and officers. Each of the suits arises out
of the acquisition and alleges that the former stockholders are
entitled to certain payments that they would have received if
they had held their stock at the time of acquisition. The
results of litigation and other legal proceedings are inherently
uncertain and adverse judgments or settlements in some or all of
these legal disputes may result in materially adverse monetary
damages or injunctive relief against us. Any claims or
litigation, even if fully indemnified or insured, could damage
our reputation and make it more difficult to compete effectively
or obtain adequate insurance in the future. The litigation and
other claims described in this prospectus under the caption
“Business — Legal Proceedings” are subject
to future developments and management’s view of these
matters may change in the future.
Systems
that we develop, integrate or maintain could experience security
breaches which may damage our reputation with our clients and
hinder future contract win rates.
Many of the systems we develop, integrate or maintain involve
managing and protecting information involved in intelligence,
national security and other sensitive or classified government
functions. A security breach in one of these systems could cause
serious harm to our business, damage our reputation and prevent
us from being eligible for further work on sensitive or
classified systems for U.S. government clients. Damage to
our reputation or limitations on our eligibility for additional
work or any liability resulting from a security breach in one of
the systems we develop, install or maintain could have a
material adverse effect on our results of operations.
Internal
system or service failures could disrupt our business and impair
our ability to effectively provide our services to our clients,
which could damage our reputation and have a material adverse
effect on our business and results of operations.
We create, implement and maintain information technology and
engineering systems, and provide services that are often
critical to our clients’ operations, some of which involve
classified or other sensitive information and may be conducted
in war zones or other hazardous environments. We are subject to
systems failures, including network, software or hardware
failures, whether caused by us, third-party service providers,
intruders or hackers, computer viruses, natural disasters, power
shortages or terrorist attacks. Any such failures could cause
loss of data and interruptions or delays in our or our
clients’ businesses and could damage our reputation. In
addition, the failure or disruption of our communications or
utilities could cause us to interrupt or suspend our operations,
which could have a material adverse effect on our business and
results of operations.
If our systems, services or other applications have significant
defects or errors, are subject to delivery delays or fail to
meet our clients’ expectations, we may:
| • | lose revenue due to adverse client reaction; | |
| • | be required to provide additional services to a client at no charge; | |
| • | receive negative publicity, which could damage our reputation and adversely affect our ability to attract or retain clients; or | |
| • | suffer claims for substantial damages. |
In addition to any costs resulting from contract performance or
required corrective action, these failures may result in
increased costs or loss of revenue if they result in clients
postponing subsequently scheduled work or canceling or failing
to renew contracts.
25
Our errors and omissions insurance coverage may not continue to
be available on reasonable terms or in sufficient amounts to
cover one or more large claims, or the insurer may disclaim
coverage as to some types of future claims. The successful
assertion of any large claim against us could seriously harm our
business. Even if not successful, these claims could result in
significant legal and other costs, may be a distraction to our
management and may harm our client relationships. In certain new
business areas, we may not be able to obtain sufficient
insurance and may decide not to accept or solicit business in
these areas.
The
growth of our business entails risks associated with new
relationships, clients, capabilities, service offerings and
maintaining our collaborative culture.
We are focused on growing our presence in our addressable
markets by: expanding our relationships with existing clients,
developing new clients by leveraging our core competencies,
creating new capabilities to address our clients’ emerging
needs and undertaking business development efforts focused on
identifying near-term developments and long-term trends that may
pose significant challenges for our clients. These efforts
entail inherent risks associated with innovation and competition
from other participants in those areas and potential failure to
help our clients respond to the challenges they face. As we
attempt to develop new relationships, clients, capabilities and
service offerings, these efforts could harm our results of
operations due to, among other things, a diversion of our focus
and resources, actual costs and opportunity costs of pursuing
these opportunities in lieu of others, and these efforts could
be unsuccessful. In addition, our ability to grow our business
by leveraging our operating model to efficiently and effectively
deploy our people across our client base is largely dependent on
our ability to maintain our collaborative culture. To the extent
that we are unable to maintain our culture for any reason, we
may be unable to grow our business. Any such failure could have
a material adverse effect on our business and results of
operations.
We and
our subsidiaries may incur debt in the future, which could
substantially reduce our profitability, limit our ability to
pursue certain business opportunities, and reduce the value of
your investment.
In connection with the acquisition and the recapitalization
transaction, which refers to the December 2009 payment of a
special dividend and repayment of a portion of the deferred
payment obligation and the related amendments to our credit
agreements, and as a result of our business activities, we have
incurred a substantial amount of debt. As of March 31,
2010, on a pro forma basis after giving effect to this offering
and the use of the net proceeds therefrom as described in
“Use of Proceeds,” we would have had approximately
$ million of debt
outstanding. The instruments governing our indebtedness may not
prevent us or our subsidiaries from incurring additional debt in
the future or other obligations that do not constitute
indebtedness, which could increase the risks described below and
lead to other risks. In addition, we may, at our option and
subject to certain closing conditions including pro forma
compliance with financial covenants, increase the borrowing
capacity under our senior credit facilities without the consent
of any person other than the institutions agreeing to provide
all or any portion of such increase, to an amount not to exceed
$100 million. The amount of our debt or such other
obligations could have important consequences for holders of our
Class A common stock, including, but not limited to:
| • | our ability to satisfy obligations to lenders may be impaired, resulting in possible defaults on and acceleration of our indebtedness; | |
| • | our ability to obtain additional financing for refinancing of existing indebtedness, working capital, capital expenditures, product and service development, acquisitions, general corporate purposes, and other purposes may be impaired; | |
| • | a substantial portion of our cash flow from operations could be dedicated to the payment of the principal and interest on our debt; | |
| • | we may be increasingly vulnerable to economic downturns and increases in interest rates; | |
| • | our flexibility in planning for and reacting to changes in our business and the industry may be limited; and | |
| • | we may be placed at a competitive disadvantage relative to other firms in our industry. |
26
Our
credit facilities contain financial and operating covenants that
limit our operations and could lead to adverse consequences if
we fail to comply with them.
Our senior credit facilities and our mezzanine credit facility,
which we refer to together as our credit facilities, contain
financial and operating covenants relating to, among other
things, interest coverage and leverage ratios, as well as
limitations on mergers, consolidations and dissolutions, sales
of assets, investments and acquisitions, indebtedness and liens,
dividends, repurchase of shares of capital stock and options to
purchase shares of capital stock, transactions with affiliates,
sale and leaseback transactions, and restricted payments.
Failure to meet these financial and operating covenants could
result from, among other things, changes in our results of
operations, the incurrence of debt, or changes in general
economic conditions, which may be beyond our control. These
covenants may restrict our ability to engage in transactions
that we believe would otherwise be in the best interests of our
stockholders, which could harm our business and operations.
Many
of our contracts with the U.S. government are classified or
subject to other security restrictions, which may limit investor
insight into portions of our business.
For fiscal 2010, we derived a substantial portion of our revenue
from contracts with the U.S. government that are classified
or subject to security restrictions which preclude the
dissemination of certain information. Because we are limited in
our ability to provide details about these contracts, their
risks or any dispute or claims relating to such contracts, you
will have less insight into certain portions of our business and
therefore may be less able to fully evaluate the risks related
to those portions of our business.
If we
cannot collect our receivables or if payment is delayed, our
business may be adversely affected by our inability to generate
cash flow, provide working capital, or continue our business
operations.
We depend on the timely collection of our receivables to
generate cash flow, provide working capital and continue our
business operations. If the U.S. government or any prime
contractor for whom we are a subcontractor fails to pay or
delays the payment of invoices for any reason, our business and
financial condition may be materially and adversely affected.
The U.S. government may delay or fail to pay invoices for a
number of reasons, including lack of appropriated funds, lack of
an approved budget, or as a result of audit findings by
government regulatory agencies. Some prime contractors for whom
we are a subcontractor have significantly fewer financial
resources than we do, which may increase the risk that we may
not be paid in full or that payment may be delayed.
Recent
efforts by the U.S. government to revise its organizational
conflict of interest rules could limit our ability to
successfully compete for new contracts or task orders, which
would adversely affect our results of operations.
Recent efforts by the U.S. government to reform its
procurement practices have focused, among other areas, on the
separation of certain types of work to facilitate objectivity
and avoid or mitigate organizational conflicts of interest and
strengthening regulations governing organizational conflicts of
interest. Organizational conflicts of interest may arise from
circumstances in which a contractor has:
| • | impaired objectivity; | |
| • | unfair access to non-public information; or | |
| • | the ability to set the “ground rules” for another procurement for which the contractor competes. |
A focus on organizational conflicts of interest issues has
resulted in legislation and a proposed regulation aimed at
increasing organizational conflicts of interest requirements,
including, among other things, separating sellers of products
and providers of advisory services in major defense acquisition
programs. In addition, we expect the U.S. government to
adopt a FAR rule to address organizational conflicts of interest
issues that will apply to all government contractors, including
us, in Department of Defense and other procurements. A future
FAR rule may also increase the restrictions in current
organizational conflicts of interest regulations and rules. To
the extent that proposed and future organizational conflicts of
interest laws, regulations, and rules, limit our ability to
successfully compete for new contracts or task orders with the
U.S. government, either because of organizational conflicts
of interest issues arising from our business, or because
companies with which we are
27
affiliated, including through Carlyle, or with which we
otherwise conduct business, create organizational conflicts of
interest issues for us, our results of operations could be
materially and adversely affected.
Acquisitions
could result in operating difficulties or other adverse
consequences to our business.
As part of our future operating strategy, we may choose to
selectively pursue acquisitions. This could pose many risks,
including:
| • | we may not be able to identify suitable acquisition candidates at prices we consider attractive; | |
| • | we may not be able to compete successfully for identified acquisition candidates, complete acquisitions or accurately estimate the financial effect of acquisitions on our business; | |
| • | future acquisitions may require us to issue common stock or spend significant cash, resulting in dilution of ownership or additional debt leverage; | |
| • | we may have difficulty retaining an acquired company’s key employees or clients; | |
| • | we may have difficulty integrating acquired businesses, resulting in unforeseen difficulties, such as incompatible accounting, information management, or other control systems, and greater expenses than expected; | |
| • | acquisitions may disrupt our business or distract our management from other responsibilities; | |
| • | as a result of an acquisition, we may incur additional debt and we may need to record write-downs from future impairments of intangible assets, each of which could reduce our future reported earnings; and | |
| • | we may have difficulty integrating personnel from the acquired company with our people and our core values. |
In connection with any acquisition that we make, there may be
liabilities that we fail to discover or that we inadequately
assess, and we may fail to discover any failure of a target
company to have fulfilled its contractual obligations to the
U.S. government or other clients. Acquired entities may not
operate profitably or result in improved operating performance.
Additionally, we may not realize anticipated synergies, business
growth opportunities, cost savings and other benefits we
anticipate, which could have a material adverse effect on our
business and results of operations.
Risks
Related to Our Industry
Our
U.S. government contracts may be terminated by the government at
any time and may contain other provisions permitting the
government to discontinue contract performance, and if lost
contracts are not replaced, our operating results may differ
materially and adversely from those anticipated.
U.S. government contracts contain provisions and are
subject to laws and regulations that provide government clients
with rights and remedies not typically found in commercial
contracts. These rights and remedies allow government clients,
among other things, to:
| • | terminate existing contracts, with short notice, for convenience as well as for default; | |
| • | reduce orders under or otherwise modify contracts; | |
| • | for contracts subject to the Truth in Negotiations Act, reduce the contract price or cost where it was increased because a contractor or subcontractor furnished cost or pricing data during negotiations that was not complete, accurate and current; | |
| • | for some contracts, (i) demand a refund, make a forward price adjustment or terminate a contract for default if a contractor provided inaccurate or incomplete data during the contract negotiation process and (ii) reduce the contract price under certain triggering circumstances, including the revision of price lists or other documents upon which the contract award was predicated; | |
| • | terminate our facility security clearances and thereby prevent us from receiving classified contracts; |
28
| • | cancel multi-year contracts and related orders if funds for contract performance for any subsequent year become unavailable; | |
| • | decline to exercise an option to renew a multi-year contract or issue task orders in connection with ID/IQ contracts; | |
| • | claim rights in solutions, systems and technology produced by us, appropriate such work-product for their continued use without continuing to contract for our services and disclose such work-product to third parties, including other U.S. government agencies and our competitors, which could harm our competitive position; | |
| • | prohibit future procurement awards with a particular agency due to a finding of organizational conflicts of interest based upon prior related work performed for the agency that would give a contractor an unfair advantage over competing contractors, or the existence of conflicting roles that might bias a contractor’s judgment; | |
| • | subject the award of contracts to protest by competitors, which may require the contracting federal agency or department to suspend our performance pending the outcome of the protest and may also result in a requirement to resubmit offers for the contract or in the termination, reduction or modification of the awarded contract; and | |
| • | suspend or debar us from doing business with the U.S. government. |
If a U.S. government client were to unexpectedly terminate,
cancel or decline to exercise an option to renew with respect to
one or more of our significant contracts, or suspend or debar us
from doing business with the U.S. government, our revenue
and operating results would be materially harmed.
The
U.S. government may revise its procurement, contract or other
practices in a manner adverse to us.
The U.S. government may:
| • | revise its procurement practices or adopt new contract laws, rules and regulations, such as cost accounting standards, organizational conflicts of interest and other rules governing inherently governmental functions at any time; | |
| • | reduce, delay or cancel procurement programs resulting from U.S. government efforts to improve procurement practices and efficiency; | |
| • | face restrictions or pressure from government employees and their unions regarding the amount of services the U.S. government may obtain from private contractors; | |
| • | award contracts on a technically acceptable/lowest cost basis in order to reduce expenditures, and we may not be the lowest cost provider of services; | |
| • | change the basis upon which it reimburses our compensation and other expenses or otherwise limit such reimbursements; and | |
| • | at its option, terminate or decline to renew our contracts. |
In addition, any new contracting methods could be costly or
administratively difficult for us to implement and could
adversely affect our future revenue. Any such changes to the
U.S. government’s procurement practices or the
adoption of new contracting rules or practices could impair our
ability to obtain new or re-compete contracts and any such
changes or increased associated costs could materially and
adversely affect our results of operations.
The
U.S. government may prefer minority-owned, small and small
disadvantaged businesses, therefore, we may not win contracts we
bid for.
As a result of the Small Business Administration, or SBA,
set-aside program, the U.S. government may decide to
restrict certain procurements only to bidders that qualify as
minority-owned, small or small disadvantaged businesses. As a
result, we would not be eligible to perform as a prime
contractor on those
29
programs and would be restricted to a maximum of 49% of the work
as a subcontractor on those programs. An increase in the amount
of procurements under the SBA set-aside program may impact our
ability to bid on new procurements as a prime contractor or
restrict our ability to recompete on incumbent work that is
placed in the set-aside program.
Our
contracts, performance and administrative processes and systems
are subject to audits, reviews, investigations and cost
adjustments by the U.S. government, which could reduce our
revenue, disrupt our business or otherwise materially adversely
affect our results of operations.
U.S. government agencies routinely audit, review and
investigate government contracts and government
contractors’ administrative processes and systems. These
agencies review our performance on contracts, pricing practices,
cost structure and compliance with applicable laws, regulations
and standards, including applicable government cost accounting
standards. They also review our compliance with government
regulations and policies and the Defense Contract Audit Agency,
or the DCAA, audits, among other areas, the adequacy of our
internal control systems and policies, including our purchasing,
property, estimating, compensation and management information
systems. In particular, over time the DCAA has increased and may
continue to increase the proportion of employee compensation
that it deems unallowable and the size of the employee
population whose compensation is disallowed, which will continue
to materially and adversely affect our results of operations or
financial condition. Any costs found to be unallowable under a
contract will not be reimbursed, and any such costs already
reimbursed must be refunded. Moreover, if any of the
administrative processes and systems are found not to comply
with government imposed requirements, we may be subjected to
increased government scrutiny and approval that could delay or
otherwise adversely affect our ability to compete for or perform
contracts. Unfavorable U.S. government audit, review or
investigation results could subject us to civil or criminal
penalties or administrative sanctions, and could harm our
reputation and relationships with our clients and impair our
ability to be awarded new contracts. For example, if our
invoicing system were found to be inadequate following an audit
by the DCAA, our ability to directly invoice
U.S. government payment offices could be eliminated. As a
result, we would be required to submit each invoice to the DCAA
for approval prior to payment, which could materially increase
our accounts receivable days sales outstanding and adversely
affect our cash flow. An unfavorable outcome to an audit, review
or investigation by any U.S. government agency could
materially and adversely affect our relationship with the
U.S. government. If a government investigation uncovers
improper or illegal activities, we may be subject to civil and
criminal penalties and administrative sanctions, including
termination of contracts, forfeitures of profits, suspension of
payments, fines and suspension or debarment from doing business
with the U.S. government. In addition, we could suffer
serious reputational harm if allegations of impropriety were
made against us. Provisions that we have recorded in our
financial statements as a compliance reserve may not cover
actual losses. Each of these results could materially and
adversely affect our results of operations or financial
condition.
A
delay in the completion of the U.S. government’s budget
process could result in a reduction in our backlog and have a
material adverse effect on our revenue and operating
results.
On an annual basis, the U.S. Congress must approve budgets
that govern spending by each of the federal agencies we support.
When the U.S. Congress is unable to agree on budget
priorities, and thus is unable to pass the annual budget on a
timely basis, the U.S. Congress typically enacts a
continuing resolution. A continuing resolution allows government
agencies to operate at spending levels approved in the previous
budget cycle. When government agencies operate on the basis of a
continuing resolution, they may delay funding we expect to
receive on contracts we are already performing. Any such delays
would likely result in new business initiatives being delayed or
cancelled and a reduction in our backlog, and could have a
material adverse effect on our revenue and operating results.
Risks
Related to Our Common Stock and This Offering
Booz
Allen Holding is a holding company with no operations of its own
that depends on its subsidiaries for cash.
The operations of Booz Allen Holding are conducted almost
entirely through its subsidiaries and its ability to generate
cash to meet its debt service obligations or to pay dividends is
highly dependent on the
30
earnings and the receipt of funds from its subsidiaries via
dividends or intercompany loans. We do not currently expect to
declare or pay dividends on our Class A common stock for
the foreseeable future; however, to the extent that we determine
in the future to pay dividends on our Class A common stock,
none of our subsidiaries will be obligated to make funds
available to us for the payment of dividends. Further, our
credit facilities significantly restrict the ability of our
subsidiaries to pay dividends or otherwise transfer assets to
us. In addition, Delaware law may impose requirements that may
restrict our ability to pay dividends to holders of our common
stock.
Our
principal stockholder could exert significant influence over our
company.
As of March 31, 2010, Carlyle, through Coinvest, owned in
the aggregate shares representing 81% of our outstanding voting
power. After completion of this offering, Carlyle will own in
the aggregate shares representing %
of our outstanding voting power,
or % if the underwriters exercise
their over-allotment option in full. As a result, Carlyle will
have a controlling influence over all matters presented to our
stockholders for approval, including election and removal of our
directors and change of control transactions.
In addition, Coinvest is a party to the stockholders agreement
pursuant to which Carlyle currently has the ability to cause the
election of a majority of our Board. Under the terms of the
amended and restated stockholders agreement to be entered into
in connection with this offering, Carlyle will continue to have
the right to nominate a majority of the members of our Board and
to exercise control over matters requiring stockholder approval
and our policy and affairs, for example, by being able to direct
the use of proceeds received from this and future security
offerings. See “Certain Relationships and Related Party
Transactions — Stockholders Agreement.” In
addition, following the consummation of this offering, we will
be a “controlled company” within the meaning of
applicable stock exchange rules and, as a result, currently
intend to rely on exemptions from certain corporate governance
requirements. The concentrated holdings of funds affiliated with
Carlyle, certain provisions of the amended and restated
stockholders agreement to be entered into prior to the
completion of this offering and the presence of Carlyle’s
nominees on our Board may result in a delay or the deterrence of
possible changes in control of our company, which may reduce the
market price of our common stock. The interests of Carlyle may
not always coincide with the interests of the other holders of
our common stock.
Carlyle is in the business of making investments in companies,
and may from time to time in the future acquire controlling
interests in businesses engaged in management and technology
consulting that complement or directly or indirectly compete
with certain portions of our business. If Carlyle pursues such
acquisitions in our industry, those acquisition opportunities
may not be available to us. In addition, to the extent that
Carlyle acquires a controlling interest in one or more companies
that provide services or products to the U.S. government,
our affiliation with any such company through Carlyle could
create organizational conflicts of interest and similar issues
for us under federal procurement laws and regulations. See
“— Risk Related to Our Business —
Recent efforts by the U.S. government to revise its
organizational conflicts of interest rules could limit our
ability to successfully compete for new contracts or task
orders, which would adversely affect our results of
operations.” We urge you to read the discussions under the
headings “Certain Relationships and Related Party
Transactions” and “Security Ownership of Certain
Beneficial Owners and Management” for further information
about the equity interests held by Carlyle and members of our
senior management.
Investors
in this offering will experience immediate dilution in net
tangible book value per share.
The initial public offering price per share will significantly
exceed the net tangible book value per share of our common
stock. As a result, investors in this offering will experience
immediate dilution of
$ in
net tangible book value per share based on an initial public
offering price of
$ ,
which is the midpoint of the price range set forth on the cover
page of this prospectus. This dilution occurs in large part
because our earlier investors paid substantially less than the
initial public offering price when they purchased their shares.
Investors in this offering may also experience additional
dilution as a result of shares of Class A common stock that
may be issued in connection with a future acquisition.
Accordingly, in the event that we are liquidated, investors may
not receive the full amount or any of their investment.
31
Our
financial results may vary significantly from period to period
as a result of a number of factors many of which are outside our
control, which could cause the market price of our Class A
common stock to decline.
Our financial results may vary significantly from period to
period in the future as a result of many external factors that
are outside of our control. Factors that may affect our
financial results include those listed in this “Risk
Factors” section and others such as:
| • | any cause of reduction or delay in U.S. government funding (e.g., changes in presidential administrations that delay timing of procurements); | |
| • | fluctuations in revenue earned on existing contracts; | |
| • | commencement, completion or termination of contracts during a particular period; | |
| • | a potential decline in our overall profit margins if our other direct costs and subcontract revenue grow at a faster rate than labor-related revenue; | |
| • | strategic decisions by us or our competitors, such as changes to business strategy, strategic investments, acquisitions, divestitures, spin offs and joint ventures; | |
| • | a change in our contract mix to less profitable contracts; | |
| • | changes in policy or budgetary measures that adversely affect U.S. government contracts in general; | |
| • | variable purchasing patterns under U.S. government GSA schedules, blanket purchase agreements, which are agreements that fulfill repetitive needs under GSA schedules, and ID/IQ contracts; | |
| • | changes in demand for our services and solutions; | |
| • | fluctuations in our staff utilization rates; | |
| • | seasonality associated with the U.S. government’s fiscal year; | |
| • | an inability to utilize existing or future tax benefits, including those related to our NOLs or stock-based compensation expense, for any reason, including a change in law; | |
| • | alterations to contract requirements; and | |
| • | adverse judgments or settlements in legal disputes. |
A decline in the price of our Class A common stock due to
any one or more of these factors could cause the value of your
investment to decline.
A
majority of our outstanding indebtedness is secured by
substantially all of our consolidated assets. As a result of
these security interests, such assets would only be available to
satisfy claims of our general creditors or to holders of our
equity securities if we were to become insolvent to the extent
the value of such assets exceeded the amount of our indebtedness
and other obligations. In addition, the existence of these
security interests may adversely affect our financial
flexibility.
Indebtedness under our senior credit facilities is secured by a
lien on substantially all of our assets. Accordingly, if an
event of default were to occur under our senior credit
facilities, the senior secured lenders under such facilities
would have a prior right to our assets, to the exclusion of our
general creditors in the event of our bankruptcy, insolvency,
liquidation or reorganization. In that event, our assets would
first be used to repay in full all indebtedness and other
obligations secured by them (including all amounts outstanding
under our senior credit facilities), resulting in all or a
portion of our assets being unavailable to satisfy the claims of
our unsecured indebtedness. Only after satisfying the claims of
our unsecured creditors and our subsidiaries’ unsecured
creditors would any amount be available for our equity holders.
The pledge of these assets and other restrictions may limit our
flexibility in raising capital for other purposes. Because
substantially all of our assets are pledged under these
financing arrangements, our ability to incur additional secured
indebtedness or to sell or dispose of assets to raise capital
may be impaired, which could have an adverse effect on our
financial flexibility. As of March 31, 2010, we had
$1.0 billion of indebtedness
32
outstanding under our senior credit facilities and had
$222.4 million of capacity available for additional
borrowings under the revolving portion of our senior credit
facilities (excluding the $21.3 million commitment by the
successor entity to Lehman Brothers Commercial Bank). In
addition, we may, at our option and subject to certain closing
conditions including pro forma compliance with financial
covenants, increase the senior credit facilities without the
consent of any person other than the institutions agreeing to
provide all or any portion of such increase, in an amount not to
exceed $100.0 million. See “Description of Certain
Indebtedness — Senior Credit Facilities —
Guarantees; Security.”
Our
Class A common stock has no prior public market, and our
stock price could be volatile and could decline after this
offering.
Before this offering, our Class A common stock had no
public market. We will negotiate the initial public offering
price per share with the representatives of the underwriters
and, therefore, that price may not be indicative of the market
price of our common stock after the offering. We cannot assure
you that an active public market for our Class A common
stock will develop after this offering or if it does develop, it
may not be sustained. In the absence of a public trading market,
you may not be able to liquidate your investment in our common
stock. In addition, the market price of our common stock could
be subject to significant fluctuations after this offering.
Among the factors that could affect our stock price are:
| • | quarterly variations in our operating results; | |
| • | changes in contract revenue and earnings estimates or publication of research reports by analysts; | |
| • | speculation in the press or investment community; | |
| • | investor perception of us and our industry; | |
| • | strategic actions by us or our competitors, such as significant contracts, acquisitions or restructurings; | |
| • | actions by institutional stockholders or other large stockholders, including future sales; | |
| • | our relationship with U.S. government agencies; | |
| • | changes in U.S. government spending; | |
| • | changes in accounting principles; and | |
| • | general economic market conditions. |
In particular, we cannot assure you that you will be able to
resell your shares at or above the initial public offering
price. The stock markets have experienced extreme volatility in
recent years that has been unrelated to the operating
performance of particular companies. These broad market
fluctuations may adversely affect the trading price of our
Class A common stock. In the past, following periods of
volatility in the market price of a company’s securities,
class action litigation has often been instituted against the
company. Any litigation of this type brought against us could
result in substantial costs and a diversion of our
management’s attention and resources, which would harm our
business, operating results and financial condition.
Fulfilling
our obligations incident to being a public company, including
with respect to the requirements of and related rules under the
Sarbanes Oxley Act of 2002, will be expensive and time consuming
and any delays or difficulty in satisfying these obligations
could have a material adverse effect on our future results of
operations and our stock price.
As a private company, we have not been subject to the
requirements of the Sarbanes-Oxley Act of 2002. As a public
company, the Sarbanes-Oxley Act of 2002 and the related rules
and regulations of the Securities and Exchange Commission, or
the SEC, as well as applicable stock exchange rules, will
require us to implement additional corporate governance
practices and adhere to a variety of reporting requirements and
complex accounting rules. Compliance with these public company
obligations will require us to devote significant management
time and will place significant additional demands on our
finance and accounting staff
33
and on our financial, accounting and information systems. We
expect to hire additional accounting and financial staff with
appropriate public company reporting experience and technical
accounting knowledge. Other expenses associated with being a
public company include increased auditing, accounting and legal
fees and expenses, investor relations expenses, increased
directors’ fees and director and officer liability
insurance costs, registrar and transfer agent fees, listing
fees, as well as other expenses.
In particular, upon completion of this offering, the
Sarbanes-Oxley Act of 2002 will require us to document and test
the effectiveness of our internal control over financial
reporting in accordance with an established internal control
framework, and to report on our conclusions as to the
effectiveness of our internal controls. It will also require an
independent registered public accounting firm to test our
internal control over financial reporting and report on the
effectiveness of such controls for fiscal 2012 and subsequent
years. In addition, upon completion of this offering, we will be
required under the Securities Exchange Act of 1934, as amended,
or the Exchange Act, to maintain disclosure controls and
procedures and internal control over financial reporting. Any
failure to implement required new or improved controls, or
difficulties encountered in their implementation, could harm our
operating results or cause us to fail to meet our reporting
obligations. If we are unable to conclude that we have effective
internal control over financial reporting, or if our independent
registered public accounting firm is unable to provide us with
an unqualified report regarding the effectiveness of our
internal control over financial reporting as of March 31,
2012 and in future periods, investors could lose confidence in
the reliability of our financial statements. This could result
in a decrease in the value of our common stock. Failure to
comply with the Sarbanes-Oxley Act of 2002 could potentially
subject us to sanctions or investigations by the SEC, the
exchange on which our Class A common stock is listed, or
other regulatory authorities.
Provisions
in our organizational documents and in the Delaware General
Corporation Law may prevent takeover attempts that could be
beneficial to our stockholders.
We have, and intend to include, effective as of the consummation
of the offering, a number of provisions in our certificate of
incorporation and bylaws that may have the effect of delaying,
deterring, preventing or rendering more difficult a change in
control of Booz Allen Holding that our stockholders might
consider in their best interests. These provisions include:
| • | establishment of a classified Board, with staggered terms; | |
| • | granting to the Board the sole power to set the number of directors and to fill any vacancy on the Board; | |
| • | limitations on the ability of stockholders to remove directors if a “group,” as defined under Section 13(d)(3) of the Exchange Act, ceases to own more than 50% of our voting common stock; | |
| • | granting to the Board the ability to designate and issue one or more series of preferred stock without stockholder approval, the terms of which may be determined at the sole discretion of the Board; | |
| • | a prohibition on stockholders from calling special meetings of stockholders; | |
| • | the establishment of advance notice requirements for stockholder proposals and nominations for election to the Board at stockholder meetings; | |
| • | requiring approval of two-thirds of stockholders to amend the bylaws; and | |
| • | prohibiting our stockholders from acting by written consent if a “group” ceases to own more than 50% of our voting common stock. |
These provisions may prevent our stockholders from receiving the
benefit from any premium to the market price of our common stock
offered by a bidder in a takeover context. Even in the absence
of a takeover attempt, the existence of these provisions may
adversely affect the prevailing market price of our common stock
if the provisions are viewed as discouraging takeover attempts
in the future. In addition, we expect to opt out of
Section 203 of the Delaware General Corporation Law, which
would have otherwise imposed additional requirements regarding
mergers and other business combinations, until Coinvest and its
34
affiliates no longer own more than % of our
Class A common stock. After such time, we will be governed
by Section 203.
Our amended and restated certificate of incorporation and
amended and restated by-laws may also make it difficult for
stockholders to replace or remove our management. These
provisions may facilitate management entrenchment that may
delay, deter, render more difficult or prevent a change in our
control, which may not be in the best interests of our
stockholders.
See “Description of Capital Stock” for additional
information on the anti-takeover measures applicable to us.
Sales
of outstanding shares of our common stock into the market in the
future could cause the market price of our common stock to drop
significantly.
Immediately following this offering, Carlyle will
own shares
of our Class A common stock,
or % of our outstanding
Class A common stock. If the underwriters exercise their
overallotment option in full, Carlyle will
own % of our outstanding
Class A common stock. If Carlyle sells, or the market
perceives that Carlyle intends to sell, a substantial portion of
its beneficial ownership interest in us in the public market,
the market price of our Class A common stock could decline
significantly. The sales also could make it more difficult for
us to sell equity or equity-related securities at a time and
price that we deem appropriate.
After this
offering, shares
of our Class A common stock will be outstanding. Of these
shares, shares
of our Class A common stock sold in this offering will be
freely tradable, without restriction, in the public market
unless purchased by our “affiliates” (as that term is
defined by Rule 144 under the Securities Act of 1933, or
Securities Act) and all of the remaining shares of Class A
common stock, as well as outstanding shares of our Class B
non-voting common stock, Class C restricted common stock
and Class E special voting common stock, subject to certain
exceptions, will be subject to a
180-day
lock-up by
virtue of either contractual lock-up agreements or pursuant to
the terms of the amended and restated stockholders agreement.
Morgan Stanley & Co. Incorporated and Barclays Capital
Inc. may, in their discretion, permit our directors, officers
and current stockholders who are subject to these
lock-ups to
sell shares prior to the expiration of the 180-day
lock-up
period. See “Shares of Common Stock Eligible for Future
Sale —
Lock-Up
Agreements.” After the
lock-up
agreements pertaining to this offering expire, up to an
additional shares of
our Class A common stock will be eligible for sale in the
public market, all of which are held by directors, executive
officers and other affiliates and will be subject to volume and
holding period limitations under Rule 144 under the
Securities Act. The
remaining shares
of Class A common stock outstanding will be restricted
securities within the meaning of Rule 144 under the
Securities Act, but will be eligible for resale subject to
applicable volume, manner of sale, holding period and other
limitations of Rule 144 or pursuant to an exemption from
registration under Rule 701 under the Securities Act. After
the lock-up
agreements relating to this offering
expire, shares
of our Class A common stock will be issuable upon
(1) transfer of our Class B non-voting common stock
and Class C restricted common stock and (2) the
exercise of outstanding stock options relating to our
outstanding Class E special voting common stock. In
addition, the shares of our
Class A common stock underlying options that are either
subject to the terms of our equity compensation plans or
reserved for future issuance under our equity compensation plans
will become eligible for sale in the public market to the extent
permitted by the provisions of various option agreements, the
lock-up
agreements and Rules 144 and 701 under the Securities Act
to the extent such shares are not otherwise registered for sale
under the Securities Act. If these additional shares are sold,
or if it is perceived that they will be sold, in the public
market, the price of our common stock could decline
substantially. For additional information, see “Shares of
Common Stock Eligible for Future Sale.”
35
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the sections entitled
“Prospectus Summary,” “Risk Factors,”
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and
“Business,” contains
forward-looking
statements. In some cases, you can identify forward-looking
statements by terminology such as “may,”
“will,” “could,” “should,”
“expects,” “intends,” “plans,”
“anticipates,” “believes,”
“estimates,” “predicts,”
“potential,” “continue,” or the negative of
these terms or other comparable terminology. Although we believe
that the expectations reflected in the forward-looking
statements are reasonable, we can give you no assurance these
expectations will prove to have been correct. These
forward-looking statements relate to future events or our future
financial performance and involve known and unknown risks,
uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to
differ materially from any future results, levels of activity,
performance or achievements expressed or implied by these
forward-looking statements. These risks and other factors
include:
| • | any issue that compromises our relationships with the U.S. government or damages our professional reputation; | |
| • | changes in U.S. government spending and mission priorities that shift expenditures away from agencies or programs that we support; | |
| • | the size of our addressable markets and the amount of U.S. government spending on private contractors; | |
| • | failure to comply with numerous laws and regulations; | |
| • | our ability to compete effectively in the competitive bidding process; | |
| • | the loss of GSA schedules or our position as prime contractor on GWACs; | |
| • | changes in the mix of our contracts and our ability to accurately estimate or otherwise recover expenses, time and resources for our contracts; | |
| • | our ability to generate revenue under certain of our contracts and our ability to realize the full value of our backlog; | |
| • | changes in estimates used in recognizing revenue; | |
| • | any inability to attract, train or retain employees with the requisite skills, experience and security clearances; | |
| • | an inability to hire enough employees to service our clients under existing contracts; | |
| • | an inability to effectively utilize our employees and professionals; | |
| • | failure by us or our employees to obtain and maintain necessary security clearances; | |
| • | the loss of members of senior management or failure to develop new leaders; | |
| • | misconduct or other improper activities from our employees or subcontractors; | |
| • | increased competition from other companies in our industry; | |
| • | failure to maintain strong relationships with other contractors; | |
| • | inherent uncertainties and potential adverse developments in legal proceedings, including litigation, audits, reviews and investigations, which may result in materially adverse judgments, settlements or other unfavorable outcomes; | |
| • | internal system or service failures and security breaches; | |
| • | risks related to our indebtedness and credit facilities which contain financial and operating covenants; | |
| • | the adoption by the U.S. government of new laws, rules and regulations, such as those relating to organizational conflicts of interest issues; |
36
| • | an inability to utilize existing or future tax benefits, including those related to our NOLs and stock-based compensation expense, for any reason, including a change in law; | |
| • | variable purchasing patterns under U.S. government GSA schedules, blanket purchase agreements and ID/IQ contracts; and | |
| • | other risks and factors listed under “Risk Factors” and elsewhere in this prospectus. |
In light of these risks, uncertainties and other factors, the
forward-looking statements contained in this prospectus might
not prove to be accurate and you should not place undue reliance
upon them. All
forward-looking
statements speak only as of the date made and we undertake no
obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future
events or otherwise.
37
USE OF
PROCEEDS
We estimate that the net proceeds from the sale
of shares of our Class A common
stock being offered by us pursuant to this prospectus at an
assumed initial offering price of $ per
share, the midpoint of the range set forth on the cover page of
this prospectus, will be approximately $
million, after deducting estimated underwriting discounts,
commissions and estimated offering expenses payable by us.
We intend to use the net proceeds we receive from the sale of
our Class A common stock to repay
$ million of our mezzanine credit
facility and pay a $ prepayment penalty
related to our repayment under our mezzanine credit facility.
Our mezzanine credit facility was entered into in connection
with the acquisition and amended in connection with the
recapitalization transaction. Our mezzanine credit facility
consists of a term loan facility in an aggregate principal
amount of up to $550.0 million that matures on
July 31, 2016. On July 31, 2008, we borrowed
$550.0 million under our mezzanine credit facility. As of
March 31, 2010, borrowings under our mezzanine credit
facility bore an interest rate at 13%. Certain of the
underwriters of this offering or their affiliates are lenders
under our mezzanine credit facility. Accordingly, certain of the
underwriters will receive net proceeds from this offering in
connection with the repayment of our mezzanine credit facility.
See “Underwriting.”
A $1.00 increase (decrease) in the assumed initial public
offering price of $ per share would
increase (decrease) the net proceeds to us from this offering by
$ , assuming the number of shares offered
by us remains the same and after deducting estimated
underwriting discounts and commission and estimated offering
expenses payable by us. We may also increase or decrease the
number of shares we are offering. Each increase (decrease) of
1.0 million shares in the number of shares offered by us,
together with a concomitant $1.00 increase (decrease) in the
assumed offering price of $ per share,
would increase (decrease) net proceeds to us from this offering
by $ million, after deducting estimated
underwriting discounts and commission and estimated offering
expenses payable by us. The information discussed above is
illustrative only and will adjust based on the actual public
offering price and other terms of this offering determined at
pricing.
38
DIVIDEND
POLICY
We do not currently expect to declare or pay dividends on our
Class A common stock for the foreseeable future. Instead,
we anticipate that all of our earnings in the foreseeable future
will be used for the operation and growth of our business. Our
ability to pay dividends to holders of our Class A common
stock is limited by covenants in the credit agreements governing
our senior credit facilities and our mezzanine credit facility.
Any future determination to pay dividends on our Class A
common stock is subject to the discretion of our Board and will
depend upon various factors then existing, including our results
of operations, financial condition, liquidity requirements,
restrictions that may be imposed by applicable laws and our
contracts, as well as economic and other factors deemed relevant
by our Board. To the extent that the Board declares any future
dividends, holders of Class A common stock, Class B
non-voting common stock, and Class C restricted common
stock will share the dividend payment equally.
On July 27, 2009, we declared a special cash dividend on
all issued and outstanding shares of Class A common stock,
Class B non-voting common stock, and Class C
restricted common stock in the aggregate amount of
$114.9 million payable to holders of record as of
July 29, 2009. On December 7, 2009, we declared
another special cash dividend on all issued and outstanding
shares to the same equity classes described above in the
aggregate amount of $497.5 million payable to the holders
of record as of December 8, 2009. Of these amounts,
approximately $548.0 million was paid to Coinvest according
to its ownership of our Class A common stock. See “The
Acquisition and Recapitalization Transaction.” We do not
currently intend to declare or pay any similar special dividends
in the foreseeable future.
39
CAPITALIZATION
The following table sets forth our capitalization on a
consolidated basis as of March 31, 2010:
| • | on an actual basis; and | |
| • | on a pro forma as adjusted basis to give effect to the sale by us of shares of our Class A common stock in this offering at the initial public offering price of $ per share (and after deducting estimated underwriting discounts and commissions and offering expenses payable by us) and the use of the net proceeds therefrom as described in “Use of Proceeds.” |
The table below excludes the Class D merger rolling common
stock, par value $0.01, and the Class F non-voting
restricted common stock, par value $0.01, each of which had
600,000 authorized shares and no shares issued and outstanding
as of March 31, 2010. Our amended and restated certificate
of incorporation, which will become effective prior to the
completion of this offering, will eliminate the Class D
merger rolling common stock and the Class F non-voting
restricted common stock.
You should read this table in conjunction with the sections of
this prospectus entitled “Selected Historical Consolidated
Financial and Other Data,” “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations,” “Description of Certain
Indebtedness” and our financial statements and related
notes included elsewhere in this prospectus.
| As of March 31, 2010 | ||||||||
|
Pro Forma as |
||||||||
| Actual | Adjusted | |||||||
| (In thousands, except share and per share amounts) | ||||||||
|
Cash and cash equivalents
|
$ | 307,835 | $ | |||||
|
Debt(1)
|
$ | 1,626,782 | $ | |||||
|
Stockholders’ equity:
|
||||||||
|
Class A common stock, par value $0.01 per share:
(i) Actual: 16,000,000 shares authorized and
10,292,290 shares issued and outstanding and (ii) Pro
forma as adjusted: shares
authorized and shares issued and
outstanding
|
$ | 103 | $ | |||||
|
Class B non-voting common stock, par value $0.01 per share:
(i) Actual: 16,000,000 shares authorized and
235,020 shares issued and outstanding and (ii) Pro
forma as adjusted: shares
authorized and shares issued and
outstanding
|
2 | |||||||
|
Class C restricted common stock, par value $0.01 per share:
(i) Actual: 600,000 shares authorized and
202,827 shares issued and outstanding and (ii) Pro
forma as adjusted: shares
authorized and shares issued and
outstanding
|
2 | |||||||
|
Class E special voting common stock, par value $0.03 per
share: (i) Actual: 2,500,000 shares authorized and
1,334,558 shares issued and outstanding and (ii) Pro
forma as adjusted: shares
authorized and shares issued and
outstanding
|
40 | |||||||
|
Preferred Stock, par value $0.01 per share: (i) Actual:
600,000 shares authorized and no shares issued and
outstanding and (ii) Pro forma as
adjusted: shares authorized and no
shares issued and outstanding
|
— | |||||||
|
Additional paid-in capital(2)
|
526,618 | |||||||
|
Accumulated deficit
|
(13,364 | ) | ||||||
|
Accumulated other comprehensive income (loss)
|
(3,818 | ) | ||||||
|
Total stockholders’ equity(2)
|
$ | 509,583 | $ | |||||
|
Total capitalization(2)
|
$ | 2,136,365 | $ | |||||
40
| (1) | Debt reflects (i) long-term debt, net of current portion of $21.9 million and (ii) the deferred payment obligation. | |
| Long-term debt, net of current portion includes borrowings under our senior credit facilities and our mezzanine credit facility. For a description of these facilities, see “Description of Certain Indebtedness.” Loans under our senior credit facilities and our mezzanine credit facility were issued with original issue discount and are presented net of unamortized discount of $19.2 million as of March 31, 2010. | ||
| The $80.0 million deferred payment obligation is comprised of a $17.6 million deferred payment obligation balance as of March 31, 2010, and contingent tax claims in the amount of $62.4 million related to the deferred payment obligation, but does not include $2.4 million of accrued interest related to the deferred payment obligation. See “The Acquisition and Recapitalization Transaction — The Acquisition — The Merger.” | ||
| (2) | A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) each of additional paid-in capital, total stockholders’ equity and total capitalization by $ , assuming the number of shares offered by us remains the same and after deducting estimated underwriting discounts and commission and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. Each increase (decrease) of 1.0 million shares in the number of shares offered by us, together with a concomitant $1.00 increase (decrease) in the assumed offering price of $ per share, would increase (decrease) the as adjusted amount of each of additional paid-in capital, total stockholders’ equity and total capitalization by approximately $ million. The as adjusted information discussed above is illustrative only and will adjust based on the actual public offering price and other terms of this offering determined at pricing. |
41
DILUTION
If you invest in our Class A common stock, your interest
will be diluted to the extent of the difference between the
initial public offering price per share of our Class A
common stock and the adjusted net tangible book value per share
of our Class A common stock, Class B non-voting common
stock and Class C restricted common stock immediately after
this offering.
Net tangible book value (deficit) per share represents the
amount of total book value of our total tangible assets less our
total liabilities divided by the number of shares of our
Class A common stock then outstanding. The net tangible
book value of our Class A common stock, Class B
non-voting common stock and Class C restricted common stock
as of March 31, 2010 was a deficit of
$ million, or approximately
$ per share.
After giving effect to the issuance and sale
of shares of our Class A
common stock offered by us at the initial public offering price
of $ , which is the midpoint of the
range set forth on the cover page of this prospectus, and after
deducting estimated underwriting discounts and commissions and
estimated offering expenses payable by us, our pro forma net
tangible book value of our Class A common stock,
Class B
non-voting
common stock and Class C restricted common stock after this
offering would have been approximately
$ million, or approximately
$ per share. This represents an
immediate increase in net tangible book value (deficit) of
approximately $ per share to
existing stockholders and an immediate dilution of approximately
$ per share to new investors
purchasing shares in this offering.
A $1.00 increase (decrease) in the assumed initial public
offering price of $ per share, the
midpoint of the range set forth on the cover of this prospectus,
would increase (decrease) our adjusted net tangible book value
after this offering by $ and
increase (decrease) the dilution to new investors purchasing
shares in this offering by $ per
share, assuming the number of shares offered by us, as set forth
on the cover page of this prospectus, remains the same and after
deducting the estimated underwriting discounts and commissions
and estimated expenses payable by us. We may also increase or
decrease the number of shares we are offering. Each increase of
1.0 million shares in the number of shares offered by us,
together with a concomitant $1.00 increase in the assumed
offering price of $ per share,
would increase the dilution to new investors purchasing shares
in this offering by $ per share.
Similarly, each decrease of 1.0 million shares in the
number of shares offered by us, together with a concomitant
$1.00 decrease in the assumed offering price of
$ per share, would decrease the
dilution to new investors purchasing shares in this offering by
$ per share. The information
discussed above is illustrative only and will adjust based on
the actual public offering price and other terms of this
offering determined at pricing.
The following table illustrates this per share dilution:
| Per Share | ||||||||
|
Initial public offering price
|
||||||||
|
Net tangible book value (deficit) as of March 31, 2010
|
||||||||
|
Increase attributable to this offering
|
||||||||
|
Pro forma net tangible book value (deficit), as adjusted to give
effect to this offering
|
||||||||
|
Dilution in pro forma net tangible book value to new investors
in this offering
|
||||||||
42
The following table summarizes, as of March 31, 2010, the
total number of shares of Class A common stock purchased
from us, the total consideration paid to us, and the weighted
average price per share paid to us, by our existing stockholders
and by the investors purchasing shares of Class A common
stock in this offering at our assumed initial public offering
price of $ per share,
which is the midpoint of the range set forth on the cover page
of this prospectus.
|
Weighted |
||||||||||||||||||||
| Shares Purchased | Total Consideration | Average Price | ||||||||||||||||||
| Number | Percent | Amount | Percent | per Share | ||||||||||||||||
| (In thousands, other than percentages) | ||||||||||||||||||||
|
Existing stockholders
|
% | % | ||||||||||||||||||
|
New investors
|
||||||||||||||||||||
|
Total
|
100 | % | 100 | % | ||||||||||||||||
The foregoing discussion and tables give effect to the issuance
of our Class A common stock upon exercise of all
outstanding stock options held by directors and officers as
of , 2010 and the
conversion of our Class B non-voting common stock and
Class C restricted common stock into Class A common stock.
As of March 31, 2010, there were outstanding stock options
granted under our Officers’ Rollover Stock Plan and our
Equity Incentive Plan to purchase, subject to vesting, up
to shares
and
shares, respectively, of our Class A common stock at a
weighted average exercise price
of per
share
and
per share, respectively. As of March 31, 2010, there were
235,020 shares issued and outstanding and 202,827 shares issued
and outstanding of Class B non-voting common stock and
Class C restricted common stock, respectively.
In addition, we may choose to raise additional capital due to
market conditions or strategic considerations even if we believe
we have sufficient funds for our current or future operating
plans. To the extent that additional capital is raised through
the sale of equity or convertible debt securities, the issuance
of such securities could result in further dilution to our
stockholders.
43
THE
ACQUISITION AND RECAPITALIZATION TRANSACTION
The
Acquisition
On July 31, 2008, or the Closing Date, Booz Allen Hamilton
completed the separation of its U.S. government consulting
business from its commercial and international consulting
business, the spin off of the commercial and international
business, and the sale of 100% of its outstanding common stock
to Booz Allen Holding, which was majority owned by Carlyle. Our
company is a corporation that is the successor to the government
business of Booz Allen Hamilton following the separation.
The separation of the commercial and international business from
the government business was accomplished pursuant to a series of
transactions under the terms of a spin off agreement, dated as
of May 15, 2008, by and among Booz Allen Hamilton and
Booz & Company, or Spin Co., and certain of its
subsidiaries. As a result of the spin off and related
transactions, former stockholders of Booz Allen Hamilton that
had been engaged in the commercial and international business,
or the commercial partners, became the owners of Spin Co., which
held the commercial and international business. The spin off
agreement contains a three-year non-compete provision, ending
July 31, 2011, during which both Spin Co. and Booz Allen
Hamilton are prohibited, with certain exceptions, from engaging
in business in the other company’s principal markets.
Following the spin off, Booz Allen Hamilton was indirectly
acquired by Carlyle pursuant to an Agreement and Plan of Merger,
dated as of May 15, 2008, and subsequently amended, by and
among Booz Allen Hamilton, Booz Allen Holding (formerly known as
Explorer Holding Corporation), which was majority owned by
Carlyle, Booz Allen Investor (formerly known as Explorer
Investor Corporation), a wholly owned subsidiary of Booz Allen
Holding, Explorer Merger Sub Corporation, a wholly-owned
subsidiary of Booz Allen Investor, and Spin Co. Under the terms
of the merger agreement, the acquisition of Booz Allen Hamilton
was achieved through the merger of Explorer Merger Sub
Corporation into Booz Allen Hamilton, with Booz Allen Hamilton
as the surviving corporation. As a result of the merger, Booz
Allen Hamilton became a direct subsidiary of Booz Allen Investor
and an indirect wholly-owned subsidiary of Booz Allen Holding.
The
Merger
Booz Allen Investor and its affiliates paid the purchase price
(subject to adjustments for transaction expenses, indebtedness,
fluctuations in working capital and other items) in
consideration for the government business through current and
deferred cash payments, stock and options in Booz Allen Holding
exchanged for Booz Allen Hamilton stock and options, and the
assumption or payment by Booz Allen Investor of certain
indebtedness.
The Booz Allen Hamilton partners working in the government
business, or the government partners, were required to exchange
a portion of their stock and options in Booz Allen Hamilton for
stock and options in Booz Allen Holding, and the commercial
partners were able to exchange a portion of their stock in Booz
Allen Hamilton for non-voting stock in Booz Allen Holding. These
exchanges were completed on July 30, 2008, and as a result,
the government partners and commercial partners held 19% and 2%,
respectively, of the common stock of Booz Allen Holding on the
Closing Date, with Carlyle, through Coinvest, beneficially
owning the remainder.
All of the remaining stock of Booz Allen Hamilton outstanding
immediately prior to the merger (other than the stock of Booz
Allen Hamilton held by Booz Allen Holding as a result of the
exchanges described above) was converted into the right to
receive the cash portion of the purchase price. Subject to the
escrows and the deferred payment described below, the cash
portion of the purchase price was distributed to the government
partners and the commercial partners shortly after the merger.
The purchase price consideration of $1,828.0 million was
comprised of the following significant components:
$1,625.9 million paid to shareholders in cash, transaction
costs of $24.0 million, fair value of stock options granted
under our Officers’ Rollover Stock Plan of
$79.7 million, and fair value of our deferred payment
obligation of $98.4 million.
44
The payment of $158.0 million of the cash consideration to
the government partners and the commercial partners was
structured as a deferred payment obligation of Booz Allen
Investor to such partners, or the deferred payment obligation,
and Booz Allen Investor is obligated to pay this amount (plus
interest at a rate of 5% per six months) to the partners, on a
pro rata basis,
81/2
years after the consummation of the merger or, in certain
circumstances, earlier. A total of $78.0 million of the
deferred payment obligation, plus $22.4 million of accrued
interest, was repaid on December 11, 2009. See
“— Recapitalization Transaction.” Currently,
up to $80.0 million of the deferred payment obligation may
be reduced to offset any claims under the indemnification
provisions of the merger agreement described below.
On the Closing Date, $90.0 million of the cash
consideration was deposited into escrow to fund certain purchase
price adjustments, future indemnification claims under the
merger agreement and for certain other adjustments. As of
March 31, 2010 of the $90.0 million placed in escrow,
approximately $38.3 million, which includes accrued
interest, remains in escrow to cover indemnification claims
relating to losses that may be incurred from outstanding
litigation associated with the merger and certain outstanding
pre-closing tax claims and certain claims that may arise with
respect to certain pre-closing matters including taxes,
government contracts or the spin off and related transactions
and liabilities.
Financing
of the Merger
To fund the aggregate consideration for the acquisition, to
repay certain indebtedness in connection with the acquisition
and to provide working capital, Booz Allen Investor and Booz
Allen Hamilton entered into a series of financing transactions,
which included:
| • | entry into our senior credit facilities, and the incurrence of $125.0 million of term loans under the Tranche A term facility of the senior credit facilities and $585.0 million under the Tranche B term facility under our senior credit facilities; | |
| • | entry into our mezzanine credit facility, and the incurrence of $550.0 million of term loans thereunder; and | |
| • | an equity contribution from Coinvest of approximately $956.5 million. |
Indemnification
Under the Merger Agreement
From and after the Closing Date, Booz Allen Holding and its
subsidiaries (including Booz Allen Hamilton) are indemnified
under the merger agreement against losses arising from
(a) breach of certain representations and warranties
regarding Booz Allen Hamilton’s capitalization, corporate
authorization, financial statements, internal accounting
controls, employee benefits, and DCAA audits and similar
government contracts investigations and claims, (b) the
failure of the sellers to perform certain covenants and
agreements in the merger agreement and the spin off agreement,
(c) the failure to assume and satisfy amounts owed under
the spin off agreement or certain ancillary agreements if and to
the extent that Spin Co. is insolvent or bankrupt, and
(d) any restructuring costs of Booz Allen Hamilton related
to the termination of transition services to Spin Co. after the
Closing Date. In addition, the merger agreement provides Booz
Allen Holding and its subsidiaries (including Booz Allen
Hamilton) with indemnification for (i) certain pre-closing
taxes and (ii) the amount of certain compensation
deductions resulting from any Booz Allen Hamilton options
exercised after the signing of the merger agreement and prior to
July 30, 2008. These indemnification rights are subject to
the various limitations, including time and dollar amounts, and
the sole recourse of Booz Allen Holding and its subsidiaries
with respect to any indemnification amounts owed to them under
the merger agreement are the escrow funds available for
indemnification and offset against Booz Allen Investor’s
obligation to pay a portion of the deferred payment obligation.
Spin
Off Agreement
In addition to governing the split of the commercial and
international business from the government business, the spin
off agreement sets forth certain restrictions and guidelines for
the interaction and operation of the government business and the
commercial and international business after the Closing Date,
including,
45
| • | for a period of three years following the Closing Date (subject to certain exceptions), Spin Co. agreed that it and its subsidiaries would not (i) provide, sell, or offer to sell or advertise certain types of consulting services provided by the government business, (ii) assist, advise, engage or participate in providing such services to certain scheduled competitors of Booz Allen Hamilton, (iii) have certain interests in such competitors, (iv) knowingly permit its names to be used by such competitors in connection with providing any services other than permitted services or (v) provide any services of any type to a scheduled list of direct competitors or their subsidiaries or successors; | |
| • | for a period of three years following the Closing Date (subject to certain exceptions), Booz Allen Hamilton agreed that it and its subsidiaries would not (i) provide, sell, or offer to sell or advertise any services other than certain types of consulting services (including cyber-security services) provided by the government business, (ii) assist or advise certain scheduled competitors of Spin Co. in providing services other than such consulting services provided by the government business, (iii) have certain interests in such competitors, or (iv) knowingly permit its names to be used by such competitors in connection with providing any services other than such consulting services provided by the government business; | |
| • | for a period of three years following the Closing Date, Booz Allen Hamilton and Spin Co. agreed not to solicit or attempt to solicit any client or business relation of the other party to cease or adversely change their business relationship with the other party or its subsidiaries; | |
| • | for a period of three years following the Closing Date, Booz Allen Hamilton and Spin Co. agreed not to hire or attempt to hire any person who was at Closing an officer, director, employee, consultant or agent of the other party (subject to certain exceptions); | |
| • | until the earlier of the fifth anniversary of the Closing Date or a change in control of the other party, Booz Allen Hamilton and Spin Co. agreed that they and their subsidiaries would not, in the case of Spin Co., hire or attempt to hire any person who was or is a stockholder of Booz Allen Hamilton (other than a commercial partner); and in the case of Booz Allen Hamilton, hire or attempt to hire any person who was, on or prior to the Closing Date, a commercial partner, or is then, a stockholder of Spin Co. (subject to certain exceptions); and | |
| • | for a period of three years following the Closing Date, Spin Co. agreed that it and its subsidiaries would not directly or indirectly acquire a competitor of Booz Allen Hamilton. |
Indemnification
under the Spin Off Agreement
Under the Spin Off Agreement, Booz Allen Hamilton has agreed to
indemnify Spin Co. from all losses arising out of breaches of
the Spin Off Agreement or certain related agreements, certain
employee benefit matters, and for liabilities and obligations
arising out of the government business, and Spin Co. has agreed
to indemnify Booz Allen Hamilton from all losses arising out of
breaches of the Spin Off Agreement or certain related
agreements, certain employee benefit matters, and for
liabilities and obligations arising out of the commercial and
international business. Spin Co. has also agreed to indemnify
Booz Allen Hamilton for increases in pre-closing taxes if a
majority of Spin Co.’s shares or a majority of its assets
are sold to a third party within three years of the Closing Date
at a price in excess of the allocable portion of the
agreed-upon
fair market value of the Spin Co. shares and a taxing authority
successfully asserts that the fair market value of such shares
at the time of the spin off was in excess of the
agreed-upon
fair market value. Furthermore, each of Spin Co. and Booz Allen
Hamilton has generally agreed to indemnify the other from the
recapture of dual consolidated losses which result from an
action of the indemnifying party or its affiliates.
Recapitalization
Transaction
On December 11, 2009, in order to facilitate the payment of
a special dividend and the repayment of a portion of the
deferred payment obligation, Booz Allen Investor and Booz Allen
Hamilton entered into a series of amendments to the credit
agreements governing our senior credit facilities and mezzanine
credit facility. The credit agreement governing our senior
credit facilities was amended to, among other things, add
46
the Tranche C term facility under our senior credit
facilities, increase commitments under the revolving credit
facility under our senior credit facilities from
$100.0 million to $245.0 million, and add a specific
exception to the restricted payments covenant to permit the
payment of the special dividend. In addition to consenting to
such amendments, the lenders under the senior credit facilities
also consented to the amendment of the credit agreement
governing the mezzanine credit facility discussed below. In
exchange for such consents, each consenting lender received a
non-refundable cash fee equal to 0.1% of the sum of the
aggregate principal amount of such lender’s Tranche A and B
term loans outstanding and such lender’s existing revolving
commitment. In addition, each lender providing an increased
commitment under the revolving credit facility received a
non-refundable cash fee equal to 1.5% of such lender’s
additional revolving commitment. The credit agreement governing
our mezzanine credit facility was amended to, among other things
add a specific exception to the restricted payments covenant to
permit the payment of the special dividend, to increase the
amount of senior credit facilities debt permitted under the debt
covenant to permit the incurrence of loans under the
Tranche C term facility and the increase in commitments
under the revolving credit facility. In addition, the premiums
payable upon the prepayment of the loans were increased, and a
1.0% premium was added with respect to payments of the loans at
maturity. In exchange for consenting to such amendments, each
consenting lender received a non-refundable cash fee equal to
1.0% of the aggregate principal amounts of such lender’s
outstanding loans. Using cash on hand and $341.3 million in
net proceeds from the increased term loan facility, Booz Allen
Hamilton paid a special dividend of $650.0 million on its
common stock, all of which was paid to Booz Allen Investor, its
sole stockholder. Booz Allen Investor in turn used the proceeds
of the special dividend (i) to repay approximately
$100.4 million of the deferred payment obligation,
including $22.4 million in accrued interest, in accordance
with the terms of the merger agreement and (ii) to pay a
special dividend of approximately $549.6 million on its
common stock, all of which was paid to Booz Allen Holding, its
sole stockholder. Booz Allen Holding in turn declared a special
dividend of $497.5 million payable on its outstanding
Class A common stock, Class B non-voting common stock
and Class C restricted common stock, approximately
$444.1 million of which was paid to Coinvest and the
remainder of which was paid to the other stockholders of Booz
Allen Holding. The aforementioned transactions are referred to
in this prospectus as the recapitalization transaction.
As required by the Officers’ Rollover Stock Plan and the
Equity Incentive Plan, the exercise price per share of each
outstanding option was reduced in an amount equal to the
reduction in the value of the common stock as a result of the
dividend. Because the reduction in share value exceeded the
exercise price for certain of the options granted under the
Officers’ Rollover Stock Plan, the exercise price for those
options was reduced to the par value of the shares issuable on
exercise, and the holders became entitled to receive on the
option’s fixed exercise date a cash payment equal to the
excess of the reduction in share value as a result of the
dividend over the reduction in exercise price, subject to
vesting of the relation options. As of March 31, 2010, the
total obligations for these cash payments was $54.4 million.
47
SELECTED
HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
The selected consolidated statements of operations data for
fiscal 2008, the four months ended July 31, 2008, the eight
months ended March 31, 2009 and fiscal 2010, and the
selected consolidated balance sheet data as of March 31,
2009 and 2010 have been derived from our audited financial
statements included elsewhere in this prospectus. The
consolidated balance sheet data as of March 31, 2008 has
been derived from audited financial statements which are not
included in this prospectus. The selected consolidated
statements of operations data for fiscal 2006 and 2007 and the
selected consolidated balance sheet data as of March 31,
2006 and 2007 have been derived from our unaudited financial
statements. The unaudited financial statements have been
prepared on the same basis as the audited financial statements
and, in the opinion of our management, include all adjustments
necessary for a fair presentation of the information set forth
herein. Our historical results are not necessarily indicative of
the results that may be expected for any future period. The
selected financial data should be read in conjunction with
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and our consolidated
financial statements and related notes included elsewhere in
this prospectus.
As discussed in more detail under “The Acquisition and
Recapitalization Transaction,” Booz Allen Hamilton was
indirectly acquired by Carlyle on July 31, 2008.
Immediately prior to the acquisition, Booz Allen Hamilton spun
off its commercial and international business and retained its
U.S. government business. The accompanying consolidated
financial statements are presented for (1) the
“Predecessor,” which are the financial statements of
Booz Allen Hamilton and its consolidated subsidiaries for the
period preceding the acquisition, and (2) the
“Company,” which are the financial statements of Booz
Allen Holding and its consolidated subsidiaries for the period
following the acquisition. Prior to the acquisition, Booz Allen
Hamilton’s U.S. government business is presented as
the continuing operations of the Predecessor. The
Predecessor’s consolidated financial statements have been
presented for the twelve months ended March 31, 2008 and
the four months ended July 31, 2008. The operating results
of the commercial and international business that was spun off
by Booz Allen Hamilton effective July 31, 2008 have been
presented as discontinued operations in the Predecessor
consolidated financial statements and the related notes included
in this prospectus. The Company’s consolidated financial
statements for periods subsequent to the acquisition have been
presented from August 1, 2008 through March 31, 2009
and for the twelve months ended March 31, 2010. The
Predecessor’s financial statements may not necessarily be
indicative of the cost structure or results of operations that
would have existed if the U.S. government business operated
as a stand-alone, independent business. The acquisition was
accounted for as a business combination, which resulted in a new
basis of accounting. The Predecessor’s and the
Company’s financial statements are not comparable as a
result of applying a new basis of accounting. See Notes 1,
4, and 24 to our consolidated financial statements for
additional information regarding the accounting treatment of the
acquisition and discontinued operations.
Additionally, the results of operations and balance sheet data
for fiscal 2006, fiscal 2007, fiscal 2008, the four months ended
July 31, 2008, and the eight months ended March 31,
2009 and as of March 31, 2006, 2007 and 2008 are presented
“as adjusted” to reflect the change in accounting
principle related to our revenue recognition policies as
described in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations —
Critical Accounting Estimates and Policies.”
Included in the table below are unaudited pro forma results of
operations for the twelve months ended March 31, 2009, or
“pro forma 2009,” assuming the acquisition had been
completed as of April 1, 2008. The unaudited pro forma
condensed consolidated results of operations for fiscal 2009 are
based on our historical audited consolidated financial
statements included elsewhere in this prospectus, adjusted to
give pro forma effect to the acquisition. The unaudited pro
forma condensed consolidated results of operations for fiscal
2009 are presented because management believes it provides a
meaningful comparison of operating results enabling twelve
months of fiscal 2009, adjusted for the impact of the
acquisition, to be compared with fiscal 2010. The unaudited pro
forma condensed consolidated financial statements are for
informational purposes only and do not purport to represent what
our actual results of operations would have been if the
acquisition had been completed as of April 1, 2008 or that
may be achieved in the future. The unaudited pro forma condensed
consolidated financial information and the accompanying notes
should be read in conjunction with our historical audited
consolidated financial statements and related notes appearing
elsewhere in this prospectus
48
and other financial information contained in “Risk
Factors,” “The Acquisition and Recapitalization
Transaction,” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations”
in this prospectus. See “Management’s Discussion and
Analysis of Financial Condition and Results of
Operations — Results of Operations” for a
description of the pro forma adjustments attributable to the
acquisition.
| Predecessor | The Company | ||||||||||||||||||||||||||||
|
Pro Forma |
|||||||||||||||||||||||||||||
|
Four Months |
Eight Months |
Fiscal Year |
Fiscal Year |
||||||||||||||||||||||||||
|
Ended |
Ended |
Ended |
Ended |
||||||||||||||||||||||||||
| Fiscal Year Ended March 31, |
July 31, |
March 31, |
March 31, |
March 31, |
|||||||||||||||||||||||||
| 2006 | 2007 | 2008 | 2008 | 2009 | 2009(1) | 2010 | |||||||||||||||||||||||
|
(Unaudited) |
(Unaudited) |
(As adjusted) | (As adjusted) | (As adjusted) | |||||||||||||||||||||||||
| (As adjusted) | (As adjusted) | ||||||||||||||||||||||||||||
| (In thousands, except share and per share data) | |||||||||||||||||||||||||||||
|
Consolidated Statement of Operations Data:
|
|||||||||||||||||||||||||||||
|
Revenue
|
$ | 2,902,513 | $ | 3,209,211 | $ | 3,625,055 | $ | 1,409,943 | $ | 2,941,275 | $ | 4,351,218 | $ | 5,122,633 | |||||||||||||||
|
Operating costs and expenses:
|
|||||||||||||||||||||||||||||
|
Compensation and other costs
|
1,572,817 | 1,813,295 | 2,028,848 | 722,986 | 1,566,763 | 2,296,335 | 2,654,143 | ||||||||||||||||||||||
|
Billable expenses
|
820,951 | 815,421 | 935,459 | 401,387 | 756,933 | 1,158,320 | 1,361,229 | ||||||||||||||||||||||
|
General and administrative expenses
|
409,576 | 421,921 | 474,188 | 726,929 | 505,226 | 723,827 | 811,944 | ||||||||||||||||||||||
|
Depreciation and amortization
|
22,284 | 27,879 | 33,079 | 11,930 | 79,665 | 106,335 | 95,763 | ||||||||||||||||||||||
|
Total operating costs and expenses
|
2,825,628 | 3,078,516 | 3,471,574 | 1,863,232 | 2,908,587 | 4,284,817 | 4,923,079 | ||||||||||||||||||||||
|
Operating income (loss)
|
76,885 | 130,695 | 153,481 | (453,289 | ) | 32,688 | 66,401 | 199,554 | |||||||||||||||||||||
|
Interest income
|
1,995 | 2,955 | 2,442 | 734 | 4,578 | 5,312 | 1,466 | ||||||||||||||||||||||
|
Interest expense
|
(966 | ) | (1,481 | ) | (2,319 | ) | (1,044 | ) | (98,068 | ) | (146,803 | ) | (150,734 | ) | |||||||||||||||
|
Other income (expense), net
|
392 | 146 | (1,931 | ) | (54 | ) | (128 | ) | (182 | ) | (1,292 | ) | |||||||||||||||||
|
Income (loss) from continuing operations and before income taxes
|
78,306 | 132,315 | 151,673 | (453,653 | ) | (60,930 | ) | (75,272 | ) | 48,994 | |||||||||||||||||||
|
Income tax (benefit) expense from continuing operations
|
39,399 | 55,921 | 62,693 | (56,109 | ) | (22,147 | ) | (25,831 | ) | 23,575 | |||||||||||||||||||
|
Income (loss) from continuing operations
|
38,907 | 76,394 | 88,980 | (397,544 | ) | $ | (38,783 | ) | $ | (49,441 | ) | 25,419 | |||||||||||||||||
|
Loss from discontinued operations
|
(30,409 | ) | (57,611 | ) | (71,106 | ) | (848,371 | ) | — | ||||||||||||||||||||
|
Net income (loss)
|
$ | 8,498 | $ | 18,783 | $ | 17,874 | $ | (1,245,915 | ) | $ | 25,419 | ||||||||||||||||||
|
Earnings per share from continuing operations(2)(3):
|
|||||||||||||||||||||||||||||
|
Basic
|
$ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
|
Diluted
|
|||||||||||||||||||||||||||||
|
Earnings (loss) per share(2)(3):
|
|||||||||||||||||||||||||||||
|
Basic
|
$ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
|
Diluted
|
|||||||||||||||||||||||||||||
|
Weighted average common shares outstanding(2)(3):
|
|||||||||||||||||||||||||||||
|
Basic
|
|||||||||||||||||||||||||||||
|
Diluted
|
|||||||||||||||||||||||||||||
|
Cash dividends per share (unaudited)(3)
|
$ | $ | $ | $ | $ | $ | (4) | ||||||||||||||||||||||
49
| Predecessor | The Company | ||||||||||||||||||||
| As of March 31, | As of March 31, | ||||||||||||||||||||
| 2006 | 2007 | 2008 | 2009 | 2010 | |||||||||||||||||
|
(Unaudited) |
(Unaudited) |
(As adjusted) | (As adjusted) | ||||||||||||||||||
| (As adjusted) | (As adjusted) | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||
|
Consolidated Balance Sheet Data:
|
|||||||||||||||||||||
|
Cash and cash equivalents
|
$ | 31,233 | $ | 3,272 | $ | 7,123 | $ | 420,902 | $ | 307,835 | |||||||||||
|
Working capital
|
724,470 | 789,275 | 1,113,656 | 789,308 | 584,248 | ||||||||||||||||
|
Total assets
|
1,422,983 | 1,482,453 | 1,891,375 | 3,182,249 | 3,062,223 | ||||||||||||||||
|
Long-term debt, net of current portion
|
— | — | — | 1,220,502 | 1,546,782 | ||||||||||||||||
|
Stockholders’ equity
|
271,090 | 272,068 | 313,065 | 1,060,343 | 509,583 | ||||||||||||||||
| (1) | The table below presents the pro forma adjustments attributable to the acquisition. The pro forma adjustments are described in the accompanying footnotes and are based upon available information and certain assumptions that we believe are reasonable. |
|
Four Months |
Eight Months |
|||||||||||||||
|
Ended |
Ended |
Pro Forma |
||||||||||||||
|
July 31, |
March 31, |
Pro Forma |
Fiscal Year Ended |
|||||||||||||
| 2008 | 2009 | Adjustments | March 31, 2009 | |||||||||||||
| (As adjusted) | (As adjusted) | |||||||||||||||
| (In thousands, except share and per share data) | ||||||||||||||||
|
Consolidated Statement of Operations Data:
|
||||||||||||||||
|
Revenue
|
$ | 1,409,943 | $ | 2,941,275 | — | $ | 4,351,218 | |||||||||
|
Operating costs and expenses:
|
||||||||||||||||
|
Compensation and other costs
|
722,986 | 1,566,763 | $ | 6,586 | (a) | 2,296,335 | ||||||||||
|
Billable expenses
|
401,387 | 756,933 | — | 1,158,320 | ||||||||||||
|
General and administrative expenses
|
726,929 | 505,226 | (508,328 | )(b) | 723,827 | |||||||||||
|
Depreciation and amortization
|
11,930 | 79,665 | 14,740 | (c) | 106,335 | |||||||||||
|
Total operating costs and expenses
|
1,863,232 | 2,908,587 | — | 4,284,817 | ||||||||||||
|
Operating income (loss)
|
(453,289 | ) | 32,688 | — | 66,401 | |||||||||||
|
Interest income
|
734 | 4,578 | — | 5,312 | ||||||||||||
|
Interest expense
|
(1,044 | ) | (98,068 | ) | (47,691 | )(d) | (146,803 | ) | ||||||||
|
Other (expense), net
|
(54 | ) | (128 | ) | — | (182 | ) | |||||||||
|
Income (loss) from continuing operations before income taxes
|
(453,653 | ) | (60,930 | ) | — | (75,272 | ) | |||||||||
|
Income tax (benefit) expense from continuing operations
|
(56,109 | ) | (22,147 | ) | 52,425 | (e) | (25,831 | ) | ||||||||
|
Net income (loss) from continuing operations
|
(397,544 | ) | (38,783 | ) | — | $ | (49,441 | ) | ||||||||
|
Loss from discontinued operations, net of tax
|
(848,371 | ) | — | |||||||||||||
|
Net (loss)
|
$ | (1,245,915 | ) | $ | (38,783 | ) | ||||||||||
| (a) | Reflects additional stock-based compensation expense associated with options issued in exchange for stock rights under the stock rights plan that existed prior to the closing of the acquisition for $6.6 million (see Note 17 to our consolidated financial statements for additional information on our stock-based compensation). | |
| (b) | Consists of the following adjustments: |
50
|
• Increase to rent expense of $1.8 million due to
the elimination of the July 31, 2008 deferred rent
liability in accordance with the accounting treatment of leases
associated with the business combination;
|
||
|
• Increase to management fees paid to Carlyle of
$0.3 million (see Note 19 to our consolidated
financial statements for additional information regarding the
management fees);
|
||
|
• Additional stock-based compensation expense of
$13.4 million associated with options issued in exchange
for stock rights under the stock rights plan that existed prior
to the closing of the acquisition (see Note 17 to our
consolidated financial statements for additional information on
our stock-based compensation);
|
||
|
• Reversal of $511.7 million for a one-time
acceleration of stock rights and the fair value
mark-up of
redeemable common shares immediately prior to the
acquisition; and
|
||
|
• Reversal of certain related transaction costs of
$12.2 million.
|
||
| (c) | Reflects amortization expense of intangible assets established as part of purchase accounting and depreciation expense associated with the fair value of fixed assets associated with the acquisition accounted for as a business combination for $14.7 million. | |
| (d) | Consists of the following adjustments: | |
|
• Reversal of interest expense of $1.0 million
recorded during the four months ended July 31, 2008 related
to the Predecessor’s previous debt outstanding prior to the
acquisition; and
|
||
|
• Incurrence of additional interest expense of
$48.7 million associated with our new senior credit
facilities and mezzanine credit facility established in
conjunction with the acquisition.
|
||
| (e) | Reflects tax effect of the cumulative pro forma adjustments. |
| (2) | Basic earnings per share for the Company has been computed using the weighted average number of shares of Class A common stock, Class B non-voting common stock and Class C restricted common stock outstanding during the period. The Company’s diluted earnings per share has been computed using the weighted average number of shares of Class A common stock, Class B non-voting common stock and Class C restricted common stock including the dilutive effect of outstanding common stock options and other stock-based awards. The weighted average number of Class E special voting common stock has not been included in the calculation of either basic earnings per share or diluted earnings per share due to the terms of such common stock. | |
| Basic earnings per share for the Predecessor has been computed using the weighted average number of shares of Class A common stock outstanding during the period. The Predecessor’s diluted earnings per share has been computed using the weighted average number of shares of Class A common stock including the dilutive effect of outstanding stock-based awards. | ||
| (3) | Reflects a -for-1 split of our common stock to be effected prior to the completion of this offering. | |
| (4) | Reflects the payment of special dividends in the aggregate amount of $114.9 million and $497.5 million to holders of record of our Class A common stock, Class B non-voting common stock, and Class C restricted common stock as of July 29, 2009 and December 8, 2009, respectively. |
51
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
AND RESULTS OF OPERATIONS
The following discussion and analysis is intended to help the
reader understand our business, financial condition, results of
operations, liquidity and capital resources. You should read
this discussion in conjunction with “Selected Historical
Consolidated Financial and Other Data,” and our audited
consolidated financial statements and the related notes
beginning on
page F-1
of this prospectus.
The statements in this discussion regarding industry outlook,
our expectations regarding our future performance, liquidity and
capital resources and other non-historical statements in this
discussion are forward-looking statements. These forward-looking
statements are subject to numerous risks and uncertainties,
including, but not limited to, the risks and uncertainties
described in “Risk Factors” and “Special Note
Regarding Forward-Looking Statements.” Our actual results
may differ materially from those contained in or implied by any
forward-looking statements.
Our fiscal year ends March 31 and, unless otherwise noted,
references to years or fiscal are for fiscal years ended
March 31. References to “pro forma 2009” in this
discussion and analysis are to unaudited pro forma results for
the twelve months ended March 31, 2009, assuming the
acquisition had been completed as of April 1, 2008. See
“— Results of Operations.”
Overview
We are a leading provider of management and technology
consulting services to the U.S. government in the defense,
intelligence and civil markets. We are a well-known, trusted and
long-term partner to our clients, who seek our expertise and
objective advice to address their most important and complex
problems. Leveraging our
95-year
consulting heritage and a talent base of approximately
23,300 people, we deploy our deep domain knowledge,
functional expertise and experience to help our clients achieve
their objectives. We have a collaborative culture, supported by
our operating model, which helps our professionals identify and
respond to emerging trends across the markets we serve and
delivers enduring results for our clients. We have grown our
revenue organically, without relying on acquisitions, at an 18%
CAGR over the
15-year
period ended March 31, 2010, reaching $5.1 billion in
revenue in fiscal 2010.
We were founded in 1914 by Edwin Booz, one of the pioneers of
management consulting. In 1940, we began serving the
U.S. government by advising the Secretary of the Navy in
preparation for World War II. As the needs of our clients have
grown more complex, we have expanded beyond our management
consulting foundation to develop deep expertise in technology,
engineering, and analytics. Today, we serve substantially all of
the cabinet-level departments of the U.S. government. Our
major clients include the Department of Defense, all branches of
the U.S. military, the U.S. Intelligence Community,
and civil agencies such as the Department of Homeland Security,
the Department of Energy, the Department of Health and Human
Services, the Department of the Treasury and the Environmental
Protection Agency. We support these clients in addressing
complex and pressing challenges such as combating global
terrorism, improving cyber capabilities, transforming the
healthcare system, improving efficiency and managing change
within the government, and protecting the environment.
Factors
and Trends Affecting Our Results of Operations
Our results of operations have been, and we expect them to
continue to be, affected by the following factors, which may
cause our future results of operations to differ from our
historical results of operations discussed under
“— Results of Operations.”
52
Business
Environment and Key Trends in Our Markets
We believe that the following trends and developments in the
U.S. government services industry and our markets may
influence our future results of operations:
| • | budgeting constraints increasing pressure on the U.S. government to control spending while pursuing numerous important policy initiatives, which may result in a slowdown in the growth rate of U.S. government spending in certain areas; | |
| • | changes in the level and mix of U.S. government spending, such as the U.S. government’s increased spending in recent years on homeland security, cyber, advanced technology analytics, intelligence and defense-related programs and healthcare; | |
| • | increased insourcing by the U.S. government of work that was traditionally performed by outside contractors, including at the Department of Defense; | |
| • | specific efficiency initiatives by the U.S. government such as the Base Realignment and Closure Program and efforts to rebalance the U.S. defense forces in accordance with the 2010 QDR, as well as general efforts to improve procurement practices and efficiencies, such as the actions recently announced by the Office of Management and Budget regarding IT procurement practices; | |
| • | U.S. government agencies awarding contracts on a technically acceptable/lowest cost basis, which could have a negative impact on our ability to win certain contracts; | |
| • | restrictions by the U.S. government on the ability of federal agencies to use lead system integrators, in response to cost, schedule and performance problems with large defense acquisition programs where contractors were performing the lead system integrator role; | |
| • | increasingly complex requirements of the Department of Defense and the U.S. Intelligence Community, including cyber-security, and focus on reforming existing government regulation of various sectors of the economy, such as financial regulation and healthcare; | |
| • | increased competition from other government contractors and market entrants seeking to take advantage of the trends identified above; and | |
| • | efforts by the U.S. government to address organizational conflicts of interest and related issues and the impact of those efforts on us and our competitors. |
Sources
of Revenue
Substantially all of our revenue is derived from services
provided under contracts and task orders with the
U.S. government, primarily by our employees and, to a
lesser extent, our subcontractors. Funding for our contracts and
task orders is generally linked to trends in budgets and
spending across various U.S. government agencies and
departments, which generally have been increasing among our key
markets and service offerings. We provide services under a large
portfolio of contracts and contract vehicles to a broad client
base, and we believe that our diversified contract and client
base lessens potential volatility in our business.
Contract
Types
We generate revenue under the following three basic types of
contracts: cost-reimbursable,
time-and-materials,
and fixed-price.
| • | Cost-reimbursable contracts. Cost-reimbursable contracts provide for the payment of allowable costs incurred during performance of the contract, up to a ceiling based on the amount that has been funded, plus a fee. We generate revenue under two general types of cost-reimbursable contracts: cost-plus-fixed-fee and cost-plus-award-fee contracts, both of which reimburse allowable costs and include a fixed contract fee. The fixed fee under each type of cost-reimbursable contract is generally payable upon completion of services in accordance with the terms of the contract, and cost-plus-fixed-fee contracts offer no opportunity for payment beyond the fixed fee. Cost-plus-award-fee contracts also provide for |
53
| an award fee that varies within specified limits based upon the client’s assessment of our performance against a predetermined set of criteria, such as targets for factors like cost, quality, schedule, and performance. |
| • | Time-and-materials contracts. Under a time-and-materials contract, we are paid a fixed hourly rate for each direct labor hour expended, and we are reimbursed for allowable material costs and allowable out-of-pocket expenses. To the extent our actual direct labor and associated costs vary in relation to the fixed hourly billing rates provided in the contract, we will generate more or less profit, or could incur a loss. | |
| • | Fixed-price contracts. Under a fixed-price contract, we agree to perform the specified work for a pre-determined price. To the extent our actual costs vary from the estimates upon which the price was negotiated, we will generate more or less profit, or could incur a loss. Some fixed-price contracts have a performance-based component, pursuant to which we can earn incentive payments or incur financial penalties based on our performance. Fixed-price level of effort contracts require us to provide a specified level of effort, over a stated period of time, for a fixed price. |
The amount of risk and potential reward varies under each type
of contract. Under cost-reimbursable contracts, there is limited
financial risk, because we are reimbursed for all allowable
costs up to a ceiling. However, profit margins on this type of
contract tend to be lower than on
time-and-materials
and fixed-price contracts. Under
time-and-materials
contracts, we are reimbursed for the hours worked using the
predetermined hourly rates for each labor category. In addition,
we are typically reimbursed for other contract direct costs and
expenses at cost. We assume financial risk on
time-and-materials
contracts because our labor costs may exceed the negotiated
billing rates. Profit margins on well-managed time and materials
contracts tends to be higher than cost-reimbursable contracts as
long as we are able to staff those contracts with people who
have an appropriate skill set. Under fixed-price contracts, we
are required to deliver the objectives under the contract for a
pre-determined
price. Compared to
time-and-materials
and
cost-reimbursable
contracts, fixed-price contracts generally offer higher profit
margin opportunities because we receive the full benefit of any
cost savings but generally involve greater financial risk
because we bear the impact of any cost overruns. In the
aggregate, the contract type mix in our revenue for any given
period will affect that period’s profitability. Over time
we have experienced a relatively stable contract mix although
the U.S. government has indicated an intent to increase its
use of fixed price contract procurements and reduce its use of
cost-plus-award-fee contract procurements.
The table below presents the percentage of total revenue for
each type of contract.
| Predecessor | The Company | ||||||||||||
|
Fiscal |
Pro Forma |
Fiscal |
|||||||||||
| 2008 | 2009 | 2010 | |||||||||||
|
Cost-reimbursable(1)
|
47 | % | 50 | % | 50 | % | |||||||
|
Time-and-materials
|
44 | % | 39 | % | 38 | % | |||||||
|
Fixed-price(2)
|
9 | % | 11 | % | 12 | % | |||||||
| (1) | Includes both cost-plus-fixed-fee and cost-plus-award fee contracts. | |
| (2) | Includes fixed-price level of effort contracts. |
Contract
Diversity and Revenue Mix
We provide our services to our clients through a large number of
single award contracts and contract vehicles and multiple award
contract vehicles. In fiscal 2010, the revenue from our top ten
single award contracts or contract vehicles based on revenue
represented 19% of our revenue. Most of our revenue is generated
under ID/IQ contract vehicles, which include multiple award
GWACs and GSA schedules and certain single award contracts.
GWACs and GSA schedules are available to all
U.S. government agencies. Any number of contractors
typically compete under multiple award ID/IQ contract vehicles
for task orders to provide particular services, and we earn
revenue under these contract vehicles only to the extent that we
are successful in the bidding process for task orders. In each
of fiscal 2008, pro forma 2009 and fiscal 2010, our revenue
under GWACs and GSA schedules collectively represented 29%, 27%
and 23% of our total revenue, respectively. No single task order
under any contract represented more than 1% of our revenue in
any of fiscal
54
2008, pro forma 2009 or fiscal 2010. No single contract
accounted for more than 9% of our revenue in any of fiscal 2008,
pro forma 2009 and fiscal 2010.
We generate revenue under our contracts and task orders through
our provision of services as both a prime contractor and
subcontractor, as well as from the provision of services by
subcontractors under contracts and task orders for which we act
as the prime contractor. The mix of these types of revenue
affect our contract margins. Our contract margins are generally
highest when we contract directly with the government without
the engagement of subcontractors. When we act as a prime
contractor or as a subcontractor, our contract margins are
generally higher on revenue earned for services we provide than
the margins we earn on services provided by our subcontractors.
For fiscal 2008, pro forma 2009 and fiscal 2010, 89%, 90% and
86%, respectively, of our revenue was generated by contracts and
task orders for which we serve as a prime contractor; 11%, 10%
and 13%, respectively, of our revenue was generated by contracts
and task orders for which we serve as a subcontractor; and 22%,
21% and 22%, respectively, of our revenue was generated by
services provided by our subcontractors.
Our
People
Revenue from our contracts is derived from services delivered by
our people and, as discussed above, to a lesser extent from our
subcontractors. Our ability to hire, retain and deploy talent is
critical to our ability to grow our revenue. As of
March 31, 2008, 2009, and 2010 we employed approximately
18,800, 21,600, and 23,300 people, respectively, of which
approximately 16,900, 19,600, and 21,000, respectively, were
consulting staff employees. Attrition for consulting staff was
15%, 15%, and 14% during fiscal 2008, 2009, and 2010,
respectively. We recently enhanced our firm-wide hiring program
to recruit and attract additional high quality and experienced
talent. We believe this program will allow us to better service
our clients under existing contracts and reduce our need to use
subcontractors.
Contract
Backlog
We define backlog to include the following three components:
| • | Funded Backlog. Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts. | |
| • | Unfunded Backlog. Unfunded backlog represents the revenue value of orders for services under existing contracts for which funding has not been appropriated or otherwise authorized. | |
| • | Priced Options. Priced contract options represent 100% of the revenue value of all future contract option periods under existing contracts that may be exercised at our clients’ option and for which funding has not been appropriated or otherwise authorized. |
Backlog does not include any task orders under ID/IQ contracts,
including GWACs and GSA schedules, except to the extent that
task orders have been awarded to us under those contracts.
The following table summarizes the value of our contract backlog
at the respective dates presented:
| The Company | ||||||||
| As of March 31, | ||||||||
| 2009 | 2010 | |||||||
| (In millions) | ||||||||
|
Backlog:
|
||||||||
|
Funded
|
$ | 2,392 | $ | 2,528 | ||||
|
Unfunded
|
1,968 | 2,453 | ||||||
|
Priced options
|
2,919 | (1) | 4,032 | (1) | ||||
|
Total backlog
|
$ | 7,279 | $ | 9,013 | ||||
| (1) | Amounts shown reflect 100% of the undiscounted revenue value of all priced options. |
55
Our backlog includes orders under contracts that in some cases
extend for several years. The U.S. Congress generally
appropriates funds for our clients on a yearly basis, even
though their contracts with us may call for performance that is
expected to take a number of years. As a result, contracts
typically are only partially funded at any point during their
term and all or some of the work to be performed under the
contracts may remain unfunded unless and until the
U.S. Congress makes subsequent appropriations and the
procuring agency allocates funding to the contract.
We view growth in total backlog and headcount growth as the two
key measures of our business growth. Headcount growth is the
primary means by which we are able to recognize revenue growth.
To the extent that we are able to hire additional people, we
generally are able to deploy them against funded backlog and, as
a result, recognize increased revenue. Some portion of our
employee base is employed on less than a full time basis, and we
measure revenue growth based on the full time equivalency of our
people. Total backlog grew 24% from March 31, 2009 to
March 31, 2010. We cannot predict with any certainty the
portion of our backlog that we expect to recognize as revenue in
any future period. While we report internally on our backlog on
a monthly basis and review backlog upon the occurrence of
certain events to determine if any adjustments are necessary, we
cannot guarantee that we will recognize any revenue from our
backlog. The primary risks that could affect our ability to
recognize such revenue are program schedule changes and contract
modifications. In our recent experience, none of these or other
factors have had a material negative effect on our ability to
realize revenue from our funded backlog. Additional risks
include the unilateral right of the U.S. government to
cancel multi-year contracts and related orders or to terminate
existing contracts for convenience or default; in the case of
unfunded backlog, the potential that funding will not be
available; and, in the case of priced options, the risk that our
clients will not exercise their options. See “Risk
Factors — Risks Related to Our Business — We
may not realize the full value of our backlog, which may result
in lower than expected revenue.”
Operating
Costs and Expenses
Costs associated with compensation and related expenses for our
people are the most significant component of our operating costs
and expenses. The principal factors that affect our costs are
additional people as we grow our business and are awarded new
contracts, task orders and additional work under our existing
contracts and the hiring of people with a specific skill set and
security clearances as required by our additional work.
Our most significant operating costs and expenses are described
below.
Cost of
Revenue
Cost of revenue includes direct labor, related employee benefits
and overhead. Overhead consists of indirect costs, including
indirect labor relating to infrastructure, management and
administration, and other expenses.
Billable
Expenses
Billable expenses include direct subcontractor expenses, travel
expenses, and other expenses incurred to perform on contracts.
General
and Administrative Expenses
General and administrative expenses include indirect labor of
executive management and corporate administrative functions,
marketing and bid and proposal costs, and other discretionary
spending.
Upon the completion of this offering, we will be required to
comply with new accounting, financial reporting and corporate
governance standards as a public company that we expect will
cause our general and administrative expenses to increase. Such
costs will include, among others, increased auditing and legal
fees, board of director fees, investor relations expenses, and
director and officer liability insurance costs.
56
Depreciation
and Amortization
Depreciation and amortization includes the depreciation of
computers, leasehold improvements, furniture and other
equipment, and the amortization of internally developed
software, as well as third-party software that we use internally
and of identifiable long-lived intangible assets over their
estimated useful lives.
Income
Taxes
Our NOL carryforward, which as of March 31, 2010 was
$367.6 million, is subject to Section 382 of the
Internal Revenue Code. Section 382 of the Internal Revenue
Code limits the use of a corporation’s NOLs and certain
other tax benefits following a change in ownership of the
corporation. We believe that it is more likely than not that the
results of future operations will generate sufficient taxable
income over the next two to five years to realize the tax
benefits of our NOL carryforward.
We also expect that our future cash tax payments will be further
reduced by utilizing deductions created upon the exercise of
employee stock options. In general, under current law, an
exercise of a compensatory option to acquire our stock would
create an income tax deduction in an amount equal to the excess
of the fair market value of the stock subject to the option over
the option exercise price. In connection with the acquisition,
we issued options under the Officers’ Rollover Stock Plan,
referred to as Rollover options, of which options to purchase
1,334,584 shares were outstanding as of March 31,
2010, including options to purchase 97,139 shares that were
vested as of such date. The remaining Rollover options vest over
the period from June 30, 2010 to June 30, 2013 and,
once vested, are required to be exercised no later than
60 days (subject to extension by the Board) following
specified exercise commencement dates ranging from June 30,
2010 to June 30, 2015 or such options will be forfeited.
Assuming that all such options vest in accordance with their
terms and are exercised in accordance with the exercise
schedule, and that the fair market value of our Class A
common stock at the time of such exercises were equal to
$ ,
the midpoint of the range set forth on the cover page of this
prospectus, the expected reduction in our cash taxes over the
exercise period for such options would be approximately
$ in
excess of the tax benefit for such awards reflected in our
consolidated financial statements. There can be no assurance
that any such options will vest and be exercised or that the
value of our stock at the time of any exercise will not be less
than such midpoint or that any such tax deduction will be
realized. Any increase or decrease in the price of our
Class A common stock at the time of any such exercise
relative to such midpoint assumed above would likewise have the
effect of increasing (in the case of a decrease in stock price)
or decreasing (in the case of an increase in stock price) our
future cash tax payments.
In addition, we have issued options under the Equity Incentive
Plan, referred to as EIP options, of which options to purchase
1,306,497 shares were outstanding as of March 31,
2010, including options to purchase 236,889 shares that
were vested as of such date. These outstanding EIP options vest
over the period from fiscal 2011 to fiscal 2016 based on the
continued employment of the holder and the fulfillment of
certain performance targets. Options are exercisable any time
between vesting and ten years after grant date ranging from
June 30, 2019 to June 30, 2020. The exercise prices of
EIP options outstanding as of March 31, 2010 range from
$ to
$ per share and the weighted
average exercise price for such outstanding EIP options is
$ . Assuming that all such options
vest in accordance with their terms and are exercised, and that
the fair market value of our Class A common stock at the
time of such exercises were equal to
$ , the midpoint of the range set
forth on the cover page of this prospectus, and after giving
effect to the exercise of 35,181 options with an exercise price
of $
per share after the end of fiscal 2010, the expected reduction
in our cash taxes over the exercise period for such options
would be approximately
$ million
in excess of the tax benefit for such awards reflected in our
consolidated financial statements. There can be no assurance
that any such options will vest and be exercised, as to the
timing of any exercise or that the value of our stock at the
time of any such exercise will not be less than such midpoint or
that any such tax deduction will be realized. Any increase or
decrease in the price of our Class A common stock at the
time of any such exercise relative to such midpoint assumed
above would likewise have the effect of increasing (in the case
of a decrease in stock price) or decreasing (in the case of an
increase in stock price) our future cash tax expense.
57
For further information regarding our outstanding options,
including vesting and exercise terms, see “Executive
Compensation — Executive Compensation Plans” and
Note 17 to our consolidated financial statements.
Effects
of Inflation
50% of our revenue is derived from cost-reimbursable contracts
as of March 31, 2010, which are generally completed within
one year of the contract start date. Bids for longer-term
fixed-price and
time-and-materials
contracts typically include sufficient provisions for labor and
other cost escalations to cover anticipated cost increases over
the period of performance. Consequently, revenue and costs have
generally both increased commensurate with overall economic
growth. As a result, net income as a percentage of total revenue
has not been significantly impacted by inflation.
Seasonality
The U.S. government’s fiscal year ends on September 30
of each year. It is not uncommon for U.S. government
agencies to award extra tasks or complete other contract actions
in the weeks before the end of its fiscal year in order to avoid
the loss of unexpended fiscal year funds. In addition, we also
have generally experienced higher bid and proposal costs in the
months leading up to the U.S. government’s fiscal
year-end as we pursue new contract opportunities being awarded
shortly after the U.S. government fiscal year-end as new
opportunities are expected to have funding appropriated in the
U.S. government’s subsequent fiscal year. We may
continue to experience this seasonality in future periods, and
our future periods may be affected by it.
Seasonality is just one of a number of factors, many of which
are outside of our control, that may affect our results in any
period. See “Risk Factors — Risks Relating to Our
Common Stock and This Offering — Our financial results
may vary significantly from period to period as a result of a
number of factors, many of which are outside our control, which
could cause the market value of our Class A common stock to
decline.”
Critical
Accounting Estimates and Policies
Our discussion and analysis of our financial condition and
results of operations are based on our consolidated financial
statements, which have been prepared in accordance with GAAP.
The preparation of these consolidated financial statements in
accordance with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingencies at the date of
the financial statements as well as the reported amounts of
revenue and expenses during the reporting period. Management
evaluates these estimates and assumptions on an ongoing basis.
Our estimates and assumptions have been prepared on the basis of
the most current reasonably available information. Actual
results may differ from these estimates under different
assumptions or conditions.
Our significant accounting policies, including the critical
policies and practices listed below, are more fully described
and discussed in the notes to the consolidated financial
statements. We consider the following accounting policies to be
critical to an understanding of our financial condition and
results of operations because these policies require the most
difficult, subjective or complex judgments on the part of our
management in their application, often as a result of the need
to make estimates about the effect of matters that are
inherently uncertain, and are the most important to our
financial condition and operating results.
Revenue
Recognition and Cost Estimation
Substantially all of our revenue is derived from contracts to
provide professional services to the U.S. government and
its agencies. In most cases, we recognize revenue as work is
performed. For fixed-price contracts, we recognize revenue on
the
percentage-of-completion
basis with progress toward completion of a particular contract
based on actual costs incurred relative to total estimated costs
to be incurred over the life of the contract. Profits on
fixed-price contracts result from the difference between the
incurred costs and the revenue earned. This method is followed
where reasonably dependable estimates of revenue and costs under
the contract can be made. Estimates of total contract revenue
and costs are reviewed regularly and at least quarterly, and
recorded revenue and costs are subject to revision as the
contract progresses. Such revisions
58
may result in increases or decreases to revenue and income, and
are reflected in the financial statements in the periods in
which they are first identified. If our estimates indicate that
a contract loss will occur, a loss provision is recorded in the
period in which the loss first becomes probable and reasonably
estimable. Estimating costs under our long-term contracts is
complex and involves significant judgment. Factors that must be
considered in making estimates include labor productivity and
availability, the nature and technical complexity of the work to
be performed, potential performance delays, availability and
timing of funding from the client, progress toward completion,
and recoverability of claims. Adjustments to original estimates
are often required as work progresses and additional information
becomes known, even though the scope of the work required under
the contract may not change. Any adjustment as a result of a
change in estimates is made when facts develop, events become
known or an adjustment is otherwise warranted, such as in the
case of a contract modification. We have procedures and
processes in place to monitor the actual progress of a project
against estimates and our estimates are updated if circumstances
are warranted.
We recognize revenue for cost-plus-fixed-fee contracts with the
U.S. government as hours are worked based on reimbursable
and allowable costs, recoverable indirect costs and an accrual
for the fixed fee component of the contract. Many of our
U.S. government contracts include award fees, which are
earned based on the client’s evaluation of our performance.
We have significant history with the client for the majority of
contracts on which we earn award fees. That history and
management monitoring of performance form the basis for our
ability to estimate such fees over the life of the contract.
Based on these estimates, we recognize award fees as work on the
contracts is performed.
Revenue earned under
time-and-materials
contracts is recognized as hours are worked based on
contractually billable rates to the client. Costs on
time-and-materials contracts are expensed as incurred.
Change
in Accounting Principle for Revenue Recognition
In 2010, we changed our methodology of recognizing revenue for
all of our U.S. government contracts to apply the
accounting guidance of Financial Accounting Standards Board, or
FASB, Accounting Standard Codification, or ASC, Subtopic
605-35, as
directed by ASC Topic 912, which permits revenue recognition on
a
percentage-of-completion
basis. Previously, we applied this guidance only to contracts
related to the construction or development of tangible assets.
For contracts not related to those activities, we had applied
the general revenue recognition guidance of Staff Accounting
Bulletin, or SAB, Topic 13, “Revenue Recognition.”
Upon contract completion, both methods yield the same results,
but we believe that the application of contract accounting under
ASC 605-35
to all U.S. government contracts is preferable to the
application of contract accounting under SAB Topic 13,
based on the fact that the percentage of completion model
utilized under
ASC 605-35
is a recognized accounting model that better reflects the
economics of a U.S. government contract during the contract
performance period.
The only material financial impact resulting from the accounting
change is the recognition of award fees based upon reliable
estimates. The guidance in
ASC 605-35
allows for award fees to be recorded over the life of a contract
based on management’s estimates of those total fees, to the
extent we are able to make such estimates. We have concluded
that these estimates, in prior and current periods, can be made
based on our significant history with our portfolio of contracts
and management’s monitoring of fees earned on such
contracts. Management concluded that accrual of award fees is
appropriate for all of our existing cost-plus-award-fee
contracts for which management is able to estimate the award
fees. This change has been reflected in all periods presented in
the audited consolidated financial statements and the unaudited
financial data presented elsewhere in this prospectus.
In accordance with ASC Subtopic
250-10,
“Accounting Changes and Error Corrections,” all prior
periods presented have been retrospectively adjusted to apply
the new method of accounting. Refer to Note 2 to our
consolidated financial statements for information on the effect
of the change in accounting principle on our consolidated
financial statements.
Goodwill
and Intangible Impairment
Goodwill represents the excess of the purchase price of an
acquired business over the fair value of its net tangible and
identifiable intangible assets. The fair value assessments
involved in the calculation of goodwill
59
require judgments and estimates that can be affected by contract
performance and other factors over time, which may cause the
amount of goodwill associated with a business to differ
materially from original estimates.
We have identified a single reporting unit for purposes of
testing goodwill. The goodwill of our reporting unit is tested
for impairment annually on January 1 and whenever an event
occurs or circumstances change such that it is reasonably
possible that an impairment condition may exist. Events or
circumstances that could trigger such an interim impairment test
include a decline in market capitalization below book value,
internal reports or reports by our competitors of a decrease in
revenue or operating income or bankruptcies, lower than expected
income during the current fiscal year or expected for the next
fiscal year, current period operating or cash flow loss, loss of
significant contracts, or projection of continuing income or
cash flow losses associated with the use of a long-lived asset
or group of assets.
Our goodwill impairment test is a two-step process performed at
the reporting unit level. The first step consists of estimating
the fair value of our reporting unit based on a discounted cash
flow model using revenue and profit forecasts and comparing its
estimated fair value with the carrying value, which includes the
allocated goodwill. If the fair value is less than the carrying
value, a second step is performed to compute the amount of the
impairment by determining an implied fair value of goodwill. The
implied fair value of goodwill is the residual fair value
derived by deducting the fair value of the reporting unit’s
identifiable assets and liabilities from its estimated fair
value calculated in step one. The impairment charge represents
the excess of the carrying amount of the reporting unit’s
goodwill over the implied fair value of goodwill. The revenue
and profit forecasts used in step one are based on
management’s best estimate of future revenue and operating
costs. Changes in these forecasts could cause the reporting unit
to either pass or fail the first step in the impairment test,
which could significantly change the amount of the impairment
recorded from step two. In addition, the estimated future cash
flows are adjusted to present value by applying a discount rate.
Changes in the discount rate impact the impairment by affecting
the calculation of the fair value of the reporting unit in step
one.
Our goodwill impairment test performed for fiscal 2010 did not
result in any impairment of goodwill. For the year ended
March 31, 2010, there were no triggering events indicative
of goodwill or intangible impairment.
Stock-Based
Compensation
We use the Black-Scholes option-pricing model to determine the
estimated fair value for stock options. The fair value of our
stock on the date of the option grant is determined based on an
external valuation prepared contemporaneously and approved by
management and reviewed by the Board.
Critical inputs into the Black-Scholes option-pricing model
include: the option exercise price; the fair value of the stock
price; the expected life of the option in years; the annualized
volatility of the stock; the annual rate of quarterly dividends
on the stock; and the risk-free interest rate.
As we have no plans to issue regular dividends, a dividend yield
of zero is used in the Black-Scholes model. Expected volatility
is calculated as of each grant date based on reported data for a
peer group of publicly traded companies for which historical
information is available. We will continue to use peer group
volatility information until our historical volatility can be
regularly measured against an open market to measure expected
volatility for future option grants. Other than the expected
life of the option, volatility is the most sensitive input to
our option grants. To be consistent with all other implied
calculations, the same peer group used to calculate other
implied metrics is also used to calculate implied volatility.
While we are not aware of any news or disclosure by our peers
that may impact their respective volatility, there is a risk
that peer group volatility may increase, thereby increasing any
prospective future compensation expense that will result from
future option grants.
The risk-free interest rate used in the Black-Scholes
option-pricing model is determined by referencing the
U.S. Treasury yield curve rates with the remaining term
equal to the expected life assumed at the date of grant. Due to
the lack of historical exercise data, the average expected life
is estimated based on internal
60
qualitative and quantitative factors. As we obtain data
associated with future exercises, the useful life of future
grants will be adjusted accordingly.
Forfeitures are estimated based on our historical analysis of
attrition levels. Forfeiture estimates will be updated annually
for actual forfeitures. We do not expect this assumption to
change materially, as attrition levels have historically been
low.
As a privately held company, we obtained contemporaneous
valuations by an independent valuation specialist for our fair
value determinations. The valuations were based on several
generally accepted valuation techniques: a discounted cash flow
analysis, a comparable public company analysis, and for the most
recent valuation, a comparative transaction analysis. Estimates
used in connection with the discounted cash flow analysis were
consistent with the plans and estimates that we use to manage
the business although there is inherent uncertainty in these
estimates. The valuation analysis results in a range of derived
values with the final value selected and approved by our
Compensation Committee. The completion of the initial public
offering may add value to the shares due to, among other things,
increased liquidity and marketability; however, the extent (if
any) of such additional value cannot be measured with precision
or certainty and the shares could suffer a decrease in value.
Accounting
for Income Taxes
Provisions for federal and state income taxes are calculated
from the income reported on our financial statements based on
current tax law and also include, in the current period, the
cumulative effect of any changes in tax rates from those
previously used in determining deferred tax assets and
liabilities. Such provisions differ from the amounts currently
receivable or payable because certain items of income and
expense are recognized in different time periods for purposes of
preparing financial statements than for income tax purposes.
Significant judgment is required in determining income tax
provisions and evaluating tax positions. We establish reserves
for income tax when, despite the belief that our tax positions
are supportable, there remains uncertainty in a tax position in
our previously filed income tax returns. For tax positions where
it is more likely than not that a tax benefit will be sustained,
we record the largest amount of tax benefit with a greater than
50% likelihood of being realized upon settlement with a taxing
authority that has full knowledge of all relevant information.
To the extent we prevail in matters for which accruals have been
established or are required to pay amounts in excess of
reserves, our effective tax rate in a given financial statement
period may be materially impacted.
The carrying value of our net deferred tax assets assumes that
we will be able to generate sufficient future taxable income in
certain tax jurisdictions to realize the value of these assets.
If we are unable to generate sufficient future taxable income in
these jurisdictions, a valuation allowance is recorded when it
is more likely than not that the value of the deferred tax
assets is not realizable.
Recent
Accounting Pronouncements
In October 2009, the FASB issued Accounting Standards Update, or
ASU,
No. 2009-13,
Revenue Recognition (Topic 605): Multiple-Deliverable Revenue
Arrangements — a consensus of the FASB
EITF 08-01,
to amend the revenue recognition guidance for arrangements with
multiple deliverables under ASC
605-25,
Revenue Recognition: Multiple-Element Arrangements. This
guidance modifies the requirements for determining whether a
deliverable can be treated as a separate unit of accounting by
removing the criteria that verifiable and objective evidence of
fair value exists for the undelivered elements.
In October 2009, the FASB issued ASU
No. 2009-14,
Software (Topic 985): Certain Revenue Arrangements That
Include Software Elements — a consensus of the FASB
Emerging Issues Task Force, to amend the revenue recognition
guidance for certain arrangements that include software elements
under FASB
ASC 985-605,
Software: Revenue Recognition. The amendment to
ASC 985-605
focuses on determining which arrangements are within the scope
of the software revenue guidance.
61
The changes in ASU
No. 2009-13
and ASU
No. 2009-14
are effective on a prospective basis for transactions entered
into or materially modified for fiscal years beginning on or
after June 15, 2010, or on a retrospective basis for all
periods presented. Early adoption is permitted as of the
beginning of our fiscal year provided we have not previously
issued financial statements for any period within that year. We
have adopted the guidance on a prospective basis effective
April 1, 2010 and we believe that the guidance will not
have material impact on our consolidated financial statements
and disclosures. We are required to adopt both
ASU No. 2009-13
and ASU
No. 2009-14
in the same manner.
In March 2010, the FASB ratified Emerging Issues Task Force, or
EITF,
No. 08-9,
Milestone Method of Revenue Recognition, relating to
revenue recognition disclosures on research and development
deliverables. Under the new guidance, entities with research and
development arrangements, regardless of whether the arrangements
have single or multiple deliverables, must make certain
financial statement disclosures about the arrangements’
milestones. These disclosures are now required to include a
description of the overall arrangement and its individual
milestones, a conclusion as to whether the milestones are
substantive, and the amount of consideration associated with the
milestone recognized during the current period. Additionally,
entities should disclose the list of factors they used in
determining whether the milestones are substantive and any
related contingent consideration. We are currently evaluating
the impact, if any, that the guidance will have on our
consolidated financial statements and disclosures. We would be
required to adopt EITF
No. 08-9
prospectively for all fiscal and interim periods after
June 15, 2010, in accordance with the new standard.
Other recent accounting pronouncements issued by the FASB
(including the EITF) and the American Institute of Certified
Public Accountants were not or are not believed by management to
have a material impact on our future consolidated financial
statements.
Segment
Reporting
We report operating results and financial data in one operating
and reportable segment. We manage our business as a single
profit center in order to promote collaboration, provide
comprehensive functional service offerings across our entire
client base, and provide incentives to employees based on the
success of the organization as a whole. Although certain
information regarding served markets and functional capabilities
is discussed for purposes of promoting an understanding of our
complex business, we manage our business and allocate resources
at the consolidated level of a single operating segment.
The
Acquisition
On July 31, 2008, pursuant to the merger agreement, the
then-existing shareholders of Booz Allen Hamilton completed the
spin off and sale of the commercial and international business
to the commercial partners and the acquisition of Booz Allen
Hamilton by Carlyle, through the merger of Booz Allen Hamilton
with a wholly-owned indirect subsidiary of Booz Allen Holding.
Booz Allen Holding was formed for the purpose of Carlyle
indirectly acquiring Booz Allen Hamilton and was capitalized
through (1) the sale of $956.5 million of shares of
Class A common stock by Booz Allen Holding to Coinvest and
(2) $1,240.3 million of net proceeds from indebtedness
incurred under our senior credit facilities and our mezzanine
credit facility. Booz Allen Holding acquired Booz Allen Hamilton
for total consideration of $1,828.0 million. The
acquisition consideration was allocated to the acquired net
assets, identified intangibles of $353.8 million, and
goodwill of $1,163.1 million.
In connection with the acquisition, Booz Allen Holding exchanged
certain shares of its common stock for previously issued and
outstanding shares of Booz Allen Hamilton. Fully vested shares
of Booz Allen Hamilton were exchanged for vested shares of Booz
Allen Holding, with a fair value of $79.7 million. This
amount was included as a component of the total acquisition
consideration. Booz Allen Holding also issued restricted shares
and options in exchange for previously issued and outstanding
stock rights of Booz Allen Hamilton. Based on the vesting terms
of the newly issued Booz Allen Holding Class C restricted
common stock and the new options granted under the
Officers’ Rollover Stock Plan, the fair value of those
awards, $147.4 million, is recognized as compensation
expense by us subsequent to the acquisition as the restricted
common stock and stock options vest over a period of three to
five years. See “The Acquisition and Recapitalization
Transaction.”
62
The
Recapitalization Transaction
On December 11, 2009, we consummated the recapitalization
transaction, which included amendments of our senior credit
facilities and our mezzanine credit facility to, among other
things, add the $350.0 million Tranche C term facility
under our senior credit facilities and waive certain covenants
to permit the recapitalization transaction. Net proceeds from
the Tranche C term facility of $341.3 million, along
with cash on hand, were used to fund Booz Allen
Hamilton’s dividend payment of $497.5 million, or
$46.42 per share, to all issued and outstanding shares of Booz
Allen Holding’s Class A common stock, Class B
non-voting common stock and Class C restricted common
stock. We also repaid a portion of the deferred payment
obligation in the amount of $100.4 million, including
$22.4 million in accrued interest. As required by the
Officers’ Rollover Stock Plan and the Equity Incentive
Plan, the exercise price per share of each outstanding option
was reduced in an amount equal to the reduction in the value of
the common stock as a result of the dividend. Because the
reduction in share value exceeded the exercise price for certain
of the options granted under the Officers’ Rollover Stock
Plan, the exercise price for those options was reduced to the
par value of the shares issuable on exercise, and the holders
became entitled to receive on the option’s fixed exercise
date a cash payment equal to the excess of the reduction in
share value as a result of the dividend over the reduction in
exercise price, subject to vesting of the relation options. As
of March 31, 2010, the total obligations for these cash
payments was $54.4 million. See “The Acquisition and
Recapitalization Transaction.”
Basis of
Presentation
As discussed in more detail under “The Acquisition and
Recapitalization Transaction,” Booz Allen Hamilton was
indirectly acquired by Carlyle on July 31, 2008.
Immediately prior to the acquisition, Booz Allen Hamilton spun
off its commercial and international business and retained its
U.S. government business. The accompanying consolidated and
combined financial statements are presented for (1) the
“Predecessor,” which are the financial statements of
Booz Allen Hamilton for the period preceding the acquisition,
and (2) the “Company,” which are the financial
statements of Booz Allen Holding and its consolidated
subsidiaries for the period following the acquisition. Prior to
the acquisition, Booz Allen Hamilton’s U.S. government
business is presented as the continuing operations of the
Predecessor. The Predecessor’s consolidated financial
statements have been presented for the twelve months ended
March 31, 2008 and the four months ended July 31,
2008. The operating results of the commercial and international
business that was spun off by Booz Allen Hamilton effective
July 31, 2008 have been presented as discontinued
operations in the Predecessor consolidated financial statements
and the related notes included in this prospectus. The
Company’s consolidated financial statements for periods
subsequent to the acquisition have been presented from
August 1, 2008 through March 31, 2009 and for the
twelve months ended March 31, 2010. The Predecessor’s
financial statements may not necessarily be indicative of the
cost structure or results of operations that would have existed
if the U.S. government business operated as a stand-alone,
independent business. The acquisition was accounted for as a
business combination, which resulted in a new basis of
accounting. The Predecessor’s and the Company’s
financial statements are not comparable as a result of applying
a new basis of accounting. See Notes 2, 4, and 24 to our
consolidated financial statements for additional information
regarding the accounting treatment of the acquisition and
discontinued operations.
The spin off of the commercial and international business, the
acquisition of a majority ownership by Carlyle, the related
application of the purchase accounting method and changes in our
outstanding debt resulted in significant changes in, among other
things, asset values, amortization expense, and interest
expense. Additionally, the Predecessor’s net loss for the
four months ended July 31, 2008 includes approximately
$1.5 billion of stock compensation expense related to the
accelerated vesting of a portion of existing rights to purchase
common stock of the Company and the
mark-up of
the Predecessor’s common stock to fair market value in
anticipation of the acquisition. The acquisition purchase price
was allocated to the Company’s net tangible and
identifiable intangible assets based upon their fair values as
of August 1, 2008. The excess of the purchase price over
the fair value of the net tangible and identifiable assets was
recorded as goodwill.
The results of operations for fiscal 2008, the four months ended
July 31, 2008 and the eight months ended March 31,
2009 are presented “as adjusted” to reflect the change
in accounting principle related to our revenue recognition
policies, as described in “— Critical Accounting
Estimates and Policies.”
63
Results of Operations
The following table sets forth items from our consolidated
statements of operations for the periods indicated (in
thousands). Included in the table below and set forth in the
following discussion are unaudited pro forma results of
operations for the twelve months ended March 31, 2009, or
“pro forma 2009,” assuming the acquisition had been
completed as of April 1, 2008. The unaudited pro forma
condensed consolidated results of operations for fiscal 2009 are
based on our historical audited consolidated financial
statements included elsewhere in this prospectus, adjusted to
give pro forma effect to the acquisition.
The unaudited pro forma condensed consolidated results of
operations for fiscal 2009 are presented because management
believes it provides a meaningful comparison of operating
results enabling twelve months of fiscal 2009 to be compared
with fiscal 2010 and fiscal 2008, adjusting for the impact of
the acquisition. The unaudited pro forma condensed consolidated
financial statements are for informational purposes only and do
not purport to represent what our actual results of operations
would have been if the acquisition had been completed as of
April 1, 2008 or that may be achieved in the future. The
unaudited pro forma condensed consolidated financial information
and the accompanying notes should be read in conjunction with
our historical audited consolidated financial statements and
related notes appearing elsewhere in this prospectus and other
financial information contained in “Prospectus
Summary,” “Risk Factors” and “The
Acquisition and Recapitalization Transaction,” in this
prospectus.
| Predecessor | The Company | ||||||||||||||||||||||||
|
Four |
Eight |
Pro Forma |
|||||||||||||||||||||||
|
Fiscal Year |
Months |
Months |
Fiscal |
Fiscal Year |
|||||||||||||||||||||
|
Ended |
Ended |
Ended |
Year Ended |
Ended |
|||||||||||||||||||||
|
March 31, |
July 31, |
March 31, |
Pro Forma |
March 31, |
March 31, |
||||||||||||||||||||
| 2008 | 2008 | 2009 | Adjustments | 2009 | 2010 | ||||||||||||||||||||
| (As adjusted) | (As adjusted) | (As adjusted) | |||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||
|
Revenue
|
$ | 3,625,055 | $ | 1,409,943 | $ | 2,941,275 | — | $ | 4,351,218 | $ | 5,122,633 | ||||||||||||||
|
Operating costs and expenses:
|
|||||||||||||||||||||||||
|
Cost of revenue
|
2,028,848 | 722,986 | 1,566,763 | $ | 6,586 | (a) | 2,296,335 | 2,654,143 | |||||||||||||||||
|
Billable expenses
|
935,459 | 401,387 | 756,933 | — | 1,158,320 | 1,361,229 | |||||||||||||||||||
|
General and administrative expenses
|
474,188 | 726,929 | 505,226 | (508,328 | )(b) | 723,827 | 811,944 | ||||||||||||||||||
|
Depreciation and amortization
|
33,079 | 11,930 | 79,665 | 14,740 | (c) | 106,335 | 95,763 | ||||||||||||||||||
|
Total operating costs and expenses
|
3,471,574 | 1,863,232 | 2,908,587 | — | 4,284,817 | 4,923,079 | |||||||||||||||||||
|
Operating income (loss)
|
153,481 | (453,289 | ) | 32,688 | — | 66,401 | 199,554 | ||||||||||||||||||
|
Interest income
|
2,442 | 734 | 4,578 | — | 5,312 | 1,466 | |||||||||||||||||||
|
Interest (expense)
|
(2,319 | ) | (1,044 | ) | (98,068 | ) | (47,691 | )(d) | (146,803 | ) | (150,734 | ) | |||||||||||||
|
Other expense, net
|
(1,931 | ) | (54 | ) | (128 | ) | — | (182 | ) | (1,292 | ) | ||||||||||||||
|
Income (loss) from continuing operations before income taxes
|
151,673 | (453,653 | ) | (60,930 | ) | — | (75,272 | ) | 48,994 | ||||||||||||||||
|
Income tax expense (benefit) from continuing operations
|
62,693 | (56,109 | ) | (22,147 | ) | 52,425 | (e) | (25,831 | ) | 23,575 | |||||||||||||||
|
Income (loss) from continuing operations
|
88,980 | (397,544 | ) | (38,783 | ) | — | $ | (49,441 | ) | 25,419 | |||||||||||||||
|
Loss from discontinued operations, net of tax
|
(71,106 | ) | (848,371 | ) | — | — | |||||||||||||||||||
|
Net income (loss)
|
$ | 17,874 | $ | (1,245,915 | ) | $ | (38,783 | ) | $ | 25,419 | |||||||||||||||
| (a) | Reflects additional stock-based compensation expense associated with options issued in exchange for stock rights under the stock rights plan that existed prior to the closing of the acquisition for $6.6 million |
64
| (see Note 17 to our consolidated financial statements for additional information on our stock-based compensation). | ||
| (b) | Consists of the following adjustments: | |
|
• Increase to rent expense of $1.8 million due to
the elimination of the July 31, 2008 deferred rent
liability in accordance with the accounting treatment of leases
associated with the business combination;
|
||
|
• Increase to management fees paid to Carlyle of
$0.3 million (see Note 19 to our consolidated
financial statements for additional information regarding the
management fees);
|
||
|
• Additional stock-based compensation expense of
$13.4 million associated with options issued in exchange
for stock rights under the stock rights plan that existed prior
to the closing of the acquisition (see Note 17 to our
consolidated financial statements for additional information on
our stock-based compensation);
|
||
|
• Reversal of $511.7 million for a one-time
acceleration of stock rights and the fair value
mark-up of
redeemable common shares immediately prior to the acquisition;
and
|
||
|
• Reversal of certain related transaction costs of
$12.2 million.
|
||
| (c) | Reflects amortization expense of intangible assets established as part of purchase accounting and depreciation expense associated with the fair value of fixed assets associated with the acquisition accounted for as a business combination for $14.7 million. | |
| (d) | Consists of the following adjustments: | |
|
• Reversal of interest expense of $1.0 million
recorded during the four months ended July 31, 2008 related
to the Predecessor’s previous debt outstanding prior to the
acquisition; and
|
||
|
• Incurrence of additional interest expense of
$48.7 million associated with our new senior credit
facilities and mezzanine credit facility established in
conjunction with the acquisition.
|
||
| (e) | Reflects tax effect of the cumulative pro forma adjustments. |
Financial
and Other Highlights — Fiscal 2010
We have a broad and diverse contract and client base and no
single contract or task order accounted for more than a 10%
impact on our revenue growth from pro forma 2009 to fiscal 2010.
Key financial highlights during fiscal 2010 include:
| • | Revenue increased 17.7% over pro forma 2009 driven primarily by the deployment of approximately 1,500 net additional consulting staff during fiscal 2010 against funded backlog. Net additional consulting staff reflects newly hired consulting staff net of consulting staff attrition. | |
| • | Operating income for fiscal 2010 as a percentage of revenue increased to 3.9% in fiscal 2010 from 1.5% in pro forma 2009. The increase in operating margin reflects a reduction in the cost of revenue as a percentage of revenue driven by a decrease in acquisition-related expenses and cost efficiencies across our overhead base primarily related to lower indirect labor costs. Operating income reflects a $3.1 million reduction in reserves for costs in excess of funding appropriated under existing contracts, (ii) recognition of $3.6 million of profits earned but unrecorded under existing contracts following a comprehensive contract review and (iii) recognition of $2.1 million of profits earned under a contract that was terminated at the request of our counterparty and with our consent. | |
| • | Income from continuing operations before taxes for fiscal 2010 was $49.0 million compared to a loss of $75.3 million for pro forma 2009 due to an increase in operating income of $133.2 million partially offset by a decrease in interest income and an increase in interest expense. |
65
Fiscal
2010 Compared to Pro Forma 2009
Revenue
Revenue increased to $5,122.6 million in fiscal 2010 from
$4,351.2 million in pro forma 2009, or a 17.7% increase.
This revenue increase was primarily driven by the deployment of
approximately 1,500 net additional consulting staff during
fiscal 2010 against funded backlog. Consulting staff increased
during the period due to ongoing recruiting efforts, resulting
in additions to consulting staff in excess of attrition.
Additions to funded backlog during fiscal 2010 totaled
$5.3 billion as a result of the conversion of unfunded
backlog to funded backlog, the award of new contracts and task
orders under which funding was appropriated and the exercise and
subsequent funding of priced options.
Cost of
Revenue
Cost of revenue increased to $2,654.1 million in fiscal
2010 from $2,296.3 million in pro forma 2009, or a 15.6%
increase, primarily due to increases in salaries and
salary-related benefits of $347.4 million and employer
retirement plan contributions of $27.8 million. The
increase in salaries and salary-related benefits was driven by
headcount growth of approximately 1,500 net additional
consulting staff during fiscal 2010. The increase in employer
retirement plan contributions was due to an increase in the
number of employees who completed one year of service and became
eligible to participate in our Employees’ Capital
Accumulation Plan. The cost of revenue increase was partially
offset by decreases in incentive compensation of
$13.9 million and $4.5 million in stock-based
compensation expense for new Rollover and EIP options for
Class A common stock and restricted shares, in each case
issued in connection with the acquisition (stock-based
compensation expense related to Rollover options and restricted
shares issued in connection with the acquisition and the initial
grant of EIP options, collectively referred to as
acquisition-related compensation expense). The decrease in
incentive compensation was primarily due to a decrease in the
number of senior personnel eligible for incentive compensation
engaged in
day-to-day
client management roles, and the decrease in acquisition-related
compensation expense was primarily due to a decrease in expense
recognition compared to the prior year period due to the
application of the accounting method for recognizing stock-based
compensation, which requires higher expenses initially and
declining expenses in subsequent years. Cost of revenue was
51.8% and 52.8% of revenue for fiscal 2010 and pro forma 2009,
respectively.
Billable
Expenses
Billable expenses increased to $1,361.2 million in fiscal
2010 from $1,158.3 million in pro forma 2009, or a 17.5%
increase, primarily due to increased direct subcontractor
expenses and, to a lesser extent, increases for travel and
material expenses incurred to support delivery of additional
services to our clients under new and existing contracts. The
increase in direct subcontractor expenses was primarily
attributable to increased use of subcontractors due to increased
funded backlog. Billable expenses as a percentage of revenue
were 26.6% for each of fiscal 2010 and pro forma 2009.
General
and Administrative Expenses
General and administrative expenses increased to
$811.9 million in fiscal 2010 from $723.8 million in
pro forma 2009, or a 12.2% increase, primarily due to increases
in salaries and salary-related benefits of $51.7 million,
incentive compensation of $32.0 million, primarily due to
an increase in the number of senior personnel that became
eligible for incentive compensation and increased compensation
under our annual performance bonus program, as well as an
increase in the number of generally senior personnel eligible
for incentive compensation engaged in internal management,
development and strategic planning, and other expenses
associated with increased headcount across our general corporate
functions, including finance, accounting, legal, and human
resources, to prepare us for operating as a public company and
support the increased scale of our business. The general and
administrative expenses increase was partially offset by a
decrease of $9.0 million in acquisition-related
compensation expense, which was principally due to the
accounting method for recognizing stock-based compensation
expense. The increase in general and administrative expenses was
also impacted by a decrease of $16.1 million in fiscal 2010
compared to pro forma 2009 of transaction expenses. Transaction
expenses in fiscal 2010 related to the payment of special
66
dividends to holders of record of our Class A common stock,
Class B non-voting common stock and Class C restricted
stock as of July 29, 2009 and December 8, 2009, and
transaction expenses in pro forma 2009 related to the
acquisition, including legal, tax and accounting expenses.
General and administrative expenses as a percentage of revenue
were 15.9% and 16.6% for fiscal 2010 and pro forma 2009,
respectively.
Depreciation
and Amortization
Depreciation and amortization decreased to $95.8 million in
fiscal 2010 from $106.3 million in pro forma 2009, or a
9.9% decrease, primarily due to a decrease of $17.2 million
in the amortization of our intangible assets, including below
market rate leases and contract backlog, that were recorded in
connection with the acquisition and amortized based on
contractual lease terms and projected future cash flows,
respectively, thereby reflecting higher amortization expense
initially, and declining expense in subsequent periods.
Intangible asset amortization expense decreased to
$3.4 million per month in fiscal 2010 compared to
$4.8 million per month in pro forma 2009.
Interest
Income, Interest (Expense) and Other Expense
Interest income is primarily related to interest on late client
payments, as well as interest earned on our cash balances.
Interest income decreased to $1.5 million in fiscal 2010
from $5.3 million in pro forma 2009, or a 72.4% decrease,
due to declining interest rates in the marketplace as well as
lower cash balances resulting from the recapitalization
transaction.
Interest expense increased to $150.7 million in fiscal 2010
from $146.8 million in pro forma 2009, or a 2.7% increase,
primarily due to debt incurred in connection with the
recapitalization transaction in December 2009. In connection
with the recapitalization transaction in December 2009, we
amended and restated our senior credit facilities to add the
Tranche C term facility. This increase also reflects an
increase of $2.6 million in amortization of debt issuance
costs. Interest accrued on our approximately $1.6 billion
of debt as of March 31, 2010 at contractually specified
rates ranging from 4.0% to 13.0%, and is generally required to
be paid to our syndicate of lenders each quarter. This increase
was partially offset by a decrease in interest expense related
to the deferred payment obligation. In December 2009, we repaid
$78.0 million of the original deferred payment obligation
plus interest accrued on the deferred payment obligation of
$22.4 million. Interest continues to be accrued subsequent
to December 2009 on the remaining $80.0 million of the
deferred payment obligation.
Other expense increased to $1.3 million in fiscal 2010 from
$0.2 million in pro forma 2009.
Income
(Loss) from Continuing Operations before Income Taxes
Pre-tax income (loss) was an income of $49.0 million in
fiscal 2010 compared to a loss of $75.3 million in pro
forma 2009. This increase was primarily due to revenue growth,
cost efficiencies across our overhead base, lower indirect cost
spending and lower acquisition-related compensation expense.
Income
Tax Expense (Benefit) from Continuing Operations
Income tax expense (benefit) was an expense of
$23.6 million in fiscal 2010 compared to a benefit of
$25.8 million in pro forma 2009, primarily due to pre-tax
income in fiscal 2010 compared to a pre-tax loss in pro forma
2009. The effective tax rate in pro forma 2009 of 34.3% reflects
the impact of state taxes and the limitations on the
deductibility of meals and entertainment expenses. This
effective tax rate does not equate to future cash expenses for
tax, as our NOLs are expected to be used to satisfy a portion of
our future tax obligations.
Pro
Forma 2009 Compared to Fiscal 2008
Revenue
Revenue increased to $4,351.2 million in pro forma 2009
from $3,625.1 million in fiscal 2008, or a 20.0% increase.
This revenue increase was primarily driven by the deployment of
approximately 2,700 net additional consulting staff during
pro forma 2009 against funded backlog. Additions to funded
backlog during pro forma 2009 totaled $4.8 billion as a
result of the conversion of unfunded backlog to funded backlog,
the
67
award of new contracts and task orders under which funding was
appropriated and the exercise and subsequent funding of priced
options.
Cost of
Revenue
Cost of revenue increased to $2,296.3 million in pro forma
2009 from $2,028.8 million in fiscal 2008, or a 13.2%
increase, primarily due to increased salaries and salary-related
benefits of $330.9 million, employer retirement plan
contributions of $16.3 million and incentive compensation
of $4.4 million, partially offset by a decrease in
stock-based compensation expense of $7.9 million from
fiscal 2008 to pro forma 2009. The increase in salaries and
salary-related benefits was driven by headcount growth of
approximately 2,700 net additional consulting staff during
pro forma 2009. Cost of revenue was 52.8% and 56.0% of revenue
for pro forma 2009 and fiscal 2008, respectively.
Billable
Expenses
Billable expenses increased to $1,158.3 million in pro
forma 2009 from $935.5 million in fiscal 2008, or a 23.8%
increase, primarily due to an increase in direct subcontractor
expenses of $89.9 million to support delivery of additional
services to our clients under new and existing contracts.
Billable expenses as a percentage of revenue were 26.6% and
25.8% for pro forma 2009 and fiscal 2008, respectively.
General
and Administrative Expenses
General and administrative expenses increased to
$723.8 million in pro forma 2009 from $474.2 million
in fiscal 2008, or a 52.6% increase, primarily due to increases
in salaries and salary-related benefits of $33.0 million,
incentive compensation of $28.3 million and related
compensation associated with our increased headcount.
Additionally, pro forma 2009 included the impact of
acquisition-related
compensation expense of $55.0 million. The increase also
reflects an increase of $14.2 million of transaction
expenses related to the acquisition, including legal, tax and
accounting expenses. General and administrative expenses as a
percentage of revenue were 16.6% and 13.1% for pro forma 2009
and fiscal 2008, respectively.
Depreciation
and Amortization
Depreciation and amortization expenses increased to
$106.3 million in pro forma 2009 from $33.1 million in
fiscal 2008, primarily due to the amortization of our intangible
assets of $57.8 million, including below market rate leases
and contract backlog, that were recorded in connection with the
acquisition and amortized based on contractual lease terms and
projected future cash flows, respectively, thereby reflecting
higher amortization expense initially, and declining expense in
subsequent periods.
Interest
Income, Interest (Expense) and Other Income (Expense)
Interest income increased to $5.3 million in pro forma 2009
from $2.4 million in fiscal 2008, primarily due to interest
earned on the additional cash maintained during the twelve
months of operations of pro forma 2009.
Interest expense increased to $146.8 million in pro forma
2009 from $2.3 million in fiscal 2008, primarily due to the
interest expense incurred associated with our new senior credit
facilities, mezzanine credit facility and deferred payment
obligation. The increase also reflects amortization of
$3.1 million of debt issuance costs.
Other expense decreased to $0.2 million in pro forma 2009
from $1.9 million in fiscal 2008.
Income
(Loss) from Continuing Operations before Income Taxes
Pre-tax income (loss) was a loss of $75.3 million in pro
forma 2009 compared to an income of $151.7 million in
fiscal 2008, primarily due to interest expense incurred in
connection with our new senior credit facilities and mezzanine
credit facility and the deferred payment obligation.
68
Income
Taxes Expense (Benefit) from Continuing Operations
Income tax expense (benefit) was a benefit of $25.8 million
in pro forma 2009 compared to an expense of $62.7 million
in fiscal 2008, primarily due to a pre-tax loss in pro forma
2009, compared to a pre-tax income in fiscal 2008.
Fiscal
2010 Compared to Eight Months Ended March 31,
2009
Revenue
Revenue increased to $5,122.6 million in fiscal 2010 from
$2,941.3 million in the eight months ended March 31,
2009, or a 74.2% increase, primarily due to twelve months of
operations included in fiscal 2010 compared to eight months of
operations included in the comparison period. This revenue
increase was primarily driven by the deployment of approximately
1,500 net additional consulting staff during fiscal 2010
against funded backlog. Additions to funded backlog during
fiscal 2010 totaled $5.3 billion as a result of the
conversion of unfunded backlog to funded backlog, the award of
new contracts and task orders under which funding was
appropriated and the exercise and subsequent funding of priced
options.
Cost of
Revenue
Cost of revenue increased to $2,654.1 million in fiscal
2010 from $1,566.8 million in the eight months ended
March 31, 2009, or a 69.4% increase, primarily due to
twelve months of operations included in fiscal 2010 compared to
eight months of operations included in the comparison period.
Increased salaries and
salary-related
benefits of $987.5 million, employer retirement plan
contributions of $76.3 million, incentive compensation of
$24.5 million, and acquisition-related compensation expense
of $2.1 million also contributed to the increase. The
increase in salaries and salary-related benefits was driven by
headcount growth of approximately 1,500 net additional
consulting staff during fiscal 2010. Cost of revenue was 51.8%
and 53.3% of revenue for fiscal 2010 and the eight months ended
March 31, 2009, respectively.
Billable
Expenses
Billable expenses increased to $1,361.2 million in fiscal
2010 from $756.9 million in the eight months ended
March 31, 2009, or a 79.8% increase, primarily due to
twelve months of operations included in fiscal 2010 compared to
eight months of operations included in the comparison period. An
increase in direct subcontractor expenses of $569.7 million
and travel expenses of $32.5 million, incurred to support
delivery of additional services to our clients under new and
existing contracts, also contributed to the increase. Billable
expenses as a percentage of revenue were 26.6% and 25.7% for
fiscal 2010 and the eight months ended March 31, 2009,
respectively.
General
and Administrative Expenses
General and administrative expenses increased to
$811.9 million in fiscal 2010 from $505.2 million in
the eight months ended March 31, 2009, or a 60.7% increase,
primarily due to twelve months of operations included in fiscal
2010 compared to eight months of operations included in the
comparison period. This increase also reflects increased
salaries and salary-related benefits of $124.1 million,
incentive compensation of $37.4 million, employer
retirement plan contributions of $14.6 million,
acquisition-related compensation expense of $4.3 million,
and other expenses associated with increased headcount across
our general corporate functions, including finance, accounting,
legal, and human resources, to prepare us for operating as a
public company and to support the increased scale of our
business. General and administrative expenses as a percentage of
revenue were 15.9% and 17.2% for fiscal 2010 and the eight
months ended March 31, 2009, respectively. General and
administrative expenses as a percentage of revenue declined in
fiscal 2010 as compared to the eight months ended March 31,
2009 as we continued to leverage our corporate infrastructure
over a larger revenue base.
69
Depreciation
and Amortization
Depreciation and amortization increased to $95.8 million in
fiscal 2010 from $79.7 million in the eight months ended
March 31, 2009, or a 20.2% increase, primarily due to
twelve months of operations included in fiscal 2010 compared to
eight months of operations included in the comparison period.
This increase also reflects the amortization of certain of our
intangible assets, including below-market rate leases and
contract backlog, that were recorded in connection with the
acquisition and amortized based on contractual lease terms and
projected future cash flows, respectively.
Interest
Income and Interest (Expense)
Our interest income decreased to $1.5 million in fiscal
2010 from $4.6 million in the eight months ended
March 31, 2009, or a decrease of 68.0%, due to declining
interest rates in the marketplace, as well as lower cash
balances resulting from the recapitalization transaction.
Interest expense increased to $150.7 million in fiscal 2010
from $98.1 million in the eight months ended March 31,
2009, or a 53.7% increase, primarily due to twelve months of
operations included in fiscal 2010 compared to eight months of
operations included in the comparison period. Debt incurred in
connection with the recapitalization transaction in December
2009 also contributed to the increase. In connection with the
recapitalization transaction in December 2009, we amended and
restated our senior credit facilities to add the Tranche C
term facility. Interest accrued on our approximately
$1.6 billion of debt as of March 31, 2010 at
contractually specified rates ranging from 4.0% to 13.0%, and is
generally required to be paid to our syndicate of lenders each
quarter. In December 2009, we also repaid $78.0 million of
the original deferred payment obligation plus interest accrued
on the deferred payment obligation of $22.4 million.
Interest continues to be accrued subsequent to December 2009 on
the remaining $80.0 million of the deferred payment
obligation.
Income
(Loss) from Continuing Operations before Income Taxes
Pre-tax income (loss) was an income of $49.0 million in
fiscal 2010 compared to a loss of $60.9 million in the
eight months ended March 31, 2009. This increase was
primarily due to stronger revenue growth, cost efficiency across
our overhead base and lower indirect costs.
Income
Tax Expense (Benefit) from Continuing Operations
Income tax expense (benefit) was an expense of
$23.6 million in fiscal 2010 compared to a benefit of
$22.1 million in the eight months ended March 31,
2009, primarily due to a pre-tax income in fiscal 2010 as
opposed to a pre-tax loss in the eight months ended
March 31, 2009.
Our effective tax rate increased from 36.3% as of March 31,
2009 to an annual rate of 48.1% as of March 31, 2010. This
effective rate is higher than the statutory rate of 35%
primarily due to state taxes and the limitations on the
deductibility of meal and entertainment expenses. This effective
tax rate does not equate to future cash expenses for tax, as our
NOLs are expected to be used to satisfy a portion of our future
tax obligations.
Eight
Months Ended March 31, 2009 Compared to Four Months Ended
July 31, 2008
Revenue
Revenue increased to $2,941.3 million in the eight months
ended March 31, 2009 from $1,409.9 million in the four
months ended July 31, 2008, or a 108.6% increase, primarily
due to eight months of operations included in the eight months
ended March 31, 2009 compared to four months of operations
included in the comparison period.
Cost of
Revenue
Cost of revenue increased to $1,566.8 million in the eight
months ended March 31, 2009 from $723.0 million in the
four months ended July 31, 2008, or a 116.7% increase,
primarily due to eight months of
70
operations included in the eight months ended March 31,
2009 compared to four months of operations included in the
comparison period. In the eight months ended March 31,
2009, we experienced increased salaries and salary-related
benefits of $692.1 million, employer retirement plan
contributions of $56.1 million, acquisition-related
compensation expense of $20.5 million, and incentive
compensation of $45.3 million. The increase in salary and
salary-related benefits resulted from our need to staff new
contract and task order awards as well as additional work under
existing contracts. Cost of revenue was 53.3% and 51.3% of
revenue for the eight months ended March 31, 2009 and the
four months ended July 31, 2008, respectively.
Billable
Expenses
Billable expenses increased to $756.9 million in the eight
months ended March 31, 2009 from $401.4 million in the
four months ended July 31, 2008, or a 88.6% increase,
primarily due to eight months of operations included in the
eight months ended March 31, 2009 compared to four months
of operations included in the comparison period. Billable
expenses as a percentage of revenue were 25.7% and 28.5% in the
eight months ended March 31, 2009 and the four months ended
July 31, 2008, respectively. The decrease in billable
expenses as a percentage of revenue in the eight months ended
March 31, 2009 was due to a higher proportion of
subcontractor and material spending in the four months ended
July 31, 2008.
General
and Administrative Expenses
General and administrative expenses decreased to
$505.2 million in the eight months ended March 31,
2009 from $726.9 million in the four months ended
July 31, 2008, or a 30.5% decrease, primarily related to
stock-based compensation expense of $511.7 million
associated with a one-time acceleration of stock rights and the
fair value
mark-up of
redeemable common shares immediately prior to the acquisition in
July 2008 compared to $41.6 million of acquisition-related
compensation expense in the eight months ended March 31,
2009. The decrease was partially offset by an increase in
salaries and salary-related expenses of $69.4 million,
incentive compensation of $28.9 million, and other expenses
during the eight months ended March 31, 2009 as we
increased headcount across our general corporate functions
following the acquisition. General and administrative expenses
as a percentage of revenue were 17.2% and 51.6% in the eight
months ended March 31, 2009 and the four months ended
July 31, 2008, respectively.
Depreciation
and Amortization
Depreciation and amortization increased to $79.7 million in
the eight months ended March 31, 2009 from
$11.9 million in the four months ended July 31, 2008
primarily due to the amortization of certain of our intangible
assets recorded in connection with the acquisition. The increase
also reflects eight months of operations included in the eight
months ended March 31, 2009 compared to four months of
operations included in the comparison period.
Interest
Income and Interest (Expense)
Interest income increased to $4.6 million in the eight
months ended March 31, 2009 from $0.7 million in the
four months ended July 31, 2008 primarily due to eight
months of operations included in the eight months ended
March 31, 2009 compared to four months of operations
included in the comparison period. Interest earned on the
additional cash maintained during the eight months ended
March 31, 2009 also contributed to this increase.
Interest expense increased to $98.1 million in the eight
months ended March 31, 2009 from $1.0 million in the
four months ended July 31, 2008 primarily due to debt
incurred in connection with the acquisition. Prior to the
acquisition, our debt consisted of an unsecured line of credit
in the amount of $245.0 million, which accrued interest at
an interest rate of 3.05% for the four months ended
July 31, 2008. In connection with the acquisition in July
2008, we incurred significant interest-bearing debt with a
syndicate of lenders which held two term loans under our senior
credit facilities (Tranche A and Tranche B) and a
mezzanine loan under our mezzanine credit facility. During the
eight months ended March 31, 2009, interest accrued on our
debt at contractually specified rates ranging from 4.0% to
13.0%, and was generally paid to our syndicate of lenders each
quarter. Additionally, in
71
connection with the acquisition, we incurred a
$158.0 million deferred payment obligation, which accrues
interest at a rate of 5.0% per six-month period.
Income
(Loss) from Continuing Operations before Income Taxes
Pre-tax loss decreased to a loss of $60.9 million in the
eight months ended March 31, 2009 from a loss of
$453.7 million in the four months ended July 31, 2008,
or a 86.6% decrease, primarily due to stock-based compensation
expense related to a one-time acceleration of stock rights and
the fair value
mark-up of
redeemable common stock in connection with the acquisition and
significant transaction related costs in the four months ended
July 31, 2008, partially offset by increased interest
expense associated with the debt incurred as part of the
acquisition and the recognition of stock compensation expense
related to new stock option plans following the acquisition.
Income
Tax Expense (Benefit) from Continuing Operations
Income tax benefit decreased to a benefit of $22.1 million
in the eight months ended March 31, 2009 from a benefit of
$56.1 million in the four months ended July 31, 2008,
or a 60.5% decrease, primarily due to a decrease in the pre-tax
loss in the eight months ended March 31, 2009 compared to
the four months ended July 31, 2008, and the tax treatment
of certain costs related to the acquisition. Our effective tax
rate of 12.4% for the four months ended July 31, 2008 was
reflective of non-deductible acquisition-related costs incurred
during the period, primarily equity compensation, for which
there was no corresponding tax benefit. The effective tax rate
of 36.3% for the eight months ended March 31, 2009 was
higher than the statutory rate of 35% primarily due to state
taxes.
Four
Months Ended July 31, 2008 Compared to Fiscal
2008
Revenue
Revenue decreased to $1,409.9 million in the four months
ended July 31, 2008 from $3,625.1 million in fiscal
2008, or a 61.1% decrease, primarily due to four months of
operations included in the four months ended July 31, 2008
compared to twelve months of operations included in fiscal 2008.
Cost of
Revenue
Cost of revenue decreased to $723.0 million in the four
months ended July 31, 2008 from $2,028.8 million in
fiscal 2008, or a 64.4% decrease, primarily due to four months
of operations included in the four months ended July 31,
2008 compared to twelve months of operations included in fiscal
2008. Cost of revenue was 51.3% and 56.0% of revenue for the
four months ended July 31, 2008 and fiscal 2008,
respectively.
Billable
Expenses
Billable expenses decreased to $401.4 million in the four
months ended July 31, 2008 from $935.5 million in
fiscal 2008, or a 57.1% decrease, primarily due to four months
of operations included in the four months ended July 31,
2008 compared to twelve months of operations included in fiscal
2008. Billable expenses as a percentage of revenue were 28.5%
and 25.8% for the four months ended July 31, 2008 and
fiscal 2008, respectively.
General
and Administrative Expenses
General and administrative expenses increased to
$726.9 million in the four months ended July 31, 2008
from $474.2 million in fiscal 2008, or a 53.3% increase,
primarily due to stock-based compensation expense of
$511.7 million associated with a one-time acceleration of
stock rights and the fair value
mark-up of
redeemable common shares immediately prior to the acquisition.
General and administrative expenses as a percentage of revenue
were 51.6% and 13.1% for the four months ended July 31,
2008 and fiscal 2008, respectively. General and administrative
expenses as a percentage of revenue for the four months ended
July 31, 2008 were significantly higher due to the
stock-based compensation expense recorded in connection with the
acquisition.
72
Depreciation
and Amortization
Depreciation and amortization expenses decreased to
$11.9 million in the four months ended July 31, 2008
from $33.1 million in fiscal 2008, or a 63.9% decrease,
primarily due to four months of operations included in the four
months ended July 31, 2008 compared to twelve months of
operations included in fiscal 2008.
Interest
Income and Interest (Expense)
Interest income decreased to $0.7 million in the four
months ended July 31, 2008 from $2.4 million in fiscal
2008, or a 69.9% decrease, primarily due to four months of
operations included in the four months ended July 31, 2008
compared to twelve months of operations included in fiscal 2008.
Interest expense decreased to $1.0 million in the four
months ended July 31, 2008 from $2.3 million in fiscal
2008, or a 55.0% decrease, primarily due to four months of
operations included in the four months ended July 31, 2008
compared to twelve months of operations included in fiscal 2008.
Income
(Loss) from Continuing Operations before Income Taxes
Pre-tax income (loss) was a loss of $453.7 million in the
four months ended July 31, 2008 compared to an income of
$151.7 million in fiscal 2008, primarily due to the
increased stock compensation expense related to a one-time
acceleration of stock rights and the fair value
mark-up of
redeemable common stock in anticipation of the acquisition.
Income
Taxes Expense (Benefit) from Continuing Operations
Income tax expense (benefit) was a benefit of $56.1 million
in the four months ended July 31, 2008 compared to an
expense of $62.7 million in fiscal 2008, primarily due to a
pre-tax loss for the four months ended July 31, 2008
compared to a pre-tax income in fiscal 2008. Our effective tax
rate of 41.3% for fiscal 2008 was higher than the statutory rate
of 35%, primarily due to state taxes and equity compensation.
Our effective tax rate of 12.4% for the four months ended
July 31, 2008 reflected a reduction to the calculated tax
benefit at the U.S. statutory and state income tax rate due
to non-deductible acquisition-related costs incurred during the
period, primarily equity compensation, for which there was no
corresponding tax benefit.
Liquidity
and Capital Resources
We have historically funded our operations, debt payments,
capital expenditures, and discretionary funding needs from our
cash from operations. We had $420.9 million and
$307.8 million in cash and cash equivalents at
March 31, 2009 and March 31, 2010, respectively. We
expect to use all of the net proceeds of this offering to repay
$ million of the term loan
under our mezzanine credit facility, which was
$545.2 million as of March 31, 2010, and pay a related
prepayment penalty of $ . As of
March 31, 2010, on a pro forma basis after giving effect to
this offering and the use of the net proceeds therefrom, we
would have had outstanding approximately
$ million in total
indebtedness. Following the completion of this offering and the
use of the net proceeds therefrom, our primary sources of
liquidity will be cash flow from operations, either from the
payment of invoices for work performed or for advances in excess
of costs incurred, and available borrowings under our senior
credit facilities.
Our primary uses of cash following this offering will be for:
| • | operating expenses, including salaries; | |
| • | working capital requirements to fund the growth of our business; | |
| • | capital expenditures which primarily relate to the purchase of computers, business systems, furniture and leasehold improvements to support our operations; and | |
| • | debt service requirements for borrowings under our senior credit facilities and mezzanine credit facility. |
73
We do not currently intend to declare or pay dividends,
including special dividends on our Class A common stock,
for the foreseeable future. Our ability to pay dividends to our
shareholders is limited as a practical matter by restrictions in
the credit agreements governing our senior credit facilities and
mezzanine credit facility. Any future determination to pay a
dividend is subject to the discretion of our Board, and will
depend upon various factors, including our results of
operations, financial condition, liquidity requirements,
restrictions that may be imposed by applicable law and our
contracts, our ability to negotiate amendments to the credit
agreements governing our senior credit facilities and mezzanine
credit facility, and other factors deemed relevant by our Board
and our creditors.
By selling shares of our Class A common stock to the public
in this offering, we will be able to expand ownership in the
firm, gain access to the public capital markets, and pay off a
portion of the indebtedness that we incurred in connection with
the recapitalization transaction. We do not expect our
transition to or existence as a public company to affect our
client focus or day-to-day operations.
Generally, cash provided by operating activities has been
adequate to fund our operations. Due to fluctuations in our cash
flows and the growth in our operations, it may be necessary from
time to time in the future to borrow under our credit facilities
to meet cash demands. We anticipate that cash provided by
operating activities, cash and cash equivalents, and borrowing
capacity under our revolving credit facility will be sufficient
to meet our anticipated cash requirements for the next twelve
months.
Cash
Flows
Cash received from clients, either from the payment of invoices
for work performed or for advances in excess of costs incurred,
is our primary source of cash. We generally do not begin work on
contracts until funding is appropriated by the client. Billing
timetables and payment terms on our contracts vary based on a
number of factors, including whether the contract type is
cost-reimbursable,
time-and-materials,
or fixed-price. We generally bill and collect cash more
frequently under cost-reimbursable and
time-and-materials
contracts, as we are authorized to bill as the costs are
incurred or work is performed. In contrast, we may be limited to
bill certain fixed-price contracts only when specified
milestones, including deliveries, are achieved. A number of our
contracts may provide for performance-based payments, which
allow us to bill and collect cash prior to completing the work.
Accounts receivable is the principal component of our working
capital and is generally driven by revenue growth with other
short-term fluctuations related to the payment practices of our
clients. Our accounts receivable reflect amounts billed to our
clients as of each balance sheet date. Our clients generally pay
our invoices within 30 days of the invoice date. At any
month-end, we also include in accounts receivable the revenue
that was recognized in the preceding month, which is generally
billed early in the following month. Finally, we include in
accounts receivable amounts related to revenue accrued in excess
of amounts billed, primarily on our fixed-price contracts and
cost-plus-award-fee contracts. The total amount of our accounts
receivable can vary significantly over time, but is generally
sensitive to revenue levels. Total accounts receivable (billed
and unbilled combined, net of allowance for doubtful accounts)
days sales outstanding, or DSO, was 91, 73, and 69 as of
March 31, 2008, March 31, 2009, and March 31,
2010, respectively.
74
The table below sets forth our net cash flows for continuing
operations for the periods presented.
| Predecessor | The Company | ||||||||||||||||
|
Twelve Months |
Four Months |
Eight Months |
Twelve Months |
||||||||||||||
|
Ended |
Ended |
Ended |
Ended |
||||||||||||||
|
March 31, |
July 31, |
March 31, |
March 31, |
||||||||||||||
| 2008 | 2008 | 2009 | 2010 | ||||||||||||||
| (In thousands) | |||||||||||||||||
|
Net cash provided by (used in) operating activities
|
$ | 43,791 | $ | (26,548 | ) | $ | 180,709 | $ | 270,484 | ||||||||
|
Net cash used in investing activities
|
(38,527 | ) | (162,976 | ) | (1,660,518 | ) | (10,991 | ) | |||||||||
|
Net cash (used in) provided by financing activities
|
(1,413 | ) | 211,112 | 1,900,711 | (372,560 | ) | |||||||||||
|
Total increase (decrease) in cash and cash equivalents
|
$ | 3,851 | $ | 21,588 | $ | 420,902 | $ | (113,067 | ) | ||||||||
Net Cash
from Operating Activities
Net cash from operations is primarily affected by the overall
profitability of our contracts, our ability to invoice and
collect from our clients in a timely manner, and our ability to
manage our vendor payments. During fiscal 2010, our net cash
provided by operations was $270.5 million, compared to
$180.7 million in the eight months ended March 31,
2009 and net cash used in operations of $26.5 million in
the four months ended July 31, 2008. The increase in net
cash provided by operations in fiscal 2010 compared to the eight
months ended March 31, 2009 was primarily due to the twelve
months of operations included in fiscal 2010 compared to eight
months included in the eight months ended March 31, 2009.
This increase was also due to improved management of vendor
payments and improved cash collection in fiscal 2010, partially
offset by accrued compensation and benefits, which included
payment of employee bonuses and annual funding of the
Employees’ Capital Accumulation Plan, our defined
contribution plan.
The increase in net cash provided by operations in the eight
months ended March 31, 2009 compared to the four months
ended July 31, 2008 was primarily due to the eight months
of operations included in the eight months ended March 31,
2009 compared to four months included in the four months ended
July 31, 2008. This increase was also due to a loss from
discontinued operations in the four months ended July 31,
2008 and transaction costs related to the acquisition in the
four months ended July 31, 2008.
Net cash used in operations of the Predecessor was
$26.5 million in the four months ended July 31, 2008
compared to net cash provided by operations of
$43.8 million in fiscal 2008, primarily due to a loss from
discontinued operations in the four months ended July 31,
2008, as well as transaction costs related to the acquisition
during that period.
Net Cash
from Investing Activities
Net cash used in investing activities was $11.0 million for
fiscal 2010 compared to $1,660.5 million in the eight
months ended March 31, 2009 and $163.0 million in the
four months ended July 31, 2008. The decrease in fiscal
2010 compared to the eight months ended March 31, 2009 and
the increase in the eight months ended March 31, 2009
compared to the four months ended July 31, 2008, were
primarily due to $1.6 billion of cash paid in connection
with the acquisition, net of cash acquired of
$28.7 million, which was recorded in the eight months ended
March 31, 2009. In fiscal 2010, this was partially offset
by an increase in capital expenditures and expenditures for
internally developed software.
Net cash used in investing activities of the Predecessor was
$163.0 million in the four months ended July 31, 2008
compared to $38.5 million in fiscal 2008, primarily due to
the Predecessor’s investments of $153.7 million in its
discontinued operations during the four months ended
July 31, 2008.
75
Net Cash
from Financing Activities
Net cash from financing activities are primarily associated with
proceeds from debt and the repayment thereof. Net cash used in
financing activities was $372.6 million in fiscal 2010,
compared to net cash provided by financing activities of
$1,900.7 million in the eight months ended March 31,
2009 and net cash provided by financing activities of
$211.1 million in the four months ended July 31, 2008.
The increase in net cash used in financing activities in fiscal
2010 compared to the eight months ended March 31, 2009 was
primarily due to the payment of $612.4 million in special
dividends and repayment of $100.4 million of the deferred
payment obligation and related accrued interest, partially
offset by net proceeds of $341.3 million from loans under
Tranche C of our senior credit facilities. The increase in
net cash used in financing activities in the eight months ended
March 31, 2009 compared to the four months ended
July 31, 2008 was primarily due to several factors relating
to the acquisition, including proceeds of $1.2 billion
related to our senior credit facilities and our mezzanine credit
facility (offset by debt issuance costs of $45.0 million)
and proceeds from the issuance of common stock in connection
with the acquisition of $956.5 million, partially offset by
repayment of $251.1 million of outstanding debt, which were
recorded in the eight months ended March 31, 2008.
Net cash provided by financing activities of the Predecessor was
$211.1 million in the four months ended July 31, 2008
compared to net cash used in financing activities of
$1.4 million in fiscal 2008, primarily due to proceeds from
debt of $227.5 million during the four months ended
July 31, 2008.
Indebtedness
In connection with the acquisition, we entered into a series of
financing transactions. See “The Acquisition and
Recapitalization Transaction” and “Description of
Certain Indebtedness.”
In connection with the acquisition, Booz Allen Hamilton, as
borrower, and Booz Allen Investor, as guarantor, entered into
our senior credit facilities. Our senior credit facilities
consist of a $125.0 million Tranche A term facility, a
$585.0 million Tranche B term facility, a
$350.0 million Tranche C term facility and a
$245.0 million revolving credit facility. As of
March 31, 2010, we had $110.8 million outstanding
under the Tranche A term facility, $566.8 million
outstanding under the Tranche B term facility, and
$345.8 million outstanding under the Tranche C term
facility. As of March 31, 2010, no amounts had been drawn
under the revolving credit facility. As of March 31, 2010,
we were contingently liable under open standby letters of credit
and bank guarantees issued by our banks in favor of third
parties that total $1.4 million. These letters of credit
and bank guarantees primarily relate to leases and support of
insurance obligations. These instruments reduce our available
borrowings under the revolving credit facility. As of
March 31, 2010, we had $222.4 million of capacity
available for additional borrowings under the revolving credit
facility (excluding the $21.3 million commitment by the
successor entity to Lehman Brothers Commercial Bank).
In connection with the acquisition, Booz Allen Hamilton, as
borrower, and Booz Allen Investor, as guarantor, entered into
our mezzanine credit facility, which consists of a
$550.0 million term loan. As of March 31, 2010, we had
$545.2 million of term loans outstanding under our
mezzanine credit facility.
The loans under our senior credit facilities are secured by
substantially all of our assets and none of such assets will be
available to satisfy the claims of our general creditors. The
credit agreement governing our senior credit facilities requires
the maintenance of certain financial and non-financial
covenants. The loans under our mezzanine credit facility are
unsecured, and likewise the credit agreement governing our
mezzanine credit facility requires the maintenance of certain
financial and non-financial covenants, including limitations on
indebtedness and liens; mergers, consolidations and
dissolutions; dispositions of property; restricted payments;
investments and acquisitions; sale and leaseback transactions;
transactions with affiliates; and limitations on activities.
In addition, we are required to meet the following financial
maintenance covenants at each quarter-end:
| • | Consolidated Total Leverage Ratio — the ratio of total leverage as of the last day of the quarter (defined as the aggregate principal amount of all funded debt, less cash, cash equivalents and permitted liquid investments) to the preceding four quarters’ “Consolidated EBITDA” (as defined in the credit agreements governing the credit facilities). For the period ending March 31, 2010, this ratio must be |
76
| less than or equal to 5.75 to 1.0 to comply with our senior credit facilities, and less than 6.9 to 1.0 to comply with our mezzanine credit facility. Effective June 30, 2010, these required ratios will decrease to 5.5 to 1.0 for our senior credit facilities, and 6.6 to 1.0 for our mezzanine credit facility. As of March 31, 2010, we were in compliance with our consolidated total leverage ratio. |
| • | Consolidated Net Interest Coverage Ratio — the ratio of the preceding four quarters’ “Consolidated EBITDA” (as defined in our senior credit facilities) to net interest expense for the preceding four quarters (defined as cash interest expense, less the sum of cash interest income and one-time financing fees (to the extent included in consolidated interest expense)). For the period ending March 31, 2010, this ratio must be greater than or equal to 1.7 to 1.0 to comply with our senior credit facilities. Effective June 30, 2010, this ratio will increase to 1.8 to 1.0. As of March 31, 2010, we were in compliance with our consolidated net interest coverage ratio. |
Capital
Structure and Resources
At March 31, 2009 and March 31, 2010, we held cash and
cash equivalents of approximately $420.9 million and
$307.8 million, respectively. Our long-term debt amounted
to $1.2 billion and $1.5 billion at March 31,
2009 and 2010, respectively. As of March 31, 2009 and 2010,
our long-term debt bears interest at specified rates and is held
by a syndicate of lenders (see Note 11 in our consolidated
financial statements).
Our stockholders’ equity amounted to $509.6 million at
March 31, 2010, a decrease of $550.8 million compared
to stockholders’ equity of $1,060.3 million at
March 31, 2009, due to the special dividend paid in July
2009 and the special dividend paid in December 2009 in
connection with the recapitalization transaction described
above, as well as the reclassification of $33.6 million
from additional paid-in capital to other long-term liabilities
related to the reduction to one cent of the strike price of
options vested and not yet exercised that would have had an
exercise price below zero as a result of the December 2009
dividend. This difference between one cent and the reduced value
for shares vested and not yet exercised is reflected in other
long-term liabilities on the March 31, 2010 balance sheet,
and is to be paid in cash upon exercise of the options. This
decrease was partially offset by net income of
$25.4 million for fiscal 2010.
Quantitative
and Qualitative Disclosures of Market Risk
Our exposure to market risk for changes in interest rates
relates primarily to our outstanding debt, and cash and cash
equivalents consisting primarily of funds invested in
U.S. government insured money-market accounts. At
March 31, 2009 and March 31, 2010, we had
$420.9 million and $307.8 million, respectively, in
cash and cash equivalents and Treasury bills. The interest
expense associated with our term loans and any loans under our
revolving credit facility will vary with market rates.
Our exposure to market risk for changes in interest rates
related to our outstanding debt is somewhat mitigated as the
term loans under the Tranche B term facility and
Tranche C term facility have LIBOR floors of 3% and 2%,
respectively. A significant rise above current interest rate
levels would be required to increase our interest expense
related to Tranche B and Tranche C. An increase in
market interest rates could result in increased interest expense
associated with Tranche A, which accounted for 7.1% of our
outstanding debt as of March 31, 2010 and which does not
have a LIBOR floor. A hypothetical 1% increase in interest rates
would increase interest expense related to the term facilities
under our senior credit facilities by approximately
$1.2 million on an annual basis, and likewise decrease our
income and cash flows. A hypothetical increase of LIBOR to 4%
would increase interest expense related to all term facilities
under our senior credit facilities by approximately
$16.9 million on an annual basis, and likewise decrease our
income and cash flows. As of June 10, 2010, one-month LIBOR
was 0.35%. The interest rate on our term loans under our
mezzanine credit facility is fixed at 13.0%.
The return on our cash and cash equivalents balance as of
March 31, 2010 was less than 1%. Therefore, although
investment interest rates may continue to decrease in the
future, the corresponding impact to our interest income, and
likewise to our income and cash flow, would not be material.
77
We do not use derivative financial instruments in our investment
portfolio and have not entered into any hedging transactions.
Off-Balance
Sheet Arrangements
As of March 31, 2009 and 2010, we did not have any
off-balance sheet arrangements.
Contractual
Obligations
The following tables summarize our contractual obligations that
require us to make future cash payments as of March 31,
2010 on a historical basis and on an as adjusted basis. For
contractual obligations, we included payments that we have an
unconditional obligation to make. The as adjusted contractual
obligations presented below give effect to this offering and the
use of the net proceeds therefrom as if these transactions
occurred on March 31, 2010.
| Payments Due by Period | ||||||||||||||||||||
|
Less Than |
1 to 3 |
3 to 5 |
More Than |
|||||||||||||||||
|
Contractual Obligations:
|
Total | 1 Year | Years | Years | 5 Years | |||||||||||||||
| (In thousands) | ||||||||||||||||||||
|
Long-term debt(a)
|
$ | 1,587,850 | $ | 21,850 | $ | 56,200 | $ | 81,200 | $ | 1,428,600 | ||||||||||
|
Operating lease obligations
|
287,676 | 74,447 | 106,777 | 69,886 | 36,566 | |||||||||||||||
|
Interest on indebtedness
|
812,118 | 141,677 | 279,989 | 272,898 | 117,554 | |||||||||||||||
|
Deferred payment obligation(b)
|
63,435 | — | — | — | 63,435 | |||||||||||||||
|
Liability to Rollover option holders(c)
|
54,351 | 6,976 | 29,422 | 17,953 | — | |||||||||||||||
|
Tax liabilities for uncertain tax positions —
FIN 48(d)
|
100,178 | 18,573 | 40,154 | 41,451 | — | |||||||||||||||
|
Other
|
13,319 | — | — | 13,319 | — | |||||||||||||||
|
Total contractual obligations
|
$ | 2,918,927 | $ | 263,523 | $ | 512,542 | $ | 496,707 | $ | 1,646,155 | ||||||||||
| Payments Due by Period | ||||||||||||||||||||
|
Less Than |
1 to 3 |
3 to 5 |
More Than |
|||||||||||||||||
|
As Adjusted Contractual Obligations:
|
Total | 1 Year | Years | Years | 5 Years | |||||||||||||||
| (In thousands) | ||||||||||||||||||||
|
Long-term debt(a)
|
$ | $ | $ | $ | $ | |||||||||||||||
|
Operating lease obligations
|
287,676 | 74,447 | 106,777 | 69,886 | 36,566 | |||||||||||||||
|
Interest on indebtedness
|
||||||||||||||||||||
|
Deferred payment obligation(b)
|
63,435 | — | — | — | 63,435 | |||||||||||||||
|
Liability to Rollover option holders(c)
|
54,351 | 6,976 | 29,422 | 17,953 | — | |||||||||||||||
|
Tax liabilities for uncertain tax positions —
FIN 48(d)
|
100,178 | 18,573 | 40,154 | 41,451 | — | |||||||||||||||
|
Other
|
13,319 | — | — | 13,319 | — | |||||||||||||||
|
Total contractual obligations
|
$ | $ | $ | $ | $ | |||||||||||||||
| (a) | See Note 11 to our consolidated financial statements for additional information regarding debt and related matters. | |
| (b) | Includes $17.6 million deferred payment obligation balance, plus current and future interest accruals. | |
| (c) | Reflects liabilities to holders of stock options issued under our Officers’ Rollover Stock Plan related to the reduction in the exercise price of such options as a result of the July 2009 dividend and the December 2009 dividend. | |
| (d) | Includes $62.4 million of tax liabilities offset by amounts owed under the deferred payment obligation. The remainder is related to other tax liabilities. |
In the normal course of business, we enter into agreements with
subcontractors and vendors to provide products and services that
we consume in our operations or that are delivered to our
clients. These products
78
and services are not considered unconditional obligations until
the products and services are actually delivered, at which time
we record a liability for our obligation.
Capital
Expenditures
Since we do not own any of our own facilities, our capital
expenditure requirements primarily relate to the purchase of
computers, business systems, furniture and leasehold
improvements to support our operations. Direct costs billed to
clients are not treated as capital expenses. Our capital
expenditures for fiscal 2010 were $49.3 million and the
majority of such capital expenditures related to facilities
infrastructure, equipment, and information technology.
Expenditures for facilities infrastructure and equipment are
generally incurred to support new and existing programs across
our business. We also incur capital expenditures for IT to
support programs and general enterprise information technology
infrastructure.
Commitments
and Contingencies
We are subject to a number of reviews, investigations, claims,
lawsuits, and other uncertainties related to our business. For a
discussion of these items, refer to Note 19 to our
consolidated financial statements.
79
BUSINESS
Overview
We are a leading provider of management and technology
consulting services to the U.S. government in the defense,
intelligence and civil markets. We are a well-known, trusted and
long-term partner to our clients, who seek our expertise and
objective advice to address their most important and complex
problems. Leveraging our
95-year
consulting heritage and a talent base of approximately
23,300 people, we deploy our deep domain knowledge,
functional expertise and experience to help our clients achieve
their objectives. We have a collaborative culture, supported by
our operating model, which helps our professionals identify and
respond to emerging trends across the markets we serve and
delivers enduring results for our clients. We have grown our
revenue organically, without relying on acquisitions, at an 18%
CAGR over the
15-year
period ended March 31, 2010, reaching $5.1 billion in
revenue in fiscal 2010. We calculated our CAGR as our annualized
revenue growth over the period taking into account the effects
of annual compounding. We believe that a
15-year CAGR
is an appropriate measurement of our growth because it
demonstrates the rate at which we have grown our business over a
meaningful period of time.
We were founded in 1914 by Edwin Booz, one of the pioneers of
management consulting. In 1940, we began serving the
U.S. government by advising the Secretary of the Navy in
preparation for World War II. As the needs of our clients have
grown more complex, we have expanded beyond our management
consulting foundation to develop deep expertise in technology,
engineering, and analytics. Today, we serve substantially all of
the cabinet-level departments of the U.S. government. Our
major clients include the Department of Defense, all branches of
the U.S. military, the U.S. Intelligence Community,
and civil agencies such as the Department of Homeland Security,
the Department of Energy, the Department of Health and Human
Services, the Department of the Treasury and the Environmental
Protection Agency. We support these clients in addressing
complex and pressing challenges such as combating global
terrorism, improving cyber capabilities, transforming the
healthcare system, improving efficiency and managing change
within the government and protecting the environment.
We have strong and longstanding relationships with a diverse
group of clients at all levels of the U.S. government. We
derived 98% of our revenue in fiscal 2010 from services provided
to over 1,300 client organizations across the
U.S. government under more than 4,900 contracts and task
orders. The single largest entity that we served in fiscal 2010
was the U.S. Army which represented 15% of our revenue in
that period. Further, we have served our top ten clients, or
their predecessor organizations, for an average of over
20 years. We derived 86% of our revenue in fiscal 2010 from
engagements for which we acted as the prime contractor. Also
during fiscal 2010, we achieved an overall win rate of 57% on
new contracts and task orders for which we competed and a win
rate of more than 92% on re-competed contracts and task orders
for existing or related business. As of March 31, 2010, our
total backlog, including funded, unfunded, and priced options,
was $9.0 billion, an increase of 24% over March 31,
2009.
We attribute the strength of our client relationships, the
commitment of our people, and our resulting growth to our
management consulting heritage and culture, which instills our
relentless focus on delivering value and enduring results to our
clients. We operate our business as a single profit center,
which drives our ability to collaborate internally and compete
externally. Our operating model is built on (1) our
dedication to client service, which focuses on leveraging our
experience and knowledge to provide differentiated insights,
(2) our partnership-style culture and compensation system,
which fosters collaboration and the efficient allocation of our
people across markets, clients and opportunities, (3) our
professional development and
360-degree
assessment system, which ensures that our people are aligned
with our collaborative culture, core values and ethics and
(4) our approach to the market, which leverages our matrix
of deep domain expertise in the defense, intelligence and civil
markets and our strong capabilities in strategy and
organization, analytics, technology and operations.
We are organized and operate as a corporation. Our use of the
term “partnership” reflects our collaborative culture,
and our use of the term “partner” refers to our
Chairman and our Senior and Executive
80
Vice Presidents. The use of the terms “partnership”
and “partner” is not meant to create any implication
that we operate our company as, or have any intention to create
a legal entity that is, a partnership.
Market
Opportunity
We believe that the U.S. government is the world’s
largest consumer of management and technology consulting
services and its demand for such services remains strong, driven
by the need to manage dynamic and complex issues such as the
improvement and effectiveness of national security and homeland
security programs, the establishment of new
intelligence-gathering processes and infrastructure, protecting
against cyber-security threats, and several civil agency reform
initiatives. At the same time, the U.S. government is
seeking to increase efficiency and improve existing procurement
practices. Major changes and crises driven by shifting domestic
priorities and external events produce shifts in government
policies and priorities that create additional sources of demand
for management and technology consulting services.
Large
Addressable Markets
The U.S. government’s budget for U.S. government
fiscal year ended September 30, 2009 was $3 trillion,
excluding authorizations from the ARRA, Overseas Contingency
Operations, and supplemental funding for the Department of
Defense. Of this amount, $1 trillion was for discretionary
budget authority, including $502 billion for the Department
of Defense and U.S. Intelligence Community and $526 billion
for civil agencies. Based on data from Bloomberg Finance L.P.,
approximately $513 billion of the U.S. government
fiscal year 2009 discretionary outlays were for non-intelligence
agency and non-ARRA funding-related products and services
procured from private contractors. We estimate that
$93 billion of the spending directed towards private
contractors in U.S. government fiscal year 2009 was for
management and technology consulting services, with
$56 billion spent by the Department of Defense and
$37 billion spent by civil agencies. The agencies of the
U.S. Intelligence Community that we serve represent an
additional market.
Focus
on Efficiency and Transforming Procurement
Practices
Focus on Efficiency. There is pressure across
the U.S. government to control spending while also
improving services for citizens and aggressively pursuing
numerous important policy initiatives. This has led to an
increased focus on accomplishing more with fewer resources,
streamlining information services and processes, improving
productivity and reducing fraud, waste and abuse. We believe
that the U.S. government will require support in the form
of the services that we provide, such as strategy and change
management and organization and process improvement to implement
these initiatives. Two efficiency initiatives currently being
undertaken by the U.S. government are the most recent Base
Realignment and Closure Program, pursuant to which military
bases and installations are shut down or reorganized to more
efficiently support U.S. military forces, and a rebalancing
of defense forces and strategy in accordance with the 2010 QDR
to more effectively meet the demands of current threats in a
constrained fiscal environment. To streamline information
services and processes and improve productivity,
U.S. government agencies are making increased use of
information technology, improving the deployment of human
capital, and deploying better decision support systems. To
reduce fraud, waste and abuse, both the Obama Administration and
Congress have recently taken action to reduce improper payments
made by the U.S. government to individuals, organizations
and contractors that, according to the White House, amounted to
$98 billion in 2009. President Obama signed an Executive
Order aimed at reducing improper payments in November 2009 and
issued a memorandum ordering the expansion of payment recapture
audits in March 2010, and the House of Representatives passed
the Improper Payments Elimination and Recovery Bill in April
2010.
Transforming Procurement Practices. Economic
pressure has also driven an emphasis on greater accountability,
transparency and spending effectiveness in U.S. government
procurement practices. Recent efforts to reform procurement
practices have focused on (1) decreasing the use of lead
system integrators, (2) the unbundling of outsourced
projects to link contract payments to specific milestones and
project benchmarks in order to ensure timely delivery and
adherence to required budgets and outlays and (3) the
separation of certain types of work to facilitate objectivity
and avoid or mitigate specific organizational conflicts of
interest issues, which issues typically arise when providers of
products to the U.S. government
81
also provide systems engineering and technical assistance work,
acquisition support and other consulting services related to the
products being sold. A focus on organizational conflicts of
interest issues has resulted in legislation and a proposed
regulation aimed at increasing organizational conflicts of
interest requirements, including, among other things, separating
sellers of products and providers of advisory services in major
defense acquisition programs. We believe that the
U.S. government’s continued efforts to improve
procurement processes will generate increased demand for
objective management and technology consulting services.
Complex
Defense, Intelligence and Civil Agency
Requirements
The U.S. government continually reassesses and updates its
long-term priorities and develops new strategies to address the
rapidly evolving issues it faces. In order to deliver effective
advice in this environment, service providers must possess a
comprehensive knowledge of, and experience with, the
participants, systems and technology employed by the
U.S. government, and must also have an ability to
facilitate knowledge sharing while managing varying objectives.
For example, within the Department of Defense, the 2010 QDR
prioritizes support for the war fighter and integrating
intelligence, surveillance and reconnaissance systems with
weapons and ground operations.
Within the U.S. Intelligence Community and across the
U.S. government generally, the current priority is
enhancing cyber-capabilities, including cyber-security, in the
face of the continually evolving threat of terrorism and the
increasing reliance of both the U.S. government and the
private sector on critical information technology systems. In
U.S. government fiscal year 2009, the U.S. government
established CNCI to support and coordinate U.S. cyber
initiatives. At the time of CNCI’s establishment, the
Washington Post reported that the U.S. government would
spend approximately $17 billion over seven years in
connection with CNCI.
Within the civil agencies of the U.S. government, there has
been an increased focus on financial regulation, energy and
environmental issues, healthcare reform and
infrastructure-related challenges. The transformation of the
nation’s healthcare system alone will require significant
effort and investment to
re-design
processes and policies and communicate changes effectively to
citizens and healthcare providers. Modernizing healthcare
information technology systems is an essential element of this
transformation as highlighted by President Obama’s Budget
Request for U.S. government fiscal year 2011, which
includes an allocation of $6.2 billion for the Department
of Health and Human Services to improve and strengthen
healthcare information technology and systems. We believe the
U.S. government will rely on management and technology
consulting service providers to provide research, consulting,
implementation and improvement services to develop and manage
programs across its various civil agencies and departments.
We believe that the initiatives resulting from these new
priorities will result in increased demand for management and
technology consulting services.
Major
Changes Create Demand
Major changes in the government, political and overall economic
landscape drive demand for objective management and technology
consulting services and advice. These changes, which can be
recurring in nature or more sudden and unexpected, create
significant opportunities for us, as clients seek out service
providers with the flexibility to rapidly deploy intellectual
capital, resources and capabilities.
The inauguration of a new presidential administration is a
recurring change that drives the need for objective analysis and
advice to help develop and implement new policies and respond to
evolving priorities. For example, one of the primary focuses of
the Reagan administration was a
build-up of
U.S. defense forces, while the Clinton administration
ushered in the era of
e-Government
by harnessing the power of the Internet for the first time.
Similarly, the Obama administration has been focused on a range
of domestic and foreign policy initiatives, including those
related to the transformation of the healthcare system.
The attacks of September 11, 2001 and the recent financial
crisis and economic downturn are examples of sudden and
unexpected changes. These developments created urgent needs for
changes to policy and the regulatory environment. In response to
the September 11 attacks, the U.S. government created the
Department of Homeland Security, fully integrating 22 previously
distinct agencies to improve oversight and protection of
82
the U.S. homeland. In response to the recent financial
crisis, the U.S. government has pursued several programs to
stabilize the U.S. and global economies, including the
institution of the Troubled Assets Recovery Program, the
Financial Recovery Act of 2009, and ARRA.
Our Value
Proposition to Our Clients
As a leading provider of management and technology consulting
services to the U.S. government, we believe that we are
well positioned to grow across markets characterized by
increasing and rapid change. We believe that our dedication to
client service, the quality of our people, our management
consulting heritage and our client-oriented matrix approach
provide the strong foundation necessary for our continued growth.
Our
People
Our success as a management and technology consulting firm is
highly dependent upon the quality, integrity and dedication of
our people.
Superior Talent Base. We have a highly
educated talent base of approximately 23,300 people: as of
March 31, 2010, 82% held bachelor degrees, 44% held masters
degrees and 4% held doctoral degrees. In addition, many of the
U.S. government contracts for which we compete require
contractors to have high-level security clearances, and our
large pool of cleared employees allows us to meet these needs.
As of March 31, 2010, 75% of our people held government
security clearances: 26% at Secret and 49% at Top Secret (54% of
the latter were Top Secret/Sensitive Compartmented Information).
High-level security clearances generally afford a person access
to data that affects national security, counterterrorism or
counterintelligence, or other highly sensitive data. Persons
with the highest security clearance, Top Secret, have access to
information that would cause “exceptionally grave
damage” to national security if disclosed to the public.
Persons with access to the most sensitive and carefully
controlled intelligence information hold a Top-Secret/Sensitive
Compartmented Information clearance. Persons with the
second-highest clearance classification, Secret, have access to
information that would cause “serious damage” to
national security if disclosed to the public. Through internal
referrals and external recruiting efforts, we are able to
successfully renew and grow our talent base, and we believe that
our ability to attract top level talent is significantly
enhanced by our commitment to professional development, our
position as a leader in our markets, the high quality of our
work and the appeal of our culture. Each year, we typically
receive more than 200,000 applications, conduct more than 15,000
interviews and hire approximately 5,000 new people,
approximately half of which are hired as a result of referrals
from our own people.
Focus on Talent Development. We develop our
talent base by providing our people with the opportunity to work
on important and complex problems, encouraging and acknowledging
contributions of our people at all levels of seniority, and
facilitating broad, inclusive and insightful leadership. We also
encourage our people to continue developing their substantive
skills through continuing education. In fiscal 2010, 75% of our
people participated in one or more internal training courses,
and 42% of our people took advantage of external training
opportunities. Our learning programs, which have consistently
been recognized as
best-in-class
in the industry, include partnerships with universities, vendors
and online content providers. These programs offer convenient,
cost-effective, quality educational opportunities that are
aligned with our core capabilities.
Assessment System that Promotes
Collaboration. We use our
360-degree
assessment process, an employee assessment tool based on
multiple sources, to help promote and enforce the consistency of
our collaborative culture, core values and ethics. Each of our
approximately 23,300 people receives an annual assessment
and also participates in the assessment of other company
personnel. Assessments combine this internal feedback from
supervisors, peers and subordinates with market input, and each
assessment is led by a Booz Allen person outside of the
employee’s area. Our assessment process is focused on
facilitating the continued development of skills and career
paths and ensuring the exchange of support and knowledge among
our people.
Core Values. We believe that one of the key
components of our success is our focus on core values. Our core
values are: client service, diversity, excellence,
entrepreneurship, teamwork, professionalism, fairness,
integrity, respect and trust. All new hires receive extensive
training that emphasizes our core values, facilitates
83
their integration into our collaborative, client-oriented
culture and helps to ensure the delivery of consistent and
exceptional client service.
The emphasis that we place on our people yields recognized
results. External awards and recognition include being named for
several consecutive years as one of Fortune Magazine’s
“100 Best Companies to Work For”, one of
Consulting Magazine’s “Best Firms to Work For”
and one of Business Week’s “Best Places to Launch a
Career.”
Our
Management Consulting Heritage
Our Approach to Client Service. Over the
70 years that we have been serving the
U.S. government, we have cultivated relationships of trust
with, and developed a comprehensive understanding of, our
clients. This insight regarding our clients, together with our
deep domain knowledge and capabilities, enable us to anticipate,
identify and address the specific needs of our clients. While
working on contract engagements, our people work to develop a
holistic understanding of the issues and challenges facing the
client to ensure that our advice helps them achieve enduring
results.
Partnership-Style Culture and Compensation
System. A commitment to teamwork is deeply
ingrained in our company, and our partnership-style culture is
critical to maintaining this component of our operating model.
We manage our company as a single profit center with a
partner-style compensation system that focuses on the success of
the institution over the success of the individual. This
distinctive system fosters internal collaboration that allows us
to compete externally by motivating our partners to act in the
best interest of the institution. As a result, we are able to
emphasize overall client service, and encourage the rapid and
efficient allocation of our people across markets, clients and
opportunities.
Our
Client-Oriented Matrix Approach
We are able to address the complex and evolving needs of our
clients and grow our business through the application of our
matrix of deep domain knowledge and market-leading capabilities.
Through this approach, we deploy our four key capabilities,
strategy and organization, analytics, technology, and
operations, across our client base. This approach enables us to
quickly assemble and deploy, and redeploy when necessary,
client-focused teams comprised of people with the skills and
expertise needed to address the challenges facing our clients.
We believe that our significant win rates on new and re-competed
contracts demonstrate the strength of our matrix approach as
well as our industry-leading reputation and our proven track
record.
Our
Strategy for Continued Growth
We serve our clients by identifying, analyzing and solving their
most complex problems and anticipating developments that will
have near- and long-term impacts on their operations. To serve
our clients and grow our business, we intend to execute the
following strategies:
Expand
Our Business Base
We are focused on growing our presence in our addressable
markets primarily by expanding our relationships with, and the
capabilities we deliver to, our existing clients. We will
continue to help our clients recognize more efficient and
effective mission execution by deploying our objective insight
and market expertise across current and future contract
engagements. We believe that significant growth opportunities
exist in our markets, and we intend to:
| • | Deepen Our Existing Client Relationships. The complex and evolving nature of the challenges our clients face requires the application of different core competencies and capabilities. Our approach to client service and collaborative culture enables us to effectively cross-sell and deploy multiple services to existing clients. We plan to leverage our comprehensive understanding of our clients’ needs and our track record of successful performance to grow our client relationships and expand the scope of the services we provide to our existing clients. | |
| • | Help Clients Rapidly Respond to Change. We will continue to help our clients formulate rapid and dynamic responses to the frequent and sometimes sudden changes that they face by leveraging: the scope and scale of our domain expertise, our broad capabilities and our one-firm culture, which allow us to effectively and efficiently allocate our resources and deploy our intellectual capital. |
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| • | Broaden Our Client Base. We intend to capitalize on our scale, the scope of our domain expertise and core capabilities, and our reputation as a trusted long-term partner to grow our client base. We believe that growing demand for the types of services we provide and our ongoing business initiatives will enable us to leverage our reputation as a trusted partner and industry leader to cultivate new client relationships across all agencies and departments of the U.S. government. We will also continue to build on our current cyber-security related work in the commercial market as permitted under the terms of our non-competition agreement with Spin Co. We will explore new opportunities as those opportunities become available in the commercial market upon termination of those contractual restrictions on July 31, 2011, particularly to the extent that we are able to leverage our core competencies, such as our domain expertise in energy, transportation, health and finance, and our functional capabilities, such as cyber and analytics. |
Capitalize
on Our Strengths in Emerging Areas
We will continue to leverage our deep domain expertise and broad
capabilities to help our clients address emerging issues.
Through the early identification of clients’ emerging needs
and the development of adaptive capabilities to help address
those needs, we have established strong competencies and
functional capabilities in numerous areas of potential growth,
including:
| • | Cyber. Network-enabled technology now forms the backbone of our economy, infrastructure and national security, and recent national policies and initiatives in this area, including CNCI, are creating new cyber-related opportunities. We have been focused on cyber and predecessor areas, such as information assurance, since 1999. We are currently involved in cyber-related initiatives for our defense, intelligence and civil clients and cyber-security initiatives for commercial clients. We are focused on further developing our cyber capabilities to position our company as a leader across the broad and growing range of areas requiring cyber-related services. | |
| • | Government Efficiency and Procurement. We are focused on helping the U.S. government achieve operating and budgetary efficiencies driven by the need to control spending while simultaneously pursuing numerous policy initiatives. In addition, recent U.S. government reforms in the procurement area may allow us to leverage our status as a large, objective service provider to win additional assignments to the extent that we are able to address organizational conflicts of interest and similar concerns more easily than our competitors. | |
| • | Ongoing Healthcare Transformation. We expect recent and ongoing developments in the healthcare market, such as the passage of the Affordable Care Act of 2010 and the Health Information Technology for Economic and Clinical Health Act of 2009, to increase demand for our healthcare consulting capabilities. We have been serving healthcare-oriented clients in the U.S. government since the late 1980’s. In 2002, we began a focused expansion of our healthcare consulting business, and the current scale of that business, together with our technology-related capabilities, provide us with a strong platform from which to address our clients’ increased focus on the interoperability of healthcare IT platforms, healthcare policy, and payment and caregiver reforms. | |
| • | Systems Engineering & Integration. Our clients are increasingly utilizing SE&I services to help them manage every phase of the development and integration of increasingly sophisticated information technology, communications and mission systems — ranging from satellite and space systems to air traffic control and naval systems. Many SE&I engagements require the application of requisite competencies across the entire range of agencies or departments involved in a particular program. Through the application of our matrix, we have developed deep cross-market knowledge and a combination of engineering, acquisition, management and leadership expertise. We plan to leverage this knowledge and expertise to bid on large-scale SE&I contracts. |
Continue
to Innovate
We will continue to invest significant resources in our efforts
to identify near-term developments and long-term trends that may
present significant challenges or opportunities for our clients.
Our single profit
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center and one-firm culture afford us the flexibility to devote
company-wide resources and key intellectual capital to
developing the functional capabilities and expertise needed to
address those issues. We have regularly allocated significant
resources to these business development efforts and have
successfully transitioned several such initiatives into
meaningful contributors to our business, including:
| • | our assurance and resilience services area, which generated approximately $450 million of revenue in fiscal 2010 and which began in 1999 with our efforts to anticipate the challenges posed to federal agencies by IT proliferation; and | |
| • | our healthcare consulting services area, which generated approximately $280 million of revenue in fiscal 2010 and began in the late 1980’s with IT work for the Department of Health and Human Services, and expanded rapidly in 2002 as the result of an internal analysis of potential long-term trends which could affect federal health agencies. |
We continue to invest in many initiatives at various stages of
development. Three such initiatives are:
Cloud Computing. Cloud computing is
Internet-based computing whereby shared resources, software and
information are provided to computers and other devices
on-demand without requiring new user infrastructure. The
U.S. government has adopted cloud computing as its
preferred information technology environment. Several pilot
programs related to the U.S. government’s transition
to cloud computing are already in progress across its agencies,
and cyber-initiatives designed to help ensure the integrity and
security of cloud computing environments will be essential to
the success of this transition.
Advanced Analytics. Through our advanced
analytics capability, we utilize advanced mathematical and other
analytical tools to examine the way in which specific issues
relate to data on past, present and projected future actions.
Advanced Analytics are critical to our clients’ efforts to
translate the enormous volumes of data flowing from our
nation’s investments in information, communications and
technology into insight, foresight and decision-making capacity.
Financial Sector. Specialized services are
needed to help modernize payment processes, implement new
technology to assist financial regulators, and reform and
redefine the role and organization of agencies such as the
Department of the Treasury, the SEC, the Federal Reserve and the
Commodity Futures Trading Commission. In addition, financial
services companies in the commercial market have extensive
electronic networks and electronic payment processing that
require the application of sophisticated cyber-security to deter
and defend against cyber-criminals and other actors intent on
compromising those systems.
Our
Clients and Capabilities
The diagram below illustrates the way we deploy our four
capability areas, including specified areas of expertise, to
serve our defense, intelligence and civil clients. Our dynamic
matrix of functional capabilities and domain expertise plays a
critical role in our efforts to deliver results to our clients.
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Deployment
of Capabilities to Serve Clients
Our
Clients
We have strong and longstanding relationships with a diverse
group of clients at all levels of the U.S. government.
Selected
Long-Term Client Relationships
|
Relationship |
||
|
Length |
||
|
Client(1)
|
(Years) | |
|
U.S. Navy
|
70 | |
|
U.S. Army
|
60 | |
|
National Security Agency
|
25+ | |
|
Department of Homeland Security
|
20+ | |
|
U.S. Air Force
|
20+ | |
|
National Reconnaissance Office
|
15+ | |
|
A U.S. intelligence agency
|
15+ | |
|
Department of Energy
|
15+ | |
|
Federal Bureau of Investigation
|
15+ | |
|
Internal Revenue Service
|
10+ |
| (1) | Includes predecessor organizations. |
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Defense
Clients
Our reputation and track record in serving the
U.S. military and defense agencies spans 70 years. Our
defense business revenue represented 55% of our business based
on revenue for fiscal 2010. Our revenue in this area for fiscal
2010 was approximately $2.8 billion. Our key defense
clients are set forth below.
| • | U.S. Army. For 60 years, we have addressed challenges for the U.S. Army at the strategic, operational and tactical levels by bringing experienced people, high quality processes and advanced technologies together. We work with our U.S. Army clients to help sustain their land combat capabilities while responding to current demands and preparing for future needs. Recent examples of the services that we have provided include enhancing field intelligence systems, delivering rapid response solutions to counter improvised explosive devices, infusing lifecycle sustainment capabilities to improve distribution and delivery of material, and employing systems and consulting methods to help expand care and support for soldiers and their families. Our clients include Army Headquarters, Army Material Command (AMC), Forces Command (FORSCOM), Training and Doctrine Command (TRADOC), and many Program Executive Offices, Direct Reporting Units and Army Service Component Commands. | |
| • | U.S. Navy/Marine Corps. We have supported the U.S. Navy for 70 years. We employ a multidimensional approach that analyzes and balances people, processes, technology, and infrastructure to meet their missions of equipping global forces for greater flexibility, mobility and efficiency, sustaining results while reducing costs and integrating new technology. Our clients include the Office of the Secretary of the Navy, Chief of Naval Operations, the Commandant of the Marine Corps to the Office of Naval Intelligence and U.S. Navy/Marine Corps operating commands and systems commands, as well as the Joint Program Executive Offices (PEO) and individual PEOs such as Naval Air Systems Command (NAVAIR), Naval Seas Systems Command (NAVSEA), U.S. Marine Corps Systems Command, and Space and Naval Warfare (SPAWAR). | |
| • | U.S. Air Force/NASA/Aerospace. We provide integrated strategy and technical services to the U.S. Air Force. Our skilled strategists and technology experts bring diverse capabilities to assignments that include weapons analysis, capability-based planning and aircraft systems engineering. We also support the space industry in applying new technologies, integrating space operations, and using strategies to address the technical issues, cost, schedule and risk of space systems. Our clients include Air Combat Command, Air Force Space Command, Air Force Materiel Command, Air Mobility Command, Air Force Cyber Command, Air Force Pacific Command, NASA, the Defense Information Systems Agency (DISA), the National Reconnaissance Office (NRO) and the National Geospatial-Intelligence Agency (NGA). | |
| • | Joint Staff and Combatant Commands. We provide mission-critical support to the Office of the Secretary of Defense, the Joint Staff, the Combatant Commands (COCOMs), and other U.S. government departments and agencies during the planning and mission execution phases to meet global mission requirements ranging from integrated intelligence, surveillance and reconnaissance (ISR) to space and global strike operations. Our clients include most major organizations within the Office of the Secretary of Defense and the Department of Defense’s agencies, as well as Joint Forces Command, Pacific Command, Northern Command, Central Command, Southern Command, European Command, Strategic Command, Special Operations Command, and Transportation Command. |
Intelligence
Clients
We have provided the primary group of government agencies and
organizations that carry out intelligence activities for the
U.S. government, or the U.S. Intelligence Community,
with
forward-thinking,
success-oriented consulting and mission support services in
analysis, systems engineering, program management, operations,
organization and change management, budget and resource
management, studies and wargaming. This critical business area
has strong barriers to entry for competitors because of the
specialized expertise and high-level security clearances
required. Our intelligence business represented 21% of our
business based on
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revenue for fiscal 2010. Revenue in this area for fiscal 2010
was approximately $1.0 billion. Our major intelligence
clients include:
| • | U.S. Intelligence Agencies. We provide critical support in strategic planning, policy development, program development and execution, information sharing, architecture, and program management for research and development projects as well as support to reform initiatives flowing from the Intelligence Reform and Terrorism Protection Act. We help clients improve the processes and substance of intelligence information provided to the executive and legislative branches of the U.S. government for policy development and operational decision making. | |
| • | Joint Staff and Unified Combatant Commands. We deliver comprehensive intelligence analysis, including providing all-source intelligence analysis and open-source intelligence analysis conducted in high intensity environments. We also provide data collection management and analytical systems intelligence training services, and provide intellectual capital and best practices for intelligence activities. | |
| • | Military Intelligence. We provide consulting services, integrated intelligence and information operations mission support, and a range of counterintelligence services to the U.S. Army, U.S. Air Force, U.S. Navy, Marine Corps, and Defense Intelligence Agency. |
Civil
Clients
Support to civil government agencies of the U.S. government
and
U.S.-funded
international development work has grown significantly as a
percentage of our overall business. The FPDS ranks us
16th on its overall list of top 100 federal contractors for
federal fiscal year 2009 based on overall prime contracting
dollars. For that same period and using data provided by
Bloomberg Finance L.P., we estimate that we ranked
24th based on overall prime contracting dollars in the
civil clients. Our civil business represented 24% of our
business based on revenue for fiscal 2010. Revenue in this area
for fiscal 2010 was approximately $1.2 billion. Our civil
government clients include:
| • | Financial Services. We provide support to all major U.S. government finance and treasury organizations charged with the collection, management and protection of the U.S. financial system, including the Department of the Treasury, Internal Revenue Service and other agencies of the Department of the Treasury, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Federal Reserve Board and Banks, the SEC, and Pension Benefit Guaranty Corporation. We create innovative approaches to some of their most challenging problems, including bank receivership, payment channel modernization, cyber initiatives and fraud detection. | |
| • | Health. We support government clients on innovative projects that help achieve public health missions, including entitlement reform, developing a national health information network, mitigating risk to populations, improving government infrastructure, and facilitating an international public-private sector dialogue on international health issues. Our clients include the Department of Health and Human Services and its agencies, including the U.S. Food and Drug Administration, National Institutes of Health, Centers for Disease Control and Prevention (CDC), the Centers for Medicare and Medicaid Services, the Department of Defense Military Health System and Department of Veterans Affairs. | |
| • | Energy, Transportation and Environment. We support clients in the transportation, energy and environment sectors which have control over our national infrastructure. We support our clients’ efforts to maintain and build infrastructure that is efficient, effective and sustainable. Our services include strategy, operations, technology and engineering. Our clients include the Departments of Energy, Transportation, and Interior and their component agencies, and the Environmental Protection Agency. We also support the Department of Defense in major environmental and infrastructure programs in the United States and Europe. | |
| • | Justice and Homeland Security. We support the U.S. government’s homeland security mission and operations in the areas of intelligence (analysis, information sharing, and risk assessment), operations (coordination, contingency planning, and decision support), strategy, technology and management |
89
| (program management and information technology tools), emergency management and response planning, and border, cargo and transportation security. We support law enforcement missions and operations in counterterrorism, intelligence and counterintelligence, and traditional criminal areas (narcotics, white collar crime, organized crime, and violent crime). |
| • | Business of Government. We help agencies effectively and efficiently manage the business processes that support government in its provision of services to its citizens, spanning management, personnel, budget operations, information technology and telecommunications. Our clients include the General Services Administration, Office of Management and Budget, Office of Personnel Management, the Congress, and Courts. We also support public sector grant-making agencies, from health and education, to labor and homeland and economic security, serving clients such as the Departments of Agriculture, Homeland Security, Commerce, Education, Labor, and Housing and Urban Development, as well as the National Science Foundation. In addition, we serve our U.S. government clients abroad in helping them resolve systemic global development needs. Our clients include the U.S. Agency for International Development, the Department of State, Millennium Challenge Corporation, and the World Bank. |
Our
Capabilities
Strategy
and Organization
Our strategy and organization capability focuses on helping
clients define and achieve their strategic objectives. We
provide transformational programs to improve organizational
effectiveness, manage change, and enable client organizations to
improve their performance. Our Transformation Life
Cycletm
framework and Change Management Advanced Practitioner program
provide a proven methodology and credentialed experts to help
clients succeed. Our areas of expertise include:
| • | Strategy and change management, helping clients formulate business strategies to meet their mission, and transforming key elements within organizations such as people, processes, technology and physical infrastructure; | |
| • | Organization and process improvement, redesigning an organization’s structure to fit its mission and strategy, aligning its business purpose, and improving operations and performance through business process reengineering, knowledge management, strategic sourcing, shared services and lean six sigma methodologies; and | |
| • | Human capital, learning and communications, helping clients build new capabilities and increasing workforce performance through competency identification and development of learning programs, designing programs to better manage the workforce for high performance, and building stakeholder understanding and buy-in. |
Analytics
Our analytics capability includes advanced analysis, modeling,
simulation of conflicts (also known as war-gaming) and other
simulations, and accountability tools to help our clients make
informed decisions about threats and opportunities, and the
practical realities of turning decisions into action, such as
resource availability. Our areas of expertise include:
| • | Business analytics, enabling our clients to optimize decisions regarding resources through financial and economic analysis, financial stewardship and accountability and disciplined contract strategy and program controls; | |
| • | Intelligence and operations analytics, providing a full spectrum of intelligence analysis, innovative all-source analysis, analytic training and counter-intelligence services to meet persistent challenges and guard against new threats; | |
| • | Mission and performance analytics, enhancing our clients’ ability to weigh alternative futures and make sound decisions that are supported by rigorous methods, including capabilities based assessments, modeling and simulation, policy analysis, threat, vulnerability and risk analysis and war-games; and |
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| • | Advanced analytics, developing capabilities to exploit very large amounts of information through the use of advanced mathematical techniques to gain insights, create foresight and make predictions to support fact-based decision making for our clients. |
Technology
Our technology capability focuses on helping clients solve their
mission-critical objectives through the deployment of advanced
technology. We have more than 7,600 highly skilled
technology experts and engineers who maintain deep knowledge of
the latest leading technologies. Our experts combine their
specialized skills with our problem-solving approach to ensure
that we understand a client’s mission and objectives and,
based on that understanding, design, develop and implement the
optimum technology solution. Our areas of expertise include:
| • | Cyber technologies, enabling clients to execute their missions in cyberspace with trusted and secure networks, systems, and information and delivering solutions for full life cycle support, information exchange, collaboration, transportation, and information storage; | |
| • | SE&I, developing, acquiring, testing and integrating complex systems, integrated acquisition management, program and technical integration, and program and organizational leadership design; | |
| • | Systems development, designing and deploying information technology solutions, including software development to automate business processes, improve client service, solve mission requirements, and share information effectively and securely; and | |
| • | Strategic technology and innovation, identifying and incubating advanced technologies, innovation processes, and innovation management critical to the achievement of our clients’ goals. |
Operations
Our operations capability is focused on the full spectrum of
mission execution and delivery from
front-end
acquisition and program management to infrastructure design and
end-to-end
supply chain management. Our operations capability helps our
clients formulate and implement a strategy to achieve tangible
results. Our areas of expertise include:
| • | Acquisition and program management, enabling clients to originate, plan, and execute programs of all types and complexity across the entire program or product lifecycle, including program and project management, acquisition and life cycle services and program integration; | |
| • | Infrastructure, developing sustainable strategies and executing plans to solve complex challenges across the many natural and man-made infrastructure environments to facilitate a safe, efficient, effective and sustainable project; | |
| • | Mission and industry expertise, supporting clients across planning and policy development, capability development and management, conceptual and operational requirements, and mission readiness and operational support; and | |
| • | Supply chain and logistics, formulating and executing supply chain strategies and mission-specific logistics solutions to optimize material, data and human capital flows designed to achieve our client’s targets for cost, readiness and operational performance. |
Client
Case Examples
Our projects require a comprehensive understanding of our
clients and their needs, and we have developed a
multi-dimensional and adaptable skill set that allows us to
provide services under each of our capability areas across our
client base. The case examples below illustrate how we have
deployed our skill-sets in the strategy and organization,
analytics, technology and operations capability areas to provide
services to our clients.
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| • | We developed a methodology that dramatically improves the design, cost and management of major weapons programs that we refer to as “Design for Affordability,” and worked closely with the U.S. Navy to achieve significant cost reductions. Launched in 2004, the first Virginia-class submarine cost more than $3.2 billion to build, which exceeded estimates provided to U.S. Navy officials for this class of over 30 boats. The Chief of Naval Operations subsequently set a target cost of $2 billion per submarine as a condition for increasing production from one to two boats per year starting in 2012. Electric Boat, the prime contractor, engaged us as a subcontractor to develop a comprehensive strategy for permanently reducing costs to $2 billion per boat. Our Design for Affordability methodology achieved positive results, which led to the U.S. Navy directly hiring us to extend our methodology across other parts of the submarine value chain in the areas of operations and sustainability. The Design for Affordability methodology utilizes our operations, strategy and organization and analytics capabilities, and we can apply this methodology to help the U.S. government achieve cost-savings in other large acquisition programs such as those for aircraft and combat vehicles. | |
| • | We are working with a major client in the U.S. Intelligence Community on cloud computing. We are employing cloud technologies to store, manage, and perform advanced analytics on massive volumes of data to identify patterns that reveal larger trends, yield new insights, and ultimately capture cyber actors’ behavior. In support of our client, we utilize our technology and analytics capabilities to analyze huge stores of historical data in the cloud and build statistical models to understand the behavior, intent, and potential future targets of adversaries attempting to conduct attacks or crimes in cyberspace. Improved cyber analysis using cloud technologies is highly useful for government agencies striving to better share information and integrate intelligence. | |
| • | We worked with the CDC to improve its process for ordering, distributing and managing the U.S.’s supply of publicly-funded childhood vaccines through the Vaccines for Children program, a $3 billion-dollar-a-year initiative that reaches half of all American children. The CDC mission was to respond more effectively to public health crises such as disease outbreaks, vaccine shortages, natural disasters and disruptions of the vaccine supply. We utilized our strategy and organization, operations and technology capabilities and leveraged our expertise in supply chain management, information management and change management to redesign the CDC’s procurement and storage process to allow them to ship inventory in hours instead of weeks. We helped the CDC integrate 64 grantees with formerly separate supply and distribution systems into a single, centrally managed supply chain that has shipped millions of doses of vaccines and realized $496 million in overall one-time savings with the potential for recurring annual savings. |
Contracts
Our portfolio of contracts is highly diversified with no single
contract accounting for more than 9% of our revenue in any of
fiscal 2008, pro forma 2009 or fiscal 2010, and no single task
order under any contract accounting for more than 1% of our
revenue in any of fiscal 2008, pro forma 2009 and fiscal 2010.
In fiscal 2010, we derived 30% of our revenue from our top 10
contracts and contract vehicles, and over 50% of our revenue was
derived from individually awarded task orders under a large
number of ID/IQ contract vehicles.
There are two predominant contracting methods by which the
U.S. government procures services: definite contracts and
indefinite contract vehicles. Each of these is described below:
| • | Definite contracts call for the performance of specified services or the delivery of specified products. The U.S. government procures services and solutions through single award, definite contracts that specify the scope of services that will be delivered and identify the contractor that will provide the specified services. When an agency recognizes a need for services or products, it develops an acquisition plan, which details the means by which it will procure those services or products. During the acquisition process, the agency may release a request for information to determine if qualified bidders exist, a draft request for a proposal to allow industry to comment on the scope of work and acquisition strategy, and finally a formal request for a proposal. Following the evaluation of submitted proposals, the agency will award the contract to the winning bidder. |
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| • | Indefinite contract vehicles provide for the issuance by the client of orders for services or products under the terms of the contract. Indefinite contracts are formally known as indefinite delivery, indefinite quantity or ID/IQ contracts, and are often referred to as contract vehicles or ordering contracts. ID/IQ contracts may be awarded to one contractor (single award) or several contractors (multiple award). Under a multiple award ID/IQ contract, there is no guarantee of work as contract holders must compete for individual work orders. ID/IQ contracts will often include pre-established labor categories and rates, and the ordering process is streamlined (usually taking less than a month from recognition of a need to an established order with a contractor). ID/IQ contracts often have multi-year terms and unfunded ceiling amounts, thereby enabling but not committing the U.S. government to purchase substantial amounts of products and services from one or more contractors in a streamlined procurement process. |
| ¡ | GWACs and GSA schedules are ID/IQ contracts that are open to all U.S. government agencies. Contract holders compete for individual task orders under both types of ID/IQ contract vehicles. Prices (labor rates) are pre-established under GSA schedules, while prices under GWACs may be pre-established or determined by task order proposal. Agencies may solicit companies directly under GSA schedules and, under GWACs, must work through the agency that operates the GWAC or receive a delegation of authority to use the GWAC. GSA schedules are administered by the General Services Administration and support a wide range of products and services. GWACs are used to procure IT products and services and are administered by the agency soliciting the services or products, with permission from the Office of Management and Budget. |
As of September 30, 2009, the end of the
U.S. government’s fiscal year, there were a total of
39 GSA schedules with over 17,000 schedule holders that
generated more than $37.4 billion in annual sales in U.S.
government fiscal year 2009. We were the number three provider
under the GSA federal supply schedule program based on revenue
with a total of $899.0 million in revenue during U.S.
government fiscal 2009. Based on revenue from our top three GSA
schedules, we were the number five contractor on the Information
Technology (IT) Schedule 70, the number two contractor on
the Mission Oriented Business Integrated Services (MOBIS)
Schedule, and the number two contractor on the Professional
Engineering Services (PES) Schedule in U.S. government
fiscal year 2009.
Listed below are our top three GSA schedules and GWACs based on
revenue for each of fiscal 2008, pro forma 2009 and fiscal 2010,
the number of active task orders as of March 31, 2010 under
each of our top three GSA schedules and GWACs and an aggregation
of all other GSA schedules and GWACs. These contract vehicles
are available to all U.S. government agencies and the
revenue stated is the result of individually competed task
orders.
|
Number of |
||||||||||||||||||||||||||||||||
|
% of |
Pro |
% of |
% of |
Task Orders |
||||||||||||||||||||||||||||
|
Fiscal |
Total |
Forma |
Total |
Fiscal |
Total |
as of |
Expiration |
|||||||||||||||||||||||||
|
Contract
|
2008 | Revenue | 2009 | Revenue | 2010 | Revenue | March 31, 2010 | Date | ||||||||||||||||||||||||
| (Revenue in millions) | ||||||||||||||||||||||||||||||||
|
Mission Oriented Business Integrated Services
(MOBIS) — #874
|
$ | 187.8 | 5 | % | $ | 245.6 | 6 | % | $ | 351.7 | 7 | % | 494 | 9/30/12 | ||||||||||||||||||
|
Information Technology (IT) — #70
|
$ | 330.2 | 9 | % | $ | 334.5 | 8 | % | $ | 257.7 | 5 | % | 326 | 7/30/10 | ||||||||||||||||||
|
Professional Engineering Services (PES) — #871
|
$ | 242.8 | 7 | % | $ | 243.8 | 6 | % | $ | 216.5 | 4 | % | 287 | 10/28/14 | ||||||||||||||||||
|
All Others
|
$ | 279.4 | 8 | % | $ | 339.1 | 7 | % | $ | 368.2 | 7 | % | ||||||||||||||||||||
|
Total
|
$ | 1,040.2 | 29 | % | $ | 1,163.0 | 27 | % | $ | 1,194.1 | 23 | % | ||||||||||||||||||||
Listed below are our top single award contract, our top five
single award contracts and our top ten single award contracts,
each based on revenue and the number of active task orders as of
March 31, 2010 under these contracts. Eight of our top ten
single award contracts and all of our top five single award
contracts are
93
ID/IQ contracts. The number of task orders for our top ten
contracts does not include task orders under classified
contracts due to the fact that information associated with those
contracts is classified.
|
Number of |
||||||||||||||||
|
% of |
Task Orders |
|||||||||||||||
|
Fiscal |
Total |
as of |
Expiration |
|||||||||||||
|
Contract
|
2010 | Revenue | March 31, 2010 | Date | ||||||||||||
| (Revenue in millions) | ||||||||||||||||
|
Top Contract
|
$ | 376.0 | 7 | % | 335 | 1/8/2013 | ||||||||||
|
Top Five Contracts
|
$ | 817.1 | 16 | % | 907 | |||||||||||
|
Top Ten Contracts
|
$ | 957.8 | 19 | % | 961 | |||||||||||
Backlog
We define backlog to include the following three components:
| • | Funded Backlog. Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts. | |
| • | Unfunded Backlog. Unfunded backlog represents the revenue value of orders for services under existing contracts for which funding has not been appropriated or otherwise authorized. | |
| • | Priced Options. Priced contract options represent 100% of the revenue value of all future contract option periods that may be exercised at our clients’ option and for which funding has not been appropriated or otherwise authorized. |
Backlog does not include any task orders under ID/IQ contracts,
including GWACs and GSA schedules, except to the extent that
task orders have been awarded to us under those contracts.
The following table summarizes the value of our contract backlog
at the respective dates presented:
| The Company | ||||||||
| As of March 31, | ||||||||
| 2009 | 2010 | |||||||
| (In millions) | ||||||||
|
Backlog:
|
||||||||
|
Funded
|
$ | 2,392 | $ | 2,528 | ||||
|
Unfunded
|
1,968 | 2,453 | ||||||
|
Priced options
|
2,919 | (1) | 4,032 | (1) | ||||
|
Total backlog
|
$ | 7,279 | $ | 9,013 | ||||
| (1) | Amounts shown reflect 100% of the undiscounted revenue value of all priced options. |
We may never realize all of the revenue that is included in our
total backlog, and there is a higher degree of risk in this
regard with respect to unfunded backlog and priced options.
Our backlog includes orders under contracts that in some cases
extend for several years. The U.S. Congress generally
appropriates funds for our clients on a yearly basis, even
though their contracts with us may call for performance that is
expected to take a number of years. As a result, contracts
typically are only partially funded at any point during their
term and all or some of the work to be performed under the
contracts may remain unfunded unless and until the
U.S. Congress makes subsequent appropriations and the
procuring agency allocates funding to the contract.
Total backlog grew 24% from March 31, 2009 to
March 31, 2010. We cannot predict with any certainty the
portion of our backlog that we expect to recognize as revenue in
any future period. While we report internally on our backlog on
a monthly basis and review backlog upon the occurrence of
certain events to determine if any adjustments are necessary, we
cannot guarantee that we will recognize any revenue from our
backlog. The primary risks that could affect our ability to
recognize such revenue are program schedule changes and contract
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modifications. In our recent experience, none of these or other
factors have had a material negative effect on our ability to
realize revenue from our funded backlog. Additional risks
include the unilateral right of the U.S. government to
cancel multi-year contracts and related orders or to terminate
existing contracts for convenience or default, and, in the case
of unfunded backlog, the potential that funding will not be
available and in the case of priced options, the risk that our
clients will not exercise these options. See “Risk
Factors — Risks Related to Our Business — We
may not realize the full value of our backlog, which may result
in lower than expected revenue.”
Competition
Due to its size, the government consulting market is highly
fragmented. As certain commercial sectors of the consulting
market have declined over the past few years, competition within
the government professional services industry has intensified.
In addition to professional service companies like our own that
focus principally on the provision of services to the
U.S. government, other companies active in our markets
include large defense contractors, diversified service providers
and small businesses. Changing government polices are also
helping to reshape the competitive landscape. Some large prime
contractors are beginning to divest their professional services
business units due to the U.S. government’s increased
sensitivity to organizational conflicts of interest and these
divested companies will be free to compete with us without their
former organizational conflicts of interest constraints. The
formal adoption of FAR organizational conflicts of interest
rules or additional more restrictive rules by
U.S. government agencies could cause further such
divestitures which could further increase competition in our
markets. At the other end of the spectrum are small businesses.
Small business are growing in the government services industry
due in large part to a push by both the Obama and Bush
administrations to bolster the economy by helping small business
owners.
In the course of doing business, we compete and collaborate with
companies of all types. We strive to maintain positive and
productive relationships with these organizations. Some of them
hire us as a subcontractor, and we hire some of these other
contractors to work with us as our subcontractors. Our major
competitors include: (i) contractors focused principally on
the provision of services to the U.S. government, such as
CACI International, Inc., L-3 Communications Holdings, Inc.,
ManTech International Corp., SRA International, Inc., and TASC
Inc.; (ii) large defense contractors which provide both
products and services to the U.S. government, such as The
Boeing Company, General Dynamics Corp., Lockheed Martin Corp.,
Northrop Grumman Corp., and Raytheon Co.; and
(iii) diversified service providers, such as Accenture,
Computer Sciences Corp., Deloitte Consulting LLP and SAIC, Inc.
We compete on the basis of our technical expertise and client
knowledge, our ability to successfully recruit appropriately
skilled and experienced talent, our ability to deliver
cost-effective multi-faceted services in a timely manner, our
reputation and relationship with our clients, past performance,
security clearances, and the size and scale of our company.
Patents
and Proprietary Information
Our management and technology consulting services and related
products are not generally dependent upon patent protection. We
claim a proprietary interest in certain of our service offerings
and related products, methodologies and know-how. We have
several patents but we do not consider our business to be
materially dependent on the protection of such patents.
Additionally, we have a number of trade secrets that contribute
to our success and competitive position, and we endeavor to
protect this proprietary information. While protecting trade
secrets and proprietary information is important, we are not
materially dependent on any specific trade secret or group of
trade secrets. Other than licenses to commercially available
third-party software, we have no licenses to intellectual
property that are significant to our business.
We rely upon a combination of nondisclosure agreements and other
contractual arrangements, as well as copyright, trademark,
patent and trade secret laws to protect our proprietary
information. We also enter into proprietary information and
intellectual property agreements with employees, which require
them to disclose any inventions created during employment, to
convey such rights to inventions to us, and to restrict any
disclosure of proprietary information.
95
Our most important trademark is the “Booz Allen
Hamilton” mark, registered in the United States and certain
foreign countries. Generally, registered trademarks have
perpetual life, provided that they are renewed on a timely basis
and continue to be used properly as trademarks. We have three
registered trademarks related to our name and logo with the
earliest renewal in February 2011. Under a branding agreement
entered in connection with the acquisition, Spin Co. was
granted a perpetual, exclusive, worldwide, royalty-free license
to use “Booz” as a name and mark other than with
“Allen” or “Hamilton” and certain other
words associated with our business in connection with certain
activities. We agreed not to use “Booz” unless it is
accompanied by “Allen” or “Hamilton” or both
and we are restricted in our use of certain other words
associated with Spin Co.’s business. Under certain
circumstances, including if certain Spin Co. competitors
obtain ownership of Booz Allen Hamilton, the licensed marks will
be assigned to Spin Co.
For our work under U.S. government funded contracts and
subcontracts, the U.S. government obtains certain rights to
data, software and related information developed under such
contracts or subcontracts. These rights generally allow the
U.S. government to disclose such data, software and related
information to third parties, which third parties may include
our competitors in some instances. In the case of our work as a
subcontractor, our prime contractor may also have certain rights
to data, information and products we develop under the
subcontract.
Facilities
We do not own any facilities or real estate. Our corporate
headquarters are located at 8283 Greensboro Drive, McLean,
Virginia 22102. We lease other operating offices and facilities
throughout North America, and a limited number of overseas
locations. Our principal offices outside of McLean, Virginia
include: Annapolis Junction, MD; Rockville, MD; San Diego,
CA; and Herndon, VA. Additionally, nationwide we have
approximately 30 Department of Defense approved locations that
support classified U.S. government operations. We also have
a number of Sensitive Compartmented Information Facilities,
which are enclosed areas within buildings that are used to
perform classified work for the U.S. Intelligence
Community. Many of our employees are located in facilities
provided by the U.S. government. The total square footage
of our leased offices and facilities is approximately
2.9 million square feet. We believe our facilities meet our
current needs, and that additional facilities will be required
and available as we expand in the future.
Regulation
As a contractor to the U.S. government, as well as state
and local governments, we are heavily regulated in most fields
in which we operate. We deal with numerous U.S. government
agencies and entities, and when working with these and other
entities, we must comply with and are affected by unique laws
and regulations relating to the formation, administration and
performance of U.S. government contracts. Some significant
laws and regulations that affect us include:
| • | FAR, and agency regulations supplemental thereto, which regulate the formation, administration and performance of U.S. government contracts; | |
| • | the Truth in Negotiations Act, which requires certification and disclosure of cost and pricing data in connection with the negotiation of a contract, modification or task order; | |
| • | the Procurement Integrity Act, which regulates access to competitor bid and proposal information and certain internal government procurement sensitive information, and our ability to provide compensation to certain former government procurement officials; | |
| • | post government employment laws and regulations, which restrict the ability of a contractor to recruit, hire, and deploy former employees of the U.S. government; | |
| • | laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the export of certain products, services and technical data; and |
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| • | the Cost Accounting Standards and FAR Cost Principles, which impose accounting requirements that govern our right to reimbursement under certain cost-based U.S. government contracts and require consistency of accounting practices over time. |
Given the magnitude of our revenue derived from contracts with
the Department of Defense, the DCAA is our cognizant government
audit agency. The DCAA audits the adequacy of our internal
control systems and policies including, among other areas,
compensation. As a result of its audits, the DCAA may determine
that a portion of our employee compensation is unallowable. See
“Risk Factors — Risk Related to Our
Industry — Our contracts, performance and
administrative processes and systems are subject to audits,
reviews, investigations and cost adjustments by the U.S.
government, which could reduce our revenue, disrupt our business
or otherwise materially adversely affect our results of
operations.”
The U.S. government may revise its procurement practices or
adopt new contract rules and regulations at any time. In order
to help ensure compliance with these laws and regulations, all
of our employees are required to attend ethics training at least
annually, as well as other compliance training relevant to their
position. Internationally, we are subject to special
U.S. government laws and regulations (such as the Foreign
Corrupt Practices Act), local government regulations and
procurement policies and practices, including regulations
relating to import-export control, investments, exchange
controls and repatriation of earnings, as well as varying
currency, political and economic risks.
U.S. government contracts are, by their terms, subject to
termination by the U.S. government either for its
convenience or default by the contractor. In addition,
U.S. government contracts are conditioned upon the
continuing availability of Congressional appropriations.
Congress usually appropriates funds for a given program on a
September 30 fiscal year basis, even though contract performance
may take many years. As is common in the industry, our company
is subject to business risks, including changes in governmental
appropriations, national defense policies, service modernization
plans, and availability of funds. Any of these factors could
materially adversely affect our company’s business with the
U.S. government in the future.
See “Risk Factors — Risks Related to Our
Business — We are required to comply with numerous
laws and regulations, some of which are highly complex, and our
failure to comply could result in fines or civil or criminal
penalties or suspension or debarment by the U.S. government
that could result in our inability to receive
U.S. government contracts, which could materially and
adversely affect our results of operations.”
Legal
Proceedings
Our performance under our U.S. government contracts and our
compliance with the terms of those contracts and applicable laws
and regulations are subject to continuous audit, review and
investigation by the U.S. government. Given the nature of our
business, these audits, reviews and investigations may focus,
among other areas, on labor time reporting, sensitive and/or
classified information access and control, executive
compensation and post government employment restrictions. We are
not always aware of our status in such matters, but we are
currently aware of certain pending audits and investigations
involving labor time charging. In addition, from time to time,
we are also involved in legal proceedings and investigations
arising in the ordinary course of business, including those
relating to employment matters, relationships with clients and
contractors, intellectual property disputes and other business
matters. These legal proceedings seek various remedies,
including monetary damages in varying amounts that currently
range up to $26.2 million or are unspecified as to amount.
Although the outcome of any such matter is inherently uncertain
and may be materially adverse, based on current information, our
management does not expect any of the currently ongoing audits,
reviews, investigations or litigation to have a material adverse
effect on our financial condition and results of operations.
Six former officers and stockholders of the Predecessor who had
departed the firm prior to the acquisition have filed a total of
nine suits, with original filing dates ranging from July 3,
2008 through December 15, 2009, three of which were amended
on July 2, 2010, against the Company and certain of the
Company’s current and former directors and officers. Each
of the suits arises out of the acquisition and alleges that the
former stockholders are entitled to certain payments that they
would have received if they had held their stock at the time of
the acquisition. The various suits assert claims for breach of
contract, tortious interference with
97
contract, breach of fiduciary duty, civil RICO violations,
violations of ERISA,
and/or
securities and common law fraud. Two of these suits have been
dismissed and another has been dismissed but the former
stockholder has sought leave to re-plead. Five of the remaining
suits are pending in the United States District Court for the
Southern District of New York and the sixth is pending in the
United States District Court for the Southern District of
California. The aggregate alleged damages sought in the six
remaining suits is approximately $724.5 million
($667.3 million of which is sought to be trebled pursuant
to RICO), plus punitive damages, costs, and fees. Although the
outcome of any of these cases is inherently uncertain and may be
materially adverse, based on current information, our management
does not expect them to have a material adverse effect on our
financial condition and results of operations.
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MANAGEMENT
Executive
Officers and Directors
The following table sets forth information about our executive
officers and directors as of July 28, 2010:
|
Name
|
Age
|
Position
|
||||
|
Ralph W. Shrader
|
65 | Chairman of the Board, President and Chief Executive Officer | ||||
|
Samuel R. Strickland
|
59 | Executive Vice President, Chief Financial Officer, Chief Administrative Officer and Director | ||||
|
CG Appleby
|
63 | Executive Vice President, General Counsel and Secretary | ||||
|
Horacio D. Rozanski
|
42 |
Executive Vice President, Chief Strategy and Talent Officer |
||||
|
Joseph E. Garner
|
62 | Executive Vice President | ||||
|
Francis J. Henry, Jr.
|
58 | Executive Vice President | ||||
|
Lloyd Howell, Jr.
|
44 | Executive Vice President | ||||
|
Joseph Logue
|
45 | Executive Vice President | ||||
|
Joseph W. Mahaffee
|
53 | Executive Vice President | ||||
|
John D. Mayer
|
64 | Executive Vice President | ||||
|
John M. McConnell
|
67 | Executive Vice President | ||||
|
Patrick F. Peck
|
52 | Executive Vice President | ||||
|
Daniel F. Akerson
|
61 | Director | ||||
|
Peter Clare
|
45 | Director | ||||
|
Ian Fujiyama
|
38 | Director | ||||
|
Philip A. Odeen
|
74 | Director | ||||
|
Charles O. Rossotti
|
69 | Director | ||||
Prior to October 2009, the title of our most senior position
other than Chief Executive Officer was Senior Vice President. In
October 2009, we renamed our Senior Vice Presidents as Executive
Vice Presidents.
Ralph W. Shrader is our Chairman, Chief Executive Officer
and President and has served in these positions since 1999,
except for President which dates to the acquisition in 2008.
Dr. Shrader has been an employee of our company since 1974.
He is the seventh chairman since our company’s founding in
1914 and has led our company through a significant period of
growth and strategic realignment. Dr. Shrader is active in
professional and charitable organizations, and is past Chairman
of the Armed Forces Communications and Electronics Association.
He is Chairman of The Neediest Kids, Inc. charity and serves on
the board of directors of Abilities, Inc., an organization
dedicated to improving career opportunities for individuals with
disabilities, and the board of directors of ServiceSource, the
largest community rehabilitative program in Virginia.
Specific qualifications, experience, skills and expertise
include:
| • | Operating and management experience; | |
| • | Understanding of government contracting; | |
| • | Core business skills, including financial and strategic planning; and | |
| • | Deep understanding of our company, its history and culture. |
Samuel R. Strickland is an Executive Vice President and
our Chief Financial and Administrative Officer. He has served as
our Chief Administrative Officer since 1999 and Chief Financial
Officer since 2008. He joined our company in 1995, and became an
Executive Vice President in 2004. Mr. Strickland is a
member of
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the Finance and Operations Group and the Chief Information
Officer (CIO) Leadership Council. Mr. Strickland serves on
the Board of Trustees at the George Mason University Foundation,
Inc.
Specific qualifications, experience, skills and expertise
include:
| • | Finance, financial reporting, compliance and controls expertise; | |
| • | Understanding of government contracting; and | |
| • | Core business skills, including financial and strategic planning. |
CG Appleby is our General Counsel and Chief Legal Officer
and Secretary and has served in these positions since 1998.
Mr. Appleby has been an employee of our company since 1974.
Mr. Appleby is a former president and board member, and
current member of the Washington Metropolitan Area Corporate
Counsel Association; former president, and current board and
executive Committee member, of the Northern Virginia Community
Foundation; former chairman and board member, and current member
of the Executive Committee, of the Professional Services
Council; board member of the Fairfax County, Virginia Chamber of
Commerce; Principal of the Council for Excellence in Government;
board member of TeamFairfax 2013; and current member of the
CharityWorks Advisory Board.
Horacio D. Rozanski is an Executive Vice President and
was recently named our Chief Strategy and Talent Officer. He is
co-chair of the Finance and Operations Group and a member of the
People Strategy Steering Committee. Mr. Rozanski served as
the Chief Personnel Officer of our company from 2002 through
2010. Mr. Rozanski joined our company in 1992 and became an
Executive Vice President in 2009.
Joseph E. Garner is an Executive Vice President of our
company and is the lead for our operations capability.
Mr. Garner joined our company in 1983 and became an
Executive Vice President in 2001. Mr. Garner is co-chair of
the People Strategy Steering Committee and a member of the
Finance and Operations Group.
Francis J. Henry, Jr. is an Executive Vice President
of our company and is the market lead for the civil business.
Mr. Henry joined our company in 1977 and became an
Executive Vice President in 2009. Mr. Henry is the chairman
of the Employees’ Capital Accumulation Plan trustees and
co-chair of the Finance and Operations Group.
Lloyd Howell, Jr. is an Executive Vice President of
our company and is the client service officer for our financial
services clients. Mr. Howell joined our company in 1988,
left in 1991, rejoined in 1995 and became an Executive Vice
President in 2005. He is chairman of the Ethics &
Compliance Committee. Mr. Howell serves on the board of
directors of the United Negro College Fund.
Joseph Logue is an Executive Vice President of our
company and is the market lead for the defense business.
Mr. Logue joined our company in 1997 and became an
Executive Vice President in 2009. Previously, he led our former
commercial Information Technology practice. He is a member of
the Finance and Operations Group.
Joseph W. Mahaffee is an Executive Vice President of our
company and is the location lead for our Northeast location.
Mr. Mahaffee joined our company in 1981 and became an
Executive Vice President in 2007. He is a member of the
Technology Capability Leadership Team and the CIO Leadership
Team. He is a member of the board of directors of the
Independent College Fund of Maryland where he serves as the
President of the Executive Steering Committee and Chairman of
the National Security Scholarship Program.
John D. Mayer is an Executive Vice President of our
company and is responsible for organizational transformation and
change management initiatives for public sector clients.
Mr. Mayer joined our company in 1997 and became an
Executive Vice President in 2009. He is chairman of the board of
directors of the Homeland Security and Defense Business Council,
a member of the board of the Washington Education and Tennis
Foundation, and a member of the Corporate Advisory Board for the
Darden School of Business at the University of Virginia.
100
John M. McConnell is an Executive Vice President of our
company and is the market lead for the intelligence business.
Mr. McConnell previously served from 2007 through 2009 as
U.S. Director of National Intelligence. From 1996 through
2007, Mr. McConnell served as an officer of our company and
became an Executive Vice President in 2009.
Patrick F. Peck is an Executive Vice President of our
company and is the lead for our technology capability.
Mr. Peck joined our company in 1984 and became an Executive
Vice President in 2008. Mr. Peck is the co-chair of the CIO
Leadership Council. He serves on the board of directors of
Junior Achievement’s National Capital Area.
Daniel F. Akerson has been a member of our Board since
2008. Mr. Akerson has served as Managing Director and Head
of Global Buyout, The Carlyle Group, a private equity firm,
since July 2009. Prior to this position, Mr. Akerson served
as Managing Director and Co-Head of U.S. Buyout Fund, March
2003 to July 2009. Mr. Akerson currently serves as a
director for American Express Company, since 1995, General
Motors Company, since July 2009, and Freescale Semiconductor,
Inc., since 2007. Mr. Akerson formerly served as a director
for Manor Care, Inc., from 2008 to 2009, MultiPlan, Inc., from
2006 to 2009, Time Warner, Inc., from 2001 to 2002 and XO
Holdings, Inc., from 1999 to 2003. Mr. Akerson has also
served as former chairman, chief executive officer or president
of several major companies, including General Instrument Corp.,
from 1993 to 1995, MCI Communications Corp., from 1983 to 1993,
Nextel Communications Inc., from 1996 to 2001, and XO
Communications, Inc. from 1999 to 2003. XO Communications, Inc.
filed a voluntary petition under Chapter 11 of the
U.S. Bankruptcy Code in June 2002, and emerged from
bankruptcy proceedings in January 2003.
Specific qualifications, experience, skills and expertise
include:
| • | Operating and management experience, including as chief executive officer, in technology-related businesses; | |
| • | Core business skills, including financial and strategic planning; | |
| • | Expertise in finance, financial reporting, compliance and controls and global businesses; and | |
| • | Public company directorship and committee experience. |
Peter Clare has been a member of our Board since 2008.
Mr. Clare is a Managing Director of The Carlyle Group, a
private equity firm, as well as deputy head of U.S. Buyout
and head of the Global Aerospace, Defense and Government
Services Group. Mr. Clare has been with The Carlyle Group
since 1992. He currently serves on the boards of directors of
ARINC, since 2007, Sequa Corporation, since 2007, and Wesco
Aircraft, since 2006.
Specific qualifications, experience, skills and expertise
include:
| • | Operating experience; | |
| • | Understanding of government contracting; | |
| • | Core business skills, including financial and strategic planning; | |
| • | Public company directorship and committee experience; and | |
| • | Expertise in finance, financial reporting, compliance and controls and global businesses. |
Ian Fujiyama has been a member of our Board since 2008.
Mr. Fujiyama is a Managing Director of The Carlyle Group, a
private equity firm, which he joined in 1997. Beginning in 1999,
Mr. Fujiyama spent two years in Hong Kong and Seoul working
in Carlyle’s Asia buyout fund, Carlyle Asia Partners. He
currently serves on the boards of directors of ARINC, since
2007, and United Components, Inc., since 2003.
Specific qualifications, experience, skills and expertise
include:
| • | Operating experience; | |
| • | Understanding of government contracting; |
101
| • | Core business skills, including financial and strategic planning; and | |
| • | Expertise in finance, financial reporting, compliance and controls and global businesses. |
Philip A. Odeen has been a member of our Board since
2008. Mr. Odeen has served as the Chairman of the Board of
Directors and Lead Independent Director of AES Corporation
since 2009, and he has served as a director of AES since 2003.
Mr. Odeen has served as the Chairman of the Board of
Convergys Corporation since 2008, and he has served as a
director of Convergys since 2000. From 2006 to 2007,
Mr. Odeen served as Chairman of the Board for Avaya. He
served as Chairman of the Board for Reynolds and Reynolds
Company from 2006 to 2007. Mr. Odeen retired as
Chairman/CEO of TRW Inc. in December 2002. Mr. Odeen has
provided leadership and guidance to our Board as a result of his
varied global business, governmental and non-profit and
charitable organizational experience of over 40 years.
Specific qualifications, experience, skills and expertise
include:
| • | Operating and risk management experience, relevant to the oversight of operational risk management; | |
| • | Core business skills, including financial and strategic planning; | |
| • | Understanding of government contracting; | |
| • | Expertise in strategic planning and executive compensation; and | |
| • | Public company directorship and committee experience. |
Charles O. Rossotti has been a member of our Board since
2008. Mr. Rossotti has served as a Senior Advisor to The
Carlyle Group since June 2003. Prior to this position
Mr. Rossotti served as the Commissioner of Internal Revenue
of the Internal Revenue Service from 1997 to 2002.
Mr. Rossotti co-founded American Management Systems, Inc.,
an international business and information technology consulting
firm in 1970, where he served at various times as President,
Chief Executive Officer and Chairman of the Board until 1997.
Mr. Rossotti currently serves as a director for Bank of
America Corporation, since 2009, and The AES Corporation,
since 2003. Mr. Rossotti formerly served as a director of
Merrill Lynch & Co., Inc., from 2004 to 2008.
Specific qualifications, experience, skills and expertise
include:
| • | Operating and risk management experience, relevant to the oversight of operational risk management; | |
| • | Core business skills, including financial and strategic planning; | |
| • | Understanding of government contracting; | |
| • | Expertise in finance, financial reporting, compliance and controls and global businesses; and | |
| • | Public company directorship and audit committee experience. |
Controlled
Company
For purposes of applicable stock exchange rules, we expect to be
a “controlled company.” Controlled companies under
those rules are companies of which more than 50% of the voting
power for the election of directors is held by an individual, a
group or another company. Carlyle, through Coinvest, will
continue to control more than 50% of the combined voting power
of our common stock upon completion of this offering and will
continue to have the right to designate a majority of the
members of our Board for nomination for election and the voting
power to elect such directors following this offering.
Accordingly, we are eligible to, and we intend to, take
advantage of certain exemptions from corporate governance
requirements provided in applicable stock exchange rules.
Specifically, as a controlled company, we are not required to
have (i) a majority of independent directors, (ii) a
Nominating Committee composed entirely of independent directors
or (iii) a Compensation Committee composed entirely of
independent directors.
102
Board
Composition
Our Board is currently composed of seven directors, including
Dr. Shrader, our President and Chief Executive Officer, and
Chairman of our Board, and Mr. Strickland, our Chief Financial
Officer and Chief Administrative Officer. Our amended and
restated bylaws will provide that our Board will consist of no
more and no less than a certain number of directors. The exact
number of members on our Board will be determined from time to
time by resolution of a majority of our full Board. Our amended
and restated bylaws will also provide that our Board will be
divided into three classes whose members will serve three-year
terms expiring in successive years. Each of our directors will
serve for a term of one year. Directors hold office until the
annual meeting of stockholders and until their successors have
been duly elected and qualified. Prior to completion of this
offering, our Board will be divided into three classes serving
staggered three-year terms. At that time we will designate
classes.
Under the stockholders agreement, Carlyle is entitled to
nominate or designate a majority of the members of our Board.
The stockholders agreement provides that when Carlyle holds less
than 40% of the voting shares of common stock issued and
outstanding, the terms of the stockholders agreement and the
ability of Carlyle to designate a majority of the members of our
Board will be renegotiated. We will be entering into the amended
and restated stockholders agreement in connection with this
offering. Upon completion of this offering, Carlyle will
continue to have the right to designate a majority of the
members of our Board for nomination for election and voting
power to elect such directors.
Board
Committees
Our Board has three standing committees: an Executive Committee,
an Audit Committee and a Compensation Committee. Under the stock
exchange rules, we will be required to have one independent
director on our Audit Committee during the
90-day
period beginning on the date of effectiveness of the
registration statement filed with the SEC in connection with
this offering. After such
90-day
period and until one year from the date of effectiveness of the
registration statement, we are required to have a majority of
independent directors on our Audit Committee. Thereafter, our
Audit Committee is required to be comprised entirely of
independent directors. As a controlled company, we are not
required to have independent Nominating and Compensation
Committees. The following is a brief description of our
committees.
Executive
Committee
Our Executive Committee is responsible, among its other duties
and responsibilities, for assisting our Board in fulfilling its
responsibilities. Our Executive Committee is responsible for
approving certain corporate actions and transactions, including
acquisitions of assets other than in the ordinary course and
outside hires or terminations above the senior associate level.
In addition, our Executive Committee currently selects or
recommends candidates to the Board for election to our Board,
develops and recommends to the Board corporate governance
guidelines that are applicable to us and oversees Board and
management evaluations. We intend to establish a Nominating
Committee that will assume the functions related to nominating
Board members and overseeing corporate governance. The members
of our Executive Committee are Dr. Shrader and
Messrs. Clare and Fujiyama. The charter of our Executive
Committee will be available without charge on the investor
relations portion of our website upon completion of this
offering.
Audit
Committee
Our Audit Committee is responsible, among its other duties and
responsibilities, for overseeing our accounting and financial
reporting processes, the audits of our financial statements, the
qualifications and independence of our independent registered
public accounting firm, the effectiveness of our internal
control over financial reporting and the performance of our
internal audit function and independent registered public
accounting firm. Our Audit Committee reviews and assesses the
qualitative aspects of our financial reporting, our processes to
manage business and financial risks, and our compliance with
significant applicable legal, ethical and regulatory
requirements. Our Audit Committee is directly responsible for
the appointment, compensation, retention and oversight of our
independent registered public accounting firm. The charter of
our
103
Audit Committee will be available without charge on the investor
relations portion of our website upon completion of this
offering.
Messrs. Rossotti (Chairman), Strickland, Clare and Fujiyama
are members of our Audit Committee.
Rule 10A-3
of the Exchange Act requires us to have a majority of
independent audit committee members within 90 days and all
independent audit committee members (within the meaning of
Rule 10A-3)
within one year of the initial listing of our securities on the
stock exchange. We intend to comply with these independence
requirements within the appropriate time periods. As required by
our Audit Committee charter, Mr. Strickland will step down
as a member of our Audit Committee prior to the completion of
this offering.
Compensation
Committee
Our Compensation Committee is responsible, among its other
duties and responsibilities, for reviewing and approving all
forms of compensation to be provided to, and employment
agreements with, the executive officers and directors of our
company and its subsidiaries (excluding the Chief Executive
Officer), reviewing and recommending to the non-management
directors of the Board compensation arrangements for and
employment agreements with the Chief Executive Officer,
establishing the general compensation policies of our company
and its subsidiaries and reviewing, approving and overseeing the
administration of the employee benefits plans of our company and
its subsidiaries. Our Compensation Committee also periodically
reviews management development and succession plans. The members
of our Compensation Committee are Dr. Shrader and
Messrs. Odeen (Chairman), Clare and Fujiyama. The charter
of our Compensation Committee will be available without charge
on the investor relations portion of our website upon completion
of this offering. As required by our Compensation Committee
charter, Dr. Shrader will step down as a member of our
Compensation Committee prior to the completion of the offering.
Code of
Ethics
Prior to the completion of this offering, we will adopt a new
written Code of Ethics and Conduct, or the Code of Ethics,
applicable to our directors, chief executive officer, chief
financial officer, controller and all other officers and
employees of Booz Allen Holding and its subsidiaries worldwide.
Copies of the Code of Ethics will be available without charge on
the investor relations portion of our website upon completion of
this offering or upon request in writing to Booz Allen Hamilton
Holding Corporation, 8283 Greensboro Drive, McLean, Virginia
22102, Attention: Corporate Secretary.
Director
Compensation
Directors who are employed by us or by Carlyle do not receive
any additional compensation for their services as a director.
Our other directors, Philip A. Odeen and Charles O. Rossotti,
are paid $100,000 per annum for their services on our Board. The
directors may elect to receive payment in cash or restricted
shares of our Class A common stock. Messrs. Odeen and
Rossotti also received a grant of options under our Equity
Incentive Plan in fiscal 2010 as compensation for joining our
Board. Messrs. Odeen and Rossotti were also afforded the
opportunity to purchase shares of our Class A common stock
at fair market value. Mr. Rossotti purchased 3,905 shares
of our Class A common stock in May 2010.
The amount paid for their service on our Board in fiscal 2010 is
reflected in the table below.
Director
Compensation Table
|
Fees Earned or |
Option |
Stock |
||||||||||||||||||
|
Paid in Cash |
Awards |
Awards |
Other(2) |
Total |
||||||||||||||||
|
Name and Principal Position
|
($) | ($)(1) | ($) | ($) | ($) | |||||||||||||||
|
Philip A. Odeen
|
100,000(3 | ) | 55,610 | 57(3 | ) | 14,450 | 170,117 | |||||||||||||
|
Charles O. Rossotti
|
100,000(4 | ) | 55,610 | 115(4 | ) | 28,900 | 184,625 | |||||||||||||
| (1) | This column represents the grant date fair value of the options granted to our directors in fiscal 2010. The fair value of the awards was determined based on the probable outcome of the performance conditions |
104
| using the valuation methodology and assumptions set forth in Note 17 to our financial statements for the fiscal year ended March 31, 2010, which are incorporated by reference herein, modified to exclude any forfeiture assumptions related to service-based vesting conditions. The amounts in this column do not reflect the value, if any, that ultimately may be realized by the director. |
The following table sets forth, by grant date, the aggregate
number of stock awards outstanding at the end of fiscal 2010.
Option
Awards for Service as a Director
| Option Awards | ||||||||||||||||||||
|
Equity Incentive |
||||||||||||||||||||
|
Plan Awards: |
||||||||||||||||||||
|
Number of |
Number of |
Number of |
||||||||||||||||||
|
Securities |
Securities |
Securities |
||||||||||||||||||
|
Underlying |
Underlying |
Underlying |
||||||||||||||||||
|
Unexercised |
Unexercised |
Unexercised |
Option |
Option |
||||||||||||||||
|
Options |
Options |
Unearned |
Exercise |
Expiration |
||||||||||||||||
|
Name
|
Exercisable | Unexercisable | Options | Price ($) | Date | |||||||||||||||
|
Philip A. Odeen
|
199 | 264 | (a) | 348 | (b) | 60.77 | 05/07/2019 | |||||||||||||
| 189 | (c) | 60.77 | 05/07/2019 | |||||||||||||||||
|
Charles O. Rossotti
|
199 | 264 | (a) | 348 | (b) | 60.77 | 05/07/2019 | |||||||||||||
| 189 | (c) | 60.77 | 05/07/2019 | |||||||||||||||||
| (a) | The options vest and become exercisable, subject to the continued service of the director, ratably on June 30, 2009, 2010, 2011, 2012 and 2013. All service-vesting options fully vest and become exercisable immediately prior to the effective date of certain change in control events. | |
| (b) | The options vest and become exercisable, subject to the continued service of the director, ratably on June 30, 2009, 2010, 2011, 2012 and 2013 based on achievement of EBITDA performance goals, with the ability to “catch up” on missed goals if (x) the missed performance goal was at least 90% of target level and (y) cumulative EBITDA performance reaches the target cumulative levels during the five-year vesting period. In addition, any unvested performance options at the time of a change in control event vest immediately prior to the effective date of the event if Carlyle achieves a specified internal rate of return as a result of the event or the investment proceeds to Carlyle are at least a specified multiple of their invested capital. | |
| (c) | The options vest and become exercisable, subject to the continued service of the director, ratably on June 30, 2009, 2010, 2011, 2012 and 2013 based on achievement of cumulative cash flow performance goals, with the ability to “catch up” on missed goals if cumulative achievement reaches the target cumulative levels during the five-year vesting period. In addition, any unvested performance options at the time of a change in control event vest immediately prior to the effective date of event if Carlyle achieves a specified internal rate of return as a result of the event or the investment proceeds to Carlyle are at least a specified multiple of their invested capital. |
| (2) | On July 27, 2009, our Board approved a special dividend of $10.87 per share paid on July 29, 2009 to holders of our Class A common stock, Class B non-voting common stock and Class C restricted common stock as of July 29, 2009. In addition, on December 7, 2009, our Board approved a special dividend of $46.42 per share paid on December 11, 2009 to holders of record of Class A common stock, Class B non-voting common stock and Class C restricted common stock as of December 8, 2009. The amount set forth in the table reflects the dividends received by Messrs. Odeen and Rossotti with respect to their unvested Class A restricted common stock. Messrs. Odeen and Rossotti also received dividends of $9,841 and $19,682, respectively, on the restricted stock granted for fiscal 2010 that vested prior to the December 8, 2009 dividend record date, which amounts are not compensation and therefore are not reflected in the Director Compensation Table. | |
| (3) | Mr. Odeen elected to receive half of his compensation in the form of restricted stock, and was granted 424 shares of restricted Class A common stock in lieu of $50,000 of the cash payment. The shares of restricted stock awarded for services performed in fiscal 2010 vested in equal installments on September 30, 2009 and March 31, 2010. The grant date fair market value of the shares was $50,057, based on the $118.06 value of our stock on the May 7, 2009 grant date. Mr. Odeen also received a grant of 212 shares of stock in fiscal 2010 |
105
| in lieu of half of his cash compensation for services as a director in fiscal 2009. These shares were vested immediately on grant and are not reflected in the Director Compensation Table as they were paid with respect to his services performed during fiscal 2009. | ||
| (4) | Mr. Rossotti elected to receive his entire compensation in the form of restricted stock, and was granted 848 shares of restricted Class A common stock in lieu of the cash payment. The shares of restricted stock awarded for services performed in fiscal 2010 vested in equal installments on September 30, 2009 and March 31, 2010. The grant date fair market value of the shares was $100,115, based on the $118.06 value of our stock on the May 7, 2009 grant date. Mr. Rossotti also received a grant of 423 shares of stock in fiscal 2010 in lieu of his cash compensation for services as a director in fiscal 2009. These shares were vested immediately on grant and are not reflected in the Director Compensation Table as they were paid with respect to his services performed during fiscal 2009. |
106
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
The following discussion and analysis of compensation
arrangements of our named executive officers for fiscal 2010 (as
set forth in the Summary Compensation Table below) should be
read together with the compensation tables and related
disclosures set forth below. This discussion contains
forward-looking statements that are based on our current plans,
considerations, expectations and determinations regarding future
compensation programs. Actual compensation programs that we
adopt may differ materially from the currently planned programs
summarized in this discussion.
Named
Executive Officers
Our named executive officers for fiscal 2010 are: Ralph W.
Shrader, our President and Chief Executive Officer, Samuel R.
Strickland, our Chief Financial Officer, and three of our
Executive Vice Presidents, CG Appleby, Joseph E. Garner,
and John M. McConnell.
Executive
Compensation Philosophy and Objectives
Although we are a corporation, we operate with a
partnership-style culture and compensation system that fosters
internal collaboration. Our compensation structure for our
officers is centered around a transparent compensation system
and a single profit center and firm-wide bonus pool. This
distinctive system fosters internal collaboration which allows
us to compete externally by motivating our officers to act in
the best interest of the firm through an emphasis on client
service and by encouraging the rapid and efficient allocation of
our people across markets, clients and opportunities.
Utilizing this philosophy, our executive compensation program
has been designed to:
| • | attract, motivate and retain executives of outstanding ability to meet and exceed the demands of our clients; | |
| • | focus management on optimizing stockholder value and fostering an ownership culture; | |
| • | create appropriate rewards for outstanding performance and penalties for under-performance; and | |
| • | provide competitive rewards and foster collaboration by: |
| • | rewarding executives for their contribution to our overall performance and financial success and, at the same time, recognizing the spirit and culture of collaboration that has defined us throughout our history; and | |
| • | determining and allocating incentives based on our performance as a whole while measuring individual performance over the long term to facilitate long-term investment and resource allocation. |
Setting
Executive Compensation
Our Compensation Committee is responsible for evaluating the
compensation levels for our executive officers, including our
named executive officers. The committee takes into
consideration, based upon their collective experience and
reasoned business judgment, labor market data and
recommendations from management. Management’s
recommendations are based on an extensive, 360-degree assessment
process executed by the officers and overseen by the executive
officers. Our executive compensation program is based on a core
belief that transparency and peer-pressure increase overall
performance, and that executive impact must be measured over
both a short- and long-term horizon in order to maximize
stockholder value creation. Accordingly, all executives within
one of our six officer compensation bands (more fully described
below) receive the same compensation, which is based on overall
firm performance, and sustained individual performance is
rewarded through accelerated progression through the levels. Our
Chief Executive Officer is in a separate level from other
officers that receives 10% more than the executives in the next
highest level, recognizing his unique role.
107
Our Compensation Committee has the goal of structuring a
compensation program that allows us to attract and retain top
tier talent and provide significant incentives for exceeding our
performance targets and significant penalties for
underperformance. Our Compensation Committee has recognized that
our current compensation program has focused on cash
compensation based on annual financial performance.
It is anticipated that we will modify our compensation programs
in the future to provide for a greater proportion of
equity-based incentives that vest over a longer term as
contrasted with current compensation and incentives.
We use relevant quantitative and qualitative measures to set
compensation for the fiscal year based on overall performance
objectives and broad market parameters. Currently, our
management obtains market analysis and executive compensation
survey data from nationally recognized survey providers,
including Towers Perrin Executive Survey, Mercer Executive
Survey, CHiPS Executive and Senior Management Total Compensation
Survey, and Watson Wyatt Top Management Survey. We segment these
surveys based on company revenue and government contracting and
professional services industries. We do not use survey data to
set compensation; instead, we use it as a check to confirm that
our compensation is within a competitive range. In addition, our
management consults with William M. Mercer, Inc., which provides
executive compensation design, best practice data and assists us
in determining market competitive positioning.
Historically, our Chief Executive Officer has participated in
Compensation Committee meetings as a member of the committee and
made recommendations to our Compensation Committee with respect
to the setting of performance targets for our executive
officers. Upon completion of this offering, our Chief Executive
Officer will not be a member of our Compensation Committee.
Nevertheless, we expect that he will continue to provide input
to our Compensation Committee regarding our executive
compensation programs, as, and to the extent, requested by our
Compensation Committee.
Elements
of Compensation
Our executive compensation consists of the following components,
which are designed to provide a mix of fixed and at-risk
compensation that is heavily tied to the achievement of our
short and long term financial goals and designed to promote a
long-term career with our company:
| • | cash compensation, a portion of which is paid as base salary, designed to reflect the requirements of the marketplace in order to attract and keep our executive talent, and a portion of which is short-term cash incentive compensation (consisting of annual cash bonuses), designed to reward our executive officers for annual improvements in key areas of our operational and financial performance; | |
| • | long-term equity incentive plans, designed to reward our executive officers for growing our company over the long term and aligning our executive officers’ interests with our stockholders; | |
| • | retirement benefits, designed to build financial security for our executive officers and promote a long-term career with our company, including a defined contribution 401(k) plan, company contributions to the defined contribution 401(k) plan and annual cash payments to supplement the contribution in cases where the IRS retirement contribution limits are reached, a lump-sum retirement payment and employer-paid retiree healthcare; and | |
| • | executive benefits, including enhanced health and welfare benefits, financial counseling and club memberships. |
A detailed description of these components is provided below.
A substantial amount of each executive officer’s total
annual cash compensation opportunity is at-risk and tied to our
annual financial performance.
Cash Compensation. As discussed above, our
compensation program is structured to drive company-wide
performance by encouraging internal collaboration and client
service through the fluid application of resources to where they
can add the most value. Key to this program is a cohort
structure under which all officers are assigned to one of six
bands plus a separate and distinct band for our Chief Executive
Officer.
108
Each band is assigned a standard number of points per executive
with all executives within the band assigned the same number of
points. The number of points assigned to each executive in each
band remains constant from year to year, however the planned
monetary value of each point is evaluated annually based on a
number of factors discussed below. The dollar value of each
point is the same across all cohort bands. Officers progress
upward through the bands based on their competencies and
performance over time.
Prior to the start of our fiscal year, the Chief Strategy and
Talent Officer, together with the Chief Financial Officer,
establish an appropriate level of cash compensation through
review of a number of factors including prior compensation
levels, market survey data, and projected profitability for the
coming year. The result is the recommendation of a per point
value that is multiplied by the number of points assigned to
each executive to determine a planned annual cash compensation.
We set cash compensation opportunities at a level that allows us
to attract and retain key talent. A portion of the cash
compensation is designated as base salary and is paid monthly.
The remaining portion of the cash compensation is designated as
an incentive bonus which is paid annually based on achievement
of company performance targets with upward or downward
adjustments for exceeding or falling below the targets. Our
Compensation Committee reviews the recommendation from
management as well as the market information provided and
approves a monetary value for each point and therefore the base
salary and total cash compensation for each executive assuming
firm targets are achieved. Although, the monetary point value is
reviewed annually, changes do not ordinarily occur every year.
As discussed above, our Chief Executive Officer,
Dr. Shrader, is in a distinct band and receives 10% higher
cash compensation than the executive officers in the next
highest band due to his unique responsibilities.
Messrs. Appleby, Garner and McConnell were in our highest
band (excluding the band for our Chief Executive Officer)
because of their level of experience and performance over time
and ability to impact financial performance (in the case of
Messrs. Garner and McConnell) and our business operations (in
the case of Mr. Appleby) and accordingly received the same cash
compensation for fiscal 2010. Mr. Strickland was in the
second highest band (excluding the band for our Chief Executive
Officer) because of his level of experience, performance over
time and impact on our financial operations and, accordingly,
received the same cash compensation for fiscal 2010 as the other
officers in his band.
For fiscal 2010, each of our named executive officers earned the
base salary set forth in the “Salary” column of the
Summary Compensation Table. Base salary levels within each band
will remain the same for fiscal 2011. However
Mr. Strickland’s salary for fiscal 2011 will increase
as a result of his promotion, effective April 1, 2010, to
align his salary with that of his new cohort band.
The annual incentive portion of our executive officers’
cash compensation is provided through our annual performance
bonus program. The bonus portion of the total cash compensation
as discussed above creates an aggregate bonus pool for the year.
The bonus pool is established by multiplying the bonus portion
of the point value times the aggregate number of points (reduced
for fringe and other charges). Annual incentive bonuses are paid
as a result of meeting the target “Bonus EBITDA,”
which is defined as our consolidated earnings before interest,
taxes, depreciation, amortization, stock-option based and other
equity-based compensation expenses, management, transaction and
similar fees paid to the principal stockholders or their
affiliates, as reflected on our audited consolidated financial
statements for such fiscal year, and adjusting for certain
extraordinary and non-recurring items as determined by the bonus
plan administrator. We base annual bonuses on Bonus EBITDA
because it is a direct reflection of the cash flow and operating
profitability of our business and it represents the element of
our performance that executives can most directly impact.
Upon availability of our year end operating results, our
Compensation Committee reviews the Bonus EBITDA, and in its sole
discretion approves any adjustments to the plan bonus pool.
Adjustments are based on performance against target Bonus
EBITDA. During fiscal 2009 and fiscal 2010, to incentivize our
executives to exceed target Bonus EBITDA levels and thereby
increase long-term company value, our compensation committee
determined that the bonus pool should be increased or decreased
by up to 50% of the amount over or under target or such lesser
percentage as our Compensation Committee may determine. At its
sole discretion, our Compensation Committee may increase or
decrease the amount of the bonus pool to take into consideration
the impact of any extraordinary and non-recurring items or other
factors. In applying this
109
discretion, the committee generally increases the bonus pool by
less than 50% to the extent the increase is due to short-term
improvements that are not expected to result in long term value
to our company. The additional and discretionary adjustments
allow the compensation committee to limit increases in the bonus
pool to factors over which the executives have control and that
result in long-term value for our company. Following any
adjustment for extraordinary and nonrecurring items and other
factors, the bonus pool is further reduced to account for the
additional fringe benefit costs incurred as a result of the
additional bonus payment to our officers. The final bonus pool
as approved by our Compensation Committee is distributed to our
officers on a consistent per point basis.
For fiscal 2010 the target Bonus EBITDA was $337.0 million
and actual results were $399.8 million. The calculation of Bonus
EBITDA for fiscal 2010 is as follows:
|
EBITDA
|
$ | 295,317 | ||
|
Compensation Adjustments
|
97,266 | |||
|
Other Adjustments
|
7,262 | |||
|
Bonus EBITDA
|
$ | 399,845 | ||
|
Bonus EBITDA Target
|
$ | 337,000 |
As shown above, for fiscal 2010, actual Bonus EBITDA exceeded
target Bonus EBITDA by $62.8 million. Accordingly, our
Compensation Committee approved the payment of an initial bonus
at the target level and an increase to the bonus pool of
approximately $25.4 million representing 50% of the excess
of actual Bonus EBITDA over target Bonus EBITDA reduced as
provided in the preceding paragraph. As with base salary, each
executive officer within the same band received the same bonus
amount. Accordingly, consistent with the other officers in their
compensation band, Messrs Appleby, Garner and McConnell received
the same bonus amount for fiscal 2010, Dr. Shrader received
10% above that amount and Mr. Strickland received a lower
bonus amount.
For fiscal 2010, each of our named executive officers received
payments under the annual performance program as reflected in
the “Non-Equity Incentive Plan Compensation” column of
the Summary Compensation Table.
Our current annual performance program is based on meeting
corporate annual performance goals. As more completely described
below under “Changes to Our Compensation Program in
Connection with this Offering,” we expect to structure our
future annual performance bonus to be delivered via a mix of
cash and equity. The equity portion will vest over time to more
closely align our compensation program with market practices and
enable future generations of officers to continue to own
personally-significant amounts of our company stock.
Long-term Equity Incentive Plans. We believe
that our executive officers should hold significant amounts of
equity to align their interests to those of our stockholders,
and, accordingly, long-term equity compensation is an important
component of our compensation program. Prior to Carlyle’s
investment in our company in 2008, our Predecessor granted stock
options to our executive officers that vested and were
exercisable on fixed dates over a period of years. In connection
with Carlyle’s investment, these stock options were
converted into stock options and restricted stock with fixed
vesting and exercise dates under our Officers’ Rollover
Stock Plan. Following that transaction and prior to the
completion of this offering, our long-term incentive program has
consisted of awards of stock options to our executives under the
Equity Incentive Plan. We believe stock options further our
objective of aligning the interests of our executive officers
with those of our stockholders by providing our executive
officers with a continuing stake in our long-term success and by
rewarding only the future growth in our equity value. We have
not historically granted stock options to our executive officers
on an annual basis. Instead, an option grant is made only upon
hire of an executive officer
and/or upon
promotion, so that each executive officer within the same band
would receive the same number of options and total compensation.
All of our named executive officers other than
Mr. McConnell received a grant of stock options in 2008
following Carlyle’s investment in our company.
Mr. McConnell received an award of options in fiscal 2010
upon his rehire, which is set forth in the “All Other
Option Awards: Number of Securities Underlying Options”
column in the Grants of Plan-Based Awards
110
Table. At the beginning of fiscal 2011, Mr. Strickland
received a grant of 4,500 performance-vesting stock options to
reflect his promotion to the next senior level. Although our
Compensation Committee approves the grant of stock options under
the Equity Incentive Plan, the grants are made based on the band
of the executive at the time of promotion
and/or hire
and generally do not take into account awards under the
Officers’ Rollover Stock Plan, which were based on
compensation initially awarded by our Predecessor. However,
award levels under the Equity Incentive Plan for officers with
long tenures and more equity under our Officers’ Rollover
Stock Plan were reduced to provide greater equity incentives to
officers in lower compensation bands.
The terms of the options under the Equity Incentive Plan were
negotiated between members of management and Carlyle at the time
they invested in our company. A portion of the options vest
based on continued service and the remainder vest based on
achievement of EBITDA and cumulative cash flow performance
goals. The terms of the options are more fully described in
footnote 2 to the Grants of Plan-Based Awards Table.
The EBITDA target for option vesting for fiscal 2010 was
$294.6 million, with the annual target level increasing by
12% each year thereafter. The cumulative cash-flow target for
fiscal 2010 was $194.4 million, with the annual amount used
to calculate the cumulative target increasing by approximately
12% per year (and subject to upward or downward adjustment for
changes in net revenue growth).
For purposes of the options, “EBITDA” is calculated in
the same manner as Bonus EBITDA under the annual performance
bonus program; and “cash flow” means (i) EBITDA
for a fiscal year less (ii) the increase in adjusted
working capital (accounts receivable (net) less accounts
payable, less other accrued expenses) in the fiscal year (which
may be a positive or a negative number) less (iii) any
overruns in the annual budget for capital expenditures in the
financial plan approved by the Board for that fiscal year.
In connection with the payment of a special dividend of $10.87
per share on July 29, 2009 and the payment of a special
dividend of $46.42 per share on December 11, 2009, in each
case to holders of record of Class A common stock,
Class B non-voting common stock and Class C restricted
common stock as of July 29, 2009 and December 8, 2009,
respectively, outstanding options were required to be adjusted
under the terms of our Officers’ Rollover Stock Plan and
Equity Incentive Plan. Our Compensation Committee determined to
adjust options by reducing the exercise price to reflect the
reduction in the value of our stock as a result of each of the
extraordinary dividends, rather than to adjust both the exercise
price and the number of shares issuable upon exercise of the
options, to avoid the increase in the number of shares issuable
upon exercise. Because the reduction in share value exceeded the
exercise price for certain of our Rollover options, the exercise
price for those options was reduced to the par value of the
share issuable on exercise, and the holders, including our
executive officers, became entitled to receive, on the
option’s fixed exercise date, a cash payment equal to the
excess of the reduction in share value as a result of the
dividend over the reduction in exercise price, subject to
vesting of the related options.
For additional information on the stock options granted under
the Equity Incentive Plan and Officers’ Rollover Stock
Plan, see “Executive Compensation Plans” below.
Defined Contribution Retirement Plan. We
provide retirement benefits to our executive officers in order
to provide them with additional security in retirement, while
allowing them to direct the investment of their retirement
savings as they choose. All employees, including our executive
officers, are automatically eligible to participate in the
tax-qualified Employees’ Capital Accumulation Plan, or
ECAP, our 401(k) plan. We make contributions to ECAP annually.
In addition to contributions made to the tax-qualified ECAP,
executive officers receive a cash payment equal to a percentage
of eligible compensation in excess of the eligible compensation
limit of the Internal Revenue Code which is intended as a
supplement to the retirement plan contribution.
Other Retirement Benefits. We provide
additional retirement benefits to our executive officers in
order to provide them with additional security in retirement and
promote a long-term career with our company. Our executive
officers participate in the Officers’ Retirement Plan,
under which the executive officer may retire with full benefits
after a minimum of either (x) age 60 with five years
of service as an officer or (y) age 50
111
with ten years of service as an officer. An eligible executive
officer who retires and does not receive severance benefits is
entitled to receive a single lump sum retirement payment equal
to $10,000 for each year of service as an officer, pro-rated as
appropriate, and an annual allowance of $4,000 for financial
counseling and tax preparation assistance. Our retirees are also
eligible to receive comprehensive coverage for medical, pharmacy
and dental health care. The premiums for this benefit are paid
by us.
Benefits and Perquisites. Our employees are
eligible to participate in a full complement of employer paid
benefit plans. Our executive officers also participate in
enhanced medical and dental plans, life insurance, AD&D and
personal liability coverage. Although our executive officers
receive additional benefits and perquisites, such as executive
medical, financial counseling and club membership reimbursement,
we do not consider these to be a principal component of their
compensation. We believe that our executive officer benefits and
perquisite programs are reasonable and commensurate with
benefits and perquisites provided to executive officers of
similarly situated companies within our industry, and are
necessary to sustain a fully competitive executive compensation
program.
The perquisites include initiation fees for club memberships and
reasonable dues on an annual basis and up to $15,000 per year
for financial counseling, up to $7,500 every three years to
update an estate plan, up to $3,000 for preparation of estate
plans following relocation to a new tax jurisdiction and a
one-time reimbursement of up to $5,000 for retirement financial
planning. For more detail on the perquisites that our named
executive officers receive, see footnote 5 to the
“Summary Compensation Table” below.
Changes
to Our Compensation Program in Connection with this
Offering
Adoption of Annual Incentive Plan. Our Board
will adopt a new compensation plan in connection with this
offering because it believes that the new plan will more
appropriately align our compensation programs with those of
similarly situated public companies. For a description of the
annual incentive plan, see “Executive Compensation
Plans” below. Going forward, we expect to deliver a portion
of the current annual compensation in the form of equity.
The amount of the annual incentive payment will be calculated in
the same fashion as it previously was under the annual
performance bonus program with the only change being that a
portion of the bonus is expected to be paid in the form of
equity. For fiscal 2011, the target bonus value was set at the
beginning of the year and is subject to achievement of target
Bonus EBITDA results. If Bonus EBITDA results exceed target,
one-third of the dollars above target will be added to the pool
available for officer compensation. If Bonus EBITDA results are
below target, one-third of the dollars below target will be
subtracted from the pool available for officer compensation. In
each case, the additions or subtractions are subject to the
adjustment of our Compensation Committee to take into
consideration the impact of any extraordinary and non-recurring
items and other factors. We determined to base annual bonuses
for fiscal 2011 on Bonus EBITDA because it is a direct
reflection of the cash flow and operating profitability of our
business and it represents the element of our performance that
executives can most directly impact. Our Compensation Committee
has the discretion to determine the actual payments to our
executive officers, subject to achievement of the performance
measures. As described above, we expect that a portion of the
annual incentive payment will be paid in cash and a portion will
be paid in equity that will vest based on the passage of time,
subject to the executive officer’s continued employment by
our company.
Executive Ownership Guidelines. Upon
completion of this offering, we will establish equity ownership
guidelines for our executive officers to further align their
interests to those of our stockholders. Each of our named
executive officers will have five years to achieve equity
ownership with a value equivalent to the amount set forth in the
following table:
|
Named Executive Officers:
|
Ownership Guideline: | |
|
Chief Executive Officer
|
5x base salary | |
|
Other Named Executive Officers
|
3x base salary |
In calculating an executive officer’s ownership, vested
stock options issued under the Equity Incentive Plan, all stock
options under the Officers’ Rollover Stock Plan and vested
and unvested restricted stock will be
112
considered owned by the executive. We determined these ownership
levels based on market and good governance practices. For more
details on the Equity Incentive Plan and the Officers’
Rollover Stock Plan, see “Executive Compensation
Plans” below.
Government
Limitations on Compensation
As a government contractor, we are subject to FAR, which governs
the reimbursement of costs by our government clients. FAR
31.205-6(p) limits the allowability of senior executive
compensation to a benchmark compensation cap established each
year by the Administrator of the Office of Federal Procurement
Policy, or OFPP, under Section 39 of the OFPP Act
(41 U.S.C. 435). The benchmark cap applies to the five most
highly compensated employees in management positions. When
comparing senior executive compensation to the benchmark cap,
all wages, salary, bonuses and deferred compensation, if any,
for the year, as recorded in our books and records, must be
included. The current benchmark compensation cap, effective
January 1, 2010 and as published in the Federal Register,
is $693,951. Any amounts over the cap are considered unallowable
and are therefore not recoverable under our government
contracts. FAR also limits the allowability of reimbursement for
non-senior executive compensation.
Policy
On Recovering Bonuses In The Event of a
Restatement
We have included provisions in our Annual Incentive Plan and our
Equity Incentive Plan that provide us with the discretion after
this offering to impose the forfeiture of bonuses and equity
compensation and the recovery of bonus amounts and gains from
equity compensation awarded under those plans with respect to
individuals who engage in misconduct or gross negligence that
results in a restatement of our financial statements or as
otherwise required under applicable laws or regulations. In
addition, if an individual engages in certain other misconduct,
we have the discretion to suspend vesting of all or a portion of
any award
and/or
require the forfeiture or disgorgement to us of any equity award
(including gains on the sale of the stock, if any) that vested,
was paid or settled in the twelve months prior to or any time
after the individual engaged in such misconduct.
Certain
Change in Control Provisions
Options and restricted stock awarded under our Officers’
Rollover Stock Plan and options granted under our Equity
Incentive Plan prior to the date of this prospectus contain
provisions that accelerate vesting in connection with certain
change in control events. Under the Officers’ Rollover
Stock Plan and the Equity Incentive Plan, “change in
control” is generally defined as the acquisition by any
person (other than Carlyle) of 50% or more of the combined
voting power our company’s then outstanding voting
securities, the merger of our company if its stockholders
immediately prior to the merger together with Carlyle do not own
more than 50% of the combined voting power of the merged entity,
the liquidation or dissolution of our company (other than in a
bankruptcy proceeding or for the purposes of effecting a
corporate restructuring or reorganization) or the sale of all or
substantially all the assets of our company to non-affiliates.
Options and restricted stock granted under the Officers’
Rollover Stock Plan vest upon a change in control. Vesting of
options granted under our Equity Incentive Plan is accelerated
only as a result of events that result in liquidity to Carlyle.
These provisions were negotiated at the time of Carlyle’s
investment in our company and are designed to motivate
management to assist our principal stockholders in achieving a
favorable return on their investment in our company.
Following the completion of this offering, in the event of a
change in control, unless the plan administrator determines
otherwise, all time-vesting awards under the Equity Incentive
Plan will fully vest and a pro-rated portion of outstanding
performance-vesting awards will vest based on the performance
achieved as of the change in control.
Policies
On Timing of Equity Grants
We expect that following the completion of this offering it will
be our policy not to time the granting of equity awards in
relation to the release of material, non-public information.
Accordingly, we expect that
113
regularly scheduled awards will be permitted to be granted at
times when there is material non-public information. We expect
that we will generally grant awards to new hires at the time of
hire, promotion awards at the time of promotion and annual
awards in June. In addition, it is our policy not to grant
equity awards with effect from, or with an exercise price based
on market conditions as they existed on, any date prior to the
date on which the party in which granting authority is vested
(typically our Compensation Committee or our Chief Executive
Officer) takes formal action to grant them. It is our policy to
promptly document any equity awards that we make; we would
normally regard documenting to be prompt if we were to
communicate the terms of the awards to their recipients, and to
obtain signed award agreements governing the grants back from
them, within one month of the date formal action is taken to
issue them.
Effect
of Accounting and Tax Treatment on Compensation
Decisions
Section 162(m) of the Internal Revenue Code imposes a limit
on the amount of compensation that we may deduct in any one year
with respect to certain “covered employees,” unless
certain specific and detailed criteria are satisfied.
Performance-based compensation, as defined in the Internal
Revenue Code, is fully deductible if the programs are approved
by stockholders and meet other requirements. As described above,
all of our short-term non-equity incentive compensation is
determined based upon the achievement of certain predetermined
financial performance goals, which would generally permit us to
deduct such amounts pursuant to Section 162(m). Pursuant to
applicable regulations, Section 162(m) will not apply to
compensation paid or stock options or restricted stock granted
under the compensation agreements and plans described in this
prospectus during the reliance transition period ending on the
earlier of the date the agreement or plan is materially modified
or the first stockholders meeting at which directors are elected
during 2014. While we will continue to monitor our compensation
programs in light of Section 162(m), our Compensation
Committee considers it important to retain the flexibility to
design compensation programs that are in the best long-term
interests of our company and our stockholders, particularly as
we continue our transition from a private to a public company.
As a result, we have not adopted a policy requiring that all
compensation be deductible and our Compensation Committee may
conclude that paying compensation at levels that are not
deductible under Section 162(m) is nevertheless in the best
interests of our company and our stockholders.
Other provisions of the Internal Revenue Code can also affect
compensation decisions. Section 409A of the Internal
Revenue Code, which governs the form and timing of payment of
deferred compensation, imposes sanctions, including a 20%
penalty and an interest penalty, on a recipient of deferred
compensation that does not comply with Section 409A. Our
Compensation Committee takes into account the potential
implications of Section 409A in determining the form and
timing of compensation awarded to our executives and strives to
structure its nonqualified deferred compensation plans to meet
these requirements.
Section 280G of the Internal Revenue Code disallows a
company’s tax deduction for payments received by certain
individuals in connection with a change in control to the extent
that the payments exceed an amount approximately three times
their average annual compensation and Section 4999 of the
Internal Revenue Code imposes a 20% excise tax on those
payments. As described above, options and restricted stock
awarded under our Officers’ Rollover Stock Plan and options
granted under our Equity Incentive Plan have or will contain
provisions that accelerate vesting of all or a portion of the
awards in connection with a change in control. To the extent
that payments upon a change in control are classified as excess
parachute payments, our company’s tax deduction would be
disallowed under Section 280G.
114
Compensation
Tables and Disclosures
Summary
Compensation Table
|
Change in |
||||||||||||||||||||||||||||||||
|
Pension Value |
||||||||||||||||||||||||||||||||
|
and |
||||||||||||||||||||||||||||||||
|
Nonqualified |
||||||||||||||||||||||||||||||||
|
Non-Equity |
Deferred |
|||||||||||||||||||||||||||||||
|
Option |
Incentive Plan |
Compensation |
All Other |
|||||||||||||||||||||||||||||
|
Year |
Salary |
Bonus |
Awards |
Compensation |
Earnings |
Compensation |
Total |
|||||||||||||||||||||||||
|
Name and Principal Position
|
(1) | ($) | ($) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($) | ||||||||||||||||||||||||
|
Ralph W. Shrader,
|
2010 | 1,162,500 | — | — | 1,559,145 | 32,694 | 1,474,503 | 4,228,842 | ||||||||||||||||||||||||
|
President and Chief Executive Officer
|
||||||||||||||||||||||||||||||||
|
Samuel R. Strickland,
|
2010 | 825,000 | — | — | 1,106,490 | 69,700 | 1,062,115 | 3,063,305 | ||||||||||||||||||||||||
|
Executive Vice President and Chief Financial Officer
|
||||||||||||||||||||||||||||||||
|
CG Appleby,
|
2010 | 1,050,000 | — | — | 1,408,260 | 42,085 | 1,394,506 | 3,894,851 | ||||||||||||||||||||||||
|
Executive Vice President and General Counsel
|
||||||||||||||||||||||||||||||||
|
Joseph E. Garner,
|
2010 | 1,050,000 | — | — | 1,408,260 | 50,985 | 1,296,961 | 3,806,206 | ||||||||||||||||||||||||
|
Executive Vice President
|
||||||||||||||||||||||||||||||||
|
John M. McConnell,
|
2010 | 1,050,000 | — | 1,436,475 | 1,408,260 | 28,277 | 122,353 | 4,045,365 | ||||||||||||||||||||||||
|
Executive Vice President
|
||||||||||||||||||||||||||||||||
| (1) | Year reflects fiscal 2010 — April 1, 2009 to March 31, 2010. | |
| (2) | This column represents the grant date fair value of the options granted in fiscal 2010 at the time of Mr. McConnell’s rehiring. Options are generally granted only on hire or promotion. See “Compensation Discussion and Analysis — Elements of Compensation — Long-term Equity Incentive Plans.” The fair value of the awards was determined based on the probable outcome of the performance conditions using the valuation methodology and assumptions set forth in Note 17 to our financial statements for the fiscal year ended March 31, 2010, which are incorporated by reference herein, modified to exclude any forfeiture assumptions related to service-based vesting conditions. The amounts in this column do not reflect the value, if any, that ultimately may be realized by Mr. McConnell. | |
| (3) | This column reflects bonuses under our annual performance bonus plan, which provides awards based on the achievement of a corporate performance objective. Awards under the annual performance bonus plan are paid in cash. The annual performance bonus plan is described more fully at “Compensation Discussion and Analysis — Elements of Compensation — Cash Compensation.” | |
| (4) | This column reflects the change in value over fiscal 2009 of the retiree medical and cash retirement benefit for each of our named executive officers. | |
| (5) | The table below describes the elements included in All Other Compensation. |
|
Dividends |
||||||||||||||||||||||||||||||||||||
|
and Related |
||||||||||||||||||||||||||||||||||||
|
Payments |
||||||||||||||||||||||||||||||||||||
|
on Unvested |
Non-Qualified |
|||||||||||||||||||||||||||||||||||
|
Restricted |
Qualified |
Company |
||||||||||||||||||||||||||||||||||
|
Stock and |
Company |
Retirement |
Executive |
Tax |
||||||||||||||||||||||||||||||||
|
Vested Stock |
Club |
Financial |
Contributions |
Contributions |
Medical Plan |
Gross |
||||||||||||||||||||||||||||||
|
Options |
Membership |
Counseling |
to 401(k) |
to Employee |
Contributions |
Ups |
Other |
Total |
||||||||||||||||||||||||||||
|
Name
|
($)(a) | ($) | ($) | ($) | ($) | ($) | ($)(b) | ($)(c) | ($) | |||||||||||||||||||||||||||
|
Ralph W. Shrader
|
927,758 | 33,753 | 15,000 | 32,377 | 392,371 | 34,677 | 8,628 | 29,939 | 1,474,503 | |||||||||||||||||||||||||||
|
Samuel R. Strickland
|
675,348 | 32,481 | 3,040 | 32,377 | 264,629 | 34,677 | 3,215 | 16,348 | 1,062,115 | |||||||||||||||||||||||||||
|
CG Appleby
|
927,758 | 11,795 | 15,000 | 32,377 | 349,790 | 34,677 | 4,998 | 18,111 | 1,394,506 | |||||||||||||||||||||||||||
|
Joseph E. Garner
|
837,255 | 11,678 | 10,000 | 32,377 | 349,790 | 34,677 | 3,729 | 17,455 | 1,296,961 | |||||||||||||||||||||||||||
|
John M. McConnell
|
0 | 0 | 7,166 | 32,377 | 22,000 | 34,677 | 4,787 | 21,346 | 122,353 | |||||||||||||||||||||||||||
115
| (a) | On July 27, 2009, our Board approved a special dividend of $10.87 per share paid on July 29, 2009 to holders of record of our Class A common stock, Class B non-voting common stock and Class C restricted common stock as of July 29, 2009. In addition, on December 7, 2009, our Board approved a special dividend of $46.42 per share paid on December 11, 2009 to holders of record as of December 8, 2009 of our Class A common stock, Class B non-voting common stock and Class C restricted common stock. In connection with these dividends and based on their equity holdings, our named executive officers received these dividend payments with respect to unvested Class C restricted common stock. Dividends on vested shares are not included because they are not considered compensation. In addition, in accordance with the terms of the Officers’ Rollover Stock Plan, the exercise price of outstanding stock options was reduced by the reduction in value of our common stock as a result of each of the dividends. For any stock option with an exercise price less than the amount of the adjustment, the exercise price was reduced to the par value of our Class A common stock ($0.01), and the option-holder was granted a right to receive a cash payment, in the same calendar year as the year the related option is required to be exercised, equal to the difference between the amount of the special dividend and the amount by which the related option’s exercise price was reduced. Amounts earned or paid in fiscal 2010 are included in this column. Amounts earned or paid with respect to vested options are set forth in the Nonqualified Deferred Compensation Table below. | |
| (b) | Includes tax gross-ups relating to life insurance coverage and milestone anniversary awards. | |
| (c) | Includes: medical, dental, supplemental medical, life insurance, accident insurance, personal excess liability coverage, estate planning and milestone anniversary awards. |
Grants
of Plan-Based Awards
|
All |
||||||||||||||||||||||||||||||||||||||||||||
|
Other |
All Other |
|||||||||||||||||||||||||||||||||||||||||||
|
Estimated Future Payouts |
Stock |
Option |
Grant Date |
|||||||||||||||||||||||||||||||||||||||||
|
Estimated Future Payouts |
Under Equity Incentive |
Awards; |
Awards: |
Exercise or |
Fair Value |
|||||||||||||||||||||||||||||||||||||||
|
Under Non-Equity Incentive |
Plan Awards |
Number of |
Number of |
Base Price |
of Stock |
|||||||||||||||||||||||||||||||||||||||
| Plan Awards(1) |
Max |
Shares or |
Securities |
of Option |
and Option |
|||||||||||||||||||||||||||||||||||||||
|
Grant |
Threshold |
Target |
Max |
Threshold |
Target |
($) |
Stock |
Underlying |
Awards |
Awards |
||||||||||||||||||||||||||||||||||
|
Name
|
Date | ($) | ($) | ($) | ($) | ($) | (H) | Units | Options | ($/Sh) | ($) | |||||||||||||||||||||||||||||||||
|
Ralph W. Shrader
|
06/29/09 | — | 1,046,250 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
|
Samuel R. Strickland
|
06/29/09 | — | 742,500 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
|
CG Appleby
|
06/29/09 | — | 945,000 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
|
Joseph E. Garner
|
06/29/09 | — | 945,000 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
|
John M. McConnell
|
06/29/09 | — | 945,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| 05/07/09 | — | — | — | — | — | — | — | 27,500 | (2) | 118.06 | (3) | 1,436,475 | ||||||||||||||||||||||||||||||||
| (1) | Reflects target bonus levels for fiscal 2010 under our annual performance bonus plan, which provides awards based on the achievement of a corporate performance objective. Awards under the annual performance bonus plan are paid in cash. The annual performance bonus plan is described more fully at “Compensation Discussion and Analysis — Elements of Compensation — Cash Compensation.” Non-equity incentive plan awards have no minimum threshold or maximum cap payouts. The actual bonuses paid under the plan for fiscal 2010 are reflected in the Summary Compensation Table. | |
| (2) | On May 7, 2009, upon rejoining our company, Mr. McConnell received one-time awards of time-vesting and performance-vesting stock options under our Equity Incentive Plan. See “Executive Compensation Plans,” below, for a description of our Equity Incentive Plan. | |
| One-third of the options are service-vesting options, which vest and become exercisable, subject to the continued employment of the named executive officer, ratably over three years. Two-thirds of the options are performance options, which vest and become exercisable, subject to the continued employment of the named executive officer, ratably over three years based on achievement of EBITDA and cumulative cash flow performance goals, with the ability to “catch up” on missed goals if cumulative achievement reaches the target cumulative levels during the three-year vesting period. In the case of an option that vests based |
116
| on EBITDA performance, the missed performance goal must be at least 90% of the target level to be eligible for “catch up.” | ||
| All service-vesting options become fully vested and exercisable immediately prior to the effective date of certain change in control events. Any unvested performance options at the time of such a change in control event vest immediately prior to the effective date of event if Carlyle achieves a specified internal rate of return or the investment proceeds to Carlyle are at least a specified multiple of their invested capital. | ||
| For purposes of the options, “internal rate of return” means the internal rate of return realized by Carlyle on its invested capital as a result of the proceeds realized, or deemed realized, by Carlyle on its capital, calculated without reduction for any taxes and after giving effect to the vesting of any awards granted under the Equity Incentive Plan. | ||
| (3) | Reflects the exercise price on the grant date. The exercise price has been adjusted to $60.77 to reflect the two extraordinary dividends paid in fiscal 2010. See “Compensation Discussion and Analysis — Elements of Compensation — Long-term Equity Incentive Plans.” |
Outstanding
Equity Awards at Fiscal Year-End Table
| Option Awards | Stock Awards | |||||||||||||||||||||||||||
|
Equity |
||||||||||||||||||||||||||||
|
Incentive |
||||||||||||||||||||||||||||
|
Plan |
Market |
|||||||||||||||||||||||||||
|
Awards: |
Value of |
|||||||||||||||||||||||||||
|
Number of |
Number of |
Number of |
Number of |
Shares or |
||||||||||||||||||||||||
|
Securities |
Securities |
Securities |
Shares or |
Units of |
||||||||||||||||||||||||
|
Underlying |
Underlying |
Underlying |
Option |
Units of |
Stock That |
|||||||||||||||||||||||
|
Unexercised |
Unexercised |
Unexercised |
Exercise |
Option |
Stock That |
Have Not |
||||||||||||||||||||||
|
Options |
Options |
Unearned |
Price |
Expiration |
Have Not |
Vested |
||||||||||||||||||||||
|
Name
|
Exercisable | Unexercisable | Options | ($) | Date | Vested(5) | ($)(6) | |||||||||||||||||||||
|
Ralph W. Shrader
|
10,445.3333 | 1,337,316 | ||||||||||||||||||||||||||
| 2,799 | 3,374 | (1) | 4,853.55 | (2) | 42.71 | 11/19/2018 | ||||||||||||||||||||||
| 2,613.45 | (3) | 42.71 | 11/19/2018 | |||||||||||||||||||||||||
| 13,895.154 | (4) | 0.01 | 08/29/2010 | |||||||||||||||||||||||||
| 11,910.132 | (4) | 0.01 | 08/29/2011 | |||||||||||||||||||||||||
| 7,940.088 | (4) | 0.01 | 08/29/2012 | |||||||||||||||||||||||||
| 7,940.088 | (4) | 0.01 | 08/29/2013 | |||||||||||||||||||||||||
| 5,955.066 | (4) | 0.01 | 08/29/2014 | |||||||||||||||||||||||||
|
Samuel R. Strickland
|
7,082.0000 | 906,708 | ||||||||||||||||||||||||||
| 3,699 | 4,934 | (1) | 6,413.55 | (2) | 42.71 | 11/19/2018 | ||||||||||||||||||||||
| 3,453.45 | (3) | 42.71 | 11/19/2018 | |||||||||||||||||||||||||
| 11,579.295 | (4) | 0.01 | 08/29/2010 | |||||||||||||||||||||||||
| 9,925.11 | (4) | 0.01 | 08/29/2011 | |||||||||||||||||||||||||
| 6,616.74 | (4) | 0.01 | 08/29/2012 | |||||||||||||||||||||||||
| 6,616.74 | (4) | 0.01 | 08/29/2013 | |||||||||||||||||||||||||
| 4,962.555 | (4) | 0.01 | 08/29/2014 | |||||||||||||||||||||||||
|
CG Appleby
|
10,445.3333 | 1,337,316 | ||||||||||||||||||||||||||
| 2,799 | 3,374 | (1) | 4,853.55 | (2) | 42.71 | 11/19/2018 | ||||||||||||||||||||||
| 2,613.45 | (3) | 42.71 | 11/19/2018 | |||||||||||||||||||||||||
| 13,895.154 | (4) | 0.01 | 08/29/2010 | |||||||||||||||||||||||||
| 11,910.132 | (4) | 0.01 | 08/29/2011 | |||||||||||||||||||||||||
| 7,940.088 | (4) | 0.01 | 08/29/2012 | |||||||||||||||||||||||||
| 7,940.088 | (4) | 0.01 | 08/29/2013 | |||||||||||||||||||||||||
| 5,955.066 | (4) | 0.01 | 08/29/2014 | |||||||||||||||||||||||||
117
| Option Awards | Stock Awards | |||||||||||||||||||||||||||
|
Equity |
||||||||||||||||||||||||||||
|
Incentive |
||||||||||||||||||||||||||||
|
Plan |
Market |
|||||||||||||||||||||||||||
|
Awards: |
Value of |
|||||||||||||||||||||||||||
|
Number of |
Number of |
Number of |
Number of |
Shares or |
||||||||||||||||||||||||
|
Securities |
Securities |
Securities |
Shares or |
Units of |
||||||||||||||||||||||||
|
Underlying |
Underlying |
Underlying |
Option |
Units of |
Stock That |
|||||||||||||||||||||||
|
Unexercised |
Unexercised |
Unexercised |
Exercise |
Option |
Stock That |
Have Not |
||||||||||||||||||||||
|
Options |
Options |
Unearned |
Price |
Expiration |
Have Not |
Vested |
||||||||||||||||||||||
|
Name
|
Exercisable | Unexercisable | Options | ($) | Date | Vested(5) | ($)(6) | |||||||||||||||||||||
|
Joseph E. Garner
|
8,993.3333 | 1,154,416 | ||||||||||||||||||||||||||
| 2,799 | 3,374 | (1) | 4,853.55 | (2) | 42.71 | 11/19/2018 | ||||||||||||||||||||||
| 2,613.45 | (3) | 42.71 | 11/19/2018 | |||||||||||||||||||||||||
| 13,627.9395 | (4) | 0.01 | 08/29/2010 | |||||||||||||||||||||||||
| 11,681.0910 | (4) | 0.01 | 08/29/2011 | |||||||||||||||||||||||||
| 7,787.3940 | (4) | 0.01 | 08/29/2012 | |||||||||||||||||||||||||
| 7,787.3940 | (4) | 0.01 | 08/29/2013 | |||||||||||||||||||||||||
| 5,840.5455 | (4) | 0.01 | 08/29/2014 | |||||||||||||||||||||||||
|
John M. McConnell
|
||||||||||||||||||||||||||||
| 9,167 | (7)(8) | 11,916.45 | (9) | 60.77 | 05/07/2019 | |||||||||||||||||||||||
| 6,416.55 | (8) | 60.77 | 05/07/2019 | |||||||||||||||||||||||||
| (1) | The options vest and become exercisable, subject to the continued employment of the named executive officer, ratably on June 30, 2009, 2010, 2011, 2012 and 2013. All service-vesting options fully vest and become exercisable immediately prior to the effective date of certain change in control events. | |
| (2) | The options vest and become exercisable, subject to the continued employment of the named executive officer, ratably on June 30, 2009, 2010, 2011, 2012 and 2013 based on achievement of EBITDA performance goals, with the ability to “catch up” on missed goals if (x) the missed performance goal was at least 90% of target level and (y) cumulative EBITDA performance reaches the target cumulative levels during the five-year vesting period. In addition, any unvested performance options at the time of a change in control event vest immediately prior to the effective date of the event if Carlyle achieves a specified internal rate of return as a result of the event or the investment proceeds to Carlyle are at least a specified multiple of its invested capital. | |
| (3) | The options vest and become exercisable, subject to the continued employment of the named executive officer, ratably on June 30, 2009, 2010, 2011, 2012 and 2013 based on achievement of cumulative cash flow performance goals, with the ability to “catch up” on missed goals if cumulative achievement reaches the target cumulative levels during the five-year vesting period. In addition, any unvested performance options at the time of a change in control event vest immediately prior to the effective date of event if Carlyle achieves a specified internal rate of return as a result of the event or the investment proceeds to Carlyle are at least a specified multiple of its invested capital. | |
| (4) | One third of the options are currently vested. The remaining options vest in equal annual installments on June 30, 2010 and 2011. To the extent the options become vested, they become exercisable as set forth below (all vested options must be exercised within 60 days following the annual exercise dates unless a named executive officer receives written consent from the administrator, in which case such options may be exercised through the end of the year in which they vest): |
|
June 30 |
June 30 |
June 30 |
June 30 |
June 30 |
||||||||||||||||
|
Exercise Commencement Date
|
2010 | 2011 | 2012 | 2013 | 2014 | |||||||||||||||
|
Percentage of vested options to be exercised
|
50 | % | 50 | % | — | — | — | |||||||||||||
|
Percentage of options with June 30, 2010 vesting date to be
exercised
|
50 | % | 20 | % | 20 | % | 10 | % | ||||||||||||
|
Percentage of options with June 30, 2011 vesting date to be
exercised
|
— | 20 | % | 20 | % | 30 | % | 30 | % | |||||||||||
118
In connection with the special dividends of $10.87 per share and
$46.42 per share paid to holders of our common stock in fiscal
2010 and in accordance with the terms of the Officers’
Rollover Stock Plan, the exercise price of outstanding stock
options was reduced by the reduction in value of our common
stock as a result of each of the dividends. For any stock option
with an exercise price less than the amount of the adjustment,
the exercise price was reduced to the par value of our
Class A common stock ($0.01), and the option-holder was
granted a right to receive a cash payment, in the same calendar
year as the year the related option is required to be exercised,
equal to the difference between the amount of the special
dividend and the amount by which the related option’s
exercise price was reduced. This payment is subject to vesting
and forfeiture on the same terms as the related option. To the
extent they become vested, payments of such amounts to our named
executive officers will be made as follows:
|
June 30 |
June 30 |
June 30 |
June 30 |
June 30 |
||||||||||||||||
| 2010 | 2011 | 2012 | 2013 | 2014 | ||||||||||||||||
|
Ralph W. Shrader
|
$ | 575,870.35 | $ | 493,603.16 | $ | 329,068.77 | $ | 329,068.77 | $ | 246,801.58 | ||||||||||
|
Samuel R. Strickland
|
$ | 471,594.55 | $ | 404,223.90 | $ | 269,482.60 | $ | 269,482.60 | $ | 202,111.95 | ||||||||||
|
CG Appleby
|
$ | 575,870.35 | $ | 493,603.16 | $ | 329,068.77 | $ | 329,068.77 | $ | 246,801.58 | ||||||||||
|
Joseph E. Garner
|
$ | 563,305.16 | $ | 482,832.99 | $ | 321,888.66 | $ | 321,888.66 | $ | 241,416.50 | ||||||||||
|
John M. McConnell
|
— | — | — | — | — | |||||||||||||||
Upon exercise of an option, the named executive officer must
sell to us, and we must repurchase, at par value, one share of
Class E special voting stock for each option exercised. If
the named executive officer fails to complete the purchase of
shares on exercise of the options within the time period set
forth in the Officers’ Rollover Stock Plan or fails to file
an election under Section 83(b) of the Code with the
Internal Revenue Service within thirty (30) days after
exercise, the related shares of common stock will be deemed to
have been forfeited by that named executive officer, and the
named executive officer must sell to us, and we must repurchase,
at par value, the related number of shares of Class E
special voting stock held by the named executive officer.
| (5) | Our Class C restricted common stock vests in equal annual installments on June 30, 2010 and 2011. | |
| (6) | Market value has been determined based on the fair market value of our stock on March 31, 2010 of $128.03. | |
| (7) | The options vest and become exercisable, subject to the continued employment of the named executive officer, ratably on June 30, 2010, 2011 and 2012. All service-vesting options fully vest and become exercisable immediately prior to the effective date of certain change in control events. | |
| (8) | The options vest and become exercisable, subject to the continued employment of the named executive officer, ratably on June 30, 2010, 2011 and 2012 based on achievement of cumulative cash flow performance goals, with the ability to “catch up” on missed goals if cumulative achievement reaches the target cumulative levels during the three-year vesting period. In addition, any unvested performance options at the time of a change in control event vest immediately prior to the effective date of event if Carlyle achieves a specified internal rate of return as a result of the event or the investment proceeds to Carlyle are at least a specified multiple of its invested capital. | |
| (9) | The options vest and become exercisable, subject to the continued employment of the executive officer, ratably on June 30, 2010, 2011 and 2012 based on achievement of EBITDA performance goals, with the ability to “catch up” on missed goals if (x) the missed performance goal was at least 90% of target level and (y) cumulative EBITDA performance reaches the target cumulative levels during the three-year vesting period. In addition, any unvested performance options at the time of a change in control event vest immediately prior to the effective date of the event if Carlyle achieves a specified internal rate of return as a result of the event or the investment proceeds to Carlyle are at least a specified multiple of its invested capital. |
Option
Exercises and Stock Vested Table
The table below provides information on the named executive
officers’ restricted stock awards that vested and the stock
options that they exercised in fiscal 2010.
119
| Option Awards | Stock Awards | |||||||||||||||
|
Number of Shares |
Value Realized on |
Number of Shares |
Value Realized on |
|||||||||||||
|
Acquired on |
Exercise |
Acquired on |
Vesting |
|||||||||||||
|
Name
|
Exercise(1) | ($)(2) | Vesting(1) | ($)(3) | ||||||||||||
|
Ralph W. Shrader
|
11,910.1320 | 1,425,064 | 5,222.6667 | 650,953 | ||||||||||||
|
Samuel R. Strickland
|
9,925.1100 | 1,180,536 | 3,541.0000 | 441,350 | ||||||||||||
|
CG Appleby
|
11,910.1320 | 1,425,064 | 5,222.6667 | 650,953 | ||||||||||||
|
Joseph E. Garner
|
11,681.0910 | 1,396,513 | 4,496.6667 | 560,465 | ||||||||||||
|
John M. McConnell
|
— | — | — | — | ||||||||||||
| (1) | Fractional shares are paid in cash. | |
| (2) | Option Award ($) value realized is based on fair market value less exercise cost at time of exercise. | |
| (3) | Stock Award ($) value realized is based on fair market value on June 30, 2009. |
Pension
Benefits Table
The Officers’ Retirement Plan is an unfunded defined
benefit retirement plan that we maintain for our executive
officers. Under the Officers’ Retirement Plan, if an
executive officer retires of his or her own volition (and is not
entitled to severance) after a minimum of either
(x) age 60 with five years of service as an officer or
(y) age 50 with ten years of service as an officer, he
or she will be entitled to receive a single lump sum retirement
payment equal to $10,000 for each year of service as an officer,
pro-rated as appropriate. Currently all of our named executive
officers are retirement eligible.
|
Present Value of |
Payments |
|||||||||||||
|
Number of |
Accumulated |
During Last |
||||||||||||
|
Years Credited |
Benefits |
Fiscal Year |
||||||||||||
|
Name
|
Plan Name
|
Service (#) | ($)(1) | ($) | ||||||||||
|
Ralph W. Shrader
|
Officers’ Retirement Plan | 31.5 | 315,000 | — | ||||||||||
|
Samuel R. Strickland
|
Officers’ Retirement Plan | 14.4 | 144,000 | — | ||||||||||
|
CG Appleby
|
Officers’ Retirement Plan | 28.0 | 280,000 | — | ||||||||||
|
Joseph E. Garner
|
Officers’ Retirement Plan | 17.5 | 175,000 | — | ||||||||||
|
John M. McConnell
|
Officers’ Retirement Plan | 12.1 | 121,000 | — | ||||||||||
| (1) | The present value of accumulated benefits has been calculated in a manner consistent with our reporting of the Retired Officers’ Bonus Plan under Statement of Financial Accounting Standards No. 87, using the Accumulated Benefit Obligation with the exception of the retirement rate assumptions. The amounts shown above reflect an assumption that each participant collects his benefit at the earliest age at which an unreduced benefit is available. |
Non-Qualified
Deferred Compensation
In connection with the special dividends paid on July 29,
2009 and December 11, 2009 that resulted in an adjustment
of the exercise price of outstanding options, our named
executive officers who held options with exercise prices less
than the amount of the adjustment were granted the right to
receive a cash payment, in the same calendar year the related
option vests, equal to the difference between the amount of the
dividend and the amount by which the related option’s
exercise price was reduced. This payment is subject to vesting
and forfeiture on the same terms as the related option. For a
description of these dividend adjustment payments, see footnote
4 to the Outstanding Equity Awards at Fiscal Year-End Table
above. Vested rights to these cash payments are reflected in the
table below.
120
Nonqualified
Deferred Compensation Table
|
Executive |
Registrant |
Aggregate |
Aggregate |
Aggregate |
||||||||||||||||||
|
Contributions |
Contributions |
Earnings in |
Withdrawals/ |
Balance at |
||||||||||||||||||
|
in Last FY |
in Last FY(1) |
Last FY |
Distributions |
Last FYE(2) |
||||||||||||||||||
|
Name
|
Plan Name
|
($) | ($) | ($) | ($) | ($) | ||||||||||||||||
|
Ralph W. Shrader
|
Officers’ Rollover Stock Plan | — | 329,345 | — | 276 | 329,069 | ||||||||||||||||
|
Samuel R. Strickland
|
Officers’ Rollover Stock Plan | — | 269,621 | — | 138 | 269,483 | ||||||||||||||||
|
CG Appleby
|
Officers’ Rollover Stock Plan | — | 329,345 | — | 276 | 329,069 | ||||||||||||||||
|
Joseph E. Garner
|
Officers’ Rollover Stock Plan | — | 322,027 | — | 138 | 321,889 | ||||||||||||||||
|
John M. McConnell
|
Officers’ Rollover Stock Plan | — | — | — | — | — | ||||||||||||||||
| (1) | Registrant contributions represent, for each vested stock option issued under the Officers’ Rollover Stock Plan held by the named executive officer on the record date with respect to each dividend declared in fiscal 2010, the difference between the value of the dividend paid and the amount by which the exercise price of the stock option was reduced. Amounts in this column are included in the “All Other Compensation” column of the Summary Compensation Table. | |
| (2) | None of the amounts in this column would have been reported in our Summary Compensation Table in prior years. |
Employment
Arrangements and Potential Payments Upon Termination or a Change
in Control
We do not have employment or severance agreements with any of
our executive officers. However, upon a company approved
departure, each named executive officer is eligible for
transition pay equal to one month’s base pay per year of
service as an officer, up to a maximum of twelve months’
base pay.
Termination
Payments
Officers’ Retirement Plan. If our named
executive officers retire, they will each be entitled to receive
a single lump sum retirement payment equal to $10,000 for each
year of service as an officer, pro-rated as appropriate, and an
annual allowance of $4,000 for financial counseling and tax
preparation assistance. In addition, each of our named executive
officers and their spouses will be entitled to receive
employer-paid retiree medical and dental coverage for life.
Officers’ Rollover Stock Plan. If a named
executive officer’s employment is terminated due to the
officer’s death, any unvested stock options and restricted
stock issued under the Officers’ Rollover Stock Plan will
vest and become exercisable. If a named executive officer’s
employment is terminated by us without cause, by reason of
disability or in a “company approved departure,”
awards under the Officers’ Rollover Stock Plan will
continue to vest and be exercisable in accordance with the plan,
subject to forfeiture if the named executive officer engages in
competitive activity following the termination.
Stockholders Agreement. If a named executive
officer’s employment is terminated for any reason, then we
may repurchase the common stock that the officer holds and that
was issued pursuant to the Equity Incentive Plan at the price
set forth in the stockholders agreement. See “Certain
Relationships and Related Party Transactions —
Stockholders Agreement.”
Change
in Control Protections
We do not have change in control agreements with any of our
employees.
If a change in control occurs, the stock options issued under
the Officers’ Rollover Stock Plan will vest. Under the
Equity Incentive Plan, if a change in control occurs,
outstanding service-vesting options will vest immediately prior
to the change in control and unvested performance-vesting
options that are scheduled to vest in the year of the change in
control, or that are subject to vesting under a
catch-up
vesting provision, vest immediately prior to the change in
control if certain performance conditions are satisfied in the
change in control.
121
The following table presents potential payments to each named
executive officer as if the named executive officer’s
employment had been terminated or a change in control had
occurred as of March 31, 2010, the last day of fiscal 2010.
If applicable, amounts in the table were calculated using
$128.03, the fair market value of our common stock on
March 31, 2010. The actual amounts that would be paid to
any named executive officer can only be determined at the time
of an actual termination of employment or change in control and
would vary from those listed below. The estimated amounts listed
below are in addition to any retirement, welfare and other
benefits that are available to our salaried employees generally.
|
Equity With |
Death and |
Continued |
||||||||||||||||||||||
|
Accelerated |
Retirement |
Disability |
Perquisites and |
|||||||||||||||||||||
|
Severance Pay |
Vesting |
Plan Benefits: |
Benefits |
Benefits |
Total |
|||||||||||||||||||
|
Name
|
($)(1) | ($)(2) | ($)(7) | ($) | ($) | ($) | ||||||||||||||||||
|
Ralph W. Shrader
|
||||||||||||||||||||||||
|
Death
|
— | 8,394,179 | — | 2,096,875 | (3) | 10,491,054 | ||||||||||||||||||
|
Disability
|
— | — | — | 79,587 | (4) | 296,198 | (5) | 375,785 | ||||||||||||||||
|
Company Approved
Departure(8)
|
1,162,500 | — | — | — | 296,198 | (5) | 1,458,698 | |||||||||||||||||
|
Retirement
|
— | — | 315,000 | — | 338,348 | (6) | 653,348 | |||||||||||||||||
|
Resignation/Other Termination
|
— | — | — | — | — | — | ||||||||||||||||||
|
Termination for Cause
|
— | — | — | — | — | — | ||||||||||||||||||
|
Change-In-Control
|
— | 9,349,848 | — | — | — | 9,349,848 | ||||||||||||||||||
|
Samuel R. Strickland
|
||||||||||||||||||||||||
|
Death
|
— | 6,758,979 | — | 2,068,750 | (3) | — | 8,827,729 | |||||||||||||||||
|
Disability
|
— | — | — | 106,438 | (4) | 494,673 | (5) | 601,111 | ||||||||||||||||
|
Company Approved
Departure(8)
|
825,000 | — | — | — | 494,673 | (5) | 1,319,673 | |||||||||||||||||
|
Retirement
|
— | — | 144,000 | — | 543,393 | (6) | 687,393 | |||||||||||||||||
|
Resignation/Other Termination
|
— | — | — | — | — | — | ||||||||||||||||||
|
Termination for Cause
|
— | — | — | |||||||||||||||||||||
|
Change-In-Control
|
— | 8,021,801 | — | — | — | 8,021,801 | ||||||||||||||||||
|
CG Appleby
|
||||||||||||||||||||||||
|
Death
|
— | 8,394,179 | — | 2,087,500 | (3) | — | 10,481,679 | |||||||||||||||||
|
Disability
|
— | — | — | 84,803 | (4) | 389,278 | (5) | 474,081 | ||||||||||||||||
|
Company Approved Departure(8)
|
1,050,000 | — | — | — | 389,278 | (5) | 1,439,278 | |||||||||||||||||
|
Retirement
|
— | — | 280,000 | — | 434,809 | (6) | 714,809 | |||||||||||||||||
|
Resignation/Other Termination
|
— | — | — | — | — | — | ||||||||||||||||||
|
Termination for Cause
|
— | — | — | — | — | — | ||||||||||||||||||
|
Change-In-Control
|
— | 9,349,848 | — | — | — | 9,349,848 | ||||||||||||||||||
|
Joseph E. Garner
|
||||||||||||||||||||||||
|
Death
|
— | 8,067,459 | — | 2,087,500 | (3) | — | 10,154,959 | |||||||||||||||||
|
Disability
|
— | — | — | 85,064 | (4) | 424,849 | (5) | 509,913 | ||||||||||||||||
|
Company Approved Departure(8)
|
1,050,000 | — | — | — | 424,849 | (5) | 1,474,849 | |||||||||||||||||
|
Retirement
|
— | — | 175,000 | — | 471,467 | (6) | 646,467 | |||||||||||||||||
|
Resignation/Other Termination
|
— | — | — | — | — | — | ||||||||||||||||||
|
Termination for Cause
|
— | — | — | — | — | — | ||||||||||||||||||
|
Change-In-Control
|
— | 9,023,129 | — | — | — | 9,023,129 | ||||||||||||||||||
|
John M. McConnell
|
||||||||||||||||||||||||
|
Death
|
— | — | — | 2,087,500 | (3) | — | 2,087,500 | |||||||||||||||||
|
Disability
|
— | — | — | 70,736 | (4) | 275,004 | (5) | 345,740 | ||||||||||||||||
|
Company Approved Departure(8)
|
1,050,000 | — | — | — | 275,004 | (5) | 1,325,004 | |||||||||||||||||
|
Retirement
|
— | — | 120,900 | — | 315,995 | (6) | 436,895 | |||||||||||||||||
|
Resignation/Other Termination
|
— | — | — | — | — | — | ||||||||||||||||||
|
Termination for Cause
|
— | — | — | — | — | — | ||||||||||||||||||
|
Change-In-Control
|
— | 1,849,650 | — | — | — | 1,849,650 | ||||||||||||||||||
122
| (1) | Each named executive officer is eligible for transition pay equal to one month’s base pay per year of service as an officer up to a maximum of twelve months’ base pay. An additional amount equal to a pro rata portion of the named executive officer’s annual incentive compensation for the year in which the termination occurs may be paid upon termination at the discretion of the Board. | |
| (2) | This column includes the value of the equity with accelerated vesting calculated using $128.03, the fair market value of our common stock on March 31, 2010, and the value of the deferred cash payment due to the named executive officers as a result of the special dividends paid on July 29, 2009 and December 11, 2009, as described in footnote 4 to the Outstanding Equity at Fiscal Year-End Table above. | |
| (3) | Each named executive officer has a $2 million life insurance policy. If the death was accidental, an additional $1.5 million would be paid. Survivors also receive one month’s base pay. | |
| (4) | Includes present value of disability insurance payments that cover up to 60% of base salary and bonus with a maximum benefit of $25,000 per month ($300,000/year). The amounts in this column were calculated by valuing the benefit as a standard annuity benefit based on the incidence of disability, using assumptions consistent with FAS 87/106 accounting for our other benefit programs and, for the assumption of a rate of disability, the 1977 Social Security Disability Index table. | |
| (5) | Amount includes actuarial present value of retiree medical benefits. The present value of accumulated benefits has been calculated in a manner consistent with our reporting of the Retired Officers’ Welfare Plan under Statement of Financial Accounting Standards No. 106, using the Accumulated Postretirement Benefit Obligation with an adjustment made to retirement age assumptions as required by SEC regulations. | |
| (6) | Amount includes actuarial present value of up to $4,000 per year for financial counseling assistance and retiree medical benefits. The amounts in this column that represent the present value of the financial counseling allowance were calculated with the same assumptions we use to disclose our Retired Officers’ Bonus Plan, consistent with FAS 87, with an adjustment to the rate of retirement; the valuation is based on the discounted value of the full $4,000. The amounts in the column that represent the actuarial present value of retiree medical benefits were calculated as described in footnote 5 above. | |
| (7) | Benefits under the Officers’ Retirement Plan. This amount has been calculated using the methodology and assumptions described in footnote 1 to the Pension Benefits Table above. | |
| (8) | Whether a termination of employment is deemed a company approved departure is determined at the discretion of our Compensation Committee. |
Compensation
Committee Interlocks and Insider Participation
The current members of our Compensation Committee are
Dr. Shrader and Messrs. Odeen (Chairman), Clare and
Fujiyama. Dr. Schrader is our Chief Executive Officer and a
stockholder and will step down as a member of the committee
prior to completion of the offering. As a stockholder,
Dr. Shrader received proceeds of dividends approved in
fiscal 2010 and is party to a stockholders agreement with Booz
Allen Holding and other stockholders. As a former stockholder
and officer of Booz Allen Hamilton, he received a combination of
current and deferred cash consideration, stock and options in
Booz Allen Holding in connection with the acquisition. Our
company also employs two of Dr. Shrader’s children and
pays a company controlled by Dr. Shrader for use of an
aircraft. See “Certain Relationships and Related Party
Transactions — Related Person Transactions —
Common Stock Dividends,” “— Stockholders
Agreement,” “— The Acquisition” and
“— Other Relationships.” Messrs. Clare
and Fujiyama are employed by The Carlyle Group, an affiliate of
Coinvest. As described below, Coinvest received proceeds of
dividends approved in fiscal 2010 and is a party to a
stockholders agreement with Booz Allen Holding and other
stockholders. Coinvest and The Carlyle Group are affiliates of
TC Group V US, L.L.C., which is party to a management agreement
with Booz Allen Holding and Booz Allen Hamilton pursuant to
which TC Group V US, L.L.C. provides Booz Allen Holding and its
subsidiaries, including Booz Allen Hamilton, with advisory,
consulting and other services for a fee. See “Certain
Relationships and Related Party Transactions — Related
Person Transactions — Common Stock
123
Dividends,” “— Stockholders Agreement,”
and “— The Management Agreement.” Upon
completion of this offering, we do not anticipate that any
members of our Compensation Committee will serve as a member of
the Board or Compensation Committee of any other entity that has
one or more executive officers serving as a member of our Board
or Compensation Committee.
Executive
Compensation Plans
The following are summaries of the short- and long-term
incentive compensation plans applicable to our executive
officers: our Annual Incentive Plan, Equity Incentive Plan and
Officers’ Rollover Stock Plan. The following summaries are
qualified by reference to the full text of the respective plans,
which have been filed as exhibits to this registration statement.
Annual
Incentive Plan
Our Board has adopted an Annual Incentive Plan under which we
will provide annual cash incentives to our executive officers
and other key employees following our initial public offering.
Purpose. The purpose of the Annual Incentive
Plan is to enable our company and its subsidiaries to attract,
retain, motivate and reward executive officers and key employees
by providing them with the opportunity to earn competitive
compensation directly linked to our company’s performance.
The Annual Incentive Plan is designed to meet the requirements
of the performance-based compensation exemption from
Section 162(m) of the Internal Revenue Code to the extent
that it is applicable to our company and the plan. We intend to
comply with the Section 162(m) limits after the post-IPO
transition period expires in 2014. See “Compensation
Discussion and Analysis — Effect of Accounting and Tax
Treatment on Compensation Decisions.”
Administration. The Annual Incentive Plan is
administered by our Compensation Committee, which may delegate
its authority under the Annual Incentive Plan, other than with
respect to awards to any employee whose compensation is subject
to Section 162(m) of the Internal Revenue Code.
Performance Criteria. To the extent
Section 162(m) of the Internal Revenue Code is applicable
to our company and the plan, our Compensation Committee
establishes the performance objective or objectives applicable
to any award under the plan prior to the 91st day after the
beginning of each performance period under the Annual Incentive
Plan (and no later than the date on which 25% of the performance
period has lapsed). When Section 162(m) of the Internal
Revenue Code is applicable to our company and the plan, unless
our Compensation Committee determines that an award will not
qualify as performance-based compensation under
Section 162(m) of the Internal Revenue Code, the
performance criteria will be based on one of the following:
earnings before interest, taxes, depreciation and amortization;
operating earnings; net earnings; income; earnings before
interest and taxes; total shareholder return; return on our
assets; increase in our earnings or earnings per share; revenue
growth; share price performance; return on invested capital;
operating income; pre- or post-tax income; net income; economic
value added; profit margins; cash flow; improvement in or
attainment of expense or capital expenditure levels; improvement
in or attainment of working capital levels; return on equity;
debt reduction; gross profit; market share; cost reductions;
workforce satisfaction and diversity goals; workplace health and
safety goals; employee retention; completion of key projects and
strategic plan development
and/or
implementation; job profit or performance against a multiplier;
or in the case of persons whose compensation is not subject to
Section 162(m) of the Internal Revenue Code, such other
criteria as may be determined by our Compensation Committee.
Payment. Payment of awards will be made as
soon as practicable after our Compensation Committee certifies
that one or more of the applicable performance criteria have
been attained. Our Compensation Committee will determine whether
any award under the Annual Incentive Plan will be paid in cash,
stock (including restricted stock or restricted stock units) or
other awards under the Equity Incentive Plan, or in a
combination of cash, stock, and other awards, including
conditioning the vesting of such shares or other awards on the
performance of additional service.
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Maximum Award; Discretion. The maximum award
amount payable per fiscal year under the Annual Incentive Plan
is $ . Our Compensation Committee
has the discretion to reduce awards under the Annual Incentive
Plan for any reason or increase awards to employees whose
compensation is not subject to Section 162(m) of the
Internal Revenue Code. Awards to employees whose compensation is
subject to Section 162(m) of the Internal Revenue Code
cannot be increased beyond the maximum award.
Termination of Employment. Unless otherwise
determined by our Compensation Committee when the performance
criteria are selected, any participant in the Annual Incentive
Plan whose employment terminates will forfeit all rights to any
unpaid award. However, (i) if a participant’s
employment terminates due to death, disability or “company
approved departure” (as defined in the Annual Incentive
Plan), our Compensation Committee may pay a partial award to the
participant with respect to the portion of the performance
period prior to the participant’s termination of employment
and (ii) if the participant’s employment terminates
for any reason prior to payment of the Annual Incentive Plan
award, our Compensation Committee may waive the forfeiture
feature, but may not waive the requirement to satisfy the
performance criteria for participants whose compensation is
subject to Section 162(m) of the Internal Revenue Code.
Forfeiture. The Annual Incentive Plan includes
a clawback provision requiring forfeiture of any award
(i) paid to an employee engaged in misconduct related to
financial reporting or (ii) to the extent required by
applicable law or regulations in effect on or after the
effective date of the plan.
Officers’
Rollover Stock Plan
Under the Officers’ Rollover Stock Plan, (i) shares of
common stock, (ii) restricted shares of common stock,
(iii) shares of our special voting stock and
(iv) non-qualified stock options were issued in exchange
for the cancellation and surrender of shares and rights to
purchase shares granted under our previous stock rights plan in
connection with Carlyle’s investment in our company.
Eligibility and Shares Subject to the Officers’
Rollover Stock Plan. Certain officers who held
stock or options in Booz Allen Hamilton Inc. prior to the
transaction were eligible to participate in the Officers’
Rollover Stock Plan. The aggregate number of shares issuable
under the Officers’ Rollover Stock Plan is equal to the
number of shares that were rolled by the officers, and these
shares may be authorized but unissued, or reacquired common
stock. The aggregate number of shares of special voting stock
that was issuable under the Officers’ Rollover Stock Plan
was equal to the number of stock rights that were rolled by the
executive officers.
Administration. The administrator administers
the Officers’ Rollover Stock Plan. The administrator has
the authority to determine the fair market value, make
determinations as to the termination of an officer with respect
to the officer’s awards, approve forms of agreement for use
under the plan, prescribe, amend and rescind rules and
regulations relating to the plan, construe the terms of the
plan, and make all other decisions and determinations that may
be required under the plan.
Restricted
Stock
Grant. Restricted stock was granted to
executive officers under the Officers’ Rollover Stock Plan
in exchange for stock rights that were originally scheduled to
vest and be exercised in 2008.
Vesting. With respect to officers who were
eligible to retire from employment as of December 31, 2008
(the “retirement eligible officers”), the restricted
stock vests in equal annual installments on June 30, 2009,
2010 and 2011. With respect to all other officers, fifty percent
(50%) of the restricted stock vests on June 30, 2011, and
twenty-five percent (25%) vests on each of June 30, 2012
and 2013. If an officer’s employment is terminated for
cause or if the officer engages in competitive activity (each as
defined in the Officers’ Rollover Stock Plan) during or
following termination of employment, then our company has a
right to repurchase the unvested restricted stock as described
below. Otherwise, all shares of restricted stock will continue
to vest without regard to his or her termination of employment
and if an officer’s employment is terminated by reason of
the officer’s death, all unvested shares of restricted
stock vest as of the date of such termination of
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employment. Upon vesting, restricted stock is subject to the
same repurchase provisions provided for common stock as
described below.
Options
Grant. Options and shares of special voting
stock were granted to officers under the Officers’ Rollover
Stock Plan in exchange for the surrender and cancellation of
their rights to purchase stock in Booz Allen Hamilton Inc. other
than those rights that were originally scheduled to vest and be
exercised in 2008. The number of shares underlying each option
(and, accordingly, an equal number of shares of special voting
stock) and the exercise price for each option were determined by
the administrator. Certain of the options (“excess
options”) were granted to certain officers who chose to
exchange an amount of stock rights in excess of the amount the
officer was required to exchange.
Vesting. With respect to retirement eligible
officers, the options vest in equal annual installments on
June 30, 2009, 2010 and 2011. With respect to all other
officers, fifty percent (50%) of the new options vest on
June 30, 2011, and twenty-five percent (25%) will vest on
or about each of June 30, 2012 and 2013.
Exercise. To the extent options granted to
retirement eligible officers (“retirement options”)
become vested, they become exercisable as set forth below (all
vested options must be exercised within sixty (60) days
following the annual exercise dates unless an officer receives
written consent from the administrator, in which case the
options may be exercised through the end of the year in which
they vest):
|
June 30, |
June 30, |
June 30, |
June 30, |
June 30, |
June 30, |
|||||||||||||||||||
|
Exercise Commencement Date
|
2009 | 2010 | 2011 | 2012 | 2013 | 2014 | ||||||||||||||||||
|
Percentage of Retirement Options with June 30, 2009 vesting
date to be exercised
|
60 | % | 20 | % | 20 | % | — | — | — | |||||||||||||||
|
Percentage of Retirement Options with June 30, 2010 vesting
date to be exercised
|
— | 50 | % | 20 | % | 20 | % | 10 | % | — | ||||||||||||||
|
Percentage of Retirement Options with June 30, 2011 vesting
date to be exercised
|
— | — | 20 | % | 20 | % | 30 | % | 30 | % | ||||||||||||||
To the extent options granted to all other officers
(“regular options”) become vested, they will become
exercisable as set forth below (all vested options must be
exercised within sixty (60) days following the annual
exercise dates unless an officer receives written consent from
the administrator, in which case the options may be exercised
through the end of the year in which they vest):
|
June 30, |
June 30, |
June 30, |
June 30, |
June 30, |
||||||||||||||||
|
Exercise Commencement Date
|
2011 | 2012 | 2013 | 2014 | 2015 | |||||||||||||||
|
Percentage of Regular Options with June 30, 2011 vesting
date to be exercised
|
20 | % | 20 | % | 20 | % | 20 | % | 20 | % | ||||||||||
|
Percentage of Regular Options with June 30, 2012 vesting
date to be exercised
|
— | 25 | % | 25 | % | 25 | % | 25 | % | |||||||||||
|
Percentage of Regular Options with June 30, 2013 vesting
date to be exercised
|
— | — | 33 | % | 33 | % | 34 | % | ||||||||||||
Upon exercise of an option, an officer will sell to our company,
and we will repurchase, at par value, one share of special
voting stock for each regular option or retirement option
exercised. If the officer fails to complete the purchase of
shares of common stock within the time period set forth in the
Officers’ Rollover Stock Plan or fails to file the 83(b)
election with the Internal Revenue Service within thirty
(30) days after exercise, the related shares of common
stock will be deemed to have been forfeited by that officer, and
the officer will sell to our company, and we will repurchase, at
par value, the related number of shares of special voting stock
acquired by the officer.
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Treatment
of Options Upon Termination of Employment
| • | Cause or competitive activity: If an officer’s employment is terminated for cause or if the officer engages in competitive activity (each as defined in the Officers’ Rollover Stock Plan) during or following termination of employment, then all unvested options will immediately be forfeited and we will have the right to convert vested but unexercised options into the right to receive upon exercise a cash payment equal to the excess, if any, of: |
| • | in the case of options (other than the excess options), (i) the lower of (a) fifty percent (50%) (or, in the case of a termination after June 30, 2016, ninety percent (90%)) of the fair market value of the shares subject thereto and (b) the “cost” over (ii) the per share exercise price, and | |
| • | in the case of excess options, (i) the fair market value of the shares subject thereto over (ii) the per share exercise price. |
“Cost” for this purpose means the greater of
$42.71 and the exercise price plus withholding taxes paid by the
officer upon acquisition of the shares under the Officers’
Rollover Stock Plan.
| • | Without cause, disability or company-approved departure: In the event that an executive officer’s employment is terminated without cause or by reason of disability or through a company-approved departure, then unvested options will continue to vest as otherwise provided and any not previously expired or exercised options held by the officer can be exercised on the applicable exercise date. However, we will have the right to convert any portion of any unexercised options into the right to receive upon vesting and exercise a cash payment equal to the excess, if any, of: |
| • | in the case of options (other than the excess options), (i) in our discretion, (a) the fair market value of the shares subject to the options as of the date of termination, or (b) the cost, over (ii) the per share exercise price for the shares, and | |
| • | in the case of excess options, (i) the fair market value of the shares subject thereto over (ii) the per share exercise price. |
| • | Death: In the event that an officer’s employment is terminated by reason of death, any unvested portion of any options held by the officer (or his or her personal representative or person empowered under the deceased officer’s will or the then applicable laws (“eligible representative”)) and not previously expired or exercised, will immediately vest in full and any vested options held by the officer (or his or her eligible representative) not previously expired or exercised, will be exercisable by the eligible representative during the calendar year following the year of the officer’s death or, if earlier, at the time that the option would have otherwise been required to be exercised. We will have the right to convert all or any portion of any unexercised options into the right to receive upon vesting and exercise a cash payment equal to the excess, if any, of: |
| • | in the case of options (other than the excess options), (i) in our discretion, (a) the fair market value of the shares subject to the option as of the date of termination, or (b) the cost, over (ii) the per share exercise price for the shares, and | |
| • | in the case of excess options, (i) the fair market value of the shares subject thereto, over (ii) the per share exercise price, which in each case, will be paid to the officer’s eligible representative during the calendar year following the year of the officer’s death or, if earlier, at the time the new option would have otherwise been required to be exercised. |
Any option that is not exercised or converted into the right to
receive a cash payment will terminate at the end of the calendar
year following the year of the officer’s death or, if
earlier, the end of the calendar year in which it would have
otherwise been required to be exercised.
| • | Termination for any Other Reason: In the event an officer’s employment is terminated for any reason other than those set forth above, any vested option not previously exercised or expired will be exercisable on the applicable exercise date. All unvested options will be immediately forfeited and canceled effective as of the date of termination. We will have the right to convert all or any portion of |
127
| any vested but unexercised options into the right to receive upon exercise a cash payment equal to the excess, if any, of |
| • | in the case of options (other than the excess options), (i) the lower of (a) the fair market value of the shares subject thereto and (b) the cost, over (ii) the per share exercise price, and | |
| • | in the case of excess options, (i) the fair market value of the shares subject thereto over (ii) the per share exercise price. |
Repurchase
of Company Common Stock Subject to the Officers’ Rollover
Stock Plan upon Termination of Employment
For any shares acquired pursuant to the Officers’ Rollover
Stock Plan that are designated as excess rollover shares
pursuant to an exchange agreement between the shareholder and
our company or are received on the exercise of an excess option,
the purchase price per share equals the fair market value.
| • | Cause or Competitive Activity: If an officer’s employment is terminated for cause or if the officer engages in competitive activity each as defined in the Officers’ Rollover Stock Plan after such termination, then |
| • | Common Stock: the purchase price for any shares of common stock (other than shares acquired pursuant to the Officers’ Rollover Stock Plan that are designated as excess rollover shares pursuant to an exchange agreement entered into between the shareholder and our company or are received on the exercise of an excess option) will equal |
| • | until June 30, 2016, the lower of (x) fifty percent (50%) of fair market value and (y) the cost and | |
| • | after June 30, 2016, ninety percent (90%) of fair market value. |
| • | Unvested Restricted Stock: the purchase price per share for any unvested restricted stock will equal the lower of (i) the exercise price of the 2008 stock rights with respect to which the restricted stock was granted plus any withholding taxes paid by the officer relating to the surrender of 2008 stock rights or the grant of the shares of restricted stock and minus any dividends paid on the restricted stock or (ii) fifty percent (50%) of the fair market value. |
| • | Without Cause, Disability, Death or Company Approved Departure: If an officer’s employment is terminated without cause or by reason of the officer’s death or disability or company approved departure, then, the purchase price for any shares of common stock (other than excess rollover shares) will equal, in the administrator’s discretion, either (x) the fair market value of the shares as of the repurchase date or (y) the cost. | |
| • | Termination for any Other Reason: If an officer is terminated for any other reason than those described above, then the purchase price for any shares of common stock (other than excess rollover shares) will equal, in our company’s discretion, either (x) the fair market value of the shares as of the date of the repurchase or (y) the cost. |
Change in
Control
Upon a change in control, any unvested options will vest in
full, and all options will become immediately exercisable. In
connection with the foregoing, the administrator may provide
that each option will be canceled in exchange for a payment in
an amount equal to the number of shares covered by option times
the excess, if any, of the change in control price (as defined
in the Officers’ Rollover Stock Plan) over any applicable
exercise price for the option. Each option that is not canceled
in exchange for a payment must be exercised no later than the
earlier of ninety (90) days after a change in control or
the end of the calendar year of the change in control, or the
options will be forfeited.
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Adjustment
in Capitalization
If the administrator determines that a corporate transaction or
event (including, for example, any recapitalization (including a
leveraged recapitalization), reclassification, stock split,
reverse stock split, reorganization, merger, consolidation,
acquisition, disposition,
split-up,
spin off, combination, repurchase, liquidation, dissolution, or
sale, transfer, exchange or any disposition of all or
substantially all of our capital stock or assets) in the
administrator’s discretion, affects the shares such that an
adjustment to an award under the Officers’ Rollover Stock
Plan is determined by the administrator to be appropriate to
prevent dilution or enlargement of benefits or potential
benefits intended to be made available under the plan, then the
administrator will adjust any or all of: (i) the number and
kind of shares with respect to which an award may be granted
under the plan; (ii) the number and kind of shares subject
to outstanding awards; (iii) the grant or exercise price
per share for any outstanding awards under the plan;
(iv) the cost, or (v) the terms and conditions of any
outstanding awards.
Equity
Incentive Plan
Administration. Our Board has the power and
authority to administer the Equity Incentive Plan. In accordance
with the terms of the Equity Incentive Plan, our Board has
delegated this power and authority to our Compensation
Committee. Our Compensation Committee has the authority to
interpret the terms and intent of the Equity Incentive Plan, to
determine eligibility for and terms of awards for participants
and to make all other determinations necessary or advisable for
the administration of the Equity Incentive Plan.
Awards. Awards under the Equity Incentive Plan
may be made in the form of stock options, which may be either
incentive stock options or non-qualified stock options; stock
purchase rights; restricted stock; restricted stock units;
performance shares; performance units; stock appreciation
rights; dividend equivalents; deferred share units; dividend
equivalents; and other stock-based awards.
Shares Subject to the Plan. Subject to
adjustment as described below, a total
of shares of our common
stock will be available for issuance under the Equity Incentive
Plan. Shares issued under the Equity Incentive Plan may be
authorized but unissued shares or reacquired shares. At such
time as Section 162(m) of the Internal Revenue Code is
applicable to our company and the plan, (i) a participant
may receive a maximum
of performance shares,
shares of performance-based restricted stock and restricted
stock units and performance-based deferred share units under the
Equity Incentive Plan in any one year, (ii) the maximum
dollar amount of cash that may be earned in connection with the
grant of performance units during any calendar year may not
exceed $ and
(iii) the maximum number of stock options, SARs or other
awards based solely on the increase in the value of common stock
that a participant may receive in one year
is .
Any shares covered by an award, or portion of an award, granted
under the plan that terminates, is forfeited, is repurchased
(other than the repurchase of shares issued with respect to a
vested award), expires, or lapses for any reason shall again be
available for the grant of an award under the plan.
Additionally, any shares tendered or withheld to satisfy the
grant or exercise price or tax withholding obligations pursuant
to any award shall again be available for issuance.
Terms and Conditions of Options and Stock Appreciation
Rights. An “incentive stock option” is
an option that meets the requirements of Section 422 of the
Internal Revenue Code, and a “non-qualified stock
option” is an option that does not meet those requirements.
A “stock appreciation right” (or SAR) is the right of
a participant to a payment, in cash, shares of common stock, or
a combination of cash and shares equal to the amount by which
the market value of a share of common stock exceeds the exercise
price of the stock appreciation right. An option or SAR granted
under the Equity Incentive Plan will be exercisable only to the
extent that it is vested on the date of exercise. No option or
SAR may be exercisable more than ten years from the grant date
or five years from the grant date in the case of an award
granted to a ten percent stockholder. Our Compensation Committee
may include in the option agreement the period during which an
option may be exercised following termination of employment or
service. Stock appreciation rights may be granted to
participants in tandem with options or on their own. Tandem
stock appreciation rights will generally have substantially
similar terms and conditions as the options with which they are
granted.
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The exercise price per share under each option granted under the
plan may not be less than 100%, or 110% in the case of an
incentive stock option granted to a ten percent stockholder, of
the fair market value of our common stock on the option grant
date. For so long as our common stock is listed on an
established stock exchange, the fair market value of the common
stock will be the closing price of our common stock on the
exchange on which it is listed on the option grant date. If
there is no closing price reported on the option grant date, the
fair market value will be deemed equal to the closing price on
the exchange on which it is listed for the last preceding date
on which sales of our common stock were reported. If the shares
of our common stock are listed on more than one established
stock exchange, the fair market value will be the closing price
of a share of common stock reported on the exchange selected by
our Board. If our common stock is not listed on any stock
exchange or traded in the
over-the-counter
market, fair market value will be as determined in good faith by
our Board in a manner consistent with Section 409A of the
Internal Revenue Code.
The aggregate fair market value of all shares with respect to
which incentive stock options are first exercisable by an award
recipient in any calendar year may not exceed $100,000 or such
other limitation as imposed by Section 422(d) of the
Internal Revenue Code.
Terms and Conditions of Restricted Stock and Restricted Stock
Units. “Restricted stock” is an award
of common stock on which certain restrictions are imposed over
specified periods that subject the shares to a substantial risk
of forfeiture, as defined in Section 83 of the Internal
Revenue Code. A restricted stock unit is a unit, equivalent in
value to a share of common stock, credited by means of a
bookkeeping entry in our books to a participant’s account,
which is settled in stock or cash upon vesting. Subject to the
provisions of the equity plan, our Compensation Committee will
determine the terms and conditions of each award of restricted
stock or restricted stock units, including the restricted period
for all or a portion of the award, and the restrictions
applicable to the award. Restricted stock and restricted stock
units granted under the plan will vest based on a minimum period
of service or the occurrence of events specified by our
Compensation Committee.
Terms and Conditions of Performance Shares and Performance
Units. A “performance share” is an
award of common stock that is subject to transfer restrictions
until predetermined performance conditions have been achieved. A
“performance unit” is a unit, equivalent in value to a
share of common stock, that represents the right to receive a
share of common stock or the equivalent cash value of a share of
common stock if predetermined performance conditions are
achieved. Vested performance units may be settled in cash, stock
or a combination of cash and stock, at the discretion of the
administrator. Performance shares and performance units will
vest based on the achievement of pre-determined performance
goals established by the Equity Incentive Plan administrator,
performance goals may be based on: the total return to our
shareholders inclusive of dividends paid, during the performance
cycle; earnings before interest, taxes, depreciation and
amortization; operating earnings; net earnings; income; earnings
before interest and taxes; total shareholder return; return on
our assets; increase in our earnings or earnings per share;
revenue growth; share price performance; return on invested
capital; operating income; pre- or post-tax income; net income;
economic value added; profit margins; cash flow; improvement in
or attainment of expense or capital expenditure levels;
improvement in or attainment of working capital levels; return
on equity; debt reduction; gross profit; market share; cost
reductions; workforce satisfaction and diversity goals;
workplace health and safety goals; employee retention;
completion of key projects and strategic plan development
and/or
implementation; job profit or performance against a multiplier;
or when Section 162(m) of the Internal Revenue Code is not
applicable to our company and the plan and for persons whose
compensation is not subject to Section 162(m) of the
Internal Revenue Code such other criteria as may be determined
by the administrator. We intend to comply with the
Section 162(m) limits after the post-IPO transition period
expires in 2014. See “Compensation Discussion and
Analysis — Effect of Accounting and Tax Treatment on
Compensation Decisions.”
Terms and Conditions of Deferred Share
Units. A “deferred share unit” is a
unit credited to a participant’s account in our books that
represents the right to receive a share of common stock or the
equivalent cash value of a share of common stock upon a
predetermined settlement date. Deferred share units may be
granted by the administrator independent of other awards or
compensation, or they may be received at the participant’s
election instead of other compensation.
130
Other Stock-Based Awards. The plan
administrator may make other equity-based or equity-related
awards not otherwise described by the terms of the plan.
Dividend Equivalents. A dividend equivalent is
the right to receive payments in cash or in stock, based on
dividends with respect to shares of stock. Dividend equivalents
may be granted to participants in tandem with another award or
on their own.
Termination of Employment. Except as otherwise
determined by the administrator at the time of grant, in the
event of a participant’s death, the participant’s
unvested awards will vest, with performance shares and
performance units will vest as if the participant had remained
employed through the end of the performance period and
performance was achieved at target levels, and all of the
participant’s options and stock appreciation rights will
remain exercisable until the first anniversary of the
participant’s termination of employment (or the expiration
of the award’s term, whichever is earlier). Except as
otherwise determined by the administrator at the time of grant,
in the event of a participant’s termination due to
disability or in a “company approved departure” (as
defined in the plan), the participant’s unvested awards
will continue to vest in accordance with the normal vesting
schedule, with the number of performance shares and performance
units based on actual achievement of the performance goals
determined as if the participant had remained employed through
the end of the performance period pro-rated, in the case of a
company approved departure, for the period of actual service,
and options or stock appreciation rights will remain exercisable
until the first anniversary of the later of the date of vesting
or the participant’s termination of employment (or the
expiration of the award’s term, whichever is earlier). In
the event of a participant’s termination for cause, all
unvested awards, and all options and SARs, whether vested or
unvested, will immediately be forfeited and canceled. In
addition, any award that vested or was paid or otherwise settled
during the twelve months prior to or any time after the
participant engaged in the conduct that gave rise to the
termination for cause is subject to forfeiture and disgorgement
to us together with all gains earned or accrued due to the
exercise of awards or sale of any of our common stock issued
pursuant to the award upon demand by the administrator. Except
as otherwise determined by the administrator at the time of
grant, if a participant’s employment terminates for any
other reason, all unvested awards will be forfeited and all
options and SARs that are vested will remain outstanding until
the 60th day after the date of termination (or the
expiration of the award’s term, whichever is earlier). The
foregoing provisions do not apply to any options granted before
this offering.
Other Forfeiture Provisions. If we are
required to prepare an accounting restatement due to material
noncompliance with any financial reporting requirement under the
securities laws, and if a participant knowingly or grossly
negligently engaged in the misconduct or knowingly or grossly
negligently failed to prevent the misconduct, or if the
participant is one of the individuals subject to automatic
forfeiture under Section 304 of the Sarbanes-Oxley Act of
2002, then the participant must forfeit and disgorge
(i) any awards granted or vested and all gains earned or
accrued due to the exercise of stock options or SARS or the sale
of any common stock during the twelve months following the
filing of the financial document embodying such financial
reporting requirement and (ii) any other awards that vested
based on the materially non-complying financial reporting. To
the extent required by applicable law or regulations, awards
granted or vested and any gains earned or accrued due to the
exercise of options or SARs or sale of common stock must be
forfeited to us.
Unless otherwise determined by the Administrator, if a
participant engages in competitive activity (as defined in the
plan), (i) all options and SARs, whether vested or
unvested, and all other awards that are unvested or
unexercisable or otherwise unpaid shall be immediately forfeited
(other than awards that vested or were paid to the participant
more than 12 months prior to the date the participant
engaged in competitive activity). Any award vested, paid or
otherwise settled in the 12 months prior to the date that
the participant engaged in the competitive activity or at any
time thereafter is subject to forfeiture and disgorgement to us
together with all gains earned or accrued due to the exercise of
awards or sale of any of our common stock issued pursuant the
award upon demand by the administrator. This provision does not
apply to any options granted before this offering.
Unless otherwise determined by the administrator, if
(i) the participant’s performance is deemed to
contribute substantially to significant financial losses,
(ii) the participant’s performance is deemed to
contribute
131
substantially to a significant downward restatement of any
published results of our company or a subsidiary, (iii) the
participant’s conduct results in or contributes
substantially to significant reputational harm to our company,
(iv) the participant materially breaches applicable legal
and/or
regulatory requirements, (v) the participant’s conduct
constitutes cause (as defined in the plan) or (vi) the
participant’s conduct results in or contributes
substantially to a material breach of our applicable internal
policies and procedures, the administrator may suspend the
vesting of a participant’s unvested awards or subject any
award vested, paid or otherwise settled in the twelve months
prior to the date that the participant engaged in the misconduct
or at any time thereafter to forfeiture and disgorgement to us
together with all gains earned or accrued due to the exercise of
awards or sale of any of our common stock issued pursuant the
award upon demand by the administrator. This provision does not
apply to any options granted before this offering.
Change in Capitalization or Other Corporate
Event. The number and kind of shares of common
stock covered by outstanding awards, the number and kind of
shares of common stock that have been authorized for issuance
under the plan, the exercise or purchase price of each
outstanding award, and the like, shall be proportionally
adjusted by the administrator in the event of any
recapitalization, reclassification, stock split, special
dividend, reverse stock split, reorganization, merger,
consolidation, acquisition, disposition,
split-up,
spin off, combination, repurchase liquidation, dissolution, or
sale, transfer, exchange or any disposition of all or
substantially all of our capital stock or assets. Such
adjustment shall be made by the administrator to prevent
dilution or enlargement of the benefits or potential benefits
intended to be made available under the plan or with respect to
an award. All determinations and adjustments made by the
administrator shall be final and binding.
Change in Control. Upon a change in control,
unless otherwise determined by the administrator, all
time-vesting awards fully vest and a pro-rated portion of
outstanding performance-vesting awards vest based on the
performance achieved as of the change in control.
EQUITY
COMPENSATION PLANS
The following table presents information concerning the
securities authorized for issuance pursuant to our equity
compensation plans as of March 31, 2010:
|
Number of |
||||||||||||
|
Securities to Be |
||||||||||||
|
Issued Upon |
Number of Securities Remaining |
|||||||||||
|
Exercise of |
Weighted-Average |
Available for Future Issuance |
||||||||||
|
Outstanding |
Exercise Price of |
Under Equity Compensation |
||||||||||
|
Options, Warrants |
Outstanding Options, |
Plans (Excluding Securities |
||||||||||
|
and Rights |
Warrants and Rights |
Reflected in Column (a)) |
||||||||||
|
Plan Category
|
(a) | (b) | (c) | |||||||||
|
Equity compensation plans approved by securityholders
|
2,641,080.7335 | (1) | $ | 23.74 | 776,356 | |||||||
|
Equity compensation plans not approved by securityholders
|
— | N/A | — | |||||||||
|
Total
|
2,641,080.7335 | (1) | 23.74 | 776,356 | ||||||||
| (1) | Upon the exercise of all outstanding options, we will issue 2,640,821 shares of Class A common stock and will redeem 259.7335 fractional shares for cash. |
132
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Policies
and Procedures for Related Person Transactions
Upon completion of this offering, we intend to adopt a related
person transactions policy pursuant to which our executive
officers, directors and principal stockholders, including their
immediate family members, will not be permitted to enter into a
related person transaction with us without the consent of our
Audit Committee, another independent committee of our Board or
the full Board. Any request for us to enter into a transaction
with an executive officer, director, principal stockholder or
any of such persons’ immediate family members, in which the
amount involved exceeds $120,000, will be required to be
presented to our Audit Committee for review, consideration and
approval. All of our directors, executive officers and employees
will be required to report to our Audit Committee any such
related person transaction. In approving or rejecting the
proposed transaction, our Audit Committee will take into
account, among other factors it deems appropriate, whether the
proposed related person transaction is on terms no less
favorable than terms generally available to an unaffiliated
third party under the same or similar circumstances, the extent
of the person’s interest in the transaction and, if
applicable, the impact on a director’s independence. Under
the policy, if we should discover related person transactions
that have not been approved, our Audit Committee will be
notified and will determine the appropriate action, including
ratification, rescission or amendment of the transaction. A copy
of our related person transactions policy will be available on
our website.
Related
Person Transactions
Set forth below is a summary of certain transactions since
April 1, 2009 among us, our directors, our executive
officers, beneficial owners of more than 5% of any class of our
common stock or our preferred stock outstanding before
completion of the offering and some of the entities with which
the foregoing persons are affiliated or associated in which the
amount involved exceeds or will exceed $120,000.
Common
Stock Dividends
On July 27, 2009, our Board approved a special dividend of
$10.87 per share paid on July 29, 2009 to holders of record
as of July 29, 2009 of our Class A common stock,
Class B non-voting common stock and Class C restricted
common stock, totaling an aggregate amount of
$114.9 million, of which Coinvest received
$104.0 million. See “Dividend Policy.”
On December 7, 2009, our Board approved a special dividend
of $46.42 per share paid on December 11, 2009 to holders of
record as of December 8, 2009 of our Class A common
stock, Class B non-voting common stock and Class C
restricted common stock, totaling an aggregate amount of
$497.5 million, approximately $444.1 million of which
was paid to Coinvest. See “Dividend Policy.”
Stockholders
Agreement
In connection with the acquisition, on July 31, 2008, Booz
Allen Holding, Coinvest, certain members of the management of
Booz Allen Holding and certain other stockholders of Booz Allen
Holding entered into the stockholders agreement. Under the
stockholders agreement, the number of directors on the Board of
Booz Allen Holding is set at six directors and may be increased,
by action of the Board, to not more than nine directors. Subject
to certain conditions and restrictions, at least a majority of
the members of the Board are to be designated by Carlyle,
through Coinvest, and at least two members of the Board must be
full-time employees of Booz Allen Hamilton and are to be
designated by Booz Allen Holding’s Chief Executive Officer.
At such time as Carlyle, through Coinvest, ceases to own at
least 40% of the voting shares of Booz Allen Holding, Carlyle
and Booz Allen Holding will use commercially reasonable efforts
to amend the board representation provisions of the stockholders
agreement consistent with the ownership position of Carlyle at
that time. See “Management — Executive Officers
and Directors” and “— Board
Composition.”
Each individual stockholder who is a party to the stockholders
agreement has certain tag-along rights in the event that Carlyle
proposes to transfer securities issued by Booz Allen Holding to
a third party purchaser. In addition, Carlyle may compel each
individual stockholder who is a party to the stockholders
agreement to
133
sell a certain number of securities issued by Booz Allen Holding
in the event that Carlyle proposes to transfer securities issued
by Booz Allen Holding to a third party purchaser.
Notwithstanding the foregoing as well as certain other limited
exceptions (including an exception for transfers occurring at
least 180 days following an initial public offering), the
stockholders agreement restricts the transfer of securities of
Booz Allen Holding by non-Carlyle stockholders without the prior
written approval of Carlyle.
Under the stockholders agreement, in the event of any sale of
shares of Class B non-voting common stock or Class C
restricted common stock pursuant to the exercise of bring-along
rights by Carlyle, the exercise of tag-along rights, certain
transfers following an initial public offering or pursuant to
the exercise of registration rights (discussed below), such
shares will be converted into shares of Class A common
stock.
Carlyle has certain registration rights under the stockholders
agreement with respect to certain securities of Booz Allen
Holding and, in certain circumstances, other stockholders of
Booz Allen Holding who are party to the stockholders agreement
may have the right, subject to certain exceptions, to request
that certain securities of Booz Allen Holding be registered.
Booz Allen Holding has agreed to indemnify the stockholders that
are a party to the stockholders agreement and their affiliates
from liabilities resulting from the registration of securities
of Booz Allen Holding pursuant to the stockholders agreement.
Booz Allen Holding has certain repurchase rights under the
stockholders agreement with respect to securities issued to a
management stockholder for up to nine months after the
occurrence of certain events specified in the stockholders
agreement. Similar repurchase rights exist for securities of
Booz Allen Holding received by certain parties in connection
with the acquisition and any other stockholders of Booz Allen
Holding that becomes an employee, consultant or independent
contractor for certain competitors of Booz Allen Hamilton.
The stockholders agreement includes a waiver by management
stockholders of certain rights to receive payments or other
benefits that would constitute a “parachute payment”
made in connection with a “change in ownership or
control” of a corporation, within the meaning of
Section 280G of the Internal Revenue Code of 1986, or the
Code, as amended, which could reasonably be expected to result
in the imposition of an excise tax on the management stockholder
under Section 4999 of the Code or in the loss of any income
tax deductions by Booz Allen Holding or the person making such
payment under Section 280G of the Code. This waiver does
not apply in certain circumstances, including at such time as
Booz Allen Holding has publicly traded securities and where Booz
Allen Holding obtains the requisite stockholder approval of such
payments or the unaffiliated directors determine the waiver
should not apply.
We will be entering into the amended and restated stockholders
agreement in connection with this offering. Upon completion of
this offering, Carlyle will continue to have the right to
designate a majority of the members of our Board for nomination
for election and voting power to elect such directors. In
addition, this agreement will continue to provide rights and
restrictions with respect to certain transactions in our
securities entered into by Coinvest or certain other
stockholders.
The
Management Agreement
On July 31, 2008, Booz Allen Holding and Booz Allen
Hamilton entered into a management agreement with TC Group V US,
L.L.C., a company affiliated with Carlyle, or TC Group, pursuant
to which TC Group provides Booz Allen Holding and its
subsidiaries, including Booz Allen Hamilton, with advisory,
consulting and other services. Booz Allen Holding pays TC Group
an aggregate annual fee of $1.0 million for such services,
plus expenses. In addition, Booz Allen Holding made a one-time
payment to TC Group of $20.0 million for investment
banking, financial advisory and other services provided to Booz
Allen Holding in connection with the acquisition. Furthermore,
in consideration for any additional investment banking services
provided by TC Group and other services other than advisory and
consulting services described above, TC Group is entitled to
receive additional reasonable compensation as agreed by the
parties.
The management agreement also provides that Booz Allen Hamilton
will indemnify the TC Group and its officers, employees, agents,
representatives, members and affiliates against certain
liabilities relating to or arising out of the performance of the
management agreement and certain other claims and liabilities.
Prior to the completion of this offering, we will enter into
indemnification agreements with each of our directors. The
134
indemnification agreements will provide the directors with
contractual rights to the indemnification and expense
advancement rights provided under our bylaws, as well as
contractual rights to additional indemnification as provided in
the indemnification agreements.
We believe that the management and indemnification agreements
are, in form and substance, substantially similar to those
commonly entered into in transactions of like size and
complexity sponsored by private equity firms. We further believe
that the fees incurred by us under the management agreement are
customary and within the range charged by similarly situated
sponsors. In addition, from time to time and in the ordinary
course of business, we engage other Carlyle portfolio companies
as subcontractors or service providers and they engage us as
subcontractors or service providers. The cost and revenue
associated with these related party transactions were
$13.5 million and $15.1 million, respectively, for
fiscal 2010.
The
Acquisition
In connection with the acquisition, our current and former
executive officers listed below (or their related family trusts)
received a combination of current and deferred cash
consideration as well as stock and options in Booz Allen
Holding. Of the overall cash consideration, $158.0 million
was structured as an interest in the deferred payment obligation
and $90.0 million was deposited into escrow to fund certain
purchase price adjustments, future indemnification claims under
the merger agreement and for certain other adjustments. The
remainder of the cash consideration was paid on the Closing Date
as part of the acquisition. The current and former executive
officers listed below (or their related family trusts) receive
their pro rata share of any payments of the deferred payment
obligation and any releases of funds held in escrow to selling
stockholders. On December 11, 2009, approximately
$100.4 million of the deferred payment obligation,
including $22.4 million in accrued interest, was repaid to
selling stockholders and our current and former executive
officers (or their related family trusts) received their pro
rata share of that partial repayment. For further information on
the partial repayment of the deferred payment obligation, see
“The Acquisition and Recapitalization Transaction.”
The table below sets forth the cash proceeds received by our
current and former executive officers (and their related family
trusts) on the Closing Date, the number of shares of
Class A Common Stock received as part of the exchange of
equity in Booz Allen Hamilton for equity in Booz Allen Holding,
cash received on the partial repayment of the deferred payment
obligation in December 2009 and the percentage interest of our
current and former executive officers (and their related family
trusts) in the deferred payment obligation and the funds held in
escrow under the merger agreement. For a description of the
restricted stock and options received by our named executive
officers in connection with the acquisition, see “Executive
Compensation.”
|
Shares of |
Partial |
|||||||||||||||||||
|
Class A |
Repayment |
Deferred |
||||||||||||||||||
|
Gross Cash |
Common |
of Deferred |
Payment |
|||||||||||||||||
|
Received at |
Stock |
Payment |
Escrow |
Obligation |
||||||||||||||||
|
Closing |
Received |
Obligation |
Percentage |
Percentage |
||||||||||||||||
|
Executive Officer
|
($) | (#)(1) | ($) | (%) | (%) | |||||||||||||||
|
Ralph W. Shrader, President and Chief Executive Officer
|
$ | 30,963,618 | 180,178 | $ | 3,049,845 | 3.02 | % | 3.04 | % | |||||||||||
|
Samuel R. Strickland, Executive Vice President and Chief
Financial Officer
|
$ | 6,867,181 | — | $ | 698,923 | 0.69 | % | 0.70 | % | |||||||||||
|
CG Appleby, Executive Vice President and General Counsel
|
$ | 22,117,104 | 106,885 | $ | 2,178,461 | 2.16 | % | 2.17 | % | |||||||||||
|
Joseph E. Garner, Executive Vice President
|
$ | 11,058,800 | 18,705 | $ | 1,089,230 | 1.08 | % | 1.08 | % | |||||||||||
|
Francis J. Henry, Executive Vice President
|
$ | 3,487,591 | — | $ | 344,923 | 0.34 | % | 0.34 | % | |||||||||||
|
Horacio D. Rozanksi, Executive Vice President and Chief Strategy
and Talent Officer
|
$ | 2,411,507 | 2,290 | $ | 299,538 | 0.30 | % | 0.30 | % | |||||||||||
|
John D. Mayer, Executive Vice President
|
$ | 2,757,101 | — | $ | 317,692 | 0.31 | % | 0.32 | % | |||||||||||
|
Joseph Logue, Executive Vice President
|
$ | 1,412,668 | — | $ | 181,538 | 0.18 | % | 0.18 | % | |||||||||||
135
|
Shares of |
Partial |
|||||||||||||||||||
|
Class A |
Repayment |
Deferred |
||||||||||||||||||
|
Gross Cash |
Common |
of Deferred |
Payment |
|||||||||||||||||
|
Received at |
Stock |
Payment |
Escrow |
Obligation |
||||||||||||||||
|
Closing |
Received |
Obligation |
Percentage |
Percentage |
||||||||||||||||
|
Executive Officer
|
($) | (#)(1) | ($) | (%) | (%) | |||||||||||||||
|
Joseph W. Mahaffee, Executive Vice President
|
$ | 3,668,814 | — | $ | 363,077 | 0.36 | % | 0.36 | % | |||||||||||
|
Lloyd Howell, Jr., Executive Vice President
|
$ | 1,796,103 | — | $ | 226,923 | 0.22 | % | 0.23 | % | |||||||||||
|
Patrick F. Peck, Executive Vice President
|
$ | 4,515,771 | 954 | $ | 444,769 | 0.44 | % | 0.44 | % | |||||||||||
|
Dennis Doughty (retired)
|
$ | 16,835,098 | — | $ | 1,270,769 | 1.26 | % | 1.27 | % | |||||||||||
| (1) | Does not reflect -for-1 split of our outstanding common stock to be effected prior to the completion of this offering. |
As of March 31, 2010, there was approximately
$82.4 million of the deferred payment obligation
outstanding, including accrued interest, and approximately
$38.3 million of funds, including accrued interest,
remaining in escrow under the merger agreement. As these amounts
are subject to various indemnification claims and other offsets,
the ultimate value of our current and former executive
officers’ (or their related family trusts’) interests
in these amounts will not be known until all such claims and
other offsets are resolved.
Other
Relationships
Jeffrey M. Shrader and Bryan E. Shrader, senior associates at
our company, are sons of Dr. Ralph Shrader, our Chairman of
the Board, President and Chief Executive Officer. Jeffrey
Shrader was hired in July 2009 at a base salary of $185,000 and
earned a bonus of $14,340 in fiscal 2010. Bryan Shrader earned a
base salary of $158,209, a bonus of $36,500 and retirement
contributions of $23,187 in fiscal 2010; and received a base
salary of $100,450 in the eight months ended March 31, 2009
and retirement contributions of $20,664 in the eight months
ended March 31, 2009, as well as a bonus of $30,135 for the
eight-month period. They also participate in the Company’s
other benefit programs on the same basis as other employees at
the same level.
Cameron A. Mayer, a senior associate at our company, is the son
of Mr. John Mayer, an Executive Vice President of our
company. He earned a base salary of $135,000, a bonus of $57,500
and received retirement contributions of $18,848 in fiscal 2010
and received base salary of $78,333 in the eight months ended
March 31, 2009 and retirement contributions of $14,820 in
the eight months ended March 31, 2009, as well as a bonus
of $28,200 for the eight-month period. Mr. Cameron Mayer
also participates in the Company’s other benefit programs
on the same basis as other employees at the same level.
Alberto L. Iannitto, an associate at our company, is the
brother-in-law
of Mr. Joseph Logue, an Executive Vice President of our
company. He earned a base salary of $112,400 and received
retirement contributions of $11,219 in fiscal 2010.
Mr. Iannitto also participates in the Company’s other
benefit programs on the same basis as other employees at the
same level.
Gail S. Harman, an executive assistant at our company, is the
sister of Mr. Samuel Strickland, our Chief Financial and
Administrative Officer and an Executive Vice President of our
company. She earned a base salary of $105,575 and received
retirement contributions of $12,467 in fiscal 2010.
Ms. Harman also participates in the Company’s other
benefit programs on the same basis as other employees at the
same level.
During fiscal 2010 and in the eight months ended March 31,
2009, we recorded expenses of $690,577 and $150,511,
respectively, for the hiring and use of an aircraft solely for
business purposes owned by a company of which our Chairman of
the Board, President and Chief Executive Officer,
Dr. Shrader, is the sole owner. The payments we made to the
affiliate of Dr. Shrader for such use were based on the
market rate charged to third parties for use of the aircraft. In
addition, we recorded expenses of $2,528 and $57,777 in fiscal
2010 and the eight months ended March 31, 2009,
respectively, for legal and consulting fees incurred by such
affiliate in connection with the acquisition of the aircraft and
paid by our company.
136
DESCRIPTION
OF CERTAIN INDEBTEDNESS
Senior
Credit Facilities
Overview
In connection with the acquisition, Booz Allen Investor, as
guarantor, and Booz Allen Hamilton, as borrower, entered into a
credit agreement, dated as of July 31, 2008, with respect
to our senior credit facilities, with Credit Suisse AG, Cayman
Islands Branch, as administrative agent and collateral agent,
Credit Suisse AG, Cayman Islands Branch, as issuing lender, and
the other financial institutions party thereto from time to
time. In connection with the recapitalization transaction, on
December 11, 2009, the credit agreement with respect to our
senior credit facilities was amended and restated in order to,
among other things, permit the recapitalization transaction, add
the Tranche C term facility under the senior term
facilities and increase commitments under the revolving credit
facility.
Our senior credit facilities provide for (1) the senior
term facilities, which include: (a) the Tranche A term
facility in an original aggregate principal amount of up to
$125.0 million, (b) the Tranche B term facility
in an original aggregate principal amount of up to
$585.0 million, and (c) the Tranche C term
facility in an original aggregate principal amount of up to
$350.0 million, and (2) the revolving credit facility
in an aggregate principal amount of up to $245.0 million. A
portion of the revolving credit facility is available for
swingline loans in an amount not to exceed $80.0 million
and letters of credit in an amount not to exceed
$60.0 million.
In addition, Booz Allen Hamilton may, at its option and subject
to certain closing conditions including pro forma compliance
with financial covenants, increase our senior credit facilities
without the consent of any person other than the institutions
agreeing to provide all or any portion of such increase, in an
amount not to exceed $100 million. Any such increase may
consist of new term loans or new revolving commitments, at Booz
Allen Hamilton’s option.
As of March 31, 2010, we had $110.8 million
outstanding under the Tranche A term facility,
$566.8 million outstanding under the Tranche B term
facility, $345.8 million outstanding under the
Tranche C term facility, and no loans outstanding under the
revolving credit facility, and had $222.4 million of
available and unused commitments under the revolving credit
facility (excluding the $21.3 million commitment by the
successor entity to Lehman Brothers Commercial Bank). The
successor entity to Lehman Brothers Commercial Bank is one of
the lenders under the revolving credit facility and as a result
of the bankruptcy of its parent company, the availability under
the revolving credit facility was effectively reduced by its
commitment of $21.3 million.
Maturity;
Amortization and Prepayments
The revolving credit facility and the Tranche A term
facility mature on July 31, 2014. The Tranche B term
facility and Tranche C term facility mature on
July 31, 2015. The term loans under the Tranche A term
facility amortize in quarterly installments varying from 1.25%
to 5.00% of the aggregate principal amount thereof funded on the
closing date of our senior credit facilities, with the balance
due on their maturity date. The term loans under the
Tranche B term facility and Tranche C term facility
amortize in equal quarterly installments of 0.25% of the
aggregate amount thereof funded on the closing date of our
senior credit facilities and on the amendment and restatement
date of our senior credit facilities, respectively, with the
balance due on their maturity date. Prior to the revolving
credit facility maturity date, loans under the revolving credit
facility may to borrowed, repaid and reborrowed.
Optional prepayments of the Tranche B Term Loans prior to
July 31, 2010 are subject to a 1% prepayment premium if the
primary purpose of the prepayment is to refinance the
Tranche B Term Loans at a lower interest rate. Loans under
our senior credit facilities may otherwise be prepaid at the
borrower’s option without premium or penalty. Subject to
certain exceptions, the senior term facilities are subject to
mandatory prepayment in amounts equal to (1) the net cash
proceeds of (a) certain indebtedness incurred by Booz Allen
Hamilton and certain of its subsidiaries (excluding indebtedness
permitted under our senior credit facilities)
137
and (b) certain asset sales or insurance recovery and
condemnation events and (2) 50% (which percentage will be
reduced upon the achievement of certain consolidated total
leverage ratios) of annual excess cash flow (as defined in our
senior credit facilities).
Guaranties;
Security
Booz Allen Investor and the following subsidiaries of Booz Allen
Hamilton, ASE, Inc., Booz Allen Hamilton International, Inc. and
Booz Allen Transportation Inc. provided an unconditional
guaranty of all amounts owing under our senior credit
facilities. Subject to certain exceptions, each newly-formed
material domestic wholly-owned subsidiary of Booz Allen Hamilton
will be required to guaranty all amounts owing under our senior
credit facilities. In addition, subject to certain exceptions,
obligations of the borrower under our senior credit facilities
and the guarantees of the guarantors thereunder are secured by
first priority perfected security interests in substantially all
of the tangible and intangible assets of the borrower and the
guarantors.
Interest
At the borrower’s election, the interest rate per annum
applicable to loans under our senior credit facilities are based
on a fluctuating rate of interest measured by reference to
either (i) an adjusted London inter-bank offered rate
(adjusted for maximum reserves) (LIBOR), plus a borrowing
margin, and (ii) an alternate base rate equal to the
greater of the prime commercial lending rate and the weighted
average of the rates on overnight federal funds transactions
plus 0.5% (ABR), plus a borrowing margin. Our senior credit
facilities provide for certain interest rate floors, so that
(i) with respect to the Tranche B term facility, at
any time prior to the third anniversary of the closing date of
our senior credit facilities, LIBOR loans will bear interest at
a rate no less than 3% plus the applicable borrowing margin and
ABR loans will bear interest at a rate no less than 4% plus the
applicable borrowing margin, and (ii) with respect to the
Tranche C term facility, LIBOR loans will bear interest at
a rate no less than 2% plus the applicable borrowing margin and
ABR loans will bear interest at a rate no less than 3% plus the
applicable borrowing margin. The borrowing margin with respect
to the Tranche A term facility is 4% or 3.75% with respect
to LIBOR loans and 3% or 2.75% for ABR loans, depending upon a
consolidated total leverage ratio based pricing grid. The
borrowing margin with respect to the Tranche B term
facility is 4.5% for LIBOR loans and 3.5% for ABR loans. The
borrowing margin with respect to the Tranche C term
facility is 4% for LIBOR loans and 3% for ABR loans. The
borrowing margin with respect to the revolving credit facility
is 4% or 3.75% with respect to LIBOR loans and 3% or 2.75% for
ABR loans, depending upon a consolidated total leverage ratio
based pricing grid.
Fees
The borrower will pay (1) fees on the unused commitments of
the lenders under the revolving credit facility equal to 0.50%
or 0.375%, depending upon a consolidated total leverage ratio
based pricing grid, (2) a letter of credit fee on the
outstanding stated amount of letters of credit plus fronting
fees for the letter of credit issuing banks and (3) other
customary fees in respect of our senior credit facilities.
Covenants
Our senior credit facilities contain a number of covenants that,
among other things, limit or restrict the ability of the
borrower and the guarantors to incur additional indebtedness,
including guarantees of indebtedness; engage in mergers,
acquisitions or dispositions; enter into sale-leaseback
transactions; make dividends and other restricted payments
(subject to certain exceptions, including for dividends in an
aggregate amount not exceeding 6.0% per year of the net cash
proceeds received by the borrower from an initial public
offering of its parent company); prepay specified indebtedness;
engage in certain transactions with affiliates; make other
investments; change the nature of its business; incur liens; and
amend specified debt agreements. Our senior credit facilities
also contain a covenant restricting the ability of Booz Allen
Investor to take actions other than those enumerated. In
addition, under our senior credit facilities, the borrower will
be required to
138
comply with a minimum consolidated net interest coverage ratio
and a maximum consolidated total leverage ratio as of the last
day of any test period during any period set forth in the
following tables:
|
Consolidated |
||
|
Total Leverage |
||
|
Period
|
Ratio | |
|
March 31, 2010
|
5.75:1.00 | |
|
June 30, 2010
|
5.50:1.00 | |
|
September 30, 2010
|
5.50:1.00 | |
|
December 31, 2010
|
5.00:1.00 | |
|
March 31, 2011
|
5.00:1.00 | |
|
June 30, 2011
|
4.50:1.00 | |
|
September 30, 2011
|
4.50:1.00 | |
|
December 31, 2011
|
4.25:1.00 | |
|
March 31, 2012
|
4.25:1.00 | |
|
June 30, 2012
|
4.00:1.00 | |
|
September 30, 2012
|
4.00:1.00 | |
|
December 31, 2012 and thereafter
|
3.75:1.00 |
|
Consolidated |
||
|
Net Interest |
||
|
Period
|
Coverage Ratio | |
|
March 31, 2010
|
1.70:1.00 | |
|
June 30, 2010
|
1.80:1.00 | |
|
September 30, 2010
|
1.80:1.00 | |
|
December 31, 2010
|
1.90:1.00 | |
|
March 31, 2011
|
1.90:1.00 | |
|
June 30, 2011
|
2.00:1.00 | |
|
September 30, 2011
|
2.00:1.00 | |
|
December 31, 2011
|
2.10:1.00 | |
|
March 31, 2012
|
2.10:1.00 | |
|
June 30, 2012
|
2.20:1.00 | |
|
September 30, 2012
|
2.20:1.00 | |
|
December 31, 2012 and thereafter
|
2.30:1.00 |
As of March 31, 2010, the borrower was in compliance with
such financial ratios and tests.
Events
of Default
Our senior credit facilities contain customary events of
default, including nonpayment of principal when due; nonpayment
of interest, fees or other amounts, in each case after a grace
period; material inaccuracy of a representation or warranty when
made or deemed made; violation of a covenant (subject, in the
case of certain covenants, to a grace period to be agreed upon
and notice); cross-default and cross-acceleration to material
indebtedness; bankruptcy events; ERISA events subject to a
material adverse effect qualifier; material monetary judgments;
actual or asserted invalidity of any guarantee or security
document; impairment of security interests; and a change of
control.
Mezzanine
Credit Facility
Overview
In connection with the acquisition, Booz Allen Investor, as
guarantor, and Booz Allen Hamilton, as borrower, entered into a
mezzanine credit agreement, dated as of July 31, 2008, with
respect to our mezzanine
139
credit facility, with Credit Suisse, as administrative agent,
and the other financial institutions party thereto from time to
time. In connection with the recapitalization transaction, on
December 11, 2009, the credit agreement with respect to our
mezzanine credit facility was amended to, among other things,
permit the recapitalization transaction, the incurrence of loans
under the Tranche C term facility and the increase in
commitments under the revolving credit facility. As of
March 31, 2010, we had $545.2 million of term loans
outstanding under our mezzanine credit facility.
Maturity;
Prepayments
Our mezzanine credit facility matures on July 31, 2016. The
term loans under our mezzanine credit facility will not
amortize. Payments of the term loans under our mezzanine credit
facility on the maturity date are subject to a 1% premium.
Optional prepayments of the term loans under our mezzanine
credit facility are subject to prepayment premiums equal to
(A) if such prepayment is made on or after the fourth
anniversary of the closing date of our mezzanine credit
facility, 1.0%, (B) if such prepayment is made on or after
the third anniversary of the closing date of our mezzanine
credit facility but prior to the fourth anniversary of the
closing date of our mezzanine credit facility, 2.0% and
(C) if such prepayment is made on or after the second
anniversary of the closing date of our mezzanine credit facility
but prior to the third anniversary of the closing date of our
mezzanine credit facility, 3.0%.
Upon the occurrence of a change of control, each lender shall
have the right to require the borrower to prepay at a price in
cash equal to 101% of the principal amount being prepaid plus
accrued and unpaid interest. In addition, the borrower will be
subject to certain mandatory prepayments after the fifth
anniversary of the closing date of our mezzanine credit facility
in an amount sufficient so that the loans under our mezzanine
credit facility are treated as not having “significant
original issue discount” for purposes of the internal
revenue code.
Guarantees
Booz Allen Investor, ASE, Inc., Booz Allen Hamilton
International, Inc., and Booz Allen Transportation Inc. provided
an unconditional guaranty of all amounts owing under our
mezzanine credit facility. Subject to certain exceptions, each
newly-formed material domestic wholly-owned subsidiary of Booz
Allen Hamilton will be required to guaranty all amounts owing
under our mezzanine credit facility.
Interest
The interest rate per annum applicable to the loans under our
mezzanine credit facility is 13%. In lieu of cash interest, the
borrower may elect to pay interest in excess of 11% per annum in
kind, through the addition of such amount to the
then-outstanding aggregate principal amount of the loans under
our mezzanine credit facility.
Fees
The borrower will pay administrative fees in respect of our
mezzanine credit facility.
Covenants
Our mezzanine credit facility contains a number of covenants
substantially identical to, but in certain cases (including with
respect to limitations on dividends and other restricted
payments) less restrictive than, the covenants contained in our
senior credit facilities, except that, under our mezzanine
credit facility, the borrower will not be required to comply
with a consolidated net interest coverage ratio, and will be
required
140
to comply with the following maximum leverage ratio as of the
last day of any test period during any period set forth in the
following table:
|
Consolidated Total |
||
|
Period
|
Leverage Ratio | |
|
March 31, 2010
|
6.90:1.00 | |
|
June 30, 2010
|
6.60:1.00 | |
|
September 30, 2010
|
6.60:1.00 | |
|
December 31, 2010
|
6.00:1.00 | |
|
March 31, 2011
|
6.00:1.00 | |
|
June 30, 2011
|
5.40:1.00 | |
|
September 30, 2011
|
5.40:1.00 | |
|
December 31, 2011
|
5.10:1.00 | |
|
March 31, 2012
|
5.10:1.00 | |
|
June 30, 2012
|
4.80:1.00 | |
|
September 30, 2012
|
4.80:1.00 | |
|
December 31, 2012 and thereafter
|
4.50:1.00 |
Events
of Default
Our mezzanine credit facility contains customary events of
default, including nonpayment of principal when due; nonpayment
of interest, fees or other amounts, in each case after a grace
period; material inaccuracy of a representation or warranty when
made or deemed made; violation of a covenant (subject, in the
case of certain covenants, to a grace period to be agreed upon
and notice); cross-acceleration to material indebtedness;
bankruptcy events; ERISA events subject to a material adverse
effect qualifier; material monetary judgments; and actual or
asserted invalidity of any guarantee.
141
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates information as of July 28,
2010 regarding the beneficial ownership of our common stock by:
1
| • | each person, or group of persons, who is known to beneficially own more than 5% of any class of our common stock; | |
| • | each of our directors; | |
| • | each of the named executive officers; and | |
| • | all of our directors and executive officers as a group. |
The percentages shown are based on 10,266,161, 305,313, 202,827
and 1,404,881 shares of Class A, Class B,
Class C and Class E common stock outstanding as of
July 28, 2010
and , ,
and shares of
Class A, Class B, Class C and Class E common
stock outstanding after the offering. The rights of the holders
of Class A common stock, Class C restricted common
stock and Class E special voting common stock are
identical, except with respect to dividend and other
distributions, vesting and conversion. Class A common
stock, Class C restricted common stock and Class E
special voting common stock are entitled to one vote per share
on all matters voted on by our stockholders. The Class B
common stock is non-voting common stock. Upon a transfer of
Class B non-voting common stock and Class C restricted
common stock that occurs at least 180 days following the
completion of this offering, we will issue shares of
Class A common stock to the transferee on a one-for-one
basis. Class E common stock underlies certain outstanding
options. When each option is exercised, we will repurchase the
underlying share of Class E common stock and issue a share
of Class A common stock to the option holder. See
“Description of Capital Stock.”
The amounts and percentages owned are reported on the basis of
the SEC’s regulations governing the determination of
beneficial ownership of securities. The SEC’s rules
generally attribute beneficial ownership of securities to each
person who possesses, either solely or shared with others, the
voting power or investment power, which includes the power to
dispose of those securities. The rules also treat as outstanding
all shares of capital stock that a person would receive upon
exercise of stock options or warrants held by that person that
are immediately exercisable or exercisable within 60 days.
These shares are deemed to be outstanding and to be beneficially
owned by the person holding those options for the purpose of
computing the number of shares beneficially owned and the
percentage ownership of that person, but they are not treated as
outstanding for the purpose of computing the percentage
ownership of any other person. Under these rules, one or more
persons may be a deemed beneficial owner of the same securities
and a person may be deemed a beneficial owner of securities to
which such person has no economic interest. Unless otherwise
indicated, the persons or entities identified in this table have
sole voting and investment power with respect to all shares
shown as beneficially owned by them, subject to applicable
community property laws.
Information with respect to beneficial ownership has been
furnished by each director, officer, or beneficial owner of more
than 5% of the shares of our common stock. Except as otherwise
noted below, the address for each person listed on the table is
c/o Booz
Allen Hamilton Inc., 8283 Greensboro Drive, McLean, Virginia
22102.
As of July 28, 2010, our 112 partners owned total
common shares representing 18% of the total voting power in our
company. Following completion of this offering and assuming that
the underwriters do not exercise their option to purchase
additional shares of Class A common stock, these officers
will own in the
aggregate % of our
Class A common stock,
and % of the total
voting power in our company.
142
|
Combined |
Combined |
Combined |
||||||||||||||||||||||||||||||||||||
|
Voting |
Voting |
Voting |
||||||||||||||||||||||||||||||||||||
|
Power |
Power |
Power |
||||||||||||||||||||||||||||||||||||
|
of Shares of |
of Shares of |
of Shares of |
||||||||||||||||||||||||||||||||||||
|
All Classes of |
Shares Beneficially |
All Classes of |
Shares Beneficially |
All Classes of |
||||||||||||||||||||||||||||||||||
|
Common |
Owned After the |
Common |
Owned After the |
Common |
||||||||||||||||||||||||||||||||||
|
Stock |
Offering Assuming the |
Stock |
Offering Assuming the |
Stock |
||||||||||||||||||||||||||||||||||
|
Shares Beneficially |
Beneficially |
Underwriters’ Option is |
Beneficially |
Underwriters’ Option is |
Beneficially |
|||||||||||||||||||||||||||||||||
| Owned Prior to Offering | Owned | Not Exercised | Owned | Exercised in Full | Owned | |||||||||||||||||||||||||||||||||
|
Class of |
Number of |
Percentage |
Total |
Number of |
Percentage |
Total |
Number of |
Percentage |
Total |
|||||||||||||||||||||||||||||
|
Name and Address
|
Stock | Shares | of Class | Percentage | Shares | of Class | Percentage | Shares | of Class | Percentage | ||||||||||||||||||||||||||||
|
Principal Stockholders
|
||||||||||||||||||||||||||||||||||||||
|
Explorer Coinvest LLC(1)
|
Class A | 9,566,000 | 93.19 | % | 80.56 | % | ||||||||||||||||||||||||||||||||
|
Executive Officers and Directors
|
||||||||||||||||||||||||||||||||||||||
|
Ralph W. Shrader
|
Class A(2) | 141,288 | 1.37 | % | ||||||||||||||||||||||||||||||||||
| Class B | — | — | ||||||||||||||||||||||||||||||||||||
| Class C | 15,668 | 7.17 | % | |||||||||||||||||||||||||||||||||||
| Class E(3) | 104,039 | 7.48 | % | |||||||||||||||||||||||||||||||||||
| Total | 260,995 | 2.20 | % | |||||||||||||||||||||||||||||||||||
|
Samuel R. Strickland
|
Class A(4) | 28,902 | * | |||||||||||||||||||||||||||||||||||
| Class B | — | — | ||||||||||||||||||||||||||||||||||||
| Class C | 10,623 | 4.98 | % | |||||||||||||||||||||||||||||||||||
| Class E(3) | 28,122 | 2.02 | % | |||||||||||||||||||||||||||||||||||
| Total | 67,647 | ** | ||||||||||||||||||||||||||||||||||||
|
CG Appleby
|
Class A(5) | 138,288 | 1.34 | % | ||||||||||||||||||||||||||||||||||
| Class B | — | — | ||||||||||||||||||||||||||||||||||||
| Class C | 15,668 | 7.17 | % | |||||||||||||||||||||||||||||||||||
| Class E(3) | 33,746 | 2.43 | % | |||||||||||||||||||||||||||||||||||
| Total | 187,702 | 1.58 | % | |||||||||||||||||||||||||||||||||||
|
Joseph E. Garner
|
Class A(6) | 49,611 | * | |||||||||||||||||||||||||||||||||||
| Class B | — | — | ||||||||||||||||||||||||||||||||||||
| Class C | 13,490 | 6.24 | % | |||||||||||||||||||||||||||||||||||
| Class E(3) | 33,096 | 2.38 | % | |||||||||||||||||||||||||||||||||||
| Total | 96,197 | ** | ||||||||||||||||||||||||||||||||||||
|
John M. McConnell
|
Class A(7) | 9,166 | * | |||||||||||||||||||||||||||||||||||
| Class B | — | — | ||||||||||||||||||||||||||||||||||||
| Class C | — | — | ||||||||||||||||||||||||||||||||||||
| Class E | — | — | ||||||||||||||||||||||||||||||||||||
| Total | 9,166 | ** | ||||||||||||||||||||||||||||||||||||
|
Daniel F. Akerson(8)
|
Class A | — | — | |||||||||||||||||||||||||||||||||||
| Class B | — | — | ||||||||||||||||||||||||||||||||||||
| Class C | — | — | ||||||||||||||||||||||||||||||||||||
| Class E | — | — | ||||||||||||||||||||||||||||||||||||
| Total | — | — | — | |||||||||||||||||||||||||||||||||||
|
Peter Clare(8)
|
Class A | — | — | |||||||||||||||||||||||||||||||||||
| Class B | — | — | ||||||||||||||||||||||||||||||||||||
| Class C | — | — | ||||||||||||||||||||||||||||||||||||
| Class E | — | — | ||||||||||||||||||||||||||||||||||||
| Total | — | — | — | |||||||||||||||||||||||||||||||||||
|
Ian Fujiyama(8)
|
Class A | — | — | |||||||||||||||||||||||||||||||||||
| Class B | — | — | ||||||||||||||||||||||||||||||||||||
| Class C | — | — | ||||||||||||||||||||||||||||||||||||
| Class E | — | — | ||||||||||||||||||||||||||||||||||||
| Total | — | — | — | |||||||||||||||||||||||||||||||||||
|
Philip A. Odeen
|
Class A(9) | 1,226 | * | |||||||||||||||||||||||||||||||||||
| Class B | — | — | ||||||||||||||||||||||||||||||||||||
| Class C | — | — | ||||||||||||||||||||||||||||||||||||
| Class E | — | — | ||||||||||||||||||||||||||||||||||||
| Total | 1,226 | ** | ||||||||||||||||||||||||||||||||||||
|
Charles O. Rossotti
|
Class A(10) | 6,157 | * | |||||||||||||||||||||||||||||||||||
| Class B | — | — | ||||||||||||||||||||||||||||||||||||
| Class C | — | — | ||||||||||||||||||||||||||||||||||||
| Class E | — | — | ||||||||||||||||||||||||||||||||||||
| Total | 6,157 | ** | ||||||||||||||||||||||||||||||||||||
143
|
Combined |
Combined |
Combined |
||||||||||||||||||||||||||||||||||||
|
Voting |
Voting |
Voting |
||||||||||||||||||||||||||||||||||||
|
Power |
Power |
Power |
||||||||||||||||||||||||||||||||||||
|
of Shares of |
of Shares of |
of Shares of |
||||||||||||||||||||||||||||||||||||
|
All Classes of |
Shares Beneficially |
All Classes of |
Shares Beneficially |
All Classes of |
||||||||||||||||||||||||||||||||||
|
Common |
Owned After the |
Common |
Owned After the |
Common |
||||||||||||||||||||||||||||||||||
|
Stock |
Offering Assuming the |
Stock |
Offering Assuming the |
Stock |
||||||||||||||||||||||||||||||||||
|
Shares Beneficially |
Beneficially |
Underwriters’ Option is |
Beneficially |
Underwriters’ Option is |
Beneficially |
|||||||||||||||||||||||||||||||||
| Owned Prior to Offering | Owned | Not Exercised | Owned | Exercised in Full | Owned | |||||||||||||||||||||||||||||||||
|
Class of |
Number of |
Percentage |
Total |
Number of |
Percentage |
Total |
Number of |
Percentage |
Total |
|||||||||||||||||||||||||||||
|
Name and Address
|
Stock | Shares | of Class | Percentage | Shares | of Class | Percentage | Shares | of Class | Percentage | ||||||||||||||||||||||||||||
|
Executive Officers and Directors as a Group (17 Persons)(11)
|
Class A | 467,982 | 4.49 | % | ||||||||||||||||||||||||||||||||||
| Class B | — | — | ||||||||||||||||||||||||||||||||||||
| Class C | 82,958 | 29.03 | % | |||||||||||||||||||||||||||||||||||
| Class E | 336,150 | 25.20 | % | |||||||||||||||||||||||||||||||||||
| Total | 887,090 | 7.52 | % | |||||||||||||||||||||||||||||||||||
| * | Represents beneficial ownership of less than 1%. | |
| ** | Represents voting power of less than 1%. | |
| (1) | Carlyle Partners V US, L.P. is the managing member of Explorer Coinvest LLC. TC Group V US, L.P. is the sole general partner of Carlyle Partners V US, L.P. TC Group V US, L.L.C. is the sole general partner of TC Group V US, L.P. TC Group Investment Holdings, L.P. is the managing member of TC Group V US, L.L.C. TCG Holdings II, L.P. is the sole general partner of TC Group Investment Holdings, L.P. DBD Investors V, L.L.C. is the sole general partner of TCG Holdings II, L.P. and, in such capacity, exercises investment discretion and control of the shares beneficially owned by Explorer Coinvest LLC. DBD Investors V, L.L.C. is managed by a three-person managing board, and all board action relating to the voting or disposition of these shares requires approval of a majority of the board. The members of the managing board are William E. Conway, Jr., Daniel A. D’Aniello and David M. Rubenstein, all of whom disclaim beneficial ownership of these shares. Excludes shares of common stock owned by other parties to the current stockholders agreement of which Carlyle may be deemed to share beneficial ownership. | |
| (2) | Includes 19,493 shares that Dr. Shrader has the right to acquire through the exercise of options. Dr. Shrader shares investment power and voting power with his wife, Mrs. Janice W. Shrader, for 121,795 shares in the Ralph W. Shrader Revocable Trust. Excludes shares of common stock owned by other parties to the stockholders agreement of which Dr. Shrader may be deemed to share beneficial ownership. | |
| (3) | The shares of Class E common stock shown as beneficially owned by each executive officer do not include the number of shares that we will repurchase upon the exercise of each executive officer’s Rollover options that are exercisable within 60 days, as follows: (i) Dr. Shrader: 13,895; (ii) Mr. Strickland: 11,579; (iii) Mr. Appleby: 13,895; and (iv) Mr. Garner: 13,627. | |
| (4) | Includes 18,977 shares that Mr. Strickland has the right to acquire through the exercise of options. Mr. Strickland has sole investment power and voting power for 9,925 shares in the Samuel Strickland Revocable Trust. | |
| (5) | Includes 19,493 shares that Mr. Appleby has the right to acquire through the exercise of options. | |
| (6) | Includes 19,225 shares that Mr. Garner has the right to acquire through the exercise of options. | |
| (7) | Includes 9,166 shares that Mr. McConnell has the right to acquire through the exercise of options. | |
| (8) | Does not include shares of common stock held by Explorer Coinvest LLC, an affiliate of Carlyle. Messrs Akerson, Clare and Fujiyama are directors of Booz Allen Holding and Managing Directors of Carlyle. Such persons disclaim beneficial ownership of the shares held by Explorer Coinvest LLC. | |
| (9) | Includes 199 shares that Mr. Odeen has the right to acquire through the exercise of options. | |
| (10) | Includes 199 shares that Mr. Rossotti has the right to acquire through the exercise of options. | |
| (11) | Includes 157,962 shares that the directors and executive officers, in aggregate, have the right to acquire through the exercise of options. |
144
DESCRIPTION
OF CAPITAL STOCK
The following descriptions of our capital stock and provisions
of our amended and restated certificate of incorporation and
amended and restated bylaws are summaries of their material
terms and provisions. Our amended and restated certificate of
incorporation and amended and restated bylaws will become
effective prior to the completion of this offering.
Common
Stock
Our amended and restated certificate of incorporation authorizes
the issuance
of shares
of common stock, which includes:
| • | shares of Class A common stock, par value $0.01 per share; | |
| • | shares of Class B non-voting common stock, par value $0.01 per share; | |
| • | shares of Class C restricted common stock, par value $0.01 per share; and | |
| • | shares of Class E special voting common stock, par value $0.03 per share. |
The shares of common stock issued and outstanding are as follows:
|
As of March 31, |
||||
| 2010 | ||||
|
Class A common stock
|
10,292,290 | |||
|
Class B non-voting common stock
|
235,020 | |||
|
Class C restricted common stock
|
202,827 | |||
|
Class E special voting common stock
|
1,334,588 | |||
|
Total shares outstanding
|
12,064,725 | |||
Shares of Class C restricted common stock were issued in
connection with Carlyle’s investment in our company to
certain officers in exchange for stock rights with an exercise
date in 2008 under the Booz Allen Hamilton stock plan.
Class C Restricted Common Stock is restricted in that a
record holder’s shares vest as set forth in the
Officers’ Rollover Stock Plan.
Shares of Class E special voting common stock were issued
pursuant to the Officers’ Rollover Stock Plan in connection
with the exchange of stock and options in Booz Allen Hamilton
for stock and options in Booz Allen Holding as part of the
acquisition. The number of shares of Class E special voting
stock issued in the exchanges equaled the number of Rollover
options to purchase Class A stock also exchanged. For each
Rollover option exercised by an individual, a Class E
special voting common stock will be repurchased by our company
at par value and retired. The Officers’ Rollover Stock Plan
has a fixed vesting and exercise schedule to comply with
Internal Revenue Code Section 409(a). In addition, a small
number of shares of Class E special voting common stock
that are not related to Rollover options have been issued
pursuant to the stockholders agreement subsequent to the
acquisition in connection with certain estate planning transfers.
Holders of Class A common stock, Class C restricted
common stock and Class E special voting common stock are
entitled to one vote for each share on all matters to be voted
on by stockholders. Except as otherwise provided by the Delaware
General Corporation Law, the holders of the voting common stock,
as such, shall vote together as a single class. Except as
required by the Delaware General Corporation Law, the holders of
Class B non-voting common stock will have no voting rights
of any nature whatsoever.
Each share of common stock, except for Class E special
voting common stock, is entitled to participate equally, when
and if declared by the Board from time to time, in such
dividends and other distributions in cash, stock, or property
from our company’s assets or funds as may become legally
available for such purposes subject to any dividend preferences
that may be attributable to preferred stock that may be
authorized and outstanding. In the event of our liquidation,
dissolution or winding up, holders of our common stock, except
for Class E special voting common stock (other than to the
extent of its par value), will be entitled to receive
proportionately any of our assets remaining after the payment of
liabilities and subject to
145
the prior rights of any outstanding preferred stock. Because we
are a holding company, our ability to pay dividends is subject
to our subsidiaries’ ability to pay dividends to us, which
is in turn subject to the restrictions set forth in our credit
facilities.
Under the amended and restated stockholders agreement, subject
to certain exceptions, stockholders cannot transfer shares of
our common stock until 180 days after the consummation of
this offering without our approval. Following the expiration of
the 180-day
lock-up
period, or such other period as the underwriters deem advisable,
upon the transfer of any shares of Class B non-voting
common stock or Class C restricted common stock, such
shares will be automatically converted into shares of
Class A common stock. Shares of our Class A common
stock and Class E special voting common stock are not
convertible into any other series or class of securities.
However, shares of our Class E special voting stock are
required to be repurchased by our company once the related
options convert into Class A common stock.
The outstanding shares of our common stock are, and the shares
of Class A common stock offered by us in this offering,
when issued, will be, fully paid and non-assessable. The rights
and privileges of holders of our common stock are subject to any
series of preferred stock that we may issue in the future.
Preferred
Stock
Our amended and restated certificate of incorporation authorizes
us to issue shares of
preferred stock, $0.01 par value per share, the terms and
conditions of which are determined by the Board upon issuance.
The rights, preferences and privileges of holders of common
stock are subject to, and may be adversely affected by, the
rights of holders of any shares of preferred stock that our
company may designate and issue in the future. At March 31,
2010 and March 31, 2009 there were no shares of preferred
stock outstanding. We have no present plans to issue any shares
of preferred stock.
Corporate
Opportunities
Our amended and restated certificate of incorporation will
provide that Carlyle has no obligation to offer us an
opportunity to participate in business opportunities presented
to Carlyle or its affiliates, including its respective officers,
directors, agents, members, partners and affiliates even if the
opportunity is one that we might reasonably have pursued, and
that neither Carlyle nor its respective officers, directors,
agents, members, partners or affiliates will be liable to us or
our stockholders for breach of any duty by reason of any such
activities unless, in the case of any person who is a director
or officer of our company, such business opportunity is
expressly offered to such director or officer in writing solely
in his or her capacity as an officer or director of our company.
Stockholders will be deemed to have notice of and consented to
this provision of our amended and restated certificate of
incorporation.
Change of
Control Related Provisions of Our Amended and Restated
Certificate of Incorporation, Amended and Restated Bylaws and
Delaware Law
Provisions in our amended and restated certificate of
incorporation and amended and restated bylaws, and in the
Delaware General Corporation Law, may make it difficult,
expensive and time-consuming for a third party to pursue a
takeover attempt even if a change in control of our company
would be beneficial to the interests of our stockholders. Any
provision of our amended and restated certificate of
incorporation or amended and restated bylaws or Delaware law
that has the effect of delaying or deterring a change in control
could limit the opportunity for our stockholders to receive a
premium for their shares of our common stock, and could also
affect the price that some investors are willing to pay for our
common stock. These provisions are intended to:
| • | enhance the likelihood of continuity and stability in the composition of our Board; | |
| • | discourage some types of transactions that may involve an actual or threatened change in control of our company; | |
| • | discourage certain tactics that may be used in proxy fights; |
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| • | ensure that our Board will have sufficient time to act in what our Board believes to be the best interests of us and our stockholders; and | |
| • | encourage persons seeking to acquire control of our company to first consult with our Board to negotiate the terms of any proposed business combination or offer. |
Delaware
Takeover Statute
In our amended and restated certificate of incorporation, we
will elect not to be governed by Section 203, as permitted
under and pursuant to subsection (b)(3) of Section 203,
until the first date that Coinvest and its affiliates no longer
beneficially own more than % of the
outstanding shares of our Class A common stock. After such
date, we will be governed by Section 203. Section 203
of the Delaware General Corporation Law, with specified
exceptions, prohibits a Delaware corporation from engaging in
any “business combination” with any “interested
stockholder” for a period of three years following the time
that the stockholder became an interested stockholder unless:
| • | before that time, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; | |
| • | upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or | |
| • | at or after that time, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the vote of at least 662/3% of the outstanding voting stock that is not owned by the interested stockholder. |
Section 203 defines “business combination” to
include the following:
| • | any merger or consolidation of the corporation with the interested stockholder; | |
| • | any sale, lease, exchange, mortgage, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; | |
| • | subject to specified exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; | |
| • | any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or | |
| • | any receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. |
Section 203 defines an “interested stockholder”
as:
| • | any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation; and | |
| • | any entity or person affiliated with or controlling or controlled by the entity or person. |
Section 203 may make it difficult and expensive for a third
party to pursue a takeover attempt that we do not approve, even
if a change in control would be beneficial to the interests of
our stockholders.
Unissued
Shares of Capital Stock
We are
issuing shares of
our authorized Class A common stock in this offering. The
remaining shares of authorized and unissued Class A common
stock will be available for future issuance without additional
stockholder approval. While the additional shares are not
designed to deter or prevent a change of
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control, under some circumstances we could use the additional
shares to create voting impediments or to frustrate persons
seeking to effect a takeover or otherwise gain control by, for
example, issuing those shares in private placements to
purchasers who might side with our Board in opposing a hostile
takeover bid.
In addition, our amended and restated certificate of
incorporation will provide our Board with the authority, without
any further vote or action by our stockholders, to designate and
issue one or more series of preferred stock at their sole
discretion and to fix the number of shares and the preferences,
limitations and relative rights of the shares constituting any
series. This provision makes it possible for our Board to issue
preferred stock with super voting, special approval, dividend or
other rights or preferences which could impede any attempt to
acquire us. These and other provisions may have the effect of
deferring, delaying or discouraging hostile takeovers or changes
in control or management of our company, discouraging bids for
the Class A common stock at a premium over the market price
of the common stock and may adversely affect the market price
of, and the voting and other rights of the holder of,
Class A common stock.
Classified
Board; Vacancies and Removal of Directors
Our amended and restated certificate of incorporation and
amended and restated bylaws will provide that our Board will be
divided into three classes whose members will serve three-year
terms expiring in successive years. Any effort to obtain control
of our Board by causing the election of a majority of the Board
may require more time than would be required without such a
staggered election structure.
Our amended and restated certificate of incorporation and
amended and restated bylaws will provide that directors may be
removed with or without cause at any time upon the affirmative
vote of holders of at least a majority of the votes to which all
the stockholders would be entitled to cast until a
“group,” as defined under Section 13(d)(3) of the
Exchange Act, no longer beneficially owns more than 50% of the
outstanding shares of our voting common stock. After such time,
directors may only be removed from office for cause upon the
affirmative vote of holders of at least a majority of the votes
which all the stockholders would be entitled to cast. Our
amended and restated certificate of incorporation and amended
and restated bylaws will provide that vacancies in our Board may
be filled only by our Board. Any director elected to fill a
vacancy will hold office for the remainder of the full term of
the class of directors in which the vacancy occurred (including
a vacancy created by increasing the size of the Board) and until
such director’s successor shall have been duly elected and
qualified. No decrease in the number of directors will shorten
the term of any incumbent director. The number of directors
shall be fixed and modified, but not reduced to less than three,
from time to time by resolution of our Board.
These provisions may have the effect of slowing or impeding a
third party from initiating a proxy contest, making a tender
offer or otherwise attempting a change in the membership of our
Board that would effect a change of control.
Advance
Notice Provisions for Stockholder Nominations of Directors and
Stockholder Proposals
Our amended and restated bylaws will establish an advance notice
procedure for stockholders to make nominations of candidates for
election as director or to bring other business before an annual
meeting of our stockholders. This procedure provides that only
persons who are nominated by the Board, a committee appointed by
the Board, or by a stockholder who has given timely written
notice to our secretary prior to the meeting, will be eligible
for election as directors, and only business that has been
brought before an annual meeting by the Board, any committee
appointed by the Board, or by a stockholder who has given timely
written notice to our secretary prior to the meeting, may be
conducted. Under the procedure, to be timely, notice must be
received by the secretary at our principal executive offices not
less than 90 days nor more than 120 days prior to the
first anniversary date of the annual meeting of the preceding
year. In addition, a stockholder’s notice proposing to
nominate a person for election as director must contain specific
information about the nominating stockholder and the proposed
nominee, and a stockholder’s notice relating to the conduct
of business other than the nomination of directors must contain
specific information about the business and the proposing
stockholder.
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Requiring advance notice of nominations by stockholders allows
our Board an opportunity to consider the qualifications of the
proposed nominees and also provides a more orderly procedure for
conducting annual meetings of stockholders. It also provides the
Board with the opportunity to inform stockholders of proposed
business prior to the meeting, so that stockholders can better
decide whether to attend the meeting or to grant a proxy
regarding the disposition of the business. These provisions may
also have the effect of precluding a contest for the election of
directors or the consideration of stockholder proposals and of
discouraging or deterring a third party from conducting a
solicitation of proxies to elect its own slate of directors or
to approve its own proposal without regard to whether
consideration of the nominees or proposals might be harmful or
beneficial to us or our stockholders.
Calling
Special Stockholder Meetings; Stockholder Action by Written
Consent
Our amended and restated certificate of incorporation and
amended and restated bylaws will provide that a special meeting
of stockholders may only be called by our Board. Our amended and
restated bylaws will allow for stockholder actions by written
consent until no “group,” as defined under
Section 13(d)(3) of the Exchange Act, owns more than 50% of
the outstanding shares of our voting common stock. After such
time, any action taken by the stockholders must be effected at a
duly called annual or special meeting, which may be called only
by the Board.
These provisions make it procedurally more difficult for a
stockholder to take action without a meeting and therefore may
reduce the likelihood that a stockholder will seek to take
independent action with respect to matters that are not
supported by management.
Limitation
of Liability of Directors; Indemnification of Directors and
Officers
Our amended and restated certificate of incorporation will
contain provisions permitted under Delaware General Corporation
Law relating to the liability of directors. These provisions
eliminate a director’s personal liability for monetary
damages resulting from a breach of fiduciary duty, except in
circumstances involving:
| • | any breach of the director’s duty of loyalty; | |
| • | acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; | |
| • | under Section 174 of the Delaware General Corporation Law (unlawful dividends); or | |
| • | any transaction from which the director derives an improper personal benefit. |
The principal effect of the limitation on liability provision is
that a stockholder will be unable to prosecute an action for
monetary damages against a director unless the stockholder can
demonstrate a basis for liability for which indemnification is
not available under the Delaware General Corporation Law. These
provisions, however, should not limit or eliminate our rights or
any stockholder’s rights to seek non-monetary relief, such
as an injunction or rescission, in the event of a breach of
director’s fiduciary duty. These provisions will not alter
a director’s liability under federal securities laws. The
inclusion of this provision in our certificate of incorporation
may discourage or deter stockholders or management from bringing
a lawsuit against directors for a breach of their fiduciary
duties, even though such an action, if successful, might
otherwise have benefited us and our stockholders.
Our amended and restated bylaws will require us to indemnify and
advance expenses to our directors and officers to the fullest
extent not prohibited by the Delaware General Corporation Law
and other applicable law, except in the case of a proceeding
instituted by the director without the approval of our Board.
Our amended and restated bylaws will provide that we are
required to indemnify our directors and officers, to the fullest
extent permitted by law, for all judgments, fines, settlements,
legal fees and other expenses incurred in connection with
pending or threatened legal proceedings because of the
director’s or officer’s positions with us or another
entity that the director or officer serves at our request,
subject to various conditions, and to advance funds to our
directors and officers to enable them to defend against such
proceedings. To receive indemnification, the director or officer
must have been successful in the legal proceeding or have acted
in
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good faith and in what was reasonably believed to be a lawful
manner in our best interest and, with respect to any criminal
proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
Prior to the completion of this offering, we expect to enter
into an indemnification agreement with each of our directors and
certain of our officers. The indemnification agreement will
provide our directors and certain of our officers with
contractual rights to the indemnification and expense
advancement rights provided under our bylaws, as well as
contractual rights to additional indemnification as provided in
the indemnification agreement.
Supermajority
Voting Requirements for Amendment of Certain Provisions of Our
Amended and Restated Bylaws
Our amended and restated bylaws will provide that our bylaws may
be amended, altered or repealed at any regular or special
meeting of the stockholders only if the amendment is approved by
the vote of holders of at least two-thirds of the shares then
entitled to vote at a general election of directors. In
addition, amendments may be instituted by resolutions adopted by
a majority of the Board at any special or regular meeting of the
Board. These provisions make it more difficult for stockholders
to remove or amend any provisions that may have an anti-takeover
effect.
Transfer
Agent and Registrar
| will serve as transfer agent and registrar for our Class A common stock. |
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SHARES OF
COMMON STOCK ELIGIBLE FOR FUTURE SALE
Immediately prior to this offering, there was no public market
for our common stock. Sales of substantial amounts of our common
stock in the public market could adversely affect prevailing
market prices of our common stock. Furthermore, some shares of
our common stock will not be available for sale for a certain
period of time after this offering because they are subject to
contractual and legal restrictions on resale some of which are
described below. Sales of substantial amounts of common stock in
the public market after these restrictions lapse, or the
perception that these sales could occur, could adversely affect
the prevailing market price and our ability to raise equity
capital in the future.
Sale of
Restricted Securities
After this
offering, shares of our
Class A common stock will be outstanding. Of these shares,
all of the shares sold in this offering will be freely tradable
without restriction under the Securities Act, unless purchased
by our “affiliates,” as that term is defined in
Rule 144 under the Securities Act. The
remaining shares of our
common stock that will be outstanding after this offering are
“restricted securities” within the meaning of
Rule 144 under the Securities Act. Restricted securities
may be sold in the public market only if they are registered
under the Securities Act or are sold pursuant to an exemption
from registration under Rule 144 or Rule 701 under the
Securities Act, which are summarized below. Subject to the
lock-up
agreements described below, shares held by our affiliates that
are not restricted securities or that have been owned for more
than one year may be sold subject to compliance with
Rule 144 of the Securities Act without regard to the
prescribed one-year holding period under Rule 144.
Lock-Up
Agreements
We, our directors and our executive officers have agreed that,
subject to specified exceptions, without the prior written
consent of Morgan Stanley & Co. Incorporated and
Barclays Capital Inc., on behalf of the underwriters, we will
not, during the period beginning on the date of this prospectus
and ending 180 days thereafter:
| • | offer, pledge, sell, announce the intention to sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock; | |
| • | enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock; or | |
| • | make any demand for or exercise any right with respect to, the registration of any shares of our common stock or any security convertible into or exercisable or exchangeable for our common stock; |
whether any such transaction described above is to be settled by
delivery of Class A common stock or such other securities,
in cash or otherwise.
The 180-day
restricted period described in the preceding paragraph will be
extended if:
| • | during the last 17 days of the 180-day restricted period we issue an earnings release, or material news or a material event relating to us occurs; or | |
| • | prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day restricted period, |
in which case the restrictions described in this paragraph will
continue to apply until the expiration of the
180-day
period beginning on the issuance of the earnings release or the
occurrence of the material news or material event.
Additionally, under the amended and restated stockholders
agreement, holders of our common stock who have not signed
contractual
lock-up
agreements with representatives of the underwriters have agreed
with us not to transfer shares of our common stock until
180 days after the consummation of this offering without
our approval. In turn, we have agreed not to release any of our
stockholders from these
lock-up
agreements prior to the expiration of the
180-day
period without the consent of Morgan Stanley & Co.
Incorporated and
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Barclays Capital Inc. We have also agreed with the underwriters
of this offering that we will extend the
180-day
lock-up
period if, as permitted by the amended and restated stockholders
agreement:
| • | during the last 17 days of the 180-day restricted period we issue an earnings release, or material news or a material event relating to us occurs; or | |
| • | prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day restricted period, in which case these restrictions will continue to apply until the expiration of the 180-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. |
There are no agreements between the underwriters and any of our
stockholders or affiliates releasing them from these
lock-up
agreements prior to the expiration of the
180-day
period. Following the
lock-up
periods, we estimate that
approximately shares of
our Class A common stock that are restricted securities or
are held by our affiliates as of the date of this prospectus
will be eligible for sale in the public market in compliance
with Rule 144 or Rule 701 under the Securities Act.
Registration
Rights
Stockholders currently have the right to require us to register
shares of Class A common stock for resale in some
circumstances. See “Certain Relationships and Related Party
Transactions — Related Person Transactions —
Stockholders Agreement.”
Rule 144
Common stock eligible for sale under Rule 144 may be sold
immediately upon the completion of this offering. In general,
under Rule 144, a person may sell shares of common stock
acquired from us immediately upon completion of this offering,
without regard to manner of sale, the availability of public
information or volume, if:
| • | the person is not an affiliate of the company and has not been an affiliate of the company at any time during the three months preceding such a sale; and | |
| • | the person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than an affiliate. |
Rule 701
Shares of our common stock issued in reliance on Rule 701,
such as those shares acquired upon exercise of options granted
under our Equity Incentive Plan, are restricted and, subject to
the contractual and legal provisions on resale described above,
beginning 90 days after the effective date of this
prospectus, may be sold by stockholders other than our
affiliates, subject only to the manner of sale provisions of
Rule 144, and by affiliates under Rule 144 without
compliance with its one-year holding requirement. We intend to
file a registration statement under the Securities Act covering
all shares subject to options outstanding under our Equity
Incentive Plan.
Stock
Options
Upon completion of this offering, we intend to file one or more
registration statements under the Securities Act to register the
shares of Class A common stock to be issued under our
Equity Incentive Plan and Officers’ Rollover Stock Option
Plan and, as a result, all shares of Class A common stock
acquired upon exercise of stock options and other equity-based
awards granted under these plans will also be freely tradable
under the Securities Act unless purchased by our affiliates. As
of ,
our Equity Incentive Plan authorized a maximum total
of shares
of common stock for issuance, and of such
total, shares
of common stock were issued to members of our management and
there were stock options outstanding to purchase, subject to
vesting, up to an
additional shares
of our common stock and our Officers’ Rollover Stock Option
Plan authorized a maximum total
of shares
of common stock for issuance, and of such
total, shares
of common stock were issued to members of our management and
there were stock options outstanding to purchase, subject to
vesting, up to an
additional shares
of our common stock.
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CERTAIN
U.S. FEDERAL TAX CONSIDERATIONS FOR
NON-U.S.
HOLDERS
The following is a discussion of the material U.S. federal
income and estate tax considerations relating to the purchase,
ownership and disposition of our common stock by
Non-U.S. Holders
(as defined below) that purchase our common stock pursuant to
this offering and hold such common stock as a capital asset.
This discussion is based on the Code, U.S. Treasury
regulations thereunder, and administrative and judicial
interpretations thereof, all as in effect on the date hereof and
all of which are subject to change, possibly with retroactive
effect, or to different interpretation. This discussion does not
address all of the U.S. federal tax considerations that may
be relevant to specific
Non-U.S. Holders
in light of their particular circumstances or to
Non-U.S. Holders
subject to special treatment under U.S. federal income tax
law (such as banks, insurance companies, dealers in securities
or other
Non-U.S. Holders
that mark their securities to market for U.S. federal
income tax purposes, foreign governments, international
organizations, controlled foreign corporations, passive foreign
investment companies, tax-exempt entities, certain former
citizens or residents of the United States, or
Non-U.S. Holders
who hold our common stock as part of a straddle, hedge,
conversion or other integrated transaction). This discussion
does not address any U.S. state or local or
non-U.S. tax
considerations or any U.S. federal gift or alternative
minimum tax considerations.
As used in this discussion, the term
“Non-U.S. Holder”
means a beneficial owner of our common stock that is for
U.S. federal income tax purposes:
| • | an individual who is neither a citizen nor a resident of the United States; | |
| • | a corporation that is not created or organized in or under the laws of the United States, any state thereof, or the District of Columbia; | |
| • | an estate that is not subject to U.S. federal income tax on income from non-U.S. sources which is not effectively connected with the conduct of a trade or business within the United States; or | |
| • | a trust unless (i) it is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all of its substantial decisions or (ii) it has in effect a valid election under applicable U.S. Treasury regulations to be treated as a United States person. |
If an entity treated as a partnership for U.S. federal
income tax purposes invests in our common stock, the
U.S. federal income tax considerations relating to such
investment will depend in part upon the status and activities of
such entity and the particular partner. Any such entity should
consult its own tax adviser regarding the U.S. federal tax
considerations applicable to it and its partners of the
purchase, ownership and disposition of our common stock.
PERSONS CONSIDERING AN INVESTMENT IN OUR COMMON STOCK SHOULD
CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL,
STATE AND LOCAL AND
NON-U.S. INCOME,
ESTATE AND OTHER TAX CONSIDERATIONS RELATING TO THE PURCHASE,
OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES.
Distributions
on Common Stock
Subject to the discussion below under “— Payments
to Foreign Financial Institutions and Non-financial Foreign
Entities” and “— Information Reporting and
Backup Withholding,” if we make a distribution of cash or
other property (other than certain pro rata distributions
of our common stock) in respect of a share of our common stock,
the distribution will be treated as a dividend to the extent it
is paid from our current or accumulated earnings and profits (as
determined under U.S. federal income tax principles). If
the amount of a distribution exceeds our current and accumulated
earnings and profits, such excess generally will be treated
first as a tax-free return of capital to the extent of the
Non-U.S. Holder’s
tax basis in such share of our common stock, and then as capital
gain. Distributions treated as dividends on our common stock
that are paid to or for the account of a
Non-U.S. Holder
generally will be subject to U.S. federal withholding tax
at a rate of 30%, or at a lower rate if provided by an
applicable tax treaty and the
Non-U.S. Holder
provides the
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documentation (generally, Internal Revenue Service, or the IRS,
Form W-8BEN)
required to claim benefits under such tax treaty to the
applicable withholding agent.
If, however, a dividend is effectively connected with the
conduct of a trade or business in the United States by a
Non-U.S. Holder,
the dividend generally will not be subject to the 30%
U.S. federal withholding tax if the
Non-U.S. Holder
provides the appropriate documentation (generally, IRS
Form W-8ECI)
to the applicable withholding agent. Instead, the
Non-U.S. Holder
generally will be subject to U.S. federal income tax in
respect of such dividend on a net income basis in substantially
the same manner as a U.S. holder (except as provided by an
applicable tax treaty). Dividends that are effectively connected
with the conduct of a trade or business in the United States by
a corporate
Non-U.S. Holder
may also be subject to a branch profits tax at the rate of 30%
(or a lower rate if provided by an applicable tax treaty).
Sale,
Exchange or Other Disposition of Common Stock
Subject to the discussion below under “— Payments
to Foreign Financial Institutions and Non-financial Foreign
Entities” and “— Information Reporting and
Backup Withholding,” a
Non-U.S. Holder
generally will not be subject to U.S. federal income tax on
gain recognized on the sale, exchange or other disposition of
our common stock unless:
| • | we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of (i) the five year period ending on the date of such sale, exchange or disposition and (ii) such Non-U.S. Holder’s holding period with respect to our common stock, and certain other conditions are met; | |
| • | such gain is effectively connected with the conduct of a trade or business in the United States by such Non-U.S. Holder, in which event such Non-U.S. Holder generally will be subject to U.S. federal income tax on a net income basis in substantially the same manner as a U.S. holder (except as provided by an applicable tax treaty) and, if it is a corporation, may also be subject to a branch profits tax at the rate of 30% (or a lower rate if provided by an applicable tax treaty); or | |
| • | such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of such sale, exchange or disposition and certain other conditions are met. |
Generally, a corporation is a “United States real property
holding corporation” if the fair market value of its United
States real property interests equals or exceeds 50% of the sum
of the fair market value of its worldwide real property
interests and its other assets used or held for use in a trade
or business (all as determined for U.S. federal income tax
purposes). We do not believe that we are, and we do not
presently anticipate that we will become, a United States real
property holding corporation.
Payments
to Foreign Financial Institutions and Non-financial Foreign
Entities
Payments of any dividend on, or any gross proceeds from the
sale, exchange or other disposition of, our common stock made
after December 31, 2012 to a
Non-U.S. Holder
that is a “foreign financial institution” or a
“non-financial foreign entity” (to the extent such
dividend or gain from such sale, exchange or disposition is not
effectively connected with the conduct of a trade or business in
the United States by such
Non-U.S. Holder)
generally will be subject to the U.S. federal withholding
tax at the rate of 30% unless such
Non-U.S. Holder
complies with certain additional U.S. reporting
requirements.
For this purpose, a foreign financial institution includes,
among others, a
non-U.S. entity
that (i) is a bank, (ii) holds, as a substantial
portion of its business, financial assets for the account for
others or (iii) is engaged primarily in the business of
investing, reinvesting or trading in securities, partnership
interests, commodities or any interest in securities,
partnership interests or commodities. A foreign financial
institution generally will be subject to this 30%
U.S. federal withholding tax unless it (i) enters into
an agreement with the IRS pursuant to which such financial
institution agrees (x) to comply with certain information,
verification, due diligence, reporting, and other procedures
established by the IRS with respect to “United States
accounts” (generally financial accounts maintained by a
financial institution (as well as non-traded debt or equity
interests in such financial institution) held by one or more
specified U.S. persons or foreign entities with a
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specified level of U.S. ownership) and (y) to withhold on
its account holders that fail to comply with reasonable
information requests or that are foreign financial institutions
that do not enter into such an agreement with the IRS or
(ii) is exempted by the IRS.
A non-financial foreign entity generally will be subject to this
30% U.S. federal withholding tax unless such entity
provides the applicable withholding agent with either (i) a
certification that such entity does not have any substantial
U.S. owners or (ii) information regarding the name,
address and taxpayer identification number of each substantial
U.S. owner of such entity. These reporting requirements
generally will not apply to a non-financial foreign entity that
is a corporation the stock of which is regularly traded on an
established securities market or certain affiliated corporations
or to certain other specified types of entities.
Non-U.S. Holders
should consult their own tax advisor regarding the application
of these withholding and reporting rules.
Information
Reporting and Backup Withholding
Generally, the amount of dividends on our common stock paid to a
Non-U.S. Holder
and the amount of any tax withheld from such dividends must be
reported annually to the IRS and to the
Non-U.S. Holder.
The information reporting and backup withholding rules that
apply to payments to certain U.S. persons generally will
not apply to payments with respect to our common stock to a
Non-U.S. Holder
if such
Non-U.S. Holder
certifies under penalties of perjury that it is not a United
States person (generally by providing an IRS
Form W-8BEN)
or otherwise establishes an exemption.
Proceeds from the sale, exchange or other disposition of our
common stock by a
Non-U.S. Holder
effected through a
non-U.S. office
of a U.S. broker or of a
non-U.S. broker
with certain specified U.S. connections generally will be
subject to information reporting (but not backup withholding)
unless such
Non-U.S. Holder
certifies under penalties of perjury that it is not a United
States person (generally by providing an IRS
Form W-8BEN)
or otherwise establishes an exemption. Proceeds from the sale,
exchange or other disposition of our common stock by a
Non-U.S. Holder
effected through a U.S. office of a broker generally will
be subject to information reporting and backup withholding,
unless such
Non-U.S. Holder
certifies under penalties of perjury that it is not a United
States person (generally by providing an IRS
Form W-8BEN)
or otherwise establishes an exemption.
Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules generally will be
allowed as a refund or a credit against a
Non-U.S. Holder’s
U.S. federal income tax liability if the required
information is furnished by such
Non-U.S. Holder
on a timely basis to the IRS.
U.S.
Federal Estate Tax
In the case of an individual
Non-U.S. Holder
who, for U.S. federal estate tax purposes, is not a citizen
or resident of the United States at the time of his or her
death, shares of our common stock owned or treated as owned at
such time by such individual will be included in his or her
gross estate for U.S. federal estate tax purposes and may
be subject to U.S. federal estate tax unless an applicable
estate tax treaty provides otherwise.
Legislation enacted in 2001 provides for reductions in the
U.S. federal estate tax through 2009 and the elimination of
the tax entirely for the year 2010. Under the legislation, the
estate tax would be fully reinstated, as in effect prior to the
reductions, for 2011 and thereafter.
155
UNDERWRITING
Morgan Stanley & Co. Incorporated, Barclays Capital
Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Credit Suisse Securities (USA) LLC are acting
as joint book-running managers of this offering and, together
with Stifel, Nicolaus & Company, Incorporated,
BB&T Capital Markets, Lazard Capital Markets LLC and
Raymond James & Associates, Inc., are acting as the
managing underwriters of this offering. Under the terms and
subject to the conditions contained in an underwriting agreement
dated the date of this prospectus, the underwriters named below
have severally agreed to purchase, and we have agreed to sell to
them, the number of shares of Class A common stock
indicated in the table below:
|
Number of |
||||
|
Underwriters
|
Shares | |||
|
Morgan Stanley & Co. Incorporated
|
||||
|
Barclays Capital Inc.
|
||||
|
Merrill Lynch, Pierce, Fenner & Smith
|
||||
|
Incorporated
|
||||
|
Credit Suisse Securities (USA) LLC
|
||||
|
Stifel, Nicolaus & Company, Incorporated
|
||||
|
BB&T Capital Markets, a division of Scott &
Stringfellow, LLC
|
||||
|
Lazard Capital Markets LLC
|
||||
|
Raymond James & Associates, Inc.
|
||||
|
Total
|
||||
The underwriters are offering the shares of Class A common
stock subject to their acceptance of the shares from us and
subject to prior sale. The underwriting agreement provides that
the obligations of the several underwriters to pay for and
accept delivery of the shares of Class A common stock
offered by this prospectus are subject to the approval of
certain legal matters by their counsel and to other conditions.
The underwriters are obligated to take and pay for all of the
shares of Class A common stock offered by this prospectus
if any such shares are taken. However, the underwriters are not
required to take or pay for the shares covered by the
underwriters’ over-allotment option described below. The
underwriters initially propose to offer part of the shares of
Class A common stock directly to the public at the public
offering price listed on the cover page of this prospectus, less
underwriting discounts and commissions, and part of the shares
of Class A common stock to certain dealers at a price that
represents a concession not in excess of
$ a share under the public
offering price. After the initial offering of the shares of
Class A common stock, the offering price and other selling
terms may from time to time be varied by the representatives.
We have granted to the underwriters an option, exercisable for
30 days from the date of this prospectus, to purchase up to
an aggregate of additional shares
of Class A common stock from us at the public offering
price, less underwriting discounts and commissions. The
underwriters may exercise this option solely for the purpose of
covering over-allotments, if any, made in connection with the
offering of the shares of Class A common stock offered by
this prospectus. To the extent the option is exercised, each
underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of the
additional shares of Class A common stock as the number
listed next to the underwriter’s name in the preceding
table bears to the total number of shares of Class A common
stock listed next to the names of all underwriters in the
preceding table. If the underwriters’ over-allotment option
is exercised in full, the total price to the public would be
$ , the total underwriters’
discounts and commissions paid by us would be
$ and the total proceeds to us
would be $ .
156
The following table shows the per share and total underwriting
discounts and commissions that we are to pay to the underwriters
in connection with this offering. These amounts are shown
assuming both no exercise and full exercise of the
underwriters’ over-allotment option.
| Paid by Us | Total | |||||||||||||||
|
No |
Full |
No |
Full |
|||||||||||||
| Exercise | Exercise | Exercise | Exercise | |||||||||||||
|
Per Share
|
$ | $ | $ | $ | ||||||||||||
|
Total
|
$ | $ | $ | $ | ||||||||||||
In addition, we estimate that the expenses of this offering
other than underwriting discounts and commissions payable by us
will be approximately
$ million.
The underwriters have informed us that they do not intend sales
to discretionary accounts to exceed 5% of the total number of
shares of Class A common stock offered by them.
We, our directors and our executive officers have agreed that,
subject to specified exceptions, without the prior written
consent of Morgan Stanley & Co. Incorporated and
Barclays Capital Inc., on behalf of the underwriters, we will
not, during the period beginning on the date of this prospectus
and ending 180 days thereafter:
| • | offer, pledge, sell, announce the intention to sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock; | |
| • | enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock; or | |
| • | make any demand for or exercise any right with respect to, the registration of any shares of our common stock or any security convertible into or exercisable or exchangeable for our common stock; |
whether any such transaction described above is to be settled by
delivery of Class A common stock or such other securities,
in cash or otherwise.
The 180-day
restricted period described in the preceding paragraph will be
extended if:
| • | during the last 17 days of the 180-day restricted period we issue an earnings release, or material news or a material event relating to us occurs; or | |
| • | prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day restricted period, |
in which case the restrictions described in this paragraph will
continue to apply until the expiration of the
180-day
period beginning on the issuance of the earnings release or the
occurrence of the material news or material event.
Additionally, under the amended and restated stockholders
agreement, holders of our common stock who have not signed
contractual
lock-up
agreements with representatives of the underwriters have agreed
with us not to transfer shares of our common stock until
180 days after the consummation of this offering without
our approval. In turn, we have agreed not to release any of our
stockholders from these
lock-up
agreements prior to the expiration of the
180-day
period without the consent of Morgan Stanley & Co.
Incorporated and Barclays Capital Inc. We have also agreed with
the underwriters of this offering that we will extend the
180-day
lock-up
period if, as permitted by the amended and restated stockholders
agreement:
| • | during the last 17 days of the 180-day restricted period we issue an earnings release, or material news or a material event relating to us occurs; or | |
| • | prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day restricted period, in which |
157
| case these restrictions will continue to apply until the expiration of the 180-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. |
The restrictions described in the preceding paragraphs do not
apply to:
| • | the sale by us of shares to the underwriters in connection with the offering; | |
| • | transactions by any person other than us relating to shares of Class A common stock or other securities convertible or exchangeable into Class A common stock acquired in open market transactions after the completion of the offering of the shares, provided that no filing under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of Class A common stock, shall be required or shall be voluntarily made during the 180-day restricted period; or |
| • | the transfer of shares of Class A common stock or any security convertible or exchangeable into shares of Class A common stock as a bona fide gift, as a distribution to general or limited partners, stockholders or members of our stockholders, or by will or intestate succession to a member of the immediate family of our stockholders. |
With respect to the last bullet, it shall be a condition to the
transfer or distribution that the transferee provide prior
written notice of such transfer or distribution to Morgan
Stanley & Co. Incorporated and Barclays Capital Inc.,
execute a copy of the
lock-up
agreement, that no filing by any donee or transferee with the
SEC shall be required or shall be made voluntarily in connection
with such transfer or distribution and no such transfer or
distribution may include a disposition for value.
In order to facilitate this offering of Class A common
stock, the underwriters may engage in transactions that
stabilize, maintain or otherwise affect the price of the
Class A common stock. Specifically, the underwriters may
sell more shares than they are obligated to purchase under the
underwriting agreement, creating a short position. A short sale
is covered if the short position is no greater than the number
of shares available for purchase by the underwriters under the
over-allotment option. The underwriters can close out a covered
short sale by exercising the over-allotment option or by
purchasing shares in the open market. In determining the source
of shares to close out a covered short sale, the underwriters
will consider, among other things, the open market price of
shares compared to the price available under the over-allotment
option. The underwriters may also sell shares in excess of the
over-allotment option, creating a naked short position. The
underwriters must close out any naked short position by
purchasing shares in the open market. A naked short position is
more likely to be created if the underwriters are concerned that
there may be downward pressure on the price of the Class A
common stock in the open market after pricing that could
adversely affect investors who purchase in this offering. In
addition, to stabilize the price of the Class A common
stock, the underwriters may bid for and purchase shares of
Class A common stock in the open market. Finally, the
underwriting syndicate may reclaim selling concessions allowed
to an underwriter or a dealer for distributing the Class A
common stock in the offering, if the syndicate repurchases
previously distributed Class A common stock to cover
syndicate short positions or to stabilize the price of the
Class A common stock. These activities may raise or
maintain the market price of the Class A common stock above
independent market levels or prevent or retard a decline in the
market price of the Class A common stock. The underwriters
are not required to engage in these activities and may end any
of these activities at any time.
We will apply to list our Class A common stock
on
under the symbol “BAH.”
We and the underwriters have agreed to indemnify each other
against certain liabilities, including liabilities arising out
of or based upon material misstatements or omissions.
Prior to this offering, there has been no public market for the
shares of Class A common stock. The initial public offering
price will be determined by negotiations between us and the
representatives of the underwriters. Among the factors to be
considered in determining the initial public offering price will
be our future prospects and those of our industry in general;
sales, earnings and other financial operating information in
recent periods; and the price-earnings ratios, price-sales
ratios and market prices of securities and certain financial and
operating information of companies engaged in activities similar
to ours. The estimated initial public offering price range set
forth on the cover page of this preliminary prospectus is
subject to change as a
158
result of market conditions and other factors. An active trading
market for the shares may not develop, and it is possible that
after the offering the shares will not trade in the market above
their initial offering price. A prospectus in electronic format
may be made available on the websites maintained by one or more
of the underwriters, and one or more of the underwriters may
distribute prospectuses electronically. The underwriters may
agree to allocate a number of shares to underwriters for sale to
their online brokerage account holders. Internet distributions
will be allocated by the underwriters that make Internet
distributions on the same basis as other allocations.
Relationships
The underwriters or their affiliates may engage in transactions
with, and may perform and have, from time to time, performed
investment banking and advisory services for us in the ordinary
course of their business and for which they have received or
would receive customary fees and expenses. For example,
affiliates of Credit Suisse Securities (USA) LLC, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated and Barclays Capital Inc.
are acting as lenders and, in some instances, agents under our
senior credit facilities. Specifically, affiliates of Credit
Suisse Securities (USA) LLC, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Barclays Capital Inc.
are lenders under the term loan facilities of our senior credit
facilities and affiliates of Credit Suisse Securities (USA) LLC,
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Barclays Capital Inc. and Morgan Stanley & Co.
Incorporated are lenders under the revolving facility portion of
our senior credit facilities. Affiliates of Credit Suisse
Securities (USA) LLC and Merrill Lynch, Pierce,
Fenner & Smith Incorporated are acting as agents and,
in the case of Credit Suisse Securities (USA) LLC, a lender
under our mezzanine credit facility. For a description of these
facilities, see “Description of Certain Indebtedness.”
Charles O. Rossotti, a member of our board of directors, also
serves as a director of Bank of America Corporation, the parent
company of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, an underwriter of this offering and a member of
FINRA.
Lazard Frères and Co. LLC referred this transaction to
Lazard Capital Markets LLC and will receive a referral fee from
Lazard Capital Markets LLC in connection therewith.
Conflicts
of Interest
The net proceeds of this offering will be used to retire a
portion of our mezzanine credit facility under which Credit
Suisse AG, Cayman Islands Branch, an affiliate of Credit Suisse
Securities (USA) LLC, is a lender. As a result, Credit Suisse
Securities (USA) LLC is deemed to have a “conflict of
interest” under NASD Conduct Rule 2720 of FINRA
because its affiliate will receive at least 5% of the net
proceeds of this offering. This offering will be conducted in
compliance with the requirements of such rule.
159
LEGAL
MATTERS
The legal validity of the Class A common stock offered in
this offering will be passed upon for us by
Debevoise & Plimpton LLP, New York, New York. Various
legal matters relating to this offering will be passed upon for
the underwriters by Latham & Watkins LLP, Washington,
District of Columbia.
160
EXPERTS
The consolidated financial statements of Booz Allen Hamilton
Holding Corporation at March 31, 2010 and 2009, and for the
year ended March 31, 2010 and for the eight months ended
March 31, 2009, as well as the consolidated statements of
operations of Booz Allen Hamilton, Inc. for the four months
ended July 31, 2008 and the year ended March 31, 2008,
appearing in this prospectus and registration statement have
been audited by Ernst & Young LLP, an independent
registered public accounting firm, as set forth in their report
thereon appearing elsewhere herein, and are included in reliance
upon such report given on the authority of such firm as experts
in accounting and auditing.
Prior to Ernst & Young LLP being engaged to
provide audit services to the Predecessor, the Predecessor
engaged foreign affiliates of Ernst & Young LLP
to provide certain legal and tax services at two insignificant
foreign subsidiaries that were subsequently spun off with the
commercial and international business. These legal and tax
services were consistent with the independence requirements of
the American Institute of Certified Public Accountants and no
public offering was contemplated by the Predecessor while the
services were being provided. In connection with the filing of
this prospectus and registration statement, the independence
rules of the SEC apply to all periods for which audited
consolidated financial statements are included in this
prospectus and registration statement.
Ernst & Young LLP and the Company’s Audit
Committee previously determined that the foregoing legal and tax
services were inconsistent with the SEC’s independence
rules for the year ended March 31, 2008. However, after
analysis of these circumstances, Ernst & Young
LLP and the Company’s Audit Committee, in consultation with
legal counsel, concluded that Ernst & Young
LLP’s objectivity and impartiality of judgment had not been
impaired with respect to Ernst & Young LLP’s
audit engagement. These circumstances and conclusion were
reviewed with the Staff of the Office of the Chief Accountant of
the SEC, which did not disagree with such conclusion.
161
WHERE YOU
CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on
Form S-1,
including exhibits, schedules and amendments filed with the
registration statement, under the Securities Act with respect to
the shares of Class A common stock being offered. This
prospectus does not contain all of the information described in
the registration statement and the related exhibits and
schedules, portions of which have been omitted as permitted by
the rules and regulations of the SEC. For further information
with respect to us and the Class A common stock being
offered, reference is made to the registration statement and the
related exhibits and schedules. With respect to statements
contained in this prospectus regarding the contents of any
contract or any other document, reference is made to the copy of
the contract or other document filed as an exhibit to the
registration statement. A copy of the registration statement and
the related exhibits, schedules and amendments may be inspected
without charge at the public reference facilities maintained by
the SEC in Washington D.C. at 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549, and copies of all
or any part of the registration statement may be obtained from
these offices upon the payment of the fees prescribed by the
SEC. Information on the operation of the Public Reference Room
may be obtained by calling the SEC at
1-800-SEC-0330.
The SEC maintains a website that contains reports, proxy and
information statements and other information regarding
registrants that file electronically with the SEC. The address
of the site is
http://www.sec.gov.
Upon the completion of this offering, Booz Allen Holding will
become subject to the information and periodic reporting
requirements of the Exchange Act and, accordingly, will file
annual reports containing financial statements audited by an
independent public accounting company, quarterly reports
containing unaudited financial statements, current reports,
proxy statements and other information with the SEC. You will be
able to inspect and copy these reports, proxy statements and
other information at the public reference facilities maintained
by the SEC at the address noted above. You will also be able to
obtain copies of this material from the Public Reference Room of
the SEC as described above, or inspect them without charge at
the SEC’s website. Upon completion of this offering, you
will also be able to access, free of charge, our reports filed
with the SEC (for example, our Annual Report on
Form 10-K,
our Quarterly Reports on
Form 10-Q
and our Current Reports on
Form 8-K
and any amendments to those forms) through the
“Investors” portion of our Internet website
(http://www.boozallen.com).
Reports filed with or furnished to the SEC will be available as
soon as reasonably practicable after they are filed with or
furnished to the SEC. Our website is included in this prospectus
as an inactive textual reference only. The information found on
our website is not part of this prospectus or any report filed
with or furnished to the SEC. We intend to provide our
stockholders with annual reports containing financial statements
audited by an independent accounting company.
162
INDEX TO
THE CONSOLIDATED FINANCIAL STATEMENTS
| Page | ||||
| F-2 | ||||
|
Part I. Financial Information
|
||||
|
Item 1. Audited Consolidated Financial Statements
|
||||
| F-3 | ||||
| F-4 | ||||
| F-5 | ||||
| F-6 | ||||
| F-8 | ||||
F-1
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of
Directors and Shareholders of
Booz Allen Hamilton Holding Corporation
Booz Allen Hamilton Holding Corporation
We have audited the accompanying consolidated balance sheets of
Booz Allen Hamilton Holding Corporation (the Company) as of
March 31, 2009 and 2010 and the related consolidated
statements of operations, stockholders’ equity and cash
flows for the eight-month period ended March 31, 2009 and
the year ended March 31, 2010. We have also audited the
consolidated statements of operations, stockholders’ equity
and cash flows for the year ended March 31, 2008 and the
four month period ended July 31, 2008 of Booz Allen Hamilton,
Inc. (Predecessor). These financial statements are the
responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. We were not engaged to perform an
audit of the Company’s internal control over financial
reporting. Our audits included consideration of internal control
over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the Company’s
internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles
used and significant estimates made by management and evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Booz Allen Hamilton Holding Corporation at
March 31, 2009 and 2010, and the consolidated results of
its operations and its cash flows for the eight months ended
March 31, 2009 and the year ended March 31, 2010 in
conformity with U.S. generally accepted accounting principles.
Also, in our opinion, the Predecessor financial statements
referred to above present fairly, in all material respects, the
consolidated results of operations and cash flows of Booz Allen
Hamilton, Inc. for the year ended March 31, 2008 and the
four month period ended July 31, 2008 in conformity with
U.S. generally accepted accounting principles.
As discussed in Note 2 to the financial statements, the
Company and the Predecessor changed their method of revenue
recognition.
/s/ Ernst & Young LLP
McLean, Virginia
June 18, 2010
McLean, Virginia
June 18, 2010
F-2
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
CONSOLIDATED
BALANCE SHEETS
| March 31, | ||||||||
| 2009 | 2010 | |||||||
| (As adjusted) | ||||||||
|
(In thousands, except share |
||||||||
| and per share data) | ||||||||
|
ASSETS
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 420,902 | $ | 307,835 | ||||
|
Accounts receivable, net of allowance
|
925,925 | 1,018,311 | ||||||
|
Prepaid expenses
|
32,696 | 32,546 | ||||||
|
Other current assets
|
53,370 | 11,476 | ||||||
|
Total current assets
|
1,432,893 | 1,370,168 | ||||||
|
Property and equipment, net
|
142,543 | 136,648 | ||||||
|
Accounts receivable
|
13,051 | 17,072 | ||||||
|
Deferred income taxes
|
99,378 | 53,204 | ||||||
|
Intangible assets, net
|
309,477 | 268,880 | ||||||
|
Goodwill
|
1,141,615 | 1,163,129 | ||||||
|
Other long-term assets
|
43,292 | 53,122 | ||||||
|
Total assets
|
$ | 3,182,249 | $ | 3,062,223 | ||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Current liabilities:
|
||||||||
|
Current portion of long-term debt
|
$ | 15,225 | $ | 21,850 | ||||
|
Accounts payable and other accrued expenses
|
243,831 | 354,097 | ||||||
|
Accrued compensation and benefits
|
344,409 | 385,145 | ||||||
|
Deferred revenue
|
18,186 | 9,996 | ||||||
|
Deferred income taxes
|
21,934 | 14,832 | ||||||
|
Total current liabilities
|
643,585 | 785,920 | ||||||
|
Long-term debt, net of current portion
|
1,220,502 | 1,546,782 | ||||||
|
Income tax reserve
|
99,394 | 100,178 | ||||||
|
Deferred payment obligation
|
108,969 | 20,028 | ||||||
|
Postretirement obligation
|
39,809 | 50,464 | ||||||
|
Other long-term liabilities
|
9,647 | 49,268 | ||||||
|
Total liabilities
|
2,121,906 | 2,552,640 | ||||||
|
Commitments and contingencies (Note 20)
|
||||||||
|
Stockholders’ equity:
|
||||||||
|
Common stock, Class A — $0.01 par
value — authorized, 16,000,000 shares; issued and
outstanding, 10,131,687 shares at March 31, 2009 and
10,292,290 shares at March 31, 2010
|
101 | 103 | ||||||
|
Non-voting common stock, Class B — $0.01 par
value — authorized, 16,000,000 shares; issued and
outstanding, 235,020 shares at March 31, 2009 and
235,020 shares at March 31, 2010
|
2 | 2 | ||||||
|
Restricted common stock, Class C — $0.01 par
value — authorized, 600,000 shares; issued and
outstanding, 202,827 shares at March 31, 2009 and
202,827 shares at March 31, 2010
|
2 | 2 | ||||||
|
Special voting common stock, Class E —
$0.03 par value — authorized,
2,500,000 shares; issued and outstanding,
1,480,288 shares at March 31, 2009 and
1,334,588 shares at March 31, 2010
|
45 | 40 | ||||||
|
Additional paid-in capital
|
1,098,278 | 526,618 | ||||||
|
Accumulated deficit
|
(38,783 | ) | (13,364 | ) | ||||
|
Accumulated other comprehensive income (loss)
|
698 | (3,818 | ) | |||||
|
Total stockholders’ equity
|
1,060,343 | 509,583 | ||||||
|
Total liabilities and stockholders’ equity
|
$ | 3,182,249 | $ | 3,062,223 | ||||
The accompanying notes are an integral part of these
Consolidated Financial Statements.
F-3
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
| Predecessor | The Company | ||||||||||||||||
|
Fiscal Year |
Four Months |
Eight Months |
Fiscal Year |
||||||||||||||
|
Ended |
Ended |
Ended |
Ended |
||||||||||||||
|
March 31, |
July 31, |
March 31, |
March 31, |
||||||||||||||
| 2008 | 2008 | 2009 | 2010 | ||||||||||||||
| (As adjusted) | (As adjusted) | (As adjusted) | |||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||
|
Revenue
|
$ | 3,625,055 | $ | 1,409,943 | $ | 2,941,275 | $ | 5,122,633 | |||||||||
|
Operating costs and expenses:
|
|||||||||||||||||
|
Cost of revenue
|
2,028,848 | 722,986 | 1,566,763 | 2,654,143 | |||||||||||||
|
Billable expenses
|
935,459 | 401,387 | 756,933 | 1,361,229 | |||||||||||||
|
General and administrative expenses
|
474,188 | 726,929 | 505,226 | 811,944 | |||||||||||||
|
Depreciation and amortization
|
33,079 | 11,930 | 79,665 | 95,763 | |||||||||||||
|
Total operating costs and expenses
|
3,471,574 | 1,863,232 | 2,908,587 | 4,923,079 | |||||||||||||
|
Operating income (loss)
|
153,481 | (453,289 | ) | 32,688 | 199,554 | ||||||||||||
|
Interest income
|
2,442 | 734 | 4,578 | 1,466 | |||||||||||||
|
Interest expense
|
(2,319 | ) | (1,044 | ) | (98,068 | ) | (150,734 | ) | |||||||||
|
Other expense, net
|
(1,931 | ) | (54 | ) | (128 | ) | (1,292 | ) | |||||||||
|
Income (loss) from continuing operations before income taxes
|
151,673 | (453,653 | ) | (60,930 | ) | 48,994 | |||||||||||
|
Income tax expense (benefit) from continuing operations
|
62,693 | (56,109 | ) | (22,147 | ) | 23,575 | |||||||||||
|
Income (loss) from continuing operations
|
88,980 | (397,544 | ) | (38,783 | ) | 25,419 | |||||||||||
|
Loss from discontinued operations, net of tax
|
(71,106 | ) | (848,371 | ) | — | — | |||||||||||
|
Net income (loss)
|
$ | 17,874 | $ | (1,245,915 | ) | $ | (38,783 | ) | $ | 25,419 | |||||||
|
Earnings (loss) from continuing operations per common share
(Note 3):
|
|||||||||||||||||
|
Basic
|
$ | 50.64 | $ | (181.28 | ) | $ | (3.67 | ) | $ | 2.39 | |||||||
|
Diluted
|
$ | 43.33 | $ | (181.28 | ) | $ | (3.67 | ) | $ | 2.19 | |||||||
|
Earnings (loss) per common share (Note 3):
|
|||||||||||||||||
|
Basic
|
$ | 10.17 | $ | (568.13 | ) | $ | (3.67 | ) | $ | 2.39 | |||||||
|
Diluted
|
$ | 8.70 | $ | (568.13 | ) | $ | (3.67 | ) | $ | 2.19 | |||||||
The accompanying notes are an integral part of these
Consolidated Financial Statements.
F-4
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
| Predecessor | The Company | ||||||||||||||||
|
Fiscal Year |
Four Months |
Eight Months |
Fiscal Year |
||||||||||||||
|
Ended |
Ended |
Ended |
Ended |
||||||||||||||
|
March 31, |
July 31, |
March 31, |
March 31, |
||||||||||||||
| 2008 | 2008 | 2009 | 2010 | ||||||||||||||
| (As adjusted) | (As adjusted) | (As adjusted) | |||||||||||||||
| (In thousands) | |||||||||||||||||
|
Cash flows from operating activities
|
|||||||||||||||||
|
Net income (loss)
|
$ | 17,874 | $ | (1,245,915 | ) | $ | (38,783 | ) | $ | 25,419 | |||||||
|
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
|
|||||||||||||||||
|
Loss from discontinued operations, net of taxes
|
71,106 | 848,371 | — | — | |||||||||||||
|
Depreciation and amortization
|
33,079 | 11,930 | 79,665 | 95,763 | |||||||||||||
|
Amortization of debt issuance costs
|
— | — | 3,106 | 5,700 | |||||||||||||
|
Amortization of original issuance discount on debt
|
— | — | 1,480 | 2,505 | |||||||||||||
|
Excess tax benefit from the exercise of stock options
|
— | — | — | (1,915 | ) | ||||||||||||
|
Stock-based compensation expense
|
35,013 | 511,653 | 62,059 | 71,897 | |||||||||||||
|
Loss on disposition of property and equipment
|
— | — | 166 | — | |||||||||||||
|
Deferred income taxes
|
(39,988 | ) | (54,236 | ) | (22,147 | ) | 19,837 | ||||||||||
|
Changes in assets and liabilities, net of effect of business
combination:
|
|||||||||||||||||
|
Accounts receivable, net
|
(181,365 | ) | (19,765 | ) | (33,675 | ) | (92,386 | ) | |||||||||
|
Income taxes receivable / payable
|
(35,934 | ) | (70,781 | ) | 21,303 | (14,429 | ) | ||||||||||
|
Prepaid expenses
|
(6,236 | ) | (4,717 | ) | (26,030 | ) | 150 | ||||||||||
|
Other current assets
|
(1,859 | ) | (327 | ) | (6,491 | ) | 15,672 | ||||||||||
|
Other long-term assets
|
2,627 | 280 | — | (3,742 | ) | ||||||||||||
|
Accrued compensation and benefits
|
(7,913 | ) | (44,050 | ) | 99,094 | 33,760 | |||||||||||
|
Accounts payable and accrued expenses
|
72,654 | 57,054 | 7,186 | 110,265 | |||||||||||||
|
Accrued interest
|
— | — | 10,604 | (10,633 | ) | ||||||||||||
|
Income tax reserve
|
73,036 | (7,220 | ) | 1,177 | 2,483 | ||||||||||||
|
Deferred revenue
|
2,716 | (4,036 | ) | 10,499 | (8,190 | ) | |||||||||||
|
Postretirement obligation
|
(4,630 | ) | 21,793 | 1,849 | 6,139 | ||||||||||||
|
Other long-term liabilities
|
13,611 | (26,582 | ) | 9,647 | 12,189 | ||||||||||||
|
Net cash provided by (used in) operating activities of
continuing operations
|
43,791 | (26,548 | ) | 180,709 | 270,484 | ||||||||||||
|
Net cash provided by (used in) operating activities of
discontinued operations
|
115,650 | (160,368 | ) | — | — | ||||||||||||
|
Net cash provided by (used in) operating activities
|
159,441 | (186,916 | ) | 180,709 | 270,484 | ||||||||||||
|
Cash flows from investing activities
|
|||||||||||||||||
|
Purchases of property and equipment
|
(35,179 | ) | (9,314 | ) | (36,835 | ) | (49,271 | ) | |||||||||
|
Cash paid in merger transaction, net of cash acquired
|
— | — | (1,623,683 | ) | — | ||||||||||||
|
Investment in discontinued operations
|
(3,348 | ) | (153,662 | ) | — | — | |||||||||||
|
Working capital escrow adjustment
|
— | — | — | 38,280 | |||||||||||||
|
Net cash used in investing activities of continuing operations
|
(38,527 | ) | (162,976 | ) | (1,660,518 | ) | (10,991 | ) | |||||||||
|
Net cash (used in) provided by investing activities of
discontinued operations
|
(68,516 | ) | 58,323 | — | — | ||||||||||||
|
Net cash used in investing activities
|
(107,043 | ) | (104,653 | ) | (1,660,518 | ) | (10,991 | ) | |||||||||
|
Cash flows from financing activities
|
|||||||||||||||||
|
Proceeds from issuance of common stock
|
18,891 | — | 956,500 | — | |||||||||||||
|
Cash dividends paid
|
— | — | — | (612,401 | ) | ||||||||||||
|
Redemption of common stock and Class B common stock
|
(15,543 | ) | (16,422 | ) | — | ||||||||||||
|
Repayment of debt
|
(4,761 | ) | — | (251,050 | ) | (16,100 | ) | ||||||||||
|
Proceeds from debt
|
— | 227,534 | 1,240,300 | 346,500 | |||||||||||||
|
Debt issuance costs
|
— | — | (45,039 | ) | (15,808 | ) | |||||||||||
|
Payment of deferred payment obligation
|
— | — | — | (78,000 | ) | ||||||||||||
|
Excess tax benefits from the exercise of stock options
|
— | — | — | 1,915 | |||||||||||||
|
Stock option exercises
|
— | — | — | 1,334 | |||||||||||||
|
Net cash (used in) provided by financing activities of
continuing operations
|
(1,413 | ) | 211,112 | 1,900,711 | (372,560 | ) | |||||||||||
|
Net cash (used in) provided by financing activities of
discontinued operations
|
(5,908 | ) | 128,712 | — | — | ||||||||||||
|
Net cash (used in) provided by financing activities
|
(7,321 | ) | 339,824 | 1,900,711 | (372,560 | ) | |||||||||||
|
Net increase (decrease) in cash and cash equivalents of
continuing operations
|
3,851 | 21,588 | 420,902 | (113,067 | ) | ||||||||||||
|
Cash and cash equivalents — beginning of period
|
3,272 | 7,123 | — | 420,902 | |||||||||||||
|
Cash and cash equivalents — end of period
|
$ | 7,123 | $ | 28,711 | $ | 420,902 | $ | 307,835 | |||||||||
|
Supplemental disclosures of cash flow information
|
|||||||||||||||||
|
Cash paid during the period for:
|
|||||||||||||||||
|
Interest
|
$ | 1,448 | $ | 720 | $ | 82,879 | $ | 126,744 | |||||||||
|
Income taxes
|
$ | 19,841 | $ | 42,336 | $ | 34 | $ | 5,474 | |||||||||
The accompanying notes are an integral part of these
Consolidated Financial Statements.
F-5
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY —
PREDECESSOR
| Predecessor | ||||||||||||||||||||||||
|
Retained |
Accumulated |
|||||||||||||||||||||||
|
Stock |
Additional |
Earnings |
Other |
Total |
||||||||||||||||||||
|
Redeemable |
Subscription |
Paid-In |
(Accumulated |
Comprehensive |
Stockholders’ |
|||||||||||||||||||
| Common Stock | Receivable | Capital | Deficit) | Income (Loss) | Equity | |||||||||||||||||||
| (In thousands, except share data) | ||||||||||||||||||||||||
|
Balance at March 31, 2007
|
$ | 242,963 | $ | — | $ | — | $ | 16,024 | $ | (15,800 | ) | $ | 243,187 | |||||||||||
|
Revenue recognition — cumulative effect of change in
accounting principle
|
— | — | — | 28,881 | — | 28,881 | ||||||||||||||||||
|
Balance at March 31, 2007 (as adjusted)
|
242,963 | — | — | 44,905 | (15,800 | ) | 272,068 | |||||||||||||||||
|
Net income (as adjusted)
|
— | — | — | 17,874 | — | 17,874 | ||||||||||||||||||
|
Issuance of redeemable common stock
|
42,831 | — | — | — | — | 42,831 | ||||||||||||||||||
|
Cash dividends
|
— | — | — | (217 | ) | — | (217 | ) | ||||||||||||||||
|
Redemption of common stock
|
(15,543 | ) | — | — | — | — | (15,543 | ) | ||||||||||||||||
|
Stock compensation expenses
|
17,216 | — | — | — | — | 17,216 | ||||||||||||||||||
|
Mark to put value for redeemable shares
|
178 | — | — | (178 | ) | — | — | |||||||||||||||||
|
Change in accounting principle for the adoption of
ASC 740-10
|
— | — | — | — | (10,081 | ) | (10,081 | ) | ||||||||||||||||
|
Decrease in minimum pension liability, net of tax of $10,500
|
— | — | — | — | 15,800 | 15,800 | ||||||||||||||||||
|
Change in accounting principle for the adoption of ASC 715,
net of tax of $17,922
|
— | — | — | — | (26,883 | ) | (26,883 | ) | ||||||||||||||||
|
Balance at March 31, 2008 (as adjusted)
|
287,645 | — | — | 62,384 | (36,964 | ) | 313,065 | |||||||||||||||||
|
Net loss (as adjusted)
|
— | — | — | (1,245,915 | ) | — | (1,245,915 | ) | ||||||||||||||||
|
Reclassification of liability for share-based payments for
shares held over six months
|
5,479 | — | — | — | — | 5,479 | ||||||||||||||||||
|
Dividends declared
|
— | — | — | (52 | ) | — | (52 | ) | ||||||||||||||||
|
Redemption of redeemable common stock
|
(16,422 | ) | — | — | — | — | (16,422 | ) | ||||||||||||||||
|
Redemption of common stock marked to redemption value in
stock-based compensation
|
854,494 | — | — | — | — | 854,494 | ||||||||||||||||||
|
Redemption of common stock marked to redemption value in equity
|
180,985 | — | — | (180,985 | ) | — | — | |||||||||||||||||
|
Unrealized loss on benefit plan, net of income taxes
|
— | — | — | — | (846 | ) | (846 | ) | ||||||||||||||||
|
Receivable from shareholders for exercise of stock rights of
Booz Allen Hamilton Inc.
|
— | (87,007 | ) | — | — | — | (87,007 | ) | ||||||||||||||||
|
Distribution of Booz & Company, Inc. common stock to
shareholders of Booz Allen Hamilton, Inc.
|
— | — | — | (134,874 | ) | 22,252 | (112,622 | ) | ||||||||||||||||
|
Balance at July 31, 2008 (as adjusted)
|
$ | 1,312,181 | $ | (87,007 | ) | $ | — | $ | (1,499,442 | ) | $ | (15,558 | ) | $ | (289,826 | ) | ||||||||
The accompanying notes are an integral part of these
Consolidated Financial Statements.
F-6
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY — THE
COMPANY
| The Company | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Class B |
Class C |
Class E |
Accumulated |
|||||||||||||||||||||||||||||||||||||||||||||
|
Class A |
Non-Voting |
Restricted |
Special Voting |
Additional |
Other |
Total |
||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Common Stock | Common Stock | Common Stock |
Paid-In |
Accumulated |
Comprehensive |
Stockholders’ |
|||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||||||||||||||||||||
| (In thousands, except share data) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Balance at August 1, 2008
|
— | $ | — | — | $ | — | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||
|
Exchange of rollover equity
|
564,187 | 6 | 235,020 | 2 | 202,827 | 2 | 1,480,288 | 45 | 79,814 | — | — | 79,869 | ||||||||||||||||||||||||||||||||||||
|
Issuance of common stock
|
9,567,500 | 95 | — | — | — | — | — | — | 956,405 | — | — | 956,500 | ||||||||||||||||||||||||||||||||||||
|
Net loss
|
— | — | — | — | — | — | — | — | — | (38,783 | ) | — | (38,783 | ) | ||||||||||||||||||||||||||||||||||
|
Actuarial gain related to employee benefits, net of taxes
|
— | — | — | — | — | — | — | — | — | — | 698 | 698 | ||||||||||||||||||||||||||||||||||||
|
Comprehensive loss
|
(38,085 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
|
Stock compensation expense
|
— | — | — | — | — | — | — | — | 62,059 | — | — | 62,059 | ||||||||||||||||||||||||||||||||||||
|
Balance at March 31, 2009
|
10,131,687 | 101 | 235,020 | 2 | 202,827 | 2 | 1,480,288 | 45 | 1,098,278 | (38,783 | ) | 698 | 1,060,343 | |||||||||||||||||||||||||||||||||||
|
Issuance of common stock
|
1,907 | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Stock options exercised
|
158,696 | 2 | — | — | — | — | (145,700 | ) | (5 | ) | 1,337 | — | — | 1,334 | ||||||||||||||||||||||||||||||||||
|
Recognition of liability related to future stock option
exercises (Note 17)
|
— | — | — | — | — | — | — | — | (34,408 | ) | — | — | (34,408 | ) | ||||||||||||||||||||||||||||||||||
|
Net income
|
— | — | — | — | — | — | — | — | — | 25,419 | — | 25,419 | ||||||||||||||||||||||||||||||||||||
|
Actuarial loss related to employee benefits, net of taxes
|
— | — | — | — | — | — | — | — | — | — | (4,516 | ) | (4,516 | ) | ||||||||||||||||||||||||||||||||||
|
Comprehensive income
|
20,903 | |||||||||||||||||||||||||||||||||||||||||||||||
|
Stock compensation expense
|
— | — | — | — | — | — | — | — | 71,897 | — | 71,897 | |||||||||||||||||||||||||||||||||||||
|
Dividends paid (Notes 1 and 17)
|
— | — | — | — | — | — | — | — | (612,401 | ) | — | (612,401 | ) | |||||||||||||||||||||||||||||||||||
|
Excess tax benefits from exercise of stock options
|
— | — | — | — | — | — | — | — | 1,915 | — | — | 1,915 | ||||||||||||||||||||||||||||||||||||
|
Balance at March 31, 2010
|
10,292,290 | $ | 103 | 235,020 | $ | 2 | 202,827 | $ | 2 | 1,334,588 | $ | 40 | $ | 526,618 | $ | (13,364 | ) | $ | (3,818 | ) | $ | 509,583 | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these
Consolidated Financial Statements.
F-7
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
March 31,
2010
| 1. | OVERVIEW |
Our
Business
Booz Allen Hamilton Holding Corporation, including its wholly
owned subsidiaries (“Holding” or the
“Company”), is an affiliate of The Carlyle Group
(“Carlyle”) and was incorporated in Delaware in May
2008. The Company and its subsidiaries provide management and
technology consulting services primarily to the
U.S. government and its agencies in the defense,
intelligence, and civil markets. The Company offers clients
functional knowledge spanning strategy and organization,
analytics, technology and operations, which it combines with
specialized expertise in clients’ mission and domain areas
to help solve critical problems. The Company reports operating
results and financial data in one operating segment. The Company
is headquartered in McLean, Virginia, with approximately
23,300 employees.
Spin-off
and Merger Transactions
On July 31, 2008, pursuant to a merger agreement (the
“Merger Agreement”), the then-existing shareholders of
Booz Allen Hamilton, Inc. completed the spin-off of the
commercial business to the commercial partners. Effective
August 1, 2008, Holding acquired the outstanding common
stock of Booz Allen Hamilton, Inc., which consisted of the
U.S. government consulting business, through the merger of
Booz Allen Hamilton, Inc. with a wholly-owned subsidiary of
Holding (the “Merger Transaction” or the
“Acquisition”). The Company acquired Booz Allen
Hamilton, Inc. for total consideration of $1,828.0 million.
As discussed in Note 4, the acquisition consideration was
allocated to the acquired net assets, identified intangibles of
$353.8 million, and goodwill of $1,163.1 million.
Prior to the Merger Transaction, Booz Allen Hamilton, Inc. is
referred to as the Predecessor for accounting purposes. The
Predecessor’s consolidated financial statements have been
presented for fiscal 2008 and the four months ended
July 31, 2008. The consolidated financial statements of
Holding subsequent to the Merger Transaction, which is referred
to as the Company, have been presented from August 1, 2008
through March 31, 2009, and for fiscal 2010. From May
through July 2008, Holding had no operations. As a result, the
Company is presented as commencing on August 1, 2008.
In connection with the Acquisition, the Company issued certain
shares of its common stock in exchange for shares of the
Predecessor. The Officers’ Rollover Stock Plan (the
“Rollover Plan”) was adopted as a mechanism to enable
the exchange of a portion of previous equity interests in the
Predecessor for equity interests in Holding. Common Stock owned
by the Predecessor’s U.S. government consulting
partners were exchanged for Class A Common Stock of
Holding, while common stock owned by a limited number of the
Predecessor’s commercial consulting partners were exchanged
for Class B Non-Voting Common Stock of Holding. Fully
vested shares of the Predecessor were exchanged for vested
shares of the Company, with a fair value of $79.7 million.
This amount was included as a component of the total acquisition
consideration. The Company also exchanged restricted shares and
options for previously issued and outstanding stock rights of
the Predecessor held by the Predecessor’s U.S. government
consulting partners. The Predecessor’s commercial
consulting partners exercised their previously outstanding stock
rights and received cash for the underlying shares surrendered.
Based on the vesting terms of the Company’s newly issued
Class C Restricted Common Stock and the new options granted
under the Rollover Plan, the fair value of the issued awards of
$147.4 million is being recognized as compensation expense
by the Company subsequent to the Acquisition, as discussed
further in Note 17.
In connection with the Merger Transaction, the Company entered
into a senior secured credit agreement (the “Senior Secured
Agreement”) and a mezzanine credit agreement (the
“Mezzanine Credit Agreement”) for a total amount of
$1,240.3 million. The total debt proceeds received by the
Company at Closing were net of debt issuance costs of
$45.0 million and original issue discount on the debt of
$19.7 million. Prior to the Merger Transaction, the
Predecessor had an outstanding line of credit of
$245.0 million. The Company paid
F-8
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
off the Predecessor’s line of credit with proceeds from the
financing. In addition to the debt used to finance the
Company’s acquisition of Booz Allen Hamilton, Inc.,
Carlyle, along with a consortium of other investors, provided
$956.5 million in cash in exchange for equity interests in
the Company.
Recapitalization
Transaction and Repricing
On December 11, 2009, the Company consummated a
recapitalization transaction (the “Recapitalization
Transaction”), which included amendments of the Senior
Secured Agreement to include a new term loan
(“Tranche C”) with $350.0 million of
principal, and the Mezzanine Credit Agreement primarily to allow
for the recapitalization and payment of a special dividend. This
special dividend was declared by the Company’s Board of
Directors on December 7, 2009, to be paid to holders of
record as of December 8, 2009. Net proceeds from
Tranche C of $341.3 million less transaction costs of
$13.2 million, along with cash on hand of
$321.9 million, were used to fund a partial payment of the
Company’s deferred payment obligation (“DPO”) in
the amount of $100.4 million, and a dividend payment of
$46.42 per share, or $497.5 million, which was paid on all
issued and outstanding shares of Holding’s Class A
Common Stock, Class B Non-Voting Common Stock, and
Class C Restricted Common Stock. As required by the
Officers’ Rollover Stock Plan and the Equity Incentive
Plan, the exercise price per share of each outstanding option
was reduced. Because the reduction in per share value exceeded
the exercise price for certain of the options granted under the
Officers’ Rollover Stock Plan, the exercise price for those
options was reduced to the $0.01 par value of the shares
issuable on exercise, and the holders became entitled to receive
a cash payment equal to the excess of the reduction in per share
value over the reduction in exercise price to the par value. The
difference between one cent and the reduced value for shares
vested and not yet exercised of approximately $54.4 million
will be paid in cash upon exercise of the options. As of
March 31, 2010, the Company reported $27.4 million in
other long-term liabilities and $7.0 million in accrued
compensation and benefits in the consolidated balance sheets for
the portion of stock-based compensation recognized as of
March 31, 2010 reflective of the options vested with an
exercise price of one cent. Transaction fees incurred in
connection with the Recapitalization Transaction were
approximately $22.4 million, of which approximately
$15.8 million were deferred financing costs and will be
amortized over the lives of the loans. Refer to Note 10 for
further discussion of the DPO, Note 11 for further
discussion of the amended credit agreements, Note 12 for
further discussion of the accounting for deferred financing
costs, and Note 17 for further discussion of the December
2009 dividend and associated future cash payments as related to
stock options.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis
of Presentation
The accompanying consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries, and
have been prepared in accordance with accounting principles
generally accepted in the United States (“GAAP”). All
intercompany balances and transactions are eliminated in
consolidation.
The operating results of the global commercial business that was
spun off by the Predecessor effective July 31, 2008 have
been presented as discontinued operations in the
Predecessor’s consolidated financial statements and the
related notes included in these financial statements. These
operations and cash flows are clearly distinguished from the
continuing business, the operations have been disposed of, and
there was no continuing involvement in the operations after
August 1, 2008.
The statement of cash flows for the year ended March 31,
2008 reflects the reclassification of certain amounts resulting
in an increase of $3.3 million in net cash used in
financing activities of continuing operations and a
corresponding decrease in net cash used in investing activities
of continuing operations.
The Company’s fiscal year ends on March 31 and unless
otherwise noted, references to fiscal year or fiscal are for
fiscal years ended March 31. These financial statements
present the financial position of the Company as of
March 31, 2009 and 2010, the Company’s results of
operations for the eight months ended
F-9
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
March 31, 2009 and fiscal 2010, and the Predecessor’s
results of operations for fiscal 2008 and four months ended
July 31, 2008.
Use of
Estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenue
and expenses during the reporting periods. Areas of the
financial statements where estimates may have the most
significant effect include allowance for doubtful accounts,
contractual and regulatory reserves, lives of tangible and
intangible assets, impairment of long-lived and other assets,
realization of deferred tax assets, accrued liabilities, revenue
recognition, bonus and other incentive compensation, stock-based
compensation, provisions for income taxes, and postretirement
obligations. Actual results experienced by the Company may
differ materially from management’s estimates.
Change
in Accounting Principle
In 2010, the Company and the Predecessor changed their
methodology of recognizing revenue for all U.S. government
contracts to apply the accounting guidance of Financial
Accounting Standards Board (“FASB”) Accounting
Standards
Codificationtm
(“ASC” or “the Codification”) Subtopic
605-35, as
directed by ASC Topic 912, which permits revenue recognition on
a
percentage-of-completion
basis. Previously, the Company applied this guidance only to
contracts related to the construction or development of tangible
assets. For contracts not related to those activities, the
Company had applied the general revenue recognition guidance of
Staff Accounting Bulletin (“SAB”) Topic 13, Revenue
Recognition. Upon contract completion, both methods yield
the same results, but the Company believes that the application
of contract accounting under
ASC 605-35
to contracts not related to the construction or development of
tangible assets is preferable to the application of contract
accounting under SAB Topic 13 based on the fact that the
percentage-of-completion
model utilized under
ASC 605-35
is a recognized accounting model, that better reflects the
economics of a U.S. government contract during the contract
performance period. The only material financial statement impact
of the revenue recognition change was the recognition of award
fees over the performance period. The Company concluded that
this change is appropriate as the award fees earned by the
Company are estimable based on historical information and
management’s monitoring of fees earned and is reflective of
the economics of such contracts.
All prior periods presented have been retrospectively adjusted
to apply the new method of accounting. The cumulative effect of
this change represents the difference between the amount of
retained earnings at the beginning of the period of change and
the amount of retained earnings that would have been reported at
the date if the new accounting principle had been applied
retroactively for all prior periods. The cumulative effect of
the change in accounting principle on periods prior to those
presented of $28.9 million has been reflected as an
adjustment to the opening balance of retained earnings, net of
tax, as of April 1, 2007.
F-10
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The table below presents the impact of the change in this
accounting principle on accounts receivable, net, accounts
payable and other accrued expenses, revenue, net earnings
(loss), and net earnings (loss) per share as if the change had
been in place throughout all periods presented (in thousands,
except per share data):
| Predecessor | The Company | ||||||||||||||||
|
Fiscal Year |
Four Months |
Eight Months |
Fiscal Year |
||||||||||||||
|
Ended |
Ended |
Ended |
Ended |
||||||||||||||
|
March 31, |
July 31, |
March 31, |
March 31, |
||||||||||||||
| 2008 | 2008 | 2009 | 2010 | ||||||||||||||
|
Impact of change in application of accounting principle applied
retrospectively:
|
|||||||||||||||||
|
Accounts receivable, net
|
$ | 842,593 | $ | 876,280 | $ | 883,311 | $ | 980,095 | |||||||||
|
Impact of change in revenue recognition
|
55,175 | 41,253 | 42,614 | 38,216 | |||||||||||||
|
Accounts receivable, net, as adjusted
|
$ | 897,768 | $ | 917,533 | $ | 925,925 | $ | 1,018,311 | |||||||||
|
Accounts payable and other accrued expenses
|
$ | 187,096 | $ | 244,024 | $ | 234,412 | $ | 344,678 | |||||||||
|
Impact of change in revenue recognition
|
9,443 | 8,813 | 9,419 | 9,419 | |||||||||||||
|
Accounts payable and other accrued expenses, as adjusted
|
$ | 196,539 | $ | 252,837 | $ | 243,831 | $ | 354,097 | |||||||||
|
Revenue
|
$ | 3,625,951 | $ | 1,423,865 | $ | 2,912,610 | $ | 5,121,895 | |||||||||
|
Impact of change in revenue recognition
|
(896 | ) | (13,922 | ) | 28,665 | 738 | |||||||||||
|
Revenue, as adjusted
|
$ | 3,625,055 | $ | 1,409,943 | $ | 2,941,275 | $ | 5,122,633 | |||||||||
|
Net earnings (loss) from continuing operations
|
$ | 90,175 | $ | (389,497 | ) | $ | (55,770 | ) | $ | 24,681 | |||||||
|
Impact of change in revenue recognition
|
(1,195 | ) | (8,047 | ) | 16,987 | 738 | |||||||||||
|
Net earnings (loss) from continuing operations, as adjusted
|
$ | 88,980 | $ | (397,544 | ) | $ | (38,783 | ) | $ | 25,419 | |||||||
|
Net earnings (loss)
|
$ | 19,069 | $ | (1,237,868 | ) | $ | (55,770 | ) | $ | 24,681 | |||||||
|
Impact of change in revenue recognition
|
(1,195 | ) | (8,047 | ) | 16,987 | 738 | |||||||||||
|
Net earnings (loss), as adjusted
|
$ | 17,874 | $ | (1,245,915 | ) | $ | (38,783 | ) | $ | 25,419 | |||||||
|
Net earnings (loss) from continuing operations per share:
|
|||||||||||||||||
|
Basic
|
$ | 51.32 | $ | (177.61 | ) | $ | (5.28 | ) | $ | 2.32 | |||||||
|
Diluted
|
$ | 43.92 | $ | (177.61 | ) | $ | (5.28 | ) | $ | 2.12 | |||||||
|
Impact of change in revenue recognition per share:
|
|||||||||||||||||
|
Basic
|
$ | (0.68 | ) | $ | (3.67 | ) | $ | 1.61 | $ | 0.07 | |||||||
|
Diluted
|
$ | (0.59 | ) | $ | (3.67 | ) | $ | 1.61 | $ | 0.07 | |||||||
|
Net earnings (loss) from continuing operations per share, as
adjusted:
|
|||||||||||||||||
|
Basic
|
$ | 50.64 | $ | (181.28 | ) | $ | (3.67 | ) | $ | 2.39 | |||||||
|
Diluted
|
$ | 43.33 | $ | (181.28 | ) | $ | (3.67 | ) | $ | 2.19 | |||||||
|
Net earnings (loss) per share:
|
|||||||||||||||||
|
Basic
|
$ | 10.85 | $ | (564.46 | ) | $ | (5.28 | ) | $ | 2.32 | |||||||
|
Diluted
|
$ | 9.29 | $ | (564.46 | ) | $ | (5.28 | ) | $ | 2.12 | |||||||
|
Impact of change in revenue recognition per share:
|
|||||||||||||||||
|
Basic
|
$ | (0.68 | ) | $ | (3.67 | ) | $ | 1.61 | $ | 0.07 | |||||||
|
Diluted
|
$ | (0.59 | ) | $ | (3.67 | ) | $ | 1.61 | $ | 0.07 | |||||||
|
Net earnings (loss) per share, as adjusted:
|
|||||||||||||||||
|
Basic
|
$ | 10.17 | $ | (568.13 | ) | $ | (3.67 | ) | $ | 2.39 | |||||||
|
Diluted
|
$ | 8.70 | $ | (568.13 | ) | $ | (3.67 | ) | $ | 2.19 | |||||||
F-11
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Revenue
Recognition
The majority of the Company’s revenue is derived from
services and solutions provided to the U.S. government and
its agencies, primarily by the Company’s employees and, to
a lesser extent, subcontractors. The Company generates its
revenue from the following types of contractual arrangements:
cost-plus-fee contracts,
time-and-materials
contracts, and fixed-price contracts.
Revenue on cost-plus-fee contracts is recognized as services are
performed, generally based on the allowable costs incurred
during the period plus any recognizable earned fee. The Company
considers fixed fees under cost-plus-fee contracts to be earned
in proportion to the allowable costs incurred in performance of
the contract. For cost-plus-fee contracts that include
performance-based fee incentives, which are principally award
fee arrangements, the Company recognizes income when such fees
are probable and estimable. Estimates of the total fee to be
earned are made based on contract provisions, prior experience
with similar contracts or clients, and management’s
monitoring of the performance on such contracts. Contract costs,
including indirect expenses, are subject to audit by the Defense
Contract Audit Agency and, accordingly, are subject to possible
cost disallowances.
Revenue for
time-and-materials
contracts is recognized as services are performed, generally on
the basis of contract allowable labor hours worked multiplied by
the contract-defined billing rates, plus allowable direct costs
and indirect cost burdens associated with materials used in and
other direct expenses incurred in connection with the
performance of the contract.
Revenue on fixed-price completion contracts is recognized using
percentage-of-completion
based on actual costs incurred relative to total estimated costs
for the contract. These estimated costs are updated during the
term of the contract, and may result in revision by the Company
of recognized revenue and estimated costs in the period in which
they are identified. Profits on fixed-price contracts result
from the difference between incurred costs and revenue earned.
Contract accounting requires significant judgment relative to
assessing risks, estimating contract revenue and costs, and
making assumptions for schedule and technical issues. Due to the
size and nature of many of the Company’s contracts,
developing total revenue and cost at completion requires the use
of estimates. Contract costs include direct labor and billable
expenses, as well as an allocation of allowable indirect costs.
Billable expenses is comprised of subcontracting costs and other
“out of pocket” costs that often include, but are not
limited to, travel-related costs and telecommunications charges.
The Company recognizes revenue and billable expenses from these
transactions on a gross basis. Assumptions regarding the length
of time to complete the contract also include expected increases
in wages and prices for materials. Estimates of total contract
revenue and costs are monitored during the term of the contract
and are subject to revision as the contract progresses.
Anticipated losses on contracts are recognized in the period
they are deemed probable and can be reasonably estimated.
The Company’s contracts may include the delivery of a
combination of one or more of the Company’s service
offerings. In these situations, the Company determines whether
such arrangements with multiple elements should be treated as
separate units of accounting, with revenue allocated to each
element of the arrangement based on the fair value of each
element.
Cash
and Cash Equivalents
Cash and cash equivalents include cash on hand and highly liquid
investments having an original maturity of three months or less.
The Company’s investments consist primarily of
institutional money market funds and U.S. Treasury
securities. The Company’s investments are carried at cost,
which approximates fair value. The Company maintains its cash
and cash equivalents in bank accounts that, at times, exceed the
federally insured limits. The Company has not experienced any
losses in such accounts.
F-12
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Valuation
of Accounts Receivable
The Company maintains allowances for doubtful accounts against
certain billed receivables based upon the latest information
regarding whether invoices are ultimately collectible. Assessing
the collectability of customer receivables requires management
judgment. The Company determines its allowance for doubtful
accounts by specifically analyzing individual accounts
receivable, historical bad debts, customer credit-worthiness,
current economic conditions, and accounts receivable aging
trends. Valuation reserves are periodically re-evaluated and
adjusted as more information about the ultimate collectability
of accounts receivable becomes available. Upon determination
that a receivable is uncollectible, the receivable balance and
any associated reserve are written off.
Concentrations
of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash
equivalents and accounts receivable. The Company’s cash
equivalents are generally invested in U.S. government
insured money market funds and Treasury bills. The Company
believes that credit risk, with respect to accounts receivable,
are limited as they are primarily U.S. government
receivables.
As of March 31, 2009, and 2010, the Company had no
derivative financial instruments.
Property
and Equipment
Property and equipment are stated at cost, and the balances are
presented net of depreciation. The cost of software purchased or
internally developed is capitalized. Depreciation is calculated
using the straight-line method over the estimated useful lives
of the assets. Furniture and equipment is depreciated over five
to ten years, computer equipment is depreciated over three
years, and software purchased or developed for internal use is
depreciated over one to three years. Leasehold improvements are
amortized over the shorter of the useful life of the asset or
the lease term. Maintenance and repairs are charged to expense
as incurred.
Goodwill
Goodwill is the amount by which the cost of acquired net assets
in a business acquisition exceeds the fair value of net
identifiable assets on the date of purchase. The Company
assesses goodwill for impairment on at least an annual basis on
January 1, and whenever impairment indicators are present
in events or changes in circumstances indicate that the carrying
value of the asset may not be recoverable. The Company defines
its reporting unit as its operating segment. The Company
considers itself to be a single reporting segment, as discussed
in Note 21, and operating unit structure given that the
Company is managed and operated as one business. There were no
impairment charges for the eight months ended March 31,
2009 or fiscal 2010.
Intangible
Assets
Intangible assets consist of trade name, contract backlog, and
favorable lease terms. Trade name is not amortized, but is
tested annually for impairment. Contract backlog is amortized
over the expected backlog life based on projected future cash
flows of approximately nine years. Favorable lease terms are
amortized over the remaining contractual terms of approximately
five years.
Valuation
of Long-Lived Assets
The Company reviews its long-lived assets, including property
and equipment and intangible assets with finite lives, for
impairment whenever events or changes in circumstances indicate
that the carrying amounts of the assets may not be fully
recoverable or that the useful lives are no longer appropriate.
If the total of the expected undiscounted future net cash flows
expected to result from the use and eventual disposition of the
F-13
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
asset is less than its carrying amount, a loss is recorded for
the amount required to reduce the carrying amount to fair value.
There were no impairment charges for the eight months ended
March 31, 2009 or fiscal 2010.
Foreign
Currency Transactions
Foreign currency gains (losses) are reported as a component of
other expense, net in the accompanying consolidated statements
of operations. For fiscal 2008, four months ended July 31,
2008, eight months ended March 31, 2009, and fiscal 2010,
net exchange (losses) gains were approximately $(529,000),
$(53,000) , $49,000, and $(105,000), respectively.
Income
Taxes
Deferred tax assets and liabilities are recorded to recognize
the expected future tax benefits or costs of events that have
been, or will be, reported in different years for financial
statement purposes than for tax purposes. Deferred tax assets
and liabilities are computed based on the difference between the
financial statement and tax basis of assets and liabilities
using enacted tax rates and laws for the years in which these
items are expected to reverse. If management determines that a
deferred tax asset is not “more likely than not” to be
realized, an offsetting valuation allowance is recorded,
reducing income and the deferred tax asset in that period.
Management records valuation allowances primarily based on an
assessment of historical earnings and future taxable income that
incorporates prudent, feasible tax-planning strategies. The
Company assesses deferred tax assets on an individual
jurisdiction basis. The Company reviews tax laws, regulations,
and related guidance on an ongoing basis in order to properly
record any uncertain tax liabilities.
Comprehensive
Income
Comprehensive income is the change in equity of a business
enterprise during a period from transactions and other events
and circumstances from nonowner sources. Comprehensive income is
presented in the consolidated statements of stockholders’
equity. Accumulated other comprehensive income as of
March 31, 2009 and 2010 consisted of unrealized gains
(losses) on the Company’s defined and postretirement
benefit plans.
Stock-Based
Compensation
Share-based payments to employees are recognized in the
consolidated statements of operations based on their grant date
fair values with the expense being recognized over the requisite
service period. The Company uses the Black-Scholes model to
determine the fair value of its awards at the time of the grant.
Redeemable
Common Stock
Prior to the Merger Transaction, the Predecessor had Redeemable
Common Stock. Shares of Redeemable Common Stock issued upon
exercise of rights granted prior to April 1, 2006 were
marked to the redemption amount at the end of each reporting
period with changes recorded in stock-based compensation
expense. For shares of Redeemable Common Stock issued upon
exercise of rights granted on or after April 1, 2006, the
Redeemable Common Stock was marked to the redemption amount
through stock-based compensation expense until such shares had
been outstanding for six months. After such time, changes in the
redemption amount were recorded as a component of
stockholders’ equity.
Defined
Benefit Plan and Other Postretirement Benefits
The Company recognizes the underfunded status of pension and
other postretirement benefit plans on the consolidated balance
sheets. Gains and losses, prior service costs and credits, and
any remaining transition amounts that have not yet been
recognized through net periodic benefit cost will be recognized
in
F-14
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
accumulated other comprehensive income, net of tax effects,
until they are amortized as a component of net periodic cost.
The measurement date, the date at which the benefit obligation
and plan assets are measured, is the Company’s fiscal year
end.
Self-Funded
Medical Plans
The Company maintains self-funded medical insurance. Self-funded
plans include a health maintenance organization, preferred
provider organization, point of service, qualified point of
service, and traditional choice. Further, self-funded plans also
include prescription drug benefits. The Company records an
incurred but unpaid claim liability in the accrued compensation
and benefits line of the consolidated balance sheets for
self-funded plans based on an external actuarial valuation.
Estimates are calculated as the midpoint of reasonable ranges.
Primary data that drives this estimate is based on claims and
enrollment data received provided by a third party valuation
firm for medical and pharmacy related costs. These reports
detail claims paid and incurred through one month prior to the
quarter end.
Deferred
Compensation Plan
The Company accounts for its deferred compensation plan on an
accrual basis, in accordance with the terms of the underlying
contract. To the extent the terms of the contract attribute all
or a portion of the expected future benefit to an individual
year of the employee’s service, the cost of the benefits
are recognized in that year. Therefore, the Company estimates
that the cost of any and all future benefits that are expected
to be paid as a result of the deferred compensation and expenses
the present value of those costs in the year as services are
provided.
Fair
Value Measurements
The accounting standard for fair value measurements defines fair
value, establishes a market-based framework or hierarchy for
measuring fair value, and expands disclosures about fair value
measurements. The standard establishes a three-tier value
hierarchy, which prioritizes the inputs used in measuring fair
value as follows: observable inputs such as quoted prices in
active markets (“Level 1”); inputs other than the
quoted prices in active markets that are observable either
directly or indirectly (“Level 2”); and
observable inputs in which there is little or no market data,
which requires the Company to develop its own assumptions
(“Level 3”).
New
Accounting Pronouncements
During the fiscal year ended March 31, 2010, the Company
adopted the following accounting pronouncements, none of which
had a material impact on the Company’s present or
historical consolidated financial statements:
During June 2009, the FASB approved the Codification as the
single source of authoritative nongovernmental
U.S. generally accepted accounting principles. The
Codification reorganizes thousands of pronouncements into
roughly 90 accounting topics and displays the topics using a
consistent structure. All existing accounting standard documents
are superseded, and all other accounting literature not included
in the Codification is considered nonauthoritative. The
Codification became effective for interim and annual periods
ending after September 15, 2009. The Codification did not
have a material impact on the Company’s results of
operations or financial position.
During December 2007, the FASB issued ASC 805, Business
Combinations, which the Company adopted effective
January 1, 2009. This guidance replaced existing guidance
and significantly changed accounting and reporting relative to
business combinations in consolidated financial statements,
including
F-15
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
requirements to recognize acquisition-related transaction costs
and post acquisition restructuring costs in the results of
operations as incurred. There was not a material impact to the
Company’s consolidated financial statements upon adoption
of this standard. Any future business combinations will be
presented in accordance with ASC 805, but the nature and
magnitude of the specific effects will depend on the nature,
terms and size of the acquisitions. Additionally, ASC 805
changes the accounting for uncertain tax positions that are
settled subsequent to adoption, but relate to preacquisition tax
contingencies that existed prior to the adoption of
ASC 805. To the extent that the Company’s established
tax contingencies are realized at an amount greater or less than
the contingency recorded, this adoption could materially impact
the Company’s results of operations.
During June 2009, the FASB issued ASC 855, Subsequent
Events, which the Company adopted effective June 30,
2009. This guidance establishes general standards of accounting
for, and disclosures of, events that occur after the balance
sheet date but before the financial statements are issued.
During February 2010, the FASB amended the evaluation and
disclosure requirements for subsequent events for companies that
are not required to file with the U.S. Securities and
Exchange Commission. The Company adopted the amended subsequent
event requirements effective March 31, 2010. There was no
material impact to the Company’s consolidated financial
statements upon adoption of the original or amended standard.
In October 2009, the FASB issued Accounting Standards Updated
No. 2009-13,
Multiple-Deliverable Revenue Arrangements, which amends
ASC 605, Revenue Recognition. The guidance relates
to the determination of when the individual deliverables
included in a multiple-element arrangement may be treated as
separate units of accounting and modifies the manner in which
the transaction consideration is allocated across the individual
deliverables, thereby affecting the timing of revenue
recognition. The guidance also expands the disclosure
requirements for revenue arrangements with multiple
deliverables. The guidance will be effective beginning on
April 1, 2011, and may be applied retrospectively for all
periods presented or prospectively to arrangements entered into
or materially modified after the adoption date. Early adoption
is permitted provided that the guidance is retroactively applied
to the beginning of the year of adoption. The Company is
currently assessing the potential effect, if any, on its
consolidated financial statements.
| 3. | EARNINGS PER SHARE |
The Company computes basic and diluted per share amounts based
on net income (loss) for the periods presented. The Company uses
the weighted average number of common shares outstanding during
the period to calculate basic earnings (loss) per share. Diluted
EPS is computed similar to basic EPS, except the weighted
average number of shares outstanding is increased to include the
dilutive effect of outstanding common stock options and other
stock-based awards.
The Company currently has outstanding shares of Class A
Common Stock, Class B Non-Voting Common Stock, Class C
Restricted Common Stock, and Class E Special Voting Common
Stock. Class E shares are not included in the calculation
of EPS as these shares represent voting rights only and are not
entitled to participate in dividends or other distributions.
F-16
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
A reconciliation of the income (loss) used to compute basic and
diluted EPS for the years noted is as follows (in thousands,
except share and per share amounts):
| Predecessor | The Company | ||||||||||||||||
|
Fiscal Year |
Four Months |
Eight Months |
Fiscal Year |
||||||||||||||
|
Ended |
Ended |
Ended |
Ended |
||||||||||||||
|
March 31, |
July 31, |
March 31, |
March 31, |
||||||||||||||
| 2008 | 2008 | 2009 | 2010 | ||||||||||||||
|
Earnings (loss) from continuing operations for basic and diluted
computations
|
$ | 88,980 | $ | (397,544 | ) | $ | (38,783 | ) | $ | 25,419 | |||||||
|
Earnings (loss) for basic and diluted computations
|
17,874 | (1,245,915 | ) | (38,783 | ) | 25,419 | |||||||||||
|
Weighted-average Class A Common Stock outstanding
|
1,757,000 | 2,193,000 | 10,131,687 | 10,209,918 | |||||||||||||
|
Weighted-average Class B Non-Voting Common Stock outstanding
|
— | — | 235,020 | 235,020 | |||||||||||||
|
Weighted-average Class C Restricted Common Stock outstanding
|
— | — | 202,827 | 202,827 | |||||||||||||
|
Total weighted-average common shares outstanding for basic
computations
|
1,757,000 | 2,193,000 | 10,569,534 | 10,647,765 | |||||||||||||
|
Dilutive stock options and restricted stock
|
296,338 | — | — | 975,073 | |||||||||||||
|
Average number of common shares outstanding for diluted
computations
|
2,053,338 | 2,193,000 | 10,569,534 | 11,622,838 | |||||||||||||
|
Earnings (loss) from continuing operations per common share
|
|||||||||||||||||
|
Basic
|
$ | 50.64 | $ | (181.28 | ) | $ | (3.67 | ) | $ | 2.39 | |||||||
|
Diluted
|
$ | 43.33 | $ | (181.28 | ) | $ | (3.67 | ) | $ | 2.19 | |||||||
|
Earnings (loss) per common share
|
|||||||||||||||||
|
Basic
|
$ | 10.17 | $ | (568.13 | ) | $ | (3.67 | ) | $ | 2.39 | |||||||
|
Diluted
|
$ | 8.70 | $ | (568.13 | ) | $ | (3.67 | ) | $ | 2.19 | |||||||
| 4. | BUSINESS COMBINATION |
The Company acquired the outstanding common stock of Booz Allen
Hamilton, Inc. effective August 1, 2008. The purchase price
was $1,828.0 million. Pursuant to the Merger Agreement,
spin-off, indemnification and working capital escrow accounts in
the amounts of $15.0 million, $25.0 million, and
$50.0 million, respectively, were established for a period
of one year from the date of the closing or until all
outstanding claims made against the escrow accounts are
resolved, whichever is later. As of March 31, 2010,
payments in the aggregate amount of $52.5 million were made
out of the escrow accounts, of which $13.0 million was
released to selling shareholders.
In connection with the Merger Transaction, the Company
established a DPO of $158.0 million, of which
$78.0 million was set aside to be paid in full to the
selling shareholders. As discussed in Note 10, on
December 11, 2009, in connection with the Recapitalization
Transaction, $100.4 million was paid to the
F-17
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
selling shareholders, of which $78.0 million was the
repayment of that portion of the DPO, with approximately
$22.4 million representing accrued interest. The DPO also
was established for additional consideration for the selling
shareholders of up to $80.0 million plus accrued interest,
payable by the tenth anniversary of the July 31, 2008
Merger Transaction closing date, and following favorable
settlement of any indemnified pre-acquisition contingency claims
made against the DPO. As of March 31, 2009 and 2010,
$59.6 million and $62.4 million, respectively, may be
indemnified under the DPO. As the indemnified claims are settled
favorably, any amount remaining after settlement will be
reflected as an increase in the DPO. An adjustment to the
purchase price equal to the DPO adjustment will be recorded as
additional consideration to be paid to the selling shareholders.
As of March 31, 2009 and 2010, there were no significant
settled claims and, accordingly, no adjustments to purchase
price. Refer to note 10 for further discussion of the DPO.
As discussed in Note 1, the total purchase price was
allocated to net tangible and identifiable intangible assets
based on their estimated fair values as of the effective date of
the acquisition. In allocating the purchase price, the Company
considered, among other factors, its intention for future use of
acquired assets, analysis of historical financial performance,
and estimates of future performance of contracts. The components
of intangible assets associated with the acquisition were
contract backlog, favorable lease terms, and trade name, valued
at $160.8 million, $2.8 million, and
$190.2 million, respectively. Trade name, an indefinite
lived intangible, represents the estimated fair value for all
trade names and trademarks employed by the Company as of the
closing date. Backlog consists of services that the Company is
committed to fulfill according to the terms of its contracts and
task orders. Favorable lease terms represent the differential
between the payment terms of in-place leases and market lease
rates. Backlog and favorable lease terms are amortized over nine
and five years, respectively.
Purchase
Price Allocation
The following table represents the purchase price allocation
which includes the resolution of certain working capital, tax
adjustments and purchase negotiation matters during fiscal 2010
(in thousands):
|
Current assets
|
$ | 1,009,589 | ||
|
Property and equipment
|
141,219 | |||
|
Other noncurrent assets
|
40,289 | |||
|
Current liabilities
|
(489,611 | ) | ||
|
Notes payable, current and long-term
|
(245,000 | ) | ||
|
Other long-term liabilities
|
(145,417 | ) | ||
|
Net assets acquired
|
311,069 | |||
|
Definite-lived intangible assets acquired
|
163,600 | |||
|
Indefinite-lived intangible assets acquired
|
190,200 | |||
|
Goodwill
|
1,163,129 | |||
|
Total purchase price
|
$ | 1,827,998 | ||
The following unaudited pro forma combined condensed statement
of income sets forth the consolidated results of operations of
the Company as if the above described acquisition had occurred
at April 1, 2008. The
F-18
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
unaudited pro forma information does not purport to be
indicative of the actual results that would have occurred if the
combination had occurred at this earlier date (in millions,
except per share amounts):
|
Fiscal Year Ended |
||||
| March 31,2009 | ||||
|
Revenue
|
$ | 4,351 | ||
|
Net loss
|
(49 | ) | ||
|
Loss per common share:
|
||||
|
Basic
|
$ | (4.68 | ) | |
|
Diluted
|
$ | (4.68 | ) | |
| 5. | GOODWILL AND OTHER INTANGIBLE ASSETS |
Goodwill
As of March 31, 2009 and 2010, goodwill was
$1,141.6 million and $1,163.1 million, respectively.
Goodwill, which is associated with the Merger Transaction, was
primarily attributed to the employees of the Company, their
presence in the marketplace, and the value paid for by companies
that operate in the Company’s industry (see Note 4).
The change in the carrying amount of goodwill is attributable to
the resolution of certain working capital and tax adjustments
and purchase negotiation matters during fiscal 2010.
The Company performed an annual valuation of indefinite-lived
intangible assets including goodwill as of January 1, 2010,
noting no impairment. Goodwill was assessed for the
Company’s one reporting unit utilizing a two-step
methodology. The first step requires the Company to estimate the
fair value of its reporting unit and compare it to the carrying
value. If the carrying value of a reporting unit were to exceed
its fair value, the goodwill of that reporting unit would be
potentially impaired, and the Company would proceed to step two
of the impairment analysis. In step two of the impairment
analysis, the Company would measure and record an impairment
loss equal to the excess of the carrying value of the reporting
unit’s goodwill over its implied fair value should such a
circumstance arise. The outcome of the first step of the
Company’s test indicated that there was no potential
impairment, and therefore the second step of the test was not
required. The trademark was evaluated as an indefinite life
intangible asset prior to the testing of goodwill. At
January 1, 2010, the fair value of the Company’s
goodwill and trademark each exceeded their carrying value. There
were no additional events or changes that indicated any
impairment as of March 31, 2010.
Other
Intangible Assets
The following tables set forth information for intangible assets
(in thousands):
| As of March 31, 2009 | As of March 31, 2010 | |||||||||||||||||||||||
|
Gross |
Net |
Gross |
Net |
|||||||||||||||||||||
|
Carrying |
Accumulated |
Carrying |
Carrying |
Accumulated |
Carrying |
|||||||||||||||||||
| Value | Amortization | Value | Value | Amortization | Value | |||||||||||||||||||
|
Amortized Intangible Assets
|
||||||||||||||||||||||||
|
Contract backlog
|
$ | 160,800 | $ | 43,613 | $ | 117,187 | $ | 160,800 | $ | 83,405 | $ | 77,395 | ||||||||||||
|
Favorable leases
|
2,800 | 710 | 2,090 | 2,800 | 1,515 | 1,285 | ||||||||||||||||||
|
Total
|
$ | 163,600 | $ | 44,323 | $ | 119,277 | $ | 163,600 | $ | 84,920 | $ | 78,680 | ||||||||||||
|
Unamortized Intangible Assets
|
||||||||||||||||||||||||
|
Trade name
|
$ | 190,200 | $ | — | $ | 190,200 | $ | 190,200 | $ | — | $ | 190,200 | ||||||||||||
|
Total
|
$ | 353,800 | $ | 44,323 | $ | 309,477 | $ | 353,800 | $ | 84,920 | $ | 268,880 | ||||||||||||
F-19
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
As a result of the Merger Transaction, amortization expense for
the eight months ended March 31, 2009 and fiscal 2010, was
$44.3 million and $40.6 million, respectively. There
were no intangible assets prior to the Merger Transaction. The
following table summarizes the estimated annual amortization
expense for the future periods indicated below (in thousands):
|
For the Fiscal Year Ending March 31,
|
||||
|
2011
|
$ | 28,645 | ||
|
2012
|
16,364 | |||
|
2013
|
12,549 | |||
|
2014
|
8,450 | |||
|
2015
|
4,225 | |||
|
Thereafter
|
8,447 | |||
| $ | 78,680 | |||
The Company reviews its long-lived assets, including property
and equipment and intangible assets, for impairment whenever
events or changes in circumstances indicate that the carrying
amounts of the assets may not be fully recoverable. If the total
of the expected undiscounted future net cash flows is less than
the carrying amount of the asset, a loss is recognized for the
difference between the fair value and carrying amount of the
asset. There were no impairment charges for the eight months
ended March 31, 2009 or fiscal 2010.
| 6. | ACCOUNTS RECEIVABLE |
Accounts receivable, net consisted of the following (in
thousands):
| March 31, | ||||||||
| 2009 | 2010 | |||||||
|
Accounts receivable — billed
|
$ | 460,215 | $ | 437,256 | ||||
|
Accounts receivable — unbilled
|
467,358 | 583,182 | ||||||
|
Allowance for doubtful accounts
|
(1,648 | ) | (2,127 | ) | ||||
|
Accounts receivable, net, current
|
925,925 | 1,018,311 | ||||||
|
Long-term unbilled receivables related to retainage and holdbacks
|
13,051 | 17,072 | ||||||
|
Total accounts receivable, net
|
$ | 938,976 | $ | 1,035,383 | ||||
The Company recognized a provision for doubtful accounts of
$7.1 million, $1.0 million, $2.1 million, and
$1.4 million for fiscal 2008, four months ended
July 31, 2008, eight months ended March 31, 2009, and
fiscal 2010, respectively. Long-term unbilled receivables
related to retainage, holdbacks, and long-term rate settlements
to be billed at contract closeout are included in accounts
receivable in the accompanying consolidated balance sheets.
F-20
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 7. | PROPERTY AND EQUIPMENT |
The components of property and equipment, net were as follows
(in thousands):
| March 31, | ||||||||
| 2009 | 2010 | |||||||
|
Furniture and equipment
|
$ | 66,748 | $ | 82,759 | ||||
|
Computer equipment
|
34,077 | 43,824 | ||||||
|
Software
|
10,164 | 20,693 | ||||||
|
Leasehold improvements
|
66,883 | 79,501 | ||||||
|
Total
|
177,872 | 226,777 | ||||||
|
Less accumulated depreciation and amortization
|
(35,329 | ) | (90,129 | ) | ||||
|
Property and equipment, net
|
$ | 142,543 | $ | 136,648 | ||||
Property and equipment, net, includes $3.1 million and
$12.1 million of internally developed software, net of
depreciation as of March 31, 2009 and 2010, respectively.
Depreciation and amortization expense relating to property and
equipment for fiscal 2008, four months ended July 31, 2008,
eight months ended March 31, 2009, and fiscal 2010, was
$33.1 million, $11.9 million, $35.3 million, and
$55.2 million, respectively.
| 8. | ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES |
Accounts payable and other accrued expenses consist of the
following (in thousands):
| March 31, | ||||||||
| 2009 | 2010 | |||||||
|
Vendor payables
|
$ | 184,394 | $ | 257,418 | ||||
|
Accrued expenses
|
56,774 | 93,317 | ||||||
|
Other
|
2,663 | 3,362 | ||||||
|
Total accounts payable and other accrued expenses
|
$ | 243,831 | $ | 354,097 | ||||
| 9. | ACCRUED COMPENSATION AND BENEFITS |
Accrued compensation and benefits consist of the following (in
thousands):
| March 31, | ||||||||
| 2009 | 2010 | |||||||
|
Bonus
|
$ | 135,566 | $ | 146,035 | ||||
|
Retirement
|
74,614 | 89,200 | ||||||
|
Vacation
|
104,249 | 119,912 | ||||||
|
Other
|
29,980 | 29,998 | ||||||
|
Total accrued compensation and benefits
|
$ | 344,409 | $ | 385,145 | ||||
| 10. | DEFERRED PAYMENT OBLIGATION |
In connection with the Merger Transaction, on July 31, 2008
(the “Closing Date”) the Company established a DPO of
$158.0 million, payable by the tenth anniversary of the
Closing Date, less any settled claims. Pursuant to the Merger
Agreement, $78.0 million of the $158.0 million DPO was
required to be paid in full to the selling shareholders. On
December 11, 2009, in connection with the Recapitalization
F-21
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Transaction, $100.4 million was paid to the selling
shareholders, of which $78.0 million was the repayment of
that portion of the DPO, with approximately $22.4 million
representing accrued interest.
The remaining $80.0 million is available to indemnify the
Company for certain pre-acquisition tax contingencies, related
interest and penalties and other matters pursuant to the Merger
Agreement. Any amounts remaining after the settlement of claims
will be paid out to the selling shareholders. As of
March 31, 2009 and 2010, the Company has recorded
$99.4 million and $100.2 million, respectively, for
pre-acquisition uncertain tax positions, of which approximately
$59.6 million and $62.4 million, respectively, may be
indemnified under the remaining available DPO. In addition,
other tax contingencies not currently recorded on the
Company’s consolidated balance sheets may arise and may be
indemnified by any remaining DPO. Accordingly, the
$109.0 million and $20.0 million DPO balance recorded
as of March 31, 2009 and 2010, respectively, includes the
residual balance to be paid to the selling shareholders based on
consideration of contingent tax claims and accrued interest.
Interest is accrued at a rate of 5.0% per six-month period on
the total remaining $158.0 million and $80.0 million
DPO, net of any settled claims or payments as of March 31,
2009 and 2010, respectively. As of March 31, 2009 and 2010,
there have been no significant settled claims or payments from
the DPO related to indemnified claims.
| 11. | DEBT |
Long-term debt, net of discount, consists of the following (in
thousands):
| March 31, | ||||||||
| 2009 | 2010 | |||||||
|
Senior secured credit agreement:
|
||||||||
|
Tranche A
|
$ | 119,708 | $ | 110,829 | ||||
|
Tranche B
|
571,260 | 566,811 | ||||||
|
Tranche C
|
— | 345,790 | ||||||
| 690,968 | 1,023,430 | |||||||
|
Unsecured credit agreement:
|
||||||||
|
Mezzanine Term Loan
|
544,759 | 545,202 | ||||||
|
Total
|
1,235,727 | 1,568,632 | ||||||
|
Current portion of long-term debt
|
(15,225 | ) | (21,850 | ) | ||||
|
Long-term debt, net of current portion
|
$ | 1,220,502 | $ | 1,546,782 | ||||
The Company maintains a Senior Secured Agreement and a Mezzanine
Credit Agreement with a syndicate of lenders. In connection with
the Recapitalization Transaction, the Senior Secured Agreement
was amended and restated effective December 11, 2009, to
add Tranche C term loans in the aggregate principal amount
of $350.0 million and provide for an increase to the
Company’s revolving credit facility of $145.0 million.
The Senior Secured Agreement, as amended, provides for
$1,060.0 million in term loans ($125.0 million
Tranche A, $585.0 million Tranche B, and
$350.0 million Tranche C), and a $245.0 million
revolving credit facility. In September 2008, a member of the
syndicate of lenders filed for bankruptcy. Therefore, management
believes that $21.3 million of the $245.0 million
revolving credit facility under the Senior Secured Agreement
will not be available to the Company.
The Senior Secured Agreement requires scheduled principal
payments in equal consecutive quarterly installments of the
stated principal amount of Tranche A, which commenced on
December 31, 2008, with incremental increases prior to the
Tranche A maturity date of July 31, 2014. As of
March 31, 2009 and 2010, the quarterly installment amount
is 1.25% and 2.5% of the stated principal amount of
Tranche A, respectively. The Senior Secured Agreement also
requires scheduled principal payments in equal consecutive
quarterly
F-22
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
installments of 0.25% of the stated principal amount of
Tranche B, which commenced on December 31, 2008, and
0.25% of the stated principal amount of Tranche C, which
commenced on March 31, 2010. The remaining balances thereof
on Tranche B and Tranche C are payable on their
maturity date of July 31, 2015. The revolving credit
facility matures on July 31, 2014, at which time any
remaining principal balance is due in full.
At the Company’s option, the interest rate on loans under
the Senior Secured Agreement may be based on the Eurocurrency
rate or alternate base rate (“ABR”). Subject to a
pricing grid, the applicable interest rate margins on
Tranche A are 3.75% with respect to Eurocurrency loans, or
2.75% with respect to ABR loans, as defined in the Senior
Secured Agreement. The applicable interest rate margins on
Tranche B are 4.5% with respect to Eurocurrency Loans, or
3.5% with respect to ABR loans, as defined in the Senior Secured
Agreement. The Tranche B interest rate may not be lower
than 7.5% on either a Eurocurrency Loan or an ABR loan. The
applicable interest rate margins on Tranche C are 4.0% with
respect to Eurocurrency Loans, or 3.0% with respect to ABR
loans, as defined in the Senior Secured Agreement. The
Tranche C interest rate may not be lower than 6.0% on
either a Eurocurrency Loan or an ABR loan.
As of March 31, 2009, interest accrued at a rate of 4.2%
and 7.5% for Tranches A and B, respectively. Interest payments
in the amounts of $4.9 million and $29.5 million were
made for Tranches A and B, respectively, during the eight months
ended March 31, 2009. As of March 31, 2010, interest
accrued at a rate of 4.0%, 7.5%, and 6.0% for Tranches A, B, and
C, respectively. Interest payments in the amounts of
$4.9 million, $44.1 million, and $5.3 million
were made for Tranches A, B, and C, respectively, during fiscal
2010. The applicable interest rate margins on the revolving
credit facility are 3.75% with respect to Eurocurrency Loans, or
2.75% with respect to ABR loans, as defined in the Senior
Secured Agreement. The revolving credit facility margin and
commitment fee are subject to the pricing grid, as defined in
the Senior Secured Agreement. As of March 31, 2009 and
2010, no amounts have been drawn on the revolving credit
facility.
The Mezzanine Credit Agreement provides for a
$550.0 million term loan (the “Mezzanine Term
Loan”). The Mezzanine Term Loan does not require scheduled
principal payment installments, but reaches maturity on
July 31, 2016, at which time the remaining principal
balance is due in full. Optional prepayment of the Mezzanine
Term Loan requires a prepayment fee equal to 3.0% of the
principal amount prepaid if paid on or after the second
anniversary but before the third anniversary of the original
July 31, 2008 closing date, 2.0% if paid on or after the
third anniversary but before the fourth anniversary of the
closing date, and a mandatory 1.0% if paid on or after the
fourth anniversary of the closing date. The Company records the
mandatory 1% payment as additional interest expense over the
life of the Mezzanine Term Loan on the consolidated statements
of operations. Prepayments made before the second anniversary of
closing date are subject to additional premiums and penalties
based on the present value of the debt and remaining interest
payments at the time of such prepayment. The applicable fixed
interest rate on the Mezzanine Term Loan is 13.0%, with the
option that, in lieu of interest payment in cash, up to 2.0% of
that amount would be added to the then outstanding aggregate
principal balance. The Company made interest payments in the
amount of $48.3 million and $72.5 million during the
eight months ended 2009, and fiscal 2010, respectively.
The total outstanding debt balance is recorded in the
accompanying consolidated balance sheets, net of unamortized
discount of $18.2 million and $19.2 million as of
March 31, 2009 and 2010, respectively.
F-23
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following tables summarizes required future debt principal
repayments (in thousands):
| Payments Due By March 31, | ||||||||||||||||||||||||||||
| Total | 2011 | 2012 | 2013 | 2014 | 2015 | Thereafter | ||||||||||||||||||||||
|
Tranche A
|
112,500 | $ | 12,500 | $ | 15,625 | $ | 21,875 | $ | 62,500 | $ | — | $ | — | |||||||||||||||
|
Tranche B
|
576,225 | 5,850 | 5,850 | 5,850 | 5,850 | 5,850 | 546,975 | |||||||||||||||||||||
|
Tranche C
|
349,125 | 3,500 | 3,500 | 3,500 | 3,500 | 3,500 | 331,625 | |||||||||||||||||||||
|
Mezzanine Term Loan
|
550,000 | — | — | — | — | — | 550,000 | |||||||||||||||||||||
|
Total
|
$ | 1,587,850 | $ | 21,850 | $ | 24,975 | $ | 31,225 | $ | 71,850 | $ | 9,350 | $ | 1,428,600 | ||||||||||||||
At March 31, 2009 and 2010, the Company was contingently
liable under open standby letters of credit and bank guarantees
issued by the Company’s banks in favor of third parties.
These letters of credit and bank guarantees primarily relate to
leases and support of insurance obligations that total
$1.4 million. These instruments reduce the Company’s
available borrowings under the revolving credit facility.
The loans under the Senior Secured Agreement are secured by
substantially all of the Company’s assets. The Senior
Secured Agreement requires the maintenance of certain financial
and non-financial covenants. The Mezzanine Term Loan is
unsecured, and the Mezzanine Credit Agreement requires the
maintenance of certain financial and non-financial covenants. As
of March 31, 2009 and 2010, the Company was in compliance
with all of its covenants.
| 12. | DEFERRED FINANCING COSTS |
Costs incurred in connection with securing the loans under the
Senior Secured Agreement as well as the Mezzanine Credit
Agreement in 2008 were $45.0 million, which is recorded as
other long-term assets and will be amortized over the life of
the loan. Costs incurred in connection with the Recapitalization
Transaction, including amending the Senior Secured Agreement and
Mezzanine Credit Agreement, were approximately
$18.9 million. Of this amount, approximately
$15.8 million was recorded as other long-term assets in the
consolidated balance sheets and will be amortized and reflected
in interest expense in the consolidated statements of operations
over the lives of the loans. Amortization of these costs will be
accelerated to the extent that any prepayment is made on the
term loans. The remaining amount of approximately
$3.1 million was recorded as general and administrative
expense in the consolidated statement of operations for fiscal
2010.
At March 31, 2009 and 2010, the unamortized debt issuance
costs of $41.9 million and $52.0 million,
respectively, were reflected as other long-term assets in the
consolidated balance sheets. During the eight months ended
March 31, 2009 and fiscal 2010, $3.1 million and
$5.7 million of costs, respectively, were amortized and
reflected in interest expense in the consolidated statements of
operations.
F-24
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 13. | INCOME TAXES |
The components of income tax expense (benefit) were as follows
(in thousands):
| Predecessor | The Company | ||||||||||||||||
|
Fiscal Year |
Four Months |
Eight Months |
Fiscal Year |
||||||||||||||
|
Ended |
Ended |
Ended |
Ended |
||||||||||||||
|
March 31, |
July 31, |
March 31, |
March 31, |
||||||||||||||
| 2008 | 2008 | 2009 | 2010 | ||||||||||||||
|
Current:
|
|||||||||||||||||
|
U.S. Federal
|
$ | 93,374 | $ | (1,414 | ) | $ | — | $ | 2,664 | ||||||||
|
State and local
|
9,307 | (459 | ) | — | 1,074 | ||||||||||||
|
Total current
|
102,681 | (1,873 | ) | — | 3,738 | ||||||||||||
|
Deferred:
|
|||||||||||||||||
|
U.S. Federal
|
(37,566 | ) | (44,996 | ) | (16,133 | ) | 18,004 | ||||||||||
|
State and local
|
(2,422 | ) | (9,240 | ) | (6,014 | ) | 1,833 | ||||||||||
|
Total deferred
|
(39,988 | ) | (54,236 | ) | (22,147 | ) | 19,837 | ||||||||||
|
Total
|
$ | 62,693 | $ | (56,109 | ) | $ | (22,147 | ) | $ | 23,575 | |||||||
A reconciliation between income tax computed at the
U.S. federal statutory income tax rate to income tax
expense (benefit) from continuing operations follows (in
thousands):
| Predecessor | The Company | ||||||||||||||||
|
Fiscal Year |
Four Months |
Eight Months |
Fiscal Year |
||||||||||||||
|
Ended |
Ended |
Ended |
Ended |
||||||||||||||
|
March 31, |
July 31, |
March 31, |
March 31, |
||||||||||||||
| 2008 | 2008 | 2009 | 2010 | ||||||||||||||
|
Income tax expense (benefit) computed at U.S. statutory rate
(35)%
|
$ | 53,086 | $ | (158,779 | ) | $ | (21,326 | ) | $ | 17,148 | |||||||
|
Increases (reductions) in taxes due to:
|
|||||||||||||||||
|
State income taxes, net of the federal tax benefit
|
8,541 | (6,889 | ) | (2,651 | ) | 2,913 | |||||||||||
|
Meals and entertainment
|
738 | — | 1,321 | 2,552 | |||||||||||||
|
Nondeductible stock-based compensation
|
— | 97,048 | — | — | |||||||||||||
|
Other
|
328 | 12,511 | 509 | 962 | |||||||||||||
|
Income tax expense (benefit) from continuing operations
|
$ | 62,693 | $ | (56,109 | ) | $ | (22,147 | ) | $ | 23,575 | |||||||
F-25
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Significant components of the Company’s net deferred income
tax asset were as follows (in thousands):
| March 31, | ||||||||
| 2009 | 2010 | |||||||
|
Deferred income tax assets:
|
||||||||
|
Accrued expenses
|
$ | 21,677 | $ | 36,655 | ||||
|
Stock-based compensation
|
26,148 | 47,461 | ||||||
|
Pension and postretirement insurance
|
15,503 | 844 | ||||||
|
Property and equipment
|
11,087 | 28,728 | ||||||
|
Net operating loss carryforwards
|
243,430 | 141,472 | ||||||
|
Capital loss carryforward
|
10,056 | 42,379 | ||||||
|
AMT
|
— | 3,091 | ||||||
|
Other
|
640 | 8,960 | ||||||
|
Total gross deferred income taxes
|
328,541 | 309,590 | ||||||
|
Less valuation allowance
|
(10,056 | ) | (42,379 | ) | ||||
|
Total net deferred income tax assets
|
318,485 | 267,211 | ||||||
|
Deferred income tax liabilities:
|
||||||||
|
Unbilled receivables
|
116,687 | 122,733 | ||||||
|
Intangible assets
|
122,845 | 106,106 | ||||||
|
Other
|
1,509 | — | ||||||
|
Total deferred tax liabilities
|
241,041 | 228,839 | ||||||
|
Net deferred income tax asset
|
$ | 77,444 | $ | 38,372 | ||||
Deferred tax balances reflect the impact of temporary
differences between the carrying amount of assets and
liabilities and their tax basis and are stated at the tax rates
expected to be in effect when taxes are actually paid or
recovered. A valuation allowance is provided against deferred
tax assets when it is more likely than not that some or all of
the deferred tax asset will not be realized. In determining if
our deferred tax assets are realizable, we consider the
Company’s history of generating taxable earnings,
forecasted future taxable income, as well as any tax planning
strategies. The Company recorded a valuation allowance of
$10.1 million and $42.4 million as of March 31,
2009 and 2010, respectively, against deferred tax assets
associated with the capital loss carryforward. For all other
deferred tax assets, the Company believes it is more likely than
not that the results of future operations will generate
sufficient taxable income to realize these deferred tax assets.
At March 31, 2009 and 2010, the Company has approximately
$608.2 million and $367.6 million, respectively, of
net operating loss (“NOL”) carryforwards, which will
begin to expire in 2028. Section 382 of the Internal
Revenue Code limits the use of a corporation’s NOLs and
certain other tax benefits following a change in ownership of
the corporation. As discussed in Notes 1 and 4, Holding
acquired the Predecessor in a nontaxable merger effective
August 1, 2008. The transaction resulted in an ownership
change, which subjects the NOL generated at July 31, 2008
to the limitation under Section 382.
The Patient Protection and Affordable Care Act and subsequent
modifications made in the Health Care and Education
Reconciliation Act of 2010 were signed into law in March 2010.
Under the new legislation, companies will no longer be able to
claim an income tax deduction related to the costs of
prescription drug benefits provided to retirees and reimbursed
under the Medicare Part D retiree drug subsidy. Although
this tax change does not take effect until 2013, the Company is
required to recognize the impact to the deferred taxes in the
period in which the law is enacted. The impact to the Company is
immaterial.
F-26
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Uncertain
Tax Positions
As of March 31, 2009 and 2010, the Company has recorded
$99.4 million and $100.2 million, respectively, for
pre-acquisition uncertain tax positions, of which approximately
$59.6 million and $62.4 million, respectively, may be
indemnified under the remaining available DPO. Refer to
Note 10 for further explanation.
A reconciliation of the beginning and ending amount of total
unrecognized tax benefits is as follows (in thousands):
| March 31, | ||||||||
| 2009 | 2010 | |||||||
|
Uncertain tax positions:
|
||||||||
|
Beginning of year
|
$ | 86,690 | $ | 87,867 | ||||
|
Increases related to prior-year tax positions
|
1,077 | — | ||||||
|
Increases related to current-year tax positions
|
100 | — | ||||||
|
Settlements
|
— | (1,885 | ) | |||||
|
End of year
|
$ | 87,867 | $ | 85,982 | ||||
Included in the balance of unrecognized tax benefits at
March 31, 2009 and March 31, 2010 are potential tax
benefits of $87.9 million and $86.0 million,
respectively, that, if recognized, would affect the effective
tax rate.
The Company recognizes accrued interest and penalties related to
unrecognized tax benefits in the income tax provision. Included
in the total unrecognized tax benefit are accrued penalties and
interest of $11.5 million and $14.2 million at
March 31, 2009 and 2010, respectively.
The Company and its subsidiaries file a U.S. consolidated
income tax return and file in various state and foreign
jurisdictions. The Internal Revenue Service (“IRS”) is
completing its examination of the Predecessor’s income tax
returns, as assumed by the Company, for 2004, 2005, and 2006. As
of March 31, 2010, the IRS has proposed certain significant
adjustments to the Company’s claim on research credits.
Management is currently appealing the proposed adjustments and
does not anticipate that the adjustments will result in a
material change to its financial position. Additionally, due to
statute of limitations expirations and audit settlements, it is
reasonably possible that approximately $18.5 million of
currently remaining unrecognized tax positions, each of which
are individually insignificant, may be effectively settled by
March 31, 2011.
| 14. | EMPLOYEE BENEFIT PLANS |
Defined
Contribution Plan
The Company sponsors the Employees’ Capital Accumulation
Plan (“ECAP”), which is a qualified defined
contribution plan that covers eligible U.S. and
international employees. ECAP provides for distributions,
subject to certain vesting provisions, to participants by reason
of retirement, death, disability, or termination of employment.
Total expense under ECAP for fiscal 2008, four months ended
July 31, 2008, eight months ended March 31, 2009, and
fiscal 2010, was $150.2 million, $53.3 million,
$116.8 million, and $210.3 million, respectively, and
the Company-paid contributions were $147.9 million,
$32.9 million, $127.3 million, and
$196.3 million, respectively.
Defined
Benefit Plan and Other Postretirement Benefit
Plans
The Company maintains and administers a defined benefit
retirement plan and a postretirement medical plan for current,
retired, and resigned officers.
F-27
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Company established a non-qualified defined benefit plan for
all Officers in May 1995 (the “Retired Officers’ Bonus
Plan”), which pays a lump-sum amount of $10,000 per year of
service as an Officer, provided the Officer meets retirement
vesting requirements. The Company also provides a fixed annual
allowance after retirement to cover financial counseling and
other expenses. The Retired Officers’ Bonus Plan is not
salary related, but rather is based primarily on years of
service.
In addition, the Company provides postretirement healthcare
benefits to former or active Officers under a medical indemnity
insurance plan, with premiums paid by the Company. This plan is
referred to as the Officer Medical Plan.
The Company recognizes an asset or liability for a defined
benefit plan’s overfunded or underfunded status, measures a
defined benefit plan’s assets and its obligations that
determine its funded status as of the end of the employer’s
fiscal year, and recognizes as a component of other
comprehensive income the changes in a defined benefit
plan’s funded status that are not recognized as components
of net periodic benefit cost.
The components of net postretirement medical expense for the
Officer Medical Plan were as follows (in thousands):
| Predecessor | The Company | ||||||||||||||||
|
Fiscal Year |
Four Months |
Eight Months |
Fiscal Year |
||||||||||||||
|
Ended |
Ended |
Ended |
Ended |
||||||||||||||
|
March 31, |
July 31, |
March 31, |
March 31, |
||||||||||||||
| 2008 | 2008 | 2009 | 2010 | ||||||||||||||
|
Service cost
|
$ | 1,894 | $ | 755 | $ | 2,325 | $ | 2,682 | |||||||||
|
Interest cost
|
1,568 | 666 | 1,395 | 2,269 | |||||||||||||
|
Total postretirement medical expense
|
$ | 3,462 | $ | 1,421 | $ | 3,720 | $ | 4,951 | |||||||||
The weighted-average assumptions used to determine the year-end
benefit obligations are as follows:
| Predecessor | ||||||||||||||||
| Officer Medical Plan | Retired Officers’ Bonus Plan | |||||||||||||||
|
Fiscal Year |
Four Months |
Fiscal Year |
Four Months |
|||||||||||||
|
Ending |
Ending |
Ending |
Ending |
|||||||||||||
|
March 31, |
July 31, |
March 31, |
July 31, |
|||||||||||||
| 2008 | 2008 | 2008 | 2008 | |||||||||||||
|
Discount rate
|
6.25 | % | 6.50 | % | 6.25 | % | 6.50 | % | ||||||||
|
Rate of increase in future compensation
|
N/A | N/A | N/A | N/A | ||||||||||||
| The Company | ||||||||||||||||||||
| Officer Medical Plan | Retired Officers’ Bonus Plan | |||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||
| 2009 | 2010 | 2009 | 2010 | |||||||||||||||||
|
Discount rate
|
6.50 | % | 5.75 | % | 6.50 | % | 5.75 | % | ||||||||||||
|
Rate of increase in future compensation
|
N/A | N/A | N/A | N/A | ||||||||||||||||
Assumed healthcare cost trend rates for the Officer Medical Plan
at March 31, 2008, 2009, and 2010, are as follows:
|
Pre-65 initial rate
|
2008 | 2009 | 2010 | |||||||||
|
Healthcare cost trend rate assumed for next year
|
11.0 | % | 7.5 | % | 8.0 | % | ||||||
|
Rate to which the cost trend rate is assumed to decline (the
ultimate trend rate)
|
5.0 | % | 5.0 | % | 5.0 | % | ||||||
|
Year that the rate reaches the ultimate trend rate
|
2013 | 2015 | 2017 | |||||||||
F-28
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Assumed healthcare cost trend rates have a significant effect on
the amounts reported for the healthcare plans. A
one-percentage-point change in assumed healthcare cost trend
rates would have the following effects (in thousands):
| 1% Increase | 1% Decrease | |||||||
|
Effect on total of service and interest cost
|
$ | 828 | $ | (676 | ) | |||
|
Effect on postretirement benefit obligation
|
$ | 6,357 | $ | (5,271 | ) | |||
Total pension expense, consisting of service and interest,
associated with the Retired Officers’ Bonus Plan was
$900,000, $300,000, $800,000, and $800,000 for fiscal 2008, four
months ended July 31, 2008, eight months ended
March 31, 2009, and fiscal 2010, respectively. Benefits
paid associated with the Retired Officers’ Bonus Plan were
$400,000, $400,000, $600,000, and $300,000 for fiscal 2008, four
months ended July 31, 2008, eight months ended
March 31, 2009, and fiscal 2010, respectively. The
end-of-period
benefit obligation of $4.2 million and $5.0 million as
of March 31, 2009 and 2010, respectively, is included in
postretirement obligation in the accompanying consolidated
balance sheets.
Accumulated other comprehensive income as of March 31,
2009, includes unrecognized net actuarial gain of
$1.1 million, net of taxes, and net actuarial loss of
$400,000, net of taxes, that have not yet been recognized in net
periodic pension cost for the Retired Officers’ Bonus Plan
and the Officer Medical Plan, respectively. Accumulated other
comprehensive income as of March 31, 2010, includes
unrecognized net actuarial loss of $3.8 million, net of
taxes, that have not yet been recognized in net periodic pension
cost for the Retired Officers’ Bonus Plan and the Officer
Medical Plan. A primary driver for the net actuarial loss of
$3.8 million in fiscal 2010 was the change in the actuarial
discount rate from 6.50% to 5.75%.
The changes in the benefit obligation, plan assets and funded
status of the Officer Medical Plan were as follows (in
thousands):
| Predecessor | The Company | ||||||||||||||||
|
Fiscal Year |
Four Months |
Eight Months |
Fiscal Year |
||||||||||||||
|
Ended |
Ended |
Ended |
Ended |
||||||||||||||
|
March 31, |
July 31, |
March 31, |
March 31, |
||||||||||||||
| 2008 | 2008 | 2009 | 2010 | ||||||||||||||
|
Benefit obligation, beginning of the year
|
$ | 26,624 | $ | 32,605 | $ | 32,157 | $ | 35,577 | |||||||||
|
Service cost
|
1,894 | 755 | 2,325 | 2,682 | |||||||||||||
|
Interest cost
|
1,569 | 666 | 1,395 | 2,270 | |||||||||||||
|
Actuarial (gain) loss
|
3,609 | (1,518 | ) | 797 | 6,673 | ||||||||||||
|
Benefits paid
|
(1,091 | ) | (351 | ) | (1,097 | ) | (1,747 | ) | |||||||||
|
Benefit obligation, end of the year
|
$ | 32,605 | $ | 32,157 | $ | 35,577 | $ | 45,455 | |||||||||
|
Changes in plan assets
|
|||||||||||||||||
|
Fair value of plan assets, beginning of the year
|
$ | — | $ | — | $ | — | $ | — | |||||||||
|
Actual return on plan assets
|
— | — | — | — | |||||||||||||
|
Employer contributions
|
1,091 | 351 | 1,097 | 1,747 | |||||||||||||
|
Benefits paid
|
(1,091 | ) | (351 | ) | (1,097 | ) | (1,747 | ) | |||||||||
|
Fair value of plan assets, end of the year
|
$ | — | $ | — | $ | — | $ | — | |||||||||
As of March 31, 2009 and 2010, the unfunded status of the
Officer Medical Plan was $35.6 million and
$45.5 million, respectively.
F-29
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The postretirement benefit liability for the Officer Medical
Plan is included in postretirement obligation in the
accompanying consolidated balance sheets.
Funded
Status for Defined Benefit Plans
Generally, annual contributions are made at such times and in
amounts as required by law and may, from time to time, exceed
minimum funding requirements. The Retired Officers’ Bonus
Plan is an unfunded plan and contributions are made as benefits
are paid, for all periods presented. As of March 31, 2009
and 2010, there were no plan assets for the Retired
Officers’ Bonus Plan and therefore, the accumulated
liability of $4.2 million and $5.0 million,
respectively, is unfunded. The liability will be distributed in
a lump-sum payment as each Officer retires.
The expected future medical benefits to be paid are as follows
(in thousands):
|
Officer |
||||
|
Medical Plan |
||||
|
For the Fiscal Year Ending March 31,
|
Benefits | |||
|
2012
|
$ | 1,641 | ||
|
2013
|
1,870 | |||
|
2014
|
2,143 | |||
|
2015
|
2,398 | |||
|
2016
|
2,758 | |||
|
2017-2021
|
19,623 | |||
The Company’s Officer Medical Plan provides prescription
drug benefits to its plan participants. Under the Medicare
Prescription Drug, Improvement and Modernization Act of 2003,
the U.S. government makes subsidy payments to eligible
employers to offset a portion of the cost incurred for
prescription drug benefits provided to the employer’s
Medicare-eligible retired plan participants. The Company’s
expected future subsidy receipts are not material.
| 15. | OTHER LONG-TERM LIABILITIES |
Other long-term liabilities consist of the following (in
thousands):
| March 31, | ||||||||
| 2009 | 2010 | |||||||
|
Deferred rent
|
$ | 4,790 | $ | 10,255 | ||||
|
Deferred compensation
|
4,770 | 11,289 | ||||||
|
Stock-based compensation
|
— | 27,432 | ||||||
|
Other
|
87 | 292 | ||||||
|
Total other long-term liabilities
|
$ | 9,647 | $ | 49,268 | ||||
Deferred rent liabilities result from recording rent expense on
a straight-line basis over the life of the respective lease and
recording incentives for tenant improvements. The increase of
$5.5 million as of March 31, 2010 as compared to
March 31, 2009 was primarily for accrual of deferred rent
on existing leases.
In fiscal 2010, the Company recorded a stock-based compensation
liability of $34.4 million, including $7.0 million
expected to be paid within one year, related to the reduction in
stock option exercise price associated with the December 2009
dividend. Options vested and not yet exercised that would have
had an exercise price below zero as a result of the dividend
were reduced to one cent, with the remaining reduction to be
paid in cash upon exercise of the options. Refer to Note 17
for further discussion of the December 2009 dividend.
F-30
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Company maintains a deferred compensation plan, the EPP,
established in January 2009, for the benefit of certain
employees. The EPP allows eligible participants to defer all or
a portion of their annual performance bonus, reduced by amounts
withheld for the payment of taxes or other deductions required
by law. The Company makes no contributions to the EPP, but
maintains participant accounts for deferred amounts and interest
earned. The amounts deferred into the EPP will earn interest at
a rate of return indexed to the results of the Company’s
growth as defined by the EPP. In each subsequent year, interest
will be compounded on the total deferred balance. Employees must
leave the money in the EPP until 2014. The deferred balance
generally will be paid within 180 days of the final
determination of the interest to be accrued for 2014, upon
retirement, or termination. As of March 31, 2009 and 2010,
the Company’s liability associated with the EPP was
$4.8 million and $11.3 million, respectively. Accrued
amounts related to the EPP are included in other long-term
liabilities on the accompanying consolidated balance sheets.
| 16. | STOCKHOLDERS’ EQUITY |
Common
Stock
As of March 31, 2009 and 2010, the Company has
16,000,000 shares of authorized Class A Common Stock,
par value $0.01 per share, 16,000,000 shares of authorized
Class B Non-Voting Common Stock, par value $0.01,
600,000 shares of authorized Class C Restricted Common
Stock, par value $0.01, 600,000 shares of authorized
Class D Merger Rolling Common Stock, par value $0.01,
2,500,000 shares of authorized Class E Special Voting
Common Stock, par value $0.03, and 600,000 shares of
authorized Class F Non-Voting Restricted Common Stock, par
value $0.01 per share. The total number of shares of capital
common stock the Company has the authority to issue is
36,300,000.
The Common Stock shares outstanding are as follows:
| March 31, | ||||||||
| 2009 | 2010 | |||||||
|
Class A Common Stock
|
10,131,687 | 10,292,290 | ||||||
|
Class B Non-Voting Common Stock
|
235,020 | 235,020 | ||||||
|
Class C Restricted Common Stock
|
202,827 | 202,827 | ||||||
|
Class E Special Voting Common Stock
|
1,480,288 | 1,334,588 | ||||||
|
Total shares outstanding
|
12,049,822 | 12,064,725 | ||||||
Holders of Class A Common Stock, Class C Restricted
Common Stock, Class D Merger Rolling Common Stock, and
Class E Special Voting Common Stock are entitled to one
vote for each share as a holder. The holders of the Voting
Common Stock shall vote together as a single class. The holders
of Class B Non-Voting Common Stock and Class F
Non-Voting Restricted Common Stock have no voting rights.
Class C Restricted Common Stock is restricted in that a
holder’s shares vest as set forth in the Officers’
Rollover Stock Plan. Refer to Note 17 for further
discussion of the Officers’ Rollover Stock Plan.
Class E Special Voting Common Stock represents the voting
rights that accompany the New Options program. The New Options
program has a fixed vesting and exercise schedule to comply with
IRS section 409(a). Upon exercise, the option will convert
to Class A Common Stock, and the corresponding Class E
Special Voting Common Stock will be repurchased by the Company
and retired. Refer to Note 17 for further discussion of the
New Options program.
Each share of Common Stock, except for Class E Special
Voting Common Stock, is entitled to participate equally, when
and if declared by the Board of Directors from time to time,
such dividends and other distributions in cash, stock, or
property from the Company’s assets or funds become legally
available for such
F-31
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
purposes subject to any dividend preferences that may be
attributable to preferred stock that may be authorized.
In May 2009, 1,907 shares of Class A Common Stock,
with certain restrictions, were granted to certain unaffiliated
Board members. These shares were restricted based on the
unaffiliated Board members’ continued service to the
Company, and vested in equal installments on May 7, 2009,
September 30, 2009, and March 31, 2010. As of
March 31, 2010, these shares were fully vested. Such shares
and related equity balances are included in the Company’s
Class A Common Stock. Refer to Note 17 for further
discussion of Class A Restricted Common Stock.
Preferred
Stock
The Company is authorized to issue 600,000 shares of
Preferred Stock, $0.01 par value per share, the terms and
conditions of which are determined by the Board of Directors
upon issuance. The rights, preferences and privileges of holders
of common stock are subject to, and may be adversely affected
by, the rights of holders of any shares of preferred stock that
the Company may designate and issue in the future. At
March 31, 2009 and March 31, 2010, there were no
shares of preferred stock outstanding.
Predecessor
Redeemable Common Stock
Prior to the Merger Transaction, the Predecessor’s
authorized capital stock as of March 31 and July 31, 2008,
consisted of 5,000 shares of Common Stock,
5,000 shares of Class A Non-Voting Common Stock,
4,000 shares of Class B Common Stock, and
1,000 shares of Class B Non-Voting Common Stock. Each
share of Common Stock and each share of the Class B Common
Stock was entitled to one vote. Pursuant to the terms of the
Predecessor’s stock rights plan, shares of Common Stock and
shares of Class A Non-Voting Common Stock were redeemable
at the book value per share at the option of the holder.
| 17. | STOCK-BASED COMPENSATION |
Officers’
Rollover Stock Plan
The Officers’ Rollover Stock Plan (the “Rollover
Plan”) was adopted as a mechanism to enable the exchange by
the Officers of the Company’s U.S. government
consulting business who were required to exchange (and those
commercial officers who elected to exchange subject to an
aggregate limit) a portion of their previous equity interests in
the Predecessor for equity interests in the Company. Among the
equity interests that were eligible for exchange were common
stock and stock rights, both vested and unvested.
The stock rights that were unvested, but would have vested in
2008, were exchanged for 202,827 shares of new Class C
Restricted Common Stock (“Class C Restricted
Stock”) issued by the Company at an estimated fair value of
$100 at August 1, 2008. The aggregate grant date fair value
of the Class C Restricted Stock issued of
$20.3 million is being recorded as expense over the vesting
period. Total compensation expense recorded in conjunction with
this Class C Restricted Stock for the eight months ended
March 31, 2009, and fiscal 2010, was $7.9 million and
$7.1 million, respectively. As of March 31, 2010,
unrecognized compensation cost related to the non-vested
Class C Restricted Stock was $5.3 million and is
expected to be recognized over 3.25 years. For fiscal 2010,
49,449 shares of Class C Restricted Stock vested. At
both March 31, 2009 and 2010, 397,173 shares of
Class C Restricted Stock were authorized but unissued under
the Plan. Notwithstanding the foregoing, Class C Restricted
Stock was intended to be issued only in connection with the
exchange process described above.
In addition to the conversion of the stock rights that would
have vested in 2008 to Class C Restricted Stock, new
options (“New Options”) were issued in exchange for
old stock rights held by the Predecessor’s U.S. government
consulting partners that were issued under the stock rights plan
that existed for the Predecessor’s Officers prior to the
closing of the Merger Transaction. The New Options were granted
based on
F-32
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
the retirement eligibility of the Officer. For the purposes of
the New Options, there are two categories of
Officers — retirement eligible and non-retirement
eligible. New Options granted to retirement eligible Officers
vest in equal annual installments on June 30, 2009, 2010,
and 2011.
The following table summarizes the exercise schedule for
Officers who were deemed retirement eligible. Exercise schedules
are based on original vesting dates applicable to the stock
rights surrendered:
|
Percentage of New Options to be Exercised |
||||||||||||||||||||||||
| As of June 30, | ||||||||||||||||||||||||
| 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | |||||||||||||||||||
|
Retirement Eligible
|
||||||||||||||||||||||||
|
Original vesting date of June 30, 2009
|
60 | % | 20 | % | 20 | % | — | — | — | |||||||||||||||
|
Original vesting date of June 30, 2010
|
— | 50 | % | 20 | % | 20 | % | 10 | % | — | ||||||||||||||
|
Original vesting date of June 30, 2011
|
— | — | 20 | % | 20 | % | 30 | % | 30 | % | ||||||||||||||
Those individuals who were considered retirement eligible also
were given the opportunity to make a one-time election to be
treated as non-retirement eligible. The determination of
retirement eligibility was made as of a fixed period of time and
cannot be changed at a future date.
New Options granted to Officers who were categorized as
non-retirement eligible will vest 50% on June 30, 2011, and
25% on June 30, 2012 and 2013.
The following table summarizes the exercise schedule for
Officers who were deemed non-retirement eligible. Exercise
schedules are based on original vesting dates applicable to the
stock rights surrendered:
|
Percentage of New Options to be Exercised |
||||||||||||||||||||
| As of June 30, | ||||||||||||||||||||
| 2011 | 2012 | 2013 | 2014 | 2015 | ||||||||||||||||
|
Non-Retirement Eligible
|
||||||||||||||||||||
|
Original vesting date of June 30, 2011
|
20 | % | 20 | % | 20 | % | 20 | % | 20 | % | ||||||||||
|
Original vesting date of June 30, 2012
|
— | 25 | % | 25 | % | 25 | % | 25 | % | |||||||||||
|
Original vesting date of June 30, 2013
|
— | — | 33 | % | 33 | % | 34 | % | ||||||||||||
If a holder’s employment with the Company were to terminate
without cause, by reason of disability, or Company approved
termination, these shares will continue to vest as if the holder
continued to be employed as a retirement eligible or
non-retirement eligible employee, as the case may be. In the
event that a holder’s employment is terminated due to
death, any unvested New Options shall immediately vest in full.
In the event of a holder’s termination of employment due to
death, disability, or a Company approved termination, the
Company may, in its sole discretion, convert all or a portion of
unexercised New Options into the right to receive upon vesting
and exercise, in lieu of Company Common Stock, a cash payment
pursuant to a prescribed formula. The aggregate grant date fair
value of the New Options issued of $127.1 million is being
recorded as compensation expense over the vesting period. Total
compensation expense recorded in conjunction with the New
Options for the eight months ended March 31, 2009 and
fiscal 2010, was $42.7 million and $42.2 million,
respectively. As of March 31, 2010, unrecognized
compensation cost related to the non-vested New Options was
$42.0 million, which is expected to be recognized over
3.25 years. For the eight months ended March 31, 2009
and fiscal 2010, zero and 242,847 New Options vested,
respectively. For the eight months ended March 31, 2009 and
fiscal 2010, zero and 145,708 New Options were exercised,
respectively.
Equity
Incentive Plan
The Equity Incentive Plan (“EIP”) was created in
connection with the transaction for employees, directors, and
consultants of Holding and its subsidiaries. The Company created
a pool of options (the “EIP
F-33
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Options”) to draw upon for future grants that would be
governed by the EIP. All options under the EIP are exercisable,
upon vesting, for shares of common stock of Holding. The first
grant of options under the EIP occurred on November 19,
2008, which was for the grant of 1,190,000 non-qualified EIP
Options. The estimated fair value of the common stock at the
time of the first option grant was $100. A second grant of
142,000 non-qualified EIP Options occurred on May 7, 2009.
The estimated fair value of the common stock at the time of the
second option grant was $118.06. Grants of 47,000 and 14,000
non-qualified EIP Options were issued on January 27, 2010,
and February 15, 2010, respectively. The estimated fair
value of the common stock at the time of the third and fourth
option grants was $114.93.
Stock options are granted at the discretion of the Board of
Directors or its Compensation Committee and expire ten years
from the date of the grant. Options generally vest over a
five-year period based upon required service and performance
conditions. The Company calculates the pool of additional
paid-in capital associated with excess tax benefits using the
“simplified method.”
The aggregate grant date fair value of the EIP Options issued
during the eight months ended March 31, 2009, and fiscal
2010, was $51.5 million and $10.6 million,
respectively, and is being recorded as expense over the vesting
period. Total compensation expense recorded in conjunction with
all options outstanding under the EIP for the eight months ended
March 31, 2009, and fiscal 2010, was $11.5 million and
$22.4 million, respectively. For the eight months ended
March 31, 2009, and fiscal 2010, zero and 12,996 EIP
Options were exercised, respectively. For the eight months ended
March 31, 2009, and fiscal 2010, zero shares and
236,889 shares vested, respectively. Future compensation
cost related to the non-vested stock options not yet recognized
in the consolidated statements of operations was
$28.3 million, and is expected to be recognized over
4.25 years. As of March 31, 2010, there were 763,360
options available for future grant under the EIP.
May
2009 Grant of Class A Restricted Common Stock
On May 7, 2009, the Compensation Committee of the Board of
Directors granted Class A Common Stock with certain
restrictions (“Class A Restricted Stock”) to
certain unaffiliated Board members for their continued service
to the Company. A total of 1,907 shares of Class A
Restricted Stock were issued on May 7, 2009. These shares
will vest in equal installments on May 7, 2009,
September 30, 2009, and March 31, 2010, and were
issued with an aggregate grant date fair value of $225,000.
Total compensation expense recorded in conjunction with this
grant of Class A Restricted Stock for fiscal 2010 was
$225,000. For fiscal 2010, 1,907 shares of Class A
Restricted Stock vested. There were no additional shares
authorized to be issued under the May 2009 Compensation
Committee grant.
Predecessor
Stock Plan
Prior to the Merger Transaction, the Predecessor’s Officer
Stock Rights Plan enabled officers to purchase shares of
Class A Common Stock. The Board of Directors had sole
discretion to establish the book value applicable to shares of
common stock to be purchased by officers upon the exercise of
their stock rights. Rights were granted in connection with the
Class B Common Stock to purchase shares of Class A
Common Stock, and vested one-tenth each year based on nine years
of continuous service, with the first tenth vesting immediately.
The exercise price for the first tenth was equal to the book
value of the Predecessor’s Class A Common Stock on the
grant date, and for the remaining rights the exercise price was
equal to 50% of the book value on the grant date. Rights not
exercised upon vesting were forfeited. Rights also accelerated
upon retirement, in which case the exercise price was equal to
100% of the grant date book value.
Effective July 30, 2008, the Predecessor modified the
Officers’ Stock Rights Plan to provide for accelerated
vesting of stock rights in anticipation of a change in control
of the Predecessor. All unvested stock rights were accelerated
and vested with the exception of rights that would be exchanged
for equity instruments in Holding after the Merger Transaction.
Any stock rights that were due to vest in June 2008 were
exercised
F-34
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
at a price of 50% of the grant date book value and converted to
Class A Common Stock on July 30, 2008. The remaining
stock rights that were accelerated and vested were subsequently
exercised at 100% of the grant date book value and converted to
Class A Common Stock on July 30, 2008.
The Predecessor accounted for the rights granted under the
Officers’ Stock Rights Plan as liability awards, which are
marked to intrinsic value for the life of the award, using an
accelerated method, through stock compensation expense.
Stock compensation expense of $193.5 million related to the
acceleration of stock rights, and $318.2 million related to
the mark-up
of redeemable common shares, was recorded during the four months
ended July 31, 2008.
Methodology
The Company uses the Black-Scholes option-pricing model to
determine the estimated fair value for stock-based awards. The
fair value of the Company stock on the date of the New Option
grant was determined based on the fair value of the Merger
Transaction involving Booz Allen Hamilton, Inc. and the Company
that occurred on July 31, 2008. For all subsequent grants
of options, fair value was determined by an independent
valuation specialist.
As the Company has no plans to issue regular dividends, a
dividend yield of zero was used in the Black-Scholes model.
Expected volatility was calculated as of each grant date based
on reported data for a peer group of publicly traded companies
for which historical information was available. The Company will
continue to use peer group volatility information until
historical volatility of the Company can be regularly measured
against an open market to measure expected volatility for future
option grants. The risk-free interest rate is determined by
reference to the U.S. Treasury yield curve rates with the
remaining term equal to the expected life assumed at the date of
grant. Due to the lack of historical exercise data, the average
expected life was estimated based on internal qualitative and
quantitative factors. Forfeitures were estimated based on the
Company’s historical analysis of Officer attrition levels.
The weighted average assumptions used in the Black-Scholes
option-pricing model for stock option awards were as follows:
| The Company | ||||||||||||
| Eight Months Ended March 31, 2009 | ||||||||||||
|
Rollover Stock Plan |
Rollover Stock Plan |
|||||||||||
|
New Options |
New Options |
Equity Incentive |
||||||||||
| (Retirement) | (Non-Retirement) | Plan | ||||||||||
|
Dividend yield
|
0.0 | % | 0.0 | % | 0.0 | % | ||||||
|
Expected volatility
|
33.6 | % | 36.0 | % | 40.0 | % | ||||||
|
Risk-free interest rate
|
2.76 | % | 3.26 | % | 2.50 | % | ||||||
|
Expected life (in years)
|
2.98 | 5.29 | 7.02 | |||||||||
| Fiscal Year Ended March 31, 2010 | ||||||||||||
|
Rollover Stock Plan |
Rollover Stock Plan |
|||||||||||
|
New Options |
New Options |
Equity Incentive |
||||||||||
| (Retirement) | (Non-Retirement) | Plan | ||||||||||
|
Dividend yield
|
0.0 | % | 0.0 | % | 0.0 | % | ||||||
|
Expected volatility
|
33.6 | % | 36.0 | % | 40.0 | % | ||||||
|
Risk-free interest rate
|
2.76 | % | 3.26 | % | 2.56 | % | ||||||
|
Expected life (in years)
|
2.98 | 5.29 | 7.03 | |||||||||
F-35
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The weighted-average grant-date fair values of retirement
eligible New Options, non-retirement eligible New Options and
EIP Options were $85.36, $86.30, and $46.93, respectively.
December
2009 Dividend and July 2009 Dividend
On December 7, 2009, the Company’s Board of Directors
approved a dividend of $46.42 per share paid to holders of
record as of December 8, 2009 of Class A Common Stock,
Class B Non-Voting Common Stock, and Class C
Restricted Common Stock. This dividend totaled
$497.5 million. As required by the Rollover Plan and the
EIP, and in accordance with applicable tax laws and regulatory
guidance, the exercise price per share of each outstanding New
Option and EIP Option was reduced in an amount equal to the
value of the dividend. The Company evaluated the reduction of
the exercise price associated with the dividend issuance. Both
the Rollover and EIP plans contained mandatory antidilution
provisions requiring modification of the options in the event of
an equity restructuring, such as the dividends declared in July
and December 2009. In addition, the structure of the
modifications, as a reduction in the exercise price of options,
did not result in an increase to the fair value of the awards.
As a result of these factors, the Company did not record
incremental compensation expense associated with the
modifications of the options as a result of the July and
December 2009 dividends. Options vested and not yet exercised
that would have had an exercise price below zero as a result of
the dividend were reduced to one cent. The difference between
one cent and the reduced value for shares vested and not yet
exercised of approximately $54.4 million will be paid in
cash upon exercise of the options subject to the continued
vesting of the options. As of March 31, 2010, the Company
reported $27.4 million in other long-term liabilities and
$7.0 million in accrued compensation and benefits in the
consolidated balance sheets based on the proportion of the
potential payment of $54.4 million which is represented by
vested options for which stock based compensation expense has
been recorded.
On July 27, 2009, the Company’s Board of Directors
approved a dividend of $10.87 per share paid to holders of
record as of July 29, 2009 of the Company’s
Class A Common Stock, Class B Non-Voting Common Stock,
and Class C Restricted Common Stock. This dividend totaled
$114.9 million. In accordance with the Officers’
Rollover Stock Plan, the exercise price per share of each
outstanding option, including New Options and EIP options, was
reduced in compliance with applicable tax laws and regulatory
guidance. Additionally, the Company evaluated the reduction of
the exercise price associated with the dividend issuance. As a
result, the Company did not record any additional incremental
compensation expense associated with the dividend and
corresponding decrease in the exercise and fair value of all
outstanding options.
The following table summarizes stock-based compensation for
stock options (in thousands):
| Predecessor | The Company | ||||||||||||||||
|
Fiscal Year |
Four Months |
Eight Months |
Fiscal Year |
||||||||||||||
|
Ended |
Ended |
Ended |
Ended |
||||||||||||||
|
March 31, |
July 31, |
March 31, |
March 31, |
||||||||||||||
| 2008 | 2008 | 2009 | 2010 | ||||||||||||||
|
Included in cost of revenue:
|
|||||||||||||||||
|
Compensation and other costs
|
$ | 35,013 | $ | — | $ | 20,479 | $ | 23,652 | |||||||||
|
Total included in cost of revenue
|
35,013 | — | 20,479 | 23,652 | |||||||||||||
|
Included in general and administrative expenses:
|
|||||||||||||||||
|
Compensation and other costs
|
— | 511,653 | 41,580 | 48,245 | |||||||||||||
|
Total included in general and administrative expenses
|
— | 511,653 | 41,580 | 48,245 | |||||||||||||
|
Total
|
$ | 35,013 | $ | 511,653 | $ | 62,059 | $ | 71,897 | |||||||||
F-36
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table summarizes stock option activity for the
periods presented:
|
Weighted |
||||||||
|
Average |
||||||||
|
Number of |
Exercise |
|||||||
| Options | Price | |||||||
|
Officers’ Rollover Stock Plan New Options
|
||||||||
|
Retirement Eligible:
|
||||||||
|
Granted at August 1, 2008
|
728,542 | $ | 16.23 | |||||
|
Forfeited
|
— | — | ||||||
|
Expired
|
— | — | ||||||
|
Exercised
|
— | — | ||||||
|
Options outstanding at March 31, 2009
|
728,542 | $ | 0.01 | * | ||||
|
Granted
|
— | — | ||||||
|
Forfeited
|
— | — | ||||||
|
Expired
|
— | — | ||||||
|
Exercised
|
145,708 | 0.01 | * | |||||
|
Options outstanding at March 31, 2010
|
582,834 | |||||||
|
Non-Retirement Eligible:
|
||||||||
|
Granted at August 1, 2008
|
751,750 | $ | 16.79 | |||||
|
Forfeited
|
— | — | ||||||
|
Expired
|
— | — | ||||||
|
Exercised
|
— | — | ||||||
|
Options outstanding at March 31, 2009
|
751,750 | 0.01 | * | |||||
|
Granted
|
— | — | ||||||
|
Forfeited
|
— | — | ||||||
|
Expired
|
— | — | ||||||
|
Exercised
|
— | — | ||||||
|
Options outstanding at March 31, 2010
|
751,750 | |||||||
|
Equity Incentive Plan Options
|
||||||||
|
Granted at November 19, 2008
|
1,190,000 | $ | 100.00 | |||||
|
Forfeited
|
— | — | ||||||
|
Expired
|
— | — | ||||||
|
Exercised
|
— | — | ||||||
|
Options outstanding at March 31, 2009
|
1,190,000 | $ | 42.71 | * | ||||
|
Granted
|
203,000 | 77.04 | * | |||||
|
Forfeited
|
73,507 | 43.82 | ||||||
|
Expired
|
— | — | ||||||
|
Exercised
|
12,996 | 42.71 | * | |||||
|
Options outstanding at March 31, 2010
|
1,306,497 | |||||||
| * | Reflects adjustment for $10.87 dividend issued July 27, 2009, and $46.42 dividend issued December 11, 2009. |
F-37
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table summarizes unvested stock options for the
periods presented:
|
Aggregate |
||||||||||||
|
Weighted |
Intrinsic |
|||||||||||
|
Number of |
Average |
Value on |
||||||||||
| Options | Fair Value | Grant Date | ||||||||||
| (In thousands) | ||||||||||||
|
Officers’ Stock Rights Plan —
Predecessor
|
||||||||||||
|
Unvested at March 31, 2008
|
903 | $ | 125.42 | $ | 56,627 | |||||||
|
Granted
|
— | — | — | |||||||||
|
Vested
|
679 | 126.11 | 42,814 | |||||||||
|
Forfeited
|
— | — | — | |||||||||
|
Unvested at July 31, 2008
|
224 | ** | ||||||||||
|
Officers’ Rollover Stock Plan New Options
|
||||||||||||
|
Retirement Eligible:
|
||||||||||||
|
Granted at August 1, 2008
|
728,542 | $ | 100.00 | $ | 61,032 | |||||||
|
Vested
|
— | — | — | |||||||||
|
Forfeited
|
— | — | — | |||||||||
|
Unvested at March 31, 2009
|
728,542 | |||||||||||
|
Granted
|
— | — | — | |||||||||
|
Vested
|
242,847 | 42.71 | * | 10,370 | * | |||||||
|
Forfeited
|
— | — | — | |||||||||
|
Unvested at March 31, 2010
|
485,695 | |||||||||||
|
Non-Retirement Eligible:
|
||||||||||||
|
Granted at August 1, 2008
|
751,750 | $ | 100.00 | $ | 62,553 | |||||||
|
Vested
|
— | — | — | |||||||||
|
Forfeited
|
— | — | — | |||||||||
|
Unvested at March 31, 2009
|
751,750 | |||||||||||
|
Granted
|
— | — | — | |||||||||
|
Vested
|
— | — | — | |||||||||
|
Forfeited
|
— | — | — | |||||||||
|
Unvested at March 31, 2010
|
751,750 | |||||||||||
|
Equity Incentive Plan Options
|
||||||||||||
|
Unvested at August 1, 2008
|
1,190,000 | $ | 100.00 | $ | — | |||||||
|
Granted
|
— | — | — | |||||||||
|
Vested
|
— | — | — | |||||||||
|
Forfeited
|
— | — | — | |||||||||
|
Unvested at March 31, 2009
|
1,190,000 | |||||||||||
|
Granted
|
203,000 | $ | 77.04 | * | $ | — | ||||||
|
Vested
|
236,889 | 42.71 | * | — | ||||||||
|
Forfeited
|
73,507 | 43.82 | — | |||||||||
|
Unvested at March 31, 2010
|
1,082,604 | |||||||||||
| * | Reflects adjustment for $10.87 dividend issued July 27, 2009, and $46.42 dividend issued December 11, 2009. | |
| ** | 224 outstanding rights remaining as of July 31, 2008, were exchanged as a part of the Merger Transaction. |
F-38
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table summarizes stock options outstanding at
March 31, 2010:
|
Weighted |
||||||||||||||||
|
Weighted |
Average |
|||||||||||||||
|
Number of |
Average |
Remaining |
Options |
|||||||||||||
|
Range of Exercise Prices
|
Options | Exercise Price | Contractual Life | Exercisable | ||||||||||||
| (In thousands) | (In years) | (In thousands) | ||||||||||||||
|
Officers’ Rollover Stock Plan
|
||||||||||||||||
|
$0.01
|
1,335 | $ | 0.01* | 2.56 | 97 | |||||||||||
|
Equity Incentive Plan
|
||||||||||||||||
|
$40.00 — $115.0
|
1,307 | $ | 47.98* | 8.72 | 134 | |||||||||||
| * | Reflects adjustment for $10.87 dividend issued July 27, 2009, and $46.42 dividend issued December 11, 2009. |
The stock-based compensation expense recorded in fiscal 2010
related to stock options was accounted for as equity awards.
| 18. | FAIR VALUE MEASUREMENTS |
The fair value hierarchy established in the accounting standard
prioritizes the inputs used in valuation techniques into three
levels as follows:
Level 1: Observable inputs —
quoted prices in active markets for identical assets and
liabilities;
Level 2: Observable inputs other than
quoted prices in active markets for identical assets and
liabilities — includes quoted prices for similar
instruments, quoted prices for identical or similar instruments
in inactive markets, and amounts derived from value models where
all significant inputs are observable in active markets; and
Level 3: Unobservable inputs —
includes amounts derived from valuation models where one or more
significant inputs are unobservable and require the Company to
develop relevant assumptions.
The Company is required to disclose the fair value of all
financial assets subject to fair value measurement and the
nature of the valuation techniques, including their
classification within the fair value hierarchy, utilized by the
Company in performing these measurements. The only financial
assets subject to fair value measurements held by the Company at
March 31, 2010 were the Company’s cash and cash
equivalents. These assets are considered to be Level 1
assets.
| 19. | RELATED-PARTY TRANSACTIONS |
As discussed in Note 4, Investor acquired all of the issued
and outstanding stock of the Company. From time to time, and in
the ordinary course of business: (1) other Carlyle
portfolio companies engage the Company as a subcontractor or
service provider, and (2) the Company engages other Carlyle
portfolio companies as subcontractors or service providers.
Revenue and cost associated with these related parties for the
eight months ended March 31, 2009, were immaterial. Revenue
and cost associated with these related parties for fiscal 2010,
were $15.1 million and $13.5 million, respectively.
Only July 31, 2008, the Company entered into a management
agreement (the “Management Agreement”) with, TC Group
V US, L.L.C. (“TC Group”), a company affiliated with
Carlyle. In accordance with the Management Agreement, TC Group
provides the Company with advisory, consulting and other
services and the Company pays TC Group an aggregate annual fee
of $1.0 million plus expenses. In addition, the Company
made a one-time payment to TC Group of $20.0 million for
investment banking, financial advisory and other services
provided to the Company in connection with the Acquisition. For
the eight months ended March 31, 2009 and fiscal 2010, the
Company incurred $700,000 and $1.0 million, respectively,
in advisory fees.
F-39
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Pursuant to the spin-off described in Note 4, effective
July 31, 2008, the Company entered into a transition
services agreement (“TSA”) and a collaboration
agreement (“CA”) with Booz & Company Inc.
(“Booz & Co.”). The TSA required the Company
and Booz & Co. to provide to each other certain
support services for up to 15 months following
July 31, 2008. Revenue and expenses were recognized as
incurred.
The CA requires the Company and Booz & Co. to provide
to each other the services of personnel that were either staffed
on existing contracts as of July 31, 2008, or contemplated
to be staffed in proposals submitted prior to but accepted after
such date. The CA will remain in effect until the termination or
expiration of the applicable contracts. Revenue and expenses are
recognized as incurred.
Included in the financial position and results of operations are
the following (in thousands):
|
Transition |
||||||||
|
Services |
Collaboration |
|||||||
| Agreement | Agreement | |||||||
|
As of March 31, 2009:
|
||||||||
|
Accounts receivable
|
$ | 2,918 | $ | 725 | ||||
|
Accounts payable
|
$ | 1,806 | $ | 93 | ||||
|
As of March 31, 2010:
|
||||||||
|
Accounts receivable
|
$ | 303 | $ | 73 | ||||
|
Accounts payable
|
$ | 1,318 | $ | — | ||||
|
For the eight months ended March 31, 2009:
|
||||||||
|
Revenue
|
$ | 12,608 | $ | 15,044 | ||||
|
Expenses
|
$ | 15,772 | $ | 12,013 | ||||
|
For the fiscal year ended March 31, 2010:
|
||||||||
|
Revenue
|
$ | 3,226 | $ | 486 | ||||
|
Expenses
|
$ | 2,096 | $ | 793 | ||||
There were no related-party transactions during fiscal 2008 and
four months ended July 31, 2008.
| 20. | COMMITMENTS AND CONTINGENCIES |
Leases
The Company leases office space under noncancelable operating
leases that expire at various dates through 2016. The terms for
the facility leases generally provide for rental payments on a
graduated scale, which are recognized on a straight-line basis
over the terms of the leases, including reasonably assured
renewal periods, from the time the Company controls the leased
property. Lease incentives are recorded as a deferred credit and
recognized as a reduction to rent expense on a straight-line
basis over the lease term. Rent expense was approximately
$84.6 million, net of $4.9 million of sublease income,
$30.2 million, net of $2.0 million of sublease income,
$68.6 million, net of $10.6 million of sublease income
and $109.5 million, net of $7.1 million of sublease
for fiscal 2008, four months ended July 31, 2008, eight
months ended March 31, 2009, and fiscal 2010, respectively.
F-40
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Future minimum operating lease payments for noncancelable
operating leases and future minimum noncancelable sublease
rentals are summarized as follows (in thousands):
|
Operating |
Operating |
|||||||
|
Lease |
Sublease |
|||||||
|
For the Fiscal Year Ending March 31,
|
Payments | Income | ||||||
|
2011
|
$ | 74,447 | $ | 801 | ||||
|
2012
|
59,001 | 320 | ||||||
|
2013
|
47,776 | — | ||||||
|
2014
|
39,642 | — | ||||||
|
2015
|
30,244 | — | ||||||
|
Thereafter
|
36,566 | — | ||||||
| $ | 287,676 | $ | 1,121 | |||||
Rent expense is included in occupancy costs, a component of
general and administrative expenses, as shown on the
consolidated statements of operations, and includes rent,
sublease income from third parties, real estate taxes,
utilities, parking, security, repairs and maintenance and
storage costs.
As a result of the Merger Transaction, the Company assigned a
total of eight leases to Booz & Co. The facilities are
located in New York, New York; Troy, Michigan; Florham Park, New
Jersey; Parsippany, New Jersey; Houston, Texas; Chicago,
Illinois; Cleveland, Ohio; and Dallas, Texas. Except for the
Cleveland and Dallas leases, which expired, the Company remains
liable under the terms of the original leases should
Booz & Co. default on its obligations. There were no
events of default under these leases as of March 31, 2009
and 2010. The Company also remains liable as a parent guarantor
of the London lease. The maximum potential amount of
undiscounted future payments is $68.9 million, and the
leases expire at different dates between February 2012 and March
2017.
Government
Contracting Matters
For fiscal 2008, four months ended July 31, 2008, eight
months ended March 31, 2009, and fiscal 2010, approximately
86%, 93%, 98%, and 98%, respectively, of the Company’s
revenue was generated from contracts with U.S. government
agencies or other U.S. government contractors. Contracts
with the U.S. government are subject to extensive legal and
regulatory requirements and, from time to time and in the
ordinary course of business, agencies of the
U.S. government investigate whether the Company’s
operations are conducted in accordance with these requirements
and the terms of the relevant contracts. U.S. government
investigations of the Company, whether related to the
Company’s U.S. government contracts or conducted for
other reasons, could result in administrative, civil, or
criminal liabilities, including repayments, fines, or penalties
being imposed upon the Company, or could lead to suspension or
debarment from future U.S. government contracting.
Management believes it has adequately reserved for any losses
that may be experienced from any investigation of which it is
aware. The Defense Contract Management Agency Administrative
Contracting Officer has negotiated annual final indirect cost
rates through fiscal year 2005. Audits of subsequent years may
result in cost reductions
and/or
penalties. Management believes it has adequately reserved for
any losses that may be experienced from any such reductions
and/or
penalties. The Company has recorded a liability of approximately
$72.7 million for its current best estimate of net amounts
to be refunded to customers for potential adjustments from such
audits or reviews of contract costs incurred subsequent to
fiscal year 2005.
Litigation
We are involved in legal proceedings and investigations arising
in the ordinary course of business, including those relating to
employment matters, relationships with clients and contractors,
intellectual property
F-41
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
disputes and other business matters. These legal proceedings
seek various remedies, including monetary damages in varying
amounts that currently range up to $26.2 million or are
unspecified as to amount. Although the outcome of any such
matter is inherently uncertain and may be materially adverse,
based on current information, our management does not expect any
of the currently ongoing audits, reviews, investigations or
litigation to have a material adverse effect on our financial
condition and results of operations.
Six former officers and stockholders of the Predecessor who had
departed the firm prior to the Acquisition have filed a total of
nine suits against the Company and certain of the Company’s
current and former directors and officers. Each of the suits
arises out of the Acquisition and alleges that the former
stockholders are entitled to certain payments that they would
have received if they had held their stock at the time of the
Acquisition. The various suits assert claims for breach of
contract, tortious interference with contract, breach of
fiduciary duty, civil RICO violations,
and/or
securities and common law fraud. Two of these suits have been
dismissed and another has been dismissed but the former
stockholder has sought leave to re-plead. Five of the remaining
suits are pending in the United States District Court for the
Southern District of New York and the sixth is pending in the
United States District Court for the Southern District of
California. The aggregate alleged damages sought in the six
remaining suits is approximately $197 million
($140 million of which is sought to be trebled pursuant to
RICO), plus punitive damages, costs, and fees. Although the
outcome of any of these cases is inherently uncertain and may be
materially adverse, based on current information, our management
does not expect them to have a material adverse effect on our
financial condition and results of operations.
Other
Matters
At March 31, 2009 and 2010, the Company was contingently
liable under open standby letters of credit and bank guarantees
issued by the Company’s banks in favor of third parties.
These letters of credit and bank guarantees primarily relate to
leases and support of insurance obligations that total
$1.4 million. These instruments reduce the Company’s
available borrowings under the revolving credit facility.
| 21. | BUSINESS SEGMENT INFORMATION |
We report operating results and financial data in one operating
and reportable segment. We manage our business as a single
profit center in order to promote collaboration, provide
comprehensive functional service offerings across our entire
client base, and provide incentives to employees based on the
success of the organization as a whole. Although certain
information regarding served markets and functional capabilities
is discussed for purposes of promoting an understanding of our
complex business, we manage our business and allocate resources
at the consolidated level of a single operating segment.
F-42
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 22. | UNAUDITED QUARTERLY FINANCIAL DATA |
| 2009 Quarters | |||||||||||||||||||||
| Predecessor | The Company | ||||||||||||||||||||
|
One Month |
Two Months |
||||||||||||||||||||
|
Ended |
Ended |
||||||||||||||||||||
|
July 31, |
September 30, |
||||||||||||||||||||
| First | 2008 | 2008 | Third | Fourth | |||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||
|
Revenue
|
$ | 1,072,986 | $ | 336,957 | $ | 693,425 | $ | 1,091,557 | $ | 1,156,293 | |||||||||||
|
Operating (loss) income
|
(257,561 | ) | (195,728 | ) | 15,744 | 17,576 | (632 | ) | |||||||||||||
|
(Loss) income before income taxes
|
(257,562 | ) | (196,091 | ) | (7,167 | ) | (18,097 | ) | (35,666 | ) | |||||||||||
|
Net (loss) income
|
(1,058,437 | ) | (187,478 | ) | (15,932 | ) | (11,492 | ) | (11,359 | ) | |||||||||||
|
Earnings (loss) per common share:
|
|||||||||||||||||||||
|
Basic(1)
|
$ | (594.96 | ) | $ | (87.48 | ) | $ | (1.54 | ) | $ | (1.11 | ) | $ | (1.10 | ) | ||||||
|
Diluted(1)
|
$ | (594.96 | ) | $ | (87.48 | ) | $ | (1.54 | ) | $ | (1.11 | ) | $ | (1.10 | ) | ||||||
| 2010 Quarters | ||||||||||||||||
| First | Second | Third | Fourth | |||||||||||||
| (As adjusted, in thousands, except per share amounts) | ||||||||||||||||
|
Revenue
|
$ | 1,229,459 | $ | 1,279,257 | $ | 1,261,353 | $ | 1,352,564 | ||||||||
|
Operating income (loss)
|
52,351 | 57,938 | 40,712 | 48,553 | ||||||||||||
|
Income (loss) before income taxes
|
15,972 | 21,262 | 2,696 | 9,064 | ||||||||||||
|
Net (loss) income(2)
|
8,425 | 10,810 | 1,294 | 4,890 | ||||||||||||
|
Earnings (loss) per common share:
|
||||||||||||||||
|
Basic(1)(2)
|
$ | 0.80 | $ | 1.02 | $ | 0.12 | $ | 0.46 | ||||||||
|
Diluted(1)(2)
|
$ | 0.76 | $ | 0.95 | $ | 0.11 | $ | 0.41 | ||||||||
| (1) | Earnings per share are computed independently for each of the quarters presented and therefore may not sum to the total for the fiscal year. | |
| (2) | Amounts are shown “as adjusted” for certain adjustments to the allocation of the effective tax rate among the quarters. |
| 23. | SUPPLEMENTAL FINANCIAL INFORMATION |
The following schedule summarizes valuation and qualifying
accounts for the periods presented (in thousands):
| Predecessor | The Company | ||||||||||||||||
|
Fiscal Year |
Four Months |
Eight Months |
Fiscal Year |
||||||||||||||
|
Ended |
Ended |
Ended |
Ended |
||||||||||||||
|
March 31, |
July 31, |
March 31, |
March 31, |
||||||||||||||
| 2008 | 2008 | 2009 | 2010 | ||||||||||||||
|
Allowance for doubtful accounts
|
|||||||||||||||||
|
Beginning balance
|
$ | 4,170 | $ | 4,364 | $ | 1,959 | $ | 1,648 | |||||||||
|
Provision for doubtful accounts
|
7,116 | 1,038 | 2,082 | 1,371 | |||||||||||||
|
Charges against allowance
|
(6,922 | ) | (3,443 | ) | (2,393 | ) | (892 | ) | |||||||||
|
Ending balance
|
$ | 4,364 | $ | 1,959 | $ | 1,648 | $ | 2,127 | |||||||||
F-43
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 24. | DISCONTINUED OPERATIONS |
As discussed in Note 4, the Predecessor spun off its global
commercial business into a stand-alone entity referred to as
Booz & Company, Inc. on July 31, 2008.
Accordingly, the following amounts related to the global
commercial business have been segregated from continuing
operations and included in discontinued operations, net of tax,
in the consolidated statement of operations for fiscal 2008 and
four months ended July 31, 2008 (in thousands):
|
March 31, |
July 31, |
|||||||
| 2008 | 2008 | |||||||
|
Revenue
|
$ | 1,147,612 | $ | 438,567 | ||||
|
Operating expenses:
|
||||||||
|
Cost of services
|
926,957 | 300,652 | ||||||
|
General and administrative expenses
|
315,537 | 1,142,880 | ||||||
|
Operating loss:
|
(94,882 | ) | (1,004,965 | ) | ||||
|
Interest and other income
|
16,165 | 2,741 | ||||||
|
Interest expense
|
(1,894 | ) | (855 | ) | ||||
| 14,271 | 1,886 | |||||||
|
Loss before income tax benefit
|
(80,611 | ) | (1,003,079 | ) | ||||
|
Income tax benefit
|
9,505 | 154,708 | ||||||
|
Loss from discontinued operations, net of tax
|
$ | (71,106 | ) | $ | (848,371 | ) | ||
Stock-Based
Compensation
As discussed in Note 17, the Predecessor’s Officer
Stock Rights Plan enabled officers of the Predecessor to
purchase shares of stock. The global commercial business
recorded stock-based compensation expense of $427.3 million
in general and administrative expense related to the
acceleration of stock rights and shadow stock units, and
$541.8 million for the
mark-up of
redeemable common stock during the four months ended
July 31, 2008. The value of the accelerated stock rights
and the redeemable common stock was determined using the price
per share paid in the Merger Transaction.
Defined
Contribution Plans
As discussed in Note 14, the Company has a defined
contribution plan. Total expense under ECAP related to the
global commercial business was $34.3 million and
$7.6 million for fiscal 2008 and four months ended
July 31, 2008, respectively.
Defined
Benefit Plan and Other Postretirement Benefit
Plans
The Predecessor recognized total pension expense of
$4.6 million and $500,000, and total postretirement expense
of zero and $1.8 million, for its U.S. employees as a
component of loss from discontinued operations for fiscal 2008
and four months ended July 31, 2008, respectively.
The officers and professional staff of the Predecessor employed
in Germany were covered by a defined benefit pension plan, (the
“Non-U.S. Plan”).
As stipulated in the Merger Agreement, the Company is not liable
for the pension obligations associated with the German Pension
Plan. The Predecessor recognized total pension expense for the
Non-U.S. Plan
as a component of loss from discontinued operations of
$29.7 million and $8.9 million for fiscal 2008 and
four months ended July 31, 2008, respectively.
These plans were transferred to Booz & Company as new
plans as part of the Merger Transaction.
F-44
BOOZ
ALLEN HAMILTON HOLDING CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Lease
Obligations
Rent expense related to the global commercial business, net of
sublease income, was $30.3 million and $10.5 million
for fiscal 2008 and four months ended July 31, 2008,
respectively.
| 25. | SUBSEQUENT EVENTS |
The Company has evaluated subsequent events through
June 18, 2010, the date upon which the consolidated
financial statements were available to be issued. No material
subsequent events have occurred since March 31, 2010 that
require recognition or disclosure in these consolidated
financial statements.
F-45
Through and
including ,
2010 (25 days after the date of this prospectus), all
dealers that buy, sell or trade our Class A common stock,
whether or not participating in this offering, may be required
to deliver a prospectus. This delivery requirement is in
addition to the obligation of dealers to deliver a prospectus
when acting as underwriters and with respect to their unsold
allotments or subscriptions.
Shares
Class A Common
Stock
PROSPECTUS
| Morgan Stanley | Barclays Capital |
| BofA Merrill Lynch | Credit Suisse |
Stifel Nicolaus
BB&T Capital
Markets Lazard Capital
Markets Raymond
James
,
2010
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
| Item 13. | Other Expenses of Issuance and Distribution. |
The following table sets forth the costs and expenses, other
than the underwriting discount, payable by our company in
connection with the sale of Class A common stock being
registered. All amounts are estimates except the SEC
registration fee and the FINRA filing fees.
|
SEC registration fee
|
$ | 21,390 | ||
|
FINRA filing fee
|
$ | 30,500 | ||
|
Stock Exchange listing fee
|
* | |||
|
Printing and engraving expenses
|
* | |||
|
Legal fees and expenses
|
* | |||
|
Accounting fees and expenses
|
* | |||
|
Blue Sky fees and expenses (including legal fees)
|
* | |||
|
Transfer agent and registrar fees and expenses
|
* | |||
|
Miscellaneous
|
* | |||
|
Total
|
* | |||
| * | To be filed by amendment. |
| Item 14. | Indemnification of Directors and Officers. |
Delaware General Corporation
Law. Section 145(a) of the Delaware General
Corporation Law provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys’ fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by the
person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person’s
conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith
and in a manner which the person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had reasonable
cause to believe that the person’s conduct was unlawful.
Section 145(b) of the Delaware General Corporation Law
states that a corporation may indemnify any person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the
fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys’ fees)
actually and reasonably incurred by the person in connection
with the defense or settlement of such action or suit if the
person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which the person
shall have been adjudged to be liable to the corporation unless
and only to the extent that the Delaware Court of Chancery or
the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, the
II-1
person is fairly and reasonably entitled to indemnity for such
expenses as the Delaware Court of Chancery or such other court
shall deem proper.
Section 145(c) of the Delaware General Corporation Law
provides that to the extent that a present or former director or
officer of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
to in subsections (a) and (b) of Section 145, or
in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys’
fees) actually and reasonably incurred by such person in
connection therewith.
Section 145(d) of the Delaware General Corporation Law
states that any indemnification under subsections (a) and
(b) of Section 145 (unless ordered by a court) shall
be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the
circumstances because the person has met the applicable standard
of conduct set forth in subsections (a) and (b) of
Section 145. Such determination shall be made with respect
to a person who is a director or officer at the time of such
determination (1) by a majority vote of the directors who
are not parties to such action, suit or proceeding, even though
less than a quorum, (2) by a committee of such directors
designated by majority vote of such directors, even though less
than a quorum, (3) if there are no such directors, or if
such directors so direct, by independent legal counsel in a
written opinion or (4) by the stockholders.
Section 145(f) of the Delaware General Corporation Law
states that the indemnification and advancement of expenses
provided by, or granted pursuant to, the other subsections of
Section 145 shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to
action in such person’s official capacity and as to action
in another capacity while holding such office.
Section 145(g) of the Delaware General Corporation Law
provides that a corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability
asserted against such person and incurred by such person in any
such capacity or arising out of such person’s status as
such, whether or not the corporation would have the power to
indemnify such person against such liability under the
provisions of Section 145.
Section 145(j) of the Delaware General Corporation Law
states that the indemnification and advancement of expenses
provided by, or granted pursuant to, Section 145 shall,
unless otherwise provided when authorized or ratified, continue
as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Certificate of Incorporation. Our
company’s amended and restated certificate of incorporation
filed as Exhibit 3.1 hereto provides that our
company’s directors will not be personally liable to our
company or its stockholders for monetary damages resulting from
a breach of their fiduciary duties as directors. However,
nothing contained in such provision will eliminate or limit the
liability of directors (1) for any breach of the
director’s duty of loyalty to our company or its
stockholders, (2) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation
of the law, (3) under Section 174 of the Delaware
General Corporation Law or (4) for any transaction from
which the director derived an improper personal benefit.
Bylaws. Our company’s amended and
restated bylaws provide for the indemnification of the officers
and directors of our company to the fullest extent permitted by
the Delaware General Corporation Law. The bylaws provide that
each person who was or is made a party to, or is threatened to
be made a party to, any civil, criminal, administrative or
investigative action, suit or proceeding by reason of the fact
that such person is or was a director or officer of our company
shall be indemnified and held harmless by our company to the
fullest extent authorized by the Delaware General Corporation
Law against all expense, liability and loss, including, without
limitation, attorneys’ fees, incurred by such person in
connection therewith, if such person satisfied the applicable
standards of conduct set forth in the Delaware General
Corporation Law.
II-2
Insurance. Our company maintains
directors’ and officers’ liability insurance, which
covers directors and officers of our company against certain
claims or liabilities arising out of the performance of their
duties.
Indemnification Agreements. Our company
intends to enter into agreements to indemnify its directors and
executive officers. These agreements will provide for
indemnification of our company’s directors and executive
officers to the fullest extent permitted by the Delaware General
Corporation Law against all expenses, including attorneys’
fees, judgments, fines and settlement amounts incurred by any
such person in actions or proceedings, including actions by our
company or in its right, arising out of such person’s
services as a director or executive officer of our company, any
subsidiary of our company or any other company or enterprise to
which the person provided services at our company’s request.
Underwriting Agreement. Our company’s
underwriting agreement with the underwriters will provide for
the indemnification of the directors and officers of our company
against specified liabilities related to this prospectus under
the Securities Act in certain circumstances.
| Item 15. | Recent Sales of Unregistered Securities. |
On May 15, 2008, we sold 1,000 shares of common stock
to Carlyle Partners V US, L.P. for aggregate consideration of
$10.00.
In connection with the acquisition, on July 30, 2008 we
issued 9,565,000 shares of our Class A common stock to
Explorer Coinvest LLC for $956.5 million and issued
(i) 564,187 shares of our Class A common stock,
(ii) 237,864 shares of our Class B non-voting
common stock, (iii) 202,827 shares of our Class C
restricted common stock, (iv) 1,480,288 shares of our
Class E special voting common stock and (v) options to
purchase 1,480,292 shares of our Class A common stock,
in each case, to employees and former employees in exchange for
stock and options in the Predecessor.
In addition to the transactions described above, during the
fiscal year ended March 31, 2009, we issued
(i) 1,500 shares of our Class A common stock to
two employees for aggregate consideration of $150,000 and
(ii) 2,500 shares of our Class B non-voting
common stock to a former employee for aggregate consideration of
$250,000.
During the fiscal year ended March 31, 2010, we issued
(i) 158,696 shares of our Class A common stock to
certain officers and other employees in connection with the
exercise of options for aggregate consideration of $1,388,100
and (ii) 1,907 shares of our Class A common stock
to certain directors in lieu of payment of fees for their
service as directors.
During the first quarter of fiscal 2011, we issued
(i) 7,810 shares of our Class A common stock to
an officer and a director for aggregate consideration of
$999,914, (ii) 35,181 shares of our Class A common
stock to certain officers and other employees in connection with
the exercise of options for aggregate consideration of
$1,502,580, (iii) 1,173 of our Class A common stock to
certain directors in lieu of payment of fees for their service
as directors, and (iv) 70,293 shares of our
Class E special voting common stock to a family trust of an
officer for aggregate consideration of $2,109.
The sales and issuances described above in this Item 15
were effected in reliance on the exemptions for sales of
securities not involving a public offering, as set forth in
Rule 506 promulgated under the Securities Act and in
Section 4(2) of the Securities Act, based on the following:
(a) a private offering in connection with the initial
capitalization of our company; or (b) (i) the
investors confirmed to us that they were either “accredited
investors,” as defined in Rule 501 of
Regulation D promulgated under the Securities Act or had
such background, education and experience in financial and
business matters as to be able to evaluate the merits and risks
of an investment in the securities; (ii) there was no
public offering or general solicitation with respect to the
offering; (iii) the investors acknowledged that all
securities being purchased were “restricted
securities” for purposes of the Securities Act, and agreed
to transfer such securities only in a transaction registered
under the Securities Act or exempt from registration under the
Securities Act; and (iv) a legend was placed on the
certificates representing each such security stating that it was
restricted and could only be
II-3
transferred if subsequently registered under the Securities Act
or transferred in a transaction exempt from registration under
the Securities Act.
| Item 16. | Exhibits and Financial Statement Schedules. |
|
Exhibit |
||||
|
No.
|
Description
|
|||
| 1 | .1* | Form of Underwriting Agreement | ||
| 2 | .1** | Agreement and Plan of Merger, dated as of May 15, 2008, by and among Booz Allen Hamilton Inc., Booz Allen Hamilton Holding Corporation (formerly known as Explorer Holding Corporation), Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation and Booz & Company Inc. | ||
| 2 | .2** | Spin Off Agreement, dated as of May 15, 2008, by and among Booz Allen Hamilton Inc., Booz & Company Holdings, LLC, Booz & Company Inc., Booz & Company Intermediate I Inc. and Booz & Company Intermediate II Inc. | ||
| 2 | .3** | Amendment to the Agreement and Plan of Merger and the Spin Off Agreement, dated as of July 30, 2008, by and among Booz Allen Hamilton Inc., Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation, Booz & Company Holdings, LLC, Booz & Company Inc., Booz & Company Intermediate I Inc. and Booz & Company Intermediate II Inc. | ||
| 3 | .1* | Form of Amended and Restated Certificate of Incorporation of Booz Allen Hamilton Holding Corporation | ||
| 3 | .2* | Form of Amended and Restated Bylaws of Booz Allen Hamilton Holding Corporation | ||
| 4 | .1 | Guarantee and Collateral Agreement, among Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation as the Initial Borrower, Booz Allen Hamilton Inc., as the Surviving Borrower, and the Subsidiary Guarantors party thereto, in favor of Credit Suisse, as Collateral Agent, dated as of July 31, 2008 | ||
| 4 | .2** | Guarantee Agreement, among Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation as the Initial Borrower, Booz Allen Hamilton Inc., as the Surviving Borrower, and the Subsidiary Guarantors party thereto, and Credit Suisse, as Administrative Agent, dated as of July 31, 2008 | ||
| 4 | .3* | Form of Amended and Restated Stockholders Agreement | ||
| 4 | .4* | Form of Stock Certificate | ||
| 5 | .1* | Opinion of Debevoise & Plimpton LLP | ||
| 10 | .1 | Credit Agreement, among Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation, as the Initial Borrower, Booz Allen Hamilton Inc., as the Surviving Borrower, the several lenders from time to time parties thereto, Credit Suisse AG, Cayman Islands Branch (formerly known as Credit Suisse), as Administrative Agent and Collateral Agent, Credit Suisse AG, Cayman Islands Branch (formerly known as Credit Suisse), as Issuing Lender, Banc of America Securities LLC and Credit Suisse Securities (USA) LLC, as Joint Lead Arrangers, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Barclays Capital, Goldman Sachs Credit Partners L.P., and Morgan Stanley Senior Funding, Inc., as Joint Bookrunners and Sumitomo Mitsui Banking Corporation, as Co-Manager, dated as of July 31, 2008 | ||
| 10 | .2 | First Amendment to Credit Agreement, dated as of December 8, 2009 | ||
| 10 | .3 | Mezzanine Credit Agreement, among Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation, as the Initial Borrower, Booz Allen Hamilton Inc., as the Surviving Borrower, the several lenders from time to time parties thereto, Credit Suisse, as Administrative Agent, and Credit Suisse Securities (USA) LLC, Banc of America Securities LLC and Lehman Brothers Inc., as Joint Lead Arrangers and Joint Bookrunners, dated as of July 31, 2008 | ||
| 10 | .4** | First Amendment to Mezzanine Credit Agreement, dated as of July 23, 2009 | ||
| 10 | .5** | Second Amendment to Mezzanine Credit Agreement, dated as of December 7, 2009 | ||
| 10 | .6** | Management Agreement, among Booz Allen Hamilton Holding Corporation (formerly known as Explorer Holding Corporation), Booz Allen Hamilton Inc., and TC Group V US, LLC, dated as of July 31, 2008. | ||
| 10 | .7* | Amended and Restated Equity Incentive Plan of Booz Allen Hamilton Holding Corporation† | ||
| 10 | .8 | Booz Allen Hamilton Holding Corporation Officers’ Rollover Stock Plan† | ||
II-4
|
Exhibit |
||||
|
No.
|
Description
|
|||
| 10 | .9 | Form of Booz Allen Hamilton Holding Corporation Rollover Stock Option Agreement† | ||
| 10 | .10 | Form of Stock Option Agreement under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation† | ||
| 10 | .11 | Form of Stock Option Agreement under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation† | ||
| 10 | .12* | Form of Stock Option Agreement for Directors under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation† | ||
| 10 | .13 | Form of Restricted Stock Agreement for Directors under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation† | ||
| 10 | .14* | Form of Restricted Stock Agreement for Employees under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation† | ||
| 10 | .15* | Booz Allen Hamilton Holding Corporation Annual Incentive Plan† | ||
| 10 | .16* | Booz Allen Hamilton Holding Corporation Officers’ Retirement Plan† | ||
| 10 | .17* | Indemnity Medical Plan† | ||
| 10 | .18* | Dental Plan† | ||
| 10 | .19* | Executive Medical Plan† | ||
| 10 | .20* | Group Variable Universal Life Insurance† | ||
| 10 | .21* | Group Personal Excess Liability Insurance† | ||
| 10 | .22* | U.S. Retired Officer Medical and Dental Insurance† | ||
| 10 | .23* | Annual Performance Program† | ||
| 10 | .24* | Excess ECAP Payment Programs† | ||
| 10 | .25* | Form of Subscription Agreement† | ||
| 21 | .1** | List of Subsidiaries | ||
| 23 | .1* | Consent of Debevoise & Plimpton LLP (included in Exhibit 5.1) | ||
| 23 | .2 | Consent of Ernst & Young LLP, Independent Auditors | ||
| 24 | .1** | Powers of Attorney | ||
| * | To be filed by amendment. | |
| ** | Previously filed. | |
| † | Indicates management compensation plan. |
| Item 17. | Undertakings. |
The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting
agreement certificates in such denominations and registered in
such names as required by the underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
II-5
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Booz Allen Hamilton Holding Corporation has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in McLean, Virginia, on
this 30th day of July, 2010.
BOOZ ALLEN HAMILTON HOLDING CORPORATION
| By: |
/s/ Horacio
D. Rozanski
|
Name: Horacio D. Rozanski
Title: Executive Vice President, Chief Strategy and Talent
Officer
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the
following persons in the capacities and on the dates indicated.
|
Signature
|
Title
|
Date
|
||||
|
* Ralph W. Shrader |
President, Chief Executive Officer and Director (Principal Executive Officer) | July 30, 2010 | ||||
|
* Samuel R. Strickland |
Executive Vice President, Chief Financial Officer, Chief Administrative Officer and Director (Principal Financial and Accounting Officer) | July 30, 2010 | ||||
|
* Daniel F. Akerson |
Director | July 30, 2010 | ||||
|
* Peter Clare |
Director | July 30, 2010 | ||||
|
* Ian Fujiyama |
Director | July 30, 2010 | ||||
|
* Philip A. Odeen |
Director | July 30, 2010 | ||||
|
* Charles O. Rossotti |
Director | July 30, 2010 | ||||
|
*By:
/s/ Horacio
D. Rozanski |
||||||
| Horacio D. Rozanski | ||||||
| Attorney-in-Fact | ||||||
II-7
EXHIBIT INDEX
|
Exhibit |
||||
|
No.
|
Description
|
|||
| 1 | .1* | Form of Underwriting Agreement | ||
| 2 | .1** | Agreement and Plan of Merger, dated as of May 15, 2008, by and among Booz Allen Hamilton Inc., Booz Allen Hamilton Holding Corporation (formerly known as Explorer Holding Corporation), Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation and Booz & Company Inc. | ||
| 2 | .2** | Spin Off Agreement, dated as of May 15, 2008, by and among Booz Allen Hamilton Inc., Booz & Company Holdings, LLC, Booz & Company Inc., Booz & Company Intermediate I Inc. and Booz & Company Intermediate II Inc. | ||
| 2 | .3** | Amendment to the Agreement and Plan of Merger and the Spin Off Agreement, dated as of July 30, 2008, by and among Booz Allen Hamilton Inc., Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation, Booz & Company Holdings, LLC, Booz & Company Inc., Booz & Company Intermediate I Inc. and Booz & Company Intermediate II Inc. | ||
| 3 | .1* | Form of Amended and Restated Certificate of Incorporation of Booz Allen Hamilton Holding Corporation | ||
| 3 | .2* | Form of Amended and Restated Bylaws of Booz Allen Hamilton Holding Corporation | ||
| 4 | .1 | Guarantee and Collateral Agreement, among Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation as the Initial Borrower, Booz Allen Hamilton Inc., as the Surviving Borrower, and the Subsidiary Guarantors party thereto, in favor of Credit Suisse, as Collateral Agent, dated as of July 31, 2008 | ||
| 4 | .2** | Guarantee Agreement, among Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation as the Initial Borrower, Booz Allen Hamilton Inc., as the Surviving Borrower, and the Subsidiary Guarantors party thereto, and Credit Suisse, as Administrative Agent, dated as of July 31, 2008 | ||
| 4 | .3* | Form of Amended and Restated Stockholders Agreement | ||
| 4 | .4* | Form of Stock Certificate | ||
| 5 | .1* | Opinion of Debevoise & Plimpton LLP | ||
| 10 | .1 | Credit Agreement, among Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation, as the Initial Borrower, Booz Allen Hamilton Inc., as the Surviving Borrower, the several lenders from time to time parties thereto, Credit Suisse AG, Cayman Islands Branch (formerly known as Credit Suisse), as Administrative Agent and Collateral Agent, Credit Suisse AG, Cayman Islands Branch (formerly known as Credit Suisse), as Issuing Lender, Banc of America Securities LLC and Credit Suisse Securities (USA) LLC, as Joint Lead Arrangers, and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Barclays Capital, Goldman Sachs Credit Partners L.P., and Morgan Stanley Senior Funding, Inc., as Joint Bookrunners and Sumitomo Mitsui Banking Corporation, as Co-Manager, dated as of July 31, 2008 | ||
| 10 | .2 | First Amendment to Credit Agreement, dated as of December 8, 2009 | ||
| 10 | .3 | Mezzanine Credit Agreement, among Booz Allen Hamilton Investor Corporation (formerly known as Explorer Investor Corporation), Explorer Merger Sub Corporation, as the Initial Borrower, Booz Allen Hamilton Inc., as the Surviving Borrower, the several lenders from time to time parties thereto, Credit Suisse, as Administrative Agent, and Credit Suisse Securities (USA) LLC, Banc of America Securities LLC and Lehman Brothers Inc., as Joint Lead Arrangers and Joint Bookrunners, dated as of July 31, 2008 | ||
| 10 | .4** | First Amendment to Mezzanine Credit Agreement, dated as of July 23, 2009 | ||
| 10 | .5** | Second Amendment to Mezzanine Credit Agreement, dated as of December 7, 2009 | ||
| 10 | .6** | Management Agreement, among Booz Allen Hamilton Holding Corporation (formerly known as Explorer Holding Corporation), Booz Allen Hamilton Inc., and TC Group V US, LLC, dated as of July 31, 2008. | ||
| 10 | .7* | Amended and Restated Equity Incentive Plan of Booz Allen Hamilton Holding Corporation† | ||
| 10 | .8 | Booz Allen Hamilton Holding Corporation Officers’ Rollover Stock Plan† | ||
|
Exhibit |
||||
|
No.
|
Description
|
|||
| 10 | .9 | Form of Booz Allen Hamilton Holding Corporation Rollover Stock Option Agreement† | ||
| 10 | .10 | Form of Stock Option Agreement under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation† | ||
| 10 | .11 | Form of Stock Option Agreement under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation† | ||
| 10 | .12* | Form of Stock Option Agreement for Directors under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation† | ||
| 10 | .13 | Form of Restricted Stock Agreement for Directors under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation† | ||
| 10 | .14* | Form of Restricted Stock Agreement for Employees under the Equity Incentive Plan of Booz Allen Hamilton Holding Corporation† | ||
| 10 | .15* | Booz Allen Hamilton Holding Corporation Annual Incentive Plan† | ||
| 10 | .16* | Booz Allen Hamilton Holding Corporation Officers’ Retirement Plan† | ||
| 10 | .17* | Indemnity Medical Plan† | ||
| 10 | .18* | Dental Plan† | ||
| 10 | .19* | Executive Medical Plan† | ||
| 10 | .20* | Group Variable Universal Life Insurance† | ||
| 10 | .21* | Group Personal Excess Liability Insurance† | ||
| 10 | .22* | U.S. Retired Officer Medical and Dental Insurance† | ||
| 10 | .23* | Annual Performance Program† | ||
| 10 | .24* | Excess ECAP Payment Programs† | ||
| 10 | .25* | Form of Subscription Agreement† | ||
| 21 | .1** | List of Subsidiaries | ||
| 23 | .1* | Consent of Debevoise & Plimpton LLP (included in Exhibit 5.1) | ||
| 23 | .2 | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm | ||
| 24 | .1** | Powers of Attorney | ||
| * | To be filed by amendment. | |
| ** | Previously filed. | |
| † | Indicates management compensation plan. |
Exhibit 4.1
EXECUTION VERSION
GUARANTEE AND COLLATERAL AGREEMENT
made by
EXPLORER INVESTOR CORPORATION,
EXPLORER MERGER SUB CORPORATION,
as the Initial Borrower,
BOOZ ALLEN HAMILTON INC.,
as the Surviving Borrower,
and the Subsidiary Guarantors party hereto
in favor of
CREDIT SUISSE,
as Collateral Agent
Dated as of July 31, 2008
TABLE OF CONTENTS
| Page | ||||
SECTION 1. DEFINED TERMS |
1 | |||
1.1 Definitions |
1 | |||
1.2 Other Definitional Provisions |
7 | |||
SECTION 2. GUARANTEE |
7 | |||
2.1 Guarantee |
7 | |||
2.2 Right of Contribution |
8 | |||
2.3 No Subrogation |
8 | |||
2.4 Amendments, etc. with respect to the Borrower Obligations |
8 | |||
2.5 Guarantee Absolute and Unconditional |
9 | |||
2.6 Reinstatement |
9 | |||
2.7 Payments |
10 | |||
SECTION 3. GRANT OF SECURITY INTEREST |
10 | |||
3.1 Grant of First Priority Security Interests |
10 | |||
SECTION 4. REPRESENTATIONS AND WARRANTIES |
11 | |||
4.1 Representations in Credit Agreement |
11 | |||
4.2 Title; No Other Liens |
11 | |||
4.3 Names; Jurisdiction of Organization; Chief Executive Office |
12 | |||
4.4 Pledged Securities |
12 | |||
4.5 Intellectual Property |
12 | |||
4.6 Material Deposit Accounts and Material Securities Accounts |
12 | |||
4.7 Material Government Contracts |
12 | |||
SECTION 5. COVENANTS |
12 | |||
5.1 Covenants in Credit Agreement |
12 | |||
5.2 Investment Property |
13 | |||
5.3 Material Government Contracts |
13 | |||
5.4 Account Control Agreements |
13 | |||
5.5 Foreign Law Pledges |
13 | |||
SECTION 6. REMEDIAL PROVISIONS |
14 | |||
6.1 Certain Matters Relating to Receivables |
14 | |||
6.2 Material Deposit Accounts, Material Securities Accounts |
14 | |||
6.3 Communications with Grantors; Grantors Remain Liable |
14 | |||
6.4 Pledged Securities |
15 | |||
6.5 Intellectual Property |
15 | |||
6.6 Proceeds to be Turned Over To Collateral Agent |
16 | |||
6.7 Application of Proceeds |
16 | |||
6.8 Code and Other Remedies |
17 | |||
6.9 Private Sales |
18 | |||
6.10 Deficiency |
18 | |||
SECTION 7. THE COLLATERAL AGENT |
18 | |||
7.1 Collateral Agent’s Appointment as Attorney-in-Fact, etc |
18 | |||
| Page | ||||
7.2 Duty of Collateral Agent |
19 | |||
7.3 Execution of Financing Statements |
20 | |||
7.4 Authority of Collateral Agent |
20 | |||
SECTION 8. MISCELLANEOUS |
20 | |||
8.1 Amendments in Writing |
20 | |||
8.2 Notices |
20 | |||
8.3 No Waiver by Course of Conduct; Cumulative Remedies |
21 | |||
8.4 Enforcement Expenses; Indemnification |
21 | |||
8.5 Successors and Assigns |
21 | |||
8.6 Set-Off |
21 | |||
8.7 Counterparts |
21 | |||
8.8 Severability |
22 | |||
8.9 Section Headings |
22 | |||
8.10 Integration |
22 | |||
8.11 GOVERNING LAW |
22 | |||
8.12 Submission To Jurisdiction; Waivers |
22 | |||
8.13 Acknowledgements |
22 | |||
8.14 Additional Guarantors and Grantors |
23 | |||
8.15 Releases |
23 | |||
8.16 WAIVER OF JURY TRIAL |
24 | |||
SCHEDULES |
||||
Schedule 1 Notice Addresses |
||||
Schedule 2 Investment Property |
||||
Schedule 3 Legal Name, Jurisdictions of Organization and Chief Executive Offices |
||||
Schedule 4 Intellectual Property |
||||
Schedule 5(a) Material Deposit Accounts |
||||
Schedule 5(b) Material Securities Accounts |
||||
Schedule 6 Material Government Contracts |
||||
ANNEXES |
||||
Annex I Assumption Agreement |
||||
Annex II Acknowledgement and Consent |
||||
ii
GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of July 31, 2008, made by each of the signatories
hereto, in favor of Credit Suisse, as Collateral Agent (in such capacity, the “Collateral
Agent”) for the banks and other financial institutions or entities (the “Lenders”) from
time to time parties to the Credit Agreement, dated as of July 31, 2008 (as amended, supplemented
or otherwise modified from time to time, the “Credit Agreement”), among Explorer Investor
Corporation, a Delaware corporation (“Holdings”), Explorer Merger Sub Corporation, a
Delaware corporation (the “Initial Borrower”), Booz Allen Hamilton Inc., a Delaware
corporation into which the Initial Borrower shall be merged (“Booz Allen” or the
“Surviving Borrower”), the Lenders, Credit Suisse, as Collateral Agent and Administrative
Agent, Bank of America, N.A., as Syndication Agent, Lehman Brothers Commercial Bank, C.I.T. Leasing
Corporation and Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit Suisse, as
Issuing Lender and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Lehman
Brothers Inc. and Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers and Joint
Bookrunners.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make
extensions of credit to the Borrower (as defined below) upon the terms and subject to the
conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies that includes each other
Grantor (as defined below);
WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used in
part to enable the Borrower to make valuable transfers to one or more of the other Grantors in
connection with the operation of their respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in related businesses, and each
Grantor will derive substantial direct and indirect benefit from the making of the extensions of
credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective
extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have
executed and delivered this Agreement to the Collateral Agent for the ratable benefit of the
Administrative Agent, the Collateral Agent and the other Secured Parties;
NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent, the
Collateral Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to
make their respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees
with the Collateral Agent, for the ratable benefit of the Secured Parties, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement, and the following
terms are used herein as defined in the New York UCC: “Accession”, “Account”,
“As-Extracted Collateral”,
“Certificated Securities”, “Chattel Paper”, “Commercial Tort Claim”,
“Commodity Account”, “Document”, “Equipment”, “Farm Products”,
“Fixture”, “General Intangible”, “Goods”, “Instrument”,
“Inventory”, “Letter-of-Credit Right”, “Securities Account”,
“Securities Intermediary”, “Security” and “Uncertificated Securities”.
(b) The following terms shall have the following meanings:
“Agreement”: this Guarantee and Collateral Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
“Borrower”: (a) at any time prior to the consummation of the Merger Transactions, the
Initial Borrower and (b) upon and at any time after the consummation of the Merger Transactions,
the Surviving Borrower.
“Borrower Cash Management Obligations”: to the extent that the Borrower so agrees in
the applicable agreements therefor, the collective reference to all obligations and liabilities of
the Borrower and the other Loan Parties (including, to the extent that such agreements so provide
and without limitation, interest accruing at the then applicable rate provided in the Specified
Cash Management Arrangement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim
for post-filing or post-petition interest is allowed or allowable in such proceeding) to any Lender
or any Affiliate of any Lender (or any Lender or any Affiliate thereof at the time such Specified
Cash Management Arrangement was entered into) (each, a “Cash Management Provider”), whether
direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, any Specified Cash Management
Arrangement or any other document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, to the extent that such agreements so provide and without
limitation, all fees and disbursements of counsel to the relevant Lender or Affiliate thereof that
are required to be paid by the Borrower pursuant to the terms of any Specified Cash Management
Arrangement) so long as the relevant Cash Management Provider executes and delivers to the
Administrative Agent a letter agreement in form and substance acceptable to the Administrative
Agent pursuant to which, unless the Collateral Agent agrees otherwise, the relevant Cash Management
Provider (i) appoints the Administrative Agent as its agent under the applicable Specified Cash
Management Arrangement and (ii) agrees to be bound by the provisions of Sections 9.3, 9.7, 10.11
and 10.12 of the Credit Agreement.
“Borrower Credit Agreement Obligations”: the collective reference to the unpaid
principal of and interest on the Loans (including, for the avoidance of doubt, any New Loans), the
Reimbursement Obligations and all other obligations and liabilities of the Borrower (including,
without limitation, interest accruing at the then applicable rate provided in the Credit Agreement
after the maturity of the Loans and Reimbursement Obligations and interest accruing at the then
applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed or allowable in such
proceeding) to the Administrative Agent, the Collateral Agent or any other Secured Party, whether
direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter
incurred, in each case, which may arise under, out of, or in connection with, the Credit Agreement,
this Agreement, the other Loan Documents, any Letter of Credit or any other document made,
delivered or given in connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative Agent, to the
2
Collateral Agent or to the other Secured Parties that are required to be paid by the Borrower
pursuant to the terms of any of the foregoing agreements).
“Borrower Hedge Agreement Obligations”: the collective reference to all obligations
and liabilities of the Borrower and any other Loan Party (including, without limitation, interest
accruing at the then applicable rate provided in any Specified Hedge Agreement after the filing of
any petition in bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed or allowable in such proceeding) to any Lender or any Affiliate of any Lender
(or any Lender or any Affiliate thereof at the time such Specified Hedge Agreement was entered
into), whether direct or indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, in each case, which may arise under, out of, or in connection with, any
Specified Hedge Agreement or any other document made, delivered or given in connection therewith,
in each case whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the relevant Lender or Affiliate thereof that are required to be paid
by the Borrower and/or such other Loan Party, as the case may be, pursuant to the terms of any
Specified Hedge Agreement) so long as, unless the Collateral Agent agrees otherwise, the relevant
Hedge Provider executes and delivers to the Administrative Agent a letter agreement in form and
substance acceptable to the Administrative Agent pursuant to which the relevant Hedge Provider (i)
appoints the Administrative Agent as its agent under the applicable Specified Hedge Agreement and
(ii) agrees to be bound by the provisions of Section 9.3, 9.7, 10.11 and 10.12 of the Credit
Agreement.
“Borrower Obligations”: the collective reference to (i) the Borrower Credit Agreement
Obligations, (ii) the Borrower Hedge Agreement Obligations and (iii) the Borrower Cash Management
Obligations, but, as to clauses (ii) and (iii) hereof, only to the extent that, and only so long
as, the Borrower Credit Agreement Obligations are secured and guaranteed pursuant hereto.
“CLIN”: a JAMIS contract line item number with respect to a Government Contract.
“Collateral”: as defined in Section 3.1.
“Collateral Account”: any collateral account established by the Collateral Agent as
provided in Section 6.1 or 6.6.
“Copyright Licenses”: with respect to any Grantor, all United States written license
agreements naming such Grantor as licensor or licensee (including, without limitation, those listed
in Schedule 4), granting any right under any Copyright, subject, in each case, to the terms
of such license agreements, and the right to prepare for sale, sell, and advertise for sale, all
Inventory now or hereafter covered by such licenses.
“Copyrights”: (i) with respect to any Grantor, all of such Grantor’s copyrights
arising under the laws of the United States, whether registered or unregistered and whether
published or unpublished (including, without limitation, those listed in Schedule 4), all
registrations and recordings thereof, and all applications in connection therewith, in each case,
owned by such Grantor in its own name, including, without limitation, all registrations,
recordings, supplemental registrations and pending applications in the United States Copyright
Office, and (ii) the right to obtain all renewals thereof.
“Deposit Account”: as defined in the Uniform Commercial Code of any applicable
jurisdiction and, in any event, including, without limitation, any demand, time, savings, passbook
or like account maintained with a depositary institution.
3
“Foreign Subsidiary Voting Stock”: the voting Capital Stock of (i) any Foreign
Subsidiary that is a Restricted Subsidiary or (ii) any Domestic Subsidiary, substantially all of
the assets of which consist of the Capital Stock of one or more Foreign Subsidiaries.
“Government Contract”: any contract to which a Loan Party is a party and a
counterparty is a Governmental Authority to the extent such contract involves the performance of
services or delivery of goods by or on behalf of such Loan Party to such Governmental Authority.
“Governmental Authority” shall mean the government of the United States of America and
any agency thereof.
“Grantors”: the collective reference to each signatory hereto (other than the
Collateral Agent) together with any other entity that may become a party hereto as provided herein.
“Guarantor Obligations”: with respect to any Guarantor, all obligations and
liabilities of such Guarantor which may arise under or in connection with this Agreement
(including, without limitation, Section 2) or any other Loan Document to which such Guarantor is a
party, in each case whether on account of guarantee obligations, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent, to the Collateral Agent or to the other
Secured Parties that are required to be paid by such Guarantor pursuant to the terms of this
Agreement or any other Loan Document).
“Guarantors”: the collective reference to Holdings and the Subsidiary Guarantors that
may become a party hereto as provided herein.
“Intellectual Property”: with respect to any Grantor, the collective reference to
such Grantor’s rights, priorities and privileges relating to intellectual property, arising under
the laws of the United States, including, without limitation, such Grantor’s Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses, and all rights to sue at law
or in equity for any infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.
“Intercompany Note”: any promissory note evidencing loans made by any Grantor to
Holdings or any of its Subsidiaries.
“Investment Property”: the collective reference to (i) all “investment property” as
such term is defined in Section 9-102(a)(49) of the New York UCC (other than any Excluded Capital
Stock excluded from the definition of “Pledged Stock”) and (ii) whether or not constituting
“investment property” as so defined, all Pledged Securities.
“Issuers”: the collective reference to each issuer of a Pledged Security.
“Liens”: as defined in Section 3.1.
“Material Deposit Accounts”: Deposit Accounts maintained by any Grantor within the
United States, any State thereof or the District of Columbia with an outstanding balance of greater
than $1,000,000, excluding Deposit Accounts established solely for the purpose of funding payroll,
payroll taxes and other compensation and benefits to employees. Material Deposit Accounts as of
the date hereof are listed on Schedule 5(a).
4
“Material Government Contracts”: all Government Contracts listed on Schedule
6, and each Government Contract entered into after the date hereof:
(i) having a duration of one year or greater,
(ii) having one or more CLINs, which CLIN involves aggregate consideration payable
(or expected gross revenue) by the applicable governmental entity to the applicable
Loan Party of $2,500,000 or more over the term of the contract, including base
period plus priced options (a “Material CLIN”); and
(iii) which are not subject to the provisions of Federal Acquisition Regulation
52.232-24 or any successor provision;
provided that “Material Government Contracts” shall not include any contract the existence
of which may not be disclosed to the Secured Parties under applicable law, rule or regulations.
“Material Securities Accounts”: Securities Accounts maintained by any Grantor within
the United States, any State thereof or the District of Columbia with an outstanding balance of
greater than $1,000,000. Material Securities Accounts as of the date hereof are listed on
Schedule 5(b).
“New York UCC”: the Uniform Commercial Code from time to time in effect in the State
of New York.
“Obligations”: (i) in the case of the Borrower, the Borrower Obligations and (ii) in
the case of each Guarantor, its Guarantor Obligations.
“Patent License”: with respect to any Grantor, all United States written license
agreements providing for the grant by or to such Grantor of any right to manufacture, use or sell
any invention covered in whole or in part by a Patent, including, without limitation, any of the
foregoing referred to in Schedule 4, subject, in each case, to the terms of such license
agreements, and the right to prepare for sale, sell and advertise for sale, all Inventory now or
hereafter covered by such licenses.
“Patents”: with respect to any Grantor, all of such Grantor’s (i) letters patent of
the United States, including, without limitation, any of the foregoing referred to in Schedule
4, (ii) applications for letters patent of the United States and all continuations and
continuations in part thereof, including, without limitation, any of the foregoing referred to in
Schedule 4, and (iii) rights to obtain any reissues or extensions of the foregoing, in each
case, owned by such Grantor in its own name.
“Pledged Notes”: all promissory notes listed on Schedule 2, all Intercompany
Notes at any time issued to any Grantor in excess of $2,000,000 (or Intercompany Notes which, in
the aggregate, are in excess of $2,000,000) and all other promissory notes issued to or held by any
Grantor in excess of $2,000,000 (other than promissory notes issued in connection with extensions
of trade credit by any Grantor in the ordinary course of business).
“Pledged Securities”: the collective reference to the Pledged Notes and the Pledged
Stock.
“Pledged Stock”: the collective reference to (i) the shares of Capital Stock listed
on Schedule 2 and (ii) any other shares, stock certificates, options, interests or rights
of any nature whatsoever in respect of the Capital Stock of any Person that may be issued or
granted to, or held by, any Grantor while this Agreement is in effect other than Excluded Capital
Stock; provided that in no event
5
shall more than 65% of the total outstanding Foreign Subsidiary Voting Stock of any Foreign
Subsidiary be required to be pledged hereunder.
“Proceeds”: all “proceeds” as such term is defined in Section 9-102(a)(64) of the New
York UCC and, in any event, shall include, without limitation, all dividends or other income from
the Investment Property, collections thereon or distributions or payments with respect thereto.
“Receivable”: any right to payment for goods sold or leased or for services rendered,
whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has
been earned by performance (including, without limitation, any Account).
“Securities Act”: the Securities Act of 1933, as amended.
“Specified Cash Management Arrangement”: any cash management arrangement (a) entered
into by (i) the Borrower or any other Loan Party and (ii) any Lender or any Affiliate thereof at
the time such cash management arrangement was entered into, as counterparty, and (b) which has been
designated by such Lender and the Borrower, by notice to the Collateral Agent not later than 90
days after the execution and delivery by the Borrower or such other Loan Party, as a Specified Cash
Management Arrangement. The designation of any cash management arrangement as a Specified Cash
Management Arrangement shall not create in favor of the Lender or Affiliate thereof that is a party
thereto any rights in connection with the management or release of any Collateral or any Guarantor
Obligations.
“Trademark License”: with respect to any Grantor, all United States written license
agreements providing for the grant by or to such Grantor of any right to use any Trademark,
including, without limitation, any of the foregoing referred to in Schedule 4, subject, in
each case, to the terms of such license agreements, and the right to prepare for sale, sell and
advertise for sale, all Inventory now or hereafter covered by such licenses.
“Trademarks”: with respect to any Grantor, all of such Grantor’s (i) trademarks,
trade names, corporate names, company names, business names, domain names, fictitious business
names, trade styles, service marks, logos and other source or business identifiers, and all
goodwill associated therewith, all registrations and recordings thereof, and all applications in
connection therewith (except for “intent to use” applications for trademark or service mark
registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, unless and until
an Amendment to Allege Use or a Statement of Use under Section 1(c) or 1(d) of said Act has been
filed), whether in the United States Patent and Trademark Office or in any similar office or agency
of the United States or any State thereof, and all United States common-law rights related thereto
owned by such Grantor in its own name, including, without limitation, any of the foregoing referred
to in Schedule 4, and (ii) the right to obtain all renewals thereof.
“Unfunded Advances/Participations” : (a) with respect to the Administrative Agent, the
aggregate amount, if any (i) made available to the Borrower on the assumption that each Lender has
made its portion of the applicable Borrowing available to the Administrative Agent as contemplated
by Section 2.2 of the Credit Agreement and (ii) with respect to which a corresponding amount shall
not in fact have been returned to the Administrative Agent by the Borrower or made available to the
Administrative Agent by any such Lender, (b) with respect to the Swingline Lender, the aggregate
amount, if any, of participations in respect of any outstanding Swingline Loan that shall not have
been funded by any Revolving Lender in accordance with Section 2.6(b) of the Credit Agreement and
(c) with respect to any Issuing Lender, the aggregate amount, if any, of any participations in
respect of Reimbursement Obligations that shall not have been funded by any L/C Participant in
accordance with Section 3.4 of the Credit Agreement.
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“Vehicles”: aircraft and all cars, trucks, trailers, construction and earth moving
equipment and other vehicles covered by a certificate of title law of any state.
1.2 Other Definitional Provisions. (a)The words “hereof,” “herein”, “hereto” and
“hereunder” and words of similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and Section and Schedule
references are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part
thereof.
SECTION 2. GUARANTEE
2.1 Guarantee.
(a) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably,
guarantees to the Collateral Agent for the ratable benefit of the Administrative Agent, the
Collateral Agent, the other Secured Parties and their respective permitted successors, indorsees,
transferees and assigns, the prompt and complete payment and performance by the Borrower when due
(whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary notwithstanding, the
maximum liability of each Guarantor hereunder and under the other Loan Documents shall in no event
exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws
relating to the insolvency of debtors (after giving effect to the right of contribution established
in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any time and from time to
time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee
contained in this Section 2 or affecting the rights and remedies of the Administrative Agent, the
Collateral Agent or any other Secured Party hereunder.
(d) The guarantee contained in this Section 2 shall remain in full force and effect until
all the Borrower Obligations and the obligations of each Guarantor under the guarantee contained in
this Section 2 shall have been satisfied by payment in full (other than Borrower Hedge Agreement
Obligations, Borrower Cash Management Obligations and contingent or indemnification obligations not
then due), no Letter of Credit (that is not cash collateralized or back-stopped to the reasonable
satisfaction of the Issuing Lender or purchasing Lender, as applicable, in respect thereof) shall
be outstanding and the Commitments shall have been terminated, notwithstanding that from time to
time during the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations, provided that any Guarantor shall be released from its guarantee contained in
this Section 2 as provided in Section 8.15.
(e) No payment (other than payment in full) made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the Administrative Agent, the
Collateral Agent or any other Secured Party from the Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation
or application at any time or from time to time in reduction of or in payment of the Borrower
Obligations shall be deemed to
7
modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect
of the Borrower Obligations or any payment received or collected from such Guarantor in respect of
the Borrower Obligations), remain liable for the Borrower Obligations up to the maximum liability
of such Guarantor hereunder until the Borrower Obligations shall have been paid in full (other than
Borrower Hedge Agreement Obligations, Borrower Cash Management Obligations and other than
contingent or indemnification obligations not then due), no Letter of Credit (that is not cash
collateralized or back-stopped to the reasonable satisfaction of the Issuing Lender or purchasing
Lender, as applicable, in respect thereof) shall be outstanding and the Commitments shall have been
terminated, provided that any Guarantor shall be released from its guarantee contained in
this Section 2 as provided in Section 8.15.
2.2 Right of Contribution. Each Guarantor hereby agrees that to the extent that a
Guarantor shall have paid more than its proportionate share of any payment made hereunder, such
Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor
hereunder which has not paid its proportionate share of such payment. Each Guarantor’s right of
contribution shall be subject to the terms and conditions of Section 2.3. The provisions of this
Section 2.2 shall in no respect limit the obligations and liabilities of any Guarantor to the
Administrative Agent, the Collateral Agent and the other Secured Parties, and each Guarantor shall
remain liable to the Administrative Agent, the Collateral Agent and the other Secured Parties for
the full amount guaranteed by such Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any
set-off or application of funds of any Guarantor by the Administrative Agent, the Collateral Agent
or any other Secured Party, no Guarantor shall be entitled to be subrogated to any of the rights of
the Administrative Agent, the Collateral Agent or any other Secured Party against the Borrower or
any other Guarantor or any collateral security or guarantee or right of offset held by the
Administrative Agent, the Collateral Agent or any other Secured Party for the payment of the
Borrower Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or
reimbursement from the Borrower or any other Guarantor in respect of payments made by such
Guarantor hereunder, until all amounts owing to the Administrative Agent, the Collateral Agent and
the other Secured Parties by the Borrower on account of the Borrower Obligations shall have been
paid in full (other than Borrower Hedge Agreement Obligations, Borrower Cash Management Obligations
and contingent or indemnification obligations not then due), no Letter of Credit (that is not cash
collateralized or back-stopped to the reasonable satisfaction of the Issuing Lender or purchasing
Lender, as applicable, in respect thereof) shall be outstanding and the Commitments shall have been
terminated. If any amount shall be paid to any Guarantor on account of such subrogation rights at
any time when all of such Borrower Obligations shall not have been paid in full, such amount shall
be held by such Guarantor in trust for the Administrative Agent, the Collateral Agent and the other
Secured Parties, segregated from other funds of such Guarantor, and shall, forthwith upon receipt
by such Guarantor, be turned over to the Collateral Agent in the exact form received by such
Guarantor (duly indorsed by such Guarantor to the Collateral Agent, if required), to be applied
against the Borrower Obligations, whether matured or unmatured, in such order as the Collateral
Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. Each Guarantor shall
remain obligated hereunder notwithstanding that, without any reservation of rights against any
Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any
of the Borrower Obligations made by the Administrative Agent, the Collateral Agent or any other
Secured Party may be rescinded by the Administrative Agent, the Collateral Agent or such other
Secured Party and any of the Borrower Obligations continued, and the Borrower Obligations, or the
liability of any other Person upon or for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by
the Administrative Agent, the Collateral
8
Agent or any other Secured Party, and the Credit Agreement and the other Loan Documents and
any other documents executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders, or the Supermajority Lenders, or all Lenders, or all Lenders directly affected thereby, as
the case may be) may deem advisable from time to time, and any collateral security, guarantee or
right of set-off at any time held by the Administrative Agent, the Collateral Agent or any other
Secured Party for the payment of the Borrower Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Administrative Agent, the Collateral Agent nor any other
Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time
held by it as security for the Borrower Obligations or for the guarantee contained in this Section
2 or any property subject thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of the
creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or proof
of reliance by the Administrative Agent, the Collateral Agent or any other Secured Party upon the
guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2;
the Borrower Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Borrower and any of the Guarantors, on
the one hand, with respect to the Loan Documents and the Administrative Agent, the Collateral Agent
and the other Secured Parties, on the other hand, likewise shall be conclusively presumed to have
been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor
waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or any of the Guarantors with respect to the Borrower Obligations. Each
Guarantor understands and agrees that the guarantee of such Guarantor contained in this Section 2
shall be construed as a continuing, absolute and unconditional guarantee of payment without regard
to (a) the validity or enforceability of the Credit Agreement or any other Loan Document, any of
the Borrower Obligations or any other collateral security therefor or guarantee or right of offset
with respect thereto at any time or from time to time held by the Administrative Agent or any
Lender, (b) any defense, set-off or counterclaim (other than a defense of payment or performance)
which may at any time be available to or be asserted by the Borrower or any other Person against
the Administrative Agent, the Collateral Agent or any other Secured Party, or (c) any other
circumstance whatsoever (other than a defense of payment or performance) (with or without notice to
or knowledge of the Borrower or any Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower from the Borrower Obligations, or of
such Guarantor under the guarantee of such Guarantor contained in this Section 2, in bankruptcy or
in any other instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against any Guarantor, the Administrative Agent, the Collateral Agent or any
other Secured Party may, but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrower, any other Guarantor or any
other Person or against any collateral security or guarantee for the Borrower Obligations or any
right of offset with respect thereto, and any failure by the Administrative Agent, the Collateral
Agent or any other Secured Party to make any such demand, to pursue such other rights or remedies
or to collect any payments from the Borrower, any other Guarantor or any other Person or to realize
upon any such collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower, any other Guarantor or any other Person or any such collateral security,
guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Administrative Agent, the Collateral Agent or any other
Secured Party against any Guarantor. For the purposes hereof “demand” shall include the
commencement and continuance of any legal proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Borrower
9
Obligations is rescinded or must otherwise be restored or returned by the Administrative
Agent, the Collateral Agent or any other Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result
of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for,
the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to
the Administrative Agent without set-off or counterclaim at the Funding Office.
SECTION 3. GRANT OF SECURITY INTEREST
3.1 Grant of First Priority Security Interests. Each Grantor hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in all of
such Grantor’s right, title and interest in and to the following property now owned or at any time
hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future
may acquire any right, title or interest (collectively, the “Collateral”), as collateral
security for the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of such Grantor’s Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Deposit Accounts;
(d) all Documents;
(e) all Equipment;
(f) all Fixtures;
(g) all General Intangibles;
(h) all Instruments, including the Pledged Notes;
(i) all Intellectual Property;
(j) all Inventory;
(k) all Investment Property;
(l) all books and records pertaining to the Collateral; and
(m) to the extent not otherwise included, all Proceeds and products of any of the Collateral
and products of any and all of the foregoing and all collateral security and guarantees given by
any Person with respect to any of the foregoing;
provided, however, that notwithstanding any of the other provisions set forth in
this Section 3.1, this Agreement shall not constitute a grant of a security interest in (i) any
leasehold interest in real property (and any Fixtures relating thereto) and any Fixtures relating
to any owned real property to the extent that
10
the Collateral Agent is not entitled to a security interest with respect to such owned real
property under the terms of the Credit Agreement, (ii) any Vehicles and all Proceeds thereof, (iii)
any property to the extent that such grant of a security interest is (A) prohibited by any
Requirements of Law of a Governmental Authority, (B) requires a consent not obtained of any
Governmental Authority pursuant to such Requirement of Law or (C) prohibited by, or constitutes a
breach or default under or results in the termination of or requires any consent not obtained
under, any contract, license, agreement, instrument, (including any permitted liens, leases and
licenses) or other document evidencing or giving rise to such property in each case with any third
party, joint venture or non wholly-owned Subsidiary and any organizational, shareholder or similar
agreements of any non-wholly owned Subsidiary or joint venture; except in the case of clauses (A),
(B) or (C), to the extent that such Requirement of Law or the term in such contract, license,
agreement, instrument or other document or organizational, shareholder or similar agreement
providing for such prohibition, breach, default or termination or requiring such consent is
ineffective under applicable law, (iv) any Collateral that constitutes Equipment subject to a
certificate of title statute, Farm Products, Accessions, Letter-of-Credit Rights, Commercial Tort
Claims and As-Extracted Collateral, (v) any Collateral to the extent the granting of such security
interest would result in adverse tax consequences as reasonably determined by the Administrative
Agent, or as to which the Administrative Agent reasonably determines that the burden or cost of
obtaining a security interest or perfection thereof is excessive when compared to the benefit to
the Secured Parties of the security to be afforded thereby (in each case as confirmed by written
notice to the Borrower), and (vi) equity interests in and assets of Unrestricted Subsidiaries and
Immaterial Subsidiaries. It is hereby understood and agreed that any Property described in the
preceding proviso, and any Property that is otherwise expressly excluded from clauses (a) through
(m) above, shall be excluded from the definition of “Collateral”.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent, the Collateral Agent and the Secured Parties to enter into
the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the
Borrower, each Guarantor and each Grantor hereby represents and warrants to each of the
Administrative Agent, the Collateral Agent and each other Secured Party that:
4.1 Representations in Credit Agreement. In the case of each Guarantor, the
representations and warranties set forth in Section 4 of the Credit Agreement to the extent they
refer to such Guarantor or to the Loan Documents to which such Guarantor is a party, each of which
is hereby incorporated herein by reference, are true and correct in all material respects, and each
of the Administrative Agent, the Collateral Agent and each other Secured Party shall be entitled to
rely on each of them as if they were fully set forth herein; provided that each reference
in each such representation and warranty to the Borrower’s knowledge shall, for the purposes of
this Section 4.1, be deemed to be a reference to such Guarantor’s knowledge.
4.2 Title; No Other Liens. Except as otherwise permitted under Section 7.3 of the Credit
Agreement, such Grantor owns or has rights in each item of the Collateral free and clear of any and
all Liens. Except as otherwise permitted under Section 7.3 of the Credit Agreement, no financing
statement or other public notice with respect to all or any part of the Collateral is on file or of
record in any public office except financing statements that have been filed without the consent of
the Grantor. For the avoidance of doubt, it is understood and agreed that any Grantor may, as part
of its business, grant licenses to third parties to use Intellectual Property owned, licensed or
developed by a Grantor. For purposes of this Agreement and the other Loan Documents, such
licensing activity shall not constitute a “Lien” on such Intellectual Property. Each of the
Administrative Agent, the Collateral Agent and each other Secured Party understands that any such
licenses may be exclusive to the applicable licensees, and
11
such exclusivity provisions may limit
the ability of the Administrative Agent to utilize, sell, lease, license
or transfer the related Intellectual Property or otherwise realize value from such
Intellectual Property pursuant hereto.
4.3 Names; Jurisdiction of Organization; Chief Executive Office. On the date hereof, such
Grantor’s full and correct legal name, jurisdiction of organization and identification number from
the jurisdiction of organization (if any) are specified on Schedule 3.
4.4 Pledged Securities. On the date hereof, the shares of Pledged Stock pledged by such
Grantor hereunder:
(a) with respect to the shares of Pledged Stock issued by the Borrower and any other
Restricted Subsidiary, have been duly authorized, validly issued and are fully paid and
non-assessable, to the extent such concepts are applicable; and
(b) constitute all the issued and outstanding shares of all classes of the Capital Stock of
each Issuer owned by such Grantor or, in the case of Foreign Subsidiary Voting Stock, 65% of the
outstanding Foreign Subsidiary Voting Stock of each relevant Issuer.
4.5 Intellectual Property.
(a) Schedule 4 lists all material Copyright registrations, Copyright Licenses,
Trademark applications and registrations, Trademark Licenses, Patent applications and Patents and
Patent Licenses owned by such Grantor in its own name on the date hereof.
(b) Except as set forth in Schedule 4, on the date hereof, none of the Copyrights,
Patents or Trademarks is the subject of any material licensing or franchise agreement pursuant to
which such Grantor is the licensor or franchisor, which is not in the ordinary course of such
Grantor’s business.
4.6 Material Deposit Accounts and Material Securities Accounts. Schedule 5(a)
lists all Material Deposit Accounts and Schedule 5(b) lists all Material Securities
Accounts, in each case, on the date hereof.
4.7 Material Government Contracts. Schedule 6 lists all Material Government
Contracts to which the Borrower or any of its Subsidiaries is a party on the date hereof.
SECTION 5. COVENANTS
Each Guarantor and each Grantor covenants and agrees with the Administrative Agent, the
Collateral Agent and the other Secured Parties that, from and after the date of this Agreement
until the Obligations shall have been paid in full (other than Borrower Hedge Agreement
Obligations, Borrower Cash Management Obligations and contingent and indemnification obligations
not yet due and owing), no Letter of Credit (that is not cash collateralized or back-stopped to the
reasonable satisfaction of the Issuing Lender or purchasing Lender, as applicable, in respect
thereof) shall be outstanding and the Commitments shall have been terminated:
5.1 Covenants in Credit Agreement. In the case of each Guarantor, to the extent
applicable, such Guarantor shall take, or shall refrain from taking, as the case may be, each
action that is necessary to be taken or not taken, as the case may be, so that no Default or Event
of Default is caused by the failure to take such action or to refrain from taking such action by
such Guarantor or any of its Subsidiaries.
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5.2 Investment Property. (a) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the Pledged Securities
issued by it and will comply with such terms insofar as such terms are applicable to it and (ii)
the terms of Sections 6.4(c) and 6.9 shall apply to it, mutatis mutandis, with respect to all
actions that may be required of it pursuant to Section 6.4(c) or 6.9 with respect to the Pledged
Securities issued by it.
(b) To the extent that any Pledged Security that is an Uncertificated Security becomes a
Certificated Security, the applicable Grantor shall promptly deliver such certificates evidencing
such Pledged Securities to the Collateral Agent together with stock powers or indorsements thereof
reasonably satisfactory to the Collateral Agent.
5.3 Material Government Contracts. In the case of each Grantor, such Grantor shall, on
each date that the Borrower is required to deliver financial statements pursuant to Section 6.1(a)
or (b) of the Credit Agreement, provide the Collateral Agent with written notice of any Material
Government Contracts entered into since the last date financial statements were delivered pursuant
to Section 6.1(a) or (b) of the Credit Agreement (or, with respect to the first such date financial
statements are delivered pursuant to such Sections, since the date hereof), such notice to include
the identification of any Material CLINs, and within fifteen days of such notice, deliver to the
Collateral Agent such documentation reasonably necessary to comply with the Assignment of Claims
Act of 1940 with respect to the assignment of the right of payment in respect of such Material
Government Contracts (or, in the case of any Material Government Contract that is an indefinite
delivery contract, task or delivery order contract, multiple award schedule contract, blanket
purchase agreement, or basic ordering agreement, in respect of any specific individual order for
the performance of services or delivery of goods placed under such Material Government Contract to
the extent such specific individual order for the performance of services or delivery of goods has
a Material CLIN), where applicable, designating a Material Deposit Account as the account in
respect of which payment thereof is to be made. Pending receipt of any consent of a Governmental
Authority as contemplated by this Section 5.3, each Grantor shall request that the relevant
Governmental Authority pay all cash payments made by it in respect of Material Government Contracts
to which it is a party into a Material Deposit Account subject to an account control agreement (if
any such accounts are then subject to an account control agreement). The relevant Grantor shall
use commercially reasonable efforts to obtain the consent of the applicable Governmental Authority
party to each such Material Government Contract in respect of the assignment of such claims in
respect of any Material CLIN, but any failure to receive such consent shall not constitute a
Default.
5.4 Account Control Agreements. In the case of each Grantor, such Grantor shall, on each
date that the Borrower is required to deliver financial statements pursuant to Section 6.1(a) or
(b) of the Credit Agreement, provide the Collateral Agent with written notice of any additional
Material Deposit Accounts and/or Material Securities Accounts since the last date financial
statements were delivered pursuant to Section 6.1(a) or (b) of the Credit Agreement (or, with
respect to the first such date financial statements are delivered pursuant to such Sections, since
the date hereof), and shall use its commercially reasonable efforts to cause each depositary bank
(other than the Collateral Agent) holding a Material Deposit Account and each Securities
Intermediary holding a Material Securities Account owned by such Grantor to execute and deliver a
control agreement with respect to such Material Deposit Account and/or Material Securities Account,
in form and substance reasonably satisfactory to the Collateral Agent and such Grantor.
5.5 Foreign Law Pledges. Notwithstanding anything to the contrary contained herein, no
Grantor shall be required to take any actions in order to perfect the security interest granted to
the Collateral Agent for the ratable benefit of the Administrative Agent, the Collateral Agent and
the Lenders (i) under the laws of any jurisdiction outside the United States or (ii) by the
execution of account control
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or similar agreements (other than with respect to Material Deposit Accounts and Material
Securities Accounts pursuant to Section 5.4).
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables.
(a) At any time during the continuance of an Event of Default, upon the Collateral Agent’s
reasonable request at the expense of the relevant Grantor, such Grantor shall cause independent
public accountants or others reasonably satisfactory to the Collateral Agent to furnish to the
Collateral Agent reports showing reconciliations, aging and test verifications of, and trial
balances for, the Receivables.
(b) If required by the Collateral Agent at any time after the occurrence and during the
continuance of an Event of Default under Section 8.1(a) or 8.1(f) of the Credit Agreement, any
payments of Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any event,
within two Business Days) deposited by such Grantor in the exact form received, duly indorsed by
such Grantor to the Collateral Agent if required, in a Collateral Account maintained under the sole
dominion and control of the Collateral Agent, subject to withdrawal by the Collateral Agent for the
account of the Administrative Agent, the Collateral Agent and the other Secured Parties only as
provided in Section 6.7, and (ii) until so turned over, shall be held by such Grantor in trust for
the Administrative Agent, the Collateral Agent and the other Secured Parties, segregated from other
funds of such Grantor. Each such deposit of Proceeds of Receivables shall be accompanied by a
report identifying in reasonable detail the nature and source of the payments included in the
deposit.
(c) If an Event of Default has occurred and is continuing and at the Collateral Agent’s
request, each Grantor shall deliver to the Collateral Agent all documents evidencing, and relating
to, the agreements and transactions which gave rise to the Receivables, including, without
limitation, all agreements, orders, invoices and shipping receipts.
6.2 Material Deposit Accounts, Material Securities Accounts.
Notwithstanding anything to the contrary contained herein, the Collateral Agent shall not
exercise its rights under account control agreements associated with Material Deposit Accounts or
Material Securities Accounts unless an Event of Default under Section 8.1(a) or 8.1(f) of the
Credit Agreement shall have occurred and be continuing.
6.3 Communications with Grantors; Grantors Remain Liable.
(a) Upon the request of the Collateral Agent at any time after the occurrence and during the
continuance of an Event of Default under Section 8.1(a) or 8.1(f) of the Credit Agreement, each
Grantor shall notify obligors on the Receivables that the Receivables have been assigned to the
Collateral Agent for the ratable benefit of the Administrative Agent, the Collateral Agent and the
other Secured Parties and that payments in respect thereof shall be made directly to the Collateral
Agent.
(b) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under
the Receivables to observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto.
Neither the Administrative Agent, the Collateral Agent nor any other Secured Party shall have any
obligation or liability under any Receivable (or any agreement giving rise thereto) by reason of or
arising out of this Agreement or the receipt by the Administrative Agent, the Collateral Agent or
any other Secured Party of
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any payment relating thereto, nor shall the Administrative Agent, the Collateral Agent or any
other Secured Party be obligated in any manner to perform any of the obligations of any Grantor
under or pursuant to any Receivable (or any agreement giving rise thereto), to make any payment, to
make any inquiry as to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
6.4 Pledged Securities. (a) Unless an Event of Default shall have occurred and be
continuing and the Collateral Agent shall have given notice to the relevant Grantor of the
Collateral Agent’s intent to exercise its corresponding rights pursuant to Section 6.4(b), each
Grantor shall be permitted to receive all cash dividends and other distributions paid in respect of
the Pledged Stock and all payments made in respect of the Pledged Notes to the extent permitted in
the Credit Agreement, and to exercise all voting and corporate rights with respect to the Pledged
Securities.
(b) If an Event of Default shall occur and be continuing and the Collateral Agent shall give
notice of its intent to exercise such rights to the relevant Grantor or Grantors (which notice
shall not be required if an Event of Default under Section 8.1(f) of the Credit Agreement shall
have occurred and be continuing), (i) the Collateral Agent shall have the right to receive any and
all cash dividends, payments or other Proceeds paid in respect of the Pledged Securities and make
application thereof to the Obligations in the order set forth in Section 6.7, and (ii) any or all
of the Pledged Securities shall be registered in the name of the Collateral Agent or its nominee,
and the Collateral Agent or its nominee may thereafter exercise (x) all voting, corporate and other
rights pertaining to such Pledged Securities at any meeting of shareholders of the relevant Issuer
or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any
other rights, privileges or options pertaining to such Pledged Securities as if it were the
absolute owner thereof (including, without limitation, the right to exchange at its discretion any
and all of the Pledged Securities upon the merger, consolidation, reorganization, recapitalization
or other fundamental change in the corporate structure of any Issuer, or upon the exercise by any
Grantor or the Collateral Agent of any right, privilege or option pertaining to such Pledged
Securities, and in connection therewith, the right to deposit and deliver any and all of the
Pledged Securities with any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as the Collateral Agent may reasonably determine), all
without liability (except liabilities resulting from the gross negligence or willful misconduct of
the Collateral Agent) except to account for property actually received by it, but the Collateral
Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall
not be responsible for any failure to do so or delay in so doing unless the Collateral Agent has
given notice of its intent to exercise as set forth above.
(c) Each Grantor hereby authorizes and instructs each Issuer of any Pledged Securities
pledged by such Grantor hereunder to comply with any instruction received by it from the
Administrative Agent in writing that (x) states that an Event of Default has occurred and is
continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other
or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully
protected in so complying.
6.5 Intellectual Property.
(i) Solely for the purpose of enabling the Collateral Agent to exercise its rights and
remedies under Section 6.8 at such time as the Collateral Agent shall be lawfully entitled
to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants
to the Collateral Agent, to the extent such Grantor has the right to do so, subject to
pre-existing rights and licenses, a non-exclusive license (exercisable without payment of
royalty or other
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compensation to such Grantor), subject in the case of Trademarks, to sufficient rights
to quality control and inspection in favor of such Grantor to avoid the risk of invalidation
of said Trademarks, to use, license or sublicense any of the Intellectual Property
constituting Collateral now owned or hereafter acquired by such Grantor, wherever the same
may be located.
(ii) Notwithstanding anything contained herein to the contrary, but subject to the
provisions of Section 7.5 of the Credit Agreement that limit the rights of the Grantors to
dispose of their property, notwithstanding the foregoing but subject to the Collateral
Agent’s exercise of its rights and remedies under Section 6, the Grantors will be permitted
to exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other
actions with respect to the Intellectual Property in the ordinary course of the business of
the Grantors. In furtherance of the foregoing, so long as no Event of Default shall have
occurred and be continuing, the Collateral Agent shall from time to time, upon the request
of the respective Grantor (through the Borrower), execute and deliver any instruments,
certificates or other documents, in the form so requested, that such Grantor (through the
Borrower) shall have certified are appropriate in its judgment to allow it to take any
action permitted above (including relinquishment of the license provided pursuant to
clause (i) immediately above as to any specific Intellectual Property). Further, upon the
payment in full in cash of all of the Obligations (other than Borrower Hedge Agreement
Obligations, Borrower Cash Management Obligations and contingent or indemnification
obligations not then due) and cancellation or termination of all Commitments and Letters of
Credit (that are not cash collateralized or back-stopped to the reasonable satisfaction of
the Issuing Lender or purchasing Lender, as applicable, in respect thereof) or earlier
expiration of this Agreement or release of the Collateral, the Collateral Agent shall grant
back to the Grantors the license granted pursuant to clause (i) immediately above. The
exercise of rights and remedies under Section 6 by the Collateral Agent shall not terminate
the rights of the holders of any licenses or sublicenses theretofore granted by the Grantors
in accordance with the first sentence of this clause (ii).
6.6 Proceeds to be Turned Over To Collateral Agent. If an Event of Default shall occur
and be continuing and the Loans shall have been accelerated pursuant to Section 8 of the Credit
Agreement, all Proceeds received by any Grantor consisting of cash, checks and other near-cash
items shall be held by such Grantor in trust for the Administrative Agent, the Collateral Agent and
the other Secured Parties, segregated from other funds of such Grantor, and shall, promptly upon
receipt by such Grantor, be turned over to the Collateral Agent in the exact form received by such
Grantor (duly indorsed by such Grantor to the Collateral Agent, if required). All Proceeds
received by the Collateral Agent hereunder shall be held by the Collateral Agent in a Collateral
Account maintained under its sole dominion and control. All Proceeds while held by the Collateral
Agent in a Collateral Account (or by such Grantor in trust for the Administrative Agent, the
Collateral Agent and the other Secured Parties) shall continue to be held as collateral security
for all of the Obligations and shall not constitute payment thereof until applied as provided in
Section 6.7.
6.7 Application of Proceeds. If an Event of Default shall have occurred and be continuing
and the Loans shall have been accelerated pursuant to Section 8 of the Credit Agreement, at any
time at the Collateral Agent’s election, the Collateral Agent may apply all or any part of Proceeds
constituting Collateral and any proceeds of the guarantee set forth in Section 2, in payment of the
Obligations, and shall make any such application in the following order:
First, to pay incurred and unpaid reasonable, out-of-pocket fees and expenses
of the Agents under the Loan Documents;
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Second, to the Collateral Agent, for application by it towards payment in full
of all Unfunded Advances/Participations (the amounts so applied to be distributed between or
among the Administrative Agent, the Swingline Lender and any Issuing Lender pro rata in
accordance with the amounts of Unfunded Advances/Participations owed to them on the date of
any such distribution);
Third, to the Collateral Agent, for application by it towards payment of
amounts then due and owing and remaining unpaid in respect of the Obligations, pro
rata among the Secured Parties according to the amounts of the Obligations then due
and owing and remaining unpaid to each of them; and
Fourth, any balance of such Proceeds remaining after the Obligations shall have
been paid in full (other than contingent or indemnification obligations not then due), no
Letter of Credit (that is not cash collateralized to the reasonable satisfaction of the
Issuing Lender or purchasing Lender, as applicable, in respect thereof) shall be outstanding
and the Commitments shall have been terminated, shall be paid over to the Borrower or to
whomsoever shall be lawfully entitled to receive the same.
6.8 Code and Other Remedies. If an Event of Default shall occur and be continuing, the
Collateral Agent, on behalf of itself, the Administrative Agent and the other Secured Parties, may
exercise, in addition to all other rights and remedies granted to them in this Agreement and in any
other instrument or agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the New York UCC or any other applicable law. Without limiting
the generality of the foregoing, the Collateral Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any notice required by
law referred to below or notices otherwise provided in the Loan Documents) to or upon any Grantor
or any other Person (all and each of which demands, defenses, advertisements and notices are hereby
waived unless otherwise provided in the Loan Documents), may in such circumstances forthwith
collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith, subject to pre-existing rights and licenses, sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to
do any of the foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker’s board or office of the Administrative Agent, the Collateral Agent or any other
Secured Party or elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without assumption of any
credit risk. The Administrative Agent, the Collateral Agent or any other Secured Party shall have
the right upon any such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption, stay or appraisal in any Grantor, which rights or equities are
hereby waived and released. Each Grantor further agrees, at the Collateral Agent’s request, to
assemble the Collateral and make it available to the Collateral Agent at places which the
Collateral Agent shall reasonably select, whether at such Grantor’s premises or elsewhere. The
Collateral Agent shall apply the net proceeds of any action taken by it pursuant to this Section
6.8, after deducting all reasonable costs and expenses of every kind actually incurred in
connection therewith or incidental to the care or safekeeping of any of the Collateral or in any
way relating to the Collateral or the rights of the Administrative Agent, the Collateral Agent and
the other Secured Parties hereunder, including, without limitation, reasonable attorneys’ fees and
disbursements, to the payment in whole or in part of the Obligations, in such order as the
Collateral Agent may elect, and only after such application and after the payment by the Collateral
Agent of any other amount required by any provision of law, including, without limitation, Section
9-615(a)(3) of the New York UCC, need the Collateral Agent account for the surplus, if any, to any
Grantor. If any notice of a proposed sale or other disposition of Collateral shall be required by
law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale
or other disposition.
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6.9 Private Sales. Each Grantor recognizes that the Collateral Agent may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained
in the Securities Act and applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges
and agrees that any such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees that any such private
sale shall be deemed to have been made in a commercially reasonable manner. The Collateral Agent
shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time
necessary to permit the Issuer thereof to register such securities for public sale under the
Securities Act, or under applicable state securities laws, even if such Issuer would agree to do
so.
6.10 Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the
reasonable fees and disbursements of any attorneys employed by the Collateral Agent to collect such
deficiency.
SECTION 7. THE COLLATERAL AGENT
7.1 Collateral Agent’s Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any
officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to
take any and all appropriate action and to execute any and all documents and instruments which may
be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, each Grantor hereby gives the Collateral Agent the power and right, on
behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the
following (provided that anything in this Section 7.1(a) to the contrary notwithstanding,
the Collateral Agent agrees that it will not exercise any rights under the power of attorney
provided for in this Section 7.1(a) unless an Event of Default shall have occurred and be
continuing):
(i) in the name of such Grantor or its own name, or otherwise, take possession of and
indorse and collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Receivable or with respect to any other Collateral and file
any claim or take any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Collateral Agent for the purpose of collecting any and all such
moneys due under any Receivable or with respect to any other Collateral whenever payable;
(ii) in the case of any United States Copyrights, Patents or Trademarks owned by such
Grantor in its own name, execute and deliver, and have recorded, any and all agreements,
instruments, documents and papers as the Collateral Agent may reasonably request to evidence
the Administrative Agent’s, the Collateral Agent’s and the other Secured Parties’ security
interest in such Copyrights, Patents and Trademarks and the goodwill and general intangibles
of such Grantor relating thereto or represented thereby;
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(iii) pay or discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or any insurance called for by the terms of this Agreement
and pay all or any part of the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.8 or 6.9, any
indorsements, assignments or other instruments of conveyance or transfer with respect to the
Collateral; and
(v) (1) direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due or to become due thereunder directly to the Collateral
Agent or as the Collateral Agent shall direct; (2) ask or demand for, collect, and receive
payment of and receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Collateral; (3) sign and indorse any
invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, notices and other documents in connection with
any of the Collateral; (4) commence and prosecute any suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any Collateral; (5) defend any suit,
action or proceeding brought against such Grantor with respect to any Collateral; (6)
settle, compromise or adjust any such suit, action or proceeding and, in connection
therewith, give such discharges or releases as the Collateral Agent may deem appropriate;
(7) subject to pre-existing rights and licenses, assign any Copyright, Patent or Trademark
of such Grantor (along with the goodwill of the business to which any such Copyright, Patent
or Trademark pertains), for such term or terms, on such conditions, and in such manner, as
the Collateral Agent shall in its reasonable discretion determine; and (8) subject to
pre-existing rights and licenses, generally, sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and completely as
though the Collateral Agent were the absolute owner thereof for all purposes, and do, at the
Collateral Agent’s option and such Grantor’s expense, at any time, or from time to time, all
acts and things which the Collateral Agent deems necessary to protect, preserve or realize
upon the Collateral and the Administrative Agent’s, the Collateral Agent’s and the other
Secured Parties’ security interests therein and to effect the intent of this Agreement, all
as fully and effectively as such Grantor might do.
(b) If any Grantor fails to perform or comply with any of its agreements contained herein,
the Collateral Agent, at its option, but without any obligation so to do, may give such Grantor
written notice of such failure to perform or comply and if such Grantor fails to perform or comply
within three (3) Business Days of receiving such notice (or if the Collateral Agent reasonably
determines that irreparable harm to the Collateral or to the security interest of the Collateral
Agent hereunder could result prior to the end of such three-Business Day period), then the
Collateral Agent may perform or comply, or otherwise cause performance or compliance, with such
agreement.
(c) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement is terminated and the security
interests created hereby are released.
7.2 Duty of Collateral Agent. To the extent permitted by law, the Collateral Agent’s
sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in
its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in
the same manner as the Collateral Agent deals with similar property for its own account. None of
the Administrative Agent, the Collateral Agent, any other Secured Party or any of their respective
officers, directors, employees or
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agents shall be liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers conferred on the
Administrative Agent, the Collateral Agent and the other Secured Parties hereunder are solely to
protect the Administrative Agent’s, the Collateral Agent’s and the other Secured Parties’ interests
in the Collateral and shall not impose any duty upon the Administrative Agent, the Collateral Agent
or any other Secured Party to exercise any such powers. The Administrative Agent, the Collateral
Agent and the other Secured Parties shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct or that of their directors,
officers, employees or agents.
7.3 Execution of Financing Statements. Pursuant to any applicable law, each Grantor
authorizes the Collateral Agent at any time and from time to time to file or record financing
statements (including fixture filings, if any, and amendments) and other filing or recording
documents or instruments with respect to the Collateral without the signature of such Grantor in
such form and in such offices as the Collateral Agent reasonably determines appropriate to perfect
the security interests of the Collateral Agent under this Agreement. Each Grantor authorizes the
Collateral Agent to use the collateral description “all personal property”, “all assets” or any
similar phrase in any such financing statements. Each Grantor agrees to provide such information
as the Collateral Agent may reasonably request necessary to enable the Collateral Agent to make any
such filings promptly following any such request. Notwithstanding anything herein or in any other
Loan Document to the contrary, the delivery of control agreements with respect to any Deposit
Accounts (other than those relating to Material Deposit Accounts pursuant to Section 5.4),
Securities Accounts (other than those relating to Material Securities Accounts pursuant to Section
5.4) and Commodities Accounts shall not be required.
7.4 Authority of Collateral Agent. Each Grantor acknowledges that the rights and
responsibilities of the Collateral Agent under this Agreement with respect to any action taken by
the Collateral Agent or the exercise or non-exercise by the Collateral Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or resulting or arising out
of this Agreement shall, as among the Administrative Agent, the Collateral Agent and the other
Secured Parties, be governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the Collateral Agent and the
Grantors, the Collateral Agent shall be conclusively presumed to be acting as agent for the
Administrative Agent, the Collateral Agent and the other Secured Parties with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this Agreement may be
waived, amended, supplemented or otherwise modified except in accordance with Section 10.1 of the
Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the Collateral Agent or any
Grantor hereunder shall be effected in the manner provided for in Section 10.2 of the Credit
Agreement; provided that any such notice, request or demand to or upon any Guarantor shall
be addressed to such Guarantor at its notice address set forth on Schedule 1 or at such
other address pursuant to notice given in accordance with Section 10.2 of the Credit Agreement.
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8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the Administrative
Agent, the Collateral Agent nor any other Secured Party shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be deemed to have
waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No
failure to exercise, nor any delay in exercising, on the part of the Administrative Agent, the
Collateral Agent or any other Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent, the Collateral Agent or any other Secured Party
of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right
or remedy which the Administrative Agent, the Collateral Agent or such other Secured Party would
otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any other rights or remedies provided
by law.
8.4 Enforcement Expenses; Indemnification. Each Guarantor agrees to pay, and to
save the Administrative Agent, the Collateral Agent and the other Secured Parties harmless from,
any and all out-of-pocket liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this Agreement to the extent
the Borrower would be required to do so pursuant to Section 10.5 of the Credit Agreement. The
agreements in this Section 8.4 shall survive repayment of the Obligations and all other amounts
payable under the Credit Agreement and the other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the successors and
assigns of each Grantor and shall inure to the benefit of the Administrative Agent, the Collateral
Agent and the other Secured Parties and their successors and assigns; provided, that no Grantor may
assign, transfer or delegate any of its rights or obligations under this Agreement without the
prior written consent of the Collateral Agent (it being understood that Dispositions permitted
under the Credit Agreement shall not be subject to this proviso).
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the Administrative Agent, the
Collateral Agent and each other Secured Party at any time and from time to time while an Event of
Default shall have occurred and be continuing, without notice to such Grantor or any other Grantor,
any such notice being expressly waived by each Grantor, to the extent permitted by applicable law,
upon any amount becoming due and payable by each Grantor (whether at the stated maturity, by
acceleration or otherwise after the expiration of any applicable grace periods) to set-off and
appropriate and apply against such amount any and all deposits (general or special, time or demand,
provisional or final but excluding trust accounts), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Administrative Agent, the
Collateral Agent or such other Secured Party to or for the credit or the account of such Grantor.
Each of the Administrative Agent, the Collateral Agent and each other Secured Party shall notify
such Grantor promptly of any such set-off made by it and the application made by it of the proceeds
thereof, provided that the failure to give such notice shall not affect the validity of such
set-off and application.
8.7 Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts (including by telecopy or electronic (i.e.,
“pdf”) transmission), and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.
21
8.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement are for convenience
of reference only and are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents represent the agreement
of the Grantors, the Administrative Agent, the Collateral Agent and the other Secured Parties with
respect to the subject matter hereof and thereof.
8.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT
THE SAME ARE NOT MANDATORILY APPLICABLE BY STATUTE AND THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
8.12 Submission To Jurisdiction; Waivers. Each party hereto hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the
State of New York, the courts of the United States of America for the Southern District of New
York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such Grantor at its address referred to in Section 8.2 or at such other address
of which the Collateral Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
22
(a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;
(b) neither the Administrative Agent, the Collateral Agent nor any other Secured Party has
any fiduciary relationship with or duty to any Grantor arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between the Grantors, on the one
hand, and the Administrative Agent, the Collateral Agent and the other Secured Parties, on the
other hand, in connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Administrative Agent, the Collateral Agent
and the Lenders or among the Grantors and the Administrative Agent, the Collateral Agent and the
Lenders.
8.14 Additional Guarantors and Grantors. Each Restricted Subsidiary of the Borrower
that is required to become a party to this Agreement pursuant to Section 6.8 of the Credit
Agreement shall become a Guarantor and a Grantor for all purposes of this Agreement upon execution
and delivery by such Restricted Subsidiary of an Assumption Agreement in the form of Annex I
hereto.
8.15 Releases.
(a) At such time as the Loans, the Reimbursement Obligations and the other Obligations
(other than Borrower Hedge Agreement Obligations, Borrower Cash Management Obligations and
contingent or indemnification obligations not then due) shall have been paid in full in cash, the
Commitments shall have been terminated and no Letter of Credit (that is not cash collateralized or
back-stopped to the reasonable satisfaction of the Issuing Lender or purchasing Lender, as
applicable, in respect thereof) shall be outstanding, the Collateral shall be automatically
released from the Liens created hereby, and this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Collateral Agent and each Grantor hereunder
shall automatically terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the request and sole
expense of any Grantor following any such termination, the Collateral Agent shall deliver to such
Grantor any Collateral held by the Collateral Agent hereunder, and execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise disposed of by any
Grantor in a transaction permitted by the Credit Agreement, then the Lien granted under this
Agreement on such Collateral shall be automatically released, and the Collateral Agent, at the
request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases or
other documents reasonably necessary or desirable to evidence the release of the Liens created
hereby on such Collateral. A Guarantor shall be automatically released from its obligations
hereunder in the event that all the Capital Stock of such Guarantor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit Agreement, or upon the designation
of such Guarantor as an Unrestricted Subsidiary as permitted under the Credit Agreement, and the
Collateral Agent, at the request and sole expense of the Borrower, shall execute and deliver to the
Borrower all releases or other documents reasonably necessary or desirable to evidence the release
of such obligations. All releases or other documents delivered by the Collateral Agent pursuant to
this Section 8.15(b) shall be without recourse to, or warranty by, the Collateral Agent.
(c) Liens on Collateral created hereunder shall be released and obligations of Guarantors
and Grantors hereunder shall terminate as set forth in Section 10.15 of the Credit Agreement.
23
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF,
EACH OF THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT AND EACH OTHER SECURED PARTY, HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
24
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and Collateral Agreement
to be duly executed and delivered as of the date first above written.
| CREDIT SUISSE, CAYMAN ISLANDS BRANCH as Collateral Agent |
||||
| By: | /s/ John D. Toronto | |||
| Name: | John D. Toronto | |||
| Title: | Director | |||
| By: | /s/ Shaheen Malik | |||
| Name: | Shaheen Malik | |||
| Title: | Associate | |||
| EXPLORER MERGER SUB CORPORATION, as Grantor |
||||
| By: | /s/ Ian Fujiyama | |||
| Name: | Ian Fujiyama | |||
| Title: | Vice President | |||
| BOOZ ALLEN HAMILTON INC., as Grantor |
||||
| By: | /s/ Ralph Shrader | |||
| Name: | Ralph Shrader | |||
| Title: | Chairman and Chief Executive Officer | |||
| By: | /s/ CG Appleby | |||
| Name: | CG Appleby | |||
| Title: | Secretary | |||
| EXPLORER INVESTOR CORPORATION, as Grantor and Guarantor |
||||
| By: | /s/ Ian Fujiyama | |||
| Name: | Ian Fujiyama | |||
| Title: | Vice President | |||
| ASE, INC., as Grantor and Guarantor |
||||
| By: | /s/ CG Appleby | |||
| Name: | CG Appleby | |||
| Title: | Senior Vice President | |||
| AESTIX, INC., as Grantor and Guarantor |
||||
| By: | /s/ CG Appleby | |||
| Name: | CG Appleby | |||
| Title: | Secretary | |||
| BOOZ ALLEN TRANSPORTATION INC., as Grantor and Guarantor |
||||
| By: | /s/ CG Appleby | |||
| Name: | CG Appleby | |||
| Title: | Secretary | |||
Schedule 1
NOTICE ADDRESSES OF GUARANTORS
| Guarantor | Address for Notices | |
Aestix, Inc.
|
8283 Greensboro Drive | |
| McLean, VA 22102 | ||
ASE, Inc.
|
8283 Greensboro Drive | |
| McLean, VA 22102 | ||
Booz Allen Transportation Inc.
|
8283 Greensboro Drive | |
| McLean, VA 22102 | ||
Explorer Investor Corporation
|
1001 Pennsylvania Ave., NW, Ste 220S | |
| Washington, DC 20004 |
Schedule 2
DESCRIPTION OF INVESTMENT PROPERTY
Pledged Stock:
| Number of | Registered | Number and Class of | Percentage of | |||||||||
| Issuer | Certificate | Owners | Equity Interest | Equity Interests | ||||||||
Aestix, Inc.
|
12 | Booz Allen Hamilton Inc. | 100 Class A Common | 100.00 | % | |||||||
Aestix, Inc.
|
2 | Booz Allen Hamilton Inc. | 29,200,000 Series A Preferred | 100.00 | % | |||||||
AESTIX (UK) Ltd.
|
Uncertificated | AESTIX, Inc. | 1 Ordinary Share | 100.00 | % | |||||||
ASE, Inc.
|
2 | Booz Allen Hamilton Inc. | 1,000 Common | 100.00 | % | |||||||
Booz Allen
Hamilton Inc.
|
7553 | Explorer Investor Corporation | 104.5 Class A Common | 100.00 | % | |||||||
Booz Allen
Transportation
Inc.
|
2 | Booz Allen Hamilton Inc. | 200 Common | 100.00 | % | |||||||
Explorer Merger Sub
Corporation
|
1 | Explorer Investor Corporation | 1,000 Common | 100.00 | % | |||||||
Pledged Notes:
None.
Schedule 3
LEGAL NAME, LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
| Jurisdiction of | Organizational | |||||
| Grantor | Organization | Chief Executive Office | Identification Number | |||
Aestix, Inc.
|
Delaware | 8283 Greensboro Drive McLean, VA 22102 |
22-3748537 | |||
ASE, Inc.
|
Delaware | 8283 Greensboro Drive McLean, VA 22102 |
22-3271700 | |||
Booz Allen Hamilton Inc. |
Delaware | 8283 Greensboro Drive McLean, VA 22102 |
36-2513626 | |||
Booz Allen
Transportation Inc. |
New York | 8283 Greensboro Drive McLean, VA 22102 |
51-0449475 | |||
Explorer Investor Corporation |
Delaware | 1001 Pennsylvania Ave., NW, Ste 220S Washington, DC 20004 |
26-2634114 | |||
Explorer Merger Sub Corporation |
Delaware | 1001 Pennsylvania Ave., NW, Ste 220S Washington, DC 20004 |
26-2623926 |
Schedule 4
COPYRIGHTS AND COPYRIGHT LICENSES
| Title | Reg. No. | Reg. Date | Owner | |||
Acquisition process for major defense systems |
TX641890 | 02/23/1981 | Booz, Allen & Hamilton, Inc. | |||
Acquisition process for major defense systems |
TX658390 | 01/21/1981 | Booz, Allen & Hamilton, Inc. | |||
AutoCAD AutoLISP
|
TXu699123 | 07/31/1995 | Booz, Allen & Hamilton, Inc. & GEO/SQL Corporation* |
|||
ASVAB career exploration system
|
TX4350344 | 07/26/1996 | Booz-Allen & Hamilton, Inc. | |||
Booz, Allen financial management systems in government |
TX721852 | 11/06/1978 | Booz Allen Hamilton Inc. & Booz & Company Inc. (as of the Closing)* | |||
Booz Allen Hamilton : helping clients envision the future / Art Kleiner |
TX6170533 | 08/24/2005 | Booz Allen Hamilton Inc. & Booz & Company Inc. (as of the Closing)* | |||
Booz Allen Hamilton—helping
clients envision the future / by
Greenwich
|
TX6264929 | 08/24/2005 | Booz Allen Hamilton Inc., & Booz & Company Inc. (as of the Closing)* | |||
Neural network computer aided design tool (NN CADtool) |
TX3455384 | 09/18/1992 | Booz Allen & Hamilton, Inc. | |||
Governance at Booz, Allen & Hamilton
|
TX721858 | 11/06/1978 | Booz, Allen & Hamilton, Inc. | |||
Heritage trolley systems
|
TXu809751 | 06/09/1997 | Booz, Allen & Hamilton, Inc. | |||
North American light rail vehicles
|
TX4850774 | 08/31/1998 | Booz, Allen & Hamilton, Inc. | |||
North American light rail vehicles
|
TXu808115 | 06/03/1997 | Booz, Allen & Hamilton, Inc. | |||
Product development : new
approaches in the 1980s / by
William P. Sommers
|
TX460089 | 04/04/1980 | Booz, Allen & Hamilton, Inc. | |||
Retirement income plans : summary plan description |
TX324509 | 09/04/1979 | Booz, Allen & Hamilton, Inc. | |||
New directions in telephony /Booz-Allen
& Hamilton, Inc.,
Golden, Freda
|
TX2652022 | 09/18/1989 | Booz-Allen & Hamilton, Inc., & Golden, Freda & Schraub, P.C.* | |||
Sistema de administracion del mantenimiento de caminos vecinales: version |
TXu745898 | 03/21/1996 | Frederic R. Harris, Inc., & Booz Allen & Hamilton, Inc.* | |||
Summary of benefits for
professional staff
|
TX384992 | 12/12/1979 | Booz Allen Hamilton Inc., & Booz & Company Inc. (as of the Closing)* | |||
A Summary of benefits for support
staff
|
TX384991 | 12/12/1979 | Booz Allen Hamilton Inc., & Booz & Company Inc. (as of the Closing)* |
| * | Security Interest is granted in Grantor’s right, title and interest only. |
PATENTS AND PATENT LICENSES
| Serial No. | Patent No. | |||||||
| Country | Patent Title | Filing Date | Issue Date | Status | ||||
United States
|
Method and system for assessing attacks on computer networks using bayesian networks | 09/969,722 10/2/2001 |
6,907,430 11/6/2005 |
Issued | ||||
United States
|
Method and system for electronic voter registration and electronic voting over a network | 09/811,823 09/26/2002 |
Pending | |||||
United States
|
Apparatus, method and computer readable medium for evaluating a network of entities and assets* | 10/845,423 05/14/2004 |
Published | |||||
United
States
|
System and method for assessing bundled non-kinetic and kinetic force options | 11/386,849 03/23/2006 |
Pending |
| * | This application has not yet been assigned by the inventors to Booz Allen Hamilton Inc. An assignment by the inventors to Booz Allen Hamilton Inc. will be filed within 30 days after the date hereof. |
TRADEMARKS AND TRADEMARK LICENSES
| Serial No. | Reg. No. | |||||||
| Country | Trademark | Filing Date | Reg. Date | Owner | ||||
United States
|
ARM-IR | 78/185,608 15-Nov-2002 |
2921509 25-Jan-2005 |
Booz Allen Hamilton Inc. | ||||
United States
|
BOOZ ALLEN HAMILTON | 72/311,547 07-Nov-1968 |
888837 31-Mar-1970 |
Booz Allen Hamilton Inc. | ||||
United States
|
BOOZ ALLEN HAMILTON | 74/054,287 30-Apr-1990 |
1634966 12-Feb-1991 |
Booz Allen Hamilton Inc. | ||||
United States
|
BOOZ ALLEN HAMILTON AND DESIGN |
76/314,788 18-Sep-2001 |
2653981 26-Nov-2002 |
Booz Allen Hamilton Inc. | ||||
United States
|
DELIVERING RESULTS THAT ENDURE |
76/471,010 20-Nov-2002 |
2808105 27-Jan-2004 |
Booz Allen Hamilton Inc. | ||||
United States
|
MISSION ENGINEERING | 78/148,501 29-Jul-2002 |
3107452 20-Jun-2006 |
Booz Allen Hamilton Inc. | ||||
United States
|
MISSION ENGINEERING | 78/975,774 29-Jul-2002 |
3137291 29-Aug-2006 |
Booz Allen Hamilton Inc. | ||||
United States
|
SERVER2CEO | 76/200,819 26-Jan-2001 |
2759564 02-Sep-2003 |
Booz Allen Hamilton Inc. | ||||
United States
|
SERVER2CIO | 76/200,354 26-Jan-2001 |
2759560 02-Sep-2003 |
Booz Allen Hamilton Inc. | ||||
United States
|
TARGET | 78/257,199 02-Jun-2003 |
3098804 30-May-2006 |
Booz Allen Hamilton Inc. |
Except for any agreements entered into in connection with or otherwise related to the Transaction
Documents, Grantor is not the licensor or franchisor of any Copyrights, Patents or Trademarks under
any material license or franchise agreement which is not in the ordinary course of Grantor’s
business.
DOMAIN NAME REGISTRATIONS
| Domain Name | Registration Date | Expiry Date | ||
boozallenhamilton.us
|
10-Aug-04 | 9-Aug-08 | ||
b2pcentral.com
|
26-Oct-01 | 26-Oct-09 | ||
bah.jobs
|
7-Mar-06 | 7-Mar-10 | ||
bid-facility.com
|
6-Nov-02 | 6-Nov-08 | ||
bidfacility.com
|
6-Nov-02 | 6-Nov-08 | ||
booz-allen.com
|
8-Jun-01 | 8-Jun-10 | ||
boozallen.biz
|
25-Apr-03 | 24-Apr-09 | ||
boozallen.jobs
|
7-Mar-06 | 6-Mar-10 | ||
boozallen.name
|
28-Jun-07 | 28-Jun-09 | ||
boozallen.net
|
25-Apr-03 | 25-Apr-13 | ||
boozallencampus.com
|
29-May-01 | 29-May-08 | ||
boozallencollege.com
|
8-May-01 | 8-May-08 | ||
boozallengraduate.com
|
29-May-01 | 29-May-08 | ||
boozallenhamilton.com
|
21-Aug-01 | 21-Aug-13 | ||
boozallenhamilton.net
|
25-Apr-03 | 25-Apr-09 | ||
boozallenintern.com
|
29-May-01 | 29-May-08 | ||
boozallenmba.com
|
29-May-01 | 29-May-08 | ||
boozallenuniversity.com
|
29-May-01 | 29-May-08 | ||
choose-prosperity.com
|
27-Nov-02 | 27-Nov-08 | ||
chooseprosperity.com
|
27-Nov-02 | 27-Nov-08 | ||
communications-network.net
|
6-Nov-98 | 5-Nov-09 | ||
mca-mk.com
|
27-Nov-02 | 27-Nov-08 | ||
neediestkids.com
|
26-Oct-01 | 26-Oct-08 | ||
neediestkids.org
|
26-Oct-01 | 26-Oct-08 | ||
onlineb2p.com
|
26-Oct-01 | 26-Oct-09 | ||
onlinep2b.com
|
26-Oct-01 | 26-Oct-09 |
| Domain Name | Registration Date | Expiry Date | ||
org-change.com
|
2-Jul-04 | 2-Jul-08 | ||
p2bonline.org
|
26-Oct-01 | 26-Oct-09 | ||
rip-bestpractices.com
|
15-May-02 | 15-May-08 | ||
youthsummit2002.com
|
28-Oct-02 | 28-Oct-09 | ||
youthsummit2002.org
|
4-Nov-02 | 4-Nov-09 | ||
boozealen.com
|
19-Dec-05 | 19-Dec-08 | ||
boozalen.com
|
19-Dec-05 | 19-Dec-08 | ||
mepicalendar.com
|
3-Jan-05 | 3-Jan-09 | ||
cartabah.com
|
10-Jan-00 | 10-Jan-09 | ||
cartabah.net
|
10-Jan-00 | 10-Jan-09 | ||
cartabah.org
|
10-Jan-00 | 10-Jan-09 | ||
see-rip.com
|
14-Feb-02 | 14-Feb-09 | ||
jmaat.com
|
10-Mar-04 | 10-Mar-09 | ||
archanalysis.com
|
10-Mar-04 | 10-Mar-09 | ||
mission-assurance.com
|
11-Mar-04 | 11-Mar-09 | ||
mission-assurance.net
|
11-Mar-04 | 11-Mar-09 | ||
customercentricorg.com
|
7-Apr-04 | 7-Apr-08 | ||
customerorg.com
|
7-Apr-04 | 7-Apr-08 | ||
customer-centric-org.com
|
7-Apr-04 | 7-Apr-08 | ||
customer-organization.com
|
7-Apr-04 | 7-Apr-08 | ||
boozallen.org
|
20-Apr-05 | 20-Apr-08 | ||
boozealan.com
|
26-Apr-05 | 26-Apr-08 | ||
ewargaming.com
|
12-May-05 | 12-May-08 | ||
ewargame.net
|
29-Jun-00 | 29-Jun-08 | ||
ewargame.org
|
29-Jun-00 | 29-Jun-08 | ||
ewargaming.net
|
29-Jun-00 | 29-Jun-08 | ||
ewargaming.org
|
29-Jun-00 | 29-Jun-08 |
| Domain Name | Registration Date | Expiry Date | ||
bizlawreform.com
|
16-Sep-04 | 16-Sep-08 | ||
dov-zakheim.com
|
19-Sep-06 | 19-Sep-08 | ||
dovzakheim.com
|
19-Sep-06 | 19-Sep-08 | ||
dovzakheim.net
|
19-Sep-06 | 19-Sep-08 | ||
ruralyouthtrans.com
|
23-Sep-03 | 23-Sep-08 | ||
orgtransform.com
|
24-Sep-04 | 24-Sep-08 | ||
transformation-agenda.com
|
26-Sep-04 | 26-Sep-08 | ||
booz-alan.com
|
17-Oct-05 | 17-Oct-08 | ||
booz-allan.com
|
17-Oct-05 | 17-Oct-08 | ||
boozalan.com
|
17-Oct-05 | 17-Oct-08 | ||
adco-oct.com
|
1-Nov-06 | 1-Nov-08 | ||
bah.biz
|
7-Nov-01 | 6-Nov-08 | ||
tcb-fastrade.com
|
17-Nov-03 | 17-Nov-08 | ||
boozeallen.com
|
21-Nov-01 | 21-Nov-08 | ||
boozallan.com
|
7-Dec-05 | 7-Dec-08 | ||
boozeallan.com
|
7-Dec-05 | 7-Dec-08 | ||
water-mendezengland.com
|
13-Dec-05 | 13-Dec-08 | ||
boozallensucks.com
|
21-Dec-03 | 21-Dec-08 | ||
boozallenhamiltoncostore.com
|
30-Mar-07 | 30-Mar-09 | ||
boozhamiltonallen.com
|
30-Mar-07 | 30-Mar-09 | ||
boozhamiltonallen.org
|
30-Mar-07 | 30-Mar-09 | ||
boosallenhamilton.com
|
2-Apr-07 | 2-Apr-09 | ||
boosallen.com
|
27-Apr-07 | 27-Apr-09 | ||
boozzallen.com
|
27-Apr-07 | 27-Apr-09 | ||
bossallenhamilton.com
|
27-Apr-07 | 27-Apr-09 | ||
bozzallenhamilton.com
|
27-Apr-07 | 27-Apr-09 | ||
strategy-defense.com
|
7-Jun-07 | 7-Jun-09 |
| Domain Name | Registration Date | Expiry Date | ||
strategy-defense.net
|
7-Jun-07 | 7-Jun-09 | ||
strategy-defense.org
|
7-Jun-07 | 7-Jun-09 | ||
boozallen-me.com
|
4-Sep-07 | 4-Sep-09 | ||
boozallenme.com
|
4-Sep-07 | 4-Sep-09 | ||
boozallen.us
|
2-May-02 | 1-May-10 | ||
megacommunities.com
|
11-Aug-06 | 11-Aug-13 | ||
megacommunities.net
|
11-Aug-06 | 11-Aug-13 | ||
megacommunities.org
|
11-Aug-06 | 11-Aug-13 | ||
boozallen.com
|
27-Sep-99 | 23-Sep-13 | ||
boozallenhamilton.org
|
28-Nov-06 | 28-Nov-14 | ||
bah.com
|
8-May-91 | 9-May-15 | ||
boozallenstrategypartners.com
|
21-Jan-08 | 21-Jan-09 | ||
bracplus.com
|
22-Jan-08 | 22-Jan-18 | ||
bracplus.net
|
22-Jan-08 | 22-Jan-18 | ||
bracplus.org
|
22-Jan-08 | 22-Jan-18 | ||
wwwboozallen.com
|
13-Sep-05 | 13-Sep-08 |
Schedule 5(a)
MATERIAL DEPOSIT ACCOUNTS
| Account Number/ | Name of | Bank Contact Name/ | ||||||
| Grantor | Type of Account | Bank | Address | Phone Number | ||||
Booz Allen Hamilton
Inc.
|
#2100010798572/Lockbox (Client Receipts) |
Wachovia | Wachovia Bank, NA 177 Clover Lane, Perkiomenville, PA 18074 |
Kelly A. Bushnell Phone: 215-646-7920 | ||||
Booz Allen Hamilton
Inc.
|
#808011359/Operating Account, Cash Concentration, ACH for T&E, ACH for Payroll, Wires for A/P, Borrowing and Investing | JP Morgan Chase | JPMorgan Chase Mail Code NY1-T015 1411 Broadway, 5th Floor New York, NY 10018 JPMorgan Funds 522 Fifth Avenue, 13th Floor New York, NY 10036 |
Scott M. O’Kula Phone: 212-391-7166 | ||||
Booz Allen Hamilton
Inc.
|
#630148635509/Cont. Disbursement (Accounts Payable Checks) | JP Morgan Chase | JPMorgan Chase Mail Code NY1-T015 1411 Broadway, 5th Floor New York, NY 10018 |
Scott M. O’Kula Phone: 212-391-7166 | ||||
| JPMorgan Funds 522 Fifth Avenue, 13th Floor New York, NY 10036 |
Schedule 5(b)
MATERIAL SECURITIES ACCOUNTS
| Account | ||||||||
| Number/ Type | Bank Contact Name/ | |||||||
| Grantor | of Fund | Name of Bank | Address | Phone Number | ||||
Booz Allen Hamilton
Inc.
|
0050009257/ Prime Money Market |
JP Morgan Chase | JPMorgan Chase Mail Code NY1-T015 1411 Broadway, 5th Floor New York, NY 10018 |
Scott M. O’Kula Phone: 212-391-7166 | ||||
| JPMorgan Funds 522 Fifth Avenue, 13th Floor New York, NY 10036 |
||||||||
Booz Allen Hamilton
Inc.
|
Customer ID: 274067/ Goldman Sachs Fund 462 |
Bank of America | Banc of America Securities, LLC 1633 Broadway — 28th Floor Mailstop: NY1-633-28-01 New York, NY 10019 | P. Michael Fannan Phone: 212-384-0700 | ||||
Booz Allen Hamilton
Inc.
|
1009337084/ Prime Cash Management Fund 494 |
Evergreen Investments (Wachovia) |
Wachovia (Evergreen): Evergreen Investment Services Money Market 190 River Road Summit, NJ 07901-1444 |
Jeff Lang Phone: 908-598-3869 |
Schedule 6
MATERIAL GOVERNMENT CONTRACTS
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
55 CONTRACTING SQUADRON
|
(IATAC) INFORMATION ASSURANCE TECHNOLOGY ANALYSIS CENTER |
09003-0480 | IAAP for Joint Comp DO 325 | 09003-0480/3250 | ||||
| IA INTEGRATION FOR NAT SEC AGE | 09003-0480/3200 | |||||||
| NETOPS/IA ANLYS FORT KNOX DOIM | 09003-0480/3330 | |||||||
| SATCOM TEL ENG INT MILS JTEO | 09003-0480/2750 | |||||||
| (AFNOC) & AF CYBER COMMAND | 09003-0480/3120 | |||||||
| AFMC AIT | 09003-0480/3100 | |||||||
| IA TECH & ANAL SPR DISA SYSTEM | 09003-0480/2860 | |||||||
| USJFCOM JTC-I DIRECT OF EXPERI | 09003-0480/2890 | |||||||
| ANALYTICAL/TECHNICAL SPRT IO | 09003-0480/2590 | |||||||
| COMM SEC FLEET (C2F)-MHQWMOC | 09003-0480/2920 | |||||||
| IA & NETOPS JOINT TF-GLOBAL NW | 09003-0480/3240 | |||||||
| AFRL & DHLS, OIC INF ASS TECP | 09003-0480/3130 | |||||||
| NETOPS/INF ASS SPRT DISA FIELD | 09003-0480/2870 | |||||||
| COMOPTEVFOR INFO IA&I ASSESSMS | 09003-0480/2760 | |||||||
| TSW NETWORK ENG,INT,ANALSPRT | 09003-0480/2880 | |||||||
| NORTHCOM IA AND THEATER | 09003-0480/2560 | |||||||
| DOD INF ASSUR CER&ACCRED IMPL | 09003-0480/2770 |
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
| IA E-AUTHENTICATION ID TO NIST | 09003-0480/2970 | |||||||
| JTF-GNO J6 | 09003-0480/3050 | |||||||
| AIR FORCE COM. ASC NETWORK IA | 09003-0480/3070 | |||||||
| IA TECH ANAL INTEGR AIR FOR C4 | 09003-0480/2850 | |||||||
| INFO ASUR TECH ANALY DEF INTE | 09003-0480/3180 | |||||||
| STRATCOM SPONSORED NETOPS | 09003-0480/2730 | |||||||
| ASD/NII GIG NET CENTRICITY SYS | 09003-0480/3000 | |||||||
| NAV UNDER WARF CENT DIV INF AS | 09003-0480/2900 | |||||||
| IA RESEARCH & ANALYSIS NATL IA | 09003-0480/3220 | |||||||
| 30TH SPACE WING & IA SUPPORT | 09003-0480/2650 | |||||||
| IA ANLYS & INTGRTION NSA/CSS | 09003-0480/3300 | |||||||
| TS NETWORK ENG,INTEG & ANAL SP | 09003-0480/2740 | |||||||
| AFSPC INFO ASSURNCE AREO INTE | 09003-0480/2950 | |||||||
| IA FOR NAVY MARITIME STRATEGY | 09003-0480/3020 | |||||||
| PMO SATCOM IA ANALY & TECH INT | 09003-0480/3150 | |||||||
| IA FOR US ALASKAN COMMAND | 09003-0480/3230 | |||||||
| DOD IDENT FRIEN OR FOE (IFF)CR | 09003-0480/2710 | |||||||
| IA FOR US FORECES KOREA | 09003-0480/3260 | |||||||
| DO 308 IA TECH ANAL AESS | 09003-0480/3080 | |||||||
| AIR FORCE COM AG IA TECH SUPRT | 09003-0480/2810 | |||||||
| NAVY WARFARE SUPP SEAPOWER 21 | 09003-0480/2980 | |||||||
| IA TRUSTED COMPU ANLYS RES DEV | 09003-0480/3280 | |||||||
| AF LAB INFO ASSURANCE INTEG. | 09003-0480/3030 | |||||||
| IA OPS INTEGRATION 67TH NWW | 09003-0480/3090 |
13
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
| ACC/SC TECHNICL/OPERATIONL SPT | 09003-0480/2520 | |||||||
| NETWARCOM ARCH&ENGINEER IA SPR | 09003-0480/2910 | |||||||
| DISA TECH ANLYS MOBILE & SECUR | 09003-0480/3190 | |||||||
| IA SUPPRT TO USSTRTCM JFCC-NW | 09003-0480/2930 | |||||||
| IA ANALY & INTERG INFO ASSURAN | 09003-0480/3160 | |||||||
| IA SECURITY SUPPORT TO GSA EIO | 09003-0480/2640 | |||||||
| COMPACFLT IA MANAGEMENT | 09003-0480/2600 | |||||||
| TIA AF SPACE COMMAND | 09003-0480/3060 | |||||||
| IA TECH ANALYTICAL AIR FORCE | 09003-0480/3040 | |||||||
| IA FOR USACE MANAGMENT SYSTEM | 09003-0480/3010 | |||||||
| IAA&I FOR DEF INF SYS SR LEADR | 09003-0480/3210 | |||||||
| LAB FOR PHY SCI IA RESEARCH | 09003-0480/3320 | |||||||
| IDENTITY VERIFICATION TO NIST | 09003-0480/2550 | |||||||
| SPAWAR SUPP FOR IRS DO 311 | 09003-0480/3110 | |||||||
| RECON SYST WING SIGN INT MAT C | 09003-0480/2800 | |||||||
| INFORMATION ASSURANCE TO JSSO | 09003-0480/2500 | |||||||
| (IATAC) INFORMATION ASSURANCE | 09003-0480/2940 | |||||||
| SP0700-98-D-4002- DO 327 | 09003-0480/3270 | |||||||
| INFO ASSUR TECH ANALY DEF INTE | 09003-0480/3170 | |||||||
| USJFCOM J86 INTER CAPAB SOL IN | 09003-0480/3140 | |||||||
| TECH ANALYT SPRT TO USPACOM IA | 09003-0480/2820 | |||||||
| IA TECH IN/IA FOR U.S DO 329 | 09003-0480/3290 | |||||||
| INF ASS TECH&ANAL SPRT 14 AFOR | 09003-0480/2840 |
14
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
| SUPRT TO JOINT STAFF,DEP DIR G | 09003-0480/2720 | |||||||
| IA NETOP SPR TO JS C(4) SD (J6 | 09003-0480/2690 | |||||||
| LABORAT FOR TELCOM SCIEN INFR | 09003-0480/2680 | |||||||
55 CONTRACTING SQUADRON
|
SURVIAC CONTRACT | 09003-0550 | SURVI/VULNER ANA (AWD) (ARCIC) | 09003-0550/2120 | ||||
| USARPAC’S CBRNE TRGN CONTINUUM | 09003-0550/0490 | |||||||
| INSCOM FORCE MNGMT,TR SPRT,ST | 09003-0550/1440 | |||||||
| ADAPTIVE PLANNING SYSTEM DEVLP | 09003-0550/1080 | |||||||
| NORAD-USNORTHCOM DO 236 | 09003-0550/2360 | |||||||
| FP/MAS/VTA FOR US NORTH COMMAN | 09003-0550/2030 | |||||||
| SUPRT TO AIR FORCE GEO INT PRO | 09003-0550/1290 | |||||||
| SURVIA/VULNER ANALYTIC SUPPORT | 09003-0550/2290 | |||||||
| DO 238 SURVIV/VULNE STRATE PLA | 09003-0550/2380 | |||||||
| SURV/VULNER TECH ANALY DO 231 | 09003-0550/2310 | |||||||
| AFCYBER DO 241 | 09003-0550/2410 | |||||||
| NAT PREP POL& IMPL SPRT TO DHS | 09003-0550/1530 | |||||||
| DO 202 SURVIAC TECHNICAL ANALY | 09003-0550/2020 | |||||||
| STRATEG PLAN/TECH EVOLU SUP | 09003-0550/2350 | |||||||
| AIR FORCE SPACE DO 219 | 09003-0550/2190 | |||||||
| SURVIV/VULNER ANALY ACC | 09003-0550/2140 | |||||||
| SURV & VULN AN IN SPR NEW TR D | 09003-0550/1770 | |||||||
| SMC DETACH 3 RES,DEV,TEST& EVA | 09003-0550/1640 | |||||||
| U.S AIR FORCE(DHS)MISSIO ASSUR | 09003-0550/2060 | |||||||
| DO 245 JLTV PROGRAM OFFICE | 09003-0550/2450 |
15
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
| INSCOM CI,CT,FP,MASINT& TR SPR | 09003-0550/1470 | |||||||
| IO & IA PLANNING TO USSTRATCOM | 09003-0550/1260 | |||||||
| STRATEGIC PLANNING SPRT USCC | 09003-0550/1230 | |||||||
| SCC WMD AND THE DTRA CENTER | 09003-0550/1990 | |||||||
| SURVIA/VOLNER PROTECT TECHNOLO | 09003-0550/2150 | |||||||
| USCENTCOM STR PL,ANAL& TECH SP | 09003-0550/1600 | |||||||
| USPACOM MA MANAG AND DEVELOPMT | 09003-0550/1850 | |||||||
| SVA OF ACC 480TH DCGS DO 234 | 09003-0550/2340 | |||||||
| AFRL/SNRE SURVIVABILITY ANALYS | 09003-0550/2080 | |||||||
| CITF SUPPORT DO 237 | 09003-0550/2370 | |||||||
| USSOUTHCOM STRAT PLAN,ANAL,TSP | 09003-0550/1430 | |||||||
| HOMELAN DEF FORCE PROTE DO 225 | 09003-0550/2250 | |||||||
| SVM & STIMU SUPP TO U.S STRATE | 09003-0550/2010 | |||||||
| AFRL DATABASE & ANALYSIS | 09003-0550/1970 | |||||||
| DO SURVIABILITY VUL(HIFLD)MISS | 09003-0550/2170 | |||||||
| ASC / XR SUPPORT | 09003-0550/1760 | |||||||
| DO 205 FH OPERAT/COMBAT TRAINI | 09003-0550/2050 | |||||||
| SEC ASSIS & SEC COOP OPER&ANAL | 09003-0550/1860 | |||||||
| DO 216 SURV/VUL ANALY (OASDRA) | 09003-0550/2160 | |||||||
| AIR FORCE(AFRL/SNRT) DO 233 | 09003-0550/2330 | |||||||
| DO 220 (COMPACFLT) ASSESSMENT | 09003-0550/2200 | |||||||
| REQ DEVEL,ANALYS & ACQUIS MIL | 09003-0550/1360 |
16
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
| AFRL SP SYS THREAT ASS&TECH EV | 09003-0550/1720 | |||||||
| SUPPRT US STRT COMMND PLANNING | 09003-0550/1910 | |||||||
| MARITIME-HOMEL SEC/DEF MIS DEV | 09003-0550/1450 | |||||||
| COMPACFLT MISSION ASSURANCE | 09003-0550/0980 | |||||||
| SURV, VULN & INF AN SPR USSTRA | 09003-0550/1780 | |||||||
| THEAT SP OPER COM OP & TR SPRT | 09003-0550/1830 | |||||||
| NAT PREP POL& PL SPRT FOR DHS | 09003-0550/1510 | |||||||
| TANK/ARMAMENT RESEARCH DEV/ENG | 09003-0550/2100 | |||||||
| US AIRFORCE&MIS SYS CENT RDT&E | 09003-0550/1880 | |||||||
| USJFCOM JO2M FOR DEV JOINT FOR | 09003-0550/1790 | |||||||
| MISSION ASSURAN SURV DO 242 | 09003-0550/2420 | |||||||
| RESEAR AND ANAL SPRT USSOCOM C | 09003-0550/1500 | |||||||
| CFFC SURVIAC TAT | 09003-0550/0620 | |||||||
| SDDC TRANSPORTATION DO 223 | 09003-0550/2230 | |||||||
| DO 248 SURV ASSESSM.FOR TARDEC | 09003-0550/2480 | |||||||
| CH-BIOL DEF SPR SER FOR ECBC | 09003-0550/1690 | |||||||
| HQ AMC TEST/EVALUA PLAN DO 226 | 09003-0550/2260 | |||||||
| NEXT GEN LONG RANGE STR PR SPT | 09003-0550/1560 | |||||||
| MARITIME SPRT TO USNORTHCOM | 09003-0550/1350 | |||||||
| NAVSP MISSION ASSURANCE SURVIV | 09003-0550/1920 | |||||||
| USMC MISSION ASSUR PROGS SPPRT | 09003-0550/1490 | |||||||
| USFK TRANSFORM/AIR FORCE DEVEL | 09003-0550/2400 | |||||||
| NATL AGENCY SUPPORT TO HLD/CS | 09003-0550/0930 |
17
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
| ACTD/JCTD OPERAT & ANALYS SPRT | 09003-0550/1840 | |||||||
| USARPAC HLD MANAGEMENT/DEVELOP | 09003-0550/1250 | |||||||
| HQ AMC PLANNING REQ,& ANALYSIS | 09003-0550/2220 | |||||||
| SURV & VUL INT ENT SPR USCG IP | 09003-0550/1800 | |||||||
| HQ AMC TEST/PLANNING DO 224 | 09003-0550/2240 | |||||||
| U.S.COAST GUAR STR RESP ACT AN | 09003-0550/1740 | |||||||
| DO 244 TECH/ANAL SUPRT OUSD | 09003-0550/2440 | |||||||
| AFRL SUPPORT | 09003-0550/1160 | |||||||
| US ARMY GEOSPATIAL INFORMATION | 09003-0550/1030 | |||||||
| SURIVA/VULNER PROTECTIO DO 230 | 09003-0550/2300 | |||||||
55 CONTRACTING SQUADRON
|
USSTRATCOM | 27100-0228 | 4001/LAB: JTF-GNO OPT TO EXTEN | 27100-0228/1160 | ||||
AIRFORCE, DEPARTMENT OF
|
VIRTUAL COMBAT ENVIRONMENT OF | 09006-0969 | CLIN 1 — EWBM | 09006-0969/0010 | ||||
CONTRACTING CTR OF EXCELLENCE |
IT CONTRACT ANGELA MESSER | 26305-6500 | ARMY U PROG MGMT & ACQ SUPP Y2 | 26305-6500/2110 | ||||
D. OF THE AIR FORCE HQ
OSSG/KA
|
NETCENTS | 09006-0947 | ISSA RAPID PROTO INTEGRATOR | 09006-0947/0950 | ||||
| RFP 2436/ITEM NO.100401/LABOR | 09006-0947/3008 | |||||||
| BY:LBR/MU62 0004/USMC INFO ASU | 09006-0947/2500 | |||||||
| BY:LBR CLN 0002/VC18 RFP 4285 | 09006-0947/2600 | |||||||
| BY:LABOR/MU61 USMC PKI- 0004 | 09006-0947/2301 | |||||||
| 4004 DEV.& SUS. AFDS LAB OPT4 | 09006-0947/8044 | |||||||
| NETCENTS RFQ# 15680/RS59 | 09006-0947/9450 |
18
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
DCMA VIRGINIA S2404A
|
(SMARTS) SUPPORT TO MANAGEMENT AND RESOURCES FOR TECHNICAL SERVICES |
09003-0599 | SMARTS T.O. 20 OY1-LABOR | 09003-0599/1200 | ||||
| SMARTS T.O. 38 LABOR & ODCS | 09003-0599/0380 | |||||||
| SMARTS T.O. 41 | 09003-0599/0410 | |||||||
| SMARTS T.O. 25 OY1 LABOR | 09003-0599/1250 | |||||||
| SMARTS T.O. 16- OY1 -LABOR | 09003-0599/1160 | |||||||
| SMARTS T.O. 23 OY1 LABOR | 09003-0599/1230 | |||||||
DEFENSE CONTRACTING COMMAND WA |
HR SOLUTIONS | 28998-0101 | OP 1 US ARMY MANAGEMENT COMMND | 28998-0101/1150 | ||||
| IMA HEADQUARTERS LABOR OY2 | 28998-0101/2130 | |||||||
DEFENSE FINANCE & ACCTING SVCS |
US ARMY-RSLF PROJECT SWORD | 09004-0241 | CLIN 0030 LOCAL PURCHASE | 09004-0241/3001 | ||||
DEFENSE FINANCE AND SC1016 |
IR&D SMES | 09003-0604 | IR&D SMES PERIOD 2 CLIN 0201 | 09003-0604/0201 | ||||
| IR&D SMES SR FUTURE WORK | 09003-0604/0203 | |||||||
DEFENSE SUPPLY SERV.
WASH.DSSW
|
OSD INDUST.AFFAIRS REACH BACK | 27100-1600 | AF/XPX STRATEGIC PLANNING OPT3 | 27100-1600/3050 | ||||
DEPT OF HEALTH & HUMAN SVCS |
CIO-SP2 (S PENFIELD — T&M) FORMERLY KNOWN AS CIO-SP2263-01-D-0072 | 27398-0031 | OIT-CBER S/W DVLPMNT&MAIN/LABR | 27398-0031/2900 | ||||
| HHSF223200750421W: ORADSS ENT. | 27398-0031/2700 | |||||||
DEPT OF HOMELAND SECURITY |
DHS SCIENCE & TECHNOLOGY SETA SUPPORT |
27100-2642 | 0001/LABOR: MANAGEMENT & ADMIN | 27100-2642/0240 | ||||
| 0001/LABOR: CHEM BIO DIVISION | 27100-2642/0210 | |||||||
| 0001/LABOR: DIR OF TRANSITION | 27100-2642/0310 | |||||||
| 0001/LABOR: COMMAND CONTROL | 27100-2642/0220 |
19
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
DFAS COLUMBUS CENTER
|
ASSURED TRANSITION AND TRANSFORMATION PROTOTYPE SYS TECHNOLOGIES |
28047-0001 | CLIN 0003/OY1:ASSURED TRANSITI | 28047-0001/1001 | ||||
DFAS-BVF/OM
|
MERLIN | 09003-0597 | CLIN 2001 | 09003-0597/2001 | ||||
DFAS-COLUMBUS CENTER
|
TANGRAM PROGRAM SUPPT | 09006-0958 | TANGRAM PROGRAM SUPPT | 09006-0958/0010 | ||||
DIRECTOR OF NATIONAL INTELLIGE |
ODNI CASES SA1IDIQ | 29792-0003 | SA1 TO 11 — IARPA | 29792-0003/0110 | ||||
| SA1 TO 12 TRANSF INTEGR & METH | 29792-0003/0120 | |||||||
| CASES SA1- TASK 13- ADNI & CFO | 29792-0003/0130 | |||||||
FA2517 — 21 CONS/LGCCB
|
NORAD-NORTHCOM ADVISORY AND ASSISTANCE SERVICES (N2A2S) |
09006-0957 | DO 0004: J34 SUPPORT — LABOR | 09006-0957/1040 | ||||
FEDERAL BUREAU OF INVESTIGATIO |
MOBIS | 29470-4400 | NATIONAL NAME CHECK PRT II | 29470-4400/0050 | ||||
FEDERAL DEPOSIT INSURANCE CORP |
FDIC ITAS/OPEN BANK- APPL MAINTENANCE AND INTERNET PROGRAM SERVICES |
29202-0200 | FDIC OB-LAB BY CORHQ0000000679 | 29202-0200/0100 | ||||
FEDSIM CONTRACTING CENTER |
FEDSIM ANSWERS — MUZIK | 26296-5626 | CB577001T3 AFSAS LABOR OPT YR1 | 26296-5626/1015 | ||||
GENERAL SERVICES ADMINISTRATIO |
IT IDIQ | 26305-3000 | OPY-3 DEPT OF ARMY | 26305-3000/3450 | ||||
GENERAL SERVICES ADMINISTRATIO |
PTTF ARMY G-1: CONSOLIDATED IT SERVICES |
26349-0006 | CLIN 0001/LABOR PTTF ARMY G-1 | 26349-0006/1000 | ||||
| CLIN 0003 LABOR (TASK 7) PTTF | 26349-0006/3000 | |||||||
GENERAL SERVICES ADMINISTRATIO |
PES CONTRACT — C. KELLY | 27100-3300 | SECURITY MGMT DIVISION SUPPORT | 27100-3300/0030 | ||||
GENERAL SERVICES ADMINISTRATIO |
IT SCHEDULE — PORTMAN | 28950-2700 | SUB LABOR-CABIG PROG MGMT OFFI | 28950-2700/0054 | ||||
| BAH LABOR-CABIG PROG MGMT OFFI | 28950-2700/0050 |
20
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
GENERAL SERVICES ADMINISTRATION |
IT IDIQ | 28950-1400 | 0001AB-LABOR:INFO SYS DVL TEC | 28950-1400/0070 | ||||
GSA/FEDERAL SYS OMTEGRATOPM & |
DISA ADNET | 26349-0002 | CLIN 0005 ADNET TRAVEL | 26349-0002/5000 | ||||
| CLIN 0001E ADNET LABOR | 26349-0002/1600 | |||||||
| CLIN 0004 ADNET ODCS | 26349-0002/4000 | |||||||
| CLIN 0003 ADNET TOOLS | 26349-0002/3000 | |||||||
| CLIN 0003A NON-DOD TOOLS | 26349-0002/3100 | |||||||
GSA/FEDERAL SYS OMTEGRATOPM & |
FEDSIM — AAUSN/OPTICONSOLIDATED IT SERVICES | 26349-0005 | 0002/LABOR:CONSOLIDATED IT SE | 26349-0005/2000 | ||||
| 0003/TOOLS: CONSOLIDATED IT SE | 26349-0005/3000 | |||||||
GSA/FSS
|
NSF- FABS | 27509-1700 | BY-OY2: LBR/TRAVEL/ODCS | 27509-1700/0010 | ||||
INTERNAL REVENUE SERVICE
|
TIPSS III IRS | 29403-0800 | OP1: TO 40/EFDS | 29403-0800/4001 | ||||
| OP1: TO 39 | 29403-0800/3901 | |||||||
MARYLAND PROCUREMENT OFFICE |
E-SPACE | 09003-0564 | E-SPACE CLIN 001 ARCHITECTURE | 09003-0564/1000 | ||||
| E-SPACE CLIN 003 SPANNING | 09003-0564/3000 | |||||||
MARYLAND PROCUREMENT OFFICE |
CONTROL NETWORKS | 09003-0573 | FY08 TTO 4001 | 09003-0573/4001 | ||||
MARYLAND PROCUREMENT OFFICE |
VENUS AFFECT | 09003-0582 | TTO: VA-2008-01 | 09003-0582/4010 | ||||
MARYLAND PROCUREMENT OFFICE |
CES CPC MIRRORCRYPTANALYSIS AND EXPLOITATIONSERVICES CONSOLIDATEDPERFORMANCE |
09003-0614 | CES MIRROR TTO 1060 | 09003-0614/1060 | ||||
| 09003-0614 | CES MIRROR TTO 1028 | 09003-0614/1028 | ||||||
MARYLAND PROCUREMENT OFFICE |
JOURNEYMAN | 09003-0616 | JOURNEYMAN | 09003-0616/0001 |
21
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
MOBIS BPA1
|
DFAS BRAC BPA — MOBIS SCHEDULE BPA # HQ0423-06-A-0011FIRST CALL ORDER UNDER29470-0080 | 29770-0101 | 0001-FY08 BAH TRNSFRMTN LABOR | 29770-0101/0220 | ||||
MRH SPECIAL PROJECTS
|
MRH SPECIAL PROJECTS | 29213-0001 | G-R&D | 29213-0001/7010 | ||||
MRH SPECIAL PROJECTS
|
SATURN | 29213-0002 | SATURN DO#5 | 29213-0002/0005 | ||||
NASA AMES RESEARCH CENTER |
ARC ASRS | 29040-0001 | CONTRACT | 29040-0001/0002 | ||||
NATIONAL RECONNAISSANCE OFFICE |
CHIEF INFORMATION OFFICER(CIO) | 28477-0007 | CLIN 0002AA — NON-CAAS LABOR | 28477-0007/0002 | ||||
| CLIN 0001AA — CAAS LABOR | 28477-0007/0001 | |||||||
NATIONAL RECONNAISSANCE OFFICE |
NRO-SCEPTER | 28477-0009 | NON CAAS LABOR-CLIN 0003AA | 28477-0009/0030 | ||||
| SCEPTER-CAAS LABOR-CLIN 0001AA | 28477-0009/0010 | |||||||
NATIONAL RECONNAISSANCE OFFICE |
TSR II — FASTMAX II | 30003-0002 | 0009AC: NRP NON-CAAS LAB OY4 | 30003-0002/4003 | ||||
NAVAL AIR WAR CTR AD N00421 |
NAWCAD — IDS | 09005-1246 | CLIN 0201 OPT YR 2 LABOR | 09005-1246/0201 | ||||
NAVAL AIR WARFARE CENTER/AD2 |
NAWCAD — ISIB | 09005-1178 | CLIN 0601 LABOR | 09005-1178/0601 | ||||
NAVSEA INDIAN HEAD
|
SETA SUPPORT — DARPA SPO | 09005-1218 | 0005:OPT YR2 SETA SUPPT-LABOR | 09005-1218/2010 | ||||
| 0003-OPT YR1 SETA SUPT — LABOR | 09005-1218/1010 | |||||||
NIH
|
MANAGEMENT SUPPORT CENTERCTSA | 00921-0001 | NCRR TECH SUPPORT CTSA ACTIVIT | 00921-0001/0010 |
| 1 | Task expires September 30, 2008. | |
| 2 | Contract expires August 31, 2008. |
22
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
| INFORMATICS PILOT PROJECTS | 00921-0001/0014 | |||||||
NRCC GENERAL SUPPORT DIVISION |
U.S. ARMY INSTALLATION MGMTCOMMAND (IMCOM) IDIQ | 09004-0440 | TO #3: PMO CONUS | 09004-0440/0030 | ||||
| TO #5: KOREA SUPPORT SERVICES | 09004-0440/1510 | |||||||
| TO #7 HQ PLANS DIVSION SUP SRV | 09004-0440/0110 | |||||||
| TO #6: EUROPE SUPPORT SERVICES | 09004-0440/1610 | |||||||
NRCC MISSION DIVISION
|
UNIFIED QUEST | 29025-0002 | CLIN 2001: OPT2 PHASE I & II | 29025-0002/2010 | ||||
SEAPORT-E NAVE
|
N0024-07-R-3417 M P E&TNAVY-N16 | 29750-0600 | CLIN 1000 MP E&T SUPPORT LABOR | 29750-0600/0010 | ||||
SEAPORT-E NAVY
|
SEAPORT-E NSWC: KARP | 29750-0401 | DO FC01: ACQUISITION CONTRACT | 29750-0401/1101 | ||||
SPACE & MISSLE SYSTEMS CENTER |
SPACE & MISSILE SYSTEMS CENTER | 26305-3766 | FA8802-04-F-7044 | 26305-3766/4010 | ||||
SPAWAR HQ
|
PMW 760 PROGRAM MANAGEMENT AND SYSTEMS ENGINEERING |
29290-1006 | DO NS06: CJR | 29290-1006/1001 | ||||
SPAWAR HQ
|
PMW-150 PROGRAM MANAGEMENT | 29290-1009 | DO NS09: OMN 5.1 LABOR OPT YR1 | 29290-1009/1001 | ||||
SPAWAR HQ
|
PEO SPACE SYSTEMS & PMW-146PROGRAM MANAGEMENT SUPPORT SERVICES | 29290-1012 | DO NS12: PEO SPACE SYSTEMS | 29290-1012/1001 | ||||
SPAWAR HQ
|
PMW 790 PROGRAM MANAGEMENT | 29290-1016 | DO NS16: PMW 790 PROGRAM MGMT | 29290-1016/1002 | ||||
SPAWAR HQ
|
JTRS PROGRAM MANAGEMENT AND SYSTEMS ENGINEERING SUPPORT |
29290-1018 | DO NS18: JTRS PROGRAM MGMT YR1 | 29290-1018/1008 | ||||
| DO NS18: JTRS PROGRAM MGMT YR1 | 29290-1018/1006 | |||||||
SPAWAR HQ
|
PMW 170 PROGRAM MANAGEMENT,COST MODELING, CONTRACT MGMT,AND ACQUISITION SUPPORT |
29290-1022 | DO NS22: PMW 170 PROGRAM MGMT | 29290-1022/0004 | ||||
| DO NS22: PMW 170 PROGRAM MGMT | 29290-1022/0001 | |||||||
SPAWAR HQ
|
SPAWAR EXECUTIVE LEVEL SUPPORTTASK | 29290-1024 | DO NS24: SPAWAR EXECUTIVE LVL | 29290-1024/0001 |
23
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
SPAWAR HQ
|
PMW 160 INFORMATION ASSURANCE(IA) TECHNICAL AND MANAGEMENTSUPPORT SERVICES |
29290-2021 | DO NS21: PMW 160IA TECH & MGMT | 29290-2021/0101 | ||||
| DO NS21: PMW 160IA TECH & MGMT | 29290-2021/0201 | |||||||
TRAINING SCHED 69
|
FACULTY AUGM-JMITC | 29700-0400 | FACULTY AUGM-JMITC LABOR OY 1 | 29700-0400/1010 | ||||
U.S.DEPARTMENT OF THE
INTERIOR
|
DARPA MTO SETA & ADMIN SERV | 09005-0147 | OPT 3 LABOR: DARPA MTO SUPPORT | 09005-0147/3011 | ||||
U.S.DEPARTMENT OF THE
INTERIOR
|
DARPA DSO SETA & ADMIN SERV | 09005-1187 | SETA & ADMIN SUPPORT OPT 3 | 09005-1187/0080 | ||||
| DSRC SUPPORT OPTION 3 | 09005-1187/0070 | |||||||
UNITED STATES POSTAL SERVICE3 |
HSPD-12 PMO SPPRT | 09008-0099 | OY-1 HSPD 12 PMO SUPPORT | 09008-0099/1010 | ||||
US ARMY — ARMY MISSILE
COMMAND
|
ITES-2S | 09004-0429 | ARMY DIMHRS SUPPORT | 09004-0429/0053 | ||||
US ARMY — CECOM
|
ETOSS | 09004-0405 | HOTAIR | 09004-0405/1701 | ||||
| ETOSS DO 19 LABOR | 09004-0405/1901 | |||||||
| INFORMATION OP EFFORTS 0001 | 09004-0405/1301 | |||||||
| HIDICE PROOF OF CONCPT PRTO EN | 09004-0405/1501 | |||||||
| SUPT TO INFO & NETWK OP DIVISN | 09004-0405/1101 | |||||||
| INO DIVISION OFFENSIVE INFO OP | 09004-0405/1001 | |||||||
| FUSION SIL ITEM 0001 DO 09 | 09004-0405/0901 | |||||||
| DO 18-HF DATA COLLECTION | 09004-0405/1801 | |||||||
| SUPPORT TO INO DIVISION, SP PR | 09004-0405/0501 | |||||||
US ARMY — CECOM
|
S3 | 09004-0408 | CREW SYSTEM SUPPORT | 09004-0408/0901 |
| 3 | Contract expires September 30, 2008. |
24
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
| SYSTEK PM DCATS SUPPORT | 09004-0408/0102 | |||||||
| S3 DO 0013 DCGS-A/FTSMB | 09004-0408/1301 | |||||||
| DO 9 CREW TRADOC SUPPORT | 09004-0408/0902 | |||||||
| WIN-T PROGRAM | 09004-0408/0401 | |||||||
| PM BATTLE COMMAND | 09004-0408/0601 | |||||||
| SATELLITE COMM SYSTEM & TEST | 09004-0408/0501 | |||||||
| DO 0010 — SIL SUPPORT | 09004-0408/1001 | |||||||
| PM SPOT | 09004-0408/0801 | |||||||
| BATTLE COMMAND SURR.SVC.(BCSS) | 09004-0408/0202 | |||||||
| DO 0011 — PFED SUPPORT | 09004-0408/1101 | |||||||
US ARMY RDECOM ACQUISITION |
JIEDDO FACILITY SUPPORT | 09003-0607 | JIEDDO 0002 | 09003-0607/0011 | ||||
| PSTB 0004 | 09003-0607/0012 | |||||||
US ARMY RDECOM ACQUISITION CTR |
TECHNICAL SUPPORT FOR SCO DEPARTMENT OF THE ARMY |
09004-0400 | 0001:PSTB | 09004-0400/0031 | ||||
US ARMY ROBERT MORRIS ACQ CTR |
SYSTEMS ENGINEERING, TECHNICAL& MGMT SUPPORT — US ARMY LAB IDIQ PRIME CONTRACT | 09004-0393 | JFCOM AND CONTROL DEVELOPMENT | 09004-0393/0340 | ||||
| INFORMATION ASSURANCE TO 0004 | 09004-0393/0040 | |||||||
| OSD SPECIAL PROJECTS | 09004-0393/0170 | |||||||
US NAVY — SPAWAR
|
RSNF C3 UPGRADE PROGRAM | 09005-1201 | CN 4001 OPT YR 4 RSNF C41 LBR | 09005-1201/4001 | ||||
USA MED RESEARCH ACQ ACTIVITY4 |
DMLSS — JOINT ENTERPRISE WIDE LOGISTICS SUPPORT LOGWORLD | 27707-0010 | 0004AA/LABOR: OPT 1-2MON EXT | 27707-0010/2210 | ||||
| 0003AF/LABOR: OPTION PERIOD | 27707-0010/2209 |
| 4 | Tasks expire September 30, 2008. |
25
| Order/Material CLIN | ||||||||
| Client | Contract Title | Contract Number | Order/Material CLIN Title | Number | ||||
| SUB FUNDING: XOTECH | 27707-0010/0033 | |||||||
USAF — ROME LAB
|
PRDA: EMERGING TECHNOLOGIESFOR IMPROVED SITUATIONALAWARENESS |
09006-0968 | 0001:SOFTWARE/HARDWARE | 09006-0968/0010 | ||||
USAF/AIR FORCE MATERIAL
CMD
|
TRAC2ES DEVELOPMENT | 09006-0339 | DO 34: TRAC2ES (CLS) | 09006-0339/0034 | ||||
USAID5
|
SEGIR 4 | 09001-0189 | TRADE FACILITATION | 09001-0189/5000 | ||||
USAID
|
GBTI II | 09001-0488 | GROWTH OPPORTUNITIES(GO)SERBIA | 09001-0488/0010 | ||||
USAID
|
GBTI II | 09001-0488 | GO SERBIA ODCS/TRAVEL | 09001-0488/0015 | ||||
USAID, M/FM/CMP
|
CLIR TECH ASST SERVICES | 09001-0478 | BIZCLIR | 09001-0478/0040 | ||||
| SCORSA | 09001-0478/0010 | |||||||
| BNKRPTCY & ENFRCMNT STRENGTH. | 09001-0478/0020 | |||||||
| UKRAINE TIBA | 09001-0478/0050 | |||||||
VIRGINIA CONTRACTING ACTIVITY |
IT SCHEDULE — GS-35F-0306JOIC LENTZ | 28950-1300 | JRIP-SETA — OY 1 — LABOR | 28950-1300/1030 |
| 5 | Task expires September 30, 2008. |
26
Annex I
to
Guarantee and Collateral Agreement
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of , 200_, made by
(the “Additional Grantor”), in favor of Credit Suisse, as
collateral agent (in such capacity, the “Collateral Agent”) for the banks and other
financial institutions or entities (the “Lenders”) parties to the Credit Agreement referred
to below. All capitalized terms not defined herein shall have the meaning ascribed to them in such
Credit Agreement.
W I T N E S S E T H:
WHEREAS, Explorer Investor Corporation, a Delaware corporation (“Holdings”), Explorer
Merger Sub Corporation, a Delaware corporation (the “Initial Borrower”), Booz Allen
Hamilton Inc., a Delaware corporation into which the Initial Borrower shall be merged (“Booz
Allen” or the “Surviving Borrower”), the several banks and other financial institutions
or entities from time to time parties to the Credit Agreement (the “Lenders”), Credit
Suisse, as Collateral Agent (in such capacity, the “Collateral Agent”) and Administrative
Agent, Bank of America, N.A., as Syndication Agent, Lehman Brothers Commercial Bank, C.I.T. Leasing
Corporation and Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit Suisse, as
Issuing Lender and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Lehman
Brothers Inc. and Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers and Joint
Bookrunners have entered into that certain Credit Agreement, dated as of July 31, 2008 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”);
WHEREAS, in connection with the Credit Agreement, the Borrower (as such term is defined in the
Guarantee and Collateral Agreement) and certain of its Affiliates (other than the Additional
Grantor) have entered into the Guarantee and Collateral Agreement, dated as of July 31, 2008 (as
amended, supplemented or otherwise modified from time to time, the “Guarantee and Collateral
Agreement”) in favor of the Collateral Agent for the benefit of the Administrative Agent, the
Collateral Agent and the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor to become a party to the
Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this Assumption Agreement in
order to become a party to the Guarantee and Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering this Assumption
Agreement, the Additional Grantor, as provided in Section 8.14 of the Guarantee and Collateral
Agreement, hereby becomes a party to the Guarantee and Collateral Agreement as a Guarantor and a
Grantor thereunder with the same force and effect as if originally named therein as a Guarantor and
a Grantor and, without limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Guarantor and a Grantor thereunder. The information set forth in
Annex 1-A hereto is hereby added to the information set forth in the Schedules to the Guarantee and
Collateral Agreement. The Additional Grantor hereby represents and warrants, to the extent
applicable, that each of the representations and warranties contained in Section 4 of the Guarantee
and Collateral Agreement is true and correct on and as of the date hereof (after giving effect to
this Assumption Agreement) as if made on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS TO THE
EXTENT THAT THE SAME ARE NOT MANDATORILY APPLICABLE BY STATUTE AND THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed
and delivered as of the date first above written.
| [ADDITIONAL GRANTOR], as Grantor and Guarantor |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
2
Annex I-A to
Assumption Agreement
Assumption Agreement
Supplement to Schedule 1
Supplement to Schedule 2
Supplement to Schedule 3
Supplement to Schedule 4
Supplement to Schedule 5(a)
Supplement to Schedule 5(b)
Supplement to Schedule 6
Annex II to
Guarantee and Collateral Agreement
ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Guarantee and Collateral
Agreement dated as of July 31, 2008 (the “Agreement”), made by the Grantors parties thereto
for the benefit of Credit Suisse, as Collateral Agent. The undersigned agrees for the benefit of
the Administrative Agent, the Collateral Agent and the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement and will comply with such terms
insofar as such terms are applicable to the undersigned.
2. The terms of Sections 6.3(c) and 6.8 of the Agreement shall apply to it, mutatis
mutandis, with respect to all actions that may be required of it pursuant to Section 6.4(c)
or 6.9 of the Agreement.
| [NAME OF ISSUER] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Address for Notices: | ||||
| Fax: | ||||
Exhibit 10.1
EXECUTION VERSION
$810,000,000
CREDIT AGREEMENT
among
EXPLORER INVESTOR CORPORATION
EXPLORER MERGER SUB CORPORATION
as the Initial Borrower,
as the Initial Borrower,
BOOZ ALLEN HAMILTON INC.
as the Surviving Borrower
as the Surviving Borrower
The Several Lenders from Time to Time Parties Hereto,
CREDIT SUISSE,
as Administrative Agent and Collateral Agent,
as Administrative Agent and Collateral Agent,
BANK OF AMERICA, N.A.
as Syndication Agent,
LEHMAN BROTHERS COMMERCIAL BANK,
C.I.T. LEASING CORPORATION,
and
SUMITOMO MITSUI BANKING CORPORATION,
as Documentation Agents,
as Documentation Agents,
CREDIT SUISSE,
as Issuing Lender
as Issuing Lender
and
BANC OF AMERICA SECURITIES LLC,
CREDIT SUISSE SECURITIES (USA) LLC,
LEHMAN BROTHERS INC.
and
SUMITOMO MITSUI BANKING CORPORATION
as Joint Lead Arrangers and Joint Bookrunners
as Joint Lead Arrangers and Joint Bookrunners
Dated as of July 31, 2008
TABLE OF CONTENTS
| Page | ||||
SECTION 1. DEFINITIONS |
1 | |||
1.1 Defined Terms |
1 | |||
1.2 Other Definitional Provisions |
37 | |||
1.3 Pro Forma Calculations |
37 | |||
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS |
38 | |||
2.1 Term Commitments |
38 | |||
2.2 Procedure for Term Loan Borrowing |
38 | |||
2.3 Repayment of Term Loans |
38 | |||
2.4 Revolving Commitments |
39 | |||
2.5 Procedure for Revolving Loan Borrowing |
39 | |||
2.6 Swingline Commitment |
40 | |||
2.7 Procedure for Swingline Borrowing; Refunding of Swingline Loans |
40 | |||
2.8 Repayment of Loans |
42 | |||
2.9 Commitment Fees, etc. |
42 | |||
2.10 Termination or Reduction of Revolving Commitments |
43 | |||
2.11 Optional Prepayments |
43 | |||
2.12 Mandatory Prepayments |
44 | |||
2.13 Conversion and Continuation Options |
46 | |||
2.14 Minimum Amounts and Maximum Number of Eurocurrency Tranches |
46 | |||
2.15 Interest Rates and Payment Dates |
47 | |||
2.16 Computation of Interest and Fees |
47 | |||
2.17 Inability to Determine Interest Rate |
48 | |||
2.18 Pro Rata Treatment and Payments |
48 | |||
2.19 Requirements of Law |
50 | |||
2.20 Taxes |
51 | |||
2.21 Indemnity |
53 | |||
2.22 Illegality |
53 | |||
2.23 Change of Lending Office |
54 | |||
2.24 Replacement of Lenders |
54 | |||
2.25 Incremental Loans |
54 | |||
SECTION 3. LETTERS OF CREDIT |
56 | |||
3.1 L/C Commitment |
56 | |||
3.2 Procedure for Issuance of Letter of Credit |
56 | |||
3.3 Fees and Other Charges |
57 | |||
3.4 L/C Participations |
57 | |||
3.5 Reimbursement Obligation of the Borrower |
58 | |||
3.6 Obligations Absolute |
58 | |||
3.7 Letter of Credit Payments |
59 | |||
3.8 Applications |
59 | |||
i
| Page | ||||
SECTION 4. REPRESENTATIONS AND WARRANTIES |
59 | |||
4.1 Financial Condition |
59 | |||
4.2 No Change |
60 | |||
4.3 Existence; Compliance with Law |
60 | |||
4.4 Corporate Power; Authorization; Enforceable Obligations |
60 | |||
4.5 No Legal Bar |
61 | |||
4.6 No Material Litigation |
61 | |||
4.7 No Default |
61 | |||
4.8 Ownership of Property; Liens |
61 | |||
4.9 Intellectual Property |
61 | |||
4.10 Taxes |
62 | |||
4.11 Federal Regulations |
62 | |||
4.12 ERISA |
62 | |||
4.13 Investment Company Act |
63 | |||
4.14 Subsidiaries |
63 | |||
4.15 Environmental Matters |
63 | |||
4.16 Accuracy of Information, etc. |
63 | |||
4.17 Security Documents |
63 | |||
4.18 Solvency |
64 | |||
SECTION 5. CONDITIONS PRECEDENT |
64 | |||
5.1 Conditions to Initial Extension of Credit |
64 | |||
5.2 Conditions to Each Revolving Loan Extension of Credit After Closing Date |
66 | |||
SECTION 6. AFFIRMATIVE COVENANTS |
67 | |||
6.1 Financial Statements |
67 | |||
6.2 Certificates; Other Information |
68 | |||
6.3 Payment of Taxes |
69 | |||
6.4 Conduct of Business and Maintenance of Existence, etc.; Compliance |
69 | |||
6.5 Maintenance of Property; Insurance |
69 | |||
6.6 Inspection of Property; Books and Records; Discussions |
70 | |||
6.7 Notices |
70 | |||
6.8 Additional Collateral, etc. |
71 | |||
6.9 Use of Proceeds |
74 | |||
6.10 Post-Closing Undertakings |
74 | |||
SECTION 7. NEGATIVE COVENANTS |
74 | |||
7.1 Financial Covenants |
74 | |||
7.2 Indebtedness |
75 | |||
7.3 Liens |
79 | |||
7.4 Fundamental Changes |
81 | |||
7.5 Dispositions of Property |
82 | |||
7.6 Restricted Payments |
84 | |||
7.7 Investments |
86 | |||
7.8 Optional Payments and Modifications of Certain Debt Instruments |
89 | |||
7.9 Transactions with Affiliates |
90 | |||
ii
| Page | ||||
7.10 Sales and Leasebacks |
90 | |||
7.11 Changes in Fiscal Periods |
90 | |||
7.12 Negative Pledge Clauses |
90 | |||
7.13 Clauses Restricting Subsidiary Distributions |
92 | |||
7.14 Lines of Business |
92 | |||
7.15 Limitation on Hedge Agreements |
92 | |||
7.16 Changes in Jurisdictions of Organization; Name |
92 | |||
7.17 Limitation on Activities of Holdings |
92 | |||
SECTION 8. EVENTS OF DEFAULT |
93 | |||
8.1 Events of Default |
93 | |||
8.2 Specified Equity Contributions |
96 | |||
SECTION 9. THE AGENTS |
97 | |||
9.1 Appointment |
97 | |||
9.2 Delegation of Duties |
97 | |||
9.3 Exculpatory Provisions |
97 | |||
9.4 Reliance by the Agents |
97 | |||
9.5 Notice of Default |
98 | |||
9.6 Non-Reliance on Agents and Other Lenders |
98 | |||
9.7 Indemnification |
98 | |||
9.8 Agent in Its Individual Capacity |
99 | |||
9.9 Successor Agents |
99 | |||
9.10 Authorization to Release Liens and Guarantees |
99 | |||
9.11 Documentation Agents and Syndication Agent |
99 | |||
SECTION 10. MISCELLANEOUS |
100 | |||
10.1 Amendments and Waivers |
100 | |||
10.2 Notices |
101 | |||
10.3 No Waiver; Cumulative Remedies |
103 | |||
10.4 Survival of Representations and Warranties |
103 | |||
10.5 Payment of Expenses; Indemnification |
103 | |||
10.6 Successors and Assigns; Participations and Assignments |
104 | |||
10.7 Adjustments; Set-off |
107 | |||
10.8 Counterparts |
108 | |||
10.9 Severability |
108 | |||
10.10 Integration |
108 | |||
10.11 GOVERNING LAW |
108 | |||
10.12 Submission to Jurisdiction; Waivers |
108 | |||
10.13 Acknowledgments |
109 | |||
10.14 Confidentiality |
109 | |||
10.15 Release of Collateral and Guarantee Obligations; Subordination of Liens |
110 | |||
10.16 Accounting Changes |
110 | |||
10.17 WAIVERS OF JURY TRIAL |
111 | |||
10.18 USA PATRIOT ACT |
111 | |||
10.19 Effect of Certain Inaccuracies |
111 | |||
iii
SCHEDULES: |
||||
1.1 Excluded Subsidiaries |
||||
2.1 Commitments |
||||
4.3 Existence; Compliance with Law |
||||
4.4 Consents, Authorizations, Filings and Notices |
||||
4.6 Litigation |
||||
4.8A Excepted Property |
||||
4.8B Owned Real Property |
||||
4.14 Subsidiaries |
||||
4.17 UCC Filing Jurisdictions |
||||
6.10 Post-Closing Undertakings |
||||
7.2(d) Existing Indebtedness |
||||
7.3(f) Existing Liens |
||||
7.7 Existing Investments |
||||
7.12 Existing Negative Pledge Clauses |
||||
EXHIBITS: |
||||
A Form of Guarantee and Collateral Agreement |
||||
B Form of Compliance Certificate |
||||
C Form of Closing Certificate |
||||
D Form of Assignment and Assumption |
||||
E-1 Form of Legal Opinion of Debevoise & Plimpton LLP |
||||
E-2 Form of Legal Opinion of Morris, Nichols, Arsht & Tunnell LLP |
||||
F Form of Exemption Certificate |
||||
G Form of Solvency Certificate |
||||
H Form of Joinder Agreement |
||||
I Form of Prepayment Option Notice |
||||
J-1 Form of Tranche A Term Loan Note |
||||
J-2 Form of Tranche B Term Loan Note |
||||
J-3 Form of Revolving Note |
iv
CREDIT AGREEMENT, dated as of July 31, 2008, among EXPLORER INVESTOR CORPORATION, a Delaware
corporation (“Holdings”), EXPLORER MERGER SUB CORPORATION, a Delaware corporation (the
“Initial Borrower”), BOOZ ALLEN HAMILTON INC., a Delaware corporation into which the
Initial Borrower shall be merged (the “Company” or the “Surviving Borrower”), the
several banks and other financial institutions or entities from time to time parties to this
Agreement (the “Lenders”), CREDIT SUISSE, as Administrative Agent and Collateral Agent,
BANK OF AMERICA, N.A., as syndication agent (in such capacity, the “Syndication Agent”),
LEHMAN BROTHERS COMMERCIAL BANK, C.I.T. LEASING CORPORATION and SUMITOMO MITSUI BANKING
CORPORATION, as documentation agents (in such capacity, collectively, the “Documentation
Agents”), CREDIT SUISSE, as Issuing Lender and BANC OF AMERICA SECURITIES LLC, CREDIT SUISSE
SECURITIES (USA) LLC, LEHMAN BROTHERS INC. and SUMITOMO MITSUI BANKING CORPORATION, as joint lead
arrangers and joint bookrunners.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in this Section 1.1
shall have the respective meanings set forth in this Section 1.1.
“ABR”: for any day, a rate per annum equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of
1%. For purposes hereof: “Prime Rate” means the prime commercial lending rate of the
Administrative Agent as established from time to time in its principal U.S. office, as in effect
from time to time. Any change in the ABR due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective day of such change
in the Prime Rate or the Federal Funds Effective Rate, respectively.
“ABR Loans”: Loans the rate of interest applicable to which is based upon the ABR.
“Accounting Changes”: as defined in Section 10.16.
“Acquisition”: as defined in the definition of “Permitted Acquisition”.
“Act”: as defined in Section 10.18.
“Administrative Agent”: Credit Suisse, as the administrative agent for the Lenders
under this Agreement and the other Loan Documents, together with any of its successors and
permitted assigns in such capacity in accordance with Section 9.9.
“Affiliate”: as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person. For purposes of this
definition, “control” of a Person means the power, directly or indirectly to direct or cause the
direction of the management and policies of such Person, in either case whether by contract or
otherwise.
“Agents”: the collective reference to the Collateral Agent and the Administrative
Agent, and for purposes of Sections 10.13 and 10.14, the Lead Arrangers.
-1-
“Aggregate Exposure”: with respect to any Lender at any time, an amount equal to
(a) until the Closing Date, the aggregate amount of such Lender’s Commitments at such time and
(b) thereafter, the sum of (i) the aggregate then unpaid principal amount of such Lender’s Term
Loans, (ii) the aggregate amount of such Lender’s Revolving Commitments then in effect or, if the
Revolving Commitments have been terminated, the amount of such Lender’s Revolving Extensions of
Credit then outstanding and (iii) the aggregate amount of such Lender’s New Loan Commitments then
in effect, or if such New Loan Commitments have been terminated, the amount of such Lender’s New
Loans.
“Aggregate Exposure Percentage”: with respect to any Lender at any time, the ratio
(expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the total Aggregate
Exposures of all Lenders at such time.
“Agreed Purposes”: as defined in Section 10.14.
“Agreement”: this Credit Agreement, as amended, restated, amended and restated,
supplemented or otherwise modified from time to time.
“AHYDO Payments”: “applicable high yield discount obligations” (within the meaning of
Section 163(i)(1) of the Code) “catch-up” payments in respect of any Indebtedness (including the
Mezzanine Loans, any Permitted Subordinated Indebtedness and any Indebtedness incurred pursuant to
Section 7.2(v)) the incurrence of which is not otherwise prohibited hereunder to the extent such
Indebtedness provides for the payment of interest on all or any portion of the principal amount of
such Indebtedness by adding such interest to the principal amount thereof.
“Annual Operating Budget”: as defined in Section 6.2(c).
“Applicable Margin” or “Applicable Commitment Fee Rate”: for any day, with
respect to (i) the Loans (including any Swingline Loan) under the Revolving Facility and the
Tranche A Term Loan Facility, and the commitment fee payable hereunder, the applicable rate per
annum determined pursuant to the Pricing Grid and (ii) the Loans under the Tranche B Term Loan
Facility, in the case of the Applicable Margin, 3.50% with respect to Tranche B Term Loans that are
ABR Loans and 4.50% with respect to Tranche B Term Loans that are Eurocurrency Loans;
provided that from the Closing Date until the next change in the Applicable Margin or
Applicable Commitment Fee Rate in accordance with the Pricing Grid (a) the Applicable Margin shall
be 3.00% with respect to Tranche A Term Loans, Revolving Loans that are ABR Loans and Swingline
Loans and 4.00% with respect to Tranche A Term Loans and Revolving Loans that are Eurocurrency
Loans and (b) the Applicable Commitment Fee Rate shall be 0.50%.
“Application”: an application, in such form as the relevant Issuing Lender may
specify from time to time, requesting such Issuing Lender to open a Letter of Credit.
“Approved Fund”: as defined in Section 10.6(b).
“Asset Sale”: any Disposition of Property or series of related Dispositions of
Property by the Borrower or any of its Restricted Subsidiaries not in the ordinary course of
business (a) under Section 7.5(e) or (p) or (b) not otherwise permitted under Section 7.5, in each
case, which yields Net Cash Proceeds (valued at the initial principal amount thereof in the case of
non-cash proceeds consisting of notes or other debt securities and valued at fair market value in
the case of other non-cash proceeds) in excess of $1,000,000.
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“Assignee”: as defined in Section 10.6(b).
“Assignment and Assumption”: an Assignment and Assumption, substantially in the form
of Exhibit D.
“Available Amount”: as at any date, the sum of, without duplication:
(a) $10,000,000;
(b) the aggregate cumulative amount, not less than zero, of 50% of Excess Cash Flow for
each fiscal year beginning with the fiscal year ending March 31, 2010;
(c) the Net Cash Proceeds received after the Closing Date and on or prior to such date
from any Equity Issuance by, or capital contribution to, Holdings or the Borrower (which in
the case of any such Equity Issuance by the Borrower, is not Disqualified Capital Stock)
which, in the case of any such Equity Issuance by, or capital contribution to, Holdings,
have been contributed in cash as common equity to the Borrower, in each case to the extent
it is not a Specified Equity Contribution;
(d) the aggregate amount of proceeds received after the Closing Date and on or prior to
such date that (i) would have constituted Net Cash Proceeds pursuant to clause (a) of the
definition of “Net Cash Proceeds” except for the operation of any of (A) the Dollar
threshold set forth in the definition of “Asset Sale” and (B) the Dollar threshold set forth
in the definition of “Recovery Event” or (ii) constitutes Declined Proceeds;
(e) the aggregate principal amount of any Indebtedness of the Borrower or any
Restricted Subsidiary issued after the Closing Date (other than Indebtedness issued to a
Restricted Subsidiary), which has been converted into or exchanged for Capital Stock in
Holdings or any Parent Company;
(f) the amount received by the Borrower or any Restricted Subsidiary in cash (and the
fair market value (as determined in good faith by the Borrower) of Property other than cash
received by the Borrower or any Restricted Subsidiary) after the Closing Date from any
dividend or other distribution by an Unrestricted Subsidiary;
(g) in the event any Unrestricted Subsidiary has been redesignated as a Restricted
Subsidiary and becomes a Subsidiary Guarantor or has been merged, consolidated or
amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the
Borrower or any Subsidiary Guarantor, the fair market value (as determined in good faith by
the Borrower) of the Investments of the Borrower or any Restricted Subsidiary in such
Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of
the assets transferred or conveyed, as applicable);
(h) an amount equal to any returns (including dividends, interest, distributions,
returns of principal, profits on sale, repayments, income and similar amounts) actually
received in cash, Cash Equivalents and Permitted Liquid Investments by the Borrower or any
Restricted Subsidiary in respect of any Investments made pursuant to Section 7.7(f)(ii)(B),
(h)(B), or (v)(ii); and
(i) the aggregate amount actually received in cash, Cash Equivalents or Permitted
Liquid Investments by the Borrower or any Restricted Subsidiary in connection with the sale,
transfer or
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other disposition of its ownership interest in any joint venture that is not a
Subsidiary or in any Unrestricted Subsidiary, in each case, to the extent of the Investment
in such joint venture or Unrestricted Subsidiary;
in each case, that has not been previously applied pursuant to Section 7.6(b), Section 7.7(f)(ii),
(h)(B) or (v)(ii) or Sections 7.8(a)(ii)(A) and 7.8(a)(ii)(B).
“Available Revolving Commitment”: as to any Revolving Lender at any time, an amount
equal to the excess, if any, of (a) such Lender’s Revolving Commitment then in effect (including
any New Loan Commitments which are Revolving Commitments) over (b) such Lender’s Revolving
Extensions of Credit then outstanding; provided that in calculating any Revolving Lender’s
Revolving Extensions of Credit under its Revolving Commitment for the purpose of determining such
Revolving Lender’s Available Revolving Commitments pursuant to Section 2.9(a), the aggregate
principal amount of Swingline Loans then outstanding shall be deemed to be zero.
“Benefited Lender”: as defined in Section 10.7(a).
“Board”: the Board of Governors of the Federal Reserve System of the United States
(or any successor).
“Board of Directors”: (a) with respect to a corporation, the board of directors of the
corporation or any committee thereof duly authorized to act on behalf of such board; (b) with
respect to a partnership, the Board of Directors of the general partner of the partnership, or any
committee thereof duly authorized to act on behalf of such board or the board or committee of any
Person serving a similar function; (c) with respect to a limited liability company, the managing
member or members or any controlling committee of managing members thereof or any Person or Persons
serving a similar function; and (d) with respect to any other Person, the board or committee of
such Person serving a similar function.
“Borrower”: (a) at any time prior to the consummation of the Merger Transactions, the
Initial Borrower and (b) upon and at any time after the consummation of the Merger Transactions,
the Surviving Borrower.
“Borrowing Date”: any Business Day specified by the Borrower as a date on which the
Borrower requests the relevant Lenders to make Loans hereunder.
“Business”: the business activities and operations of the Company and/or its
Affiliates on the Closing Date immediately after giving effect to the transactions contemplated by
the Spin Off Agreement.
“Business Day”: a day (a) other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close and (b) with respect
to notices and determinations in connection with, and payments of principal and interest on,
Eurocurrency Loans, such day is also a day for trading by and between banks in Dollar deposits in
the London interbank eurocurrency market.
“Capital Expenditures”: for any period, with respect to any Person, the aggregate of
all cash expenditures by such Person for the acquisition or leasing (pursuant to a capital lease
but excluding any amount representing capitalized interest) of fixed or capital assets, computer
software or additions to equipment (including replacements, capitalized repairs and improvements
during such period) which are
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required to be capitalized under GAAP on a balance sheet of such Person; provided that
in any event the term “Capital Expenditures” shall exclude: (i) any Permitted Acquisition and any
other Investment permitted hereunder; (ii) any expenditures to the extent financed with any
Reinvestment Deferred Amount; (iii) expenditures for leasehold improvements for which such Person
is reimbursed in cash or receives a credit; and (iv) capital expenditures to the extent they are
made with the proceeds of equity contributions (other than in respect of Disqualified Capital
Stock) made to the Borrower after the Closing Date.
“Capital Lease Obligations”: as to any Person, 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, for the purposes
of this Agreement, the amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP; provided that for purposes of this
definition, “GAAP” shall mean generally accepted accounting principles in the United States as in
effect on the date hereof.
“Capital Stock”: any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, and any and all equivalent ownership
interests in a Person (other than a corporation).
“Carlyle Fund”: Carlyle Partners US V, L.P., and no other Person or entity.
“Cash Equivalents”: (a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit of the United States
of America), in each case maturing within eighteen months from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the date of issuance thereof
and having, at such date of acquisition, the highest credit rating obtainable from S&P or from
Moody’s;
(c) investments in certificates of deposit, banker’s acceptances and time deposits maturing
within one year from the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, the Administrative Agent or any domestic office
of any commercial bank organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000
and that issues (or the parent of which issues) commercial paper rated at least “Prime-1” (or the
then equivalent grade) by Moody’s or “A-1” (or the then equivalent grade) by S&P;
(d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution satisfying
the criteria of clause (c) above;
(e) investments in “money market funds” within the meaning of Rule 2a-7 of the Investment
Company Act of 1940, as amended, substantially all of whose assets are invested in investments of
the type described in clauses (a) through (d) above; and
(f) other short-term investments utilized by Foreign Subsidiaries in accordance with normal
investment practices for cash management in investments of a type analogous to the foregoing.
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“Cash Management Obligations”: obligations owed by the Borrower or any Subsidiary
Guarantor to any Lender or any Affiliate of a Lender in respect of any overdraft and related
liabilities arising from treasury, depository and cash management services, credit or debit card,
or any automated clearing house transfers of funds.
“Certificated Security”: as defined in the Guarantee and Collateral Agreement.
“Change in Law”: (a) the adoption of any law, rule or regulation, or (b) any change
in any law, rule or regulation or in the interpretation or application thereof by any Governmental
Authority.
“Change of Control”: as defined in Section 8.1(j).
“Chattel Paper”: as defined in the Guarantee and Collateral Agreement.
“Closing Date”: the date on which the conditions precedent set forth in Section 5.1
shall have been satisfied or waived and the Term Loans hereunder shall have been funded, which date
is July 31, 2008.
“Closing Date Material Adverse Effect”: a “Company Material Adverse Effect” as
defined in the Merger Agreement.
“Closing Date Stock Certificates”: Collateral consisting of stock certificates
representing the Capital Stock of the Domestic Subsidiaries that are Restricted Subsidiaries (and
not Immaterial Subsidiaries) of the Borrower for which a security interest can be perfected by
delivering such stock certificates.
“Closing Date UCC Filing Collateral”: Collateral for which a security interest can be
perfected by filing a UCC financing statement.
“Code”: the Internal Revenue Code of 1986, as amended from time to time.
“Collateral”: the meaning assigned to such term in the Guarantee and Collateral
Agreement.
“Collateral Agent”: Credit Suisse, in its capacity as collateral agent for the
Secured Parties under the Security Documents and any of its successors and permitted assigns in
such capacity in accordance with Section 9.9.
“Commitment”: as to any Lender, the sum of the Term Commitments, the Revolving
Commitments and the New Loan Commitments (in each case, if any) of such Lender.
“Committed Reinvestment Amount”: as defined in the definition of “Reinvestment
Prepayment Amount”.
“Commonly Controlled Entity”: an entity, whether or not incorporated, that is under
common control with Holdings within the meaning of Section 4001 of ERISA or is part of a group that
includes Holdings and that is treated as a single employer under Section 414(b), (c), (m) or (o) of
the Code.
“Commonly Controlled Plan”: as defined in Section 4.12(b).
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“Company”: as defined in the preamble hereto.
“Company Reorganization”: the series of transactions described in the “Project
Explorer Summarized Transaction Steps”, dated May 12, 2008, attached as Exhibit D to the Spin-Off
Agreement dated as of May 15, 2008 among the Company, Booz & Company Holdings, LLC, Booz & Company
Inc., Booz & Company Intermediate I Inc. and Booz & Company Intermediate II Inc., as amended,
supplemented or otherwise modified from time to time, provided that any such amendments,
supplements or modifications that are, when taken as a whole, materially adverse to the Lenders,
shall be reasonably acceptable to the Administrative Agent.
“Compliance Certificate”: a certificate duly executed by a Responsible Officer
substantially in the form of Exhibit B.
“Confidential Information”: as defined in Section 10.14.
“Consolidated Current Assets”: at any date, all amounts (other than (a) cash, Cash
Equivalents and Permitted Liquid Investments, (b) deferred financing fees and (c) payments for
deferred taxes so long as such items described in clauses (b) and (c) are not cash items) that
would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any
like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at
such date.
“Consolidated Current Liabilities”: at any date, all amounts that would, in
conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like
caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such
date, but excluding (a) the current portion of any Indebtedness of the Borrower and its Restricted
Subsidiaries, (b) without duplication, all Indebtedness consisting of Revolving Loans, L/C
Obligations or Swingline Loans, to the extent otherwise included therein, (c) amounts for deferred
taxes and non-cash tax reserves accounted for pursuant to FASB Interpretation No. 48 and (d) any
equity compensation related liability.
“Consolidated EBITDA”: of any Person for any period, Consolidated Net Income of such
Person and its Restricted Subsidiaries for such period plus, without duplication and, if
applicable, to the extent reflected as a charge in the statement of such Consolidated Net Income
(regardless of classification) for such period, the sum of:
(a) provisions for taxes based on income (or similar taxes in lieu of income taxes),
profits, capital (or equivalents), including federal, foreign, state, local, franchise,
excise and similar taxes and foreign withholding taxes of such Person paid or accrued
during such period;
(b) Consolidated Net Interest Expense and, to the extent not reflected in such
Consolidated Net Interest Expense, any net losses on hedging obligations or other
derivative instruments entered into for the purpose of hedging interest rate risk,
amortization or write-off of debt discount and debt issuance costs and commissions,
discounts and other fees and charges associated with Indebtedness (including commitment,
letter of credit and administrative fees and charges with respect to the Facilities and the
Mezzanine Loan Facility);
(c) depreciation and amortization expense and impairment charges (including deferred
financing fees, capitalized software expenditures, intangibles (including goodwill),
organization costs and amortization of unrecognized prior service costs and actuarial gains
and losses related to pensions and other post-employment benefits);
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(d) any extraordinary, unusual or non-recurring expenses or losses (including losses
on sales of assets outside of the ordinary course of business and restructuring and
integration costs or reserves, including any severance costs, costs associated with office
and facility openings, closings and consolidations, relocation costs and other
non-recurring business optimization expenses);
(e) any other non-cash charges, expenses or losses (except to the extent such charges,
expenses or losses represent an accrual of or reserve for cash expenses in any future
period or an amortization of a prepaid cash expense paid in a prior period);
(f) stock-option based and other equity-based compensation expenses;
(g) transaction costs, fees, losses and expenses (whether or not any transaction is
actually consummated) (including those relating to the Merger Transactions, the
transactions contemplated hereby and by the Mezzanine Loan Documents (including any
amendments or waivers of the Loan Documents or the Mezzanine Loan Documents), and those
payable in connection with the sale of Capital Stock, the incurrence of Indebtedness
permitted by Section 7.2, transactions permitted by Section 7.4, Dispositions permitted by
Section 7.5, or any Permitted Acquisition or other Investment permitted by Section 7.7 (in
each case whether or not successful));
(h) all fees and expenses paid pursuant to the Management Agreement;
(i) proceeds from any business interruption insurance (to the extent not reflected as
revenue or income in such statement of such Consolidated Net Income);
(j) the amount of cost savings and other operating improvements and synergies
projected by the Borrower in good faith and certified in writing to the Administrative
Agent to be realized as a result of any acquisition (including the Merger Transactions) or
Disposition (including the termination or discontinuance of activities constituting such
business) of business entities or properties or assets, constituting a division or line of
business of any business entity, division or line of business that is the subject of any
such acquisition or Disposition, or from any operational change taken or committed to be
taken during such period (in each case calculated on a pro forma basis as
though such cost savings and other operating improvements and synergies had been realized
on the first day of such period), net of the amount of actual benefits realized during such
period from such actions to the extent already included in the Consolidated Net Income for
such period, provided that (i) the Borrower shall have certified to the
Administrative Agent that (A) such cost savings, operating improvements and synergies are
reasonably anticipated to result from such actions, (B) such actions have been taken, or
have been committed to be taken and the benefits resulting therefrom are anticipated by the
Borrower to be realized within 12 months and (ii) no cost savings shall be added pursuant
to this clause (j) to the extent already included in clause (d) above with respect to such
period;
(k) cash expenses relating to earn-outs and similar obligations;
(l) charges, losses, lost profits, expenses or write-offs to the extent indemnified or
insured by a third party, including expenses covered by indemnification provisions in any
agreement in connection with the Merger Transactions, a Permitted Acquisition or any other
acquisition permitted by Section 7.7;
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(m) losses recognized and expenses incurred in connection with the effect of currency
and exchange rate fluctuations on intercompany balances and other balance sheet items;
(n) costs of surety bonds in connection with financing activities of such Person and
its Restricted Subsidiaries; and
(o) costs associated with, or in anticipation of, or preparation for, compliance with
the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith and Public Company Costs;
minus, to the extent reflected as income or a gain in the statement of such
Consolidated Net Income for such period, the sum of:
(a) any extraordinary, unusual or non-recurring income or gains (including gains on
the sales of assets outside of the ordinary course of business);
(b) any other non-cash income or gains (other than the accrual of revenue in the
ordinary course), but excluding any such items (i) in respect of which cash was received in
a prior period or will be received in a future period or (ii) which represent the reversal
in such period of any accrual of, or reserve for, anticipated cash charges in any prior
period where such accrual or reserve is no longer required, all as determined on a
consolidated basis; and
(c) gains realized and income accrued in connection with the effect of currency and
exchange rate fluctuations on intercompany balances and other balance sheet items;
provided that for purposes of calculating Consolidated EBITDA of the Borrower and its
Restricted Subsidiaries for any period, (A) the Consolidated EBITDA of any Person or Properties
constituting a division or line of business of any business entity, division or line of business,
in each case, acquired by the Borrower or any of the Restricted Subsidiaries during such period and
assuming any synergies, cost savings and other operating improvements to the extent certified by
the Borrower as having been determined in good faith to be reasonably anticipated to be realizable
within 12 months following such acquisition, or of any Subsidiary designated as a Restricted
Subsidiary during such period, shall be included on a pro forma basis for such
period (but assuming the consummation of such acquisition or such designation, as the case may be,
occurred on the first day of such period) and (B) the Consolidated EBITDA of any Person or
Properties constituting a division or line of business of any business entity, division or line of
business, in each case, Disposed of by the Borrower or any of the Restricted Subsidiaries during
such period, or of any Subsidiary designated as an Unrestricted Subsidiary during such period,
shall be excluded for such period (assuming the consummation of such Disposition or such
designation, as the case may be, occurred on the first day of such period). With respect to each
Subsidiary that is not a wholly-owned Subsidiary or any joint venture, for purposes of calculating
Consolidated EBITDA, the amount of income attributable to such Subsidiary or joint venture, as
applicable, that shall be counted for such purposes shall equal the product of (x) the Borrower’s
direct and/or indirect percentage ownership of such Subsidiary or joint venture and (y) the
aggregate amount of the applicable item of such Subsidiary or joint venture, as applicable, except
to the extent the application of GAAP already takes into account the non-wholly owned subsidiary
relationship. Notwithstanding the forgoing, Consolidated EBITDA shall be calculated without giving
effect to the effects of purchase accounting or similar adjustments required or permitted by GAAP
in connection with the Transactions, any Investment (including any Permitted Acquisition) and any
other acquisition or Investment. For purposes of determining Consolidated EBITDA under this
Agreement, Consolidated EBITDA for the fiscal quarter ended March 31, 2008 shall be deemed to be
$64,635,000. Unless otherwise qualified, all
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references to “Consolidated EBITDA” in this Agreement shall refer to Consolidated EBITDA of the
Borrower.
“Consolidated Net Income”: of any Person for any period, the consolidated net income
(or loss) of such Person and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP; provided that in calculating Consolidated Net
Income of the Borrower and its consolidated Restricted Subsidiaries for any period, there shall be
excluded (a) the income (or loss) of any Person accrued prior to the date it becomes a Restricted
Subsidiary or is merged into or consolidated with the Borrower or any of its Subsidiaries and
(b) the income (or loss) of any Person (other than a Restricted Subsidiary) in which Holdings, the
Borrower or any of its Restricted Subsidiaries has an ownership interest (including any joint
venture), except to the extent that any such income is actually received by Holdings, the Borrower
or such Restricted Subsidiary in the form of dividends or similar distributions (which dividends
and distributions shall be included in the calculation of Consolidated Net Income).
Notwithstanding the forgoing, for purposes of calculating Excess Cash Flow, Consolidated Net Income
shall not include: (i) extraordinary gains for such period, (ii) the cumulative effect of a change
in accounting principles during such period, (iii) any fees and expenses incurred during such
period, or any amortization thereof for such period, in connection with any acquisition,
investment, recapitalization, asset disposition, issuance or repayment of debt, issuance of equity
securities, refinancing transaction or amendment or other modification of any debt instrument (in
each case, including any such transaction undertaken but not completed) and any charges or
non-recurring merger costs incurred during such period as a result of any such transaction and (iv)
any income (loss) for such period attributable to the early extinguishment of Indebtedness or Hedge
Agreements. Unless otherwise qualified, all references to “Consolidated Net Income” in this
Agreement shall refer to Consolidated Net Income of the Borrower. There shall be excluded from
Consolidated Net Income for any period the purchase accounting effects of adjustments to inventory,
Property and equipment, software and other intangible assets and deferred revenue required or
permitted by GAAP and related authoritative pronouncements (including the effects of such
adjustments pushed down to the Borrower and the Restricted Subsidiaries), as a result of the
Transactions, any consummated acquisition whether consummated before or after the Closing Date, or
the amortization or write-off of any amounts thereof.
“Consolidated Net Interest Coverage Ratio”: as of any date of determination, the
ratio of (a) Consolidated EBITDA of the Borrower and its Restricted Subsidiaries for the most
recently ended Test Period to (b) Consolidated Net Interest Expense of the Borrower and its
Restricted Subsidiaries for such period.
“Consolidated Net Interest Expense”: of any Person for any period, (a) total cash
interest expense (including that attributable to Capital Lease Obligations) of such Person and its
Restricted Subsidiaries for such period with respect to all outstanding Indebtedness of such Person
and its Restricted Subsidiaries, minus (b) the sum of (i) total cash interest income of
such Person and its Restricted Subsidiaries for such period (excluding any interest income earned
on receivables due from clients), in each case determined in accordance with GAAP plus
(ii) any one time financing fees (to the extent included in such Person’s consolidated interest
expense for such period), including, with respect to the Borrower, those paid in connection with
the Transaction Documents or in connection with any amendment thereof. Unless otherwise qualified,
all references to “Consolidated Net Interest Expense” in this Agreement shall refer to
Consolidated Net Interest Expense of the Borrower.
“Consolidated Total Assets”: the total assets of the Borrower and its Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP, as shown on the
consolidated balance sheet of the Borrower for the most recently completed fiscal quarter for which
financial statements have been delivered pursuant to Section 6.1(a) or (b).
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“Consolidated Total Leverage”: at any date, (a) the aggregate principal amount of all
Funded Debt of the Borrower and its Restricted Subsidiaries on such date, minus (b) cash, Cash
Equivalents and, to the extent they are subject to a perfected Lien pursuant to the Security
Documents, Permitted Liquid Investments held by the Borrower and its Restricted Subsidiaries on
such date, in each case determined on a consolidated basis in accordance with GAAP.
“Consolidated Total Leverage Ratio”: as of any date of determination, the ratio of
(a) Consolidated Total Leverage on such day to (b) Consolidated EBITDA of the Borrower and the
Restricted Subsidiaries for the most recently ended Test Period.
“Consolidated Working Capital”: at any date, the difference of (a) Consolidated
Current Assets on such date minus (b) Consolidated Current Liabilities on such date,
provided that, for purposes of calculating Excess Cash Flow, increases or decreases in
Consolidated Working Capital shall be calculated without regard to changes in the working capital
balance as a result of non-cash increases or decreases thereof that will not result in future cash
payments or receipts or cash payments or receipts in any previous period, in each case, including,
without limitation, any changes in Consolidated Current Assets or Consolidated Current Liabilities
as a result of (i) any reclassification in accordance with GAAP of assets or liabilities, as
applicable, between current and noncurrent, (ii) the effects of purchase accounting and (iii) the
effect of fluctuations in the amount of accrued or contingent obligations, assets or liabilities
under Hedge Agreements.
“Continuing Directors”: the directors of Holdings on the Closing Date and each other
director of Holdings, if, in each case, such other director’s nomination for election to the Board
of Directors of Holdings is recommended by at least 51% of the then Continuing Directors or such
other director receives the vote of the Sponsor and/or its Affiliates (excluding any operating
portfolio companies of the Sponsor) or any other Permitted Investor in his or her nomination or
election by the shareholders of Holdings.
“Contractual Obligation”: as to any Person, any provision of any security issued by
such Person or of any written or recorded agreement, instrument or other undertaking to which such
Person is a party or by which it or any of its Property is bound.
“Declined Proceeds”: the amount of any prepayment declined by the Required Prepayment
Lenders or any Tranche B Term Lender, as applicable, in accordance with Sections 2.12(a), 2.12(b),
2.12(c) or 2.12(e), as the case may be, to the extent, in the case of amounts declined in
accordance with Section 2.12(e), such declined amounts have not been used to prepay Tranche A Term
Loans.
“Default”: any of the events specified in Section 8.1, whether or not any requirement
for the giving of notice, the lapse of time, or both, has been satisfied.
“Defaulting Lender”: any Lender that (a) has failed to fund any portion of the Loans,
participations in L/C Obligations or participations in Swingline Loans required to be funded by it
hereunder within one Business Day of the date required to be funded by it hereunder unless such
failure has been cured, (b) has otherwise failed to pay over to the Administrative Agent or any
other Lender any other amount required to be paid by it hereunder within one Business Day of the
date when due, unless the subject of a good faith dispute or unless such failure has been cured, or
(c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding or
otherwise has taken any action or become the subject of any action or proceeding of the type
described in Section 8.1(f).
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“Disinterested Director” : as defined in Section 7.9.
“Derivatives Counterparty”: as defined in Section 7.6.
“Disposition”: with respect to any Property, any sale, sale and leaseback,
assignment, conveyance, transfer or other effectively complete disposition thereof. The terms
“Dispose” and “Disposed of” shall have correlative meanings.
“Disqualified Capital Stock”: Capital Stock that (a) requires the payment of any
dividends (other than dividends payable solely in shares of Qualified Capital Stock), (b) matures
or is mandatorily redeemable or subject to mandatory repurchase or redemption or repurchase at the
option of the holders thereof (other than solely for Qualified Capital Stock), in each case in
whole or in part and whether upon the occurrence of any event, pursuant to a sinking fund
obligation on a fixed date or otherwise (including as the result of a failure to maintain or
achieve any financial performance standards) or (c) are convertible or exchangeable, automatically
or at the option of any holder thereof, into any Indebtedness, Capital Stock or other assets other
than Qualified Capital Stock, in the case of clauses (a), (b) and (c), prior to the date that is 91
days after the final scheduled maturity date of the Loans (other than (i) upon payment in full of
the Obligations (other than indemnification and other contingent obligations not yet due and owing)
or (ii) upon a “change in control”; provided that any payment required pursuant to this
clause (ii) is subject to the prior repayment in full of the Obligations (other than
indemnification and other contingent obligations not yet due and owing) that are accrued and
payable and the termination of the Commitments); provided further, however, that if
such Capital Stock is issued to any employee or to any plan for the benefit of employees of the
Borrower or the Subsidiaries or by any such plan to such employees, such Capital Stock shall not
constitute Disqualified Capital Stock solely because it may be required to be repurchased by the
Borrower in order to satisfy applicable statutory or regulatory obligations or as a result of such
employee’s termination, death or disability.
“Disqualified Institution”: (i) those institutions identified by the Borrower in
writing to the Administrative Agent prior to the Closing Date or, with the consent of the
Administrative Agent (not to be unreasonably withheld; consent of the Administrative Agent shall be
deemed to have been given if the Administrative Agent does not object within 5 Business Days after
identification of an institution) from time to time thereafter, and their known Affiliates and (ii)
business competitors of the Borrower and its Subsidiaries or the Company identified by Borrower in
writing to the Administrative Agent from time to time and their known Affiliates.
“Documentation Agents”: as defined in the preamble hereto.
“Dollars” and “$”: dollars in lawful currency of the United States.
“Domestic Subsidiary”: any direct or indirect Restricted Subsidiary organized under
the laws of any jurisdiction within the United States.
“Environmental Laws”: any and all applicable laws, rules, orders, regulations,
statutes, ordinances, codes or decrees (including, without limitation, common law) of any
international authority, foreign government, the United States, or any state, provincial, local,
municipal or other governmental authority, regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment, natural resources or human health
and safety as it relates to Releases of Materials of Environmental Concern, as has been, is now, or
at any time hereafter is, in effect.
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“Environmental Liability”: any liability, claim, action, suit, judgment or order
under or relating to any Environmental Law for any damages, injunctive relief, losses, fines,
penalties, fees, expenses (including reasonable fees and expenses of attorneys and consultants) or
costs, whether contingent or otherwise, including those arising from or relating to: (a)
compliance or non-compliance with any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Materials of Environmental Concern, (c)
exposure to any Materials of Environmental Concern, (d) the Release of any Materials of
Environmental Concern or (e) any contract, agreement or other consensual arrangement pursuant to
which liability is assumed or imposed with respect to any of the foregoing.
“Equity Issuance”: any issuance by Holdings, the Borrower or any Restricted
Subsidiary of its Capital Stock in a public or private offering.
“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to
time.
“Eurocurrency Base Rate”: with respect to each day during each Interest Period, the
rate per annum determined by reference to the British Bankers’ Association Interest Settlement
Rates for deposits in Dollars for a period equal to such Interest Period commencing on the first
day of such Interest Period appearing on the Screen as of 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period, as the Eurocurrency Rate for deposits
denominated with a maturity comparable to such Interest Period. In the event that such rate does
not appear on the Screen at such time for any reason, then the “Eurocurrency Base Rate”
shall be determined by reference to such other comparable publicly available service for displaying
eurocurrency rates as may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is offered deposits at or
about 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period in
the interbank eurocurrency market where its eurodollar and exchange operations are then being
conducted for delivery on the first day of such Interest Period for the number of days comprised
therein.
“Eurocurrency Loans”: Loans the rate of interest applicable to which is based upon
the Eurocurrency Rate.
“Eurocurrency Rate”: with respect to each day during each Interest Period pertaining
to a Eurocurrency Loan, a rate per annum determined for such day in accordance with the following
formula:
Eurocurrency Base Rate
1.00 — Eurocurrency Reserve Requirements
“Eurocurrency Reserve Requirements”: for any day as applied to a Eurocurrency Loan,
the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of
reserve requirements in effect on such day (including basic, supplemental, marginal and emergency
reserves) under any regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a
member bank of the Federal Reserve System.
“Eurocurrency Tranche”: the collective reference to Eurocurrency Loans under a
particular Facility the then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans shall originally have been made
on the same day).
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“Event of Default”: any of the events specified in Section 8.1; provided that
any requirement set forth therein for the giving of notice, the lapse of time, or both, has been
satisfied.
“Excess Cash Flow”: for any fiscal year of the Borrower, the difference, if any, of
(a) the sum, without duplication, of (i) Consolidated Net Income of the Borrower for such fiscal
year, (ii) the amount of all non-cash charges (including depreciation, amortization and deferred
tax expense) deducted in arriving at such Consolidated Net Income and cash receipts included in
clause (i) of the definition of “Consolidated Net Income” and excluded in arriving at such
Consolidated Net Income, (iii) the amount of the decrease, if any, in Consolidated Working Capital
for such fiscal year (excluding any decrease in Consolidated Working Capital relating to leasehold
improvements for which the Borrower or any of its Subsidiaries is reimbursed in cash or receives a
credit) and (iv) the aggregate net amount of non-cash loss on the Disposition of Property by the
Borrower and its Restricted Subsidiaries during such fiscal year (other than sales of inventory in
the ordinary course of business), to the extent deducted in arriving at such Consolidated Net
Income; minus (b) the sum, without duplication (including, in the case of clauses (ii) and
(viii) below, duplication across periods (provided that all or any portion of the amounts
referred to in clauses (ii) and (viii) below with respect to a period may be applied in the
determination of Excess Cash Flow for any subsequent period to the extent such amounts did not
previously result in a reduction of Excess Cash Flow in any prior period)) of:
(i) the amount of all non-cash gains or credits included in arriving at such
Consolidated Net Income (including, without limitation, credits included in the calculation
of deferred tax assets and liabilities) and cash charges excluded in clauses (i) through
(iv) of the definition of “Consolidated Net Income” and included in arriving at such
Consolidated Net Income;
(ii) the aggregate amount (A) actually paid by the Borrower and its Restricted
Subsidiaries in cash during such fiscal year on account of Capital Expenditures and
Permitted Acquisitions and (B) committed during such fiscal year to be used to make Capital
Expenditures or Permitted Acquisitions which in either case have been actually made or
consummated or for which a binding agreement exists as of the time of determination of
Excess Cash Flow for such fiscal year (in each case under this clause (ii) other than to the
extent any such Capital Expenditure or Permitted Acquisition is made (or, in the case of the
preceding clause (B), is expected to be made) with the proceeds of new long-term
Indebtedness or an Equity Issuance or with the proceeds of any Reinvestment Deferred
Amount);
(iii) the aggregate amount of all regularly scheduled principal payments and all
prepayments of Indebtedness (including, without limitation, the Term Loans and, if
applicable, the Mezzanine Loans) of the Borrower and its Restricted Subsidiaries made during
such fiscal year (other than in respect of any revolving credit facility to the extent there
is not an equivalent permanent reduction in commitments thereunder and other than to the
extent any such prepayments are the result of the incurrence of additional indebtedness and
other than optional prepayments of the Term Loans and optional prepayments of Revolving
Loans and Swingline Loans to the extent accompanied by permanent optional reductions of the
Revolving Commitments);
(iv) the amount of the increase, if any, in Consolidated Working Capital for such
fiscal year (excluding any increase in Consolidated Working Capital relating to leasehold
improvements for which the Borrower or any of its Subsidiaries is reimbursed in cash or
receives a credit);
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(v) the aggregate net amount of non-cash gain on the Disposition of Property by the
Borrower and its Restricted Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business), to the extent included in arriving at such
Consolidated Net Income;
(vi) fees and expenses incurred in connection with the Transactions or any Permitted
Acquisition (whether or not consummated);
(vii) purchase price adjustments paid or received in connection with the Merger
Transactions, any Permitted Acquisition or any other acquisition permitted under Section
7.7(h) or (v);
(viii) (A) the net amount of Investments made during such period pursuant to paragraphs
(d), (f), (h), (l), (v) and (y) of Section 7.7 (to the extent, in the case of clause (y),
such Investment relates to Restricted Payments permitted under Section 7.6(c), (e), (h) or
(i)) or committed during such period to be used to make Investments pursuant to such
paragraphs of Section 7.7 which have been actually made or for which a binding agreement
exists as of the time of determination of Excess Cash Flow for such period (but excluding
Investments among the Borrower and its Restricted Subsidiaries) and (B) permitted Restricted
Payments made in each case by the Borrower during such period and permitted Restricted
Payments made by any Restricted Subsidiary to any Person other than Holdings, the Borrower
or any of the Restricted Subsidiaries during such period, in each case, to the extent
permitted by Section 7.6(c), (e), (h) or (i); provided that the amount of Restricted
Payments made pursuant to Section 7.6(e) and deducted pursuant to this clause (viii) shall
not exceed $10,000,000 in any fiscal year;
(ix) the amount (determined by the Borrower) of such Consolidated Net Income which is
mandatorily prepaid or reinvested pursuant to Section 2.12(b) (or as to which a waiver of
the requirements of such Section applicable thereto has been granted under Section 10.1)
prior to the date of determination of Excess Cash Flow for such fiscal year as a result of
any Asset Sale or Recovery Event;
(x) the aggregate amount of any premium or penalty actually paid in cash that is
required to be made in connection with any prepayment of Indebtedness;
(xi) cash payments by the Borrower and its Restricted Subsidiaries during such period
in respect of long-term liabilities of the Borrower and its Subsidiaries other than
Indebtedness;
(xii) the aggregate amount of expenditures actually made by the Borrower and its
Restricted Subsidiaries in cash during such period (including expenditures for the payment
of financing fees) to the extent that such expenditures are not expensed during such period
and are not deducted in calculating Consolidated Net Income;
(xiii) cash expenditures in respect of Hedge Agreements during such period to the
extent not deducted in arriving at such Consolidated Net Income;
(xiv) the amount of taxes (including penalties and interest) paid in cash in such
period or tax reserves set aside or payable (without duplication) in such period to the
extent they exceed the amount of tax expense deducted in determining Consolidated Net Income
for such period;
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(xv) the amount of cash payments made in respect of pensions and other post-employment
benefits in such period;
(xvi) payments made in respect of the minority equity interests of third parties in any
non-wholly owned Restricted Subsidiary in such period, including pursuant to dividends
declared or paid on Capital Stock held by third parties in respect of such non-wholly-owned
Restricted Subsidiary; and
(xvii) the amount representing accrued expenses for cash payments (including with
respect to retirement plan obligations) that are not paid in cash in such fiscal year,
provided that such amounts will be added to Consolidated Excess Cash Flow for the
following fiscal year to the extent not paid in cash during such following fiscal year.
“Excess Cash Flow Application Date”: as defined in Section 2.12(c).
“Excess Cash Flow Percentage”: 50%; provided that the Excess Cash Flow
Percentage shall be reduced to (a) 25% if the Consolidated Total Leverage Ratio as of the last day
of the relevant fiscal year is not greater than 3.75 to 1.00 and (b) to 0% if the Consolidated
Total Leverage Ratio as of the last day of the relevant fiscal year is not greater than 2.25 to
1.00.
“Excluded Capital Stock”: (a) any Capital Stock with respect to which, in the
reasonable judgment of Administrative Agent (confirmed by notice to the Borrower), (i) the cost of
pledging such Capital Stock in favor of the Secured Parties under the Security Documents shall be
excessive in view of the benefits to be obtained by the Lenders therefrom or (ii) would result in
adverse tax consequences, (b) solely in the case of any pledge of Capital Stock of any Foreign
Subsidiary or any Foreign Subsidiary Holding Company to secure the Obligations, any Capital Stock
of any class of such Foreign Subsidiary or such Foreign Subsidiary Holding Company in excess of 65%
of the outstanding Capital Stock of such class (such percentage to be adjusted by mutual agreement
(not to be unreasonably withheld) upon any change in law as may be required to avoid adverse U.S.
federal income tax consequences to the Borrower or any Subsidiary), (c) any Capital Stock to the
extent the pledge thereof would violate any applicable Requirement of Law, (d) the Capital Stock of
any Special Purpose Entity, any Immaterial Subsidiary (for so long as such Subsidiary remains an
Immaterial Subsidiary) or any Unrestricted Subsidiary and (e) in the case of any Capital Stock of
any Subsidiary that is subject of a Lien permitted under Section 7.3(g) securing Indebtedness
permitted under Section 7.2(t) or (u) any Capital Stock of each such Subsidiary to the extent that
(i) a pledge thereof to secure the Obligations is prohibited by any applicable Contractual
Obligations (other than customary non-assignment provisions which are ineffective under the Uniform
Commercial Code) or (ii) any Contractual Obligation prohibits such a pledge without the consent of
the other party; provided that this clause (ii) shall not apply if (A) such other party is
a Loan Party or a wholly-owned Subsidiary or (B) consent has been obtained to consummate such
pledge and for so long as such Contractual Obligation or replacement or renewal thereof is in
effect or (iii) a pledge thereof to secure the Obligations would give any other party to a
Contractual Obligation the right to terminate its obligations thereunder (other than customary
non-assignment provisions which are ineffective under the Uniform Commercial Code or other
applicable law); provided that this clause (iii) shall not apply if such other party is a
Loan Party or a wholly-owned Subsidiary.
“Excluded Collateral”: as defined in Section 4.17(a).
“Excluded Real Property”: (a) any Real Property that is subject to a Lien expressly
permitted by Section 7.3(g) or 7.3(z), (b) any Real Property with respect to which, in the
reasonable judgment of Administrative Agent (confirmed by notice to the Borrower) the cost of
providing a
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mortgage on such Real Property in favor of the Secured Parties under the Security Documents
shall be excessive in view of the benefits to be obtained by the Lenders therefrom and (c) any Real
Property to the extent providing a mortgage on such Real Property would (i) result in adverse tax
consequences as reasonably determined by the Administrative Agent, (ii) violate any applicable
Requirement of Law, (iii) be prohibited by any applicable Contractual Obligations (other than
customary non-assignment provisions which are ineffective under the Uniform Commercial Code) or
(iv) give any other party (other than a Loan Party or a wholly-owned Subsidiary) to any contract,
agreement, instrument or indenture governing such Real Property the right to terminate its
obligations thereunder (other than customary non-assignment provisions which are ineffective under
the Uniform Commercial Code or other applicable law).
“Excluded Subsidiary”: (a) each Domestic Subsidiary which is an Immaterial Subsidiary
as of the Closing Date and listed on Schedule 1.1 and each future Domestic Subsidiary which is an
Immaterial Subsidiary, in each case, for so long as such Subsidiary remains an Immaterial
Subsidiary, (b) each Domestic Subsidiary that is not a wholly-owned Subsidiary on any date such
Subsidiary would otherwise be required to become a Guarantor pursuant to the requirements of
Section 6.8(c) (for so long as such Subsidiary remains a non-wholly-owned Restricted Subsidiary),
(c) any Foreign Subsidiary Holding Company, (d) each Domestic Subsidiary that is a Subsidiary of a
Foreign Subsidiary, (e) each Unrestricted Subsidiary, (f) each Domestic Subsidiary to the extent
that (i) such Domestic Subsidiary is prohibited by any applicable Contractual Obligation or
Requirement of Law from guaranteeing the Obligations, (ii) any Contractual Obligation prohibits
such guarantee without the consent of the other party or (iii) a guarantee of the Obligations would
give any other party to a Contractual Obligation the right to terminate its obligation thereunder;
provided that clauses (ii) and (iii) shall not be applicable if (A) such other party is a
Loan Party or a wholly-owned Subsidiary or (B) consent has been obtained to provide such pledge and
for so long as such Contractual Obligation or replacement or renewal thereof is in effect, (g) any
Subsidiary that is a Special Purpose Entity or (h) any other Domestic Subsidiary with respect to
which, in the reasonable judgment of the Administrative Agent (confirmed by notice to the Borrower)
the cost of providing a guarantee is excessive in view of the benefits to be obtained by the
Lenders.
“Facility”: each of (a) the Tranche A Term Commitments and the Tranche A Term Loans
made thereunder (the “Tranche A Term Facility”), (b) the Tranche B Term Commitments and the
Tranche B Term Loans made thereunder (the “Tranche B Term Facility”), (c) any New Loan
Commitments and the New Loans made thereunder (a “New Facility”) and (d) the Revolving
Commitments and the extensions of credit made thereunder (the “Revolving Facility”).
“Federal Funds Effective Rate”: for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it.
“Fee Payment Date”: commencing on September 30, 2008, (a) the last Business Day of
each March, June, September and December and (b) the last day of the Revolving Commitment Period.
“Foreign Subsidiary”: any Restricted Subsidiary of the Borrower that is not a
Domestic Subsidiary.
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“Foreign Subsidiary Holding Company”: any Restricted Subsidiary of the Borrower which
is a Domestic Subsidiary substantially all of the assets of which consist of the Capital Stock of
one or more Foreign Subsidiaries.
“Funded Debt”: with respect to any Person, all Indebtedness of such Person of the
types described in clauses (a), (b), (e), (g)(ii) or, to the extent related to Indebtedness of the
types described in the preceding clauses, (d) of the definition of “Indebtedness”.
“Funding Office”: the office of the Administrative Agent specified in Section 10.2 or
such other office as may be specified from time to time by the Administrative Agent as its funding
office by written notice to the Borrower and the Lenders.
“GAAP”: generally accepted accounting principles in the United States as in effect
from time to time.
“Governmental Authority”: any nation or government, any state, province or other
political subdivision thereof and any governmental entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government and, as to any
Lender, any securities exchange and any self regulatory organization (including the National
Association of Insurance Commissioners).
“Government Contracts”: as defined in the Guarantee and Collateral Agreement.
“Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement to be
executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor, substantially in
the form of Exhibit A, as the same may be amended, supplemented or otherwise modified from time to
time.
“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any
obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any
bank under any letter of credit) pursuant to which the guaranteeing person has issued a guarantee,
reimbursement, counterindemnity or similar obligation, in either case guaranteeing or by which such
Person becomes contingently liable for any Indebtedness (the “primary obligations”) of any
other third Person (the “primary obligor”) in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any
such primary obligation or (2) to maintain working capital, equity capital or any other financial
statement condition or liquidity of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase Property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business and reasonable indemnity obligations
in effect on the Closing Date or entered into in connection with any acquisition or disposition of
assets or any Investment permitted under this Agreement. The amount of any Guarantee Obligation of
any guaranteeing Person shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee Obligation is made
and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms
of the instrument embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated or determinable, in
which case, the amount of such Guarantee Obligation shall be
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such guaranteeing person’s maximum reasonably anticipated liability in respect thereof
(assuming such person is required to perform thereunder) as determined by such Person in good
faith.
“Guarantors”: the collective reference to Holdings and the Subsidiary Guarantors.
“Hedge Agreements”: all agreements with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions, in each case, entered into by the
Borrower or any Restricted Subsidiary.
“Holdings”: as defined in the preamble hereto.
“Holdings IPO”: the issuance by Holdings or any Parent Company of its common Capital
Stock in an underwritten primary public offering (other than a public offering pursuant to a
registration statement on Form S-8) pursuant to an effective registration statement filed with the
SEC in accordance with the Securities Act whether alone or in connection with a secondary public
offering.
“Immaterial Subsidiary”: on any date, any Subsidiary of the Borrower that has had
less than 5% of Consolidated Total Assets and 5% of annual consolidated revenues of the Borrower
and its Restricted Subsidiaries as reflected on the most recent financial statements delivered
pursuant to Section 6.1 prior to such date; provided that at no time shall all Immaterial
Subsidiaries have in the aggregate Consolidated Total Assets or annual consolidated revenues (as
reflected on the most recent financial statements delivered pursuant to Section 6.1 prior to such
time) in excess of 7.5% of Consolidated Total Assets or annual consolidated revenues, respectively,
of the Borrower and its Restricted Subsidiaries.
“Increased Amount Date”: as defined in Section 2.25.
“Indebtedness” of any Person: without duplication, (a) all indebtedness of such
Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person for the deferred purchase price of
Property or services already received, (d) all Guarantee Obligations by such Person of Indebtedness
of others, (e) all Capital Lease Obligations of such Person, (f) all payments that such Person
would have to make in the event of an early termination, on the date Indebtedness of such Person is
being determined in respect of outstanding Hedge Agreements (such payments in respect of any Hedge
Agreement with a counterparty being calculated subject to and in accordance with any netting
provisions in such Hedge Agreement), (g) the principal component of all obligations, contingent or
otherwise, of such Person (i) as an account party in respect of letters of credit (other than any
letters of credit, bank guarantees or similar instrument in respect of which a back-to-back letter
of credit has been issued under or permitted by this Credit Agreement) and (ii) in respect of
bankers’ acceptances; provided that Indebtedness shall not include (A) trade and other
ordinary course payables, accrued expenses and intercompany liabilities arising in the ordinary
course of business, (B) prepaid or deferred revenue arising in the ordinary course of business, (C)
purchase price holdbacks arising in the ordinary course of business in respect of a portion of the
purchase price of an asset to satisfy unperformed obligations of the seller of such asset or (D)
earn-out and other contingent obligations until such obligations become a liability on the balance
sheet of such Person in accordance with GAAP. The Indebtedness of any Person shall include the
Indebtedness of any partnership in which such Person is a general Partner, other than to the extent
that the instrument or agreement evidencing such Indebtedness expressly limits the liability of
such Person in respect thereof.
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“Indebtedness for Borrowed Money”: (a) to the extent the following would be reflected
on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries prepared in
accordance with GAAP, the principal amount of all Indebtedness of the Borrower and its Restricted
Subsidiaries with respect to (i) borrowed money, evidenced by debt securities, debentures,
acceptances, notes or other similar instruments and (ii) Capital Lease Obligations, (b)
reimbursement obligations for letters of credit and financial guarantees (without duplication)
(other than ordinary course of business contingent reimbursement obligations) and (c) Hedge
Agreements; provided that the Obligations shall not constitute Indebtedness for Borrowed
Money.
“Indemnified Liabilities”: as defined in Section 10.5.
“Indemnitee”: as defined in Section 10.5.
“Initial Borrower”: as defined in the preamble hereto.
“Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is
insolvent within the meaning of Section 4245 of ERISA.
“Insolvent”: pertaining to a condition of Insolvency.
“Instrument”: as defined in the Guarantee and Collateral Agreement.
“Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including, without limitation, copyrights, copyright licenses, domain
names, patents, patent licenses, trademarks, trademark licenses, trade names, technology, know-how
and processes, and all rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
“Interest Payment Date”: (a) commencing on September 30, 2008, as to any ABR Loan,
the last Business Day of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any Eurocurrency Loan having an
Interest Period of three months or less, the last day of such Interest Period, (c) as to any
Eurocurrency Loan having an Interest Period longer than three months, each day that is three
months, or a whole multiple thereof, after the first day of such Interest Period and the last day
of such Interest Period and (d) as to any Loan (other than any Revolving Loan that is an ABR Loan
and any Swingline Loan), the date of any repayment or prepayment made in respect thereof.
“Interest Period”: as to any Eurocurrency Loan, (a) initially, the period commencing
on the borrowing or conversion date, as the case may be, with respect to such Eurocurrency Loan and
ending one, two, three or six or (if available from all Lenders under the relevant Facility) nine
or twelve months (or such other period acceptable to all such Lenders) thereafter, as selected by
the Borrower in its notice of borrowing or notice of continuation or conversion, as the case may
be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurocurrency Loan and ending one, two, three or
six or (with the consent of each affected Lender under the relevant Facility) nine or twelve months
(or such other period acceptable to all such Lenders) thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not later than 1:00 P.M., New York City time, on the
date that is three Business Days prior to the last day of the then current Interest Period with
respect thereto; provided that all of the foregoing provisions relating to Interest Periods
are subject to the following:
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(i) if any Interest Period would otherwise end on a day that is not a Business Day,
such Interest Period shall be extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the scheduled Revolving
Termination Date or beyond the date final payment is due on the Term Loans shall end on the
Revolving Termination Date or such due date, as applicable; and
(iii) any Interest Period that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of a calendar month.
“Investments”: as defined in Section 7.7.
“Issuing Lenders”: (a) Credit Suisse and (b) any other Revolving Lender from time to
time designated by the Borrower, in its sole discretion, as an Issuing Lender with the consent of
such other Revolving Lender.
“Joinder Agreement”: an agreement substantially in the form of Exhibit H.
“L/C Commitment”: $30,000,000.
“L/C Obligations”: at any time, an amount equal to the sum of (a) the aggregate then
undrawn and unexpired face amount of the then outstanding Letters of Credit and (b) the aggregate
amount of drawings under Letters of Credit that have not then been reimbursed. The L/C Obligations
of any Lender at any time shall be its Revolving Percentage of the total L/C Obligations at such
time.
“L/C Participants”: the collective reference to all the Revolving Lenders other than
the applicable Issuing Lender.
“Lead Arrangers”: Banc of America Securities LLC, Credit Suisse Securities (USA) LLC
and Lehman Brothers Inc. in their capacity as joint lead arrangers and joint bookrunners.
“Lenders”: as defined in the preamble hereto.
“Letters of Credit”: as defined in Section 3.1(a).
“Lien”: any mortgage, pledge, hypothecation, collateral assignment, encumbrance, lien
(statutory or other), charge or other security interest or any other security agreement of any kind
or nature whatsoever (including any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the foregoing). For the
avoidance of doubt, it is understood and agreed that the Borrower and any Restricted Subsidiary
may, as part of its business, grant licenses to third parties to use Intellectual Property owned or
developed by, or licensed to, such entity. For purposes of this Agreement and the other Loan
Documents, such licensing activity, and licenses granted pursuant to the Merger Documents, shall
not constitute a “Lien” on such Intellectual Property. Each of the Administrative Agent and each
Lender understands that any such licenses may be exclusive to the applicable licensees, and such
exclusivity provisions may limit the ability of the Administrative Agent to utilize, sell, lease,
license or transfer the related Intellectual Property or otherwise realize value from such
Intellectual Property pursuant hereto.
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“Loan”: any loan made by any Lender pursuant to this Agreement.
“Loan Documents”: the collective reference to this Agreement, the Security Documents
and the Notes (if any) and any amendment, waiver, supplement or other modification to any of the
foregoing.
“Loan Parties”: Holdings, the Borrower and each Subsidiary Guarantor.
“Majority Facility Lenders”: with respect to any Facility, the holders of more than
50% of the aggregate unpaid principal amount of the Tranche A Term Loans, Tranche B Term Loans, New
Loans or the Revolving Extensions of Credit, as the case may be, outstanding under such Facility
(or (i) in the case of the Revolving Facility, prior to any termination of the Revolving
Commitments under such Facility, the holders of more than 50% of the Revolving Commitments under
such Facility or (ii) in the case of any New Facility that is a revolving credit facility, prior to
any termination of the New Loan Commitments under such Facility, the holders of more than 50% of
the New Loan Commitments under such Facility); provided, however, that
determinations of the “Majority Facility Lenders” shall exclude any Commitments or Loans held by
the Carlyle Fund.
“Majority Revolving Facility Lenders”: the Majority Facility Lenders in respect of
the Revolving Facility.
“Majority Tranche A Term Facility Lenders”: the Majority Facility Lenders in respect
of the Tranche A Term Facility.
“Majority Tranche B Term Facility Lenders”: the Majority Facility Lenders in respect
of the Tranche B Term Facility.
“Management Agreement”: the Management Agreement, by and between Explorer Holding
Corporation, the Borrower and TC Group V, L.L.C., as in effect on the Closing Date and as modified
from time to time with the consent of the Administrative Agent (which consent shall not be
unreasonably withheld or delayed).
“Mandatory Prepayment Date”: as defined in Section 2.12(e).
“Material Adverse Effect”: a material adverse effect on (a) the business, operations,
assets, financial condition or results of operations of the Borrower and its Restricted
Subsidiaries, taken as a whole, or (b) the material rights and remedies available to the
Administrative Agent and the Lenders, taken as a whole, under the Loan Documents.
“Material Real Property”: any Real Property located in the United States and owned in
fee by a Loan Party on the Closing Date having an estimated fair market value (in the good faith
judgment of such Loan Party) exceeding $2,000,000 and any after-acquired Real Property located in
the United States owned by a Loan Party having a gross purchase price exceeding $2,000,000 at the
time of acquisition.
“Material Subsidiary”: any Subsidiary that is not an Immaterial Subsidiary.
“Materials of Environmental Concern”: any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products, polychlorinated biphenyls, urea-formaldehyde
insulation,
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asbestos, pollutants, contaminants, radioactivity and any other substances that are defined as
hazardous or toxic under any Environmental Law, that are regulated pursuant to any Environmental
Law.
“Merger Agreement”: the Agreement and Plan of Merger, dated as of May 15, 2008, by
and among, Holdings, the Company, Explorer Holding Corporation, the Initial Borrower and Booz &
Company Inc.
“Merger Documents”: collectively, the Merger Agreement, the Spin Off Agreement, and
all schedules, exhibits, annexes and amendments thereto (including the execution versions of any
agreements that are exhibits or annexes thereto), in each case, as amended, supplemented or
otherwise modified from time to time.
“Merger Transactions”: the transactions contemplated by the Merger Documents.
“Mezzanine Facility Indebtedness”: Indebtedness incurred under the Mezzanine Loan
Facility.
“Mezzanine Loan Agreement”: the Mezzanine Credit Agreement, dated as of July 31,
2008, among the Borrower, the lenders from time to time parties thereto, Credit Suisse, as
administrative agent, and Credit Suisse Securities (USA) LLC, Banc of America Securities LLC and
Lehman Brothers Inc., as joint lead arrangers and joint bookrunners, as such agreement may be
amended, supplemented or otherwise modified from time to time or refunded, refinanced,
restructured, replaced, renewed, repaid, increased or extended from time to time to the extent not
prohibited by this Agreement (whether in whole or in part, whether with the original administrative
agent and lenders or other agents and lenders or otherwise, and whether provided under the original
Mezzanine Loan Agreement or other credit agreements, indentures or otherwise, unless such agreement
or instrument expressly provides that it is not intended to be and is not a Mezzanine Loan
Agreement hereunder).
“Mezzanine Loan Documents”: the Loan Documents as defined in the Mezzanine Loan
Agreement or any other documentation evidencing any Mezzanine Loan Facility, as the same may be
amended, supplemented or otherwise modified, extended, renewed, refinanced or replaced from time to
time to the extent not prohibited by this Agreement.
“Mezzanine Loan Facility”: the collective reference to the Mezzanine Loan Agreement,
any Mezzanine Loan Documents, any notes issued pursuant thereto and any guarantee agreement, and
other instruments and documents executed and delivered pursuant to or in connection with any of the
foregoing, in each case as the same may be amended, supplemented or otherwise modified from time to
time, or refunded, refinanced, restructured, replaced, renewed, repaid, increased or extended from
time to time (whether in whole or in part, whether with the original agent and lenders or other
agents and lenders or otherwise, and whether provided under the original Mezzanine Loan Agreement
or other credit agreements, indentures or otherwise, unless such agreement expressly provides that
it is not intended to be and is not a Mezzanine Loan Facility hereunder).
“Mezzanine Loans”: the loans made pursuant to the Mezzanine Loan Agreement.
“Moody’s”: Moody’s Investors Service, Inc. or any successor to the rating agency
business thereof.
“Mortgaged Properties”: all Real Property that shall be subject to a Mortgage that is
delivered pursuant to the terms of this Agreement.
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“Mortgage”: any mortgage, deed of trust, hypothec, assignment of leases and rents or
other similar document delivered on or after the Closing Date by any Loan Party in favor of, or for
the benefit of, the Collateral Agent for the benefit of the Secured Parties, with respect to
Mortgaged Properties, each substantially in form and substance reasonably acceptable to the
Administrative Agent and the Borrower (taking into account the law of the jurisdiction in which
such mortgage, deed of trust, hypothec or similar document is to be recorded), as the same may be
amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Multiemployer Plan”: a Plan that is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
“Net Cash Proceeds”: (a) in connection with any Asset Sale or any Recovery Event, the
proceeds thereof in the form of cash, Cash Equivalents and Permitted Liquid Investments (including
any such proceeds received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but only as and when
received) received by any Loan Party, net of (i) attorneys’ fees, accountants’ fees, investment
banking fees, consulting fees, amounts required to be applied to the repayment of Indebtedness
secured by a Lien expressly permitted hereunder on any asset which is the subject of such Asset
Sale or Recovery Event (other than any Lien pursuant to a Security Document) and other customary
fees and expenses actually incurred by any Loan Party in connection therewith; (ii) taxes paid or
reasonably estimated to be payable by any Loan Party as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing arrangements); (iii) the amount of any
reasonable reserve established in accordance with GAAP against any liabilities (other than any
taxes deducted pursuant to clause (ii) above) (A) associated with the assets that are the subject
of such event and (B) retained by the Borrower or any of the Restricted Subsidiaries,
provided that the amount of any subsequent reduction of such reserve (other than in
connection with a payment in respect of any such liability) shall be deemed to be Net Cash Proceeds
of such event occurring on the date of such reduction and (iv) the pro rata portion of the Net Cash
Proceeds thereof (calculated without regard to this clause (iv)) attributable to minority interests
and not available for distribution to or for the account of the Borrower or any Domestic Subsidiary
as a result thereof and (b) in connection with any Equity Issuance or other issuance or sale of
debt securities or instruments or the incurrence of Funded Debt, the cash proceeds received from
such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees,
consulting fees, underwriting discounts and commissions and other customary fees and expenses
actually incurred in connection therewith.
“New Facility”: as defined in the definition of “Facility”.
“New Lender”: as defined in Section 2.25.
“New Loan Commitments”: as defined in Section 2.25.
“New Loans”: any loan made by any New Lender pursuant to this Agreement.
“New Revolving Loans”: as defined in Section 2.25.
“New Subsidiary”: as defined in Section 7.2(t).
“New Term Lender”: a Lender that has a New Term Loan.
“New Term Loans”: as defined in Section 2.25.
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“Non-Excluded Subsidiary”: any Subsidiary of the Borrower which is not an Excluded
Subsidiary.
“Non-Excluded Taxes”: as defined in Section 2.20(a).
“Non-Guarantor Subsidiary”: any Subsidiary of the Borrower which is not a Subsidiary
Guarantor.
“Non-Recourse Debt”: Indebtedness (a) with respect to which no default would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness of Holdings, the Borrower
or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity and (b) as to which the
lenders or holders thereof will not have any recourse to the capital stock or assets of Holdings,
the Borrower or any of its Restricted Subsidiaries.
“Non-US Lender”: as defined in Section 2.20(d).
“Note”: any promissory note evidencing any Loan, which promissory note shall be in
the form of Exhibit J-1, Exhibit J-2 or Exhibit J-3, as applicable, or such other form as agreed
upon by the Administrative Agent and the Borrower.
“Obligations”: the unpaid principal of and interest on (including, without
limitation, interest accruing after the maturity of the Loans and Reimbursement Obligations and
interest accruing after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed or allowable in such proceeding) the Loans, the
Reimbursement Obligations and all other obligations and liabilities of the Borrower to the
Administrative Agent, the Collateral Agent or to any Lender (or, in the case of Specified Hedge
Agreements or Cash Management Obligations of the Borrower or any of its Subsidiaries to the
Administrative Agent, the Collateral Agent, any Lender or any affiliate of any Lender), whether
direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter
incurred, in each case, which may arise under, out of, or in connection with, this Agreement, any
other Loan Document, the Letters of Credit, any Specified Hedge Agreement or Cash Management
Obligations or any other document made, delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees, charges and disbursements of counsel to the
Administrative Agent or any Lender that are required to be paid by the Borrower pursuant hereto) or
otherwise; provided that (a) obligations of the Borrower or any of the Subsidiary
Guarantors under any Specified Hedge Agreement or any Cash Management Obligations shall be secured
and guaranteed pursuant to the Security Documents only to the extent that, and for so long as, the
other Obligations are so secured and guaranteed and (b) any release of Collateral or Guarantors
effected in the manner permitted by this Agreement shall not require the consent of holders of
obligations under Specified Hedge Agreements or Cash Management Obligations.
“Offer”: as defined in Section 2.11(c)(i).
“Offer Loans”: as defined in Section 2.11(c)(i).
“Other Taxes”: any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or from
the
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execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.
“Parent Company”: any direct or indirect parent of Holdings.
“Participant”: as defined in Section 10.6(c).
“Payment Amount”: as defined in Section 3.5.
“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A
of Title IV of ERISA (or any successor).
“Permitted Acquisition”: (a) any acquisition (including, if applicable, in the case
of any Intellectual Property, by way of license) approved by the Required Lenders, (b) any
acquisition made solely with the Net Cash Proceeds of any substantially concurrent Equity Issuance
or capital contribution (other than Disqualified Capital Stock) or (c) any acquisition of a
majority controlling interest in the Capital Stock, or all or substantially all of the assets, of
any Person, or of all or substantially all of the assets constituting a division, product line or
business line of any Person (each, an “Acquisition”), if such Acquisition described in this
clause (c) complies with the following criteria:
(a) no Event of Default shall be in effect immediately prior or after giving effect to
such Acquisition; and
(b) if the total consideration (other than any equity consideration) in respect of such
Acquisition exceeds $10,000,000, the Borrower shall have delivered to the Administrative
Agent a certificate of the Borrower signed by a Responsible Officer to such effect, together
with all relevant financial information for such Subsidiary or asset to be acquired
reasonably requested by the Administrative Agent prior to such acquisition to the extent
available.
“Permitted Business”: the Business and any services, activities or businesses
incidental or directly related or similar to any line of business engaged in by the Borrower and
its Subsidiaries as of the Closing Date or any business activity that is a reasonable extension,
development or expansion thereof or ancillary thereto.
“Permitted Investors”: the collective reference to the Sponsor and its Affiliates
(but excluding any operating portfolio companies of the foregoing), the members of management of
Holdings and its Subsidiaries that have ownership interests in Holdings as of the Closing Date, and
the directors of Holdings and its Subsidiaries or any Parent Company on, or as of no later than 60
days following, the Closing Date.
“Permitted Liquid Investments”: (a) securities issued or directly and fully and
unconditionally guaranteed or insured by the United States government or any agency or
instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and
credit obligation of such government with maturities of 24 months or less from the date of
acquisition, (b) certificates of deposit, time deposits and eurodollar time deposits with
maturities of 24 months or less from the date of acquisition, bankers’ acceptances with maturities
not exceeding 24 months and overnight bank deposits, in each case, with any domestic commercial
bank having capital and surplus in excess of $250,000,000, (c) repurchase obligations with a term
of not more than 30 days for underlying securities of the types described in clauses (a) and (b)
above entered into with any financial institution meeting the qualifications specified in clause
(b) above, (d) commercial paper having a rating of at least A-1 from S&P or P-1 from
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Moody’s (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an
equivalent rating from another rating agency) and maturing within 24 months after the date of
acquisition and Indebtedness and Preferred Stock issued by Persons with a rating of “A” or higher
from S&P or “A2” or higher from Moody’s with maturities of 24 months or less from the date of
acquisition, (e) readily marketable direct obligations issued by any state of the United States or
any political subdivision thereof having one of the two highest rating categories obtainable from
either Moody’s or S&P with maturities of 24 months or less from the date of acquisition, (f)
marketable short-term money market and similar securities having a rating of at least P-1 or A-1
from Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such
obligations, an equivalent rating from another rating agency) and in each case maturing within 24
months after the date of creation or acquisition thereof, (g) Investments with average maturities
of 12 months or less from the date of acquisition in money market funds rated AA- (or the
equivalent thereof) or better by S&P or Aa3 (or the equivalent thereof) or better by Moody’s, (h)
instruments equivalent to those referred to in clauses (a) through (g) above denominated in euro or
pound sterling or any other foreign currency comparable in credit quality and tenor to those
referred to above and customarily used by corporations for cash management purposes in any
jurisdiction outside the United States to the extent reasonably required in connection with any
business conducted by any Restricted Subsidiary organized in such jurisdiction including, without
limitation, certificates of deposit or bankers’ acceptances of, and bank deposits with, any bank
organized under the laws of any country that is a member of the European Economic Community or
Canada or any subdivision thereof, whose short-term commercial paper rating from S&P is at least
A-1 or the equivalent thereof or from Moody’s is at least P-1 or the equivalent thereof, in each
case with maturities of not more than 24 months from the date of acquisition and (i) investment in
funds which invest substantially all of their assets in Cash Equivalents of the kinds described in
clauses (a) through (h) of this definition.
“Permitted Refinancings”: with respect to any Person, refinancings, replacements,
modifications, refundings, renewals or extensions of Indebtedness provided that (a) there
is no increase in the principal amount (or accrued value) thereof (excluding accrued interest,
fees, discounts, premiums and expenses), (b) the weighted average life to maturity of such
Indebtedness is greater than or equal to the shorter of (i) the weighted average life to maturity
of the Indebtedness being refinanced and (ii) the weighted average life to maturity that would
result if all payments of principal on the Indebtedness being refinanced that were due on or after
the date that is one year following the Tranche B Term Maturity Date were instead due one year
following the Tranche B Term Maturity Date, (c) if the Indebtedness being refinanced, refunded,
modified, renewed or extended is subordinated in right of payment to the Obligations, such
refinancing, refunding, modification, renewal or extension is subordinated in right of payment to
the Obligations (A) on terms at least as favorable to the Lenders as those contained in the
documentation governing the Indebtedness being refinanced, refunded, modified, renewed or extended,
(B) on terms consistent with the then-prevailing market terms for subordination of comparable
Indebtedness or (C) on terms to which the Administrative Agent shall agree, (d) the terms and
conditions (including, if applicable, as to collateral) of any such refinanced, refunded, modified,
renewed or extended Indebtedness are not materially less favorable to the Lenders than the terms
and conditions of the Indebtedness being modified, refinanced, refunded, renewed or extended, (e)
no Default or Event of Default shall have occurred and be continuing at the time thereof or no
Default or Event of Default would result from any such refinancing, refunding, modification,
renewal or extension and (f) with respect to any such Indebtedness that is secured, neither the
Borrower nor any Restricted Subsidiary shall be an obligor or guarantor of any such refinancings,
replacements, refundings, renewals or extensions except to the extent that such Person was such an
obligor or guarantor in respect of the applicable Indebtedness being modified, refinanced,
refunded, renewed or extended.
“Permitted Subordinated Indebtedness”: unsecured, senior subordinated or subordinated
Indebtedness of the Borrower or any Restricted Subsidiary (including guarantees thereof by the
Borrower
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or any Guarantor, as applicable), provided that (a) no scheduled principal payments,
mandatory prepayments, redemptions or sinking fund payments of any Permitted Subordinated
Indebtedness shall be required prior to the date at least 180 days following the Tranche B Term
Maturity Date (or, such later date that is the latest final maturity date of any incremental
extensions of credit hereunder) (other than customary offers to purchase upon a change of control,
asset sale, customary acceleration rights upon an event of default and AHYDO Payments), (b) the
covenants and events of default of such Permitted Subordinated Indebtedness (i) shall be, taken as
a whole, customary for Indebtedness of a similar nature as such Permitted Subordinated Indebtedness
or (ii) shall otherwise not have been objected to by the Administrative Agent, after the
Administrative Agent shall have been afforded a period of five Business Days to review such terms
of such Permitted Subordinated Indebtedness, (c) the terms of subordination applicable to any
Permitted Subordinated Indebtedness shall be (i) taken as a whole, customary for unsecured
subordinated high yield debt securities issued by any Affiliates of the Sponsor or (ii) shall
otherwise not have been objected to by the Administrative Agent, after the Administrative Agent
shall have been afforded a period of five Business Days to review such terms of such Permitted
Subordinated Indebtedness and (d) no Default or Event of Default shall have occurred and be
continuing at the time of incurrence of such Indebtedness or would result therefrom.
“Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
“Plan”: at a particular time, any employee benefit plan as defined in Section 3(3) of
ERISA and in respect of which Holdings, the Borrower or any of its Restricted Subsidiaries is (or,
if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an
“employer” as defined in Section 3(5) of ERISA, including a Multiemployer Plan.
“Pledged Securities”: as defined in the Guarantee and Collateral Agreement.
“Pledged Stock”: as defined in the Guarantee and Collateral Agreement.
“Prepayment Option Notice”: as defined in Section 2.12(e).
“Pricing Grid”: the table set forth below:
| Applicable | Applicable | |||||||||
| Margin for | Applicable | Applicable | Margin for | |||||||
| Tranche A | Margin for | Margin for | Revolving | |||||||
| Term Loans | Tranche A | Revolving Loans | Loans that are | |||||||
| Consolidated | that are | Term Loans | that are | ABR Loans | Applicable | |||||
| Total Leverage | Eurocurrency | that are | Eurocurrency | and Swingline | Commitment | |||||
| Ratio | Loans | ABR Loans | Loans | Loans | Fee Rate | |||||
| ³ 4.00:1.00 | 4.00% | 3.00% | 4.00% | 3.00% | ||||||
| < 4.00:1.00 | 3.75% | 2.75% | 3.75% | 2.75% | ||||||
| ³ 3.50:1.00 | 0.500% | |||||||||
| < 3.50:1.00 | 0.375% |
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Changes in the Applicable Margin with respect to Loans or the Applicable Commitment Fee Rate
resulting from changes in the Consolidated Total Leverage Ratio shall become effective on the date
on which financial statements are delivered to the Lenders pursuant to Section 6.1 and shall remain
in effect until the next change to be effected pursuant to this paragraph. If any financial
statements referred to above are not delivered within the time periods specified in Section 6.1,
then, at the option of (and upon the delivery of notice (telephonic or otherwise) by) the
Administrative Agent or the Required Lenders, until such financial statements are delivered, the
Consolidated Total Leverage Ratio as at the end of the fiscal period that would have been covered
thereby shall for the purposes of this definition be deemed to be greater than 4.00 to 1.00. In
addition, at all times while an Event of Default set forth in Section 8.1(a) or 8.1(f) shall have
occurred and be continuing, the Consolidated Total Leverage Ratio shall for the purposes of the
Pricing Grid be deemed to be greater than 4.00 to 1.00.
“Prime Rate”: as defined in the definition of “ABR”.
“Property”: any right or interest in or to property of any kind whatsoever, whether
real, personal or mixed and whether tangible or intangible, including, without limitation, Capital
Stock.
“Public Company Costs”: costs relating to compliance with the provisions of the
Securities Act and the Exchange Act, as applicable to companies with equity or debt securities held
by the public, the rules of national securities exchange companies with listed equity or debt
securities, directors’ compensation, fees and expense reimbursement, costs relating to investor
relations, shareholder meetings and reports to shareholders or debtholders, directors and officers’
insurance and other executive costs, legal and other professional fees, and listing fees.
“Qualified Capital Stock”: any Capital Stock that is not Disqualified Capital Stock.
“Rate Determination Notice”: as defined in Section 2.22.
“Ratio Calculation Date”: as defined in Section 1.3(a).
“Real Property”: collectively, all right, title and interest of the Borrower or any
other Subsidiary in and to any and all parcels of real property owned or operated by the Borrower
or any other Subsidiary together with all improvements and appurtenant fixtures, easements and
other property and rights incidental to the ownership, lease or operation thereof.
“Recovery Event”: any settlement of or payment in respect of any Property or casualty
insurance claim or any condemnation proceeding relating to any asset of the Borrower or any
Domestic Subsidiary that is a Restricted Subsidiary, in an amount for each such event exceeding
$1,000,000.
“Reference Period”: the period of four fiscal quarters most recently ended
immediately prior to the date of any specified event for which financial statements have been
delivered pursuant to Section 6.1.
“Refinanced Term Loans”: as defined in Section 10.1.
“Refinancing”: the repayment of certain existing Indebtedness of the Company on the
Closing Date.
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“Refunded Swingline Loans”: as defined in Section 2.7(b).
“Register”: as defined in Section 10.6(b)(iv).
“Regulation U”: Regulation U of the Board as in effect from time to time.
“Reimbursement Obligation”: the obligation of the Borrower to reimburse an Issuing
Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit issued by such Issuing
Lender.
“Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the aggregate
Net Cash Proceeds received by any Loan Party for its own account in connection therewith that are
not applied to prepay the Term Loans pursuant to Section 2.12 as a result of the delivery of a
Reinvestment Notice.
“Reinvestment Event”: any Asset Sale or Recovery Event in respect of which a Loan
Party has delivered a Reinvestment Notice.
“Reinvestment Notice”: a written notice signed on behalf of any Loan Party by a
Responsible Officer stating that such Loan Party (directly or indirectly through a Subsidiary)
intends and expects to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or
Recovery Event to acquire assets or make investments useful in the Business.
“Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the
Reinvestment Deferred Amount relating thereto less any amount contractually committed by
the applicable Loan Party (directly or indirectly through a Subsidiary) to be expended prior to the
relevant Reinvestment Prepayment Date (a “Committed Reinvestment Amount”), or actually
expended prior to such date, in each case to acquire assets or make investments useful in the
Business.
“Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the earlier
of (i) the date occurring 12 months after such Reinvestment Event and (ii) with respect to any
portion of a Reinvestment Deferred Amount, the date on which any Loan Party shall have determined
not to acquire assets or make investments useful in the Business with such portion of such
Reinvestment Deferred Amount.
“Related Business Assets”: assets (other than cash, Cash Equivalents or Permitted
Liquid Investments) used or useful in a Permitted Business; provided that any assets
received by the Borrower or a Restricted Subsidiary in exchange for assets transferred by the
Borrower or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they
consist of securities of a Person, unless upon receipt of the securities of such Person, such
Person would become a Restricted Subsidiary.
“Release”: any release, spill, emission, leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or
within or upon any building, structure or facility.
“Reorganization”: with respect to any Multiemployer Plan, the condition that such
plan is in reorganization within the meaning of Section 4241 of ERISA.
“Replacement Term Loans”: as defined in Section 10.1.
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“Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, other
than those events as to which the thirty day notice period is waived by the PBGC in accordance with
the regulations thereunder.
“Representatives”: as defined in Section 10.14.
“Repricing Transaction”: any prepayment of the Tranche B Term Loans using proceeds of
Indebtedness incurred by the Borrower or one or more Subsidiaries from a substantially concurrent
issuance or incurrence of secured, syndicated term loans, including, without limitation, by way of
Replacement Loans incurred pursuant to Section 10.1(d), provided by one or more banks, financial
institutions or other Persons for which the interest rate payable thereon (disregarding any
performance or ratings based pricing grid that could result in a lower interest rate based on
future performance) is lower than the Eurocurrency Rate on the date of such optional prepayment
plus the Applicable Margin with respect to the Tranche B Term Loans on the date of such optional
prepayment, provided that the primary purpose of such prepayment is to refinance Tranche B
Term Loans at a lower interest rate.
“Required Lenders”: at any time, the holders of more than 50% of (a) until the
Closing Date, the Commitments then in effect and (b) thereafter, the sum of (i) the aggregate
unpaid principal amount of the Term Loans then outstanding, (ii) the Revolving Commitments then in
effect or, if the Revolving Commitments have been terminated, the Revolving Extensions of Credit
then outstanding and (iii) the New Loan Commitments then in effect in respect of any New Facility
that is a revolving credit facility or, if such New Loan Commitments have been terminated, the New
Revolving Loans then outstanding; provided, however, that determinations of the
“Required Lenders” shall exclude any Commitments or Loans held by the Carlyle Fund.
“Required Prepayment Lenders”: the holders of more than 50% of the aggregate unpaid
principal amount of the Tranche A Term Loans and the Tranche B Term Loans.
“Requirement of Law”: as to any Person, the certificate of incorporation and by-laws
or other organizational or governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.
“Responsible Officer”: the chief executive officer, president, chief financial
officer (or similar title) controller or treasurer (or similar title) of Holdings or the Borrower,
as applicable, or (with respect to Section 6.7) any Restricted Subsidiary and, with respect to
financial matters, the chief financial officer (or similar title), controller or treasurer (or
similar title) of Holdings or the Borrower, as applicable.
“Restricted Payments”: as defined in Section 7.6.
“Restricted Subsidiary”: any Subsidiary of the Borrower which is not an Unrestricted
Subsidiary.
“Revolving Commitment Period”: the period from and including the Closing Date to the
Revolving Termination Date.
“Revolving Commitments”: as to any Revolving Lender, the obligation of such Lender,
if any, to make Revolving Loans and participate in Swingline Loans and Letters of Credit in an
aggregate principal and/or face amount not to exceed the amount set forth under the heading
“Revolving
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Commitment” opposite such Lender’s name on Schedule 2.1, or, as the case may be, in the
Assignment and Assumption pursuant to which such Lender became a party hereto, as the same may be
changed from time to time pursuant to the terms hereof. The original aggregate amount of the
Revolving Commitments is $100,000,000.
“Revolving Extensions of Credit”: as to any Revolving Lender at any time, an amount
equal to the sum of, without duplication (a) the aggregate principal amount of all Revolving Loans
held by such Lender then outstanding, (b) such Lender’s Revolving Percentage of the L/C Obligations
then outstanding and (c) such Lender’s Revolving Percentage of the aggregate principal amount of
Swingline Loans then outstanding.
“Revolving Facility”: as defined in the definition of “Facility”.
“Revolving Lender”: each Lender that has a Revolving Commitment or that holds
Revolving Loans.
“Revolving Loans”: as defined in Section 2.4(a).
“Revolving Percentage” as to any Revolving Lender at any time, the percentage which
such Lender’s Revolving Commitment then constitutes of the aggregate Revolving Commitments or, at
any time after the Revolving Commitments shall have expired or terminated, the percentage which
such Revolving Lender’s Revolving Extensions of Credit then outstanding constitutes of the
aggregate Revolving Extensions of Credit then outstanding.
“Revolving Termination Date”: the sixth anniversary of the Closing Date.
“S&P”: Standard & Poor’s Ratings Group, Inc., or any successor to the rating agency
business thereof.
“Screen”: the relevant display page for the Eurocurrency Base Rate (as reasonably
determined by the Administrative Agent) on the Bloomberg Information Service or any successor
thereto; provided that if the Administrative Agent determines that there is no such
relevant display page or otherwise in Bloomberg for the Eurocurrency Base Rate, “Screen” means such
other comparable publicly available service for displaying the Eurocurrency Base Rate (as
reasonably determined by the Administrative Agent).
“SEC”: the Securities and Exchange Commission (or successors thereto or an analogous
Governmental Authority).
“Secured Parties”: collectively, the Lenders, the Administrative Agent, the
Collateral Agent, the Swingline Lender, any Issuing Lender, any other holder from time to time of
any of the Obligations and, in each case, their respective successors and permitted assigns.
“Securities Act”: the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
“Security”: as defined in the Guarantee and Collateral Agreement.
“Security Documents”: the collective reference to the Guarantee and Collateral
Agreement and all other security documents (including any Mortgages) hereafter delivered to the
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Administrative Agent or the Collateral Agent purporting to grant a Lien on any Property of any
Loan Party to secure the Obligations.
“Single Employer Plan”: any Plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA and in respect
of which any Loan Party or any Commonly Controlled Entity 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.
“Solvent”: with respect to any Person, as of any date of determination, (a) the
amount of the “present fair saleable value” of the assets of such Person will, as of such date,
exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as
such quoted terms are determined in accordance with applicable federal and state laws governing
determinations of the solvency of debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount that will be required to pay the
liability of such Person on its debts as such debts become absolute and matured, (c) such Person
will not have, as of such date, an unreasonably small amount of capital with which to conduct its
business and (d) such Person will be able to pay its debts as they mature. For purposes of this
definition, (i) “debt” means liability on a “claim”, (ii) “claim” means any (x) right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured and (iii) except as otherwise provided by
applicable law, the amount of “contingent liabilities” at any time shall be the amount thereof
which, in light of all the facts and circumstances existing at such time, can reasonably be
expected to become actual or matured liabilities.
“Special Purpose Entity”: Booz Allen Hamilton Intellectual Property Holdings, LLC or
any other Person formed or organized primarily for the purpose of holding trademarks, service
marks, trade names, logos, slogans and/or internet domain names containing the mark “Booz” without
the names “Allen” or “Hamilton” and licensing such marks to Booz & Company Inc. and its affiliates.
“Specified Equity Contribution”: as defined in Section 8.2.
“Specified Hedge Agreement”: any Hedge Agreement (a) entered into by (i) the Borrower
or any Subsidiary Guarantor and (ii) any Lender or any affiliate thereof at the time such Hedge
Agreement was entered into, as counterparty and (b) that has been designated by such Lender and the
Borrower, by notice to the Administrative Agent, as a Specified Hedge Agreement. The designation
of any Hedge Agreement as a Specified Hedge Agreement shall not create in favor of the Lender or
affiliate thereof that is a party thereto any rights in connection with the management or release
of any Collateral or of the obligations of any Guarantor under the Guarantee and Collateral
Agreement. For the avoidance of doubt, all Hedge Agreements in existence on the Closing Date
between the Borrower or any Subsidiary Guarantor and any Lender shall constitute Specified Hedge
Agreements.
“Specified Representations”: (a) the representations made by the Company in the
Merger Agreement as are material to the interests of the Lenders, but only to the extent that the
Borrower has the right to terminate its obligations under the Merger Agreement as a result of the
breach of such representations and (b) the representations and warranties set forth in Sections
4.2(a), 4.4(a), 4.4(c), 4.11 and 4.13.
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“Spin Off Agreement”: the Spin Off Agreement, dated as of May 15, 2008, by and among
the Company, Booz & Company Holdings, LLC, Booz & Company Inc., Booz & Company Intermediate I Inc.
and Booz & Company Intermediate II Inc.
“Sponsor”: The Carlyle Group and any Affiliates thereof (but excluding any operating
portfolio companies of the foregoing).
“Subsidiary”: as to any Person, a corporation, partnership, limited liability company
or other entity of which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the Board of Directors of such corporation,
partnership or other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both, by such Person;
provided that any joint venture that is not required to be consolidated with the Borrower
and its consolidated Subsidiaries in accordance with GAAP shall not be deemed to be a “Subsidiary”
for purposes hereof. Unless otherwise qualified, all references to a “Subsidiary” or to
“Subsidiaries” in this Agreement shall refer to a direct or indirect Subsidiary or
Subsidiaries of the Borrower.
“Subsidiary Guarantors”: (a) each Subsidiary other than any Excluded Subsidiary and
(b) any other Subsidiary of the Borrower that is a party to the Guarantee and Collateral Agreement.
“Surviving Borrower”: as defined in the preamble hereto.
“Swingline Commitment”: the obligation of the Swingline Lender to make Swingline
Loans pursuant to Section 2.6 in an aggregate principal amount at any one time outstanding not to
exceed $40,000,000.
“Swingline Lender”: (a) Credit Suisse, in its capacity as the lender of Swingline
Loans or (b) upon the resignation of Credit Suisse as a Swingline Lender, any Revolving Lender from
time to time designated by the Borrower, in its sole discretion, as the Swingline Lender (with the
consent of such other Revolving Lender).
“Swingline Loans”: as defined in Section 2.6(a).
“Swingline Participation Amount”: as defined in Section 2.7(c).
“Syndication Agent”: as defined in the preamble hereto.
“Taxes”: all present and future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, including any interest, additions to tax or
penalties applicable thereto.
“Term Lenders”: the collective reference to the Tranche A Term Lenders and the
Tranche B Term Lenders.
“Term Loans”: the collective reference to the Tranche A Term Loans, the Tranche B
Term Loans and the New Term Loans, if any.
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“Test Period”: on any date of determination, the period of four consecutive fiscal
quarters of the Borrower (in each case taken as one accounting period) most recently ended on or
prior to such date for which financial statements have been or are required to be delivered
pursuant to Section 6.1.
“Tranche”: as defined in Section 2.25.
“Tranche A Term Commitment”: as to any Lender, the obligation of such Lender, if any,
to make a Tranche A Term Loan to the Borrower in a principal amount not to exceed the amount set
forth under the heading “Tranche A Term Commitment” opposite such Lender’s name on Schedule 2.1,
or, as the case may be, in the Assignment and Assumption pursuant to which such Lender became a
party hereto. The original aggregate amount of the Tranche A Term Commitments is $125,000,000.
“Tranche A Term Facility”: as defined in the definition of “Facility”.
“Tranche A Term Lender”: each Lender that has a Tranche A Term Commitment or that
holds a Tranche A Term Loan.
“Tranche A Term Loan”: as defined in Section 2.1.
“Tranche A Term Maturity Date”: the sixth anniversary of the Closing Date.
“Tranche A Term Percentage”: as to any Tranche A Term Lender at any time on the
Closing Date (but prior to the initial funding of the Tranche A Term Loans), the percentage which
the sum of such Lender’s Tranche A Term Commitments then constitutes of the aggregate Tranche A
Term Commitments (or, at any time after the Closing Date, the percentage which the aggregate
principal amount of such Lender’s Tranche A Term Loans then outstanding constitutes of the
aggregate principal amount of the Tranche A Term Loans then outstanding).
“Tranche B Prepayment Amount”: as defined in Section 2.12(e).
“Tranche B Term Commitment”: as to any Lender, the obligation of such Lender, if any,
to make a Tranche B Term Loan to the Borrower in a principal amount not to exceed the amount set
forth under the heading “Tranche B Term Commitment” opposite such Lender’s name on Schedule 2.1,
or, as the case may be, in the Assignment and Assumption pursuant to which such Lender became a
party hereto. The original aggregate amount of the Tranche B Term Commitments is $585,000,000.
“Tranche B Term Facility”: as defined in the definition of “Facility”.
“Tranche B Term Lender”: each Lender that has a Tranche B Term Commitment or that
holds a Tranche B Term Loan.
“Tranche B Term Loan”: as defined in Section 2.1.
“Tranche B Term Maturity Date”: the seventh anniversary of the Closing Date.
“Tranche B Term Percentage”: as to any Tranche B Term Lender at any time on the
Closing Date (but prior to the initial funding of the Tranche B Term Loans), the percentage which
the sum of such Lender’s Tranche B Term Commitments then constitutes of the aggregate Tranche B
Term Commitments (or, at any time after the Closing Date, the percentage which the aggregate
principal
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amount of such Lender’s Tranche B Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche B Term Loans then outstanding).
“Transaction Documents”: the Merger Documents, the Loan Documents and the Mezzanine
Loan Documents.
“Transactions”: (a) the transactions to occur pursuant to the Transaction Documents,
(b) the Refinancing and (c) the Company Reorganization.
“Transferee”: any Assignee or Participant.
“Trigger Date”: as defined in Section 2.12(b).
“Type”: as to any Loan, its nature as an ABR Loan or Eurocurrency Loan.
“United States”: the United States of America.
“Unrestricted Subsidiary”: (i) any Subsidiary of the Borrower designated as such and
listed on Schedule 4.14 on the Closing Date and (ii) any Subsidiary of the Borrower that is
designated by a resolution of the Board of Directors of the Borrower as an Unrestricted Subsidiary,
but only to the extent that, in the case of each of clauses (i) and (ii), such Subsidiary: (a) has
no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with Holdings, the Borrower or any Restricted Subsidiary unless the
terms of any such agreement, contract, arrangement or understanding are no less favorable to
Holdings, the Borrower or such Restricted Subsidiary than those that might be obtained at the time
from Persons who are not Affiliates of Holdings or the Borrower; (c) is a Person with respect to
which neither Holdings, the Borrower nor any of the Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Capital Stock or warrants, options or other
rights to acquire Capital Stock or (y) to maintain or preserve such Person’s financial condition or
to cause such Person to achieve any specified levels of operating results; and (d) does not
guarantee or otherwise provide credit support after the time of such designation for any
Indebtedness of Holdings, the Borrower or any of its Restricted Subsidiaries, in the case of
clauses (a), (b) and (c), except to the extent not otherwise prohibited by Section 7. If, at any
time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes hereof.
Subject to the foregoing, the Borrower may at any time designate any Unrestricted Subsidiary to be
a Restricted Subsidiary or any Restricted Subsidiary to be an Unrestricted Subsidiary;
provided that (i) such designation shall only be permitted if no Default or Event of
Default would be in existence following such designation and after giving effect to such
designation the Borrower shall be in pro forma compliance with the financial
covenants set forth in Section 7.1, (ii) any designation of an Unrestricted Subsidiary as a
Restricted Subsidiary shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary and (iii) any
designation of a Restricted Subsidiary as an Unrestricted Subsidiary shall be deemed to be an
Investment in an Unrestricted Subsidiary and shall reduce amounts available for Investments in
Unrestricted Subsidiaries permitted by Section 7.7 in an amount equal to the fair market value of
the Subsidiary so designated; provided that the Borrower may subsequently redesignate any
such Unrestricted Subsidiary as a Restricted Subsidiary so long as the Borrower does not
subsequently re-designate such Restricted Subsidiary as an Unrestricted Subsidiary for a period of
the succeeding four fiscal quarters.
“US Lender”: as defined in Section 2.20(e).
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1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms
defined in this Agreement shall have the defined meanings when used in the other Loan Documents or
any certificate or other document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any certificate or other document made
or delivered pursuant hereto or thereto, (i) accounting terms relating to the Borrower and its
Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words
“include”, “includes” and “including” shall be deemed to be followed by the phrase “without
limitation”, and (iii) references to agreements or other Contractual Obligations shall, unless
otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended,
supplemented, restated or otherwise modified from time to time.
(c) The words “hereof”, “herein” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Annex, Section, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The term “license” shall include sub-license. The term “documents” includes any and all
documents whether in physical or electronic form.
The meanings given to terms defined herein shall be equally applicable to both the singular
and plural forms of such terms.
1.3 Pro Forma Calculations. Solely for purposes of determining whether any action is
otherwise permitted to be taken hereunder, the Consolidated Total Leverage Ratio and Consolidated
Net Interest Coverage Ratio shall be calculated as follows:
(a) In the event that the Borrower or any Restricted Subsidiary incurs, assumes,
guarantees, redeems, retires or extinguishes any Indebtedness subsequent to the commencement
of the period for which such ratio is being calculated but prior to or simultaneously with
the event for which the calculation of such ratio is made (a “Ratio Calculation
Date”), then such ratio shall be calculated giving pro forma effect to
such incurrence, assumption, guarantee, redemption, retirement or extinguishment of
Indebtedness as if the same had occurred at the beginning of the applicable four-quarter
period.
(b) For purposes of making the computation referred to above, if any acquisitions,
Dispositions or designations of Unrestricted Subsidiaries or Restricted Subsidiaries are
made (or committed to be made pursuant to a definitive agreement) during the four-quarter
reference period or subsequent to such reference period and on or prior to or simultaneously
with the relevant Ratio Calculation Date, Consolidated EBITDA shall be calculated on a
pro forma basis, assuming that all such acquisitions, Dispositions and
designations had occurred on the first day of the four-quarter reference period in a manner
consistent, where applicable, with the pro forma adjustments set forth in
clause (j) of and the last proviso of the first sentence of the definition of “Consolidated
EBITDA”. If since the beginning of such period any Person that subsequently became a
Restricted Subsidiary or was merged with or into the Borrower or any of its Restricted
Subsidiaries since the beginning of such period shall have made any acquisition or
Disposition, in each case with respect to a business or an operating unit of a business,
that would have required adjustment pursuant to this provision, then such ratio shall be
calculated giving pro forma effect
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thereto for such period as if such acquisition or Disposition had occurred at the
beginning of the applicable four-quarter period.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Commitments. Subject to the terms and conditions hereof, (a) each Tranche A Term
Lender severally agrees to make a term loan (a “Tranche A Term Loan”) in Dollars to the
Borrower on the Closing Date in an amount which will not exceed the amount of the Tranche A Term
Commitment of such Lender and (b) each Tranche B Term Lender severally agrees to make a term loan
(a “Tranche B Term Loan”) in Dollars to the Borrower on the Closing Date in an amount which
will not exceed the amount of the Tranche B Term Commitment of such Lender. The Borrower and the
Lenders acknowledge that the Term Loans funded on the Closing Date will be funded with original
issue discount of 2%. Notwithstanding the foregoing, the aggregate outstanding principal amount of
the Term Loans for all purposes of this Agreement and the other Loan Documents shall be the stated
principal amount thereof outstanding from time to time. The Term Loans may from time to time be
Eurocurrency Loans or ABR Loans, as determined by the Borrower and notified to the Administrative
Agent in accordance with Sections 2.2 and 2.13.
2.2 Procedure for Term Loan Borrowing. The Borrower shall give the Administrative Agent
irrevocable written notice (which notice must be received by the Administrative Agent prior to
12:00 Noon, New York City time, one Business Day prior to the anticipated Closing Date) requesting
that the Term Lenders make the Term Loans on the Closing Date and specifying the amount to be
borrowed and the requested Interest Period, if applicable. Upon receipt of such notice the
Administrative Agent shall promptly notify each Term Lender thereof. Not later than 11:00 A.M.,
New York City time, on the Closing Date each Term Lender shall make available to the Administrative
Agent at the Funding Office an amount in immediately available funds equal to the Term Loan or Term
Loans to be made by such Lender. The Administrative Agent shall credit the account designated in
writing by the Borrower to the Administrative Agent with the aggregate of the amounts made
available to the Administrative Agent by the Term Lenders in immediately available funds.
2.3 Repayment of Term Loans. (a) The Tranche A Term Loan of each Tranche A Term Lender
shall be payable on each date set forth below in an amount set forth opposite such date (expressed
as a percentage of the stated principal amount of the Tranche A Term Loans funded on the Closing
Date) (as adjusted to reflect any prepayments thereof), with the remaining balance thereof payable
on the Tranche A Term Maturity Date.
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| Date | Amount | |||||
December 31, 2008 |
1.25 | % | ||||
March 31, 2009 |
1.25 | % | ||||
June 30, 2009 |
1.25 | % | ||||
September 30, 2009 |
1.25 | % | ||||
December 31, 2009 |
2.50 | % | ||||
March 31, 2010 |
2.50 | % | ||||
June 30, 2010 |
2.50 | % | ||||
September 30, 2010 |
2.50 | % | ||||
December 31, 2010 |
2.50 | % | ||||
March 31, 2011 |
2.50 | % | ||||
June 30, 2011 |
2.50 | % | ||||
September 30, 2011 |
2.50 | % | ||||
December 31, 2011 |
3.75 | % | ||||
March 31, 2012 |
3.75 | % | ||||
June 30, 2012 |
3.75 | % | ||||
September 30, 2012 |
3.75 | % | ||||
December 31, 2012 |
5.00 | % | ||||
March 31, 2013 |
5.00 | % | ||||
June 30, 2013 |
5.00 | % | ||||
September 30, 2013 |
5.00 | % | ||||
(b) The Tranche B Term Loan of each Tranche B Term Lender shall be payable in equal
consecutive quarterly installments, commencing on December 31, 2008, on the last Business Day of
each March, June, September and December following the Closing Date in an amount equal to one
quarter of one percent (0.25%) of the stated principal amount of the Tranche B Term Loans funded on
the Closing Date (as adjusted to reflect any prepayments thereof), with the remaining balance
thereof payable on the Tranche B Term Maturity Date.
2.4 Revolving Commitments. (a) Subject to the terms and conditions hereof, each
Revolving Lender severally agrees to make revolving credit loans (“Revolving Loans”) in
Dollars to the Borrower from time to time during the Revolving Commitment Period in an aggregate
principal amount at any one time outstanding which when added to such Lender’s Revolving Percentage
of the sum of (i) the L/C Obligations then outstanding and (ii) the aggregate principal amount of
the Swingline Loans then outstanding, does not exceed the amount of such Lender’s Revolving
Commitment. During the Revolving Commitment Period, the Borrower may use the Revolving Commitments
by borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof. The Revolving Loans may from time to time be Eurocurrency
Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.5 and 2.13.
(b) The Borrower shall repay all outstanding Revolving Loans made to it on the Revolving
Termination Date.
2.5 Procedure for Revolving Loan Borrowing. The Borrower may borrow under the Revolving
Commitments during the Revolving Commitment Period on any Business Day; provided that the
Borrower shall give the Administrative Agent irrevocable written notice (which notice must be
received by the Administrative Agent (i) in the case of Eurocurrency Loans, prior to 12:00 Noon,
New York City time, three Business Days prior to the requested Borrowing Date or (ii) in the case
of ABR
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Loans, prior to 12:00 Noon, New York City time, one Business Day prior to the proposed
Borrowing Date), specifying (x) the amount and Type of Revolving Loans to be borrowed, (y) the
requested Borrowing Date and (z) in the case of Eurocurrency Loans, the respective amounts of each
such Type of Loan and the respective lengths of the initial Interest Period therefor. The
aggregate principal amount of all Revolving Loans made on the Closing Date shall not exceed
$25,000,000 (which amount, for the avoidance of doubt, shall not include the face amount of any
outstanding Letters of Credit). Each borrowing by the Borrower under the Revolving Commitments
shall be in an amount equal to (x) in the case of ABR Loans, $1,000,000 or a whole multiple of
$100,000 in excess thereof (or, if the then aggregate Available Revolving Commitments are less than
$1,000,000, such lesser amount) and (y) in the case of Eurocurrency Loans, $1,000,000 or a whole
multiple of $500,000 in excess thereof; provided that the Swingline Lender may request, on
behalf of the Borrower, borrowings under the Revolving Commitments that are ABR Loans in other
amounts pursuant to Section 2.7(a). Upon receipt of any such notice from the Borrower, the
Administrative Agent shall promptly notify each Revolving Lender thereof. Each Revolving Lender
will make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of the Borrower at the Funding Office prior to 11:00 A.M., New
York City time, on the Borrowing Date requested by the Borrower in funds immediately available to
the Administrative Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting the account designated in writing by the Borrower to the
Administrative Agent with the aggregate of the amounts made available to the Administrative Agent
by such Revolving Lenders and in like funds as received by the Administrative Agent. If no
election as to the Type of a Revolving Loan is specified, then the requested Loan shall be an ABR
Loan. If no Interest Period is specified with respect to any requested Eurocurrency Loan, the
Borrower shall be deemed to have selected an Interest Period of one month’s duration.
2.6 Swingline Commitment. (a) Subject to the terms and conditions hereof, the Swingline
Lender agrees to make a portion of the credit otherwise available to the Borrower under the
Revolving Commitments from time to time during the Revolving Commitment Period by making swing line
loans (“Swingline Loans”) in Dollars to the Borrower; provided that (i) the
aggregate principal amount of Swingline Loans outstanding at any time shall not exceed the
Swingline Commitment then in effect (provided that the Swingline Loans outstanding at any
time, when aggregated with the Swingline Lenders’ other outstanding Revolving Loans, may exceed the
Swingline Commitment then in effect) and (ii) the Borrower shall not request, and the Swingline
Lender shall not make, any Swingline Loan if, after giving effect to the making of such Swingline
Loan, the aggregate amount of the Available Revolving Commitments under the Revolving Commitments
would be less than zero. During the Revolving Commitment Period, the Borrower may use the
Swingline Commitment by borrowing, repaying and reborrowing, all in accordance with the terms and
conditions hereof. Swingline Loans shall be ABR Loans only.
(b) The Borrower shall repay to the Swingline Lender the then unpaid principal amount of each
Swingline Loan on the Revolving Termination Date.
2.7 Procedure for Swingline Borrowing; Refunding of Swingline Loans. (a) Whenever the
Borrower desires that the Swingline Lender make Swingline Loans it shall give the Swingline Lender
and the Administrative Agent irrevocable written notice (which notice must be received by the
Swingline Lender and the Administrative Agent not later than 12:00 Noon, New York City time, on the
proposed Borrowing Date, specifying (i) the amount to be borrowed and (ii) the requested Borrowing
Date (which shall be a Business Day during the Revolving Commitment Period). Each borrowing under
the Swingline Commitment shall be in an amount equal to $500,000 or a whole multiple of $100,000 in
excess thereof. Not later than 3:00 P.M., New York City time, on the Borrowing Date specified in a
notice in respect of Swingline Loans, the Swingline Lender shall make available to the
Administrative Agent at the Funding
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Office an amount in immediately available funds equal to the amount of the Swingline Loan to
be made by the Swingline Lender. The Administrative Agent shall make the proceeds of such
Swingline Loan available to the Borrower on such Borrowing Date by depositing such proceeds in the
account of the Borrower with the Administrative Agent or as otherwise directed by the Borrower on
such Borrowing Date in immediately available funds.
(b) The Swingline Lender, at any time and from time to time in its sole and absolute
discretion may, on behalf of the Borrower (which hereby irrevocably directs such Swingline Lender
to act on its behalf), request each Revolving Lender to make, and each such Revolving Lender hereby
agrees to make, a Revolving Loan, in an amount equal to such Revolving Lender’s Revolving
Percentage of the aggregate amount of the Swingline Loans (the “Refunded Swingline Loans”)
outstanding on the date of such notice, to repay such Swingline Lender. Each Revolving Lender
shall make the amount of Revolving Loans available to the Administrative Agent at the Funding
Office in immediately available funds on the date of such request or, if such request is made after
10:00 A.M., New York City time on any Business Day, not later than 10:00 A.M., New York City time,
on the next Business Day. The proceeds of such Revolving Loans shall be immediately made available
by the Administrative Agent to the Swingline Lender for application by the Swingline Lender to the
repayment of the Refunded Swingline Loans.
(c) If prior to the time a Revolving Loan would have otherwise been made pursuant to Section
2.7(b), one of the events described in Section 8.1(f) shall have occurred and be continuing with
respect to the Borrower or if for any other reason, as determined by the Swingline Lender in its
sole discretion, Revolving Loans may not be made as contemplated by Section 2.7(b), each Revolving
Lender shall, on the date such Revolving Loan was to have been made pursuant to the notice referred
to in Section 2.7(b), purchase for cash an undivided participating interest in the then outstanding
Swingline Loans by paying to the Swingline Lender an amount (the “Swingline Participation
Amount”) equal to (A) such Revolving Lender’s Revolving Percentage times (B) the sum of the
aggregate principal amount of Swingline Loans then outstanding that were to have been repaid with
such Revolving Loans.
(d) Whenever, at any time after the Swingline Lender has received from any Revolving Lender
such Lender’s Swingline Participation Amount with respect to any Swingline Loans, the Swingline
Lender receives any payment on account of such Swingline Loans, the Swingline Lender will
distribute to such Lender its Swingline Participation Amount with respect thereto (appropriately
adjusted, in the case of interest payments, to reflect the period of time during which such
Lender’s participating interest was outstanding and funded and, in the case of principal and
interest payments, to reflect such Lender’s pro rata portion of such payment if such payment is not
sufficient to pay the principal of and interest on all such Swingline Loans then due);
provided, however, that in the event that such payment received by the Swingline
Lender is required to be returned, such Lender will return to the Swingline Lender any portion
thereof previously distributed to it by the Swingline Lender.
(e) Each Revolving Lender’s obligation to make the Loans referred to in Section 2.7(b) and to
purchase participating interests pursuant to Section 2.7(c) shall be absolute and unconditional and
shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment,
defense or other right that such Revolving Lender or the Borrower may have against the Swingline
Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or
continuance of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5, (iii) any adverse change in the condition (financial or
otherwise) of the Borrower or any other Loan Party, (iv) any breach of this Agreement or any other
Loan Document by the Borrower, any other Loan Party or any other Lender or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.
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2.8 Repayment of Loans. (a) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of the appropriate Revolving Lender or Term Lender, as the
case may be, (i) the then unpaid principal amount of each Revolving Loan of such Revolving Lender
made to the Borrower outstanding on the Revolving Termination Date (or on such earlier date on
which the Loans become due and payable pursuant to Section 8.1) and (ii) the principal amount of
each outstanding Term Loan of such Term Lender made to the Borrower in installments according to
the amortization schedule set forth in Section 2.3 (or on such earlier date on which the Loans
become due and payable pursuant to Section 8.1). The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Loans made to the Borrower from time to time
outstanding from the date made until payment in full thereof at the rates per annum, and on the
dates, set forth in Section 2.15.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from
time to time, including the amounts of principal and interest payable and paid to such Lender from
time to time under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall maintain the Register pursuant
to Section 10.6(b)(iv), and a subaccount therein for each Lender, in which shall be recorded (i)
the amount of each Loan made hereunder and any Note evidencing such Loan, the Type of such Loan and
each Interest Period applicable thereto, (ii) the amount of any principal, interest and fees, as
applicable, due and payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower
and each Lender’s share thereof.
(d) The entries made in the Register and the accounts of each Lender maintained pursuant to
Section 2.8(c) shall, to the extent permitted by applicable law, be presumptively correct absent
demonstrable error of the existence and amounts of the obligations of the Borrower therein
recorded; provided, however, that the failure of the Administrative Agent or any
Lender to maintain the Register or any such account, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the
Borrower by such Lender in accordance with the terms of this Agreement.
2.9 Commitment Fees, etc. (a) The Borrower agrees to pay to the Administrative Agent for
the account of each Revolving Lender a commitment fee for the period from and including the Closing
Date to the last day of the Revolving Commitment Period, computed at the Applicable Commitment Fee
Rate on the average daily amount of the Available Revolving Commitment of such Lender during the
period for which payment is made, payable quarterly in arrears on each Fee Payment Date;
provided that (i) for purposes of calculating any fees owing in accordance with this
Section 2.9(a), the Available Revolving Commitment for the Swingline Lender shall exclude any
outstanding Swingline Loans and (ii) the Swingline Lender shall not be entitled to any commitment
fee with respect to its Swingline Commitment separate from that to which it is entitled with
respect to its Available Revolving Commitment; provided, further, that (i) any
commitment fee accrued with respect to any of the Revolving Commitments of a Defaulting Lender
during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time
shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender except to
the extent that such commitment fee shall otherwise have been due and payable by the Borrower prior
to such time and (ii) no commitment fee shall accrue on any of the Revolving Commitments of a
Defaulting Lender so long as such Lender shall be a Defaulting Lender.
(b) The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the
dates as set forth in any fee agreements with the Administrative Agent.
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2.10 Termination or Reduction of Revolving Commitments. The Borrower shall have the right,
upon not less than two Business Days’ notice to the Administrative Agent, to terminate the
Revolving Commitments or, from time to time, to reduce the amount of the Revolving Commitments;
provided that no such termination or reduction of Revolving Commitments shall be permitted
if, after giving effect thereto and to any prepayments of the Revolving Loans made on the effective
date thereof, the total Revolving Extensions of Credit would exceed the total Revolving
Commitments. Any such partial reduction shall be in an amount equal to $1,000,000, or a whole
multiple of $500,000 in excess thereof, and shall reduce permanently the Revolving Commitments then
in effect. Notwithstanding anything to the contrary contained in this Agreement, the Borrower may
rescind any notice of termination under this Section 2.10 if such termination would have resulted
from a refinancing of all of the Loans, which refinancing shall not be consummated or shall
otherwise be delayed.
2.11 Optional Prepayments. (a) The Borrower may at any time and from time to time prepay
the Revolving Loans, the Swingline Loans or the Term Loans, in whole or in part, without premium or
penalty except as specifically provided in Section 2.11(b), upon irrevocable written notice
delivered to the Administrative Agent no later than 12:00 Noon, New York City time, three Business
Days prior thereto, in the case of Eurocurrency Loans, and no later than 12:00 Noon, New York City
time, (i) one Business Day prior thereto, in the case of ABR Loans that are Revolving Loans and
(ii) on the prepayment date, in the case of ABR Loans that are Swingline Loans, which notice shall
specify (x) the date and amount of prepayment, (y) whether the prepayment is of Swingline Loans,
Revolving Loans, Tranche A Term Loans, Tranche B Term Loans or New Loans and (z) whether the
prepayment is of Eurocurrency Loans or ABR Loans; provided that if a Eurocurrency Loan is
prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower
shall also pay any amounts owing pursuant to Section 2.21. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is
given, the amount specified in such notice shall be due and payable on the date specified therein
(provided that such notice may be conditioned on receiving the proceeds of any
refinancing), together with (except in the case of Revolving Loans that are ABR Loans and Swingline
Loans) accrued interest to such date on the amount prepaid. Partial prepayments of Term Loans and
of Revolving Loans shall be in an aggregate principal amount of (i) $1,000,000 or a whole multiple
of $100,000 in excess thereof (in the case of prepayments of ABR Loans) or (ii) $1,000,000 or a
whole multiple of $500,000 in excess thereof (in the case of prepayments of Eurocurrency Loans),
and in each case shall be subject to the provisions of Section 2.18. Partial prepayments of
Swingline Loans shall be in an aggregate principal amount of $500,000 or a whole multiple of
$100,000 in excess thereof.
(b) Any optional prepayment in full of the Tranche B Term Loans as a result of a Repricing
Transaction shall be accompanied by a prepayment fee, which shall initially be 2% of the aggregate
principal amount prepaid, shall decline to 1% on and after the first anniversary of the Closing
Date and shall decline to 0% on and after the second anniversary of the Closing Date.
(c) Notwithstanding anything to the contrary contained in this Section 2.11 or any other
provision of this Agreement and without otherwise limiting the rights in respect of prepayments of
the Loans of the Borrower and its Subsidiaries, so long as no Default has occurred and is
continuing, the Borrower or any Subsidiary of the Borrower may repurchase outstanding Term Loans
pursuant to this Section 2.11(c) on the following basis:
(i) Holdings, the Borrower or any Subsidiary of the Borrower may make one or more
offers (each, an “Offer”) to repurchase all or any portion of the Term Loans (such
Term Loans, the “Offer Loans”) of Term Lenders; provided that, (A) Holdings,
the Borrower or such Subsidiary delivers a notice of such Offer to the Administrative Agent
and all Term Lenders no later than noon (New York City time) at least five Business Days in
advance of a proposed
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consummation date of such Offer indicating (1) the last date on which such Offer may be
accepted, (2) the maximum dollar amount of such Offer, (3) the repurchase price per dollar
of principal amount of such Offer Loans at which Holdings, the Borrower or such Subsidiary
is willing to repurchase such Offer Loans and (4) the instructions, consistent with this
Section 2.11(c) with respect to the Offer, that a Term Lender must follow in order to have
its Offer Loans repurchased; (B) the maximum dollar amount of each Offer shall be no less
than $10,000,000; (C) Holdings, the Borrower or such Subsidiary shall hold such Offer open
for a minimum period of two Business Days; (D) a Term Lender who elects to participate in
the Offer may choose to sell all or part of such Term Lender’s Offer Loans; and (E) such
Offer shall be made to Term Lenders holding the Offer Loans on a pro rata basis in
accordance with the respective principal amount then due and owing to the Term Lenders;
provided, further that, if any Term Lender elects not to participate in the
Offer, either in whole or in part, the amount of such Term Lender’s Offer Loans not being
tendered shall be excluded in calculating the pro rata amount applicable to the balance of
such Offer Loans;
(ii) With respect to all repurchases made by Holdings, the Borrower or a Subsidiary of
the Borrower, such repurchases shall be deemed to be voluntary prepayments pursuant to this
Section 2.11 in an amount equal to the aggregate principal amount of such Term Loans,
provided that such repurchases shall not be subject to the provisions of paragraphs
(a) and (b) of this Section 2.11, Section 2.18 and Section 2.21;
(iii) Following repurchase by Holdings, the Borrower or any Subsidiary of the Borrower,
(A) all principal and accrued and unpaid interest on the Term Loans so repurchased shall be
deemed to have been paid for all purposes and no longer outstanding (and may not be resold
by Holdings, the Borrower or such Subsidiary), for all purposes of this Agreement and all
other Loan Documents and (B) Holdings, the Borrower or any Subsidiary of the Borrower, as
the case may be, will promptly advise the Administrative Agent of the total amount of Offer
Loans that were repurchased from each Lender who elected to participate in the Offer; and
(iv) Failure by Holdings, the Borrower or a Subsidiary of the Borrower to make any
payment to a Lender required by an agreement permitted by this Section 2.11(c) shall not
constitute an Event of Default under Section 8.1(a).
(d) In connection with any optional prepayments by the Borrower of the Term Loans pursuant to
this Section 2.11, such prepayments shall be applied on a pro rata basis to the then outstanding
Term Loans being prepaid irrespective of whether such outstanding Term Loans are ABR Loans or
Eurocurrency Loans; provided that if all Lenders elect to participate in the Offer on a pro rata
basis in accordance with their respective principal amounts then due and owing, such prepayments
shall be applied first to ABR Loans to the full extent thereof before application to Eurocurrency
Loans.
2.12 Mandatory Prepayments. (a) Unless the Required Prepayment Lenders shall otherwise
agree, if any Indebtedness (excluding any Indebtedness incurred in accordance with Section 7.2)
shall be incurred by the Borrower or any Restricted Subsidiary, an amount equal to 100% of the Net
Cash Proceeds thereof shall be applied not later than one Business Day after the date of receipt of
such Net Cash Proceeds toward the prepayment of the Term Loans as set forth in Section 2.12(d).
(b) Unless the Required Prepayment Lenders shall otherwise agree, if on any date the Borrower
or any Restricted Subsidiary shall for its own account receive Net Cash Proceeds from any Asset
Sale or Recovery Event then, unless a Reinvestment Notice shall be delivered to the Administrative
Agent in respect thereof, such Net Cash Proceeds shall be applied not later than five Business Days
after
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such date toward the prepayment of the Term Loans as set forth in Section 2.12(d);
provided that, notwithstanding the foregoing, (i) on each Reinvestment Prepayment Date, the
Term Loans shall be prepaid as set forth in Section 2.12(d) by an amount equal to the Reinvestment
Prepayment Amount with respect to the relevant Reinvestment Event and (ii) on the date (the
“Trigger Date”) that is six months after any such Reinvestment Prepayment Date, the Term
Loans shall be prepaid as set forth in Section 2.12(d) by an amount equal to the portion of any
Committed Reinvestment Amount with respect to the relevant Reinvestment Event not actually expended
by such Trigger Date.
(c) Unless the Required Prepayment Lenders shall otherwise agree, if, for any fiscal year of
the Borrower commencing with the fiscal year ending March 31, 2010, there shall be Excess Cash
Flow, the Borrower shall, on the relevant Excess Cash Flow Application Date, apply an amount equal
to (i) the Excess Cash Flow Percentage of such Excess Cash Flow minus (ii) the aggregate
amount of all prepayments of Revolving Loans and Swingline Loans during such fiscal year to the
extent accompanied by permanent optional reductions of the Revolving Commitments, and all optional
prepayments of Term Loans during such fiscal year (other than optional prepayments pursuant to
Section 2.11(c)), in each case other than to the extent any such prepayment is funded with the
proceeds of long-term Indebtedness, toward the prepayment of Term Loans as set forth in Section
2.12(d). Each such prepayment shall be made on a date (an “Excess Cash Flow Application
Date”) no later than ten days after the date on which the financial statements referred to in
Section 6.1(a), for the fiscal year with respect to which such prepayment is made, are required to
be delivered to the Lenders.
(d) Amounts to be applied in connection with prepayments pursuant to this Section 2.12 shall
be applied to the prepayment of the Term Loans in accordance with Section 2.18(b) until paid in
full. In connection with any mandatory prepayments by the Borrower of the Term Loans pursuant to
Section 2.12, such prepayments shall be applied on a pro rata basis to the then outstanding Term
Loans being prepaid irrespective of whether such outstanding Term Loans are ABR Loans or
Eurocurrency Loans; provided that if no Lender exercises the right to waive a given mandatory
prepayment of the Term Loans pursuant to Section 2.12(e), then, with respect to such mandatory
prepayment, the amount of such mandatory prepayment shall be applied first to Term Loans that are
ABR Loans to the full extent thereof before application to Term Loans that are Eurocurrency Loans
in a manner that minimizes the amount of any payments required to be made by the Borrower pursuant
to Section 2.21. Each prepayment of the Term Loans under this Section 2.12 shall be accompanied by
accrued interest to the date of such prepayment on the amount prepaid.
(e) Notwithstanding anything to the contrary in Section 2.12(d) or 2.18, with respect to the
amount of any mandatory prepayment pursuant to this Section 2.12 that is allocated to Tranche B
Term Loans (such amount, the “Tranche B Prepayment Amount”), at any time when Tranche A
Term Loans remain outstanding, the Borrower will, in lieu of applying such amount to the prepayment
of Tranche B Term Loans as provided in paragraph (d) above, on the date specified in this Section
2.12 for such prepayment, give the Administrative Agent telephonic notice (promptly confirmed in
writing) requesting that the Administrative Agent prepare and provide to each Tranche B Term Lender
(which, for avoidance of doubt, includes each New Term Lender) a notice (each, a “Prepayment
Option Notice”) as described below. As promptly as practicable after receiving such notice
from the Borrower, the Administrative Agent will send to each Tranche B Term Lender a Prepayment
Option Notice, which shall be in the form of Exhibit I (or such other form approved by the
Administrative Agent), and shall include an offer by the Borrower to prepay, on the date (each a
“Mandatory Prepayment Date”) that is ten Business Days after the date of the Prepayment
Option Notice, the relevant Term Loans of such Lender by an amount equal to the portion of the
Tranche B Prepayment Amount indicated in such Lender’s Prepayment Option Notice as being applicable
to such Lender’s Tranche B Term Loans. Each Tranche B Term Lender may reject all or a portion of
its Tranche B Prepayment Amount by providing written notice
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to the Administrative Agent and the Borrower no later than 5:00 p.m. (New York time) one
Business Day after such Tranche B Term Lender’s receipt of the Prepayment Option Notice (which
notice shall specify the principal amount of the Tranche B Prepayment Amount to be rejected by such
Lender); provided that any Tranche B Term Lender’s failure to so reject such Tranche B
Prepayment Amount shall be deemed an acceptance by such Tranche B Term Lender of such Prepayment
Option Notice and the amount to be prepaid in respect of Term Loans held by such Tranche B Term
Lender. On the Mandatory Prepayment Date, the Borrower shall (i) pay to the relevant Tranche B
Term Lenders the aggregate amount necessary to prepay that portion of the outstanding relevant Term
Loans in respect of which such Lenders have (or are deemed to have) accepted prepayment as
described above and (ii) prepay outstanding Tranche A Term Loans in an aggregate amount equal to
the amounts declined by Tranche B Term Lenders as described above; provided that, upon the
making of such prepayments, any amount remaining unapplied (i.e., after the payment in full of the
Tranche A Term Loans) shall be returned to the Borrower.
2.13 Conversion and Continuation Options. (a) The Borrower may elect from time to time to
convert Eurocurrency Loans made to the Borrower to ABR Loans by giving the Administrative Agent
prior irrevocable written notice of such election no later than 12:00 Noon, New York City time, on
the third Business Day preceding the proposed conversion date; provided that if any
Eurocurrency Loan is so converted on any day other than the last day of the Interest Period
applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.21. The
Borrower may elect from time to time to convert ABR Loans made to the Borrower to Eurocurrency
Loans by giving the Administrative Agent prior irrevocable written notice of such election no later
than 12:00 Noon, New York City time, on the third Business Day preceding the proposed conversion
date (which notice shall specify the length of the initial Interest Period therefor);
provided that no ABR Loan under a particular Facility may be converted into a Eurocurrency
Loan when any Event of Default has occurred and is continuing and the Administrative Agent or the
Majority Facility Lenders in respect of such Facility have determined in its or their sole
discretion not to permit such conversions. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.
(b) Any Eurocurrency Loan may be continued as such by the Borrower giving irrevocable written
notice to the Administrative Agent, in accordance with the applicable provisions of the term
“Interest Period” set forth in Section 1.1 and no later than 12:00 Noon, New York City time, on the
third Business Day preceding the proposed continuation date, of the length of the next Interest
Period to be applicable to such Loans; provided that if any Eurocurrency Loan is so
continued on any day other than the last day of the Interest Period applicable thereto, the
Borrower shall also pay any amounts owing pursuant to Section 2.21; provided,
further, that no Eurocurrency Loan under a particular Facility may be continued as such
when any Event of Default has occurred and is continuing and the Administrative Agent has or the
Majority Facility Lenders in respect of such Facility have determined in its or their sole
discretion not to permit such continuations; and provided, further, that (i) if the
Borrower shall fail to give any required notice as described above in this paragraph such
Eurocurrency Loans shall be automatically continued as Eurocurrency Loans having an Interest Period
of one month’s duration on the last day of such then-expiring Interest Period and (ii) if such
continuation is not permitted pursuant to the preceding proviso, such Eurocurrency Loans shall be
automatically converted to ABR Loans on the last day of such then expiring Interest Period. Upon
receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
2.14 Minimum Amounts and Maximum Number of Eurocurrency Tranches. Notwithstanding anything
to the contrary in this Agreement, all borrowings, conversions, continuations and optional
prepayments of Eurocurrency Loans and all selections of Interest Periods shall be in such amounts
and be made pursuant to such elections so that (a) after giving effect thereto, the aggregate
principal amount of the Eurocurrency Loans comprising each Eurocurrency Tranche shall be equal to a
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minimum of $1,000,000 or a whole multiple of $500,000 in excess thereof and (b) no more than twelve
Eurocurrency Tranches shall be outstanding at any one time.
2.15 Interest Rates and Payment Dates. (a) (i) Each Eurocurrency Loan other than a
Eurocurrency Loan that is a Tranche B Term Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the Eurocurrency Rate determined
for such day plus the Applicable Margin, and (ii) each Eurocurrency Loan that is a Tranche
B Term Loan shall bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to (A) (1) prior to the third anniversary of the Closing Date, the greater of
(x) the Eurocurrency Rate determined for such day and (y) 3.00% and (2) thereafter, the
Eurocurrency Rate determined for such day plus (B) the Applicable Margin.
(b) (i) Each ABR Loan other than an ABR Loan that is a Tranche B Term Loan shall bear interest
at a rate per annum equal to ABR plus the Applicable Margin, and (ii) each ABR Loan that is
a Tranche B Term Loan shall bear interest at a rate per annum equal to (A) (1) prior to the third
anniversary of the Closing Date, the greater of (x) ABR and (y) 4.00% and (2) thereafter, ABR
plus (B) the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or Reimbursement Obligation
shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such
overdue amount shall bear interest at a rate per annum equal to (x) in the case of the Loans, the
rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this
Section 2.15 plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable
to ABR Loans under the Revolving Facility plus 2%, and (ii) if all or a portion of any
interest payable on any Loan or Reimbursement Obligation or any commitment fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then
applicable to ABR Loans under the relevant Facility plus 2% (or, in the case of any such
other amounts that do not relate to a particular Facility, the rate then applicable to ABR Loans
under the Revolving Facility plus 2%), in each case, with respect to clauses (i) and (ii)
above, from the date of such non-payment until such amount is paid in full (after as well as before
judgment); provided that no amount shall be payable pursuant to this Section 2.15(c) to a
Defaulting Lender so long as such Lender shall be a Defaulting Lender; provided
further no amounts shall accrue pursuant to this Section 2.15(c) on any overdue Loan,
Reimbursement Obligation, commitment fee or other amount payable to a Defaulting Lender so long as
such Lender shall be a Defaulting Lender
(d) Interest shall be payable by the Borrower in arrears on each Interest Payment Date;
provided that interest accruing pursuant to paragraph (c) of this Section 2.15 shall be
payable from time to time on demand.
2.16 Computation of Interest and Fees. (a) Interest and fees payable pursuant hereto
shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with
respect to ABR Loans the rate of interest on which is calculated on the basis of the Prime Rate,
the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of each determination of a Eurocurrency Rate. Any change in the
interest rate on a Loan resulting from a change in the ABR or the Eurocurrency Reserve Requirements
shall become effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the Borrower and the
relevant Lenders of the effective date and the amount of each such change in interest rate.
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(b) Each determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be presumptively correct in the absence of demonstrable error.
The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement
showing the quotations used by the Administrative Agent in determining any interest rate pursuant
to Section 2.15(a) and Section 2.15(b).
2.17 Inability to Determine Interest Rate. If prior to the first day of any Interest
Period for any Eurocurrency Loan:
(a) the Administrative Agent shall have determined (which determination shall be
presumptively correct absent demonstrable error) that, by reason of circumstances affecting
the relevant market, adequate and reasonable means do not exist for ascertaining the
Eurocurrency Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the Majority Facility
Lenders in respect of the relevant Facility that by reason of any changes arising after the
date of this Agreement the Eurocurrency Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such Lenders (as
certified by such Lenders) of making or maintaining their affected Loans during such
Interest Period,
the Administrative Agent shall give telecopy notice thereof to the Borrower and the relevant
Lenders as soon as practicable thereafter. If such notice is given (x) any Eurocurrency Loans
under the relevant Facility requested to be made on the first day of such Interest Period shall be
made as ABR Loans, (y) any Loans under the relevant Facility that were to have been converted on
the first day of such Interest Period to Eurocurrency Loans shall be continued as ABR Loans and (z)
any outstanding Eurocurrency Loans under the relevant Facility shall be converted, on the last day
of the then-current Interest Period with respect thereto, to ABR Loans. Until such notice has been
withdrawn by the Administrative Agent (which action the Administrative Agent will take promptly
after the conditions giving rise to such notice no longer exist), no further Eurocurrency Loans
under the relevant Facility shall be made or continued as such, nor shall the Borrower have the
right to convert Loans under the relevant Facility to Eurocurrency Loans.
2.18 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower from the Lenders
hereunder, each payment by the Borrower on account of any commitment fee and any reduction of the
Revolving Commitments shall be made pro rata according to the respective Tranche A Term
Percentages, Tranche B Term Percentages or Revolving Percentages, as the case may be, of the
relevant Lenders. Each payment (other than prepayments) in respect of principal or interest in
respect of the Tranche A Term Loans, Tranche B Term Loans or New Term Loans and each payment in
respect of fees payable hereunder shall be applied to the amounts of such obligations owing to the
Tranche A Term Lenders, Tranche B Term Lenders or New Term Lenders, as applicable, pro rata
according to the respective amounts then due and owing to such Lenders, other than payments
pursuant to Section 2.11(c) or 2.24.
(b) Each mandatory prepayment of the Term Loans shall be allocated between the Tranche A Term
Facility, the Tranche B Term Facility and any New Facility comprising Term Loans, if any, pro rata
except as affected by the opt-out provision under Section 2.12(e). Each optional prepayment and
mandatory prepayment of the Tranche A Term Loans, Tranche B Term Loans or New Term Loans shall be
applied to the remaining installments thereof as specified by the Borrower. Amounts repaid or
prepaid on account of the Term Loans may not be reborrowed.
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(c) Each payment (including prepayments) to be made by the Borrower on account of principal of
and interest on the Revolving Loans shall be made pro rata according to the respective outstanding
principal amounts of the Revolving Loans then held by the Revolving Lenders. Each payment
(including prepayments) to be made by the Borrower on account of principal of and interest on the
New Revolving Loans shall be made pro rata according to the respective outstanding principal
amounts of the New Revolving Loans then held by the New Lenders. Each payment in respect of
Reimbursement Obligations in respect of any Letter of Credit shall be made to the Issuing Lender
that issued such Letter of Credit.
(d) All payments (including prepayments) to be made by the Borrower hereunder, whether on
account of principal, interest, fees or otherwise, shall be made without setoff, deduction or
counterclaim and shall be made prior to 2:00 P.M., New York City time, on the due date thereof to
the Administrative Agent, for the account of the relevant Lenders, at the Funding Office, in
immediately available funds. Any payment received by the Administrative Agent after 2:00 P.M., New
York City time may be considered received on the next Business Day in the Administrative Agent’s
sole discretion. The Administrative Agent shall distribute such payments to the relevant Lenders
promptly upon receipt in like funds as received. If any payment hereunder (other than payments on
the Eurocurrency Loans) becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day. If any payment on a Eurocurrency Loan
becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended
to the next succeeding Business Day unless the result of such extension would be to extend such
payment into another calendar month, in which event such payment shall be made on the immediately
preceding Business Day. In the case of any extension of any payment of principal pursuant to the
preceding two sentences, interest thereon shall be payable at the then applicable rate during such
extension.
(e) Unless the Administrative Agent shall have been notified in writing by any Lender prior to
a borrowing that such Lender will not make the amount that would constitute its share of such
borrowing available to the Administrative Agent, the Administrative Agent may assume that such
Lender is making such amount available to the Administrative Agent, and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If
such amount is not made available to the Administrative Agent by the required time on the Borrowing
Date therefor, such Lender shall pay to the Administrative Agent on demand, such amount with
interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a
rate determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation, for the period until such Lender makes such amount immediately available to the
Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be presumptively correct in the absence of
demonstrable error. If such Lender’s share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days after such Borrowing Date, the
Administrative Agent shall give notice of such fact to the Borrower and the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate per annum
applicable to ABR Loans under the relevant Facility, on demand, from the Borrower. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or the Borrower against any
Defaulting Lender.
(f) Unless the Administrative Agent shall have been notified in writing by the Borrower prior
to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make
such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required to, in reliance
upon such assumption, make available to the relevant Lenders their respective pro rata shares of a
corresponding amount. If such payment is not made to the Administrative Agent by the Borrower
within
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three Business Days after such due date, the Administrative Agent shall be entitled to
recover, on demand, from each relevant Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per annum equal to the
daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of
the Administrative Agent or any Lender against the Borrower.
2.19 Requirements of Law. (a) Except with respect to Taxes, which are addressed in
Section 2.20, if the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof or compliance by any Lender with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority first made, in each
case, subsequent to the date hereof:
(i) shall impose, modify or hold applicable any reserve, special deposit, compulsory
loan or similar requirement against assets held by, deposits or other liabilities in or for
the account of, advances, loans or other extensions of credit by, or any other acquisition
of funds by, any office of such Lender that is not otherwise included in the determination
of the Eurocurrency Rate hereunder; or
(ii) shall impose on such Lender any other condition not otherwise contemplated
hereunder;
and the result of any of the foregoing is to increase the cost to such Lender, by an amount which
such Lender reasonably deems to be material, of making, converting into, continuing or maintaining
Eurocurrency Loans or issuing or participating in Letters of Credit (in each case hereunder), or to
reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower
shall promptly pay such Lender, in Dollars, within thirty Business Days after the Borrower’s
receipt of a reasonably detailed invoice therefor (showing with reasonable detail the calculations
thereof), any additional amounts necessary to compensate such Lender for such increased cost or
reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant
to this Section 2.19, it shall promptly notify the Borrower (with a copy to the Administrative
Agent) of the event by reason of which it has become so entitled.
(b) If any Lender shall have reasonably determined that the adoption of or any change in any
Requirement of Law regarding capital adequacy or in the interpretation or application thereof or
compliance by such Lender or any entity controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any Governmental Authority
first made, in each case, subsequent to the date hereof shall have the effect of reducing the rate
of return on such Lender’s or such entity’s capital as a consequence of its obligations hereunder
or under or in respect of any Letter of Credit to a level below that which such Lender or such
entity could have achieved but for such adoption, change or compliance (taking into consideration
such Lender’s or such entity’s policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, after submission by such Lender to the Borrower
(with a copy to the Administrative Agent) of a reasonably detailed written request therefor
(consistent with the detail provided by such Lender to similarly situated borrowers), the Borrower
shall pay to such Lender, in Dollars, such additional amount or amounts as will compensate such
Lender or such entity for such reduction.
(c) A certificate prepared in good faith as to any additional amounts payable pursuant to this
Section 2.19 submitted by any Lender to the Borrower (with a copy to the Administrative Agent)
shall be presumptively correct in the absence of demonstrable error. Notwithstanding anything to
the contrary in this Section 2.19, the Borrower shall not be required to compensate a Lender
pursuant to this
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Section 2.19 for any amounts incurred more than 180 days prior to the date that such Lender
notifies the Borrower of such Lender’s intention to claim compensation therefor; provided
that if the circumstances giving rise to such claim have a retroactive effect, then such 180-day
period shall be extended to include the period of such retroactive effect. The obligations of the
Borrower pursuant to this Section 2.19 shall survive the termination of this Agreement and the
payment of the Obligations. Notwithstanding the foregoing, the Borrower shall not be obligated to
make payment to any of the Administrative Agent or a Lender with respect to penalties, interest and
expenses if written demand therefore was not made by the Administrative Agent or such Lender within
180 days from the date on which such party makes payment for such penalties, interest and expenses.
2.20 Taxes. (a) Except as otherwise provided in this Agreement or as required by law, all
payments made by the Borrower or any Loan Party under this Agreement and the other Loan Documents
to the Administrative Agent or any Lender under this Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any Taxes, excluding (i) net income Taxes,
net profits Taxes and franchise Taxes (and net worth Taxes and capital Taxes imposed in lieu of net
income Taxes) imposed on the Administrative Agent or any Lender (A) by the jurisdiction (or any
political subdivision thereof) under the laws of which the Administrative Agent or any Lender (or,
in the case of a pass-through entity, any of its beneficial owners) is organized or in which its
applicable lending office is located or (B) as a result of a present or former connection between
the Administrative Agent or such Lender or beneficial owner and the jurisdiction of the
Governmental Authority imposing such Tax or any political subdivision or taxing authority thereof
or therein (other than any such connection arising solely from the Administrative Agent or such
Lender having executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document) and (ii) any branch profits or backup
withholding Taxes imposed by the United States or any similar Tax imposed by any other jurisdiction
in which the applicable Borrower or any Loan Party under this Agreement and the other Loan
Documents is located or is deemed to be doing business. If any such non-excluded Taxes
(“Non-Excluded Taxes”) or Other Taxes are required to be withheld from any amounts payable
by the Borrower or any Loan Party under this Agreement and the other Loan Documents to the
Administrative Agent or any Lender hereunder, the amounts so payable to the Administrative Agent or
such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such
Lender (after deduction or withholding of all Non-Excluded Taxes and Other Taxes including
Non-Excluded Taxes attributable to amounts payable under this Section 2.20(a)) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this Agreement;
provided, however, that the Borrower or any Loan Party under this Agreement and the
other Loan Documents shall not be required to increase any such amounts payable to or in respect of
any Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender’s (or,
in the case of a pass-through entity, any of its beneficial owners’) failure to comply with the
requirements of paragraph (d) or (e), as applicable, of this Section 2.20 or (ii) that are
withholding Taxes imposed on amounts payable under this Agreement or the other Loan Documents,
unless such Taxes are imposed as a result of a Change in Law occurring after such Lender becomes a
party hereto or as a result of any change in facts, occurring after such Lender becomes a party
hereto, that is not attributable to the Lender, except (in the case of an assignment) to the extent
that such Lender’s assignor (if any) was entitled, at the time of such assignment, to receive
additional amounts from the Borrower or any Loan Party under this Agreement and the other Loan
Documents with respect to such Taxes pursuant to this paragraph.
(b) In addition, the Borrower or any Loan Party under this Agreement and the other Loan
Documents shall pay any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.
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(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower and any Loan
Party under this Agreement and the other Loan Documents, as promptly as possible thereafter the
Borrower shall send to the Administrative Agent for the account of the Administrative Agent or
Lender, as the case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof if such receipt is obtainable, or, if not, such other evidence of
payment as may reasonably be required by the Administrative Agent or such Lender. If the Borrower
or any Loan Party under this Agreement and the other Loan Documents fails to pay any Non-Excluded
Taxes or Other Taxes that the Borrower or any Loan Party under this Agreement and the other Loan
Documents is required to pay pursuant to this Section 2.20 (or in respect of which the Borrower or
any Loan Party under this Agreement and the other Loan Documents would be required to pay increased
amounts pursuant to Section 2.20(a) if such Non-Excluded Taxes or Other Taxes were withheld) when
due to the appropriate taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Borrower or any Loan Party under this
Agreement and the other Loan Documents shall indemnify the Administrative Agent and the Lenders for
any payments by them of such Non-Excluded Taxes or Other Taxes and for any incremental taxes,
interest or penalties that become payable by the Administrative Agent or any Lender as a result of
any such failure within thirty days after the Lender or the Administrative Agent delivers to the
Borrower (with a copy to the Administrative Agent) either (a) a copy of the receipt issued by a
Governmental Authority evidencing payment of such Taxes or (b) certificates as to the amount of
such payment or liability prepared in good faith.
(d) Each Lender (and, in the case of a pass-through entity, each of its beneficial owners)
that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) (a
“Non-US Lender”) shall deliver to the Borrower and the Administrative Agent (or, in the
case of a Participant, to the Borrower and to the Lender from which the related participation shall
have been purchased) (i) two accurate and complete copies of IRS Form W-8ECI or W-8BEN, or, (ii) in
the case of a Non-US Lender claiming exemption from United States federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement
substantially in the form of Exhibit F and two accurate and complete copies of IRS Form W-8BEN, or
any subsequent versions or successors to such forms, in each case properly completed and duly
executed by such Non-US Lender claiming complete exemption from, or a reduced rate of, United
States federal withholding tax on all payments by the Borrower or any Loan Party under this
Agreement and the other Loan Documents. Such forms shall be delivered by each Non-US Lender on or
before the date it becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In addition, each Non-US
Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-US Lender. Each Non-US Lender shall (i) promptly notify the Borrower at any
time it determines that it is no longer in a position to provide any previously delivered
certificate to the Borrower (or any other form of certification adopted by the United States taxing
authorities for such purpose) and (ii) take such steps as shall not be disadvantageous to it, in
its reasonable judgment, and as may be reasonably necessary (including the re-designation of its
lending office pursuant to Section 2.23) to avoid any requirement of applicable laws of any such
jurisdiction that the Borrower or any Loan Party make any deduction or withholding for taxes from
amounts payable to such Lender. Notwithstanding any other provision of this paragraph, a Non-US
Lender shall not be required to deliver any form pursuant to this paragraph that such Non-US Lender
is not legally able to deliver.
(e) Each Lender (and, in the case of a Lender that is a non-United States pass-through entity,
each of its beneficial owners) that is a United States person (as such term is defined in Section
7701(a)(30) of the Code) (a “US Lender”) shall deliver to the Borrower and the
Administrative Agent two accurate and complete copies of IRS Form W-9, or any subsequent versions
or successors to such form and certify that such lender is not subject to backup withholding. Such
forms shall be delivered by each
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US Lender on or before the date it becomes a party to this Agreement. In addition, each US
Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously
delivered by such US Lender. Each US Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously delivered certifications to
the Borrower (or any other form of certification adopted by the United States taxing authorities
for such purpose).
(f) If the Administrative Agent or any Lender determines, in good faith, that it has received
a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the
Borrower or any Loan Party or with respect to which the Borrower or any Loan Party has paid
additional amounts pursuant to this Section 2.20, it shall promptly pay over such refund to the
Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the
Borrower or any Loan Party under this Section 2.20 with respect to the Non-Excluded Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or
such Lender and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or such Lender is
required to repay such refund to such Governmental Authority; provided, further, that the Borrower
shall not be required to repay to the Administrative Agent or the Lender an amount in excess of the
amount paid over by such party to the Borrower pursuant to this Section 2.20. This paragraph shall
not be construed to require the Administrative Agent or any Lender to make available its tax
returns (or any other information relating to its taxes which it deems confidential) to the
Borrower or any other Person. In no event will the Administrative Agent or any Lender be required
to pay any amount to the Borrower the payment of which would place the Administrative Agent or such
Lender in a less favorable net after-tax position than the Administrative Agent or such Lender
would have been in if the additional amounts giving rise to such refund of any Non-Excluded Taxes
or Other Taxes had never been paid. The agreements in this Section 2.20 shall survive the
termination of this Agreement and the payment of the Obligations.
2.21 Indemnity. Other than with respect to Taxes, which shall be governed solely by
Section 2.20, the Borrower agrees to indemnify each Lender for, and to hold each Lender harmless
from, any loss or expense (other than lost profits, including the loss of Applicable Margin) that
such Lender may actually sustain or incur as a consequence of (a) any failure by the Borrower in
making a borrowing of, conversion into or continuation of Eurocurrency Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this Agreement, (b) any
failure by the Borrower in making any prepayment of or conversion from Eurocurrency Loans after the
Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment, conversion or continuation of Eurocurrency Loans on a day that is not the
last day of an Interest Period with respect thereto. A reasonably detailed certificate as to
(showing in reasonable detail the calculation of) any amounts payable pursuant to this Section 2.21
submitted to the Borrower by any Lender shall be presumptively correct in the absence of
demonstrable error. This covenant shall survive the termination of this Agreement and the payment
of the Obligations.
2.22 Illegality. Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof, in each case,
first made after the date hereof, shall make it unlawful for any Lender to make or maintain
Eurocurrency Loans as contemplated by this Agreement, such Lender shall promptly give notice
thereof (a “Rate Determination Notice”) to the Administrative Agent and the Borrower, and
(a) the commitment of such Lender hereunder to make Eurocurrency Loans, continue Eurocurrency Loans
as such and convert ABR Loans to Eurocurrency Loans shall be suspended during the period of such
illegality and (b) such Lender’s Loans
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then outstanding as Eurocurrency Loans, if any, shall be converted automatically to ABR Loans
on the respective last days of the then current Interest Periods with respect to such Loans or
within such earlier period as required by law. If any such conversion of a Eurocurrency Loan
occurs on a day which is not the last day of the then current Interest Period with respect thereto,
the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section
2.21.
2.23 Change of Lending Office. Each Lender agrees that, upon the occurrence of any event
giving rise to the operation of Section 2.19, 2.20(a) or 2.22 with respect to such Lender, it will,
if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided that such designation is made
on terms that, in the good faith judgment of such Lender, cause such Lender and its lending
office(s) to suffer no material economic, legal or regulatory disadvantage and; provided,
further, that nothing in this Section 2.23 shall affect or postpone any of the obligations
of the Borrower or the rights of any Lender pursuant to Section 2.19, 2.20(a) or 2.22.
2.24 Replacement of Lenders. The Borrower shall be permitted to (a) replace with a
financial institution or financial institutions, or (b) prepay, without premium or penalty (but
subject to Section 2.21), the Loans of, any Lender that (i) requests reimbursement for amounts
owing or otherwise results in increased costs imposed on the Borrower or on account of which the
Borrower is required to pay additional amounts to any Governmental Authority pursuant to Section
2.19, 2.20 or 2.21 (to the extent a request made by a Lender pursuant to the operation of Section
2.21 is materially greater than requests made by other Lenders) or gives a notice of illegality
pursuant to Section 2.22, (ii) defaults in its obligation to make Loans hereunder or to comply with
its obligations under Section 3.4, (iii) has refused to consent to any waiver or amendment with
respect to any Loan Document that requires such Lender’s consent and has been consented to by the
Required Lenders; or (iv) becomes the subject of a bankruptcy or insolvency proceeding;
provided that, in the case of a replacement pursuant to clause (a) above, (A) such
replacement does not conflict with any Requirement of Law, (B) the replacement financial
institution or financial institutions shall purchase, at par, all Loans and other amounts owing to
such replaced Lender on or prior to the date of replacement, (C) the Borrower shall be liable to
such replaced Lender under Section 2.21 (as though Section 2.21 were applicable) if any
Eurocurrency Loan owing to such replaced Lender shall be purchased other than on the last day of
the Interest Period relating thereto, (D) the replacement financial institution or financial
institutions, (x) if not already a Lender, shall be reasonably satisfactory to the Administrative
Agent to the extent that an assignment to such replacement financial institution of the rights and
obligations being acquired by it would otherwise require the consent of the Administrative Agent
pursuant to Section 10.6(b)(i)(B) and (y) shall pay (unless otherwise paid by the Borrower) any
processing and recordation fee required under Section 10.6(b)(ii)(B), (E) the replaced Lender shall
be obligated to make such replacement in accordance with the provisions of Section 10.6, (F) the
Borrower shall pay all additional amounts (if any) required pursuant to Section 2.19 or 2.20, as
the case may be, in respect of any period prior to the date on which such replacement shall be
consummated, (G) if applicable, the replacement financial institution or financial institutions
shall consent to such amendment or waiver and (H) any such replacement shall not be deemed to be a
waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have
against the replaced Lender. Prepayments pursuant to clause (b) above (i) shall be accompanied by
accrued and unpaid interest on the principal amount so prepaid up to the date of such prepayment
and (ii) shall not be subject to the provisions of Section 2.18.
2.25 Incremental Loans. (a) The Borrower may by written notice to the Administrative
Agent elect to request the establishment of one or more new term loan or revolving commitments (the
“New Loan Commitments”) hereunder, in an aggregate amount for all such New Loan
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Commitments not in excess of $100,000,000. Each such notice shall specify the date (each, an “Increased
Amount Date”) on which the Borrower proposes that the New Loan Commitments shall be effective,
which shall be a date not less than 10 Business Days after the date on which such notice is
delivered to the Administrative Agent; provided that any Lender offered or approached to
provide all or a portion of any New Loan Commitments may elect or decline, in its sole discretion,
to provide such New Loan Commitments.
(b) Such New Loan Commitments shall become effective as of such Increased Amount Date;
provided that (i) no Default or Event of Default shall exist on such Increased Amount Date
before or after giving effect to such New Loan Commitments and to the making of any Tranche of New
Loans pursuant thereto and after giving effect to any Permitted Acquisition consummated in
connection therewith; (ii) the Borrower shall be in pro forma compliance with the
financial covenants set forth in Section 7.1; (iii) the proceeds of any New Loans shall be used for
general corporate purposes of the Borrower and its Subsidiaries (including Permitted Acquisitions
and Investments permitted under Section 7.7); (iv) the New Loans shall share ratably in the
Collateral; (v) the New Loans that are term loans (“New Term Loans”) shall share ratably in
any mandatory prepayments of the existing Term Loans; (vi) in the case of any New Term Loans, the
maturity date thereof shall not be earlier than the Tranche B Term Maturity Date and the weighted
average life to maturity shall be equal to or greater than the weighted average life to maturity of
the Tranche B Term Loans; (vii) in the case of any New Loans that are revolving loans or
commitments (“New Revolving Loans”) the maturity date or commitment termination date
thereof shall not be earlier than the Revolving Termination Date and such New Revolving Loans shall
not require any scheduled commitment reductions prior to the Revolving Termination Date; (viii) the
New Revolving Loans shall share ratably in any mandatory prepayments of the existing Revolving
Loans; (ix) all terms and documentation with respect to any New Loans which differ from those with
respect to the Loans under the applicable Facility shall be reasonably satisfactory to the
Administrative Agent (except to the extent permitted by clauses (vi) and (vii) above and the last
sentence of this paragraph); (x) such New Loans or New Loan Commitments shall be effected pursuant
to one or more Joinder Agreements executed and delivered by the Borrower, the Administrative Agent
and one or more New Lenders; (xi) the Borrower shall deliver or cause to be delivered any customary
legal opinions or other documents reasonably requested by Administrative Agent in connection with
any such transaction, including any supplements or amendments to the Security Documents providing
for such New Loans to be secured thereby; and (xii) if the initial “spread” (for purposes of this
Section 2.25 the “spread” with respect to any Loan shall be calculated as the sum of the Eurodollar
Loan margin on the relevant Loan plus any original issue discount or upfront fees in lieu of
original issue discount (other than any arranging fees, underwriting fees and commitment fees)
(based on an assumed four-year average life for the applicable Facilities (e.g., 100 basis points
in original issue discount or upfront fees equals 25 basis points of interest rate margin)))
relating to the New Term Loans exceeds the spread then in effect with respect to the Tranche B Term
Loans by more than 0.25%, the Applicable Margin relating to the existing Tranche B Term Loans shall
be adjusted so that the spread relating to such New Term Loans does not exceed the spread
applicable to the existing Tranche B Term Loans by more than 0.25%. Any New Loans made on an
Increased Amount Date that have terms and provisions that differ from those of the Term Loans or
Revolving Loans, as applicable, outstanding on the date on which such New Loans are made shall be
designated as a separate tranche (a “Tranche”) of Term Loans or Revolving Loans, as
applicable, for all purposes of this Agreement, except as the relevant Joinder Agreement otherwise
provides. For the avoidance of doubt, the rate of interest and the amortization
schedule (if
applicable) of any New Loan Commitments shall be determined by the Borrower and the applicable New
Lenders and shall be set forth in the applicable Joinder Agreement.
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(c) On any Increased Amount Date on which any New Loan Commitment become effective, subject to
the foregoing terms and conditions, each lender with a New Loan Commitment (each, a “New
Lender”) shall become a Lender hereunder with respect to such New Loan Commitment.
(d) The terms and provisions of the New Loan Commitments of any Tranche shall be, except as
otherwise set forth in the relevant Joinder Agreement, identical to those of the applicable Loans
and for purposes of this Agreement, any New Loans or New Loan Commitments shall be deemed to be
Term Loans, Revolving Loans or Revolving Commitments, as applicable. Each Joinder Agreement may,
without the consent of any other Lenders, effect such amendments to this Agreement and the other
Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to
effect the provisions of this Section 2.25.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, each Issuing Lender,
in reliance on the agreements of the other Revolving Lenders set forth in Section 3.4(a), agrees to
issue letters of credit (“Letters of Credit”) under the Revolving Commitment for the
account of the Borrower or any Guarantor on any Business Day during the Revolving Commitment Period
in such form as may be approved from time to time by such Issuing Lender; provided that no
Issuing Lender shall have any obligation to issue any Letter of Credit if, after giving effect to
such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the aggregate amount
of the Available Revolving Commitments would be less than zero. Each Letter of Credit shall (i) be
denominated in Dollars and (ii) expire no later than the earlier of (x) the first anniversary of
its date of issuance and (y) the date that is three Business Days prior to the Revolving
Termination Date (unless cash collateralized or backstopped, in each case in a manner agreed to by
the Borrower and the Issuing Lender); provided that any Letter of Credit with a one-year
term may provide for the renewal thereof for additional one-year periods (which shall in no event
extend beyond the date referred to in clause (y) above).
(b) No Issuing Lender shall at any time be obligated to issue any Letter of Credit if such
issuance would conflict with, or cause such Issuing Lender to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower may from time to time
request that the relevant Issuing Lender issue a Letter of Credit (or amend, renew or extend an
outstanding Letter of Credit) by delivering to such Issuing Lender at its address for notices
specified to the Borrower by such Issuing Lender an Application therefor, with a copy to the
Administrative Agent, completed to the reasonable satisfaction of such Issuing Lender, and such
other certificates, documents and other papers and information as such Issuing Lender may
reasonably request. Upon receipt of any Application, the relevant Issuing Lender will process such
Application and the certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall promptly issue (or
amend, renew or extend, as the case may be) the Letter of Credit requested thereby (but in no event
without the consent of the applicable Issuing Lender shall any Issuing Lender be required to issue
(or amend, renew or extend, as the case may be) any Letter of Credit earlier than three Business
Days after its receipt of the Application therefor and all such other certificates, documents and
other papers and information relating thereto) by issuing the original of such Letter of Credit (or
such amendment, renewal or extension, as the case may be) to the beneficiary thereof or as
otherwise may be agreed to by such Issuing Lender and the Borrower. Such Issuing Lender shall
furnish a copy of such Letter of Credit to the Borrower promptly following the issuance (or such
amendment, renewal or extension, as the case may be) thereof. Each Issuing Lender shall promptly
furnish to the Administrative Agent, which shall in turn promptly furnish to the relevant Revolving
Lenders, notice of
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the issuance (or such amendment, renewal or extension, as the case may be) of
each Letter of Credit issued by it (including the amount thereof).
3.3 Fees and Other Charges. (a) The Borrower will pay a fee on each outstanding Letter
of Credit requested by it, at a per annum rate equal to the Applicable Margin then in effect with
respect to Eurocurrency Loans under the Revolving Facility (minus the fronting fee referred to
below), on the face amount of such Letter of Credit, which fee shall be shared ratably among the
Revolving Lenders and payable quarterly in arrears on each Fee Payment Date after the issuance
date; provided that, with respect to any Defaulting Lender, such Lender’s ratable share of
any letter of credit fee accrued on the aggregate amount available to be drawn on any outstanding
Letters of Credit during the period prior to the time such Lender became a Defaulting Lender and
unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a
Defaulting Lender except to the extent that such Lender’s ratable share of any letter of credit fee
shall otherwise have been due and payable by the Borrower prior to such time; provided
further that any Defaulting Lender’s ratable share of any letter of credit fee accrued on
the aggregate amount available to be drawn on any outstanding Letters of Credit shall accrue for
the account of the Borrower so long as such Lender shall be a Defaulting Lender. In addition, the
Borrower shall pay to each Issuing Lender for its own account a fronting fee on the aggregate face
amount of all outstanding Letters of Credit issued by it to the Borrower separately agreed to by
the Borrower and such Issuing Lender (but in any event not to exceed 0.25% per annum), payable
quarterly in arrears on each Fee Payment Date after the issuance date.
(b) In addition to the foregoing fees, the Borrower shall pay or reimburse each Issuing Lender
for costs and expenses agreed by the Borrower and such Issuing Lender in issuing, negotiating,
effecting payment under, amending or otherwise administering any Letter of Credit requested by the
Borrower.
3.4 L/C Participations. (a) Each Issuing Lender irrevocably agrees to grant and hereby
grants to each L/C Participant, and, to induce such Issuing Lender to issue Letters of Credit, each
L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from
such Issuing Lender, on the terms and conditions set forth below, for such L/C Participant’s own
account and risk an undivided interest equal to such L/C Participant’s Revolving Percentage in such
Issuing Lender’s obligations and rights under and in respect of each Letter of Credit issued by it
and the amount of each draft paid by such Issuing Lender thereunder. Each L/C Participant agrees
with each Issuing Lender that, if a draft is paid under any Letter of Credit issued by it for which
such Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Administrative Agent for the account of such
Issuing Lender upon demand an amount equal to such L/C Participant’s Revolving Percentage of the
amount of such draft, or any part thereof, that is not so reimbursed; provided that,
nothing in this paragraph shall relieve the Issuing Lender of any liability resulting from the
gross negligence or willful misconduct of the Issuing Lender. Each L/C Participant’s obligation to
pay such amount shall be absolute and unconditional and shall not be affected by any circumstance,
including (i) any setoff, counterclaim, recoupment, defense or other right that such L/C
Participant may have against any Issuing Lender, the Borrower or any other Person for any reason
whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the failure
to satisfy any of the other conditions specified in Section 5, (iii) any adverse change in the
financial condition of the Borrower, (iv) any breach of this Agreement or any other Loan Document
by the Borrower, any other Loan Party or any other L/C Participant or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
(b) If any amount required to be paid by any L/C Participant to the Administrative Agent for
the account of any Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of
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any payment made by such Issuing Lender under any Letter of Credit is paid to the Administrative
Agent for the account of such Issuing Lender within three Business Days after the date such payment
is due, such L/C Participant shall pay to the Administrative Agent for the account of such Issuing
Lender on
demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment is required to the
date on which such payment is immediately available to such Issuing Lender, times (iii) a fraction
the numerator of which is the number of days that elapse during such period and the denominator of
which is 360. If any such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the Administrative Agent for the account of the relevant Issuing
Lender by such L/C Participant within three Business Days after the date such payment is due, such
Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with
interest thereon calculated from such due date at the rate per annum applicable to ABR Loans under
the Revolving Facility. A certificate of the relevant Issuing Lender submitted to any relevant L/C
Participant with respect to any amounts owing under this Section 3.4 shall be presumptively correct
in the absence of demonstrable error.
(c) Whenever, at any time after any Issuing Lender has made payment under any Letter of Credit
and has received from any L/C Participant its pro rata share of such payment in
accordance with Section 3.4(a) such Issuing Lender receives any payment related to such Letter of
Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied
thereto by such Issuing Lender), or any payment of interest on account thereof, such Issuing Lender
will distribute to the Administrative Agent for the account of such L/C Participant its pro
rata share thereof; provided, however, that in the event that any such
payment received by such Issuing Lender shall be required to be returned by such Issuing Lender,
such L/C Participant shall return to the Administrative Agent for the account of such Issuing
Lender the portion thereof previously distributed by such Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to reimburse each
Issuing Lender on the Business Day following the date on which such Issuing Lender notifies the
Borrower of the date and amount of a draft presented under any Letter of Credit issued by such
Issuing Lending at the Borrower’s request and paid by such Issuing Lender for the amount of (a)
such draft so paid and (b) any Non-Excluded Taxes and Other Taxes, fees, charges or other costs or
expenses reasonably incurred by such Issuing Lender in connection with such payment (the amounts
described in the foregoing clauses (a) and (b) in respect of any drawing, collectively, the
“Payment Amount”). Each such payment shall be made to such Issuing Lender at its address
for notices specified to the Borrower and in immediately available funds. Interest shall be
payable on any such amounts from the date on which the relevant draft is paid until payment in full
at a rate equal to (i) until the second Business Day next succeeding the date of the relevant
notice, the rate applicable to ABR Loans under the Revolving Facility and (ii) thereafter, the rate
set forth in Section 2.15(c).
3.6 Obligations Absolute. The Borrower’s obligations under this Section 3 shall be
absolute and unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment that the Borrower may have or have had against any Issuing
Lender, any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees with
each Issuing Lender that such Issuing Lender shall not be responsible for, and the Borrower’s
Reimbursement Obligations under Section 3.5 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even though such documents
shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the
Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such
Letter of Credit or any such transferee, or any other events or circumstances that, pursuant to
applicable law or the applicable customs and practices promulgated by the International Chamber of
Commerce, are not within the responsibility of such Issuing Lender, except for
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errors, omissions, interruptions or delays resulting from the gross negligence or willful misconduct of such Issuing
Lender or its employees or agents. No Issuing Lender shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or advice, however
transmitted,
in connection with any Letter of Credit, except for errors, omissions, interruptions or delays
resulting from the gross negligence or willful misconduct of such Issuing Lender or its employees
or agents. The Borrower agrees that any action taken or omitted by any Issuing Lender under or in
connection with any Letter of Credit or the related drafts or documents, if done in the absence of
gross negligence or willful misconduct and in accordance with the standards or care specified in
the Uniform Commercial Code of the State of New York, shall be binding on the Borrower and shall
not result in any liability of such Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for payment under any
Letter of Credit, the relevant Issuing Lender shall promptly notify the Borrower of the date and
amount thereof. The responsibility of such Issuing Lender to the Borrower in connection with any
draft presented for payment under any Letter of Credit issued by such Issuing Lender shall, in
addition to any payment obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such Letter of Credit.
3.8 Applications. To the extent that any provision of any Application related to any
Letter of Credit is inconsistent with the provisions of this Agreement or any other Loan Document,
the provisions of this Agreement or such other Loan Document shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement and to make the Loans and
issue or participate in the Letters of Credit, Holdings (to the extent applicable) and the Borrower
hereby jointly represent and warrant (as to itself and each of its Restricted Subsidiaries) to the
Agents and each Lender, which representations and warranties shall be deemed made on the Closing
Date (to the extent relating to Holdings or the Initial Borrower, immediately before giving effect
to the Merger Transactions and to the extent relating to Holdings, the Surviving Borrower or any
Restricted Subsidiary, immediately after giving effect to the Merger Transactions) and on the date
of each borrowing of Loans or issuance, extension or renewal of a Letter of Credit hereunder that:
4.1 Financial Condition. (a) The audited consolidated balance sheet of the Company and
its Subsidiaries as at March 31, 2006, March 31, 2007 and March 31, 2008, and the related
statements of income and of cash flows for the fiscal years ended on such dates, in each case with
consolidating schedules for the U.S. government business of the Company and the other businesses of
the Company, reported on by and accompanied by an unqualified report from Ernst & Young LLP,
present fairly in all material respects the financial condition of the Company and its Subsidiaries
as at such date, and the results of, their operations, their cash flows and their changes in
stockholders’ equity for the respective fiscal years then ended. All such financial statements,
including the related schedules and notes thereto and year end adjustments, have been prepared in
accordance with GAAP (except as otherwise noted therein).
(b) The pro forma consolidated balance sheet of the Borrower and its
Subsidiaries as of June 30, 2008 (i) has been prepared in good faith based on assumptions that are
believed by the Borrower to be reasonable at the time made (it being understood that such
assumptions are based on good faith estimates with respect to certain items and that the actual
amounts of such items on the Closing Date is subject to variation)), (ii) accurately reflects all
adjustments necessary to give effect to the Transactions
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and (iii) presents fairly, in all material
respects, the pro forma financial position of the Borrower and its Subsidiaries as
of June 30, 2008, as if the Transactions had occurred on such date; provided that such
pro
forma balance sheet has been prepared without giving effect to all purchase accounting
or similar adjustments.
4.2 No Change. (a) As of the Closing Date, there has been no event, circumstance,
development, change or effect that has had a Closing Date Material Adverse Effect since the date of
the Merger Agreement.
(b) At any time after the Closing Date as of which this representation and warranty is made or
deemed made, there has been no event, development or circumstance since March 31, 2008 that has had
or would reasonably be expected to have a Material Adverse Effect.
4.3 Existence; Compliance with Law. Except as set forth in Schedule 4.3, each of
Holdings, the Borrower and its Restricted Subsidiaries (other than any Immaterial Subsidiaries) (a)
(i) is duly organized (or incorporated), validly existing and in good standing (or, only where if
applicable, the equivalent status in any foreign jurisdiction) under the laws of the jurisdiction
of its organization or incorporation, (ii) has the corporate or organizational power and authority,
and the legal right, to own and operate its Property, to lease the Property it operates as lessee
and to conduct the business in which it is currently engaged, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect and (iii) is duly qualified as a
foreign corporation or limited liability company and in good standing (where such concept is
relevant) under the laws of each jurisdiction where its ownership, lease or operation of Property
or the conduct of its business requires such qualification except, in each case, to the extent that
the failure to be so qualified or in good standing (where such concept is relevant) would not have
a Material Adverse Effect and (b) is in compliance with all Requirements of Law except to the
extent that any such failure to comply therewith would not have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. (a) Each Loan Party has the
corporate power and authority to make, deliver and perform the Loan Documents to which it is a
party and, in the case of the Borrower, to borrow or have Letters of Credit issued hereunder. Each
Loan Party has taken all necessary corporate or other action to authorize the execution, delivery
and performance of the Loan Documents to which it is a party and, in the case of the Borrower, to
authorize the extensions of credit on the terms and conditions of this Agreement.
(b) No consent or authorization of, filing with, notice to or other act by or in respect of,
any Governmental Authority is required in connection with the extensions of credit hereunder or the
execution, delivery, performance, validity or enforceability of this Agreement or any of the other
Loan Documents, except (i) consents, authorizations, filings and notices described in Schedule 4.4,
which consents, authorizations, filings and notices have been obtained or made and are in full
force and effect or the failure to obtain which would not reasonably be expected to have a Material
Adverse Effect and (ii) the filings referred to in Section 4.17.
(c) Each Loan Document has been duly executed and delivered on behalf of each Loan Party that
is a party thereto. This Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party that is a party thereto,
enforceable against each such Loan Party in accordance with its terms (provided that, with
respect to the creation and perfection of security interests with respect to the Capital Stock of
Foreign Subsidiaries, only to the extent enforceability of such obligation with respect to which
Capital Stock is governed by the Uniform Commercial Code), except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and by
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general equitable principles (whether enforcement
is sought by proceedings in equity or at law) and the implied covenants of good faith and fair
dealing.
4.5 No Legal Bar. The execution, delivery and performance of this Agreement and the other
Loan Documents by the Loan Parties thereto, the issuance of Letters of Credit, the borrowings
hereunder and the use of the proceeds thereof will not (a) violate the organizational or governing
documents of the Loan Parties, (b) except as would not reasonably be expected to have a Material
Adverse Effect, violate any Requirement of Law binding on the Borrower or any of its Restricted
Subsidiaries or any Contractual Obligation of Holdings, the Borrower or any of its Restricted
Subsidiaries or (c) except as would not have a Material Adverse Effect, result in, or require, the
creation or imposition of any Lien on any of their respective properties or revenues pursuant to
any Requirement of Law or any such Contractual Obligation (other than the Liens permitted by
Section 7.3).
4.6 No Material Litigation. Except as set forth in Schedule 4.6, no litigation,
investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to
the knowledge of the Borrower, likely to be commenced within a reasonable time period against the
Borrower or any of its Restricted Subsidiaries or against any of their Properties which, taken as a
whole, would reasonably be expected to have a Material Adverse Effect.
4.7 No Default. No Default or Event of Default has occurred and is continuing (other
than, on the Closing Date, as a result of a breach of any representation or warranty other than any
Specified Representation).
4.8 Ownership of Property; Liens. Except as set forth in Schedule 4.8A, each of the
Borrower and its Restricted Subsidiaries has good title in fee simple to, or a valid leasehold
interest in, all its Real Property, and good title to, or a valid leasehold interest in, all its
other Property (other than Intellectual Property), in each case, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect, and none of such Property is
subject to any Lien except as permitted by the Loan Documents. Schedule 4.8B lists all Real
Property which is owned or leased by any Loan Party as of the Closing Date.
4.9 Intellectual Property. Each of the Borrower and its Restricted Subsidiaries owns, or
has a valid license to use, all Intellectual Property necessary for the conduct of its business as
currently conducted free and clear of all Liens except as permitted by the Loan Documents, other
than Intellectual Property owned by a Special Purpose Entity, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect. To the Borrower’s knowledge,
no holding, injunction, decision or judgment has been rendered by any Governmental Authority
against the Borrower or any Restricted Subsidiary and neither the Borrower nor any of its
Restricted Subsidiaries has entered into any settlement stipulation or other agreement (except
license agreements in the ordinary course of business) which would limit, cancel or question the
validity of the Borrower’s or any Restricted Subsidiary’s rights in, any Intellectual Property in
any respect that would reasonably be expected to have a Material Adverse Effect. To Borrower’s
knowledge, no claim has been asserted or threatened or is pending by any Person challenging or
questioning the use by the Borrower or its Restricted Subsidiaries of any Intellectual Property
owned by the Borrower or any of its Restricted Subsidiaries or the validity or effectiveness of any
Intellectual Property, except as would not reasonably be expected to have a Material Adverse
Effect. To the Borrower’s knowledge, the use of Intellectual Property by the Borrower and its
Restricted Subsidiaries does not infringe on the rights of any Person in a manner that would
reasonably be expected to have a Material Adverse Effect. The Borrower and its Restricted
Subsidiaries take all reasonable actions that in the exercise of their reasonable business judgment
should be taken to protect their
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Intellectual Property, including Intellectual Property that is
confidential in nature, except where the failure to do so would not reasonably be expected to have
a Material Adverse Effect.
4.10 Taxes. Each of Holdings, the Borrower and its Restricted Subsidiaries (i) has filed
or caused to be filed all federal, state, provincial and other tax returns that are required to be
filed and (ii) has paid all taxes shown to be due and payable on said returns and all other taxes,
fees or other charges imposed on it or any of its Property by any Governmental Authority (other
than any the amount or validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which any reserves required in conformity with GAAP have been
provided on the books of the Borrower or such Restricted Subsidiary, as the case may be), except in
each case where the failure to do so would not reasonably be expected to have a Material Adverse
Effect.
4.11 Federal Regulations. No part of the proceeds of any Loans, and no other extensions of
credit hereunder, will be used for any purpose that violates the provisions of the regulations of
the Board. If requested by any Lender (through the Administrative Agent) or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in
Regulation U.
4.12 ERISA. (a) Except as would not reasonably be expected, either individually or in the
aggregate, to have a Material Adverse Effect: (i) neither a Reportable Event nor a failure to meet
the minimum funding standards (within the meaning of Section 412(a) of the Code or Section
302(a)(2) of ERISA) with respect to periods beginning on or after January 1, 2008 or an
“accumulated funding deficiency” (within the meaning of Section 412(a) of the Code or Section
302(a)(2) of ERISA) has occurred during the five-year period prior to the date on which this
representation is made with respect to any Single Employer Plan, and each Single Employer Plan has
complied with the applicable provisions of ERISA and the Code; (ii) no termination of a Single
Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen on the assets of
Holdings, the Borrower or any of its Restricted Subsidiaries, during such five-year period; the
present value of all accrued benefits under each Single Employer Plan (based on those assumptions
used to fund such Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of such Single Employer
Plan allocable to such accrued benefits; (iii) none of Holdings, the Borrower or any of its
Restricted Subsidiaries has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or would reasonably be expected to result in a liability under ERISA; (iv) none of
Holdings, the Borrower or any of its Restricted Subsidiaries would become subject to any liability
under ERISA if the Borrower or such Restricted Subsidiary were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the date on which this
representation is made; and (v) no Multiemployer Plan is in Reorganization or Insolvent.
(b) Holdings, the Borrower and its Restricted Subsidiaries have not incurred, and do not
reasonably expect to incur, any liability under ERISA or the Code with respect to any plan within
the meaning of Section 3(3) of ERISA which is subject to Title IV of ERISA or Section 412 of the
Code or Section 302 of ERISA that is maintained by a Commonly Controlled Entity (other than
Holdings, the Borrower and its Restricted Subsidiaries) (a “Commonly Controlled Plan”)
merely by virtue of being treated as a single employer under Title IV of ERISA with the sponsor of
such plan that would reasonably be likely to have a Material Adverse Effect and result in a direct
obligation of Holdings, the Borrower or any of its Restricted Subsidiaries to pay money.
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4.13 Investment Company Act. No Loan Party is an “investment company”, or a company
“controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940,
as amended.
4.14 Subsidiaries. (a) The Subsidiaries listed on Schedule 4.14 constitute all the
Subsidiaries of the Borrower at the date of this Agreement (and after giving effect to the Merger
Transactions and, to
the extent applicable, the Company Reorganization). Schedule 4.14 sets forth as of the
Closing Date the name and jurisdiction of incorporation of each Subsidiary and, as to each
Subsidiary, the percentage of each class of Capital Stock owned by any Loan Party and the
designation of such Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary.
(b) As of the Closing Date (and after giving effect to the Merger Transactions and, to the
extent applicable, the Company Reorganization), except as set forth on Schedule 4.14 or as
otherwise contemplated by the Merger Agreement, there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than stock options granted to
officers, employees or directors and directors’ qualifying shares) of any nature relating to any
Capital Stock of the Borrower or any of its Restricted Subsidiaries.
4.15 Environmental Matters. Other than exceptions to any of the following that would not
reasonably be expected to have a Material Adverse Effect, none of the Borrower or any of its
Restricted Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain
or comply with any permit, license or other approval required under any Environmental Law for the
operation of the Business; or (ii) has become subject to any Environmental Liability.
4.16 Accuracy of Information, etc. As of the Closing Date, no statement or information
(excluding the projections and pro forma financial information referred to below)
contained in this Agreement, any other Loan Document or any certificate furnished to the
Administrative Agent or the Lenders or any of them, by or on behalf of any Loan Party for use in
connection with the transactions contemplated by this Agreement or the other Loan Documents when
taken as a whole, contained as of the date such statement, information, or certificate was so
furnished, any untrue statement of a material fact or omitted to state a material fact necessary in
order to make the statements contained herein or therein, in light of the circumstances under which
they were made, not materially misleading. As of the Closing Date, the projections and pro
forma financial information contained in the materials referenced above are based upon good
faith estimates and assumptions believed by management of the Borrower to be reasonable at the time
made, in light of the circumstances under which they were made, it being recognized by the Agents
and the Lenders that such financial information as it relates to future events is not to be viewed
as fact and that actual results during the period or periods covered by such financial information
may differ from the projected results set forth therein by a material amount.
4.17 Security Documents. (a) The Guarantee and Collateral Agreement is effective to
create in favor of the Collateral Agent for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral described therein of a type in which a security
interest can be created under Article 9 of the UCC (including any proceeds of any such item of
Collateral); provided that for purposes of this Section 4.17(a), Collateral shall be deemed
to exclude any Property expressly excluded from the definition of “Collateral” as set forth in the
Guarantee and Collateral Agreement (the “Excluded Collateral”). In the case of (i) the
Pledged Securities described in the Guarantee and Collateral Agreement (other than Excluded Capital
Stock) when any stock certificates or notes, as applicable, representing such Pledged Securities
are delivered to the Collateral Agent, (ii) the Material Deposit Accounts and Material Securities
Accounts described in the Guarantee and Collateral Agreement, when control agreements with respect
to such Material Deposit Accounts and Material Securities Accounts are
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executed granting “control”
(as defined in the UCC) of such accounts to the Collateral Agent and (iii) the other Collateral
described in the Guarantee and Collateral Agreement (other than Excluded Collateral and deposit
accounts and securities accounts that do not constitute Material Deposit Accounts and Material
Securities Accounts), when financing statements in appropriate form are filed in the offices
specified on Schedule 4.17 (which financing statements have been duly completed and executed (as
applicable) and delivered to the Collateral Agent) and such other filings as are specified on
Schedule 3 to the Guarantee
and Collateral Agreement are made, the Collateral Agent shall have a fully perfected first
priority Lien on, and security interest in, all right, title and interest of the Loan Parties in
such Collateral (including any proceeds of any item of Collateral) (to the extent a security
interest in such Collateral can be perfected through the filing of financing statements in the
offices specified on Schedule 4.17 and the filings specified on Schedule 3 to the Guarantee and
Collateral Agreement, and through the delivery of the Pledged Securities required to be delivered
on the Closing Date), as security for the Obligations, in each case prior in right to the Lien of
any other Person (except (i) in the case of Collateral other than Pledged Securities, Liens
permitted by Section 7.3 and (ii) Liens having priority by operation of law) to the extent required
by the Guarantee and Collateral Agreement.
(b) Upon the execution and delivery of any Mortgage to be executed and delivered pursuant to
Section 6.8(b), such Mortgage shall be effective to create in favor of the Collateral Agent for the
benefit of the Secured Parties a legal, valid and enforceable Lien on the Mortgaged Property
described therein and proceeds thereof, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law) and the implied covenants of good faith and fair dealing; and when
such Mortgage is filed in the recording office designated by the Borrower, such Mortgage shall
constitute a fully perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in such Mortgaged Property and the proceeds thereof, as security for the
Obligations (as defined in the relevant Mortgage), in each case prior and superior in right to any
other Person (other than Liens permitted by Section 7.3 or other encumbrances or rights permitted
by the relevant Mortgage).
4.18 Solvency. As of the Closing Date, the Loan Parties are (on a consolidated basis), and
after giving effect to the Transactions will be, Solvent.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each Lender to make the
initial extension of credit requested to be made by it is subject to the satisfaction (or waiver),
prior to or concurrently with the making of such extension of credit on the Closing Date, of the
following conditions precedent:
(a) Credit Agreement; Mezzanine Loan Facility. The Administrative Agent shall
have received (i) this Agreement, executed and delivered by the Administrative Agent, the
Collateral Agent, Holdings, the Borrower, the Lead Arrangers, the Lenders party hereto and
the Issuing Bank, (ii) the Guarantee and Collateral Agreement, executed and delivered by
Holdings, the Borrower and each Subsidiary Guarantor and (iii) (subject to the last
paragraph of this Section 5.1) with respect to each Material Real Property owned by a Loan
Party as of the Closing Date, a Mortgage executed and delivery by such Loan Party in favor
of the Collateral Agent for the benefit of the Secured Parties, covering such Real Property
(together with such other documents relating thereto consistent with the requirements of
Section 6.8(b)). The Administrative Agent shall have received evidence that the Mezzanine
Loan Agreement has been executed and
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delivered by all Persons stated to be a party thereto
in the form then most recently delivered to the Administrative Agent, and the Mezzanine
Loans shall have been made.
(b) Transaction, etc. The following transactions shall be consummated:
(i) Merger. The Merger Transactions shall be consummated substantially
concurrently with the initial funding of the Loans on the Closing Date (A) in
accordance
with the Merger Agreement and the related disclosure schedules and exhibits
thereto, without waiver or amendment of any material provision thereof (other than
any such waivers or amendments (including, without limitation, with respect to any
representations and warranties in the Merger Agreement) as are not materially
adverse to the Lenders or the Lead Arrangers (including, without limitation, the
definition of “Company Material Adverse Effect” therein and the representation and
warranty set forth in Section 4.8(c) thereof)) unless consented to by the Lead
Arrangers (which consent shall not be unreasonably withheld or delayed) or (B) on
such other terms and conditions as are reasonably satisfactory to the Lead
Arrangers.
(ii) Equity Financing. The Permitted Investors shall have made equity
contributions to, or purchased for cash equity of, Holdings in an aggregate amount
that, together with all roll-over equity, constitutes not less than 40% of the
pro forma capitalization of Holdings and its subsidiaries on a
consolidated basis (after giving effect to the Transactions but excluding any Loans
made or Letters of Credit issued under the Revolving Facility).
(iii) The representation and warranty of the Company contained in Section
4.8(c) of the Merger Agreement shall be true and correct as of the Closing Date as
if made on and as of the Closing Date, except where the failure of such
representation and warranty to be so true and correct has not had and would not be
reasonably likely to have, individually or in the aggregate, a Closing Date Material
Adverse Effect.
(c) Solvency Certificate. The Administrative Agent shall have received a
solvency certificate signed by the chief financial officer on behalf of Holdings,
substantially in the form of Exhibit G.
(d) Lien Searches. The Collateral Agent shall have received the results of a
recent lien search in each of the jurisdictions in which Uniform Commercial Code financing
statements or other filings or recordations should be made to evidence or perfect security
interests in all assets of the Loan Parties, and such search shall reveal no liens on any of
the assets of the Loan Party, except for Liens permitted by Section 7.3 or liens to be
discharged on or prior to the Closing Date.
(e) Closing Certificate. The Administrative Agent shall have received a
certificate of each Loan Party, dated as of the Closing Date, substantially in the form of
Exhibit C, with appropriate insertions and attachments.
(f) Legal Opinions. The Administrative Agent shall have received an executed
legal opinion of (i) Debevoise & Plimpton LLP, special New York counsel to the Loan Parties,
substantially in the form of Exhibit E-1 and (ii) Morris, Nichols, Arsht & Tunnell LLP,
special Delaware counsel to the Loan Parties, substantially in the form of Exhibit E-2.
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(g) Pledged Stock; Stock Powers. The Collateral Agent shall have received the
certificates, if any, representing the shares of Capital Stock held by a Loan Party pledged
pursuant to the Guarantee and Collateral Agreement, together with an undated stock power for
each such certificate executed in blank by a duly authorized officer of the pledgor thereof.
(h) Filings, Registrations and Recordings. Each document (including, without
limitation, any Uniform Commercial Code financing statement) required by the Security
Documents to be
filed, registered or recorded in order to create in favor of the Collateral Agent for
the benefit of the Secured Parties, a first priority perfected Lien on the Collateral
described therein, shall have been delivered to the Collateral Agent in proper form for
filing, registration or recordation.
(i) Insurance. The Administrative Agent shall have received insurance
certificates satisfying the requirements of Section 6.5(c).
(j) USA Patriot Act. The Lenders shall have received from each of the Loan
Parties documentation and other information requested by any Lender no less than 10 calendar
days prior to the Closing Date that is required by regulatory authorities under applicable
“know your customer” and anti-money laundering rules and regulations, including, without
limitation, the USA Patriot Act.
(k) Specified Representations. The Specified Representations shall be true and
correct in all material respects.
Notwithstanding anything in any Loan Document to the contrary, (i) other than with respect to
any Closing Date UCC Filing Collateral or Closing Date Stock Certificates, to the extent any
collateral is not provided on the Closing Date after the Borrower’s use of commercially reasonable
efforts to do so, the delivery of such collateral shall not constitute a condition precedent to the
availability of the Loans on the Closing Date, (ii) with respect to perfection of security
interests in the Closing Date UCC Filing Collateral, the Borrower’s sole obligation shall be to
deliver, or cause to be delivered, necessary UCC financing statements to the Administrative Agent
or to irrevocably authorize or cause the applicable Guarantor to irrevocably authorize the
Administrative Agent to file necessary UCC financing statements and (iii) with respect to
perfection of security interests in Closing Date Stock Certificates, the Borrower’s sole obligation
shall be to deliver to the Administrative Agent the Closing Date Stock Certificates as and to the
extent they are delivered to the Borrower by the Company pursuant to the Merger Agreement, in each
case, duly endorsed in blank.
5.2 Conditions to Each Revolving Loan Extension of Credit After Closing Date. The
agreement of each Lender to make any Revolving Loan or to issue or participate in any Letter of
Credit hereunder on any date after the Closing Date is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all
material respects, in each case on and as of such date as if made on and as of such date
except to the extent that such representations and warranties relate to an earlier date, in
which case such representations and warranties shall be true and correct in all material
respects as of such earlier date.
(b) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the extensions of credit requested to be
made on such date.
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Each borrowing of a Revolving Loan by and issuance, extension or renewal of a Letter of Credit on
behalf of the Borrower hereunder after the Closing Date shall constitute a representation and
warranty by the Borrower as of the date of such extension of credit that the conditions contained
in this Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower (on behalf of itself and each of the Restricted Subsidiaries) hereby agrees that,
so long as the Commitments remain in effect, any Letter of Credit remains outstanding (that has not
been cash collateralized or backstopped, in each case on terms agreed to by the Borrower and the
applicable Issuing Lender) or any Loan or other amount is owing to any Lender or any Agent
hereunder (other than (i) contingent or indemnification obligations not then due and (ii)
obligations in respect of Specified Hedge Agreements or Cash Management Obligations), the Borrower
shall, and shall cause each of the Restricted Subsidiaries to:
6.1
Financial Statements. Furnish to the Administrative Agent for delivery to each Lender
(which may be delivered via posting on IntraLinks or another similar electronic platform):
(a) within 120 days (or 135 days with respect to the fiscal year ending March 31, 2009)
after the end of each fiscal year of the Borrower, commencing with the fiscal year ending
March 31, 2009, a copy of the audited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such year and the related audited consolidated
statements of income and of cash flows for such year, setting forth, commencing with the
financial statements with respect to the fiscal year ending March 31, 2010, in comparative
form the figures as of the end of and for the previous year, reported on without
qualification arising out of the scope of the audit, by Ernst & Young LLP or other
independent certified public accountants of nationally recognized standing; and
(b) within 45 days (or 60 days with respect to the fiscal quarters ending prior to
March 31, 2009) after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, commencing with the fiscal quarter ending September 30, 2008, the
unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at
the end of such quarter and the related unaudited consolidated statements of income and of
cash flows for such quarter and the portion of the fiscal year through the end of such
quarter, setting forth, commencing after the first full fiscal year after the Closing Date,
in comparative form the figures as of the end of and for the corresponding period in the
previous year, certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments and the lack of notes);
all such financial statements to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior periods (except as
disclosed therein and except in the case of the financial statements referred to in clause (b), for
customary year-end adjustments and the absence of footnotes). The Borrower may satisfy its
obligations under this Section 6.1 with respect to financial information of the Borrower and its
consolidated Subsidiaries by delivering information relating to Holdings, the Borrower and its
consolidated Subsidiaries.
Documents required to be delivered pursuant to this Section 6.1 may be delivered by posting
such documents electronically with notice of such posting to the Administrative Agent and if so
posted, shall be deemed to have been delivered on the date on which such documents are posted on
the Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each
Lender
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and the Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent).
6.2
Certificates; Other Information. Furnish to the Administrative Agent for delivery to
each Lender, or, in the case of clause (g), to the relevant Lender:
(a) to the extent permitted by the internal policies of such independent certified
public accountants, concurrently with the delivery of the financial statements referred to
in Section 6.1(a), a certificate of the independent certified public accountants in
customary form reporting on such financial statements stating that in making the examination
necessary therefor no knowledge was obtained of any Default or Event of Default arising
under Section 7.1, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements pursuant to Section 6.1,
(i) a Compliance Certificate of a Responsible Officer on behalf of the Borrower stating that
such Responsible Officer has obtained no knowledge of any Default or Event of Default that
has occurred and is continuing except as specified in such certificate and (ii) to the
extent not previously disclosed to the Administrative Agent, (x) a description of any
Default or Event of Default that occurred and (y) a description of any new Subsidiary and of
any change in the name or jurisdiction of organization of any Loan Party and a listing of
any material registrations of or applications for United States Intellectual Property by any
Loan Party since the date of the most recent list delivered pursuant to this clause (or, in
the case of the first such list so delivered, since the Closing Date);
(c) not later than 120 days (or 135 days with respect to the fiscal year ending March
31, 2009) after the end of each fiscal year of the Borrower, a detailed consolidated budget
for the following fiscal year (including a projected consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of the following fiscal year and the related
consolidated statements of projected cash flow and projected income (collectively, the
“Annual Operating Budget”)); provided that at any time the Borrower,
Holdings or any Parent Company is subject to the reporting requirements set forth in Section
13(a) or 15(d) of the Securities Exchange Act of 1934, the Administrative Agent shall
deliver the Annual Operating Budget only to “private-side” Lenders (i.e., Lenders that wish
to receive material non-public information with respect to any Loan Party or its securities
for purposes of United States federal or state securities laws).
(d) promptly after the same are sent, copies of all financial statements and material
reports that the Borrower sends to the holders of any class of its debt securities or public
equity securities (except for Permitted Investors) and, promptly after the same are filed,
copies of all financial statements and reports that the Borrower may make to, or file with,
the SEC, in each case to the extent not already provided pursuant to Section 6.1 or any
other clause of this Section 6.2;
(e) promptly upon delivery thereof to the Borrower and to the extent permitted, copies
of any accountants’ letters addressed to its Board of Directors (or any committee thereof);
(f) promptly upon delivery thereof under the relevant agreement, notice of any default
or event of default under the Mezzanine Loan Facility, and, prior to the effectiveness
thereof, copies of substantially final drafts of any proposed material amendment,
supplement, waiver or other modification with respect to the Mezzanine Loan Facility; and
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(g) promptly, such additional financial and other information as the Administrative
Agent (for its own account or upon the request from any Lender) may from time to time
reasonably request.
Notwithstanding anything to the contrary in this Section 6.2, none of Holdings, the Borrower
or any of the Restricted Subsidiaries will be required to disclose any document, information or
other matter that (i) constitutes non-financial trade secrets or non-financial proprietary
information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or
their respective representatives or contractors) is prohibited by Law or any binding agreement,
(iii) is subject to attorney-client or similar privilege or constitutes attorney work product or
(iv) constitutes classified information.
Documents required to be delivered pursuant to this Section 6.2 may be delivered by posting such
documents electronically with notice of such posting to the Administrative Agent and each Lender
and if so posted, shall be deemed to have been delivered on the date (i) on which the Borrower
posts such documents, or to provide a link thereto on the Borrower’s website or (ii) on which such
documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant
website, if any, to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative Agent).
6.3 Payment of Taxes. Pay, discharge or otherwise satisfy at or before maturity or before
they become delinquent, as the case may be, all its material Taxes, governmental assessments and
governmental charges (other than Indebtedness), except (a) where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves required in
conformity with GAAP with respect thereto have been provided on the books of the Borrower or its
Restricted Subsidiaries, as the case may be, or (b) to the extent that failure to pay or satisfy
such obligations would not reasonably be expected to have a Material Adverse Effect.
6.4 Conduct of Business and Maintenance of Existence, etc.; Compliance. (a) Preserve,
renew and keep in full force and effect its corporate or other existence and take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable in the normal
conduct of its business, except, in each case, as otherwise permitted by Section 7.4 or except to
the extent that failure to do so would not reasonably be expected to have a Material Adverse
Effect; and (b) comply with all Requirements of Law except to the extent that failure to comply
therewith would not reasonably be expected to have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all Property useful and necessary in
its business in reasonably good working order and condition, ordinary wear and tear excepted,
except where the failure to do so would not reasonably be expected to have a Material Adverse
Effect.
(b) Take all reasonable and necessary steps, including, without limitation, in any proceeding
before the United States Patent and Trademark Office or the United States Copyright Office, to
maintain and pursue each application (and to obtain the relevant registration) and to maintain each
registration of the material United States Intellectual Property owned by the Borrower or its
Restricted Subsidiaries, including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability, except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect.
(c) Maintain insurance with financially sound and reputable insurance companies on all its
material Property in at least such amounts and against at least such risks as are usually insured
against in the same general area by companies engaged in the same or a similar business. All such
insurance
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shall, to the extent customary (but in any event, not including business interruption
insurance and personal injury insurance) (i) provide that no cancellation thereof shall be
effective until at least 10 days after receipt by the Administrative Agent of written notice
thereof and (ii) name the Administrative Agent as insured party or loss payee.
(d) With respect to any Mortgaged Properties, if at any time the area in which the Premises
(as defined in the Mortgages, if any) are located is designated a “flood hazard area” in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency),
obtain flood insurance in such reasonable total amount as the Collateral Agent may from time to
time reasonably require, and otherwise to ensure compliance with the National Flood Insurance
Program as set forth in the Flood Disaster Protection Act of 1973, as it may be amended from time
to time.
6.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper books of
records and account in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all material financial dealings and transactions in relation
to its business and activities, (b) permit representatives of any Lender to visit and inspect any
of its properties and examine and make abstracts from any of its books and records upon reasonable
notice and at such reasonable times during normal business hours (provided that (i) such
visits shall be coordinated by the Administrative Agent, (ii) such visits shall be limited to no more
than one such visit per calendar year, and (iii) such visits by any Lender shall be at the Lender’s
expense, except in the case of clauses (ii) and (iii) during the continuance of an Event of
Default), (c) permit representatives of any Lender to have reasonable discussions regarding the
business, operations, properties and financial and other condition of the Borrower and its
Restricted Subsidiaries with officers and employees of the Borrower and its Restricted Subsidiaries
(provided that (i) a Responsible Officer of the Borrower shall be afforded the opportunity
to be present during such discussions, (ii) such discussions shall be coordinated by the
Administrative Agent, and (iii) such discussions shall be limited to no more than once per calendar
quarter except during the continuance of an Event of Default) and (d) permit representatives of the
Administrative Agent to have reasonable discussions regarding the business, operations, properties
and financial and other condition of the Borrower and its Restricted Subsidiaries with its
independent certified public accountants to the extent permitted by the internal policies of such
independent certified public accountants (provided that (i) a Responsible Officer of the
Borrower shall be afforded the opportunity to be present during such discussions and (ii) such
discussions shall be limited to no more than once per calendar year except during the continuance
of an Event of Default). Notwithstanding anything to the contrary in this Section 6.6, none of
Holdings, the Borrower or any of the Restricted Subsidiaries will be required to disclose, permit
the inspection, examination or making copies or abstracts of, or discussion of, any document,
information or other matter that (i) constitutes non-financial trade secrets or non-financial
proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any
Lender (or their respective representatives or contractors) is prohibited by Law or any binding
agreement, (iii) is subject to attorney-client or similar privilege or constitutes attorney work
product or (iv) constitutes classified information.
6.7 Notices. Promptly upon a Responsible Officer of the Borrower or any Subsidiary
Guarantor obtaining knowledge thereof, give notice to the Administrative Agent of:
(a) the occurrence of any Default or Event of Default;
(b) any litigation, investigation or proceeding which may exist at any time between the
Borrower or any of its Restricted Subsidiaries and any other Person, that in either case,
would reasonably be expected to have a Material Adverse Effect;
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(c) the following events, that would reasonably be expected to have a Material Adverse
Effect, as soon as possible and in any event within 30 days after the Borrower or any
Subsidiary Guarantor knows thereof: (i) the occurrence of any Reportable Event with respect
to any Single Employer Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan on the assets of Holdings, the Borrower
or any of its Restricted Subsidiaries or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan, (ii) the institution of proceedings
or the taking of any other action by the PBGC or Holdings or any Commonly Controlled Entity
or any Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (iii) the occurrence of any
similar events with respect to a Commonly Controlled Plan, that would reasonably be likely
to result in a direct obligation of the Borrower or any of its Restricted Subsidiaries to
pay money;
(d) any development or event that has had or would reasonably be expected to have a
Material Adverse Effect; and
(e) the acquisition of any Property after the Closing Date in which the Collateral
Agent does not already have a perfected security interest and in which a security interest
is required to be created or perfected pursuant to Section 6.8.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of a Responsible
Officer setting forth details of the occurrence referred to therein and stating what action the
Borrower or the relevant Restricted Subsidiary proposes to take with respect thereto.
6.8 Additional Collateral, etc. (a) With respect to any Property (other than Excluded
Collateral) located in the United States having a value, individually or in the aggregate, of at
least $2,000,000 acquired after the Closing Date by any Loan Party (other than (w) any interests in
Real Property and any Property described in paragraph (c) or paragraph (d) of this Section 6.8,
(x) any Property subject to a Lien expressly permitted by Section 7.3(g) or 7.3(z),
(y) Instruments, Certificated Securities, Securities and Chattel Paper, which are referred to in
the last sentence of this paragraph (a) and (z) Government Contracts, deposit accounts and
securities accounts (the Loan Parties’ obligations with respect to which are contained in the
Guarantee and Collateral Agreement)) as to which the Collateral Agent for the benefit of the
Secured Parties does not have a perfected Lien, promptly (i) give notice of such Property to the
Collateral Agent and execute and deliver to the Collateral Agent such amendments to the Guarantee
and Collateral Agreement or such other documents as the Collateral Agent reasonably requests to
grant to the Collateral Agent for the benefit of the Secured Parties a security interest in such
Property and (ii) take all actions reasonably requested by the Collateral Agent to grant to the
Collateral Agent for the benefit of the Secured Parties a perfected security interest (to the
extent required by the Security Documents and with the priority required by Section 4.17) in such
Property (with respect to Property of a type owned by a Loan Party as of the Closing Date to the
extent the Collateral Agent for the benefit of the Secured Parties, has a perfected security
interest in such Property as of the Closing Date), including, without limitation, the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be reasonably requested by the Collateral
Agent. If any amount in excess of $5,000,000 payable under or in connection with any of the
Collateral shall be or become evidenced by any Instrument, Certificated Security, Security or
Chattel Paper (or, if more than $5,000,000 in the aggregate payable under or in connection with the
Collateral shall become evidenced by Instruments, Certificated Securities, Securities or Chattel
Paper), such Instrument, Certificated Security, Security or Chattel Paper shall be promptly
delivered to the Collateral Agent indorsed in a manner reasonably satisfactory to the Collateral
Agent to be held as Collateral pursuant to this Agreement.
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(b) With respect to any fee interest in any Material Real Property acquired after the Closing
Date by any Loan Party (other than Excluded Real Property), (i) give notice of such acquisition to
the Collateral Agent and, if requested by the Collateral Agent execute and deliver a first priority
Mortgage (subject to liens permitted by Section 7.3) in favor of the Collateral Agent for the
benefit of the Secured Parties, covering such Real Property (provided that no Mortgage nor survey
shall be obtained if the Administrative Agent determines in consultation with the Borrower that the
costs of obtaining such Mortgage or survey are excessive in relation to the value of the security
to be afforded thereby), (ii) if reasonably requested by the Collateral Agent (A) provide the
Lenders with a lenders’ title insurance policy with extended coverage covering such Real Property
in an amount at least equal to the purchase price of such Real Property (or such other amount as
shall be reasonably specified by the Collateral Agent) as well as a current ALTA survey thereof,
together with a surveyor’s certificate unless the title insurance policy referred to above shall
not contain an exception for any matter shown by a survey (except to the extent an existing survey
has been provided and specifically incorporated into such title insurance policy), each in form and substance reasonably satisfactory to the Collateral Agent,
(B) use commercially reasonable efforts to obtain any consents or estoppels reasonably deemed
necessary by the Collateral Agent, in connection with such Mortgage, each of the foregoing in form
and substance reasonably satisfactory to the Collateral Agent and (C) provide to the Administrative
Agent evidence of flood hazard insurance if any portion of the improvements on the owned Property
is currently or at any time in the future identified by the Federal Emergency Management Agency as
an area having special flood hazards and in which flood insurance has been made available under the
National Flood Insurance Act of 1968 (and any amendment or successor act thereto) or otherwise
being designated as a “special flood hazard area or part of a 100 year flood zone”, in an amount
equal to 100% of the full replacement cost of the improvements; provided, however, that a portion
of such flood hazard insurance may be obtained under the National Flood Insurance Act of 1968, the
Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each
may be amended and (iii) if requested by the Collateral Agent deliver to the Collateral Agent legal
opinions relating to the matters described above, which opinions shall be in form and substance,
and from counsel, reasonably satisfactory to the Collateral Agent.
(c) Except as otherwise contemplated by Section 7.7(p), with respect to any new Subsidiary
that is a Non-Excluded Subsidiary created or acquired after the Closing Date (which, for the
purposes of this paragraph, shall include any Subsidiary that was previously an Excluded Subsidiary
that becomes a Non-Excluded Subsidiary) by any Loan Party, promptly (i) give notice of such
acquisition or creation to the Collateral Agent and, if requested by the Collateral Agent, execute
and deliver to the Collateral Agent such amendments to the Guarantee and Collateral Agreement or
such other documents as the Collateral Agent reasonably deems necessary to grant to the Collateral
Agent for the benefit of the Secured Parties a perfected security interest (to the extent required
by the Security Documents and with the priority required by Section 4.17) in the Capital Stock of
such new Subsidiary that is owned by such Loan Party, (ii) deliver to the Collateral Agent the
certificates, if any, representing such Capital Stock, together with undated stock powers, in
blank, executed and delivered by a duly authorized officer of such Loan Party, and (iii) cause such
new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement and (B) to take such
actions necessary or advisable to grant to the Collateral Agent for the benefit of the Secured
Parties a perfected security interest (to the extent required by the Security Documents and with
the priority required by Section 4.17) in the Collateral described in the Guarantee and Collateral
Agreement with respect to such new Subsidiary (to the extent the Collateral Agent, for the benefit
of the Secured Parties, has a perfected security interest in the same type of Collateral as of the
Closing Date), including, without limitation, the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be reasonably requested by the Collateral Agent. Without limiting the foregoing, if
(i) the aggregate Consolidated Total Assets or annual consolidated revenues of all Subsidiaries
designated as “Immaterial
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Subsidiaries” hereunder shall at any time exceed 7.5% of Consolidated
Total Assets or annual consolidated revenues, respectively, of the Borrower and its Restricted
Subsidiaries (as reflected on the most recent financial statements delivered pursuant to Section
6.1 prior to such time) or (ii) if any Subsidiary shall at any time cease to constitute an
Immaterial Subsidiary under clause (i) of the definition of “Immaterial Subsidiary” (as reflected
on the most recent financial statements delivered pursuant to Section 6.1 prior to such time), the
Borrower shall promptly, (x) in the case of clause (i) above, rescind the designation as
“Immaterial Subsidiaries” of one or more of such Subsidiaries so that, after giving effect thereto,
the aggregate Consolidated Total Assets or annual consolidated revenues, as applicable, of all
Subsidiaries so designated (and which designations have not been rescinded) shall not exceed 7.5%
of Consolidated Total Assets or annual consolidated revenues, respectively, of the Borrower and its
Restricted Subsidiaries (as reflected on the most recent financial statements delivered pursuant to
Section 6.1 prior to such time), as applicable, and (y) in the case of clauses (i) and (ii) above,
to the extent not already effected, (A) cause each affected Subsidiary to take such actions to
become a “Subsidiary Guarantor” hereunder and under the Guarantee and Collateral Agreement and execute and deliver
the documents and other instruments referred to in this paragraph (c) to the extent such affected
Subsidiary is not otherwise an Excluded Subsidiary and (B) cause the owner of the Capital Stock of
such affected Subsidiary to take such actions to pledge such Capital Stock to the extent required
by, and otherwise in accordance with, the Guarantee and Collateral Agreement and execute and
deliver the documents and other instruments required hereby and thereby unless such Capital Stock
otherwise constitutes Excluded Capital Stock.
(d) Except as otherwise contemplated by Section 7.7(p), with respect to any new first tier
Foreign Subsidiary that is a Non-Excluded Subsidiary created or acquired after the Closing Date by
any Loan Party, promptly (i) give notice of such acquisition or creation to the Collateral Agent
and, if requested by the Collateral Agent, execute and deliver to the Collateral Agent such
amendments to the Guarantee and Collateral Agreement as the Collateral Agent deems necessary or
reasonably advisable in order to grant to the Collateral Agent, for the benefit of the Secured
Parties, a perfected security interest (to the extent required by the Security Documents and with
the priority required by Section 4.17) in the Capital Stock of such new Subsidiary (other than any
Excluded Capital Stock) that is owned by such Loan Party and (ii) deliver to the Collateral Agent
the certificates, if any, representing such Capital Stock (other than any Excluded Capital Stock),
together with undated stock powers, in blank, executed and delivered by a duly authorized officer
of such Loan Party, and take such other action as may be necessary or, in the reasonable opinion of
the Collateral Agent, desirable to perfect or ensure appropriate priority the Lien of the
Collateral Agent thereon.
(e) Notwithstanding anything in this Section 6.8 to the contrary, neither the Borrower nor any
of its Restricted Subsidiaries shall be required to take any actions in order to perfect the
security interest in the Collateral granted to the Collateral Agent for the ratable benefit of the
Secured Parties under the laws of any jurisdiction outside the United States.
(f) Notwithstanding the foregoing, to the extent any new Restricted Subsidiary is created
solely for the purpose of consummating a merger transaction pursuant to an acquisition permitted by
Section 7.7, and such new Subsidiary at no time holds any assets or liabilities other than any
merger consideration contributed to it contemporaneously with the closing of such merger
transaction, such new Subsidiary shall not be required to take the actions set forth in Section
6.8(c) or 6.8(d), as applicable, until the respective acquisition is consummated (at which time the
surviving entity of the respective merger transaction shall be required to so comply within ten
Business Days).
(g) From time to time the Loan Parties shall execute and deliver, or cause to be executed and
delivered, such additional instruments, certificates or documents, and take all such actions, as the
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Collateral Agent may reasonably request for the purposes implementing or effectuating the
provisions of this Agreement and the other Loan Documents, or of renewing the rights of the Secured
Parties with respect to the Collateral as to which the Collateral Agent, for the ratable benefit of
the Secured Parties, has a perfected Lien pursuant hereto or thereto, including, without
limitation, filing any financing or continuation statements or financing change statements under
the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to
the security interests created thereby. Notwithstanding the foregoing, the provisions of this
Section 6.8 shall not apply to assets as to which the Administrative Agent and the Borrower shall
reasonably determine that the costs and burdens of obtaining a security interest therein or
perfection thereof outweigh the value of the security afforded thereby.
6.9 Use of Proceeds. The proceeds of the Tranche A Term Loans and Tranche B Term Loans shall be used solely to
effect the Merger Transactions, the Refinancing and to pay related fees and expenses. The proceeds
of the Revolving Loans, the Swingline Loans and the Letters of Credit shall be used to finance a
portion of the Merger Transactions (including purchase price adjustments), to finance the
Refinancing, to finance Permitted Acquisitions and Investments permitted hereunder and for other
general corporate purposes of the Borrower and its Subsidiaries not prohibited by this Agreement.
6.10 Post-Closing Undertakings. Within the time period specified on Schedule 6.10 (or such
later date to which the Administrative Agent consents), comply with the provisions set forth in
Schedule 6.10.
SECTION 7. NEGATIVE COVENANTS
The Borrower (on behalf of itself and each of the Restricted Subsidiaries) hereby agrees that,
so long as the Commitments remain in effect, any Letter of Credit remains outstanding (that has not
been cash collateralized or backstopped, in each case on terms agreed to by the Borrower and the
applicable Issuing Lender) or any Loan or other amount is owing to any Lender or any Agent
hereunder (other than (i) contingent or indemnification obligations not then due and (ii)
obligations in respect of Specified Hedge Agreements or Cash Management Obligations), the Borrower
shall not, and shall not permit any of the Restricted Subsidiaries to:
7.1 Financial Covenants. (a) Consolidated Total Leverage Ratio. Commencing with
the Test Period ending December 31, 2008, permit the Consolidated Total Leverage Ratio as at the
last day of any Test Period ending in any period set forth below to be in excess of the ratio set
forth below for such period:
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| Period | Consolidated Total Leverage Ratio | ||
December 31, 2008
|
6.25:1.00 | ||
March 31, 2009
|
6.25:1.00 | ||
June 30, 2009
|
6.00:1.00 | ||
September 30, 2009
|
5.75:1.00 | ||
December 31, 2009
|
5.50:1.00 | ||
March 31, 2010
|
5.25:1.00 | ||
June 30, 2010
|
5.00:1.00 | ||
September 30, 2010
|
4.75:1.00 | ||
December 31, 2010
|
4.75:1.00 | ||
March 31, 2011
|
4.50:1.00 | ||
June 30, 2011
|
4.25:1.00 | ||
September 30, 2011
|
4.00:1.00 | ||
December 31, 2011
|
3.75:1.00 | ||
March 31, 2012
and thereafter
|
3.50:1.00 | ||
(b) Consolidated Net Interest Coverage Ratio. Commencing with the Test Period ending
December 31, 2008, permit the Consolidated Net Interest Coverage Ratio as at the last day of any
Test Period ending in any period set forth below to be less than the ratio set forth below for such
period:
| Consolidated Net | |||
| Period | Interest Coverage Ratio | ||
December 31, 2008
|
1.60:1.00 | ||
March 31, 2009
|
1.60:1.00 | ||
June 30, 2009
|
1.70:1.00 | ||
September 30, 2009
|
1.75:1.00 | ||
December 31, 2009
|
1.80:1.00 | ||
March 31, 2010
|
1.90:1.00 | ||
June 30, 2010
|
2.00:1.00 | ||
September 30, 2010
|
2.00:1.00 | ||
December 31, 2010
|
2.10:1.00 | ||
March 31, 2011
|
2.10:1.00 | ||
June 30, 2011
|
2.20:1.00 | ||
September 30, 2011
|
2.20:1.00 | ||
December 31, 2011
|
2.30:1.00 | ||
March 31, 2012
|
2.40:1.00 | ||
June 30, 2012
and thereafter
|
2.50:1.00 | ||
7.2 Indebtedness. Create, issue, incur, assume, or permit to exist any Indebtedness,
except:
(a) Indebtedness of the Borrower and any Restricted Subsidiary pursuant to any Loan
Document or Hedge Agreement or in respect of any Cash Management Obligations;
(b) Indebtedness (i) of the Borrower to any of its Restricted Subsidiaries or Holdings
or of any Subsidiary Guarantor to Holdings, the Borrower or any Restricted Subsidiary,
provided that any such Indebtedness owing to a Restricted Subsidiary that is not a
Subsidiary Guarantor is expressly subordinated in right of payment to the Obligations
pursuant to the Guarantee and
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Collateral Agreement or otherwise and (ii) of any Non-Guarantor Subsidiary to any other Non-Guarantor Subsidiary;
(c) Indebtedness (including, without limitation, Capital Lease Obligations) secured by
Liens permitted by Section 7.3(g) in an aggregate principal amount, when combined with the
aggregate principal amount of Indebtedness outstanding under clauses (t) and (u) of this
Section 7.2, not to exceed $75,000,000 at any one time outstanding;
(d) (i) Indebtedness outstanding on the date hereof and listed on Schedule 7.2(d) and
any Permitted Refinancing thereof and (ii) Indebtedness otherwise permitted under Section
7.10;
(e) Guarantee Obligations (i) by the Borrower or any of its Restricted Subsidiaries of
obligations of the Borrower or any Subsidiary Guarantor not prohibited by this Agreement to
be incurred and (ii) by any Non-Guarantor Subsidiary of obligations of any other
Non-Guarantor Subsidiary;
(f) Indebtedness of the Borrower or any of its Restricted Subsidiaries arising from the
honoring by a bank or other financial institution of a check, draft or similar instrument
inadvertently drawn by the Borrower or such Restricted Subsidiary in the ordinary
course of business against insufficient funds, so long as such Indebtedness is promptly
repaid;
(g) (A) Indebtedness of any joint venture or Non-Guarantor Subsidiary owing to any Loan
Party and (B) Guarantee Obligations of the Borrower or any Subsidiary Guarantor of
Indebtedness of any joint venture or Non-Guarantor Subsidiary, to the extent such
Indebtedness and Guarantee Obligations are permitted as Investments by Section 7.7(h), (k),
(m) or (v);
(h) Indebtedness in the form of earn-outs, indemnification, incentive, non-compete,
consulting or other similar arrangements and other contingent obligations in respect of
acquisitions or Investments permitted by Section 7.7 (both before or after any liability
associated therewith becomes fixed);
(i) (i) Indebtedness of the Borrower in respect of the Mezzanine Loan Agreement in an
aggregate principal amount not to exceed $550,000,000, plus any accrued pay-in-kind
interest, capitalized interest, accrued interest, fees, discounts, premiums and expenses, in
each case, in respect thereof, (ii) Guarantee Obligations of any Subsidiary Guarantor in
respect of such Indebtedness, interest, fees, discounts, premiums and expenses;
provided that, in each case, in the case of any guarantee of Indebtedness in respect
of the Mezzanine Loan Agreement by any Restricted Subsidiary that is not a Subsidiary
Guarantor, such Restricted Subsidiary becomes a Subsidiary Guarantor under this Agreement at
or prior to the time of such guarantee, and (iii) any Permitted Refinancing thereof;
(j) additional Indebtedness of the Borrower or any of its Restricted Subsidiaries in an
aggregate principal amount (for the Borrower and all Restricted Subsidiaries), not to exceed
$75,000,000 at any time outstanding;
(k) Indebtedness of Non-Guarantor Subsidiaries in respect of local lines of credit,
letters of credit, bank guarantees, factoring arrangements, sale/leaseback transactions and
similar extensions of credit in the ordinary course of business, in an aggregate principal
amount, when combined with the aggregate principal amount of Indebtedness outstanding under
clause (s)(iii) of this Section 7.2, not to exceed $35,000,000 at any one time outstanding;
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(l) Indebtedness of the Borrower or any of its Restricted Subsidiaries in respect of
workers’ compensation claims, bank guarantees, warehouse receipts or similar facilities,
property casualty or liability insurance, take-or-pay obligations in supply arrangements,
self-insurance obligations, performance, bid, customs, government, appeal and surety bonds,
completion guaranties and other obligations of a similar nature, in each case in the
ordinary course of business;
(m) Indebtedness incurred by the Borrower or any of its Restricted Subsidiaries arising
from agreements providing for indemnification related to sales of goods or adjustment of
purchase price or similar obligations in any case incurred in connection with the
acquisition or Disposition of any business, assets or Subsidiary;
(n) Indebtedness supported by a Letter of Credit, in a principal amount not in excess
of the stated amount of such Letter of Credit;
(o) Indebtedness issued in lieu of cash payments of Restricted Payments permitted by
Section 7.6; provided that such Indebtedness is subordinated to the Obligations on
terms reasonably satisfactory to the Administrative Agent;
(p) Permitted Subordinated Indebtedness in an aggregate principal amount not to exceed
$50,000,000 at any one time outstanding and any guarantees incurred in respect thereof;
(q) Indebtedness of the Borrower or any Subsidiary Guarantor as an account party in
respect of trade letters of credit issued in the ordinary course of business;
(r) Indebtedness owing to any insurance company in connection with the financing of any
insurance premiums permitted by such insurance company in the ordinary course of business;
(s) (i) Guarantee Obligations made in the ordinary course of business; provided
that such Guarantees are not of Indebtedness for Borrowed Money, (ii) Guarantee Obligations
in respect of lease obligations of Booz & Company Inc. and its Affiliates and (iii)
Guarantee Obligations in respect of Indebtedness of joint ventures; provided that
the aggregate principal amount of any such Guarantee Obligations under this sub-clause
(iii), when combined with the aggregate principal amount of Indebtedness outstanding under
clause (k) of this Section 7.2, shall not exceed $35,000,000 at any time outstanding;
(t) Indebtedness of any Person that becomes a Restricted Subsidiary or is merged into
the Borrower or a Restricted Subsidiary after the Closing Date as part of an acquisition,
merger or consolidation or amalgamation or other Investment not prohibited hereunder (a
“New Subsidiary”), which Indebtedness exists at the time of such acquisition, merger
or consolidation or amalgamation or other Investment, and any Permitted Refinancing thereof;
provided that (A) such Indebtedness exists at the time such Person becomes a
Restricted Subsidiary or is merged into the Borrower or a Restricted Subsidiary and is not
created in contemplation of or in connection with such Person becoming a Restricted
Subsidiary or with such merger (except to the extent such Indebtedness refinanced other
Indebtedness to facilitate such Person becoming a Restricted Subsidiary), (B) the aggregate
principal amount of Indebtedness permitted by this clause (t) and Sections 7.2(c) and 7.2(u)
shall not at any one time outstanding exceed $75,000,000 and (C) neither the Borrower nor
any Restricted Subsidiary (other than the applicable New Subsidiary) shall provide security
therefor;
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(u) Indebtedness incurred to finance any acquisition or other Investment permitted
under Section 7.7 in an aggregate amount for all such Indebtedness together with the
aggregate principal amount of Indebtedness permitted by Sections 7.2(c) and 7.2(t) not to
exceed $75,000,000 at any one time outstanding;
(v) other unsecured Indebtedness so long as, at the time of incurrence thereof, (i)
after giving effect to the incurrence of such unsecured Indebtedness (as if such unsecured
Indebtedness had been incurred on the first day of the most recently completed period of
four consecutive fiscal quarters of the Borrower ending on or prior to such date), the
Consolidated Total Leverage Ratio would be less than or equal to 4.25 to 1.00, (ii) no
Default or Event of Default shall have occurred and be continuing at the time of incurrence
of such unsecured Indebtedness or would result therefrom; and (iii) the terms of such
unsecured Indebtedness do not provide for any scheduled repayment, mandatory redemption or
sinking fund obligation prior to the date at least 180 days following the Term Maturity Date
(or such later date that is the latest final maturity date of any incremental extension of
credit hereunder);
(w) (i) Indebtedness representing deferred compensation or stock-based compensation to
employees of the Borrower or any Restricted Subsidiary incurred in the ordinary course of
business and (ii) Indebtedness consisting of obligations of the Borrower or any Restricted
Subsidiary under deferred compensation or other similar arrangements incurred in connection
with the Merger Transactions and any Investment permitted hereunder;
(x) Indebtedness issued by the Borrower or any Restricted Subsidiary to the officers,
directors and employees of Holdings, any Parent Company, the Borrower or any Restricted
Subsidiary, in lieu of or combined with cash payments to finance the purchase of Capital
Stock of Holdings, any Parent Company or the Borrower, in each case, to the extent such
purchase is permitted by Section 7.6(e);
(y) Indebtedness in respect of overdraft facilities, employee credit card programs,
netting services, automatic clearinghouse arrangements and other cash management and similar
arrangements in the ordinary course of business;
(z) (i) Indebtedness of the Borrower or any of its Restricted Subsidiaries undertaken
in connection with cash management and related activities with respect to any Subsidiary or
joint venture in the ordinary course of business and (ii) Indebtedness of the Borrower or
any Restricted Subsidiary to any joint venture (regardless of the form of legal entity) that
is not a Subsidiary arising in the ordinary course of business in connection with the cash
management operations (including in respect of intercompany self-insurance arrangements) of
the Borrower and its Restricted Subsidiaries;
(aa) all premium (if any), interest (including post-petition interest), fees, expenses,
charges, accretion or amortization of original issue discount, accretion of interest paid in
kind and additional or contingent interest on obligations described in clauses (a) through
(z) above.
For purposes of determining compliance with this Section 7.2, in the event that an item
of Indebtedness meets the criteria of more than one of the categories of Indebtedness
described in clauses (c), (j), (k), (p), (s)(iii), (t), (u) or (v) above, the Borrower
shall, in its sole discretion, classify and reclassify or later divide, classify or
reclassify such item of Indebtedness (or any portion thereof) and may include the amount and
type of such Indebtedness in one or more of the
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above clauses; provided, that, for
the avoidance of doubt, Indebtedness reclassified under Section 7.2(v) must be unsecured.
7.3 Liens. Create, incur, assume or suffer to exist any Lien upon any of its Property,
whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good faith by
appropriate proceedings; provided that adequate reserves with respect thereto are
maintained on the books of the Borrower or its Restricted Subsidiaries, as the case may be,
to the extent required by GAAP;
(b) landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the ordinary course of business which are not overdue for a
period of more than 60 days or that are being contested in good faith by appropriate
proceedings;
(c) pledges, deposits or statutory trusts in connection with workers’ compensation,
unemployment insurance and other social security legislation;
(d) deposits and other Liens to secure the performance of bids, government, trade and
other similar contracts (other than for borrowed money), leases, subleases, statutory
obligations, surety, judgment and appeal bonds, performance bonds and other obligations of a
like nature incurred in the ordinary course of business;
(e) encumbrances shown as exceptions in the title insurance policies insuring the
Mortgages, easements, zoning restrictions, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the aggregate, do not
materially detract from the value of the Property subject thereto or materially interfere
with the ordinary conduct of the business of the Borrower or any of its Restricted
Subsidiaries;
(f) Liens (i) in existence on the date hereof listed on Schedule 7.3(f) (or to the
extent not listed on such Schedule 7.3(f), where the fair market value of the Property to
which such Lien is attached is less than $5,000,000), (ii) securing Indebtedness permitted
by Section 7.2(d) and (iii) created after the date hereof in connection with any
refinancing, refundings, or renewals or extensions thereof permitted by Section 7.2(d);
provided that no such Lien is spread to cover any additional Property of the
Borrower or any Restricted Subsidiary after the Closing Date and that the amount of
Indebtedness secured thereby is not increased;
(g) (i) Liens securing Indebtedness of the Borrower or any Restricted Subsidiary
incurred pursuant to Sections 7.2(c), 7.2(g), 7.2(j), 7.2(k), 7.2(r), 7.2(s), 7.2(t), 7.2(u)
and 7.2(w); provided that (A) in the case of any such Liens securing Indebtedness
incurred pursuant to Section 7.2(u) to the extent incurred to finance Acquisitions or
Investments permitted under Section 7.7, (x) such Liens shall be created substantially
concurrently with, or within 90 days after, the acquisition of the assets financed by such
Indebtedness and (y) such Liens do not at any time encumber any Property of the Borrower or
any Restricted Subsidiary other than the Property financed by such Indebtedness and the
proceeds thereof, (B) in the case of any such Liens securing Indebtedness pursuant to
Sections 7.2(g) or 7.2(k), such Liens do not at any time encumber any Property of the
Borrower or any Subsidiary Guarantor, (C) in the case of any such Liens securing
Indebtedness incurred pursuant to Section 7.2(s), such Liens do not encumber any Property
other than cash paid to any such insurance company in respect of such insurance and (D) in
the case of any such Liens securing Indebtedness pursuant to Section 7.2(t), such Liens
exist at the time that the relevant Person becomes a Restricted Subsidiary and are not
created in
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contemplation of or in connection with such Person becoming a Restricted
Subsidiary and (ii) any extension, refinancing, renewal or replacement of the Liens
described in clause (i) of this Section 7.2(g) in whole or in part; provided that
such extension, renewal or replacement shall be limited to all or a part of the property
which secured the Lien so extended, renewed or replaced (plus improvements on such property,
if any);
(h) Liens created pursuant to the Security Documents;
(i) Liens arising from judgments in circumstances not constituting an Event of Default
under Section 8.1(h);
(j) Liens on Property or assets acquired pursuant to an acquisition permitted under
Section 7.7 (and the proceeds thereof) or assets of a Restricted Subsidiary in existence at
the time such Restricted Subsidiary is acquired pursuant to an acquisition permitted under
Section 7.7 and not created in contemplation thereof and Liens created after the Closing Date in
connection with any refinancing, refundings, or renewals or extensions of the obligations
secured thereby permitted hereunder, provided that no such Lien is spread to cover
any additional Property after the Closing Date and that the amount of Indebtedness secured
thereby is not increased;
(k) (i) Liens on Property of Non-Guarantor Subsidiaries securing Indebtedness or other
obligations not prohibited by this Agreement to be incurred by such Non-Guarantor
Subsidiaries and (ii) Liens securing Indebtedness or other obligations of the Borrower or
any Subsidiary in favor of any Loan Party;
(l) receipt of progress payments and advances from customers in the ordinary course of
business to the extent same creates a Lien on the related inventory and proceeds thereof;
(m) Liens in favor of customs and revenue authorities arising as a matter of law to
secure the payment of customs duties in connection with the importation of goods;
(n) Liens arising out of consignment or similar arrangements for the sale by the
Borrower and its Restricted Subsidiaries of goods through third parties in the ordinary
course of business;
(o) Liens solely on any cash earnest money deposits made by the Borrower or any of its
Restricted Subsidiaries in connection with an Investment permitted by Section 7.7;
(p) Liens deemed to exist in connection with Investments permitted by Section 7.7(b)
that constitute repurchase obligations;
(q) Liens upon specific items of inventory or other goods and proceeds of the Borrower
or any of its Restricted Subsidiaries arising in the ordinary course of business securing
such Person’s obligations in respect of bankers’ acceptances and letters of credit issued or
created for the account of such Person to facilitate the purchase, shipment or storage of
such inventory or other goods;
(r) Liens on cash deposits securing any Hedge Agreement permitted hereunder;
(s) any interest or title of a lessor under any leases or subleases entered into by the
Borrower or any Restricted Subsidiary in the ordinary course of business and any financing
statement filed in connection with any such lease;
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(t) Liens on cash or cash equivalents used to defease or to satisfy and discharge
Indebtedness, provided that such defeasance or satisfaction and discharge is not
prohibited hereunder;
(u) (i) Liens that are contractual rights of set-off (A) relating to the establishment
of depository relations with banks not given in connection with the issuance of
Indebtedness, (B) relating to pooled deposit or sweep accounts of the Borrower or any
Restricted Subsidiary to permit satisfaction of overdraft or similar obligations incurred in
the ordinary course of business of the Borrower and the Subsidiaries, (C) relating to
purchase orders and other agreements entered into with customers of the Borrower or any
Restricted Subsidiary in the ordinary course of business or (D) relating to the Mezzanine
Loan Documents and (ii) other Liens securing cash management obligations (that do not
constitute Indebtedness) in the ordinary course of business;
(v) Liens arising solely by virtue of any statutory or common law provision relating to
banker’s liens, rights of set-off or similar rights;
(w) Liens on Capital Stock in joint ventures securing obligations of such joint
venture;
(x) Liens on securities that are the subject of repurchase agreements constituting Cash
Equivalents or Permitted Liquid Investments;
(y) Liens securing obligations in respect of trade-related letters of credit permitted
under Section 7.2 and covering the goods (or the documents of title in respect of such
goods) financed by such letters of credit and the proceeds and products thereof;
(z) other Liens with respect to obligations that do not exceed $35,000,000 at any one
time outstanding.
7.4 Fundamental Changes. Consummate any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all
or substantially all of its Property or business, except that:
(a) (i) any Restricted Subsidiary may be merged, amalgamated or consolidated with or
into the Borrower (provided that the Borrower shall be the continuing or surviving
corporation) or (ii) any Restricted Subsidiary may be merged, amalgamated or consolidated
with or into any Subsidiary Guarantor (provided that (x) a Subsidiary Guarantor
shall be the continuing or surviving corporation or (y) simultaneously with such
transaction, the continuing or surviving corporation shall become a Subsidiary Guarantor and
the Borrower shall comply with Section 6.8 in connection therewith);
(b) any Non-Guarantor Subsidiary may be merged or consolidated with or into, or be
liquidated into, any other Non-Guarantor Subsidiary that is a Restricted Subsidiary;
(c) any Restricted Subsidiary may Dispose of all or substantially all of its assets
upon voluntary liquidation or otherwise to the Borrower or any Subsidiary Guarantor;
(d) any Non-Guarantor Subsidiary may Dispose of all or substantially all of its assets
(upon voluntary liquidation, dissolution, winding-up or otherwise) to any other
Non-Guarantor Subsidiary that is a Restricted Subsidiary;
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(e) Dispositions permitted by Section 7.5 and any merger, dissolution, liquidation,
consolidation, investment or Disposition, the purpose of which is to effect a Disposition
permitted by Section 7.5 may be consummated;
(f) any Investment expressly permitted by Section 7.7 may be structured as a merger,
consolidation or amalgamation;
(g) the transactions contemplated under the Transaction Documents; and
(h) any Restricted Subsidiary may liquidate or dissolve if (i) the Borrower determines
in good faith that such liquidation or dissolution is in the best interest of the Borrower
and is not materially disadvantageous to the Lenders and (ii) to the extent such Restricted
Subsidiary is a Loan Party, any assets or business of such Restricted Subsidiary not
otherwise disposed of or transferred in accordance with Section 7.4 or 7.5 or, in the case
of any such business, discontinued, shall be transferred to, or otherwise owned or conducted
by, a Loan Party after giving effect to such liquidation or dissolution.
7.5 Dispositions of Property. Dispose of any of its owned Property (including, without
limitation, receivables) whether now owned or hereafter acquired, or, in the case of any Restricted
Subsidiary, issue or sell any shares of such Restricted Subsidiary’s Capital Stock to any Person,
except:
(a) (i) the Disposition of surplus, obsolete or worn out Property in the ordinary
course of business, (ii) the sale of defaulted receivables in the ordinary course of
business, (iii) abandonment, cancellation or disposition of any Intellectual Property in the
ordinary course of business and (iv) sales, leases or other dispositions of inventory
determined by the management of the Borrower to be no longer useful or necessary in the
operation of the Business;
(b) (i) the sale of inventory or other property in the ordinary course of business,
(ii) the cross-licensing or licensing of Intellectual Property, in the ordinary course of
business and (iii) the contemporaneous exchange, in the ordinary course of business, of
Property for Property of a like kind, to the extent that the Property received in such
exchange is of a value equivalent to the value of the Property exchanged (provided
that after giving effect to such exchange, the value of the Property of the Borrower or any
Subsidiary Guarantor subject to Liens in favor of the Collateral Agent under the Security
Documents is not materially reduced);
(c) Dispositions permitted by Section 7.4;
(d) the sale or issuance of (i) any Subsidiary’s Capital Stock to the Borrower or any
Subsidiary Guarantor; provided that the sale or issuance of Capital Stock of an
Unrestricted Subsidiary to the Borrower or any Restricted Subsidiary is otherwise permitted
by Section 7.7, (ii) the Capital Stock of any Non-Guarantor Subsidiary that is a Restricted
Subsidiary to any other Non-Guarantor Subsidiary that is a Restricted Subsidiary and (iii)
the Capital Stock of any Subsidiary that is an Unrestricted Subsidiary to any other
Subsidiary that is an Unrestricted Subsidiary, in each case, including, without limitation,
in connection with any tax restructuring activities not otherwise prohibited hereunder;
(e) the Disposition of other assets for fair market value not to exceed $200,000,000 in
the aggregate; provided that (i) at least 75% of the total consideration for any
such Disposition received by the Borrower and its Restricted Subsidiaries is in the form of
cash, Cash Equivalents
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or Permitted Liquid Investments and (ii) the requirements of Section
2.12(b), to the extent applicable, are complied with in connection therewith;
(f) (i) any Recovery Event; provided that the requirements of Section 2.12(b)
are complied with in connection therewith and (ii) any event that would constitute a
Recovery Event but for the Dollar threshold set forth in the definition thereof;
(g) the leasing, occupancy agreements or sub-leasing of Property pursuant to the Merger
Documents or that would not materially interfere with the required use of such Property by
the Borrower or its Restricted Subsidiaries;
(h) the transfer for fair value of Property (including Capital Stock of Subsidiaries)
to another Person in connection with a joint venture arrangement with respect to the
transferred Property; provided that such transfer is permitted under Section 7.7(h)
or (v);
(i) the sale or discount, in each case without recourse and in the ordinary course of
business, of overdue accounts receivable arising in the ordinary course of business, but
only in connection with the compromise or collection thereof consistent with customary
industry practice (and not as part of any bulk sale or financing of receivables);
(j) transfers of condemned Property as a result of the exercise of “eminent domain” or
other similar policies to the respective Governmental Authority or agency that has condemned
the same (whether by deed in lieu of condemnation or otherwise), and transfers of properties
that have been subject to a casualty to the respective insurer of such Property as part of
an insurance settlement;
(k) the Disposition of any Immaterial Subsidiary or any Unrestricted Subsidiary;
(l) the transfer of Property (including Capital Stock of Subsidiaries) of the Borrower
or any Guarantor to any Restricted Subsidiary for fair market value;
(m) the transfer of Property (i) by the Borrower or any Subsidiary Guarantor to the
Borrower or any other Subsidiary Guarantor or (ii) from a Non-Guarantor Subsidiary to
(A) the Borrower or any Subsidiary Guarantor for no more than fair market value or (B) any
other Non-Guarantor Subsidiary that is a Restricted Subsidiary;
(n) the sale of cash, Cash Equivalents or Permitted Liquid Investments in the ordinary
course of business;
(o) (i) Liens permitted by Section 7.3, (ii) Restricted Payments permitted by
Section 7.6, (iii) Investments permitted by Section 7.7, (iv) payments permitted by Section
7.8 and (v) sale and leaseback transactions permitted by Section 7.10;
(p) Dispositions of Investments in joint ventures to the extent required by, or made
pursuant to customary buy/sell arrangements between the joint venture parties set forth in
joint venture arrangements and similar binding arrangements; provided that the
requirements of Section 2.12(b), to the extent applicable, are complied with in connection
therewith; and
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(q) Dispositions of Property between or among the Borrower and/or its Restricted
Subsidiaries as a substantially concurrent interim Disposition in connection with a
Disposition otherwise permitted pursuant to clauses (a) through (p) above.
7.6 Restricted Payments. Declare or pay any dividend on, or make any payment on account
of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any Capital Stock of the Borrower or any
Subsidiary, whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or Property or in obligations of the
Borrower or any Restricted Subsidiary, or enter into any derivatives or other transaction with any
financial institution, commodities or stock exchange or clearinghouse (a “Derivatives
Counterparty”) obligating the Borrower or any Restricted Subsidiary to make payments to
such Derivatives Counterparty as a result of any change in market value of any such Capital
Stock (collectively, “Restricted Payments”), except that:
(a) (i) any Restricted Subsidiary may make Restricted Payments to the Borrower or any
Subsidiary Guarantor and (ii) Non-Guarantor Subsidiaries may make Restricted Payments to
other Non-Guarantor Subsidiaries;
(b) provided that (x) no Default or Event of Default is continuing or would
result therefrom and (y) the Consolidated Total Leverage Ratio for the most recently ended
period of four consecutive fiscal quarters of the Borrower shall not exceed 4.50 to 1.00 for
such period immediately before and immediately after giving effect to such Restricted
Payment, the Borrower may make Restricted Payments in an aggregate amount not to exceed the
Available Amount; provided no Restricted Payments under this clause (b) may be made
for the purpose of making a dividend or other distribution in respect of, or repurchasing or
redeeming, Capital Stock held by the Sponsor or any of its Affiliates (other than Holdings
or any Parent Company) in Holdings or any Parent Company; it being understood that such
Restricted Payments may be used for such purposes with respect to Capital Stock held by any
other Person in Holdings or any Parent Company;
(c) the Borrower may make Restricted Payments to Holdings or any Parent Company to
permit Holdings or any Parent Company to pay (i) any taxes which are due and payable by
Holdings or any Parent Company, the Borrower and the Restricted Subsidiaries as part of a
consolidated group (or shareholders of Holdings, to the extent such taxes are attributable
to Holdings, the Borrower and the Restricted Subsidiaries), (ii) customary fees, salary,
bonus, severance and other benefits payable to, and indemnities provided on behalf of, their
current and former officers and employees and members of their Board of Directors, (iii)
ordinary course corporate operating expenses and other fees and expenses required to
maintain its corporate existence, (iv) fees and expenses to the extent permitted under
clause (i) of the second sentence of Section 7.9, (v) reasonable fees and expenses incurred
in connection with any debt or equity offering by Holdings or any Parent Company, to the
extent the proceeds thereof are (or, in the case of an unsuccessful offering, were intended
to be) used for the benefit of the Borrower and the Restricted Subsidiaries, whether or not
completed, (vi) reasonable fees and expenses in connection with compliance with reporting
obligations under, or in connection with compliance with, federal or state laws or under
this Agreement or any other Loan Document and the Mezzanine Agreement and any other
Mezzanine Loan Document and (vii) amounts due in respect of the Deferred Obligation Amount
under the Merger Agreement with the Net Cash Proceeds of any Equity Issuance by, or capital
contribution to, the Borrower;
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(d) the Borrower may make Restricted Payments in the form of Capital Stock of the
Borrower;
(e) the Borrower or any Subsidiary may make Restricted Payments to, directly or
indirectly, purchase the Capital Stock of the Borrower, Holdings or any Parent Company from
present or former officers, directors, consultants, agents or employees (or their estates,
trusts, family members or former spouses) of Holdings, the Borrower, any Parent Company or
any Subsidiary upon the death, disability, retirement or termination of the applicable
officer, director, consultant, agent or employee or pursuant to any equity subscription
agreement, stock option or equity incentive award agreement, shareholders’ or members’
agreement or similar agreement, plan or arrangement; provided that the aggregate
amount of payments under this clause (e) in any fiscal year of the Borrower shall not exceed
the sum of (i) $20,000,000 in any fiscal year (but not exceeding $50,000,000 in the aggregate since the Closing Date), plus (ii) any
proceeds received from key man life insurance policies, plus (iii) any proceeds
received by the Borrower, Holdings or any Parent Company during such fiscal year from sales
of the Capital Stock of Holdings, the Borrower or any Parent Company to directors,
consultants, officers or employees of Holdings, such Parent Company, the Borrower or any
Subsidiary in connection with permitted employee compensation and incentive arrangements,
plus (iv) the amount of any bona fide cash bonuses otherwise payable to members of
management, directors or consultants of Holdings, any Parent Company, the Borrower or its
Restricted Subsidiaries in connection with the Transactions that are foregone in return for
the receipt of Capital Stock the fair market value of which is equal to or less than the
amount of such cash bonuses; provided that any Restricted Payments permitted (but
not made) pursuant to sub-clause (ii), (iii) or (iv) of this clause (e) in any prior fiscal
year may be carried forward to any subsequent calendar year, and provided,
further, that cancellation of Indebtedness owing to the Borrower or any Restricted
Subsidiary by any member of management of Holdings, any Parent Company, the Borrower or its
Restricted Subsidiaries in connection with a repurchase of the Capital Stock of Holdings or
any Parent Company will not be deemed to constitute a Restricted Payment for purposes of
this Section 7.6;
(f) noncash repurchases of Capital Stock deemed to occur upon exercise of stock options
or similar equity incentive awards if such Capital Stock represents a portion of the
exercise price of such options or similar equity incentive awards;
(g) the Borrower and its Restricted Subsidiaries may make Restricted Payments to
consummate the Transactions (including any Restricted Payments contemplated by the Merger
Agreement);
(h) the Borrower may make Restricted Payments to allow Holdings or any Parent Company
to make payments in cash, in lieu of the issuance of fractional shares, upon the exercise of
warrants or upon the conversion or exchange of Capital Stock of any such Person;
(i) so long as no Event of Default under Section 8.1(a) or 8.1(f) has occurred and is
continuing, the Borrower and its Restricted Subsidiaries may make Restricted Payments to
make payments provided for in the Management Agreement;
(j) to the extent constituting Restricted Payments, the Borrower and its Restricted
Subsidiaries may enter into and consummate transactions expressly permitted by any provision
of Sections 7.4, 7.5, 7.7 and 7.9;
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(k) any non-wholly owned Restricted Subsidiary of the Borrower may declare and pay cash
dividends to its equity holders generally so long as the Borrower or its respective
Subsidiary which owns the equity interests in the Restricted Subsidiary paying such dividend
receives at least its proportional share thereof (based upon its relative holding of the
equity interests in the Restricted Subsidiary paying such dividends and taking into account
the relative preferences, if any, of the various classes of equity interest of such
Restricted Subsidiary);
(l) the Borrower may make Restricted Payments using any amounts placed in escrow in
connection with the Transactions;
(m) provided that (i) no Default or Event of Default is continuing or would
result therefrom and (ii) the Consolidated Total Leverage Ratio for the most recently ended
period of four consecutive fiscal quarters of the Borrower shall not exceed 2.00 to 1.00 for
such period immediately before and immediately after giving effect to such Restricted Payment, at
any time following the sixth anniversary of the Closing Date, the Borrower and its
Restricted Subsidiaries may make Restricted Payments to redeem or purchase the Capital Stock
of the Borrower, Holdings or any Parent Company in an amount not to exceed 10% of the
Borrower’s Consolidated EBITDA in any fiscal year; provided no Restricted Payments
under this clause (m) may be made for the purpose of making a dividend or other distribution
in respect of, or repurchasing or redeeming, Capital Stock held by the Sponsor or any of its
Affiliates (other than Holdings or any Parent Company) in Holdings or any Parent Company; it
being understood that such Restricted Payments may be used for such purposes with respect to
Capital Stock held by any other Person in Holdings or any Parent Company;
(n) provided that no Default or Event of Default is continuing or would result
therefrom, after a Holdings IPO, the Borrower may make Restricted Payments to Holdings or
any Parent Company so that Holdings or any Parent Company may make Restricted Payments to
its equity holders in an aggregate amount not exceeding 6.0% per annum of the Net Cash
Proceeds received by the Borrower from such Holdings IPO; provided that the
Available Amount shall be reduced by a corresponding amount of any such Restricted Payments;
and
(o) provided that no Default or Event of Default is continuing or would result
therefrom, other Restricted Payments in an amount not to exceed $30,000,000;
provided that no Restricted Payments under this clause (o) may be made for the
purpose of making a dividend or other distribution in respect of, or repurchasing or
redeeming, Capital Stock held by the Sponsor or any of its Affiliates (other than Holdings
or any Parent Company) in Holdings or any Parent Company; it being understood that such
Restricted Payments may be used for such purposes with respect to Capital Stock held by any
other Person in Holdings or any Parent Company.
7.7 Investments. Make any advance, loan, extension of credit (by way of guaranty or
otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or
other debt securities of, or all or substantially all of the assets constituting an ongoing
business from, or make any other similar investment in, any other Person (all of the foregoing,
“Investments”), except:
(a) (i) extensions of trade credit in the ordinary course of business and (ii)
purchases and acquisitions of inventory, supplies, materials and equipment or purchases of
contract rights or licenses or leases of Intellectual Property in each case in the ordinary
course of business, to the extent such purchases and acquisitions constitute Investments;
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(b) Investments in Cash Equivalents and Investments that were Cash Equivalents when
made;
(c) Investments arising in connection with (i) the incurrence of Indebtedness permitted
by Sections 7.2 to the extent arising as a result of Indebtedness among Holdings, the
Borrower or any Restricted Subsidiary and Guarantee Obligations permitted by Section 7.2 and
payments made in respect of such Guarantee Obligations, (ii) the forgiveness or conversion
to equity of any Indebtedness permitted by Section 7.2 and (iii) Guarantees by any Borrower
or any Restricted Subsidiary of operating leases (other than Capital Lease Obligations) or
of other obligations that do not constitute Indebtedness, in each case entered into in the
ordinary course of business;
(d) loans and advances to employees, consultants or directors of Holdings, the Borrower
or any of its Restricted Subsidiaries in the ordinary course of business in an aggregate
amount (for Holdings, the Borrower and all Restricted Subsidiaries) not to exceed $5,000,000
(excluding (for purposes of such cap) tuition advances, travel and entertainment expenses,
but including relocation expenses) at any one time outstanding;
(e) Investments (other than those relating to the incurrence of Indebtedness permitted
by Section 7.7(c)) by the Borrower or any of its Restricted Subsidiaries in the Borrower or
any Person that, prior to such Investment, is a Subsidiary Guarantor or is a Domestic
Subsidiary that becomes a Subsidiary Guarantor at the time of such Investment;
(f) (i) Permitted Acquisitions to the extent that any Person or Property acquired in
such acquisition becomes a Subsidiary Guarantor or a part of the Borrower or any Subsidiary
Guarantor or becomes (whether or not such Person is a wholly owned Subsidiary) a Subsidiary
Guarantor in the manner contemplated by Section 6.8(c) and (ii) other Permitted Acquisitions
in an aggregate purchase price in the case of this clause (ii) (other than purchase price
paid through the issuance of equity by Holdings or any Parent Company with the proceeds
thereof, including (A) (x) whether or not any equity is issued, capital contributions (other
than relating to Disqualified Capital Stock) and (y) equity issued to the seller) in an
aggregate amount not to exceed $75,000,000 plus (B) an amount equal to the Available
Amount; provided that after giving effect to any such Permitted Acquisition the
Borrower shall be in pro forma compliance with the financial covenants set
forth in Section 7.1;
(g) loans by the Borrower or any of its Restricted Subsidiaries to the employees,
officers or directors of Holdings, the Borrower or any of its Restricted Subsidiaries in
connection with management incentive plans; provided that such loans represent
cashless transactions pursuant to which such employees, officers or directors directly
invest the proceeds of such loans in the Capital Stock of Holdings;
(h) Investments by the Borrower and its Restricted Subsidiaries in joint ventures or
similar arrangements and Non-Guarantor Subsidiaries in an aggregate amount at any one time
outstanding (for the Borrower and all Restricted Subsidiaries), not to exceed the sum of
(A) $50,000,000 plus (B) an amount equal to the Available Amount; provided,
that any Investment made for the purpose of funding a Permitted Acquisition permitted under
Section 7.7(f) shall not be deemed a separate Investment for the purposes of this clause
(h); provided, further, that no Investment may be made pursuant to this
clause (h) in any Unrestricted Subsidiary for the purpose of making a Restricted Payment
prohibited pursuant to Section 7.6;
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(i) Investments (including debt obligations) received in the ordinary course of
business by the Borrower or any Restricted Subsidiary in connection with the bankruptcy or
reorganization of suppliers, customers and other Persons and in settlement of delinquent
obligations of, and other disputes with, suppliers, customers and other Persons arising out
of the ordinary course of business;
(j) Investments by any Non-Guarantor Subsidiary in any other Non-Guarantor Subsidiary;
(k) Investments in existence on, or pursuant to legally binding written commitments in
existence on, the Closing Date and listed on Schedule 7.7 and, in each case, any extensions
or renewals thereof, so long as the amount of any Investment made pursuant to this clause
(k) is not increased at any time above the amount of such Investment set forth on Schedule
7.7;
(l) Investments of the Borrower or any Restricted Subsidiary under Hedge Agreements
permitted hereunder;
(m) Investments of any Person in existence at the time such Person becomes a Restricted
Subsidiary; provided that such Investment was not made in connection with or in
anticipation of such Person becoming a Restricted Subsidiary;
(n) Investments arising as a result of payments permitted by Section 7.8(a);
(o) consummation of the Merger Transactions pursuant to the Merger Documents and the
Company Reorganization;
(p) Subsidiaries of the Borrower may be established or created, if (i) to the extent
such new Subsidiary is a Domestic Subsidiary, the Borrower and such Subsidiary comply with
the provisions of Section 6.8(c) and (ii) to the extent such new Subsidiary is a Foreign
Subsidiary, the Borrower complies with the provisions of Section 6.8(d); provided
that, in each case, to the extent such new Subsidiary is created solely for the purpose of
consummating a merger transaction pursuant to an acquisition permitted by this Section 7.7,
and such new Subsidiary at no time holds any assets or liabilities other than any merger
consideration contributed to it contemporaneously with the closing of such merger
transactions, such new Subsidiary shall not be required to take the actions set forth in
Section 6.8(c) or 6.8(d), as applicable, until the respective acquisition is consummated (at
which time the surviving entity of the respective merger transaction shall be required to so
comply within ten Business Days or such longer period as the Administrative Agent shall
agree);
(q) Investments arising directly out of the receipt by the Borrower or any Restricted
Subsidiary of non-cash consideration for any sale of assets permitted under Section 7.5;
provided that such non-cash consideration shall in no event exceed 25% of the total
consideration received for such sale;
(r) Investments resulting from pledges and deposits referred to in Sections 7.3(c)
and (d);
(s) Investments consisting of the licensing or contribution of Intellectual Property
pursuant to joint marketing arrangements with other persons;
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(t) any Investment in a Foreign Subsidiary to the extent such Investment is
substantially contemporaneously repaid in full with a dividend or other distribution from
such Foreign Subsidiary;
(u) Investments in the ordinary course of business consisting of UCC Article 3
endorsements for collection or deposit and UCC Article 4 customary trade arrangements with
customers consistent with past practices;
(v) additional Investments so long as the aggregate amount thereof outstanding at no
time exceeds the sum of (i) $25,000,000 plus (ii) an amount equal to the Available
Amount; provided that no Investment may be made pursuant to this clause (v) in any
Unrestricted Subsidiary for the purpose of making a Restricted Payment prohibited pursuant
to Section 7.6;
(w) advances of payroll payments to employees, or fee payments to directors or
consultants, in the ordinary course of business;
(x) Investments in Permitted Liquid Investments and Investments that were Permitted
Liquid Investments when made in an amount not to exceed $40,000,000 at any one time
outstanding; and
(y) Investments constituting loans or advances by the Borrower to Holdings or a Parent
Company in lieu of Restricted Payments permitted pursuant to Section 7.6.
It is further understood and agreed that for purposes of determining the value of any Investment
outstanding for purposes of this Section 7.7, such amount shall deemed to be the amount of such
Investment when made, purchased or acquired less any returns on such Investment (not to exceed the
original amount invested). Notwithstanding the foregoing, no Investment in an Unrestricted
Subsidiary is permitted under this Section 7.7 unless such Investment is permitted pursuant to
clause (h) or (v) above.
7.8 Optional Payments and Modifications of Certain Debt Instruments. (a) Make any
optional or voluntary payment, prepayment, repurchase or redemption of, or otherwise voluntarily or
optionally defease (i) any Mezzanine Facility Indebtedness then outstanding or (ii) the principal
of or interest on, or any other amount owing in respect of any Permitted Subordinated Indebtedness;
provided that (A) the Borrower or any Restricted Subsidiary may prepay any Mezzanine
Facility Indebtedness (or any Permitted Refinancing thereof) with amounts constituting the
Available Amount at any time if the Consolidated Total Leverage Ratio is equal to or less than 4.50
to 1.00 as of the end of the most recently ended Reference Period, (B) the Borrower or any
Restricted Subsidiary may prepay any Permitted Subordinated Indebtedness (or any Permitted
Refinancing thereof) with amounts constituting the Available Amount at any time if the Consolidated
Total Leverage Ratio is equal to or less than 4.50 to 1.00 as of the end of the most recently ended
Reference Period, (C) the Borrower or any Restricted Subsidiary may refinance, replace or extend
any Mezzanine Facility Indebtedness or Permitted Subordinated Indebtedness to the extent permitted
by Section 7.2 and (D) the Borrower or any Restricted Subsidiary may convert any Mezzanine Facility
Indebtedness or any Permitted Subordinated Indebtedness (or any Permitted Refinancing thereof) to
the Capital Stock of Holdings or any Parent Company and (E) the Borrower may prepay the Mezzanine
Facility Indebtedness (or any Permitted Refinancing thereof) in an aggregate principal amount not
to exceed $75,000,000 at any time if the Consolidated Total Leverage Ratio is equal to or less than
4.00 to 1.00 as of the end of the most recently ended Reference Period. Notwithstanding the
foregoing, nothing in this Section 7.8 shall prohibit any AHYDO Payments in respect of the
Mezzanine Facility Indebtedness or any Permitted Subordinated Indebtedness or, in each case, any
Permitted Refinancing thereof.
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(b) Amend, modify or otherwise change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms of any Permitted Subordinated Indebtedness or Mezzanine
Loan Document, in any manner that is materially adverse to the Lenders without the prior consent of
the Administrative Agent (with the approval of the Required Lenders); provided that nothing
in this Section 7.8(b) shall prohibit the refinancing, replacement, extension or other similar
modification of the Permitted Subordinated Indebtedness or the Mezzanine Facility Indebtedness to
the extent otherwise permitted by Section 7.2.
7.9 Transactions with Affiliates. Enter into any transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any management, advisory or
similar fees, with any Affiliate (other than Holdings, the Borrower or any Restricted Subsidiary)
unless such transaction is (a) otherwise not prohibited under this Agreement and (b) upon fair and
reasonable terms no less favorable to the Borrower or such Restricted Subsidiary, as the case may
be, than it would obtain in a comparable arm’s length transaction with a Person that is not an
Affiliate. Notwithstanding the foregoing, the Borrower and its Restricted Subsidiaries may (i) pay
to the Sponsor and its Affiliates fees, indemnities and expenses pursuant to the Management
Agreement and/or fees and expenses in connection with the Merger and disclosed to the
Administrative Agent prior to the Closing Date; (ii) enter into any transaction with an Affiliate
that is not prohibited by the terms of this Agreement to be entered into by the Borrower or such
Restricted Subsidiary with an Affiliate; (iii) make any Restricted Payments contemplated by the
Merger Agreement, and otherwise perform their obligations under the Transaction Documents and
(iv) without being subject to the terms of this Section 7.9, enter into any transaction with any
Person which is an Affiliate of Holdings only by reason of such Person and Holdings having common
directors. For the avoidance of doubt, this Section 7.9 shall not apply to employment, bonus,
retention and severance arrangements with, and payments of compensation or benefits to or for the
benefit of, current or former employees, consultants, officers or directors of the Borrower or any
of its Restricted Subsidiaries in the ordinary course of business. For purposes of this Section
7.9, any transaction with any Affiliate shall be deemed to have satisfied the standard set forth in
clause (b) of the first sentence hereof if such transaction is approved by a majority of the
Disinterested Directors of the board of directors of the Borrower or such Restricted Subsidiary, as
applicable. “Disinterested Director” shall mean, with respect to any Person and
transaction, a member of the Board of Directors of such Person who does not have any material
direct or indirect financial interest in or with respect to such transaction.
7.10 Sales and Leasebacks. Enter into any arrangement with any Person providing for the
leasing by the Borrower or any Restricted Subsidiary of real or personal Property which is to be
sold or transferred by the Borrower or such Restricted Subsidiary (a) to such Person or (b) to any
other Person to whom funds have been or are to be advanced by such Person on the security of such
Property or rental obligations of the Borrower or such Restricted Subsidiary, except for (i) any
such arrangement entered into in the ordinary course of business of the Borrower and its
Subsidiaries, (ii) sales or transfers by the Borrower or any Subsidiary Guarantor to the Borrower
or any other Subsidiary Guarantor, (iii) sales or transfers by any Non Guarantor Subsidiary to any
other Non Guarantor Subsidiary that is a Restricted Subsidiary and (iv) any such arrangement to the
extent that the fair market value of such Property does not exceed $35,000,000 in the aggregate for
all such arrangements.
7.11 Changes in Fiscal Periods. Permit the fiscal year of the Borrower to end on a day
other than March 31.
7.12 Negative Pledge Clauses. Enter into any agreement that prohibits or limits the
ability of the Borrower or any of its Restricted Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its Property, whether now owned or hereafter acquired, to secure the
Obligations or, in
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the case of any Subsidiary Guarantor, its obligations under the Guarantee and
Collateral Agreement, other than:
(a) this Agreement and the other Loan Documents and the Mezzanine Loan Documents;
(b) any agreements governing any purchase money Liens or Capital Lease Obligations
otherwise permitted hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby and the proceeds thereof);
(c) software and other Intellectual Property licenses pursuant to which the Borrower or
such Restricted Subsidiary is the licensee of the relevant software or Intellectual
Property, as the case may be, (in which case, any prohibition or limitation shall relate
only to the assets subject of the applicable license);
(d) Contractual Obligations incurred in the ordinary course of business and on
customary terms which limit Liens on the assets subject of the applicable Contractual
Obligation;
(e) any agreements regarding Indebtedness or other obligations of any Non-Guarantor
Subsidiary not prohibited under Section 7.2 (in which case, any prohibition or limitation
shall only be effective against the assets of such Non-Guarantor Subsidiary and its
Subsidiaries);
(f) prohibitions and limitations in effect on the date hereof and listed on
Schedule 7.12;
(g) customary provisions contained in joint venture agreements and other similar
agreements applicable to joint ventures entered into in the ordinary course of business;
(h) customary provisions restricting the subletting or assignment of any lease
governing a leasehold interest;
(i) customary restrictions and conditions contained in any agreement relating to any
Disposition of Property not prohibited hereunder;
(j) any agreement in effect at the time any Person becomes a Subsidiary, so long as
such agreement was not entered into in contemplation of such Person becoming a Subsidiary;
(k) restrictions imposed by applicable law;
(l) restrictions imposed by any Permitted Subordinated Indebtedness (i) that are
consistent with the definition thereof or otherwise consistent with prevailing market
practice for similar types of Indebtedness at the time such restrictions are incurred or
(ii) to which the Administrative Agent has not objected after having been afforded a period
of at least five Business Days to review such restrictions;
(m) restrictions in respect of Indebtedness secured by Liens permitted by Sections
7.3(g) and 7.3(z) relating solely to the assets or proceeds thereof secured by such
Indebtedness to the extent required to be so limited by such Sections; and
(n) customary provisions restricting assignment of any agreement entered into in the
ordinary course of business.
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7.13 Clauses Restricting Subsidiary Distributions. Enter into any consensual encumbrance
or restriction on the ability of any Restricted Subsidiary to (a) make Restricted Payments in
respect of any Capital Stock of such Restricted Subsidiary held by, or pay any Indebtedness owed
to, the Borrower or any Restricted Subsidiary or (b) make Investments in the Borrower or any Restricted Subsidiary, except for such encumbrances or
restrictions existing under or by reason of (i) any restrictions existing under the Loan Documents
and the Mezzanine Loan Documents, (ii) any restrictions with respect to such Restricted Subsidiary
imposed pursuant to an agreement that has been entered into in connection with the Disposition of
all or substantially all of the Capital Stock or assets of such Restricted Subsidiary,
(iii) customary net worth provisions contained in Real Property leases entered into by the Borrower
and its Restricted Subsidiaries, so long as the Borrower has determined in good faith that such net
worth provisions would not reasonably be expected to impair the ability of the Borrower and its
Restricted Subsidiaries to meet their ongoing obligations, (iv) any restrictions contained in
agreements related to Indebtedness of any Non-Guarantor Subsidiary not prohibited under Section 7.2
(in which case such restriction shall relate only to such Indebtedness and/or such Non-Guarantor
Subsidiary and its Restricted Subsidiaries) or Indebtedness secured by Liens permitted by Sections
7.3(g) and 7.3(z), (v) any restrictions regarding licenses or sublicenses by the Borrower and its
Restricted Subsidiaries of Intellectual Property in the ordinary course of business (in which case
such restriction shall relate only to such Intellectual Property), (vi) Contractual Obligations
incurred in the ordinary course of business which include customary provisions restricting the
assignment of any agreement relating thereto, (vii) customary provisions contained in joint venture
agreements and other similar agreements applicable to joint ventures entered into in the ordinary
course of business, (viii) customary provisions restricting the subletting or assignment of any
lease governing a leasehold interest, (ix) customary restrictions and conditions contained in any
agreement relating to any Disposition of Property not prohibited hereunder, (x) any agreement in
effect at the time any Person becomes a Restricted Subsidiary, so long as such agreement was not
entered into in contemplation of such Person becoming a Restricted Subsidiary and (xi) restrictions
on cash or other deposits imposed by customers under contracts entered into in the ordinary course
of business.
7.14 Lines of Business. Enter into any business, either directly or through any of its
Restricted Subsidiaries, except for the Business or a business reasonably related thereto or that
are reasonable extensions thereof.
7.15 Limitation on Hedge Agreements. Enter into any Hedge Agreement other than Hedge
Agreements entered into in the ordinary course of business, and not for speculative purposes.
7.16 Changes in Jurisdictions of Organization; Name. Other than pursuant to the
Transactions, in the case of any Loan Party, change its name or change its jurisdiction of
organization, in either case except upon prompt written notice to the Collateral Agent and delivery
to the Collateral Agent, of all additional executed financing statements, financing change
statements and other documents reasonably requested by the Collateral Agent to maintain the
validity, perfection and priority of the security interests provided for in the Security Documents.
7.17 Limitation on Activities of Holdings. In the case of Holdings only, notwithstanding
anything to the contrary in this Agreement or any other Loan Document, Holdings shall not, so long
as the Commitments remain in effect, any Letter of Credit remains outstanding (that has not been
cash collateralized or backstopped, in each case on terms agreed to by the Borrower and the
applicable Issuing Lender) or any Loan or other amount is owing to any Lender or any Agent
hereunder (other than (i) contingent or indemnification obligations not then due and (ii) obligations in respect of Specified Hedge Agreements and
Cash Management Obligations): conduct, transact or otherwise engage in, or commit to conduct,
transact or otherwise engage in, any business or operations other than (i) those
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incidental to its ownership of the Capital Stock of the Borrower and the Subsidiaries of the Borrower and those
incidental to Investments by or in Holdings permitted hereunder, (ii) activities incidental to the
maintenance of its existence and compliance with applicable laws and legal, tax and accounting
matters related thereto and activities relating to its employees, (iii) activities relating to the
performance of obligations under the Loan Documents and the Mezzanine Loan Documents to which it is
a party or expressly permitted thereunder, (iv) the making of Restricted Payments to the extent of
Restricted Payments permitted to be made to Holdings pursuant to Section 7.6, (v) the receipt and
payment of Restricted Payments permitted under Section 7.6, (vi) those related to the Transactions
and in connection with the Merger Documents and other agreements contemplated thereby or hereby,
(vii) to the extent that Section 7 expressly permits the Borrower or a Restricted Subsidiary to
enter into a transaction with Holdings, (viii) activities in connection with or in preparation for
an initial public offering and (ix) activities incidental to the foregoing activities.
SECTION 8. EVENTS OF DEFAULT
8.1 Events of Default. If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay (i) any principal of any Loan when due in accordance
with the terms hereof, (ii) any principal of any Reimbursement Obligation within three
Business Days after any such Reimbursement Obligation becomes due in accordance with the
terms hereof or (iii) any interest owed by it on any Loan or Reimbursement Obligation, or
any other amount payable by it hereunder or under any other Loan Document, within five
Business Days after any such interest or other amount becomes due in accordance with the
terms hereof; or
(b) (i) On the Closing Date, any Specified Representation, and (ii) at any time after
the Closing Date, any representation or warranty made or deemed made by any Loan Party
herein or in any other Loan Document or that is contained in any certificate, document or
financial or other statement furnished by it at any time under or in connection with this
Agreement or any such other Loan Document, shall in either case prove to have been
inaccurate in any material respect and such inaccuracy is adverse to the Lenders on or as of
the date made or deemed made or furnished; or
(c) Any Loan Party shall default in the observance or performance of any agreement
contained in Section 6.7(a) or Section 7; provided that, any Event of Default under
Section 7.1 is subject to cure as contemplated by Section 8.2; or
(d) Any Loan Party shall default in the observance or performance of any other
agreement contained in this Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section 8.1), and such default shall continue unremedied
for a period of 30 days after the earlier of the date that (x) such Loan Party receives from
the Administrative Agent or the Required Lenders notice of the existence of such default or
(y) a Responsible Officer of such Loan Party has knowledge thereof; or
(e) Holdings, the Borrower or any of its Restricted Subsidiaries shall (i) default in
making any payment of any principal of any Indebtedness for Borrowed Money (excluding the
Loans and Reimbursement Obligations) on the scheduled or original due date with respect thereto;
or (ii) default in making any payment of any interest on any such Indebtedness for Borrowed
Money beyond the period of grace, if any, provided in the instrument or agreement under
which such Indebtedness for Borrowed Money was created; or (iii) default in the observance
or performance of any other agreement or condition relating to any such Indebtedness for
Borrowed Money or
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contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event of default shall occur, the effect of which payment or other
default or other event of default is to cause, or to permit the holder or beneficiary of
such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause,
with the giving of notice if required, such Indebtedness for Borrowed Money to become due
prior to its stated maturity or to become subject to a mandatory offer to purchase by the
obligor thereunder or to become payable; provided that (A) a default, event or
condition described in this paragraph shall not at any time constitute an Event of Default
unless, at such time, one or more defaults or events of default of the type described in
this paragraph shall have occurred and be continuing with respect to Indebtedness for
Borrowed Money the outstanding principal amount of which individually exceeds $25,000,000,
and in the case of Indebtedness for Borrowed Money of the types described in clauses (i) and
(ii) of the definition thereof, with respect to such Indebtedness which exceeds such amount
either individually or in the aggregate and (B) this paragraph (e) shall not apply to (i)
secured Indebtedness that becomes due as a result of the sale, transfer, destruction or
other disposition of the Property or assets securing such Indebtedness for Borrowed Money if
such sale, transfer, destruction or other disposition is not prohibited hereunder and under
the documents providing for such Indebtedness or (ii) any Guarantee Obligations except to
the extent such Guarantee Obligations shall become due and payable by any Loan Party and
remain unpaid after any applicable grace period or period permitted following demand for the
payment thereof; or
(f) (i) Holdings, the Borrower or any of its Restricted Subsidiaries (other than any
Immaterial Subsidiary) shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or Holdings, the Borrower or any of its Restricted
Subsidiaries (other than any Immaterial Subsidiary) shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against Holdings, the Borrower or
any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) any case,
proceeding or other action of a nature referred to in clause (i) above that (A) results in
the entry of an order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against Holdings, the Borrower or any of its Restricted Subsidiaries (other than
any Immaterial Subsidiary) any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against substantially all of
its assets that results in the entry of an order for any such relief that shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) Holdings, the Borrower or any of its Restricted Subsidiaries (other than
any Immaterial Subsidiary) shall consent to or approve of, or acquiescence in, any of the
acts set forth in clause (i), (ii), or (iii) above; or (v) Holdings, the Borrower or any of
its Restricted Subsidiaries (other than any Immaterial Subsidiary) shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as they become
due; or
(g) (i) Holdings, the Borrower or any of its Restricted Subsidiaries shall incur any
liability in connection with any “prohibited transaction” (as defined in Section 406 of
ERISA or Section 4975 of the Code) involving any Plan, (ii) a failure to meet the minimum
funding standards (as defined in Section 302(a) of ERISA), whether or not waived, shall
exist with respect to any Single Employer Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets
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of Holdings, the Borrower or any of its Restricted Subsidiaries,
(iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have
a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or appointment
of a trustee is reasonably likely to result in the termination of such Single Employer Plan
for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate in a
distress termination under Section 4041(c) of ERISA or in an involuntary termination by the
PBGC under Section 4042 of ERISA, (v) Holdings, the Borrower or any of its Restricted
Subsidiaries shall, or is reasonably likely to, incur any liability as a result of a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a Plan or a Commonly
Controlled Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, could reasonably be
expected to result in a direct obligation of Holdings, the Borrower or any of its Restricted
Subsidiaries to pay money that could have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against Holdings, the Borrower or
any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) involving for
Holdings, the Borrower and any such Restricted Subsidiaries taken as a whole a liability
(not paid or fully covered by third-party insurance or effective indemnity) of $25,000,000
(net of any amounts which are covered by insurance or an effective indemnity) or more, and
all such judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 30 days from the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any reason (other than by reason
of the express release thereof in accordance with the terms thereof) to be in full force and
effect or shall be asserted in writing by the Borrower or any Subsidiary Guarantor not to be
a legal, valid and binding obligation of any party thereto, (ii) any security interest
purported to be created by any Security Document and to extend to Collateral that is not
immaterial to the Borrower and its Restricted Subsidiaries on a consolidated basis shall
cease to be, or shall be asserted in writing by any Loan Party not to be, a valid and
perfected security interest (having the priority required by this Agreement or the relevant
Security Document) in the securities, assets or properties covered thereby, except to the
extent that (x) any such loss of perfection or priority results from limitations of foreign
laws, rules and regulations as they apply to pledges of Capital Stock in Foreign
Subsidiaries or the application thereof, or from the failure of the Collateral Agent to
maintain possession of certificates actually delivered to it representing securities pledged
under the Guarantee and Collateral Agreement or to file UCC continuation statements, (y)
such loss is covered by a lender’s title insurance policy and the Administrative Agent shall
be reasonably satisfied with the credit of such insurer or (z) any such loss of validity,
perfection or priority is the result of any failure by the Collateral Agent to take any
action necessary to secure the validity, perfection or priority of the liens or (iii) the
Guarantees pursuant to the Security Documents by any Loan Party of any of the Obligations
shall cease to be in full force and effect (other than in accordance with the terms
thereof), or shall be asserted in writing by any Loan Party not to be in effect or not to be
legal, valid and binding obligations; or
(j) (i) Holdings shall cease to own, directly or indirectly, 100% of the Capital Stock
of the Borrower; or (ii) at any time before Holdings’ or any Parent Company’s Capital Stock
is traded on a nationally-recognized stock exchange, the Permitted Investors shall cease to
own, directly or indirectly, at least 51% of the Capital Stock of Holdings; or (iii) at any
time after Holdings’ or any Parent Company’s Capital Stock is traded on a
nationally-recognized stock exchange and for any reason whatsoever, (x) a majority of the
Board of Directors of Holdings shall not be
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Continuing Directors or (y) the Permitted
Investors shall cease to own, directly or indirectly, at least 35% of the Capital Stock of
Holdings and any other “person” or “group” (within the meaning of Rule 13d-5 of the
Securities Exchange Act of 1934 as in effect on the date hereof) shall own a greater amount
(it being understood that if any such person or group includes one or more Permitted
Investors, the shares of Capital Stock of Holdings directly or indirectly owned by the
Permitted Investors that are part of such person or group shall not be treated as being
owned by such person or group for purposes of determining whether this clause (y) is
triggered) (any of the foregoing, a “Change of Control”);
then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or
(ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall
immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts
owing under this Agreement and the other Loan Documents shall immediately become due and payable,
and (B) if such event is any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare
the Revolving Commitments to be terminated forthwith, whereupon the Revolving Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the
Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents to be due and payable forthwith, whereupon the
same shall immediately become due and payable. In the case of all Letters of Credit with respect
to which presentment for honor shall not have occurred at the time of an acceleration pursuant to
this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the
Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused
portion thereof after all such Letters of Credit shall have expired or been backstopped or been
fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and
under the other Loan Documents. After all such Letters of Credit shall have expired or been fully
drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower then due and owing hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or
such other Person as may be lawfully entitled thereto). Except as expressly provided above in this
Section 8.1 or otherwise in any Loan Document, presentment, demand and protest of any kind are
hereby expressly waived by Holdings and the Borrower.
8.2 Specified Equity Contributions. For purposes of determining compliance with
Section 7.1 only (and not any other provision of this Agreement, including any such other provision
that utilizes a calculation of Consolidated EBITDA), any equity contribution (other than
Disqualified Capital Stock) made by Holdings or any of the other direct or indirect equityholders
of the Borrower to the Borrower, on or after the Closing Date and on or prior to the day that is 10
Business Days after the day on which financial statements are required to be delivered for such
fiscal quarter pursuant to Section 6.1 shall, at the request of the
Borrower, be deemed to increase, dollar for dollar, Consolidated EBITDA for such fiscal
quarter for the purposes of determining compliance with Section 7.1 at the end of such fiscal
quarter and applicable subsequent periods (it being understood that each such contribution shall be
effective as to such fiscal quarter for all periods in which such fiscal quarter is included) (any
such equity contribution so included in the calculation of Consolidated EBITDA, a “Specified
Equity Contribution”); provided that (a) in each four fiscal quarter period there shall
be a period of at least three fiscal quarters in which no Specified Equity Contribution is made,
(b) the amount of any Specified Equity Contribution shall be no greater than the amount required to
cause the Borrower to be in compliance with Section 7.1,
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(c) no more than four Specified Equity
Contributions may be made in the aggregate prior to the Tranche B Term Loan Maturity Date, (d)
Specified Equity Contributions shall not be included in cash, Cash Equivalents and Permitted Liquid
Investments for purposes of calculating Consolidated Total Leverage and (e) all Specified Equity
Contributions shall be disregarded for any purpose under this Agreement other than determining
compliance with Section 7.1.
If, after the making of the Specified Equity Contribution and the recalculations of
Consolidated EBITDA pursuant to the preceding paragraph, the Borrower shall then be in compliance
with the requirements of Section 7.1, the Borrower shall be deemed to have satisfied the
requirements of such covenant as of the relevant date of determination with the same effect as
though there had been no failure to comply therewith at such date, and the applicable Event of
Default that had occurred shall be deemed cured.
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and appoints each Agent as
the agent of such Lender under the Loan Documents and each such Lender irrevocably authorizes each
Agent, in such capacity, to take such action on its behalf under the provisions of the applicable
Loan Documents and to exercise such powers and perform such duties as are expressly delegated to
such Agent by the terms of the applicable Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agents shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other
Loan Document or otherwise exist against the Agents.
9.2 Delegation of Duties. Each Agent may execute any of its duties under the
applicable Loan Documents by or through any of its branches, agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such duties. Neither Agent
shall be responsible for the negligence or misconduct of any agents or attorneys in-fact selected
by it with reasonable care.
9.3 Exculpatory Provisions. Neither any Agent nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in connection with this
Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a
final and nonappealable decision of a court of competent jurisdiction to have resulted from its or
such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties
made by any Loan Party or any officer thereof contained in this Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any other Loan Document or
for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to
perform its obligations hereunder or thereunder. The Agents shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Loan Party.
9.4 Reliance by the Agents. The Agents shall be entitled to rely, and shall be fully
protected in relying, upon any instrument, writing, resolution, notice, consent, certificate,
affidavit, letter, telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to
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be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel (including counsel to
Holdings), independent accountants and other experts selected by the Agents. The Agents may deem
and treat the payee of any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent.
The Agents shall be fully justified in failing or refusing to take any action under the applicable
Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or,
if so specified by this Agreement, all Lenders or the Majority Facility Lenders in respect of any
Facility) as it deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. The Agents shall in all cases be fully protected in acting, or
in refraining from acting, under the applicable Loan Documents in accordance with a request of the
Required Lenders (or, if so specified by this Agreement, all Lenders or the Majority Facility
Lenders in respect of any Facility), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.
9.5 Notice of Default. Neither Agent shall be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default unless such Agent has received written notice
from a Lender, Holdings or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a “notice of default”. In the event that an Agent
receives such a notice, such Agent shall give notice thereof to the Lenders. The Agents shall take
such action with respect to such Default or Event of Default as shall be reasonably directed by the
Required Lenders (or, if so specified by this Agreement, all Lenders or the Majority Facility
Lenders in respect of any Facility); provided that unless and until such Agent shall have
received such directions, such Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that
neither the Agents nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates have made any representations or warranties to it and that no act
by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate
of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any
Lender. Each Lender represents to the Agents that it has, independently and without reliance upon
any Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the business, operations,
Property, financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without reliance upon any Agent or any
other Lender, and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or not taking action
under the applicable Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, Property, financial and other condition and creditworthiness
of the Loan Parties and their affiliates. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agents hereunder, the Agents shall not
have any duty or responsibility to provide any Lender with any credit or other information
concerning the business, operations, Property, condition (financial or otherwise), prospects or
creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the
possession of either Agent or any of its officers, directors, employees, agents, attorneys-in-fact
or affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent and any Issuing Lender
in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective Aggregate Exposure
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Percentages in effect on the date on which indemnification is sought under this Section 9.7 (or, if
indemnification is sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages
immediately prior to such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on,
incurred by or asserted against such Agent or any Issuing Lender in any way relating to or arising
out of, the Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by such Agent or any Issuing Lender under or in connection with any
of the foregoing; provided that no Lender shall be liable for the payment of any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Agent’s or any Issuing Lender’s gross negligence
or willful misconduct. The agreements in this Section 9.7 shall survive the payment of the Loans
and all other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its affiliates may make loans
to, accept deposits from and generally engage in any kind of business with any Loan Party as though
such Agent were not an Agent. With respect to its Loans made or renewed by it and with respect to
any Letter of Credit issued or participated in by it, each Agent shall have the same rights and
powers under the applicable Loan Documents as any Lender and may exercise the same as though it
were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual
capacity.
9.9 Successor Agents. Any Agent may resign upon 30 days’ notice to the Lenders, the
Borrower and the other Agent effective upon appointment of a successor Agent. Upon receipt of any
such notice of resignation, the Required Lenders shall appoint from among the Lenders a successor
agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8.1(a) or Section 8.1(f) with
respect to the Borrower shall have occurred and be continuing) be subject to approval by the
Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor
agent shall succeed to the rights, powers and duties of such retiring Agent, and the retiring
Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or
deed on the part of such retiring Agent or any of the parties to this Agreement or any holders of
the Loans. If no successor Agent shall have been so appointed by the Required Lenders with such
consent of the Borrower and shall have accepted such appointment within 30 days after the retiring
Agent’s giving of notice of resignation, then the retiring Agent may, on behalf of the Lenders and
with the consent of the Borrower (such consent not to be unreasonably withheld or delayed), appoint
a successor Agent, that shall be a bank that has an office in New York, New York with a combined
capital and surplus of at least $500,000,000. After any retiring Agent’s resignation as Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement and the other Loan Documents.
9.10 Authorization to Release Liens and Guarantees. The Agents are hereby irrevocably
authorized by each of the Lenders to effect any release or subordination of Liens or Guarantee
Obligations contemplated by Section 10.15.
9.11 Documentation Agents and Syndication Agent. Neither the Documentation Agents nor
the Syndication Agents shall have any duties or responsibilities hereunder in their respective
capacities as such.
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SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. (a) Subject to Section 2.25, neither this Agreement,
any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified
except in accordance with the provisions of this Section 10.1. The Required Lenders and each Loan
Party party to the relevant Loan Document may, or, with the written consent of the Required
Lenders, the Agents and each Loan Party party to the relevant Loan Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or
changing in any manner the rights or obligations of the Agents, the Swingline Lender, the Issuing
Lenders, the Lenders or of the Loan Parties or their Subsidiaries hereunder or thereunder or (b)
waive, on such terms and conditions as the Required Lenders or the Agents may specify in such
instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver and
no such amendment, supplement or modification shall (i) forgive or reduce the principal amount or
extend the final scheduled date of maturity of any Loan, extend the scheduled date or reduce the
amount of any amortization payment in respect of any Term Loan, reduce the stated rate of any
interest, fee or premium payable hereunder (except (A) in connection with the waiver of
applicability of any post-default increase in interest rates (which waiver shall be effective with
the consent of the Required Lenders) and (B) that any amendment or modification of defined terms
used in the financial ratios in this Agreement shall not constitute a reduction in the rate of
interest or fees for purposes of this clause (i)) or extend the scheduled date of any payment
thereof, or increase the amount or extend the expiration date of any Lender’s Commitment, in each
case without the written consent of each Lender directly and adversely affected thereby; (ii)
amend, modify or waive any provision of paragraph (a) of this
Section 10.1 without the written consent of all Lenders; (iii) reduce any percentage specified
in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement and the other Loan Documents, release all or
substantially all of the Collateral or release all or substantially all of the Guarantors from
their obligations under the Guarantee and Collateral Agreement, in each case without the written
consent of all Lenders (other than to the extent permitted by Section 7.4); (iv) amend, modify or
waive any provision of paragraph (a) or (c) of Section 2.18 without the written consent of all
Lenders adversely affected thereby; (v) amend, modify or waive any provision of paragraph (b) of
Section 2.18 without the written consent of the Majority Facility Lenders in respect of each
Facility adversely affected thereby; (vi) reduce the percentage specified in the definition of
Majority Facility Lenders with respect to any Facility without the written consent of all Lenders
under such Facility; (vii) amend, modify or waive any provision of Section 9 without the written
consent of the Agents; (viii) amend, modify or waive any provision of Section 2.6 or 2.7 with
respect to Swingline Loans without the written consent of the Swingline Lender; (ix) amend, modify
or waive any provision of Section 3 without the written consent of the Issuing Lenders; or (x)
amend the definition of “Change of Control” or amend, modify or waive the provisions of Section
8.1(j) without the written consent of Lenders holding more than 66-2/3% of the sum of (x) the
aggregate unpaid principal amount of the Term Loans then outstanding and (y) the Revolving
Commitments then in effect or, if the Revolving Commitments have been terminated, the Revolving
Extensions of Credit then outstanding. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties,
the Lenders, the Agents and all future holders of the Loans. In the case of any waiver, the Loan
Parties, the Lenders and the Agents shall be restored to their former position and rights hereunder
and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to
be cured and not continuing unless limited by the terms of such waiver; but no such waiver shall
extend to any subsequent or other Default or Event of Default, or impair any right consequent
thereon.
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(b) Notwithstanding the foregoing, this Agreement may be amended (or amended and restated)
with the written consent of the Required Lenders, the Agents, Holdings and the Borrower (a) to add
one or more additional credit facilities to this Agreement (it being understood that no Lender
shall have any obligation to provide or to commit to provide all or any portion of any such
additional credit facility) and to permit the extensions of credit from time to time outstanding
thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of
this Agreement and the other Loan Documents with the Term Loans and Revolving Extensions of Credit
and the accrued interest and fees in respect thereof and (b) to include appropriately, after the
effectiveness of any such amendment (or amendment and restatement), the Lenders holding such credit
facilities in any determination of the Required Lenders and Majority Facility Lenders, as
applicable.
(c) In addition, notwithstanding the foregoing, this Agreement may be amended with the
written consent of the Agents, Holdings, the Borrower and the Lenders providing the relevant
Replacement Term Loans (as defined below) to permit the refinancing of all outstanding Term Loans
of any Tranche (“Refinanced Term Loans”) with a replacement term loan tranche hereunder
(“Replacement Term Loans”); provided that (a) the aggregate principal amount of
such Replacement Term Loans shall not exceed the aggregate principal amount of such Refinanced Term
Loans, (b) the Applicable Margin for such Replacement Term Loans shall not be higher than the
Applicable Margin for such Refinanced Term Loans, (c) the weighted average life to maturity of such
Replacement Term Loans shall not be shorter than the weighted average life to maturity of such
Refinanced Term Loans at the time of such refinancing and (d) all other terms applicable to such
Replacement Term Loans shall be substantially identical to, or less favorable to the Lenders
providing such Replacement Term Loans than, those applicable to such Refinanced Term Loans, except
to the extent necessary to provide for covenants and other terms
applicable to any period after the latest final maturity of the Term Loans in effect
immediately prior to such refinancing.
(d) Furthermore, notwithstanding the foregoing, if following the Closing Date, the
Administrative Agent and the Borrower shall have jointly identified an obvious error or any error
or omission of a technical or immaterial nature, in each case, in any provision of this Agreement
or any other Loan Document, then the Administrative Agent and the Borrower shall be permitted to
amend such provision and such amendment shall become effective without any further action or
consent of any other party to this Agreement or any other Loan Document if the same is not objected
to in writing by the Required Lenders within five Business Days following receipt of notice
thereof; it being understood that posting such amendment electronically on IntraLinks/IntraAgency
or another relevant website with notice of such posting by the Administrative Agent to the Required
Lenders shall be deemed adequate receipt of notice of such amendment.
10.2 Notices. (a) All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when delivered, or three
Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as follows in the case of Holdings, the Borrower, the Agents, and
as set forth in an administrative questionnaire delivered to the Administrative Agent in the case
of the Lenders, or to such other address as may be hereafter notified by the respective parties
hereto:
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Holdings:
|
Explorer Investor Corporation | |
| 1001 Pennsylvania Avenue, NW | ||
| Washington, DC 20004 | ||
| Attention: Ian Fujiyama | ||
| Telecopy: (202) 347-9250 | ||
| Telephone: (202) 729-5426 | ||
| in each case with a copy to: | ||
| The Carlyle Group | ||
| 1001 Pennsylvania Avenue, NW | ||
| Washington, DC 20004 | ||
| Attention: Ian Fujiyama | ||
| Telecopy: (202) 347-9250 | ||
| Telephone: (202) 729-5426 | ||
With a copy to:
|
Debevoise & Plimpton LLP | |
| 919 Third Avenue | ||
| New York, NY 10022 | ||
| Attention: Gregory H. Woods III | ||
| Telecopy: (212) 521-7643 | ||
| Telephone: (212) 909-6643 | ||
The Borrower:
|
Booz Allen Hamilton Inc. | |
| 8283 Greensboro Drive | ||
| McLean VA 22102 | ||
| Attention: Sam Strickland | ||
| Telecopy: (703) 902-3011 | ||
| Telephone: (703) 902-4700 | ||
| in each case with a copy to: | ||
| The Carlyle Group | ||
| 1001 Pennsylvania Avenue, NW | ||
| Washington, DC 20004 | ||
| Attention: Ian Fujiyama | ||
| Telecopy: (202) 347-9250 | ||
| Telephone: (202) 729-5426 | ||
With a copy to:
|
Debevoise & Plimpton LLP | |
| 919 Third Avenue | ||
| New York, NY 10022 | ||
| Attention: Gregory H. Woods III | ||
| Telecopy: (212) 521-7643 | ||
| Telephone: (212) 909-6643 |
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Agents:
|
Credit Suisse | |
| One Madison Avenue, New York, NY 10010 | ||
| Attention: Agency Manager | ||
| Telecopy: (212) 322-2291 | ||
| Email: agency.loanops@credit-suisse.com |
provided that any notice, request or demand to or upon the Agents, the Lenders, Holdings or
the Borrower shall not be effective until received.
(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent;
provided that the foregoing shall not apply to notices pursuant to Section 2 unless
otherwise agreed by the Administrative Agent and the applicable Lender. The Agents, Holdings or
the Borrower may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or communications.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder
or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations and warranties
made hereunder, in the other Loan Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the making of the Loans and other extensions
of credit hereunder.
10.5 Payment of Expenses; Indemnification. Except with respect to Taxes which are
addressed in Section 2.20, the Borrower agrees (a) to pay or reimburse each Agent for all of its
reasonable and documented out-of-pocket costs and expenses incurred in connection with the
syndication of the Facilities (other than fees payable to syndicate members) and the development,
preparation, execution and delivery of this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith and any amendment, supplement or
modification thereto, and, as to the Agents only, the administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable fees and
disbursements and other charges of a single firm of counsel to the Agents (plus one firm of special
regulatory counsel and one firm of local counsel per material jurisdiction as may reasonably be
necessary in connection with collateral matters) in connection with all of the foregoing, (b) to
pay or reimburse each Lender and each Agent for all their reasonable and documented out-of-pocket
costs and expenses incurred in connection with the enforcement of any rights under this Agreement,
the other Loan Documents and any such other documents, including, without limitation, the
documented fees and disbursements of a single firm of counsel and, if necessary, a single firm of
special regulatory counsel and a single firm of local counsel per material jurisdiction as may
reasonably be necessary, for the Agents and the Lenders, taken as a whole, and (c) to pay,
indemnify or reimburse each Lender, each Agent, the Documentation Agents, each Issuing Lender, each
Lead Arranger and their respective affiliates, and their respective officers, directors, employees,
trustees, advisors, agents and controlling Persons (each, an “Indemnitee”) for, and hold
each Indemnitee harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, costs, expenses or disbursements arising out of any actions, judgments or suits
of any kind or nature whatsoever, arising out of or in connection
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with any claim, action or
proceeding relating to or otherwise with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and any such other
documents, including, without limitation, any of the foregoing relating to the use of proceeds of
the Loans or the violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower, any of its Subsidiaries or any of the Properties and
the fees and disbursements and other charges of legal counsel in connection with claims, actions or
proceedings by any Indemnitee against Holdings or the Borrower hereunder (all the foregoing in this
clause (c), collectively, the “Indemnified Liabilities”); provided that, neither
Holdings nor the Borrower shall have any obligation hereunder to any Indemnitee with respect to
Indemnified Liabilities to the extent such Indemnified Liabilities are found by a court of
competent jurisdiction to have resulted from (i) the gross negligence, bad faith or willful
misconduct of such Indemnitee or its Related Persons, (ii) a material breach of the Loan Documents
by such Indemnitee or its Related Persons or (iii) disputes solely among Indemnitees or their
Related Persons (it being understood that this clause (iii) shall not apply to the indemnification
of an Agent or Lead Arranger in a suit involving an Agent or Lead Arranger in its capacity as
such). For purposes hereof, a “Related Person” of an Indemnitee means (i) if the Indemnitee is any
Agent or any of its affiliates or their respective officers, directors, employees, agents and
controlling Persons, any of such Agent and its affiliates and their respective officers, directors,
employees, agents and controlling Persons, and (ii) if the Indemnitee is any Lender or any of its
affiliates or their respective officers, directors, employees, agents and controlling Persons, any
of such Lender and its affiliates and their respective officers, directors, employees, agents and
controlling Persons. All amounts due under this Section 10.5 shall be payable promptly after
receipt of a reasonably detailed invoice therefor. Statements payable by the Borrower pursuant to
this Section 10.5 shall be submitted to the Borrower at the address thereof set forth in Section
10.2, or to such other Person or address as may be hereafter designated by the Borrower in a
written notice to the Administrative Agent. The agreements in this Section 10.5 shall survive
repayment of the Obligations.
10.6 Successors and Assigns; Participations and Assignments. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any affiliate of any Issuing Lender
that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null
and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this Section 10.6.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may, in
compliance with applicable law, assign (other than to any Disqualified Institution or a natural
person) to one or more assignees (each, an “Assignee”), all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitments and the Loans at
the time owing to it) with the prior written consent (such consent not to be unreasonably withheld
or delayed) of:
(A) the Borrower; provided that no consent of the Borrower shall be required
for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund (as defined
below), or, if an Event of Default under Section 8.1(a) or 8.1(f) has occurred and is
continuing, any other Person; and
(B) the Administrative Agent; provided that no consent of the Administrative
Agent shall be required for an assignment to (x) a Lender, an Affiliate of a Lender or an
Approved Fund or (y) Holdings, the Borrower or a Subsidiary of the Borrower in connection
with a purchase of Term Loans pursuant to Section 2.11(c); and
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(C) in the case of an assignment under the Revolving Facility, each Issuing Lender and
the Swingline Lender.
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s
Commitments or Loans under any Facility, the amount of the Commitments or Loans of the
assigning Lender subject to each such assignment (determined as of (I) the date the
Assignment and Assumption with respect to such assignment is delivered to the Administrative
Agent or (II) if earlier, the “trade date” (if any) specified in such Assignment and
Assumption) shall not be less than (x) $5,000,000, in the case of the Revolving Facility or
(y) $1,000,000, in the case of the Tranche A Term Facility or the Tranche B Term Facility,
unless the Borrower and the Administrative Agent otherwise consent; provided that
(1) no such consent of the Borrower shall be required if an Event of Default under Section
8.1(a) or 8.1(f) has occurred and is continuing and (2) such amounts shall be aggregated in
respect of each Lender and its Affiliates or Approved Funds, if any;
(B) the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption via an electronic settlement system acceptable to the
Administrative Agent and the Borrower (or, at the Borrower’s request, manually) together
with a processing and recordation fee of $3,500 (which fee may be waived or reduced in the
sole discretion of the Administrative Agent); provided that only one such fee shall
be payable in the case of contemporaneous assignments to or by two or more related Approved
Funds; and
(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an administrative questionnaire and all applicable tax forms; provided that
the provisions of this clause (ii) shall not apply to an assignment to Holdings or a
Subsidiary of the Borrower in connection with a purchase of Term Loans pursuant to Section
2.11(c).
For the purposes of this Section 10.6, “Approved Fund” means any Person (other than a
natural person) that is engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course and that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) (i) an entity or an Affiliate of an entity that
administers or manages a Lender or (ii) an entity or an Affiliate of an entity that is the
investment advisor to a Lender. Notwithstanding the foregoing, no Lender shall be permitted to
make assignments under this Agreement to any Disqualified Institutions.
(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below,
from and after the effective date specified in each Assignment and Assumption the Assignee
thereunder shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement (and, in
the case of an Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto but shall
continue to be subject to the obligations under and entitled to the benefits of Sections
2.19, 2.20, 2.21 and 10.5). Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this Section 10.6 shall be treated for
purposes of this Agreement as a sale by such
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Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section 10.6 (and will be required to
comply therewith).
(iv) The Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption delivered to
it and a register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). Holdings, the
Borrower, the Administrative Agent, the Issuing Lenders, the Swingline Lender and the
Lenders may treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement (and the entries in the
Register shall be conclusive absent demonstrable error for such purposes), notwithstanding
notice to the contrary. The Register shall be available for inspection by Holdings, the
Borrower, the Issuing Lenders, the Swingline Lender and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an Assignee, the Assignee’s completed administrative questionnaire
(unless the Assignee shall already be a Lender hereunder) and all applicable tax forms, the
processing and recordation fee referred to in paragraph (b) of this Section 10.6 and any
written consent to such assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Assumption and promptly record the
information contained therein in the Register. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as provided in this
paragraph.
(c) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent, in
compliance with applicable law, sell participations (other than to any Disqualified Institution) to
one or more banks or other entities (a “Participant”), in all or a portion of such
Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments
and the Loans owing to it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrower, the Administrative
Agent, the Issuing Lenders, the Swingline Lender and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and obligations under
this Agreement. Any agreement pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such
agreement may provide that such Lender will not, without the consent of the Participant, agree to
any amendment, modification or waiver that (1) requires the consent of each Lender directly and
adversely affected thereby pursuant to the proviso to the second sentence of Section 10.1 and (2)
directly affects such Participant. Subject to paragraph (c)(ii) of this Section 10.6, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 2.19, 2.20 and 2.21 (if
such Participant agrees to have related obligations thereunder) to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 10.6.
Notwithstanding the foregoing, no Lender shall be permitted to sell participations under this
Agreement to any Disqualified Institutions.
(ii) A Participant shall not be entitled to receive any greater payment under Section
2.19 or 2.20 than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent to such greater amounts. No
Participant shall be entitled to the benefits of Section 2.20 unless such Participant
complies with Section 2.20(d) or (e), as (and to the extent) applicable, as if such
Participant were a Lender.
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(d) Any Lender may, without the consent of or notice to the Administrative Agent or the
Borrower, at any time pledge or assign a security interest in all or any portion of its rights
under this Agreement to secure obligations of such Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Bank, and this Section 10.6 shall not apply to any such
pledge or assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or Assignee for such Lender as a party hereto.
(e) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue
Notes to any Lender requiring the same (in the case of an assignment, following surrender by the
assigning Lender of all Notes representing its assigned interests).
(f) The Borrower may prohibit any assignment if it would require the Borrower to make any
filing with any Governmental Authority or qualify any Loan or Note under the laws of any
jurisdiction and the Borrower shall be entitled to request and receive such information and
assurances as it may reasonably request from any Lender or any Assignee to determine whether any
such filing or qualification is required or whether any assignment is otherwise in accordance with
applicable law.
(g) Notwithstanding anything to the contrary contained herein, other than pursuant to Section
2.11(c), none of Holdings, the Borrower or any of its Subsidiaries may acquire by assignment,
participation or otherwise any right to or interest in any of the Commitments or Loans hereunder
(and any such attempted acquisition shall be null and void).
10.7 Adjustments; Set-off. (a) Except to the extent that this Agreement provides for payments to be allocated to a
particular Lender or to the Lenders under a particular Facility, if any Lender (a “Benefited
Lender”) shall at any time receive any payment of all or part of the Obligations owing to it,
or receive any collateral in respect thereof (whether voluntarily or involuntarily, by setoff,
pursuant to events or proceedings of the nature referred to in Section 8.1(f), or otherwise) in a
greater proportion than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender’s Obligations, such Benefited Lender shall purchase for cash from the
other Lenders a participating interest in such portion of each such other Lender’s Obligations, or
shall provide such other Lenders with the benefits of any such collateral, as shall be necessary to
cause such Benefited Lender to share the excess payment or benefits of such collateral ratably with
each of the Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such recovery, but
without interest.
(b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall
have the right, without prior notice to the Borrower, any such notice being expressly waived by the
Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) after the
expiration of any cure or grace periods, to set off and appropriate and apply against such amount
any and all deposits (general or special, time or demand, provisional or final but excluding trust
accounts), in any currency, and any other credits, indebtedness or claims, in any currency, in each
case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any affiliate, branch or agency thereof to or for the credit or the account
of the Borrower. Each Lender agrees promptly to notify the Borrower and the Administrative Agent
after any such setoff and application made by such Lender; provided that the failure to
give such notice shall not affect the validity of such setoff and application.
-107-
10.8 Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. Delivery of an executed signature page
of this Agreement by facsimile or electronic (i.e., “pdf”) transmission shall be effective as
delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed
by all the parties shall be lodged with the Borrower and the Administrative Agent.
10.9 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents represent the entire
agreement of Holdings, the Borrower, the Agents and the Lenders with respect to the subject matter
hereof and thereof.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE SAME ARE NOT MANDATORILY
APPLICABLE BY STATUTE AND THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
10.12 Submission to Jurisdiction; Waivers. Each of Holdings and the Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or proceeding relating to
this Agreement and the other Loan Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of
the courts of the State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to it at its address set forth in Section 10.2 or at such other
address of which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to sue in any other jurisdiction;
and
(e) waives, to the maximum extent not prohibited by law, any right it may have to claim
or recover in any legal action or proceeding referred to in this Section 10.12 any special,
exemplary, punitive or consequential damages.
-108-
10.13 Acknowledgments. Each of Holdings and the Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents;
(b) neither the Agents nor any Lender has any fiduciary relationship with or duty to
either of Holdings or the Borrower arising out of or in connection with this Agreement or
any of the other Loan Documents, and the relationship between the Agents and Lenders, on one
hand, and Holdings and the Borrower, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Lenders or among
Holdings, the Borrower and the Lenders.
10.14 Confidentiality. The Agents and the Lenders agree to treat any and all
information, regardless of the medium or form of communication, that is disclosed, provided or
furnished, directly or indirectly, by or on behalf of Holdings or any of its affiliates in
connection with this Agreement or the transactions contemplated hereby whether furnished before or
after the Closing Date (“Confidential Information”), strictly confidential and not to use
Confidential Information for any purpose other than evaluating the Merger Transactions and
negotiating, making available, syndicating and administering this Agreement (the “Agreed
Purposes”). Without limiting the foregoing, each Agent and each Lender agrees to treat any and
all Confidential Information with adequate means to preserve its confidentiality, and each Agent
and each Lender agrees not to disclose Confidential Information, at any time, in any manner
whatsoever, directly or indirectly, to any other Person whomsoever, except (1) to its directors,
officers, employees, counsel, advisors, trustees, affiliates and other representatives
(collectively, the “Representatives”), to the extent necessary to permit such
Representatives to assist in connection with the Agreed Purposes (it being understood that the
Representatives to whom such disclosure is made will be informed of the confidential nature of such
Confidential Information and instructed to keep such Confidential Information confidential), (2) to
any pledgee referred to in Section 10.6(d) and prospective Lenders and participants in connection
with the syndication (including secondary trading) of the Facilities and Commitments and Loans
hereunder, in each case who are informed of the confidential nature of the information and agree to
observe and be bound by standard confidentiality terms, (3) upon the request or demand of any
Governmental Authority having or purporting to have jurisdiction over it, (4) in response to any
order of any Governmental Authority or as may otherwise be required pursuant to any Requirement of
Law, (5) to the extent reasonably required or necessary, in connection with any litigation or
similar proceeding relating to the Facilities, (6) that has been publicly disclosed other than in
breach of this Section 10.14, (7) to the National Association of Insurance Commissioners or any
similar organization or any nationally recognized rating agency that requires access to information
about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender
or in connection with examinations or audits of such Lender or (8) to the extent reasonably
required or necessary, in connection with the exercise of any remedy under the Loan Documents.
Each Agent and each Lender acknowledges that (i) Confidential Information includes information that
is not otherwise publicly available and that such non-public information may constitute
confidential business information which is proprietary to the Borrower and (ii) the Borrower has
advised the Agents and the Lenders that it is relying on the Confidential Information for its
success and would not disclose the Confidential Information to the Agents and the Lenders without
the confidentiality provisions of this Agreement. All information, including requests for waivers
and amendments, furnished by the Borrower or the Administrative Agent pursuant to, or in the course
of administering, this Agreement will be syndicate-
-109-
level information, which may contain material
non-public information about the Borrower and its Affiliates and their related parties or their
respective securities. Accordingly, each Lender represents to the Borrower and the Administrative
Agent that it has identified in its administrative questionnaire a credit contact who may receive
information that may contain material non-public information in accordance with its compliance
procedures and applicable law, including Federal and state securities laws.
10.15 Release of Collateral and Guarantee Obligations; Subordination of Liens. (a)
Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon
request of the Borrower in connection with any Disposition of Property permitted by the
Loan Documents, the Collateral Agent shall (without notice to, or vote or consent of, any
Lender, or any affiliate of any Lender that is a party to any Specified Hedge Agreement or Cash
Management Obligations or contingent or indemnification obligations not then due) take such actions
as shall be required to release its security interest in any Collateral being Disposed of in such
Disposition, and to release any Guarantee Obligations under any Loan Document of any Person being
Disposed of in such Disposition, to the extent necessary to permit consummation of such Disposition
in accordance with the Loan Documents. Any representation, warranty or covenant contained in any
Loan Document relating to any such Property so Disposed of (other than Property Disposed of to the
Borrower or any of its Restricted Subsidiaries) shall no longer be deemed to be repeated once such
Property is so Disposed of.
(b) Notwithstanding anything to the contrary contained herein or any other Loan Document, when
all Obligations (other than (x) obligations in respect of any Specified Hedge Agreement or Cash
Management Obligations and (y) any contingent or indemnification obligations not then due) have
been paid in full, all Commitments have terminated or expired and no Letter of Credit shall be
outstanding that is not cash collateralized or backstopped, upon request of Holdings or the
Borrower, the Collateral Agent shall (without notice to, or vote or consent of, any Lender, or any
affiliate of any Lender that is a party to any Specified Hedge Agreement or documentation in
respect of Cash Management Obligations) take such actions as shall be required to release its
security interest in all Collateral, and to release all Guarantee Obligations under any Loan
Document, whether or not on the date of such release there may be outstanding Obligations in
respect of Specified Hedge Agreements or Cash Management Obligations or contingent or
indemnification obligations not then due. Any such release of Guarantee Obligations shall be
deemed subject to the provision that such Guarantee Obligations shall be reinstated if after such
release any portion of any payment in respect of the Obligations guaranteed thereby shall be
rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its Property, or otherwise, all as though such
payment had not been made.
(c) Notwithstanding anything to the contrary contained herein or in any other Loan Document,
upon request of Holdings or the Borrower in connection with any Liens permitted by the Loan
Documents, the Collateral Agent shall (without notice to, or vote or consent of, any Lender) take
such actions as shall be required to subordinate the Lien on any Collateral to any Lien permitted
under Section 7.3.
10.16 Accounting Changes. In the event that any Accounting Change (as defined below)
shall occur and such change results in a change in the method of calculation of financial ratios,
standards or terms in this Agreement, then the Borrower and the Administrative Agent agree to enter
into negotiations in order to amend such provisions of this Agreement so as to equitably reflect
such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s
financial condition shall be the same after such Accounting Changes as if such Accounting Changes
had not been
-110-
made. Until such time as such an amendment shall have been executed and delivered by
the Borrower, the Administrative Agent and the Required Lenders, all financial ratios, standards
and terms in this Agreement shall continue to be calculated or construed as if such Accounting
Changes had not occurred. “Accounting Changes” refers to changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.
10.17 WAIVERS OF JURY TRIAL. EACH OF HOLDINGS, THE BORROWER, THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.18 USA PATRIOT ACT. Each Lender hereby notifies the Loan Parties that pursuant to
the requirements of the USA Patriot Act (Title III of Publ. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that identifies
the Loan Parties, which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Loan Parties in accordance with the Act.
10.19 Effect of Certain Inaccuracies. In the event that any financial statement
delivered pursuant to Section 6.1(a) or (b) or any Compliance Certificate delivered pursuant to
Section 6.2(b) is inaccurate, and such inaccuracy, if corrected, would have led to the application
of a higher Applicable Margin or Applicable Commitment Fee Rate for any period (an “Applicable
Period”) than the Applicable Margin or Applicable Commitment Fee Rate for such Applicable Period,
then (i) promptly following the correction of such financial statement by the Borrower, the
Borrower shall deliver to the Administrative Agent a corrected financial statement and a corrected
Compliance Certificate for such Applicable Period, (ii) the Applicable Margin and Applicable
Commitment Fee Rate for the twelve month period preceding the delivery of such corrected financial
statement and Compliance Certificate shall be determined based on the corrected Compliance
Certificate for such Applicable Period and (iii) the Borrower shall promptly pay to the
Administrative Agent the accrued additional interest or commitment fees owing as a result of such
increased Applicable Margin or Applicable Commitment Fee Rate for such twelve month period. This
Section 10.19 shall not limit the rights of the Administrative Agent or the Lenders hereunder,
including under Section 8.1.
[Signature Pages Follow]
-111-
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to
be duly executed and delivered as of the date first above written.
| EXPLORER INVESTOR CORPORATION, as Holdings |
||||
| By: | /s/ Ian Fujiyama | |||
| Name: | Ian Fujiyama | |||
| Title: | Vice President | |||
| EXPLORER MERGER SUB CORPORATION, as Initial Borrower |
||||
| By: | /s/ Ian Fujiyama | |||
| Name: | Ian Fujiyama | |||
| Title: | Vice President | |||
| BOOZ ALLEN HAMILTON INC., as Surviving Borrower |
||||
| By: | /s/ Ralph Shrader | |||
| Name: | Ralph Shrader | |||
| Title: | Chairman and Chief Executive Officer | |||
| By: | /s/ CG Appleby | |||
| Name: | CG Appleby | |||
| Title: | Secretary | |||
| CREDIT SUISSE, CAYMAN ISLANDS BRANCH as Administrative Agent, Collateral Agent, Issuing Lender, Swingline Lender and a Lender |
||||
| By: | /s/ John D. Toronto | |||
| Name: | John D. Toronto | |||
| Title: | Director | |||
| By: | /s/ Shaheen Malik | |||
| Name: | Shaheen Malik | |||
| Title: | Associate | |||
| BANK OF AMERICA, N.A., as Syndication Agent and a Lender |
||||
| By: | /s/ Bradford Jones | |||
| Name: | Bradford Jones | |||
| Title: | Managing Director | |||
| LEHMAN BROTHERS COMMERCIAL BANK, as a Lender and Documentation Agent |
||||
| By: | /s/ Darren S. Lane | |||
| Name: | Darren S. Lane | |||
| Title: | Operations Officer | |||
| C.I.T. LEASING CORPORATION, as Documentation Agent |
||||
| By: | /s/ Greg Wheeless | |||
| Name: | Greg Wheeless | |||
| Title: | Director | |||
| SUMITOMO MITSUI BANKING CORPORATION, as Lender and Documentation Agent |
||||
| By: | /s/ Yoshihiro Hyakutome | |||
| Name: | Yoshihiro Hyakutome | |||
| Title: | General Manager | |||
| GENERAL ELECTRIC CAPITAL CORPORATION, as Lender |
||||
| By: | /s/ Martin J. Mahoney | |||
| Name: | Martin J. Mahoney | |||
| Title: | Duly Authorized Signatory | |||
| THE BANK OF NOVA SCOTIA, as Lender |
||||
| By: | /s/ Steven S. Kerr | |||
| Name: | Steven S. Kerr | |||
| Title: | Managing Director | |||
| BANK OF TOKYO-MITSUBISHI UFJ
TRUST COMPANY, as Lender |
||||
| By: | /s/ Charles Stewart | |||
| Name: | Charles Stewart | |||
| Title: | Vice President | |||
| NATIXIS, as Lender |
||||
| By: | /s/ Edward N. Parkes IV | |||
| Name: | Edward N. Parkes IV | |||
| Title: | Director | |||
| By: | /s/ Harold Birk | |||
| Name: | Harold Birk | |||
| Title: | Managing Director | |||
| CIT BANK, as Lender |
||||
| By: | /s/ Daniel Burnett | |||
| Name: | Daniel Burnett | |||
| Title: | Authorized Signatory | |||
| CALYON NEW YORK BRANCH, as Lender |
||||
| By: | /s/ A. Averbukh | |||
| Name: | A. Averbukh | |||
| Title: | Managing Director | |||
| By: | /s/ Elvis Grgurovic | |||
| Name: | Elvis Grgurovic | |||
| Title: | Director | |||
SCHEDULES
to
CREDIT AGREEMENT1
among
EXPLORER INVESTOR CORPORATION,
EXPLORER MERGER SUB CORPORATION,
as the Initial Borrower,
as the Initial Borrower,
BOOZ ALLEN HAMILTON INC.,
as the Surviving Borrower,
as the Surviving Borrower,
The Several Lenders from Time to Time Parties Hereto,
CREDIT SUISSE, CAYMAN ISLANDS BRANCH,
as Administrative Agent and Collateral Agent,
as Administrative Agent and Collateral Agent,
BANK OF AMERICA, N.A.,
as Syndication Agent,
as Syndication Agent,
LEHMAN BROTHERS COMMERICAL BANK,
C.I.T. LEASING CORPORATION and
SUMITOMO MITSUI BANKING CORPORATION,
as Documentation Agents.
C.I.T. LEASING CORPORATION and
SUMITOMO MITSUI BANKING CORPORATION,
as Documentation Agents.
and
CREDIT SUISSE,
as Issuing Lender
as Issuing Lender
Dated as of July 31, 2008
BANC OF AMERICA SECURITIES, LLC,
CREDIT SUISSE SECURITIES (USA) LLC,
LEHMAN BROTHERS INC.
and
SUMITOMO MITSUI BANKING CORPORATION
as Joint Lead Arrangers and Joint Bookrunners
CREDIT SUISSE SECURITIES (USA) LLC,
LEHMAN BROTHERS INC.
and
SUMITOMO MITSUI BANKING CORPORATION
as Joint Lead Arrangers and Joint Bookrunners
| 1 Capitalized terms used but not defined in this Disclosure Schedule shall have the meanings assigned in the Credit Agreement | ||
Schedule 1.1
to Credit Agreement
to Credit Agreement
Excluded Subsidiaries
Booz Allen Hamilton Intellectual Property Holdings, LLC
Schedule 2.1
to Credit Agreement
to Credit Agreement
Commitments
| Revolving | Tranche A Term | Tranche B Term | ||||||||||
| Lender | Commitment | Commitment | Commitment | |||||||||
Credit Suisse
|
$ | 21,250,000.00 | $ | 6,666,666.67 | $ | 355,333,333.34 | ||||||
Lehman Brothers Commercial Bank
|
$ | 21,250,000.00 | $ | 3,333,333.33 | $ | 177,666,666.66 | ||||||
Bank of America, N.A.
|
$ | 21,250,000.00 | — | — | ||||||||
Sumitomo Mitsui Banking Corporation
|
$ | 21,250,000.00 | $ | 20,000,000.00 | — | |||||||
CIT Bank
|
$ | 15,000,000.00 | $ | 20,000,000.00 | — | |||||||
Bank of Tokyo-Mitsubishi UFJ Trust Company
|
— | $ | 20,000,000.00 | — | ||||||||
Calyon New York Branch
|
— | $ | 35,000,000.00 | $ | 5,000,000.00 | |||||||
General Electric Capital Corporation
|
— | $ | 5,000,000.00 | $ | 25,000,000.00 | |||||||
Natixis
|
— | $ | 3,000,000.00 | $ | 12,000,000.00 | |||||||
The Bank of Nova Scotia
|
— | $ | 12,000,000.00 | $ | 10,000,000.00 | |||||||
Total
|
$ | 100,000,000.00 | $ | 125,000,000.00 | $ | 585,000,000.00 | ||||||
Schedule 4.3
to Credit Agreement
to Credit Agreement
Existence; Compliance with Law
Booz Allen Transportation Inc. is not in good standing due to New York State franchise tax
returns missing and franchise tax payments past due for the following periods: 9/30/1989 and
10/31/2002 including 9/30/2002, 9/30/2003 and 3/31/2006 MTA Surcharge Reports.
Schedule 4.4
to Credit Agreement
to Credit Agreement
Consents, Authorizations, Filings and Notices
Government Approvals:
None.
Consents:
None.
Schedule 4.6
to Credit Agreement
to Credit Agreement
Litigation
None.
Schedule 4.8A
to Credit Agreement
to Credit Agreement
Excepted Property
None.
Schedule 4.8B
to Credit Agreement
to Credit Agreement
Owned Real Property
None.
Leased Real Property
| ZIP | Commencement/ | Expiry | ||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||
EXEC SUITE 7 |
6565 Americas Parkway, 215 — 218 | Albuquerque, NM | 87110 | 12/1/2006, 10/1/2007 | 9/30/2008 | |||||
OFFICE |
6363 Walker Lane | Alexandria, VA | 22301 | 3/6/2007 | 7/31/2012 | |||||
OFFICE |
134 National Business Parkway, Suite 100, 200 & 300 | Annapolis Junction, MD | 20701 | 5/19/1999 | 9/30/2009 | |||||
OFFICE |
304 Sentinel Drive | Annapolis Junction, MD | 20701 | 1/1/2006 | 12/31/2015 | |||||
OFFICE |
2345 Crystal Drive, Suite 913 | Arlington, VA | 22202 | 6/1/1994, 4/1/2007 | 3/31/2011 | |||||
OFFICE |
1530 Wilson Boulevard, Suite 100 | Arlington, VA | 22209 | 10/10/2003 | 10/31/2008 | |||||
OFFICE |
3811 N. Fairfax Drive (10th Fl) | Arlington, VA | 22203 | 11/14/2002 | 11/30/2009 | |||||
OFFICE |
4001 N. Fairfax Drive, Suite 750 | Arlington, VA | 22203 | 10/1/1995 | 12/31/2010 | |||||
OFFICE |
3811 N. Fairfax Drive, Suite 600 (6th Fl) | Arlington, VA | 22203 | 11/14/2001, 2/20/2007 | 11/30/2011 | |||||
OFFICE |
1550 Crystal Drive, Suite 1100 | Arlington, VA | 22202 | 2/1/1994, 1/1/2007 | 12/31/2011 | |||||
DUPLICATE |
1550 Crystal Drive, Suite 1205 | Arlington, VA | 22202 | 9/1/1998, 1/1/2007 | 12/31/2011 | |||||
OFFICE |
33 Pervaya Magistralnaya Street, Suite 1002 | Astana, Kazakhstan | 1/1/2007 | 12/31/2008 | ||||||
OFFICE 7 |
230 Peachtree Street, Suite 2100 | Atlanta, GA | 30303 | 7/1/1999, 7/1/2004 | 6/30/2012 |
| ZIP | Commencement/ | Expiry | ||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||
APARTMENT 3, 1 |
J. Jabbarly Street, 44 | Baku, Azerbaijan | 9/1/2006 | 11/30/2008 | ||||||
DIRECT CHARGE — Storage |
201 N. Charles Street | Baltimore, MD | 21201 | 6/18/1997, 5/25/2005 | M-T-M | |||||
OFFICE |
201 N. Charles Street, Suite 1201 | Baltimore, MD | 21201 | 6/1/1996, 6/6/2007 | 9/30/2010 | |||||
OFFICE 7 |
4692 Millenium Drive, Suite 200 | Belcamp, MD | 4/1/2006 | 3/31/2013 | ||||||
EXPANSION SPACE |
4692 Millenium Drive, Suite 300 | Belcamp, MD | 4/1/2008 | 3/31/2013 | ||||||
USAID OFFICE |
24, Smiljaniceva Street | Belgrade, Serbia | 9/1/2006 | 1st floor: 9/30/2010; 2nd floor: 9/30/2008 | ||||||
USAID OFFICE |
17, Dalmatiuska Street | Belgrade, Serbia | 3/1/2008 | 2/28/2011 | ||||||
OFFICE |
22 Batterymarch Street, 2nd and 5th Floors | Boston, MA | 02109 | 3/1/2000 | 2/28/2010 | |||||
STORAGE |
22 Batterymarch Street | Boston, MA | 02109 | 6/15/2000 | 2/28/2010 | |||||
EXEC SUITE |
35 Corporate Drive, 4th floor | Burlington, MA | 1803 | 8/1/2006, 1/1/2008 | 12/31/2008 | |||||
OFFICE |
15059 Conference Center Drive, 3rd Floor | Chantilly, VA | 22021 | 4/1/2001, 4/1/2008 | 3/31/2013 | |||||
OFFICE |
Ashley Center, 4401 Belle Oaks Drive, Suite 310 | Charleston, SC | 29405 | 9/1/2002, 9/1/2007 | 8/31/2012 | |||||
OFFICE |
1001 Research Park Blvd, Suite 300 | Charlottesville, VA | 22911 | 2/12/2007 | 2/28/2012 | |||||
DIRECT CHARGE 1 |
1450 Academy Park Loop, 2nd Floor | Colorado Springs, CO | 80910 | 12/15/2004, 10/1/2007 | 8/31/2008 | |||||
OFFICE |
121 South Tejon Street (Plaza of the Rockies) (9th fl) | Colorado Springs, CO | 80910 | 10/28/2002, 5/1/2004 | 4/30/2009 | |||||
DUPLICATE |
121 South Tejon Street (Plaza of the Rockies) 11th Fl | Colorado Springs, CO | 80910 | 12/18/2006 | 12/31/2011 | |||||
DUPLICATE |
121 South Tejon Street (Plaza of the Rockies) (10th fl) | Colorado Springs, CO | 80910 | 10/1/2003 | 5/31/2014 | |||||
DIRECT CHARGE / License
Agreement |
1050 North Newport Drive | Colorado Springs, CO | 80916 | 9/1/2007 | M-T-M |
| ZIP | Commencement/ | Expiry | ||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||
OFFICE 1 |
1900 Founders Drive, Suite 300 | Dayton, OH (Kettering) | 45420 | 12/1/2002, 2/1/2008 | 11/30/2012 | |||||
Direct Charge |
17286 Dumfries Road | Dumfries, VA | 22026 | 9/1/2006 | M-T-M | |||||
EXECUTIVE SUITE |
2530 Meridian Parkway | Durham, NC | 27713 | 5/13/2008 | 9/30/2008 | |||||
OFFICE |
151 Industrial Way East | Eatontown, NJ | 07724 | 7/9/1993, 5/1/2004 | 4/30/2009 | |||||
DUPLICATE |
151 Industrial Way East, Building C | Eatontown, NJ | 07724 | 10/20/2006 | 4/30/2009 | |||||
DIRECT CHARGE / License
Agreement 5 |
2350 E. El Segundo Boulevard | El Segundo, CA | 90245 | 10/1/2004, 10/1/2007 | 9/30/2010 | |||||
OFFICE 1 |
5201 Leesburg Pike, Suite 400 | Falls Church, VA | 22041 | 4/1/1998, 4/1/2002, 4/1/2007 | 6/30/2009 | |||||
DIRECT CHARGE — Storage |
Skyline 3, 5201 Leesburg Pike | Falls Church, VA | 22041 | 9/1/2001 | 6/14/2009 | |||||
DIRECT CHARGE — Storage |
Skyline 5, 5111 Leesburg Pike, B100 | Falls Church, VA | 22041 | 9/1/2001 | 6/14/2009 | |||||
OFFICE |
5205 Leesburg Pike, Suite 402 | Falls Church, VA | 22041 | 1/1/2001 | 12/31/2010 | |||||
EXECUTIVE SUITE |
5235 Westview Drive, Suite 100 | Frederick, MD | 21073 | 7/14/2008 | 7/31/2009 | |||||
OFFICE |
5299 DTC Boulevard, Suite 410 | Greenwood Village, CO | 80111 | 9/22/1997, 10/1/2007 | 9/30/2010 | |||||
OFFICE 1 |
1331 Ashton Road, Ste C&E | Hanover, MD | 21076 | 10/15/1998, 10/1/2007 | 9/30/2008 | |||||
OFFICE |
13200 Woodland Park Road | Herndon, VA | 20171 | 7/19/2004 | 12/31/2015 | |||||
DUPLICATE 1, 2 |
737 Bishop Street, Suite 2800, Mauka Tower | Honolulu, HI | 96813 | 8/7/2000, 4/22/2003, 6/6/2008 | 8/31/2009 | |||||
OFFICE |
733 Bishop Street, Suite 3000, Makai Tower | Honolulu, HI | 96813 | 3/1/2005 | 8/31/2009 | |||||
OFFICE |
2525 Bay Area Boulevard, Suite 290 | Houston, TX | 77058 | 4/1/1992, 4/1/2008 | 8/31/2008 (negotiating 1-yr. extension) |
| ZIP | Commencement/ | Expiry | ||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||
OFFICE9 |
2625 Bay Area Boulevard, Suite 550 | Houston, TX | 77058 | 4/1/2007, 4/1/2008 | 8/31/2008 | |||||
OFFICE |
Cummings Research Park, Suite 200, 6703 Odyssey Drive | Huntsville, AL | 35806 | 10/24/2003, 2/1/2007 | 1/31/2012 | |||||
EXEC SUITE |
8888 Keystone Crossing, Suite 1300 | Indianapolis, IN | 46240 | 9/1/2006, 6/14/2007 | 7/31/2009 | |||||
OFFICE |
7th Floor, Menara BDN, JI. M.H. Thamrin No. 5, Jakarta Pusat | Jakarta, Indonesia | 10340 | 12/1/2006 | 9/30/2009 | |||||
OFFICE |
1 Pasquerilla Plaza, Suite 128 | Johnstown, PA | 15901 | 10/15/2005 | 10/31/2010 | |||||
EXEC SUITE |
2300 Main Street, Suite 900 | Kansas City, MO | 64108 | 2/1/2007, 2/1/2008 | 1/31/2009 | |||||
OFFICE |
12B/V Igorivska Street, 5th Floor | Kiev, Ukraine | 4/1/2007 | 12/9/2008 | ||||||
OFFICE |
9500 Hillwood Drive, Suite 140 | Las Vegas, NV | 89134 | 4/13/2004, 5/1/2007 | 4/30/2010 | |||||
OFFICE 7 |
The Abernathy Bldg., 1122 North Second St. | Leavenworth, KS | 66048 | 7/1/2001, 7/22/2005, 9/1/2007 | 7/31/2010 | |||||
OFFICE |
46950 Bradley Blvd | Lexington Park, MD | 20653 | 10/1/1991 | 9/30/2008 | |||||
DUPLICATE |
46950 Bradley Blvd, Building #2 | Lexington Park, MD | 20653 | 12/1/1998 | 9/30/2008 | |||||
TEMP OFFICE |
46610 Expedition Drive, Suite 100 | Lexington Park, MD | 20653 | 9/15/2006 | 9/30/2008 | |||||
Sublease 1 office |
46610 Expedition Drive, Suite 101 | Lexington Park, MD | 20653 | 1/1/2007 | M-T-M | |||||
DUPLICATE |
900 Elk Ridge Landing Road, Airport Square II | Linthicum, MD | 21090 | 8/26/1996 | 9/30/2008 | |||||
OFFICE |
900 Elk Ridge Landing Road, Airport Square II | Linthicum, MD | 21090 | 9/1/2003 | 9/30/2008 | |||||
OFFICE |
515 S. Flower Street, 36th Floor (REGUS) | Los Angeles, CA | 90071 | 4/15/08 | 4/30/2009 | |||||
DUPLICATE |
5220 Pacific Concourse Drive, Suite 390 | Los Angeles, CA | 90045 | 9/28/92, 10/1/07 | 7/31/2009 | |||||
OFFICE |
5220 Pacific Concourse Drive, 2nd Floor | Los Angeles, CA | 90045 | 7/13/04 | 7/31/2009 | |||||
OFFICE |
8281 Greensboro Drive | McLean, VA | 22102 | 1/1/1992 | 12/31/2010 | |||||
OFFICE |
8251 Greensboro Drive | McLean, VA | 22102 | 6/4/1993 | 12/31/2010 | |||||
DUPLICATE |
8251 Greensboro Drive | McLean, VA | 22102 | 5/1/2004 | 12/31/2010 | |||||
OFFICE |
8283 Greensboro Drive | McLean, VA | 22102 | 1/21/1996 | 1/31/2011 |
| ZIP | Commencement/ | Expiry | ||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||
OFFICE |
8285 Greensboro Drive | McLean, VA | 22102 | 1/2/2000 | 1/31/2012 | |||||
OFFICE |
8255 Greensboro Drive | McLean, VA | 22102 | 4/2/2002 | 6/30/2014 | |||||
EXEC SUITE |
6767 N. Wickham Road, Suite A-401 | Melbourne, FL | 32940 | 07/12/05 | 12/31/2008 | |||||
EXEC SUITE |
5201 Blue Lagoon Drive, 9th Floor | Miami, FL | 33126 | 7/1/2006 | 6/30/2009 | |||||
EXEC SUITE |
2501 Liberty Parkway, Suite 200 | Midwest City, OK | 73110 | 8/1/2007 | 7/31/2009 | |||||
OFFICE |
430 Davis Drive, Suite 150 | Morrisville, NC | 27560 | 3/1/2005 | 5/31/2010 | |||||
OFFICE |
Office 28, Building 1, Entrance 3 House 7/5, Bol’shaya Dmitrovka Street | Moscow, Russia | 12 | 4/1/2004 | 3/31/2009 | |||||
OFFICE1, 2 |
111 Veterans Boulevard, Suite 230 | New Orleans, LA | 70005 | 3/31/2002, 3/21/2007 | 3/31/2009 | |||||
OFFICE |
Three Gateway Center, Suite 1625,100 Mulberry Street | Newark, NJ | 07102 | 6/20/1996, 7/1/2006 | 6/30/2009 | |||||
OFFICE |
221 Third Street, 6th Floor, Admiral’s Gate Tower | Newport, RI | 02840 | 11/1/1998, 11/1/2007 | 10/31/2010 | |||||
OFFICE |
Twin Oaks II, 5800 Lake Wright Drive — 1st, 3rd, 4th floors | Norfolk, VA | 23502 | 4/1/2002 | 4/30/2010 | |||||
DIRECT CHARGE1 or 6 |
39555 Orchard Hill Place, Suite 600 | Novi, MI | 48375 | 10/1/2007 | 7/31/2008 | |||||
OFFICE 4 |
1003 E. Wesley Drive, Suite C | O’Fallon, IL | 62269 | 12/6/2007 | 12/5/2012 | |||||
OFFICE 1 |
1299 Farnam Street, Suite 1230 | Omaha, NE | 68102 | 4/1/2003, 4/15/2008 | 6/30/2010 | |||||
OFFICE |
6825 Pine Street, Suite 358 | Omaha, NE | 68106 | 8/29/07 | 8/28/2012 | |||||
EXEC SUITE |
333 City Boulevard West — 17th Floor | Orange, CA | 92868 | 10/1/2005, 4/1/2007 | 6/30/2008 | |||||
OFFICE |
13501 Ingenuity Drive, Suite 228, One Resource Square | Orlando, FL | 32826 | 12/1/1999, 6/1/2004 | 11/30/2009 | |||||
OFFICE |
6710 Oxon Hill Road | Oxon Hill, MD | 20745 | 5/7/2008 | 5/6/2013 | |||||
OFFICE |
220 West Garden Street, Suite 600 | Pensacola, FL | 32502 | 3/28/2005 | 1/31/2011 |
| ZIP | Commencement/ | Expiry | ||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||
OFFICE |
1818 Market Street, 27th Floor | Philadelphia, PA | 19103 | 11/8/1999, 11/1/2004 | 3/31/2010 | |||||
DIRECT CHARGE |
Pueblo Union Depot, 104 West B Street | Pueblo, CO | 81003 | 11/7/2005, 1/1/2008 | 12/31/2008 | |||||
LICENSE AGREEMENT (for one
person in ACWA Public
Outreach Office) |
104 West B Street | Pueblo, CO | 81003 | 11/7/2005 | M-T-M | |||||
OFFICE |
1003-D N. Wilson Road | Radcliff, KY | 40160 | 12/1/2006 | 11/30/2009 | |||||
DIRECT CHARGE |
1000 Commercial Drive, Suite #2 | Richmond, KY | 40475 | 1/5/2006 | 12/31/2008 | |||||
License Agreement |
900 E North Heritage Drive, Suite 1 | Ridgcrest, CA | 93555 | 12/1/2006 | 2/29/2009 | |||||
OFFICE |
Rock Island Arsenal, Building 62, Ground Floor, West Wing | Rock Island, IL | 61299 | 4/27/2007 | 7/31/2008 | |||||
OFFICE 6 |
12345 Parklawn Drive | Rockville, MD | 20852 | 10/2/1998, 8/1/2006 | 7/31/2008 | |||||
OFFICE 6 |
6010 Executive Blvd | Rockville, MD | 20852 | 5/14/1999, 6/1/2001, 8/1/2006 | 7/31/2008 | |||||
OFFICE 4, 2 |
One Preserve Parkway, 2600 Tower Oaks Blvd. | Rockville, MD | 20852 | 2/15/08 | 10/31/2015 | |||||
OFFICE |
1101 Wootton Parkway, Suite 800 | Rockville, MD | 20852 | 3/15/2003 | 3/31/2013 | |||||
OFFICE |
500 Avery Lane | Rome, NY | 13421 | 7/1/2008 | 6/30/2013 | |||||
OFFICE |
201 South Main Street, Suite 950 | Salt Lake City, UT | 84111 | 5/10/2005 | 6/30/2010 | |||||
OFFICE |
4241 Piedras Drive East, Suite 165 | San Antonio, TX | 78228 | 9/1/2001, 1/13/2005 | 1/12/2010 | |||||
OFFICE |
700 N. St. Mary’s St., Suite 700 (Riverwalk Plaza) | San Antonio, TX | 78205 | 10/28/2002 | 7/31/2011 | |||||
DUPLICATE |
1615 Murray Canyon, Suite 900 | San Diego, CA | 92108 | 2/17/2004 | 5/31/2009 | |||||
DUPLICATE |
1615 Murray Canyon, Suite 140 & 615 | San Diego, CA | 92108 | 7/20/2006 | 7/31/2011 | |||||
DUPLICATE |
1615 Murray Canyon, Suite 800 (w/1010 &300) | San Diego, CA | 92108 | 9/1/1996, 1/12/2006 | 5/31/2012 | |||||
DUPLICATE |
1615 Murray Canyon, Suite 1010 (w/800 & 300 | San Diego, CA | 92108 | 12/16/98, 1/12/2006 | 5/31/2012 |
| ZIP | Commencement/ | Expiry | ||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||
DUPLICATE |
1615 Murray Canyon, Suite 300 (w/800 & 1010) | San Diego, CA | 92108 | 6/10/2000, 1/12/2006 | 5/31/2012 | |||||
OFFICE |
3201 Airpark Drive, Suite 202 | Santa Maria, CA | 93455 | 3/1/2002, 5/12/2007 | 5/11/2010 | |||||
OFFICE |
101 California Street, Suite 3300 | San Francisco, CA | 94111-5855 | 12/15/1994 | 1/21/2014 | |||||
EXEC SUITE |
1990 Main Street, Suite 737, 739, 741 & 748 | Sarasota, FL | 34236 | 2/1/2008 | 1/31/2009 | |||||
EXEC SUITE 4 |
720 Olive Way, Suite 1250 | Seattle, WA | 98101 | 9/1/2007 | 8/31/2012 | |||||
License Agreement |
500 N. Garden Avenue, 1B | Sierra Vista, AZ | 85635 | 11/1/2007 | 10/31/2008 | |||||
OFFICE 4 |
2/4 Nikola Vapcarov St | Skopje, Macedonia | 11/20/2006 | 9/28/2011 | ||||||
OFFICE |
25 Center Street, Suite 103 | Stafford, VA | 22556 | 7/16/2001, 8/1/2006 | 7/31/2011 | |||||
DIRECT CHARGE |
385 Moffett Park Drive, Suite 200 | Sunnyvale, CA | 94089 | 6/1/2005 | 5/31/2010 | |||||
OFFICE |
4890 W. Kennedy Boulevard, Suite 400, 475 | Tampa, FL | 33609 | 12/1/1992, 10/1/2006 | 9/30/2009 | |||||
EXEC SUITE |
7 Bambis Rigi St. | Tbilisi, Georgia | 0105 | 4/20/2006 | 1/20/2009 | |||||
OFFICE 4 |
2900 100 Street | Urbandale, IA | 50322 | 3/26/2007 | 3/31/2012 | |||||
EXEC SUITE1 |
308 N. Davis Drive, Suite 120 | Warner Robins, Georgia | 31088 | 5/1/2007, 10/31/2007, [To be fully executed] | 4/30/2009 | |||||
SUBLEASE |
East Columbia Square, 555 13th Street N.W., Suite 480 | Washington, DC | 20004 | 5/1/1998, 1/1/2006 | 2/28/2009 | |||||
SUBLEASE |
700 13th Street, N.W. | Washington, DC | 20005 | 8/22/2003 | 1/31/2012 (lease) 1/30/2012 (sublease) |
|||||
OFFICE |
1201 M Street, S.E., Suite 220 | Washington, DC | 20003 | 11/12/2001, 12/1/2006 | 11/30/2009 | |||||
OFFICE |
955 L’Enfant Plaza North, S.W. Suite 5300 | Washington, DC | 20024 | 11/19/2004 | 11/30/2009 | |||||
DIRECT CHARGE |
One Technology Drive, 2nd Floor | Westborough, MA | 01581 | 4/19/2007 | 4/27/2010 |
| ZIP | Commencement/ | Expiry | ||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||
OFFICE |
Dragon Hill Lodge, Bldg 40508, South Post, Yongson | Seoul, South Korea | 4/1/08 | 3/31/09 |
Note: 1: Lease Renewal/Extension; 2: Waiting for signed Lease; 3: Mail Drop or Apartment; 4:
New Office; 5: Temp Office; 6: Closing Office; 7: Expansion; 8: Renovation; 9: Relocating
Schedule 4.14
to Credit Agreement
to Credit Agreement
Subsidiaries
(a) Subsidiaries – All Subsidiaries, other than Booz Allen Hamilton Intellectual Property Holdings,
LLC, are restricted on the Closing Date.
| Jurisdiction of | Class of Equity | Percent | ||||||
| Entity | Incorporation | Parent | Interest | Held | ||||
Aestix, Inc. |
Delaware | Booz Allen Hamilton Inc. | Common Stock | 100% | ||||
| Preferred Stock | 100% | |||||||
ASE, Inc. |
Delaware | Booz Allen Hamilton Inc. | Common Stock | 100% | ||||
Booz Allen Hamilton Intellectual Property Holdings, LLC |
Delaware | Booz Allen Hamilton Inc. | Class A Member Interest | 100% of Class A Member Interests | ||||
Booz Allen Transportation Inc. |
New York | Booz Allen Hamilton Inc. | Common Stock | 100% | ||||
Aestix (UK) Ltd. |
United Kingdom | Aestix, Inc. | Ordinary Shares | 100% |
(b) Outstanding subscriptions, options, warrants, calls, rights or other agreements or
commitments (other than stock options granted to officers, employees or directors and directors’
qualifying shares) of any nature relating to any Capital Stock the Borrower or any of its
Restricted Subsidiaries:
None.
Schedule 4.17
to Credit Agreement
to Credit Agreement
U.C.C. Filing Jurisdictions
| Entity Name | Office | |
ASE, Inc. |
Delaware Secretary of State | |
| Department of Corporations | ||
| Uniform Commercial Code Division | ||
| 401 Federal Street | ||
| Dover, DE 19901 | ||
Aestix, Inc. |
Delaware Secretary of State | |
| Department of Corporations | ||
| Uniform Commercial Code Division | ||
| 401 Federal Street | ||
| Dover, DE 19901 | ||
Booz Allen Hamilton Inc. |
Delaware Secretary of State | |
| Department of Corporations | ||
| Uniform Commercial Code Division | ||
| 401 Federal Street | ||
| Dover, DE 19901 | ||
Booz Allen Transportation Inc. |
The Division of Corporations, State | |
| Records and Uniform Commercial Code | ||
| One Commerce Plaza | ||
| 99 Washington Avenue, Suite 600 | ||
| Albany, NY 12231 | ||
Explorer Investor Corporation |
Delaware Secretary of State | |
| Department of Corporations | ||
| Uniform Commercial Code Division | ||
| 401 Federal Street | ||
| Dover, DE 19901 | ||
Explorer Merger Sub Corporation |
Delaware Secretary of State | |
| Department of Corporations | ||
| Uniform Commercial Code Division | ||
| 401 Federal Street | ||
| Dover, DE 19901 |
Schedule 6.10
to Credit Agreement
to Credit Agreement
Post-Closing Undertakings
Evidence that Booz Allen Transportation Inc. is in good standing with the New York State Department
of Taxation and Finance to be delivered to Administrative Agent no later than 60 days following the
Closing Date.
Schedule 7.2(d)
To Credit Agreement
To Credit Agreement
Existing Indebtedness
| Outstanding Letters of Credit |
| Issuing Lender | Reference # | Beneficiary | Issue Date | Expiry Date | Currency | USD Amount | ||||||||
Citibank |
NY-61640142 Lease | Citibank International (London)—Moscow Lease | 04/19/05 | 10/31/09 | USD | $ | 62,675.00 | |||||||
Citibank |
NY-63661500 Bid Bond | Citibank, Romania—Ministry fro Small and Medium Size Enterprises | 04/23/08 | Expires Citibank Romania 12/30/08; Expires Citibank New York 01/31/09 | LEI | $ | 7,094.23 | |||||||
Citibank |
NY-61667052 Performance | Citibank UAE—GHQ Armed Forces | 07/05/07 | Expires Citibank UAE 07/31/17; Expires Citibank New York 08/31/17 | AED | $ | 82,719.00 | |||||||
Citibank |
NY-61671197 Performance | Citibank Egypt—Fast Missile Craft | 12/11/07 | 10/01/08 | USD | $ | 150,000.00 | |||||||
JP Morgan Chase Manhattan Bank |
T-247850 Financial | ACE—Workers’ Comp Guarantee | 04/28/04 | Open-Ended | USD | $ | 845,585.00 | |||||||
Schedule 7.3(f)
to Credit Agreement
to Credit Agreement
Existing Liens
| Secured | Original | Original | ||||||||||
| Debtor | Jurisdiction | Filing | Party | Collateral | File Date | File No. | ||||||
Booz Allen Hamilton Inc. |
Delaware Secretary of State | UCC Continuation | BLC Corporation | Leased equipment | 02/09/06 | 60494369 | ||||||
Booz Allen Hamilton Inc. |
Delaware Secretary of State | UCC Continuation | BLC Corporation | Leased equipment | 01/03/07 | 70024322 | ||||||
Booz Allen Hamilton Inc. |
Delaware Secretary of State | UCC Continuation | Financial Leasing Corporation | Leased equipment | 01/03/07 | 70024199 | ||||||
Booz Allen Hamilton Inc. |
Delaware Secretary of State | UCC Continuation | BLC Corporation | Leased equipment | 09/18/07 | 73516696 | ||||||
Booz Allen Hamilton Inc. |
Delaware Secretary of State | UCC-1 | McGrath Rentcorp and TRS-Rentelco | Leased equipment | 07/11/08 | 20082384954 |
Liens of Booz Allen Transportation Inc. arising from New York State franchise tax returns
missing and franchise tax payments past due for the following periods: 9/30/1989 and 10/31/2002
including 9/30/2002, 9/30/2003 and 3/31/2006 MTA Surcharge Reports.
The patent application for “Apparatus, method and computer readable medium for evaluating a network
of entities and assets” has not yet been assigned to Booz Allen Hamilton Inc. An assignment to
Booz Allen Hamilton Inc. will be filed within 30 days after the date hereof.
Schedule 7.7
to Credit Agreement
to Credit Agreement
Existing Investments
Wholly-Owned Unrestricted Subsidiaries: Booz Allen Hamilton Intellectual Property Holdings, LLC
Fee for Equity:
| Net | ||||||||||||||||||
| Asset | Number of | |||||||||||||||||
| Company Name | Cost Basis | Reserve | Value | Class of Equity Interests | Interests | |||||||||||||
Vocatus |
$ | 152,722.80 | (152,722.80 | ) | $ | 0 | Undetermined | 5,916.00 | ||||||||||
Dotphone Company |
$ | 66,960.60 | (66,960.60 | ) | $ | 0 | B Ordinary | 26,100.00 | ||||||||||
Sharemax I (1) |
$ | 629,615.10 | (629,615.10 | ) | $ | 0 | Common Stock 5/22/00 | 251,776.80 | ||||||||||
| Series C Preferred 1/29/01 | 2,037,598.20 | |||||||||||||||||
| Common Stock 1/31/01 | 283,248.90 | |||||||||||||||||
| Common Stock 1/31/01 | 509,399.40 | |||||||||||||||||
| Series C Preferred 1/31/01 | 5,784,061.80 | |||||||||||||||||
Sharemax II |
$ | 161,040.00 | (161,040.00 | ) | $ | 0 | See above | |||||||||||
Sharemax PH II |
$ | 270,000.00 | (270,000.00 | ) | $ | 0 | See above | |||||||||||
Greyhound |
$ | 300,523.20 | (300,523.20 | ) | $ | 0 | Preferred Stock | 226,752.60 | ||||||||||
Transportmax (2) |
$ | 1,500,000.00 | (1,500,000.00 | ) | $ | 0 | N.A. | N.A. | ||||||||||
Clearforest |
$ | 59,441.40 | (59,441.40 | ) | $ | 0 | Series B3 Preferred | 56,341.80 | ||||||||||
Daleen |
$ | 8,949.60 | (8,949.60 | ) | $ | 0 | Options on Common Stock Expires 2/9/2010 | 1,800.00 | ||||||||||
Schema |
$ | 36,405.00 | (36,405.00 | ) | $ | 0 | Ordinary Shares | 10,638.00 | ||||||||||
Quentra |
$ | 75,000.00 | (75,000.00 | ) | $ | 0 | Common Stock | 11,242.50 | ||||||||||
Oceanconnect |
$ | 180,661.50 | (180,661.50 | ) | $ | 0 | Common Stock | 60,000.00 | ||||||||||
Cci (Convergence Communications, Inc.) |
$ | 36,000.00 | (36,000.00 | ) | $ | 0 | ||||||||||||
Eutex |
$ | 409,257.60 | (409,257.60 | ) | $ | 0 | Common Stock | 5,638.50 | ||||||||||
Eyematic PH I and II |
$ | 142,070.40 | (142,070.40 | ) | $ | 0 | Series C Preferred | 70,406.70 | ||||||||||
| Warrants (Expiry 5/20/2012 or five years after IPO) | 34,265.70 | |||||||||||||||||
Minority Equity:
| Net Asset | Number of | |||||||||||||||||
| Company Name | Cost Basis | Reserve | Value | Class of Equity Interests | Interests | |||||||||||||
Panthea |
$ | 1,205,920 | $ | (1,080,000 | ) | $ | 125,920 | Series A | 228,021.00 | |||||||||
| Series B | 443,979.00 | |||||||||||||||||
Logispring |
$ | 851,281 | $ | 0 | $ | 851,281 | Preferred B Shares | 7.50 | ||||||||||
| Common B Shares | 1,500.00 | |||||||||||||||||
| (1) | Shares represent amounts for all Sharemax tranches | |
| (2) | Not Applicable — Not a Minority Equity Stake |
Schedule 7.12
to Credit Agreement
to Credit Agreement
Existing Negative Pledge Clauses
None.
EXECUTION COPY
EXHIBIT A
FORM OF GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT
made by
EXPLORER INVESTOR CORPORATION,
EXPLORER MERGER SUB CORPORATION,
as the Initial Borrower,
BOOZ ALLEN HAMILTON INC.,
as the Surviving Borrower,
and the Subsidiary Guarantors party hereto
in favor of
CREDIT SUISSE,
as Collateral Agent
Dated as of ____ __, 20__
A-1
TABLE OF CONTENTS
| Page | ||||||
SECTION 1.
|
DEFINED TERMS | A-4 | ||||
1.1
|
Definitions | A-4 | ||||
1.2
|
Other Definitional Provisions | A-10 | ||||
SECTION 2.
|
GUARANTEE | A-10 | ||||
2.1
|
Guarantee | A-10 | ||||
2.2
|
Right of Contribution | A-11 | ||||
2.3
|
No Subrogation | A-11 | ||||
2.4
|
Amendments, etc. with respect to the Borrower Obligations | A-11 | ||||
2.5
|
Guarantee Absolute and Unconditional | A-12 | ||||
2.6
|
Reinstatement | A-12 | ||||
2.7
|
Payments | A-13 | ||||
SECTION 3.
|
GRANT OF SECURITY INTEREST | A-13 | ||||
3.1
|
Grant of First Priority Security Interests | A-13 | ||||
SECTION 4.
|
REPRESENTATIONS AND WARRANTIES | A-14 | ||||
4.1
|
Representations in Credit Agreement | A-14 | ||||
4.2
|
Title; No Other Liens | A-14 | ||||
4.3
|
Names; Jurisdiction of Organization; Chief Executive Office | A-15 | ||||
4.4
|
Pledged Securities | A-15 | ||||
4.5
|
Intellectual Property | A-15 | ||||
4.6
|
Material Deposit Accounts and Material Securities Accounts | A-15 | ||||
4.7
|
Material Government Contracts | A-15 | ||||
SECTION 5.
|
COVENANTS | A-15 | ||||
5.1
|
Covenants in Credit Agreement | A-15 | ||||
5.2
|
Investment Property | A-16 | ||||
5.3
|
Material Government Contracts | A-16 | ||||
5.4
|
Account Control Agreements | A-16 | ||||
5.5
|
Foreign Law Pledges | A-16 | ||||
SECTION 6.
|
REMEDIAL PROVISIONS | A-17 | ||||
6.1
|
Certain Matters Relating to Receivables | A-17 | ||||
6.2
|
Material Deposit Accounts, Material Securities Accounts. | A-17 | ||||
6.3
|
Communications with Grantors; Grantors Remain Liable | A-17 | ||||
6.4
|
Pledged Securities | A-18 | ||||
6.5
|
Intellectual Property | A-18 | ||||
6.6
|
Proceeds to be Turned Over To Collateral Agent | A-19 | ||||
6.7
|
Application of Proceeds | A-19 | ||||
6.8
|
Code and Other Remedies | A-20 | ||||
6.9
|
Private Sales | A-21 | ||||
6.10
|
Deficiency | A-21 | ||||
SECTION 7.
|
THE COLLATERAL AGENT | A-21 | ||||
7.1
|
Collateral Agent’s Appointment as Attorney-in-Fact, etc | A-21 | ||||
A-2
| Page | ||||||
7.2
|
Duty of Collateral Agent | A-22 | ||||
7.3
|
Execution of Financing Statements | A-23 | ||||
7.4
|
Authority of Collateral Agent | A-23 | ||||
SECTION 8.
|
MISCELLANEOUS | A-23 | ||||
8.1
|
Amendments in Writing | A-23 | ||||
8.2
|
Notices | A-23 | ||||
8.3
|
No Waiver by Course of Conduct; Cumulative Remedies | A-24 | ||||
8.4
|
Enforcement Expenses; Indemnification | A-24 | ||||
8.5
|
Successors and Assigns | A-24 | ||||
8.6
|
Set-Off | A-24 | ||||
8.7
|
Counterparts | A-24 | ||||
8.8
|
Severability | A-25 | ||||
8.9
|
Section Headings | A-25 | ||||
8.10
|
Integration | A-25 | ||||
8.11
|
GOVERNING LAW | A-25 | ||||
8.12
|
Submission To Jurisdiction; Waivers | A-25 | ||||
8.13
|
Acknowledgements | A-25 | ||||
8.14
|
Additional Guarantors and Grantors | A-26 | ||||
8.15
|
Releases | A-26 | ||||
8.16
|
WAIVER OF JURY TRIAL | A-27 | ||||
| SCHEDULES | ||||||
Schedule 1
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Notice Addresses | |||||
Schedule 2
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Investment Property | |||||
Schedule 3
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Legal Name, Jurisdictions of Organization and Chief Executive Offices | |||||
Schedule 4
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Intellectual Property | |||||
Schedule 5(a)
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Material Deposit Accounts | |||||
Schedule 5(b)
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Material Securities Accounts | |||||
Schedule 6
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Material Government Contracts | |||||
| ANNEXES | ||||||
Annex I
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Assumption Agreement | |||||
Annex II
|
Acknowledgement and Consent | |||||
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GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of ___, 20___, made by each of the signatories
hereto, in favor of Credit Suisse, as Collateral Agent (in such capacity, the “Collateral
Agent”) for the banks and other financial institutions or entities (the “Lenders”) from
time to time parties to the Credit Agreement, dated as of July 31, 2008 (as amended, supplemented
or otherwise modified from time to time, the “Credit Agreement”), among Explorer Investor
Corporation, a Delaware corporation (“Holdings”), Explorer Merger Sub Corporation, a
Delaware corporation (the “Initial Borrower”), Booz Allen Hamilton Inc., a Delaware
corporation into which the Initial Borrower shall be merged (“Booz Allen” or the
“Surviving Borrower”), the Lenders, Credit Suisse, as Collateral Agent and Administrative
Agent, Bank of America, N.A., as Syndication Agent, Lehman Brothers Commercial Bank, C.I.T. Leasing
Corporation and Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit Suisse, as
Issuing Lender and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Lehman
Brothers Inc. and Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers and Joint
Bookrunners.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make
extensions of credit to the Borrower (as defined below) upon the terms and subject to the
conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies that includes each other
Grantor (as defined below);
WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used in
part to enable the Borrower to make valuable transfers to one or more of the other Grantors in
connection with the operation of their respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in related businesses, and each
Grantor will derive substantial direct and indirect benefit from the making of the extensions of
credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective
extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have
executed and delivered this Agreement to the Collateral Agent for the ratable benefit of the
Administrative Agent, the Collateral Agent and the other Secured Parties;
NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent, the
Collateral Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to
make their respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees
with the Collateral Agent, for the ratable benefit of the Secured Parties, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement, and the following terms are used herein as
defined in the New York UCC: “Accession”, “Account”, “As-Extracted
Collateral”,
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“Certificated Securities”, “Chattel Paper”, “Commercial Tort Claim”,
“Commodity Account”, “Document”, “Equipment”, “Farm Products”,
“Fixture”, “General Intangible”, “Goods”, “Instrument”,
“Inventory”, “Letter-of-Credit Right”, “Securities Account”,
“Securities Intermediary”, “Security” and “Uncertificated Securities”.
(b) The following terms shall have the following meanings:
“Agreement”: this Guarantee and Collateral Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
“Borrower”: (a) at any time prior to the consummation of the Merger Transactions, the
Initial Borrower and (b) upon and at any time after the consummation of the Merger Transactions,
the Surviving Borrower.
“Borrower Cash Management Obligations”: to the extent that the Borrower so agrees in
the applicable agreements therefor, the collective reference to all obligations and liabilities of
the Borrower and the other Loan Parties (including, to the extent that such agreements so provide
and without limitation, interest accruing at the then applicable rate provided in the Specified
Cash Management Arrangement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim
for post-filing or post-petition interest is allowed or allowable in such proceeding) to any Lender
or any Affiliate of any Lender (or any Lender or any Affiliate thereof at the time such Specified
Cash Management Arrangement was entered into) (each, a “Cash Management Provider”), whether
direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, any Specified Cash Management
Arrangement or any other document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, to the extent that such agreements so provide and without
limitation, all fees and disbursements of counsel to the relevant Lender or Affiliate thereof that
are required to be paid by the Borrower pursuant to the terms of any Specified Cash Management
Arrangement) so long as the relevant Cash Management Provider executes and delivers to the
Administrative Agent a letter agreement in form and substance acceptable to the Administrative
Agent pursuant to which, unless the Collateral Agent agrees otherwise, the relevant Cash Management
Provider (i) appoints the Administrative Agent as its agent under the applicable Specified Cash
Management Arrangement and (ii) agrees to be bound by the provisions of Sections 9.3, 9.7, 10.11
and 10.12 of the Credit Agreement.
“Borrower Credit Agreement Obligations”: the collective reference to the unpaid
principal of and interest on the Loans (including, for the avoidance of doubt, any New Loans), the
Reimbursement Obligations and all other obligations and liabilities of the Borrower (including,
without limitation, interest accruing at the then applicable rate provided in the Credit Agreement
after the maturity of the Loans and Reimbursement Obligations and interest accruing at the then
applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed or allowable in such
proceeding) to the Administrative Agent, the Collateral Agent or any other Secured Party, whether
direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter
incurred, in each case, which may arise under, out of, or in connection with, the Credit Agreement,
this Agreement, the other Loan Documents, any Letter of Credit or any other document made,
delivered or given in connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative Agent, to the
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Collateral Agent or to the other Secured Parties that are required to be paid by the Borrower
pursuant to the terms of any of the foregoing agreements).
“Borrower Hedge Agreement Obligations”: the collective reference to all obligations
and liabilities of the Borrower and any other Loan Party (including, without limitation, interest
accruing at the then applicable rate provided in any Specified Hedge Agreement after the filing of
any petition in bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed or allowable in such proceeding) to any Lender or any Affiliate of any Lender
(or any Lender or any Affiliate thereof at the time such Specified Hedge Agreement was entered
into), whether direct or indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, in each case, which may arise under, out of, or in connection with, any
Specified Hedge Agreement or any other document made, delivered or given in connection therewith,
in each case whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the relevant Lender or Affiliate thereof that are required to be paid
by the Borrower and/or such other Loan Party, as the case may be, pursuant to the terms of any
Specified Hedge Agreement) so long as, unless the Collateral Agent agrees otherwise, the relevant
Hedge Provider executes and delivers to the Administrative Agent a letter agreement in form and
substance acceptable to the Administrative Agent pursuant to which the relevant Hedge Provider (i)
appoints the Administrative Agent as its agent under the applicable Specified Hedge Agreement and
(ii) agrees to be bound by the provisions of Section 9.3, 9.7, 10.11 and 10.12 of the Credit
Agreement.
“Borrower Obligations”: the collective reference to (i) the Borrower Credit Agreement
Obligations, (ii) the Borrower Hedge Agreement Obligations and (iii) the Borrower Cash Management
Obligations, but, as to clauses (ii) and (iii) hereof, only to the extent that, and only so long
as, the Borrower Credit Agreement Obligations are secured and guaranteed pursuant hereto.
“CLIN”: a JAMIS contract line item number with respect to a Government Contract.
“Collateral”: as defined in Section 3.1.
“Collateral Account”: any collateral account established by the Collateral Agent as
provided in Section 6.1 or 6.6.
“Copyright Licenses”: with respect to any Grantor, all United States written license
agreements naming such Grantor as licensor or licensee (including, without limitation, those listed
in Schedule 4), granting any right under any Copyright, subject, in each case, to the terms
of such license agreements, and the right to prepare for sale, sell, and advertise for sale, all
Inventory now or hereafter covered by such licenses.
“Copyrights”: (i) with respect to any Grantor, all of such Grantor’s copyrights
arising under the laws of the United States, whether registered or unregistered and whether
published or unpublished (including, without limitation, those listed in Schedule 4), all
registrations and recordings thereof, and all applications in connection therewith, in each case,
owned by such Grantor in its own name, including, without limitation, all registrations,
recordings, supplemental registrations and pending applications in the United States Copyright
Office, and (ii) the right to obtain all renewals thereof.
“Deposit Account”: as defined in the Uniform Commercial Code of any applicable
jurisdiction and, in any event, including, without limitation, any demand, time, savings, passbook
or like account maintained with a depositary institution.
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“Foreign Subsidiary Voting Stock”: the voting Capital Stock of (i) any Foreign
Subsidiary that is a Restricted Subsidiary or (ii) any Domestic Subsidiary, substantially all of
the assets of which consist of the Capital Stock of one or more Foreign Subsidiaries.
“Government Contract”: any contract to which a Loan Party is a party and a
counterparty is a Governmental Authority to the extent such contract involves the performance of
services or delivery of goods by or on behalf of such Loan Party to such Governmental Authority.
“Governmental Authority” shall mean the government of the United States of America and
any agency thereof.
“Grantors”: the collective reference to each signatory hereto (other than the
Collateral Agent) together with any other entity that may become a party hereto as provided herein.
“Guarantor Obligations”: with respect to any Guarantor, all obligations and
liabilities of such Guarantor which may arise under or in connection with this Agreement
(including, without limitation, Section 2) or any other Loan Document to which such Guarantor is a
party, in each case whether on account of guarantee obligations, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent, to the Collateral Agent or to the other
Secured Parties that are required to be paid by such Guarantor pursuant to the terms of this
Agreement or any other Loan Document).
“Guarantors”: the collective reference to Holdings and the Subsidiary Guarantors that
may become a party hereto as provided herein.
“Intellectual Property”: with respect to any Grantor, the collective reference to
such Grantor’s rights, priorities and privileges relating to intellectual property, arising under
the laws of the United States, including, without limitation, such Grantor’s Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses, and all rights to sue at law
or in equity for any infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.
“Intercompany Note”: any promissory note evidencing loans made by any Grantor to
Holdings or any of its Subsidiaries.
“Investment Property”: the collective reference to (i) all “investment property” as
such term is defined in Section 9-102(a)(49) of the New York UCC (other than any Excluded Capital
Stock excluded from the definition of “Pledged Stock”) and (ii) whether or not constituting
“investment property” as so defined, all Pledged Securities.
“Issuers”: the collective reference to each issuer of a Pledged Security.
“Liens”: as defined in Section 3.1.
“Material Deposit Accounts”: Deposit Accounts maintained by any Grantor within the
United States, any State thereof or the District of Columbia with an outstanding balance of greater
than $1,000,000, excluding Deposit Accounts established solely for the purpose of funding payroll,
payroll taxes and other compensation and benefits to employees. Material Deposit Accounts as of
the date hereof are listed on Schedule 5(a).
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“Material Government Contracts”: all Government Contracts listed on Schedule
6, and each Government Contract entered into after the date hereof:
(i) having a duration of one year or greater,
(ii) having one or more CLINs, which CLIN involves aggregate consideration payable
(or expected gross revenue) by the applicable governmental entity to the applicable
Loan Party of $2,500,000 or more over the term of the contract, including base
period plus priced options (a “Material CLIN”); and
(iii) which are not subject to the provisions of Federal Acquisition Regulation
52.232-24 or any successor provision;
provided that “Material Government Contracts” shall not include any contract the existence
of which may not be disclosed to the Secured Parties under applicable law, rule or regulations.
“Material Securities Accounts”: Securities Accounts maintained by any Grantor within
the United States, any State thereof or the District of Columbia with an outstanding balance of
greater than $1,000,000. Material Securities Accounts as of the date hereof are listed on
Schedule 5(b).
“New York UCC”: the Uniform Commercial Code from time to time in effect in the State
of New York.
“Obligations”: (i) in the case of the Borrower, the Borrower Obligations and (ii) in
the case of each Guarantor, its Guarantor Obligations.
“Patent License”: with respect to any Grantor, all United States written license
agreements providing for the grant by or to such Grantor of any right to manufacture, use or sell
any invention covered in whole or in part by a Patent, including, without limitation, any of the
foregoing referred to in Schedule 4, subject, in each case, to the terms of such license
agreements, and the right to prepare for sale, sell and advertise for sale, all Inventory now or
hereafter covered by such licenses.
“Patents”: with respect to any Grantor, all of such Grantor’s (i) letters patent of
the United States, including, without limitation, any of the foregoing referred to in Schedule
4, (ii) applications for letters patent of the United States and all continuations and
continuations in part thereof, including, without limitation, any of the foregoing referred to in
Schedule 4, and (iii) rights to obtain any reissues or extensions of the foregoing, in each
case, owned by such Grantor in its own name.
“Pledged Notes”: all promissory notes listed on Schedule 2, all Intercompany
Notes at any time issued to any Grantor in excess of $2,000,000 (or Intercompany Notes which, in
the aggregate, are in excess of $2,000,000) and all other promissory notes issued to or held by any
Grantor in excess of $2,000,000 (other than promissory notes issued in connection with extensions
of trade credit by any Grantor in the ordinary course of business).
“Pledged Securities”: the collective reference to the Pledged Notes and the Pledged
Stock.
“Pledged Stock”: the collective reference to (i) the shares of Capital Stock listed
on Schedule 2 and (ii) any other shares, stock certificates, options, interests or rights
of any nature whatsoever in respect of the Capital Stock of any Person that may be issued or
granted to, or held by, any Grantor while this Agreement is in effect other than Excluded Capital
Stock; provided that in no event
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shall more than 65% of the total outstanding Foreign Subsidiary Voting Stock of any Foreign
Subsidiary be required to be pledged hereunder.
“Proceeds”: all “proceeds” as such term is defined in Section 9-102(a)(64) of the New
York UCC and, in any event, shall include, without limitation, all dividends or other income from
the Investment Property, collections thereon or distributions or payments with respect thereto.
“Receivable”: any right to payment for goods sold or leased or for services rendered,
whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has
been earned by performance (including, without limitation, any Account).
“Securities Act”: the Securities Act of 1933, as amended.
“Specified Cash Management Arrangement”: any cash management arrangement (a) entered
into by (i) the Borrower or any other Loan Party and (ii) any Lender or any Affiliate thereof at
the time such cash management arrangement was entered into, as counterparty, and (b) which has been
designated by such Lender and the Borrower, by notice to the Collateral Agent not later than 90
days after the execution and delivery by the Borrower or such other Loan Party, as a Specified Cash
Management Arrangement. The designation of any cash management arrangement as a Specified Cash
Management Arrangement shall not create in favor of the Lender or Affiliate thereof that is a party
thereto any rights in connection with the management or release of any Collateral or any Guarantor
Obligations.
“Trademark License”: with respect to any Grantor, all United States written license
agreements providing for the grant by or to such Grantor of any right to use any Trademark,
including, without limitation, any of the foregoing referred to in Schedule 4, subject, in
each case, to the terms of such license agreements, and the right to prepare for sale, sell and
advertise for sale, all Inventory now or hereafter covered by such licenses.
“Trademarks”: with respect to any Grantor, all of such Grantor’s (i) trademarks,
trade names, corporate names, company names, business names, domain names, fictitious business
names, trade styles, service marks, logos and other source or business identifiers, and all
goodwill associated therewith, all registrations and recordings thereof, and all applications in
connection therewith (except for “intent to use” applications for trademark or service mark
registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, unless and until
an Amendment to Allege Use or a Statement of Use under Section 1(c) or 1(d) of said Act has been
filed), whether in the United States Patent and Trademark Office or in any similar office or agency
of the United States or any State thereof, and all United States common-law rights related thereto
owned by such Grantor in its own name, including, without limitation, any of the foregoing referred
to in Schedule 4, and (ii) the right to obtain all renewals thereof.
“Unfunded Advances/Participations” : (a) with respect to the Administrative Agent, the
aggregate amount, if any (i) made available to the Borrower on the assumption that each Lender has
made its portion of the applicable Borrowing available to the Administrative Agent as contemplated
by Section 2.2 of the Credit Agreement and (ii) with respect to which a corresponding amount shall
not in fact have been returned to the Administrative Agent by the Borrower or made available to the
Administrative Agent by any such Lender, (b) with respect to the Swingline Lender, the aggregate
amount, if any, of participations in respect of any outstanding Swingline Loan that shall not have
been funded by any Revolving Lender in accordance with Section 2.6(b) of the Credit Agreement and
(c) with respect to any Issuing Lender, the aggregate amount, if any, of any participations in
respect of Reimbursement Obligations that shall not have been funded by any L/C Participant in
accordance with Section 3.4 of the Credit Agreement.
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“Vehicles”: aircraft and all cars, trucks, trailers, construction and earth moving
equipment and other vehicles covered by a certificate of title law of any state.
1.2 Other Definitional Provisions. (a)The words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular provision
of this Agreement, and Section and Schedule references are to this Agreement unless otherwise
specified.
(b) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part
thereof.
SECTION 2. GUARANTEE
2.1 Guarantee.
(a) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably,
guarantees to the Collateral Agent for the ratable benefit of the Administrative Agent, the
Collateral Agent, the other Secured Parties and their respective permitted successors, indorsees,
transferees and assigns, the prompt and complete payment and performance by the Borrower when due
(whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary notwithstanding, the
maximum liability of each Guarantor hereunder and under the other Loan Documents shall in no event
exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws
relating to the insolvency of debtors (after giving effect to the right of contribution established
in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any time and from time to
time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee
contained in this Section 2 or affecting the rights and remedies of the Administrative Agent, the
Collateral Agent or any other Secured Party hereunder.
(d) The guarantee contained in this Section 2 shall remain in full force and effect until
all the Borrower Obligations and the obligations of each Guarantor under the guarantee contained in
this Section 2 shall have been satisfied by payment in full (other than Borrower Hedge Agreement
Obligations, Borrower Cash Management Obligations and contingent or indemnification obligations not
then due), no Letter of Credit (that is not cash collateralized or back-stopped to the reasonable
satisfaction of the Issuing Lender or purchasing Lender, as applicable, in respect thereof) shall
be outstanding and the Commitments shall have been terminated, notwithstanding that from time to
time during the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations, provided that any Guarantor shall be released from its guarantee contained in
this Section 2 as provided in Section 8.15.
(e) No payment (other than payment in full) made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the Administrative Agent, the
Collateral Agent or any other Secured Party from the Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation
or application at any time or from time to time in reduction of or in payment of the Borrower
Obligations shall be deemed to
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modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect
of the Borrower Obligations or any payment received or collected from such Guarantor in respect of
the Borrower Obligations), remain liable for the Borrower Obligations up to the maximum liability
of such Guarantor hereunder until the Borrower Obligations shall have been paid in full (other than
Borrower Hedge Agreement Obligations, Borrower Cash Management Obligations and other than
contingent or indemnification obligations not then due), no Letter of Credit (that is not cash
collateralized or back-stopped to the reasonable satisfaction of the Issuing Lender or purchasing
Lender, as applicable, in respect thereof) shall be outstanding and the Commitments shall have been
terminated, provided that any Guarantor shall be released from its guarantee contained in
this Section 2 as provided in Section 8.15.
2.2 Right of Contribution. Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than
its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder which has not paid its
proportionate share of such payment. Each Guarantor’s right of contribution shall be subject to
the terms and conditions of Section 2.3. The provisions of this Section 2.2 shall in no respect
limit the obligations and liabilities of any Guarantor to the Administrative Agent, the Collateral
Agent and the other Secured Parties, and each Guarantor shall remain liable to the Administrative
Agent, the Collateral Agent and the other Secured Parties for the full amount guaranteed by such
Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any set-off or application
of funds of any Guarantor by the Administrative Agent, the Collateral Agent or any other Secured
Party, no Guarantor shall be entitled to be subrogated to any of the rights of the Administrative
Agent, the Collateral Agent or any other Secured Party against the Borrower or any other Guarantor
or any collateral security or guarantee or right of offset held by the Administrative Agent, the
Collateral Agent or any other Secured Party for the payment of the Borrower Obligations, nor shall
any Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or
any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts
owing to the Administrative Agent, the Collateral Agent and the other Secured Parties by the
Borrower on account of the Borrower Obligations shall have been paid in full (other than Borrower
Hedge Agreement Obligations, Borrower Cash Management Obligations and contingent or indemnification
obligations not then due), no Letter of Credit (that is not cash collateralized or back-stopped to
the reasonable satisfaction of the Issuing Lender or purchasing Lender, as applicable, in respect
thereof) shall be outstanding and the Commitments shall have been terminated. If any amount shall
be paid to any Guarantor on account of such subrogation rights at any time when all of such
Borrower Obligations shall not have been paid in full, such amount shall be held by such Guarantor
in trust for the Administrative Agent, the Collateral Agent and the other Secured Parties,
segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor,
be turned over to the Collateral Agent in the exact form received by such Guarantor (duly indorsed
by such Guarantor to the Collateral Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Collateral Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further assent by any
Guarantor, any demand for payment of any of the Borrower Obligations made by the Administrative
Agent, the Collateral Agent or any other Secured Party may be rescinded by the Administrative
Agent, the Collateral Agent or such other Secured Party and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset with respect thereto,
may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Administrative Agent, the Collateral
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Agent or any other Secured Party, and the Credit Agreement and the other Loan Documents and
any other documents executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders, or the Supermajority Lenders, or all Lenders, or all Lenders directly affected thereby, as
the case may be) may deem advisable from time to time, and any collateral security, guarantee or
right of set-off at any time held by the Administrative Agent, the Collateral Agent or any other
Secured Party for the payment of the Borrower Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Administrative Agent, the Collateral Agent nor any other
Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time
held by it as security for the Borrower Obligations or for the guarantee contained in this Section
2 or any property subject thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any
of the Borrower Obligations and notice of or proof of reliance by the Administrative Agent, the
Collateral Agent or any other Secured Party upon the guarantee contained in this Section 2 or
acceptance of the guarantee contained in this Section 2; the Borrower Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings
between the Borrower and any of the Guarantors, on the one hand, with respect to the Loan Documents
and the Administrative Agent, the Collateral Agent and the other Secured Parties, on the other
hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Each Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Borrower or any of the
Guarantors with respect to the Borrower Obligations. Each Guarantor understands and agrees that
the guarantee of such Guarantor contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the validity or
enforceability of the Credit Agreement or any other Loan Document, any of the Borrower Obligations
or any other collateral security therefor or guarantee or right of offset with respect thereto at
any time or from time to time held by the Administrative Agent or any Lender, (b) any defense,
set-off or counterclaim (other than a defense of payment or performance) which may at any time be
available to or be asserted by the Borrower or any other Person against the Administrative Agent,
the Collateral Agent or any other Secured Party, or (c) any other circumstance whatsoever (other
than a defense of payment or performance) (with or without notice to or knowledge of the Borrower
or any Guarantor) which constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower from the Borrower Obligations, or of such Guarantor under the guarantee
of such Guarantor contained in this Section 2, in bankruptcy or in any other instance. When making
any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor,
the Administrative Agent, the Collateral Agent or any other Secured Party may, but shall be under
no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may
have against the Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Borrower Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agent, the Collateral Agent or any other Secured Party to make
any such demand, to pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such collateral security
or guarantee or to exercise any such right of offset, or any release of the Borrower, any other
Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall
not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect
the rights and remedies, whether express, implied or available as a matter of law, of the
Administrative Agent, the Collateral Agent or any other Secured Party against any Guarantor. For
the purposes hereof “demand” shall include the commencement and continuance of any legal
proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall continue to be effective, or be reinstated,
as the case may be, if at any time payment, or any part thereof, of any of the Borrower
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Obligations is rescinded or must otherwise be restored or returned by the Administrative
Agent, the Collateral Agent or any other Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result
of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for,
the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Administrative
Agent without set-off or counterclaim at the Funding Office.
SECTION 3. GRANT OF SECURITY INTEREST
3.1 Grant of First Priority Security Interests. Each Grantor hereby grants to the Collateral Agent, for the ratable benefit of the Secured
Parties, a security interest in all of such Grantor’s right, title and interest in and to the
following property now owned or at any time hereafter acquired by such Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or interest
(collectively, the “Collateral”), as collateral security for the prompt and complete
payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of
such Grantor’s Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Deposit Accounts;
(d) all Documents;
(e) all Equipment;
(f) all Fixtures;
(g) all General Intangibles;
(h) all Instruments, including the Pledged Notes;
(i) all Intellectual Property;
(j) all Inventory;
(k) all Investment Property;
(l) all books and records pertaining to the Collateral; and
(m) to the extent not otherwise included, all Proceeds and products of any of the Collateral
and products of any and all of the foregoing and all collateral security and guarantees given by
any Person with respect to any of the foregoing;
provided, however, that notwithstanding any of the other provisions set forth in
this Section 3.1, this Agreement shall not constitute a grant of a security interest in (i) any
leasehold interest in real property (and any Fixtures relating thereto) and any Fixtures relating
to any owned real property to the extent that
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the Collateral Agent is not entitled to a security interest with respect to such owned real
property under the terms of the Credit Agreement, (ii) any Vehicles and all Proceeds thereof, (iii)
any property to the extent that such grant of a security interest is (A) prohibited by any
Requirements of Law of a Governmental Authority, (B) requires a consent not obtained of any
Governmental Authority pursuant to such Requirement of Law or (C) prohibited by, or constitutes a
breach or default under or results in the termination of or requires any consent not obtained
under, any contract, license, agreement, instrument, (including any permitted liens, leases and
licenses) or other document evidencing or giving rise to such property in each case with any third
party, joint venture or non wholly-owned Subsidiary and any organizational, shareholder or similar
agreements of any non-wholly owned Subsidiary or joint venture; except in the case of clauses (A),
(B) or (C), to the extent that such Requirement of Law or the term in such contract, license,
agreement, instrument or other document or organizational, shareholder or similar agreement
providing for such prohibition, breach, default or termination or requiring such consent is
ineffective under applicable law, (iv) any Collateral that constitutes Equipment subject to a
certificate of title statute, Farm Products, Accessions, Letter-of-Credit Rights, Commercial Tort
Claims and As-Extracted Collateral, (v) any Collateral to the extent the granting of such security
interest would result in adverse tax consequences as reasonably determined by the Administrative
Agent, or as to which the Administrative Agent reasonably determines that the burden or cost of
obtaining a security interest or perfection thereof is excessive when compared to the benefit to
the Secured Parties of the security to be afforded thereby (in each case as confirmed by written
notice to the Borrower), and (vi) equity interests in and assets of Unrestricted Subsidiaries and
Immaterial Subsidiaries. It is hereby understood and agreed that any Property described in the
preceding proviso, and any Property that is otherwise expressly excluded from clauses (a) through
(m) above, shall be excluded from the definition of “Collateral”.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent, the Collateral Agent and the Secured Parties to enter into
the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the
Borrower, each Guarantor and each Grantor hereby represents and warrants to each of the
Administrative Agent, the Collateral Agent and each other Secured Party that:
4.1 Representations in Credit Agreement. In the case of each Guarantor, the representations and warranties set forth in Section 4 of
the Credit Agreement to the extent they refer to such Guarantor or to the Loan Documents to which
such Guarantor is a party, each of which is hereby incorporated herein by reference, are true and
correct in all material respects, and each of the Administrative Agent, the Collateral Agent and
each other Secured Party shall be entitled to rely on each of them as if they were fully set forth
herein; provided that each reference in each such representation and warranty to the
Borrower’s knowledge shall, for the purposes of this Section 4.1, be deemed to be a reference to
such Guarantor’s knowledge.
4.2 Title; No Other Liens. Except as otherwise permitted under Section 7.3 of the Credit Agreement, such Grantor owns
or has rights in each item of the Collateral free and clear of any and all Liens. Except as
otherwise permitted under Section 7.3 of the Credit Agreement, no financing statement or other
public notice with respect to all or any part of the Collateral is on file or of record in any
public office except financing statements that have been filed without the consent of the Grantor.
For the avoidance of doubt, it is understood and agreed that any Grantor may, as part of its
business, grant licenses to third parties to use Intellectual Property owned, licensed or developed
by a Grantor. For purposes of this Agreement and the other Loan Documents, such licensing activity
shall not constitute a “Lien” on such Intellectual Property. Each of the Administrative Agent, the
Collateral Agent and each other Secured Party understands that any such licenses may be exclusive
to the applicable licensees, and
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such exclusivity provisions may limit the ability of the Administrative Agent to utilize,
sell, lease, license or transfer the related Intellectual Property or otherwise realize value from
such Intellectual Property pursuant hereto.
4.3 Names; Jurisdiction of Organization; Chief Executive Office. On the date hereof, such Grantor’s full and correct legal name, jurisdiction of
organization and identification number from the jurisdiction of organization (if any) are specified
on Schedule 3.
4.4 Pledged Securities. On the date hereof, the shares of Pledged Stock pledged by such Grantor hereunder:
(a) with respect to the shares of Pledged Stock issued by the Borrower and any other
Restricted Subsidiary, have been duly authorized, validly issued and are fully paid and
non-assessable, to the extent such concepts are applicable; and
(b) constitute all the issued and outstanding shares of all classes of the Capital Stock of
each Issuer owned by such Grantor or, in the case of Foreign Subsidiary Voting Stock, 65% of the
outstanding Foreign Subsidiary Voting Stock of each relevant Issuer.
4.5 Intellectual Property.
(a) Schedule 4 lists all material Copyright registrations, Copyright Licenses,
Trademark applications and registrations, Trademark Licenses, Patent applications and Patents and
Patent Licenses owned by such Grantor in its own name on the date hereof.
(b) Except as set forth in Schedule 4, on the date hereof, none of the Copyrights,
Patents or Trademarks is the subject of any material licensing or franchise agreement pursuant to
which such Grantor is the licensor or franchisor, which is not in the ordinary course of such
Grantor’s business.
4.6 Material Deposit Accounts and Material Securities Accounts. Schedule 5(a) lists all Material Deposit Accounts and Schedule 5(b) lists
all Material Securities Accounts, in each case, on the date hereof.
4.7 Material Government Contracts. Schedule 6 lists all Material Government Contracts to which the Borrower or any of
its Subsidiaries is a party on the date hereof.
SECTION 5. COVENANTS
Each Guarantor and each Grantor covenants and agrees with the Administrative Agent, the
Collateral Agent and the other Secured Parties that, from and after the date of this Agreement
until the Obligations shall have been paid in full (other than Borrower Hedge Agreement
Obligations, Borrower Cash Management Obligations and contingent and indemnification obligations
not yet due and owing), no Letter of Credit (that is not cash collateralized or back-stopped to the
reasonable satisfaction of the Issuing Lender or purchasing Lender, as applicable, in respect
thereof) shall be outstanding and the Commitments shall have been terminated:
5.1 Covenants in Credit Agreement. In the case of each Guarantor, to the extent applicable, such Guarantor shall take, or
shall refrain from taking, as the case may be, each action that is necessary to be taken or not
taken, as the case may be, so that no Default or Event of Default is caused by the failure to take
such action or to refrain from taking such action by such Guarantor or any of its Subsidiaries.
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5.2 Investment Property. (a) In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be
bound by the terms of this Agreement relating to the Pledged Securities issued by it and will
comply with such terms insofar as such terms are applicable to it and (ii) the terms of Sections
6.4(c) and 6.9 shall apply to it, mutatis mutandis, with respect to all actions that may be
required of it pursuant to Section 6.4(c) or 6.9 with respect to the Pledged Securities issued by
it.
(b) To the extent that any Pledged Security that is an Uncertificated Security becomes a
Certificated Security, the applicable Grantor shall promptly deliver such certificates evidencing
such Pledged Securities to the Collateral Agent together with stock powers or indorsements thereof
reasonably satisfactory to the Collateral Agent.
5.3 Material Government Contracts. In the case of each Grantor, such Grantor shall, on each date that the Borrower is required
to deliver financial statements pursuant to Section 6.1(a) or (b) of the Credit Agreement, provide
the Collateral Agent with written notice of any Material Government Contracts entered into since
the last date financial statements were delivered pursuant to Section 6.1(a) or (b) of the Credit
Agreement (or, with respect to the first such date financial statements are delivered pursuant to
such Sections, since the date hereof), such notice to include the identification of any Material
CLINs, and within fifteen days of such notice, deliver to the Collateral Agent such documentation
reasonably necessary to comply with the Assignment of Claims Act of 1940 with respect to the
assignment of the right of payment in respect of such Material Government Contracts (or, in the
case of any Material Government Contract that is an indefinite delivery contract, task or delivery
order contract, multiple award schedule contract, blanket purchase agreement, or basic ordering
agreement, in respect of any specific individual order for the performance of services or delivery
of goods placed under such Material Government Contract to the extent such specific individual
order for the performance of services or delivery of goods has a Material CLIN), where applicable,
designating a Material Deposit Account as the account in respect of which payment thereof is to be
made. Pending receipt of any consent of a Governmental Authority as contemplated by this Section
5.3, each Grantor shall request that the relevant Governmental Authority pay all cash payments made
by it in respect of Material Government Contracts to which it is a party into a Material Deposit
Account subject to an account control agreement (if any such accounts are then subject to an
account control agreement). The relevant Grantor shall use commercially reasonable efforts to
obtain the consent of the applicable Governmental Authority party to each such Material Government
Contract in respect of the assignment of such claims in respect of any Material CLIN, but any
failure to receive such consent shall not constitute a Default.
5.4 Account Control Agreements. In the case of each Grantor, such Grantor shall, on each date that the Borrower is required
to deliver financial statements pursuant to Section 6.1(a) or (b) of the Credit Agreement, provide
the Collateral Agent with written notice of any additional Material Deposit Accounts and/or
Material Securities Accounts since the last date financial statements were delivered pursuant to
Section 6.1(a) or (b) of the Credit Agreement (or, with respect to the first such date financial
statements are delivered pursuant to such Sections, since the date hereof), and shall use its
commercially reasonable efforts to cause each depositary bank (other than the Collateral Agent)
holding a Material Deposit Account and each Securities Intermediary holding a Material Securities
Account owned by such Grantor to execute and deliver a control agreement with respect to such
Material Deposit Account and/or Material Securities Account, in form and substance reasonably
satisfactory to the Collateral Agent and such Grantor.
5.5 Foreign Law Pledges. Notwithstanding anything to the contrary contained herein, no Grantor shall be required to
take any actions in order to perfect the security interest granted to the Collateral Agent for the
ratable benefit of the Administrative Agent, the Collateral Agent and the Lenders (i) under the
laws of any jurisdiction outside the United States or (ii) by the execution of account control
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or similar agreements (other than with respect to Material Deposit Accounts and Material
Securities Accounts pursuant to Section 5.4).
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables.
(a) At any time during the continuance of an Event of Default, upon the Collateral Agent’s
reasonable request at the expense of the relevant Grantor, such Grantor shall cause independent
public accountants or others reasonably satisfactory to the Collateral Agent to furnish to the
Collateral Agent reports showing reconciliations, aging and test verifications of, and trial
balances for, the Receivables.
(b) If required by the Collateral Agent at any time after the occurrence and during the
continuance of an Event of Default under Section 8.1(a) or 8.1(f) of the Credit Agreement, any
payments of Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any event,
within two Business Days) deposited by such Grantor in the exact form received, duly indorsed by
such Grantor to the Collateral Agent if required, in a Collateral Account maintained under the sole
dominion and control of the Collateral Agent, subject to withdrawal by the Collateral Agent for the
account of the Administrative Agent, the Collateral Agent and the other Secured Parties only as
provided in Section 6.7, and (ii) until so turned over, shall be held by such Grantor in trust for
the Administrative Agent, the Collateral Agent and the other Secured Parties, segregated from other
funds of such Grantor. Each such deposit of Proceeds of Receivables shall be accompanied by a
report identifying in reasonable detail the nature and source of the payments included in the
deposit.
(c) If an Event of Default has occurred and is continuing and at the Collateral Agent’s
request, each Grantor shall deliver to the Collateral Agent all documents evidencing, and relating
to, the agreements and transactions which gave rise to the Receivables, including, without
limitation, all agreements, orders, invoices and shipping receipts.
6.2 Material Deposit Accounts, Material Securities Accounts. Notwithstanding anything to the contrary contained herein, the Collateral Agent shall not
exercise its rights under account control agreements associated with Material Deposit Accounts or
Material Securities Accounts unless an Event of Default under Section 8.1(a) or 8.1(f) of the
Credit Agreement shall have occurred and be continuing.
6.3 Communications with Grantors; Grantors Remain Liable.
(a) Upon the request of the Collateral Agent at any time after the occurrence and during the
continuance of an Event of Default under Section 8.1(a) or 8.1(f) of the Credit Agreement, each
Grantor shall notify obligors on the Receivables that the Receivables have been assigned to the
Collateral Agent for the ratable benefit of the Administrative Agent, the Collateral Agent and the
other Secured Parties and that payments in respect thereof shall be made directly to the Collateral
Agent.
(b) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under
the Receivables to observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto.
Neither the Administrative Agent, the Collateral Agent nor any other Secured Party shall have any
obligation or liability under any Receivable (or any agreement giving rise thereto) by reason of or
arising out of this Agreement or the receipt by the Administrative Agent, the Collateral Agent or
any other Secured Party of
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any payment relating thereto, nor shall the Administrative Agent, the Collateral Agent or any
other Secured Party be obligated in any manner to perform any of the obligations of any Grantor
under or pursuant to any Receivable (or any agreement giving rise thereto), to make any payment, to
make any inquiry as to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
6.4 Pledged Securities. (a) Unless an Event of Default shall have occurred and be continuing and the Collateral
Agent shall have given notice to the relevant Grantor of the Collateral Agent’s intent to exercise
its corresponding rights pursuant to Section 6.4(b), each Grantor shall be permitted to receive all
cash dividends and other distributions paid in respect of the Pledged Stock and all payments made
in respect of the Pledged Notes to the extent permitted in the Credit Agreement, and to exercise
all voting and corporate rights with respect to the Pledged Securities.
(b) If an Event of Default shall occur and be continuing and the Collateral Agent shall give
notice of its intent to exercise such rights to the relevant Grantor or Grantors (which notice
shall not be required if an Event of Default under Section 8.1(f) of the Credit Agreement shall
have occurred and be continuing), (i) the Collateral Agent shall have the right to receive any and
all cash dividends, payments or other Proceeds paid in respect of the Pledged Securities and make
application thereof to the Obligations in the order set forth in Section 6.7, and (ii) any or all
of the Pledged Securities shall be registered in the name of the Collateral Agent or its nominee,
and the Collateral Agent or its nominee may thereafter exercise (x) all voting, corporate and other
rights pertaining to such Pledged Securities at any meeting of shareholders of the relevant Issuer
or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any
other rights, privileges or options pertaining to such Pledged Securities as if it were the
absolute owner thereof (including, without limitation, the right to exchange at its discretion any
and all of the Pledged Securities upon the merger, consolidation, reorganization, recapitalization
or other fundamental change in the corporate structure of any Issuer, or upon the exercise by any
Grantor or the Collateral Agent of any right, privilege or option pertaining to such Pledged
Securities, and in connection therewith, the right to deposit and deliver any and all of the
Pledged Securities with any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as the Collateral Agent may reasonably determine), all
without liability (except liabilities resulting from the gross negligence or willful misconduct of
the Collateral Agent) except to account for property actually received by it, but the Collateral
Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall
not be responsible for any failure to do so or delay in so doing unless the Collateral Agent has
given notice of its intent to exercise as set forth above.
(c) Each Grantor hereby authorizes and instructs each Issuer of any Pledged Securities
pledged by such Grantor hereunder to comply with any instruction received by it from the
Administrative Agent in writing that (x) states that an Event of Default has occurred and is
continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other
or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully
protected in so complying.
6.5 Intellectual Property.
(i) Solely for the purpose of enabling the Collateral Agent to exercise its rights and
remedies under Section 6.8 at such time as the Collateral Agent shall be lawfully entitled
to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants
to the Collateral Agent, to the extent such Grantor has the right to do so, subject to
pre-existing rights and licenses, a non-exclusive license (exercisable without payment of
royalty or other
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compensation to such Grantor), subject in the case of Trademarks, to sufficient rights
to quality control and inspection in favor of such Grantor to avoid the risk of invalidation
of said Trademarks, to use, license or sublicense any of the Intellectual Property
constituting Collateral now owned or hereafter acquired by such Grantor, wherever the same
may be located.
(ii) Notwithstanding anything contained herein to the contrary, but subject to the
provisions of Section 7.5 of the Credit Agreement that limit the rights of the Grantors to
dispose of their property, notwithstanding the foregoing but subject to the Collateral
Agent’s exercise of its rights and remedies under Section 6, the Grantors will be permitted
to exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other
actions with respect to the Intellectual Property in the ordinary course of the business of
the Grantors. In furtherance of the foregoing, so long as no Event of Default shall have
occurred and be continuing, the Collateral Agent shall from time to time, upon the request
of the respective Grantor (through the Borrower), execute and deliver any instruments,
certificates or other documents, in the form so requested, that such Grantor (through the
Borrower) shall have certified are appropriate in its judgment to allow it to take any
action permitted above (including relinquishment of the license provided pursuant to clause
(i) immediately above as to any specific Intellectual Property). Further, upon the payment
in full in cash of all of the Obligations (other than Borrower Hedge Agreement Obligations,
Borrower Cash Management Obligations and contingent or indemnification obligations not then
due) and cancellation or termination of all Commitments and Letters of Credit (that are not
cash collateralized or back-stopped to the reasonable satisfaction of the Issuing Lender or
purchasing Lender, as applicable, in respect thereof) or earlier expiration of this
Agreement or release of the Collateral, the Collateral Agent shall grant back to the
Grantors the license granted pursuant to clause (i) immediately above. The exercise of
rights and remedies under Section 6 by the Collateral Agent shall not terminate the rights
of the holders of any licenses or sublicenses theretofore granted by the Grantors in
accordance with the first sentence of this clause (ii).
6.6 Proceeds to be Turned Over To Collateral Agent. If an Event of Default shall occur and be continuing and the Loans shall have been
accelerated pursuant to Section 8 of the Credit Agreement, all Proceeds received by any Grantor
consisting of cash, checks and other near-cash items shall be held by such Grantor in trust for the
Administrative Agent, the Collateral Agent and the other Secured Parties, segregated from other
funds of such Grantor, and shall, promptly upon receipt by such Grantor, be turned over to the
Collateral Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the
Collateral Agent, if required). All Proceeds received by the Collateral Agent hereunder shall be
held by the Collateral Agent in a Collateral Account maintained under its sole dominion and
control. All Proceeds while held by the Collateral Agent in a Collateral Account (or by such
Grantor in trust for the Administrative Agent, the Collateral Agent and the other Secured Parties)
shall continue to be held as collateral security for all of the Obligations and shall not
constitute payment thereof until applied as provided in Section 6.7.
6.7 Application of Proceeds. If an Event of Default shall have occurred and be continuing and the Loans shall have been
accelerated pursuant to Section 8 of the Credit Agreement, at any time at the Collateral Agent’s
election, the Collateral Agent may apply all or any part of Proceeds constituting Collateral and
any proceeds of the guarantee set forth in Section 2, in payment of the Obligations, and shall make
any such application in the following order:
First, to pay incurred and unpaid reasonable, out-of-pocket fees and expenses
of the Agents under the Loan Documents;
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Second, to the Collateral Agent, for application by it towards payment in full
of all Unfunded Advances/Participations (the amounts so applied to be distributed between or
among the Administrative Agent, the Swingline Lender and any Issuing Lender pro rata in
accordance with the amounts of Unfunded Advances/Participations owed to them on the date of
any such distribution);
Third, to the Collateral Agent, for application by it towards payment of
amounts then due and owing and remaining unpaid in respect of the Obligations, pro
rata among the Secured Parties according to the amounts of the Obligations then due
and owing and remaining unpaid to each of them; and
Fourth, any balance of such Proceeds remaining after the Obligations shall have
been paid in full (other than contingent or indemnification obligations not then due), no
Letter of Credit (that is not cash collateralized to the reasonable satisfaction of the
Issuing Lender or purchasing Lender, as applicable, in respect thereof) shall be outstanding
and the Commitments shall have been terminated, shall be paid over to the Borrower or to
whomsoever shall be lawfully entitled to receive the same.
6.8
Code and Other Remedies. If an Event of Default shall occur and be continuing, the Collateral Agent, on behalf of
itself, the Administrative Agent and the other Secured Parties, may exercise, in addition to all
other rights and remedies granted to them in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured
party under the New York UCC or any other applicable law. Without limiting the generality of the
foregoing, the Collateral Agent, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required by law referred to below
or notices otherwise provided in the Loan Documents) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby waived unless
otherwise provided in the Loan Documents), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith, subject to
pre-existing rights and licenses, sell, lease, assign, give option or options to purchase, or
otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s
board or office of the Administrative Agent, the Collateral Agent or any other Secured Party or
elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any credit risk. The
Administrative Agent, the Collateral Agent or any other Secured Party shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of
redemption, stay or appraisal in any Grantor, which rights or equities are hereby waived and
released. Each Grantor further agrees, at the Collateral Agent’s request, to assemble the
Collateral and make it available to the Collateral Agent at places which the Collateral Agent shall
reasonably select, whether at such Grantor’s premises or elsewhere. The Collateral Agent shall
apply the net proceeds of any action taken by it pursuant to this Section 6.8, after deducting all
reasonable costs and expenses of every kind actually incurred in connection therewith or incidental
to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the
rights of the Administrative Agent, the Collateral Agent and the other Secured Parties hereunder,
including, without limitation, reasonable attorneys’ fees and disbursements, to the payment in
whole or in part of the Obligations, in such order as the Collateral Agent may elect, and only
after such application and after the payment by the Collateral Agent of any other amount required
by any provision of law, including, without limitation, Section 9-615(a)(3) of the New York UCC,
need the Collateral Agent account for the surplus, if any, to any Grantor. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or other disposition.
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6.9 Private Sales. Each Grantor recognizes that the Collateral Agent may be unable to effect a public sale of
any or all the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and
applicable state securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged to agree, among
other things, to acquire such securities for their own account for investment and not with a view
to the distribution or resale thereof. Each Grantor acknowledges and agrees that any such private
sale may result in prices and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Collateral Agent shall be under no obligation to
delay a sale of any of the Pledged Stock for the period of time necessary to permit the Issuer
thereof to register such securities for public sale under the Securities Act, or under applicable
state securities laws, even if such Issuer would agree to do so.
6.10 Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay its Obligations and the reasonable fees and
disbursements of any attorneys employed by the Collateral Agent to collect such deficiency.
SECTION 7. THE COLLATERAL AGENT
7.1 Collateral Agent’s Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any
officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to
take any and all appropriate action and to execute any and all documents and instruments which may
be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, each Grantor hereby gives the Collateral Agent the power and right, on
behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the
following (provided that anything in this Section 7.1(a) to the contrary notwithstanding,
the Collateral Agent agrees that it will not exercise any rights under the power of attorney
provided for in this Section 7.1(a) unless an Event of Default shall have occurred and be
continuing):
(i) in the name of such Grantor or its own name, or otherwise, take possession of and
indorse and collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Receivable or with respect to any other Collateral and file
any claim or take any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Collateral Agent for the purpose of collecting any and all such
moneys due under any Receivable or with respect to any other Collateral whenever payable;
(ii) in the case of any United States Copyrights, Patents or Trademarks owned by such
Grantor in its own name, execute and deliver, and have recorded, any and all agreements,
instruments, documents and papers as the Collateral Agent may reasonably request to evidence
the Administrative Agent’s, the Collateral Agent’s and the other Secured Parties’ security
interest in such Copyrights, Patents and Trademarks and the goodwill and general intangibles
of such Grantor relating thereto or represented thereby;
A-21
(iii) pay or discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or any insurance called for by the terms of this Agreement
and pay all or any part of the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.8 or 6.9, any
indorsements, assignments or other instruments of conveyance or transfer with respect to the
Collateral; and
(v) (1) direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due or to become due thereunder directly to the Collateral
Agent or as the Collateral Agent shall direct; (2) ask or demand for, collect, and receive
payment of and receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Collateral; (3) sign and indorse any
invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, notices and other documents in connection with
any of the Collateral; (4) commence and prosecute any suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any Collateral; (5) defend any suit,
action or proceeding brought against such Grantor with respect to any Collateral; (6)
settle, compromise or adjust any such suit, action or proceeding and, in connection
therewith, give such discharges or releases as the Collateral Agent may deem appropriate;
(7) subject to pre-existing rights and licenses, assign any Copyright, Patent or Trademark
of such Grantor (along with the goodwill of the business to which any such Copyright, Patent
or Trademark pertains), for such term or terms, on such conditions, and in such manner, as
the Collateral Agent shall in its reasonable discretion determine; and (8) subject to
pre-existing rights and licenses, generally, sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and completely as
though the Collateral Agent were the absolute owner thereof for all purposes, and do, at the
Collateral Agent’s option and such Grantor’s expense, at any time, or from time to time, all
acts and things which the Collateral Agent deems necessary to protect, preserve or realize
upon the Collateral and the Administrative Agent’s, the Collateral Agent’s and the other
Secured Parties’ security interests therein and to effect the intent of this Agreement, all
as fully and effectively as such Grantor might do.
(b) If any Grantor fails to perform or comply with any of its agreements contained herein,
the Collateral Agent, at its option, but without any obligation so to do, may give such Grantor
written notice of such failure to perform or comply and if such Grantor fails to perform or comply
within three (3) Business Days of receiving such notice (or if the Collateral Agent reasonably
determines that irreparable harm to the Collateral or to the security interest of the Collateral
Agent hereunder could result prior to the end of such three-Business Day period), then the
Collateral Agent may perform or comply, or otherwise cause performance or compliance, with such
agreement.
(c) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement is terminated and the security
interests created hereby are released.
7.2 Duty of Collateral Agent. To the extent permitted by law, the Collateral Agent’s sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its possession, under Section
9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the
Collateral Agent deals with similar property for its own account. None of the Administrative
Agent, the Collateral Agent, any other Secured Party or any of their respective officers,
directors, employees or
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agents shall be liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers conferred on the
Administrative Agent, the Collateral Agent and the other Secured Parties hereunder are solely to
protect the Administrative Agent’s, the Collateral Agent’s and the other Secured Parties’ interests
in the Collateral and shall not impose any duty upon the Administrative Agent, the Collateral Agent
or any other Secured Party to exercise any such powers. The Administrative Agent, the Collateral
Agent and the other Secured Parties shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct or that of their directors,
officers, employees or agents.
7.3 Execution of Financing Statements. Pursuant to any applicable law, each Grantor authorizes the Collateral Agent at any time
and from time to time to file or record financing statements (including fixture filings, if any,
and amendments) and other filing or recording documents or instruments with respect to the
Collateral without the signature of such Grantor in such form and in such offices as the Collateral
Agent reasonably determines appropriate to perfect the security interests of the Collateral Agent
under this Agreement. Each Grantor authorizes the Collateral Agent to use the collateral
description “all personal property”, “all assets” or any similar phrase in any such financing
statements. Each Grantor agrees to provide such information as the Collateral Agent may reasonably
request necessary to enable the Collateral Agent to make any such filings promptly following any
such request. Notwithstanding anything herein or in any other Loan Document to the contrary, the
delivery of control agreements with respect to any Deposit Accounts (other than those relating to
Material Deposit Accounts pursuant to Section 5.4), Securities Accounts (other than those relating
to Material Securities Accounts pursuant to Section 5.4) and Commodities Accounts shall not be
required.
7.4 Authority of Collateral Agent. Each Grantor acknowledges that the rights and responsibilities of the Collateral Agent
under this Agreement with respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, voting right, request, judgment or other right
or remedy provided for herein or resulting or arising out of this Agreement shall, as among the
Administrative Agent, the Collateral Agent and the other Secured Parties, be governed by the Credit
Agreement and by such other agreements with respect thereto as may exist from time to time among
them, but, as between the Collateral Agent and the Grantors, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Administrative Agent, the Collateral Agent and
the other Secured Parties with full and valid authority so to act or refrain from acting, and no
Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such
authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except in accordance with Section 10.1 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the Collateral Agent or any Grantor hereunder
shall be effected in the manner provided for in Section 10.2 of the Credit Agreement;
provided that any such notice, request or demand to or upon any Guarantor shall be
addressed to such Guarantor at its notice address set forth on Schedule 1 or at such other
address pursuant to notice given in accordance with Section 10.2 of the Credit Agreement.
A-23
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the Administrative Agent, the Collateral Agent nor any other Secured Party shall by
any act (except by a written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of
the Administrative Agent, the Collateral Agent or any other Secured Party, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Administrative Agent, the Collateral Agent
or any other Secured Party of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Administrative Agent, the Collateral Agent or
such other Secured Party would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. Each Guarantor agrees to pay, and to save the Administrative Agent, the Collateral
Agent and the other Secured Parties harmless from, any and all out-of-pocket liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the Borrower would be
required to do so pursuant to Section 10.5 of the Credit Agreement. The agreements in this Section
8.4 shall survive repayment of the Obligations and all other amounts payable under the Credit
Agreement and the other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of each Grantor and shall
inure to the benefit of the Administrative Agent, the Collateral Agent and the other Secured
Parties and their successors and assigns; provided, that no Grantor may assign, transfer or
delegate any of its rights or obligations under this Agreement without the prior written consent of
the Collateral Agent (it being understood that Dispositions permitted under the Credit Agreement
shall not be subject to this proviso).
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the Administrative Agent, the Collateral Agent
and each other Secured Party at any time and from time to time while an Event of Default shall have
occurred and be continuing, without notice to such Grantor or any other Grantor, any such notice
being expressly waived by each Grantor, to the extent permitted by applicable law, upon any amount
becoming due and payable by each Grantor (whether at the stated maturity, by acceleration or
otherwise after the expiration of any applicable grace periods) to set-off and appropriate and
apply against such amount any and all deposits (general or special, time or demand, provisional or
final but excluding trust accounts), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured
or unmatured, at any time held or owing by the Administrative Agent, the Collateral Agent or such
other Secured Party to or for the credit or the account of such Grantor. Each of the
Administrative Agent, the Collateral Agent and each other Secured Party shall notify such Grantor
promptly of any such set-off made by it and the application made by it of the proceeds thereof,
provided that the failure to give such notice shall not affect the validity of such set-off and
application.
8.7 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any
number of separate counterparts (including by telecopy or electronic (i.e., “pdf”) transmission),
and all of said counterparts taken together shall be deemed to constitute one and the same
instrument.
A-24
8.8 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement are for convenience of reference only and are
not to affect the construction hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents represent the agreement of the Grantors, the
Administrative Agent, the Collateral Agent and the other Secured Parties with respect to the
subject matter hereof and thereof.
8.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE SAME ARE NOT MANDATORILY
APPLICABLE BY STATUTE AND THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
8.12 Submission To Jurisdiction; Waivers. Each party hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the
State of New York, the courts of the United States of America for the Southern District of New
York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such Grantor at its address referred to in Section 8.2 or at such other address
of which the Collateral Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
A-25
(a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;
(b) neither the Administrative Agent, the Collateral Agent nor any other Secured Party has
any fiduciary relationship with or duty to any Grantor arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between the Grantors, on the one
hand, and the Administrative Agent, the Collateral Agent and the other Secured Parties, on the
other hand, in connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Administrative Agent, the Collateral Agent
and the Lenders or among the Grantors and the Administrative Agent, the Collateral Agent and the
Lenders.
8.14 Additional Guarantors and Grantors. Each Restricted Subsidiary of the Borrower that is required to become a party to this
Agreement pursuant to Section 6.8 of the Credit Agreement shall become a Guarantor and a Grantor
for all purposes of this Agreement upon execution and delivery by such Restricted Subsidiary of an
Assumption Agreement in the form of Annex I hereto.
8.15 Releases.
(a) At such time as the Loans, the Reimbursement Obligations and the other Obligations
(other than Borrower Hedge Agreement Obligations, Borrower Cash Management Obligations and
contingent or indemnification obligations not then due) shall have been paid in full in cash, the
Commitments shall have been terminated and no Letter of Credit (that is not cash collateralized or
back-stopped to the reasonable satisfaction of the Issuing Lender or purchasing Lender, as
applicable, in respect thereof) shall be outstanding, the Collateral shall be automatically
released from the Liens created hereby, and this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Collateral Agent and each Grantor hereunder
shall automatically terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the request and sole
expense of any Grantor following any such termination, the Collateral Agent shall deliver to such
Grantor any Collateral held by the Collateral Agent hereunder, and execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise disposed of by any
Grantor in a transaction permitted by the Credit Agreement, then the Lien granted under this
Agreement on such Collateral shall be automatically released, and the Collateral Agent, at the
request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases or
other documents reasonably necessary or desirable to evidence the release of the Liens created
hereby on such Collateral. A Guarantor shall be automatically released from its obligations
hereunder in the event that all the Capital Stock of such Guarantor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit Agreement, or upon the designation
of such Guarantor as an Unrestricted Subsidiary as permitted under the Credit Agreement, and the
Collateral Agent, at the request and sole expense of the Borrower, shall execute and deliver to the
Borrower all releases or other documents reasonably necessary or desirable to evidence the release
of such obligations. All releases or other documents delivered by the Collateral Agent pursuant to
this Section 8.15(b) shall be without recourse to, or warranty by, the Collateral Agent.
(c) Liens on Collateral created hereunder shall be released and obligations of Guarantors
and Grantors hereunder shall terminate as set forth in Section 10.15 of the Credit Agreement.
A-26
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, EACH OF THE ADMINISTRATIVE AGENT,
THE COLLATERAL AGENT AND EACH OTHER SECURED PARTY, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
A-27
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and Collateral Agreement
to be duly executed and delivered as of the date first above written.
| CREDIT SUISSE, CAYMAN ISLANDS BRANCH as Collateral Agent |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
A-28
| EXPLORER MERGER SUB CORPORATION, as Grantor |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
A-29
| BOOZ ALLEN HAMILTON INC., as Grantor |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
A-30
| EXPLORER INVESTOR CORPORATION, as Grantor and Guarantor |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| ASE, INC., as Grantor and Guarantor |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| AESTIX, INC., as Grantor and Guarantor |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| BOOZ ALLEN TRANSPORTATION INC., as Grantor and Guarantor |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
A-31
Schedule 1
NOTICE ADDRESSES OF GUARANTORS
A-32
Schedule 2
DESCRIPTION OF INVESTMENT PROPERTY
Pledged Stock:
| Issuer | Class of Stock | Stock Certificate No. | No. of Shares | |||||||||
Pledged Notes:
| Issuer | Payee | Principal Amount | ||||||
A-33
Schedule 3
LEGAL NAME, LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
Grantor
|
Jurisdiction of Organization | Organizational Identification | ||
| Number (if any) |
A-34
Schedule 4
COPYRIGHTS AND COPYRIGHT LICENSES
PATENTS AND PATENT LICENSES
TRADEMARKS AND TRADEMARK LICENSES
A-35
Schedule 5(a)
MATERIAL DEPOSIT ACCOUNTS
A-36
Schedule 5(b)
MATERIAL SECURITIES ACCOUNTS
A-37
Schedule 6
MATERIAL GOVERNMENT CONTRACTS
A-38
Annex I to
Guarantee and Collateral Agreement
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT
A-39
Annex II to
Guarantee and Collateral Agreement
Guarantee and Collateral Agreement
ACKNOWLEDGMENT AND CONSENT
A-40
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies as follows:
| 1. | I am the [TITLE] of Booz Allen Hamilton Inc., a Delaware corporation (the “Company”). | ||
| 2. | I have reviewed the terms of that certain Credit Agreement, dated as of July 31, 2008 (as it may be amended, supplemented or otherwise modified, the “Credit Agreement”; unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement), among Explorer Investor Corporation, a Delaware corporation, Explorer Merger Sub Corporation, a Delaware corporation, the Company, the several banks and other financial institutions or entities from time to time parties thereto, Credit Suisse, as Administrative Agent (in such capacity, the “Administrative Agent”) and Collateral Agent, Bank of America, N.A., as Syndication Agent, Lehman Brothers Commercial Bank, C.I.T. Leasing Corporation and Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit Suisse, as Issuing Lender and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Lehman Brothers Inc. and Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers and Joint Bookrunners, and I have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and condition of the Company and its Subsidiaries during the accounting period covered by the attached financial statements. A description of all new Subsidiaries (if any) and of any change in the name or jurisdiction of organization of any Loan Party (if any) and a listing of any material registrations of or applications for United States Intellectual Property by any Loan Party (if any) during the period covered by this Compliance Certificate is set forth in a separate attachment to this Compliance Certificate. | ||
| 3. | The examination described in paragraph 2 above did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Default or Default not previously disclosed in writing to the Administrative Agent during or at the end of the accounting period covered by the attached financial statements or as of the date of this Compliance Certificate, except as set forth in a separate attachment, if any, to this Compliance Certificate, describing in detail the nature of the condition or event, the period during which it has existed and the action which the Company has taken, is taking, or proposes to take with respect to each such condition or event. |
The foregoing certifications, together with the financial statements delivered with this
Compliance Certificate in support hereof, are made and delivered on behalf of the Company and not
individually, on [MM/DD/YY] pursuant to Section 6.2(b) of the Credit Agreement.
| BOOZ ALLEN HAMILTON, INC. |
||||
| By: | ||||
| Title: | ||||
B-1
EXHIBIT C
FORM OF CLOSING CERTIFICATE
July 31, 2008
July 31, 2008
Pursuant to Section 5.1(e) of the Credit Agreement, dated as of July 31, 2008 (the “Credit
Agreement”; unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement), among Explorer Investor
Corporation, a Delaware corporation, Explorer Merger Sub Corporation, a Delaware corporation, Booz
Allen Hamilton Inc., a Delaware corporation, the several banks and other financial institutions or
entities from time to time parties thereto, Credit Suisse, as Administrative Agent and Collateral
Agent, Bank of America, N.A., as Syndication Agent, Lehman Brothers Commercial Bank, C.I.T. Leasing
Corporation and Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit Suisse, as
Issuing Lender and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Lehman
Brothers Inc. and Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers and Joint
Bookrunners, the undersigned [•], [insert title of officer if Borrower/Holdings]
[Secretary/Assistant Secretary] of (the “Company”), hereby certifies
on behalf of the Company (and not individually) as follows:
| [1. | The Specified Representations of [the Company and its Subsidiaries]1 [the Company]2 are true and correct in all material respects. | ||
| [2. | No material provision of the Merger Agreement and the related disclosure schedules and exhibits thereto has been waived or amended (other than any such waivers or amendments (including, without limitation, with respect to any representations and warranties in the Merger Agreement) as are not materially adverse to the Lenders or the Lead Arrangers (including, without limitation, the definition of “Company Material Adverse Effect” therein and the representation and warranty set forth in Section 4.8(c) thereof)), other than such waivers or amendments consented to by the Lead Arrangers. | ||
| 3. | The transactions described in Section 5.1(b)(ii) of the Credit Agreement have been consummated, in accordance with the terms set forth in such Section 5.1(b)(ii).]3 | ||
| 3. | is the duly elected and qualified Secretary of the Company and the signature set forth for such officer below is such officer’s true and genuine signature. |
The undersigned Secretary of the Company hereby certifies as follows:] [Borrower/Holdings
only]
| 1. | Attached hereto as Exhibit [A] is a copy of a certificate of good standing or the equivalent from the Company’s jurisdiction of organization dated as of a recent date prior to the date hereof. |
| 1 | Surviving Borrower certificate only. | |
| 2 | Holdings and Merger Sub certificate only. | |
| 3 | Surviving Borrower certificate only. |
C-1
| 2. | Attached hereto as Exhibit [B] is a true and complete copy of [a unanimous written consent duly adopted by the Board of Directors of the Company]4 [resolutions duly adopted at a meeting of the Board of Directors]5, and such [unanimous written consent has][resolutions have] not in any way been amended, modified, revoked or rescinded, [has/have] been in full force and effect since [its/their] adoption to and including the date hereof and [is/are] now in full force and effect. | ||
| 3. | Attached hereto as Exhibit [C] is a true and complete copy of the bylaws of the Company as in effect on the date hereof. | ||
| 4. | Attached hereto as Exhibit [D] is a true and complete certified copy of the Certificate of Incorporation of the Company as in effect on the date hereof, and such Certificate of Incorporation has not been amended, repealed, modified or restated. | ||
| 5. | The following persons are now duly elected and qualified officers of the Company holding the offices indicated next to their respective names, and the signatures appearing opposite their respective names are the true and genuine signatures of such officers, and each of such officers is duly authorized to execute and deliver on behalf of the Company each of the Loan Documents to which it is a party and any certificate or other document to be delivered by the Company pursuant to the Loan Documents to which it is a party: |
| Name and Title | Signature | |||
[Name]
|
|
|||
[Title] |
||||
[Name]
|
|
|||
[Title] |
||||
[Name]
|
|
|||
[Title] |
||||
[Name]
|
|
|||
[Title] |
||||
[Name]
|
|
|||
[Title] |
| 4 | Holdings, Merger Sub and Booz Allen Transportation Inc. only. | |
| 5 | Borrower, ASE, Inc. and Aestix, Inc. only. |
C-2
| Name and Title | Signature | |||
[Name]
|
|
|||
[Title] |
IN WITNESS WHEREOF, the undersigned have hereunto set our names as of the date set forth
above.
| [COMPANY] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
[I, [NAME], [TITLE] of the Company, do hereby certify that [NAME] is the duly elected,
qualified and [TITLE] of the Company, and that [his/her] signature set forth above is [his/her]
genuine signature.
| Name: | ||||
| Title: ]6 | ||||
| 6 | Subsidiary Guarantor certificates only. |
C-3
Exhibit A
to Closing Certificate
to Closing Certificate
[Certificate of Good Standing]
C-4
Exhibit B
to Closing Certificate
to Closing Certificate
[Unanimous Written Consent]
C-5
Exhibit C
to Closing Certificate
to Closing Certificate
[Bylaws]
C-6
Exhibit D
to Closing Certificate
to Closing Certificate
[Certificate/Articles of Incorporation]
C-7
EXHIBIT D
FORM OF
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the
“Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used
but not defined herein shall have the meanings given to them in the Credit Agreement identified
below (as amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard
Terms and Conditions set forth in Annex 1 attached hereto (the “Standard Terms and
Conditions”) are hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below (including any letters of credit and
swingline loans included in such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the Assignor (in its
capacity as a Lender) against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and all other claims
at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned Interest”). Such sale and assignment is
without recourse to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.
1. Assignor:
|
||
2. Assignee:
|
||
| [and is an Affiliate/Approved Fund of [identify Lender]7] | ||
3. Borrowers:
|
Explorer Merger Sub Corporation, a Delaware corporation (the “Initial Borrower”) and Booz Allen Hamilton Inc., a Delaware corporation (the “Surviving Borrower”) | |
4. Administrative Agent:
|
Credit Suisse, as the administrative agent under the Credit Agreement | |
5. Credit Agreement:
|
The $810,000,000 Credit Agreement, dated as of July 31, 2008, among Explorer Investor Corporation, a Delaware corporation, the Initial Borrower, the Surviving Borrower, the several banks and other financial |
| 7 | Select as applicable. |
D-1
| institutions or entities from time to time parties thereto, Credit Suisse, as Administrative Agent and Collateral Agent, Bank of America, N.A., as Syndication Agent, Lehman Brothers Commercial Bank, C.I.T. Leasing Corporation and Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit Suisse, as Issuing Lender and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Lehman Brothers Inc. and Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers and Joint Bookrunners | ||
6. Assigned Interest: |
| Aggregate Amount of | Amount of | |||||||||||
| Commitment/Loans for | Commitment/Loans | Percentage Assigned of | ||||||||||
| Facility Assigned8 | all Lenders | Assigned3 | Commitment/Loans9 | |||||||||
| $ | $ | % | ||||||||||
| $ | $ | % | ||||||||||
| $ | $ | % | ||||||||||
Effective Date: , 20 [TO BE INSERTED BY ADMINISTRATIVE AGENT IN ACCORDANCE
WITH THE CREDIT AGREEMENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]
The Assignee agrees to deliver to the Administrative Agent a completed Administrative Questionnaire
in which the Assignee designates one or more credit contacts to whom all syndicate-level
information (which may contain material non-public information about the Loan Parties and their
related parties or their respective securities) will be made available and who may receive such
information in accordance with the Assignee’s compliance procedures and applicable laws, including
Federal and state securities laws.
The terms set forth in this Assignment and Assumption are hereby agreed to:
| ASSIGNOR [NAME OF ASSIGNOR] |
||||
| By: | ||||
| Title: | ||||
| 8 | Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment and Assumption (e.g. “Revolving Commitment,” “Tranche A Term Commitment,” etc.) | |
| 9 | Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder. |
D-2
| ASSIGNEE [NAME OF ASSIGNEE] |
||||
| By: | ||||
| Title: | ||||
| [Consented to and]10 Accepted: | ||||
| CREDIT SUISSE, CAYMAN ISLANDS BRANCH, | ||||
| as Administrative Agent | ||||
By:
|
|
|||
| Title: | ||||
By:
|
||||
| Title: | ||||
| [Consented to:11 | ||||
| [BOOZ ALLEN HAMILTON INC.] | ||||
By
|
||||
| Title:] | ||||
| [Consented to:12 | ||||
| [CREDIT SUISSE, CAYMAN ISLANDS BRANCH, | ||||
| as Issuing Lender and Swingline Lender] | ||||
By:
|
||||
| Title: | ||||
By
|
||||
| Title:] | ||||
| 10 | To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement. | |
| 11 | To be added only if the consent of the Borrower is required by the terms of the Credit Agreement. | |
| 12 | To be added only if the consent of the Issuing Lender and the Swingline Lender is required by the terms of the Credit Agreement. |
D-3
ANNEX 1
The $810,000,000 Credit Agreement, dated as of July 31, 2008 (the “Credit Agreement”),
among Explorer Investor Corporation, a Delaware corporation, Explorer Merger Sub Corporation, a
Delaware corporation, Booz Allen Hamilton Inc., a Delaware corporation (the “Borrower”),
the several banks and other financial institutions or entities from time to time parties thereto
(the “Lenders”), Credit Suisse, as Administrative Agent and Collateral Agent, Bank of
America, N.A., as Syndication Agent, Lehman Brothers Commercial Bank, C.I.T. Leasing Corporation
and Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit Suisse, as Issuing Lender
and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Lehman Brothers Inc. and
Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers and Joint Bookrunners. Capitalized
terms used but not defined herein have the meanings given to them in the Credit Agreement.
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any
lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Credit Agreement or any
other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of any Borrower, any Subsidiary or Affiliate thereof or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by any Borrower, any Subsidiary
or Affiliate thereof or any other Person of any of their respective obligations under any Loan
Document.
1.2. Assignee. The Assignee (a) repeats each Lender representation set forth in
Section 9.6 of the Credit Agreement; (b) represents and warrants that (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement
that are required to be satisfied by it in order to acquire the Assigned Interest and become a
Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received and/or had the opportunity to review a
copy of the Credit Agreement to the extent it has in its sole discretion deemed necessary, together
with copies of the most recent financial statements delivered pursuant to Section 6.1 thereof, as
applicable, and such other documents and information as it has in its sole discretion deemed
appropriate to make its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or any other Lender,
and (v) if it is a Non-US Lender, attached to the Assignment and Assumption is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and
executed by the Assignee; (c) agrees that (i) it will, independently and without reliance on the
Administrative Agent, the Assignor or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms
all of the obligations which by the terms of the Loan Documents are required to be performed by it
as a Lender; and (d) appoints and
D-4
authorizes (i) the Administrative Agent, and (ii) the Collateral Agent to take such action as
agent in their respective capacities on its behalf and to exercise such powers and discretion under
the Credit Agreement, the other Loan Documents and any other instrument or document furnished
pursuant hereto or thereto as are delegated to the Administrative Agent and the Collateral Agent,
as applicable, by the terms thereof, together with such powers as are incidental thereto.
2. Payments. From and after the Effective Date, the Administrative Agent shall make
all payments in respect of the Assigned Interest (including payments of principal, interest, fees
and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective
Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption. This Assignment and Assumption and the rights and
obligations of the parties under this Assignment and Assumption shall be governed by, and construed
and interpreted in accordance with, the law of the State of New York without regard to principles
of conflicts of laws to the extent that the same are not mandatorily applicable by statute and the
application of the laws of another jurisdiction would be required thereby.
D-5
EXHIBIT E-1
FORM OF LEGAL OPINION
OF DEBEVOISE & PLIMPTON LLP
OF DEBEVOISE & PLIMPTON LLP
E-1-1
EXHIBIT E-2
FORM OF LEGAL OPINION
OF MORRIS, NICHOLS, ARSHT & TUNNELL LLP
OF MORRIS, NICHOLS, ARSHT & TUNNELL LLP
E-2-1
EXHIBIT F
FORM OF EXEMPTION CERTIFICATE
Reference is made to the Credit Agreement, dated as of July 31, 2008 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”), among
Explorer Investor Corporation, a Delaware corporation, Explorer Merger Sub Corporation, a Delaware
corporation, Booz Allen Hamilton Inc., a Delaware corporation (the “Borrower”), the several
banks and other financial institutions or entities from time to time parties thereto, Credit
Suisse, as Administrative Agent (in such capacity, the “Administrative Agent”) and
Collateral Agent, Bank of America, N.A., as Syndication Agent, Lehman Brothers Commercial Bank,
C.I.T. Leasing Corporation and Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit
Suisse, as Issuing Lender and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC,
Lehman Brothers Inc. and Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers and Joint
Bookrunners. Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
(the “Non-US Lender”) is providing this certificate pursuant to
Section 2.20(d) of the Credit Agreement. The Non-US Lender hereby represents and warrants that:
1. The Non-US Lender is the sole record and beneficial owner of the Loans or the obligations
evidenced by Note(s) in respect of which it is providing this certificate.
2. The income from the Loans held by the Non-US Lender is not effectively connected with
the conduct of a trade or business within the United States.
3. The Non-US Lender is not a “bank” as such term is used in Section 881(c)(3)(A) of the Code.
In this regard, the Non-US Lender further represents and warrants that:
(a) the Non-US Lender is not subject to regulatory or other legal requirements as a
bank in any jurisdiction; and
(b) the Non-US Lender has not been treated as a bank for purposes of any tax,
securities law or other filing or submission made to any Governmental Authority, any
application made to a rating agency or qualification for any exemption from tax, securities
law or other legal requirements.
4. The Non-US Lender is not a “10-percent shareholder” of the Borrower within the meaning of
Section 881(c)(3)(B) of the Code.
5. The Non-US Lender is not a controlled foreign corporation receiving interest from a related
person within the meaning of Section 881(c)(3)(B) of the Code.
We have furnished you with a certificate of our non-U.S. person status on Internal Revenue
Service Form W-8BEN. By executing this certificate, the Non-US Lender agrees that (1) if the
information provided on this certificate changes, the Non-US Lender shall inform the Borrower (for
the benefit of the Borrower and the Administrative Agent) in writing within 30 days of such change
and (2) the Non-US Lender shall furnish the Borrower (for the benefit of the Borrower and the
Administrative Agent) a properly completed and currently effective certificate in either the
calendar year in which
F-1
payment is to be made by the Borrower to the Non-US Lender, or in either of the two calendar years
preceding such payment.
F-2
IN WITNESS WHEREOF, the undersigned has duly executed this certificate.
| [NAME OF NON-US LENDER] | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
Date:
F-3
EXHIBIT G
FORM OF SOLVENCY CERTIFICATE
July 31, 2008
July 31, 2008
Pursuant to Section 5.1(c) of the Credit Agreement, dated as of July 31, 2008 (the “Credit
Agreement”; unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement), among Explorer Investor
Corporation, a Delaware corporation (“Holdings”), Explorer Merger Sub Corporation, a
Delaware corporation, Booz Allen Hamilton Inc., a Delaware corporation, the several banks and other
financial institutions or entities from time to time parties thereto, Credit Suisse, as
Administrative Agent and Collateral Agent, Bank of America, N.A., as Syndication Agent, Lehman
Brothers Commercial Bank, C.I.T. Leasing Corporation and Sumitomo Mitsui Banking Corporation, as
Documentation Agents, Credit Suisse, as Issuing Lender and Banc of America Securities LLC, Credit
Suisse Securities (USA) LLC, Lehman Brothers Inc. and Sumitomo Mitsui Banking Corporation, as Joint
Lead Arrangers and Joint Bookrunners, the undersigned hereby certifies that he is the duly elected
and acting Chief Financial Officer of Holdings and that as such he is authorized to execute and
deliver this Solvency Certificate on behalf of Holdings (and not as an individual).
Holdings further certifies that on the date hereof, it and each of the Loan Parties (on a
consolidated basis) is, and after giving effect to the Transactions will be, Solvent.
[Remainder of page intentionally left blank]
G-1
IN WITNESS WHEREOF, the undersigned has caused this Solvency Certificate to be executed as of
the date set forth above.
| EXPLORER INVESTOR CORPORATION |
||||
| By: | ||||
| Name: | ||||
| Title: | Chief Financial Officer | |||
G-2
EXHIBIT H
FORM OF JOINDER AGREEMENT
JOINDER AGREEMENT, dated as of [ , 200___] (the “Joinder Agreement” or this
“Agreement”), by and among [NEW LENDERS] (each, a “New Lender” and, collectively,
the “New Lenders”), EXPLORER INVESTOR CORPORATION, a Delaware corporation
(“Holdings”), BOOZ ALLEN HAMILTON INC., a Delaware corporation (the “Borrower”),
and CREDIT SUISSE (the “Administrative Agent”).
RECITALS:
WHEREAS, reference is hereby made to the Credit Agreement, dated as of July 31, 2008 (as
amended, supplemented or otherwise modified from time to time, the “Credit Agreement”),
among Holdings, Explorer Merger Sub Corporation, a Delaware corporation, Booz Allen Hamilton Inc.,
a Delaware corporation, the several banks and other financial institutions or entities from time to
time parties thereto (the “Lenders”), Credit Suisse, as Administrative Agent (in such
capacity, the “Administrative Agent”) and Collateral Agent, Bank of America, N.A., as
Syndication Agent, Lehman Brothers Commercial Bank, C.I.T. Leasing Corporation and Sumitomo Mitsui
Banking Corporation, as Documentation Agents, Credit Suisse, as Issuing Lender and Banc of America
Securities LLC, Credit Suisse Securities (USA) LLC, Lehman Brothers Inc. and Sumitomo Mitsui
Banking Corporation, as Joint Lead Arrangers and Joint Bookrunners (capitalized terms used but not
defined herein having the meaning provided in the Credit Agreement); and
WHEREAS, subject to the terms and conditions of the Credit Agreement, the Borrower may
establish New Loan Commitments by, among other things, entering into one or more Joinder Agreements
with New Lenders;
NOW, THEREFORE, in consideration of the premises and agreements, provisions and covenants
herein contained, the parties hereto agree as follows:
I. Each New Lender party hereto hereby agrees to commit to provide its New Loan Commitment, as
set forth on Schedule A annexed hereto, on the terms and subject to the conditions set
forth below:
II. Each New Lender (i) confirms that it has received a copy of the Credit Agreement and the
other Loan Documents, together with copies of the financial statements referred to therein and such
other documents and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Agreement; (ii) agrees that it will, independently and without reliance
upon the Administrative Agent, or any other New Lender or any other Lender or Agent and based on
such documents and information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and
authorizes the Administrative Agent and/or the Collateral Agent, to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as
are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms
thereof, together with such powers as are reasonably incidental thereto; and (iv) agrees that it
will perform in accordance with their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a New Lender.
H-1
III. Each New Lender hereby agrees to make its respective Commitment on the following terms
and conditions:
1. Applicable Margin. The Applicable Margin for each New [Term][Revolving] Loan shall mean, as
of any date of determination, a percentage per annum as set forth below:
[INSERT PRICING]
2. [Principal Payments. The Borrower shall make principal payments on the New Term Loan in
installments on the dates and in the amounts set forth below:
| (A) | (B) | |
| Scheduled | ||
| Payment | Repayment of New Term | |
| Date | Loans | |
| $ | ||
| $ | ||
| $ | ||
| $ | ||
| $ | ||
| $ | ||
| $ | ||
| $ | ||
| $ | ||
| $ | ||
| $ | ||
| $ | ||
| $ | ||
| $ | ||
| $ | ||
][Maturity Date. The Borrower shall repay the then unpaid principal amount of the New Revolving
Loans outstanding, and the New Loan Commitments in respect thereof will terminate, on [•].]
3. Voluntary and Mandatory Prepayments. [Scheduled installments of principal of the New Term
Loans set forth above shall be reduced in connection with any optional or mandatory prepayments of
the New Term Loans in accordance with Sections 2.11 and 2.12 of the Credit Agreement respectively.]
[The New Loan Commitments with respect to New Revolving Loans shall be reduced in accordance with
Section 2.10.]
4. Proposed Borrowing. This Agreement represents the Borrower’s request to [borrow New Term
Loans] [establish commitments for New Revolving Loans] from the New Lenders as follows (the
“Proposed Borrowing”):
H-2
SECTION 1. Business Day of Proposed Borrowing: , ___
SECTION 2. Amount of Proposed Borrowing: $
[SECTION 3. Interest rate option:
a. ABR Loan(s)
b. Eurocurrency Loan(s) with an initial Interest Period of ___ months]
b. Eurocurrency Loan(s) with an initial Interest Period of ___ months]
5. [New Lenders. Each New Lender acknowledges and agrees that upon its execution of this
Agreement and the making of New [Term][Revolving] Loans, such New Lender shall become a “Lender”
under, and for all purposes of, the Credit Agreement and the other Loan Documents, and shall be
subject to and bound by the terms thereof, and shall perform all the obligations of and shall have
all rights of a Lender thereunder.]13
6. Credit Agreement Governs. Except as set forth in this Agreement, the New [Term][Revolving]
Loans shall otherwise be subject to the provisions of the Credit Agreement and the other Loan
Documents.
7. Certification. By its execution of this Agreement, the undersigned officer on behalf of
Holdings and the Borrower certifies that:
| i. | each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents are true and correct in all material respects, in each case on and as of the date hereof as if made on and as of the date hereof except to the extent that such representations and warranties relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date; and | ||
| ii. | the Borrower, upon the incurrence of the Proposed Borrowing, will be in compliance with the conditions contained in Section 2.25(b) of the Credit Agreement. |
8. Notice. For purposes of the Credit Agreement, the initial notice address of each New
Lender shall be as set forth below its signature below.
9. Non-US Lenders. For each New Lender that is a Non-US Lender, delivered herewith to the
Administrative Agent are such forms, certificates or other evidence with respect to United States
federal income tax withholding matters as such New Lender may be required to deliver to
Administrative Agent pursuant to Section 2.20(d) of the Credit Agreement.
10. Recordation of the New Loans. Upon execution and delivery hereof, the Administrative
Agent will record the New [Term][Revolving] Loans made by each New Lender in the Register.
11. Amendment, Modification and Waiver. This Agreement may not be amended, modified or waived
except as provided by Section 10.1 of the Credit Agreement.
12. Entire Agreement. This Agreement, the Credit Agreement and the other Loan Documents
constitute the entire agreement among the parties with respect to the subject matter hereof and
| 13 | Insert bracketed language if the lending institution is not already a Lender. |
H-3
thereof and supersede all other prior agreements and understandings, both written and verbal,
among the parties or any of them with respect to the subject matter hereof.
13. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE SAME ARE
NOT MANDATORILY APPLICABLE BY STATUTE AND THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD
BE REQUIRED THEREBY.
14. Severability. Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the remaining terms and provisions
of this Agreement or affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as would be enforceable.
15. Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one and the same agreement.
H-4
IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized officer to execute and
deliver this Joinder Agreement as of [ , ___].
| [NAME OF NEW LENDER], | ||||||||
| By: | ||||||||
| Title: | ||||||||
| Notice Address: | ||||||||
| Attention: | ||||||||
| Telephone: | ||||||||
| Facsimile: | ||||||||
| EXPLORER INVESTOR CORPORATION | ||||||||
| By: | ||||||||
| Title: | ||||||||
| BOOZ ALLEN HAMILTON INC. | ||||||||
| By: | ||||||||
| Title: | ||||||||
H-5
Consented to by:
| CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Administrative Agent |
||||||
| By: | ||||||
| Title: | ||||||
| By: | ||||||
| Title: | ||||||
H-6
SCHEDULE A
TO JOINDER AGREEMENT
TO JOINDER AGREEMENT
| Type of New Loan | ||||
| Name of New Lender | Commitment | Amount | ||
[ ]
|
[Term][Revolving] Loan Commitment |
$ |
H-7
EXHIBIT I
FORM OF
PREPAYMENT OPTION NOTICE
PREPAYMENT OPTION NOTICE
Attention of
Telecopy No.
Telecopy No.
[Date]
Ladies and Gentlemen:
The undersigned, Credit Suisse, as administrative agent (in such capacity, the
“Administrative Agent”) for the Lenders referred to below, refers to the Credit Agreement,
dated as of July 31, 2008 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Explorer Investor Corporation, a Delaware corporation,
Explorer Merger Sub Corporation, a Delaware corporation, Booz Allen Hamilton Inc., a Delaware
corporation, the several banks and other financial institutions or entities from time to time
parties thereto, Credit Suisse, as Administrative Agent and Collateral Agent, Bank of America,
N.A., as Syndication Agent, Lehman Brothers Commercial Bank, C.I.T. Leasing Corporation and
Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit Suisse, as Issuing Lender and
Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Lehman Brothers Inc. and
Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers and Joint Bookrunners. Capitalized
terms used herein and not otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement. The Administrative Agent hereby gives notice of an offer of prepayment
made by the Borrower pursuant to Section 2.12(e) of the Credit Agreement of the Prepayment Amount.
Amounts applied to prepay the Tranche B Term Loans shall be applied pro rata to the
Tranche B Term Loan held by you. The portion of the prepayment amount to be allocated to the
Tranche B Term Loan held by you and the date on which such prepayment will be made to you (should
you elect to receive such prepayment) are set forth below:
(A)
|
Total Prepayment Amount | $ | ||||
(B)
|
Portion of Prepayment Amount to be received by you | $ | ||||
(C)
|
Prepayment Date (ten Business Days after the date of this Prepayment Option Notice) | , 20___ |
I-1
IF YOU DO NOT WISH TO RECEIVE ALL OR ANY PORTION OF THE TRANCHE B TERM LOAN PREPAYMENT AMOUNT
TO BE ALLOCATED TO YOU ON THE PREPAYMENT DATE INDICATED IN PARAGRAPH (C) ABOVE, please sign this
notice in the space provided below and indicate the percentage and the dollar amount of the
Prepayment Amount otherwise payable to you which you do not wish to receive. Please return this
notice as so completed via telecopy to the attention of [ ] at Credit Suisse, no later than
5:00 P.M., New York City time, one Business Day after the date of this Notice, at telecopy number
[(___)___ — ___]. IF YOU DO NOT RETURN THIS NOTICE, YOU WILL RECEIVE 100% OF THE PREPAYMENT AMOUNT
ALLOCATED TO YOU ON THE PREPAYMENT DATE.
| Credit Suisse, Cayman Islands Branch, as Administrative Agent |
||||||
| By: | ||||||
| Title: | ||||||
| By: | ||||||
| Title: | ||||||
| Name of Term Loan Lender | ||||||
| By: | ||||||
| Title: | ||||||
Percentage and Dollar Amount
of Prepayment Amount
Declined: ____%; $ _____
of Prepayment Amount
Declined: ____%; $ _____
I-2
EXHIBIT J-1
FORM OF
TRANCHE A TERM LOAN NOTE
TRANCHE A TERM LOAN NOTE
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE AND THE
OBLIGATIONS REPRESENTED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE
AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
| $ | New York, New York , 20__ |
FOR VALUE RECEIVED, the undersigned, Booz Allen Hamilton Inc., a Delaware corporation
(“Booz Allen”, and, together with any assignee of, or successor by merger to, Booz Allen
Hamilton Inc.’s rights and obligations under the Credit Agreement (as hereinafter defined) as
provided therein, the “Borrower”), hereby unconditionally promises to pay to
(the “Lender”) or its registered assigns at the Funding Office specified
in the Credit Agreement in Dollars and in immediately available funds, the principal amount of (a)
DOLLARS ($ ), or, if less, (b) the aggregate unpaid principal amount of all
Term Loans owing to the Lender under the Credit Agreement. The principal amount shall be paid in
the amounts and on the dates specified in Section 2.3 of the Credit Agreement. The
Borrower further agrees to pay interest in like money at such office on the unpaid principal amount
hereof from time to time outstanding at the rates and on the dates specified in the Credit
Agreement.
This Note (a) is one of the Notes issued pursuant to the Credit Agreement, dated as of July
31, 2008 (as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Explorer Investor Corporation, a Delaware corporation, Explorer
Merger Sub Corporation, a Delaware corporation, the Borrower, the several banks and other financial
institutions or entities from time to time parties thereto, Credit Suisse, Cayman Islands Branch,
as administrative agent (in such capacity, the “Administrative Agent”) and Collateral
Agent, Bank of America, N.A., as Syndication Agent, Lehman Brothers Commercial Bank, C.I.T. Leasing
Corporation and Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit Suisse, as
Issuing Lender and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Lehman
Brothers Inc. and Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers and Joint
Bookrunners, (b) is subject to the provisions of the Credit Agreement, which are hereby
incorporated by reference, (c) is subject to optional and mandatory prepayment in whole or in part
as provided in the Credit Agreement and (d) is secured and guaranteed as provided in the Loan
Documents. Reference is hereby made to the Credit Agreement for a statement of all the terms and
conditions under which the Tranche A Term Loans evidenced hereby are made and are to be repaid. In
the event of any conflict or inconsistency between the terms of this Note and the terms of the
Credit Agreement, to the fullest extent permitted by applicable law, the terms of the Credit
Agreement shall govern and be controlling.
Upon the occurrence of any one or more Events of Default, all principal and all accrued
interest then remaining unpaid on this Note shall become, or may be declared to be, immediately due
and payable, all as and to the extent provided in the Credit Agreement. No failure in exercising
any rights hereunder or under the other Loan Documents on the part of the Lender shall operate as a
waiver of such rights.
J-1-1
All parties now and hereafter liable with respect to this Note, whether maker, principal,
surety, guarantor, indorser or otherwise, hereby expressly waive, to the fullest extent permitted
by applicable law, presentment, demand, protest and all other similar notices or similar
requirements.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE CREDIT AGREEMENT, THIS
NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE REGISTRATION AND OTHER PROVISIONS OF SECTION 10.6 OF THE CREDIT AGREEMENT.
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
AND THE RULES AND REGULATIONS THEREUNDER, THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT.
THE ISSUE PRICE, AMOUNT OF THE ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY OF THE
NOTE CAN BE OBTAINED BY WRITTEN REQUEST TO BOOZ ALLEN HAMILTON INC., CHIEF FINANCIAL OFFICER, AT
8283 GREENSBORO DRIVE, McLEAN, VA 22102.
[Remainder of page intentionally left blank]
J-1-2
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND THE LENDER HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
| BOOZ ALLEN HAMILTON INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
J-1-3
EXHIBIT J-2
FORM OF
TRANCHE B TERM LOAN NOTE
TRANCHE B TERM LOAN NOTE
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE AND THE
OBLIGATIONS REPRESENTED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE
AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
| $ | New York, New York , 20___ |
FOR VALUE RECEIVED, the undersigned, Booz Allen Hamilton Inc., a Delaware corporation
(“Booz Allen”, and, together with any assignee of, or successor by merger to, Booz Allen
Hamilton Inc.’s rights and obligations under the Credit Agreement (as hereinafter defined) as
provided therein, the “Borrower”), hereby unconditionally promises to pay to
(the “Lender”) or its registered assigns at the Funding Office specified
in the Credit Agreement in Dollars and in immediately available funds, the principal amount of (a)
DOLLARS ($ ), or, if less, (b) the aggregate unpaid principal amount of all
Term Loans owing to the Lender under the Credit Agreement. The principal amount shall be paid in
the amounts and on the dates specified in Section 2.3 of the Credit Agreement. The
Borrower further agrees to pay interest in like money at such office on the unpaid principal amount
hereof from time to time outstanding at the rates and on the dates specified in the Credit
Agreement.
This Note (a) is one of the Notes issued pursuant to the Credit Agreement, dated as of July
31, 2008 (as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Explorer Investor Corporation, a Delaware corporation, Explorer
Merger Sub Corporation, a Delaware corporation, the Borrower, the several banks and other financial
institutions or entities from time to time parties thereto, Credit Suisse, Cayman Islands Branch,
as administrative agent (in such capacity, the “Administrative Agent”) and Collateral
Agent, Bank of America, N.A., as Syndication Agent, Lehman Brothers Commercial Bank, C.I.T. Leasing
Corporation and Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit Suisse, as
Issuing Lender and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Lehman
Brothers Inc. and Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers and Joint
Bookrunners, (b) is subject to the provisions of the Credit Agreement, which are hereby
incorporated by reference, (c) is subject to optional and mandatory prepayment in whole or in part
as provided in the Credit Agreement and (d) is secured and guaranteed as provided in the Loan
Documents. Reference is hereby made to the Credit Agreement for a statement of all the terms and
conditions under which the Tranche B Term Loans evidenced hereby are made and are to be repaid. In
the event of any conflict or inconsistency between the terms of this Note and the terms of the
Credit Agreement, to the fullest extent permitted by applicable law, the terms of the Credit
Agreement shall govern and be controlling.
Upon the occurrence of any one or more Events of Default, all principal and all accrued
interest then remaining unpaid on this Note shall become, or may be declared to be, immediately due
and payable, all as and to the extent provided in the Credit Agreement. No failure in exercising
any rights hereunder or under the other Loan Documents on the part of the Lender shall operate as a
waiver of such rights.
J-2-1
All parties now and hereafter liable with respect to this Note, whether maker, principal,
surety, guarantor, indorser or otherwise, hereby expressly waive, to the fullest extent permitted
by applicable law, presentment, demand, protest and all other similar notices or similar
requirements.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE CREDIT AGREEMENT, THIS
NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE REGISTRATION AND OTHER
PROVISIONS OF SECTION 10.6 OF THE CREDIT AGREEMENT.
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
AND THE RULES AND REGULATIONS THEREUNDER, THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT.
THE ISSUE PRICE, AMOUNT OF THE ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY OF THE
NOTE CAN BE OBTAINED BY WRITTEN REQUEST BOOZ ALLEN HAMILTON INC., CHIEF FINANCIAL OFFICER, AT 8283
GREENSBORO DRIVE, McLEAN, VA 22102.
[Remainder of page intentionally left blank]
J-2-2
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND THE LENDER HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
| BOOZ ALLEN HAMILTON INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
J-2-3
EXHIBIT J-3
FORM OF
REVOLVING NOTE
REVOLVING NOTE
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE AND THE
OBLIGATIONS REPRESENTED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE
AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
| $ | New York, New York , 20___ |
FOR VALUE RECEIVED, the undersigned, Booz Allen Hamilton Inc., a Delaware corporation
(“Booz Allen”, and, together with any assignee of, or successor by merger to, Booz Allen
Hamilton Inc.’s rights and obligations under the Credit Agreement (as hereinafter defined) as
provided therein, the “Borrower”), hereby unconditionally promises to pay to
(the “Lender”) or its registered assigns at the Funding Office specified
in the Credit Agreement in Dollars and in immediately available funds, the aggregate unpaid
principal amount of all Revolving Loans made by the Lender to the undersigned pursuant to Section
2.4 of the Credit Agreement, which sum shall be payable on the Revolving Termination Date. The
Borrower further agrees to pay interest in like money at such office on the unpaid principal amount
hereof from time to time outstanding at the rates and on the dates specified in the Credit
Agreement.
This Note (a) is one of the Notes issued pursuant to the Credit Agreement, dated as of July
31, 2008 (as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among Explorer Investor Corporation, a Delaware corporation, Explorer
Merger Sub Corporation, a Delaware corporation, the Borrower, the several banks and other financial
institutions or entities from time to time parties thereto, Credit Suisse, Cayman Islands Branch,
as administrative agent (in such capacity, the “Administrative Agent”) and Collateral
Agent, Bank of America, N.A., as Syndication Agent, Lehman Brothers Commercial Bank, C.I.T. Leasing
Corporation and Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit Suisse, as
Issuing Lender and Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Lehman
Brothers Inc. and Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers and Joint
Bookrunners, (b) is subject to the provisions of the Credit Agreement, which are hereby
incorporated by reference, (c) is subject to optional and mandatory prepayment in whole or in part
as provided in the Credit Agreement and (d) is secured and guaranteed as provided in the Loan
Documents. Reference is hereby made to the Credit Agreement for a statement of all the terms and
conditions under which the Revolving Loans evidenced hereby are made and are to be repaid. In the
event of any conflict or inconsistency between the terms of this Note and the terms of the Credit
Agreement, to the fullest extent permitted by applicable law, the terms of the Credit Agreement
shall govern and be controlling.
Upon the occurrence of any one or more Events of Default, all principal and all accrued
interest then remaining unpaid on this Note shall become, or may be declared to be, immediately due
and payable, all as and to the extent provided in the Credit Agreement. No failure in exercising
any rights hereunder or under the other Loan Documents on the part of the Lender shall operate as a
waiver of such rights.
J-3-1
All parties now and hereafter liable with respect to this Note, whether maker, principal,
surety, guarantor, indorser or otherwise, hereby expressly waive, to the fullest extent permitted
by applicable law, presentment, demand, protest and all other similar notices or similar
requirements.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE CREDIT AGREEMENT, THIS
NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE REGISTRATION AND OTHER
PROVISIONS OF SECTION 10.6 OF THE CREDIT AGREEMENT.
[Remainder of page intentionally left blank]
J-3-2
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND THE LENDER HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
| BOOZ ALLEN HAMILTON INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
J-3-3
Exhibit 10.2
EXECUTION VERSION
AMENDMENT NO. 1, dated as of December 8, 2009 (this
“Amendment”), to the Credit Agreement, dated as of
July 31, 2008 (as heretofore amended, the “Existing
Credit Agreement”), among BOOZ ALLEN HAMILTON INVESTOR
CORPORATION (formerly known as Explorer Investor
Corporation), a Delaware corporation (“Holdings”),
EXPLORER MERGER SUB CORPORATION, a Delaware corporation (the
“Initial Borrower”), BOOZ ALLEN HAMILTON INC., a
Delaware corporation into which the Initial Borrower was
merged (the “Company” or the “Borrower”), the
several banks and other financial institutions or entities
from time to time parties thereto (the “Lenders”),
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH (formerly known as
Credit Suisse), as Administrative Agent, Collateral Agent and
Issuing Lender, BANK OF AMERICA, N.A., as Syndication Agent,
LEHMAN BROTHERS COMMERCIAL BANK, C.I.T. LEASING CORPORATION,
and SUMITOMO MITSUI BANKING CORPORATION, as Documentation
Agents, and BANC OF AMERICA SECURITIES LLC, CREDIT SUISSE
SECURITIES (USA) LLC, LEHMAN BROTHERS INC. and SUMITOMO
MITSUI BANKING CORPORATION, as Joint Lead Arrangers and Joint
Bookrunners.
WHEREAS, the Tranche C Term Lenders have agreed to make Tranche C Term Loans in an aggregate
principal amount of $350,000,000, and the Additional Revolving Lenders have agreed to provide
Additional Revolving Commitments in an aggregate amount equal to $145,000,000, in each case on the
terms and conditions set forth herein;
WHEREAS, the Borrower has requested certain amendments to the Existing Credit Agreement in
connection with the Recapitalization Transactions; and
WHEREAS, the Borrower and the Lenders have agreed to amend and restate the Existing Credit
Agreement on the terms and conditions contained herein.
NOW, THEREFORE, the Borrower, the Lenders and the Administrative Agent hereby agree as
follows:
ARTICLE 1
Definitions
Section 1.1 Defined Terms. Terms defined in the Amended and Restated Credit Agreement
(as defined in Section 2.1 hereof) and used herein shall have the meanings assigned to such terms
in the Amended and Restated Credit Agreement, unless otherwise defined herein or the context
otherwise requires.
ARTICLE 2
Amendments
Section 2.1 Amended and Restated Credit Agreement. As of the Amendment and
Restatement Effective Date (as defined in Section 5.1 hereof), the Existing Credit Agreement is
hereby amended and restated in its entirety, in the form attached hereto as Exhibit A (the
“Amended and Restated Credit Agreement”).
Section 2.2 New Schedule 2.1A. As of the Amendment and Restatement Effective Date, a
new Schedule 2.1A is hereby added to the Amended and Restated Credit Agreement, in the form
attached hereto as Exhibit B.
Section 2.3 Amendment of Schedule 4.3. As of the Amendment and Restatement Effective
Date, Schedule 4.3 to the Existing Credit Agreement is hereby amended and restated in its entirety,
in the form attached hereto as Exhibit C.
Section 2.4 New Exhibit J-4. As of the Amendment and Restatement Effective Date, a
new Exhibit J-4 is hereby added to the Amended and Restated Credit Agreement, in the form attached
hereto as Exhibit D.
Section 2.5 Schedules and Exhibits. Except as set forth in Sections 2.2, 2.3 and 2.4
above, all schedules and exhibits to the Existing Credit Agreement, in the forms thereof
immediately prior to the Amendment and Restatement Effective Date, will continue to be schedules
and exhibits to the Amended and Restated Credit Agreement.
ARTICLE 3
Tranche C Term Loans and Additional Revolving Commitments
Section 3.1 Tranche C Term Loans. On the Amendment and Restatement Effective Date,
the Tranche C Term Lenders will make the Tranche C Term Loans as provided in the Amended and
Restated Credit Agreement.
Section 3.2 Additional Revolving Commitments. On the Amendment and Restatement
Effective Date, (i) the Revolving Commitment of each Additional Revolving Lender that has an
Existing Revolving Commitment shall be automatically and without further action increased by an
amount equal to such Additional Revolving Lender’s Additional Revolving Commitment and (ii) each
Additional Revolving Lender that does not have an Existing Revolving Commitment shall automatically
and without further action provide a new Revolving Commitment in an amount equal to such Revolving
Lender’s Additional Revolving Commitment. To the extent any Revolving Loans are outstanding on the
Amendment and Restatement Effective Date, such Revolving Loans shall be prepaid immediately prior
to giving effect to the increase in Revolving Commitments on the Amendment and Restatement
Effective Date and reborrowed as ABR Loans immediately after giving effect to the increase in
Revolving Commitments on the Amendment and Restatement Effective Date, so that such Revolving Loans
are held pro rata by the Revolving Lenders after giving effect to such increase. For the avoidance
of doubt, such repayment and borrowing of Revolving Loans pursuant to this Section 3.2 shall be
subject to Section 2.21, but shall not be subject to the notice and other requirements of Sections
2.5 and 2.11 of the Amended and Restated Credit Agreement.
2
ARTICLE 4
Consent to Amendment of Mezzanine Loan Agreement
Section 4.1 Consent to Amendment of Mezzanine Loan Agreement. The Lenders
hereby consent to Amendment No. 2 to the Mezzanine Loan Agreement, dated as of December 7, 2009,
among Holdings, the Borrower, Credit Suisse AG, as administrative agent, and the lenders party
thereto.
ARTICLE 5
Miscellaneous
Section 5.1 Conditions to Effectiveness. This Amendment shall become effective as of
the date (the “Amendment and Restatement Effective Date”) on which:
(a) Amendment. The Administrative Agent shall have received this Amendment,
executed and delivered by the Borrower, the Required Lenders, each Tranche C Term Lender and each
Additional Revolving Lender;
(b) Acknowledgment and Confirmation. The Administrative Agent shall have
received the Acknowledgment and Confirmation, substantially in the form of Exhibit E
hereto, executed and delivered by each Guarantor;
(c) Fees. The Borrower shall have paid to the Administrative Agent (i) for
distribution to each Lender which executes and delivers to the Administrative Agent (or its
designee) a counterpart hereof by 5:00 P.M. (New York City time) on December 8, 2009, a
non-refundable cash fee (the “Amendment Fee”) in dollars in an amount equal to 10 basis
points (0.10%) of the sum of (x) the aggregate principal amount of all Tranche A Term Loans and
Tranche B Term Loans of such Lender outstanding on the Amendment and Restatement Effective Date and
(y) the amount of such Lender’s Existing Revolving Commitment on the Amendment and Restatement
Effective Date and (ii) for distribution to each Additional Revolving Lender, a non-refundable cash
fee (the “Upfront Fee”) in dollars in an amount equal to 150 basis points (1.50%) of such
Lender’s Additional Revolving Commitment;
(d) Solvency Opinion. The Administrative Agent shall have received a solvency opinion
in form and substance and from an independent investment bank or valuation firm reasonably
satisfactory to the Administrative Agent to the effect that each of (a) Holdings, the Borrower and
the Subsidiary Guarantors, on a consolidated basis, and (b) the Borrower and the Subsidiary
Guarantors, on a consolidated basis, in each case after giving effect to the Recapitalization
Transactions, are solvent;
(e) Legal Opinions. The Administrative Agent shall have received an executed legal
opinion of (i) Debevoise & Plimpton LLP, special New York counsel to the Loan Parties,
substantially in the form of Exhibit F-1 and (ii) Morris, Nichols, Arsht & Tunnell LLP,
special Delaware counsel to the Loan Parties, substantially in the form of Exhibit F-2;
(f) Closing Certificate. The Administrative Agent shall have received a certificate
of the Borrower, dated as of the Amendment and Restatement Effective Date, substantially in the
form of Exhibit G, with appropriate insertions and attachments; and
(g) Recapitalization Transactions. The Recapitalization Transactions shall be
consummated substantially concurrently with the effectiveness of the Amendment.
Section 5.2 Representations and Warranties; No Defaults. In order to induce the
Lenders to enter into this Amendment and to make the Tranche C Term Loans, the Borrower hereby
represents and warrants that:
3
(a) no Default or Event of Default exists as of the Amendment and Restatement Effective
Date, both immediately before and immediately after giving effect to this Amendment and the
borrowing of the Tranche C Term Loans; and
(b) all of the representations and warranties contained in the Amended and Restated
Credit Agreement and in the other Loan Documents are true and correct in all material
respects on the Amendment and Restatement Effective Date, both immediately before and
immediately after giving effect to this Amendment and the borrowing of the Tranche C Term
Loans, with the same effect as though such representations and warranties had been made on
and as of the Amendment and Restatement Effective Date (unless such representation or
warranty relates to a specific date, in which case such representation or warranty shall be
true and correct in all material respects as of such specific date).
Section 5.3 Security. The Borrower acknowledges that (i) the Tranche C Term Loans and
any Revolving Loans and Reimbursement Obligations in respect of Additional Revolving Commitments
constitute Borrower Obligations (as defined in the Guarantee and Collateral Agreement), (ii) the
Guarantee and Collateral Agreement shall continue to be in full force and effect and (iii) all
Liens granted by the Borrower as security for the Borrower Obligations pursuant to the Guarantee
and Collateral Agreement continue in full force and effect.
Section 5.4 Severability. Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 5.5 Continuing Effect; No Other Waivers or Amendments. Except as expressly
set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a
waiver of, or otherwise affect the rights and remedies of the Lenders, the Administrative Agent or
the Loan Parties under the Amended and Restated Credit Agreement or any other Loan Document, and
shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations,
covenants or agreements contained in the Amended and Restated Credit Agreement or any other Loan
Document, all of which are ratified and affirmed in all respects and shall continue in full force
and effect. Nothing herein shall be deemed to entitle any Loan Party to a consent to, or a waiver,
amendment, modification or other change of, any of the terms, conditions, obligations, covenants or
agreements contained in the Amended and Restated Credit Agreement or any other Loan Document in
similar or different circumstances. After the Amendment and Restatement Effective Date, any
reference in any Loan Document to the Credit Agreement shall mean the Amended and Restated Credit
Agreement.
Section 5.6 Counterparts. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. Delivery of an executed
signature page of this Amendment by facsimile or electronic (i.e. “pdf”) transmission shall be
effective as delivery of a manually executed counterpart hereof.
Section 5.7 Payment of Fees and Expenses. The Borrower agrees to pay or reimburse the
Administrative Agent for all of its reasonable and documented out-of-pocket costs and expenses
incurred in connection with this Amendment including, without limitation, the reasonable fees and
disbursements and other charges of Cravath, Swaine & Moore LLP, counsel to the Administrative
Agent.
4
Section 5.8 GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS TO THE
EXTENT THAT THE SAME ARE NOT MANDATORILY APPLICABLE BY STATUTE AND THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and
delivered as of the date first above written.
| BOOZ ALLEN HAMILTON INC. |
||||
| By: | /s/ CG Appleby | |||
| Name: | CG Appleby | |||
| Title: | Secretary | |||
| BOOZ ALLEN HAMILTON INVESTOR CORPORATION |
||||
| By: | /s/ Samuel Strickland | |||
| Name: | Samuel Strickland | |||
| Title: | Chief Financial Officer | |||
| CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH as Administrative Agent, Collateral Agent, Issuing Lender and Swingline Lender |
||||
| By: | /s/ John D. Toronto | |||
| Name: | John D. Toronto | |||
| Title: | Director | |||
| By: | /s/ Vipul Dhadda | |||
| Name: | Vipul Dhadda | |||
| Title: | Associate | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: BANK OF AMERICA, N.A. |
||||
| By: | /s/ David H. Strickert | |||
| Name: | David H. Strickert | |||
| Title: | Senior Vice President | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: CIT Bank |
||||
| By: | /s/ Daniel Burnett | |||
| Name: | Daniel Burnett | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH |
||||
| By: | /s/ John D. Toronto | |||
| Name: | John D. Toronto | |||
| Title: | Director | |||
| By: | /s/ Vipul Dhadda | * | ||
| Name: | Vipul Dhadda | |||
| Title: | Associate | |||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Sumitomo Mitsui Banking Corporation |
||||
| By: | /s/ William M. Ginn | |||
| Name: | William M. Ginn | |||
| Title: | Executive Officer | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Morgan Stanley Bank, N.A. |
||||
| By: | /s/ Peter Zippelius | |||
| Name: | Peter Zippelius | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: GOLDMAN SACHS CREDIT PARTNERS L.P. |
||||
| By: | /s/ Alexis Maged | |||
| Name: | Alexis Maged | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Barclays Bank PLC |
||||
| By: | /s/ Craig Malley | |||
| Name: | Craig Malley | |||
| Title: | Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: THE BANK OF NOVA SCOTIA |
||||
| By: | /s/ David Mahmood | |||
| Name: | David Mahmood | |||
| Title: | Managing Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Carlyle Credit Partners Financing I, Ltd. |
||||
| By: | /s/ Linda Pace | |||
| Name: | Linda Pace | |||
| Title: | Managing Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Carlyle High Yield Partners 2008-1, Ltd. |
||||
| By: | /s/ Linda Pace | |||
| Name: | Linda Pace | |||
| Title: | Managing Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Carlyle High Yield Partners VI, Ltd. |
||||
| By: | /s/ Linda Pace | |||
| Name: | Linda Pace | |||
| Title: | Managing Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Carlyle High Yield Partners VII, Ltd. |
||||
| By: | /s/ Linda Pace | |||
| Name: | Linda Pace | |||
| Title: | Managing Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Carlyle High Yield Partners VIII, Ltd. |
||||
| By: | /s/ Linda Pace | |||
| Name: | Linda Pace | |||
| Title: | Managing Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Carlyle High Yield Partners IX, Ltd. |
||||
| By: | /s/ Linda Pace | |||
| Name: | Linda Pace | |||
| Title: | Managing Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Carlyle High Yield Partners X, Ltd. |
||||
| By: | /s/ Linda Pace | |||
| Name: | Linda Pace | |||
| Title: | Managing Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Deutsche Bank AG New York Branch By: DB Services New Jersey, Inc. |
||||
| By: | /s/ Edward Schaffer | |||
| Name: | Edward Schaffer | |||
| Title: | Vice President | |||
| By: | /s/ Deirdre D. Cesario | * | ||
| Name: | Deirdre D. Cesario | |||
| Title: | Assistant Vice President | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: FORTRESS CREDIT INVESTMENTS I LTD. |
||||
| By: | /s/ Glenn P. Cummins | |||
| Name: | Glenn P. Cummins | |||
| Title: | Director | |||
| FORTRESS CREDIT INVESTMENTS II LTD. |
||||
| By: | /s/ Glenn P. Cummins | |||
| Name: | Glenn P. Cummins | |||
| Title: | Director | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: FORTRESS CREDIT OPPORTUNITIES I LP By: Fortress Credit Opportunities I GP LLC, its general partner |
||||
| By: | /s/ Glenn P. Cummins | |||
| Name: | Glenn P. Cummins | |||
| Title: | Chief Financial Officer | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: FORTRESS CREDIT INVESTMENTS I LTD. |
||||
| By: | /s/ Glenn P. Cummins | |||
| Name: | Glenn P. Cummins | |||
| Title: | Director | |||
| FORTRESS CREDIT INVESTMENTS II LTD. |
||||
| By: | /s/ Glenn P. Cummins | |||
| Name: Glenn P. Cummins | ||||
| Title: | Director | |||
LENDERS:
| By signing below, you have indicated your consent to the Second Amendment Name of Institution: FORTRESS CREDIT OPPORTUNITIES I LP By: Fortress Credit Opportunities I GP LLC, its general partner |
||||
| By: | /s/ Glenn P. Cummins | |||
| Name: | Glenn P. Cummins | |||
| Title: | Chief Financial Officer | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: MAGNOLIA FUNDING |
||||
| By: | /s/ Irfan Ahmed | |||
| Name: | Irfan Ahmed | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: LANDMARK VIII CLO LTD. By Aladdin Capital Management LLC as Manager |
||||
| By: | /s/ Christine M. Barto | |||
| Name: | Christine M. Barto | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: LANDMARK IX CDO LTD. By Aladdin Capital Management LLC as Manager |
||||
| By: | /s/ Christine M. Barto | |||
| Name: | Christine M. Barto | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Aladdin Flexible Investment Fund SPC Series 2008-2 |
||||
| By: | /s/ Christine M. Barto | |||
| Name: | Christine M. Barto | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your
consent to the Amendment Name of Institution: Prospero CLO II B.V. |
||||
| By: | /s/ Ronald M. Grobeck | |||
| Name: | Ronald M. Grobeck | |||
| Title: | Managing Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Veritas CLO I, LTD |
||||
| By: | /s/ Ronald M. Grobeck | |||
| Name: | Ronald M. Grobeck | |||
| Title: | Managing Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Veritas CLO II, LTD |
||||
| By: | /s/ Ronald M. Grobeck | |||
| Name: | Ronald M. Grobeck | |||
| Title: | Managing Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: ACAS CLO 2007-1, Ltd., By: American Capital Asset Management, LLC as Portfolio Manager |
||||
| By: | /s/ Mark Pelletier | |||
| Name: | Mark Pelletier | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: FULTON FUNDING |
||||
| By: | /s/ Irfan Ahmed | |||
| Name: | Irfan Ahmed | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: GLARKE FUNDING |
||||
| By: | /s/ Irfan Ahmed | |||
| Name: | Irfan Ahmed | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have
indicated your consent to the Amendment |
||||
| Name of Institution: | ||||
| Ares IIR CLO Ltd. | ||||
| By: | Ares CLO Management IIR, L.P., | |||
| Investment Manager | ||||
| By: | Ares CLO GP IIR, LLC, | |||
| Its General Partner | ||||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| * | For institutions requiring two signature blocks. |
| ARES IIIR/IVR CLO LTD. |
||||
| By: | ARES CLO MANAGEMENT IIIR/IVR, L.P. | |||
| By: | ARES CLO GP IIIR/IVR, LLC, ITS GENERAL PARTNER | |||
| By: | ARES MANAGEMENT LLC, ITS MANAGER |
|||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| |
||||
| Ares VR CLO Ltd. |
||||
| By: | Ares CLO Management VR, L.P., Investment Manager |
|||
| By: | Ares CLO GP VR, LLC, Its General Partner |
|||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| * | For institutions requiring two signature blocks. |
| Ares VIR CLO Ltd. |
||||
| By: | Ares CLO Management VIR, L.P., Investment Manager |
|||
| By: | Ares CLO GP VIR, LLC, Its General Partner |
|||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| Ares VIII CLO Ltd. |
||||
| By: | Ares CLO Management VIII, L.P., Investment Manager |
|||
| By: | Ares CLO GP VIII, LLC, Its General Partner |
|||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| * | For institutions requiring two signature blocks. |
| Ares IX CLO Ltd. |
||||
| By: | Ares CLO Management IX, L.P., Investment Manager |
|||
| By: | Ares CLO GP IX, LLC, Its General Partner |
|||
| By: | Ares Management LLC, Its Managing Member |
|||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| Ares X CLO Ltd. |
||||
| By: | Ares CLO Management X, L.P., Investment Manager |
|||
| By: | Ares CLO GP X, LLC, Its General Partner |
|||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| * | For institutions requiring two signature blocks. |
| ARES XI CLO Ltd. |
||||
| By: | ARES CLO MANAGEMENT XI, L.P. | |||
| By: | ARES CLO GP XI, LLC, ITS GENERAL PARTNER | |||
| By: | ARES MANAGEMENT LLC, ITS MANAGER | |||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| ARES XII CLO LTD. |
||||
| By: | ARES CLO MANAGEMENT XII, L.P.
|
|||
| By: | ARES CLO GP XII, LLC, ITS GENERAL PARTNER | |||
| By: | ARES MANAGEMENT LLC, ITS MANAGER | |||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| * | For institutions requiring two signature blocks. |
| CONFLUENT 2 LIMITED |
||||
| By: | Ares Private Account Management I, L.P., as Sub-Manager | |||
| By: | Ares Private Account Management I GP, LLC, as General Partner | |||
| By: | Ares Management LLC, as Manager | |||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| ARES ENHANCED CREDIT OPPORTUNITIES FUND LTD. |
||||
| By: | Ares Enhanced Credit Opportunities Fund Management, L.P., | |||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| * | For institutions requiring two signature blocks. |
| ARES ENHANCED LOAN INVESTMENT STRATEGY IR LTD. |
||||
| By: | ARES ENHANCED LOAN MANAGEMENT IR, L.P., as Portfolio Manager | |||
| By: | Ares Enhanced Loan IR GP, LLC, as its General Partner | |||
| By: | Ares Management LLC, as its Manager | |||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| ARES ENHANCED LOAN INVESTMENT STRATEGY II, LTD. |
||||
| By: | Ares Enhanced Loan Management II, L.P., Investment Manager |
|||
| By: | Ares Enhanced Loan GP II, LLC Its General Partner |
|||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| * | For institutions requiring two signature blocks. |
| ARES ENHANCED LOAN INVESTMENT STRATEGY III, LTD. |
||||
| By: | ARES ENHANCED LOAN MANAGEMENT III, L.P. | |||
| By: | ARES ENHANCED LOAN III GP, LLC, ITS GENERAL PARTNER | |||
| By: | ARES MANAGEMENT LLC, ITS MANAGER | |||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| FUTURE FUND BOARD OF GUARDIANS |
||||
| By: | Ares Enhanced Loan Investment Strategy Advisor IV, L.P., its investment manager | |||
| By: | Ares Enhanced Loan Investment Strategy Advisor IV GP, LLC, its general partner | |||
| By: | Ares Management LLC, its managing member | |||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| * | For institutions requiring two signature blocks. |
| Global Loan Opportunity Fund B.V. |
||||
| By: | Ares Management Limited, its Portfolio Manager | |||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| Ares Institutional Loan Fund B.V. |
||||
| By: | Ares Management Limited, its investment advisor | |||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| * | For institutions requiring two signature blocks. |
| SEI INSTITUTIONAL INVESTMENTS TRUST ENHANCED LIBOR OPPORTUNITIES FUND |
||||
| By: | Ares Management LLC, as Portfolio Manager | |||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| SEI INSTITUTIONAL MANAGED TRUST ENHANCED INCOME FUND |
||||
| By: | Ares Management LLC, as Portfolio Manager | |||
| By: | /s/ Americo Cascella | |||
| Name: | Americo Cascella | |||
| Title: | Authorized Signatory | |||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: ARCC Commercial Loan Trust 2006 |
||||
| By: | /s/ Mitchell Goldstein | |||
| Name: | Mitchell Goldstein | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Ivy Hill Middle Market Credit Fund, Ltd. |
||||
| By: | /s/ Ryan Cascade | |||
| Name: | Ryan Cascade | |||
| Title: | Duly Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: OREGON PUBLIC EMPLOYEES RETIREMENT FUND |
||||
| By: | /s/ Mark Casanova | |||
| Name: | Mark Casanova | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: ARTUS LOAN FUND 2007-I, LTD. BABSON CLO LTD. 2004-II BABSON CLO LTD. 2005-I BABSON CLO LTD. 2005-II BABSON CLO LTD. 2005-III BABSON CLO LTD. 2006-I BABSON CLO LTD. 2006-II BABSON CLO LTD. 2007-I BABSON CLO LTD. 2008-I BABSON CLO LTD. 2008-II BABSON LOAN OPPORTUNITY CLO LTD. OSPREY CDO 2006-1 LTD. SAPPHIRE VALLEY CDO I, LTD. SUFFIELD CLO, LIMITED By: Babson Capital Management LLC as Collateral Manager |
||||
| By: | /s/ Kenneth M. Gacevich | |||
| Name: | Kenneth M. Gacevich | |||
| Title: | Managing Director | |||
| BABSON CAPITAL LOAN PARTNERS I,
L.P. By: Babson Capital Management LLC as Investment Manager |
||||
| By: | /s/ Kenneth M. Gacevich | |||
| Name: | Kenneth M. Gacevich | |||
| Title: | Managing Director | |||
| HOLLY INVESTMENT CORPORATION By: Babson Capital Management LLC as Investment Manager |
||||
| By: | /s/ Kenneth M. Gacevich | |||
| Name: | Kenneth M. Gacevich | |||
| Title: | Managing Director | |||
| OLYMPIC PARK, LTD. By: Babson Capital Management LLC as Investment Manager |
||||
| By: | /s/ Kenneth M. Gacevich | |||
| Name: | Kenneth M. Gacevich | |||
| Title: | Managing Director | |||
| VINACASA CLO, LTD. By: Babson Capital Management LLC as Collateral Servicer |
||||
| By: | /s/ Kenneth M. Gacevich | |||
| Name: | Kenneth M. Gacevich | |||
| Title: | Managing Director | |||
| XELO VII LIMITED By: Babson Capital Management LLC as Sub-Adviser |
||||
| By: | /s/ Kenneth M. Gacevich | |||
| Name: | Kenneth M. Gacevich | |||
| Title: | Managing Director | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: SWISS CAPITAL PRO LOAN LIMITED For and on Behalf of BNY Mellon Trust company (Ireland) Limited under power of attorney |
||||
| By: | /s/ Jason Harewood | |||
| Name: | Jason Harewood | |||
| Title: | Director | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Bank of Montreal |
||||
| By: | /s/ Peter Konigsmann | |||
| Name: | Peter Konigsmann | |||
| Title: | Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
* For institutions requiring two signature blocks.
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Ariel Reinsurance Company Ltd. BlackRock Credit Investors Master Fund, L.P. BlackRock Floating Rate Income Trust BlackRock Defined Opportunity Credit Trust BlackRock Fixed Income Value Opportunities Trust The Broad Institute, Inc Master Senior Floating Rate LLC Missouri State Employees’ Retirement System Senior Loan Portfolio BlackRock Senior Floating Rate Portfolio BlackRock Senior Income Series BlackRock Senior Income Series IV BlackRock Senior Income Series V Limited Magnetite V CLO, Limited |
||||
| By: | /s/ Ann Marie Smith | |||
| Name: | Ann Marie Smith | |||
| Title: | Authorized Signatory | |||
* For institutions requiring two signature blocks.
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: BCI 1 LOAN FUNDNG LLC |
||||
| By: | /s/ Lynette Skrehot | |||
| Name: | Lynette Skrehot | |||
| Title: | Director | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: LAFAYETTE SQUARE CDO LTD. By: Blackstone Debt Advisors L.P. as Collateral Manager |
||||
| By: | /s/ Dean T. Criares | |||
| Name: | Dean T. Criares | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: INWOOD PARK CDO LTD. By: Blackstone Debt Advisors L.P. as Collateral Manager |
||||
| By: | /s/ Dean T. Criares | |||
| Name: | Dean T. Criares | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: MONUMENT PARK CDO LTD. By: Blackstone Debt Advisors L.P. as Collateral Manager |
||||
| By: | /s/ Dean T. Criares | |||
| Name: | Dean T. Criares | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: LOAN FUNDING VI LLC, for itself or as agent for Corporate Loan Funding VI LLC |
||||
| By: | /s/ Dean T. Criares | |||
| Name: | Dean T. Criares | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: RIVERSIDE PARK CLO LTD. By: GSO / Blackstone Debt Funds Management LLC as Collateral Manager |
||||
| By: | /s/ Lee M. Shaiman | |||
| Name: | Lee M. Shaiman | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: CHELSEA PARK CLO LTD. By: GSO / Blackston Debt Funds Management LLC as Collateral Manager |
||||
| By: | /s/ Lee M. Shaiman | |||
| Name: Lee M. Shaiman | ||||
| Title: Authorized Signatory | ||||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: GALE FORCE 4 CLO, LTD. By: GSO / Blackstone Debt Funds Management LLC as Collateral Manager |
||||
| By: | /s/ Lee M. Shaiman | |||
| Name: | Lee M. Shaiman | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: GALE FORCE 3 CLO, LTD. By: GSO / Blackstone Debt Funds Management LLC as Collateral Manager |
||||
| By: | /s/ Lee M. Shaiman | |||
| Name: | Lee M. Shaiman | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: GALE FORCE 2 CLO, LTD. By GSO / Blackstone Debt Funds Management LLC as Collateral Manager |
||||
| By: | /s/ Lee M. Shaiman | |||
| Name: | Lee M. Shaiman | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Sunsuper Pooled Superannuation Trust By: GSO Capital Partners LP, its Investment Manager |
||||
| By: | /s/ Lee M. Shaiman | |||
| Name: | Lee M. Shaiman | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Sun Life Assurance Company of Canada (US) By: GSO CP Holdings LP as Sub-Advisor |
||||
| By: | /s/ Lee M. Shaiman | |||
| Name: | Lee M. Shaiman | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: HUDSON STRAITS CLO 2004, LTD. By: GSO / Blackstone Debt Funds Management LLC as Collateral Manager |
||||
| By: | /s/ Lee M. Shaiman | |||
| Name: | Lee M. Shaiman | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated
your consent to the Amendment Name of Institution: FRIEDBERGMILSTEIN PRIVATE CAPITAL FUND I By: GSO / Blackstone Debt Funds Management LLC as Subadviser to FriedbergMilstein LLC |
||||
| By: | /s/ Lee M. Shaiman | |||
| Name: | Lee M. Shaiman | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: TRIBECA PARK CLO LTD. By: GSO / Blackstone Debt Funds Management LLC as Collateral Manager |
||||
| By: | /s/ Lee M. Shaiman | |||
| Name: | Lee M. Shaiman | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Citron Investment Corporation By GSO Capital Partners LP as Manager |
||||
| By: | /s/ Lee M. Shaiman | |||
| Name: | Lee M. Shaiman | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: CIM VI, L.L.C. By GSO Capital Partners LP as Manager |
||||
| By: | /s/ Lee M. Shaiman | |||
| Name: | Lee M. Shaiman | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: GSO Co-Investment Partners, LLC By GSO Capital Partners LP as Manager |
||||
| By: | /s/ Lee M. Shaiman | |||
| Name: | Lee M. Shaiman | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: BLT 18 LLC |
||||
| By: | /s/ Douglas DiBella | |||
| Name: | Douglas DiBella | |||
| Title: | Authorized Signatory | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: CapitalSource Bank |
||||
| By: | /s/ Robert Dailey | |||
| Name: | Robert Dailey | |||
| Title: | Banking Officer | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Churchill Financial Cayman Ltd, by: Churchill Financial LLC, as its Collateral Manager |
||||
| By: | /s/ David Montague | |||
| Name: | David Montague | |||
| Title: | Vice President | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Main Street Capital Corporation |
||||
| By: | /s/ Rodger Stout | |||
| Name: | Rodger Stout | |||
| Title: | Senior Vice President & Treasurer | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment |
||
| Name of Institution: | ||
| Cratos CLO I Ltd. As a Lender |
||
| By: Cratos CDO Management, LLC As Attorney-in-Fact |
| By: | Cratos Capital Partners, LLC | |||
| Its Manager Ron Banks | ||||
| /s/ Ron Banks | ||||
| Name: Title: |
Ron Banks Managing Director |
|||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Atrium II |
||||
| By: | /s/ David H. Lerner | |||
| Name: | David H. Lerner | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Atrium IV |
||||
| By: | /s/ David H. Lerner | |||
| Name: | David H. Lerner | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Atrium V By: Credit Suisse Alternative Capital, Inc., as collateral manager |
||||
| By: | /s/ David H. Lerner | |||
| Name: | David H. Lerner | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: CSAM Funding IV |
||||
| By: | /s/ David H. Lerner | |||
| Name: | David H. Lerner | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Credit Suisse Syndicated Loan Fund By: Credit Suisse Alternative Capital, Inc., as Agent (Subadvisor) for Credit Suisse Asset Management (Australia) Limited, the Responsible Entity for Credit Suisse Syndicated Loan Fund |
||||
| By: | /s/ David H. Lerner | |||
| Name: | David H. Lerner | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
| LENDERS: | By signing below, you have indicated your consent to the Amendment |
|||||||
| Name of Institution: | ||||||||
| Madison Park Funding I, Ltd, | ||||||||
| By: | /s/ David H. Lerner | |||||||
| Name: | David H. Lerner | |||||||
| Title: | Authorized Signatory | |||||||
| By: | * | |||||||
| Name: | ||||||||
| Title: | ||||||||
| * | For institutions requiring two signature blocks. |
| LENDERS: | By signing below, you have indicated your consent to the Amendment |
|||||||
| Name of Institution: Madison Park Funding II Ltd, |
||||||||
| By Credit Suisse Alternative Capital, Inc. as collateral manager |
||||||||
| By: | /s/ David H. Lerner | |||||||
| Name: | David H. Lerner | |||||||
| Title: | Authorized Signatory | |||||||
| By: | * | |||||||
| Name: | ||||||||
| Title: | ||||||||
| * | For institutions requiring two signature blocks. |
| LENDERS: | By signing below, you have indicated your consent to the Amendment |
|||||||
| Name of Institution: | ||||||||
| Castle Garden Funding | ||||||||
| By: | /s/ David H. Lerner | |||||||
| Name: | David H. Lerner | |||||||
| Title: | Authorized Signatory | |||||||
| By: | * | |||||||
| Name: | ||||||||
| Title: | ||||||||
| * | For institutions requiring two signature blocks. |
| LENDERS: | By signing below, you have indicated your consent to the Amendment Name of Institution: GoldenTree Capital Opportunities, LP By: GoldenTree Asset Management, LP | |||
| By: | /s/ Karen Weber | |||
| Name: | Karen Weber | |||
| Title: | Director — Bank Debt | |||
| LENDERS: | By signing below, you have indicated your consent to the Amendment Name of Institution: GoldenTree Loan Opportunities III, Limited By: GoldenTree Asset Management, LP | |||
| By: | /s/ Karen Weber | |||
| Name: | Karen Weber | |||
| Title: | Director — Bank Debt | |||
| LENDERS: | By signing below, you have indicated your
consent to the Amendment Name of Institution: GoldenTree Loan Opportunities IV, Limited By: GoldenTree Asset Management, LP | |||
| By: | /s/ Karen Weber | |||
| Name: | Karen Weber | |||
| Title: | Director — Bank Debt | |||
| LENDERS: | By signing below, you have indicated your consent to the Amendment Name of Institution: GoldenTree Loan Opportunities V, Limited By: GoldenTree Asset Management, LP | |||
| By: | /s/ Karen Weber | |||
| Name: | Karen Weber | |||
| Title: | Director — Bank Debt | |||
| LENDERS: | By signing below, you have indicated your consent to the Amendment | |||||||
| LINCOLN S.A.R.L. SOCIETE A RESPONSABILITE LIMITEE, | ||||||||
| By: Highbridge Leveraged Loan Partners Master Fund, L.P. as Portfolio Manager | ||||||||
| By: Highbridge Capital Management, LLC as Trading Manager | ||||||||
| By: | /s/ Marc Creatore | |||||||
| Name: | Marc Creatore | |||||||
| Title: | Director of Operations | |||||||
| LENDERS: | By signing below, you have indicated your consent to the Amendment ALZETTE EUROPEAN CLO S.A. By: INVESCO Senior Secured Management, Inc. As Collateral Manager |
|||
| By: | /s/ Thomas Ewald | |||
| Name: | Thomas Ewald | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
| LENDERS: | By signing below, you have indicated your consent to the Amendment AVALON CAPITAL LTD. 3 By: INVESCO Senior Secured Management, Inc. As Asset Manager |
|||
| By: | /s/ Thomas Ewald | |||
| Name: | Thomas Ewald | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
| LENDERS: | By signing below, you have indicated your consent to the Amendment CHAMPLAIN CLO, LTD. By: INVESCO Senior Secured Management, Inc. As Collateral Manager |
|||
| By: | /s/ Thomas Ewald | |||
| Name: | Thomas Ewald | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
| LENDERS: | By signing below, you have indicated your consent to the Amendment CHARTER VIEW PORTFOLIO By: INVESCO Senior Secured Management Inc. As Investment Advisor |
|||
| By: | /s/ Thomas Ewald | |||
| Name: | Thomas Ewald | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
| LENDERS: | By signing below, you have indicated your consent to the Amendment DIVERSIFIED CREDIT PORTFOLIO LTD. By: INVESCO Senior Secured Management, Inc. as Investment Adviser |
|||
| By: | /s/ Thomas Ewald | |||
| Name: | Thomas Ewald | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment HUDSON CANYON FUNDING II, LTD By: INVESCO Senior Secured Management, Inc. As Collateral Manager & Attorney InFact |
||||
| By: | /s/ Thomas Ewald | |||
| Name: | Thomas Ewald | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment LIMEROCK CLO I By: INVESCO Senior Secured Management, Inc. As Investment Manager |
||||
| By: | /s/ Thomas Ewald | |||
| Name: | Thomas Ewald | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment MOSELLE CLO S.A. By: INVESCO Senior Secured Management, Inc. As Collateral Manager |
||||
| By: | /s/ Thomas Ewald | |||
| Name: | Thomas Ewald | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment NAUTIQUE FUNDING LTD. By: INVESCO Senior Secured Management, Inc. As Collateral Manager |
||||
| By: | /s/ Thomas Ewald | |||
| Name: | Thomas Ewald | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment SAGAMORE CLO LTD. By: INVESCO Senior Secured Management, Inc. As Collateral Manager |
||||
| By: | /s/ Thomas Ewald | |||
| Name: | Thomas Ewald | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment SARATOGA CLO I, LIMITED By: INVESCO Senior Secured Management, Inc. As the Asset Manager |
||||
| By: | /s/ Thomas Ewald | |||
| Name: | Thomas Ewald | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment WASATCH CLO LTD By: INVESCO Senior Secured Management, Inc. As Portfolio Manager |
||||
| By: | /s/ Thomas Ewald | |||
| Name: | Thomas Ewald | |||
| Title: | Authorized Signatory | |||
| By: | ||||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment CELTS CLO 2007-1 LTD By: INVESCO Senior Secured Management, Inc. As Portfolio Manager |
||||
| By: | /s/ Thomas Ewald | |||
| Name: | Thomas Ewald | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Grand Central Asset Trust, Cameron I Series |
||||
| By: | /s/ Patrick W. Reichart | |||
| Name: | Patrick W. Reichart | |||
| Title: | Attorney In Fact | |||
LENDERS:
| By signing below, you have indicated
your consent to the Amendment Name of Institution: Venture VIII CDO, Limited By its investment advisor, MJX Asset Management LLC |
||||
| By: | /s/ Martin Davey | |||
| Name: | Martin Davey | |||
| Title: | Managing Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Morgan Stanley Investment Management Garda B.V. By: Morgan Stanley Investment Management Limited as Collateral Manager |
||||
| By: | /s/ Robert Drobny | |||
| Name: | Robert Drobny | |||
| Title: | Executive Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Morgan Stanley Investment Management Coniston B.V. By: Morgan Stanley Investment Management Limited as Collateral Manager |
||||
| By: | /s/ Robert Drobny | |||
| Name: | Robert Drobny | |||
| Title: | Executive Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Morgan Stanley Investment Management Mezzano B.V. Signed By: Morgan Stanley Investment Management Limited as Collateral Manager |
||||
| By: | /s/ Robert Drobny | |||
| Name: | Robert Drobny | |||
| Title: | Executive Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Zodiac Fund — Morgan Stanley US Senior Loan Fund |
||||
| By: | Morgan Stanley Investment Management Inc. as Investment Manager | |||
| By: | /s/ Robert Drobny | |||
| Name: | Robert Drobny | |||
| Title: | Executive Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: VAN KAMPEN SENIOR INCOME TRUST |
||||
| By: | Van Kampen Asset Management | |||
| By: | /s/ Robert Drobny | |||
| Name: | Robert Drobny | |||
| Title: | Executive Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: VAN KAMPEN SENIOR LOAN FUND |
||||
| By: | Van Kampen Asset Management | |||
| By: | /s/ Robert Drobny | |||
| Name: | Robert Drobny | |||
| Title: | Executive Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: QUALCOMM Global Trading, lnc. |
||||
| By: | Morgan Stanley Investment Management Inc. as Investment Manager |
|||
| By: | /s/ Robert Drobny | |||
| Name: | Robert Drobny | |||
| Title: | Executive Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Morgan Stanley Prime Income Trust |
||||
| By: | /s/ Robert Drobny | |||
| Name: | Robert Drobny | |||
| Title: | Executive Director | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment |
|||||
| Name of Institution: | |||||
| MSIM Peconic Bay, Ltd. | |||||
| By: Morgan Stanley Investment Management Inc. as Collateral Manager |
|||||
| By: | /s/ Robert Drobny
|
||||
| Title: Executive Director | |||||
| By: | * | ||||
| Title: | |||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your | |||||
| consent to the Amendment | |||||
| Name of Institution: | |||||
| NATIXIS | |||||
| By: | /s/ Edward N. Parkes IV
|
||||
| Title: Director | |||||
| By: | /s/ Harold Birk | ||||
| Title: Managing Director | |||||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Natixis COF I, LLC |
||||
| By: | /s/ Ray Meyer | |||
| Name: | Ray Meyer | |||
| Title: | Director | |||
| By: | /s/ Patrick Owens | |||
| Name: | Patrick Owens | |||
| Title: | Managing Director | |||
By signing below, you have indicated your Consent to the Amendment |
||
Oaktree Senior Loan Fund L.P. |
||
By: Oaktree Senior Loan fund GP, L.P. |
||
Its: General Partner |
||
By: Oaktree Fund GP II, L.P. Its: General Partner |
||
/s/ Desmund Shirazi
|
||
Title: Authorized Signatory |
||
/s/ William Melanson
|
||
Title: Vice President |
By signing below, you have indicated your Consent to the Amendment |
||
Oaktree TT Multi-Strategy Fund, L.P. |
||
By: Oaktree TT Multi-Strategy Fund GP, L.P. |
||
Its: General Partner |
||
By: Oaktree Fund GP, LLC |
||
Its: General Partner |
||
| By: Oaktree Fund 1, L.P. Its: Managing Member |
||
/s/ Desmund Shirazi |
||
Title: Authorized Signatory |
||
/s/ William Melanson |
||
Title: Vice President |
||
By signing below, you have indicated your
Consent to the Amendment
Consent to the Amendment
The Public Education Employee Retirement System
of Missouri
of Missouri
By: Oaktree Capital Management, L.P.
Its: Investment Manager
Its: Investment Manager
| /s/ Desmund Shirazi | ||||
| Name: Desmund Shirazi | ||||
| Title: Authorized Signatory | ||||
| /s/ William Melanson | ||||
| Name: William Melanson | ||||
| Title Vice President | ||||
By signing below, you have indicated your
Consent to the Amendment
Consent to the Amendment
The Public School Retirement System
of Missouri
of Missouri
By: Oaktree Capital Management, L.P.
Its: Investment Manager
Its: Investment Manager
| /s/ Desmund Shirazi | ||||
| Name: Desmund Shirazi | ||||
| Title: Authorized Signatory | ||||
| /s/ William Melanson | ||||
| Name: William Melanson | ||||
| Title Vice President | ||||
By signing below, you have indicated your
Consent to the Amendment
Consent to the Amendment
The Delaware Public Employees’ Retirement System
By: Oaktree Capital Management, L.P.
Its: Investment Manager
Its: Investment Manager
| /s/ Desmund Shirazi | ||||
| Name: Desmund Shirazi | ||||
| Title: Authorized Signatory | ||||
| /s/ William Melanson | ||||
| Name: William Melanson | ||||
| Title Vice President | ||||
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Oppenheimer Master Loan Fund, LLC |
||||
| By: | /s/ Jeff Schwartz | |||
| Name: | Jeff Schwartz | |||
| Title: | Assistant Vice President | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your | ||
| consent to the Amendment | ||
| Name of Institution: | ||
| COMSTOCK FUNDING LTD. | ||
| By: Silvermine Capital Management LLC | ||
| As Investment Manager |
| By: | /s/ Jonathan J. Marks | |||
| Name: | Jonathan J. Marks | |||
| Title: | Principal Silvermine Capital Management, LLC |
|||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment |
||
| Name of Institution: | ||
| GREENS CREEK FUNDING LTD. | ||
| By: Silvermine Capital Management, | ||
LLC as Investment Manager
|
| By: | /s/ Jonathan J. Marks | |||
| Name: | Jonathan J. Marks | |||
| Title: | Principal Silvermine Capital Management, LLC |
|||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your | ||
| consent to the Amendment | ||
| Name of Institution: | ||
| CANNINGTON FUNDING LTD. | ||
| By: Silvermine Capital Management, LLC | ||
as Investment Manager
|
| By: | /s/ Jonathan J. Marks | |||
| Name: | Jonathan J. Marks | |||
| Title: | Principal Silvermine Capital Management, LLC |
|||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment |
||
| Name of Institution: | ||
| ECP CLO 2008-1, LTD | ||
| Silvermine Capital Management LLC | ||
| As Portfolio Manager |
| By: | /s/ Jonathan J. Marks | |||
| Name: | Jonathan J. Marks | |||
| Title: | Principal Silvermine Capital Management, LLC |
|||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have
indicated your consent to the Amendment |
||
| Name of Institution: | ||
| Cornerstone CLO Ltd. | ||
| By Stone Tower Debt Advisors LLC, | ||
| As its Collateral Manager | ||
| By: | /s/ Michael W. DelPercio
|
|||||
| Title: Authorized Signatory | ||||||
| By: |
|
* | ||||
| Title: |
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have
indicated your consent to the Amendment |
||
| Name of Institution: | ||
| Granite Ventures II Ltd. | ||
| By Stone Tower Debt Advisors LLC, | ||
| As its Collateral Manager | ||
| By: | /s/ Michael W. DelPercio
|
|||||
| Title: Authorized Signatory | ||||||
| By: |
|
* | ||||
| Title: |
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have
indicated your consent to the Amendment |
||
| Name of Institution: | ||
| Granite Ventures III Ltd. | ||
| By Stone Tower Debt Advisors LLC, | ||
| As its Collateral Manager | ||
| By: | /s/ Michael W. DelPercio
|
|||||
| Title: Authorized Signatory | ||||||
| By: |
|
* | ||||
| Title: |
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have
indicated your consent to the Amendment |
||
| Name of Institution: | ||
| Rampart CLO 2007 Ltd. | ||
| By Stone Tower Debt Advisors LLC, | ||
| As its Collateral Manager | ||
| By: | /s/ Michael W. DelPercio
|
|||||
| Title: Authorized Signatory | ||||||
| By: |
|
* | ||||
| Title: |
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have
indicated your consent to the Amendment |
||
| Name of Institution: | ||
| Rampart CLO 2006-1 Ltd. | ||
| By Stone Tower Debt Advisors LLC, | ||
| As its Collateral Manager | ||
| By: | /s/ Michael W. DelPercio
|
|||||
| Title: Authorized Signatory | ||||||
| By: |
|
* | ||||
| Title: |
| * | For institutions requiring two signature blocks. |
| LENDERS: | By signing below, you have indicated your consent to the Amendment Name of Institution: Stone Tower CLO III Ltd. By Stone Tower Debt Advisors LLC, As its Collateral Manager |
|||
| By: | /s/ Michael W. DelPercio | |||
| Name: | Michael W. DelPercio | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
| LENDERS: | By signing below, you have indicated your consent to the Amendment Name of Institution: Stone Tower CLO IV Ltd. By Stone Tower Debt Advisors LLC, As its Collateral Manager |
|||
| By: | /s/ Michael W. DelPercio | |||
| Name: | Michael W. DelPercio | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
| LENDERS: | By signing below, you have indicated your consent to the Amendment Name of Institution: Stone Tower CLO V Ltd. By Stone Tower Debt Advisors LLC, As its Collateral Manager |
|||
| By: | /s/ Michael W. DelPercio | |||
| Name: | Michael W. DelPercio | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
| LENDERS: | By signing below, you have indicated your consent to the Amendment Name of Institution: Stone Tower CLO VI Ltd. By Stone Tower Debt Advisors LLC, As its Collateral Manager |
|||
| By: | /s/ Michael W. DelPercio | |||
| Name: | Michael W. DelPercio | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
| LENDERS: | By signing below, you have indicated your consent to the Amendment Name of Institution: Stone Tower CLO VII Ltd. By Stone Tower Debt Advisors LLC, As its Collateral Manager |
|||
| By: | /s/ Michael W. DelPercio | |||
| Name: | Michael W. DelPercio | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment Name of Institution: Stone Tower Credit Funding I Ltd. By Stone Tower Fund Management LLC, As its Collateral Manager |
||||
| By: | /s/ Michael W. DelPercio, | |||
| Name: | Michael W. DelPercio, | |||
| Title: | Authorized Signatory | |||
| By: | * | |||
| Name: | ||||
| Title: | ||||
| * | For institutions requiring two signature blocks. |
LENDERS:
| By signing below, you have indicated your consent to the Amendment WEST BEND MUTUAL INSURANCE COMPANY |
||||
| By: | TCW Asset Management Company, as its Investment Advisor |
|||
| By: | /s/ Edison Hwang | |||
| Name: | Edison Hwang | |||
| Title: | Vice President | |||
| By: | /s/ Gil Tollinchi | |||
| Name: | Gil Tollinchi | |||
| Title: | Senior Vice President | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment CELERITY CLO LTD. |
||||
| By: | TCW Asset Management Company, as Agent |
|||
| By: | /s/ Edison Hwang | |||
| Name: | Edison Hwang | |||
| Title: | Vice President | |||
| By: | /s/ Gil Tollinchi | |||
| Name: | Gil Tollinchi | |||
| Title: | Senior Vice President | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment FARAKER INVESTMENT PTE LTD. By: TCW Asset Management Company, as Manager |
||||
| By: | /s/ Edison Hwang | |||
| Name: | Edison Hwang | |||
| Title: | Vice President | |||
| By: | /s/ Gil Tollinchi | |||
| Name: | Gil Tollinchi | |||
| Title: | Senior Vice President | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment FIRST 2004-I CLO, LTD. |
||||
| By: | TCW Asset Management Company, its Collateral Manager |
|||
| By: | /s/ Edison Hwang | |||
| Name: | Edison Hwang | |||
| Title: | Vice President | |||
| By: | /s/ Gil Tollinchi | |||
| Name: | Gil Tollinchi | |||
| Title: | Senior Vice President | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment FIRST 2004-II CLO, LTD. By: TCW Asset Management Company, as its Collateral Manager |
||||
| By: | /s/ Edison Hwang | |||
| Name: Edison Hwang | ||||
| Title: Vice President | ||||
| By: | /s/ Gil Tollinchi | |||
| Name: Gil Tollinchi | ||||
| Title: Senior Vice President | ||||
LENDERS:
| By signing below, you have indicated
your consent to the Amendment ILLINOIS STATE BOARD OF INVESTMENT By: TCW Asset Management Company, as its Investment Advisor |
||||
| By: | /s/ Edison Hwang | |||
| Name: | Edison Hwang | |||
| Title: | Vice President | |||
| By: | /s/ Gil Tollinchi | |||
| Name: | Gil Tollinchi | |||
| Title: | Senior Vice President | |||
LENDERS:
| By signing below, you have indicated
your consent to the Amendment MOMENTUM CAPITAL FUND, LTD. By: TCW Asset Management Company as its Portfolio Manager |
||||
| By: | /s/ Edison Hwang | |||
| Name: | Edison Hwang | |||
| Title: | Vice President | |||
| By: | /s/ Gil Tollinchi | |||
| Name: | Gil Tollinchi | |||
| Title: | Senior Vice President | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment PARK AVENUE LOAN TRUST By: TCW Asset Management Company, as Agent |
||||
| By: | /s/ Edison Hwang | |||
| Name: Edison Hwang | ||||
| Title: Vice President | ||||
| By: | /s/ Gil Tollinchi | |||
| Name: Gil Tollinchi | ||||
| Title: Senior Vice President | ||||
LENDERS:
| By signing below, you have indicated your consent to the Amendment RGA Reinsurance Company By: TCW Asset Management Company as its Investment Advisor |
||||
| By: | /s/ Edison Hwang | |||
| Name: | Edison Hwang | |||
| Title: | Vice President | |||
| By: | /s/ Gil Tollinchi | |||
| Name: | Gil Tollinchi | |||
| Title: | Senior Vice President | |||
LENDERS:
| By signing below, you have indicated your consent to the Amendment TCW Credit Opportunities Fund, L.P. By: TCW Asset Management Company as Manager |
||||
| By: | /s/ Edison Hwang | |||
| Name: Edison Hwang | ||||
| Title: Vice President | ||||
| By: | /s/ Gil Tollinchi | |||
| Name: Gil Tollinchi | ||||
| Title: Senior Vice President | ||||
LENDERS:
| By signing below, you have indicated your consent to the Amendment TCW Senior Secured Floating Rate Loan Fund, L.P. By: TCW Asset Management Company as its Investment |
||||
| By: | /s/ Edison Hwang | |||
| Name: Edison Hwang | ||||
| Title: Vice President | ||||
| By: | /s/ Gil Tollinchi | |||
| Name: Gil Tollinchi | ||||
| Title: Senior Vice President | ||||
LENDERS:
| By signing below, you have indicated your consent to the Amendment TCW Senior Secured Loan Fund, LP By: TCW Asset Management Company, as its Investment Advisor |
||||
| By: | /s/ Edison Hwang | |||
| Name: Edison Hwang | ||||
| Title: Vice President | ||||
| By: | /s/ Gil Tollinchi | |||
| Name: Gil Tollinchi | ||||
| Title: Senior Vice President | ||||
LENDERS:
| By signing below, you have indicated your consent to the Amendment VELOCITY CLO LTD. By: TCW Asset Management Company, as Collateral Manager |
||||
| By: | /s/ Edison Hwang | |||
| Name: Edison Hwang | ||||
| Title: Vice President | ||||
| By: | /s/ Gil Tollinchi | |||
| Name: Gil Tollinchi | ||||
| Title: Senior Vice President | ||||
LENDERS:
| By signing below, you have indicated your consent to the Amendment VITESSE CLO LTD. By: TCW Asset Management Company as its Portfolio Manager |
||||
| By: | /s/ Edison Hwang | |||
| Name: Edison Hwang | ||||
| Title: Vice President | ||||
| By: | /s/ Gil Tollinchi | |||
| Name: Gil Tollinchi | ||||
| Title: Senior Vice President | ||||
Exhibit
A to
Amendment:
EXECUTION VERSION
Amendment:
EXECUTION VERSION
$1,305,000,000
CREDIT AGREEMENT
among
BOOZ ALLEN HAMILTON INVESTOR CORPORATION
(f/k/a EXPLORER INVESTOR CORPORATION),
(f/k/a EXPLORER INVESTOR CORPORATION),
BOOZ ALLEN HAMILTON INC.,
as the Borrower,
The Several Lenders from Time to Time Parties Hereto,
as the Borrower,
The Several Lenders from Time to Time Parties Hereto,
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
(f/k/a CREDIT SUISSE)
as Administrative Agent and Collateral Agent,
(f/k/a CREDIT SUISSE)
as Administrative Agent and Collateral Agent,
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
(f/k/a CREDIT SUISSE)
as Issuing Lender,
(f/k/a CREDIT SUISSE)
as Issuing Lender,
BANC OF AMERICA SECURITIES LLC,
and
CREDIT SUISSE SECURITIES (USA) LLC,
as Joint Lead Arrangers,
and
as Joint Lead Arrangers,
and
BANC OF AMERICA SECURITIES LLC,
CREDIT SUISSE SECURITIES (USA) LLC,
BARCLAYS CAPITAL,
GOLDMAN SACHS CREDIT PARTNERS L.P.,
and
MORGAN STANLEY SENIOR FUNDING, INC.,
as Joint Bookrunners
as Joint Bookrunners
and
SUMITOMO MITSUI BANKING CORPORATION,
as Co-Manager
as Co-Manager
Dated as of July 31, 2008
and
Amended and Restated as of December 11, 2009
Amended and Restated as of December 11, 2009
TABLE OF CONTENTS
| Page | ||||||
SECTION 1. |
DEFINITIONS | 1 | ||||
1.1 |
Defined Terms | 1 | ||||
1.2 |
Other Definitional Provisions | 38 | ||||
1.3 |
Pro Forma Calculations | 39 | ||||
SECTION 2. |
AMOUNT AND TERMS OF COMMITMENTS | 39 | ||||
2.1 |
Term Commitments | 39 | ||||
2.2 |
Procedure for Term Loan Borrowing | 40 | ||||
2.3 |
Repayment of Term Loans | 40 | ||||
2.4 |
Revolving Commitments | 41 | ||||
2.5 |
Procedure for Revolving Loan Borrowing | 41 | ||||
2.6 |
Swingline Commitment | 42 | ||||
2.7 |
Procedure for Swingline Borrowing; Refunding of Swingline Loans | 42 | ||||
2.8 |
Repayment of Loans | 43 | ||||
2.9 |
Commitment Fees, etc. | 44 | ||||
2.10 |
Termination or Reduction of Revolving Commitments | 44 | ||||
2.11 |
Optional Prepayments | 44 | ||||
2.12 |
Mandatory Prepayments | 46 | ||||
2.13 |
Conversion and Continuation Options | 48 | ||||
2.14 |
Minimum Amounts and Maximum Number of Eurocurrency Tranches | 48 | ||||
2.15 |
Interest Rates and Payment Dates | 48 | ||||
2.16 |
Computation of Interest and Fees | 49 | ||||
2.17 |
Inability to Determine Interest Rate | 50 | ||||
2.18 |
Pro Rata Treatment and Payments | 50 | ||||
2.19 |
Requirements of Law | 52 | ||||
2.20 |
Taxes | 53 | ||||
2.21 |
Indemnity | 55 | ||||
2.22 |
Illegality | 55 | ||||
2.23 |
Change of Lending Office | 56 | ||||
2.24 |
Replacement of Lenders | 56 | ||||
2.25 |
Incremental Loans | 56 | ||||
SECTION 3. |
LETTERS OF CREDIT | 58 | ||||
3.1 |
L/C Commitment | 58 | ||||
3.2 |
Procedure for Issuance of Letter of Credit | 58 | ||||
3.3 |
Fees and Other Charges | 59 | ||||
3.4 |
L/C Participations | 59 | ||||
3.5 |
Reimbursement Obligation of the Borrower | 60 | ||||
3.6 |
Obligations Absolute | 60 | ||||
3.7 |
Letter of Credit Payments | 61 | ||||
3.8 |
Applications | 61 | ||||
i
| Page | ||||||
SECTION 4. |
REPRESENTATIONS AND WARRANTIES | 61 | ||||
4.1 |
Financial Condition | 61 | ||||
4.2 |
No Change | 62 | ||||
4.3 |
Existence; Compliance with Law | 62 | ||||
4.4 |
Corporate Power; Authorization; Enforceable Obligations | 62 | ||||
4.5 |
No Legal Bar | 63 | ||||
4.6 |
No Material Litigation | 63 | ||||
4.7 |
No Default | 63 | ||||
4.8 |
Ownership of Property; Liens | 63 | ||||
4.9 |
Intellectual Property | 63 | ||||
4.10 |
Taxes | 64 | ||||
4.11 |
Federal Regulations | 64 | ||||
4.12 |
ERISA | 64 | ||||
4.13 |
Investment Company Act | 64 | ||||
4.14 |
Subsidiaries | 65 | ||||
4.15 |
Environmental Matters | 65 | ||||
4.16 |
Accuracy of Information, etc. | 65 | ||||
4.17 |
Security Documents | 65 | ||||
4.18 |
Solvency | 66 | ||||
SECTION 5. |
CONDITIONS PRECEDENT | 66 | ||||
5.1 |
Conditions to Initial Extension of Credit | 66 | ||||
5.2 |
Conditions to Each Revolving Loan Extension of Credit After Closing Date | 68 | ||||
SECTION 6. |
AFFIRMATIVE COVENANTS | 69 | ||||
6.1 |
Financial Statements | 69 | ||||
6.2 |
Certificates; Other Information | 70 | ||||
6.3 |
Payment of Taxes | 71 | ||||
6.4 |
Conduct of Business and Maintenance of Existence, etc.; Compliance | 71 | ||||
6.5 |
Maintenance of Property; Insurance | 71 | ||||
6.6 |
Inspection of Property; Books and Records; Discussions | 72 | ||||
6.7 |
Notices | 72 | ||||
6.8 |
Additional Collateral, etc. | 73 | ||||
6.9 |
Use of Proceeds | 76 | ||||
6.10 |
Post-Closing Undertakings | 76 | ||||
SECTION 7. |
NEGATIVE COVENANTS | 76 | ||||
7.1 |
Financial Covenants | 76 | ||||
7.2 |
Indebtedness | 78 | ||||
7.3 |
Liens | 81 | ||||
7.4 |
Fundamental Changes | 83 | ||||
7.5 |
Dispositions of Property | 84 | ||||
7.6 |
Restricted Payments | 86 | ||||
7.7 |
Investments | 89 | ||||
7.8 |
Optional Payments and Modifications of Certain Debt Instruments | 91 | ||||
7.9 |
Transactions with Affiliates | 92 | ||||
7.10 |
Sales and Leasebacks | 93 | ||||
ii
| Page | ||||||
7.11 |
Changes in Fiscal Periods | 93 | ||||
7.12 |
Negative Pledge Clauses | 93 | ||||
7.13 |
Clauses Restricting Subsidiary Distributions | 94 | ||||
7.14 |
Lines of Business | 94 | ||||
7.15 |
Limitation on Hedge Agreements | 95 | ||||
7.16 |
Changes in Jurisdictions of Organization; Name | 95 | ||||
7.17 |
Limitation on Activities of Holdings | 95 | ||||
SECTION 8. |
EVENTS OF DEFAULT | 95 | ||||
8.1 |
Events of Default | 95 | ||||
8.2 |
Specified Equity Contributions | 99 | ||||
SECTION 9. |
THE AGENTS | 99 | ||||
9.1 |
Appointment | 99 | ||||
9.2 |
Delegation of Duties | 99 | ||||
9.3 |
Exculpatory Provisions | 100 | ||||
9.4 |
Reliance by the Agents | 100 | ||||
9.5 |
Notice of Default | 100 | ||||
9.6 |
Non-Reliance on Agents and Other Lenders | 100 | ||||
9.7 |
Indemnification | 101 | ||||
9.8 |
Agent in Its Individual Capacity | 101 | ||||
9.9 |
Successor Agents | 101 | ||||
9.10 |
Authorization to Release Liens and Guarantees | 102 | ||||
9.11 |
Joint Bookrunners and Co-Manager | 102 | ||||
SECTION 10. |
MISCELLANEOUS | 102 | ||||
10.1 |
Amendments and Waivers | 102 | ||||
10.2 |
Notices | 104 | ||||
10.3 |
No Waiver; Cumulative Remedies | 105 | ||||
10.4 |
Survival of Representations and Warranties | 105 | ||||
10.5 |
Payment of Expenses; Indemnification | 105 | ||||
10.6 |
Successors and Assigns; Participations and Assignments | 106 | ||||
10.7 |
Adjustments; Set-off | 109 | ||||
10.8 |
Counterparts | 110 | ||||
10.9 |
Severability | 110 | ||||
10.10 |
Integration | 110 | ||||
10.11 |
GOVERNING LAW | 110 | ||||
10.12 |
Submission to Jurisdiction; Waivers | 110 | ||||
10.13 |
Acknowledgments | 111 | ||||
10.14 |
Confidentiality | 111 | ||||
10.15 |
Release of Collateral and Guarantee Obligations; Subordination of Liens | 112 | ||||
10.16 |
Accounting Changes | 113 | ||||
10.17 |
WAIVERS OF JURY TRIAL | 113 | ||||
10.18 |
USA PATRIOT ACT | 113 | ||||
10.19 |
Effect of Certain Inaccuracies | 113 | ||||
iii
| SCHEDULES: | ||
1.1
|
Excluded Subsidiaries | |
2.1
|
Commitments | |
2.1A
|
Commitments | |
4.3
|
Existence; Compliance with Law | |
4.4
|
Consents, Authorizations, Filings and Notices | |
4.6
|
Litigation | |
4.8A
|
Excepted Property | |
4.8B
|
Owned Real Property | |
4.14
|
Subsidiaries | |
4.17
|
UCC Filing Jurisdictions | |
6.10
|
Post-Closing Undertakings | |
7.2(d)
|
Existing Indebtedness | |
7.3(f)
|
Existing Liens | |
7.7
|
Existing Investments | |
7.12
|
Existing Negative Pledge Clauses | |
| EXHIBITS: | ||
A
|
Form of Guarantee and Collateral Agreement | |
B
|
Form of Compliance Certificate | |
C
|
Form of Closing Certificate | |
D
|
Form of Assignment and Assumption | |
E-1
|
Form of Legal Opinion of Debevoise & Plimpton LLP | |
E-2
|
Form of Legal Opinion of Morris, Nichols, Arsht & Tunnell LLP | |
F
|
Form of Exemption Certificate | |
G
|
Form of Solvency Certificate | |
H
|
Form of Joinder Agreement | |
I
|
Form of Prepayment Option Notice | |
J-1
|
Form of Tranche A Term Loan Note | |
J-2
|
Form of Tranche B Term Loan Note | |
J-3
|
Form of Revolving Note | |
J-4
|
Form of Tranche C Term Loan Note | |
iv
CREDIT AGREEMENT, dated as of July 31, 2008 and amended and restated as of December 11,
2009, among BOOZ ALLEN HAMILTON INVESTOR CORPORATION (f/k/a EXPLORER INVESTOR CORPORATION), a
Delaware corporation (“Holdings”), BOOZ ALLEN HAMILTON INC., a Delaware corporation (the
“Company” or the “Borrower”), the several banks and other financial institutions or
entities from time to time parties to this Agreement (the “Lenders”), CREDIT SUISSE AG,
CAYMAN ISLANDS BRANCH (f/k/a CREDIT SUISSE), as Administrative Agent and Collateral Agent, CREDIT
SUISSE AG, CAYMAN ISLANDS BRANCH (f/k/a CREDIT SUISSE), as Issuing Lender, BANC OF AMERICA
SECURITIES LLC and CREDIT SUISSE SECURITIES (USA) LLC, as joint lead arrangers, BANC OF AMERICA
SECURITIES LLC, CREDIT SUISSE SECURITIES (USA) LLC, BARCLAYS CAPITAL, the investment banking
division of Barclays Bank PLC, GOLDMAN SACHS CREDIT PARTNERS L.P., and MORGAN STANLEY SENIOR
FUNDING, INC., as joint bookrunners and SUMITOMO MITSUI BANKING CORPORATION, as co-manager.
WHEREAS, pursuant to that certain credit agreement, dated as of July 31, 2008 (the
“Existing Credit Agreement”), among Holdings, the Initial Borrower, the Borrower, the
Lenders, the Agents, and the other parties thereto, the Lenders extended, and agreed to extend,
credit to the Borrower, and
WHEREAS, Holdings, the Borrower, the Lenders and the Agents have entered into the First
Amendment pursuant to which, subject to the conditions set forth therein (a) the Tranche C Term
Lenders have agreed to make Tranche C Term Loans to the Borrower in an aggregate principal amount
equal to $350,000,000, (b) the Additional Revolving Lenders have agreed to provide Additional
Revolving Commitments in an aggregate amount equal to $145,000,000 and (c) Holdings, the Borrower,
the Lenders and the Agents have agreed to amend and restate the Existing Credit Agreement in the
form of this Agreement,
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in this Section 1.1
shall have the respective meanings set forth in this Section 1.1.
“ABR”: for any day, a rate per annum equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of
1%. For purposes hereof: “Prime Rate” means the prime commercial lending rate of the
Administrative Agent as established from time to time in its principal U.S. office, as in effect
from time to time. Any change in the ABR due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective day of such change
in the Prime Rate or the Federal Funds Effective Rate, respectively.
“ABR Loans”: Loans the rate of interest applicable to which is based upon the ABR.
“Accounting Changes”: as defined in Section 10.16.
“Acquisition”: as defined in the definition of “Permitted Acquisition”.
“Act”: as defined in Section 10.18.
1
“Additional Revolving Commitment”: with respect to any Revolving Lender, the new or
additional Revolving Commitment provided by such Revolving Lender on the Amendment and Restatement
Effective Date in the amount set forth under the heading “Additional Revolving Commitment” opposite
such Lender’s name on Schedule 2.1A. The aggregate amount of the Additional Revolving Commitments
is $145,000,000.
“Additional Revolving Lender”: each Lender that has an Additional Revolving
Commitment.
“Administrative Agent”: Credit Suisse AG, Cayman Islands Branch (f/k/a Credit
Suisse), as the administrative agent for the Lenders under this Agreement and the other Loan
Documents, together with any of its successors and permitted assigns in such capacity in accordance
with Section 9.9.
“Affiliate”: as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person. For purposes of this
definition, “control” of a Person means the power, directly or indirectly to direct or cause the
direction of the management and policies of such Person, in either case whether by contract or
otherwise.
“Agents”: the collective reference to the Collateral Agent and the Administrative
Agent, and for purposes of Sections 10.13 and 10.14, the Lead Arrangers, Joint Bookrunners and
Co-Manager.
“Aggregate Exposure”: with respect to any Lender at any time, an amount equal to
(a) until the Closing Date, the aggregate amount of such Lender’s Commitments at such time and
(b) thereafter, the sum of (i) the aggregate then unpaid principal amount of such Lender’s Term
Loans, (ii) the aggregate amount of such Lender’s Revolving Commitments then in effect or, if the
Revolving Commitments have been terminated, the amount of such Lender’s Revolving Extensions of
Credit then outstanding and (iii) the aggregate amount of such Lender’s New Loan Commitments then
in effect, or if such New Loan Commitments have been terminated, the amount of such Lender’s New
Loans.
“Aggregate Exposure Percentage”: with respect to any Lender at any time, the ratio
(expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the total Aggregate
Exposures of all Lenders at such time.
“Agreed Purposes”: as defined in Section 10.14.
“Agreement”: this Credit Agreement, as amended and restated as of December 11, 2009,
and as further amended, restated, amended and restated, supplemented or otherwise modified from
time to time.
“AHYDO Payments”: “applicable high yield discount obligations” (within the meaning of
Section 163(i)(1) of the Code) “catch-up” payments in respect of any Indebtedness (including the
Mezzanine Loans, any Permitted Subordinated Indebtedness and any Indebtedness incurred pursuant to
Section 7.2(v)) the incurrence of which is not otherwise prohibited hereunder to the extent such
Indebtedness provides for the payment of interest on all or any portion of the principal amount of
such Indebtedness by adding such interest to the principal amount thereof.
“Amendment and Restatement Effective Date”: December 11, 2009.
“Annual Operating Budget”: as defined in Section 6.2(c).
2
“Applicable Period”: as defined in Section 10.19.
“Applicable Margin” or “Applicable Commitment Fee Rate”: for any day, with
respect to (i) the Loans (including any Swingline Loan) under the Revolving Facility and the
Tranche A Term Loan Facility, and the commitment fee payable hereunder, the applicable rate per
annum determined pursuant to the Pricing Grid, (ii) the Loans under the Tranche B Term Loan
Facility, in the case of the Applicable Margin, 3.50% with respect to Tranche B Term Loans that are
ABR Loans and 4.50% with respect to Tranche B Term Loans that are Eurocurrency Loans and (iii) the
Loans under the Tranche C Term Loan Facility, in the case of the Applicable Margin, 3.00% with
respect to Tranche C Term Loans that are ABR Loans and 4.00% with respect to Tranche C Term Loans
that are Eurocurrency Loans; provided that from the Closing Date until the next change in
the Applicable Margin or Applicable Commitment Fee Rate in accordance with the Pricing Grid (a) the
Applicable Margin shall be 3.00% with respect to Tranche A Term Loans, Revolving Loans that are ABR
Loans and Swingline Loans and 4.00% with respect to Tranche A Term Loans and Revolving Loans that
are Eurocurrency Loans and (b) the Applicable Commitment Fee Rate shall be 0.50%.
“Application”: an application, in such form as the relevant Issuing Lender may
specify from time to time, requesting such Issuing Lender to open a Letter of Credit.
“Approved Fund”: as defined in Section 10.6(b).
“Asset Sale”: any Disposition of Property or series of related Dispositions of
Property by the Borrower or any of its Restricted Subsidiaries not in the ordinary course of
business (a) under Section 7.5(e) or (p) or (b) not otherwise permitted under Section 7.5, in each
case, which yields Net Cash Proceeds (valued at the initial principal amount thereof in the case of
non-cash proceeds consisting of notes or other debt securities and valued at fair market value in
the case of other non-cash proceeds) in excess of $1,000,000.
“Assignee”: as defined in Section 10.6(b).
“Assignment and Assumption”: an Assignment and Assumption, substantially in the form
of Exhibit D.
“Available Amount”: as at any date, the sum of, without duplication:
(a) $10,000,000;
(b) the aggregate cumulative amount, not less than zero, of 50% of Excess Cash Flow for
each fiscal year beginning with the fiscal year ending March 31, 2010;
(c) the Net Cash Proceeds received after the Closing Date and on or prior to such date
from any Equity Issuance by, or capital contribution to, Holdings or the Borrower (which in
the case of any such Equity Issuance by the Borrower, is not Disqualified Capital Stock)
which, in the case of any such Equity Issuance by, or capital contribution to, Holdings,
have been contributed in cash as common equity to the Borrower, in each case to the extent
it is not a Specified Equity Contribution;
(d) the aggregate amount of proceeds received after the Closing Date and on or prior to
such date that (i) would have constituted Net Cash Proceeds pursuant to clause (a) of the
definition of “Net Cash Proceeds” except for the operation of any of (A) the Dollar
threshold set
3
forth in the definition of “Asset Sale” and (B) the Dollar threshold set forth
in the definition of “Recovery Event” or (ii) constitutes Declined Proceeds;
(e) the aggregate principal amount of any Indebtedness of the Borrower or any
Restricted Subsidiary issued after the Closing Date (other than Indebtedness issued to a
Restricted Subsidiary), which has been converted into or exchanged for Capital Stock in
Holdings or any Parent Company;
(f) the amount received by the Borrower or any Restricted Subsidiary in cash (and the
fair market value (as determined in good faith by the Borrower) of Property other than cash
received by the Borrower or any Restricted Subsidiary) after the Closing Date from any
dividend or other distribution by an Unrestricted Subsidiary;
(g) in the event any Unrestricted Subsidiary has been redesignated as a Restricted
Subsidiary and becomes a Subsidiary Guarantor or has been merged, consolidated or
amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the
Borrower or any Subsidiary Guarantor, the fair market value (as determined in good faith by
the Borrower) of the Investments of the Borrower or any Restricted Subsidiary in such
Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of
the assets transferred or conveyed, as applicable);
(h) an amount equal to any returns (including dividends, interest, distributions,
returns of principal, profits on sale, repayments, income and similar amounts) actually
received in cash, Cash Equivalents and Permitted Liquid Investments by the Borrower or any
Restricted Subsidiary in respect of any Investments made pursuant to Section 7.7(f)(ii)(B),
(h)(B), or (v)(ii); and
(i) the aggregate amount actually received in cash, Cash Equivalents or Permitted
Liquid Investments by the Borrower or any Restricted Subsidiary in connection with the sale,
transfer or other disposition of its ownership interest in any joint venture that is not a
Subsidiary or in any Unrestricted Subsidiary, in each case, to the extent of the Investment
in such joint venture or Unrestricted Subsidiary;
in each case, that has not been previously applied pursuant to Section 7.6(b), Section 7.7(f)(ii),
(h)(B) or (v)(ii) or Sections 7.8(a)(ii)(A) and 7.8(a)(ii)(B), less the amount of any payments made
pursuant to Section 7.8(a)(ii)(F).
“Available Revolving Commitment”: as to any Revolving Lender at any time, an amount
equal to the excess, if any, of (a) such Lender’s Revolving Commitment then in effect (including
any New Loan Commitments which are Revolving Commitments) over (b) such Lender’s Revolving
Extensions of Credit then outstanding; provided that in calculating any Revolving Lender’s
Revolving Extensions of Credit under its Revolving Commitment for the purpose of determining such
Revolving Lender’s Available Revolving Commitments pursuant to Section 2.9(a), the aggregate
principal amount of Swingline Loans then outstanding shall be deemed to be zero.
“Benefited Lender”: as defined in Section 10.7(a).
“Board”: the Board of Governors of the Federal Reserve System of the United States
(or any successor).
4
“Board of Directors”: (a) with respect to a corporation, the board of directors of the
corporation or any committee thereof duly authorized to act on behalf of such board; (b) with
respect to a partnership, the Board of Directors of the general partner of the partnership, or any
committee thereof duly authorized to act on behalf of such board or the board or committee of any
Person serving a similar function; (c) with respect to a limited liability company, the managing
member or members or any controlling committee of managing members thereof or any Person or Persons
serving a similar function; and (d) with respect to any other Person, the board or committee of
such Person serving a similar function.
“Borrower”: as defined in the preamble hereto.
“Borrowing Date”: any Business Day specified by the Borrower as a date on which the
Borrower requests the relevant Lenders to make Loans hereunder.
“Business”: the business activities and operations of the Company and/or its
Affiliates on the Closing Date immediately after giving effect to the transactions contemplated by
the Spin Off Agreement.
“Business Day”: a day (a) other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close and (b) with respect
to notices and determinations in connection with, and payments of principal and interest on,
Eurocurrency Loans, such day is also a day for trading by and between banks in Dollar deposits in
the London interbank eurocurrency market.
“Capital Expenditures”: for any period, with respect to any Person, the aggregate of
all cash expenditures by such Person for the acquisition or leasing (pursuant to a capital lease
but excluding any amount representing capitalized interest) of fixed or capital assets, computer
software or additions to equipment (including replacements, capitalized repairs and improvements
during such period) which are required to be capitalized under GAAP on a balance sheet of such
Person; provided that in any event the term “Capital Expenditures” shall exclude: (i) any
Permitted Acquisition and any other Investment permitted hereunder; (ii) any expenditures to the
extent financed with any Reinvestment Deferred Amount; (iii) expenditures for leasehold
improvements for which such Person is reimbursed in cash or receives a credit; and (iv) capital
expenditures to the extent they are made with the proceeds of equity contributions (other than in
respect of Disqualified Capital Stock) made to the Borrower after the Closing Date.
“Capital Lease Obligations”: as to any Person, 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, for the purposes
of this Agreement, the amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP; provided that for purposes of this
definition, “GAAP” shall mean generally accepted accounting principles in the United States as in
effect on the Closing Date.
“Capital Stock”: any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, and any and all equivalent ownership
interests in a Person (other than a corporation).
“Carlyle Fund”: Carlyle Partners US V, L.P., and no other Person or entity.
5
“Cash Equivalents”: (a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit of the United States
of America), in each case maturing within eighteen months from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the date of issuance thereof
and having, at such date of acquisition, the highest credit rating obtainable from S&P or from
Moody’s;
(c) investments in certificates of deposit, banker’s acceptances and time deposits maturing
within one year from the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, the Administrative Agent or any domestic office
of any commercial bank organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000
and that issues (or the parent of which issues) commercial paper rated at least “Prime-1” (or the
then equivalent grade) by Moody’s or “A-1” (or the then equivalent grade) by S&P;
(d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution satisfying
the criteria of clause (c) above;
(e) investments in “money market funds” within the meaning of Rule 2a-7 of the Investment
Company Act of 1940, as amended, substantially all of whose assets are invested in investments of
the type described in clauses (a) through (d) above; and
(f) other short-term investments utilized by Foreign Subsidiaries in accordance with normal
investment practices for cash management in investments of a type analogous to the foregoing.
“Cash Management Obligations”: obligations owed by the Borrower or any Subsidiary
Guarantor to any Lender or any Affiliate of a Lender in respect of any overdraft and related
liabilities arising from treasury, depository and cash management services, credit or debit card,
or any automated clearing house transfers of funds.
“Certificated Security”: as defined in the Guarantee and Collateral Agreement.
“Change in Law”: (a) the adoption of any law, rule or regulation, or (b) any change
in any law, rule or regulation or in the interpretation or application thereof by any Governmental
Authority.
“Change of Control”: as defined in Section 8.1(j).
“Chattel Paper”: as defined in the Guarantee and Collateral Agreement.
“Closing Date”: July 31, 2008.
“Closing Date Material Adverse Effect”: a “Company Material Adverse Effect” as
defined in the Merger Agreement.
“Closing Date Stock Certificates”: Collateral consisting of stock certificates
representing the Capital Stock of the Domestic Subsidiaries that are Restricted Subsidiaries (and
not Immaterial
6
Subsidiaries) of the Borrower for which a security interest can be perfected by delivering such
stock certificates.
“Closing Date UCC Filing Collateral”: Collateral for which a security interest can be
perfected by filing a UCC financing statement.
“Code”: the Internal Revenue Code of 1986, as amended from time to time.
“Collateral”: the meaning assigned to such term in the Guarantee and Collateral
Agreement.
“Collateral Agent”: Credit Suisse AG, Cayman Islands Branch (f/k/a Credit Suisse), in
its capacity as collateral agent for the Secured Parties under the Security Documents and any of
its successors and permitted assigns in such capacity in accordance with Section 9.9.
“Co-Manager”: Sumitomo Mitsui Banking Corporation, in its capacity as co-manager.
“Commitment”: as to any Lender, the sum of the Tranche A Term Commitments, the
Tranche B Term Commitments, the Tranche C Term Commitments, the Revolving Commitments and the New
Loan Commitments (in each case, if any) of such Lender.
“Committed Reinvestment Amount”: as defined in the definition of “Reinvestment
Prepayment Amount”.
“Commonly Controlled Entity”: an entity, whether or not incorporated, that is under
common control with Holdings within the meaning of Section 4001 of ERISA or is part of a group that
includes Holdings and that is treated as a single employer under Section 414(b), (c), (m) or (o) of
the Code.
“Commonly Controlled Plan”: as defined in Section 4.12(b).
“Company”: as defined in the preamble hereto.
“Company Reorganization”: the series of transactions described in the “Project
Explorer Summarized Transaction Steps”, dated May 12, 2008, attached as Exhibit D to the Spin-Off
Agreement dated as of May 15, 2008 among the Company, Booz & Company Holdings, LLC, Booz & Company
Inc., Booz & Company Intermediate I Inc. and Booz & Company Intermediate II Inc., as amended,
supplemented or otherwise modified from time to time, provided that any such amendments,
supplements or modifications that are, when taken as a whole, materially adverse to the Lenders,
shall be reasonably acceptable to the Administrative Agent.
“Compliance Certificate”: a certificate duly executed by a Responsible Officer
substantially in the form of Exhibit B.
“Confidential Information”: as defined in Section 10.14.
“Consolidated Current Assets”: at any date, all amounts (other than (a) cash, Cash
Equivalents and Permitted Liquid Investments, (b) deferred financing fees and (c) payments for
deferred taxes so long as such items described in clauses (b) and (c) are not cash items) that
would, in conformity
7
with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a
consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such date.
“Consolidated Current Liabilities”: at any date, all amounts that would, in
conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like
caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such
date, but excluding (a) the current portion of any Indebtedness of the Borrower and its Restricted
Subsidiaries, (b) without duplication, all Indebtedness consisting of Revolving Loans, L/C
Obligations or Swingline Loans, to the extent otherwise included therein, (c) amounts for deferred
taxes and non-cash tax reserves accounted for pursuant to FASB Interpretation No. 48, (d) any
equity compensation related liability and (e) any liabilities in respect of adjustments to the
outstanding stock options in connection with the Recapitalization Transactions.
“Consolidated EBITDA”: of any Person for any period, Consolidated Net Income of such
Person and its Restricted Subsidiaries for such period plus, without duplication and, if
applicable, to the extent reflected as a charge in the statement of such Consolidated Net Income
(regardless of classification) for such period, the sum of:
(a) provisions for taxes based on income (or similar taxes in lieu of income taxes),
profits, capital (or equivalents), including federal, foreign, state, local, franchise,
excise and similar taxes and foreign withholding taxes of such Person paid or accrued
during such period;
(b) Consolidated Net Interest Expense and, to the extent not reflected in such
Consolidated Net Interest Expense, any net losses on hedging obligations or other
derivative instruments entered into for the purpose of hedging interest rate risk,
amortization or write-off of debt discount and debt issuance costs and commissions,
discounts and other fees and charges associated with Indebtedness (including commitment,
letter of credit and administrative fees and charges with respect to the Facilities and the
Mezzanine Loan Facility);
(c) depreciation and amortization expense and impairment charges (including deferred
financing fees, capitalized software expenditures, intangibles (including goodwill),
organization costs and amortization of unrecognized prior service costs and actuarial gains
and losses related to pensions and other post-employment benefits);
(d) any extraordinary, unusual or non-recurring expenses or losses (including (x)
losses on sales of assets outside of the ordinary course of business and restructuring and
integration costs or reserves, including any severance costs, costs associated with office
and facility openings, closings and consolidations, relocation costs and other
non-recurring business optimization expenses and (y) any expenses in connection with the
Recapitalization Transactions (including expenses in respect of adjustments to the
outstanding stock options in connection with the Recapitalization Transactions));
(e) any other non-cash charges, expenses or losses (except to the extent such charges,
expenses or losses represent an accrual of or reserve for cash expenses in any future
period or an amortization of a prepaid cash expense paid in a prior period);
(f) stock-option based and other equity-based compensation expenses;
(g) transaction costs, fees, losses and expenses (whether or not any transaction is
actually consummated) (including those relating to the Merger Transactions, the
transactions
8
contemplated hereby and by the Mezzanine Loan Documents (including any amendments or
waivers of the Loan Documents or the Mezzanine Loan Documents), and those payable in
connection with the sale of Capital Stock, the incurrence of Indebtedness permitted by
Section 7.2, transactions permitted by Section 7.4, Dispositions permitted by Section 7.5,
or any Permitted Acquisition or other Investment permitted by Section 7.7 (in each case
whether or not successful));
(h) all fees and expenses paid pursuant to the Management Agreement;
(i) proceeds from any business interruption insurance (to the extent not reflected as
revenue or income in such statement of such Consolidated Net Income);
(j) the amount of cost savings and other operating improvements and synergies
projected by the Borrower in good faith and certified in writing to the Administrative
Agent to be realized as a result of any acquisition (including the Merger Transactions) or
Disposition (including the termination or discontinuance of activities constituting such
business) of business entities or properties or assets, constituting a division or line of
business of any business entity, division or line of business that is the subject of any
such acquisition or Disposition, or from any operational change taken or committed to be
taken during such period (in each case calculated on a pro forma basis as
though such cost savings and other operating improvements and synergies had been realized
on the first day of such period), net of the amount of actual benefits realized during such
period from such actions to the extent already included in the Consolidated Net Income for
such period, provided that (i) the Borrower shall have certified to the
Administrative Agent that (A) such cost savings, operating improvements and synergies are
reasonably anticipated to result from such actions, (B) such actions have been taken, or
have been committed to be taken and the benefits resulting therefrom are anticipated by the
Borrower to be realized within 12 months and (ii) no cost savings shall be added pursuant
to this clause (j) to the extent already included in clause (d) above with respect to such
period;
(k) cash expenses relating to earn-outs and similar obligations;
(l) charges, losses, lost profits, expenses or write-offs to the extent indemnified or
insured by a third party, including expenses covered by indemnification provisions in any
agreement in connection with the Merger Transactions, a Permitted Acquisition or any other
acquisition permitted by Section 7.7;
(m) losses recognized and expenses incurred in connection with the effect of currency
and exchange rate fluctuations on intercompany balances and other balance sheet items;
(n) costs of surety bonds in connection with financing activities of such Person and
its Restricted Subsidiaries; and
(o) costs associated with, or in anticipation of, or preparation for, compliance with
the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith and Public Company Costs;
minus, to the extent reflected as income or a gain in the statement of such
Consolidated Net Income for such period, the sum of:
9
(a) any extraordinary, unusual or non-recurring income or gains (including gains on
the sales of assets outside of the ordinary course of business);
(b) any other non-cash income or gains (other than the accrual of revenue in the
ordinary course), but excluding any such items (i) in respect of which cash was received in
a prior period or will be received in a future period or (ii) which represent the reversal
in such period of any accrual of, or reserve for, anticipated cash charges in any prior
period where such accrual or reserve is no longer required, all as determined on a
consolidated basis; and
(c) gains realized and income accrued in connection with the effect of currency and
exchange rate fluctuations on intercompany balances and other balance sheet items;
provided that for purposes of calculating Consolidated EBITDA of the Borrower and its
Restricted Subsidiaries for any period, (A) the Consolidated EBITDA of any Person or Properties
constituting a division or line of business of any business entity, division or line of business,
in each case, acquired by the Borrower or any of the Restricted Subsidiaries during such period and
assuming any synergies, cost savings and other operating improvements to the extent certified by
the Borrower as having been determined in good faith to be reasonably anticipated to be realizable
within 12 months following such acquisition, or of any Subsidiary designated as a Restricted
Subsidiary during such period, shall be included on a pro forma basis for such
period (but assuming the consummation of such acquisition or such designation, as the case may be,
occurred on the first day of such period) and (B) the Consolidated EBITDA of any Person or
Properties constituting a division or line of business of any business entity, division or line of
business, in each case, Disposed of by the Borrower or any of the Restricted Subsidiaries during
such period, or of any Subsidiary designated as an Unrestricted Subsidiary during such period,
shall be excluded for such period (assuming the consummation of such Disposition or such
designation, as the case may be, occurred on the first day of such period). With respect to each
Subsidiary that is not a wholly-owned Subsidiary or any joint venture, for purposes of calculating
Consolidated EBITDA, the amount of income attributable to such Subsidiary or joint venture, as
applicable, that shall be counted for such purposes shall equal the product of (x) the Borrower’s
direct and/or indirect percentage ownership of such Subsidiary or joint venture and (y) the
aggregate amount of the applicable item of such Subsidiary or joint venture, as applicable, except
to the extent the application of GAAP already takes into account the non-wholly owned subsidiary
relationship. Notwithstanding the forgoing, Consolidated EBITDA shall be calculated without giving
effect to the effects of purchase accounting or similar adjustments required or permitted by GAAP
in connection with the Transactions, any Investment (including any Permitted Acquisition) and any
other acquisition or Investment. For purposes of determining Consolidated EBITDA under this
Agreement, Consolidated EBITDA for the fiscal quarter ended March 31, 2008 shall be deemed to be
$64,635,000. Unless otherwise qualified, all references to “Consolidated EBITDA” in this Agreement
shall refer to Consolidated EBITDA of the Borrower.
“Consolidated Net Income”: of any Person for any period, the consolidated net income
(or loss) of such Person and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP; provided that in calculating Consolidated Net
Income of the Borrower and its consolidated Restricted Subsidiaries for any period, there shall be
excluded (a) the income (or loss) of any Person accrued prior to the date it becomes a Restricted
Subsidiary or is merged into or consolidated with the Borrower or any of its Subsidiaries and
(b) the income (or loss) of any Person (other than a Restricted Subsidiary) in which Holdings, the
Borrower or any of its Restricted Subsidiaries has an ownership interest (including any joint
venture), except to the extent that any such income is actually received by Holdings, the Borrower
or such Restricted Subsidiary in the form of dividends or similar distributions (which dividends
and distributions shall be included in the calculation of
10
Consolidated Net Income). Notwithstanding the forgoing, for purposes of calculating Excess
Cash Flow, Consolidated Net Income shall not include: (i) extraordinary gains for such period,
(ii) the cumulative effect of a change in accounting principles during such period, (iii) any fees
and expenses incurred during such period, or any amortization thereof for such period, in
connection with any acquisition, investment, recapitalization, asset disposition, issuance or
repayment of debt, issuance of equity securities, refinancing transaction or amendment or other
modification of any debt instrument (in each case, including any such transaction undertaken but
not completed) and any charges or non-recurring merger costs incurred during such period as a
result of any such transaction and (iv) any income (loss) for such period attributable to the early
extinguishment of Indebtedness or Hedge Agreements. Unless otherwise qualified, all references to
“Consolidated Net Income” in this Agreement shall refer to Consolidated Net Income of the Borrower.
There shall be excluded from Consolidated Net Income for any period the purchase accounting
effects of adjustments to inventory, Property and equipment, software and other intangible assets
and deferred revenue required or permitted by GAAP and related authoritative pronouncements
(including the effects of such adjustments pushed down to the Borrower and the Restricted
Subsidiaries), as a result of the Transactions, any consummated acquisition whether consummated
before or after the Closing Date, or the amortization or write-off of any amounts thereof.
“Consolidated Net Interest Coverage Ratio”: as of any date of determination, the
ratio of (a) Consolidated EBITDA of the Borrower and its Restricted Subsidiaries for the most
recently ended Test Period to (b) Consolidated Net Interest Expense of the Borrower and its
Restricted Subsidiaries for such period.
“Consolidated Net Interest Expense”: of any Person for any period, (a) total cash
interest expense (including that attributable to Capital Lease Obligations) of such Person and its
Restricted Subsidiaries for such period with respect to all outstanding Indebtedness of such Person
and its Restricted Subsidiaries, minus (b) the sum of (i) total cash interest income of
such Person and its Restricted Subsidiaries for such period (excluding any interest income earned
on receivables due from clients), in each case determined in accordance with GAAP plus
(ii) any one time financing fees (to the extent included in such Person’s consolidated interest
expense for such period), including, with respect to the Borrower, those paid in connection with
the Transaction Documents or in connection with any amendment thereof. Unless otherwise qualified,
all references to “Consolidated Net Interest Expense” in this Agreement shall refer to
Consolidated Net Interest Expense of the Borrower.
“Consolidated Total Assets”: the total assets of the Borrower and its Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP, as shown on the
consolidated balance sheet of the Borrower for the most recently completed fiscal quarter for which
financial statements have been delivered pursuant to Section 6.1(a) or (b).
“Consolidated Total Leverage”: at any date, (a) the aggregate principal amount of all
Funded Debt of the Borrower and its Restricted Subsidiaries on such date, minus (b) cash, Cash
Equivalents and, to the extent they are subject to a perfected Lien pursuant to the Security
Documents, Permitted Liquid Investments held by the Borrower and its Restricted Subsidiaries on
such date, in each case determined on a consolidated basis in accordance with GAAP.
“Consolidated Total Leverage Ratio”: as of any date of determination, the ratio of
(a) Consolidated Total Leverage on such day to (b) Consolidated EBITDA of the Borrower and the
Restricted Subsidiaries for the most recently ended Test Period.
“Consolidated Working Capital”: at any date, the difference of (a) Consolidated
Current Assets on such date minus (b) Consolidated Current Liabilities on such date,
provided that, for purposes
11
of calculating Excess Cash Flow, increases or decreases in Consolidated Working Capital shall
be calculated without regard to changes in the working capital balance as a result of non-cash
increases or decreases thereof that will not result in future cash payments or receipts or cash
payments or receipts in any previous period, in each case, including, without limitation, any
changes in Consolidated Current Assets or Consolidated Current Liabilities as a result of (i) any
reclassification in accordance with GAAP of assets or liabilities, as applicable, between current
and noncurrent, (ii) the effects of purchase accounting and (iii) the effect of fluctuations in the
amount of accrued or contingent obligations, assets or liabilities under Hedge Agreements.
“Continuing Directors”: the directors of Holdings on the Closing Date and each other
director of Holdings, if, in each case, such other director’s nomination for election to the Board
of Directors of Holdings is recommended by at least 51% of the then Continuing Directors or such
other director receives the vote of the Sponsor and/or its Affiliates (excluding any operating
portfolio companies of the Sponsor) or any other Permitted Investor in his or her nomination or
election by the shareholders of Holdings.
“Contractual Obligation”: as to any Person, any provision of any security issued by
such Person or of any written or recorded agreement, instrument or other undertaking to which such
Person is a party or by which it or any of its Property is bound.
“Declined Proceeds”: the amount of any prepayment declined by the Required Prepayment
Lenders or any Tranche B Term Lender or Tranche C Term Lender, as applicable, in accordance with
Sections 2.12(a), 2.12(b), 2.12(c) or 2.12(e), as the case may be, to the extent, in the case of
amounts declined in accordance with Section 2.12(e), such declined amounts have not been used to
prepay Tranche A Term Loans.
“Default”: any of the events specified in Section 8.1, whether or not any requirement
for the giving of notice, the lapse of time, or both, has been satisfied.
“Defaulting Lender”: any Lender that (a) has failed to fund any portion of the Loans,
participations in L/C Obligations or participations in Swingline Loans required to be funded by it
hereunder within one Business Day of the date required to be funded by it hereunder unless such
failure has been cured, (b) has otherwise failed to pay over to the Administrative Agent or any
other Lender any other amount required to be paid by it hereunder within one Business Day of the
date when due, unless the subject of a good faith dispute or unless such failure has been cured, or
(c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding or
otherwise has taken any action or become the subject of any action or proceeding of the type
described in Section 8.1(f).
“Disinterested Director” : as defined in Section 7.9.
“Derivatives Counterparty”: as defined in Section 7.6.
“Disposition”: with respect to any Property, any sale, sale and leaseback,
assignment, conveyance, transfer or other effectively complete disposition thereof. The terms
“Dispose” and “Disposed of” shall have correlative meanings.
“Disqualified Capital Stock”: Capital Stock that (a) requires the payment of any
dividends (other than dividends payable solely in shares of Qualified Capital Stock), (b) matures
or is mandatorily redeemable or subject to mandatory repurchase or redemption or repurchase at the
option of the holders thereof (other than solely for Qualified Capital Stock), in each case in
whole or in part and
12
whether upon the occurrence of any event, pursuant to a sinking fund obligation on a fixed
date or otherwise (including as the result of a failure to maintain or achieve any financial
performance standards) or (c) are convertible or exchangeable, automatically or at the option of
any holder thereof, into any Indebtedness, Capital Stock or other assets other than Qualified
Capital Stock, in the case of clauses (a), (b) and (c), prior to the date that is 91 days after the
final scheduled maturity date of the Loans (other than (i) upon payment in full of the Obligations
(other than indemnification and other contingent obligations not yet due and owing) or (ii) upon a
“change in control”; provided that any payment required pursuant to this clause (ii) is
subject to the prior repayment in full of the Obligations (other than indemnification and other
contingent obligations not yet due and owing) that are accrued and payable and the termination of
the Commitments); provided further, however, that if such Capital Stock is issued
to any employee or to any plan for the benefit of employees of the Borrower or the Subsidiaries or
by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital
Stock solely because it may be required to be repurchased by the Borrower in order to satisfy
applicable statutory or regulatory obligations or as a result of such employee’s termination, death
or disability.
“Disqualified Institution”: (i) those institutions identified by the Borrower in
writing to the Administrative Agent prior to the Closing Date or, with the consent of the
Administrative Agent (not to be unreasonably withheld; consent of the Administrative Agent shall be
deemed to have been given if the Administrative Agent does not object within 5 Business Days after
identification of an institution) from time to time thereafter, and their known Affiliates and (ii)
business competitors of the Borrower and its Subsidiaries or the Company identified by Borrower in
writing to the Administrative Agent from time to time and their known Affiliates.
“Dollars” and “$”: dollars in lawful currency of the United States.
“Domestic Subsidiary”: any direct or indirect Restricted Subsidiary organized under
the laws of any jurisdiction within the United States.
“Environmental Laws”: any and all applicable laws, rules, orders, regulations,
statutes, ordinances, codes or decrees (including, without limitation, common law) of any
international authority, foreign government, the United States, or any state, provincial, local,
municipal or other governmental authority, regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment, natural resources or human health
and safety as it relates to Releases of Materials of Environmental Concern, as has been, is now, or
at any time hereafter is, in effect.
“Environmental Liability”: any liability, claim, action, suit, judgment or order
under or relating to any Environmental Law for any damages, injunctive relief, losses, fines,
penalties, fees, expenses (including reasonable fees and expenses of attorneys and consultants) or
costs, whether contingent or otherwise, including those arising from or relating to:
(a) compliance or non-compliance with any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Materials of Environmental Concern,
(c) exposure to any Materials of Environmental Concern, (d) the Release of any Materials of
Environmental Concern or (e) any contract, agreement or other consensual arrangement pursuant to
which liability is assumed or imposed with respect to any of the foregoing.
“Equity Issuance”: any issuance by Holdings, the Borrower or any Restricted
Subsidiary of its Capital Stock in a public or private offering.
“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to
time.
13
“Eurocurrency Base Rate”: with respect to each day during each Interest Period, the
rate per annum determined by reference to the British Bankers’ Association Interest Settlement
Rates for deposits in Dollars for a period equal to such Interest Period commencing on the first
day of such Interest Period appearing on the Screen as of 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period, as the Eurocurrency Rate for deposits
denominated with a maturity comparable to such Interest Period. In the event that such rate does
not appear on the Screen at such time for any reason, then the “Eurocurrency Base Rate”
shall be determined by reference to such other comparable publicly available service for displaying
eurocurrency rates as may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is offered deposits at or
about 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period in
the interbank eurocurrency market where its eurodollar and exchange operations are then being
conducted for delivery on the first day of such Interest Period for the number of days comprised
therein.
“Eurocurrency Loans”: Loans the rate of interest applicable to which is based upon
the Eurocurrency Rate.
“Eurocurrency Rate”: with respect to each day during each Interest Period pertaining
to a Eurocurrency Loan, a rate per annum determined for such day in accordance with the following
formula:
Eurocurrency Base Rate
1.00 — Eurocurrency Reserve Requirements
“Eurocurrency Reserve Requirements”: for any day as applied to a Eurocurrency Loan,
the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of
reserve requirements in effect on such day (including basic, supplemental, marginal and emergency
reserves) under any regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a
member bank of the Federal Reserve System.
“Eurocurrency Tranche”: the collective reference to Eurocurrency Loans under a
particular Facility the then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans shall originally have been made
on the same day).
“Event of Default”: any of the events specified in Section 8.1; provided that
any requirement set forth therein for the giving of notice, the lapse of time, or both, has been
satisfied.
“Excess Cash Flow”: for any fiscal year of the Borrower, the difference, if any, of
(a) the sum, without duplication, of (i) Consolidated Net Income of the Borrower for such fiscal
year, (ii) the amount of all non-cash charges (including depreciation, amortization and deferred
tax expense) deducted in arriving at such Consolidated Net Income and cash receipts included in
clause (i) of the definition of “Consolidated Net Income” and excluded in arriving at such
Consolidated Net Income, (iii) the amount of the decrease, if any, in Consolidated Working Capital
for such fiscal year (excluding any decrease in Consolidated Working Capital relating to leasehold
improvements for which the Borrower or any of its Subsidiaries is reimbursed in cash or receives a
credit) and (iv) the aggregate net amount of non-cash loss on the Disposition of Property by the
Borrower and its Restricted Subsidiaries during such fiscal year (other than sales of inventory in
the ordinary course of business), to the extent deducted in arriving at
such Consolidated Net Income; minus (b) the sum, without duplication (including, in
the case of clauses (ii) and (viii) below, duplication across periods (provided that all or
any portion of the amounts
14
referred to in clauses (ii) and (viii) below with respect to a period
may be applied in the determination of Excess Cash Flow for any subsequent period to the extent
such amounts did not previously result in a reduction of Excess Cash Flow in any prior period)) of:
(i) the amount of all non-cash gains or credits included in arriving at such
Consolidated Net Income (including, without limitation, credits included in the calculation
of deferred tax assets and liabilities) and cash charges excluded in clauses (i) through
(iv) of the definition of “Consolidated Net Income” and included in arriving at such
Consolidated Net Income;
(ii) the aggregate amount (A) actually paid by the Borrower and its Restricted
Subsidiaries in cash during such fiscal year on account of Capital Expenditures and
Permitted Acquisitions and (B) committed during such fiscal year to be used to make Capital
Expenditures or Permitted Acquisitions which in either case have been actually made or
consummated or for which a binding agreement exists as of the time of determination of
Excess Cash Flow for such fiscal year (in each case under this clause (ii) other than to the
extent any such Capital Expenditure or Permitted Acquisition is made (or, in the case of the
preceding clause (B), is expected to be made) with the proceeds of new long-term
Indebtedness or an Equity Issuance or with the proceeds of any Reinvestment Deferred
Amount);
(iii) the aggregate amount of all regularly scheduled principal payments and all
prepayments of Indebtedness (including, without limitation, the Term Loans and, if
applicable, the Mezzanine Loans) of the Borrower and its Restricted Subsidiaries made during
such fiscal year (other than in respect of any revolving credit facility to the extent there
is not an equivalent permanent reduction in commitments thereunder and other than to the
extent any such prepayments are the result of the incurrence of additional indebtedness and
other than optional prepayments of the Term Loans and optional prepayments of Revolving
Loans and Swingline Loans to the extent accompanied by permanent optional reductions of the
Revolving Commitments);
(iv) the amount of the increase, if any, in Consolidated Working Capital for such
fiscal year (excluding any increase in Consolidated Working Capital relating to leasehold
improvements for which the Borrower or any of its Subsidiaries is reimbursed in cash or
receives a credit);
(v) the aggregate net amount of non-cash gain on the Disposition of Property by the
Borrower and its Restricted Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business), to the extent included in arriving at such
Consolidated Net Income;
(vi) fees and expenses incurred in connection with the Transactions or any Permitted
Acquisition (whether or not consummated);
(vii) purchase price adjustments paid or received in connection with the Merger
Transactions, any Permitted Acquisition or any other acquisition permitted under Section
7.7(h) or (v);
(viii) (A) the net amount of Investments made during such period pursuant to paragraphs
(d), (f), (h), (l), (v) and (y) of Section 7.7 (to the extent, in the case of clause (y),
such Investment
relates to Restricted Payments permitted under Section 7.6(c), (e), (h) or (i)) or
committed during such period to be used to make Investments pursuant to such paragraphs of
Section 7.7 which
15
have been actually made or for which a binding agreement exists as of the
time of determination of Excess Cash Flow for such period (but excluding Investments among
the Borrower and its Restricted Subsidiaries) and (B) permitted Restricted Payments made in
each case by the Borrower during such period and permitted Restricted Payments made by any
Restricted Subsidiary to any Person other than Holdings, the Borrower or any of the
Restricted Subsidiaries during such period, in each case, to the extent permitted by Section
7.6(c), (e), (h), (i) or (p) (to the extent, in the case of clause (p), such Restricted
Payment is funded using cash on hand); provided that the amount of Restricted
Payments made pursuant to Section 7.6(e) and deducted pursuant to this clause (viii) shall
not exceed $10,000,000 in any fiscal year;
(ix) the amount (determined by the Borrower) of such Consolidated Net Income which is
mandatorily prepaid or reinvested pursuant to Section 2.12(b) (or as to which a waiver of
the requirements of such Section applicable thereto has been granted under Section 10.1)
prior to the date of determination of Excess Cash Flow for such fiscal year as a result of
any Asset Sale or Recovery Event;
(x) the aggregate amount of any premium or penalty actually paid in cash that is
required to be made in connection with any prepayment of Indebtedness;
(xi) cash payments by the Borrower and its Restricted Subsidiaries during such period
in respect of long-term liabilities of the Borrower and its Subsidiaries other than
Indebtedness;
(xii) the aggregate amount of expenditures actually made by the Borrower and its
Restricted Subsidiaries in cash during such period (including expenditures for the payment
of financing fees) to the extent that such expenditures are not expensed during such period
and are not deducted in calculating Consolidated Net Income;
(xiii) cash expenditures in respect of Hedge Agreements during such period to the
extent not deducted in arriving at such Consolidated Net Income;
(xiv) the amount of taxes (including penalties and interest) paid in cash in such
period or tax reserves set aside or payable (without duplication) in such period to the
extent they exceed the amount of tax expense deducted in determining Consolidated Net Income
for such period;
(xv) the amount of cash payments made in respect of pensions and other post-employment
benefits in such period;
(xvi) payments made in respect of the minority equity interests of third parties in any
non-wholly owned Restricted Subsidiary in such period, including pursuant to dividends
declared or paid on Capital Stock held by third parties in respect of such non-wholly-owned
Restricted Subsidiary; and
(xvii) the amount representing accrued expenses for cash payments (including with
respect to retirement plan obligations) that are not paid in cash in such fiscal year,
provided that such amounts will be added to Consolidated Excess Cash Flow for the
following fiscal year to the extent not paid in cash during such following fiscal year.
“Excess Cash Flow Application Date”: as defined in Section 2.12(c).
16
“Excess Cash Flow Percentage”: 50%; provided that the Excess Cash Flow
Percentage shall be reduced to (a) 25% if the Consolidated Total Leverage Ratio as of the last day
of the relevant fiscal year is not greater than 3.75 to 1.00 and (b) to 0% if the Consolidated
Total Leverage Ratio as of the last day of the relevant fiscal year is not greater than 2.25 to
1.00.
“Existing Credit Agreement”: as defined in the recitals hereto.
“Excluded Capital Stock”: (a) any Capital Stock with respect to which, in the
reasonable judgment of Administrative Agent (confirmed by notice to the Borrower), (i) the cost of
pledging such Capital Stock in favor of the Secured Parties under the Security Documents shall be
excessive in view of the benefits to be obtained by the Lenders therefrom or (ii) would result in
adverse tax consequences, (b) solely in the case of any pledge of Capital Stock of any Foreign
Subsidiary or any Foreign Subsidiary Holding Company to secure the Obligations, any Capital Stock
of any class of such Foreign Subsidiary or such Foreign Subsidiary Holding Company in excess of 65%
of the outstanding Capital Stock of such class (such percentage to be adjusted by mutual agreement
(not to be unreasonably withheld) upon any change in law as may be required to avoid adverse U.S.
federal income tax consequences to the Borrower or any Subsidiary), (c) any Capital Stock to the
extent the pledge thereof would violate any applicable Requirement of Law, (d) the Capital Stock of
any Special Purpose Entity, any Immaterial Subsidiary (for so long as such Subsidiary remains an
Immaterial Subsidiary) or any Unrestricted Subsidiary and (e) in the case of any Capital Stock of
any Subsidiary that is subject of a Lien permitted under Section 7.3(g) securing Indebtedness
permitted under Section 7.2(t) or (u) any Capital Stock of each such Subsidiary to the extent that
(i) a pledge thereof to secure the Obligations is prohibited by any applicable Contractual
Obligations (other than customary non-assignment provisions which are ineffective under the Uniform
Commercial Code) or (ii) any Contractual Obligation prohibits such a pledge without the consent of
the other party; provided that this clause (ii) shall not apply if (A) such other party is
a Loan Party or a wholly-owned Subsidiary or (B) consent has been obtained to consummate such
pledge and for so long as such Contractual Obligation or replacement or renewal thereof is in
effect or (iii) a pledge thereof to secure the Obligations would give any other party to a
Contractual Obligation the right to terminate its obligations thereunder (other than customary
non-assignment provisions which are ineffective under the Uniform Commercial Code or other
applicable law); provided that this clause (iii) shall not apply if such other party is a
Loan Party or a wholly-owned Subsidiary.
“Excluded Collateral”: as defined in Section 4.17(a).
“Excluded Real Property”: (a) any Real Property that is subject to a Lien expressly
permitted by Section 7.3(g) or 7.3(z), (b) any Real Property with respect to which, in the
reasonable judgment of Administrative Agent (confirmed by notice to the Borrower) the cost of
providing a mortgage on such Real Property in favor of the Secured Parties under the Security
Documents shall be excessive in view of the benefits to be obtained by the Lenders therefrom and
(c) any Real Property to the extent providing a mortgage on such Real Property would (i) result in
adverse tax consequences as reasonably determined by the Administrative Agent, (ii) violate any
applicable Requirement of Law, (iii) be prohibited by any applicable Contractual Obligations (other
than customary non-assignment provisions which are ineffective under the Uniform Commercial Code)
or (iv) give any other party (other than a Loan Party or a wholly-owned Subsidiary) to any
contract, agreement, instrument or indenture governing such Real Property the right to terminate
its obligations thereunder (other than customary non-assignment provisions which are ineffective
under the Uniform Commercial Code or other applicable law).
“Excluded Subsidiary”: (a) each Domestic Subsidiary which is an Immaterial Subsidiary
as of the Closing Date and listed on Schedule 1.1 and each future Domestic Subsidiary which is an
Immaterial Subsidiary, in each case, for so long as such Subsidiary remains an Immaterial
Subsidiary,
17
(b) each Domestic Subsidiary that is not a wholly-owned Subsidiary on any date such Subsidiary
would otherwise be required to become a Guarantor pursuant to the requirements of Section 6.8(c)
(for so long as such Subsidiary remains a non-wholly-owned Restricted Subsidiary), (c) any Foreign
Subsidiary Holding Company, (d) each Domestic Subsidiary that is a Subsidiary of a Foreign
Subsidiary, (e) each Unrestricted Subsidiary, (f) each Domestic Subsidiary to the extent that
(i) such Domestic Subsidiary is prohibited by any applicable Contractual Obligation or Requirement
of Law from guaranteeing the Obligations, (ii) any Contractual Obligation prohibits such guarantee
without the consent of the other party or (iii) a guarantee of the Obligations would give any other
party to a Contractual Obligation the right to terminate its obligation thereunder;
provided that clauses (ii) and (iii) shall not be applicable if (A) such other party is a
Loan Party or a wholly-owned Subsidiary or (B) consent has been obtained to provide such pledge and
for so long as such Contractual Obligation or replacement or renewal thereof is in effect, (g) any
Subsidiary that is a Special Purpose Entity or (h) any other Domestic Subsidiary with respect to
which, in the reasonable judgment of the Administrative Agent (confirmed by notice to the Borrower)
the cost of providing a guarantee is excessive in view of the benefits to be obtained by the
Lenders.
“Existing Revolving Commitment”: with respect to any Revolving Lender, the Revolving
Commitment of such Revolving Lender immediately prior to the Amendment and Restatement Effective
Date, in the amount set forth under the heading “Existing Revolving Commitment” opposite such
Lender’s name on Schedule 2.1A. The aggregate amount of the Existing Revolving Commitments is
$100,000,000.
“Facility”: each of (a) the Tranche A Term Commitments and the Tranche A Term Loans
made thereunder (the “Tranche A Term Facility”), (b) the Tranche B Term Commitments and the
Tranche B Term Loans made thereunder (the “Tranche B Term Facility”), (c) the Tranche C
Term Commitments and the Tranche C Term Loans made thereunder (the “Tranche C Term
Facility”), (d) any New Loan Commitments and the New Loans made thereunder (a “New
Facility”) and (e) the Revolving Commitments and the extensions of credit made thereunder (the
“Revolving Facility”).
“Federal Funds Effective Rate”: for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a Business Day, the average of
the quotations for the day of such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it.
“Fee Payment Date”: commencing on September 30, 2008, (a) the last Business Day of
each March, June, September and December and (b) the last day of the Revolving Commitment Period.
“First Amendment”: Amendment No. 1 to Credit Agreement, dated as of December 8, 2009,
among Holdings, the Borrower, the Lenders party thereto and the Agents, providing for the amendment
and restatement of the Existing Credit Agreement in the form of this Agreement.
“Foreign Subsidiary”: any Restricted Subsidiary of the Borrower that is not a
Domestic Subsidiary.
“Foreign Subsidiary Holding Company”: any Restricted Subsidiary of the Borrower which
is a Domestic Subsidiary substantially all of the assets of which consist of the Capital Stock of
one or more Foreign Subsidiaries.
18
“Funded Debt”: with respect to any Person, all Indebtedness of such Person of the
types described in clauses (a), (b), (e), (g)(ii) or, to the extent related to Indebtedness of the
types described in the preceding clauses, (d) of the definition of “Indebtedness”.
“Funding Office”: the office of the Administrative Agent specified in Section 10.2 or
such other office as may be specified from time to time by the Administrative Agent as its funding
office by written notice to the Borrower and the Lenders.
“GAAP”: generally accepted accounting principles in the United States as in effect
from time to time.
“Governmental Authority”: any nation or government, any state, province or other
political subdivision thereof and any governmental entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government and, as to any
Lender, any securities exchange and any self regulatory organization (including the National
Association of Insurance Commissioners).
“Government Contracts”: as defined in the Guarantee and Collateral Agreement.
“Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement, dated
as of July 31, 2008, among Holdings, the Borrower and each Subsidiary Guarantor, substantially in
the form of Exhibit A, as the same may be amended, supplemented or otherwise modified from time to
time.
“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any
obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any
bank under any letter of credit) pursuant to which the guaranteeing person has issued a guarantee,
reimbursement, counterindemnity or similar obligation, in either case guaranteeing or by which such
Person becomes contingently liable for any Indebtedness (the “primary obligations”) of any
other third Person (the “primary obligor”) in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any
such primary obligation or (2) to maintain working capital, equity capital or any other financial
statement condition or liquidity of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase Property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business and reasonable indemnity obligations
in effect on the Closing Date or entered into in connection with any acquisition or disposition of
assets or any Investment permitted under this Agreement. The amount of any Guarantee Obligation of
any guaranteeing Person shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee Obligation is made
and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms
of the instrument embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated or determinable, in
which case, the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum
reasonably anticipated liability in respect thereof (assuming such person is required to perform
thereunder) as determined by such Person in good faith.
“Guarantors”: the collective reference to Holdings and the Subsidiary Guarantors.
19
“Hedge Agreements”: all agreements with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions, in each case, entered into by the
Borrower or any Restricted Subsidiary.
“Holdings”: as defined in the preamble hereto.
“Holdings IPO”: the issuance by Holdings or any Parent Company of its common Capital
Stock in an underwritten primary public offering (other than a public offering pursuant to a
registration statement on Form S-8) pursuant to an effective registration statement filed with the
SEC in accordance with the Securities Act whether alone or in connection with a secondary public
offering.
“Immaterial Subsidiary”: on any date, any Subsidiary of the Borrower that has had
less than 5% of Consolidated Total Assets and 5% of annual consolidated revenues of the Borrower
and its Restricted Subsidiaries as reflected on the most recent financial statements delivered
pursuant to Section 6.1 prior to such date; provided that at no time shall all Immaterial
Subsidiaries have in the aggregate Consolidated Total Assets or annual consolidated revenues (as
reflected on the most recent financial statements delivered pursuant to Section 6.1 prior to such
time) in excess of 7.5% of Consolidated Total Assets or annual consolidated revenues, respectively,
of the Borrower and its Restricted Subsidiaries.
“Increased Amount Date”: as defined in Section 2.25.
“Indebtedness” of any Person: without duplication, (a) all indebtedness of such
Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person for the deferred purchase price of
Property or services already received, (d) all Guarantee Obligations by such Person of Indebtedness
of others, (e) all Capital Lease Obligations of such Person, (f) all payments that such Person
would have to make in the event of an early termination, on the date Indebtedness of such Person is
being determined in respect of outstanding Hedge Agreements (such payments in respect of any Hedge
Agreement with a counterparty being calculated subject to and in accordance with any netting
provisions in such Hedge Agreement), (g) the principal component of all obligations, contingent or
otherwise, of such Person (i) as an account party in respect of letters of credit (other than any
letters of credit, bank guarantees or similar instrument in respect of which a back-to-back letter
of credit has been issued under or permitted by this Credit Agreement) and (ii) in respect of
bankers’ acceptances; provided that Indebtedness shall not include (A) trade and other
ordinary course payables, accrued expenses and intercompany liabilities arising in the ordinary
course of business, (B) prepaid or deferred revenue arising in the ordinary course of business, (C)
purchase price holdbacks arising in the ordinary course of business in respect of a portion of the
purchase price of an asset to satisfy unperformed obligations of the seller of such asset or (D)
earn-out and other contingent obligations until such obligations become a liability on the balance
sheet of such Person in accordance with GAAP. The Indebtedness of any Person shall include the
Indebtedness of any partnership in which such Person is a general Partner, other than to the extent
that the instrument or agreement evidencing such Indebtedness expressly limits the liability of
such Person in respect thereof.
“Indebtedness for Borrowed Money”: (a) to the extent the following would be reflected
on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries prepared in
accordance with GAAP, the principal amount of all Indebtedness of the Borrower and its Restricted
Subsidiaries with respect to (i) borrowed money, evidenced by debt securities, debentures,
acceptances, notes or other similar instruments and (ii) Capital Lease Obligations, (b)
reimbursement obligations for letters of credit
20
and financial guarantees (without duplication) (other than ordinary course of business
contingent reimbursement obligations) and (c) Hedge Agreements; provided that the
Obligations shall not constitute Indebtedness for Borrowed Money.
“Indemnified Liabilities”: as defined in Section 10.5.
“Indemnitee”: as defined in Section 10.5.
“Initial Borrower”: Explorer Merger Sub Corporation, a Delaware corporation that was
merged into the Borrower on the Closing Date.
“Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is
insolvent within the meaning of Section 4245 of ERISA.
“Insolvent”: pertaining to a condition of Insolvency.
“Instrument”: as defined in the Guarantee and Collateral Agreement.
“Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including, without limitation, copyrights, copyright licenses, domain
names, patents, patent licenses, trademarks, trademark licenses, trade names, technology, know-how
and processes, and all rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
“Interest Payment Date”: (a) commencing on September 30, 2008, as to any ABR Loan,
the last Business Day of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any Eurocurrency Loan having an
Interest Period of three months or less, the last day of such Interest Period, (c) as to any
Eurocurrency Loan having an Interest Period longer than three months, each day that is three
months, or a whole multiple thereof, after the first day of such Interest Period and the last day
of such Interest Period and (d) as to any Loan (other than any Revolving Loan that is an ABR Loan
and any Swingline Loan), the date of any repayment or prepayment made in respect thereof.
“Interest Period”: as to any Eurocurrency Loan, (a) initially, the period commencing
on the borrowing or conversion date, as the case may be, with respect to such Eurocurrency Loan and
ending one, two, three or six or (if available from all Lenders under the relevant Facility) nine
or twelve months (or such other period acceptable to all such Lenders) thereafter, as selected by
the Borrower in its notice of borrowing or notice of continuation or conversion, as the case may
be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurocurrency Loan and ending one, two, three or
six or (with the consent of each affected Lender under the relevant Facility) nine or twelve months
(or such other period acceptable to all such Lenders) thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not later than 1:00 P.M., New York City time, on the
date that is three Business Days prior to the last day of the then current Interest Period with
respect thereto; provided that all of the foregoing provisions relating to Interest Periods
are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not a Business Day,
such Interest Period shall be extended to the next succeeding Business Day unless the result
of such
21
extension would be to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the scheduled Revolving
Termination Date or beyond the date final payment is due on the Term Loans shall end on the
Revolving Termination Date or such due date, as applicable; and
(iii) any Interest Period that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of a calendar month.
“Investments”: as defined in Section 7.7.
“Issuing Lenders”: (a) Credit Suisse AG, Cayman Islands Branch, (f/k/a Credit Suisse)
and (b) any other Revolving Lender from time to time designated by the Borrower, in its sole
discretion, as an Issuing Lender with the consent of such other Revolving Lender.
“Joinder Agreement”: an agreement substantially in the form of Exhibit H.
“Joint Bookrunners”: Banc of America Securities LLC, Credit Suisse Securities (USA)
LLC, Barclays Capital, the investment banking division of Barclays Bank PLC, Goldman Sachs Credit
Partners L.P. and Morgan Stanley Senior Funding, Inc, in their capacity as joint bookrunners.
“L/C Commitment”: $60,000,000.
“L/C Obligations”: at any time, an amount equal to the sum of (a) the aggregate then
undrawn and unexpired face amount of the then outstanding Letters of Credit and (b) the aggregate
amount of drawings under Letters of Credit that have not then been reimbursed. The L/C Obligations
of any Lender at any time shall be its Revolving Percentage of the total L/C Obligations at such
time.
“L/C Participants”: the collective reference to all the Revolving Lenders other than
the applicable Issuing Lender.
“Lead Arrangers”: Banc of America Securities LLC and Credit Suisse Securities (USA)
LLC in their capacity as joint lead arrangers.
“Lenders”: as defined in the preamble hereto.
“Letters of Credit”: as defined in Section 3.1(a).
“Lien”: any mortgage, pledge, hypothecation, collateral assignment, encumbrance, lien
(statutory or other), charge or other security interest or any other security agreement of any kind
or nature whatsoever (including any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the foregoing). For the
avoidance of doubt, it is understood and agreed that the Borrower and any Restricted Subsidiary
may, as part of its business, grant licenses to third parties to use Intellectual Property owned or
developed by, or licensed to, such entity. For purposes of this Agreement and the other Loan
Documents, such licensing activity, and licenses granted pursuant to the Merger Documents, shall
not constitute a “Lien” on such Intellectual Property. Each of the Administrative Agent and each
Lender understands that any such licenses may be exclusive to the applicable licensees, and such
exclusivity provisions may limit the ability of the Administrative Agent
22
to utilize, sell, lease, license or transfer the related Intellectual Property or otherwise
realize value from such Intellectual Property pursuant hereto.
“Loan”: any loan made by any Lender pursuant to this Agreement.
“Loan Documents”: the collective reference to this Agreement, the Security Documents
and the Notes (if any) and any amendment, waiver, supplement or other modification to any of the
foregoing.
“Loan Parties”: Holdings, the Borrower and each Subsidiary Guarantor.
“Majority Facility Lenders”: with respect to any Facility, the holders of more than
50% of the aggregate unpaid principal amount of the Tranche A Term Loans, Tranche B Term Loans,
Tranche C Term Loans, New Loans or the Revolving Extensions of Credit, as the case may be,
outstanding under such Facility (or (i) in the case of the Revolving Facility, prior to any
termination of the Revolving Commitments under such Facility, the holders of more than 50% of the
Revolving Commitments under such Facility or (ii) in the case of any New Facility that is a
revolving credit facility, prior to any termination of the New Loan Commitments under such
Facility, the holders of more than 50% of the New Loan Commitments under such Facility);
provided, however, that determinations of the “Majority Facility Lenders” shall
exclude any Commitments or Loans held by the Carlyle Fund.
“Majority Revolving Facility Lenders”: the Majority Facility Lenders in respect of
the Revolving Facility.
“Majority Tranche A Term Facility Lenders”: the Majority Facility Lenders in respect
of the Tranche A Term Facility.
“Majority Tranche B Term Facility Lenders”: the Majority Facility Lenders in respect
of the Tranche B Term Facility.
“Majority Tranche C Term Facility Lenders”: the Majority Facility Lenders in respect
of the Tranche C Term Facility.
“Management Agreement”: the Management Agreement, by and between Explorer Holding
Corporation, the Borrower and TC Group V, L.L.C., as in effect on the Closing Date and as modified
from time to time with the consent of the Administrative Agent (which consent shall not be
unreasonably withheld or delayed).
“Mandatory Prepayment Date”: as defined in Section 2.12(e).
“Material Adverse Effect”: a material adverse effect on (a) the business, operations,
assets, financial condition or results of operations of the Borrower and its Restricted
Subsidiaries, taken as a whole, or (b) the material rights and remedies available to the
Administrative Agent and the Lenders, taken as a whole, under the Loan Documents.
“Material Real Property”: any Real Property located in the United States and owned in
fee by a Loan Party on the Closing Date having an estimated fair market value (in the good faith
judgment of such Loan Party) exceeding $2,000,000 and any after-acquired Real Property located in
the United States owned by a Loan Party having a gross purchase price exceeding $2,000,000 at the
time of acquisition.
23
“Material Subsidiary”: any Subsidiary that is not an Immaterial Subsidiary.
“Materials of Environmental Concern”: any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products, polychlorinated biphenyls, urea-formaldehyde
insulation, asbestos, pollutants, contaminants, radioactivity and any other substances that are
defined as hazardous or toxic under any Environmental Law, that are regulated pursuant to any
Environmental Law.
“Merger Agreement”: the Agreement and Plan of Merger, dated as of May 15, 2008, by
and among, Holdings, the Company, Explorer Holding Corporation, the Initial Borrower and Booz &
Company Inc.
“Merger Documents”: collectively, the Merger Agreement, the Spin Off Agreement, and
all schedules, exhibits, annexes and amendments thereto (including the execution versions of any
agreements that are exhibits or annexes thereto), in each case, as amended, supplemented or
otherwise modified from time to time.
“Merger Transactions”: the transactions contemplated by the Merger Documents.
“Mezzanine Facility Indebtedness”: Indebtedness incurred under the Mezzanine Loan
Facility.
“Mezzanine Loan Agreement”: the Mezzanine Credit Agreement, dated as of July 31,
2008, among the Borrower, the lenders from time to time parties thereto, Credit Suisse AG, Cayman
Islands Branch (f/k/a Credit Suisse), as administrative agent, and Credit Suisse Securities (USA)
LLC, Banc of America Securities LLC and Lehman Brothers Inc., as joint lead arrangers and joint
bookrunners, as such agreement may be amended, supplemented or otherwise modified from time to time
or refunded, refinanced, restructured, replaced, renewed, repaid, increased or extended from time
to time to the extent not prohibited by this Agreement (whether in whole or in part, whether with
the original administrative agent and lenders or other agents and lenders or otherwise, and whether
provided under the original Mezzanine Loan Agreement or other credit agreements, indentures or
otherwise, unless such agreement or instrument expressly provides that it is not intended to be and
is not a Mezzanine Loan Agreement hereunder).
“Mezzanine Loan Documents”: the Loan Documents as defined in the Mezzanine Loan
Agreement or any other documentation evidencing any Mezzanine Loan Facility, as the same may be
amended, supplemented or otherwise modified, extended, renewed, refinanced or replaced from time to
time to the extent not prohibited by this Agreement.
“Mezzanine Loan Facility”: the collective reference to the Mezzanine Loan Agreement,
any Mezzanine Loan Documents, any notes issued pursuant thereto and any guarantee agreement, and
other instruments and documents executed and delivered pursuant to or in connection with any of the
foregoing, in each case as the same may be amended, supplemented or otherwise modified from time to
time, or refunded, refinanced, restructured, replaced, renewed, repaid, increased or extended from
time to time (whether in whole or in part, whether with the original agent and lenders or other
agents and lenders or otherwise, and whether provided under the original Mezzanine Loan Agreement
or other credit agreements, indentures or otherwise, unless such agreement expressly provides that
it is not intended to be and is not a Mezzanine Loan Facility hereunder).
“Mezzanine Loans”: the loans made pursuant to the Mezzanine Loan Agreement.
24
“Moody’s”: Moody’s Investors Service, Inc. or any successor to the rating agency
business thereof.
“Mortgaged Properties”: all Real Property that shall be subject to a Mortgage that is
delivered pursuant to the terms of this Agreement.
“Mortgage”: any mortgage, deed of trust, hypothec, assignment of leases and rents or
other similar document delivered on or after the Closing Date by any Loan Party in favor of, or for
the benefit of, the Collateral Agent for the benefit of the Secured Parties, with respect to
Mortgaged Properties, each substantially in form and substance reasonably acceptable to the
Administrative Agent and the Borrower (taking into account the law of the jurisdiction in which
such mortgage, deed of trust, hypothec or similar document is to be recorded), as the same may be
amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Multiemployer Plan”: a Plan that is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
“Net Cash Proceeds”: (a) in connection with any Asset Sale or any Recovery Event, the
proceeds thereof in the form of cash, Cash Equivalents and Permitted Liquid Investments (including
any such proceeds received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but only as and when
received) received by any Loan Party, net of (i) attorneys’ fees, accountants’ fees, investment
banking fees, consulting fees, amounts required to be applied to the repayment of Indebtedness
secured by a Lien expressly permitted hereunder on any asset which is the subject of such Asset
Sale or Recovery Event (other than any Lien pursuant to a Security Document) and other customary
fees and expenses actually incurred by any Loan Party in connection therewith; (ii) taxes paid or
reasonably estimated to be payable by any Loan Party as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing arrangements); (iii) the amount of any
reasonable reserve established in accordance with GAAP against any liabilities (other than any
taxes deducted pursuant to clause (ii) above) (A) associated with the assets that are the subject
of such event and (B) retained by the Borrower or any of the Restricted Subsidiaries,
provided that the amount of any subsequent reduction of such reserve (other than in
connection with a payment in respect of any such liability) shall be deemed to be Net Cash Proceeds
of such event occurring on the date of such reduction and (iv) the pro rata portion of the Net Cash
Proceeds thereof (calculated without regard to this clause (iv)) attributable to minority interests
and not available for distribution to or for the account of the Borrower or any Domestic Subsidiary
as a result thereof and (b) in connection with any Equity Issuance or other issuance or sale of
debt securities or instruments or the incurrence of Funded Debt, the cash proceeds received from
such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees,
consulting fees, underwriting discounts and commissions and other customary fees and expenses
actually incurred in connection therewith.
“New Facility”: as defined in the definition of “Facility”.
“New Lender”: as defined in Section 2.25.
“New Loan Commitments”: as defined in Section 2.25.
“New Loans”: any loan made by any New Lender pursuant to this Agreement.
“New Revolving Loans”: as defined in Section 2.25.
25
“New Subsidiary”: as defined in Section 7.2(t).
“New Term Lender”: a Lender that has a New Term Loan.
“New Term Loans”: as defined in Section 2.25.
“Non-Excluded Subsidiary”: any Subsidiary of the Borrower which is not an Excluded
Subsidiary.
“Non-Excluded Taxes”: as defined in Section 2.20(a).
“Non-Guarantor Subsidiary”: any Subsidiary of the Borrower which is not a Subsidiary
Guarantor.
“Non-Recourse Debt”: Indebtedness (a) with respect to which no default would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness of Holdings, the Borrower
or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity and (b) as to which the
lenders or holders thereof will not have any recourse to the capital stock or assets of Holdings,
the Borrower or any of its Restricted Subsidiaries.
“Non-US Lender”: as defined in Section 2.20(d).
“Note”: any promissory note evidencing any Loan, which promissory note shall be in
the form of Exhibit J-1, Exhibit J-2, Exhibit J-3 or Exhibit J-4, as applicable, or such other form
as agreed upon by the Administrative Agent and the Borrower.
“Obligations”: the unpaid principal of and interest on (including, without
limitation, interest accruing after the maturity of the Loans and Reimbursement Obligations and
interest accruing after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed or allowable in such proceeding) the Loans, the
Reimbursement Obligations and all other obligations and liabilities of the Borrower to the
Administrative Agent, the Collateral Agent or to any Lender (or, in the case of Specified Hedge
Agreements or Cash Management Obligations of the Borrower or any of its Subsidiaries to the
Administrative Agent, the Collateral Agent, any Lender or any affiliate of any Lender), whether
direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter
incurred, in each case, which may arise under, out of, or in connection with, this Agreement, any
other Loan Document, the Letters of Credit, any Specified Hedge Agreement or Cash Management
Obligations or any other document made, delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees, charges and disbursements of counsel to the
Administrative Agent or any Lender that are required to be paid by the Borrower pursuant hereto) or
otherwise; provided that (a) obligations of the Borrower or any of the Subsidiary
Guarantors under any Specified Hedge Agreement or any Cash Management Obligations shall be secured
and guaranteed pursuant to the Security Documents only to the extent that, and for so long as, the
other Obligations are so secured and guaranteed and (b) any release of Collateral or Guarantors
effected in the manner permitted by this Agreement shall not require the consent of holders of
obligations under Specified Hedge Agreements or Cash Management Obligations.
“Offer”: as defined in Section 2.11(c)(i).
26
“Offer Loans”: as defined in Section 2.11(c)(i).
“Other Taxes”: any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.
“Parent Company”: any direct or indirect parent of Holdings.
“Participant”: as defined in Section 10.6(c).
“Payment Amount”: as defined in Section 3.5.
“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A
of Title IV of ERISA (or any successor).
“Permitted Acquisition”: (a) any acquisition (including, if applicable, in the case
of any Intellectual Property, by way of license) approved by the Required Lenders, (b) any
acquisition made solely with the Net Cash Proceeds of any substantially concurrent Equity Issuance
or capital contribution (other than Disqualified Capital Stock) or (c) any acquisition of a
majority controlling interest in the Capital Stock, or all or substantially all of the assets, of
any Person, or of all or substantially all of the assets constituting a division, product line or
business line of any Person (each, an “Acquisition”), if such Acquisition described in this
clause (c) complies with the following criteria:
(a) no Event of Default shall be in effect immediately prior or after giving effect to
such Acquisition; and
(b) if the total consideration (other than any equity consideration) in respect of such
Acquisition exceeds $10,000,000, the Borrower shall have delivered to the Administrative
Agent a certificate of the Borrower signed by a Responsible Officer to such effect, together
with all relevant financial information for such Subsidiary or asset to be acquired
reasonably requested by the Administrative Agent prior to such acquisition to the extent
available.
“Permitted Business”: the Business and any services, activities or businesses
incidental or directly related or similar to any line of business engaged in by the Borrower and
its Subsidiaries as of the Closing Date or any business activity that is a reasonable extension,
development or expansion thereof or ancillary thereto.
“Permitted Investors”: the collective reference to the Sponsor and its Affiliates
(but excluding any operating portfolio companies of the foregoing), the members of management of
Holdings and its Subsidiaries that have ownership interests in Holdings as of the Closing Date, and
the directors of Holdings and its Subsidiaries or any Parent Company on, or as of no later than 60
days following, the Closing Date.
“Permitted Liquid Investments”: (a) securities issued or directly and fully and
unconditionally guaranteed or insured by the United States government or any agency or
instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and
credit obligation of such government with maturities of 24 months or less from the date of
acquisition, (b) certificates of deposit, time deposits and eurodollar time deposits with
maturities of 24 months or less from the date of acquisition, bankers’ acceptances with maturities
not exceeding 24 months and overnight bank deposits,
27
in each case, with any domestic commercial bank having capital and surplus in excess of
$250,000,000, (c) repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clauses (a) and (b) above entered into with any financial
institution meeting the qualifications specified in clause (b) above, (d) commercial paper having a
rating of at least A-1 from S&P or P-1 from Moody’s (or, if at any time neither Moody’s nor S&P
shall be rating such obligations, an equivalent rating from another rating agency) and maturing
within 24 months after the date of acquisition and Indebtedness and Preferred Stock issued by
Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s with maturities of
24 months or less from the date of acquisition, (e) readily marketable direct obligations issued by
any state of the United States or any political subdivision thereof having one of the two highest
rating categories obtainable from either Moody’s or S&P with maturities of 24 months or less from
the date of acquisition, (f) marketable short-term money market and similar securities having a
rating of at least P-1 or A-1 from Moody’s or S&P, respectively (or, if at any time neither Moody’s
nor S&P shall be rating such obligations, an equivalent rating from another rating agency) and in
each case maturing within 24 months after the date of creation or acquisition thereof,
(g) Investments with average maturities of 12 months or less from the date of acquisition in money
market funds rated AA- (or the equivalent thereof) or better by S&P or Aa3 (or the equivalent
thereof) or better by Moody’s, (h) instruments equivalent to those referred to in clauses (a)
through (g) above denominated in euro or pound sterling or any other foreign currency comparable in
credit quality and tenor to those referred to above and customarily used by corporations for cash
management purposes in any jurisdiction outside the United States to the extent reasonably required
in connection with any business conducted by any Restricted Subsidiary organized in such
jurisdiction including, without limitation, certificates of deposit or bankers’ acceptances of, and
bank deposits with, any bank organized under the laws of any country that is a member of the
European Economic Community or Canada or any subdivision thereof, whose short-term commercial paper
rating from S&P is at least A-1 or the equivalent thereof or from Moody’s is at least P-1 or the
equivalent thereof, in each case with maturities of not more than 24 months from the date of
acquisition and (i) investment in funds which invest substantially all of their assets in Cash
Equivalents of the kinds described in clauses (a) through (h) of this definition.
“Permitted Refinancings”: with respect to any Person, refinancings, replacements,
modifications, refundings, renewals or extensions of Indebtedness provided that (a) there
is no increase in the principal amount (or accrued value) thereof (excluding accrued interest,
fees, discounts, premiums and expenses), (b) the weighted average life to maturity of such
Indebtedness is greater than or equal to the shorter of (i) the weighted average life to maturity
of the Indebtedness being refinanced and (ii) the weighted average life to maturity that would
result if all payments of principal on the Indebtedness being refinanced that were due on or after
the date that is one year following the Tranche B Term Maturity Date were instead due one year
following the Tranche B Term Maturity Date, (c) if the Indebtedness being refinanced, refunded,
modified, renewed or extended is subordinated in right of payment to the Obligations, such
refinancing, refunding, modification, renewal or extension is subordinated in right of payment to
the Obligations (A) on terms at least as favorable to the Lenders as those contained in the
documentation governing the Indebtedness being refinanced, refunded, modified, renewed or extended,
(B) on terms consistent with the then-prevailing market terms for subordination of comparable
Indebtedness or (C) on terms to which the Administrative Agent shall agree, (d) the terms and
conditions (including, if applicable, as to collateral) of any such refinanced, refunded, modified,
renewed or extended Indebtedness are not materially less favorable to the Lenders than the terms
and conditions of the Indebtedness being modified, refinanced, refunded, renewed or extended, (e)
no Default or Event of Default shall have occurred and be continuing at the time thereof or no
Default or Event of Default would result from any such refinancing, refunding, modification,
renewal or extension and (f) with respect to any such Indebtedness that is secured, neither the
Borrower nor any Restricted Subsidiary shall be an obligor or guarantor of any such refinancings,
replacements, refundings, renewals or extensions except to
28
the extent that such Person was such an obligor or guarantor in respect of the applicable
Indebtedness being modified, refinanced, refunded, renewed or extended.
“Permitted Subordinated Indebtedness”: unsecured, senior subordinated or subordinated
Indebtedness of the Borrower or any Restricted Subsidiary (including guarantees thereof by the
Borrower or any Guarantor, as applicable), provided that (a) no scheduled principal
payments, mandatory prepayments, redemptions or sinking fund payments of any Permitted Subordinated
Indebtedness shall be required prior to the date at least 180 days following the Tranche B Term
Maturity Date (or, such later date that is the latest final maturity date of any incremental
extensions of credit hereunder) (other than customary offers to purchase upon a change of control,
asset sale, customary acceleration rights upon an event of default and AHYDO Payments), (b) the
covenants and events of default of such Permitted Subordinated Indebtedness (i) shall be, taken as
a whole, customary for Indebtedness of a similar nature as such Permitted Subordinated Indebtedness
or (ii) shall otherwise not have been objected to by the Administrative Agent, after the
Administrative Agent shall have been afforded a period of five Business Days to review such terms
of such Permitted Subordinated Indebtedness, (c) the terms of subordination applicable to any
Permitted Subordinated Indebtedness shall be (i) taken as a whole, customary for unsecured
subordinated high yield debt securities issued by any Affiliates of the Sponsor or (ii) shall
otherwise not have been objected to by the Administrative Agent, after the Administrative Agent
shall have been afforded a period of five Business Days to review such terms of such Permitted
Subordinated Indebtedness and (d) no Default or Event of Default shall have occurred and be
continuing at the time of incurrence of such Indebtedness or would result therefrom.
“Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
“Plan”: at a particular time, any employee benefit plan as defined in Section 3(3) of
ERISA and in respect of which Holdings, the Borrower or any of its Restricted Subsidiaries is (or,
if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an
“employer” as defined in Section 3(5) of ERISA, including a Multiemployer Plan.
“Pledged Securities”: as defined in the Guarantee and Collateral Agreement.
“Pledged Stock”: as defined in the Guarantee and Collateral Agreement.
“Prepayment Option Notice”: as defined in Section 2.12(e).
“Pricing Grid”: the table set forth below:
| Applicable Margin | Applicable Margin | Applicable Margin | Applicable Margin | ||||||||||||||||||
| for Tranche A Term | for Tranche A Term | for Revolving Loans | for Revolving Loans | ||||||||||||||||||
| Consolidated Total | Loans that are | Loans that are ABR | that are | that are ABR Loans | Applicable | ||||||||||||||||
| Leverage Ratio | Eurocurrency Loans | Loans | Eurocurrency Loans | and Swingline Loans | Commitment Fee Rate | ||||||||||||||||
≥ 4.00:1.00 |
4.00 | % | 3.00 | % | 4.00 | % | 3.00 | % | |||||||||||||
< 4.00:1.00 |
3.75 | % | 2.75 | % | 3.75 | % | 2.75 | % | |||||||||||||
≥ 3.50:1.00 |
0.500 | % | |||||||||||||||||||
< 3.50:1.00 |
0.375 | % | |||||||||||||||||||
29
Changes in the Applicable Margin with respect to Loans or the Applicable Commitment Fee Rate
resulting from changes in the Consolidated Total Leverage Ratio shall become effective on the date
on which financial statements are delivered to the Lenders pursuant to Section 6.1 and shall remain
in effect until the next change to be effected pursuant to this paragraph. If any financial
statements referred to above are not delivered within the time periods specified in Section 6.1,
then, at the option of (and upon the delivery of notice (telephonic or otherwise) by) the
Administrative Agent or the Required Lenders, until such financial statements are delivered, the
Consolidated Total Leverage Ratio as at the end of the fiscal period that would have been covered
thereby shall for the purposes of this definition be deemed to be greater than 4.00 to 1.00. In
addition, at all times while an Event of Default set forth in Section 8.1(a) or 8.1(f) shall have
occurred and be continuing, the Consolidated Total Leverage Ratio shall for the purposes of the
Pricing Grid be deemed to be greater than 4.00 to 1.00.
“Prime Rate”: as defined in the definition of “ABR”.
“Property”: any right or interest in or to property of any kind whatsoever, whether
real, personal or mixed and whether tangible or intangible, including, without limitation, Capital
Stock.
“Public Company Costs”: costs relating to compliance with the provisions of the
Securities Act and the Exchange Act, as applicable to companies with equity or debt securities held
by the public, the rules of national securities exchange companies with listed equity or debt
securities, directors’ compensation, fees and expense reimbursement, costs relating to investor
relations, shareholder meetings and reports to shareholders or debtholders, directors and officers’
insurance and other executive costs, legal and other professional fees, and listing fees.
“Qualified Capital Stock”: any Capital Stock that is not Disqualified Capital Stock.
“Rate Determination Notice”: as defined in Section 2.22.
“Ratio Calculation Date”: as defined in Section 1.3(a).
“Real Property”: collectively, all right, title and interest of the Borrower or any
other Subsidiary in and to any and all parcels of real property owned or operated by the Borrower
or any other Subsidiary together with all improvements and appurtenant fixtures, easements and
other property and rights incidental to the ownership, lease or operation thereof.
“Recapitalization Transactions”: the incurrence by the Borrower of Tranche C Term
Loans, and the use of the net proceeds thereof, together with other funds, to (i) pay dividends or
make other distributions (including payments in respect of stock options) to holders of the Capital
Stock of the Borrower, Holdings or any Parent Company and (ii) pay, or permit Holdings or any
Parent Company to pay, amounts due in respect of the Deferred Obligation Amount under and as
defined in the Merger Agreement.
30
“Recovery Event”: any settlement of or payment in respect of any Property or casualty
insurance claim or any condemnation proceeding relating to any asset of the Borrower or any
Domestic Subsidiary that is a Restricted Subsidiary, in an amount for each such event exceeding
$1,000,000.
“Reference Period”: the period of four fiscal quarters most recently ended
immediately prior to the date of any specified event for which financial statements have been
delivered pursuant to Section 6.1.
“Refinanced Term Loans”: as defined in Section 10.1.
“Refinancing”: the repayment of certain existing Indebtedness of the Company on the
Closing Date.
“Refunded Swingline Loans”: as defined in Section 2.7(b).
“Register”: as defined in Section 10.6(b)(iv).
“Regulation U”: Regulation U of the Board as in effect from time to time.
“Reimbursement Obligation”: the obligation of the Borrower to reimburse an Issuing
Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit issued by such Issuing
Lender.
“Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the aggregate
Net Cash Proceeds received by any Loan Party for its own account in connection therewith that are
not applied to prepay the Term Loans pursuant to Section 2.12 as a result of the delivery of a
Reinvestment Notice.
“Reinvestment Event”: any Asset Sale or Recovery Event in respect of which a Loan
Party has delivered a Reinvestment Notice.
“Reinvestment Notice”: a written notice signed on behalf of any Loan Party by a
Responsible Officer stating that such Loan Party (directly or indirectly through a Subsidiary)
intends and expects to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or
Recovery Event to acquire assets or make investments useful in the Business.
“Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the
Reinvestment Deferred Amount relating thereto less any amount contractually committed by
the applicable Loan Party (directly or indirectly through a Subsidiary) to be expended prior to the
relevant Reinvestment Prepayment Date (a “Committed Reinvestment Amount”), or actually
expended prior to such date, in each case to acquire assets or make investments useful in the
Business.
“Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the earlier
of (i) the date occurring 12 months after such Reinvestment Event and (ii) with respect to any
portion of a Reinvestment Deferred Amount, the date on which any Loan Party shall have determined
not to acquire assets or make investments useful in the Business with such portion of such
Reinvestment Deferred Amount.
“Related Business Assets”: assets (other than cash, Cash Equivalents or Permitted
Liquid Investments) used or useful in a Permitted Business; provided that any assets
received by the Borrower or a Restricted Subsidiary in exchange for assets transferred by the
Borrower or a Restricted Subsidiary shall
31
not be deemed to be Related Business Assets if they consist of securities of a Person,
unless upon receipt of the securities of such Person, such Person would become a Restricted
Subsidiary.
“Release”: any release, spill, emission, leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or
within or upon any building, structure or facility.
“Reorganization”: with respect to any Multiemployer Plan, the condition that such
plan is in reorganization within the meaning of Section 4241 of ERISA.
“Replacement Term Loans”: as defined in Section 10.1.
“Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, other
than those events as to which the thirty day notice period is waived by the PBGC in accordance with
the regulations thereunder.
“Representatives”: as defined in Section 10.14.
“Repricing Transaction”: any prepayment of the Tranche B Term Loans using proceeds of
Indebtedness incurred by the Borrower or one or more Subsidiaries from a substantially concurrent
issuance or incurrence of secured, syndicated term loans, including, without limitation, by way of
Replacement Loans incurred pursuant to Section 10.1(d), provided by one or more banks, financial
institutions or other Persons for which the interest rate payable thereon (disregarding any
performance or ratings based pricing grid that could result in a lower interest rate based on
future performance) is lower than the Eurocurrency Rate on the date of such optional prepayment
plus the Applicable Margin with respect to the Tranche B Term Loans on the date of such optional
prepayment, provided that the primary purpose of such prepayment is to refinance Tranche B
Term Loans at a lower interest rate.
“Required Lenders”: at any time, the holders of more than 50% of (a) until the
Closing Date, the Commitments then in effect and (b) thereafter, the sum of (i) the aggregate
unpaid principal amount of the Term Loans then outstanding, (ii) the Revolving Commitments then in
effect or, if the Revolving Commitments have been terminated, the Revolving Extensions of Credit
then outstanding and (iii) the New Loan Commitments then in effect in respect of any New Facility
that is a revolving credit facility or, if such New Loan Commitments have been terminated, the New
Revolving Loans then outstanding; provided, however, that determinations of the
“Required Lenders” shall exclude any Commitments or Loans held by the Carlyle Fund.
“Required Prepayment Lenders”: the holders of more than 50% of the aggregate unpaid
principal amount of the Tranche A Term Loans, the Tranche B Term Loans and the Tranche C Term
Loans.
“Requirement of Law”: as to any Person, the certificate of incorporation and by-laws
or other organizational or governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.
“Responsible Officer”: the chief executive officer, president, chief financial
officer (or similar title) controller or treasurer (or similar title) of Holdings or the Borrower,
as applicable, or (with respect to Section 6.7) any Restricted Subsidiary and, with respect to
financial matters, the chief financial
32
officer (or similar title), controller or treasurer (or similar title) of Holdings or the Borrower, as applicable.
“Restricted Payments”: as defined in Section 7.6.
“Restricted Subsidiary”: any Subsidiary of the Borrower which is not an Unrestricted
Subsidiary.
“Revolving Commitment Period”: the period from and including the Closing Date to the
Revolving Termination Date.
“Revolving Commitments”: as to any Revolving Lender, the obligation of such Lender,
if any, to make Revolving Loans and participate in Swingline Loans and Letters of Credit in an
aggregate principal and/or face amount not to exceed the amount set forth under the heading
“Revolving Commitment” opposite such Lender’s name on Schedule 2.1A, or, as the case may be, in the
Assignment and Assumption pursuant to which such Lender became a party hereto, as the same may be
changed from time to time pursuant to the terms hereof. The Revolving Commitment of each Revolving
Lender as of the Amendment and Restatement Effective Date is equal to the sum of such Revolving
Lender’s Existing Revolving Commitment, if any, and Additional Revolving Commitment, if any. The
aggregate amount of the Revolving Commitments as of the Amendment and Restatement Effective Date is
$245,000,000.
“Revolving Extensions of Credit”: as to any Revolving Lender at any time, an amount
equal to the sum of, without duplication (a) the aggregate principal amount of all Revolving Loans
held by such Lender then outstanding, (b) such Lender’s Revolving Percentage of the L/C Obligations
then outstanding and (c) such Lender’s Revolving Percentage of the aggregate principal amount of
Swingline Loans then outstanding.
“Revolving Facility”: as defined in the definition of “Facility”.
“Revolving Lender”: each Lender that has a Revolving Commitment or that holds
Revolving Loans.
“Revolving Loans”: as defined in Section 2.4(a).
“Revolving Percentage” as to any Revolving Lender at any time, the percentage which
such Lender’s Revolving Commitment then constitutes of the aggregate Revolving Commitments or, at
any time after the Revolving Commitments shall have expired or terminated, the percentage which
such Revolving Lender’s Revolving Extensions of Credit then outstanding constitutes of the
aggregate Revolving Extensions of Credit then outstanding.
“Revolving Termination Date”: the sixth anniversary of the Closing Date.
“S&P”: Standard & Poor’s Ratings Group, Inc., or any successor to the rating agency
business thereof.
“Screen”: the relevant display page for the Eurocurrency Base Rate (as reasonably
determined by the Administrative Agent) on the Bloomberg Information Service or any successor
thereto; provided that if the Administrative Agent determines that there is no such
relevant display page or otherwise in Bloomberg for the Eurocurrency Base Rate, “Screen” means such
other comparable publicly
33
available service for displaying the Eurocurrency Base Rate (as
reasonably determined by the Administrative Agent).
“SEC”: the Securities and Exchange Commission (or successors thereto or an analogous
Governmental Authority).
“Secured Parties”: collectively, the Lenders, the Administrative Agent, the
Collateral Agent, the Swingline Lender, any Issuing Lender, any other holder from time to time of
any of the Obligations and, in each case, their respective successors and permitted assigns.
“Securities Act”: the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
“Security”: as defined in the Guarantee and Collateral Agreement.
“Security Documents”: the collective reference to the Guarantee and Collateral
Agreement and all other security documents (including any Mortgages) hereafter delivered to the
Administrative Agent or the Collateral Agent purporting to grant a Lien on any Property of any Loan
Party to secure the Obligations.
“Single Employer Plan”: any Plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA and in respect
of which any Loan Party or any Commonly Controlled Entity 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.
“Solvent”: with respect to any Person, as of any date of determination, (a) the
amount of the “present fair saleable value” of the assets of such Person will, as of such date,
exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as
such quoted terms are determined in accordance with applicable federal and state laws governing
determinations of the solvency of debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount that will be required to pay the
liability of such Person on its debts as such debts become absolute and matured, (c) such Person
will not have, as of such date, an unreasonably small amount of capital with which to conduct its
business and (d) such Person will be able to pay its debts as they mature. For purposes of this
definition, (i) “debt” means liability on a “claim”, (ii) “claim” means any (x) right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured and (iii) except as otherwise provided by
applicable law, the amount of “contingent liabilities” at any time shall be the amount thereof
which, in light of all the facts and circumstances existing at such time, can reasonably be
expected to become actual or matured liabilities.
“Special Purpose Entity”: Booz Allen Hamilton Intellectual Property Holdings, LLC or
any other Person formed or organized primarily for the purpose of holding trademarks, service
marks, trade names, logos, slogans and/or internet domain names containing the mark “Booz” without
the names “Allen” or “Hamilton” and licensing such marks to Booz & Company Inc. and its affiliates.
“Specified Equity Contribution”: as defined in Section 8.2.
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“Specified Hedge Agreement”: any Hedge Agreement (a) entered into by (i) the Borrower
or any Subsidiary Guarantor and (ii) any Lender or any affiliate thereof at the time such Hedge
Agreement was entered into, as counterparty and (b) that has been designated by such Lender and the
Borrower, by notice to the Administrative Agent, as a Specified Hedge Agreement. The designation
of any Hedge Agreement as a Specified Hedge Agreement shall not create in favor of the Lender or
affiliate thereof that is a party thereto any rights in connection with the management or release
of any Collateral or of the obligations of any Guarantor under the Guarantee and Collateral
Agreement. For the avoidance of doubt, all Hedge Agreements in existence on the Closing Date
between the Borrower or any Subsidiary Guarantor and any Lender shall constitute Specified Hedge
Agreements.
“Specified Representations”: (a) the representations made by the Company in the
Merger Agreement as are material to the interests of the Lenders, but only to the extent that the
Borrower has the right to terminate its obligations under the Merger Agreement as a result of the
breach of such representations and (b) the representations and warranties set forth in
Sections 4.2(a), 4.4(a), 4.4(c), 4.11 and 4.13.
“Spin Off Agreement”: the Spin Off Agreement, dated as of May 15, 2008, by and among
the Company, Booz & Company Holdings, LLC, Booz & Company Inc., Booz & Company Intermediate I Inc.
and Booz & Company Intermediate II Inc.
“Sponsor”: The Carlyle Group and any Affiliates thereof (but excluding any operating
portfolio companies of the foregoing).
“Subsidiary”: as to any Person, a corporation, partnership, limited liability company
or other entity of which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the Board of Directors of such corporation,
partnership or other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both, by such Person;
provided that any joint venture that is not required to be consolidated with the Borrower
and its consolidated Subsidiaries in accordance with GAAP shall not be deemed to be a “Subsidiary”
for purposes hereof. Unless otherwise qualified, all references to a “Subsidiary” or to
“Subsidiaries” in this Agreement shall refer to a direct or indirect Subsidiary or
Subsidiaries of the Borrower.
“Subsidiary Guarantors”: (a) each Subsidiary other than any Excluded Subsidiary and
(b) any other Subsidiary of the Borrower that is a party to the Guarantee and Collateral Agreement.
“Swingline Commitment”: the obligation of the Swingline Lender to make Swingline
Loans pursuant to Section 2.6 in an aggregate principal amount at any one time outstanding not to
exceed $80,000,000.
“Swingline Lender”: (a) Credit Suisse AG, Cayman Islands Branch (f/k/a Credit
Suisse), in its capacity as the lender of Swingline Loans or (b) upon the resignation of Credit
Suisse AG, Cayman Islands Branch (f/k/a Credit Suisse) as a Swingline Lender, any Revolving Lender
from time to time designated by the Borrower, in its sole discretion, as the Swingline Lender (with
the consent of such other Revolving Lender).
“Swingline Loans”: as defined in Section 2.6(a).
“Swingline Participation Amount”: as defined in Section 2.7(c).
35
“Taxes”: all present and future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, including any interest, additions to tax or
penalties applicable thereto.
“Term Lenders”: the collective reference to the Tranche A Term Lenders, the Tranche B
Term Lenders and the Tranche C Term Lenders.
“Term Loans”: the collective reference to the Tranche A Term Loans, the Tranche B
Term Loans, the Tranche C Term Loans and the New Term Loans, if any.
“Test Period”: on any date of determination, the period of four consecutive fiscal
quarters of the Borrower (in each case taken as one accounting period) most recently ended on or
prior to such date for which financial statements have been or are required to be delivered
pursuant to Section 6.1.
“Tranche”: as defined in Section 2.25.
“Tranche A Term Commitment”: as to any Lender, the obligation of such Lender, if any,
to make a Tranche A Term Loan to the Borrower in a principal amount not to exceed the amount set
forth under the heading “Tranche A Term Commitment” opposite such Lender’s name on Schedule 2.1 to
the Existing Credit Agreement, or, as the case may be, in the Assignment and Assumption pursuant to
which such Lender became a party hereto. The original aggregate amount of the Tranche A Term
Commitments is $125,000,000.
“Tranche A Term Facility”: as defined in the definition of “Facility”.
“Tranche A Term Lender”: each Lender that has a Tranche A Term Commitment or that
holds a Tranche A Term Loan.
“Tranche A Term Loan”: as defined in Section 2.1.
“Tranche A Term Maturity Date”: the sixth anniversary of the Closing Date.
“Tranche A Term Percentage”: as to any Tranche A Term Lender at any time on the
Closing Date (but prior to the initial funding of the Tranche A Term Loans), the percentage which
the sum of such Lender’s Tranche A Term Commitments then constitutes of the aggregate Tranche A
Term Commitments (or, at any time after the Closing Date, the percentage which the aggregate
principal amount of such Lender’s Tranche A Term Loans then outstanding constitutes of the
aggregate principal amount of the Tranche A Term Loans then outstanding).
“Tranche B Prepayment Amount”: as defined in Section 2.12(e).
“Tranche B Term Commitment”: as to any Lender, the obligation of such Lender, if any,
to make a Tranche B Term Loan to the Borrower in a principal amount not to exceed the amount set
forth under the heading “Tranche B Term Commitment” opposite such Lender’s name on Schedule 2.1 to
the Existing Credit Agreement, or, as the case may be, in the Assignment and Assumption pursuant to
which such Lender became a party hereto. The original aggregate amount of the Tranche B Term
Commitments is $585,000,000.
“Tranche B Term Facility”: as defined in the definition of “Facility”.
36
“Tranche B Term Lender”: each Lender that has a Tranche B Term Commitment or that
holds a Tranche B Term Loan.
“Tranche B Term Loan”: as defined in Section 2.1.
“Tranche B Term Maturity Date”: the seventh anniversary of the Closing Date.
“Tranche B Term Percentage”: as to any Tranche B Term Lender at any time on the
Closing Date (but prior to the initial funding of the Tranche B Term Loans), the percentage which
the sum of such Lender’s Tranche B Term Commitments then constitutes of the aggregate Tranche B
Term Commitments (or, at any time after the Closing Date, the percentage which the aggregate
principal amount of such Lender’s Tranche B Term Loans then outstanding constitutes of the
aggregate principal amount of the Tranche B Term Loans then outstanding).
“Tranche C Term Commitment”: as to any Lender, the obligation of such Lender, if any,
to make a Tranche C Term Loan to the Borrower in a principal amount not to exceed the amount set
forth under the heading “Tranche C Term Commitment” opposite such Lender’s name on Schedule 2.1A.
The original aggregate amount of the Tranche C Term Commitments is $350,000,000.
“Tranche C Term Facility”: as defined in the definition of “Facility”.
“Tranche C Term Lender”: each Lender that has a Tranche C Term Commitment or that
holds a Tranche C Term Loan.
“Tranche C Term Loan”: as defined in Section 2.1.
“Tranche C Term Maturity Date”: the seventh anniversary of the Closing Date.
“Tranche C Term Percentage”: as to any Tranche C Term Lender, the percentage which
the aggregate principal amount of such Lender’s Tranche C Term Loans then outstanding constitutes
of the aggregate principal amount of the Tranche C Term Loans then outstanding.
“Transaction Documents”: the Merger Documents, the Loan Documents and the Mezzanine
Loan Documents.
“Transactions”: (a) the transactions to occur pursuant to the Transaction Documents,
(b) the Refinancing and (c) the Company Reorganization.
“Transferee”: any Assignee or Participant.
“Trigger Date”: as defined in Section 2.12(b).
“Type”: as to any Loan, its nature as an ABR Loan or Eurocurrency Loan.
“United States”: the United States of America.
“Unrestricted Subsidiary”: (i) any Subsidiary of the Borrower designated as such and
listed on Schedule 4.14 on the Closing Date and (ii) any Subsidiary of the Borrower that is
designated by a resolution of the Board of Directors of the Borrower as an Unrestricted Subsidiary,
but only to the extent that, in the case of each of clauses (i) and (ii), such Subsidiary: (a) has
no Indebtedness other than
37
Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with Holdings, the Borrower or any Restricted Subsidiary unless the
terms of any such agreement, contract, arrangement or understanding are no less favorable to
Holdings, the Borrower or such Restricted Subsidiary than those that might be obtained at the time
from Persons who are not Affiliates of Holdings or the Borrower; (c) is a Person with respect to
which neither Holdings, the Borrower nor any of the Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Capital Stock or warrants, options or other
rights to acquire Capital Stock or (y) to maintain or preserve such Person’s financial condition or
to cause such Person to achieve any specified levels of operating results; and (d) does not
guarantee or otherwise provide credit support after the time of such designation for any
Indebtedness of Holdings, the Borrower or any of its Restricted Subsidiaries, in the case of
clauses (a), (b) and (c), except to the extent not otherwise prohibited by Section 7. If, at any
time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes hereof.
Subject to the foregoing, the Borrower may at any time designate any Unrestricted Subsidiary to be
a Restricted Subsidiary or any Restricted Subsidiary to be an Unrestricted Subsidiary;
provided that (i) such designation shall only be permitted if no Default or Event of
Default would be in existence following such designation and after giving effect to such
designation the Borrower shall be in pro forma compliance with the financial
covenants set forth in Section 7.1, (ii) any designation of an Unrestricted Subsidiary as a
Restricted Subsidiary shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary and (iii) any
designation of a Restricted Subsidiary as an Unrestricted Subsidiary shall be deemed to be an
Investment in an Unrestricted Subsidiary and shall reduce amounts available for Investments in
Unrestricted Subsidiaries permitted by Section 7.7 in an amount equal to the fair market value of
the Subsidiary so designated; provided that the Borrower may subsequently redesignate any
such Unrestricted Subsidiary as a Restricted Subsidiary so long as the Borrower does not
subsequently re-designate such Restricted Subsidiary as an Unrestricted Subsidiary for a period of
the succeeding four fiscal quarters.
“US Lender”: as defined in Section 2.20(e).
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms
defined in this Agreement shall have the defined meanings when used in the other Loan Documents or
any certificate or other document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any certificate or other document made
or delivered pursuant hereto or thereto, (i) accounting terms relating to the Borrower and its
Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words
“include”, “includes” and “including” shall be deemed to be followed by the phrase “without
limitation”, and (iii) references to agreements or other Contractual Obligations shall, unless
otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended,
supplemented, restated or otherwise modified from time to time.
(c) The words “hereof”, “herein” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Annex, Section, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The term “license” shall include sub-license. The term “documents” includes any and all
documents whether in physical or electronic form.
38
The meanings given to terms defined herein shall be equally applicable to both the singular
and plural forms of such terms.
1.3 Pro Forma Calculations. Solely for purposes of determining whether any action is
otherwise permitted to be taken hereunder, the Consolidated Total Leverage Ratio and Consolidated
Net Interest Coverage Ratio shall be calculated as follows:
(a) In the event that the Borrower or any Restricted Subsidiary incurs, assumes,
guarantees, redeems, retires or extinguishes any Indebtedness subsequent to the commencement
of the period for which such ratio is being calculated but prior to or simultaneously with
the event for which the calculation of such ratio is made (a “Ratio Calculation
Date”), then such ratio shall be calculated giving pro forma effect to
such incurrence, assumption, guarantee, redemption, retirement or extinguishment of
Indebtedness as if the same had occurred at the beginning of the applicable four-quarter
period.
(b) For purposes of making the computation referred to above, if any acquisitions,
Dispositions or designations of Unrestricted Subsidiaries or Restricted Subsidiaries are
made (or committed to be made pursuant to a definitive agreement) during the four-quarter
reference period or subsequent to such reference period and on or prior to or simultaneously
with the relevant Ratio Calculation Date, Consolidated EBITDA shall be calculated on a
pro forma basis, assuming that all such acquisitions, Dispositions and
designations had occurred on the first day of the four-quarter reference period in a manner
consistent, where applicable, with the pro forma adjustments set forth in
clause (j) of and the last proviso of the first sentence of the definition of “Consolidated
EBITDA”. If since the beginning of such period any Person that subsequently became a
Restricted Subsidiary or was merged with or into the Borrower or any of its Restricted
Subsidiaries since the beginning of such period shall have made any acquisition or
Disposition, in each case with respect to a business or an operating unit of a business,
that would have required adjustment pursuant to this provision, then such ratio shall be
calculated giving pro forma effect thereto for such period as if such
acquisition or Disposition had occurred at the beginning of the applicable four-quarter
period.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Commitments. Subject to the terms and conditions hereof, (a) each Tranche A Term
Lender severally agrees to make a term loan (a “Tranche A Term Loan”) in Dollars to the
Borrower on the Closing Date in an amount which will not exceed the amount of the Tranche A Term
Commitment of such Lender, (b) each Tranche B Term Lender severally agrees to make a term loan (a
“Tranche B Term Loan”) in Dollars to the Borrower on the Closing Date in an amount which
will not exceed the amount of the Tranche B Term Commitment of such Lender and (c) each Tranche C
Term Lender severally agrees to make a term loan (a “Tranche C Term Loan”) in Dollars to
the Borrower on the Amendment and Restatement Effective Date in an amount which will not exceed the
amount of the Tranche C Term Commitment of such Lender. The Borrower and the Lenders acknowledge
that the Term Loans funded on the Closing Date will be funded with original issue discount of 2%.
The Borrower and the Lenders acknowledge that the Tranche C Term Loans funded on the Amendment and
Restatement Effective Date will be funded with original issue discount of 1%. Notwithstanding the
foregoing, the aggregate outstanding principal amount of the Term Loans for all purposes of this
Agreement and the other Loan Documents shall be the stated principal amount thereof outstanding
from time to time. The Term Loans may from time to time be Eurocurrency Loans or ABR Loans, as
determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2
and 2.13.
39
2.2 Procedure for Term Loan Borrowing. The Borrower shall give the Administrative Agent
irrevocable written notice (which notice must be received by the Administrative Agent prior to
12:00 Noon, New York City time, one Business Day prior to the anticipated Closing Date or Amendment
and Restatement Effective Date, as applicable) requesting that the applicable Term Lenders make the
applicable Term Loans on the Closing Date or Amendment and Restatement Effective Date, as
applicable, and specifying the amount to be borrowed and the requested Interest Period, if
applicable. Upon receipt of such notice the Administrative Agent shall promptly notify each
applicable Term Lender thereof. Not later than 11:00 A.M., New York City time, on the Closing Date
or Amendment and Restatement Effective Date, as applicable, each applicable Term Lender shall make
available to the Administrative Agent at the Funding Office an amount in immediately available
funds equal to the Term Loan or Term Loans to be made by such Lender on such date. The
Administrative Agent shall credit the account designated in writing by the Borrower to the
Administrative Agent with the aggregate of the amounts made available to the Administrative Agent
by the Term Lenders in immediately available funds.
2.3 Repayment of Term Loans. (a) The Tranche A Term Loan of each Tranche A Term Lender
shall be payable on each date set forth below in an amount set forth opposite such date (expressed
as a percentage of the stated principal amount of the Tranche A Term Loans funded on the Closing
Date) (as adjusted to reflect any prepayments thereof), with the remaining balance thereof payable
on the Tranche A Term Maturity Date.
| Date | Amount | |
December 31, 2008 |
1.25% | |
March 31, 2009 |
1.25% | |
June 30, 2009 |
1.25% | |
September 30, 2009 |
1.25% | |
December 31, 2009 |
2.50% | |
March 31, 2010 |
2.50% | |
June 30, 2010 |
2.50% | |
September 30, 2010 |
2.50% | |
December 31, 2010 |
2.50% | |
March 31, 2011 |
2.50% | |
June 30, 2011 |
2.50% | |
September 30, 2011 |
2.50% | |
December 31, 2011 |
3.75% | |
March 31, 2012 |
3.75% | |
June 30, 2012 |
3.75% | |
September 30, 2012 |
3.75% | |
December 31, 2012 |
5.00% | |
March 31, 2013 |
5.00% | |
June 30, 2013 |
5.00% | |
September 30, 2013 |
5.00% |
(b) The Tranche B Term Loan of each Tranche B Term Lender shall be payable in equal
consecutive quarterly installments, commencing on December 31, 2008, on the last Business Day of
each March, June, September and December following the Closing Date in an amount equal to one
quarter of one percent (0.25%) of the stated principal amount of the Tranche B Term Loans funded on
the Closing Date (as adjusted to reflect any prepayments thereof), with the remaining balance
thereof payable on the Tranche B Term Maturity Date.
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(c) The Tranche C Term Loan of each Tranche C Term Lender shall be payable in equal
consecutive quarterly installments, commencing on March 31, 2010, on the last Business Day of each
March, June, September and December following the Amendment and Restatement Effective Date in an
amount equal to one quarter of one percent (0.25%) of the stated principal amount of the Tranche C
Term Loans funded on the Amendment and Restatement Effective Date (as adjusted to reflect any
prepayments thereof), with the remaining balance thereof payable on the Tranche C Term Maturity
Date.
2.4 Revolving Commitments. (a) Subject to the terms and conditions hereof, each
Revolving Lender severally agrees to make revolving credit loans (“Revolving Loans”) in
Dollars to the Borrower from time to time during the Revolving Commitment Period in an aggregate
principal amount at any one time outstanding which when added to such Lender’s Revolving Percentage
of the sum of (i) the L/C Obligations then outstanding and (ii) the aggregate principal amount of
the Swingline Loans then outstanding, does not exceed the amount of such Lender’s Revolving
Commitment. During the Revolving Commitment Period, the Borrower may use the Revolving Commitments
by borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof. The Revolving Loans may from time to time be Eurocurrency
Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.5 and 2.13.
(b) The Borrower shall repay all outstanding Revolving Loans made to it on the Revolving
Termination Date.
(c) On the Amendment and Restatement Effective Date, (i) the Revolving Commitment of each
Additional Revolving Lender that has an Existing Revolving Commitment shall be automatically and
without further action increased by an amount equal to such Additional Revolving Lender’s
Additional Revolving Commitment and (ii) each Additional Revolving Lender that does not have an
Existing Revolving Commitment shall automatically and without further action provide a new
Revolving Commitment in an amount equal to such Revolving Lender’s Additional Revolving Commitment.
2.5 Procedure for Revolving Loan Borrowing. The Borrower may borrow under the Revolving
Commitments during the Revolving Commitment Period on any Business Day; provided that the
Borrower shall give the Administrative Agent irrevocable written notice (which notice must be
received by the Administrative Agent (i) in the case of Eurocurrency Loans, prior to 12:00 Noon,
New York City time, three Business Days prior to the requested Borrowing Date or (ii) in the case
of ABR Loans, prior to 12:00 Noon, New York City time, one Business Day prior to the proposed
Borrowing Date), specifying (x) the amount and Type of Revolving Loans to be borrowed, (y) the
requested Borrowing Date and (z) in the case of Eurocurrency Loans, the respective amounts of each
such Type of Loan and the respective lengths of the initial Interest Period therefor. The
aggregate principal amount of all Revolving Loans made on the Closing Date shall not exceed
$25,000,000 (which amount, for the avoidance of doubt, shall not include the face amount of any
outstanding Letters of Credit). Each borrowing by the Borrower under the Revolving Commitments
shall be in an amount equal to (x) in the case of ABR Loans, $1,000,000 or a whole multiple of
$100,000 in excess thereof (or, if the then aggregate Available Revolving Commitments are less than
$1,000,000, such lesser amount) and (y) in the case of Eurocurrency Loans, $1,000,000 or a whole
multiple of $500,000 in excess thereof; provided that the Swingline Lender may request, on
behalf of the Borrower, borrowings under the Revolving Commitments that are ABR Loans in other
amounts pursuant to Section 2.7(a). Upon receipt of any such notice from the Borrower, the
Administrative Agent shall promptly notify each Revolving Lender thereof. Each Revolving Lender
will make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of the Borrower at the Funding Office prior to 11:00 A.M., New
York City time, on the Borrowing Date requested by the Borrower in
funds immediately available to the
41
Administrative Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting the account designated in writing by the Borrower to the
Administrative Agent with the aggregate of the amounts made available to the Administrative Agent
by such Revolving Lenders and in like funds as received by the Administrative Agent. If no
election as to the Type of a Revolving Loan is specified, then the requested Loan shall be an ABR
Loan. If no Interest Period is specified with respect to any requested Eurocurrency Loan, the
Borrower shall be deemed to have selected an Interest Period of one month’s duration.
2.6 Swingline Commitment. (a) Subject to the terms and conditions hereof, the Swingline
Lender agrees to make a portion of the credit otherwise available to the Borrower under the
Revolving Commitments from time to time during the Revolving Commitment Period by making swing line
loans (“Swingline Loans”) in Dollars to the Borrower; provided that (i) the
aggregate principal amount of Swingline Loans outstanding at any time shall not exceed the
Swingline Commitment then in effect (provided that the Swingline Loans outstanding at any
time, when aggregated with the Swingline Lenders’ other outstanding Revolving Loans, may exceed the
Swingline Commitment then in effect) and (ii) the Borrower shall not request, and the Swingline
Lender shall not make, any Swingline Loan if, after giving effect to the making of such Swingline
Loan, the aggregate amount of the Available Revolving Commitments under the Revolving Commitments
would be less than zero. During the Revolving Commitment Period, the Borrower may use the
Swingline Commitment by borrowing, repaying and reborrowing, all in accordance with the terms and
conditions hereof. Swingline Loans shall be ABR Loans only.
(b) The Borrower shall repay to the Swingline Lender the then unpaid principal amount of each
Swingline Loan on the Revolving Termination Date.
2.7 Procedure for Swingline Borrowing; Refunding of Swingline Loans. (a) Whenever the
Borrower desires that the Swingline Lender make Swingline Loans it shall give the Swingline Lender
and the Administrative Agent irrevocable written notice (which notice must be received by the
Swingline Lender and the Administrative Agent not later than 12:00 Noon, New York City time, on the
proposed Borrowing Date, specifying (i) the amount to be borrowed and (ii) the requested Borrowing
Date (which shall be a Business Day during the Revolving Commitment Period). Each borrowing under
the Swingline Commitment shall be in an amount equal to $500,000 or a whole multiple of $100,000 in
excess thereof. Not later than 3:00 P.M., New York City time, on the Borrowing Date specified in a
notice in respect of Swingline Loans, the Swingline Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available funds equal to the
amount of the Swingline Loan to be made by the Swingline Lender. The Administrative Agent shall
make the proceeds of such Swingline Loan available to the Borrower on such Borrowing Date by
depositing such proceeds in the account of the Borrower with the Administrative Agent or as
otherwise directed by the Borrower on such Borrowing Date in immediately available funds.
(b) The Swingline Lender, at any time and from time to time in its sole and absolute
discretion may, on behalf of the Borrower (which hereby irrevocably directs such Swingline Lender
to act on its behalf), request each Revolving Lender to make, and each such Revolving Lender hereby
agrees to make, a Revolving Loan, in an amount equal to such Revolving Lender’s Revolving
Percentage of the aggregate amount of the Swingline Loans (the “Refunded Swingline Loans”)
outstanding on the date of such notice, to repay such Swingline Lender. Each Revolving Lender
shall make the amount of Revolving Loans available to the Administrative Agent at the Funding
Office in immediately available funds on the date of such request or, if such request is made after
10:00 A.M., New York City time on any Business Day, not later than 10:00 A.M., New York City time,
on the next Business Day. The proceeds of such Revolving Loans shall be immediately made available
by the Administrative Agent to the
42
Swingline Lender for application by the Swingline Lender to the repayment of the Refunded Swingline Loans.
(c) If prior to the time a Revolving Loan would have otherwise been made pursuant to Section
2.7(b), one of the events described in Section 8.1(f) shall have occurred and be continuing with
respect to the Borrower or if for any other reason, as determined by the Swingline Lender in its
sole discretion, Revolving Loans may not be made as contemplated by Section 2.7(b), each Revolving
Lender shall, on the date such Revolving Loan was to have been made pursuant to the notice referred
to in Section 2.7(b), purchase for cash an undivided participating interest in the then outstanding
Swingline Loans by paying to the Swingline Lender an amount (the “Swingline Participation
Amount”) equal to (A) such Revolving Lender’s Revolving Percentage times (B) the sum of the
aggregate principal amount of Swingline Loans then outstanding that were to have been repaid with
such Revolving Loans.
(d) Whenever, at any time after the Swingline Lender has received from any Revolving Lender
such Lender’s Swingline Participation Amount with respect to any Swingline Loans, the Swingline
Lender receives any payment on account of such Swingline Loans, the Swingline Lender will
distribute to such Lender its Swingline Participation Amount with respect thereto (appropriately
adjusted, in the case of interest payments, to reflect the period of time during which such
Lender’s participating interest was outstanding and funded and, in the case of principal and
interest payments, to reflect such Lender’s pro rata portion of such payment if such payment is not
sufficient to pay the principal of and interest on all such Swingline Loans then due);
provided, however, that in the event that such payment received by the Swingline
Lender is required to be returned, such Lender will return to the Swingline Lender any portion
thereof previously distributed to it by the Swingline Lender.
(e) Each Revolving Lender’s obligation to make the Loans referred to in Section 2.7(b) and to
purchase participating interests pursuant to Section 2.7(c) shall be absolute and unconditional and
shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment,
defense or other right that such Revolving Lender or the Borrower may have against the Swingline
Lender, the Borrower or any other Person for any reason whatsoever, (ii) the occurrence or
continuance of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5, (iii) any adverse change in the condition (financial or
otherwise) of the Borrower or any other Loan Party, (iv) any breach of this Agreement or any other
Loan Document by the Borrower, any other Loan Party or any other Lender or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.
2.8 Repayment of Loans. (a) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of the appropriate Revolving Lender or Term Lender, as the
case may be, (i) the then unpaid principal amount of each Revolving Loan of such Revolving Lender
made to the Borrower outstanding on the Revolving Termination Date (or on such earlier date on
which the Loans become due and payable pursuant to Section 8.1) and (ii) the principal amount of
each outstanding Term Loan of such Term Lender made to the Borrower in installments according to
the amortization schedule set forth in Section 2.3 (or on such earlier date on which the Loans
become due and payable pursuant to Section 8.1). The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Loans made to the Borrower from time to time
outstanding from the date made until payment in full thereof at the rates per annum, and on the
dates, set forth in Section 2.15.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from
time to time, including the amounts of principal and interest payable and paid to such Lender from
time to time under this Agreement.
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(c) The Administrative Agent, on behalf of the Borrower, shall maintain the Register pursuant
to Section 10.6(b)(iv), and a subaccount therein for each Lender, in which shall be recorded
(i) the amount of each Loan made hereunder and any Note evidencing such Loan, the Type of such Loan
and each Interest Period applicable thereto, (ii) the amount of any principal, interest and fees,
as applicable, due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the
Borrower and each Lender’s share thereof.
(d) The entries made in the Register and the accounts of each Lender maintained pursuant to
Section 2.8(c) shall, to the extent permitted by applicable law, be presumptively correct absent
demonstrable error of the existence and amounts of the obligations of the Borrower therein
recorded; provided, however, that the failure of the Administrative Agent or any
Lender to maintain the Register or any such account, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the
Borrower by such Lender in accordance with the terms of this Agreement.
2.9 Commitment Fees, etc. (a) The Borrower agrees to pay to the Administrative Agent for
the account of each Revolving Lender a commitment fee for the period from and including the Closing
Date to the last day of the Revolving Commitment Period, computed at the Applicable Commitment Fee
Rate on the average daily amount of the Available Revolving Commitment of such Lender during the
period for which payment is made, payable quarterly in arrears on each Fee Payment Date;
provided that (i) for purposes of calculating any fees owing in accordance with this
Section 2.9(a), the Available Revolving Commitment for the Swingline Lender shall exclude any
outstanding Swingline Loans and (ii) the Swingline Lender shall not be entitled to any commitment
fee with respect to its Swingline Commitment separate from that to which it is entitled with
respect to its Available Revolving Commitment; provided, further, that (i) any
commitment fee accrued with respect to any of the Revolving Commitments of a Defaulting Lender
during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time
shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender except to
the extent that such commitment fee shall otherwise have been due and payable by the Borrower prior
to such time and (ii) no commitment fee shall accrue on any of the Revolving Commitments of a
Defaulting Lender so long as such Lender shall be a Defaulting Lender.
(b) The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the
dates as set forth in any fee agreements with the Administrative Agent.
2.10 Termination or Reduction of Revolving Commitments. The Borrower shall have the right,
upon not less than two Business Days’ notice to the Administrative Agent, to terminate the
Revolving Commitments or, from time to time, to reduce the amount of the Revolving Commitments;
provided that no such termination or reduction of Revolving Commitments shall be permitted
if, after giving effect thereto and to any prepayments of the Revolving Loans made on the effective
date thereof, the total Revolving Extensions of Credit would exceed the total Revolving
Commitments. Any such partial reduction shall be in an amount equal to $1,000,000, or a whole
multiple of $500,000 in excess thereof, and shall reduce permanently the Revolving Commitments then
in effect. Notwithstanding anything to the contrary contained in this Agreement, the Borrower may
rescind any notice of termination under this Section 2.10 if such termination would have resulted
from a refinancing of all of the Loans, which refinancing shall not be consummated or shall
otherwise be delayed.
2.11 Optional Prepayments. (a) The Borrower may at any time and from time to time prepay
the Revolving Loans, the Swingline Loans or the Term Loans, in whole or in part, without premium or
penalty except as specifically provided in Section 2.11(b), upon irrevocable written notice
44
delivered to the Administrative Agent no later than 12:00 Noon, New York City time, three Business
Days prior thereto, in the case of Eurocurrency Loans, and no later than 12:00 Noon, New York City
time, (i) one Business Day prior thereto, in the case of ABR Loans that are Revolving Loans or Term
Loans and (ii) on the prepayment date, in the case of ABR Loans that are Swingline Loans, which
notice shall specify (x) the date and amount of prepayment, (y) whether the prepayment is of
Swingline Loans, Revolving Loans, Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans
or New Loans and (z) whether the prepayment is of Eurocurrency Loans or ABR Loans; provided
that if a Eurocurrency Loan is prepaid on any day other than the last day of the Interest Period
applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.21. Upon
receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender
thereof. If any such notice is given, the amount specified in such notice shall be due and payable
on the date specified therein (provided that such notice may be conditioned on receiving
the proceeds of any refinancing), together with (except in the case of Revolving Loans that are ABR
Loans and Swingline Loans) accrued interest to such date on the amount prepaid. Partial
prepayments of Term Loans and of Revolving Loans shall be in an aggregate principal amount of
(i) $1,000,000 or a whole multiple of $100,000 in excess thereof (in the case of prepayments of ABR
Loans) or (ii) $1,000,000 or a whole multiple of $500,000 in excess thereof (in the case of
prepayments of Eurocurrency Loans), and in each case shall be subject to the provisions of
Section 2.18. Partial prepayments of Swingline Loans shall be in an aggregate principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof.
(b) Any optional prepayment in full of the Tranche B Term Loans as a result of a Repricing
Transaction shall be accompanied by a prepayment fee, which shall initially be 2% of the aggregate
principal amount prepaid, shall decline to 1% on and after the first anniversary of the Closing
Date and shall decline to 0% on and after the second anniversary of the Closing Date.
(c) Notwithstanding anything to the contrary contained in this Section 2.11 or any other
provision of this Agreement and without otherwise limiting the rights in respect of prepayments of
the Loans of the Borrower and its Subsidiaries, so long as no Default has occurred and is
continuing, the Borrower or any Subsidiary of the Borrower may repurchase outstanding Term Loans
pursuant to this Section 2.11(c) on the following basis:
(i) Holdings, the Borrower or any Subsidiary of the Borrower may make one or more
offers (each, an “Offer”) to repurchase all or any portion of the Term Loans (such
Term Loans, the “Offer Loans”) of Term Lenders; provided that, (A) Holdings,
the Borrower or such Subsidiary delivers a notice of such Offer to the Administrative Agent
and all Term Lenders no later than noon (New York City time) at least five Business Days in
advance of a proposed consummation date of such Offer indicating (1) the last date on which
such Offer may be accepted, (2) the maximum dollar amount of such Offer, (3) the repurchase
price per dollar of principal amount of such Offer Loans at which Holdings, the Borrower or
such Subsidiary is willing to repurchase such Offer Loans and (4) the instructions,
consistent with this Section 2.11(c) with respect to the Offer, that a Term Lender must
follow in order to have its Offer Loans repurchased; (B) the maximum dollar amount of each
Offer shall be no less than $10,000,000; (C) Holdings, the Borrower or such Subsidiary shall
hold such Offer open for a minimum period of two Business Days; (D) a Term Lender who elects
to participate in the Offer may choose to sell all or part of such Term Lender’s Offer
Loans; and (E) such Offer shall be made to Term Lenders holding the Offer Loans on a pro
rata basis in accordance with the respective principal amount then due and owing to the Term
Lenders; provided, further that, if any Term Lender elects not to
participate in the Offer, either in whole or in part, the amount of such Term Lender’s Offer
Loans not being tendered shall be excluded in calculating the pro rata amount applicable to
the balance of such Offer Loans;
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(ii) With respect to all repurchases made by Holdings, the Borrower or a Subsidiary of
the Borrower, such repurchases shall be deemed to be voluntary prepayments pursuant to this
Section 2.11 in an amount equal to the aggregate principal amount of such Term Loans,
provided that such repurchases shall not be subject to the provisions of paragraphs
(a) and (b) of this Section 2.11, Section 2.18 and Section 2.21;
(iii) Following repurchase by Holdings, the Borrower or any Subsidiary of the Borrower,
(A) all principal and accrued and unpaid interest on the Term Loans so repurchased shall be
deemed to have been paid for all purposes and no longer outstanding (and may not be resold
by Holdings, the Borrower or such Subsidiary), for all purposes of this Agreement and all
other Loan Documents and (B) Holdings, the Borrower or any Subsidiary of the Borrower, as
the case may be, will promptly advise the Administrative Agent of the total amount of Offer
Loans that were repurchased from each Lender who elected to participate in the Offer; and
(iv) Failure by Holdings, the Borrower or a Subsidiary of the Borrower to make any
payment to a Lender required by an agreement permitted by this Section 2.11(c) shall not
constitute an Event of Default under Section 8.1(a).
(d) In connection with any optional prepayments by the Borrower of the Term Loans pursuant to
this Section 2.11, such prepayments shall be applied on a pro rata basis to the then outstanding
Term Loans being prepaid irrespective of whether such outstanding Term Loans are ABR Loans or
Eurocurrency Loans; provided that if all Lenders elect to participate in the Offer on a pro rata
basis in accordance with their respective principal amounts then due and owing, such prepayments
shall be applied first to ABR Loans to the full extent thereof before application to Eurocurrency
Loans.
2.12 Mandatory Prepayments. (a) Unless the Required Prepayment Lenders shall otherwise
agree, if any Indebtedness (excluding any Indebtedness incurred in accordance with Section 7.2)
shall be incurred by the Borrower or any Restricted Subsidiary, an amount equal to 100% of the Net
Cash Proceeds thereof shall be applied not later than one Business Day after the date of receipt of
such Net Cash Proceeds toward the prepayment of the Term Loans as set forth in Section 2.12(d).
(b) Unless the Required Prepayment Lenders shall otherwise agree, if on any date the Borrower
or any Restricted Subsidiary shall for its own account receive Net Cash Proceeds from any Asset
Sale or Recovery Event then, unless a Reinvestment Notice shall be delivered to the Administrative
Agent in respect thereof, such Net Cash Proceeds shall be applied not later than five Business Days
after such date toward the prepayment of the Term Loans as set forth in Section 2.12(d);
provided that, notwithstanding the foregoing, (i) on each Reinvestment Prepayment Date, the
Term Loans shall be prepaid as set forth in Section 2.12(d) by an amount equal to the Reinvestment
Prepayment Amount with respect to the relevant Reinvestment Event and (ii) on the date (the
“Trigger Date”) that is six months after any such Reinvestment Prepayment Date, the Term
Loans shall be prepaid as set forth in Section 2.12(d) by an amount equal to the portion of any
Committed Reinvestment Amount with respect to the relevant Reinvestment Event not actually expended
by such Trigger Date.
(c) Unless the Required Prepayment Lenders shall otherwise agree, if, for any fiscal year of
the Borrower commencing with the fiscal year ending March 31, 2010, there shall be Excess Cash
Flow, the Borrower shall, on the relevant Excess Cash Flow Application Date, apply an amount equal
to (i) the Excess Cash Flow Percentage of such Excess Cash Flow minus (ii) the aggregate
amount of all prepayments of Revolving Loans and Swingline Loans during such fiscal year to the
extent accompanied by permanent optional reductions of the Revolving Commitments, and all optional
prepayments of Term Loans during such fiscal year (other than optional prepayments pursuant to
Section 2.11(c)), in each case
46
other than to the extent any such prepayment is funded with the
proceeds of long-term Indebtedness, toward the prepayment of Term Loans as set forth in
Section 2.12(d). Each such prepayment shall be made on a date (an “Excess Cash Flow
Application Date”) no later than ten days after the date on which the financial statements
referred to in Section 6.1(a), for the fiscal year with respect to which such prepayment is made,
are required to be delivered to the Lenders.
(d) Amounts to be applied in connection with prepayments pursuant to this Section 2.12 shall
be applied to the prepayment of the Term Loans in accordance with Section 2.18(b) until paid in
full. In connection with any mandatory prepayments by the Borrower of the Term Loans pursuant to
Section 2.12, such prepayments shall be applied on a pro rata basis to the then outstanding Term
Loans being prepaid irrespective of whether such outstanding Term Loans are ABR Loans or
Eurocurrency Loans; provided that if no Lender exercises the right to waive a given mandatory
prepayment of the Term Loans pursuant to Section 2.12(e), then, with respect to such mandatory
prepayment, the amount of such mandatory prepayment shall be applied first to Term Loans that are
ABR Loans to the full extent thereof before application to Term Loans that are Eurocurrency Loans
in a manner that minimizes the amount of any payments required to be made by the Borrower pursuant
to Section 2.21. Each prepayment of the Term Loans under this Section 2.12 shall be accompanied by
accrued interest to the date of such prepayment on the amount prepaid.
(e) Notwithstanding anything to the contrary in Section 2.12(d) or 2.18, with respect to the
amount of any mandatory prepayment pursuant to this Section 2.12 that is allocated to Tranche B
Term Loans and Tranche C Term Loans (such amount, the “Tranche B Prepayment Amount”), at
any time when Tranche A Term Loans remain outstanding, the Borrower will, in lieu of applying such
amount to the prepayment of Tranche B Term Loans and Tranche C Term Loans as provided in paragraph
(d) above, on the date specified in this Section 2.12 for such prepayment, give the Administrative
Agent telephonic notice (promptly confirmed in writing) requesting that the Administrative Agent
prepare and provide to each Tranche B Term Lender (which, for avoidance of doubt, includes each New
Term Lender) and Tranche C Term Lender a notice (each, a “Prepayment Option Notice”) as
described below. As promptly as practicable after receiving such notice from the Borrower, the
Administrative Agent will send to each Tranche B Term Lender and Tranche C Term Lender a Prepayment
Option Notice, which shall be in the form of Exhibit I (or such other form approved by the
Administrative Agent), and shall include an offer by the Borrower to prepay, on the date (each a
“Mandatory Prepayment Date”) that is ten Business Days after the date of the Prepayment
Option Notice, the relevant Term Loans of such Lender by an amount equal to the portion of the
Tranche B Prepayment Amount indicated in such Lender’s Prepayment Option Notice as being applicable
to such Lender’s Tranche B Term Loans and Tranche C Term Loans. Each Tranche B Term Lender and
Tranche C Term Lender may reject all or a portion of its Tranche B Prepayment Amount by providing
written notice to the Administrative Agent and the Borrower no later than 5:00 p.m. (New York time)
one Business Day after such Tranche B Term Lender’s or Tranche C Term Lender’s receipt of the
Prepayment Option Notice (which notice shall specify the principal amount of the Tranche B
Prepayment Amount to be rejected by such Lender); provided that any Tranche B Term Lender’s
or Tranche C Term Lender’s failure to so reject such Tranche B Prepayment Amount shall be deemed an
acceptance by such Tranche B Term Lender or Tranche C Term Lender of such Prepayment Option Notice
and the amount to be prepaid in respect of Term Loans held by such Tranche B Term Lender or Tranche
C Term Lender. On the Mandatory Prepayment Date, the Borrower shall (i) pay to the relevant
Tranche B Term Lenders and Tranche C Term Lenders the aggregate amount necessary to prepay that
portion of the outstanding relevant Term Loans in respect of which such Lenders have (or are deemed
to have) accepted prepayment as described above and (ii) prepay outstanding Tranche A Term Loans in
an aggregate amount equal to the amounts declined by Tranche B Term Lenders and Tranche C Term
Lenders as described above; provided that, upon the making of such
47
prepayments, any amount remaining unapplied (i.e., after the payment in full of
the Tranche A Term Loans) shall be returned to the Borrower.
2.13 Conversion and Continuation Options. (a) The Borrower may elect from time to time to
convert Eurocurrency Loans made to the Borrower to ABR Loans by giving the Administrative Agent
prior irrevocable written notice of such election no later than 12:00 Noon, New York City time, on
the third Business Day preceding the proposed conversion date; provided that if any
Eurocurrency Loan is so converted on any day other than the last day of the Interest Period
applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.21. The
Borrower may elect from time to time to convert ABR Loans made to the Borrower to Eurocurrency
Loans by giving the Administrative Agent prior irrevocable written notice of such election no later
than 12:00 Noon, New York City time, on the third Business Day preceding the proposed conversion
date (which notice shall specify the length of the initial Interest Period therefor);
provided that no ABR Loan under a particular Facility may be converted into a Eurocurrency
Loan when any Event of Default has occurred and is continuing and the Administrative Agent or the
Majority Facility Lenders in respect of such Facility have determined in its or their sole
discretion not to permit such conversions. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.
(b) Any Eurocurrency Loan may be continued as such by the Borrower giving irrevocable written
notice to the Administrative Agent, in accordance with the applicable provisions of the term
“Interest Period” set forth in Section 1.1 and no later than 12:00 Noon, New York City time, on the
third Business Day preceding the proposed continuation date, of the length of the next Interest
Period to be applicable to such Loans; provided that if any Eurocurrency Loan is so
continued on any day other than the last day of the Interest Period applicable thereto, the
Borrower shall also pay any amounts owing pursuant to Section 2.21; provided,
further, that no Eurocurrency Loan under a particular Facility may be continued as such
when any Event of Default has occurred and is continuing and the Administrative Agent has or the
Majority Facility Lenders in respect of such Facility have determined in its or their sole
discretion not to permit such continuations; and provided, further, that (i) if the
Borrower shall fail to give any required notice as described above in this paragraph such
Eurocurrency Loans shall be automatically continued as Eurocurrency Loans having an Interest Period
of one month’s duration on the last day of such then-expiring Interest Period and (ii) if such
continuation is not permitted pursuant to the preceding proviso, such Eurocurrency Loans shall be
automatically converted to ABR Loans on the last day of such then expiring Interest Period. Upon
receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
2.14 Minimum Amounts and Maximum Number of Eurocurrency Tranches. Notwithstanding anything
to the contrary in this Agreement, all borrowings, conversions, continuations and optional
prepayments of Eurocurrency Loans and all selections of Interest Periods shall be in such amounts
and be made pursuant to such elections so that (a) after giving effect thereto, the aggregate
principal amount of the Eurocurrency Loans comprising each Eurocurrency Tranche shall be equal to a
minimum of $1,000,000 or a whole multiple of $500,000 in excess thereof and (b) no more than twelve
Eurocurrency Tranches shall be outstanding at any one time.
2.15 Interest Rates and Payment Dates. (a) (i) Each Eurocurrency Loan other than a
Eurocurrency Loan that is a Tranche B Term Loan or a Tranche C Term Loan shall bear interest for
each day during each Interest Period with respect thereto at a rate per annum equal to the
Eurocurrency Rate determined for such day plus the Applicable Margin, (ii) each
Eurocurrency Loan that is a Tranche B Term Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to (A) (1) prior to the third
anniversary of the Closing Date, the greater of (x) the Eurocurrency Rate determined for such day and (y) 3.00% and (2) thereafter, the Eurocurrency Rate
48
determined for such day plus (B)
the Applicable Margin and (iii) each Eurocurrency Loan that is a Tranche C Term Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate per annum equal to
(A) the greater of (x) the Eurocurrency Rate determined for such day and (y) 2.00% plus (B)
the Applicable Margin.
(b) (i) Each ABR Loan other than an ABR Loan that is a Tranche B Term Loan or a Tranche C Term
Loan shall bear interest at a rate per annum equal to ABR plus the Applicable Margin, (ii)
each ABR Loan that is a Tranche B Term Loan shall bear interest at a rate per annum equal to (A)
(1) prior to the third anniversary of the Closing Date, the greater of (x) ABR and (y) 4.00% and
(2) thereafter, ABR plus (B) the Applicable Margin and (iii) each ABR Loan that is a
Tranche C Term Loan shall bear interest at a rate per annum equal to (A) the greater of (x) ABR and
(y) 3.00% plus (B) the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or Reimbursement Obligation
shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such
overdue amount shall bear interest at a rate per annum equal to (x) in the case of the Loans, the
rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this
Section 2.15 plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable
to ABR Loans under the Revolving Facility plus 2%, and (ii) if all or a portion of any
interest payable on any Loan or Reimbursement Obligation or any commitment fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then
applicable to ABR Loans under the relevant Facility plus 2% (or, in the case of any such
other amounts that do not relate to a particular Facility, the rate then applicable to ABR Loans
under the Revolving Facility plus 2%), in each case, with respect to clauses (i) and (ii)
above, from the date of such non-payment until such amount is paid in full (after as well as before
judgment); provided that no amount shall be payable pursuant to this Section 2.15(c) to a
Defaulting Lender so long as such Lender shall be a Defaulting Lender; provided
further no amounts shall accrue pursuant to this Section 2.15(c) on any overdue Loan,
Reimbursement Obligation, commitment fee or other amount payable to a Defaulting Lender so long as
such Lender shall be a Defaulting Lender
(d) Interest shall be payable by the Borrower in arrears on each Interest Payment Date;
provided that interest accruing pursuant to paragraph (c) of this Section 2.15 shall be
payable from time to time on demand.
2.16 Computation of Interest and Fees. (a) Interest and fees payable pursuant hereto
shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with
respect to ABR Loans the rate of interest on which is calculated on the basis of the Prime Rate,
the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of each determination of a Eurocurrency Rate. Any change in the
interest rate on a Loan resulting from a change in the ABR or the Eurocurrency Reserve Requirements
shall become effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the Borrower and the
relevant Lenders of the effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be presumptively correct in the absence of demonstrable error.
The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement
showing the quotations used by the Administrative Agent in determining any interest rate pursuant
to Section 2.15(a) and Section 2.15(b).
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2.17 Inability to Determine Interest Rate. If prior to the first day of any Interest
Period for any Eurocurrency Loan:
(a) the Administrative Agent shall have determined (which determination shall be
presumptively correct absent demonstrable error) that, by reason of circumstances affecting
the relevant market, adequate and reasonable means do not exist for ascertaining the
Eurocurrency Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the Majority Facility
Lenders in respect of the relevant Facility that by reason of any changes arising after the
Closing Date the Eurocurrency Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as certified by such
Lenders) of making or maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy notice thereof to the Borrower and the relevant
Lenders as soon as practicable thereafter. If such notice is given (x) any Eurocurrency Loans
under the relevant Facility requested to be made on the first day of such Interest Period shall be
made as ABR Loans, (y) any Loans under the relevant Facility that were to have been converted on
the first day of such Interest Period to Eurocurrency Loans shall be continued as ABR Loans and
(z) any outstanding Eurocurrency Loans under the relevant Facility shall be converted, on the last
day of the then-current Interest Period with respect thereto, to ABR Loans. Until such notice has
been withdrawn by the Administrative Agent (which action the Administrative Agent will take
promptly after the conditions giving rise to such notice no longer exist), no further Eurocurrency
Loans under the relevant Facility shall be made or continued as such, nor shall the Borrower have
the right to convert Loans under the relevant Facility to Eurocurrency Loans.
2.18 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower from the Lenders
hereunder, each payment by the Borrower on account of any commitment fee and any reduction of the
Revolving Commitments shall be made pro rata according to the respective Tranche A Term
Percentages, Tranche B Term Percentages, Tranche C Term Percentages or Revolving Percentages, as
the case may be, of the relevant Lenders. Each payment (other than prepayments) in respect of
principal or interest in respect of the Tranche A Term Loans, Tranche B Term Loans, Tranche C Term
Loans or New Term Loans and each payment in respect of fees payable hereunder shall be applied to
the amounts of such obligations owing to the Tranche A Term Lenders, Tranche B Term Lenders,
Tranche C Term Lenders or New Term Lenders, as applicable, pro rata according to the respective
amounts then due and owing to such Lenders, other than payments pursuant to Section 2.11(c) or
2.24.
(b) Each mandatory prepayment of the Term Loans shall be allocated between the Tranche A Term
Facility, the Tranche B Term Facility, the Tranche C Term Facility and any New Facility comprising
Term Loans, if any, pro rata except as affected by the opt-out provision under Section 2.12(e).
Each optional prepayment and mandatory prepayment of the Tranche A Term Loans, Tranche B Term
Loans, Tranche C Term Loans or New Term Loans shall be applied to the remaining installments
thereof as specified by the Borrower. Amounts repaid or prepaid on account of the Term Loans may
not be reborrowed.
(c) Each payment (including prepayments) to be made by the Borrower on account of principal of
and interest on the Revolving Loans shall be made pro rata according to the respective outstanding
principal amounts of the Revolving Loans then held by the Revolving Lenders. Each payment
(including prepayments) to be made by the Borrower on account of principal of and interest on the
New Revolving Loans shall be made pro rata according to the respective outstanding principal
50
amounts of the New Revolving Loans then held by the New Lenders. Each payment in respect of
Reimbursement Obligations in respect of any Letter of Credit shall be made to the Issuing Lender
that issued such Letter of Credit.
(d) All payments (including prepayments) to be made by the Borrower hereunder, whether on
account of principal, interest, fees or otherwise, shall be made without setoff, deduction or
counterclaim and shall be made prior to 2:00 P.M., New York City time, on the due date thereof to
the Administrative Agent, for the account of the relevant Lenders, at the Funding Office, in
immediately available funds. Any payment received by the Administrative Agent after 2:00 P.M., New
York City time may be considered received on the next Business Day in the Administrative Agent’s
sole discretion. The Administrative Agent shall distribute such payments to the relevant Lenders
promptly upon receipt in like funds as received. If any payment hereunder (other than payments on
the Eurocurrency Loans) becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day. If any payment on a Eurocurrency Loan
becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended
to the next succeeding Business Day unless the result of such extension would be to extend such
payment into another calendar month, in which event such payment shall be made on the immediately
preceding Business Day. In the case of any extension of any payment of principal pursuant to the
preceding two sentences, interest thereon shall be payable at the then applicable rate during such
extension.
(e) Unless the Administrative Agent shall have been notified in writing by any Lender prior to
a borrowing that such Lender will not make the amount that would constitute its share of such
borrowing available to the Administrative Agent, the Administrative Agent may assume that such
Lender is making such amount available to the Administrative Agent, and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If
such amount is not made available to the Administrative Agent by the required time on the Borrowing
Date therefor, such Lender shall pay to the Administrative Agent on demand, such amount with
interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a
rate determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation, for the period until such Lender makes such amount immediately available to the
Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be presumptively correct in the absence of
demonstrable error. If such Lender’s share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days after such Borrowing Date, the
Administrative Agent shall give notice of such fact to the Borrower and the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate per annum
applicable to ABR Loans under the relevant Facility, on demand, from the Borrower. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or the Borrower against any
Defaulting Lender.
(f) Unless the Administrative Agent shall have been notified in writing by the Borrower prior
to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make
such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required to, in reliance
upon such assumption, make available to the relevant Lenders their respective pro rata shares of a
corresponding amount. If such payment is not made to the Administrative Agent by the Borrower
within three Business Days after such due date, the Administrative Agent shall be entitled to
recover, on demand, from each relevant Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per annum equal to the
daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of
the Administrative Agent or any Lender against the Borrower.
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2.19 Requirements of Law. (a) Except with respect to Taxes, which are addressed in
Section 2.20, if the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof or compliance by any Lender with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority first made, in each
case, subsequent to the Closing Date:
(i) shall impose, modify or hold applicable any reserve, special deposit, compulsory
loan or similar requirement against assets held by, deposits or other liabilities in or for
the account of, advances, loans or other extensions of credit by, or any other acquisition
of funds by, any office of such Lender that is not otherwise included in the determination
of the Eurocurrency Rate hereunder; or
(ii) shall impose on such Lender any other condition not otherwise contemplated
hereunder;
and the result of any of the foregoing is to increase the cost to such Lender, by an amount which
such Lender reasonably deems to be material, of making, converting into, continuing or maintaining
Eurocurrency Loans or issuing or participating in Letters of Credit (in each case hereunder), or to
reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower
shall promptly pay such Lender, in Dollars, within thirty Business Days after the Borrower’s
receipt of a reasonably detailed invoice therefor (showing with reasonable detail the calculations
thereof), any additional amounts necessary to compensate such Lender for such increased cost or
reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant
to this Section 2.19, it shall promptly notify the Borrower (with a copy to the Administrative
Agent) of the event by reason of which it has become so entitled.
(b) If any Lender shall have reasonably determined that the adoption of or any change in any
Requirement of Law regarding capital adequacy or in the interpretation or application thereof or
compliance by such Lender or any entity controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any Governmental Authority
first made, in each case, subsequent to the Closing Date shall have the effect of reducing the rate
of return on such Lender’s or such entity’s capital as a consequence of its obligations hereunder
or under or in respect of any Letter of Credit to a level below that which such Lender or such
entity could have achieved but for such adoption, change or compliance (taking into consideration
such Lender’s or such entity’s policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, after submission by such Lender to the Borrower
(with a copy to the Administrative Agent) of a reasonably detailed written request therefor
(consistent with the detail provided by such Lender to similarly situated borrowers), the Borrower
shall pay to such Lender, in Dollars, such additional amount or amounts as will compensate such
Lender or such entity for such reduction.
(c) A certificate prepared in good faith as to any additional amounts payable pursuant to this
Section 2.19 submitted by any Lender to the Borrower (with a copy to the Administrative Agent)
shall be presumptively correct in the absence of demonstrable error. Notwithstanding anything to
the contrary in this Section 2.19, the Borrower shall not be required to compensate a Lender
pursuant to this Section 2.19 for any amounts incurred more than 180 days prior to the date that
such Lender notifies the Borrower of such Lender’s intention to claim compensation therefor;
provided that if the circumstances giving rise to such claim have a retroactive effect,
then such 180-day period shall be extended to include the period of such retroactive effect. The
obligations of the Borrower pursuant to this Section 2.19 shall survive the termination of this
Agreement and the payment of the Obligations. Notwithstanding the foregoing, the Borrower shall
not be obligated to make payment to any of the Administrative Agent or a
52
Lender with respect to penalties, interest and expenses if written demand therefore was not
made by the Administrative Agent or such Lender within 180 days from the date on which such party
makes payment for such penalties, interest and expenses.
2.20 Taxes. (a) Except as otherwise provided in this Agreement or as required by law, all
payments made by the Borrower or any Loan Party under this Agreement and the other Loan Documents
to the Administrative Agent or any Lender under this Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any Taxes, excluding (i) net income Taxes,
net profits Taxes and franchise Taxes (and net worth Taxes and capital Taxes imposed in lieu of net
income Taxes) imposed on the Administrative Agent or any Lender (A) by the jurisdiction (or any
political subdivision thereof) under the laws of which the Administrative Agent or any Lender (or,
in the case of a pass-through entity, any of its beneficial owners) is organized or in which its
applicable lending office is located or (B) as a result of a present or former connection between
the Administrative Agent or such Lender or beneficial owner and the jurisdiction of the
Governmental Authority imposing such Tax or any political subdivision or taxing authority thereof
or therein (other than any such connection arising solely from the Administrative Agent or such
Lender having executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document) and (ii) any branch profits or backup
withholding Taxes imposed by the United States or any similar Tax imposed by any other jurisdiction
in which the applicable Borrower or any Loan Party under this Agreement and the other Loan
Documents is located or is deemed to be doing business. If any such non-excluded Taxes
(“Non-Excluded Taxes”) or Other Taxes are required to be withheld from any amounts payable
by the Borrower or any Loan Party under this Agreement and the other Loan Documents to the
Administrative Agent or any Lender hereunder, the amounts so payable to the Administrative Agent or
such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such
Lender (after deduction or withholding of all Non-Excluded Taxes and Other Taxes including
Non-Excluded Taxes attributable to amounts payable under this Section 2.20(a)) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this Agreement;
provided, however, that the Borrower or any Loan Party under this Agreement and the
other Loan Documents shall not be required to increase any such amounts payable to or in respect of
any Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender’s (or,
in the case of a pass-through entity, any of its beneficial owners’) failure to comply with the
requirements of paragraph (d) or (e), as applicable, of this Section 2.20 or (ii) that are
withholding Taxes imposed on amounts payable under this Agreement or the other Loan Documents,
unless such Taxes are imposed as a result of a Change in Law occurring after such Lender becomes a
party hereto or as a result of any change in facts, occurring after such Lender becomes a party
hereto, that is not attributable to the Lender, except (in the case of an assignment) to the extent
that such Lender’s assignor (if any) was entitled, at the time of such assignment, to receive
additional amounts from the Borrower or any Loan Party under this Agreement and the other Loan
Documents with respect to such Taxes pursuant to this paragraph.
(b) In addition, the Borrower or any Loan Party under this Agreement and the other Loan
Documents shall pay any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower and any Loan
Party under this Agreement and the other Loan Documents, as promptly as possible thereafter the
Borrower shall send to the Administrative Agent for the account of the Administrative Agent or
Lender, as the case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof if such receipt is obtainable, or, if not, such other evidence of
payment as may reasonably be required by the Administrative Agent or such Lender. If the Borrower
or any Loan Party under this Agreement and the other Loan Documents fails to pay any Non-Excluded
Taxes or Other
53
Taxes that the Borrower or any Loan Party under this Agreement and the other Loan Documents is
required to pay pursuant to this Section 2.20 (or in respect of which the Borrower or any Loan
Party under this Agreement and the other Loan Documents would be required to pay increased amounts
pursuant to Section 2.20(a) if such Non-Excluded Taxes or Other Taxes were withheld) when due to
the appropriate taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Borrower or any Loan Party under this
Agreement and the other Loan Documents shall indemnify the Administrative Agent and the Lenders for
any payments by them of such Non-Excluded Taxes or Other Taxes and for any incremental taxes,
interest or penalties that become payable by the Administrative Agent or any Lender as a result of
any such failure within thirty days after the Lender or the Administrative Agent delivers to the
Borrower (with a copy to the Administrative Agent) either (a) a copy of the receipt issued by a
Governmental Authority evidencing payment of such Taxes or (b) certificates as to the amount of
such payment or liability prepared in good faith.
(d) Each Lender (and, in the case of a pass-through entity, each of its beneficial owners)
that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) (a
“Non-US Lender”) shall deliver to the Borrower and the Administrative Agent (or, in the
case of a Participant, to the Borrower and to the Lender from which the related participation shall
have been purchased) (i) two accurate and complete copies of IRS Form W-8ECI or W-8BEN, or, (ii) in
the case of a Non-US Lender claiming exemption from United States federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement
substantially in the form of Exhibit F and two accurate and complete copies of IRS Form W-8BEN, or
any subsequent versions or successors to such forms, in each case properly completed and duly
executed by such Non-US Lender claiming complete exemption from, or a reduced rate of, United
States federal withholding tax on all payments by the Borrower or any Loan Party under this
Agreement and the other Loan Documents. Such forms shall be delivered by each Non-US Lender on or
before the date it becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In addition, each Non-US
Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-US Lender. Each Non-US Lender shall (i) promptly notify the Borrower at any
time it determines that it is no longer in a position to provide any previously delivered
certificate to the Borrower (or any other form of certification adopted by the United States taxing
authorities for such purpose) and (ii) take such steps as shall not be disadvantageous to it, in
its reasonable judgment, and as may be reasonably necessary (including the re-designation of its
lending office pursuant to Section 2.23) to avoid any requirement of applicable laws of any such
jurisdiction that the Borrower or any Loan Party make any deduction or withholding for taxes from
amounts payable to such Lender. Notwithstanding any other provision of this paragraph, a Non-US
Lender shall not be required to deliver any form pursuant to this paragraph that such Non-US Lender
is not legally able to deliver.
(e) Each Lender (and, in the case of a Lender that is a non-United States pass-through entity,
each of its beneficial owners) that is a United States person (as such term is defined in Section
7701(a)(30) of the Code) (a “US Lender”) shall deliver to the Borrower and the
Administrative Agent two accurate and complete copies of IRS Form W-9, or any subsequent versions
or successors to such form and certify that such lender is not subject to backup withholding. Such
forms shall be delivered by each US Lender on or before the date it becomes a party to this
Agreement. In addition, each US Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such US Lender. Each US Lender shall promptly
notify the Borrower at any time it determines that it is no longer in a position to provide any
previously delivered certifications to the Borrower (or any other form of certification adopted by
the United States taxing authorities for such purpose).
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(f) If the Administrative Agent or any Lender determines, in good faith, that it has received
a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the
Borrower or any Loan Party or with respect to which the Borrower or any Loan Party has paid
additional amounts pursuant to this Section 2.20, it shall promptly pay over such refund to the
Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the
Borrower or any Loan Party under this Section 2.20 with respect to the Non-Excluded Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or
such Lender and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or such Lender is
required to repay such refund to such Governmental Authority; provided, further, that the Borrower
shall not be required to repay to the Administrative Agent or the Lender an amount in excess of the
amount paid over by such party to the Borrower pursuant to this Section 2.20. This paragraph shall
not be construed to require the Administrative Agent or any Lender to make available its tax
returns (or any other information relating to its taxes which it deems confidential) to the
Borrower or any other Person. In no event will the Administrative Agent or any Lender be required
to pay any amount to the Borrower the payment of which would place the Administrative Agent or such
Lender in a less favorable net after-tax position than the Administrative Agent or such Lender
would have been in if the additional amounts giving rise to such refund of any Non-Excluded Taxes
or Other Taxes had never been paid. The agreements in this Section 2.20 shall survive the
termination of this Agreement and the payment of the Obligations.
2.21 Indemnity. Other than with respect to Taxes, which shall be governed solely by
Section 2.20, the Borrower agrees to indemnify each Lender for, and to hold each Lender harmless
from, any loss or expense (other than lost profits, including the loss of Applicable Margin) that
such Lender may actually sustain or incur as a consequence of (a) any failure by the Borrower in
making a borrowing of, conversion into or continuation of Eurocurrency Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this Agreement, (b) any
failure by the Borrower in making any prepayment of or conversion from Eurocurrency Loans after the
Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment, conversion or continuation of Eurocurrency Loans on a day that is not the
last day of an Interest Period with respect thereto. A reasonably detailed certificate as to
(showing in reasonable detail the calculation of) any amounts payable pursuant to this Section 2.21
submitted to the Borrower by any Lender shall be presumptively correct in the absence of
demonstrable error. This covenant shall survive the termination of this Agreement and the payment
of the Obligations.
2.22 Illegality. Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof, in each case,
first made after the Closing Date, shall make it unlawful for any Lender to make or maintain
Eurocurrency Loans as contemplated by this Agreement, such Lender shall promptly give notice
thereof (a “Rate Determination Notice”) to the Administrative Agent and the Borrower, and
(a) the commitment of such Lender hereunder to make Eurocurrency Loans, continue Eurocurrency Loans
as such and convert ABR Loans to Eurocurrency Loans shall be suspended during the period of such
illegality and (b) such Lender’s Loans then outstanding as Eurocurrency Loans, if any, shall be
converted automatically to ABR Loans on the respective last days of the then current Interest
Periods with respect to such Loans or within such earlier period as required by law. If any such
conversion of a Eurocurrency Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any,
as may be required pursuant to Section 2.21.
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2.23 Change of Lending Office. Each Lender agrees that, upon the occurrence of any event
giving rise to the operation of Section 2.19, 2.20(a) or 2.22 with respect to such Lender, it will,
if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided that such designation is made
on terms that, in the good faith judgment of such Lender, cause such Lender and its lending
office(s) to suffer no material economic, legal or regulatory disadvantage and; provided,
further, that nothing in this Section 2.23 shall affect or postpone any of the obligations
of the Borrower or the rights of any Lender pursuant to Section 2.19, 2.20(a) or 2.22.
2.24 Replacement of Lenders. The Borrower shall be permitted to (a) replace with a
financial institution or financial institutions, or (b) prepay, without premium or penalty (but
subject to Section 2.21), the Loans of, any Lender that (i) requests reimbursement for amounts
owing or otherwise results in increased costs imposed on the Borrower or on account of which the
Borrower is required to pay additional amounts to any Governmental Authority pursuant to Section
2.19, 2.20 or 2.21 (to the extent a request made by a Lender pursuant to the operation of Section
2.21 is materially greater than requests made by other Lenders) or gives a notice of illegality
pursuant to Section 2.22, (ii) defaults in its obligation to make Loans hereunder or to comply with
its obligations under Section 3.4, (iii) has refused to consent to any waiver or amendment with
respect to any Loan Document that requires such Lender’s consent and has been consented to by the
Required Lenders; or (iv) becomes the subject of a bankruptcy or insolvency proceeding;
provided that, in the case of a replacement pursuant to clause (a) above, (A) such
replacement does not conflict with any Requirement of Law, (B) the replacement financial
institution or financial institutions shall purchase, at par, all Loans and other amounts owing to
such replaced Lender on or prior to the date of replacement, (C) the Borrower shall be liable to
such replaced Lender under Section 2.21 (as though Section 2.21 were applicable) if any
Eurocurrency Loan owing to such replaced Lender shall be purchased other than on the last day of
the Interest Period relating thereto, (D) the replacement financial institution or financial
institutions, (x) if not already a Lender, shall be reasonably satisfactory to the Administrative
Agent to the extent that an assignment to such replacement financial institution of the rights and
obligations being acquired by it would otherwise require the consent of the Administrative Agent
pursuant to Section 10.6(b)(i)(B) and (y) shall pay (unless otherwise paid by the Borrower) any
processing and recordation fee required under Section 10.6(b)(ii)(B), (E) the replaced Lender shall
be obligated to make such replacement in accordance with the provisions of Section 10.6, (F) the
Borrower shall pay all additional amounts (if any) required pursuant to Section 2.19 or 2.20, as
the case may be, in respect of any period prior to the date on which such replacement shall be
consummated, (G) if applicable, the replacement financial institution or financial institutions
shall consent to such amendment or waiver and (H) any such replacement shall not be deemed to be a
waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have
against the replaced Lender. Prepayments pursuant to clause (b) above (i) shall be accompanied by
accrued and unpaid interest on the principal amount so prepaid up to the date of such prepayment
and (ii) shall not be subject to the provisions of Section 2.18.
2.25 Incremental Loans. (a) The Borrower may by written notice to the Administrative
Agent elect to request the establishment of one or more new term loan or revolving commitments (the
“New Loan Commitments”) hereunder, in an aggregate amount for all such New Loan Commitments
not in excess of $100,000,000. Each such notice shall specify the date (each, an “Increased
Amount Date”) on which the Borrower proposes that the New Loan Commitments shall be effective,
which shall be a date not less than 10 Business Days after the date on which such notice is delivered to the Administrative Agent;
provided that any Lender offered or approached to provide all or a portion of any New Loan
Commitments may elect or decline, in its sole discretion, to provide such New Loan Commitments.
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(b) Such New Loan Commitments shall become effective as of such Increased Amount Date;
provided that (i) no Default or Event of Default shall exist on such Increased Amount Date
before or after giving effect to such New Loan Commitments and to the making of any Tranche of New
Loans pursuant thereto and after giving effect to any Permitted Acquisition consummated in
connection therewith; (ii) the Borrower shall be in pro forma compliance with the
financial covenants set forth in Section 7.1; (iii) the proceeds of any New Loans shall be used for
general corporate purposes of the Borrower and its Subsidiaries (including Permitted Acquisitions
and Investments permitted under Section 7.7); (iv) the New Loans shall share ratably in the
Collateral; (v) the New Loans that are term loans (“New Term Loans”) shall share ratably in
any mandatory prepayments of the existing Term Loans; (vi) in the case of any New Term Loans, the
maturity date thereof shall not be earlier than the Tranche C Term Maturity Date and the weighted
average life to maturity shall be equal to or greater than the weighted average life to maturity of
the Tranche C Term Loans; (vii) in the case of any New Loans that are revolving loans or
commitments (“New Revolving Loans”) the maturity date or commitment termination date
thereof shall not be earlier than the Revolving Termination Date and such New Revolving Loans shall
not require any scheduled commitment reductions prior to the Revolving Termination Date; (viii) the
New Revolving Loans shall share ratably in any mandatory prepayments of the existing Revolving
Loans; (ix) all terms and documentation with respect to any New Loans which differ from those with
respect to the Loans under the applicable Facility shall be reasonably satisfactory to the
Administrative Agent (except to the extent permitted by clauses (vi) and (vii) above and the last
sentence of this paragraph); (x) such New Loans or New Loan Commitments shall be effected pursuant
to one or more Joinder Agreements executed and delivered by the Borrower, the Administrative Agent
and one or more New Lenders; (xi) the Borrower shall deliver or cause to be delivered any customary
legal opinions or other documents reasonably requested by Administrative Agent in connection with
any such transaction, including any supplements or amendments to the Security Documents providing
for such New Loans to be secured thereby; and (xii) if the initial “spread” (for purposes of this
Section 2.25 the “spread” with respect to any Loan shall be calculated as the sum of the Eurodollar
Loan margin on the relevant Loan plus any original issue discount or upfront fees in lieu of
original issue discount (other than any arranging fees, underwriting fees and commitment fees)
(based on an assumed four-year average life for the applicable Facilities (e.g., 100 basis points
in original issue discount or upfront fees equals 25 basis points of interest rate margin)))
relating to the New Term Loans exceeds the spread then in effect with respect to the Tranche B Term
Loans by more than 0.25%, the Applicable Margin relating to the existing Tranche B Term Loans shall
be adjusted so that the spread relating to such New Term Loans does not exceed the spread
applicable to the existing Tranche B Term Loans by more than 0.25%. Any New Loans made on an
Increased Amount Date that have terms and provisions that differ from those of the Term Loans or
Revolving Loans, as applicable, outstanding on the date on which such New Loans are made shall be
designated as a separate tranche (a “Tranche”) of Term Loans or Revolving Loans, as
applicable, for all purposes of this Agreement, except as the relevant Joinder Agreement otherwise
provides. For the avoidance of
doubt, the rate of interest and the amortization schedule (if
applicable) of any New Loan Commitments shall be determined by the Borrower and the applicable New
Lenders and shall be set forth in the applicable Joinder Agreement.
(c) On any Increased Amount Date on which any New Loan Commitment become effective, subject
to the foregoing terms and conditions, each lender with a New Loan Commitment (each, a “New
Lender”) shall become a Lender hereunder with respect to such New Loan Commitment.
(d) The terms and provisions of the New Loan Commitments of any Tranche shall be, except as
otherwise set forth in the relevant Joinder Agreement, identical to those of the applicable Loans
and for purposes of this Agreement, any New Loans or New Loan Commitments shall be deemed to be
Term Loans, Revolving Loans or Revolving Commitments, as applicable. Each Joinder Agreement may,
without the consent of any other Lenders, effect such amendments to this Agreement and the other
Loan
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Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to
effect the provisions of this Section 2.25.
(e) For the avoidance of doubt, the Additional Revolving Commitments and the Tranche C Term
Commitments shall not constitute New Loan Commitments, any Revolving Loans made in respect of the
Additional Revolving Commitments shall not constitute New Loans or New Revolving Loans and the
Tranche C Term Loans shall not constitute New Loans or New Term Loans.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, each Issuing Lender,
in reliance on the agreements of the other Revolving Lenders set forth in Section 3.4(a), agrees to
issue letters of credit (“Letters of Credit”) under the Revolving Commitment for the
account of the Borrower or any Guarantor on any Business Day during the Revolving Commitment Period
in such form as may be approved from time to time by such Issuing Lender; provided that no
Issuing Lender shall have any obligation to issue any Letter of Credit if, after giving effect to
such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the aggregate amount
of the Available Revolving Commitments would be less than zero. Each Letter of Credit shall (i) be
denominated in Dollars and (ii) expire no later than the earlier of (x) the first anniversary of
its date of issuance and (y) the date that is three Business Days prior to the Revolving
Termination Date (unless cash collateralized or backstopped, in each case in a manner agreed to by
the Borrower and the Issuing Lender); provided that any Letter of Credit with a one-year
term may provide for the renewal thereof for additional one-year periods (which shall in no event
extend beyond the date referred to in clause (y) above).
(b) No Issuing Lender shall at any time be obligated to issue any Letter of Credit if such
issuance would conflict with, or cause such Issuing Lender to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower may from time to time
request that the relevant Issuing Lender issue a Letter of Credit (or amend, renew or extend an
outstanding Letter of Credit) by delivering to such Issuing Lender at its address for notices
specified to the Borrower by such Issuing Lender an Application therefor, with a copy to the
Administrative Agent, completed to the reasonable satisfaction of such Issuing Lender, and such
other certificates, documents and other papers and information as such Issuing Lender may
reasonably request. Upon receipt of any Application, the relevant Issuing Lender will process such
Application and the certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall promptly issue (or
amend, renew or extend, as the case may be) the Letter of Credit requested thereby (but in no event
without the consent of the applicable Issuing Lender shall any Issuing Lender be required to issue
(or amend, renew or extend, as the case may be) any Letter of Credit earlier than three Business
Days after its receipt of the Application therefor and all such other certificates, documents and
other papers and information relating thereto) by issuing the original of such Letter of Credit (or
such amendment, renewal or extension, as the case may be) to the beneficiary thereof or as otherwise may be agreed to by such Issuing
Lender and the Borrower. Such Issuing Lender shall furnish a copy of such Letter of Credit to the
Borrower promptly following the issuance (or such amendment, renewal or extension, as the case may
be) thereof. Each Issuing Lender shall promptly furnish to the Administrative Agent, which shall
in turn promptly furnish to the relevant Revolving Lenders, notice of the issuance (or such
amendment, renewal or extension, as the case may be) of each Letter of Credit issued by it
(including the amount thereof).
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3.3 Fees and Other Charges. (a) The Borrower will pay a fee on each outstanding Letter
of Credit requested by it, at a per annum rate equal to the Applicable Margin then in effect with
respect to Eurocurrency Loans under the Revolving Facility (minus the fronting fee referred to
below), on the face amount of such Letter of Credit, which fee shall be shared ratably among the
Revolving Lenders and payable quarterly in arrears on each Fee Payment Date after the issuance
date; provided that, with respect to any Defaulting Lender, such Lender’s ratable share of
any letter of credit fee accrued on the aggregate amount available to be drawn on any outstanding
Letters of Credit during the period prior to the time such Lender became a Defaulting Lender and
unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a
Defaulting Lender except to the extent that such Lender’s ratable share of any letter of credit fee
shall otherwise have been due and payable by the Borrower prior to such time; provided
further that any Defaulting Lender’s ratable share of any letter of credit fee accrued on
the aggregate amount available to be drawn on any outstanding Letters of Credit shall accrue for
the account of the Borrower so long as such Lender shall be a Defaulting Lender. In addition, the
Borrower shall pay to each Issuing Lender for its own account a fronting fee on the aggregate face
amount of all outstanding Letters of Credit issued by it to the Borrower separately agreed to by
the Borrower and such Issuing Lender (but in any event not to exceed 0.25% per annum), payable
quarterly in arrears on each Fee Payment Date after the issuance date.
(b) In addition to the foregoing fees, the Borrower shall pay or reimburse each Issuing Lender
for costs and expenses agreed by the Borrower and such Issuing Lender in issuing, negotiating,
effecting payment under, amending or otherwise administering any Letter of Credit requested by the
Borrower.
3.4 L/C Participations. (a) Each Issuing Lender irrevocably agrees to grant and hereby
grants to each L/C Participant, and, to induce such Issuing Lender to issue Letters of Credit, each
L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from
such Issuing Lender, on the terms and conditions set forth below, for such L/C Participant’s own
account and risk an undivided interest equal to such L/C Participant’s Revolving Percentage in such
Issuing Lender’s obligations and rights under and in respect of each Letter of Credit issued by it
and the amount of each draft paid by such Issuing Lender thereunder. Each L/C Participant agrees
with each Issuing Lender that, if a draft is paid under any Letter of Credit issued by it for which
such Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Administrative Agent for the account of such
Issuing Lender upon demand an amount equal to such L/C Participant’s Revolving Percentage of the
amount of such draft, or any part thereof, that is not so reimbursed; provided that,
nothing in this paragraph shall relieve the Issuing Lender of any liability resulting from the
gross negligence or willful misconduct of the Issuing Lender. Each L/C Participant’s obligation to
pay such amount shall be absolute and unconditional and shall not be affected by any circumstance,
including (i) any setoff, counterclaim, recoupment, defense or other right that such L/C
Participant may have against any Issuing Lender, the Borrower or any other Person for any reason
whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default or the
failure to satisfy any of the other conditions specified in Section 5, (iii) any adverse change in
the financial condition of the Borrower, (iv) any breach of this Agreement or any other Loan
Document by the Borrower, any other Loan Party or any other L/C Participant or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.
(b) If any amount required to be paid by any L/C Participant to the Administrative Agent for
the account of any Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by such Issuing Lender under any Letter of Credit is paid to the Administrative
Agent for the account of such Issuing Lender within three Business Days after the date such payment
is due, such L/C Participant shall pay to the Administrative Agent for the account of such Issuing
Lender on
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demand an amount equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such payment is required
to the date on which such payment is immediately available to such Issuing Lender, times (iii) a
fraction the numerator of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C Participant
pursuant to Section 3.4(a) is not made available to the Administrative Agent for the account of the
relevant Issuing Lender by such L/C Participant within three Business Days after the date such
payment is due, such Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the rate per annum
applicable to ABR Loans under the Revolving Facility. A certificate of the relevant Issuing Lender
submitted to any relevant L/C Participant with respect to any amounts owing under this Section 3.4
shall be presumptively correct in the absence of demonstrable error.
(c) Whenever, at any time after any Issuing Lender has made payment under any Letter of Credit
and has received from any L/C Participant its pro rata share of such payment in
accordance with Section 3.4(a) such Issuing Lender receives any payment related to such Letter of
Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied
thereto by such Issuing Lender), or any payment of interest on account thereof, such Issuing Lender
will distribute to the Administrative Agent for the account of such L/C Participant its pro
rata share thereof; provided, however, that in the event that any such
payment received by such Issuing Lender shall be required to be returned by such Issuing Lender,
such L/C Participant shall return to the Administrative Agent for the account of such Issuing
Lender the portion thereof previously distributed by such Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to reimburse each
Issuing Lender on the Business Day following the date on which such Issuing Lender notifies the
Borrower of the date and amount of a draft presented under any Letter of Credit issued by such
Issuing Lending at the Borrower’s request and paid by such Issuing Lender for the amount of
(a) such draft so paid and (b) any Non-Excluded Taxes and Other Taxes, fees, charges or other costs
or expenses reasonably incurred by such Issuing Lender in connection with such payment (the amounts
described in the foregoing clauses (a) and (b) in respect of any drawing, collectively, the
“Payment Amount”). Each such payment shall be made to such Issuing Lender at its address
for notices specified to the Borrower and in immediately available funds. Interest shall be
payable on any such amounts from the date on which the relevant draft is paid until payment in full
at a rate equal to (i) until the second Business Day next succeeding the date of the relevant
notice, the rate applicable to ABR Loans under the Revolving Facility and (ii) thereafter, the rate
set forth in Section 2.15(c).
3.6 Obligations Absolute. The Borrower’s obligations under this Section 3 shall be absolute and unconditional under
any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that
the Borrower may have or have had against any Issuing Lender, any beneficiary of a Letter of Credit
or any other Person. The Borrower also agrees with each Issuing Lender that such Issuing Lender
shall not be responsible for, and the Borrower’s Reimbursement Obligations under Section 3.5 shall
not be affected by, among other things, the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or
forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or
any other party to which such Letter of Credit may be transferred or any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such transferee, or any other
events or circumstances that, pursuant to applicable law or the applicable customs and practices
promulgated by the International Chamber of Commerce, are not within the responsibility of such
Issuing Lender, except for errors, omissions, interruptions or delays resulting from the gross
negligence or willful misconduct of such Issuing Lender or its employees or agents. No Issuing
Lender shall be liable for any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted,
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in connection with any Letter of Credit, except for errors, omissions, interruptions or delays resulting from the gross negligence or
willful misconduct of such Issuing Lender or its employees or agents. The Borrower agrees that any
action taken or omitted by any Issuing Lender under or in connection with any Letter of Credit or
the related drafts or documents, if done in the absence of gross negligence or willful misconduct
and in accordance with the standards or care specified in the Uniform Commercial Code of the State
of New York, shall be binding on the Borrower and shall not result in any liability of such Issuing
Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for payment under any
Letter of Credit, the relevant Issuing Lender shall promptly notify the Borrower of the date and
amount thereof. The responsibility of such Issuing Lender to the Borrower in connection with any
draft presented for payment under any Letter of Credit issued by such Issuing Lender shall, in
addition to any payment obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such Letter of Credit.
3.8 Applications. To the extent that any provision of any Application related to any
Letter of Credit is inconsistent with the provisions of this Agreement or any other Loan Document,
the provisions of this Agreement or such other Loan Document shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement and to make the Loans and
issue or participate in the Letters of Credit, Holdings (to the extent applicable) and the Borrower
hereby jointly represent and warrant (as to itself and each of its Restricted Subsidiaries) to the
Agents and each Lender, which representations and warranties shall be deemed made on the Closing
Date (to the extent relating to Holdings or the Initial Borrower, immediately before giving effect
to the Merger Transactions and to the extent relating to Holdings, the Borrower or any Restricted
Subsidiary, immediately after giving effect to the Merger Transactions) and on the date of each
borrowing of Loans or issuance, extension or renewal of a Letter of Credit hereunder that:
4.1 Financial Condition. (a) The audited consolidated balance sheet of the Company and its Subsidiaries as at March
31, 2006, March 31, 2007 and March 31, 2008, and the related statements of income and of cash flows
for the fiscal years ended on such dates, in each case with consolidating schedules for the U.S.
government business of the Company and the other businesses of the Company, reported on by and
accompanied by an unqualified report from Ernst & Young LLP, present fairly in all material
respects the financial condition of the Company and its Subsidiaries as at such date, and the
results of, their operations, their cash flows and their changes in stockholders’ equity for the
respective fiscal years then ended. All such financial statements, including the related schedules
and notes thereto and year end adjustments, have been prepared in accordance with GAAP (except as
otherwise noted therein).
(b) The pro forma consolidated balance sheet of the Borrower and its
Subsidiaries as of June 30, 2008 (i) has been prepared in good faith based on assumptions that are
believed by the Borrower to be reasonable at the time made (it being understood that such
assumptions are based on good faith estimates with respect to certain items and that the actual
amounts of such items on the Closing Date is subject to variation)), (ii) accurately reflects all
adjustments necessary to give effect to the Transactions and (iii) presents fairly, in all material
respects, the pro forma financial position of the Borrower and its Subsidiaries as
of June 30, 2008, as if the Transactions had occurred on such date; provided that such
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pro forma balance sheet has been prepared without giving effect to all purchase
accounting or similar adjustments.
4.2 No Change. (a) As of the Closing Date, there has been no event, circumstance,
development, change or effect that has had a Closing Date Material Adverse Effect since the date of
the Merger Agreement.
(b) At any time after the Closing Date as of which this representation and warranty is made or
deemed made, there has been no event, development or circumstance since March 31, 2008 that has had
or would reasonably be expected to have a Material Adverse Effect.
4.3 Existence; Compliance with Law. Except as set forth in Schedule 4.3, each of
Holdings, the Borrower and its Restricted Subsidiaries (other than any Immaterial Subsidiaries)
(a) (i) is duly organized (or incorporated), validly existing and in good standing (or, only where
if applicable, the equivalent status in any foreign jurisdiction) under the laws of the
jurisdiction of its organization or incorporation, (ii) has the corporate or organizational power
and authority, and the legal right, to own and operate its Property, to lease the Property it
operates as lessee and to conduct the business in which it is currently engaged, except where the
failure to do so would not reasonably be expected to have a Material Adverse Effect and (iii) is
duly qualified as a foreign corporation or limited liability company and in good standing (where
such concept is relevant) under the laws of each jurisdiction where its ownership, lease or
operation of Property or the conduct of its business requires such qualification except, in each
case, to the extent that the failure to be so qualified or in good standing (where such concept is
relevant) would not have a Material Adverse Effect and (b) is in compliance with all Requirements
of Law except to the extent that any such failure to comply therewith would not have a Material
Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. (a) Each Loan Party has the
corporate power and authority to make, deliver and perform the Loan Documents to which it is a
party and, in the case of the Borrower, to borrow or have Letters of Credit issued hereunder. Each Loan Party has taken all necessary corporate or
other action to authorize the execution, delivery and performance of the Loan Documents to which it
is a party and, in the case of the Borrower, to authorize the extensions of credit on the terms and
conditions of this Agreement.
(b) No consent or authorization of, filing with, notice to or other act by or in respect of,
any Governmental Authority is required in connection with the extensions of credit hereunder or the
execution, delivery, performance, validity or enforceability of this Agreement or any of the other
Loan Documents, except (i) consents, authorizations, filings and notices described in Schedule 4.4,
which consents, authorizations, filings and notices have been obtained or made and are in full
force and effect or the failure to obtain which would not reasonably be expected to have a Material
Adverse Effect and (ii) the filings referred to in Section 4.17.
(c) Each Loan Document has been duly executed and delivered on behalf of each Loan Party that
is a party thereto. This Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party that is a party thereto,
enforceable against each such Loan Party in accordance with its terms (provided that, with
respect to the creation and perfection of security interests with respect to the Capital Stock of
Foreign Subsidiaries, only to the extent enforceability of such obligation with respect to which
Capital Stock is governed by the Uniform Commercial Code), except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles (whether enforcement
is sought by proceedings in equity or at law) and the implied covenants of good faith and fair
dealing.
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4.5 No Legal Bar. The execution, delivery and performance of this Agreement and the other
Loan Documents by the Loan Parties thereto, the issuance of Letters of Credit, the borrowings
hereunder and the use of the proceeds thereof will not (a) violate the organizational or governing
documents of the Loan Parties, (b) except as would not reasonably be expected to have a Material
Adverse Effect, violate any Requirement of Law binding on the Borrower or any of its Restricted
Subsidiaries or any Contractual Obligation of Holdings, the Borrower or any of its Restricted
Subsidiaries or (c) except as would not have a Material Adverse Effect, result in, or require, the
creation or imposition of any Lien on any of their respective properties or revenues pursuant to
any Requirement of Law or any such Contractual Obligation (other than the Liens permitted by
Section 7.3).
4.6 No Material Litigation. Except as set forth in Schedule 4.6, no litigation,
investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to
the knowledge of the Borrower, likely to be commenced within a reasonable time period against the
Borrower or any of its Restricted Subsidiaries or against any of their Properties which, taken as a
whole, would reasonably be expected to have a Material Adverse Effect.
4.7 No Default. No Default or Event of Default has occurred and is continuing (other
than, on the Closing Date, as a result of a breach of any representation or warranty other than any
Specified Representation).
4.8 Ownership of Property; Liens. Except as set forth in Schedule 4.8A, each of the
Borrower and its Restricted Subsidiaries has good title in fee simple to, or a valid leasehold
interest in, all its Real Property, and good title to, or a valid leasehold interest in, all its
other Property (other than Intellectual Property), in each case, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect, and none of such Property is
subject to any Lien except as permitted by the Loan Documents. Schedule 4.8B lists all Real
Property which is owned or leased by any Loan Party as of the Closing Date.
4.9 Intellectual Property. Each of the Borrower and its Restricted Subsidiaries owns, or
has a valid license to use, all Intellectual Property necessary for the conduct of its business as
currently conducted free and clear of all Liens except as permitted by the Loan Documents, other
than Intellectual Property owned by a Special Purpose Entity, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect. To the Borrower’s knowledge,
no holding, injunction, decision or judgment has been rendered by any Governmental Authority
against the Borrower or any Restricted Subsidiary and neither the Borrower nor any of its
Restricted Subsidiaries has entered into any settlement stipulation or other agreement (except
license agreements in the ordinary course of business) which would limit, cancel or question the
validity of the Borrower’s or any Restricted Subsidiary’s rights in, any Intellectual Property in
any respect that would reasonably be expected to have a Material Adverse Effect. To Borrower’s
knowledge, no claim has been asserted or threatened or is pending by any Person challenging or
questioning the use by the Borrower or its Restricted Subsidiaries of any Intellectual Property
owned by the Borrower or any of its Restricted Subsidiaries or the validity or effectiveness of any
Intellectual Property, except as would not reasonably be expected to have a Material Adverse
Effect. To the Borrower’s knowledge, the use of Intellectual Property by the Borrower and its
Restricted Subsidiaries does not infringe on the rights of any Person in a manner that would
reasonably be expected to have a Material Adverse Effect. The Borrower and its Restricted
Subsidiaries take all reasonable actions that in the exercise of their reasonable business judgment
should be taken to protect their Intellectual Property, including Intellectual Property that is
confidential in nature, except where the failure to do so would not reasonably be expected to have
a Material Adverse Effect.
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4.10 Taxes. Each of Holdings, the Borrower and its Restricted Subsidiaries (i) has filed
or caused to be filed all federal, state, provincial and other tax returns that are required to be
filed and (ii) has paid all taxes shown to be due and payable on said returns and all other taxes,
fees or other charges imposed on it or any of its Property by any Governmental Authority (other
than any the amount or validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which any reserves required in conformity with GAAP have been
provided on the books of the Borrower or such Restricted Subsidiary, as the case may be), except in
each case where the failure to do so would not reasonably be expected to have a Material Adverse
Effect.
4.11 Federal Regulations. No part of the proceeds of any Loans, and no other extensions of
credit hereunder, will be used for any purpose that violates the provisions of the regulations of
the Board. If requested by any Lender (through the Administrative Agent) or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in
Regulation U.
4.12 ERISA. (a) Except as would not reasonably be expected, either individually or in the
aggregate, to have a Material Adverse Effect: (i) neither a Reportable Event nor a failure to meet
the minimum funding standards (within the meaning of Section 412(a) of the Code or Section
302(a)(2) of ERISA) with respect to periods beginning on or after January 1, 2008 or an
“accumulated funding deficiency” (within the meaning of Section 412(a) of the Code or Section
302(a)(2) of ERISA) has occurred during the five-year period prior to the date on which this
representation is made with respect to any Single Employer Plan, and each Single Employer Plan has
complied with the applicable provisions of ERISA and the Code; (ii) no termination of a Single
Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen on the assets of
Holdings, the Borrower or any of its Restricted Subsidiaries, during such five-year period; the
present value of all accrued benefits under each Single Employer Plan (based on those assumptions
used to fund such Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of such Single Employer
Plan allocable to such accrued benefits; (iii) none of Holdings, the Borrower or any of its
Restricted Subsidiaries has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or would reasonably be expected to result in a liability under ERISA; (iv) none of
Holdings, the Borrower or any of its Restricted Subsidiaries would become subject to any liability
under ERISA if the Borrower or such Restricted Subsidiary were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the date on which this
representation is made; and (v) no Multiemployer Plan is in Reorganization or Insolvent.
(b) Holdings, the Borrower and its Restricted Subsidiaries have not incurred, and do not
reasonably expect to incur, any liability under ERISA or the Code with respect to any plan within
the meaning of Section 3(3) of ERISA which is subject to Title IV of ERISA or Section 412 of the
Code or Section 302 of ERISA that is maintained by a Commonly Controlled Entity (other than
Holdings, the Borrower and its Restricted Subsidiaries) (a “Commonly Controlled Plan”)
merely by virtue of being treated as a single employer under Title IV of ERISA with the sponsor of
such plan that would reasonably be likely to have a Material Adverse Effect and result in a direct
obligation of Holdings, the Borrower or any of its Restricted Subsidiaries to pay money.
4.13 Investment Company Act. No Loan Party is an “investment company”, or a company
“controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940,
as amended.
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4.14 Subsidiaries. (a) The Subsidiaries listed on Schedule 4.14 constitute all the
Subsidiaries of the Borrower at the Closing Date (and after giving effect to the Merger
Transactions and, to the extent applicable, the Company Reorganization). Schedule 4.14 sets forth
as of the Closing Date the name and jurisdiction of incorporation of each Subsidiary and, as to
each Subsidiary, the percentage of each class of Capital Stock owned by any Loan Party and the
designation of such Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary.
(b) As of the Closing Date (and after giving effect to the Merger Transactions and, to the
extent applicable, the Company Reorganization), except as set forth on Schedule 4.14 or as
otherwise contemplated by the Merger Agreement, there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than stock options granted to
officers, employees or directors and directors’ qualifying shares) of any nature relating to any Capital Stock of the
Borrower or any of its Restricted Subsidiaries.
4.15 Environmental Matters. Other than exceptions to any of the following that would not
reasonably be expected to have a Material Adverse Effect, none of the Borrower or any of its
Restricted Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain
or comply with any permit, license or other approval required under any Environmental Law for the
operation of the Business; or (ii) has become subject to any Environmental Liability.
4.16 Accuracy of Information, etc. As of the Closing Date, no statement or information
(excluding the projections and pro forma financial information referred to below)
contained in this Agreement, any other Loan Document or any certificate furnished to the
Administrative Agent or the Lenders or any of them, by or on behalf of any Loan Party for use in
connection with the transactions contemplated by this Agreement or the other Loan Documents when
taken as a whole, contained as of the date such statement, information, or certificate was so
furnished, any untrue statement of a material fact or omitted to state a material fact necessary in
order to make the statements contained herein or therein, in light of the circumstances under which
they were made, not materially misleading. As of the Closing Date, the projections and pro
forma financial information contained in the materials referenced above are based upon good
faith estimates and assumptions believed by management of the Borrower to be reasonable at the time
made, in light of the circumstances under which they were made, it being recognized by the Agents
and the Lenders that such financial information as it relates to future events is not to be viewed
as fact and that actual results during the period or periods covered by such financial information
may differ from the projected results set forth therein by a material amount.
4.17 Security Documents. (a) The Guarantee and Collateral Agreement is effective to
create in favor of the Collateral Agent for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral described therein of a type in which a security
interest can be created under Article 9 of the UCC (including any proceeds of any such item of
Collateral); provided that for purposes of this Section 4.17(a), Collateral shall be deemed
to exclude any Property expressly excluded from the definition of “Collateral” as set forth in the
Guarantee and Collateral Agreement (the “Excluded Collateral”). In the case of (i) the
Pledged Securities described in the Guarantee and Collateral Agreement (other than Excluded Capital
Stock) when any stock certificates or notes, as applicable, representing such Pledged Securities
are delivered to the Collateral Agent, (ii) the Material Deposit Accounts and Material Securities
Accounts described in the Guarantee and Collateral Agreement, when control agreements with respect
to such Material Deposit Accounts and Material Securities Accounts are executed granting “control”
(as defined in the UCC) of such accounts to the Collateral Agent and (iii) the other Collateral
described in the Guarantee and Collateral Agreement (other than Excluded Collateral and deposit
accounts and securities accounts that do not constitute Material Deposit Accounts and Material
Securities Accounts),when financing statements in appropriate form are filed in the offices
specified on
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Schedule 4.17 (which financing statements have been duly completed and executed (as
applicable) and delivered to the Collateral Agent) and such other filings as are specified on
Schedule 3 to the Guarantee and Collateral Agreement are made, the Collateral Agent shall have a
fully perfected first priority Lien on, and security interest in, all right, title and interest of
the Loan Parties in such Collateral (including any proceeds of any item of Collateral) (to the
extent a security interest in such Collateral can be perfected through the filing
of financing statements in the offices specified on Schedule 4.17 and the filings specified on
Schedule 3 to the Guarantee and Collateral Agreement, and through the delivery of the Pledged
Securities required to be delivered on the Closing Date), as security for the Obligations, in each
case prior in right to the Lien of any other Person (except (i) in the case of Collateral other
than Pledged Securities, Liens permitted by Section 7.3 and (ii) Liens having priority by operation
of law) to the extent required by the Guarantee and Collateral Agreement.
(b) Upon the execution and delivery of any Mortgage to be executed and delivered pursuant to
Section 6.8(b), such Mortgage shall be effective to create in favor of the Collateral Agent for the
benefit of the Secured Parties a legal, valid and enforceable Lien on the Mortgaged Property
described therein and proceeds thereof, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law) and the implied covenants of good faith and fair dealing; and when
such Mortgage is filed in the recording office designated by the Borrower, such Mortgage shall
constitute a fully perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in such Mortgaged Property and the proceeds thereof, as security for the
Obligations (as defined in the relevant Mortgage), in each case prior and superior in right to any
other Person (other than Liens permitted by Section 7.3 or other encumbrances or rights permitted
by the relevant Mortgage).
4.18 Solvency. As of the Closing Date, the Loan Parties are (on a consolidated basis), and
after giving effect to the Transactions will be, Solvent.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each Lender to make the
initial extension of credit requested to be made by it is subject to the satisfaction (or waiver),
prior to or concurrently with the making of such extension of credit on the Closing Date, of the
following conditions precedent:
(a) Credit Agreement; Mezzanine Loan Facility. The Administrative Agent shall
have received (i) this Agreement, executed and delivered by the Administrative Agent, the
Collateral Agent, Holdings, the Borrower, the Lead Arrangers, the Lenders party hereto and
the Issuing Bank, (ii) the Guarantee and Collateral Agreement, executed and delivered by
Holdings, the Borrower and each Subsidiary Guarantor and (iii) (subject to the last
paragraph of this Section 5.1) with respect to each Material Real Property owned by a Loan
Party as of the Closing Date, a Mortgage executed and delivery by such Loan Party in favor
of the Collateral Agent for the benefit of the Secured Parties, covering such Real Property
(together with such other documents relating thereto consistent with the requirements of
Section 6.8(b)). The Administrative Agent shall have received evidence that the Mezzanine
Loan Agreement has been executed and delivered by all Persons stated to be a party thereto
in the form then most recently delivered to the Administrative Agent, and the Mezzanine
Loans shall have been made.
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(b) Transaction, etc. The following transactions shall be consummated:
(i) Merger. The Merger Transactions shall be consummated substantially
concurrently with the initial funding of the Loans on the Closing Date (A) in
accordance with the Merger Agreement and the related disclosure schedules and exhibits
thereto, without waiver or amendment of any material provision thereof (other than
any such waivers or amendments (including, without limitation, with respect to any
representations and warranties in the Merger Agreement) as are not materially
adverse to the Lenders or the Lead Arrangers (including, without limitation, the
definition of “Company Material Adverse Effect” therein and the representation and
warranty set forth in Section 4.8(c) thereof)) unless consented to by the Lead
Arrangers (which consent shall not be unreasonably withheld or delayed) or (B) on
such other terms and conditions as are reasonably satisfactory to the Lead
Arrangers.
(ii) Equity Financing. The Permitted Investors shall have made equity
contributions to, or purchased for cash equity of, Holdings in an aggregate amount
that, together with all roll-over equity, constitutes not less than 40% of the
pro forma capitalization of Holdings and its subsidiaries on a
consolidated basis (after giving effect to the Transactions but excluding any Loans
made or Letters of Credit issued under the Revolving Facility).
(iii) The representation and warranty of the Company contained in
Section 4.8(c) of the Merger Agreement shall be true and correct as of the Closing
Date as if made on and as of the Closing Date, except where the failure of such
representation and warranty to be so true and correct has not had and would not be
reasonably likely to have, individually or in the aggregate, a Closing Date Material
Adverse Effect.
(c) Solvency Certificate. The Administrative Agent shall have received a
solvency certificate signed by the chief financial officer on behalf of Holdings,
substantially in the form of Exhibit G.
(d) Lien Searches. The Collateral Agent shall have received the results of a
recent lien search in each of the jurisdictions in which Uniform Commercial Code financing
statements or other filings or recordations should be made to evidence or perfect security
interests in all assets of the Loan Parties, and such search shall reveal no liens on any of
the assets of the Loan Party, except for Liens permitted by Section 7.3 or liens to be
discharged on or prior to the Closing Date.
(e) Closing Certificate. The Administrative Agent shall have received a
certificate of each Loan Party, dated as of the Closing Date, substantially in the form of
Exhibit C, with appropriate insertions and attachments.
(f) Legal Opinions. The Administrative Agent shall have received an executed
legal opinion of (i) Debevoise & Plimpton LLP, special New York counsel to the Loan Parties,
substantially in the form of Exhibit E-1 and (ii) Morris, Nichols, Arsht & Tunnell LLP,
special Delaware counsel to the Loan Parties, substantially in the form of Exhibit E-2.
(g) Pledged Stock; Stock Powers. The Collateral Agent shall have received the
certificates, if any, representing the shares of Capital Stock held by a Loan Party pledged
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pursuant to the Guarantee and Collateral Agreement, together with an undated stock power for
each such certificate executed in blank by a duly authorized officer of the pledgor thereof.
(h) Filings, Registrations and Recordings. Each document (including, without
limitation, any Uniform Commercial Code financing statement) required by the Security
Documents to be filed, registered or recorded in order to create in favor of the Collateral Agent for
the benefit of the Secured Parties, a first priority perfected Lien on the Collateral
described therein, shall have been delivered to the Collateral Agent in proper form for
filing, registration or recordation.
(i) Insurance. The Administrative Agent shall have received insurance
certificates satisfying the requirements of Section 6.5(c).
(j) USA Patriot Act. The Lenders shall have received from each of the Loan
Parties documentation and other information requested by any Lender no less than 10 calendar
days prior to the Closing Date that is required by regulatory authorities under applicable
“know your customer” and anti-money laundering rules and regulations, including, without
limitation, the USA Patriot Act.
(k) Specified Representations. The Specified Representations shall be true and
correct in all material respects.
Notwithstanding anything in any Loan Document to the contrary, (i) other than with respect to
any Closing Date UCC Filing Collateral or Closing Date Stock Certificates, to the extent any
collateral is not provided on the Closing Date after the Borrower’s use of commercially reasonable
efforts to do so, the delivery of such collateral shall not constitute a condition precedent to the
availability of the Loans on the Closing Date, (ii) with respect to perfection of security
interests in the Closing Date UCC Filing Collateral, the Borrower’s sole obligation shall be to
deliver, or cause to be delivered, necessary UCC financing statements to the Administrative Agent
or to irrevocably authorize or cause the applicable Guarantor to irrevocably authorize the
Administrative Agent to file necessary UCC financing statements and (iii) with respect to
perfection of security interests in Closing Date Stock Certificates, the Borrower’s sole obligation
shall be to deliver to the Administrative Agent the Closing Date Stock Certificates as and to the
extent they are delivered to the Borrower by the Company pursuant to the Merger Agreement, in each
case, duly endorsed in blank.
5.2 Conditions to Each Revolving Loan Extension of Credit After Closing Date. The
agreement of each Lender to make any Revolving Loan or to issue or participate in any Letter of
Credit hereunder on any date after the Closing Date is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all
material respects, in each case on and as of such date as if made on and as of such date
except to the extent that such representations and warranties relate to an earlier date, in
which case such representations and warranties shall be true and correct in all material
respects as of such earlier date.
(b) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the extensions of credit requested to be
made on such date.
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Each borrowing of a Revolving Loan by and issuance, extension or renewal of a Letter of Credit
on behalf of the Borrower hereunder after the Closing Date shall constitute a representation and
warranty by the Borrower as of the date of such extension of credit that the conditions contained
in this Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower (on behalf of itself and each of the Restricted Subsidiaries) hereby agrees that,
so long as the Commitments remain in effect, any Letter of Credit remains outstanding (that has not
been cash collateralized or backstopped, in each case on terms agreed to by the Borrower and the
applicable Issuing Lender) or any Loan or other amount is owing to any Lender or any Agent
hereunder (other than (i) contingent or indemnification obligations not then due and (ii)
obligations in respect of Specified Hedge Agreements or Cash Management Obligations), the Borrower
shall, and shall cause each of the Restricted Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent for delivery to each Lender
(which may be delivered via posting on IntraLinks or another similar electronic platform):
(a) within 120 days (or 135 days with respect to the fiscal year ending March 31, 2009)
after the end of each fiscal year of the Borrower, commencing with the fiscal year ending
March 31, 2009, a copy of the audited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such year and the related audited consolidated
statements of income and of cash flows for such year, setting forth, commencing with the
financial statements with respect to the fiscal year ending March 31, 2010, in comparative
form the figures as of the end of and for the previous year, reported on without
qualification arising out of the scope of the audit, by Ernst & Young LLP or other
independent certified public accountants of nationally recognized standing; and
(b) within 45 days (or 60 days with respect to the fiscal quarters ending prior to
March 31, 2009) after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, commencing with the fiscal quarter ending September 30, 2008, the
unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at
the end of such quarter and the related unaudited consolidated statements of income and of
cash flows for such quarter and the portion of the fiscal year through the end of such
quarter, setting forth, commencing after the first full fiscal year after the Closing Date,
in comparative form the figures as of the end of and for the corresponding period in the
previous year, certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments and the lack of notes);
all such financial statements to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior periods (except as
disclosed therein and except in the case of the financial statements referred to in clause (b), for
customary year-end adjustments and the absence of footnotes). The Borrower may satisfy its
obligations under this Section 6.1 with respect to financial information of the Borrower and its
consolidated Subsidiaries by delivering information relating to Holdings, the Borrower and its
consolidated Subsidiaries.
Documents required to be delivered pursuant to this Section 6.1 may be delivered by posting
such documents electronically with notice of such posting to the Administrative Agent and if so
posted, shall be deemed to have been delivered on the date on which such documents are posted on
the Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each
Lender
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and the Administrative Agent have access (whether a commercial, third-party website or whether
sponsored by the Administrative Agent).
6.2 Certificates; Other Information. Furnish to the Administrative Agent for delivery to
each Lender, or, in the case of clause (g), to the relevant Lender:
(a) to the extent permitted by the internal policies of such independent certified
public accountants, concurrently with the delivery of the financial statements referred to
in Section 6.1(a), a certificate of the independent certified public accountants in
customary form reporting on such financial statements stating that in making the examination
necessary therefor no knowledge was obtained of any Default or Event of Default arising
under Section 7.1, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements pursuant to Section 6.1,
(i) a Compliance Certificate of a Responsible Officer on behalf of the Borrower stating that
such Responsible Officer has obtained no knowledge of any Default or Event of Default that
has occurred and is continuing except as specified in such certificate and (ii) to the
extent not previously disclosed to the Administrative Agent, (x) a description of any
Default or Event of Default that occurred and (y) a description of any new Subsidiary and of
any change in the name or jurisdiction of organization of any Loan Party and a listing of
any material registrations of or applications for United States Intellectual Property by any
Loan Party since the date of the most recent list delivered pursuant to this clause (or, in
the case of the first such list so delivered, since the Closing Date);
(c) not later than 120 days (or 135 days with respect to the fiscal year ending March
31, 2009) after the end of each fiscal year of the Borrower, a detailed consolidated budget
for the following fiscal year (including a projected consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of the following fiscal year and the related
consolidated statements of projected cash flow and projected income (collectively, the
“Annual Operating Budget”)); provided that at any time the Borrower,
Holdings or any Parent Company is subject to the reporting requirements set forth in Section
13(a) or 15(d) of the Securities Exchange Act of 1934, the Administrative Agent shall
deliver the Annual Operating Budget only to “private-side” Lenders (i.e., Lenders that wish
to receive material non-public information with respect to any Loan Party or its securities
for purposes of United States federal or state securities laws).
(d) promptly after the same are sent, copies of all financial statements and material
reports that the Borrower sends to the holders of any class of its debt securities or public
equity securities (except for Permitted Investors) and, promptly after the same are filed,
copies of all financial statements and reports that the Borrower may make to, or file with,
the SEC, in each case to the extent not already provided pursuant to Section 6.1 or any
other clause of this Section 6.2;
(e) promptly upon delivery thereof to the Borrower and to the extent permitted, copies
of any accountants’ letters addressed to its Board of Directors (or any committee thereof);
(f) promptly upon delivery thereof under the relevant agreement, notice of any default
or event of default under the Mezzanine Loan Facility, and, prior to the effectiveness
thereof, copies of substantially final drafts of any proposed material amendment,
supplement, waiver or other modification with respect to the Mezzanine Loan Facility; and
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(g) promptly, such additional financial and other information as the Administrative
Agent (for its own account or upon the request from any Lender) may from time to time
reasonably request.
Notwithstanding anything to the contrary in this Section 6.2, none of Holdings, the Borrower
or any of the Restricted Subsidiaries will be required to disclose any document, information or
other matter that (i) constitutes non-financial trade secrets or non-financial proprietary
information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or
their respective representatives or contractors) is prohibited by Law or any binding agreement,
(iii) is subject to attorney-client or similar privilege or constitutes attorney work product or
(iv) constitutes classified information.
Documents required to be delivered pursuant to this Section 6.2 may be delivered by posting such
documents electronically with notice of such posting to the Administrative Agent and each Lender
and if so posted, shall be deemed to have been delivered on the date (i) on which the Borrower
posts such documents, or to provide a link thereto on the Borrower’s website or (ii) on which such
documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant
website, if any, to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative Agent).
6.3 Payment of Taxes. Pay, discharge or otherwise satisfy at or before maturity or before
they become delinquent, as the case may be, all its material Taxes, governmental assessments and
governmental charges (other than Indebtedness), except (a) where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves required in
conformity with GAAP with respect thereto have been provided on the books of the Borrower or its
Restricted Subsidiaries, as the case may be, or (b) to the extent that failure to pay or satisfy
such obligations would not reasonably be expected to have a Material Adverse Effect.
6.4 Conduct of Business and Maintenance of Existence, etc.; Compliance. (a) Preserve,
renew and keep in full force and effect its corporate or other existence and take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable in the normal
conduct of its business, except, in each case, as otherwise permitted by Section 7.4 or except to
the extent that failure to do so would not reasonably be expected to have a Material Adverse
Effect; and (b) comply with all Requirements of Law except to the extent that failure to comply
therewith would not reasonably be expected to have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all Property useful and necessary in
its business in reasonably good working order and condition, ordinary wear and tear excepted,
except where the failure to do so would not reasonably be expected to have a Material Adverse
Effect.
(b) Take all reasonable and necessary steps, including, without limitation, in any proceeding
before the United States Patent and Trademark Office or the United States Copyright Office, to
maintain and pursue each application (and to obtain the relevant registration) and to maintain each
registration of the material United States Intellectual Property owned by the Borrower or its
Restricted Subsidiaries, including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability, except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect.
(c) Maintain insurance with financially sound and reputable insurance companies on all its
material Property in at least such amounts and against at least such risks as are usually insured
against in the same general area by companies engaged in the same or a similar business. All such
insurance
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shall, to the extent customary (but in any event, not including business interruption
insurance and personal injury insurance) (i) provide that no cancellation thereof shall be
effective until at least 10 days after receipt by the Administrative Agent of written notice
thereof and (ii) name the Administrative Agent as insured party or loss payee.
(d) With respect to any Mortgaged Properties, if at any time the area in which the Premises
(as defined in the Mortgages, if any) are located is designated a “flood hazard area” in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency),
obtain flood insurance in such reasonable total amount as the Collateral Agent may from time to
time reasonably require, and otherwise to ensure compliance with the National Flood Insurance
Program as set forth in the Flood Disaster Protection Act of 1973, as it may be amended from time
to time.
6.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper books of
records and account in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all material financial dealings and transactions in relation
to its business and activities, (b) permit representatives of any Lender to visit and inspect any
of its properties and examine and make abstracts from any of its books and records upon reasonable
notice and at such reasonable times during normal business hours (provided that (i) such
visits shall be coordinated by the Administrative Agent, (ii) such visits shall be limited to no
more than one such visit per calendar year, and (iii) such visits by any Lender shall be at the
Lender’s expense, except in the case of clauses (ii) and (iii) during the continuance of an Event
of Default), (c) permit representatives of any Lender to have reasonable discussions regarding the
business, operations, properties and financial and other condition of the Borrower and its
Restricted Subsidiaries with officers and employees of the Borrower and its Restricted Subsidiaries
(provided that (i) a Responsible Officer of the Borrower shall be afforded the opportunity
to be present during such discussions, (ii) such discussions shall be coordinated by the
Administrative Agent, and (iii) such discussions shall be limited to no more than once per calendar
quarter except during the continuance of an Event of Default) and (d) permit representatives of the
Administrative Agent to have reasonable discussions regarding the business, operations, properties
and financial and other condition of the Borrower and its Restricted Subsidiaries with its
independent certified public accountants to the extent permitted by the internal policies of such
independent certified public accountants (provided that (i) a Responsible Officer of the
Borrower shall be afforded the opportunity to be present during such discussions and (ii) such
discussions shall be limited to no more than once per calendar year except during the continuance
of an Event of Default). Notwithstanding anything to the contrary in this Section 6.6, none of
Holdings, the Borrower or any of the Restricted Subsidiaries will be required to disclose, permit
the inspection, examination or making copies or abstracts of, or discussion of, any document,
information or other matter that (i) constitutes non-financial trade secrets or non-financial
proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any
Lender (or their respective representatives or contractors) is prohibited by Law or any binding
agreement, (iii) is subject to attorney-client or similar privilege or constitutes attorney work
product or (iv) constitutes classified information.
6.7 Notices. Promptly upon a Responsible Officer of the Borrower or any Subsidiary
Guarantor obtaining knowledge thereof, give notice to the Administrative Agent of:
(a) the occurrence of any Default or Event of Default;
(b) any litigation, investigation or proceeding which may exist at any time between the
Borrower or any of its Restricted Subsidiaries and any other Person, that in either case,
would reasonably be expected to have a Material Adverse Effect;
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(c) the following events, that would reasonably be expected to have a Material Adverse
Effect, as soon as possible and in any event within 30 days after the Borrower or any
Subsidiary Guarantor knows thereof: (i) the occurrence of any Reportable Event with respect
to any Single Employer Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan on the assets of Holdings, the Borrower
or any of its Restricted Subsidiaries or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan, (ii) the institution of proceedings
or the taking of any other action by the PBGC or Holdings or any Commonly Controlled Entity
or any Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (iii) the occurrence of any
similar events with respect to a Commonly Controlled Plan, that would reasonably be likely
to result in a direct obligation of the Borrower or any of its Restricted Subsidiaries to
pay money;
(d) any development or event that has had or would reasonably be expected to have a
Material Adverse Effect; and
(e) the acquisition of any Property after the Closing Date in which the Collateral
Agent does not already have a perfected security interest and in which a security interest
is required to be created or perfected pursuant to Section 6.8.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of a Responsible
Officer setting forth details of the occurrence referred to therein and stating what action the
Borrower or the relevant Restricted Subsidiary proposes to take with respect thereto.
6.8 Additional Collateral, etc. (a) With respect to any Property (other than Excluded
Collateral) located in the United States having a value, individually or in the aggregate, of at
least $2,000,000 acquired after the Closing Date by any Loan Party (other than (w) any interests in
Real Property and any Property described in paragraph (c) or paragraph (d) of this Section 6.8,
(x) any Property subject to a Lien expressly permitted by Section 7.3(g) or 7.3(z),
(y) Instruments, Certificated Securities, Securities and Chattel Paper, which are referred to in
the last sentence of this paragraph (a) and (z) Government Contracts, deposit accounts and
securities accounts (the Loan Parties’ obligations with respect to which are contained in the
Guarantee and Collateral Agreement)) as to which the Collateral Agent for the benefit of the
Secured Parties does not have a perfected Lien, promptly (i) give notice of such Property to the
Collateral Agent and execute and deliver to the Collateral Agent such amendments to the Guarantee
and Collateral Agreement or such other documents as the Collateral Agent reasonably requests to
grant to the Collateral Agent for the benefit of the Secured Parties a security interest in such
Property and (ii) take all actions reasonably requested by the Collateral Agent to grant to the
Collateral Agent for the benefit of the Secured Parties a perfected security interest (to the
extent required by the Security Documents and with the priority required by Section 4.17) in such
Property (with respect to Property of a type owned by a Loan Party as of the Closing Date to the
extent the Collateral Agent for the benefit of the Secured Parties, has a perfected security
interest in such Property as of the Closing Date), including, without limitation, the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be reasonably requested by the Collateral
Agent. If any amount in excess of $5,000,000 payable under or in connection with any of the
Collateral shall be or become evidenced by any Instrument, Certificated Security, Security or
Chattel Paper (or, if more than $5,000,000 in the aggregate payable under or in connection with the
Collateral shall become evidenced by Instruments, Certificated Securities, Securities or Chattel
Paper), such Instrument, Certificated Security, Security or Chattel Paper shall be promptly
delivered to the Collateral Agent indorsed in a manner reasonably satisfactory to the Collateral
Agent to be held as Collateral pursuant to this Agreement.
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(b) With respect to any fee interest in any Material Real Property acquired after the Closing
Date by any Loan Party (other than Excluded Real Property), (i) give notice of such acquisition to
the Collateral Agent and, if requested by the Collateral Agent execute and deliver a first priority
Mortgage (subject to liens permitted by Section 7.3) in favor of the Collateral Agent for the
benefit of the Secured Parties, covering such Real Property (provided that no Mortgage nor survey
shall be obtained if the Administrative Agent determines in consultation with the Borrower that the
costs of obtaining such Mortgage or survey are excessive in relation to the value of the security
to be afforded thereby), (ii) if reasonably requested by the Collateral Agent (A) provide the
Lenders with a lenders’ title insurance policy with extended coverage covering such Real Property
in an amount at least equal to the purchase price of such Real Property (or such other amount as
shall be reasonably specified by the Collateral Agent) as well as a current ALTA survey thereof,
together with a surveyor’s certificate unless the title insurance policy referred to above shall
not contain an exception for any matter shown by a survey (except to the extent an existing survey
has been provided and specifically incorporated into such title insurance policy), each in form and
substance reasonably satisfactory to the Collateral Agent, (B) use commercially reasonable efforts
to obtain any consents or estoppels reasonably deemed necessary by the Collateral Agent, in
connection with such Mortgage, each of the foregoing in form and substance reasonably satisfactory
to the Collateral Agent and (C) provide to the Administrative Agent evidence of flood hazard
insurance if any portion of the improvements on the owned Property is currently or at any time in
the future identified by the Federal Emergency Management Agency as an area having special flood
hazards and in which flood insurance has been made available under the National Flood Insurance Act
of 1968 (and any amendment or successor act thereto) or otherwise being designated as a “special
flood hazard area or part of a 100 year flood zone”, in an amount equal to 100% of the full
replacement cost of the improvements; provided, however, that a portion of such flood hazard
insurance may be obtained under the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be amended
and (iii) if requested by the Collateral Agent deliver to the Collateral Agent legal opinions
relating to the matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Collateral Agent.
(c) Except as otherwise contemplated by Section 7.7(p), with respect to any new Subsidiary
that is a Non-Excluded Subsidiary created or acquired after the Closing Date (which, for the
purposes of this paragraph, shall include any Subsidiary that was previously an Excluded Subsidiary
that becomes a Non-Excluded Subsidiary) by any Loan Party, promptly (i) give notice of such
acquisition or creation to the Collateral Agent and, if requested by the Collateral Agent, execute
and deliver to the Collateral Agent such amendments to the Guarantee and Collateral Agreement or
such other documents as the Collateral Agent reasonably deems necessary to grant to the Collateral
Agent for the benefit of the Secured Parties a perfected security interest (to the extent required
by the Security Documents and with the priority required by Section 4.17) in the Capital Stock of
such new Subsidiary that is owned by such Loan Party, (ii) deliver to the Collateral Agent the
certificates, if any, representing such Capital Stock, together with undated stock powers, in
blank, executed and delivered by a duly authorized officer of such Loan Party, and (iii) cause such
new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement and (B) to take such
actions necessary or advisable to grant to the Collateral Agent for the benefit of the Secured
Parties a perfected security interest (to the extent required by the Security Documents and with
the priority required by Section 4.17) in the Collateral described in the Guarantee and Collateral
Agreement with respect to such new Subsidiary (to the extent the Collateral Agent, for the benefit
of the Secured Parties, has a perfected security interest in the same type of Collateral as of the
Closing Date), including, without limitation, the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be reasonably requested by the Collateral Agent. Without limiting the foregoing, if
(i) the aggregate Consolidated Total Assets or annual consolidated revenues of all Subsidiaries
designated as “Immaterial
74
Subsidiaries” hereunder shall at any time exceed 7.5% of Consolidated Total Assets or annual
consolidated revenues, respectively, of the Borrower and its Restricted Subsidiaries (as reflected
on the most recent financial statements delivered pursuant to Section 6.1 prior to such time) or
(ii) if any Subsidiary shall at any time cease to constitute an Immaterial Subsidiary under clause
(i) of the definition of “Immaterial Subsidiary” (as reflected on the most recent financial
statements delivered pursuant to Section 6.1 prior to such time), the Borrower shall promptly, (x)
in the case of clause (i) above, rescind the designation as “Immaterial Subsidiaries” of one or
more of such Subsidiaries so that, after giving effect thereto, the aggregate Consolidated Total
Assets or annual consolidated revenues, as applicable, of all Subsidiaries so designated (and which
designations have not been rescinded) shall not exceed 7.5% of Consolidated Total Assets or annual
consolidated revenues, respectively, of the Borrower and its Restricted Subsidiaries (as reflected
on the most recent financial statements delivered pursuant to Section 6.1 prior to such time), as
applicable, and (y) in the case of clauses (i) and (ii) above, to the extent not already effected,
(A) cause each affected Subsidiary to take such actions to become a “Subsidiary Guarantor”
hereunder and under the Guarantee and Collateral Agreement and execute and deliver the documents
and other instruments referred to in this paragraph (c) to the extent such affected Subsidiary is
not otherwise an Excluded Subsidiary and (B) cause the owner of the Capital Stock of such affected
Subsidiary to take such actions to pledge such Capital Stock to the extent required by, and
otherwise in accordance with, the Guarantee and Collateral Agreement and execute and deliver the
documents and other instruments required hereby and thereby unless such Capital Stock otherwise
constitutes Excluded Capital Stock.
(d) Except as otherwise contemplated by Section 7.7(p), with respect to any new first tier
Foreign Subsidiary that is a Non-Excluded Subsidiary created or acquired after the Closing Date by
any Loan Party, promptly (i) give notice of such acquisition or creation to the Collateral Agent
and, if requested by the Collateral Agent, execute and deliver to the Collateral Agent such
amendments to the Guarantee and Collateral Agreement as the Collateral Agent deems necessary or
reasonably advisable in order to grant to the Collateral Agent, for the benefit of the Secured
Parties, a perfected security interest (to the extent required by the Security Documents and with
the priority required by Section 4.17) in the Capital Stock of such new Subsidiary (other than any
Excluded Capital Stock) that is owned by such Loan Party and (ii) deliver to the Collateral Agent
the certificates, if any, representing such Capital Stock (other than any Excluded Capital Stock),
together with undated stock powers, in blank, executed and delivered by a duly authorized officer
of such Loan Party, and take such other action as may be necessary or, in the reasonable opinion of
the Collateral Agent, desirable to perfect or ensure appropriate priority the Lien of the
Collateral Agent thereon.
(e) Notwithstanding anything in this Section 6.8 to the contrary, neither the Borrower nor any
of its Restricted Subsidiaries shall be required to take any actions in order to perfect the
security interest in the Collateral granted to the Collateral Agent for the ratable benefit of the
Secured Parties under the laws of any jurisdiction outside the United States.
(f) Notwithstanding the foregoing, to the extent any new Restricted Subsidiary is created
solely for the purpose of consummating a merger transaction pursuant to an acquisition permitted by
Section 7.7, and such new Subsidiary at no time holds any assets or liabilities other than any
merger consideration contributed to it contemporaneously with the closing of such merger
transaction, such new Subsidiary shall not be required to take the actions set forth in Section
6.8(c) or 6.8(d), as applicable, until the respective acquisition is consummated (at which time the
surviving entity of the respective merger transaction shall be required to so comply within ten
Business Days).
(g) From time to time the Loan Parties shall execute and deliver, or cause to be executed and
delivered, such additional instruments, certificates or documents, and take all such actions, as
the
75
Collateral Agent may reasonably request for the purposes implementing or effectuating the
provisions of this Agreement and the other Loan Documents, or of renewing the rights of the Secured
Parties with respect to the Collateral as to which the Collateral Agent, for the ratable benefit of
the Secured Parties, has a perfected Lien pursuant hereto or thereto, including, without
limitation, filing any financing or continuation statements or financing change statements under
the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to
the security interests created thereby. Notwithstanding the foregoing, the provisions of this
Section 6.8 shall not apply to assets as to which the Administrative Agent and the Borrower shall
reasonably determine that the costs and burdens of obtaining a security interest therein or
perfection thereof outweigh the value of the security afforded thereby.
6.9 Use of Proceeds. The proceeds of the Tranche A Term Loans and Tranche B Term Loans
shall be used solely to effect the Merger Transactions, the Refinancing and to pay related fees and
expenses. The proceeds of the Tranche C Term Loans shall be used solely to effect the
Recapitalization Transactions (including payments in respect of stock options in connection with
the Recapitalization Transactions) and to pay related fees and expenses. The proceeds of the
Revolving Loans, the Swingline Loans and the Letters of Credit shall be used to finance a portion
of the Merger Transactions (including purchase price adjustments), to finance the Refinancing, to
finance Permitted Acquisitions and Investments permitted hereunder and for other general corporate
purposes of the Borrower and its Subsidiaries not prohibited by this Agreement.
6.10 Post-Closing Undertakings. Within the time period specified on Schedule 6.10 (or such
later date to which the Administrative Agent consents), comply with the provisions set forth in
Schedule 6.10.
SECTION 7. NEGATIVE COVENANTS
The Borrower (on behalf of itself and each of the Restricted Subsidiaries) hereby agrees that,
so long as the Commitments remain in effect, any Letter of Credit remains outstanding (that has not
been cash collateralized or backstopped, in each case on terms agreed to by the Borrower and the
applicable Issuing Lender) or any Loan or other amount is owing to any Lender or any Agent
hereunder (other than (i) contingent or indemnification obligations not then due and (ii)
obligations in respect of Specified Hedge Agreements or Cash Management Obligations), the Borrower
shall not, and shall not permit any of the Restricted Subsidiaries to:
7.1 Financial Covenants. (a) Consolidated Total Leverage Ratio. Commencing with
the Test Period ending December 31, 2008, permit the Consolidated Total Leverage Ratio as at the
last day of any Test Period ending in any period set forth below to be in excess of the ratio set
forth below for such period:
76
| Period | Consolidated Total Leverage Ratio | |
December 31, 2008
|
6.25:1.00 | |
March 31, 2009
|
6.25:1.00 | |
June 30, 2009
|
6.00:1.00 | |
September 30, 2009
|
5.75:1.00 | |
December 31, 2009
|
5.75:1.00 | |
March 31, 2010
|
5.75:1.00 | |
June 30, 2010
|
5.50:1.00 | |
September 30, 2010
|
5.50:1.00 | |
December 31, 2010
|
5.00:1.00 | |
March 31, 2011
|
5.00:1.00 | |
June 30, 2011
|
4.50:1.00 | |
September 30, 2011
|
4.50:1.00 | |
December 31, 2011
|
4.25:1.00 | |
March 31, 2012
|
4.25:1.00 | |
June 30, 2012
|
4.00:1.00 | |
September 30, 2012
|
4.00:1.00 | |
December 31, 2012
|
3.75:1.00 | |
and thereafter |
(b) Consolidated Net Interest Coverage Ratio. Commencing with the Test Period ending
December 31, 2008, permit the Consolidated Net Interest Coverage Ratio as at the last day of any
Test Period ending in any period set forth below to be less than the ratio set forth below for such
period:
| Consolidated Net | ||
| Period | Interest Coverage Ratio | |
December 31, 2008
|
1.60:1.00 | |
March 31, 2009
|
1.60:1.00 | |
June 30, 2009
|
1.70:1.00 | |
September 30, 2009
|
1.75:1.00 | |
December 31, 2009
|
1.70:1.00 | |
March 31, 2010
|
1.70:1.00 | |
June 30, 2010
|
1.80:1.00 | |
September 30, 2010
|
1.80:1.00 | |
December 31, 2010
|
1.90:1.00 | |
March 31, 2011
|
1.90:1.00 | |
June 30, 2011
|
2.00:1.00 | |
September 30, 2011
|
2.00:1.00 | |
December 31, 2011
|
2.10:1.00 | |
March 31, 2012
|
2.10:1.00 | |
June 30, 2012
|
2.20:1.00 | |
September 30, 2012
|
2.20:1.00 | |
December 31, 2012
|
2.30:1.00 | |
and thereafter |
77
7.2 Indebtedness. Create, issue, incur, assume, or permit to exist any Indebtedness,
except:
(a) Indebtedness of the Borrower and any Restricted Subsidiary pursuant to any Loan
Document or Hedge Agreement or in respect of any Cash Management Obligations;
(b) Indebtedness (i) of the Borrower to any of its Restricted Subsidiaries or Holdings
or of any Subsidiary Guarantor to Holdings, the Borrower or any Restricted Subsidiary,
provided that any such Indebtedness owing to a Restricted Subsidiary that is not a
Subsidiary Guarantor is expressly subordinated in right of payment to the Obligations
pursuant to the Guarantee and Collateral Agreement or otherwise and (ii) of any
Non-Guarantor Subsidiary to any other Non-Guarantor Subsidiary;
(c) Indebtedness (including, without limitation, Capital Lease Obligations) secured by
Liens permitted by Section 7.3(g) in an aggregate principal amount, when combined with the
aggregate principal amount of Indebtedness outstanding under clauses (t) and (u) of this
Section 7.2, not to exceed $75,000,000 at any one time outstanding;
(d) (i) Indebtedness outstanding on the Closing Date and listed on Schedule 7.2(d) and
any Permitted Refinancing thereof and (ii) Indebtedness otherwise permitted under Section
7.10;
(e) Guarantee Obligations (i) by the Borrower or any of its Restricted Subsidiaries of
obligations of the Borrower or any Subsidiary Guarantor not prohibited by this Agreement to
be incurred and (ii) by any Non-Guarantor Subsidiary of obligations of any other
Non-Guarantor Subsidiary;
(f) Indebtedness of the Borrower or any of its Restricted Subsidiaries arising from the
honoring by a bank or other financial institution of a check, draft or similar instrument
inadvertently drawn by the Borrower or such Restricted Subsidiary in the ordinary course of
business against insufficient funds, so long as such Indebtedness is promptly repaid;
(g) (A) Indebtedness of any joint venture or Non-Guarantor Subsidiary owing to any Loan
Party and (B) Guarantee Obligations of the Borrower or any Subsidiary Guarantor of
Indebtedness of any joint venture or Non-Guarantor Subsidiary, to the extent such
Indebtedness and Guarantee Obligations are permitted as Investments by Section 7.7(h), (k),
(m) or (v);
(h) Indebtedness in the form of earn-outs, indemnification, incentive, non-compete,
consulting or other similar arrangements and other contingent obligations in respect of
acquisitions or Investments permitted by Section 7.7 (both before or after any liability
associated therewith becomes fixed);
(i) (i) Indebtedness of the Borrower in respect of the Mezzanine Loan Agreement in an
aggregate principal amount not to exceed $550,000,000, plus any accrued pay-in-kind
interest, capitalized interest, accrued interest, fees, discounts, premiums and expenses, in
each case, in respect thereof, (ii) Guarantee Obligations of any Subsidiary Guarantor in
respect of such Indebtedness, interest, fees, discounts, premiums and expenses;
provided that, in each case, in the case of any guarantee of Indebtedness in respect
of the Mezzanine Loan Agreement by any Restricted Subsidiary that is not a Subsidiary
Guarantor, such Restricted Subsidiary becomes a Subsidiary Guarantor under this Agreement at
or prior to the time of such guarantee, and (iii) any Permitted Refinancing thereof;
78
(j) additional Indebtedness of the Borrower or any of its Restricted Subsidiaries in an
aggregate principal amount (for the Borrower and all Restricted Subsidiaries), not to exceed
$75,000,000 at any time outstanding;
(k) Indebtedness of Non-Guarantor Subsidiaries in respect of local lines of credit,
letters of credit, bank guarantees, factoring arrangements, sale/leaseback transactions and
similar extensions of credit in the ordinary course of business, in an aggregate principal
amount, when combined with the aggregate principal amount of Indebtedness outstanding under
clause (s)(iii) of this Section 7.2, not to exceed $35,000,000 at any one time outstanding;
(l) Indebtedness of the Borrower or any of its Restricted Subsidiaries in respect of
workers’ compensation claims, bank guarantees, warehouse receipts or similar facilities,
property casualty or liability insurance, take-or-pay obligations in supply arrangements,
self-insurance obligations, performance, bid, customs, government, appeal and surety bonds,
completion guaranties and other obligations of a similar nature, in each case in the
ordinary course of business;
(m) Indebtedness incurred by the Borrower or any of its Restricted Subsidiaries arising
from agreements providing for indemnification related to sales of goods or adjustment of
purchase price or similar obligations in any case incurred in connection with the
acquisition or Disposition of any business, assets or Subsidiary;
(n) Indebtedness supported by a Letter of Credit, in a principal amount not in excess
of the stated amount of such Letter of Credit;
(o) Indebtedness issued in lieu of cash payments of Restricted Payments permitted by
Section 7.6; provided that such Indebtedness is subordinated to the Obligations on
terms reasonably satisfactory to the Administrative Agent;
(p) Permitted Subordinated Indebtedness in an aggregate principal amount not to exceed
$50,000,000 at any one time outstanding and any guarantees incurred in respect thereof;
(q) Indebtedness of the Borrower or any Subsidiary Guarantor as an account party in
respect of trade letters of credit issued in the ordinary course of business;
(r) Indebtedness owing to any insurance company in connection with the financing of any
insurance premiums permitted by such insurance company in the ordinary course of business;
(s) (i) Guarantee Obligations made in the ordinary course of business; provided
that such Guarantees are not of Indebtedness for Borrowed Money, (ii) Guarantee Obligations
in respect of lease obligations of Booz & Company Inc. and its Affiliates and (iii)
Guarantee Obligations in respect of Indebtedness of joint ventures; provided that
the aggregate principal amount of any such Guarantee Obligations under this sub-clause
(iii), when combined with the aggregate principal amount of Indebtedness outstanding under
clause (k) of this Section 7.2, shall not exceed $35,000,000 at any time outstanding;
(t) Indebtedness of any Person that becomes a Restricted Subsidiary or is merged into
the Borrower or a Restricted Subsidiary after the Closing Date as part of an acquisition,
merger or consolidation or amalgamation or other Investment not prohibited hereunder (a
“New Subsidiary”), which Indebtedness exists at the time of such acquisition, merger
or consolidation
79
or amalgamation or other Investment, and any Permitted Refinancing thereof;
provided that (A) such Indebtedness exists at the time such Person becomes a
Restricted Subsidiary or is merged into the Borrower or a Restricted Subsidiary and is not
created in contemplation of or in connection with such Person becoming a Restricted
Subsidiary or with such merger (except to the extent such Indebtedness refinanced other
Indebtedness to facilitate such Person becoming a Restricted Subsidiary), (B) the aggregate
principal amount of Indebtedness permitted by this clause (t) and Sections 7.2(c) and 7.2(u)
shall not at any one time outstanding exceed $75,000,000 and (C) neither the Borrower nor
any Restricted Subsidiary (other than the applicable New Subsidiary) shall provide security
therefor;
(u) Indebtedness incurred to finance any acquisition or other Investment permitted
under Section 7.7 in an aggregate amount for all such Indebtedness together with the
aggregate principal amount of Indebtedness permitted by Sections 7.2(c) and 7.2(t) not to
exceed $75,000,000 at any one time outstanding;
(v) other unsecured Indebtedness so long as, at the time of incurrence thereof, (i)
after giving effect to the incurrence of such unsecured Indebtedness (as if such unsecured
Indebtedness had been incurred on the first day of the most recently completed period of
four consecutive fiscal quarters of the Borrower ending on or prior to such date), the
Consolidated Total Leverage Ratio would be less than or equal to 4.25 to 1.00, (ii) no
Default or Event of Default shall have occurred and be continuing at the time of incurrence
of such unsecured Indebtedness or would result therefrom; and (iii) the terms of such
unsecured Indebtedness do not provide for any scheduled repayment, mandatory redemption or
sinking fund obligation prior to the date at least 180 days following the Term Maturity Date
(or such later date that is the latest final maturity date of any incremental extension of
credit hereunder);
(w) (i) Indebtedness representing deferred compensation or stock-based compensation to
employees of the Borrower or any Restricted Subsidiary incurred in the ordinary course of
business and (ii) Indebtedness consisting of obligations of the Borrower or any Restricted
Subsidiary under deferred compensation or other similar arrangements incurred in connection
with the Merger Transactions and any Investment permitted hereunder;
(x) Indebtedness issued by the Borrower or any Restricted Subsidiary to the officers,
directors and employees of Holdings, any Parent Company, the Borrower or any Restricted
Subsidiary, in lieu of or combined with cash payments to finance the purchase of Capital
Stock of Holdings, any Parent Company or the Borrower, in each case, to the extent such
purchase is permitted by Section 7.6(e);
(y) Indebtedness in respect of overdraft facilities, employee credit card programs,
netting services, automatic clearinghouse arrangements and other cash management and similar
arrangements in the ordinary course of business;
(z) (i) Indebtedness of the Borrower or any of its Restricted Subsidiaries undertaken
in connection with cash management and related activities with respect to any Subsidiary or
joint venture in the ordinary course of business and (ii) Indebtedness of the Borrower or
any Restricted Subsidiary to any joint venture (regardless of the form of legal entity) that
is not a Subsidiary arising in the ordinary course of business in connection with the cash
management operations (including in respect of intercompany self-insurance arrangements) of
the Borrower and its Restricted Subsidiaries;
80
(aa) all premium (if any), interest (including post-petition interest), fees, expenses,
charges, accretion or amortization of original issue discount, accretion of interest paid in
kind and additional or contingent interest on obligations described in clauses (a) through
(z) above.
For purposes of determining compliance with this Section 7.2, in the event that an item
of Indebtedness meets the criteria of more than one of the categories of Indebtedness
described in clauses (c), (j), (k), (p), (s)(iii), (t), (u) or (v) above, the Borrower
shall, in its sole discretion, classify and reclassify or later divide, classify or
reclassify such item of Indebtedness (or any portion thereof) and may include the amount and
type of such Indebtedness in one or more of the above clauses; provided, that, for
the avoidance of doubt, Indebtedness reclassified under Section 7.2(v) must be unsecured.
7.3 Liens. Create, incur, assume or suffer to exist any Lien upon any of its
Property, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good faith by
appropriate proceedings; provided that adequate reserves with respect thereto are
maintained on the books of the Borrower or its Restricted Subsidiaries, as the case may be,
to the extent required by GAAP;
(b) landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the ordinary course of business which are not overdue for a
period of more than 60 days or that are being contested in good faith by appropriate
proceedings;
(c) pledges, deposits or statutory trusts in connection with workers’ compensation,
unemployment insurance and other social security legislation;
(d) deposits and other Liens to secure the performance of bids, government, trade and
other similar contracts (other than for borrowed money), leases, subleases, statutory
obligations, surety, judgment and appeal bonds, performance bonds and other obligations of a
like nature incurred in the ordinary course of business;
(e) encumbrances shown as exceptions in the title insurance policies insuring the
Mortgages, easements, zoning restrictions, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the aggregate, do not
materially detract from the value of the Property subject thereto or materially interfere
with the ordinary conduct of the business of the Borrower or any of its Restricted
Subsidiaries;
(f) Liens (i) in existence on the Closing Date listed on Schedule 7.3(f) (or to the
extent not listed on such Schedule 7.3(f), where the fair market value of the Property to
which such Lien is attached is less than $5,000,000), (ii) securing Indebtedness permitted
by Section 7.2(d) and (iii) created after the Closing Date in connection with any
refinancing, refundings, or renewals or extensions thereof permitted by Section 7.2(d);
provided that no such Lien is spread to cover any additional Property of the
Borrower or any Restricted Subsidiary after the Closing Date and that the amount of
Indebtedness secured thereby is not increased;
(g) (i) Liens securing Indebtedness of the Borrower or any Restricted Subsidiary
incurred pursuant to Sections 7.2(c), 7.2(g), 7.2(j), 7.2(k), 7.2(r), 7.2(s), 7.2(t), 7.2(u)
and 7.2(w); provided that (A) in the case of any such Liens securing Indebtedness
incurred pursuant to Section 7.2(u) to the extent incurred to finance Acquisitions or
Investments permitted under Section 7.7, (x) such Liens shall be created substantially
concurrently with, or within 90 days after, the
81
acquisition of the assets financed by such Indebtedness and (y) such Liens do not at any time encumber any Property of the Borrower or
any Restricted Subsidiary other than the Property financed by such Indebtedness and the
proceeds thereof, (B) in the case of any such Liens securing Indebtedness pursuant to
Sections 7.2(g) or 7.2(k), such Liens do not at any time encumber any Property of the
Borrower or any Subsidiary Guarantor, (C) in the case of any such Liens securing
Indebtedness incurred pursuant to Section 7.2(s), such Liens do not encumber any Property
other than cash paid to any such insurance company in respect of such insurance and (D) in
the case of any such Liens securing Indebtedness pursuant to Section 7.2(t), such Liens
exist at the time that the relevant Person becomes a Restricted Subsidiary and are not
created in contemplation of or in connection with such Person becoming a Restricted
Subsidiary and (ii) any extension, refinancing, renewal or replacement of the Liens
described in clause (i) of this Section 7.2(g) in whole or in part; provided that
such extension, renewal or replacement shall be limited to all or a part of the property
which secured the Lien so extended, renewed or replaced (plus improvements on such property,
if any);
(h) Liens created pursuant to the Security Documents;
(i) Liens arising from judgments in circumstances not constituting an Event of Default
under Section 8.1(h);
(j) Liens on Property or assets acquired pursuant to an acquisition permitted under
Section 7.7 (and the proceeds thereof) or assets of a Restricted Subsidiary in existence at
the time such Restricted Subsidiary is acquired pursuant to an acquisition permitted under
Section 7.7 and not created in contemplation thereof and Liens created after the Closing Date in
connection with any refinancing, refundings, or renewals or extensions of the obligations
secured thereby permitted hereunder, provided that no such Lien is spread to cover
any additional Property after the Closing Date and that the amount of Indebtedness secured
thereby is not increased;
(k) (i) Liens on Property of Non-Guarantor Subsidiaries securing Indebtedness or other
obligations not prohibited by this Agreement to be incurred by such Non-Guarantor
Subsidiaries and (ii) Liens securing Indebtedness or other obligations of the Borrower or
any Subsidiary in favor of any Loan Party;
(l) receipt of progress payments and advances from customers in the ordinary course of
business to the extent same creates a Lien on the related inventory and proceeds thereof;
(m) Liens in favor of customs and revenue authorities arising as a matter of law to
secure the payment of customs duties in connection with the importation of goods;
(n) Liens arising out of consignment or similar arrangements for the sale by the
Borrower and its Restricted Subsidiaries of goods through third parties in the ordinary
course of business;
(o) Liens solely on any cash earnest money deposits made by the Borrower or any of its
Restricted Subsidiaries in connection with an Investment permitted by Section 7.7;
(p) Liens deemed to exist in connection with Investments permitted by Section 7.7(b)
that constitute repurchase obligations;
(q) Liens upon specific items of inventory or other goods and proceeds of the Borrower
or any of its Restricted Subsidiaries arising in the ordinary course of business securing
such
82
Person’s obligations in respect of bankers’ acceptances and letters of credit issued or
created for the account of such Person to facilitate the purchase, shipment or storage of
such inventory or other goods;
(r) Liens on cash deposits securing any Hedge Agreement permitted hereunder;
(s) any interest or title of a lessor under any leases or subleases entered into by the
Borrower or any Restricted Subsidiary in the ordinary course of business and any financing
statement filed in connection with any such lease;
(t) Liens on cash or cash equivalents used to defease or to satisfy and discharge
Indebtedness, provided that such defeasance or satisfaction and discharge is not
prohibited hereunder;
(u) (i) Liens that are contractual rights of set-off (A) relating to the establishment
of depository relations with banks not given in connection with the issuance of
Indebtedness, (B) relating to pooled deposit or sweep accounts of the Borrower or any
Restricted Subsidiary to permit satisfaction of overdraft or similar obligations incurred in
the ordinary course of business of the Borrower and the Subsidiaries, (C) relating to
purchase orders and other agreements entered into with customers of the Borrower or any
Restricted Subsidiary in the ordinary course of business or (D) relating to the Mezzanine
Loan Documents and (ii) other Liens securing cash management obligations (that do not
constitute Indebtedness) in the ordinary course of business;
(v) Liens arising solely by virtue of any statutory or common law provision relating to
banker’s liens, rights of set-off or similar rights;
(w) Liens on Capital Stock in joint ventures securing obligations of such joint
venture;
(x) Liens on securities that are the subject of repurchase agreements constituting Cash
Equivalents or Permitted Liquid Investments;
(y) Liens securing obligations in respect of trade-related letters of credit permitted
under Section 7.2 and covering the goods (or the documents of title in respect of such
goods) financed by such letters of credit and the proceeds and products thereof;
(z) other Liens with respect to obligations that do not exceed $35,000,000 at any one
time outstanding.
7.4 Fundamental Changes. Consummate any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all
or substantially all of its Property or business, except that:
(a) (i) any Restricted Subsidiary may be merged, amalgamated or consolidated with or
into the Borrower (provided that the Borrower shall be the continuing or surviving
corporation) or (ii) any Restricted Subsidiary may be merged, amalgamated or consolidated
with or into any Subsidiary Guarantor (provided that (x) a Subsidiary Guarantor
shall be the continuing or surviving corporation or (y) simultaneously with such
transaction, the continuing or surviving corporation shall become a Subsidiary Guarantor and
the Borrower shall comply with Section 6.8 in connection therewith);
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(b) any Non-Guarantor Subsidiary may be merged or consolidated with or into, or be
liquidated into, any other Non-Guarantor Subsidiary that is a Restricted Subsidiary;
(c) any Restricted Subsidiary may Dispose of all or substantially all of its assets
upon voluntary liquidation or otherwise to the Borrower or any Subsidiary Guarantor;
(d) any Non-Guarantor Subsidiary may Dispose of all or substantially all of its assets
(upon voluntary liquidation, dissolution, winding-up or otherwise) to any other
Non-Guarantor Subsidiary that is a Restricted Subsidiary;
(e) Dispositions permitted by Section 7.5 and any merger, dissolution, liquidation,
consolidation, investment or Disposition, the purpose of which is to effect a Disposition
permitted by Section 7.5 may be consummated;
(f) any Investment expressly permitted by Section 7.7 may be structured as a merger,
consolidation or amalgamation;
(g) the transactions contemplated under the Transaction Documents; and
(h) any Restricted Subsidiary may liquidate or dissolve if (i) the Borrower determines
in good faith that such liquidation or dissolution is in the best interest of the Borrower
and is not materially disadvantageous to the Lenders and (ii) to the extent such Restricted
Subsidiary is a Loan Party, any assets or business of such Restricted Subsidiary not
otherwise disposed of or transferred in accordance with Section 7.4 or 7.5 or, in the case
of any such business, discontinued, shall be transferred to, or otherwise owned or conducted
by, a Loan Party after giving effect to such liquidation or dissolution.
7.5 Dispositions of Property. Dispose of any of its owned Property (including,
without limitation, receivables) whether now owned or hereafter acquired, or, in the case of any
Restricted Subsidiary, issue or sell any shares of such Restricted Subsidiary’s Capital Stock to
any Person, except:
(a) (i) the Disposition of surplus, obsolete or worn out Property in the ordinary
course of business, (ii) the sale of defaulted receivables in the ordinary course of
business, (iii) abandonment, cancellation or disposition of any Intellectual Property in the
ordinary course of business and (iv) sales, leases or other dispositions of inventory
determined by the management of the Borrower to be no longer useful or necessary in the
operation of the Business;
(b) (i) the sale of inventory or other property in the ordinary course of business,
(ii) the cross-licensing or licensing of Intellectual Property, in the ordinary course of
business and (iii) the contemporaneous exchange, in the ordinary course of business, of
Property for Property of a like kind, to the extent that the Property received in such
exchange is of a value equivalent to the value of the Property exchanged (provided
that after giving effect to such exchange, the value of the Property of the Borrower or any
Subsidiary Guarantor subject to Liens in favor of the Collateral Agent under the Security
Documents is not materially reduced);
(c) Dispositions permitted by Section 7.4;
(d) the sale or issuance of (i) any Subsidiary’s Capital Stock to the Borrower or any
Subsidiary Guarantor; provided that the sale or issuance of Capital Stock of an
Unrestricted Subsidiary to the Borrower or any Restricted Subsidiary is otherwise permitted
by Section 7.7,
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(ii) the Capital Stock of any Non-Guarantor Subsidiary that is a Restricted
Subsidiary to any other Non-Guarantor Subsidiary that is a Restricted Subsidiary and (iii)
the Capital Stock of any Subsidiary that is an Unrestricted Subsidiary to any other
Subsidiary that is an Unrestricted Subsidiary, in each case, including, without limitation,
in connection with any tax restructuring activities not otherwise prohibited hereunder;
(e) the Disposition of other assets for fair market value not to exceed $200,000,000 in
the aggregate; provided that (i) at least 75% of the total consideration for any
such Disposition received by the Borrower and its Restricted Subsidiaries is in the form of
cash, Cash Equivalents or Permitted Liquid Investments and (ii) the requirements of Section
2.12(b), to the extent applicable, are complied with in connection therewith;
(f) (i) any Recovery Event; provided that the requirements of Section 2.12(b)
are complied with in connection therewith and (ii) any event that would constitute a
Recovery Event but for the Dollar threshold set forth in the definition thereof;
(g) the leasing, occupancy agreements or sub-leasing of Property pursuant to the Merger
Documents or that would not materially interfere with the required use of such Property by
the Borrower or its Restricted Subsidiaries;
(h) the transfer for fair value of Property (including Capital Stock of Subsidiaries)
to another Person in connection with a joint venture arrangement with respect to the
transferred Property; provided that such transfer is permitted under Section 7.7(h)
or (v);
(i) the sale or discount, in each case without recourse and in the ordinary course of
business, of overdue accounts receivable arising in the ordinary course of business, but
only in connection with the compromise or collection thereof consistent with customary
industry practice (and not as part of any bulk sale or financing of receivables);
(j) transfers of condemned Property as a result of the exercise of “eminent domain” or
other similar policies to the respective Governmental Authority or agency that has condemned
the same (whether by deed in lieu of condemnation or otherwise), and transfers of properties
that have been subject to a casualty to the respective insurer of such Property as part of
an insurance settlement;
(k) the Disposition of any Immaterial Subsidiary or any Unrestricted Subsidiary;
(l) the transfer of Property (including Capital Stock of Subsidiaries) of the Borrower
or any Guarantor to any Restricted Subsidiary for fair market value;
(m) the transfer of Property (i) by the Borrower or any Subsidiary Guarantor to the
Borrower or any other Subsidiary Guarantor or (ii) from a Non-Guarantor Subsidiary to
(A) the Borrower or any Subsidiary Guarantor for no more than fair market value or (B) any
other Non-Guarantor Subsidiary that is a Restricted Subsidiary;
(n) the sale of cash, Cash Equivalents or Permitted Liquid Investments in the ordinary
course of business;
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(o) (i) Liens permitted by Section 7.3, (ii) Restricted Payments permitted by
Section 7.6, (iii) Investments permitted by Section 7.7, (iv) payments permitted by Section
7.8 and (v) sale and leaseback transactions permitted by Section 7.10;
(p) Dispositions of Investments in joint ventures to the extent required by, or made
pursuant to customary buy/sell arrangements between the joint venture parties set forth in
joint venture arrangements and similar binding arrangements; provided that the
requirements of Section 2.12(b), to the extent applicable, are complied with in connection
therewith; and
(q) Dispositions of Property between or among the Borrower and/or its Restricted
Subsidiaries as a substantially concurrent interim Disposition in connection with a
Disposition otherwise permitted pursuant to clauses (a) through (p) above.
7.6 Restricted Payments. Declare or pay any dividend on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any Capital Stock of the Borrower or
any Subsidiary, whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or Property or in obligations of the
Borrower or any Restricted Subsidiary, or enter into any derivatives or other transaction with any
financial institution, commodities or stock exchange or clearinghouse (a “Derivatives
Counterparty”) obligating the Borrower or any Restricted Subsidiary to make payments to
such Derivatives Counterparty as a result of any change in market value of any such Capital
Stock (collectively, “Restricted Payments”), except that:
(a) (i) any Restricted Subsidiary may make Restricted Payments to the Borrower or any
Subsidiary Guarantor and (ii) Non-Guarantor Subsidiaries may make Restricted Payments to
other Non-Guarantor Subsidiaries;
(b) provided that (x) no Default or Event of Default is continuing or would
result therefrom and (y) the Consolidated Total Leverage Ratio for the most recently ended
period of four consecutive fiscal quarters of the Borrower shall not exceed 4.50 to 1.00 for
such period immediately before and immediately after giving effect to such Restricted
Payment, the Borrower may make Restricted Payments in an aggregate amount not to exceed the
Available Amount; provided no Restricted Payments under this clause (b) may be made
for the purpose of making a dividend or other distribution in respect of, or repurchasing or
redeeming, Capital Stock held by the Sponsor or any of its Affiliates (other than Holdings
or any Parent Company) in Holdings or any Parent Company; it being understood that such
Restricted Payments may be used for such purposes with respect to Capital Stock held by any
other Person in Holdings or any Parent Company;
(c) the Borrower may make Restricted Payments to Holdings or any Parent Company to
permit Holdings or any Parent Company to pay (i) any taxes which are due and payable by
Holdings or any Parent Company, the Borrower and the Restricted Subsidiaries as part of a
consolidated group (or shareholders of Holdings, to the extent such taxes are attributable
to Holdings, the Borrower and the Restricted Subsidiaries), (ii) customary fees, salary,
bonus, severance and other benefits payable to, and indemnities provided on behalf of, their
current and former officers and employees and members of their Board of Directors, (iii)
ordinary course corporate operating expenses and other fees and expenses required to
maintain its corporate existence, (iv) fees and expenses to the extent permitted under
clause (i) of the second sentence of Section 7.9, (v) reasonable fees and expenses incurred
in connection with any debt or equity offering by Holdings or any Parent Company, to the
extent the proceeds thereof are (or, in the
86
case of an unsuccessful offering, were intended to be) used for the benefit of the Borrower and the Restricted Subsidiaries, whether or not
completed, (vi) reasonable fees and expenses in connection with compliance with reporting
obligations under, or in connection with compliance with, federal or state laws or under
this Agreement or any other Loan Document and the Mezzanine Agreement and any other
Mezzanine Loan Document and (vii) amounts due in respect of the Deferred Obligation Amount
under the Merger Agreement with the Net Cash Proceeds of any Equity Issuance by, or capital
contribution to, the Borrower;
(d) the Borrower may make Restricted Payments in the form of Capital Stock of the
Borrower;
(e) the Borrower or any Subsidiary may make Restricted Payments to, directly or
indirectly, purchase the Capital Stock of the Borrower, Holdings or any Parent Company from
present or former officers, directors, consultants, agents or employees (or their estates,
trusts, family members or former spouses) of Holdings, the Borrower, any Parent Company or
any Subsidiary upon the death, disability, retirement or termination of the applicable
officer, director, consultant, agent or employee or pursuant to any equity subscription
agreement, stock option or equity incentive award agreement, shareholders’ or members’
agreement or similar agreement, plan or arrangement; provided that the aggregate
amount of payments under this clause (e) in any fiscal year of the Borrower shall not exceed
the sum of (i) $20,000,000 in any fiscal year (but not
exceeding $50,000,000 in the aggregate since the Closing Date), plus (ii) any
proceeds received from key man life insurance policies, plus (iii) any proceeds
received by the Borrower, Holdings or any Parent Company during such fiscal year from sales
of the Capital Stock of Holdings, the Borrower or any Parent Company to directors,
consultants, officers or employees of Holdings, such Parent Company, the Borrower or any
Subsidiary in connection with permitted employee compensation and incentive arrangements,
plus (iv) the amount of any bona fide cash bonuses otherwise payable to members of
management, directors or consultants of Holdings, any Parent Company, the Borrower or its
Restricted Subsidiaries in connection with the Transactions that are foregone in return for
the receipt of Capital Stock the fair market value of which is equal to or less than the
amount of such cash bonuses; provided that any Restricted Payments permitted (but
not made) pursuant to sub-clause (ii), (iii) or (iv) of this clause (e) in any prior fiscal
year may be carried forward to any subsequent calendar year, and provided,
further, that cancellation of Indebtedness owing to the Borrower or any Restricted
Subsidiary by any member of management of Holdings, any Parent Company, the Borrower or its
Restricted Subsidiaries in connection with a repurchase of the Capital Stock of Holdings or
any Parent Company will not be deemed to constitute a Restricted Payment for purposes of
this Section 7.6;
(f) noncash repurchases of Capital Stock deemed to occur upon exercise of stock options
or similar equity incentive awards if such Capital Stock represents a portion of the
exercise price of such options or similar equity incentive awards;
(g) the Borrower and its Restricted Subsidiaries may make Restricted Payments to
consummate the Transactions (including any Restricted Payments contemplated by the Merger
Agreement);
(h) the Borrower may make Restricted Payments to allow Holdings or any Parent Company
to make payments in cash, in lieu of the issuance of fractional shares, upon the exercise of
warrants or upon the conversion or exchange of Capital Stock of any such Person;
87
(i) so long as no Event of Default under Section 8.1(a) or 8.1(f) has occurred and is
continuing, the Borrower and its Restricted Subsidiaries may make Restricted Payments to
make payments provided for in the Management Agreement;
(j) to the extent constituting Restricted Payments, the Borrower and its Restricted
Subsidiaries may enter into and consummate transactions expressly permitted by any provision
of Sections 7.4, 7.5, 7.7 and 7.9;
(k) any non-wholly owned Restricted Subsidiary of the Borrower may declare and pay cash
dividends to its equity holders generally so long as the Borrower or its respective
Subsidiary which owns the equity interests in the Restricted Subsidiary paying such dividend
receives at least its proportional share thereof (based upon its relative holding of the
equity interests in the Restricted Subsidiary paying such dividends and taking into account
the relative preferences, if any, of the various classes of equity interest of such
Restricted Subsidiary);
(l) the Borrower may make Restricted Payments using any amounts placed in escrow in
connection with the Transactions;
(m) provided that (i) no Default or Event of Default is continuing or would
result therefrom and (ii) the Consolidated Total Leverage Ratio for the most recently ended
period of four consecutive fiscal quarters of the Borrower shall not exceed 2.00 to 1.00 for
such period immediately before and immediately after giving effect to such Restricted Payment, at
any time following the sixth anniversary of the Closing Date, the Borrower and its
Restricted Subsidiaries may make Restricted Payments to redeem or purchase the Capital Stock
of the Borrower, Holdings or any Parent Company in an amount not to exceed 10% of the
Borrower’s Consolidated EBITDA in any fiscal year; provided no Restricted Payments
under this clause (m) may be made for the purpose of making a dividend or other distribution
in respect of, or repurchasing or redeeming, Capital Stock held by the Sponsor or any of its
Affiliates (other than Holdings or any Parent Company) in Holdings or any Parent Company; it
being understood that such Restricted Payments may be used for such purposes with respect to
Capital Stock held by any other Person in Holdings or any Parent Company;
(n) provided that no Default or Event of Default is continuing or would result
therefrom, after a Holdings IPO, the Borrower may make Restricted Payments to Holdings or
any Parent Company so that Holdings or any Parent Company may make Restricted Payments to
its equity holders in an aggregate amount not exceeding 6.0% per annum of the Net Cash
Proceeds received by the Borrower from such Holdings IPO; provided that the
Available Amount shall be reduced by a corresponding amount of any such Restricted Payments;
(o) provided that no Default or Event of Default is continuing or would result
therefrom, other Restricted Payments in an amount not to exceed $30,000,000;
provided that no Restricted Payments under this clause (o) may be made for the
purpose of making a dividend or other distribution in respect of, or repurchasing or
redeeming, Capital Stock held by the Sponsor or any of its Affiliates (other than Holdings
or any Parent Company) in Holdings or any Parent Company; it being understood that such
Restricted Payments may be used for such purposes with respect to Capital Stock held by any
other Person in Holdings or any Parent Company; and
(p) the Borrower may make Restricted Payments in connection with the Recapitalization
Transactions (including but not limited to Restricted Payments from time to time to, or to
permit Holdings or any Parent Company to make payments to, holders of outstanding stock
options in
88
respect of adjustments to the outstanding stock options in connection with the
Recapitalization Transactions) in an amount not to exceed $650,000,000.
7.7 Investments. Make any advance, loan, extension of credit (by way of guaranty or
otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or
other debt securities of, or all or substantially all of the assets constituting an ongoing
business from, or make any other similar investment in, any other Person (all of the foregoing,
“Investments”), except:
(a) (i) extensions of trade credit in the ordinary course of business and (ii)
purchases and acquisitions of inventory, supplies, materials and equipment or purchases of
contract rights or licenses or leases of Intellectual Property in each case in the ordinary
course of business, to the extent such purchases and acquisitions constitute Investments;
(b) Investments in Cash Equivalents and Investments that were Cash Equivalents when
made;
(c) Investments arising in connection with (i) the incurrence of Indebtedness permitted
by Sections 7.2 to the extent arising as a result of Indebtedness among Holdings, the
Borrower or any Restricted Subsidiary and Guarantee Obligations permitted by Section 7.2 and
payments made in respect of such Guarantee Obligations, (ii) the forgiveness or conversion to
equity of any Indebtedness permitted by Section 7.2 and (iii) Guarantees by any Borrower or
any Restricted Subsidiary of operating leases (other than Capital Lease Obligations) or of
other obligations that do not constitute Indebtedness, in each case entered into in the
ordinary course of business;
(d) loans and advances to employees, consultants or directors of Holdings, the Borrower
or any of its Restricted Subsidiaries in the ordinary course of business in an aggregate
amount (for Holdings, the Borrower and all Restricted Subsidiaries) not to exceed $5,000,000
(excluding (for purposes of such cap) tuition advances, travel and entertainment expenses,
but including relocation expenses) at any one time outstanding;
(e) Investments (other than those relating to the incurrence of Indebtedness permitted
by Section 7.7(c)) by the Borrower or any of its Restricted Subsidiaries in the Borrower or
any Person that, prior to such Investment, is a Subsidiary Guarantor or is a Domestic
Subsidiary that becomes a Subsidiary Guarantor at the time of such Investment;
(f) (i) Permitted Acquisitions to the extent that any Person or Property acquired in
such acquisition becomes a Subsidiary Guarantor or a part of the Borrower or any Subsidiary
Guarantor or becomes (whether or not such Person is a wholly owned Subsidiary) a Subsidiary
Guarantor in the manner contemplated by Section 6.8(c) and (ii) other Permitted Acquisitions
in an aggregate purchase price in the case of this clause (ii) (other than purchase price
paid through the issuance of equity by Holdings or any Parent Company with the proceeds
thereof, including (A) (x) whether or not any equity is issued, capital contributions (other
than relating to Disqualified Capital Stock) and (y) equity issued to the seller) in an
aggregate amount not to exceed $75,000,000 plus (B) an amount equal to the Available
Amount; provided that after giving effect to any such Permitted Acquisition the
Borrower shall be in pro forma compliance with the financial covenants set
forth in Section 7.1;
(g) loans by the Borrower or any of its Restricted Subsidiaries to the employees,
officers or directors of Holdings, the Borrower or any of its Restricted Subsidiaries in
connection with management incentive plans; provided that such loans represent
cashless transactions pursuant to
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which such employees, officers or directors directly
invest the proceeds of such loans in the Capital Stock of Holdings;
(h) Investments by the Borrower and its Restricted Subsidiaries in joint ventures or
similar arrangements and Non-Guarantor Subsidiaries in an aggregate amount at any one time
outstanding (for the Borrower and all Restricted Subsidiaries), not to exceed the sum of
(A) $50,000,000 plus (B) an amount equal to the Available Amount; provided,
that any Investment made for the purpose of funding a Permitted Acquisition permitted under
Section 7.7(f) shall not be deemed a separate Investment for the purposes of this clause
(h); provided, further, that no Investment may be made pursuant to this
clause (h) in any Unrestricted Subsidiary for the purpose of making a Restricted Payment
prohibited pursuant to Section 7.6;
(i) Investments (including debt obligations) received in the ordinary course of
business by the Borrower or any Restricted Subsidiary in connection with the bankruptcy or
reorganization of suppliers, customers and other Persons and in settlement of delinquent
obligations of, and other disputes with, suppliers, customers and other Persons arising out
of the ordinary course of business;
(j) Investments by any Non-Guarantor Subsidiary in any other Non-Guarantor Subsidiary;
(k) Investments in existence on, or pursuant to legally binding written commitments in
existence on, the Closing Date and listed on Schedule 7.7 and, in each case, any extensions
or renewals thereof, so long as the amount of any Investment made pursuant to this clause
(k) is not increased at any time above the amount of such Investment set forth on Schedule
7.7;
(l) Investments of the Borrower or any Restricted Subsidiary under Hedge Agreements
permitted hereunder;
(m) Investments of any Person in existence at the time such Person becomes a Restricted
Subsidiary; provided that such Investment was not made in connection with or in
anticipation of such Person becoming a Restricted Subsidiary;
(n) Investments arising as a result of payments permitted by Section 7.8(a);
(o) consummation of the Merger Transactions pursuant to the Merger Documents and the
Company Reorganization;
(p) Subsidiaries of the Borrower may be established or created, if (i) to the extent
such new Subsidiary is a Domestic Subsidiary, the Borrower and such Subsidiary comply with
the provisions of Section 6.8(c) and (ii) to the extent such new Subsidiary is a Foreign
Subsidiary, the Borrower complies with the provisions of Section 6.8(d); provided
that, in each case, to the extent such new Subsidiary is created solely for the purpose of
consummating a merger transaction pursuant to an acquisition permitted by this Section 7.7,
and such new Subsidiary at no time holds any assets or liabilities other than any merger
consideration contributed to it contemporaneously with the closing of such merger
transactions, such new Subsidiary shall not be required to take the actions set forth in
Section 6.8(c) or 6.8(d), as applicable, until the respective acquisition is consummated (at
which time the surviving entity of the respective merger transaction shall be required to so
comply within ten Business Days or such longer period as the Administrative Agent shall
agree);
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(q) Investments arising directly out of the receipt by the Borrower or any Restricted
Subsidiary of non-cash consideration for any sale of assets permitted under Section 7.5;
provided that such non-cash consideration shall in no event exceed 25% of the total
consideration received for such sale;
(r) Investments resulting from pledges and deposits referred to in Sections 7.3(c)
and (d);
(s) Investments consisting of the licensing or contribution of Intellectual Property
pursuant to joint marketing arrangements with other persons;
(t) any Investment in a Foreign Subsidiary to the extent such Investment is
substantially contemporaneously repaid in full with a dividend or other distribution from
such Foreign Subsidiary;
(u) Investments in the ordinary course of business consisting of UCC Article 3
endorsements for collection or deposit and UCC Article 4 customary trade arrangements with
customers consistent with past practices;
(v) additional Investments so long as the aggregate amount thereof outstanding at no
time exceeds the sum of (i) $25,000,000 plus (ii) an amount equal to the Available
Amount; provided that no Investment may be made pursuant to this clause (v) in any
Unrestricted Subsidiary for the purpose of making a Restricted Payment prohibited pursuant
to Section 7.6;
(w) advances of payroll payments to employees, or fee payments to directors or
consultants, in the ordinary course of business;
(x) Investments in Permitted Liquid Investments and Investments that were Permitted
Liquid Investments when made in an amount not to exceed $40,000,000 at any one time
outstanding; and
(y) Investments constituting loans or advances by the Borrower to Holdings or a Parent
Company in lieu of Restricted Payments permitted pursuant to Section 7.6.
It is further understood and agreed that for purposes of determining the value of any Investment
outstanding for purposes of this Section 7.7, such amount shall deemed to be the amount of such
Investment when made, purchased or acquired less any returns on such Investment (not to exceed the
original amount invested). Notwithstanding the foregoing, no Investment in an Unrestricted
Subsidiary is permitted under this Section 7.7 unless such Investment is permitted pursuant to
clause (h) or (v) above.
7.8 Optional Payments and Modifications of Certain Debt Instruments. (a) Make any
optional or voluntary payment, prepayment, repurchase or redemption of, or otherwise voluntarily or
optionally defease (i) any Mezzanine Facility Indebtedness then outstanding or (ii) the principal
of or interest on, or any other amount owing in respect of any Permitted Subordinated Indebtedness;
provided that (A) the Borrower or any Restricted Subsidiary may prepay any Mezzanine
Facility Indebtedness (or any Permitted Refinancing thereof) with amounts constituting the
Available Amount at any time if the Consolidated Total Leverage Ratio is equal to or less than 4.50
to 1.00 as of the end of the most recently ended Reference Period, (B) the Borrower or any
Restricted Subsidiary may prepay any Permitted Subordinated Indebtedness (or any Permitted
Refinancing thereof) with amounts constituting the Available Amount at any time if the Consolidated
Total Leverage Ratio is equal to or less than 4.50 to 1.00 as of the end of the most recently ended
Reference Period, (C) the Borrower or any Restricted
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Subsidiary may refinance, replace or extend any Mezzanine Facility Indebtedness or Permitted Subordinated Indebtedness to the extent permitted
by Section 7.2 and (D) the Borrower or any Restricted Subsidiary may convert any Mezzanine Facility
Indebtedness or any Permitted Subordinated Indebtedness (or any Permitted Refinancing thereof) to
the Capital Stock of Holdings or any Parent Company, (E) the Borrower may prepay the Mezzanine
Facility Indebtedness (or any Permitted Refinancing thereof) in an aggregate principal amount not
to exceed $75,000,000 at any time if the Consolidated Total Leverage Ratio is equal to or less than
4.00 to 1.00 as of the end of the most recently ended Reference Period and (F) the Borrower may
prepay the Mezzanine Facility Indebtedness (or any Permitted Refinancing thereof) with the Net Cash
Proceeds received from any Equity Issuance by, or capital contribution to, Holdings or the Borrower
(which in the case of any such Equity Issuance by the Borrower, is not Disqualified Capital Stock)
which, in the case of any such Equity Issuance by, or capital contribution to, Holdings, have been
contributed in cash as common equity to the Borrower, in each case to the extent it is not a
Specified Equity Contribution. Notwithstanding the foregoing, nothing in this Section 7.8 shall
prohibit any AHYDO Payments in respect of the Mezzanine Facility Indebtedness or any Permitted
Subordinated Indebtedness or, in each case, any Permitted Refinancing thereof.
(b) Amend, modify or otherwise change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms of any Permitted Subordinated Indebtedness or Mezzanine
Loan Document, in any manner that is materially adverse to the Lenders without the prior consent of
the Administrative Agent (with the approval of the Required Lenders); provided that nothing
in this Section 7.8(b) shall prohibit the refinancing, replacement, extension or other similar
modification of the Permitted Subordinated Indebtedness or the Mezzanine Facility Indebtedness to
the extent otherwise permitted by Section 7.2.
7.9 Transactions with Affiliates. Enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of Property, the rendering of any service or the
payment of any management, advisory or similar fees, with any Affiliate (other than Holdings, the
Borrower or any Restricted Subsidiary) unless such transaction is (a) otherwise not prohibited
under this Agreement and (b) upon fair and reasonable terms no less favorable to the Borrower or
such Restricted Subsidiary, as the case may be, than it would obtain in a comparable arm’s length
transaction with a Person that is not an Affiliate. Notwithstanding the foregoing, the Borrower
and its Restricted Subsidiaries may (i) pay to the Sponsor and its Affiliates fees, indemnities and
expenses pursuant to the Management Agreement and/or fees and expenses in connection with the
Merger and disclosed to the Administrative Agent prior to the Closing Date; (ii) enter into any
transaction with an Affiliate that is not prohibited by the terms of this Agreement to be entered
into by the Borrower or such Restricted Subsidiary with an Affiliate; (iii) make any Restricted
Payments contemplated by the Merger Agreement, and otherwise perform their obligations under the
Transaction Documents and (iv) without being subject to the terms of this Section 7.9, enter into
any transaction with any Person which is an Affiliate of Holdings only by reason of such Person and
Holdings having common directors. For the avoidance of doubt, this Section 7.9 shall not apply to
employment, bonus, retention and severance arrangements with, and payments of compensation or
benefits to or for the benefit of, current or former employees, consultants, officers or directors
of the Borrower or any of its Restricted Subsidiaries in the ordinary course of business. For
purposes of this Section 7.9, any transaction with any Affiliate shall be deemed to have satisfied
the standard set forth in clause (b) of the first sentence hereof if such transaction is approved
by a majority of the Disinterested Directors of the board of directors of the Borrower or such
Restricted Subsidiary, as applicable. “Disinterested Director” shall mean, with respect to
any Person and transaction, a member of the Board of Directors of such Person who does not have any
material direct or indirect financial interest in or with respect to such transaction.
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7.10 Sales and Leasebacks. Enter into any arrangement with any Person providing for
the leasing by the Borrower or any Restricted Subsidiary of real or personal Property which is to
be sold or transferred by the Borrower or such Restricted Subsidiary (a) to such Person or (b) to
any other Person to whom funds have been or are to be advanced by such Person on the security of
such Property or rental obligations of the Borrower or such Restricted Subsidiary, except for (i)
any such arrangement entered into in the ordinary course of business of the Borrower and its
Subsidiaries, (ii) sales or transfers by the Borrower or any Subsidiary Guarantor to the Borrower
or any other Subsidiary Guarantor, (iii) sales or transfers by any Non Guarantor Subsidiary to any
other Non Guarantor Subsidiary that is a Restricted Subsidiary and (iv) any such arrangement to the
extent that the fair market value of such Property does not exceed $35,000,000 in the aggregate for
all such arrangements.
7.11 Changes in Fiscal Periods. Permit the fiscal year of the Borrower to end on a
day other than March 31.
7.12 Negative Pledge Clauses. Enter into any agreement that prohibits or limits the
ability of the Borrower or any of its Restricted Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its Property, whether now owned or hereafter acquired, to secure the
Obligations or, in the case of any Subsidiary Guarantor, its obligations under the Guarantee and
Collateral Agreement, other than:
(a) this Agreement and the other Loan Documents and the Mezzanine Loan Documents;
(b) any agreements governing any purchase money Liens or Capital Lease Obligations
otherwise permitted hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby and the proceeds thereof);
(c) software and other Intellectual Property licenses pursuant to which the Borrower or
such Restricted Subsidiary is the licensee of the relevant software or Intellectual
Property, as the case may be, (in which case, any prohibition or limitation shall relate
only to the assets subject of the applicable license);
(d) Contractual Obligations incurred in the ordinary course of business and on
customary terms which limit Liens on the assets subject of the applicable Contractual
Obligation;
(e) any agreements regarding Indebtedness or other obligations of any Non-Guarantor
Subsidiary not prohibited under Section 7.2 (in which case, any prohibition or limitation
shall only be effective against the assets of such Non-Guarantor Subsidiary and its
Subsidiaries);
(f) prohibitions and limitations in effect on the Closing Date and listed on
Schedule 7.12;
(g) customary provisions contained in joint venture agreements and other similar
agreements applicable to joint ventures entered into in the ordinary course of business;
(h) customary provisions restricting the subletting or assignment of any lease
governing a leasehold interest;
(i) customary restrictions and conditions contained in any agreement relating to any
Disposition of Property not prohibited hereunder;
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(j) any agreement in effect at the time any Person becomes a Subsidiary, so long as
such agreement was not entered into in contemplation of such Person becoming a Subsidiary;
(k) restrictions imposed by applicable law;
(l) restrictions imposed by any Permitted Subordinated Indebtedness (i) that are
consistent with the definition thereof or otherwise consistent with prevailing market
practice for similar types of Indebtedness at the time such restrictions are incurred or
(ii) to which the Administrative Agent has not objected after having been afforded a period
of at least five Business Days to review such restrictions;
(m) restrictions in respect of Indebtedness secured by Liens permitted by Sections
7.3(g) and 7.3(z) relating solely to the assets or proceeds thereof secured by such
Indebtedness to the extent required to be so limited by such Sections; and
(n) customary provisions restricting assignment of any agreement entered into in the
ordinary course of business.
7.13 Clauses Restricting Subsidiary Distributions. Enter into any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to (a) make Restricted
Payments in respect of any Capital Stock of such Restricted Subsidiary held by, or pay any
Indebtedness owed to, the Borrower or any Restricted Subsidiary or (b) make Investments in the
Borrower or any Restricted Subsidiary, except for such encumbrances or restrictions existing under
or by reason of (i) any restrictions existing under the Loan Documents and the Mezzanine Loan
Documents, (ii) any restrictions with respect to such Restricted Subsidiary imposed pursuant to an
agreement that has been entered into in connection with the Disposition of all or substantially all
of the Capital Stock or assets of such Restricted Subsidiary, (iii) customary net worth provisions
contained in Real Property leases entered into by the Borrower and its Restricted Subsidiaries, so
long as the Borrower has determined in good faith that such net worth provisions would not
reasonably be expected to impair the ability of the Borrower and its Restricted Subsidiaries to
meet their ongoing obligations, (iv) any restrictions contained in agreements related to
Indebtedness of any Non-Guarantor Subsidiary not prohibited under Section 7.2 (in which case such
restriction shall relate only to such Indebtedness and/or such Non-Guarantor Subsidiary and its
Restricted Subsidiaries) or Indebtedness secured by Liens permitted by Sections 7.3(g) and 7.3(z),
(v) any restrictions regarding licenses or sublicenses by the Borrower and its Restricted
Subsidiaries of Intellectual Property in the ordinary course of business (in which case such
restriction shall relate only to such Intellectual Property), (vi) Contractual Obligations incurred
in the ordinary course of business which include customary provisions restricting the assignment of
any agreement relating thereto, (vii) customary provisions contained in joint venture agreements
and other similar agreements applicable to joint ventures entered into in the ordinary course of
business, (viii) customary provisions restricting the subletting or assignment of any lease
governing a leasehold interest, (ix) customary restrictions and conditions contained in any
agreement relating to any Disposition of Property not prohibited hereunder, (x) any agreement in
effect at the time any Person becomes a Restricted Subsidiary, so long as such agreement was not
entered into in contemplation of such Person becoming a Restricted Subsidiary and (xi) restrictions
on cash or other deposits imposed by customers under contracts entered into in the ordinary course
of business.
7.14 Lines of Business. Enter into any business, either directly or through any of
its Restricted Subsidiaries, except for the Business or a business reasonably related thereto or
that are reasonable extensions thereof.
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7.15 Limitation on Hedge Agreements. Enter into any Hedge Agreement other than Hedge
Agreements entered into in the ordinary course of business, and not for speculative purposes.
7.16 Changes in Jurisdictions of Organization; Name. Other than pursuant to the
Transactions, in the case of any Loan Party, change its name or change its jurisdiction of
organization, in either case except upon prompt written notice to the Collateral Agent and delivery
to the Collateral Agent, of all additional executed financing statements, financing change
statements and other documents reasonably requested by the Collateral Agent to maintain the
validity, perfection and priority of the security interests provided for in the Security Documents.
7.17 Limitation on Activities of Holdings. In the case of Holdings only,
notwithstanding anything to the contrary in this Agreement or any other Loan Document, Holdings
shall not, so long as the Commitments remain in effect, any Letter of Credit remains outstanding
(that has not been cash collateralized or backstopped, in each case on terms agreed to by the
Borrower and the applicable Issuing Lender) or any Loan or other amount is owing to any Lender or
any Agent hereunder (other than (i) contingent or indemnification obligations not then due and (ii)
obligations in respect of Specified Hedge Agreements and Cash Management Obligations): conduct,
transact or otherwise engage in, or commit to conduct, transact or otherwise engage in, any
business or operations other than (i) those incidental to its ownership of the Capital Stock of the
Borrower and the Subsidiaries of the Borrower and those incidental to Investments by or in Holdings
permitted hereunder, (ii) activities incidental to the maintenance of its existence and compliance
with applicable laws and legal, tax and accounting matters related thereto and activities relating
to its employees, (iii) activities relating to the performance of obligations under the Loan
Documents and the Mezzanine Loan Documents to which it is a party or expressly permitted
thereunder, (iv) the making of Restricted Payments to the extent of Restricted Payments permitted
to be made to Holdings pursuant to Section 7.6, (v) the receipt and payment of Restricted Payments
permitted under Section 7.6, (vi) those related to the Transactions and in connection with the
Merger Documents and other agreements contemplated thereby or hereby, (vii) to the extent that
Section 7 expressly permits the Borrower or a Restricted Subsidiary to enter into a transaction
with Holdings, (viii) activities in connection with or in preparation for an initial public
offering and (ix) activities incidental to the foregoing activities.
SECTION 8. EVENTS OF DEFAULT
8.1 Events of Default. If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay (i) any principal of any Loan when due in accordance
with the terms hereof, (ii) any principal of any Reimbursement Obligation within three
Business Days after any such Reimbursement Obligation becomes due in accordance with the
terms hereof or (iii) any interest owed by it on any Loan or Reimbursement Obligation, or
any other amount payable by it hereunder or under any other Loan Document, within five
Business Days after any such interest or other amount becomes due in accordance with the
terms hereof; or
(b) (i) On the Closing Date, any Specified Representation, and (ii) at any time after
the Closing Date, any representation or warranty made or deemed made by any Loan Party
herein or in any other Loan Document or that is contained in any certificate, document or
financial or other statement furnished by it at any time under or in connection with this
Agreement or any such other Loan Document, shall in either case prove to have been
inaccurate in any material respect and such inaccuracy is adverse to the Lenders on or as of
the date made or deemed made or furnished; or
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(c) Any Loan Party shall default in the observance or performance of any agreement
contained in Section 6.7(a) or Section 7; provided that, any Event of Default under
Section 7.1 is subject to cure as contemplated by Section 8.2; or
(d) Any Loan Party shall default in the observance or performance of any other
agreement contained in this Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section 8.1), and such default shall continue
unremedied for a period of 30 days after the earlier of the date that (x) such Loan Party
receives from the Administrative Agent or the Required Lenders notice of the existence of
such default or (y) a Responsible Officer of such Loan Party has knowledge thereof; or
(e) Holdings, the Borrower or any of its Restricted Subsidiaries shall (i) default in
making any payment of any principal of any Indebtedness for Borrowed Money (excluding the
Loans and Reimbursement Obligations) on the scheduled or original due date with respect
thereto; or (ii) default in making any payment of any interest on any such Indebtedness for
Borrowed Money beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness for Borrowed Money was created; or (iii) default in the
observance or performance of any other agreement or condition relating to any such
Indebtedness for Borrowed Money or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event of default shall occur, the effect of which
payment or other default or other event of default is to cause, or to permit the holder or
beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such Indebtedness for Borrowed
Money to become due prior to its stated maturity or to become subject to a mandatory offer
to purchase by the obligor thereunder or to become payable; provided that (A) a
default, event or condition described in this paragraph shall not at any time constitute an
Event of Default unless, at such time, one or more defaults or events of default of the type
described in this paragraph shall have occurred and be continuing with respect to
Indebtedness for Borrowed Money the outstanding principal amount of which individually
exceeds $25,000,000, and in the case of Indebtedness for Borrowed Money of the types
described in clauses (i) and (ii) of the definition thereof, with respect to such
Indebtedness which exceeds such amount either individually or in the aggregate and (B) this
paragraph (e) shall not apply to (i) secured Indebtedness that becomes due as a result of
the sale, transfer, destruction or other disposition of the Property or assets securing such
Indebtedness for Borrowed Money if such sale, transfer, destruction or other disposition is
not prohibited hereunder and under the documents providing for such Indebtedness or (ii) any
Guarantee Obligations except to the extent such Guarantee Obligations shall become due and
payable by any Loan Party and remain unpaid after any applicable grace period or period
permitted following demand for the payment thereof; or
(f) (i) Holdings, the Borrower or any of its Restricted Subsidiaries (other than any
Immaterial Subsidiary) shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or Holdings, the Borrower or any of its Restricted
Subsidiaries (other than any Immaterial Subsidiary) shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against Holdings, the Borrower or
any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) any case,
proceeding or other action of a nature referred to in clause (i) above that (A) results in
the entry of an order for
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relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against Holdings, the Borrower or any of its Restricted Subsidiaries (other than
any Immaterial Subsidiary) any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against substantially all of
its assets that results in the entry of an order for any such relief that shall not have
been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) Holdings, the Borrower or any of its
Restricted Subsidiaries (other than any Immaterial Subsidiary) shall consent to or approve
of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or
(v) Holdings, the Borrower or any of its Restricted Subsidiaries (other than any Immaterial
Subsidiary) shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) Holdings, the Borrower or any of its Restricted Subsidiaries shall incur any
liability in connection with any “prohibited transaction” (as defined in Section 406 of
ERISA or Section 4975 of the Code) involving any Plan, (ii) a failure to meet the minimum
funding standards (as defined in Section 302(a) of ERISA), whether or not waived, shall
exist with respect to any Single Employer Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of Holdings, the Borrower or any of its Restricted Subsidiaries,
(iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have
a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or appointment
of a trustee is reasonably likely to result in the termination of such Single Employer Plan
for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate in a
distress termination under Section 4041(c) of ERISA or in an involuntary termination by the
PBGC under Section 4042 of ERISA, (v) Holdings, the Borrower or any of its Restricted
Subsidiaries shall, or is reasonably likely to, incur any liability as a result of a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a Plan or a Commonly
Controlled Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, could reasonably be
expected to result in a direct obligation of Holdings, the Borrower or any of its Restricted
Subsidiaries to pay money that could have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against Holdings, the Borrower or
any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) involving for
Holdings, the Borrower and any such Restricted Subsidiaries taken as a whole a liability
(not paid or fully covered by third-party insurance or effective indemnity) of $25,000,000
(net of any amounts which are covered by insurance or an effective indemnity) or more, and
all such judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 30 days from the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any reason (other than by reason
of the express release thereof in accordance with the terms thereof) to be in full force and
effect or shall be asserted in writing by the Borrower or any Subsidiary Guarantor not to be
a legal, valid and binding obligation of any party thereto, (ii) any security interest
purported to be created by any Security Document and to extend to Collateral that is not
immaterial to the Borrower and its Restricted Subsidiaries on a consolidated basis shall
cease to be, or shall be asserted in writing by any Loan Party not to be, a valid and
perfected security interest (having the priority required by this Agreement or the relevant
Security Document) in the securities, assets or properties covered thereby, except to the
extent that (x) any such loss of perfection or priority results from
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limitations of foreign laws, rules and regulations as they apply to pledges of Capital Stock in Foreign
Subsidiaries or the application thereof, or from the failure of the Collateral Agent to
maintain possession of certificates actually delivered to it representing securities pledged
under the Guarantee and Collateral Agreement or to file UCC continuation statements, (y)
such loss is covered by a lender’s title insurance policy and the Administrative Agent shall
be reasonably satisfied with the credit of such insurer or (z) any such loss of validity,
perfection or priority is the result of any failure by the Collateral Agent to take any action necessary to secure
the validity, perfection or priority of the liens or (iii) the Guarantees pursuant to the
Security Documents by any Loan Party of any of the Obligations shall cease to be in full
force and effect (other than in accordance with the terms thereof), or shall be asserted in
writing by any Loan Party not to be in effect or not to be legal, valid and binding
obligations; or
(j) (i) Holdings shall cease to own, directly or indirectly, 100% of the Capital Stock
of the Borrower; or (ii) at any time before Holdings’ or any Parent Company’s Capital Stock
is traded on a nationally-recognized stock exchange, the Permitted Investors shall cease to
own, directly or indirectly, at least 51% of the Capital Stock of Holdings; or (iii) at any
time after Holdings’ or any Parent Company’s Capital Stock is traded on a
nationally-recognized stock exchange and for any reason whatsoever, (x) a majority of the
Board of Directors of Holdings shall not be Continuing Directors or (y) the Permitted
Investors shall cease to own, directly or indirectly, at least 35% of the Capital Stock of
Holdings and any other “person” or “group” (within the meaning of Rule 13d-5 of the
Securities Exchange Act of 1934 as in effect on the Closing Date) shall own a greater amount
(it being understood that if any such person or group includes one or more Permitted
Investors, the shares of Capital Stock of Holdings directly or indirectly owned by the
Permitted Investors that are part of such person or group shall not be treated as being
owned by such person or group for purposes of determining whether this clause (y) is
triggered) (any of the foregoing, a “Change of Control”);
then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or
(ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall
immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts
owing under this Agreement and the other Loan Documents shall immediately become due and payable,
and (B) if such event is any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare
the Revolving Commitments to be terminated forthwith, whereupon the Revolving Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the
Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents to be due and payable forthwith, whereupon the
same shall immediately become due and payable. In the case of all Letters of Credit with respect
to which presentment for honor shall not have occurred at the time of an acceleration pursuant to
this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the
Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused
portion thereof after all such Letters of Credit shall have expired or been backstopped or been
fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and
under the other Loan Documents. After all such Letters of Credit shall have expired or been fully
drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower then due and owing hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or
such other Person as
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may be lawfully entitled thereto). Except as expressly provided above in this
Section 8.1 or otherwise in any Loan Document, presentment, demand and protest of any kind are
hereby expressly waived by Holdings and the Borrower.
8.2 Specified Equity Contributions. For purposes of determining compliance with Section 7.1 only (and not any other provision
of this Agreement, including any such other provision that utilizes a calculation of Consolidated
EBITDA), any equity contribution (other than Disqualified Capital Stock) made by Holdings or any of
the other direct or indirect equityholders of the Borrower to the Borrower, on or after the Closing
Date and on or prior to the day that is 10 Business Days after the day on which financial
statements are required to be delivered for such fiscal quarter pursuant to Section 6.1 shall, at
the request of the Borrower, be deemed to increase, dollar for dollar, Consolidated EBITDA for such
fiscal quarter for the purposes of determining compliance with Section 7.1 at the end of such
fiscal quarter and applicable subsequent periods (it being understood that each such contribution
shall be effective as to such fiscal quarter for all periods in which such fiscal quarter is
included) (any such equity contribution so included in the calculation of Consolidated EBITDA, a
“Specified Equity Contribution”); provided that (a) in each four fiscal quarter
period there shall be a period of at least three fiscal quarters in which no Specified Equity
Contribution is made, (b) the amount of any Specified Equity Contribution shall be no greater than
the amount required to cause the Borrower to be in compliance with Section 7.1, (c) no more than
four Specified Equity Contributions may be made in the aggregate prior to the Tranche B Term Loan
Maturity Date, (d) Specified Equity Contributions shall not be included in cash, Cash Equivalents
and Permitted Liquid Investments for purposes of calculating Consolidated Total Leverage and (e)
all Specified Equity Contributions shall be disregarded for any purpose under this Agreement other
than determining compliance with Section 7.1.
If, after the making of the Specified Equity Contribution and the recalculations of
Consolidated EBITDA pursuant to the preceding paragraph, the Borrower shall then be in compliance
with the requirements of Section 7.1, the Borrower shall be deemed to have satisfied the
requirements of such covenant as of the relevant date of determination with the same effect as
though there had been no failure to comply therewith at such date, and the applicable Event of
Default that had occurred shall be deemed cured.
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and appoints each Agent as
the agent of such Lender under the Loan Documents and each such Lender irrevocably authorizes each
Agent, in such capacity, to take such action on its behalf under the provisions of the applicable
Loan Documents and to exercise such powers and perform such duties as are expressly delegated to
such Agent by the terms of the applicable Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agents shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other
Loan Document or otherwise exist against the Agents.
9.2 Delegation of Duties. Each Agent may execute any of its duties under the
applicable Loan Documents by or through any of its branches, agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such duties. Neither Agent
shall be responsible for the negligence or misconduct of any agents or attorneys in-fact selected
by it with reasonable care.
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9.3 Exculpatory Provisions. Neither any Agent nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any other Loan Document
(except to the extent that any of the foregoing are found by a final and nonappealable decision of
a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer thereof contained
in this Agreement or any other Loan Document or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agents under or in connection with,
this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of
any Loan Party a party thereto to perform its obligations hereunder or thereunder. The Agents
shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the properties, books or records of any Loan Party.
9.4 Reliance by the Agents. The Agents shall be entitled to rely, and shall be fully
protected in relying, upon any instrument, writing, resolution, notice, consent, certificate,
affidavit, letter, telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel (including counsel to
Holdings), independent accountants and other experts selected by the Agents. The Agents may deem
and treat the payee of any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent.
The Agents shall be fully justified in failing or refusing to take any action under the applicable
Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or,
if so specified by this Agreement, all Lenders or the Majority Facility Lenders in respect of any
Facility) as it deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. The Agents shall in all cases be fully protected in acting, or
in refraining from acting, under the applicable Loan Documents in accordance with a request of the
Required Lenders (or, if so specified by this Agreement, all Lenders or the Majority Facility
Lenders in respect of any Facility), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.
9.5 Notice of Default. Neither Agent shall be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default unless such Agent has received written notice
from a Lender, Holdings or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a “notice of default”. In the event that an Agent
receives such a notice, such Agent shall give notice thereof to the Lenders. The Agents shall take
such action with respect to such Default or Event of Default as shall be reasonably directed by the
Required Lenders (or, if so specified by this Agreement, all Lenders or the Majority Facility
Lenders in respect of any Facility); provided that unless and until such Agent shall have
received such directions, such Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that neither the Agents nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter taken, including any
review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to
constitute any representation or warranty by any Agent to any Lender. Each Lender represents to the
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Agents that it has, independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, Property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates and made its own decision to make its
Loans hereunder and enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under the applicable Loan Documents, and to
make such investigation as it deems necessary to inform itself as to the business, operations,
Property, financial and other condition and creditworthiness of the Loan Parties and their
affiliates. Except for notices, reports and other documents expressly required to be furnished to
the Lenders by the Agents hereunder, the Agents shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business, operations,
Property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or
any affiliate of a Loan Party that may come into the possession of either Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent and any Issuing Lender
in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective Aggregate Exposure
Percentages in effect on the date on which indemnification is sought under this Section 9.7 (or, if
indemnification is sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages
immediately prior to such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on,
incurred by or asserted against such Agent or any Issuing Lender in any way relating to or arising
out of, the Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by such Agent or any Issuing Lender under or in connection with any
of the foregoing; provided that no Lender shall be liable for the payment of any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Agent’s or any Issuing Lender’s gross negligence
or willful misconduct. The agreements in this Section 9.7 shall survive the payment of the Loans
and all other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its affiliates may make loans to,
accept deposits from and generally engage in any kind of business with any Loan Party as though
such Agent were not an Agent. With respect to its Loans made or renewed by it and with respect to
any Letter of Credit issued or participated in by it, each Agent shall have the same rights and
powers under the applicable Loan Documents as any Lender and may exercise the same as though it
were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual
capacity.
9.9 Successor Agents. Any Agent may resign upon 30 days’ notice to the Lenders, the
Borrower and the other Agent effective upon appointment of a successor Agent. Upon receipt of any
such notice of resignation, the Required Lenders shall appoint from among the Lenders a successor
agent for the Lenders, which successor agent shall (unless an Event of Default under Section 8.1(a)
or Section 8.1(f) with respect to the Borrower shall have occurred and be continuing) be subject to
approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon
such successor agent shall succeed to the rights, powers and duties of such retiring Agent, and the
retiring Agent’s rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on
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the part of such retiring Agent or any of the parties to this Agreement or any holders of the
Loans. If no successor Agent shall have been so appointed by the Required Lenders with such
consent of the Borrower and shall have accepted such appointment within 30 days after the retiring
Agent’s giving of notice of resignation, then the retiring Agent may, on behalf of the Lenders and
with the consent of the Borrower (such consent not to be unreasonably withheld or delayed), appoint
a successor Agent, that shall be a bank that has an office in New York, New York with a combined
capital and surplus of at least $500,000,000. After any retiring Agent’s resignation as Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement and the other Loan Documents.
9.10 Authorization to Release Liens and Guarantees. The Agents are hereby irrevocably
authorized by each of the Lenders to effect any release or subordination of Liens or Guarantee
Obligations contemplated by Section 10.15.
9.11 Joint Bookrunners and Co-Manager. None of the Joint Bookrunners or the Co-Manager
shall have any duties or responsibilities hereunder in their respective capacities as such.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. (a) Subject to Section 2.25, neither this Agreement, any
other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified
except in accordance with the provisions of this Section 10.1. The Required Lenders and each Loan
Party party to the relevant Loan Document may, or, with the written consent of the Required
Lenders, the Agents and each Loan Party party to the relevant Loan Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or
changing in any manner the rights or obligations of the Agents, the Swingline Lender, the Issuing
Lenders, the Lenders or of the Loan Parties or their Subsidiaries hereunder or thereunder or (b)
waive, on such terms and conditions as the Required Lenders or the Agents may specify in such
instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver and
no such amendment, supplement or modification shall (i) forgive or reduce the principal amount or
extend the final scheduled date of maturity of any Loan, extend the scheduled date or reduce the
amount of any amortization payment in respect of any Term Loan, reduce the stated rate of any
interest, fee or premium payable hereunder (except (A) in connection with the waiver of
applicability of any post-default increase in interest rates (which waiver shall be effective with
the consent of the Required Lenders) and (B) that any amendment or modification of defined terms
used in the financial ratios in this Agreement shall not constitute a reduction in the rate of
interest or fees for purposes of this clause (i)) or extend the scheduled date of any payment
thereof, or increase the amount or extend the expiration date of any Lender’s Commitment, in each
case without the written consent of each Lender directly and adversely affected thereby; (ii)
amend, modify or waive any provision of paragraph (a) of this Section 10.1 without the written
consent of all Lenders; (iii) reduce any percentage specified in the definition of Required
Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement and the other Loan Documents, release all or substantially all of the
Collateral or release all or substantially all of the Guarantors from their obligations under the
Guarantee and Collateral Agreement, in each case without the written consent of all Lenders (other
than to the extent permitted by Section 7.4); (iv) amend, modify or waive any provision of
paragraph (a) or (c) of Section 2.18 without the written consent of all Lenders adversely affected thereby; (v) amend, modify
or waive any provision of paragraph (b) of Section 2.18 without the written consent of the Majority
Facility Lenders in respect of each Facility adversely affected thereby; (vi) reduce the percentage
specified in the definition of Majority Facility Lenders with respect to any
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Facility without the written consent of all Lenders under such Facility; (vii) amend, modify or waive any provision of
Section 9 without the written consent of the Agents; (viii) amend, modify or waive any provision of
Section 2.6 or 2.7 with respect to Swingline Loans without the written consent of the Swingline
Lender; (ix) amend, modify or waive any provision of Section 3 without the written consent of the
Issuing Lenders; or (x) amend the definition of “Change of Control” or amend, modify or waive the
provisions of Section 8.1(j) without the written consent of Lenders holding more than 66-2/3% of
the sum of (x) the aggregate unpaid principal amount of the Term Loans then outstanding and (y) the
Revolving Commitments then in effect or, if the Revolving Commitments have been terminated, the
Revolving Extensions of Credit then outstanding. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall be binding upon the
Loan Parties, the Lenders, the Agents and all future holders of the Loans. In the case of any
waiver, the Loan Parties, the Lenders and the Agents shall be restored to their former position and
rights hereunder and under the other Loan Documents, and any Default or Event of Default waived
shall be deemed to be cured and not continuing unless limited by the terms of such waiver; but no
such waiver shall extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.
(b) Notwithstanding the foregoing, this Agreement may be amended (or amended and restated)
with the written consent of the Required Lenders, the Agents, Holdings and the Borrower (a) to add
one or more additional credit facilities to this Agreement (it being understood that no Lender
shall have any obligation to provide or to commit to provide all or any portion of any such
additional credit facility) and to permit the extensions of credit from time to time outstanding
thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of
this Agreement and the other Loan Documents with the Term Loans and Revolving Extensions of Credit
and the accrued interest and fees in respect thereof and (b) to include appropriately, after the
effectiveness of any such amendment (or amendment and restatement), the Lenders holding such credit
facilities in any determination of the Required Lenders and Majority Facility Lenders, as
applicable.
(c) In addition, notwithstanding the foregoing, this Agreement may be amended with the
written consent of the Agents, Holdings, the Borrower and the Lenders providing the relevant
Replacement Term Loans (as defined below) to permit the refinancing of all outstanding Term Loans
of any Tranche (“Refinanced Term Loans”) with a replacement term loan tranche hereunder
(“Replacement Term Loans”); provided that (a) the aggregate principal amount of
such Replacement Term Loans shall not exceed the aggregate principal amount of such Refinanced Term
Loans, (b) the Applicable Margin for such Replacement Term Loans shall not be higher than the
Applicable Margin for such Refinanced Term Loans, (c) the weighted average life to maturity of such
Replacement Term Loans shall not be shorter than the weighted average life to maturity of such
Refinanced Term Loans at the time of such refinancing and (d) all other terms applicable to such
Replacement Term Loans shall be substantially identical to, or less favorable to the Lenders
providing such Replacement Term Loans than, those applicable to such Refinanced Term Loans, except
to the extent necessary to provide for covenants and other terms applicable to any period after the
latest final maturity of the Term Loans in effect immediately prior to such refinancing.
(d) Furthermore, notwithstanding the foregoing, if following the Closing Date, the
Administrative Agent and the Borrower shall have jointly identified an obvious error or any error
or omission of a technical or immaterial nature, in each case, in any provision of this Agreement
or any other Loan Document, then the Administrative Agent and the Borrower shall be permitted to
amend such provision and such amendment shall become effective without any further action or
consent of any other party to this Agreement or any other Loan Document if the same is not objected to in writing
by the Required Lenders within five Business Days following receipt of notice thereof; it being
understood that posting such amendment electronically on IntraLinks/IntraAgency or another relevant
website with notice
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of such posting by the Administrative Agent to the Required Lenders shall be
deemed adequate receipt of notice of such amendment.
10.2 Notices. (a) All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered, or three Business
Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of Holdings, the Borrower, the Agents, and as set forth
in an administrative questionnaire delivered to the Administrative Agent in the case of the
Lenders, or to such other address as may be hereafter notified by the respective parties hereto:
Holdings:
|
Booz Allen Hamilton Inc. | |
| 8283 Greensboro Drive | ||
| McLean VA 22102 | ||
| Attention: Sam Strickland | ||
| Telecopy: (703) 902-3011 | ||
| Telephone: (703) 902-4700 | ||
| in each case with a copy to: | ||
| The Carlyle Group | ||
| 1001 Pennsylvania Avenue, NW | ||
| Washington, DC 20004 | ||
| Attention: Ian Fujiyama | ||
| Telecopy: (202) 347-9250 | ||
| Telephone: (202) 729-5426 | ||
With a copy to:
|
Debevoise & Plimpton LLP | |
| 919 Third Avenue | ||
| New York, NY 10022 | ||
| Attention: Pierre Maugüé | ||
| Telecopy: (212) 521-7643 | ||
| Telephone: (212) 909-6643 | ||
The Borrower:
|
Booz Allen Hamilton Inc. | |
| 8283 Greensboro Drive | ||
| McLean VA 22102 | ||
| Attention: Sam Strickland | ||
| Telecopy: (703) 902-3011 | ||
| Telephone: (703) 902-4700 | ||
| in each case with a copy to: | ||
| The Carlyle Group | ||
| 1001 Pennsylvania Avenue, NW | ||
| Washington, DC 20004 | ||
| Attention: Ian Fujiyama | ||
| Telecopy: (202) 347-9250 | ||
| Telephone: (202) 729-5426 |
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With a copy to:
|
Debevoise & Plimpton LLP | |
| 919 Third Avenue | ||
| New York, NY 10022 | ||
| Attention: Pierre Maugüé | ||
| Telecopy: (212) 521-7643 | ||
| Telephone: (212) 909-6643 | ||
Agents:
|
Credit Suisse AG, Cayman Islands Branch | |
| One Madison Avenue, New York, NY 10010 | ||
| Attention: Agency Manager | ||
| Telecopy: (212) 322-2291 | ||
| Email: agency.loanops@credit-suisse.com |
provided that any notice, request or demand to or upon the Agents, the Lenders, Holdings or
the Borrower shall not be effective until received.
(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent;
provided that the foregoing shall not apply to notices pursuant to Section 2 unless
otherwise agreed by the Administrative Agent and the applicable Lender. The Agents, Holdings or
the Borrower may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or communications.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on
the part of any Agent or any Lender, any right, remedy, power or privilege hereunder or under the
other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
10.4 Survival of Representations and Warranties. All representations and warranties made
hereunder, in the other Loan Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and delivery of this
Agreement and the making of the Loans and other extensions of credit hereunder.
10.5 Payment of Expenses; Indemnification. Except with respect to Taxes which are
addressed in Section 2.20, the Borrower agrees (a) to pay or reimburse each Agent for all of its
reasonable and documented out-of-pocket costs and expenses incurred in connection with the
syndication of the Facilities (other than fees payable to syndicate members) and the development,
preparation, execution and delivery of this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith and any amendment, supplement or modification thereto, and, as to the Agents only, the administration
of the transactions contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements and other charges of a single firm of counsel to the Agents (plus one firm
of special regulatory counsel and one firm of local counsel per material jurisdiction as may
reasonably be necessary in connection with collateral matters) in connection with all of the
foregoing, (b) to pay or reimburse each Lender and each Agent for all their reasonable and
documented out-of-pocket costs and expenses incurred in connection with the enforcement of any
rights under this Agreement, the other Loan Documents and any such other documents, including,
without limitation, the
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documented fees and disbursements of a single firm of counsel and, if necessary, a single firm of special regulatory counsel and a single firm of local counsel per
material jurisdiction as may reasonably be necessary, for the Agents and the Lenders, taken as a
whole, and (c) to pay, indemnify or reimburse each Lender, each Agent, each Issuing Lender, each
Lead Arranger, each Joint Bookrunner, the Co-Manager and their respective affiliates, and their
respective officers, directors, employees, trustees, advisors, agents and controlling Persons
(each, an “Indemnitee”) for, and hold each Indemnitee harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, costs, expenses or disbursements
arising out of any actions, judgments or suits of any kind or nature whatsoever, arising out of or
in connection with any claim, action or proceeding relating to or otherwise with respect to the
execution, delivery, enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including, without limitation, any of the foregoing
relating to the use of proceeds of the Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of the Borrower, any of its Subsidiaries
or any of the Properties and the fees and disbursements and other charges of legal counsel in
connection with claims, actions or proceedings by any Indemnitee against Holdings or the Borrower
hereunder (all the foregoing in this clause (c), collectively, the “Indemnified
Liabilities”); provided that, neither Holdings nor the Borrower shall have any
obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities are found by a court of competent jurisdiction to have resulted from (i)
the gross negligence, bad faith or willful misconduct of such Indemnitee or its Related Persons,
(ii) a material breach of the Loan Documents by such Indemnitee or its Related Persons or (iii)
disputes solely among Indemnitees or their Related Persons (it being understood that this clause
(iii) shall not apply to the indemnification of an Agent or Lead Arranger in a suit involving an
Agent or Lead Arranger in its capacity as such). For purposes hereof, a “Related Person” of an
Indemnitee means (i) if the Indemnitee is any Agent or any of its affiliates or their respective
officers, directors, employees, agents and controlling Persons, any of such Agent and its
affiliates and their respective officers, directors, employees, agents and controlling Persons, and
(ii) if the Indemnitee is any Lender or any of its affiliates or their respective officers,
directors, employees, agents and controlling Persons, any of such Lender and its affiliates and
their respective officers, directors, employees, agents and controlling Persons. All amounts due
under this Section 10.5 shall be payable promptly after receipt of a reasonably detailed invoice
therefor. Statements payable by the Borrower pursuant to this Section 10.5 shall be submitted to
the Borrower at the address thereof set forth in Section 10.2, or to such other Person or address
as may be hereafter designated by the Borrower in a written notice to the Administrative Agent.
The agreements in this Section 10.5 shall survive repayment of the Obligations.
10.6 Successors and Assigns; Participations and Assignments. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any affiliate of any Issuing Lender that issues
any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no
Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance
with this Section 10.6.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may, in
compliance with applicable law, assign (other than to any Disqualified Institution or a natural
person) to one or more assignees (each, an “Assignee”), all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitments and the Loans at
the time owing to it) with the prior written consent (such consent not to be unreasonably withheld
or delayed) of:
(A) the Borrower; provided that no consent of the Borrower shall be required
for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund (as defined
below), or, if an
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Event of Default under Section 8.1(a) or 8.1(f) has occurred and is
continuing, any other Person; and
(B) the Administrative Agent; provided that no consent of the Administrative
Agent shall be required for an assignment to (x) a Lender, an Affiliate of a Lender or an
Approved Fund or (y) Holdings, the Borrower or a Subsidiary of the Borrower in connection
with a purchase of Term Loans pursuant to Section 2.11(c); and
(C) in the case of an assignment under the Revolving Facility, each Issuing Lender and
the Swingline Lender.
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s
Commitments or Loans under any Facility, the amount of the Commitments or Loans of the
assigning Lender subject to each such assignment (determined as of (I) the date the
Assignment and Assumption with respect to such assignment is delivered to the Administrative
Agent or (II) if earlier, the “trade date” (if any) specified in such Assignment and
Assumption) shall not be less than (x) $5,000,000, in the case of the Revolving Facility or
(y) $1,000,000, in the case of the Tranche A Term Facility or the Tranche B Term Facility,
unless the Borrower and the Administrative Agent otherwise consent; provided that
(1) no such consent of the Borrower shall be required if an Event of Default under Section
8.1(a) or 8.1(f) has occurred and is continuing and (2) such amounts shall be aggregated in
respect of each Lender and its Affiliates or Approved Funds, if any;
(B) the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption via an electronic settlement system acceptable to the
Administrative Agent and the Borrower (or, at the Borrower’s request, manually) together
with a processing and recordation fee of $3,500 (which fee may be waived or reduced in the
sole discretion of the Administrative Agent); provided that only one such fee shall
be payable in the case of contemporaneous assignments to or by two or more related Approved
Funds; and
(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an administrative questionnaire and all applicable tax forms; provided that
the provisions of this clause (ii) shall not apply to an assignment to Holdings or a
Subsidiary of the Borrower in connection with a purchase of Term Loans pursuant to Section
2.11(c).
For the purposes of this Section 10.6, “Approved Fund” means any Person (other than a
natural person) that is engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course and that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) (i) an entity or an Affiliate of an entity that
administers or manages a Lender or (ii) an entity or an Affiliate of an entity that is the
investment advisor to a Lender. Notwithstanding the
foregoing, no Lender shall be permitted to make assignments under this Agreement to any
Disqualified Institutions.
(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below,
from and after the effective date specified in each Assignment and Assumption the Assignee
thereunder shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under this Agreement,
and the
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assigning Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement (and, in
the case of an Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto but shall
continue to be subject to the obligations under and entitled to the benefits of Sections
2.19, 2.20, 2.21 and 10.5). Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this Section 10.6 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section 10.6 (and will be required to
comply therewith).
(iv) The Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption delivered to
it and a register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). Holdings, the
Borrower, the Administrative Agent, the Issuing Lenders, the Swingline Lender and the
Lenders may treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement (and the entries in the
Register shall be conclusive absent demonstrable error for such purposes), notwithstanding
notice to the contrary. The Register shall be available for inspection by Holdings, the
Borrower, the Issuing Lenders, the Swingline Lender and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an Assignee, the Assignee’s completed administrative questionnaire
(unless the Assignee shall already be a Lender hereunder) and all applicable tax forms, the
processing and recordation fee referred to in paragraph (b) of this Section 10.6 and any
written consent to such assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Assumption and promptly record the
information contained therein in the Register. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as provided in this
paragraph.
(c) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent, in
compliance with applicable law, sell participations (other than to any Disqualified Institution) to
one or more banks or other entities (a “Participant”), in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its Commitments and the
Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall
remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations and (C) the Borrower, the Administrative Agent, the Issuing
Lenders, the Swingline Lender and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this Agreement. Any
agreement pursuant to which a Lender sells such a participation shall provide that such Lender
shall retain the sole right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement may provide that
such Lender will not, without the consent of the Participant, agree to any amendment, modification
or waiver that (1) requires the consent of each Lender directly and adversely
affected thereby pursuant to the proviso to the second sentence of Section 10.1 and (2)
directly affects such Participant. Subject to paragraph (c)(ii) of this Section 10.6, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 2.19, 2.20 and 2.21 (if
such Participant agrees to have related obligations thereunder) to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 10.6.
Notwithstanding the foregoing, no Lender shall be permitted to sell participations under this
Agreement to any Disqualified Institutions.
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(ii) A Participant shall not be entitled to receive any greater payment under Section
2.19 or 2.20 than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent to such greater amounts. No
Participant shall be entitled to the benefits of Section 2.20 unless such Participant
complies with Section 2.20(d) or (e), as (and to the extent) applicable, as if such
Participant were a Lender.
(d) Any Lender may, without the consent of or notice to the Administrative Agent or the
Borrower, at any time pledge or assign a security interest in all or any portion of its rights
under this Agreement to secure obligations of such Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Bank, and this Section 10.6 shall not apply to any such
pledge or assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or Assignee for such Lender as a party hereto.
(e) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue
Notes to any Lender requiring the same (in the case of an assignment, following surrender by the
assigning Lender of all Notes representing its assigned interests).
(f) The Borrower may prohibit any assignment if it would require the Borrower to make any
filing with any Governmental Authority or qualify any Loan or Note under the laws of any
jurisdiction and the Borrower shall be entitled to request and receive such information and
assurances as it may reasonably request from any Lender or any Assignee to determine whether any
such filing or qualification is required or whether any assignment is otherwise in accordance with
applicable law.
(g) Notwithstanding anything to the contrary contained herein, other than pursuant to Section
2.11(c), none of Holdings, the Borrower or any of its Subsidiaries may acquire by assignment,
participation or otherwise any right to or interest in any of the Commitments or Loans hereunder
(and any such attempted acquisition shall be null and void).
10.7 Adjustments; Set-off. (a) Except to the extent that this Agreement provides for
payments to be allocated to a particular Lender or to the Lenders under a particular Facility, if
any Lender (a “Benefited Lender”) shall at any time receive any payment of all or part of
the Obligations owing to it, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by setoff, pursuant to events or proceedings of the nature referred to in Section
8.1(f), or otherwise) in a greater proportion than any such payment to or collateral received by
any other Lender, if any, in respect of such other Lender’s Obligations, such Benefited Lender
shall purchase for cash from the other Lenders a participating interest in such portion of each
such other Lender’s Obligations, or shall provide such other Lenders with the benefits of any such
collateral, as shall be necessary to cause such Benefited Lender to share the excess payment or
benefits of such collateral ratably with each of the Lenders; provided, however,
that if all or any portion of such excess payment or benefits is thereafter recovered from such
Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but
without interest.
(b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall
have the right, without prior notice to the Borrower, any such notice being expressly waived by the
Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) after the
expiration of any cure or grace periods, to set off and appropriate and apply against such amount
any and all deposits (general or special, time or demand, provisional or final but excluding trust
accounts), in any currency,
109
and any other credits, indebtedness or claims, in any currency, in each
case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any affiliate, branch or agency thereof to or for the credit or the account
of the Borrower. Each Lender agrees promptly to notify the Borrower and the Administrative Agent
after any such setoff and application made by such Lender; provided that the failure to
give such notice shall not affect the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts taken together shall
be deemed to constitute one and the same instrument. Delivery of an executed signature page of
this Agreement by facsimile or electronic (i.e., “pdf”) transmission shall be effective as delivery
of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
10.9 Severability. Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents represent the entire
agreement of Holdings, the Borrower, the Agents and the Lenders with respect to the subject matter
hereof and thereof.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE SAME
ARE NOT MANDATORILY APPLICABLE BY STATUTE AND THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION
WOULD BE REQUIRED THEREBY.
10.12 Submission to Jurisdiction; Waivers. Each of Holdings and the Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or proceeding relating to
this Agreement and the other Loan Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of
the courts of the State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to it at its address set forth in Section 10.2 or at such other
address of which the Administrative Agent shall have been notified pursuant thereto;
110
(d) agrees that nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to sue in any other jurisdiction;
and
(e) waives, to the maximum extent not prohibited by law, any right it may have to claim
or recover in any legal action or proceeding referred to in this Section 10.12 any special,
exemplary, punitive or consequential damages.
10.13 Acknowledgments. Each of Holdings and the Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents;
(b) neither the Agents nor any Lender has any fiduciary relationship with or duty to
either of Holdings or the Borrower arising out of or in connection with this Agreement or
any of the other Loan Documents, and the relationship between the Agents and Lenders, on one
hand, and Holdings and the Borrower, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Lenders or among
Holdings, the Borrower and the Lenders.
10.14 Confidentiality. The Agents and the Lenders agree to treat any and all information,
regardless of the medium or form of communication, that is disclosed, provided or furnished,
directly or indirectly, by or on behalf of Holdings or any of its affiliates in connection with
this Agreement or the transactions contemplated hereby whether furnished before or after the
Closing Date (“Confidential Information”), strictly confidential and not to use
Confidential Information for any purpose other than evaluating the
Merger Transactions and negotiating, making available, syndicating and administering this
Agreement (the “Agreed Purposes”). Without limiting the foregoing, each Agent and each
Lender agrees to treat any and all Confidential Information with adequate means to preserve its
confidentiality, and each Agent and each Lender agrees not to disclose Confidential Information, at
any time, in any manner whatsoever, directly or indirectly, to any other Person whomsoever, except
(1) to its directors, officers, employees, counsel, advisors, trustees, affiliates and other
representatives (collectively, the “Representatives”), to the extent necessary to permit
such Representatives to assist in connection with the Agreed Purposes (it being understood that the
Representatives to whom such disclosure is made will be informed of the confidential nature of such
Confidential Information and instructed to keep such Confidential Information confidential), (2) to
any pledgee referred to in Section 10.6(d) and prospective Lenders and participants in connection
with the syndication (including secondary trading) of the Facilities and Commitments and Loans
hereunder, in each case who are informed of the confidential nature of the information and agree to
observe and be bound by standard confidentiality terms, (3) upon the request or demand of any
Governmental Authority having or purporting to have jurisdiction over it, (4) in response to any
order of any Governmental Authority or as may otherwise be required pursuant to any Requirement of
Law, (5) to the extent reasonably required or necessary, in connection with any litigation or
similar proceeding relating to the Facilities, (6) that has been publicly disclosed other than in
breach of this Section 10.14, (7) to the National Association of Insurance Commissioners or any
similar organization or any nationally recognized rating agency that requires access to information
about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender
or in connection with examinations or audits of such Lender or (8) to the extent reasonably
required or necessary, in connection with the exercise of any remedy under the Loan Documents.
Each Agent and
111
each Lender acknowledges that (i) Confidential Information includes information that
is not otherwise publicly available and that such non-public information may constitute
confidential business information which is proprietary to the Borrower and (ii) the Borrower has
advised the Agents and the Lenders that it is relying on the Confidential Information for its
success and would not disclose the Confidential Information to the Agents and the Lenders without
the confidentiality provisions of this Agreement. All information, including requests for waivers
and amendments, furnished by the Borrower or the Administrative Agent pursuant to, or in the course
of administering, this Agreement will be syndicate-level information, which may contain material
non-public information about the Borrower and its Affiliates and their related parties or their
respective securities. Accordingly, each Lender represents to the Borrower and the Administrative
Agent that it has identified in its administrative questionnaire a credit contact who may receive
information that may contain material non-public information in accordance with its compliance
procedures and applicable law, including Federal and state securities laws.
10.15 Release of Collateral and Guarantee Obligations; Subordination of Liens. (a)
Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon
request of the Borrower in connection with any Disposition of Property permitted by the Loan
Documents, the Collateral Agent shall (without notice to, or vote or consent of, any Lender, or any
affiliate of any Lender that is a party to any Specified Hedge Agreement or Cash Management
Obligations or contingent or indemnification obligations not then due) take such actions as shall
be required to release its security interest in any Collateral being Disposed of in such
Disposition, and to release any Guarantee Obligations under any Loan Document of any Person being
Disposed of in such Disposition, to the extent necessary to permit consummation of such Disposition
in accordance with the Loan Documents. Any representation, warranty or covenant contained in any
Loan Document relating to any such Property so Disposed of (other than Property Disposed of to the
Borrower or any of its Restricted Subsidiaries) shall no longer be deemed to be repeated once such
Property is so Disposed of.
(b) Notwithstanding anything to the contrary contained herein or any other Loan Document, when
all Obligations (other than (x) obligations in respect of any Specified Hedge Agreement
or Cash Management Obligations and (y) any contingent or indemnification obligations not then
due) have been paid in full, all Commitments have terminated or expired and no Letter of Credit
shall be outstanding that is not cash collateralized or backstopped, upon request of Holdings or
the Borrower, the Collateral Agent shall (without notice to, or vote or consent of, any Lender, or
any affiliate of any Lender that is a party to any Specified Hedge Agreement or documentation in
respect of Cash Management Obligations) take such actions as shall be required to release its
security interest in all Collateral, and to release all Guarantee Obligations under any Loan
Document, whether or not on the date of such release there may be outstanding Obligations in
respect of Specified Hedge Agreements or Cash Management Obligations or contingent or
indemnification obligations not then due. Any such release of Guarantee Obligations shall be
deemed subject to the provision that such Guarantee Obligations shall be reinstated if after such
release any portion of any payment in respect of the Obligations guaranteed thereby shall be
rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its Property, or otherwise, all as though such
payment had not been made.
(c) Notwithstanding anything to the contrary contained herein or in any other Loan Document,
upon request of Holdings or the Borrower in connection with any Liens permitted by the Loan
Documents, the Collateral Agent shall (without notice to, or vote or consent of, any Lender) take
such actions as shall be required to subordinate the Lien on any Collateral to any Lien permitted
under Section 7.3.
112
10.16 Accounting Changes. In the event that any Accounting Change (as defined below) shall
occur and such change results in a change in the method of calculation of financial ratios,
standards or terms in this Agreement, then the Borrower and the Administrative Agent agree to enter
into negotiations in order to amend such provisions of this Agreement so as to equitably reflect
such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s
financial condition shall be the same after such Accounting Changes as if such Accounting Changes
had not been made. Until such time as such an amendment shall have been executed and delivered by
the Borrower, the Administrative Agent and the Required Lenders, all financial ratios, standards
and terms in this Agreement shall continue to be calculated or construed as if such Accounting
Changes had not occurred. “Accounting Changes” refers to changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.
10.17 WAIVERS OF JURY TRIAL. EACH OF HOLDINGS, THE BORROWER, THE AGENTS AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.18 USA PATRIOT ACT. Each Lender hereby notifies the Loan Parties that pursuant to the
requirements of the USA Patriot Act (Title III of Publ. 107-56 (signed into law October 26, 2001))
(the “Act”), it is required to obtain, verify and record information that identifies the
Loan Parties, which information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Loan Parties in accordance with the Act.
10.19 Effect of Certain Inaccuracies. In the event that any financial statement delivered
pursuant to Section 6.1(a) or (b) or any Compliance Certificate delivered pursuant to Section
6.2(b) is inaccurate, and such inaccuracy, if corrected, would have led to the application of a
higher Applicable Margin or Applicable Commitment Fee Rate for any period (an “Applicable
Period”) than the Applicable Margin or Applicable Commitment Fee Rate for such Applicable
Period, then (i) promptly following the correction of such financial statement by the Borrower, the
Borrower shall deliver to the Administrative Agent a corrected financial statement and a corrected
Compliance Certificate for such Applicable Period, (ii) the Applicable Margin and Applicable
Commitment Fee Rate for the twelve month period preceding the delivery of such corrected financial
statement and Compliance Certificate shall be determined based on the corrected Compliance
Certificate for such Applicable Period and (iii) the Borrower shall promptly pay to the
Administrative Agent the accrued additional interest or commitment fees owing as a result of such
increased Applicable Margin or Applicable Commitment Fee Rate for such twelve month period. This
Section 10.19 shall not limit the rights of the Administrative Agent or the Lenders hereunder,
including under Section 8.1.
113
Exhibit
B to
Amendment:
Amendment:
Schedule 2.1A
to Credit Agreement
to Credit Agreement
Commitments
| Existing | Additional | Tranche C | ||||||||||||||
| Revolving | Revolving | Revolving | Term | |||||||||||||
| Lender | Commitment | Commitment | Commitment | Commitment | ||||||||||||
Credit Suisse AG,
Cayman Islands
Branch |
$ | 21,250,000 | $ | 25,250,000 | $ | 46,500,000 | $ | 350,000,000 | ||||||||
Barclays Bank
PLC |
— | 26,500,000 | 26,500,000 | — | ||||||||||||
Goldman Sachs
Credit Partners
L.P. |
— | 26,500,000 | 26,500,000 | — | ||||||||||||
Morgan Stanley
Bank, N.A. |
— | 26,500,000 | 26,500,000 | — | ||||||||||||
Bank of America,
N.A. |
21,250,000 | 25,250,000 | 46,500,000 | — | ||||||||||||
Sumitomo Mitsui
Banking
Corporation |
21,250,000 | 15,000,000 | 36,250,000 | — | ||||||||||||
CIT Bank |
15,000,000 | — | 15,000,000 | — | ||||||||||||
Lehman Brothers
Inc/ Woodlands
Commercial Bank |
21,250,000 | — | 21,250,000 | — | ||||||||||||
Total |
$ | 100,000,000 | $ | 145,000,000 | $ | 245,000,000 | $ | 350,000,000 | ||||||||
Exhibit
C to
Amendment
Amendment
Schedule 4.3
to Credit Agreement
to Credit Agreement
Existence; Compliance with Law
Booz Allen Transportation Inc. is not in good standing due to overdue New York State corporate
franchise tax payments relating to its July 31, 2008 return.
EXHIBIT
D
TO AMENDMENT
TO AMENDMENT
FORM OF
TRANCHE C TERM LOAN NOTE
TRANCHE C TERM LOAN NOTE
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE
WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE
AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE
ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
| $ | New York, New York |
, 20__
FOR VALUE RECEIVED, the undersigned, Booz Allen Hamilton Inc., a Delaware corporation
(“Booz Allen”, and, together with any assignee of, or successor by merger to, Booz Allen
Hamilton Inc.’s rights and obligations under the Credit Agreement (as hereinafter defined) as
provided therein, the “Borrower”), hereby unconditionally promises to pay to
(the “Lender”) or its registered assigns at the Funding Office specified
in the Credit Agreement in Dollars and in immediately available funds, the principal amount of (a)
DOLLARS ($ ), or, if less, (b) the aggregate unpaid principal amount of all
Tranche C Term Loans owing to the Lender under the Credit Agreement. The principal amount shall be
paid in the amounts and on the dates specified in Section 2.3 of the Credit Agreement. The
Borrower further agrees to pay interest in like money at such office on the unpaid principal amount
hereof from time to time outstanding at the rates and on the dates specified in the Credit
Agreement.
This Note (a) is one of the Notes issued pursuant to the Credit Agreement, dated as of July
31, 2008 and amended and restated as of December 11, 2009 (as further amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”), among Booz
Allen Hamilton Investor Corporation (f/k/a Explorer Investor Corporation), a Delaware corporation,
the Borrower, the several banks and other financial institutions or entities from time to time
parties thereto, Credit Suisse AG, Cayman Islands Branch, as administrative agent (in such
capacity, the “Administrative Agent”) and Collateral Agent, Credit Suisse AG, Cayman
Islands Branch, as Issuing Lender, Banc of America Securities LLC and Credit Suisse Securities
(USA) LLC, as Joint Lead Arrangers, Banc of America Securities LLC, Credit Suisse Securities (USA)
LLC, Morgan Stanley Senior Funding, Inc., Goldman Sachs Credit Partners L.P., Barclays Capital, as
Joint Bookrunners, and Sumitomo Mitsui Banking Corporation, as Co-Manager, (b) is subject to the
provisions of the Credit Agreement, which are hereby incorporated by reference, (c) is subject to
optional and mandatory prepayment in whole or in part as provided in the Credit Agreement and (d)
is secured and guaranteed as provided in the Loan Documents. Reference is hereby made to the
Credit Agreement for a statement of all the terms and conditions under which the Tranche C Term
Loans evidenced hereby are made and are to be repaid. In the event of any conflict or
inconsistency between the terms of this Note and the terms of the Credit Agreement, to the fullest
extent permitted by applicable law, the terms of the Credit Agreement shall govern and be
controlling.
Upon the occurrence of any one or more Events of Default, all principal and all accrued
interest then remaining unpaid on this Note shall become, or may be declared to be, immediately due
and payable, all as and to the extent provided in the Credit Agreement. No failure in exercising
any rights
J-4-1
hereunder or under the other Loan Documents on the part of the Lender shall operate as a
waiver of such rights.
All parties now and hereafter liable with respect to this Note, whether maker, principal,
surety, guarantor, indorser or otherwise, hereby expressly waive, to the fullest extent permitted
by applicable law, presentment, demand, protest and all other similar notices or similar
requirements.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE CREDIT AGREEMENT, THIS
NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE REGISTRATION AND OTHER
PROVISIONS OF SECTION 10.6 OF THE CREDIT AGREEMENT.
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
AND THE RULES AND REGULATIONS THEREUNDER, THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT.
THE ISSUE PRICE, AMOUNT OF THE ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY OF THE
NOTE CAN BE OBTAINED BY WRITTEN REQUEST BOOZ ALLEN HAMILTON INC., CHIEF FINANCIAL OFFICER, AT 8283
GREENSBORO DRIVE, McLEAN, VA 22102.
[Remainder of page intentionally left blank]
J-4-2
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND THE LENDER HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
| BOOZ ALLEN HAMILTON INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
J-4-3
EXHIBIT E
TO AMENDMENT
TO AMENDMENT
FORM OF ACKNOWLEDGMENT AND CONFIRMATION
1. Reference is made to Amendment No. 1 to the Existing Credit Agreement, dated as of December
8, 2009 (the “Amendment”), by and among the Borrower, the Administrative Agent and the
Lenders from time to time party thereto.
2. The Existing Credit Agreement is being amended pursuant to the Amendment. Each of the
undersigned is a Guarantor of the Borrower Obligations of the Borrower pursuant to the Guarantee
and Collateral Agreement and hereby:
(a) acknowledges its receipt of the foregoing Amendment and its review of the terms and
conditions thereof and consents to the foregoing Amendment, and the amendment and restatement of
the Existing Credit Agreement pursuant thereto;
(b) acknowledges that the Tranche C Term Loans and any Revolving Loans and Reimbursement
Obligations in respect of Additional Revolving Commitments constitute Borrower Obligations;
(c) acknowledges that, notwithstanding the execution and delivery of the foregoing Amendment
and the amendment and restatement of the Existing Credit Agreement pursuant thereto, (i) the
Guarantee and Collateral Agreement shall continue to be in full force and effect, (ii) the
Guarantor Obligations of such Guarantor are not impaired or affected and (iii) all guarantees made
by such Guarantor pursuant to the Guarantee and Collateral Agreement and all Liens granted by such
Guarantor as security for the Guarantor Obligations of such Guarantor pursuant to the Guarantee and
Collateral Agreement continue in full force and effect and benefit the Borrower Obligations
described in clause (b) above; and
(d) confirms and ratifies its obligations under each of the Loan Documents executed by it.
3. Capitalized terms used herein without definition shall have the meanings given to such
terms in the Amendment to which this Acknowledgment and Confirmation is attached or in the Amended
and Restated Credit Agreement referred to therein or in the Guarantee and Collateral Agreement, as
applicable.
4. THIS ACKNOWLEDGMENT AND CONFIRMATION SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS
TO THE EXTENT THAT THE SAME ARE NOT MANDATORILY APPLICABLE BY STATUTE AND THE APPLICATION OF THE
LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
5. This Acknowledgment and Confirmation may be executed by one or more of the parties to this
Acknowledgment and Confirmation on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of
an executed signature page of this Acknowledgment and Confirmation by facsimile or electronic (i.e.
“pdf”) transmission shall be effective as delivery of a manually executed counterpart hereof.
[rest of page intentionally left blank]
2
IN WITNESS WHEREOF, the parties hereto have caused this Acknowledgment and Confirmation to be
duly executed and delivered as of the day and year first above written.
| BOOZ ALLEN HAMILTON INVESTOR CORPORATION |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| ASE, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| AESTIX, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| BOOZ ALLEN TRANSPORTATION, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
EXHIBIT F-1
TO AMENDMENT
TO AMENDMENT
EXHIBIT F-2
TO AMENDMENT
TO AMENDMENT
EXHIBIT
G
TO AMENDMENT
TO AMENDMENT
CLOSING CERTIFICATE
BOOZ ALLEN HAMILTON INC.
December 11, 2009
BOOZ ALLEN HAMILTON INC.
December 11, 2009
Pursuant to Section 5.1(f) of Amendment No. 1, dated as of December 8, 2009 (the
“Amendment”; unless otherwise defined herein, terms defined in the Amendment or the Amended
and Restated Credit Agreement referred to therein and used herein shall have the meanings given to
them in the Amendment or the Amended and Restated Credit Agreement, as applicable), to the Credit
Agreement, dated as of July 31, 2008, among Booz Allen Hamilton Investor Corporation (formerly
known as Explorer Investor Corporation), a Delaware corporation, Explorer Merger Sub Corporation, a
Delaware corporation, Booz Allen Hamilton Inc., a Delaware corporation, the several banks and other
financial institutions or entities from time to time parties thereto, Credit Suisse AG, Cayman
Islands Branch (formerly known as Credit Suisse, Cayman Islands Branch) (“Credit Suisse”), as
Administrative Agent and Collateral Agent, Bank of America, N.A., as Syndication Agent, Lehman
Brothers Commercial Bank, C.I.T. Leasing Corporation and Sumitomo Mitsui Banking Corporation, as
Documentation Agents, Credit Suisse, as Issuing Lender and Banc of America Securities LLC, Credit
Suisse Securities (USA) LLC, Lehman Brothers Inc. and Sumitomo Mitsui Banking Corporation, as Joint
Lead Arrangers and Joint Bookrunners, the undersigned Ralph Shrader, Chairman, President and Chief
Executive Officer of Booz Allen Hamilton Inc. (the “Company”), hereby certifies on behalf
of the Company (and not individually) as follows:
| 1. | No Default or Event of Default exists as of the Amendment and Restatement Effective Date, both immediately before and immediately after giving effect to the Amendment and the borrowing of the Tranche C Term Loans. | ||
| 2. | All of the representations and warranties contained in the Amended and Restated Credit Agreement and in the other Loan Documents are true and correct in all material respects on the Amendment and Restatement Effective Date, both immediately before and immediately after giving effect to the Amendment and the borrowing of the Tranche C Term Loans, with the same effect as though such representations and warranties had been made on and as of the Amendment and Restatement Effective Date (unless such representation or warranty relates to a specific date, in which case such representation or warranty shall be true and correct in all material respects as of such specific date). | ||
| 3. | CG Appleby is the duly elected and qualified Secretary of the Company and the signature set forth for such officer below is such officer’s true and genuine signature. |
The undersigned Secretary of the Company hereby certifies as follows:
| 1. | Attached hereto as Exhibit A is a copy of a certificate of good standing or the equivalent from the Company’s jurisdiction of organization dated as of a recent date prior to the date hereof. | |
| 2. | Attached hereto as Exhibit B is a true and complete copy of resolutions duly adopted at a meeting of the Board of Directors of the Company, and such resolutions have not in any way been amended, modified, revoked or rescinded, have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect. | |
| 3. | Attached hereto as Exhibit C is a true and complete copy of the bylaws of the Company as in effect on the date hereof. | |
| 4. | Attached hereto as Exhibit D is a true and complete certified copy of the Certificate of Incorporation of the Company as in effect on the date hereof, and such Certificate of Incorporation has not been amended, repealed, modified or restated. | |
| 5. | The following persons are now duly elected and qualified officers of the Company holding the offices indicated next to their respective names, and the signatures appearing opposite their respective names are the true and genuine signatures of such officers, and each of such officers is duly authorized to execute and deliver on behalf of the Company the Amendment, each of the Loan Documents to which it is a party and any certificate or other document to be delivered by the Company pursuant to the Amendment or the Loan Documents to which it is a party: |
| Name and Title | Signature | |||
Ralph Shrader
|
||||
Chairman, President and Chief Executive Officer |
||||
CG Appleby
|
||||
General Counsel and Secretary |
||||
Samuel Strickland
|
||||
Chief Financial Officer, Vice President
and Treasurer |
||||
Horacio Rozanski
|
||||
Chief Personnel Officer |
||||
Douglas Manya
|
||||
Assistant Secretary |
||||
Marie Lerch
|
||||
Assistant Secretary |
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to
be duly executed and delivered as of the date first above written.
| BOOZ ALLEN HAMILTON INC. |
||||
| By: | ||||
| Name: | Ralph Shrader | |||
| Title: | Chairman, President and Chief Executive Officer | |||
| By: | ||||
| Name: | CG Appleby | |||
| Title: | Secretary | |||
Exhibit A
to Closing Certificate
to Closing Certificate
Certificate of Good Standing
Exhibit B
to Closing Certificate
to Closing Certificate
Resolutions
Exhibit C
to Closing Certificate
to Closing Certificate
Bylaws
Exhibit D
to Closing Certificate
to Closing Certificate
Certificate/Articles of Incorporation
Exhibit 10.3
EXECUTION VERSION
$550,000,000
MEZZANINE CREDIT AGREEMENT
among
EXPLORER INVESTOR CORPORATION,
EXPLORER MERGER SUB CORPORATION,
as the Initial Borrower,
as the Initial Borrower,
BOOZ ALLEN HAMILTON INC.,
as the Surviving Borrower,
as the Surviving Borrower,
The Several Lenders from Time to Time Parties Hereto,
CREDIT SUISSE,
as Administrative Agent,
as Administrative Agent,
and
CREDIT SUISSE SECURITIES (USA) LLC,
BANC OF AMERICA SECURITIES LLC,
and
LEHMAN BROTHERS INC.,
as Joint Lead Arrangers and Joint Bookrunners
as Joint Lead Arrangers and Joint Bookrunners
Dated as of July 31, 2008
TABLE OF CONTENTS
| Page | ||||
SECTION 1. DEFINITIONS |
1 | |||
1.1 Defined Terms |
1 | |||
1.2 Other Definitional Provisions |
27 | |||
1.3 Pro Forma Calculations |
27 | |||
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS |
28 | |||
2.1 Commitments |
28 | |||
2.2 Procedure for Borrowing |
28 | |||
2.3 Repayment of Loans |
28 | |||
2.4 Administrative Fees |
29 | |||
2.5 Optional Prepayments |
29 | |||
2.6 Change of Control Offer |
30 | |||
2.7 Special Mandatory Prepayment |
31 | |||
2.8 Interest Rates, Payment Dates; Computation of Interest and Fees |
32 | |||
2.9 Pro Rata Treatment and Payments |
32 | |||
2.10 Taxes |
33 | |||
2.11 Change of Lending Office |
36 | |||
2.12 Replacement of Lenders |
36 | |||
SECTION 3. REPRESENTATIONS AND WARRANTIES |
36 | |||
3.1 Financial Condition |
37 | |||
3.2 No Change |
37 | |||
3.3 Existence; Compliance with Law |
37 | |||
3.4 Corporate Power; Authorization; Enforceable Obligations |
37 | |||
3.5 No Legal Bar |
38 | |||
3.6 No Material Litigation |
38 | |||
3.7 No Default |
38 | |||
3.8 Ownership of Property; Liens |
38 | |||
3.9 Intellectual Property |
38 | |||
3.10 Taxes |
39 | |||
3.11 Federal Regulations |
39 | |||
3.12 ERISA |
39 | |||
3.13 Investment Company Act |
40 | |||
3.14 Subsidiaries |
40 | |||
3.15 Environmental Matters |
40 | |||
3.16 Accuracy of Information, etc. |
40 | |||
3.17 Solvency |
40 | |||
SECTION 4. CONDITIONS PRECEDENT |
40 | |||
4.1 Conditions to Loans |
40 | |||
i
| Page | ||||
SECTION 5. AFFIRMATIVE COVENANTS |
42 | |||
5.1 Financial Statements |
42 | |||
5.2 Certificates; Other Information |
43 | |||
5.3 Payment of Taxes |
44 | |||
5.4 Conduct of Business and Maintenance of Existence, etc.; Compliance |
44 | |||
5.5 Maintenance of Property; Insurance |
44 | |||
5.6 Inspection of Property; Books and Records; Discussions |
44 | |||
5.7 Notices |
45 | |||
5.8 Further Assurances |
46 | |||
5.9 Use of Proceeds |
46 | |||
5.10 Post-Closing Undertakings |
46 | |||
SECTION 6. NEGATIVE COVENANTS |
47 | |||
6.1 Consolidated Total Leverage Ratio |
47 | |||
6.2 Indebtedness |
47 | |||
6.3 Liens |
51 | |||
6.4 Fundamental Changes |
53 | |||
6.5 Dispositions of Property |
54 | |||
6.6 Restricted Payments |
56 | |||
6.7 Investments |
58 | |||
6.8 Optional Payments and Modifications of Certain Debt Instruments |
61 | |||
6.9 Transactions with Affiliates |
61 | |||
6.10 Sales and Leasebacks |
62 | |||
6.11 Changes in Fiscal Periods |
62 | |||
6.12 Clauses Restricting Subsidiary Distributions |
62 | |||
6.13 Lines of Business |
63 | |||
6.14 Limitation on Hedge Agreements |
63 | |||
6.15 Limitation on Activities of Holdings |
63 | |||
SECTION 7. EVENTS OF DEFAULT |
63 | |||
7.1 Events of Default |
63 | |||
7.2 Specified Equity Contributions |
66 | |||
SECTION 8. THE ADMINISTRATIVE AGENT |
66 | |||
8.1 Appointment |
66 | |||
8.2 Delegation of Duties |
66 | |||
8.3 Exculpatory Provisions |
66 | |||
8.4 Reliance by the Agents |
67 | |||
8.5 Notice of Default |
67 | |||
8.6 Non-Reliance on the Administrative Agent and Other Lenders |
67 | |||
8.7 Indemnification |
68 | |||
8.8 The Administrative Agent in Its Individual Capacity |
68 | |||
8.9 Successor Agent |
68 | |||
8.10 Authorization to Release Guarantees |
69 | |||
ii
| Page | ||||
SECTION 9. MISCELLANEOUS |
69 | |||
9.1 Amendments and Waivers |
69 | |||
9.2 Notices |
70 | |||
9.3 No Waiver; Cumulative Remedies |
71 | |||
9.4 Survival of Representations and Warranties |
71 | |||
9.5 Payment of Expenses; Indemnification |
71 | |||
9.6 Successors and Assigns; Participations and Assignments |
72 | |||
9.7 Adjustments; Set-off |
75 | |||
9.8 Counterparts |
76 | |||
9.9 Severability |
76 | |||
9.10 Integration |
76 | |||
9.11 GOVERNING LAW |
76 | |||
9.12 Submission to Jurisdiction; Waivers |
76 | |||
9.13 Acknowledgments |
77 | |||
9.14 Confidentiality |
77 | |||
9.15 Release of Guarantee Obligations |
78 | |||
9.16 Accounting Changes |
78 | |||
9.17 WAIVERS OF JURY TRIAL |
78 | |||
9.18 USA PATRIOT ACT |
79 | |||
SCHEDULES:
1.1
|
Excluded Subsidiaries | |
2.1
|
Commitments | |
3.3
|
Existence; Compliance with Law | |
3.4
|
Consents, Authorizations, Filings and Notices | |
3.6
|
Litigation | |
3.8A
|
Excepted Property | |
3.8B
|
Owned Real Property | |
3.14
|
Subsidiaries | |
5.10
|
Post-Closing Undertakings | |
6.2(d)
|
Existing Indebtedness | |
6.3(f)
|
Existing Liens | |
6.7
|
Existing Investments |
EXHIBITS:
A
|
Form of Guarantee Agreement | |
B
|
Form of Compliance Certificate | |
C
|
Form of Closing Certificate | |
D
|
Form of Assignment and Assumption | |
E-1
|
Form of Legal Opinion of Debevoise & Plimpton LLP | |
E-2
|
Form of Legal Opinion of Morris, Nichols, Arsht & Tunnell LLP | |
F
|
Form of Exemption Certificate | |
G
|
Form of Solvency Certificate | |
H
|
Form of Note |
iii
MEZZANINE CREDIT AGREEMENT, dated as of July 31, 2008, among EXPLORER INVESTOR CORPORATION, a
Delaware corporation (“Holdings”), EXPLORER MERGER SUB CORPORATION, a Delaware corporation
(the “Initial Borrower”), BOOZ ALLEN HAMILTON INC., a Delaware corporation into which the
Initial Borrower shall be merged (the “Company” or the “Surviving Borrower”), the
several banks and other financial institutions or entities from time to time parties to this
Agreement (the “Lenders”), CREDIT SUISSE, as Administrative Agent, and CREDIT SUISSE
SECURITIES (USA) LLC, BANC OF AMERICA SECURITIES LLC and LEHMAN BROTHERS INC., as joint lead
arrangers and joint bookrunners.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in this Section 1.1
shall have the respective meanings set forth in this Section 1.1.
“Accounting Changes”: as defined in Section 9.16.
“Acquisition”: as defined in the definition of “Permitted Acquisition”.
“Act”: as defined in Section 9.18.
“Adjusted Actual Payment”: as defined in Section 2.7.
“Adjusted Treasury Rate”: with respect to a Specified Prepayment Date, the yield,
under the heading which represents the average for the immediately preceding week, appearing in the
most recently published statistical release designated “H.15(519)” or any successor publication
which is published weekly by the Board and which establishes yields on actively traded United
States Treasury securities adjusted to constant maturity under the caption “Treasury Constant
Maturities”, for the maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the First Call Date, yields for the two published maturities
most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted
Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month), calculated on the third Business Day immediately preceding the
Specified Prepayment Date, plus 0.50%.
“Administrative Agent”: Credit Suisse, as the administrative agent for the Lenders
under this Agreement and the other Loan Documents, together with any of its successors and
permitted assigns in such capacity in accordance with Section 8.9.
“Affiliate”: as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person. For purposes of this
definition, “control” of a Person means the power, directly or indirectly to direct or cause the
direction of the management and policies of such Person, in either case whether by contract or
otherwise.
“Agents”: the collective reference to the Administrative Agent and, for purposes of
Sections 9.13 and 9.14, the Lead Arrangers.
“Aggregate Exposure”: with respect to any Lender at any time, an amount equal to (a)
until the Closing Date, the aggregate amount of such Lender’s Commitments at such time and (b)
thereafter, the aggregate then unpaid principal amount of such Lender’s Loans.
-1-
“Aggregate Exposure Percentage”: with respect to any Lender at any time, the ratio
(expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the total Aggregate
Exposures of all Lenders at such time.
“Aggregate Inclusion”: as defined in Section 2.7.
“Agreed Purposes”: as defined in Section 9.14.
“Agreement”: this Mezzanine Credit Agreement, as amended, restated, amended and
restated, supplemented or otherwise modified from time to time.
“AHYDO Payments”: “applicable high yield discount obligations” (within the meaning of
Section 163(i)(1) of the Code) “catch-up” payments in respect of any Indebtedness (including any
Permitted Subordinated Indebtedness and any Indebtedness incurred pursuant to Section 6.2(v)) the
incurrence of which is not otherwise prohibited hereunder to the extent such Indebtedness provides
for the payment of interest on all or any portion of the principal amount of such Indebtedness by
adding such interest to the principal amount thereof.
“Annual Operating Budget”: as defined in Section 5.2(c).
“Applicable Make-Whole Premium”: with respect to any Loan to be prepaid on any
Specified Prepayment Date, the greater of (a) 2.0% of the principal amount of such Loan and (b) the
excess of (i) the present value at such Specified Prepayment Date of (x) 102% of the principal
amount of such Loan plus (y) all required remaining scheduled interest payments due on such Loans
through the First Call Date (but excluding accrued and unpaid interest payments due on such Loans
through the Specified Prepayment Date), computed using a discount rate equal to the Adjusted
Treasury Rate; over (ii) the principal amount of the Loan to be prepaid.
“Approved Fund”: as defined in Section 9.6(b).
“Asset Sale”: any Disposition of Property or series of related Dispositions of
Property by the Borrower or any of its Restricted Subsidiaries not in the ordinary course of
business (a) under Section 6.5(e) or (p) or (b) not otherwise permitted under Section 6.5, in each
case, which yields Net Cash Proceeds (valued at the initial principal amount thereof in the case of
non-cash proceeds consisting of notes or other debt securities and valued at fair market value in
the case of other non-cash proceeds) in excess of $1,000,000.
“Assignee”: as defined in Section 9.6(b).
“Assignment and Assumption”: an Assignment and Assumption, substantially in the form
of Exhibit D.
“Available Amount”: as at any date, the sum of, without duplication:
(a) $10,000,000;
(b) the aggregate cumulative amount, not less than zero, of 50% of Excess Cash Flow for
each fiscal year beginning with the fiscal year ending March 31, 2010;
(c) the Net Cash Proceeds received after the Closing Date and on or prior to such date
from any Equity Issuance by, or capital contribution to, Holdings or the Borrower (which in
the
-2-
case of any such Equity Issuance by the Borrower, is not Disqualified Capital Stock)
which, in the case of any such Equity Issuance by, or capital contribution to, Holdings,
have been contributed in cash as common equity to the Borrower, in each case to the extent
it is not a Specified Equity Contribution;
(d) the aggregate amount of proceeds received after the Closing Date and on or prior to
such date that (i) would have constituted Net Cash Proceeds pursuant to clause (a) of the
definition of “Net Cash Proceeds” except for the operation of any of (A) the Dollar
threshold set forth in the definition of “Asset Sale” and (B) the Dollar threshold set forth
in the definition of “Recovery Event” or (ii) constitutes Declined Proceeds under, and as
defined in, the Senior Secured Loan Agreement (as in effect on the Closing Date);
(e) the aggregate principal amount of any Indebtedness of the Borrower or any
Restricted Subsidiary issued after the Closing Date (other than Indebtedness issued to a
Restricted Subsidiary), which has been converted into or exchanged for Capital Stock in
Holdings or any Parent Company;
(f) the amount received by the Borrower or any Restricted Subsidiary in cash (and the
fair market value (as determined in good faith by the Borrower) of Property other than cash
received by the Borrower or any Restricted Subsidiary) after the Closing Date from any
dividend or other distribution by an Unrestricted Subsidiary;
(g) in the event any Unrestricted Subsidiary has been redesignated as a Restricted
Subsidiary and becomes a Subsidiary Guarantor or has been merged, consolidated or
amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the
Borrower or any Subsidiary Guarantor, the fair market value (as determined in good faith by
the Borrower) of the Investments of the Borrower or any Restricted Subsidiary in such
Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of
the assets transferred or conveyed, as applicable);
(h) an amount equal to any returns (including dividends, interest, distributions,
returns of principal, profits on sale, repayments, income and similar amounts) actually
received in cash, Cash Equivalents and Permitted Liquid Investments by the Borrower or any
Restricted Subsidiary in respect of any Investments made pursuant to Section 6.7(f)(ii)(B),
(h)(B), or (v)(ii); and
(i) the aggregate amount actually received in cash, Cash Equivalents or Permitted
Liquid Investments by the Borrower or any Restricted Subsidiary in connection with the sale,
transfer or other disposition of its ownership interest in any joint venture that is not a
Subsidiary or in any Unrestricted Subsidiary, in each case, to the extent of the Investment
in such joint venture or Unrestricted Subsidiary;
in each case, that has not been previously applied pursuant to Section 6.6(b), Section 6.7(f)(ii),
(h)(B) or (v)(ii) or Sections 6.8(a)(ii)(A) and 6.8(a)(ii)(B).
“Benefited Lender”: as defined in Section 9.7(a).
“Board”: the Board of Governors of the Federal Reserve System of the United States
(or any successor).
“Board of Directors”: (a) with respect to a corporation, the board of directors of the
corporation or any committee thereof duly authorized to act on behalf of such board; (b) with
respect to a
-3-
partnership, the Board of Directors of the general partner of the partnership, or any
committee thereof duly authorized to act on behalf of such board or the board or committee of any
Person serving a similar function; (c) with respect to a limited liability company, the managing
member or members or any controlling committee of managing members thereof or any Person or Persons
serving a similar function; and (d) with respect to any other Person, the board or committee of
such Person serving a similar function.
“Borrower”: (a) at any time prior to the consummation of the Merger Transactions, the
Initial Borrower and (b) upon and at any time after the consummation of the Merger Transactions,
the Surviving Borrower.
“Business”: the business activities and operations of the Company and/or its
Affiliates on the Closing Date immediately after giving effect to the transactions contemplated by
the Spin Off Agreement.
“Business Day”: a day other than a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to close.
“Capital Expenditures”: for any period, with respect to any Person, the aggregate of
all cash expenditures by such Person for the acquisition or leasing (pursuant to a capital lease
but excluding any amount representing capitalized interest) of fixed or capital assets, computer
software or additions to equipment (including replacements, capitalized repairs and improvements
during such period) which are required to be capitalized under GAAP on a balance sheet of such
Person; provided that in any event the term “Capital Expenditures” shall exclude: (i) any
Permitted Acquisition and any other Investment permitted hereunder; (ii) any expenditures to the
extent financed with any Reinvestment Deferred Amount under, and as defined in, the Senior Secured
Loan Agreement (as in effect on the Closing Date); (iii) expenditures for leasehold improvements
for which such Person is reimbursed in cash or receives a credit; and (iv) capital expenditures to
the extent they are made with the proceeds of equity contributions (other than in respect of
Disqualified Capital Stock) made to the Borrower after the Closing Date.
“Capital Lease Obligations”: as to any Person, 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, for the purposes
of this Agreement, the amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP; provided that for purposes of this
definition, “GAAP” shall mean generally accepted accounting principles in the United States as in
effect on the date hereof.
“Capital Stock”: any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, and any and all equivalent ownership
interests in a Person (other than a corporation).
“Carlyle Fund”: Carlyle Partners US V, L.P. or any of its Affiliates that is a Person
engaged primarily in the business of, and derives substantially all of its revenues from, making
control-oriented investments through the direct or indirect acquisition of equity securities of
operating companies.
“Cash Equivalents”: (a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit of the United States of
America), in each case maturing within eighteen months from the date of acquisition thereof;
-4-
(b) investments in commercial paper maturing within 270 days from the date of issuance thereof
and having, at such date of acquisition, the highest credit rating obtainable from S&P or from
Moody’s;
(c) investments in certificates of deposit, banker’s acceptances and time deposits maturing
within one year from the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, the Administrative Agent or any domestic office
of any commercial bank organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000
and that issues (or the parent of which issues) commercial paper rated at least “Prime-1” (or the
then equivalent grade) by Moody’s or “A-1” (or the then equivalent grade) by S&P;
(d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution satisfying
the criteria of clause (c) above;
(e) investments in “money market funds” within the meaning of Rule 2a-7 of the Investment
Company Act of 1940, as amended, substantially all of whose assets are invested in investments of
the type described in clauses (a) through (d) above; and
(f) other short-term investments utilized by Foreign Subsidiaries in accordance with normal
investment practices for cash management in investments of a type analogous to the foregoing.
“Change in Law”: (a) the adoption of any law, rule or regulation, or (b) any change
in any law, rule or regulation or in the interpretation or application thereof by any Governmental
Authority.
“Change of Control”: the occurrence of any of the following: (a) Holdings shall cease
to own, directly or indirectly, 100% of the Capital Stock of the Borrower, (b) at any time before
Holdings’ or any Parent Company’s Capital Stock is traded on a nationally-recognized stock
exchange, the Permitted Investors shall cease to own, directly or indirectly, at least 51% of the
Capital Stock of Holdings or (c) at any time after Holdings’ or any Parent Company’s Capital Stock
is traded on a nationally-recognized stock exchange and for any reason whatsoever, (i) a majority
of the Board of Directors of Holdings shall not be Continuing Directors or (ii) the Permitted
Investors shall cease to own, directly or indirectly, at least 35% of the Capital Stock of Holdings
and any other “person” or “group” (within the meaning of Rule 13d-5 of the Securities Exchange Act
of 1934 as in effect on the date hereof) shall own a greater amount (it being understood that if
any such person or group includes one or more Permitted Investors, the shares of Capital Stock of
Holdings directly or indirectly owned by the Permitted Investors that are part of such person or
group shall not be treated as being owned by such person or group for purposes of determining
whether this clause (ii) is triggered).
“Change of Control Offer”: as defined in Section 2.6(b).
“Closing Date”: the date on which the conditions precedent set forth in Section 4.1
shall have been satisfied or waived and the Loans hereunder shall have been funded, which date is
July 31, 2008.
“Closing Date Material Adverse Effect”: a “Company Material Adverse Effect” as
defined in the Merger Agreement.
“Code”: the Internal Revenue Code of 1986, as amended from time to time.
-5-
“Commitment”: as to any Lender, the obligation of such Lender, if any, to make a Loan
to the Borrower in a stated principal amount not to exceed the amount set forth under the heading
“Commitment” opposite such Lender’s name on Schedule 2.1, or in the Assignment and Assumption
pursuant to which such Lender became a party hereto. The original aggregate stated amount of the
Commitments is $550,000,000.
“Commonly Controlled Entity”: an entity, whether or not incorporated, that is under
common control with Holdings within the meaning of Section 4001 of ERISA or is part of a group that
includes Holdings and that is treated as a single employer under Section 414(b), (c), (m) or (o) of
the Code.
“Commonly Controlled Plan”: as defined in Section 3.12(b).
“Company”: as defined in the preamble hereto.
“Company Reorganization”: the series of transactions described in the “Project
Explorer Summarized Transaction Steps”, dated May 12, 2008, attached as Exhibit D to the Spin-Off
Agreement dated as of May 15, 2008 among the Company, Booz & Company Holdings, LLC, Booz & Company
Inc., Booz & Company Intermediate I Inc. and Booz & Company Intermediate II Inc., as amended,
supplemented or otherwise modified from time to time, provided that any such amendments,
supplements or modifications that are, when taken as a whole, materially adverse to the Lenders,
shall be reasonably acceptable to the Administrative Agent.
“Comparable Treasury Issue” shall mean the United States Treasury security reasonably
selected by the Administrative Agent as having a maturity comparable to the remaining term of the
Loans from the applicable Specified Prepayment Date to the First Call Date, that would be utilized,
at the time of selection and in accordance with customary financial practice, in pricing new issues
of corporate debt securities of a maturity most nearly equal to the First Call Date.
“Compliance Certificate”: a certificate duly executed by a Responsible Officer
substantially in the form of Exhibit B.
“Confidential Information”: as defined in Section 9.14.
“Consolidated Current Assets”: at any date, all amounts (other than (a) cash, Cash
Equivalents and Permitted Liquid Investments, (b) deferred financing fees and (c) payments for
deferred taxes so long as such items described in clauses (b) and (c) are not cash items) that
would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any
like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at
such date.
“Consolidated Current Liabilities”: at any date, all amounts that would, in
conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like
caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such
date, but excluding (a) the current portion of any Indebtedness of the Borrower and its Restricted
Subsidiaries, (b) without duplication, all Indebtedness consisting of Revolving Loans, L/C
Obligations or Swingline Loans, in each case, under, and as defined in, the Senior Secured Loan Agreement, to the extent otherwise
included therein, (c) amounts for deferred taxes and non-cash tax reserves accounted for pursuant
to FASB Interpretation No. 48 and (d) any equity compensation related liability.
“Consolidated EBITDA”: of any Person for any period, Consolidated Net Income of such
Person and its Restricted Subsidiaries for such period plus, without duplication and, if applicable, to
-6-
the extent reflected as a charge in the statement of such Consolidated Net Income
(regardless of classification) for such period, the sum of:
(a) provisions for taxes based on income (or similar taxes in lieu of income taxes),
profits, capital (or equivalents), including federal, foreign, state, local, franchise,
excise and similar taxes and foreign withholding taxes of such Person paid or accrued
during such period;
(b) Consolidated Net Interest Expense and, to the extent not reflected in such
Consolidated Net Interest Expense, any net losses on hedging obligations or other
derivative instruments entered into for the purpose of hedging interest rate risk,
amortization or write-off of debt discount and debt issuance costs and commissions,
discounts and other fees and charges associated with Indebtedness (including commitment,
letter of credit and administrative fees and charges with respect to the Senior Secured
Loan Facilities and administrative fees and charges with respect to the Facility);
(c) depreciation and amortization expense and impairment charges (including deferred
financing fees, capitalized software expenditures, intangibles (including goodwill),
organization costs and amortization of unrecognized prior service costs and actuarial gains
and losses related to pensions and other post-employment benefits);
(d) any extraordinary, unusual or non-recurring expenses or losses (including losses
on sales of assets outside of the ordinary course of business and restructuring and
integration costs or reserves, including any severance costs, costs associated with office
and facility openings, closings and consolidations, relocation costs and other
non-recurring business optimization expenses);
(e) any other non-cash charges, expenses or losses (except to the extent such charges,
expenses or losses represent an accrual of or reserve for cash expenses in any future
period or an amortization of a prepaid cash expense paid in a prior period);
(f) stock-option based and other equity-based compensation expenses;
(g) transaction costs, fees, losses and expenses (whether or not any transaction is
actually consummated) (including those relating to the Merger Transactions, the
transactions contemplated hereby and by the Senior Secured Loan Documents (including any
amendments or waivers of the Loan Documents or the Senior Secured Loan Documents), and
those payable in connection with the sale of Capital Stock, the incurrence of Indebtedness
permitted by Section 6.2, transactions permitted by Section 6.4, Dispositions permitted by
Section 6.5, or any Permitted Acquisition or other Investment permitted by Section 6.7 (in
each case whether or not successful));
(h) all fees and expenses paid pursuant to the Management Agreement;
(i) proceeds from any business interruption insurance (to the extent not reflected as
revenue or income in such statement of such Consolidated Net Income);
(j) the amount of cost savings and other operating improvements and synergies
projected by the Borrower in good faith and certified in writing to the Administrative
Agent to be realized as a result of any acquisition (including the Merger Transactions) or
Disposition (including the termination or discontinuance of activities constituting such
business) of business entities or properties or assets, constituting
a division or line of business of any business entity, division or
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line of business that is the subject of any
such acquisition or Disposition, or from any operational change taken or committed to be
taken during such period (in each case calculated on a pro forma basis as
though such cost savings and other operating improvements and synergies had been realized
on the first day of such period), net of the amount of actual benefits realized during such
period from such actions to the extent already included in the Consolidated Net Income for
such period, provided that (i) the Borrower shall have certified to the
Administrative Agent that (A) such cost savings, operating improvements and synergies are
reasonably anticipated to result from such actions, (B) such actions have been taken, or
have been committed to be taken and the benefits resulting therefrom are anticipated by the
Borrower to be realized within 12 months and (ii) no cost savings shall be added pursuant
to this clause (j) to the extent already included in clause (d) above with respect to such
period;
(k) cash expenses relating to earn-outs and similar obligations;
(l) charges, losses, lost profits, expenses or write-offs to the extent indemnified or
insured by a third party, including expenses covered by indemnification provisions in any
agreement in connection with the Merger Transactions, a Permitted Acquisition or any other
acquisition permitted by Section 6.7;
(m) losses recognized and expenses incurred in connection with the effect of currency
and exchange rate fluctuations on intercompany balances and other balance sheet items;
(n) costs of surety bonds in connection with financing activities of such Person and
its Restricted Subsidiaries; and
(o) costs associated with, or in anticipation of, or preparation for, compliance with
the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith and Public Company Costs;
minus, to the extent reflected as income or a gain in the statement of such
Consolidated Net Income for such period, the sum of:
(a) any extraordinary, unusual or non-recurring income or gains (including gains on
the sales of assets outside of the ordinary course of business);
(b) any other non-cash income or gains (other than the accrual of revenue in the
ordinary course), but excluding any such items (i) in respect of which cash was received in
a prior period or will be received in a future period or (ii) which represent the reversal
in such period of any accrual of, or reserve for, anticipated cash charges in any prior
period where such accrual or reserve is no longer required, all as determined on a
consolidated basis; and
(c) gains realized and income accrued in connection with the effect of currency and
exchange rate fluctuations on intercompany balances and other balance sheet items;
provided that for purposes of calculating Consolidated EBITDA of the Borrower and its
Restricted Subsidiaries for any period, (A) the Consolidated EBITDA of any Person or Properties
constituting a division or line of business of any business entity, division or line of business,
in each case, acquired by the Borrower or any of the Restricted Subsidiaries during such period and
assuming any synergies, cost savings and other operating improvements to the extent certified by
the Borrower as having been determined in good faith to be reasonably anticipated to be realizable
within 12 months following such acquisition, or of any Subsidiary designated as a Restricted
Subsidiary during such period, shall be
-8-
included on a pro forma basis for such
period (but assuming the consummation of such acquisition or such designation, as the case may be,
occurred on the first day of such period) and (B) the Consolidated EBITDA of any Person or
Properties constituting a division or line of business of any business entity, division or line of
business, in each case, Disposed of by the Borrower or any of the Restricted Subsidiaries during
such period, or of any Subsidiary designated as an Unrestricted Subsidiary during such period,
shall be excluded for such period (assuming the consummation of such Disposition or such
designation, as the case may be, occurred on the first day of such period). With respect to each
Subsidiary that is not a wholly-owned Subsidiary or any joint venture, for purposes of calculating
Consolidated EBITDA, the amount of income attributable to such Subsidiary or joint venture, as
applicable, that shall be counted for such purposes shall equal the product of (x) the Borrower’s
direct and/or indirect percentage ownership of such Subsidiary or joint venture and (y) the
aggregate amount of the applicable item of such Subsidiary or joint venture, as applicable, except
to the extent the application of GAAP already takes into account the non-wholly owned subsidiary
relationship. Notwithstanding the forgoing, Consolidated EBITDA shall be calculated without giving
effect to the effects of purchase accounting or similar adjustments required or permitted by GAAP
in connection with the Transactions, any Investment (including any Permitted Acquisition) and any
other acquisition or Investment. For purposes of determining Consolidated EBITDA under this
Agreement, Consolidated EBITDA for the fiscal quarter ended March 31, 2008 shall be deemed to be
$64,635,000. Unless otherwise qualified, all references to “Consolidated EBITDA” in this Agreement
shall refer to Consolidated EBITDA of the Borrower.
“Consolidated Net Income”: of any Person for any period, the consolidated net income
(or loss) of such Person and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP; provided that in calculating Consolidated Net
Income of the Borrower and its consolidated Restricted Subsidiaries for any period, there shall be
excluded (a) the income (or loss) of any Person accrued prior to the date it becomes a Restricted
Subsidiary or is merged into or consolidated with the Borrower or any of its Subsidiaries and (b)
the income (or loss) of any Person (other than a Restricted Subsidiary) in which Holdings, the
Borrower or any of its Restricted Subsidiaries has an ownership interest (including any joint
venture), except to the extent that any such income is actually received by Holdings, the Borrower
or such Restricted Subsidiary in the form of dividends or similar distributions (which dividends
and distributions shall be included in the calculation of Consolidated Net Income).
Notwithstanding the forgoing, for purposes of calculating Excess Cash Flow, Consolidated Net Income
shall not include: (i) extraordinary gains for such period, (ii) the cumulative effect of a change
in accounting principles during such period, (iii) any fees and expenses incurred during such
period, or any amortization thereof for such period, in connection with any acquisition,
investment, recapitalization, asset disposition, issuance or repayment of debt, issuance of equity
securities, refinancing transaction or amendment or other modification of any debt instrument (in
each case, including any such transaction undertaken but not completed) and any charges or
non-recurring merger costs incurred during such period as a result of any such transaction and (iv)
any income (loss) for such period attributable to the early extinguishment of Indebtedness or Hedge
Agreements. Unless otherwise qualified, all references to “Consolidated Net Income” in this Agreement shall refer to Consolidated Net
Income of the Borrower. There shall be excluded from Consolidated Net Income for any period the
purchase accounting effects of adjustments to inventory, Property and equipment, software and other
intangible assets and deferred revenue required or permitted by GAAP and related authoritative
pronouncements (including the effects of such adjustments pushed down to the Borrower and the
Restricted Subsidiaries), as a result of the Transactions, any consummated acquisition whether
consummated before or after the Closing Date, or the amortization or write-off of any amounts
thereof.
“Consolidated Net Interest Expense”: of any Person for any period, (a) total cash
interest expense (including that attributable to Capital Lease Obligations) of such Person and its
Restricted Subsidiaries for such period with respect to all outstanding Indebtedness of such Person
and its Restricted
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Subsidiaries, minus (b) the sum of (i) total cash interest income of
such Person and its Restricted Subsidiaries for such period (excluding any interest income earned
on receivables due from clients), in each case determined in accordance with GAAP plus (ii)
any one time financing fees (to the extent included in such Person’s consolidated interest expense
for such period), including, with respect to the Borrower, those paid in connection with the
Transaction Documents or in connection with any amendment thereof. Unless otherwise qualified, all
references to “Consolidated Net Interest Expense” in this Agreement shall refer to
Consolidated Net Interest Expense of the Borrower.
“Consolidated Secured Leverage”: at any date, (a) the aggregate principal amount of
all Funded Debt of the Borrower and its Restricted Subsidiaries secured by a Lien on such date,
minus (b) cash, Cash Equivalents and Permitted Liquid Investments held by the Borrower and its
Restricted Subsidiaries on such date, in each case determined on a consolidated basis in accordance
with GAAP.
“Consolidated Secured Leverage Ratio”: as of any date of determination, the ratio of
(a) Consolidated Secured Leverage on such day to (b) Consolidated EBITDA of the Borrower and the
Restricted Subsidiaries for the most recently ended Test Period.
“Consolidated Total Assets”: the total assets of the Borrower and its Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP, as shown on the
consolidated balance sheet of the Borrower for the most recently completed fiscal quarter for which
financial statements have been delivered pursuant to Section 5.1(a) or (b).
“Consolidated Total Leverage”: at any date, (a) the aggregate principal amount of all
Funded Debt of the Borrower and its Restricted Subsidiaries on such date, minus (b) cash, Cash
Equivalents and Permitted Liquid Investments held by the Borrower and its Restricted Subsidiaries
on such date, in each case determined on a consolidated basis in accordance with GAAP.
“Consolidated Total Leverage Ratio”: as of any date of determination, the ratio of
(a) Consolidated Total Leverage on such day to (b) Consolidated EBITDA of the Borrower and the
Restricted Subsidiaries for the most recently ended Test Period.
“Consolidated Working Capital”: at any date, the difference of (a) Consolidated
Current Assets on such date minus (b) Consolidated Current Liabilities on such date,
provided that, for purposes of calculating Excess Cash Flow, increases or decreases in
Consolidated Working Capital shall be calculated without regard to changes in the working capital
balance as a result of non-cash increases or decreases thereof that will not result in future cash
payments or receipts or cash payments or receipts in any previous period, in each case, including,
without limitation, any changes in Consolidated Current Assets or Consolidated Current Liabilities
as a result of (i) any reclassification in accordance with GAAP of assets or liabilities, as
applicable, between current and noncurrent, (ii) the effects of purchase
accounting and (iii) the effect of fluctuations in the amount of accrued or contingent
obligations, assets or liabilities under Hedge Agreements.
“Continuing Directors”: the directors of Holdings on the Closing Date and each other
director of Holdings, if, in each case, such other director’s nomination for election to the Board
of Directors of Holdings is recommended by at least 51% of the then Continuing Directors or such
other director receives the vote of the Sponsor and/or its Affiliates (excluding any operating
portfolio companies of the Sponsor) or any other Permitted Investor in his or her nomination or
election by the shareholders of Holdings.
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“Contractual Obligation”: as to any Person, any provision of any security issued by
such Person or of any written or recorded agreement, instrument or other undertaking to which such
Person is a party or by which it or any of its Property is bound.
“Default”: any of the events specified in Section 7.1, whether or not any requirement
for the giving of notice, the lapse of time, or both, has been satisfied.
“Derivatives Counterparty”: as defined in Section 6.6.
“Disinterested Director”: as defined in Section 6.9.
“Disposition”: with respect to any Property, any sale, sale and leaseback,
assignment, conveyance, transfer or other effectively complete disposition thereof. The terms
“Dispose” and “Disposed of” shall have correlative meanings.
“Disqualified Capital Stock”: Capital Stock that (a) requires the payment of any
dividends (other than dividends payable solely in shares of Qualified Capital Stock), (b) matures
or is mandatorily redeemable or subject to mandatory repurchase or redemption or repurchase at the
option of the holders thereof (other than solely for Qualified Capital Stock), in each case in
whole or in part and whether upon the occurrence of any event, pursuant to a sinking fund
obligation on a fixed date or otherwise (including as the result of a failure to maintain or
achieve any financial performance standards) or (c) are convertible or exchangeable, automatically
or at the option of any holder thereof, into any Indebtedness, Capital Stock or other assets other
than Qualified Capital Stock, in the case of clauses (a), (b) and (c), prior to the date that is 91
days after the Maturity Date (other than (i) upon payment in full of the Obligations (other than
indemnification and other contingent obligations not yet due and owing) or (ii) upon a “change in
control”; provided that any payment required pursuant to this clause (ii) is subject to the
prior repayment in full of the Obligations (other than indemnification and other contingent
obligations not yet due and owing) that are accrued and payable); provided further,
however, that if such Capital Stock is issued to any employee or to any plan for the benefit of
employees of the Borrower or the Subsidiaries or by any such plan to such employees, such Capital
Stock shall not constitute Disqualified Capital Stock solely because it may be required to be
repurchased by the Borrower in order to satisfy applicable statutory or regulatory obligations or
as a result of such employee’s termination, death or disability.
“Disqualified Institution”: (i) those institutions identified by the Borrower in
writing to the Administrative Agent prior to the Closing Date or, with the consent of the
Administrative Agent (not to be unreasonably withheld; consent of the Administrative Agent shall be
deemed to have been given if the Administrative Agent does not object within 5 Business Days after
identification of an institution) from time to time thereafter, and their known Affiliates and (ii)
business competitors of the Borrower and its Subsidiaries or the Company identified by Borrower in writing to the Administrative Agent
from time to time and their known Affiliates.
“Dollars” and “$”: dollars in lawful currency of the United States.
“Domestic Subsidiary”: any direct or indirect Restricted Subsidiary organized under
the laws of any jurisdiction within the United States.
“Environmental Laws”: any and all applicable laws, rules, orders, regulations,
statutes, ordinances, codes or decrees (including, without limitation, common law) of any
international authority, foreign government, the United States, or any state, provincial, local,
municipal or other governmental authority, regulating, relating to or imposing liability or
standards of conduct concerning protection of the
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environment, natural resources or human health and safety as it relates to Releases of Materials of Environmental Concern, as has been, is now, or
at any time hereafter is, in effect.
“Environmental Liability”: any liability, claim, action, suit, judgment or order
under or relating to any Environmental Law for any damages, injunctive relief, losses, fines,
penalties, fees, expenses (including reasonable fees and expenses of attorneys and consultants) or
costs, whether contingent or otherwise, including those arising from or relating to: (a)
compliance or non-compliance with any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Materials of Environmental Concern, (c)
exposure to any Materials of Environmental Concern, (d) the Release of any Materials of
Environmental Concern or (e) any contract, agreement or other consensual arrangement pursuant to
which liability is assumed or imposed with respect to any of the foregoing.
“Equity Issuance”: any issuance by Holdings, the Borrower or any Restricted
Subsidiary of its Capital Stock in a public or private offering.
“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to
time.
“Event of Default”: any of the events specified in Section 7.1; provided that
any requirement set forth therein for the giving of notice, the lapse of time, or both, has been
satisfied.
“Excess Cash Flow”: for any fiscal year of the Borrower, the difference, if any, of
(a) the sum, without duplication, of (i) Consolidated Net Income of the Borrower for such fiscal
year, (ii) the amount of all non-cash charges (including depreciation, amortization and deferred
tax expense) deducted in arriving at such Consolidated Net Income and cash receipts included in
clause (i) of the definition of “Consolidated Net Income” and excluded in arriving at such
Consolidated Net Income, (iii) the amount of the decrease, if any, in Consolidated Working Capital
for such fiscal year (excluding any decrease in Consolidated Working Capital relating to leasehold
improvements for which the Borrower or any of its Subsidiaries is reimbursed in cash or receives a
credit) and (iv) the aggregate net amount of non-cash loss on the Disposition of Property by the
Borrower and its Restricted Subsidiaries during such fiscal year (other than sales of inventory in
the ordinary course of business), to the extent deducted in arriving at such Consolidated Net
Income; minus (b) the sum, without duplication (including, in the case of clauses (ii) and
(viii) below, duplication across periods (provided that all or any portion of the amounts
referred to in clauses (ii) and (viii) below with respect to a period may be applied in the
determination of Excess Cash Flow for any subsequent period to the extent such amounts did not
previously result in a reduction of Excess Cash Flow in any prior period)) of:
(i) the amount of all non-cash gains or credits included in arriving at such
Consolidated Net Income (including, without limitation, credits included in the calculation
of deferred tax assets and liabilities) and cash charges excluded in clauses (i) through
(iv) of the definition of “Consolidated Net Income” and included in arriving at such
Consolidated Net Income;
(ii) the aggregate amount (A) actually paid by the Borrower and its Restricted
Subsidiaries in cash during such fiscal year on account of Capital Expenditures and
Permitted Acquisitions and (B) committed during such fiscal year to be used to make Capital
Expenditures or Permitted Acquisitions which in either case have been actually made or
consummated or for which a binding agreement exists as of the time of determination of
Excess Cash Flow for such fiscal year (in each case under this clause (ii) other than to the
extent any such Capital Expenditure or Permitted Acquisition is made (or, in the case of the
preceding clause (B), is expected to be made) with the proceeds of new long-term
Indebtedness or an Equity Issuance or
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with the proceeds of any Reinvestment Deferred Amount under, and as defined in, the Senior Secured Loan Agreement (as in effect on the Closing
Date));
(iii) the aggregate amount of all regularly scheduled principal payments and all
prepayments of Indebtedness (including, without limitation, the Loans and, if applicable,
the Senior Secured Loans) of the Borrower and its Restricted Subsidiaries made during such
fiscal year (other than in respect of any revolving credit facility to the extent there is
not an equivalent permanent reduction in commitments thereunder and other than to the extent
any such prepayments are the result of the incurrence of additional indebtedness and other
than optional prepayments of the Term Loans under and as defined in the Senior Secured Loan
Agreement and optional prepayments of Revolving Loans and Swingline Loans under and as
defined in the Senior Secured Loan Agreement to the extent accompanied by permanent optional
reductions of the Revolving Commitments under and as defined in the Senior Secured Loan
Agreement);
(iv) the amount of the increase, if any, in Consolidated Working Capital for such
fiscal year (excluding any increase in Consolidated Working Capital relating to leasehold
improvements for which the Borrower or any of its Subsidiaries is reimbursed in cash or
receives a credit);
(v) the aggregate net amount of non-cash gain on the Disposition of Property by the
Borrower and its Restricted Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business), to the extent included in arriving at such
Consolidated Net Income;
(vi) fees and expenses incurred in connection with the Transactions or any Permitted
Acquisition (whether or not consummated);
(vii) purchase price adjustments paid or received in connection with the Merger
Transactions, any Permitted Acquisition or any other acquisition permitted under Section
6.7(h) or (v);
(viii) (A) the net amount of Investments made during such period pursuant to paragraphs
(d), (f), (h), (l), (v) and (y) of Section 6.7 (to the extent, in the case of clause (y),
such Investment relates to Restricted Payments permitted under Section 6.6(c), (e), (h) or
(i)) or committed during such period to be used to make Investments pursuant to such
paragraphs of Section 6.7 which have been actually made or for which a binding agreement
exists as of the time of determination of Excess Cash Flow for such period (but excluding
Investments among the Borrower and its Restricted Subsidiaries) and (B) permitted Restricted Payments made in each case by the
Borrower during such period and permitted Restricted Payments made by any Restricted
Subsidiary to any Person other than Holdings, the Borrower or any of the Restricted
Subsidiaries during such period, in each case, to the extent permitted by Section 6.6(c),
(e), (h) or (i); provided that the amount of Restricted Payments made pursuant to
Section 6.6(e) and deducted pursuant to this clause (viii) shall not exceed $10,000,000 in
any fiscal year;
(ix) the amount (determined by the Borrower) of such Consolidated Net Income which is
mandatorily prepaid or reinvested pursuant to Section 2.12(b) of the Senior Secured Loan
Agreement or any successor provision (or as to which a waiver of the requirements of such
Section applicable thereto has been granted) prior to the date of determination of Excess
Cash Flow for such fiscal year as a result of any Asset Sale or Recovery Event;
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(x) the aggregate amount of any premium or penalty actually paid in cash that is
required to be made in connection with any prepayment of Indebtedness;
(xi) cash payments by the Borrower and its Restricted Subsidiaries during such period
in respect of long-term liabilities of the Borrower and its Subsidiaries other than
Indebtedness;
(xii) the aggregate amount of expenditures actually made by the Borrower and its
Restricted Subsidiaries in cash during such period (including expenditures for the payment
of financing fees) to the extent that such expenditures are not expensed during such period
and are not deducted in calculating Consolidated Net Income;
(xiii) cash expenditures in respect of Hedge Agreements during such period to the
extent not deducted in arriving at such Consolidated Net Income;
(xiv) the amount of taxes (including penalties and interest) paid in cash in such
period or tax reserves set aside or payable (without duplication) in such period to the
extent they exceed the amount of tax expense deducted in determining Consolidated Net Income
for such period;
(xv) the amount of cash payments made in respect of pensions and other post-employment
benefits in such period;
(xvi) payments made in respect of the minority equity interests of third parties in any
non-wholly owned Restricted Subsidiary in such period, including pursuant to dividends
declared or paid on Capital Stock held by third parties in respect of such non-wholly-owned
Restricted Subsidiary; and
(xvii) the amount representing accrued expenses for cash payments (including with
respect to retirement plan obligations) that are not paid in cash in such fiscal year,
provided that such amounts will be added to Excess Cash Flow for the following
fiscal year to the extent not paid in cash during such following fiscal year.
“Excluded Subsidiary”: (a) each Domestic Subsidiary which is an Immaterial Subsidiary
as of the Closing Date and listed on Schedule 1.1 and each future Domestic Subsidiary which is an
Immaterial Subsidiary, in each case, for so long as such Subsidiary remains an Immaterial
Subsidiary, (b) each Domestic Subsidiary that is not a wholly-owned Subsidiary on any date such
Subsidiary would otherwise be required to become a Guarantor pursuant to the requirements of
Section 5.8(a) (for so long as such Subsidiary remains a non-wholly-owned Restricted Subsidiary),
(c) any Foreign Subsidiary Holding Company, (d) each Domestic Subsidiary that is a Subsidiary of a Foreign Subsidiary,
(e) each Unrestricted Subsidiary, (f) each Domestic Subsidiary to the extent that (i) such Domestic
Subsidiary is prohibited by any applicable Contractual Obligation or Requirement of Law from
guaranteeing the Obligations, (ii) any Contractual Obligation prohibits such guarantee without the
consent of the other party or (iii) a guarantee of the Obligations would give any other party to a
Contractual Obligation the right to terminate its obligation thereunder; provided that
clauses (ii) and (iii) shall not be applicable if (A) such other party is a Loan Party or a
wholly-owned Subsidiary or (B) consent has been obtained to provide such guarantee and for so long
as such Contractual Obligation or replacement or renewal thereof is in effect, (g) any Subsidiary
that is a Special Purpose Entity or (h) any other Domestic Subsidiary with respect to which, in the
reasonable judgment of the Administrative Agent (confirmed by notice to the Borrower) the cost of
providing a guarantee is excessive in view of the benefits to be obtained by the Lenders.
“Facility”: the Commitments and the Loans made hereunder.
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“Federal Funds Effective Rate”: for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it.
“First Call Date”: the second anniversary of the Closing Date.
“Foreign Subsidiary”: any Restricted Subsidiary of the Borrower that is not a
Domestic Subsidiary.
“Foreign Subsidiary Holding Company”: any Restricted Subsidiary of the Borrower which
is a Domestic Subsidiary substantially all of the assets of which consist of the Capital Stock of
one or more Foreign Subsidiaries.
“Funded Debt”: with respect to any Person, all Indebtedness of such Person of the
types described in clauses (a), (b), (e), (g)(ii) or, to the extent related to Indebtedness of the
types described in the preceding clauses, (d) of the definition of “Indebtedness”.
“Funding Office”: the office of the Administrative Agent specified in Section 9.2 or
such other office as may be specified from time to time by the Administrative Agent as its funding
office by written notice to the Borrower and the Lenders.
“GAAP”: generally accepted accounting principles in the United States as in effect
from time to time.
“Governmental Authority”: any nation or government, any state, province or other
political subdivision thereof and any governmental entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government and, as to any
Lender, any securities exchange and any self regulatory organization (including the National
Association of Insurance Commissioners).
“Guarantee Agreement”: the Guarantee Agreement to be executed and delivered by
Holdings, the Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit A, as
the same may be amended, supplemented or otherwise modified from time to time.
“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any
obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any
bank under any letter of credit) pursuant to which the guaranteeing person has issued a guarantee,
reimbursement, counterindemnity or similar obligation, in either case guaranteeing or by which such
Person becomes contingently liable for any Indebtedness (the “primary obligations”) of any
other third Person (the “primary obligor”) in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any
such primary obligation or (2) to maintain working capital, equity capital or any other financial
statement condition or liquidity of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase Property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect thereof; provided,
however, that the term
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Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business and reasonable indemnity obligations
in effect on the Closing Date or entered into in connection with any acquisition or disposition of
assets or any Investment permitted under this Agreement. The amount of any Guarantee Obligation of
any guaranteeing Person shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee Obligation is made
and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms
of the instrument embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated or determinable, in
which case, the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum
reasonably anticipated liability in respect thereof (assuming such person is required to perform
thereunder) as determined by such Person in good faith.
“Guarantors”: the collective reference to Holdings and the Subsidiary Guarantors.
“Hedge Agreements”: all agreements with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions, in each case, entered into by the
Borrower or any Restricted Subsidiary.
“Holdings”: as defined in the preamble hereto.
“Holdings IPO”: the issuance by Holdings or any Parent Company of its common Capital
Stock in an underwritten primary public offering (other than a public offering pursuant to a
registration statement on Form S-8) pursuant to an effective registration statement filed with the
SEC in accordance with the Securities Act whether alone or in connection with a secondary public
offering.
“Immaterial Subsidiary”: on any date, any Subsidiary of the Borrower that has had
less than 5% of Consolidated Total Assets and 5% of annual consolidated revenues of the Borrower
and its Restricted Subsidiaries as reflected on the most recent financial statements delivered
pursuant to Section 5.1 prior to such date; provided that at no time shall all Immaterial
Subsidiaries have in the aggregate Consolidated Total Assets or annual consolidated revenues (as reflected on the most recent
financial statements delivered pursuant to Section 5.1 prior to such time) in excess of 7.5% of
Consolidated Total Assets or annual consolidated revenues, respectively, of the Borrower and its
Restricted Subsidiaries.
“Indebtedness” of any Person: without duplication, (a) all indebtedness of such
Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person for the deferred purchase price of
Property or services already received, (d) all Guarantee Obligations by such Person of Indebtedness
of others, (e) all Capital Lease Obligations of such Person, (f) all payments that such Person
would have to make in the event of an early termination, on the date Indebtedness of such Person is
being determined in respect of outstanding Hedge Agreements (such payments in respect of any Hedge
Agreement with a counterparty being calculated subject to and in accordance with any netting
provisions in such Hedge Agreement), (g) the principal component of all obligations, contingent or
otherwise, of such Person (i) as an account party in respect of letters of credit (other than any
letters of credit, bank guarantees or similar instrument in respect of which a back-to-back letter
of credit has been permitted by this Agreement) and (ii) in respect of bankers’ acceptances;
provided that Indebtedness shall not include (A) trade and other ordinary course payables,
accrued expenses and intercompany liabilities arising in the ordinary course of business, (B)
prepaid or deferred revenue arising in the ordinary course of business, (C) purchase price holdbacks
-16-
arising in the ordinary course of business in respect of a portion of the purchase price
of an asset to satisfy unperformed obligations of the seller of such asset or (D) earn-out and
other contingent obligations until such obligations become a liability on the balance sheet of such
Person in accordance with GAAP. The Indebtedness of any Person shall include the Indebtedness of
any partnership in which such Person is a general Partner, other than to the extent that the
instrument or agreement evidencing such Indebtedness expressly limits the liability of such Person
in respect thereof.
“Indebtedness for Borrowed Money”: (a) to the extent the following would be reflected
on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries prepared in
accordance with GAAP, the principal amount of all Indebtedness of the Borrower and its Restricted
Subsidiaries with respect to (i) borrowed money, evidenced by debt securities, debentures,
acceptances, notes or other similar instruments and (ii) Capital Lease Obligations, (b)
reimbursement obligations for letters of credit and financial guarantees (without duplication)
(other than ordinary course of business contingent reimbursement obligations) and (c) Hedge
Agreements; provided that the Obligations shall not constitute Indebtedness for Borrowed
Money.
“Indemnified Liabilities”: as defined in Section 9.5.
“Indemnitee”: as defined in Section 9.5.
“Initial Borrower”: as defined in the preamble hereto.
“Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is
insolvent within the meaning of Section 4245 of ERISA.
“Insolvent”: pertaining to a condition of Insolvency.
“Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including, without limitation, copyrights, copyright licenses, domain
names, patents, patent licenses, trademarks, trademark licenses, trade names, technology, know-how
and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including
the right to receive all proceeds and damages therefrom.
“Interest Payment Date”: (a) commencing on September 30, 2008, the last Business Day
of each March, June, September and December to occur while each Loan is outstanding and the final
maturity date of each Loan and (b) as to any Loan, the date of any repayment or prepayment made in
respect thereof.
“Interest Period”: the period commencing on and including an Interest Payment Date
and ending on and including the day immediately preceding the next succeeding Interest Payment
Date, with the exception that the first Interest Period shall commence on and include the Closing
Date to but excluding September 30, 2008.
“Investments”: as defined in Section 6.7.
“Lead Arrangers”: Credit Suisse Securities (USA) LLC, Banc of America Securities LLC
and Lehman Brothers Inc. in their capacity as joint lead arrangers and joint bookrunners.
“Lenders”: as defined in the preamble hereto.
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“Lien”: any mortgage, pledge, hypothecation, collateral assignment, encumbrance, lien
(statutory or other), charge or other security interest or any other security agreement of any kind
or nature whatsoever (including any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the foregoing). For the
avoidance of doubt, it is understood and agreed that the Borrower and any Restricted Subsidiary
may, as part of its business, grant licenses to third parties to use Intellectual Property owned or
developed by, or licensed to, such entity. For purposes of this Agreement and the other Loan
Documents, such licensing activity, and licenses granted pursuant to the Merger Documents, shall
not constitute a “Lien” on such Intellectual Property. Each of the Administrative Agent and each
Lender understands that any such licenses may be exclusive to the applicable licensees, and such
exclusivity provisions may limit the ability of the Administrative Agent to utilize, sell, lease,
license or transfer the related Intellectual Property or otherwise realize value from such
Intellectual Property pursuant hereto.
“Loan”: as defined in Section 2.1.
“Loan Documents”: the collective reference to this Agreement, the Guarantee Agreement
and the Notes (if any) and any amendment, waiver, supplement or other modification to any of the
foregoing.
“Loan Parties”: Holdings, the Borrower and each Subsidiary Guarantor.
“Management Agreement”: the Management Agreement, by and between Explorer Holding
Corporation, the Borrower and TC Group V, L.L.C., as in effect on the Closing Date and as modified
from time to time with the consent of the Administrative Agent (which consent shall not be
unreasonably withheld or delayed).
“Material Adverse Effect”: a material adverse effect on (a) the business, operations,
assets, financial condition or results of operations of the Borrower and its Restricted
Subsidiaries, taken as a whole, or (b) the material rights and remedies available to the
Administrative Agent and the Lenders, taken as a whole, under the Loan Documents.
“Materials of Environmental Concern”: any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products, polychlorinated biphenyls, urea-formaldehyde
insulation, asbestos, pollutants, contaminants, radioactivity and any other substances that are
defined as hazardous or toxic under any Environmental Law, that are regulated pursuant to any
Environmental Law.
“Maturity Date”: the eighth anniversary of the Closing Date.
“Merger Agreement”: the Agreement and Plan of Merger, dated as of May 15, 2008, by
and among, Holdings, the Company, Explorer Holding Corporation, the Initial Borrower and Booz &
Company Inc.
“Merger Documents”: collectively, the Merger Agreement, the Spin Off Agreement, and
all schedules, exhibits, annexes and amendments thereto (including the execution versions of any
agreements that are exhibits or annexes thereto), in each case, as amended, supplemented or
otherwise modified from time to time.
“Merger Transactions”: the transactions contemplated by the Merger Documents.
“Moody’s”: Moody’s Investors Service, Inc. or any successor to the rating agency
business thereof.
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“Multiemployer Plan”: a Plan that is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
“Net Cash Proceeds”: (a) in connection with any Asset Sale or any Recovery Event, the
proceeds thereof in the form of cash, Cash Equivalents and Permitted Liquid Investments (including
any such proceeds received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but only as and when
received) received by any Loan Party, net of (i) attorneys’ fees, accountants’ fees, investment
banking fees, consulting fees, amounts required to be applied to the repayment of Indebtedness
secured by a Lien expressly permitted hereunder on any asset which is the subject of such Asset
Sale or Recovery Event and other customary fees and expenses actually incurred by any Loan Party in
connection therewith; (ii) taxes paid or reasonably estimated to be payable by any Loan Party as a
result thereof (after taking into account any available tax credits or deductions and any tax
sharing arrangements); (iii) the amount of any reasonable reserve established in accordance with
GAAP against any liabilities (other than any taxes deducted pursuant to clause (ii) above) (A)
associated with the assets that are the subject of such event and (B) retained by the Borrower or
any of the Restricted Subsidiaries, provided that the amount of any subsequent reduction of
such reserve (other than in connection with a payment in respect of any such liability) shall be
deemed to be Net Cash Proceeds of such event occurring on the date of such reduction and (iv) the
pro rata portion of the Net Cash Proceeds thereof (calculated without regard to this clause (iv))
attributable to minority interests and not available for distribution to or for the account of the
Borrower or any Domestic Subsidiary as a result thereof and (b) in connection with any Equity
Issuance or other issuance or sale of debt securities or instruments or the incurrence of Funded
Debt, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees,
investment banking fees, accountants’ fees, consulting fees, underwriting discounts and commissions
and other customary fees and expenses actually incurred in connection therewith.
“New Subsidiary”: as defined in Section 6.2(t).
“Non-Excluded Subsidiary”: any Subsidiary of the Borrower which is not an Excluded
Subsidiary.
“Non-Excluded Taxes”: as defined in Section 2.10(a).
“Non-Guarantor Subsidiary”: any Subsidiary of the Borrower which is not a Subsidiary
Guarantor.
“Non-Recourse Debt”: Indebtedness (a) with respect to which no default would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness of Holdings, the Borrower
or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity and (b) as to which the
lenders or holders thereof will not have any recourse to the capital stock or assets of Holdings,
the Borrower or any of its Restricted Subsidiaries.
“Non-US Lender”: as defined in Section 2.10(d).
“Note”: any promissory note evidencing any Loan, which promissory note shall be in
the form of Exhibit H or such other form as agreed upon by the Administrative Agent and the
Borrower.
“Obligations”: the unpaid principal (including, for the avoidance of doubt, any
original issue discount and the amount of all PIK Interest, if any, that has been added to such
principal) of and interest on (including, without limitation, interest accruing after the maturity
of the Loans and interest
-19-
accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed or allowable in such
proceeding) the Loans and all other obligations and liabilities of the Borrower to the
Administrative Agent or to any Lender, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, in each case, which may arise under, out of,
or in connection with, this Agreement, any other Loan Document or any other document made,
delivered or given in connection herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all
fees, charges and disbursements of counsel to the Administrative Agent or any Lender that are
required to be paid by the Borrower pursuant hereto) or otherwise.
“Offer”: as defined in Section 2.5(d)(i).
“Offer Loans”: as defined in Section 2.5(d)(i).
“Other Taxes”: any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.
“Parent Company”: any direct or indirect parent of Holdings.
“Participant”: as defined in Section 9.6(c).
“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A
of Title IV of ERISA (or any successor).
“Permitted Acquisition”: (a) any acquisition (including, if applicable, in the case
of any Intellectual Property, by way of license) approved by the Required Lenders, (b) any
acquisition made solely with the Net Cash Proceeds of any substantially concurrent Equity Issuance
or capital contribution (other than Disqualified Capital Stock) or (c) any acquisition of a
majority controlling interest in the Capital Stock, or all or substantially all of the assets, of
any Person, or of all or substantially all of the assets constituting a division, product line or
business line of any Person (each, an “Acquisition”), if such Acquisition described in this
clause (c) complies with the following criteria:
(a) no Event of Default shall be in effect immediately prior or after giving effect to
such Acquisition; and
(b) if the total consideration (other than any equity consideration) in respect of such
Acquisition exceeds $10,000,000, the Borrower shall have delivered to the Administrative
Agent a certificate of the Borrower signed by a Responsible Officer to such effect, together
with all relevant financial information for such Subsidiary or asset to be acquired
reasonably requested by the Administrative Agent prior to such acquisition to the extent
available.
“Permitted Business”: the Business and any services, activities or businesses
incidental or directly related or similar to any line of business engaged in by the Borrower and
its Subsidiaries as of the Closing Date or any business activity that is a reasonable extension,
development or expansion thereof or ancillary thereto.
“Permitted Investors”: the collective reference to the Sponsor and its Affiliates
(but excluding any operating portfolio companies of the foregoing), the members of management of
Holdings
-20-
and its Subsidiaries that have ownership interests in Holdings as of the Closing Date,
and the directors of Holdings and its Subsidiaries or any Parent Company on, or as of no later than
60 days following, the Closing Date.
“Permitted Liquid Investments”: (a) securities issued or directly and fully and
unconditionally guaranteed or insured by the United States government or any agency or
instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and
credit obligation of such government with maturities of 24 months or less from the date of
acquisition, (b) certificates of deposit, time deposits and eurodollar time deposits with
maturities of 24 months or less from the date of acquisition, bankers’ acceptances with maturities
not exceeding 24 months and overnight bank deposits, in each case, with any domestic commercial
bank having capital and surplus in excess of $250,000,000, (c) repurchase obligations with a term
of not more than 30 days for underlying securities of the types described in clauses (a) and (b)
above entered into with any financial institution meeting the qualifications specified in clause
(b) above, (d) commercial paper having a rating of at least A-1 from S&P or P-1 from Moody’s (or,
if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from
another rating agency) and maturing within 24 months after the date of acquisition and Indebtedness
and Preferred Stock issued by Persons with a rating of “A” or higher from S&P or “A2” or higher
from Moody’s with maturities of 24 months or less from the date of acquisition, (e) readily
marketable direct obligations issued by any state of the United States or any political subdivision
thereof having one of the two highest rating categories obtainable from either Moody’s or S&P with
maturities of 24 months or less from the date of acquisition, (f) marketable short-term money
market and similar securities having a rating of at least P-1 or A-1 from Moody’s or S&P,
respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an
equivalent rating from another rating agency) and in each case maturing within 24 months after the
date of creation or acquisition thereof, (g) Investments with average maturities of 12 months or
less from the date of acquisition in money market funds rated AA- (or the equivalent thereof) or
better by S&P or Aa3 (or the equivalent thereof) or better by Moody’s, (h) instruments equivalent
to those referred to in clauses (a) through (g) above denominated in euro or pound sterling or any
other foreign currency comparable in credit quality and tenor to those referred to above and
customarily used by corporations for cash management purposes in any jurisdiction outside the
United States to the extent reasonably required in connection with any business conducted by any
Restricted Subsidiary organized in such jurisdiction including, without limitation, certificates of
deposit or bankers’ acceptances of, and bank deposits with, any bank organized under the laws of
any country that is a member of the European Economic Community or Canada or any subdivision
thereof, whose short-term commercial paper rating from S&P is at least A-1 or the equivalent
thereof or from Moody’s is at least P-1 or the equivalent thereof, in each case with maturities of
not more than 24 months from the date of acquisition and (i) investment in funds which invest
substantially all of their assets in Cash Equivalents of the kinds described in clauses (a) through
(h) of this definition.
“Permitted Refinancings”: with respect to any Person, refinancings, replacements,
modifications, refundings, renewals or extensions of Indebtedness provided that (a) there
is no increase in the principal amount (or accrued value) thereof (excluding accrued interest,
fees, discounts, premiums and expenses), (b) the weighted average life to maturity of such
Indebtedness is greater than or equal to the shorter of (i) the weighted average life to maturity
of the Indebtedness being refinanced and (ii) the weighted average life to maturity that would
result if all payments of principal on the Indebtedness being refinanced that were due on or after
the date that is one year following the Maturity Date were instead due one year following the
Maturity Date, (c) if the Indebtedness being refinanced, refunded, modified, renewed or extended is
subordinated in right of payment to the Obligations, such refinancing, refunding, modification,
renewal or extension is subordinated in right of payment to the Obligations (A) on terms at least
as favorable to the Lenders as those contained in the documentation governing the Indebtedness
being refinanced, refunded, modified, renewed or extended, (B) on terms consistent with the then-prevailing
market terms for subordination of comparable Indebtedness or (C) on terms to which
the
-21-
Administrative Agent shall agree, (d) the terms and conditions (including, if applicable, as to
collateral) of any such refinanced, refunded, modified, renewed or extended Indebtedness are not
materially less favorable to the Lenders than the terms and conditions of the Indebtedness being
modified, refinanced, refunded, renewed or extended, (e) no Default or Event of Default shall have
occurred and be continuing at the time thereof or no Default or Event of Default would result from
any such refinancing, refunding, modification, renewal or extension and (f) with respect to any
such Indebtedness that is secured, neither the Borrower nor any Restricted Subsidiary shall be an
obligor or guarantor of any such refinancings, replacements, refundings, renewals or extensions
except to the extent that such Person was such an obligor or guarantor in respect of the applicable
Indebtedness being modified, refinanced, refunded, renewed or extended.
“Permitted Subordinated Indebtedness”: unsecured, senior subordinated or subordinated
Indebtedness of the Borrower or any Restricted Subsidiary (including guarantees thereof by the
Borrower or any Guarantor, as applicable), provided that (a) no scheduled principal
payments, mandatory prepayments, redemptions or sinking fund payments of any Permitted Subordinated
Indebtedness shall be required prior to the date at least 180 days following the Maturity Date
(other than customary offers to purchase upon a change of control, asset sale, customary
acceleration rights upon an event of default and AHYDO Payments), (b) the covenants and events of
default of such Permitted Subordinated Indebtedness (i) shall be, taken as a whole, customary for
Indebtedness of a similar nature as such Permitted Subordinated Indebtedness or (ii) shall
otherwise not have been objected to by the Administrative Agent, after the Administrative Agent
shall have been afforded a period of five Business Days to review such terms of such Permitted
Subordinated Indebtedness, (c) the terms of subordination applicable to any Permitted Subordinated
Indebtedness shall be (i) taken as a whole, customary for unsecured subordinated high yield debt
securities issued by any Affiliates of the Sponsor or (ii) shall otherwise not have been objected
to by the Administrative Agent, after the Administrative Agent shall have been afforded a period of
five Business Days to review such terms of such Permitted Subordinated Indebtedness and (d) no
Default or Event of Default shall have occurred and be continuing at the time of incurrence of such
Indebtedness or would result therefrom.
“Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
“PIK Interest Amount”: as defined in Section 2.8(a).
“Plan”: at a particular time, any employee benefit plan as defined in Section 3(3) of
ERISA and in respect of which Holdings, the Borrower or any of its Restricted Subsidiaries is (or,
if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an
“employer” as defined in Section 3(5) of ERISA, including a Multiemployer Plan.
“Property”: any right or interest in or to property of any kind whatsoever, whether
real, personal or mixed and whether tangible or intangible, including, without limitation, Capital
Stock.
“Public Company Costs”: costs relating to compliance with the provisions of the
Securities Act and the Exchange Act, as applicable to companies with equity or debt securities held
by the public, the rules of national securities exchange companies with listed equity or debt
securities, directors’ compensation, fees and expense reimbursement, costs relating to investor
relations, shareholder meetings and reports to shareholders or debtholders, directors and officers’
insurance and other executive costs, legal and other professional fees, and listing fees.
“Qualified Capital Stock”: any Capital Stock that is not Disqualified Capital Stock.
-22-
“Ratio Calculation Date”: as defined in Section 1.3(a).
“Real Property”: collectively, all right, title and interest of the Borrower or any
other Subsidiary in and to any and all parcels of real property owned or operated by the Borrower
or any other Subsidiary together with all improvements and appurtenant fixtures, easements and
other property and rights incidental to the ownership, lease or operation thereof.
“Recovery Event”: any settlement of or payment in respect of any Property or casualty
insurance claim or any condemnation proceeding relating to any asset of the Borrower or any
Domestic Subsidiary that is a Restricted Subsidiary, in an amount for each such event exceeding
$1,000,000.
“Reference Period”: the period of four fiscal quarters most recently ended
immediately prior to the date of any specified event for which financial statements have been
delivered pursuant to Section 5.1.
“Refinancing”: the repayment of certain existing Indebtedness of the Company on the
Closing Date.
“Register”: as defined in Section 9.6(b)(iv).
“Regulation U”: Regulation U of the Board as in effect from time to time.
“Related Business Assets”: assets (other than cash, Cash Equivalents or Permitted
Liquid Investments) used or useful in a Permitted Business; provided that any assets
received by the Borrower or a Restricted Subsidiary in exchange for assets transferred by the
Borrower or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they
consist of securities of a Person, unless upon receipt of the securities of such Person, such
Person would become a Restricted Subsidiary.
“Release”: any release, spill, emission, leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or
within or upon any building, structure or facility.
“Reorganization”: with respect to any Multiemployer Plan, the condition that such
plan is in reorganization within the meaning of Section 4241 of ERISA.
“Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, other
than those events as to which the thirty day notice period is waived by the PBGC in accordance with
the regulations thereunder.
“Representatives”: as defined in Section 9.14.
“Required Lenders”: at any time, the holders of more than 50% of (a) until the
Closing Date, the Commitments then in effect and (b) thereafter, the aggregate unpaid principal
amount of the Loans then outstanding; provided, however, that determinations of the
“Required Lenders” shall exclude any Commitments or Loans held by any Carlyle Fund.
“Requirement of Law”: as to any Person, the certificate of incorporation and by-laws
or other organizational or governing documents of such Person, and any law, treaty, rule or
regulation or
determination of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property or to which such Person or any of
its Property is subject.
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“Responsible Officer”: the chief executive officer, president, chief financial
officer (or similar title) controller or treasurer (or similar title) of Holdings or the Borrower,
as applicable, or (with respect to Section 5.7) any Restricted Subsidiary and, with respect to
financial matters, the chief financial officer (or similar title), controller or treasurer (or
similar title) of Holdings or the Borrower, as applicable.
“Restricted Payments”: as defined in Section 6.6.
“Restricted Subsidiary”: any Subsidiary of the Borrower which is not an Unrestricted
Subsidiary.
“S&P”: Standard & Poor’s Ratings Group, Inc., or any successor to the rating agency
business thereof.
“SEC”: the Securities and Exchange Commission (or successors thereto or an analogous
Governmental Authority).
“Securities Act”: the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
“Senior Secured Loan Agreement”: the Credit Agreement, dated as of July 31, 2008,
among Holdings, the Borrower, the lenders from time to time parties thereto, Credit Suisse, as
administrative agent and collateral agent, Bank of America, N.A., as syndication agent, and Lehman
Brothers Commercial Bank, C.I.T. Leasing Corporation and Sumitomo Mitsui Bank Corporation, as
documentation agents, Credit Suisse, as issuing lender and Banc of America Securities LLC, Credit
Suisse Securities (USA) LLC, Lehman Brothers Inc. and Sumitomo Mitsui Bank Corporation, as joint
lead arrangers and joint bookrunners, as such agreement may be amended, supplemented or otherwise
modified from time to time or refunded, refinanced, restructured, replaced, renewed, repaid,
increased or extended from time to time to the extent not prohibited by this Agreement (whether in
whole or in part, whether with the original administrative agent and lenders or other agents and
lenders or otherwise, and whether provided under the original Senior Secured Loan Agreement or
other credit agreements, indentures or otherwise, unless such agreement or instrument expressly
provides that it is not intended to be and is not a Senior Secured Loan Agreement hereunder).
“Senior Secured Loan Documents”: the Loan Documents as defined in the Senior Secured
Loan Agreement or any other documentation evidencing any Senior Secured Loan Facility, as the same
may be amended, supplemented or otherwise modified, extended, renewed, refinanced or replaced from
time to time to the extent not prohibited by this Agreement.
“Senior Secured Loan Facilities”: the collective reference to the Senior Secured Loan
Agreement, any Senior Secured Loan Documents, any notes issued pursuant thereto and any guarantee
and collateral agreement, and other instruments and documents executed and delivered pursuant to or
in connection with any of the foregoing, in each case as the same may be amended, supplemented or
otherwise modified from time to time, or refunded, refinanced, restructured, replaced, renewed,
repaid, increased or extended from time to time (whether in whole or in part, whether with the
original agent and lenders or other agents and lenders or otherwise, and whether provided under the
original Senior Secured
Loan Agreement or other credit agreements, indentures or otherwise, unless such agreement
expressly provides that it is not intended to be and is not a Senior Secured Loan Facility
hereunder).
“Senior Secured Loans”: the loans made pursuant to the Senior Secured Loan Agreement.
-24-
“Single Employer Plan”: any Plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA and in respect
of which any Loan Party or any Commonly Controlled Entity 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.
“Solvent”: with respect to any Person, as of any date of determination, (a) the
amount of the “present fair saleable value” of the assets of such Person will, as of such date,
exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as
such quoted terms are determined in accordance with applicable federal and state laws governing
determinations of the solvency of debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount that will be required to pay the
liability of such Person on its debts as such debts become absolute and matured, (c) such Person
will not have, as of such date, an unreasonably small amount of capital with which to conduct its
business and (d) such Person will be able to pay its debts as they mature. For purposes of this
definition, (i) “debt” means liability on a “claim”, (ii) “claim” means any (x) right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured and (iii) except as otherwise provided by
applicable law, the amount of “contingent liabilities” at any time shall be the amount thereof
which, in light of all the facts and circumstances existing at such time, can reasonably be
expected to become actual or matured liabilities.
“Special Mandatory Prepayment”: as defined in Section 2.7.
“Special Purpose Entity”: Booz Allen Hamilton Intellectual Property Holdings, LLC or
any other Person formed or organized primarily for the purpose of holding trademarks, service
marks, trade names, logos, slogans and/or internet domain names containing the mark “Booz” without
the names “Allen” or “Hamilton” and licensing such marks to Booz & Company Inc. and its affiliates.
“Specified Equity Contribution”: as defined in Section 7.2.
“Specified Prepayment Date”: with respect to any Loan to be prepaid pursuant to
Section 2.5(b)(ii), the date fixed for such prepayment by or pursuant to this Agreement.
“Specified Representations”: (a) the representations made by the Company in the
Merger Agreement as are material to the interests of the Lenders, but only to the extent that the
Borrower has the right to terminate its obligations under the Merger Agreement as a result of the
breach of such representations and (b) the representations and warranties set forth in
Sections 3.2, 3.4(a), 3.4(c), 3.11 and 3.13.
“Spin Off Agreement”: the Spin Off Agreement, dated as of May 15, 2008, by and among
the Company, Booz & Company Holdings, LLC, Booz & Company Inc., Booz & Company Intermediate I Inc.
and Booz & Company Intermediate II Inc.
“Sponsor”: The Carlyle Group and any Affiliates thereof (but excluding any operating
portfolio companies of the foregoing).
“Subsidiary”: as to any Person, a corporation, partnership, limited liability company
or other entity of which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by reason of the
happening of a
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contingency) to elect a majority of the Board of Directors of such corporation,
partnership or other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both, by such Person;
provided that any joint venture that is not required to be consolidated with the Borrower
and its consolidated Subsidiaries in accordance with GAAP shall not be deemed to be a “Subsidiary”
for purposes hereof. Unless otherwise qualified, all references to a “Subsidiary” or to
“Subsidiaries” in this Agreement shall refer to a direct or indirect Subsidiary or
Subsidiaries of the Borrower.
“Subsidiary Guarantors”: (a) each Subsidiary other than any Excluded Subsidiary and
(b) any other Subsidiary of the Borrower that is a party to the Guarantee Agreement.
“Supermajority Lenders”: as defined in Section 9.1(a).
“Surviving Borrower”: as defined in the preamble hereto.
“Taxes”: all present and future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, including any interest, additions to tax or
penalties applicable thereto.
“Test Period”: on any date of determination, the period of four consecutive fiscal
quarters of the Borrower (in each case taken as one accounting period) most recently ended on or
prior to such date for which financial statements have been or are required to be delivered
pursuant to Section 5.1.
“Transaction Documents”: the Merger Documents, the Loan Documents and the Senior
Secured Loan Documents.
“Transactions”: (a) the transactions to occur pursuant to the Transaction Documents,
(b) the Refinancing and (c) the Company Reorganization.
“Transferee”: any Assignee or Participant.
“United States”: the United States of America.
“Unrestricted Subsidiary”: (i) any Subsidiary of the Borrower designated as such and
listed on Schedule 3.14 on the Closing Date and (ii) any Subsidiary of the Borrower that is
designated by a resolution of the Board of Directors of the Borrower as an Unrestricted Subsidiary,
but only to the extent that, in the case of each of clauses (i) and (ii), such Subsidiary: (a) has
no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with Holdings, the Borrower or any Restricted Subsidiary unless the
terms of any such agreement, contract, arrangement or understanding are no less favorable to
Holdings, the Borrower or such Restricted Subsidiary than those that might be obtained at the time
from Persons who are not Affiliates of Holdings or the Borrower; (c) is a Person with respect to
which neither Holdings, the Borrower nor any of the Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Capital Stock or warrants, options or other
rights to acquire Capital Stock or (y) to maintain or preserve such Person’s
financial condition or to cause such Person to achieve any specified levels of operating
results; and (d) does not guarantee or otherwise provide credit support after the time of such
designation for any Indebtedness of Holdings, the Borrower or any of its Restricted Subsidiaries,
in the case of clauses (a), (b) and (c), except to the extent not otherwise prohibited by
Section 6. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes hereof. Subject to the foregoing, the Borrower may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary or any Restricted Subsidiary
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to be an
Unrestricted Subsidiary; provided that (i) such designation shall only be permitted if no
Default or Event of Default would be in existence following such designation and after giving
effect to such designation the Borrower shall be in pro forma compliance with the
financial covenants set forth in Section 6.1, (ii) any designation of an Unrestricted Subsidiary as
a Restricted Subsidiary shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary and (iii) any
designation of a Restricted Subsidiary as an Unrestricted Subsidiary shall be deemed to be an
Investment in an Unrestricted Subsidiary and shall reduce amounts available for Investments in
Unrestricted Subsidiaries permitted by Section 6.7 in an amount equal to the fair market value of
the Subsidiary so designated; provided that the Borrower may subsequently redesignate any
such Unrestricted Subsidiary as a Restricted Subsidiary so long as the Borrower does not
subsequently re-designate such Restricted Subsidiary as an Unrestricted Subsidiary for a period of
the succeeding four fiscal quarters.
“US Lender”: as defined in Section 2.10(e).
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms
defined in this Agreement shall have the defined meanings when used in the other Loan Documents or
any certificate or other document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any certificate or other document made
or delivered pursuant hereto or thereto, (i) accounting terms relating to the Borrower and its
Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words
“include”, “includes” and “including” shall be deemed to be followed by the phrase “without
limitation”, and (iii) references to agreements or other Contractual Obligations shall, unless
otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended,
supplemented, restated or otherwise modified from time to time.
(c) The words “hereof”, “herein” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Annex, Section, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The term “license” shall include sub-license. The term “documents” includes any and all
documents whether in physical or electronic form.
The meanings given to terms defined herein shall be equally applicable to both the singular
and plural forms of such terms.
1.3 Pro Forma Calculations. Solely for purposes of determining whether any action is otherwise permitted to be taken
hereunder, the Consolidated Total Leverage Ratio and Consolidated Secured Leverage Ratio shall be
calculated as follows:
(a) In the event that the Borrower or any Restricted Subsidiary incurs, assumes,
guarantees, redeems, retires or extinguishes any Indebtedness subsequent to the commencement
of the period for which such ratio is being calculated but prior to or simultaneously with
the event for which the calculation of such ratio is made (a “Ratio Calculation
Date”), then such ratio shall be calculated giving pro forma effect to
such incurrence, assumption, guarantee, redemption, retirement or extinguishment of
Indebtedness as if the same had occurred at the beginning of the applicable four-quarter
period.
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(b) For purposes of making the computation referred to above, if any acquisitions,
Dispositions or designations of Unrestricted Subsidiaries or Restricted Subsidiaries are
made (or committed to be made pursuant to a definitive agreement) during the four-quarter
reference period or subsequent to such reference period and on or prior to or simultaneously
with the relevant Ratio Calculation Date, Consolidated EBITDA shall be calculated on a
pro forma basis, assuming that all such acquisitions, Dispositions and
designations had occurred on the first day of the four-quarter reference period in a manner
consistent, where applicable, with the pro forma adjustments set forth in
clause (j) of and the last proviso of the first sentence of the definition of “Consolidated
EBITDA”. If since the beginning of such period any Person that subsequently became a
Restricted Subsidiary or was merged with or into the Borrower or any of its Restricted
Subsidiaries since the beginning of such period shall have made any acquisition or
Disposition, in each case with respect to a business or an operating unit of a business,
that would have required adjustment pursuant to this provision, then such ratio shall be
calculated giving pro forma effect thereto for such period as if such
acquisition or Disposition had occurred at the beginning of the applicable four-quarter
period.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments. Subject to the terms and conditions hereof, each Lender severally agrees
to make a term loan (a “Loan”) in Dollars to the Borrower on the Closing Date in an amount
which will not exceed the amount of the Commitment of such Lender. The Borrower and the Lenders
acknowledge that the Loans funded on the Closing Date will be funded with original issue discount
of 1%. Notwithstanding the foregoing, the aggregate outstanding principal amount of the Loans for
all purposes of this Agreement and the other Loan Documents shall be the stated principal amount
thereof outstanding from time to time. After the making of the Loans to be made hereunder on the
Closing Date, any unused Commitments hereunder will terminate on the Closing Date.
2.2 Procedure for Borrowing. The Borrower shall give the Administrative Agent irrevocable
written notice (which notice must be received by the Administrative Agent prior to 12:00 Noon, New
York City time, one Business Day prior to the anticipated Closing Date) requesting that the Lenders
make the Loans on the Closing Date and specifying the amount to be borrowed. Upon receipt of such
notice the Administrative Agent shall promptly notify each Lender thereof. Not later than
11:00 A.M., New York City time, on the Closing Date each Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available funds equal to the
Loan to be made by such Lender. The Administrative
Agent shall credit the account designated in writing by the Borrower to the Administrative
Agent with the aggregate of the amounts made available to the Administrative Agent by the Lenders
in immediately available funds.
2.3 Repayment of Loans. (a) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of the appropriate Lender (i) the then unpaid principal amount
(including, for the avoidance of doubt, all PIK Interest Amounts, if any, that have been added to
such principal amount) of each Loan of such Lender made to the Borrower outstanding on the Maturity
Date (or on such earlier date on which the Loans become due and payable pursuant to Section 7.1).
The Borrower hereby further agrees to pay interest on the unpaid principal amount (including, for
the avoidance of doubt, all PIK Interest Amounts, if any, that have been added to such principal
amount) of the Loans made to the Borrower from time to time outstanding from the date made until
payment in full thereof at the rates per annum, and on the dates, set forth in Section 2.8.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such
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Lender from
time to time, including the amounts of principal and interest payable and paid to such Lender from
time to time under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall maintain the Register pursuant
to Section 9.6(b)(iv), and a subaccount therein for each Lender, in which shall be recorded (i) the
amount of each Loan made hereunder and any Note evidencing such Loan, (ii) the amount of any
principal, interest and fees, as applicable, due and payable or to become due and payable from the
Borrower to each Lender hereunder, (iii) each payment of a PIK Interest Amount pursuant to Section
2.8, (iv) each interest election made pursuant to Section 2.8 and (v) the amount of any sum
received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.
(d) The entries made in the Register and the accounts of each Lender maintained pursuant to
Section 2.3(c) shall, to the extent permitted by applicable law, be presumptively correct absent
demonstrable error of the existence and amounts of the obligations of the Borrower therein
recorded; provided, however, that the failure of the Administrative Agent or any
Lender to maintain the Register or any such account, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the
Borrower by such Lender in accordance with the terms of this Agreement.
2.4 Administrative Fees.The Borrower agrees to pay to the Administrative Agent the fees in
the amounts and on the dates as set forth in any fee agreements with the Administrative Agent.
2.5 Optional Prepayments. (a) The Borrower may at any time and from time to time prepay
the Loans, in whole or in part, without premium or penalty except as specifically provided in
Sections 2.5(b) and (c), upon irrevocable written notice delivered to the Administrative Agent no
later than 12:00 Noon, New York City time, three Business Days prior thereto, which notice shall
specify the date and amount of prepayment. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof. If any such notice is given, the amount specified
in such notice shall be due and payable on the
date specified therein (provided that such notice may be conditioned on receiving the
proceeds of any refinancing), together with accrued interest to such date on the amount prepaid.
Partial prepayments of Loans shall be in an aggregate principal amount of $1,000,000 or a whole
multiple of $100,000 in excess thereof, and in each case shall be subject to the provisions of
Section 2.9.
(b) (i) Prior to the fourth anniversary of the Closing Date, each prepayment of the Loans made
pursuant to Section 2.5(a) shall be made together with a prepayment premium in an amount equal to
(A) if such prepayment is made on or after the third anniversary of the Closing Date but prior to
the fourth anniversary of the Closing Date, 1.0% of the principal amount prepaid and (B) if such
prepayment is made on or after the second anniversary of the Closing Date but prior to the third
anniversary of the Closing Date, 2.0%.
(ii) Prior to the second anniversary of the Closing Date, each prepayment of the Loans
made pursuant to Section 2.5(a) shall be made together with a prepayment premium in an
amount equal to the Applicable Make-Whole Premium. No prepayment premium shall be payable
in respect of any prepayment made on or after the fourth anniversary of the Closing Date.
(c) Notwithstanding the foregoing (but subject to the notice requirements set forth in Section
2.5(a)), prior to the second anniversary of the Closing Date, the Borrower may prepay Loans in an
aggregate principal amount not to exceed 40% of the stated aggregate principal amount of Loans made
on the Closing Date with all or a portion of the Net Cash Proceeds from one or more Holdings IPOs;
provided, however, that any such prepayment pursuant to this Section 2.5(c), (i)
shall be made together
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with a prepayment premium in an amount equal to 5.0% of the principal amount
prepaid and (ii) shall occur within 90 days of the closing of the related Holdings IPO.
(d) Notwithstanding anything to the contrary contained in this Section 2.5 or any other
provision of this Agreement and without otherwise limiting the rights in respect of prepayments of
the Loans of the Borrower and its Subsidiaries, so long as no Default has occurred and is
continuing, the Borrower or any Subsidiary of the Borrower may repurchase outstanding Loans
pursuant to this Section 2.5(d) on the following basis:
(i) Holdings, the Borrower or any Subsidiary of the Borrower may make one or more
offers (each, an “Offer”) to repurchase all or any portion of the Loans (such Loans,
the “Offer Loans”) of Lenders; provided that, (A) Holdings, the Borrower or
such Subsidiary delivers a notice of such Offer to the Administrative Agent and all Lenders
no later than noon (New York City time) at least five Business Days in advance of a proposed
consummation date of such Offer indicating (1) the last date on which such Offer may be
accepted, (2) the maximum dollar amount of such Offer, (3) the repurchase price per dollar
of principal amount of such Offer Loans at which Holdings, the Borrower or such Subsidiary
is willing to repurchase such Offer Loans and (4) the instructions, consistent with this
Section 2.5(d) with respect to the Offer, that a Lender must follow in order to have its
Offer Loans repurchased; (B) the maximum dollar amount of each Offer shall be no less than
$10,000,000; (C) Holdings, the Borrower or such Subsidiary shall hold such Offer open for a
minimum period of two Business Days; (D) a Lender who elects to participate in the Offer may
choose to sell all or part of such Lender’s Offer Loans; and (E) such Offer shall be made to
Lenders holding the Offer Loans on a pro rata basis in accordance with the respective
principal amount then due and owing to the Lenders; provided, further that,
if any Lender elects not to participate in the Offer, either in whole or in part, the amount
of such Lender’s Offer Loans not being tendered shall be excluded in calculating the pro
rata amount applicable to the balance of such Offer Loans;
(ii) With respect to all repurchases made by Holdings, the Borrower or a Subsidiary of
the Borrower, such repurchases shall be deemed to be voluntary prepayments pursuant to this
Section 2.5 in an amount equal to the aggregate principal amount of such Loans,
provided that such repurchases shall not be subject to the provisions of paragraphs
(a) and (b) of this Section 2.5 or Section 2.9;
(iii) Following repurchase by Holdings, the Borrower or any Subsidiary of the Borrower,
(A) all principal and accrued and unpaid interest on the Loans so repurchased shall be
deemed to have been paid for all purposes and no longer outstanding (and may not be resold
by Holdings, the Borrower or such Subsidiary), for all purposes of this Agreement and all
other Loan Documents and (B) Holdings, the Borrower or any Subsidiary of the Borrower, as
the case may be, will promptly advise the Administrative Agent of the total amount of Offer
Loans that were repurchased from each Lender who elected to participate in the Offer; and
(iv) Failure by Holdings, the Borrower or a Subsidiary of the Borrower to make any
payment to a Lender required by an agreement permitted by this Section 2.5(d) shall not
constitute an Event of Default under Section 7.1(a).
2.6 Change of Control Offer. (a) Upon the occurrence of a Change of Control, each Lender
shall have the right to require that the Borrower prepay such Lender’s Loans at a price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date
of prepayment (subject to the right of Lenders to receive interest on the relevant Interest Payment
Date), in accordance with the terms contemplated in Section 2.6(b). In the event that at the time
of such Change of
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Control the terms of the Senior Secured Loan Facilities restrict or prohibit the
prepayment of Loans pursuant to this Section, then prior to the mailing of the notice to Lenders
provided for in Section 2.6(b) below but in any event within 30 days following any Change of
Control, the Borrower shall, unless otherwise agreed by the Supermajority Lenders, (i) repay in
full all such Senior Secured Loans and terminate the Senior Secured Loan Agreement or (ii) obtain
the requisite consent under the Senior Secured Loan Facilities to permit the prepayment of the
Loans as provided for in Section 2.6(b).
(b) Within 30 days following any Change of Control, the Borrower shall mail a notice to the
Administrative Agent (which shall promptly inform each Lender) (the “Change of Control
Offer”) stating:
(i) that a Change of Control has occurred and that each Lender has the right to
require the Borrower to prepay such Lender’s Loans at a prepayment price in cash
equal to 101% of the principal amount thereof on the date of prepayment, plus
accrued and unpaid interest, if any, to the date of prepayment (subject to the right
of Lenders to receive interest on the relevant Interest Payment Date);
(ii) the circumstances and relevant facts regarding such Change of Control
(including information with respect to pro forma historical income, cash flow and
capitalization, in each case after giving effect to such Change of Control);
(iii) the prepayment date (which shall be no earlier than 10 days nor later
than 30 days from the date such notice is mailed); and
(iv) the instructions, as determined by the Borrower, consistent with this
Section, that a Lender must follow in order to have its Loans prepaid.
(c) Lenders electing to have a Loan prepaid will be required to execute an appropriate form
duly completed, to the Administrative Agent. Lenders will be entitled to withdraw their election
if the Administrative Agent receives not later than three Business Days prior to the prepayment
date, a facsimile transmission or letter setting forth the name of the Lender, the principal amount
of Loans which was requested to be prepaid by the Lender and a statement that such Lender is
withdrawing its election to have such Loans prepaid.
(d) On the prepayment date, the Borrower shall prepay the Loans of all Lenders who accept the
Change of Control Offer at a prepayment price equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of prepayment.
(e) Notwithstanding the foregoing provisions of this Section, the Borrower shall not be
required to make a Change of Control Offer following a Change of Control if (i) a third party makes
the Change of Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section applicable to a Change of Control Offer made by the Borrower
and prepays all Loans as to which offers for prepayment have been validly accepted and not
withdrawn under such Change of Control Offer or (ii) the Borrower optionally prepays the Loans
pursuant to Section 2.5 prior to the applicable Change of Control prepayment date.
2.7 Special Mandatory Prepayment. If the aggregate amount which would be includible in
gross income for federal income tax purposes with respect to the Loans before the close of any
“accrual period” (as defined in Section 1272(a)(5) of the Code and Treasury Regulation Section
1.1272-1(b)(1)(ii)) ending after five years from the Closing Date (the “Aggregate
Inclusion”) exceeds an amount equal to the sum of (x) the aggregate amount of interest to be
paid in cash under the Loans before the close of such
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accrual period and (y) the product of the
issue price of the Loans (as determined under Section 1273(b) of the Code) multiplied by the yield
to maturity of the Loans (as determined for purposes of applying Section 163(i) of the Code) (the
sum of (x) and (y), the “Adjusted Actual Payment”), the Borrower shall, before the close of
any such accrual period, make a mandatory prepayment in cash (any such prepayment, a “Special
Mandatory Prepayment”) on the Loans in an amount equal to the amount by which the Aggregate
Inclusion as of such time exceeds the Adjusted Actual Payment. Such Special Mandatory Prepayment
will be applied against and reduce the principal amount of the Loans outstanding at such time, but
will be taken into account as payments of interest for purposes of calculating any subsequent
Special Mandatory Prepayments. The Lenders and the Borrower intend that the Special Mandatory
Prepayments be sufficient to result in the Loans being treated as not having “significant original
issue discount” within the meaning of Section 163(i)(2) of the Code, and this paragraph shall be
interpreted in a manner consistent with such intent.
2.8 Interest Rates, Payment Dates; Computation of Interest and Fees. (a) Subject to the
paragraph (b) of this Section 2.8, the Loans shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal to 13.00%. Not
less than 3 Business Days prior to the commencement of each Interest Period, the Borrower may elect
by delivery of a written notice to the Administrative Agent to pay interest in excess of 11.00% per
annum (or any portion of such excess interest (other than interest due under Section 2.8(b))) on
the Interest Payment Date for such Interest Period through the addition of such amount (the
“PIK Interest Amount”) to the then-outstanding aggregate principal amount of the
Loans. For all purposes under this Agreement, all PIK Interest Amounts shall be treated as
principal amounts of the Loans and all references in this Agreement to Loans shall include PIK
Interest Amounts. PIK Interest Amounts shall be allocated ratably to the principal amounts of the
Loans of each Lender in accordance with the aggregate principal amount of outstanding Loans of such
Lender. The Administrative Agent shall promptly deliver to each Lender any notice so received by
the Borrower. In the absence of such an election for any such Interest Period, interest on the
Loans shall be payable entirely in cash for such Interest Period. With respect to the Interest
Period commencing on the Closing Date, the Borrower will be deemed to have elected to pay all
interest for such Interest Period in cash.
(b) (i) If all or a portion of the principal amount of, or any interest payable on, any Loan
or any other amount shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate that
would otherwise be applicable thereto pursuant to the foregoing provisions of this Section 2.8
plus 2% (all of which shall be payable in cash), in each case from the date of such
non-payment until such amount is paid in full (after as well as before judgment).
(c) Interest shall be payable by the Borrower in arrears on each Interest Payment Date;
provided that interest accruing pursuant to paragraph (b) of this Section 2.8 shall be
payable from time to time on demand.
2.9 Pro Rata Treatment and Payments. (a) Each payment or prepayment in respect of
principal or interest (including any PIK Interest Amount) in respect of the Loans shall be applied
to the amounts of such obligations owing to the Lenders, pro rata according to the respective
amounts then due and owing to such Lenders, other than payments pursuant to Section 2.5(d) or 2.12.
(b) All payments (including prepayments) to be made by the Borrower hereunder, whether on
account of principal, interest, fees or otherwise, shall be made without setoff, deduction or
counterclaim and shall be made prior to 2:00 P.M., New York City time, on the due date thereof to
the Administrative Agent, for the account of the Lenders, at the Funding Office, in immediately
available funds. Any payment received by the Administrative Agent after 2:00 P.M., New York City
time may be
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considered received on the next Business Day in the Administrative Agent’s sole
discretion. The Administrative Agent shall distribute such payments to the relevant Lenders
promptly upon receipt in like funds as received. If any payment hereunder becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next succeeding Business
Day. In the case of any extension of any payment of principal pursuant to the preceding sentence,
interest thereon shall be payable at the then applicable rate during such extension.
(c) Unless the Administrative Agent shall have been notified in writing by any Lender prior to
a borrowing that such Lender will not make the amount that would constitute its share of such
borrowing available to the Administrative Agent, the Administrative Agent may assume that such
Lender is making such amount available to the Administrative Agent, and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If
such amount is not made available to the Administrative Agent by the required time on the Closing
Date, such Lender shall pay to the Administrative Agent on demand, such amount with interest
thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate
determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation, for the period until such Lender makes such amount immediately available to the
Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing under this
paragraph shall be presumptively correct in the absence of demonstrable error. If such Lender’s
share of such borrowing is not made available to the Administrative Agent by such Lender within
three Business Days after the Closing Date, the Administrative Agent shall give notice of such fact
to the Borrower and the Administrative Agent shall also be entitled to recover such amount with
interest thereon at the rate per annum applicable to the Loans, on demand, from the Borrower.
Nothing herein shall be deemed to limit the rights of the Administrative Agent or the Borrower
against any defaulting Lender.
(d) Unless the Administrative Agent shall have been notified in writing by the Borrower prior
to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make
such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required to, in reliance
upon such assumption, make available to the relevant Lenders their respective pro rata shares of a
corresponding amount. If such payment is not made to the Administrative Agent by the Borrower
within three Business Days after such due date, the Administrative Agent shall be entitled to
recover, on demand, from each relevant Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per annum equal to the
daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of
the Administrative Agent or any Lender against the Borrower.
2.10 Taxes. (a) Except as otherwise provided in this Agreement or as required by law, all
payments made by the Borrower or any Loan Party under this Agreement and the other Loan Documents
to the Administrative Agent or any Lender under this Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any Taxes, excluding (i) net income Taxes,
net profits Taxes, and franchise Taxes (and net worth Taxes and capital Taxes imposed in lieu of
net income Taxes) imposed on the Administrative Agent or any Lender (A) by the jurisdiction (or any
political subdivision thereof) under the laws of which the Administrative Agent or any Lender (or,
in the case of a pass-through entity, any of its beneficial owners) is organized or in which its
applicable lending office is located or (B) as a result of a present or former connection between
the Administrative Agent or such Lender or beneficial owner and the jurisdiction of the
Governmental Authority imposing such Tax or any political subdivision or taxing authority thereof
or therein (other than any such connection arising solely from the Administrative Agent or such
Lender having executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document) and (ii) any branch profits or backup
withholding Taxes imposed by the United States or any similar Tax
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imposed by any other jurisdiction
in which the applicable Borrower or any Loan Party under this Agreement and the other Loan
Documents is located or is deemed to be doing business. If any such non-excluded Taxes
(“Non-Excluded Taxes”) or Other Taxes are required to be withheld from any amounts payable
by the Borrower or any Loan Party under this Agreement and the other Loan Documents to the
Administrative Agent or any Lender hereunder, the amounts so payable to the Administrative Agent or
such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such
Lender (after deduction or withholding of all Non-Excluded Taxes and Other Taxes including
Non-Excluded Taxes attributable to amounts payable under this Section 2.10(a)) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this Agreement;
provided, however, that the Borrower or any Loan Party under this Agreement and the
other Loan Documents shall not be required to increase any such amounts payable to or in respect of
any Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender’s (or,
in the case of a pass-through entity, any of its beneficial owners’) failure to comply with the
requirements of paragraph (d) or (e), as applicable, of this Section 2.10 or (ii) that are
withholding Taxes imposed on amounts payable under this Agreement or the other Loan Documents,
unless such Taxes are imposed as a result of a Change in Law occurring after such Lender becomes a
party hereto or as a result of any change in facts, occurring after such Lender
becomes a party hereto, that is not attributable to the Lender, except (in the case of an
assignment) to the extent that such Lender’s assignor (if any) was entitled, at the time of such
assignment, to receive additional amounts from the Borrower or any Loan Party under this Agreement
and the other Loan Documents with respect to such Taxes pursuant to this paragraph.
(b) In addition, the Borrower or any Loan Party under this Agreement and the other Loan
Documents shall pay any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower and any Loan
Party under this Agreement and the other Loan Documents, as promptly as possible thereafter the
Borrower shall send to the Administrative Agent for the account of the Administrative Agent or
Lender, as the case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof if such receipt is obtainable, or, if not, such other evidence of
payment as may reasonably be required by the Administrative Agent or such Lender. If the Borrower
or any Loan Party under this Agreement and the other Loan Documents fails to pay any Non-Excluded
Taxes or Other Taxes that the Borrower or any Loan Party under this Agreement and the other Loan
Documents is required to pay pursuant to this Section 2.10 (or in respect of which the Borrower or
any Loan Party under this Agreement and the other Loan Documents would be required to pay increased
amounts pursuant to Section 2.10(a) if such Non-Excluded Taxes or Other Taxes were withheld) when
due to the appropriate taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Borrower or any Loan Party under this
Agreement and the other Loan Documents shall indemnify the Administrative Agent and the Lenders for
any payments by them of such Non-Excluded Taxes or Other Taxes and for any incremental taxes,
interest or penalties that become payable by the Administrative Agent or any Lender as a result of
any such failure within thirty days after the Lender or the Administrative Agent delivers to the
Borrower (with a copy to the Administrative Agent) either (a) a copy of the receipt issued by a
Governmental Authority evidencing payment of such Taxes or (b) certificates as to the amount of
such payment or liability prepared in good faith.
(d) Each Lender (and, in the case of a pass-through entity, each of its beneficial owners)
that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) (a
“Non-US Lender”) shall deliver to the Borrower and the Administrative Agent (or, in the
case of a Participant, to the Borrower and to the Lender from which the related participation shall
have been purchased) (i) two accurate and complete copies of IRS Form W-8ECI or W-8BEN, or, (ii) in
the case of a Non-US Lender claiming exemption from United States federal withholding tax under
Section 871(h) or 881(c) of the
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Code with respect to payments of “portfolio interest”, a statement
substantially in the form of Exhibit F and two accurate and complete copies of IRS Form W-8BEN, or
any subsequent versions or successors to such forms, in each case properly completed and duly
executed by such Non-US Lender claiming complete exemption from, or a reduced rate of, United
States federal withholding tax on all payments by the Borrower or any Loan Party under this
Agreement and the other Loan Documents. Such forms shall be delivered by each Non-US Lender on or
before the date it becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In addition, each Non-US
Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-US Lender. Each Non-US Lender shall (i) promptly notify the Borrower at any
time it determines that it is no longer in a position to provide any previously delivered
certificate to the Borrower (or any other form of certification adopted by the United States taxing
authorities for such purpose) and (ii) take such steps as shall not be disadvantageous to it, in
its reasonable judgment, and as may be reasonably necessary (including the re-designation of its
lending office pursuant to Section 2.11) to avoid any requirement of applicable laws of any such
jurisdiction that the Borrower or any Loan Party make any deduction or withholding for taxes from
amounts payable to
such Lender. Notwithstanding any other provision of this paragraph, a Non-US Lender shall not
be required to deliver any form pursuant to this paragraph that such Non-US Lender is not legally
able to deliver.
(e) Each Lender (and, in the case of a Lender that is a non-United States pass-through entity,
each of its beneficial owners) that is a United States person (as such term is defined in Section
7701(a)(30) of the Code) (a “US Lender”) shall deliver to the Borrower and the
Administrative Agent two accurate and complete copies of IRS Form W-9, or any subsequent versions
or successors to such form and certify that such lender is not subject to backup withholding. Such
forms shall be delivered by each US Lender on or before the date it becomes a party to this
Agreement. In addition, each US Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such US Lender. Each US Lender shall promptly
notify the Borrower at any time it determines that it is no longer in a position to provide any
previously delivered certifications to the Borrower (or any other form of certification adopted by
the United States taxing authorities for such purpose).
(f) If the Administrative Agent or any Lender determines, in good faith, that it has received
a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the
Borrower or any Loan Party or with respect to which the Borrower or any Loan Party has paid
additional amounts pursuant to this Section 2.10, it shall promptly pay over such refund to the
Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the
Borrower or any Loan Party under this Section 2.10 with respect to the Non-Excluded Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or
such Lender and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or such Lender is
required to repay such refund to such Governmental Authority; provided, further, that the Borrower
shall not be required to repay to the Administrative Agent or the Lender an amount in excess of the
amount paid over by such party to the Borrower pursuant to this Section 2.10. This paragraph shall
not be construed to require the Administrative Agent or any Lender to make available its tax
returns (or any other information relating to its taxes which it deems confidential) to the
Borrower or any other Person. In no event will the Administrative Agent or any Lender be required
to pay any amount to the Borrower the payment of which would place the Administrative Agent or such
Lender in a less favorable net after-tax position than the Administrative Agent or such Lender
would have been in if the additional amounts giving rise to such refund of any Non-Excluded Taxes
or Other Taxes
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had never been paid. The agreements in this Section 2.10 shall survive the
termination of this Agreement and the payment of the Obligations.
2.11 Change of Lending Office. Each Lender agrees that, upon the occurrence of any event
giving rise to the operation of Section 2.10(a) with respect to such Lender, it will, if requested
by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender)
to designate another lending office for any Loans affected by such event with the object of
avoiding the consequences of such event; provided that such designation is made on terms
that, in the good faith judgment of such Lender, cause such Lender and its lending office(s) to
suffer no material economic, legal or regulatory disadvantage and; provided,
further, that nothing in this Section 2.11 shall affect or postpone any of the obligations
of the Borrower or the rights of any Lender pursuant to Section 2.10(a).
2.12 Replacement of Lenders. The Borrower shall be permitted to (a) replace with a financial institution or financial
institutions, or (b) prepay, subject to any applicable premium required by Section 2.5, the Loans
of, any Lender that (i) requests reimbursement for amounts owing or otherwise results in increased
costs imposed on the Borrower or on account of which the Borrower is required to pay additional
amounts to any Governmental Authority pursuant to Section 2.10; (ii) has refused to consent to any
waiver or amendment with respect to any Loan Document that requires such Lender’s consent and has
been consented to by the Required Lenders; or (iii) becomes the subject of a bankruptcy or
insolvency proceeding; provided that, in the case of a replacement pursuant to clause (a)
above, (A) such replacement does not conflict with any Requirement of Law, (B) the replacement
financial institution or financial institutions shall purchase, (x) until the second anniversary of
the Closing Date, at a price equal to 102% of the principal amount of the Loans being purchased,
and (y) thereafter, at par plus any premium that would have been required to be paid at the time by
the Borrower were the Borrower to make a voluntary prepayment of such Loans pursuant to Section
2.5, all Loans, and, in each case, other amounts owing to such replaced Lender on or prior to the
date of replacement; provided, that the Borrower may pay any premium owed under this clause
(B) on behalf of such replacement financial institution or financial institutions, (C) the
replacement financial institution or financial institutions, (x) if not already a Lender, shall be
reasonably satisfactory to the Administrative Agent to the extent that an assignment to such
replacement financial institution of the rights and obligations being acquired by it would
otherwise require the consent of the Administrative Agent pursuant to Section 9.6(b)(i)(B) and (y)
shall pay (unless otherwise paid by the Borrower) any processing and recordation fee required under
Section 9.6(b)(ii)(B), (D) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions of Section 9.6, (E) if applicable, the replacement financial
institution or financial institutions shall consent to such amendment or waiver and (F) any such
replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative
Agent or any other Lender shall have against the replaced Lender. Prepayments pursuant to clause
(b) above (i) shall be accompanied by accrued and unpaid interest on the principal amount so
prepaid up to the date of such prepayment and (ii) shall not be subject to the provisions of
Section 2.9.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and to make the Loans,
Holdings (to the extent applicable) and the Borrower hereby jointly represent and warrant (as to
itself and each of its Restricted Subsidiaries) to the Agent and each Lender, which representations
and warranties shall be deemed made on the Closing Date (to the extent relating to Holdings or the
Initial Borrower, immediately before giving effect to the Merger Transactions and to the extent
relating to Holdings, the Surviving Borrower or any Restricted Subsidiary, immediately after giving
effect to the Merger Transactions) that:
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3.1 Financial Condition. (a) The audited consolidated balance sheet of the Company and
its Subsidiaries as at March 31, 2006, March 31, 2007 and March 31, 2008, and the related
statements of income and of cash flows for the fiscal years ended on such dates, in each case with
consolidating schedules for the U.S. government business of the Company and the other businesses of
the Company reported on by and accompanied by an unqualified report from Ernst & Young LLP, present
fairly in all material respects the financial condition of the Company and its Subsidiaries as at
such date, and the results of, their operations, their cash flows and their changes in
stockholders’ equity for the respective fiscal years then ended. All such financial statements,
including the related schedules and notes thereto and year end adjustments, have been prepared in
accordance with GAAP (except as otherwise noted therein).
(b) The pro forma consolidated balance sheet of the Borrower and its
Subsidiaries as of June 30, 2008 (i) has been prepared in good faith based on assumptions that are
believed by the Borrower to be reasonable at the time made (it being understood that such
assumptions are based on good faith estimates with respect to certain items and that the actual
amounts of such items on the Closing Date is subject to variation)), (ii) accurately reflects all
adjustments necessary to give effect to the Transactions and (iii) presents fairly, in all material
respects, the pro forma financial position of the Borrower and its Subsidiaries as
of June 30, 2008, as if the Transactions had occurred on such date; provided that such
pro forma balance sheet has been prepared without giving effect to all purchase
accounting or similar adjustments.
3.2 No Change. As of the Closing Date, there has been no event, circumstance,
development, change or effect that has had a Closing Date Material Adverse Effect since the date of
the Merger Agreement.
3.3 Existence; Compliance with Law. Except as set forth in Schedule 3.3, each of
Holdings, the Borrower and its Restricted Subsidiaries (other than any Immaterial Subsidiaries)
(a) (i) is duly organized (or incorporated), validly existing and in good standing (or, only where
if applicable, the equivalent status in any foreign jurisdiction) under the laws of the
jurisdiction of its organization or incorporation, (ii) has the corporate or organizational power
and authority, and the legal right, to own and operate its Property, to lease the Property it
operates as lessee and to conduct the business in which it is currently engaged, except where the
failure to do so would not reasonably be expected to have a Material Adverse Effect and (iii) is
duly qualified as a foreign corporation or limited liability company and in good standing (where
such concept is relevant) under the laws of each jurisdiction where its ownership, lease or
operation of Property or the conduct of its business requires such qualification except, in each
case, to the extent that the failure to be so qualified or in good standing (where such concept is
relevant) would not have a Material Adverse Effect and (b) is in compliance with all Requirements
of Law except to the extent that any such failure to comply therewith would not have a Material
Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations. (a) Each Loan Party has the
corporate power and authority to make, deliver and perform the Loan Documents to which it is a
party and, in the case of the Borrower, to borrow hereunder. Each Loan Party has taken all
necessary corporate or other action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and, in the case of the Borrower, to authorize the extensions
of credit on the terms and conditions of this Agreement.
(b) No consent or authorization of, filing with, notice to or other act by or in respect of,
any Governmental Authority is required in connection with the extensions of credit hereunder or the
execution, delivery, performance, validity or enforceability of this Agreement or any of the other
Loan Documents, except consents, authorizations, filings and notices described in Schedule 3.4,
which
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consents, authorizations, filings and notices have been obtained or made and are in full
force and effect or the failure to obtain which would not reasonably be expected to have a Material
Adverse Effect.
(c) Each Loan Document has been duly executed and delivered on behalf of each Loan Party that
is a party thereto. This Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party that is a party thereto,
enforceable against each such Loan Party in accordance with its terms, except as enforceability may
be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles (whether enforcement
is sought by proceedings in equity or at law) and the implied covenants of good faith and fair
dealing.
3.5 No Legal Bar. The execution, delivery and performance of this Agreement and the other
Loan Documents by the Loan Parties thereto, the borrowings hereunder and the use of the proceeds
thereof will not (a) violate the organizational or governing documents of the Loan Parties, (b)
except as would not reasonably be expected to have a Material Adverse Effect, violate any
Requirement of Law binding on the Borrower or any of its Restricted Subsidiaries or any Contractual
Obligation of Holdings, the Borrower or any of its Restricted Subsidiaries or (c) except as would
not have a Material Adverse Effect, result in, or require, the creation or imposition of any Lien
on any of their respective properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens permitted by Section 6.3).
3.6 No Material Litigation. Except as set forth in Schedule 3.6, no litigation,
investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to
the knowledge of the Borrower, likely to be commenced within a reasonable time period against the
Borrower or any of its Restricted Subsidiaries or against any of their Properties which, taken as a
whole, would reasonably be expected to have a Material Adverse Effect.
3.7 No Default. No Default or Event of Default has occurred and is continuing (other
than, on the Closing Date, as a result of a breach of any representation or warranty other than any
Specified Representation).
3.8 Ownership of Property; Liens. Except as set forth in Schedule 3.8A, each of the
Borrower and its Restricted Subsidiaries has good title in fee simple to, or a valid leasehold
interest in, all its Real Property, and good title to, or a valid leasehold interest in, all its
other Property (other than Intellectual Property), in each case, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect, and none of such Property is
subject to any Lien except as permitted by the Loan Documents. Schedule 3.8B lists all Real
Property which is owned or leased by any Loan Party as of the Closing Date.
3.9 Intellectual Property. Each of the Borrower and its Restricted Subsidiaries owns, or
has a valid license to use, all Intellectual Property necessary for the conduct of its business as
currently conducted free and clear of all Liens except as permitted by the Senior Secured Loan
Documents, other than Intellectual Property owned by a Special Purpose Entity, except where the
failure to do so would not reasonably be expected to have a Material Adverse Effect. To the
Borrower’s knowledge, no holding, injunction, decision or judgment has been rendered by any
Governmental Authority against the Borrower or any Restricted Subsidiary and neither the Borrower
nor any of its Restricted Subsidiaries has entered into any settlement stipulation or other
agreement (except license agreements in the ordinary course of business) which would limit, cancel
or question the validity of the Borrower’s or any Restricted Subsidiary’s rights in, any
Intellectual Property in any respect that would reasonably be expected to have a Material
Adverse Effect. To Borrower’s knowledge, no claim has been asserted or threatened or is pending by
any Person challenging or questioning the use by the Borrower or its Restricted Subsidiaries
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of any
Intellectual Property owned by the Borrower or any of its Restricted Subsidiaries or the validity
or effectiveness of any Intellectual Property, except as would not reasonably be expected to have a
Material Adverse Effect. To the Borrower’s knowledge, the use of Intellectual Property by the
Borrower and its Restricted Subsidiaries does not infringe on the rights of any Person in a manner
that would reasonably be expected to have a Material Adverse Effect. The Borrower and its
Restricted Subsidiaries take all reasonable actions that in the exercise of their reasonable
business judgment should be taken to protect their Intellectual Property, including Intellectual
Property that is confidential in nature, except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect.
3.10 Taxes. Each of Holdings, the Borrower and its Restricted Subsidiaries (i) has filed
or caused to be filed all federal, state, provincial and other tax returns that are required to be
filed and (ii) has paid all taxes shown to be due and payable on said returns and all other taxes,
fees or other charges imposed on it or any of its Property by any Governmental Authority (other
than any the amount or validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which any reserves required in conformity with GAAP have been
provided on the books of the Borrower or such Restricted Subsidiary, as the case may be), except in
each case where the failure to do so would not reasonably be expected to have a Material Adverse
Effect.
3.11 Federal Regulations. No part of the proceeds of any Loans, and no other extensions of
credit hereunder, will be used for any purpose that violates the provisions of the regulations of
the Board. If requested by any Lender (through the Administrative Agent) or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in
Regulation U.
3.12 ERISA. (a) Except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect: (i) neither a Reportable Event nor a failure to meet
the minimum funding standards (within the meaning of Section 412(a) of the Code or Section
302(a)(2) of ERISA) with respect to periods beginning on or after January 1, 2008 or an
“accumulated funding deficiency” (within the meaning of Section 412(a) of the Code or Section
302(a)(2) of ERISA) has occurred during the five-year period prior to the date on which this
representation is made with respect to any Single Employer Plan, and each Single Employer Plan has
complied with the applicable provisions of ERISA and the Code; (ii) no termination of a Single
Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen on the assets of
Holdings, the Borrower or any of its Restricted Subsidiaries, during such five-year period; the
present value of all accrued benefits under each Single Employer Plan (based on those assumptions
used to fund such Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of such Single Employer
Plan allocable to such accrued benefits; (iii) none of Holdings, the Borrower or any of its
Restricted Subsidiaries has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or would reasonably be expected to result in a liability under ERISA; (iv) none of
Holdings, the Borrower or any of its Restricted Subsidiaries would become subject to any liability
under ERISA if the Borrower or such Restricted Subsidiary were to withdraw completely from all
Multiemployer Plans as of
the valuation date most closely preceding the date on which this representation is made; and
(v) no Multiemployer Plan is in Reorganization or Insolvent.
(b) Holdings, the Borrower and its Restricted Subsidiaries have not incurred, and do not
reasonably expect to incur, any liability under ERISA or the Code with respect to any plan within
the meaning of Section 3(3) of ERISA which is subject to Title IV of ERISA or Section 412 of the
Code or Section 302 of ERISA that is maintained by a Commonly Controlled Entity (other than
Holdings, the Borrower and its Restricted Subsidiaries) (a “Commonly Controlled Plan”)
merely by virtue of being treated as a single employer under Title IV of ERISA with the sponsor of
such plan that would reasonably
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be likely to have a Material Adverse Effect and result in a direct
obligation of Holdings, the Borrower or any of its Restricted Subsidiaries to pay money.
3.13 Investment Company Act. No Loan Party is an “investment company”, or a company
“controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940,
as amended.
3.14 Subsidiaries. (a) The Subsidiaries listed on Schedule 3.14 constitute all the
Subsidiaries of the Borrower at the date of this Agreement (and after giving effect to the Merger
Transactions and, to the extent applicable, the Company Reorganization). Schedule 3.14 sets forth
as of the Closing Date the name and jurisdiction of incorporation of each Subsidiary and, as to
each Subsidiary, the percentage of each class of Capital Stock owned by any Loan Party and the
designation of such Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary.
(b) As of the Closing Date (and after giving effect to the Merger Transactions and, to the
extent applicable, the Company Reorganization), except as set forth on Schedule 3.14 or as
otherwise contemplated by the Merger Agreement, there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than stock options granted to
officers, employees or directors and directors’ qualifying shares) of any nature relating to any
Capital Stock of the Borrower or any of its Restricted Subsidiaries.
3.15 Environmental Matters. Other than exceptions to any of the following that would not
reasonably be expected to have a Material Adverse Effect, none of the Borrower or any of its
Restricted Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain
or comply with any permit, license or other approval required under any Environmental Law for the
operation of the Business; or (ii) has become subject to any Environmental Liability.
3.16 Accuracy of Information, etc. As of the Closing Date, no statement or information
(excluding the projections and pro forma financial information referred to below)
contained in this Agreement, any other Loan Document or any certificate furnished to the
Administrative Agent or the Lenders or any of them, by or on behalf of any Loan Party for use in
connection with the transactions contemplated by this Agreement or the other Loan Documents when
taken as a whole, contained as of the date such statement, information, or certificate was so
furnished, any untrue statement of a material fact or omitted to state a material fact necessary in
order to make the statements contained herein or therein, in light of the circumstances under
which they were made, not materially misleading. As of the Closing Date, the projections and
pro forma financial information contained in the materials referenced above are
based upon good faith estimates and assumptions believed by management of the Borrower to be
reasonable at the time made, in light of the circumstances under which they were made, it being
recognized by the Agents and the Lenders that such financial information as it relates to future
events is not to be viewed as fact and that actual results during the period or periods covered by
such financial information may differ from the projected results set forth therein by a material
amount.
3.17 Solvency. As of the Closing Date, the Loan Parties are (on a consolidated basis), and
after giving effect to the Transactions will be, Solvent.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Loans. The agreement of each Lender to make the Loans requested to be
made by it is subject to the satisfaction (or waiver), prior to or concurrently with the making of
such Loan on the Closing Date, of the following conditions precedent:
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(a) Credit Agreement; Senior Secured Loan Facilities. The Administrative Agent
shall have received (i) this Agreement, executed and delivered by the Administrative Agent,
Holdings, the Borrower, the Lead Arrangers and the Lenders party hereto and (ii) the
Guarantee Agreement, executed and delivered by Holdings, the Borrower and each Subsidiary
Guarantor. The Administrative Agent shall have received evidence that the Senior Secured
Loan Documents have been executed and delivered by all Persons stated to be a party thereto in the form
then most recently delivered to the Administrative Agent, and the Senior Secured Loans
contemplated to be made thereunder on the Closing Date shall have been made.
(b) Transaction, etc. The following transactions shall be consummated:
(i) Merger. The Merger Transactions shall be consummated substantially
concurrently with the initial funding of the Loans on the Closing Date (A) in
accordance with the Merger Agreement and the related disclosure schedules and
exhibits thereto, without waiver or amendment of any material provision thereof
(other than any such waivers or amendments (including, without limitation, with
respect to any representations and warranties in the Merger Agreement) as are not
materially adverse to the Lenders or the Lead Arrangers (including, without
limitation, the definition of “Company Material Adverse Effect” therein and the
representation and warranty set forth in Section 4.8(c) thereof)) unless consented
to by the Lead Arrangers (which consent shall not be unreasonably withheld or
delayed) or (B) on such other terms and conditions as are reasonably satisfactory to
the Lead Arrangers.
(ii) Equity Financing. The Permitted Investors shall have made equity
contributions to, or purchased for cash equity of, Holdings in an aggregate amount
that, together with all roll-over equity, constitutes not less than 40% of the
pro forma capitalization of Holdings and its subsidiaries on a
consolidated basis (after giving effect to the Transactions but excluding any
revolving loans made or letters of credit issued under the Senior Secured Loan
Facilities).
(iii) The representation and warranty of the Company contained in Section
4.8(c) of the Merger Agreement shall be true and correct as of the Closing Date as
if made on and as of the Closing Date, except where the failure of such
representation and warranty to be so true and correct has not had and would not be
reasonably likely to have, individually or in the aggregate, a Closing Date Material
Adverse Effect.
(c) Solvency Certificate. The Administrative Agent shall have received a
solvency certificate signed by the chief financial officer on behalf of Holdings,
substantially in the form of Exhibit G.
(d) Closing Certificate. The Administrative Agent shall have received a
certificate of each Loan Party, dated as of the Closing Date, substantially in the form of
Exhibit C, with appropriate insertions and attachments.
(e) Legal Opinions. The Administrative Agent shall have received an executed
legal opinion of (i) Debevoise & Plimpton LLP, special New York counsel to the Loan Parties,
substantially in the form of Exhibit E-1 and (ii) Morris, Nichols, Arsht & Tunnell LLP,
special Delaware counsel to the Loan Parties, substantially in the form of Exhibit E-2.
(f) Insurance. The Administrative Agent shall have received insurance
certificates satisfying the requirements of Section 5.5(c).
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(g) USA Patriot Act. The Lenders shall have received from each of the Loan
Parties documentation and other information requested by any Lender no less than 10 calendar
days prior to the Closing Date that is required by regulatory authorities under applicable
“know your customer” and anti-money laundering rules and regulations, including, without
limitation, the USA Patriot Act.
(h) Specified Representations. The Specified Representations shall be true and
correct in all material respects.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower (on behalf of itself and each of the Restricted Subsidiaries) hereby agrees that,
so long as the Commitments remain in effect or any Loan or other amount is owing to any Lender or
any Agent hereunder (other than contingent or indemnification obligations not then due), the
Borrower shall, and shall cause each of the Restricted Subsidiaries to:
5.1 Financial Statements. Furnish to the Administrative Agent for delivery to each Lender
(which may be delivered via posting on IntraLinks or another similar electronic platform):
(a) within 120 days (or 135 days with respect to the fiscal year ending March 31, 2009)
after the end of each fiscal year of the Borrower, commencing with the fiscal year ending
March 31, 2009, a copy of the audited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such year and the related audited consolidated
statements of income and of cash flows for such year, setting forth, commencing with the
financial statements with respect to the fiscal year ending March 31, 2010, in comparative
form the figures as of the end of and for the previous year, reported on without
qualification arising out of the scope of the audit, by Ernst & Young LLP or other
independent certified public accountants of nationally recognized standing; and
(b) within 45 days (or 60 days with respect to the fiscal quarters ending prior to
March 31, 2009) after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, commencing with the fiscal quarter ending September 30, 2008, the
unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at
the end of such quarter and the related unaudited consolidated statements of income and of
cash flows for such quarter and the portion of the fiscal year through the end of such
quarter, setting forth, commencing after the first full fiscal year after the Closing Date,
in comparative form the figures as of the end of and for the corresponding period in the
previous year, certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments and the lack of notes);
all such financial statements to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior periods (except as
disclosed therein and except in the case of the financial statements referred to in clause (b), for
customary year-end adjustments and the absence of footnotes). The Borrower may satisfy its
obligations under this Section 5.1 with respect to financial information of the Borrower and its
consolidated Subsidiaries by delivering information relating to Holdings, the Borrower and its
consolidated Subsidiaries.
Documents required to be delivered pursuant to this Section 5.1 may be delivered by posting
such documents electronically with notice of such posting to the Administrative Agent and if so
posted, shall be deemed to have been delivered on the date on which such documents are posted on
the Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each
Lender
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and the Administrative Agent have access (whether a commercial, third-party website or whether
sponsored by the Administrative Agent).
5.2 Certificates; Other Information. Furnish to the Administrative Agent for delivery to
each Lender, or, in the case of clause (g), to the relevant Lender:
(a) to the extent permitted by the internal policies of such independent certified
public accountants, concurrently with the delivery of the financial statements referred to
in Section 5.1(a), a certificate of the independent certified public accountants in
customary form reporting on such financial statements stating that in making the examination
necessary therefor no knowledge was obtained of any Default or Event of Default arising
under Section 7.1, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements pursuant to Section 5.1,
(i) a Compliance Certificate of a Responsible Officer on behalf of the Borrower stating that
such Responsible Officer has obtained no knowledge of any Default or Event of Default that
has occurred and is continuing except as specified in such certificate and (ii) to the
extent not previously disclosed to the Administrative Agent, (x) a description of any
Default or Event of Default that occurred and (y) a description of any new Subsidiary since
the date of the most recent list delivered pursuant to this clause (or, in the case of the
first such list so delivered, since the Closing Date);
(c) not later than 120 days (or 135 days with respect to the fiscal year ending March
31, 2009) after the end of each fiscal year of the Borrower, a detailed consolidated budget
for the following fiscal year (including a projected consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of the following fiscal year and the related
consolidated statements of projected cash flow and projected income (collectively, the
“Annual Operating Budget”)); provided that at any time the Borrower,
Holdings or any Parent Company is subject to the reporting requirements set forth in Section
13(a) or 15(d) of the Securities Exchange Act of 1934, the Administrative Agent shall
deliver the Annual Operating Budget only to “private-side” Lenders (i.e., Lenders that wish
to receive material non-public information with respect to any Loan Party or its securities
for purposes of United States federal or state securities laws).
(d) promptly after the same are sent, copies of all financial statements and material
reports that the Borrower sends to the holders of any class of its debt securities or public
equity securities (except for Permitted Investors) and, promptly after the same are filed,
copies of all financial statements and reports that the Borrower may make to, or file with,
the SEC, in each case to the extent not already provided pursuant to Section 5.1 or any
other clause of this Section 5.2;
(e) promptly upon delivery thereof to the Borrower and to the extent permitted, copies
of any accountants’ letters addressed to its Board of Directors (or any committee thereof);
(f) promptly upon delivery thereof under the relevant agreement, notice of any default
or event of default under the Senior Secured Loan Facilities, and, prior to the
effectiveness thereof, copies of substantially final drafts of any proposed material
amendment, supplement, waiver or other modification with respect to the Senior Secured Loan
Facilities; and
(g) promptly, such additional financial and other information as the Administrative
Agent (for its own account or upon the request from any Lender) may from time to time
reasonably request.
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Notwithstanding anything to the contrary in this Section 5.2, none of Holdings, the Borrower
or any of the Restricted Subsidiaries will be required to disclose any document, information or
other matter that (i) constitutes non-financial trade secrets or non-financial proprietary
information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or
their respective representatives or contractors) is prohibited by Law or any binding agreement,
(iii) is subject to attorney-client or similar privilege or constitutes attorney work product or
(iv) constitutes classified information.
Documents required to be delivered pursuant to this Section 5.2 may be delivered by posting such
documents electronically with notice of such posting to the Administrative Agent and each Lender
and if so posted, shall be deemed to have been delivered on the date (i) on which the Borrower
posts such documents, or to provide a link thereto on the Borrower’s website or (ii) on which such
documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant
website, if any, to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative Agent).
5.3 Payment of Taxes. Pay, discharge or otherwise satisfy at or before maturity or before
they become delinquent, as the case may be, all its material Taxes, governmental assessments and
governmental charges (other than Indebtedness), except (a) where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves required in
conformity with GAAP with respect thereto have been provided on the books of the Borrower or its
Restricted Subsidiaries, as the case may be, or (b) to the extent that failure to pay or satisfy
such obligations would not reasonably be expected to have a Material Adverse Effect.
5.4 Conduct of Business and Maintenance of Existence, etc.; Compliance. (a) Preserve,
renew and keep in full force and effect its corporate or other existence and take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable in the normal
conduct of its business, except, in each case, as otherwise permitted by Section 6.4 or except to
the extent that failure to do so would not reasonably be expected to have a Material Adverse
Effect; and (b) comply with all Requirements of Law except to the extent that failure to comply
therewith would not reasonably be expected to have a Material Adverse Effect.
5.5 Maintenance of Property; Insurance. (a) Keep all Property useful and necessary in
its business in reasonably good working order and condition, ordinary wear and tear excepted,
except where the failure to do so would not reasonably be expected to have a Material Adverse
Effect.
(b) Take all reasonable and necessary steps, including, without limitation, in any proceeding
before the United States Patent and Trademark Office or the United States Copyright Office, to
maintain and pursue each application (and to obtain the relevant registration) and to maintain each
registration of the material United States Intellectual Property owned by the Borrower or its
Restricted Subsidiaries, including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability, except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect.
(c) Maintain insurance with financially sound and reputable insurance companies on all its
material Property in at least such amounts and against at least such risks as are usually insured
against in the same general area by companies engaged in the same or a similar business.
5.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper books of
records and account in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all material financial dealings and transactions in relation
to its business and activities, (b) permit representatives of any Lender to visit and inspect any
of its properties and examine
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and make abstracts from any of its books and records upon reasonable
notice and at such reasonable times during normal business hours (provided that (i) such
visits shall be coordinated by the Administrative Agent, (ii) such visits shall be limited to no
more than one such visit per calendar year, and (iii) such visits by any Lender shall be at the
Lender’s expense, except in the case of clauses (ii) and (iii) during the continuance of an Event
of Default), (c) permit representatives of any Lender to have reasonable discussions regarding the
business, operations, properties and financial and other condition of the Borrower and its
Restricted Subsidiaries with officers and employees of the Borrower and its Restricted Subsidiaries
(provided that (i) a Responsible Officer of the Borrower shall be afforded the opportunity
to be present during such discussions, (ii) such discussions shall be coordinated by the
Administrative Agent, and (iii) such discussions shall be limited to no more than once per calendar
quarter except during the continuance of an Event of Default) and (d) permit representatives of the
Administrative Agent to have reasonable discussions regarding the business, operations, properties
and financial and other condition of the Borrower and its Restricted Subsidiaries with its
independent certified public accountants to the extent permitted by the internal policies of such
independent certified public accountants (provided that (i) a Responsible Officer of the
Borrower shall be afforded the opportunity to be present during such discussions and (ii) such
discussions shall be limited to no more than once per calendar year except during the continuance
of an Event of Default). Notwithstanding anything to the contrary in this Section 5.6, none of
Holdings, the Borrower or any of the Restricted Subsidiaries will be required to disclose, permit
the inspection, examination or making copies or abstracts of, or discussion of, any document,
information or other matter that (i) constitutes non-financial trade secrets or non-financial
proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any
Lender (or their respective representatives or contractors) is prohibited by Law or any binding
agreement, (iii) is subject to attorney-client or similar privilege or constitutes attorney work
product or (iv) constitutes classified information.
5.7 Notices. Promptly upon a Responsible Officer of the Borrower or any Subsidiary
Guarantor obtaining knowledge thereof, give notice to the Administrative Agent of:
(a) the occurrence of any Default or Event of Default;
(b) any litigation, investigation or proceeding which may exist at any time between the
Borrower or any of its Restricted Subsidiaries and any other Person, that in either case,
would reasonably be expected to have a Material Adverse Effect;
(c) the following events, that would reasonably be expected to have a Material Adverse
Effect, as soon as possible and in any event within 30 days after the Borrower or any
Subsidiary Guarantor knows thereof: (i) the occurrence of any Reportable Event with respect to
any Single Employer Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan on the assets of Holdings, the Borrower
or any of its Restricted Subsidiaries or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan, (ii) the institution of proceedings
or the taking of any other action by the PBGC or Holdings or any Commonly Controlled Entity
or any Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (iii) the occurrence of any
similar events with respect to a Commonly Controlled Plan, that would reasonably be likely
to result in a direct obligation of the Borrower or any of its Restricted Subsidiaries to
pay money; and
(d) any development or event that has had or would reasonably be expected to have a
Material Adverse Effect.
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Each notice pursuant to this Section 5.7 shall be accompanied by a statement of a Responsible
Officer setting forth details of the occurrence referred to therein and stating what action the
Borrower or the relevant Restricted Subsidiary proposes to take with respect thereto.
5.8 Further Assurances. (a) Except as otherwise contemplated by Section 6.7(p), with
respect to any new Subsidiary that is a Non-Excluded Subsidiary created or acquired after the
Closing Date (which, for the purposes of this paragraph, shall include any Subsidiary that was
previously an Excluded Subsidiary that becomes a Non-Excluded Subsidiary) by any Loan Party,
promptly (i) give notice of such acquisition or creation to the Administrative Agent and cause such
new Subsidiary to become a party to the Guarantee Agreement. Without limiting the foregoing, if
(i) the aggregate Consolidated Total Assets or annual consolidated revenues of all Subsidiaries
designated as “Immaterial Subsidiaries” hereunder shall at any time exceed 7.5% of Consolidated
Total Assets or annual consolidated revenues, respectively, of the Borrower and its Restricted
Subsidiaries (as reflected on the most recent financial statements delivered pursuant to Section
5.1 prior to such time) or (ii) if any Subsidiary shall at any time cease to constitute an
Immaterial Subsidiary under clause (i) of the definition of “Immaterial Subsidiary” (as reflected
on the most recent financial statements delivered pursuant to Section 5.1 prior to such time), the
Borrower shall promptly, (x) in the case of clause (i) above, rescind the designation as
“Immaterial Subsidiaries” of one or more of such Subsidiaries so that, after giving effect thereto,
the aggregate Consolidated Total Assets or annual consolidated revenues, as applicable, of all
Subsidiaries so designated (and which designations have not been rescinded) shall not exceed 7.5%
of Consolidated Total Assets or annual consolidated revenues, respectively, of the Borrower and its
Restricted Subsidiaries (as reflected on the most recent financial statements delivered pursuant to
Section 5.1 prior to such time), as applicable, and (y) in the case of clauses (i) and (ii) above,
to the extent not already effected, (A) cause each affected Subsidiary to take such actions to
become a “Subsidiary Guarantor” hereunder and under the Guarantee Agreement and execute and deliver
the documents and other instruments referred to in this paragraph (a) to the extent such affected
Subsidiary is not otherwise an Excluded Subsidiary.
(b) Notwithstanding the foregoing, to the extent any new Restricted Subsidiary is created
solely for the purpose of consummating a merger transaction pursuant to an acquisition permitted by
Section 6.7, and such new Subsidiary at no time holds any assets or liabilities other than any
merger consideration contributed to it contemporaneously with the closing of such merger
transaction, such new Subsidiary shall not be required to take the actions set forth in Section
5.8(a) until the respective acquisition is consummated (at which time the surviving entity of the
respective merger transaction shall be required to so comply within ten Business Days).
(c) From time to time the Loan Parties shall execute and deliver, or cause to be executed and
delivered, such additional instruments, certificates or documents, and take all such actions, as
the Administrative Agent may reasonably request for the purposes implementing or effectuating the
provisions of this Agreement and the other Loan Documents.
5.9 Use of Proceeds. The proceeds of the Loans shall be used solely to effect the Merger
Transactions, the Refinancing and to pay related fees and expenses.
5.10 Post-Closing Undertakings. Within the time period specified on Schedule 5.10 (or such
later date to which the Administrative Agent consents), comply with the provisions set forth in
Schedule 5.10.
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SECTION 6. NEGATIVE COVENANTS
The Borrower (on behalf of itself and each of the Restricted Subsidiaries) hereby agrees that,
so long as the Commitments remain in effect or any Loan or other amount is owing to any Lender or
the Administrative Agent (other than contingent or indemnification obligations not then due), the
Borrower shall not, and shall not permit any of the Restricted Subsidiaries to:
6.1 Consolidated Total Leverage Ratio. (a) Commencing with the Test Period ending
December 31, 2008, permit the Consolidated Total Leverage Ratio as at the last day of any Test
Period ending in any period set forth below to be less than the ratio set forth below for such
period:
| Consolidated Total | ||
| Period | Leverage Ratio | |
December 31, 2008
|
7.50:1.00 | |
March 31, 2009
|
7.50:1.00 | |
June 30, 2009
|
7.20:1.00 | |
September 30, 2009
|
6.90:1.00 | |
December 31, 2009
|
6.60:1.00 | |
March 31, 2010
|
6.30:1.00 | |
June 30, 2010
|
6.00:1.00 | |
September 30, 2010
|
5.70:1.00 | |
December 31, 2010
|
5.70:1.00 | |
March 31, 2011
|
5.40:1.00 | |
June 30, 2011
|
5.10:1.00 | |
September 30, 2011
|
4.80:1.00 | |
December 31, 2011
|
4.50:1.00 | |
March 31, 2012
|
4.20:1.00 | |
and thereafter |
6.2 Indebtedness. Create, issue, incur, assume, or permit to exist any Indebtedness,
except:
(a) Indebtedness of the Borrower and any Restricted Subsidiary pursuant to any Loan
Document or Hedge Agreement;
(b) Indebtedness (i) of the Borrower to any of its Restricted Subsidiaries or Holdings
or of any Subsidiary Guarantor to Holdings, the Borrower or any Restricted Subsidiary,
provided that any such Indebtedness owing to a Restricted Subsidiary that is not a
Subsidiary Guarantor is expressly subordinated in right of payment to the Obligations
pursuant to the Guarantee Agreement or otherwise and (ii) of any Non-Guarantor Subsidiary to
any other Non-Guarantor Subsidiary;
(c) Indebtedness (including, without limitation, Capital Lease Obligations) secured by
Liens permitted by Section 6.3(g) in an aggregate principal amount, when combined with the
aggregate principal amount of Indebtedness outstanding under clauses (t) and (u) of this
Section 6.2, not to exceed $90,000,000 at any one time outstanding;
(d) (i) Indebtedness outstanding on the date hereof and listed on Schedule 6.2(d) and
any Permitted Refinancing thereof and (ii) Indebtedness otherwise permitted under Section
6.10;
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(e) Guarantee Obligations (i) by the Borrower or any of its Restricted Subsidiaries of
obligations of the Borrower or any Subsidiary Guarantor not prohibited by this Agreement to
be incurred and (ii) by any Non-Guarantor Subsidiary of obligations of any other
Non-Guarantor Subsidiary;
(f) Indebtedness of the Borrower or any of its Restricted Subsidiaries arising from the
honoring by a bank or other financial institution of a check, draft or similar instrument
inadvertently drawn by the Borrower or such Restricted Subsidiary in the ordinary course of
business against insufficient funds, so long as such Indebtedness is promptly repaid;
(g) (A) Indebtedness of any joint venture or Non-Guarantor Subsidiary owing to any Loan
Party and (B) Guarantee Obligations of the Borrower or any Subsidiary Guarantor of
Indebtedness of any joint venture or Non-Guarantor Subsidiary, to the extent such
Indebtedness and Guarantee Obligations are permitted as Investments by Section 6.7(h), (k),
(m) or (v);
(h) Indebtedness in the form of earn-outs, indemnification, incentive, non-compete,
consulting or other similar arrangements and other contingent obligations in respect of
acquisitions or Investments permitted by Section 6.7 (both before or after any liability
associated therewith becomes fixed);
(i) (i) Indebtedness of the Borrower in respect of the Senior Secured Loan Agreement in
an aggregate principal amount not to exceed $910,000,000 less the principal amount thereof
mandatorily prepaid thereunder as a result of any “Asset Sales” or “Recovery Events” under
and as defined in the Senior Secured Loan Agreement, plus any accrued interest, fees,
discounts, premiums and expenses, in each case, in respect thereof, (ii) Guarantee
Obligations of any Subsidiary Guarantor in respect of such Indebtedness, interest, fees,
discounts, premiums and expenses; provided that, in each case, in the case of any
guarantee of Indebtedness in respect of the Senior Secured Loan Agreement by any Restricted
Subsidiary that is not a Subsidiary Guarantor, such Restricted Subsidiary becomes a Subsidiary Guarantor under this
Agreement at or prior to the time of such guarantee, and (iii) any Permitted Refinancing
thereof;
(j) additional Indebtedness of the Borrower or any of its Restricted Subsidiaries in an
aggregate principal amount (for the Borrower and all Restricted Subsidiaries), not to exceed
$90,000,000 at any time outstanding;
(k) Indebtedness of Non-Guarantor Subsidiaries in respect of local lines of credit,
letters of credit, bank guarantees, factoring arrangements, sale/leaseback transactions and
similar extensions of credit in the ordinary course of business, in an aggregate principal
amount, when combined with the aggregate principal amount of Indebtedness outstanding under
clause (s)(iii) of this Section 6.2, not to exceed $42,000,000 at any one time outstanding;
(l) Indebtedness of the Borrower or any of its Restricted Subsidiaries in respect of
workers’ compensation claims, bank guarantees, warehouse receipts or similar facilities,
property casualty or liability insurance, take-or-pay obligations in supply arrangements,
self-insurance obligations, performance, bid, customs, government, appeal and surety bonds,
completion guaranties and other obligations of a similar nature, in each case in the
ordinary course of business;
(m) Indebtedness incurred by the Borrower or any of its Restricted Subsidiaries arising
from agreements providing for indemnification related to sales of goods or adjustment of
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purchase price or similar obligations in any case incurred in connection with the
acquisition or Disposition of any business, assets or Subsidiary;
(n) Indebtedness supported by a Letter of Credit issued under, and as defined in, the
Senior Secured Loan Agreement, in a principal amount not in excess of the stated amount of
such Letter of Credit;
(o) Indebtedness issued in lieu of cash payments of Restricted Payments permitted by
Section 6.6; provided that such Indebtedness is subordinated to the Obligations on
terms reasonably satisfactory to the Administrative Agent;
(p) Permitted Subordinated Indebtedness in an aggregate principal amount not to exceed
$60,000,000 at any one time outstanding and any guarantees incurred in respect thereof;
(q) Indebtedness of the Borrower or any Subsidiary Guarantor as an account party in
respect of trade letters of credit issued in the ordinary course of business;
(r) Indebtedness owing to any insurance company in connection with the financing of any
insurance premiums permitted by such insurance company in the ordinary course of business;
(s) (i) Guarantee Obligations made in the ordinary course of business; provided
that such Guarantees are not of Indebtedness for Borrowed Money, (ii) Guarantee Obligations
in respect of lease obligations of Booz & Company Inc. and its Affiliates and (iii)
Guarantee Obligations in respect of Indebtedness of joint ventures; provided that
the aggregate principal amount of any such Guarantee Obligations under this sub-clause
(iii), when combined with the aggregate principal amount of Indebtedness outstanding under
clause (k) of this Section 6.2, shall not exceed $42,000,000 at any time outstanding;
(t) Indebtedness of any Person that becomes a Restricted Subsidiary or is merged into
the Borrower or a Restricted Subsidiary after the Closing Date as part of an acquisition,
merger or consolidation or amalgamation or other Investment not prohibited hereunder (a
“New Subsidiary”), which Indebtedness exists at the time of such acquisition, merger
or consolidation or amalgamation or other Investment, and any Permitted Refinancing thereof;
provided that (A) such Indebtedness exists at the time such Person becomes a
Restricted Subsidiary or is merged into the Borrower or a Restricted Subsidiary and is not
created in contemplation of or in connection with such Person becoming a Restricted
Subsidiary or with such merger (except to the extent such Indebtedness refinanced other
Indebtedness to facilitate such Person becoming a Restricted Subsidiary), (B) the aggregate
principal amount of Indebtedness permitted by this clause (t) and Sections 6.2(c) and 6.2(u)
shall not at any one time outstanding exceed $90,000,000 and (C) neither the Borrower nor
any Restricted Subsidiary (other than the applicable New Subsidiary) shall provide security
therefor;
(u) Indebtedness incurred to finance any acquisition or other Investment permitted
under Section 6.7 in an aggregate amount for all such Indebtedness together with the
aggregate principal amount of Indebtedness permitted by Sections 6.2(c) and 6.2(t) not to
exceed $90,000,000 at any one time outstanding;
(v) other unsecured Indebtedness so long as, at the time of incurrence thereof, (i)
after giving effect to the incurrence of such unsecured Indebtedness (as if such unsecured
Indebtedness had been incurred on the first day of the most recently completed period of
four consecutive fiscal quarters of the Borrower ending on or prior to such date), the
Consolidated Total Leverage Ratio
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would be less than or equal to (x) from the Closing Date until the second anniversary of the Closing Date, 5.25 to 1.00, (y) after the second
anniversary of the Closing Date until the third anniversary of the Closing Date, 5.00 to
1.00, and (z) after the third anniversary of the Closing Date, 4.75 to 1.00; (ii) no Default
or Event of Default shall have occurred and be continuing at the time of incurrence of such
unsecured Indebtedness or would result therefrom; and (iii) the terms of such unsecured
Indebtedness do not provide for any scheduled repayment, mandatory redemption or sinking
fund obligation prior to the date at least 180 days following the Maturity Date;
(w) (i) Indebtedness representing deferred compensation or stock-based compensation to
employees of the Borrower or any Restricted Subsidiary incurred in the ordinary course of
business and (ii) Indebtedness consisting of obligations of the Borrower or any Restricted
Subsidiary under deferred compensation or other similar arrangements incurred in connection
with the Merger Transactions and any Investment permitted hereunder;
(x) Indebtedness issued by the Borrower or any Restricted Subsidiary to the officers,
directors and employees of Holdings, any Parent Company, the Borrower or any Restricted
Subsidiary, in lieu of or combined with cash payments to finance the purchase of Capital
Stock of Holdings, any Parent Company or the Borrower, in each case, to the extent such
purchase is permitted by Section 6.6(e);
(y) Indebtedness in respect of overdraft facilities, employee credit card programs,
netting services, automatic clearinghouse arrangements and other cash management and similar
arrangements in the ordinary course of business and any “Cash Management Obligations” as
defined in the Senior Secured Loan Agreement (as in effect on the Closing Date);
(z) (i) Indebtedness of the Borrower or any of its Restricted Subsidiaries undertaken
in connection with cash management and related activities with respect to any Subsidiary or
joint venture in the ordinary course of business and (ii) Indebtedness of the Borrower or
any Restricted Subsidiary to any joint venture (regardless of the form of legal entity) that
is not a Subsidiary arising in the ordinary course of business in connection with the cash
management operations (including in respect of intercompany self-insurance arrangements) of
the Borrower and its Restricted Subsidiaries;
(aa) other Indebtedness so long as, at the time of and after giving effect thereto, (i)
the Consolidated Secured Leverage Ratio would be less than or equal to (x) from the Closing
Date until the last day of the eighteenth month after the Closing Date, 2.50 to 1.00 and (y)
after the last day of the eighteenth month after the Closing Date, 2.25 to 1.00
(provided that any unsecured Indebtedness incurred under this clause (aa) shall be
deemed to be secured Indebtedness for purposes of calculating the Consolidated Secured
Leverage Ratio under this clause (aa) for so long as such Indebtedness is maintained under
this clause (aa)) and (ii) no Default or Event of Default shall have occurred and be
continuing; and
(bb) all premium (if any), interest (including post-petition interest), fees, expenses,
charges, accretion or amortization of original issue discount, accretion of interest paid in
kind and additional or contingent interest on obligations described in clauses (a) through
(aa) above.
For purposes of determining compliance with this Section 6.2, in the event that an item
of Indebtedness meets the criteria of more than one of the categories of Indebtedness
described in clauses (c), (j), (k), (p), (s)(iii), (t), (u), (v) or (aa) above, the Borrower
shall, in its sole discretion, classify and reclassify or later divide, classify or
reclassify such item of Indebtedness (or any
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portion thereof) and may include the amount and type of such Indebtedness in one or more of the above clauses; provided, that, for
the avoidance of doubt, Indebtedness reclassified under Section 6.2(v) must be unsecured.
6.3
Liens. Create, incur, assume or suffer to exist any Lien upon any of its Property,
whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good faith by
appropriate proceedings; provided that adequate reserves with respect thereto are
maintained on the books of the Borrower or its Restricted Subsidiaries, as the case may be,
to the extent required by GAAP;
(b) landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the ordinary course of business which are not overdue for a
period of more than 60 days or that are being contested in good faith by appropriate
proceedings;
(c) pledges, deposits or statutory trusts in connection with workers’ compensation,
unemployment insurance and other social security legislation;
(d) deposits and other Liens to secure the performance of bids, government, trade and
other similar contracts (other than for borrowed money), leases, subleases, statutory
obligations, surety, judgment and appeal bonds, performance bonds and other obligations of a
like nature incurred in the ordinary course of business;
(e) encumbrances shown as exceptions in the title insurance policies insuring the
Mortgages, easements, zoning restrictions, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the aggregate, do not
materially detract from the value of the Property subject thereto or materially interfere
with the ordinary conduct of the business of the Borrower or any of its Restricted
Subsidiaries;
(f) Liens (i) in existence on the date hereof listed on Schedule 6.3(f) (or to the
extent not listed on such Schedule 6.3(f), where the fair market value of the Property to
which such Lien is attached is less than $5,000,000), (ii) securing Indebtedness permitted
by Section 6.2(d) and (iii) created after the date hereof in connection with any
refinancing, refundings, or renewals or extensions thereof permitted by Section 6.2(d);
provided that no such Lien is spread to cover any additional Property of the
Borrower or any Restricted Subsidiary after the Closing Date and that the amount of
Indebtedness secured thereby is not increased;
(g) (i) Liens securing Indebtedness of the Borrower or any Restricted Subsidiary
incurred pursuant to Sections 6.2(c), 6.2(g), 6.2(j), 6.2(k), 6.2(r), 6.2(s), 6.2(t), 6.2(u)
and 6.2(w); provided that (A) in the case of any such Liens securing Indebtedness
incurred pursuant to Section 6.2(u) to the extent incurred to finance Acquisitions or
Investments permitted under Section 6.7, (x) such Liens shall be created substantially
concurrently with, or within 90 days after, the acquisition of the assets financed by such
Indebtedness and (y) such Liens do not at any time encumber any Property of the Borrower or
any Restricted Subsidiary other than the Property financed by such Indebtedness and the
proceeds thereof, (B) in the case of any such Liens securing Indebtedness pursuant to
Sections 6.2(g) or 6.2(k), such Liens do not at any time encumber any Property of the
Borrower or any Subsidiary Guarantor, (C) in the case of any such Liens securing
Indebtedness incurred pursuant to Section 6.2(s), such Liens do not encumber any Property
other than cash paid to any such insurance company in respect of such insurance and (D) in
the case of any such Liens securing Indebtedness pursuant to Section 6.2(u), such Liens
exist at the time that the relevant Person becomes a Restricted Subsidiary and are not
created in
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contemplation of or in connection with such Person becoming a Restricted Subsidiary and (ii) any extension, refinancing, renewal or replacement of the Liens
described in clause (i) of this Section 6.2(g) in whole or in part; provided that
such extension, renewal or replacement shall be limited to all or a part of the property
which secured the Lien so extended, renewed or replaced (plus improvements on such property,
if any);
(h) Liens securing Indebtedness incurred under Section 6.2(i) or (aa);
(i) Liens arising from judgments in circumstances not constituting an Event of Default
under Section 7.1(h);
(j) Liens on Property or assets acquired pursuant to an acquisition permitted under
Section 6.7 (and the proceeds thereof) or assets of a Restricted Subsidiary in existence at
the time such Restricted Subsidiary is acquired pursuant to an acquisition permitted under
Section 6.7 and not created in contemplation thereof and Liens created after the Closing
Date in connection with any refinancing, refundings, or renewals or extensions of the
obligations secured thereby permitted hereunder, provided that no such Lien is
spread to cover any additional Property after the Closing Date and that the amount of
Indebtedness secured thereby is not increased;
(k) (i) Liens on Property of Non-Guarantor Subsidiaries securing Indebtedness or other
obligations not prohibited by this Agreement to be incurred by such Non-Guarantor
Subsidiaries and (ii) Liens securing Indebtedness or other obligations of the Borrower or any
Subsidiary in favor of any Loan Party;
(l) receipt of progress payments and advances from customers in the ordinary course of
business to the extent same creates a Lien on the related inventory and proceeds thereof;
(m) Liens in favor of customs and revenue authorities arising as a matter of law to
secure the payment of customs duties in connection with the importation of goods;
(n) Liens arising out of consignment or similar arrangements for the sale by the
Borrower and its Restricted Subsidiaries of goods through third parties in the ordinary
course of business;
(o) Liens solely on any cash earnest money deposits made by the Borrower or any of its
Restricted Subsidiaries in connection with an Investment permitted by Section 6.7;
(p) Liens deemed to exist in connection with Investments permitted by Section 6.7(b)
that constitute repurchase obligations;
(q) Liens upon specific items of inventory or other goods and proceeds of the Borrower
or any of its Restricted Subsidiaries arising in the ordinary course of business securing
such Person’s obligations in respect of bankers’ acceptances and letters of credit issued or
created for the account of such Person to facilitate the purchase, shipment or storage of
such inventory or other goods;
(r) Liens on cash deposits securing any Hedge Agreement permitted hereunder;
(s) any interest or title of a lessor under any leases or subleases entered into by the
Borrower or any Restricted Subsidiary in the ordinary course of business and any financing
statement filed in connection with any such lease;
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(t) Liens on cash or cash equivalents used to defease or to satisfy and discharge
Indebtedness, provided that such defeasance or satisfaction and discharge is not
prohibited hereunder;
(u) (i) Liens that are contractual rights of set-off (A) relating to the establishment
of depository relations with banks not given in connection with the issuance of
Indebtedness, (B) relating to pooled deposit or sweep accounts of the Borrower or any
Restricted Subsidiary to permit satisfaction of overdraft or similar obligations incurred in
the ordinary course of business of the Borrower and the Subsidiaries, (C) relating to
purchase orders and other agreements entered into with customers of the Borrower or any
Restricted Subsidiary in the ordinary course of business, (ii) other Liens securing cash
management obligations (that do not constitute Indebtedness) in the ordinary course of
business or (iii) Liens securing the Obligations;
(v) Liens arising solely by virtue of any statutory or common law provision relating to
banker’s liens, rights of set-off or similar rights;
(w) Liens on Capital Stock in joint ventures securing obligations of such joint
venture;
(x) Liens on securities that are the subject of repurchase agreements constituting Cash
Equivalents or Permitted Liquid Investments;
(y) Liens securing obligations in respect of trade-related letters of credit permitted
under Section 6.2 and covering the goods (or the documents of title in respect of such
goods) financed by such letters of credit and the proceeds and products thereof; and
(z) other Liens with respect to obligations that do not exceed $42,000,000 at any one
time outstanding.
6.4 Fundamental Changes. Consummate any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all
or substantially all of its Property or business, except that:
(a) (i) any Restricted Subsidiary may be merged, amalgamated or consolidated with or
into the Borrower (provided that the Borrower shall be the continuing or surviving
corporation) or (ii) any Restricted Subsidiary may be merged, amalgamated or consolidated
with or into any Subsidiary Guarantor (provided that (x) a Subsidiary Guarantor
shall be the continuing or surviving corporation or (y) simultaneously with such
transaction, the continuing or surviving corporation shall become a Subsidiary Guarantor and
the Borrower shall comply with Section 5.8 in connection therewith);
(b) any Non-Guarantor Subsidiary may be merged or consolidated with or into, or be
liquidated into, any other Non-Guarantor Subsidiary that is a Restricted Subsidiary;
(c) any Restricted Subsidiary may Dispose of all or substantially all of its assets
upon voluntary liquidation or otherwise to the Borrower or any Subsidiary Guarantor;
(d) any Non-Guarantor Subsidiary may Dispose of all or substantially all of its assets
(upon voluntary liquidation, dissolution, winding-up or otherwise) to any other
Non-Guarantor Subsidiary that is a Restricted Subsidiary;
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(e) Dispositions permitted by Section 6.5 and any merger, dissolution, liquidation,
consolidation, investment or Disposition, the purpose of which is to effect a Disposition
permitted by Section 6.5 may be consummated;
(f) any Investment expressly permitted by Section 6.7 may be structured as a merger,
consolidation or amalgamation;
(g) the transactions contemplated under the Transaction Documents;
(h) any Restricted Subsidiary may liquidate or dissolve if (i) the Borrower determines
in good faith that such liquidation or dissolution is in the best interest of the Borrower
and is not materially disadvantageous to the Lenders and (ii) to the extent such Restricted
Subsidiary is a Loan Party, any assets or business of such Restricted Subsidiary not
otherwise disposed of or transferred in accordance with Section 6.4 or 6.5 or, in the case
of any such business, discontinued, shall be transferred to, or otherwise owned or conducted
by, a Loan Party after giving effect to such liquidation or dissolution; and
(i) any such transaction may be effected to the extent such transaction constitutes a
Change of Control and the Borrower complies with the requirements set forth in Section 2.6
within the period of time set forth therein.
6.5 Dispositions of Property. Dispose of any of its owned Property (including, without
limitation, receivables) whether now owned or hereafter acquired, or, in the case of any Restricted
Subsidiary, issue or sell any shares of such Restricted Subsidiary’s Capital Stock to any Person,
except:
(a) (i) the Disposition of surplus, obsolete or worn out Property in the ordinary
course of business, (ii) the sale of defaulted receivables in the ordinary course of
business, (iii) abandonment, cancellation or disposition of any Intellectual Property in the
ordinary course of business and (iv) sales, leases or other dispositions of inventory
determined by the management of the Borrower to be no longer useful or necessary in the
operation of the Business;
(b) (i) the sale of inventory or other property in the ordinary course of business,
(ii) the cross-licensing or licensing of Intellectual Property, in the ordinary course of
business and (iii) the contemporaneous exchange, in the ordinary course of business, of
Property for Property of a like kind, to the extent that the Property received in such
exchange is of a value equivalent to the value of the Property exchanged;
(c) Dispositions permitted by Section 6.4;
(d) the sale or issuance of (i) any Subsidiary’s Capital Stock to the Borrower or any
Subsidiary Guarantor; provided that the sale or issuance of Capital Stock of an
Unrestricted Subsidiary to the Borrower or any Restricted Subsidiary is otherwise permitted
by Section 6.7, (ii) the Capital Stock of any Non-Guarantor Subsidiary that is a Restricted
Subsidiary to any other Non-Guarantor Subsidiary that is a Restricted Subsidiary and (iii)
the Capital Stock of any Subsidiary that is an Unrestricted Subsidiary to any other
Subsidiary that is an Unrestricted Subsidiary, in each case, including, without limitation,
in connection with any tax restructuring activities not otherwise prohibited hereunder;
(e) the Disposition of other assets for fair market value not to exceed $240,000,000 in
the aggregate; provided that at least 75% of the total consideration for any such
Disposition received
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by the Borrower and its Restricted Subsidiaries is in the form of cash, Cash Equivalents or Permitted Liquid Investments;
(f) (i) any Recovery Event and (ii) any event that would constitute a Recovery Event
but for the Dollar threshold set forth in the definition thereof;
(g) the leasing, occupancy agreements or sub-leasing of Property pursuant to the Merger
Documents or that would not materially interfere with the required use of such Property by
the Borrower or its Restricted Subsidiaries;
(h) the transfer for fair value of Property (including Capital Stock of Subsidiaries)
to another Person in connection with a joint venture arrangement with respect to the
transferred Property; provided that such transfer is permitted under Section 6.7(h)
or (v);
(i) the sale or discount, in each case without recourse and in the ordinary course of
business, of overdue accounts receivable arising in the ordinary course of business, but
only in connection with the compromise or collection thereof consistent with customary
industry practice (and not as part of any bulk sale or financing of receivables);
(j) transfers of condemned Property as a result of the exercise of “eminent domain” or
other similar policies to the respective Governmental Authority or agency that has condemned
the same (whether by deed in lieu of condemnation or otherwise), and transfers of properties
that have been subject to a casualty to the respective insurer of such Property as part of
an insurance settlement;
(k) the Disposition of any Immaterial Subsidiary or any Unrestricted Subsidiary;
(l) the transfer of Property (including Capital Stock of Subsidiaries) of the Borrower
or any Guarantor to any Restricted Subsidiary for fair market value;
(m) the transfer of Property (i) by the Borrower or any Subsidiary Guarantor to the
Borrower or any other Subsidiary Guarantor or (ii) from a Non-Guarantor Subsidiary to (A)
the Borrower or any Subsidiary Guarantor for no more than fair market value or (B) any other
Non-Guarantor Subsidiary that is a Restricted Subsidiary;
(n) the sale of cash, Cash Equivalents or Permitted Liquid Investments in the ordinary
course of business;
(o) (i) Liens permitted by Section 6.3, (ii) Restricted Payments permitted by Section
6.6, (iii) Investments permitted by Section 6.7, (iv) payments permitted by Section 6.8 and
(v) sale and leaseback transactions permitted by Section 6.10;
(p) Dispositions of Investments in joint ventures to the extent required by, or made
pursuant to customary buy/sell arrangements between the joint venture parties set forth in
joint venture arrangements and similar binding arrangements; and
(q) Dispositions of Property between or among the Borrower and/or its Restricted
Subsidiaries as a substantially concurrent interim Disposition in connection with a
Disposition otherwise permitted pursuant to clauses (a) through (p) above;
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6.6 Restricted Payments. Declare or pay any dividend on, or make any payment on account
of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any Capital Stock of the Borrower or any
Subsidiary, whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or Property or in obligations of the
Borrower or any Restricted Subsidiary, or enter into any derivatives or other transaction with any
financial institution, commodities or stock exchange or clearinghouse (a “Derivatives
Counterparty”) obligating the Borrower or any Restricted Subsidiary to make payments to such
Derivatives Counterparty as a result of any change in market value of any such Capital Stock
(collectively, “Restricted Payments”), except that:
(a) (i) any Restricted Subsidiary may make Restricted Payments to the Borrower or any
Subsidiary Guarantor and (ii) Non-Guarantor Subsidiaries may make Restricted Payments to
other Non-Guarantor Subsidiaries;
(b) provided that (x) no Default or Event of Default is continuing or would
result therefrom and (y) the Consolidated Total Leverage Ratio for the most recently ended
period of four consecutive fiscal quarters of the Borrower shall not exceed 4.50 to 1.00 for
such period immediately before and immediately after giving effect to such Restricted Payment, the
Borrower may make Restricted Payments in an aggregate amount not to exceed the Available
Amount; provided no Restricted Payments under this clause (b) may be made for the
purpose of making a dividend or other distribution in respect of, or repurchasing or
redeeming, Capital Stock held by the Sponsor or any of its Affiliates (other than Holdings
or any Parent Company) in Holdings or any Parent Company; it being understood that such
Restricted Payments may be used for such purposes with respect to Capital Stock held by any
other Person in Holdings or any Parent Company;
(c) the Borrower may make Restricted Payments to Holdings or any Parent Company to
permit Holdings or any Parent Company to pay (i) any taxes which are due and payable by
Holdings or any Parent Company, the Borrower and the Restricted Subsidiaries as part of a
consolidated group (or shareholders of Holdings, to the extent such taxes are attributable
to Holdings, the Borrower and the Restricted Subsidiaries), (ii) customary fees, salary,
bonus, severance and other benefits payable to, and indemnities provided on behalf of, their
current and former officers and employees and members of their Board of Directors, (iii)
ordinary course corporate operating expenses and other fees and expenses required to
maintain its corporate existence, (iv) fees and expenses to the extent permitted under
clause (i) of the second sentence of Section 6.9, (v) reasonable fees and expenses incurred
in connection with any debt or equity offering by Holdings or any Parent Company, to the
extent the proceeds thereof are (or, in the case of an unsuccessful offering, were intended
to be) used for the benefit of the Borrower and the Restricted Subsidiaries, whether or not
completed, (vi) reasonable fees and expenses in connection with compliance with reporting
obligations under, or in connection with compliance with, federal or state laws or under
this Agreement or any other Loan Document and the Senior Secured Loan Agreement and any
other Senior Secured Loan Document and (vii) amounts due in respect of the Deferred
Obligation Amount under the Merger Agreement with the Net Cash Proceeds of any Equity
Issuance by, or capital contribution to, the Borrower;
(d) the Borrower may make Restricted Payments in the form of Capital Stock of the
Borrower;
(e) the Borrower or any Subsidiary may make Restricted Payments to, directly or
indirectly, purchase the Capital Stock of the Borrower, Holdings or any Parent Company from
present or former officers, directors, consultants, agents or employees (or their estates,
trusts,
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family members or former spouses) of Holdings, the Borrower, any Parent Company or
any Subsidiary upon the death, disability, retirement or termination of the applicable
officer, director, consultant, agent or employee or pursuant to any equity subscription
agreement, stock option or equity incentive award agreement, shareholders’ or members’
agreement or similar agreement, plan or arrangement; provided that the aggregate
amount of payments under this clause (e) in any fiscal year of the Borrower shall not exceed
the sum of (i) $24,000,000 in any fiscal year (but not exceeding $60,000,000 in the
aggregate since the Closing Date), plus (ii) any proceeds received from key man life
insurance policies, plus (iii) any proceeds received by the Borrower, Holdings or
any Parent Company during such fiscal year from sales of the Capital Stock of Holdings, the
Borrower or any Parent Company to directors, consultants, officers or employees of Holdings,
such Parent Company, the Borrower or any Subsidiary in connection with permitted employee
compensation and incentive arrangements, plus (iv) the amount of any bona fide cash
bonuses otherwise payable to members of management, directors or consultants of Holdings,
any Parent Company, the Borrower or its Restricted Subsidiaries in connection with the
Transactions that are foregone in return for the receipt of Capital Stock the fair market
value of which is equal to or less than the amount of such cash bonuses; provided
that any Restricted Payments permitted (but not made) pursuant to sub-clause (ii), (iii) or (iv) of this clause (e) in any prior
fiscal year may be carried forward to any subsequent calendar year, and provided,
further, that cancellation of Indebtedness owing to the Borrower or any Restricted
Subsidiary by any member of management of Holdings, any Parent Company, the Borrower or its
Restricted Subsidiaries in connection with a repurchase of the Capital Stock of Holdings or
any Parent Company will not be deemed to constitute a Restricted Payment for purposes of
this Section 6.6;
(f) noncash repurchases of Capital Stock deemed to occur upon exercise of stock options
or similar equity incentive awards if such Capital Stock represents a portion of the
exercise price of such options or similar equity incentive awards;
(g) the Borrower and its Restricted Subsidiaries may make Restricted Payments to
consummate the Transactions (including any Restricted Payments contemplated by the Merger
Agreement);
(h) the Borrower may make Restricted Payments to allow Holdings or any Parent Company
to make payments in cash, in lieu of the issuance of fractional shares, upon the exercise of
warrants or upon the conversion or exchange of Capital Stock of any such Person;
(i) so long as no Event of Default under Section 7.1(a) or 7.1(f) has occurred and is
continuing, the Borrower and its Restricted Subsidiaries may make Restricted Payments to
make payments provided for in the Management Agreement;
(j) to the extent constituting Restricted Payments, the Borrower and its Restricted
Subsidiaries may enter into and consummate transactions expressly permitted by any provision
of Sections 6.4, 6.5, 6.7 and 6.9;
(k) any non-wholly owned Restricted Subsidiary of the Borrower may declare and pay cash
dividends to its equity holders generally so long as the Borrower or its respective
Subsidiary which owns the equity interests in the Restricted Subsidiary paying such dividend
receives at least its proportional share thereof (based upon its relative holding of the
equity interests in the Restricted Subsidiary paying such dividends and taking into account
the relative preferences, if any, of the various classes of equity interest of such
Restricted Subsidiary);
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(l) the Borrower may make Restricted Payments using any amounts placed in escrow in
connection with the Transactions;
(m) provided that (i) no Default or Event of Default is continuing or would
result therefrom and (ii) the Consolidated Total Leverage Ratio for the most recently ended
period of four consecutive fiscal quarters of the Borrower shall not exceed 2.00 to 1.00 for
such period immediately before and immediately after giving effect to such Restricted
Payment, at any time following the sixth anniversary of the Closing Date, the Borrower and
its Restricted Subsidiaries may make Restricted Payments to redeem or purchase the Capital
Stock of the Borrower, Holdings or any Parent Company in an amount not to exceed 10% of the
Borrower’s Consolidated EBITDA in any fiscal year; provided no Restricted Payments
under this clause (m) may be made for the purpose of making a dividend or other distribution
in respect of, or repurchasing or redeeming, Capital Stock held by the Sponsor or any of its
Affiliates (other than Holdings or any Parent Company) in Holdings or any Parent Company; it
being understood that such Restricted Payments may be used for such purposes with respect to
Capital Stock held by any other Person in Holdings or any Parent Company;
(n) provided that no Default or Event of Default is continuing or would result
therefrom, after a Holdings IPO, the Borrower may make Restricted Payments to Holdings or
any Parent Company so that Holdings or any Parent Company may make Restricted Payments to
its equity holders in an aggregate amount not exceeding 6.0% per annum of the Net Cash
Proceeds received by the Borrower from such Holdings IPO; provided that the
Available Amount shall be reduced by a corresponding amount of any such Restricted Payments;
and
(o) provided that no Default or Event of Default is continuing or would result
therefrom, other Restricted Payments in an amount not to exceed $36,000,000;
provided that no Restricted Payments under this clause (o) may be made for the
purpose of making a dividend or other distribution in respect of, or repurchasing or
redeeming, Capital Stock held by the Sponsor or any of its Affiliates (other than Holdings
or any Parent Company) in Holdings or any Parent Company; it being understood that such
Restricted Payments may be used for such purposes with respect to Capital Stock held by any
other Person in Holdings or any Parent Company.
6.7 Investments. Make any advance, loan, extension of credit (by way of guaranty or
otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or
other debt securities of, or all or substantially all of the assets constituting an ongoing
business from, or make any other similar investment in, any other Person (all of the foregoing,
“Investments”), except:
(a) (i) extensions of trade credit in the ordinary course of business and (ii)
purchases and acquisitions of inventory, supplies, materials and equipment or purchases of
contract rights or licenses or leases of Intellectual Property in each case in the ordinary
course of business, to the extent such purchases and acquisitions constitute Investments;
(b) Investments in Cash Equivalents and Investments that were Cash Equivalents when
made;
(c) Investments arising in connection with (i) the incurrence of Indebtedness permitted
by Sections 6.2 to the extent arising as a result of Indebtedness among Holdings, the
Borrower or any Restricted Subsidiary and Guarantee Obligations permitted by Section 6.2 and
payments made in respect of such Guarantee Obligations, (ii) the forgiveness or conversion
to equity of any Indebtedness permitted by Section 6.2 and (iii) Guarantees by any Borrower
or any Restricted
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Subsidiary of operating leases (other than Capital Lease Obligations) or of other obligations that do not constitute Indebtedness, in each case entered into in the
ordinary course of business;
(d) loans and advances to employees, consultants or directors of Holdings, the Borrower
or any of its Restricted Subsidiaries in the ordinary course of business in an aggregate
amount (for Holdings, the Borrower and all Restricted Subsidiaries) not to exceed $6,000,000
(excluding (for purposes of such cap) tuition advances, travel and entertainment expenses,
but including relocation expenses) at any one time outstanding;
(e) Investments (other than those relating to the incurrence of Indebtedness permitted
by Section 6.7(c)) by the Borrower or any of its Restricted Subsidiaries in the Borrower or
any Person that, prior to such Investment, is a Subsidiary Guarantor or is a Domestic
Subsidiary that becomes a Subsidiary Guarantor at the time of such Investment;
(f) (i) Permitted Acquisitions to the extent that any Person or Property acquired in
such acquisition becomes a Subsidiary Guarantor or a part of the Borrower or any Subsidiary
Guarantor or becomes (whether or not such Person is a wholly owned Subsidiary) a Subsidiary
Guarantor in the manner contemplated by Section 5.8(a) and (ii) other Permitted Acquisitions
in an aggregate purchase price in the case of this clause (ii) (other than purchase price
paid through the issuance of equity by Holdings or any Parent Company with the proceeds
thereof, including (A) (x) whether or not any equity is issued, capital contributions (other
than relating to Disqualified Capital Stock) and (y) equity issued to the seller) in an
aggregate amount not to exceed $90,000,000 plus (B) an amount equal to the Available
Amount; provided that after giving effect to any such Permitted Acquisition the
Borrower shall be in pro forma compliance with the financial covenants set
forth in Section 6.1;
(g) loans by the Borrower or any of its Restricted Subsidiaries to the employees,
officers or directors of Holdings, the Borrower or any of its Restricted Subsidiaries in
connection with management incentive plans; provided that such loans represent
cashless transactions pursuant to which such employees, officers or directors directly
invest the proceeds of such loans in the Capital Stock of Holdings;
(h) Investments by the Borrower and its Restricted Subsidiaries in joint ventures or
similar arrangements and Non-Guarantor Subsidiaries in an aggregate amount at any one time
outstanding (for the Borrower and all Restricted Subsidiaries), not to exceed the sum of (A)
$60,000,000 plus (B) an amount equal to the Available Amount; provided, that
any Investment made for the purpose of funding a Permitted Acquisition permitted under
Section 6.7(f) shall not be deemed a separate Investment for the purposes of this clause
(h); provided, further, that no Investment may be made pursuant to this
clause (h) in any Unrestricted Subsidiary for the purpose of making a Restricted Payment
prohibited pursuant to Section 6.6;
(i) Investments (including debt obligations) received in the ordinary course of
business by the Borrower or any Restricted Subsidiary in connection with the bankruptcy or
reorganization of suppliers, customers and other Persons and in settlement of delinquent
obligations of, and other disputes with, suppliers, customers and other Persons arising out
of the ordinary course of business;
(j) Investments by any Non-Guarantor Subsidiary in any other Non-Guarantor Subsidiary;
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(k) Investments in existence on, or pursuant to legally binding written commitments in
existence on, the Closing Date and listed on Schedule 6.7 and, in each case, any extensions
or renewals thereof, so long as the amount of any Investment made pursuant to this clause
(k) is not increased at any time above the amount of such Investment set forth on Schedule
6.7;
(l) Investments of the Borrower or any Restricted Subsidiary under Hedge Agreements
permitted hereunder;
(m) Investments of any Person in existence at the time such Person becomes a Restricted
Subsidiary; provided that such Investment was not made in connection with or in
anticipation of such Person becoming a Restricted Subsidiary;
(n) Investments arising as a result of payments permitted by Section 6.8(a);
(o) consummation of the Merger Transactions pursuant to the Merger Documents and the
Company Reorganization;
(p) Subsidiaries of the Borrower may be established or created, if to the extent such
new Subsidiary is a Domestic Subsidiary, the Borrower and such Subsidiary comply with the
provisions of Section 5.8(a); provided that, in each case, to the extent such new
Subsidiary is created solely for the purpose of consummating a merger transaction pursuant
to an acquisition permitted by this Section 6.7, and such new Subsidiary at no time holds
any assets or liabilities other than any merger consideration contributed to it
contemporaneously with the closing of such merger transactions, such new Subsidiary shall
not be required to take the actions set forth in Section 5.8(a) until the respective
acquisition is consummated (at which time the surviving entity of the respective merger
transaction shall be required to so comply within ten Business Days or such longer period as
the Administrative Agent shall agree);
(q) Investments arising directly out of the receipt by the Borrower or any Restricted
Subsidiary of non-cash consideration for any sale of assets permitted under Section 6.5;
provided that such non-cash consideration shall in no event exceed 25% of the total
consideration received for such sale;
(r) Investments resulting from pledges and deposits referred to in Sections 6.3(c) and
(d);
(s) Investments consisting of the licensing or contribution of Intellectual Property
pursuant to joint marketing arrangements with other persons;
(t) any Investment in a Foreign Subsidiary to the extent such Investment is
substantially contemporaneously repaid in full with a dividend or other distribution from
such Foreign Subsidiary;
(u) Investments in the ordinary course of business consisting of UCC Article 3
endorsements for collection or deposit and UCC Article 4 customary trade arrangements with
customers consistent with past practices;
(v) additional Investments so long as the aggregate amount thereof outstanding at no
time exceeds the sum of (i) $30,000,000 plus (ii) an amount equal to the Available
Amount; provided that no Investment may be made pursuant to this clause (v) in any
Unrestricted Subsidiary for the purpose of making a Restricted Payment prohibited pursuant
to Section 6.6;
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(w) advances of payroll payments to employees, or fee payments to directors or
consultants, in the ordinary course of business;
(x) Investments in Permitted Liquid Investments and Investments that were Permitted
Liquid Investments when made in an amount not to exceed $48,000,000 at any one time
outstanding; and
(y) Investments constituting loans or advances by the Borrower to Holdings or a Parent
Company in lieu of Restricted Payments permitted pursuant to Section 6.6.
It is further understood and agreed that for purposes of determining the value of any Investment
outstanding for purposes of this Section 6.7, such amount shall deemed to be the amount of such
Investment when made, purchased or acquired less any returns on such Investment (not to exceed the
original amount invested). Notwithstanding the foregoing, no Investment in an Unrestricted
Subsidiary is permitted under this Section 6.7 unless such Investment is permitted pursuant to
clause (h) or (v) above.
6.8 Optional Payments and Modifications of Certain Debt Instruments. (a) Make any
optional or voluntary payment, prepayment, repurchase or redemption of, or otherwise voluntarily or
optionally defease the principal of or interest on, or any other amount owing in respect of any
Permitted Subordinated Indebtedness; provided that (A) the Borrower or any Restricted
Subsidiary may prepay any Permitted Subordinated Indebtedness (or any Permitted Refinancing
thereof) with amounts constituting the Available Amount at any time if the Consolidated Total
Leverage Ratio is equal to or less than 4.50 to 1.00 as of the end of the most recently ended
Reference Period, (B) the Borrower or any Restricted Subsidiary may refinance, replace or extend
any Permitted Subordinated Indebtedness to the extent permitted by Section 6.2 and (C) the Borrower
or any Restricted Subsidiary may convert any Permitted Subordinated Indebtedness (or any Permitted
Refinancing thereof) to the Capital Stock of Holdings or any Parent Company. Notwithstanding the
foregoing, nothing in this Section 6.8 shall prohibit any AHYDO Payments in respect of any
Permitted Subordinated Indebtedness or, in each case, any Permitted Refinancing thereof.
(b) Amend, modify or otherwise change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms of any Permitted Subordinated Indebtedness in any
manner that is materially adverse to the Lenders without the prior consent of the Administrative
Agent (with the approval of the Required Lenders); provided that nothing in this Section
6.8(b) shall prohibit the refinancing, replacement, extension or other similar modification of the
Permitted Subordinated Indebtedness to the extent otherwise permitted by Section 6.2.
6.9 Transactions with Affiliates. Enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of Property, the rendering of any service or the
payment of any management, advisory or similar fees, with any Affiliate (other than Holdings, the
Borrower or any Restricted Subsidiary) unless such transaction is (a) otherwise not prohibited
under this Agreement and (b) upon fair and reasonable terms no less favorable to the Borrower or
such Restricted Subsidiary, as the case may be, than it would obtain in a comparable arm’s length
transaction with a Person that is not an Affiliate. Notwithstanding the foregoing, the Borrower
and its Restricted Subsidiaries may (i) pay to the Sponsor and its Affiliates fees, indemnities and
expenses pursuant to the Management Agreement and/or fees and expenses in connection with the
Merger and disclosed to the Administrative Agent prior to the Closing Date; (ii) enter into any
transaction with an Affiliate that is not prohibited by the terms of this Agreement to be entered
into by the Borrower or such Restricted Subsidiary with an Affiliate; (iii) make any Restricted
Payments contemplated by the Merger Agreement, and otherwise perform their obligations under the
Transaction Documents and (iv) without being subject to the terms of this Section 6.9, enter into
any transaction with any Person which is an Affiliate of Holdings only by reason of such Person and
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Holdings having common directors. For the avoidance of doubt, this Section 6.9 shall not apply to
employment, bonus, retention and severance arrangements with, and payments of compensation or
benefits to or for the benefit of, current or former employees, consultants, officers or directors
of the Borrower or any of its Restricted Subsidiaries in the ordinary course of business. For
purposes of this Section 6.9, any transaction with any Affiliate shall be deemed to have satisfied
the standard set forth in clause (b) of the first sentence hereof if such transaction is approved
by a majority of the Disinterested Directors of the board of directors of the Borrower or such
Restricted Subsidiary, as applicable. “Disinterested Director” shall mean, with respect to
any Person and transaction, a member of the Board of Directors of such Person who does not have any
material direct or indirect financial interest in or with respect to such transaction.
6.10 Sales and Leasebacks. Enter into any arrangement with any Person providing for the
leasing by the Borrower or any Restricted Subsidiary of real or personal Property which is to be
sold or transferred by the Borrower or such Restricted Subsidiary (a) to such Person or (b) to any
other Person to whom funds have been or are to be advanced by such Person on the security of such
Property or rental obligations of the Borrower or such Restricted Subsidiary, except for (i) any
such arrangement entered into in the ordinary course of business of the Borrower and its
Subsidiaries, (ii) sales or transfers by the Borrower or any Subsidiary Guarantor to the Borrower
or any other Subsidiary Guarantor, (iii) sales or transfers by any Non Guarantor Subsidiary to any
other Non Guarantor Subsidiary that is a Restricted Subsidiary and (iv) any such arrangement to the
extent that the fair market value of such Property does not exceed $42,000,000 in the aggregate for
all such arrangements.
6.11 Changes in Fiscal Periods. Permit the fiscal year of the Borrower to end on a day
other than March 31.
6.12 Clauses Restricting Subsidiary Distributions. Enter into any consensual encumbrance
or restriction on the ability of any Restricted Subsidiary to (a) make Restricted Payments in
respect of any Capital Stock of such Restricted Subsidiary held by, or pay any Indebtedness owed
to, the Borrower or any Restricted Subsidiary or (b) make Investments in the Borrower or any
Restricted Subsidiary, except for such encumbrances or restrictions existing under or by reason of
(i) any restrictions existing under the Loan Documents and the Senior Secured Loan Documents, (ii)
any restrictions with respect to such Restricted Subsidiary imposed pursuant to an agreement that
has been entered into in connection with the Disposition of all or substantially all of the Capital
Stock or assets of such Restricted Subsidiary, (iii) customary net worth provisions contained in
Real Property leases entered into by the Borrower and its Restricted Subsidiaries, so long as the
Borrower has determined in good faith that such net worth provisions would not reasonably be
expected to impair the ability of the Borrower and its Restricted Subsidiaries to meet their
ongoing obligations, (iv) any restrictions contained in agreements related to Indebtedness of any
Non-Guarantor Subsidiary not prohibited under Section 6.2 (in which case such restriction shall
relate only to such Indebtedness and/or such Non-Guarantor Subsidiary and its Restricted
Subsidiaries) or Indebtedness secured by Liens permitted by Sections 6.3(g) and 6.3(z), (v) any
restrictions regarding licenses or sublicenses by the Borrower and its Restricted Subsidiaries of
Intellectual Property in the ordinary course of business (in which case such restriction shall
relate only to such Intellectual Property), (vi) Contractual Obligations incurred in the ordinary
course of business which include customary provisions restricting the assignment of any agreement
relating thereto, (vii) customary provisions contained in joint venture agreements and other
similar agreements applicable to joint ventures entered into in the ordinary course of business,
(viii) customary provisions restricting the subletting or assignment of any lease governing a
leasehold interest, (ix) customary restrictions and conditions contained in any agreement relating
to any Disposition of Property not prohibited hereunder, (x) any agreement in effect at the time
any Person becomes a Restricted Subsidiary, so long as such agreement was not entered into in
contemplation of such Person becoming a Restricted Subsidiary and (xi)
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restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of
business.
6.13 Lines of Business. Enter into any business, either directly or through any of its
Restricted Subsidiaries, except for the Business or a business reasonably related thereto or that
are reasonable extensions thereof.
6.14 Limitation on Hedge Agreements. Enter into any Hedge Agreement other than Hedge
Agreements entered into in the ordinary course of business, and not for speculative purposes.
6.15 Limitation on Activities of Holdings. In the case of Holdings only, notwithstanding
anything to the contrary in this Agreement or any other Loan Document, Holdings shall not, so long
as the Commitments remain in effect or any Loan or other amount is owing to any Lender or any Agent
hereunder (other than contingent or indemnification obligations not then due): conduct, transact
or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or
operations other than (i) those incidental to its ownership of the Capital Stock of the Borrower
and the Subsidiaries of the Borrower and those incidental to Investments by or in Holdings
permitted hereunder, (ii) activities incidental to the maintenance of its existence and compliance
with applicable laws and legal, tax and accounting matters related thereto and activities relating
to its employees, (iii) activities relating to the performance of obligations under the Loan
Documents and the Senior Secured Loan Documents to which it is a party or expressly permitted
thereunder, (iv) the making of Restricted Payments to the extent of Restricted Payments permitted
to be made to Holdings pursuant to Section 6.6, (v) the receipt and payment of Restricted Payments
permitted under Section 6.6, (vi) those related to the Transactions and in connection with the
Merger Documents and other agreements contemplated thereby or hereby, (vii) to the extent that
Section 6 expressly permits the Borrower or a Restricted Subsidiary to enter into a transaction
with Holdings, (viii) activities in connection with or in preparation for an initial public
offering and (ix) activities incidental to the foregoing activities.
SECTION 7. EVENTS OF DEFAULT
7.1 Events of Default. If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay (i) any principal of any Loan when due in accordance
with the terms hereof, or (ii) any interest owed by it on any Loan, or any other amount
payable by it hereunder or under any other Loan Document, within five Business Days after
any such interest or other amount becomes due in accordance with the terms hereof; or
(b) (i) On the Closing Date, any Specified Representation, and (ii) at any time after
the Closing Date, any representation or warranty made or deemed made by any Loan Party
herein or in any other Loan Document or that is contained in any certificate, document or
financial or other statement furnished by it at any time under or in connection with this
Agreement or any such other Loan Document, shall in either case prove to have been
inaccurate in any material respect and such inaccuracy is adverse to the Lenders on or as of
the date made or deemed made or furnished; or
(c) Any Loan Party shall default in the observance or performance of any agreement
contained in Section 5.7(a) or Section 6; provided that, any Event of Default under
Section 6.1 is subject to cure as contemplated by Section 7.2; or
(d) Any Loan Party shall default in the observance or performance of any other
agreement contained in this Agreement or any other Loan Document (other than as provided in
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paragraphs (a) through (c) of this Section 7.1), and such default shall continue
unremedied for a period of 30 days after the earlier of the date that (x) such Loan Party
receives from the Administrative Agent or the Required Lenders notice of the existence of
such default or (y) a Responsible Officer of such Loan Party has knowledge thereof; or
(e) Holdings, the Borrower or any of its Restricted Subsidiaries shall (i) default in
making any payment of any principal of any Indebtedness for Borrowed Money (excluding the
Loans) on the scheduled or original due date with respect thereto; or (ii) default in making
any payment of any interest on any such Indebtedness for Borrowed Money beyond the period of
grace, if any, provided in the instrument or agreement under which such Indebtedness for
Borrowed Money was created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness for Borrowed Money or contained in
any instrument or agreement evidencing, securing or relating thereto, or any other event of
default shall occur, the effect of which payment or other default or other event of default
is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or
agent on behalf of such holder or beneficiary) to cause, with the giving of notice if
required, such Indebtedness for Borrowed Money to become due prior to its stated maturity or
to become subject to a mandatory offer to purchase by the obligor thereunder or to become
payable; provided that (A) a default, event or condition described in this paragraph
shall not at any time constitute an Event of Default unless, at such time, one or more
defaults or events of default of the type described in this paragraph shall have occurred
and be continuing with respect to Indebtedness for Borrowed Money the outstanding principal
amount of which individually exceeds $30,000,000, and in the case of Indebtedness for
Borrowed Money of the types described in clauses (i) and (ii) of the definition thereof,
with respect to such Indebtedness which exceeds such amount either individually or in the
aggregate and (B) this paragraph (e) shall not apply to (i) secured Indebtedness that
becomes due as a result of the sale, transfer, destruction or other disposition of the
Property or assets securing such Indebtedness for Borrowed Money if such sale, transfer,
destruction or other disposition is not prohibited hereunder and under the documents
providing for such Indebtedness or (ii) any Guarantee Obligations except to the extent such
Guarantee Obligations shall become due and payable by any Loan Party and remain unpaid after
any applicable grace period or period permitted following demand for the payment thereof; or
(f) (i) Holdings, the Borrower or any of its Restricted Subsidiaries (other than any
Immaterial Subsidiary) shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or Holdings, the Borrower or any of its Restricted
Subsidiaries (other than any Immaterial Subsidiary) shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against Holdings, the Borrower or
any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) any case,
proceeding or other action of a nature referred to in clause (i) above that (A) results in
the entry of an order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against Holdings, the Borrower or any of its Restricted Subsidiaries (other than
any Immaterial Subsidiary) any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against substantially all of
its assets that results in the entry of an order for any such relief that shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) Holdings, the Borrower or any of its
Restricted
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Subsidiaries (other than any Immaterial Subsidiary) shall consent to or approve of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or
(v) Holdings, the Borrower or any of its Restricted Subsidiaries (other than any Immaterial
Subsidiary) shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) Holdings, the Borrower or any of its Restricted Subsidiaries shall incur any
liability in connection with any “prohibited transaction” (as defined in Section 406 of
ERISA or Section 4975 of the Code) involving any Plan, (ii) a failure to meet the minimum
funding standards (as defined in Section 302(a) of ERISA), whether or not waived, shall
exist with respect to any Single Employer Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of Holdings, the Borrower or any of its Restricted Subsidiaries,
(iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have
a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or appointment
of a trustee is reasonably likely to result in the termination of such Single Employer Plan
for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate in a
distress termination under Section 4041(c) of ERISA or in an involuntary termination by the
PBGC under Section 4042 of ERISA, (v) Holdings, the Borrower or any of its Restricted
Subsidiaries shall, or is reasonably likely to, incur any liability as a result of a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a Plan or a Commonly
Controlled Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, could reasonably be
expected to result in a direct obligation of Holdings, the Borrower or any of its Restricted
Subsidiaries to pay money that could have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against Holdings, the Borrower or
any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) involving for
Holdings, the Borrower and any such Restricted Subsidiaries taken as a whole a liability
(not paid or fully covered by third-party insurance or effective indemnity) of $30,000,000
(net of any amounts which are covered by insurance or an effective indemnity) or more, and
all such judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 30 days from the entry thereof; or
(i) The Guarantees pursuant to the Guarantee Agreement by any Loan Party shall cease to
be in full force and effect (other than in accordance with the terms thereof) or shall be
asserted in writing by any Loan Party not to be legal, valid and binding obligations;
then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or
(ii) of paragraph (f) above with respect to the Borrower, automatically the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement and the other Loan
Documents shall immediately become due and payable in full in cash, and (B) if such event is any
other Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or
upon the request of the Required Lenders, the Administrative Agent shall, by notice to the
Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents to be due and payable forthwith, whereupon the
same shall immediately become due and payable in full in cash. Except as expressly provided above
in this Section 7.1 or otherwise in any Loan Document, presentment, demand and protest of any kind
are hereby expressly waived by Holdings and the Borrower.
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7.2 Specified Equity Contributions. For purposes of determining compliance with Section
6.1 only (and not any other provision of this Agreement, including any such other provision that
utilizes a calculation of Consolidated EBITDA), any equity contribution (other than Disqualified
Capital Stock) made by Holdings or any of the other direct or indirect equityholders of the
Borrower to the Borrower, on or after the Closing Date and on or prior to the day that is 10
Business Days after the day on which financial statements are required to be delivered for such
fiscal quarter pursuant to Section 5.1 shall, at the request of the Borrower, be deemed to
increase, dollar for dollar, Consolidated EBITDA for such fiscal quarter for the purposes of
determining compliance with Section 6.1 at the end of such fiscal quarter and applicable subsequent
periods (it being understood that each such contribution shall be effective as to such fiscal
quarter for all periods in which such fiscal quarter is included) (any such equity contribution so
included in the calculation of Consolidated EBITDA, a “Specified Equity Contribution”);
provided that (a) in each four fiscal quarter period there shall be a period of at least
three fiscal quarters in which no Specified Equity Contribution is made, (b) the amount of any
Specified Equity Contribution shall be no greater than the amount required to cause the Borrower to
be in compliance with Section 6.1, (c) no more than four Specified Equity Contributions may be made
in the aggregate prior to the Maturity Date, (d) Specified Equity Contributions shall not be
included in cash, Cash Equivalents and Permitted Liquid Investments for purposes of calculating
Consolidated Total Leverage and (e) all Specified Equity Contributions shall be disregarded for any
purpose under this Agreement other than determining compliance with Section 6.1.
If, after the making of the Specified Equity Contribution and the recalculations of
Consolidated EBITDA pursuant to the preceding paragraph, the Borrower shall then be in compliance
with the requirements of Section 6.1, the Borrower shall be deemed to have satisfied the
requirements of such covenant as of the relevant date of determination with the same effect as
though there had been no failure to comply therewith at such date, and the applicable Event of
Default that had occurred shall be deemed cured.
SECTION 8. THE ADMINISTRATIVE AGENT
8.1 Appointment. Each Lender hereby irrevocably designates and appoints the
Administrative Agent as the agent of such Lender under the Loan Documents and each such Lender
irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its
behalf under the provisions of the applicable Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the Administrative Agent by the terms of the
applicable Loan Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent
shall not have any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
8.2 Delegation of Duties. The Administrative Agent may execute any of its duties under
the applicable Loan Documents by or through any of its branches, agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care.
8.3 Exculpatory Provisions. The Administrative Agent and its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall not be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted from its or such
Person’s own gross negligence or
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willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or
any officer thereof contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other Loan Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Loan Party.
8.4 Reliance by the Agents. The Administrative Agent shall be entitled to rely, and shall
be fully protected in relying, upon any instrument, writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have been signed, sent or
made by the proper Person or Persons and upon advice and statements of legal counsel (including
counsel to Holdings), independent accountants and other experts selected by the Administrative
Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for
all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing
or refusing to take any action under the applicable Loan Document unless it shall first receive
such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all
Lenders or the Supermajority Lenders) as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense that may be incurred by
it by reason of taking or continuing to take any such action. The Administrative Agent shall in
all cases be fully protected in acting, or in refraining from acting, under the applicable Loan
Documents in accordance with a request of the Required Lenders (or, if so specified by this
Agreement, all Lenders or the Supermajority Lenders), and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the
Loans.
8.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless it has received written notice
from a Lender, Holdings or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a “notice of default”. In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders or the Supermajority Lenders); provided that unless and until the
Administrative Agent shall have received such directions, the Administrative Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
8.6 Non-Reliance on the Administrative Agent and Other Lenders. Each Lender expressly
acknowledges that the Administrative Agent and its respective officers, directors, employees,
agents, attorneys-in-fact or affiliates have not made any representations or warranties to it and
that no act by the Administrative Agent hereafter taken, including any review of the affairs of a
Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, Property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates and made its own decision
to make its Loans hereunder and enter into
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this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the time, continue to make
its own credit analysis, appraisals and decisions in taking or not taking action under the
applicable Loan Documents, and to make such investigation as it deems necessary to inform itself as
to the business, operations, Property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative
Agent shall not have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, Property, condition (financial or otherwise),
prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into
its possession or the possession of any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
8.7 Indemnification. The Lenders agree to indemnify the Administrative Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation
of the Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in
effect on the date on which indemnification is sought under this Section 8.7 (or, if
indemnification is sought after the date upon which the Loans shall have been paid in full, ratably
in accordance with such Aggregate Exposure Percentages immediately prior to such date), from and
against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before
or after the payment of the Loans) be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of, the Loans, this Agreement, any of
the other Loan Documents or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by the Administrative
Agent under or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements that are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted from the
Administrative Agent’s gross negligence or willful misconduct. The agreements in this Section 8.7
shall survive the payment of the Loans and all other amounts payable hereunder.
8.8 The Administrative Agent in Its Individual Capacity. The Administrative Agent and its affiliates may make loans to, accept deposits from and
generally engage in any kind of business with any Loan Party as though it were not the
Administrative Agent. With respect to its Loans made or renewed by it the Administrative Agent
shall have the same rights and powers under the applicable Loan Documents as any Lender and may
exercise the same as though it were not the Administrative Agent, and the terms “Lender” and
“Lenders” shall include the Administrative Agent in its individual capacity.
8.9 Successor Agent. The Administrative Agent may resign upon 30 days’ notice to the
Lenders and the Borrower effective upon appointment of a successor Administrative Agent. Upon
receipt of any such notice of resignation, the Required Lenders shall appoint from among the
Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default
under Section 7.1(a) or Section 7.1(f) with respect to the Borrower shall have occurred and be
continuing) be subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties
of such retiring Administrative Agent, and the retiring Administrative Agent’s rights, powers and
duties as Administrative Agent shall be terminated, without any other or further act or deed on the
part of such retiring Administrative Agent or any of the parties to this Agreement or any holders
of the Loans. If no successor Administrative Agent shall have been so appointed by the Required
Lenders with such consent of the Borrower and shall have accepted such appointment within 30 days
after the retiring Administrative Agent’s giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders and with the consent of the Borrower (such
consent not to be unreasonably withheld or delayed), appoint a successor Administrative
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Agent, that shall be a bank that has an office in New York, New York with a combined capital and surplus of at
least $500,000,000. After any retiring Administrative Agent’s resignation as Administrative Agent,
the provisions of this Section 8 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.
8.10 Authorization to Release Guarantees. The Administrative Agents is hereby irrevocably
authorized by each of the Lenders to effect any release of Guarantee Obligations contemplated by
Section 9.15.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. (a) Neither this Agreement, any other Loan Document, nor any
terms hereof or thereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 9.1. The Required Lenders and each Loan Party party to the relevant
Loan Document may, or, with the written consent of the Required Lenders, the Administrative Agent
and each Loan Party party to the relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to the other Loan Documents for the
purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights or obligations of the Administrative Agent, the Lenders or of the Loan Parties or
their Subsidiaries hereunder or thereunder or (b) waive, on such terms and conditions as the
Required Lenders or the Administrative Agent may specify in such instrument, any of the
requirements of this Agreement or the other Loan Documents or any Default or Event of Default and
its consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) forgive or reduce the principal amount or extend the final
scheduled date of maturity of any Loan, reduce the stated rate of any interest, fee or premium
payable hereunder (except in connection with the waiver of applicability of any post-default increase in
interest rates (which waiver shall be effective with the consent of the Required Lenders)) or
extend the scheduled date of any payment thereof, or increase the amount or extend the expiration
date of any Lender’s Commitment, in each case without the written consent of each Lender directly
and adversely affected thereby; (ii) amend, modify or waive any provision of paragraph (a) of this
Section 9.1 without the written consent of all Lenders; (iii) reduce any percentage specified in
the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement and the other Loan Documents, or release all or
substantially all of the Guarantors from their obligations under the Guarantee Agreement, in each
case without the written consent of all Lenders (other than to the extent permitted by Section
6.4); (iv) amend, modify or waive any provision of paragraph (a) of Section 2.9 without the written
consent of all Lenders adversely affected thereby; (v) amend, modify or waive any provision of
Section 8 without the written consent of the Administrative Agent; or (vi) amend the definition of
“Change of Control” or amend, modify or waive the provisions of Section 2.6 without the written
consent of Lenders holding more than 66-2/3% of the Commitments and Loans then outstanding (the
“Supermajority Lenders”); provided that determinations of the “Supermajority
Lenders” shall exclude any Commitments or Loans held by any Carlyle Fund. Any such waiver and any
such amendment, supplement or modification shall apply equally to each of the Lenders and shall be
binding upon the Loan Parties, the Lenders, the Administrative Agent and all future holders of the
Loans. In the case of any waiver, the Loan Parties, the Lenders and the Administrative Agent shall
be restored to their former position and rights hereunder and under the other Loan Documents, and
any Default or Event of Default waived shall be deemed to be cured and not continuing unless
limited by the terms of such waiver; but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.
(b) Furthermore, notwithstanding the foregoing, if following the Closing Date, the
Administrative Agent and the Borrower shall have jointly identified an obvious error or any error
or omission of a technical or immaterial nature, in each case, in any provision of this Agreement
or any other
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Loan Document, then the Administrative Agent and the Borrower shall be permitted to amend such
provision and such amendment shall become effective without any further action or consent of any
other party to this Agreement or any other Loan Document if the same is not objected to in writing
by the Required Lenders within five Business Days following receipt of notice thereof; it being
understood that posting such amendment electronically on IntraLinks/IntraAgency or another relevant
website with notice of such posting by the Administrative Agent to the Required Lenders shall be
deemed adequate receipt of notice of such amendment.
9.2 Notices. (a) All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered, or three Business
Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of Holdings, the Borrower, the Administrative Agent, and
as set forth in an administrative questionnaire delivered to the Administrative Agent in the case
of the Lenders, or to such other address as may be hereafter notified by the respective parties
hereto:
| Holdings: | Explorer Investor Corporation | |||||
| 1001 Pennsylvania Avenue, NW | ||||||
| Washington, DC 20004 | ||||||
| Attention: Ian Fujiyama | ||||||
| Telecopy: (202) 347-9250 | ||||||
| Telephone: (202) 729-5426 | ||||||
| in each case with a copy to: | ||||||
| The Carlyle Group | ||||||
| 1001 Pennsylvania Avenue, NW | ||||||
| Washington, DC 20004 | ||||||
| Attention: Ian Fujiyama | ||||||
| Telecopy: (202) 347-9250 | ||||||
| Telephone: (202) 729-5426 | ||||||
| With a copy to: | Debevoise & Plimpton LLP | |||||
| 919 Third Avenue | ||||||
| New York, NY 10022 | ||||||
| Attention: Gregory H. Woods III | ||||||
| Telecopy: (212) 521-7643 | ||||||
| Telephone: (212) 909-6643 | ||||||
| The Borrower: | Booz Allen Hamilton Inc. | |||||
| 8283 Greensboro Drive | ||||||
| McLean VA 22102 | ||||||
| Attention: Sam Strickland | ||||||
| Telecopy: (703) 902-3011 | ||||||
| Telephone: (703) 902-4700 | ||||||
| in each case with a copy to: | ||||||
| The Carlyle Group | ||||||
| 1001 Pennsylvania Avenue, NW | ||||||
| Washington, DC 20004 |
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| Attention: Ian Fujiyama | ||||||
| Telecopy: (202) 347-9250 | ||||||
| Telephone: (202) 729-5426 | ||||||
| With a copy to: | Debevoise & Plimpton LLP | |||||
| 919 Third Avenue | ||||||
| New York, NY 10022 | ||||||
| Attention: Gregory H. Woods III | ||||||
| Telecopy: (212) 521-7643 | ||||||
| Telephone: (212) 909-6643 | ||||||
| The Administrative Agent: | Credit Suisse | |||||
| One Madison Avenue, New York, NY 10010 | ||||||
| Attention: Agency Manager | ||||||
| Telecopy: (212) 322-2291 | ||||||
| Email: agency.loanops@credit-suisse.com |
provided that any notice, request or demand to or upon the Administrative Agent,
the Lenders, Holdings or the Borrower shall not be effective until received.
(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent;
provided that the foregoing shall not apply to notices pursuant to Section 2 unless
otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent,
Holdings or the Borrower may, in its discretion, agree to accept notices and other communications
to it hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular notices or
communications.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or
privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All representations and warranties
made hereunder, in the other Loan Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and delivery of this
Agreement and the making of the Loans hereunder.
9.5 Payment of Expenses; Indemnification. Except with respect to Taxes which are
addressed in Section 2.10, the Borrower agrees (a) to pay or reimburse the Administrative Agent for
all of its reasonable and documented out-of-pocket costs and expenses incurred in connection with
the syndication of the Facility (other than fees payable to syndicate members) and the development,
preparation, execution and delivery of this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith and
any amendment, supplement or modification thereto, and, as to the Administrative Agent only, the
administration of the transactions contemplated hereby and thereby, including, without limitation,
the reasonable fees and disbursements and other charges of a single firm of counsel to the Agents (plus one firm of special regulatory counsel and one firm
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of local counsel per material jurisdiction as may reasonably be necessary in connection with collateral matters) in connection
with all of the foregoing, (b) to pay or reimburse each Lender and the Administrative Agent for all
its reasonable and documented out-of-pocket costs and expenses incurred in connection with the
enforcement of any rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the documented fees and disbursements of a single firm of
counsel and, if necessary, a single firm of special regulatory counsel and a single firm of local
counsel per material jurisdiction as may reasonably be necessary, for the Administrative Agent and
the Lenders, taken as a whole, and (c) to pay, indemnify or reimburse each Lender, the
Administrative Agent, each Lead Arranger and their respective affiliates, and their respective
officers, directors, employees, trustees, advisors, agents and controlling Persons (each, an
“Indemnitee”) for, and hold each Indemnitee harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, costs, expenses or disbursements arising out
of any actions, judgments or suits of any kind or nature whatsoever, arising out of or in
connection with any claim, action or proceeding relating to or otherwise with respect to the
execution, delivery, enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including, without limitation, any of the foregoing
relating to the use of proceeds of the Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of the Borrower, any of its Subsidiaries
or any of the Properties and the fees and disbursements and other charges of legal counsel in
connection with claims, actions or proceedings by any Indemnitee against Holdings or the Borrower
hereunder (all the foregoing in this clause (c), collectively, the “Indemnified
Liabilities”); provided that, neither Holdings nor the Borrower shall have any
obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities are found by a court of competent jurisdiction to have resulted from
(i) the gross negligence, bad faith or willful misconduct of such Indemnitee or its Related
Persons, (ii) a material breach of the Loan Documents by such Indemnitee or its Related Persons or
(iii) disputes solely among Indemnitees or their Related Persons (it being understood that this
clause (iii) shall not apply to the indemnification of the Administrative Agent or Lead Arranger in
a suit involving the Administrative Agent or Lead Arranger in its capacity as such). For purposes
hereof, a “Related Person” of an Indemnitee means (i) if the Indemnitee is the Administrative Agent
or any of its affiliates or their respective officers, directors, employees, agents and controlling
Persons, any of the Administrative Agent and its affiliates and their respective officers,
directors, employees, agents and controlling Persons, and (ii) if the Indemnitee is any Lender or
any of its affiliates or their respective officers, directors, employees, agents and controlling
Persons, any of such Lender and its affiliates and their respective officers, directors, employees,
agents and controlling Persons. All amounts due under this Section 9.5 shall be payable promptly
after receipt of a reasonably detailed invoice therefor. Statements payable by the Borrower
pursuant to this Section 9.5 shall be submitted to the Borrower at the address thereof set forth in
Section 9.2, or to such other Person or address as may be hereafter designated by the Borrower in a
written notice to the Administrative Agent. The agreements in this Section 9.5 shall survive
repayment of the Obligations.
9.6 Successors and Assigns; Participations and Assignments. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or
otherwise transfer any of its rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section 9.6.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may, in
compliance with applicable law, assign (other than to any Disqualified Institution or a natural
person) to one or more assignees (each, an “Assignee”), all or a portion of its rights and
obligations under this
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Agreement (including all or a portion of its Commitments and the Loans at
the time owing to it) with the prior written consent (such consent not to be unreasonably withheld
or delayed) of:
(A) the Borrower; provided that no consent of the Borrower shall be required
for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund (as defined
below), or, if an Event of Default under Section 7.1(a) or 7.1(f) has occurred and is
continuing, any other Person; and
(B) the Administrative Agent; provided that no consent of the Administrative
Agent shall be required for an assignment to (x) a Lender, an Affiliate of a Lender or an
Approved Fund or (y) Holdings, the Borrower or a Subsidiary of the Borrower in connection
with a purchase of Loans pursuant to Section 2.5(d).
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s
Commitments or Loans under any Facility, the amount of the Loans of the assigning Lender
subject to each such assignment (determined as of (I) the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent or (II) if earlier,
the “trade date” (if any) specified in such Assignment and Assumption) shall not be less
than $1,000,000, unless the Borrower and the Administrative Agent otherwise consent;
provided that (1) no such consent of the Borrower shall be required if an Event of
Default under Section 7.1(a) or 7.1(f) has occurred and is continuing and (2) such amount
shall be aggregated in respect of each Lender and its Affiliates or Approved Funds, if any;
(B) the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption via an electronic settlement system acceptable to the
Administrative Agent and the Borrower (or, at the Borrower’s request, manually) together
with a processing and recordation fee of $3,500 (which fee may be waived or reduced in the
sole discretion of the Administrative Agent); provided that only one such fee shall
be payable in the case of contemporaneous assignments to or by two or more related Approved
Funds; and
(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an administrative questionnaire and all applicable tax forms; provided that
the provisions of this clause (ii) shall not apply to an assignment to Holdings or a
Subsidiary of the Borrower in connection with a purchase of Loans pursuant to
Section 2.5(d).
For the purposes of this Section 9.6, “Approved Fund” means any Person (other than a
natural person) that is engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course and that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) (i) an entity or an Affiliate of an entity that
administers or manages a Lender or (ii) an entity or an Affiliate of an entity that is the
investment advisor to a Lender. Notwithstanding the foregoing, no Lender shall be permitted to
make assignments under this Agreement to any Disqualified Institutions.
(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below,
from and after the effective date specified in each Assignment and Assumption the Assignee
thereunder shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest assigned by such
Assignment and
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Assumption, be released from its obligations under this Agreement (and, in
the case of an Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto but shall
continue to be subject to the obligations under and entitled to the benefits of
Sections 2.10 and 9.5). Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this Section 9.6 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section 9.6 (and will be required to
comply therewith).
(iv) The Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption delivered to
it and a register for the recordation of the names and addresses of the Lenders, and the
principal amount of the Loans owing to each Lender pursuant to the terms hereof from time to
time (the “Register”). Holdings, the Borrower, the Administrative Agent and the
Lenders may treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement (and the entries in the
Register shall be conclusive absent demonstrable error for such purposes), notwithstanding
notice to the contrary. The Register shall be available for inspection by Holdings, the
Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(v) Upon its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an Assignee, the Assignee’s completed administrative questionnaire
(unless the Assignee shall already be a Lender hereunder) and all applicable tax forms, the
processing and recordation fee referred to in paragraph (b) of this Section 9.6 and any
written consent to such assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Assumption and promptly record the
information contained therein in the Register. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as provided in this
paragraph.
(c) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent, in
compliance with applicable law, sell participations (other than to any Disqualified Institution) to
one or more banks or other entities (a “Participant”), in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties hereto for the performance of
such obligations and (C) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to enforce this Agreement
and to approve any amendment, modification or waiver of any provision of this Agreement;
provided that such agreement may provide that such Lender will not, without the consent of
the Participant, agree to any amendment, modification or waiver that (1) requires the consent of
each Lender directly and adversely affected thereby pursuant to the proviso to the second sentence
of Section 9.1 and (2) directly affects such Participant. Subject to paragraph (c)(ii) of this
Section 9.6, the Borrower agrees that each Participant shall be entitled to the benefits of
Section 2.10 (if such Participant agrees to have related obligations thereunder) to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section 9.6. Notwithstanding the foregoing, no Lender shall be permitted to sell
participations under this Agreement to any Disqualified Institutions.
(ii) A Participant shall not be entitled to receive any greater payment under
Section 2.10 than the applicable Lender would have been entitled to receive with respect to
the participation
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sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent to such greater amounts. No
Participant shall be entitled to the benefits of Section 2.10 unless such Participant
complies with Section 2.10(d) or (e), as (and to the extent) applicable, as if such
Participant were a Lender.
(d) Any Lender may, without the consent of or notice to the Administrative Agent or the
Borrower, at any time pledge or assign a security interest in all or any portion of its rights
under this Agreement to secure obligations of such Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Bank, and this Section 9.6 shall not apply to any such
pledge or assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or Assignee for such Lender as a party hereto.
(e) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue
Notes to any Lender requiring the same (in the case of an assignment, following surrender by the
assigning Lender of all Notes representing its assigned interests).
(f) The Borrower may prohibit any assignment if it would require the Borrower to make any
filing with any Governmental Authority or qualify any Loan or Note under the laws of any
jurisdiction and the Borrower shall be entitled to request and receive such information and
assurances as it may reasonably request from any Lender or any Assignee to determine whether any
such filing or qualification is required or whether any assignment is otherwise in accordance with
applicable law.
(g) Notwithstanding anything to the contrary contained herein, other than pursuant to Section
2.5(d), none of Holdings, the Borrower or any of its Subsidiaries may acquire by assignment,
participation or otherwise any right to or interest in any of the Commitments or Loans hereunder
(and any such attempted acquisition shall be null and void).
9.7 Adjustments; Set-off. (a) Except to the extent that this Agreement provides for
payments to be allocated to a particular Lender, if any Lender (a “Benefited Lender”) shall
at any time receive any payment of all or part of the Obligations owing to it, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by setoff, pursuant to events
or proceedings of the nature referred to in Section 7.1(f), or otherwise) in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in respect of such
other Lender’s Obligations, such Benefited Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender’s Obligations, or shall provide
such other Lenders with the benefits of any such collateral, as shall be necessary to cause such
Benefited Lender to share the excess payment or benefits of such collateral ratably with each of
the Lenders; provided, however, that if all or any portion of such excess payment
or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded,
and the purchase price and benefits returned, to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall
have the right, without prior notice to the Borrower, any such notice being expressly waived by the
Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) after the
expiration of any cure or grace periods, to set off and appropriate and apply against such amount
any and all deposits (general or special, time or demand, provisional or final but excluding trust
accounts), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or
any affiliate, branch or agency thereof to or for the credit or the account of the Borrower. Each
Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff
and application made
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by such Lender; provided that the failure to give such notice shall
not affect the validity of such setoff and application.
9.8 Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. Delivery of an executed signature page
of this Agreement by facsimile or electronic (i.e. “pdf”) transmission shall be effective as
delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed
by all the parties shall be lodged with the Borrower and the Administrative Agent.
9.9 Severability. Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.
9.10 Integration. This Agreement and the other Loan Documents represent the entire
agreement of Holdings, the Borrower, the Administrative Agent and the Lenders with respect to the
subject matter hereof and thereof.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT
THE SAME ARE NOT MANDATORILY APPLICABLE BY STATUTE AND THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
9.12 Submission to Jurisdiction; Waivers. Each of Holdings and the Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or proceeding relating to
this Agreement and the other Loan Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of
the courts of the State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an inconvenient court
and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to it at its address set forth in Section 9.2 or at such other
address of which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to sue in any other jurisdiction;
and
-76-
(e) waives, to the maximum extent not prohibited by law, any right it may have to claim
or recover in any legal action or proceeding referred to in this Section 9.12 any special,
exemplary, punitive or consequential damages.
9.13 Acknowledgments. Each of Holdings and the Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents;
(b) neither the Agents nor any Lender has any fiduciary relationship with or duty to
either of Holdings or the Borrower arising out of or in connection with this Agreement or
any of the other Loan Documents, and the relationship between the Agents and Lenders, on one
hand, and Holdings and the Borrower, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Lenders or among
Holdings, the Borrower and the Lenders.
9.14 Confidentiality. The Agents and the Lenders agree to treat any and all
information, regardless of the medium or form of communication, that is disclosed, provided or
furnished, directly or indirectly, by or on behalf of Holdings or any of its affiliates in
connection with this Agreement or the transactions contemplated hereby whether furnished before or
after the Closing Date (“Confidential Information”), strictly confidential and not to use
Confidential Information for any purpose other than evaluating the Merger Transactions and
negotiating, making available, syndicating and administering this Agreement (the “Agreed
Purposes”). Without limiting the foregoing, each Agent and each Lender agrees to treat any and
all Confidential Information with adequate means to preserve its confidentiality, and each Agent
and each Lender agrees not to disclose Confidential Information, at any time, in any manner
whatsoever, directly or indirectly, to any other Person whomsoever, except (1) to its directors,
officers, employees, counsel, advisors, trustees, affiliates and other representatives
(collectively, the “Representatives”), to the extent necessary to permit such
Representatives to assist in connection with the Agreed Purposes (it being understood that the
Representatives to whom such disclosure is made will be informed of the confidential nature of such
Confidential Information and instructed to keep such Confidential Information confidential), (2) to
any pledgee referred to in Section 9.6(d) and prospective Lenders and participants in connection
with the syndication (including secondary trading) of the Facility and Loans hereunder, in each
case who are informed of the confidential nature of the information and agree to observe and be
bound by standard confidentiality terms, (3) upon the request or demand of any Governmental
Authority having or purporting to have jurisdiction over it, (4) in response to any order of any
Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (5) to
the extent reasonably required or necessary, in connection with any litigation or similar
proceeding relating to the Facility, (6) that has been publicly disclosed other than in breach of
this Section 9.14, (7) to the National Association of Insurance Commissioners or any similar
organization or any nationally recognized rating agency that requires access to information about a
Lender’s investment portfolio in connection with ratings issued with respect to such Lender or in
connection with examinations or audits of such Lender or (8) to the extent reasonably required or
necessary, in connection with the exercise of any remedy under the Loan Documents. Each Agent and
each Lender acknowledges that (i) Confidential Information includes information that is not
otherwise publicly available and that such non-public information may constitute confidential
business information which is proprietary to the Borrower and (ii) the Borrower has advised the
Agents and the Lenders that it is relying on the Confidential Information for its success and would
not disclose the Confidential Information to the Agents and the Lenders without
-77-
the confidentiality provisions of this Agreement. All information, including requests for waivers and amendments,
furnished by the Borrower or the Administrative Agent pursuant to, or in the course of
administering, this Agreement will be syndicate-level information, which may contain material
non-public information about the Borrower and its Affiliates and their related parties or their
respective securities. Accordingly, each Lender represents to the Borrower and the Administrative
Agent that it has identified in its administrative questionnaire a credit contact who may receive
information that may contain material non-public information in accordance with its compliance
procedures and applicable law, including Federal and state securities laws.
9.15 Release of Guarantee Obligations. (a) Notwithstanding anything to the contrary
contained herein or in any other Loan Document, upon request of the Borrower in connection with any
Disposition of Property permitted by the Loan Documents, the Administrative Agent shall (without
notice to, or vote or consent of, any Lender, or any affiliate of any Lender that is a party to any
Specified Hedge Agreement or contingent or indemnification obligations not then due) take such
actions as shall be required to release any Guarantee Obligations under any Loan Document of any
Person being Disposed of in such Disposition, to the extent necessary to permit consummation of
such Disposition in accordance with the Loan Documents. Any representation, warranty or covenant
contained in any Loan Document relating to any such Property so Disposed of (other than Property
Disposed of to the Borrower or any of its Restricted Subsidiaries) shall no longer be deemed to be
repeated once such Property is so Disposed of.
(b) Notwithstanding anything to the contrary contained herein or any other Loan Document, when
all Obligations (other than any contingent or indemnification obligations not then due) have been
paid in full, upon request of Holdings or the Borrower, the Administrative Agent shall take such
actions as shall be required to release all Guarantee Obligations under any Loan Document, whether
or not on the date of such release there may be contingent or indemnification obligations not then
due. Any such release of Guarantee Obligations shall be deemed subject to the provision that such
Guarantee Obligations shall be reinstated if after such release any portion of any payment in
respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial
part of its Property, or otherwise, all as though such payment had not been made.
9.16 Accounting Changes. In the event that any Accounting Change (as defined below) shall occur and such change
results in a change in the method of calculation of financial ratios, standards or terms in this
Agreement, then the Borrower and the Administrative Agent agree to enter into negotiations in order
to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with
the desired result that the criteria for evaluating the Borrower’s financial condition shall be the
same after such Accounting Changes as if such Accounting Changes had not been made. Until such
time as such an amendment shall have been executed and delivered by the Borrower, the
Administrative Agent and the Required Lenders, all financial ratios, standards and terms in this
Agreement shall continue to be calculated or construed as if such Accounting Changes had not
occurred. “Accounting Changes” refers to changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants or, if applicable, the
SEC.
9.17 WAIVERS OF JURY TRIAL. EACH OF HOLDINGS, THE BORROWER, THE AGENTS AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING
-78-
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
9.18 USA PATRIOT ACT. Each Lender hereby notifies the Loan Parties that pursuant to
the requirements of the USA Patriot Act (Title III of Publ. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that identifies
the Loan Parties, which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Loan Parties in accordance with the Act.
[Signature Pages Follow]
-79-
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to
be duly executed and delivered as of the date first above written.
| EXPLORER INVESTOR CORPORATION, as Holdings |
||||
| By: | /s/ Ian Fujiyama | |||
| Name: | Ian Fujiyama | |||
| Title: | Vice President | |||
| EXPLORER MERGER SUB CORPORATION, as Initial Borrower |
||||
| By: | /s/ Ian Fujiyama | |||
| Name: | Ian Fujiyama | |||
| Title: | Vice President | |||
| BOOZ ALLEN HAMILTON INC., as Surviving Borrower |
||||
| By: | /s/ Ralph Shrader | |||
| Name: | Ralph Shrader | |||
| Title: | Chairman and Chief Executive Officer | |||
| By: | /s/ CG Appleby | |||
| Name: | CG Appleby | |||
| Title: | Secretary | |||
| CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Administrative Agent and a Lender |
||||
| By: | /s/ John D. Toronto | |||
| Name: | John D. Toronto | |||
| Title: | Director | |||
| By: | /s/ Shaheen Malik | |||
| Name: | Shaheen Malik | |||
| Title: | Associate | |||
| LEHMAN BROTHERS COMMERCIAL BANK, as a Lender |
||||
| By: | /s/ Darren S. Lane | |||
| Name: | Darren S. Lane | |||
| Title: | Operations Officer | |||
SCHEDULES
to
MEZZANINE CREDIT AGREEMENT1
among
EXPLORER INVESTOR CORPORATION,
EXPLORER INVESTOR CORPORATION,
EXPLORER MERGER SUB CORPORATION,
as the Initial Borrower,
as the Initial Borrower,
BOOZ ALLEN HAMILTON INC.,
as the Surviving Borrower,
as the Surviving Borrower,
The Several Lenders from Time to Time Parties Hereto,
and
CREDIT SUISSE, CAYMAN ISLANDS BRANCH,
as Administrative Agent
as Administrative Agent
Dated as of July 31, 2008
BANC OF AMERICA SECURITIES, LLC,
CREDIT SUISSE SECURITIES (USA) LLC,
and
LEHMAN BROTHERS INC.
as Joint Lead Arrangers and Joint Bookrunners
CREDIT SUISSE SECURITIES (USA) LLC,
and
LEHMAN BROTHERS INC.
as Joint Lead Arrangers and Joint Bookrunners
| 1 | Capitalized terms used but not defined in this Disclosure Schedule shall have the meanings assigned in the Mezzanine Credit Agreement |
Schedule 1.1
to Mezzanine Credit Agreement
to Mezzanine Credit Agreement
Excluded Subsidiaries
Booz Allen Hamilton Intellectual Property Holdings, LLC
Schedule 2.1
to Mezzanine Credit Agreement
to Mezzanine Credit Agreement
Commitments
| Lender | Commitment | |
| Credit Suisse | $366,666,666.67 | |
| Lehman Brothers Commercial Bank | $183,333,333.33 | |
| Total | $550,000,000.00 |
Schedule 3.3
to Mezzanine Credit Agreement
to Mezzanine Credit Agreement
Existence; Compliance with Law
Booz Allen Transportation Inc. is not in good standing due to New York State franchise tax
returns missing and franchise tax payments past due for the following periods: 9/30/1989 and
10/31/2002 including 9/30/2002, 9/30/2003 and 3/31/2006 MTA Surcharge Reports.
Schedule 3.4
to Mezzanine Credit Agreement
to Mezzanine Credit Agreement
Consents, Authorizations, Filings and Notices
Government Approvals:
None.
Consents:
None.
Schedule 3.6
to Mezzanine Credit Agreement
to Mezzanine Credit Agreement
Litigation
None.
Schedule 3.8A
to Mezzanine Credit Agreement
to Mezzanine Credit Agreement
Excepted Property
None.
Schedule 3.8B
to Mezzanine Credit Agreement
to Mezzanine Credit Agreement
Owned Real Property
None.
Leased Real Property
| ZIP | Commencement/ | Expiry | ||||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||||
EXEC SUITE 7
|
6565 Americas Parkway, 215 — 218 | Albuquerque, NM | 87110 | 12/1/2006, 10/1/2007 | 9/30/2008 | |||||||
OFFICE
|
6363 Walker Lane | Alexandria, VA | 22301 | 3/6/2007 | 7/31/2012 | |||||||
OFFICE
|
134 National Business Parkway, Suite 100, 200 & 300 | Annapolis Junction, MD | 20701 | 5/19/1999 | 9/30/2009 | |||||||
OFFICE
|
304 Sentinel Drive | Annapolis Junction, MD | 20701 | 1/1/2006 | 12/31/2015 | |||||||
OFFICE
|
2345 Crystal Drive, Suite 913 | Arlington, VA | 22202 | 6/1/1994, 4/1/2007 | 3/31/2011 | |||||||
OFFICE
|
1530 Wilson Boulevard, Suite 100 | Arlington, VA | 22209 | 10/10/2003 | 10/31/2008 | |||||||
OFFICE
|
3811 N. Fairfax Drive (10th Fl) | Arlington, VA | 22203 | 11/14/2002 | 11/30/2009 | |||||||
OFFICE
|
4001 N. Fairfax Drive, Suite 750 | Arlington, VA | 22203 | 10/1/1995 | 12/31/2010 | |||||||
OFFICE
|
3811 N. Fairfax Drive, Suite 600 (6th Fl) | Arlington, VA | 22203 | 11/14/2001, 2/20/2007 | 11/30/2011 | |||||||
OFFICE
|
1550 Crystal Drive, Suite 1100 | Arlington, VA | 22202 | 2/1/1994, 1/1/2007 | 12/31/2011 | |||||||
DUPLICATE
|
1550 Crystal Drive, Suite 1205 | Arlington, VA | 22202 | 9/1/1998, 1/1/2007 | 12/31/2011 | |||||||
OFFICE
|
33 Pervaya Magistralnaya Street, Suite 1002 | Astana, Kazakhstan | 1/1/2007 | 12/31/2008 | ||||||||
OFFICE 7
|
230 Peachtree Street, Suite 2100 | Atlanta, GA | 30303 | 7/1/1999, 7/1/2004 | 6/30/2012 | |||||||
| ZIP | Commencement/ | Expiry | ||||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||||
APARTMENT 3, 1
|
J. Jabbarly Street, 44 | Baku, Azerbaijan | 9/1/2006 | 11/30/2008 | ||||||||
DIRECT CHARGE — Storage
|
201 N. Charles Street | Baltimore, MD | 21201 | 6/18/1997, 5/25/2005 | M-T-M | |||||||
OFFICE
|
201 N. Charles Street, Suite 1201 | Baltimore, MD | 21201 | 6/1/1996, 6/6/2007 | 9/30/2010 | |||||||
OFFICE 7
|
4692 Millenium Drive, Suite 200 | Belcamp, MD | 4/1/2006 | 3/31/2013 | ||||||||
EXPANSION SPACE
|
4692 Millenium Drive, Suite 300 | Belcamp, MD | 4/1/2008 | 3/31/2013 | ||||||||
USAID OFFICE
|
24, Smiljaniceva Street | Belgrade, Serbia | 9/1/2006 | 1st floor: 9/30/2010; 2nd floor: 9/30/2008 | ||||||||
USAID OFFICE
|
17, Dalmatiuska Street | Belgrade, Serbia | 3/1/2008 | 2/28/2011 | ||||||||
OFFICE
|
22 Batterymarch Street, 2nd and 5th Floors | Boston, MA | 02109 | 3/1/2000 | 2/28/2010 | |||||||
STORAGE
|
22 Batterymarch Street | Boston, MA | 02109 | 6/15/2000 | 2/28/2010 | |||||||
EXEC SUITE
|
35 Corporate Drive, 4th floor | Burlington, MA | 1803 | 8/1/2006, 1/1/2008 | 12/31/2008 | |||||||
OFFICE
|
15059 Conference Center Drive, 3rd Floor | Chantilly, VA | 22021 | 4/1/2001, 4/1/2008 | 3/31/2013 | |||||||
OFFICE
|
Ashley Center, 4401 Belle Oaks Drive, Suite 310 | Charleston, SC | 29405 | 9/1/2002, 9/1/2007 | 8/31/2012 | |||||||
OFFICE
|
1001 Research Park Blvd, Suite 300 | Charlottesville, VA | 22911 | 2/12/2007 | 2/28/2012 | |||||||
DIRECT CHARGE 1
|
1450 Academy Park Loop, 2nd Floor | Colorado Springs, CO | 80910 | 12/15/2004, 10/1/2007 | 8/31/2008 | |||||||
OFFICE
|
121 South Tejon Street (Plaza of the Rockies) (9th fl) | Colorado Springs, CO | 80910 | 10/28/2002, 5/1/2004 | 4/30/2009 | |||||||
DUPLICATE
|
121 South Tejon Street (Plaza of the Rockies) 11th Fl | Colorado Springs, CO | 80910 | 12/18/2006 | 12/31/2011 | |||||||
DUPLICATE
|
121 South Tejon Street (Plaza of the Rockies) (10th fl) | Colorado Springs, CO | 80910 | 10/1/2003 | 5/31/2014 | |||||||
DIRECT CHARGE / License Agreement
|
1050 North Newport Drive | Colorado Springs, CO | 80916 | 9/1/2007 | M-T-M | |||||||
| ZIP | Commencement/ | Expiry | ||||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||||
OFFICE 1
|
1900 Founders Drive, Suite 300 | Dayton, OH (Kettering) | 45420 | 12/1/2002, 2/1/2008 | 11/30/2012 | |||||||
Direct Charge
|
17286 Dumfries Road | Dumfries, VA | 22026 | 9/1/2006 | M-T-M | |||||||
EXECUTIVE SUITE
|
2530 Meridian Parkway | Durham, NC | 27713 | 5/13/2008 | 9/30/2008 | |||||||
OFFICE
|
151 Industrial Way East | Eatontown, NJ | 07724 | 7/9/1993, 5/1/2004 | 4/30/2009 | |||||||
DUPLICATE
|
151 Industrial Way East, Building C | Eatontown, NJ | 07724 | 10/20/2006 | 4/30/2009 | |||||||
DIRECT CHARGE / License Agreement 5
|
2350 E. El Segundo Boulevard | El Segundo, CA | 90245 | 10/1/2004, 10/1/2007 | 9/30/2010 | |||||||
OFFICE 1
|
5201 Leesburg Pike, Suite 400 | Falls Church, VA | 22041 | 4/1/1998, 4/1/2002, 4/1/2007 | 6/30/2009 | |||||||
DIRECT CHARGE — Storage
|
Skyline 3, 5201 Leesburg Pike | Falls Church, VA | 22041 | 9/1/2001 | 6/14/2009 | |||||||
DIRECT CHARGE — Storage
|
Skyline 5, 5111 Leesburg Pike, B100 | Falls Church, VA | 22041 | 9/1/2001 | 6/14/2009 | |||||||
OFFICE
|
5205 Leesburg Pike, Suite 402 | Falls Church, VA | 22041 | 1/1/2001 | 12/31/2010 | |||||||
EXECUTIVE SUITE
|
5235 Westview Drive, Suite 100 | Frederick, MD | 21073 | 7/14/2008 | 7/31/2009 | |||||||
OFFICE
|
5299 DTC Boulevard, Suite 410 | Greenwood Village, CO | 80111 | 9/22/1997, 10/1/2007 | 9/30/2010 | |||||||
OFFICE 1
|
1331 Ashton Road, Ste C&E | Hanover, MD | 21076 | 10/15/1998, 10/1/2007 | 9/30/2008 | |||||||
OFFICE
|
13200 Woodland Park Road | Herndon, VA | 20171 | 7/19/2004 | 12/31/2015 | |||||||
DUPLICATE 1, 2
|
737 Bishop Street, Suite 2800, Mauka Tower | Honolulu, HI | 96813 | 8/7/2000, 4/22/2003, 6/6/2008 | 8/31/2009 | |||||||
OFFICE
|
733 Bishop Street, Suite 3000, Makai Tower | Honolulu, HI | 96813 | 3/1/2005 | 8/31/2009 | |||||||
OFFICE
|
2525 Bay Area Boulevard, Suite 290 | Houston, TX | 77058 | 4/1/1992, 4/1/2008 | 8/31/2008 (negotiating 1-yr. extension) | |||||||
| ZIP | Commencement/ | Expiry | ||||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||||
OFFICE9
|
2625 Bay Area Boulevard, Suite 550 | Houston, TX | 77058 | 4/1/2007, 4/1/2008 | 8/31/2008 | |||||||
OFFICE
|
Cummings Research Park, Suite 200, 6703 Odyssey Drive | Huntsville, AL | 35806 | 10/24/2003, 2/1/2007 | 1/31/2012 | |||||||
EXEC SUITE
|
8888 Keystone Crossing, Suite 1300 | Indianapolis, IN | 46240 | 9/1/2006, 6/14/2007 | 7/31/2009 | |||||||
OFFICE
|
7th Floor, Menara BDN, JI. M.H. Thamrin No. 5, Jakarta Pusat | Jakarta, Indonesia | 10340 | 12/1/2006 | 9/30/2009 | |||||||
OFFICE
|
1 Pasquerilla Plaza, Suite 128 | Johnstown, PA | 15901 | 10/15/2005 | 10/31/2010 | |||||||
EXEC SUITE
|
2300 Main Street, Suite 900 | Kansas City, MO | 64108 | 2/1/2007, 2/1/2008 | 1/31/2009 | |||||||
OFFICE
|
12B/V Igorivska Street, 5th Floor | Kiev, Ukraine | 4/1/2007 | 12/9/2008 | ||||||||
OFFICE
|
9500 Hillwood Drive, Suite 140 | Las Vegas, NV | 89134 | 4/13/2004, 5/1/2007 | 4/30/2010 | |||||||
OFFICE 7
|
The Abernathy Bldg., 1122 North Second St. | Leavenworth, KS | 66048 | 7/1/2001, 7/22/2005, 9/1/2007 | 7/31/2010 | |||||||
OFFICE
|
46950 Bradley Blvd | Lexington Park, MD | 20653 | 10/1/1991 | 9/30/2008 | |||||||
DUPLICATE
|
46950 Bradley Blvd, Building #2 | Lexington Park, MD | 20653 | 12/1/1998 | 9/30/2008 | |||||||
TEMP OFFICE
|
46610 Expedition Drive, Suite 100 | Lexington Park, MD | 20653 | 9/15/2006 | 9/30/2008 | |||||||
Sublease 1 office
|
46610 Expedition Drive, Suite 101 | Lexington Park, MD | 20653 | 1/1/2007 | M-T-M | |||||||
DUPLICATE
|
900 Elk Ridge Landing Road, Airport Square II | Linthicum, MD | 21090 | 8/26/1996 | 9/30/2008 | |||||||
OFFICE
|
900 Elk Ridge Landing Road, Airport Square II | Linthicum, MD | 21090 | 9/1/2003 | 9/30/2008 | |||||||
OFFICE
|
515 S. Flower Street, 36th Floor (REGUS) | Los Angeles, CA | 90071 | 4/15/08 | 4/30/2009 | |||||||
DUPLICATE
|
5220 Pacific Concourse Drive, Suite 390 | Los Angeles, CA | 90045 | 9/28/92, 10/1/07 | 7/31/2009 | |||||||
OFFICE
|
5220 Pacific Concourse Drive, 2nd Floor | Los Angeles, CA | 90045 | 7/13/04 | 7/31/2009 | |||||||
OFFICE
|
8281 Greensboro Drive | McLean, VA | 22102 | 1/1/1992 | 12/31/2010 | |||||||
OFFICE
|
8251 Greensboro Drive | McLean, VA | 22102 | 6/4/1993 | 12/31/2010 | |||||||
DUPLICATE
|
8251 Greensboro Drive | McLean, VA | 22102 | 5/1/2004 | 12/31/2010 | |||||||
OFFICE
|
8283 Greensboro Drive | McLean, VA | 22102 | 1/21/1996 | 1/31/2011 | |||||||
| ZIP | Commencement/ | Expiry | ||||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||||
OFFICE
|
8285 Greensboro Drive | McLean, VA | 22102 | 1/2/2000 | 1/31/2012 | |||||||
OFFICE
|
8255 Greensboro Drive | McLean, VA | 22102 | 4/2/2002 | 6/30/2014 | |||||||
EXEC SUITE
|
6767 N. Wickham Road, Suite A-401 | Melbourne, FL | 32940 | 07/12/05 | 12/31/2008 | |||||||
EXEC SUITE
|
5201 Blue Lagoon Drive, 9th Floor | Miami, FL | 33126 | 7/1/2006 | 6/30/2009 | |||||||
EXEC SUITE
|
2501 Liberty Parkway, Suite 200 | Midwest City, OK | 73110 | 8/1/2007 | 7/31/2009 | |||||||
OFFICE
|
430 Davis Drive, Suite 150 | Morrisville, NC | 27560 | 3/1/2005 | 5/31/2010 | |||||||
OFFICE
|
Office 28, Building 1, Entrance 3 House 7/5, Bol’shaya Dmitrovka Street | Moscow, Russia | 12 | 4/1/2004 | 3/31/2009 | |||||||
OFFICE1, 2
|
111 Veterans Boulevard, Suite 230 | New Orleans, LA | 70005 | 3/31/2002, 3/21/2007 | 3/31/2009 | |||||||
OFFICE
|
Three Gateway Center, Suite 1625,100 Mulberry Street | Newark, NJ | 07102 | 6/20/1996, 7/1/2006 | 6/30/2009 | |||||||
OFFICE
|
221 Third Street, 6th Floor, Admiral’s Gate Tower | Newport, RI | 02840 | 11/1/1998, 11/1/2007 | 10/31/2010 | |||||||
OFFICE
|
Twin Oaks II, 5800 Lake Wright Drive — 1st, 3rd, 4th floors | Norfolk, VA | 23502 | 4/1/2002 | 4/30/2010 | |||||||
DIRECT CHARGE1 or 6
|
39555 Orchard Hill Place, Suite 600 | Novi, MI | 48375 | 10/1/2007 | 7/31/2008 | |||||||
OFFICE 4
|
1003 E. Wesley Drive, Suite C | O’Fallon, IL | 62269 | 12/6/2007 | 12/5/2012 | |||||||
OFFICE 1
|
1299 Farnam Street, Suite 1230 | Omaha, NE | 68102 | 4/1/2003 4/15/2008 | 6/30/2010 | |||||||
OFFICE
|
6825 Pine Street, Suite 358 | Omaha, NE | 68106 | 8/29/07 | 8/28/2012 | |||||||
EXEC SUITE
|
333 City Boulevard West — 17th Floor | Orange, CA | 92868 | 10/1/2005, 4/1/2007 | 6/30/2008 | |||||||
OFFICE
|
13501 Ingenuity Drive, Suite 228, One Resource Square | Orlando, FL | 32826 | 12/1/1999, 6/1/2004 | 11/30/2009 | |||||||
OFFICE
|
6710 Oxon Hill Road | Oxon Hill, MD | 20745 | 5/7/2008 | 5/6/2013 | |||||||
OFFICE
|
220 West Garden Street, Suite 600 | Pensacola, FL | 32502 | 3/28/2005 | 1/31/2011 | |||||||
| ZIP | Commencement/ | Expiry | ||||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||||
OFFICE
|
1818 Market Street, 27th Floor | Philadelphia, PA | 19103 | 11/8/1999, 11/1/2004 | 3/31/2010 | |||||||
DIRECT CHARGE
|
Pueblo Union Depot, 104 West B Street | Pueblo, CO | 81003 | 11/7/2005, 1/1/2008 | 12/31/2008 | |||||||
LICENSE AGREEMENT (for one person in ACWA Public Outreach Office) |
104 West B Street | Pueblo, CO | 81003 | 11/7/2005 | M-T-M | |||||||
OFFICE
|
1003-D N. Wilson Road | Radcliff, KY | 40160 | 12/1/2006 | 11/30/2009 | |||||||
DIRECT CHARGE
|
1000 Commercial Drive, Suite #2 | Richmond, KY | 40475 | 1/5/2006 | 12/31/2008 | |||||||
License Agreement
|
900 E North Heritage Drive, Suite 1 | Ridgcrest, CA | 93555 | 12/1/2006 | 2/29/2009 | |||||||
OFFICE
|
Rock Island Arsenal, Building 62, Ground Floor, West Wing | Rock Island, IL | 61299 | 4/27/2007 | 7/31/2008 | |||||||
OFFICE 6
|
12345 Parklawn Drive | Rockville, MD | 20852 | 10/2/1998, 8/1/2006 | 7/31/2008 | |||||||
OFFICE 6
|
6010 Executive Blvd | Rockville, MD | 20852 | 5/14/1999, 6/1/2001, 8/1/2006 | 7/31/2008 | |||||||
OFFICE 4, 2
|
One Preserve Parkway, 2600 Tower Oaks Blvd. | Rockville, MD | 20852 | 2/15/08 | 10/31/2015 | |||||||
OFFICE
|
1101 Wootton Parkway, Suite 800 | Rockville, MD | 20852 | 3/15/2003 | 3/31/2013 | |||||||
OFFICE
|
500 Avery Lane | Rome, NY | 13421 | 7/1/2008 | 6/30/2013 | |||||||
OFFICE
|
201 South Main Street, Suite 950 | Salt Lake City, UT | 84111 | 5/10/2005 | 6/30/2010 | |||||||
OFFICE
|
4241 Piedras Drive East, Suite 165 | San Antonio, TX | 78228 | 9/1/2001, 1/13/2005 | 1/12/2010 | |||||||
OFFICE
|
700 N. St. Mary’s St., Suite 700 (Riverwalk Plaza) | San Antonio, TX | 78205 | 10/28/2002 | 7/31/2011 | |||||||
DUPLICATE
|
1615 Murray Canyon, Suite 900 | San Diego, CA | 92108 | 2/17/2004 | 5/31/2009 | |||||||
DUPLICATE
|
1615 Murray Canyon, Suite 140 & 615 | San Diego, CA | 92108 | 7/20/2006 | 7/31/2011 | |||||||
DUPLICATE
|
1615 Murray Canyon, Suite 800 (w/1010 &300) | San Diego, CA | 92108 | 9/1/1996, 1/12/2006 | 5/31/2012 | |||||||
DUPLICATE
|
1615 Murray Canyon, Suite 1010 (w/800 & 300 | San Diego, CA | 92108 | 12/16/98, 1/12/2006 | 5/31/2012 | |||||||
| ZIP | Commencement/ | Expiry | ||||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||||
DUPLICATE
|
1615 Murray Canyon, Suite 300 (w/800 & 1010) | San Diego, CA | 92108 | 6/10/2000, 1/12/2006 | 5/31/2012 | |||||||
OFFICE
|
3201 Airpark Drive, Suite 202 | Santa Maria, CA | 93455 | 3/1/2002, 5/12/2007 | 5/11/2010 | |||||||
OFFICE
|
101 California Street, Suite 3300 | San Francisco, CA | 94111-5855 | 12/15/1994 | 1/21/2014 | |||||||
EXEC SUITE
|
1990 Main Street, Suite 737, 739, 741 & 748 | Sarasota, FL | 34236 | 2/1/2008 | 1/31/2009 | |||||||
EXEC SUITE 4
|
720 Olive Way, Suite 1250 | Seattle, WA | 98101 | 9/1/2007 | 8/31/2012 | |||||||
License Agreement
|
500 N. Garden Avenue, 1B | Sierra Vista, AZ | 85635 | 11/1/2007 | 10/31/2008 | |||||||
OFFICE 4
|
2/4 Nikola Vapcarov St | Skopje, Macedonia | 11/20/2006 | 9/28/2011 | ||||||||
OFFICE
|
25 Center Street, Suite 103 | Stafford, VA | 22556 | 7/16/2001, 8/1/2006 | 7/31/2011 | |||||||
DIRECT CHARGE
|
385 Moffett Park Drive, Suite 200 | Sunnyvale, CA | 94089 | 6/1/2005 | 5/31/2010 | |||||||
OFFICE
|
4890 W. Kennedy Boulevard, Suite 400, 475 | Tampa, FL | 33609 | 12/1/1992, 10/1/2006 | 9/30/2009 | |||||||
EXEC SUITE
|
7 Bambis Rigi St. | Tbilisi, Georgia | 0105 | 4/20/2006 | 1/20/2009 | |||||||
OFFICE 4
|
2900 100 Street | Urbandale, IA | 50322 | 3/26/2007 | 3/31/2012 | |||||||
EXEC SUITE1
|
308 N. Davis Drive, Suite 120 | Warner Robins, Georgia | 31088 | 5/1/2007, 10/31/2007, [To be fully executed] |
4/30/2009 | |||||||
SUBLEASE
|
East Columbia Square, 555 13th Street N.W., Suite 480 | Washington, DC | 20004 | 5/1/1998, 1/1/2006 | 2/28/2009 | |||||||
SUBLEASE
|
700 13th Street, N.W. | Washington, DC | 20005 | 8/22/2003 | 1/31/2012 (lease) 1/30/2012 (sublease) |
|||||||
OFFICE
|
1201 M Street, S.E., Suite 220 | Washington, DC | 20003 | 11/12/2001, 12/1/2006 | 11/30/2009 | |||||||
OFFICE
|
955 L’Enfant Plaza North, S.W. Suite 5300 | Washington, DC | 20024 | 11/19/2004 | 11/30/2009 | |||||||
DIRECT CHARGE
|
One Technology Drive, 2nd Floor | Westborough, MA | 01581 | 4/19/2007 | 4/27/2010 | |||||||
| ZIP | Commencement/ | Expiry | ||||||||||
| OFFICE | ADDRESS | LOCATION | CODE | Renewal Date | Date | |||||||
OFFICE
|
Dragon Hill Lodge, Bldg 40508, South Post, Yongson | Seoul, South Korea | 4/1/08 | 3/31/09 | ||||||||
Note: 1: Lease Renewal/Extension; 2: Waiting for signed Lease; 3: Mail Drop or Apartment; 4:
New Office; 5: Temp Office; 6: Closing Office; 7: Expansion; 8: Renovation; 9: Relocating
Schedule 3.14
to Mezzanine Credit Agreement
to Mezzanine Credit Agreement
Subsidiaries
(a) Subsidiaries — All Subsidiaries, other than Booz Allen Hamilton Intellectual Property
Holdings, LLC, are restricted on the Closing Date.
| Jurisdiction of | Class of Equity | Percent | ||||||||
| Entity | Incorporation | Parent | Interest | Held | ||||||
Aestix, Inc.
|
Delaware | Booz Allen Hamilton Inc. | Common Stock | 100 | % | |||||
| Preferred Stock | 100 | % | ||||||||
ASE, Inc.
|
Delaware | Booz Allen Hamilton Inc. | Common Stock | 100 | % | |||||
Booz Allen Hamilton Intellectual Property Holdings, LLC |
Delaware | Booz Allen Hamilton Inc. | Class A Member Interest | 100% of Class A Member Interests | ||||||
Booz Allen Transportation Inc.
|
New York | Booz Allen Hamilton Inc. | Common Stock | 100 | % | |||||
Aestix (UK) Ltd.
|
United Kingdom | Aestix, Inc. | Ordinary Shares | 100 | % | |||||
| (b) Outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than stock options granted to officers, employees or directors and directors’ qualifying shares) of any nature relating to any Capital Stock the Borrower or any of its Restricted Subsidiaries: | ||
None.
Schedule 5.10
to Mezzanine Credit Agreement
to Mezzanine Credit Agreement
Post-Closing Undertakings
Evidence that Booz Allen Transportation Inc. is in good standing with the New York State Department
of Taxation and Finance to be delivered to Administrative Agent no later than 60 days following the
Closing Date.
Schedule 6.2(d)
to Mezzanine Credit Agreement
to Mezzanine Credit Agreement
Existing Indebtedness
Outstanding Letters of Credit
| Issuing Lender | Reference # | Beneficiary | Issue Date | Expiry Date | Currency | USD Amount | ||||||||
Citibank
|
NY-61640142 Lease | Citibank International (London)—Moscow Lease | 04/19/05 | 10/31/09 | USD | $ | 62,675.00 | |||||||
Citibank
|
NY-63661500 Bid Bond | Citibank, Romania—Ministry fro Small and Medium Size Enterprises | 04/23/08 | Expires Citibank Romania 12/30/08; Expires Citibank New York 01/31/09 | LEI | $ | 7,094.23 | |||||||
Citibank
|
NY-61667052 Performance |
Citibank UAE—GHQ Armed Forces | 07/05/07 | Expires Citibank UAE 07/31/17; Expires Citibank New York 08/31/17 | AED | $ | 82,719.00 | |||||||
Citibank
|
NY-61671197 Performance |
Citibank Egypt—Fast Missile Craft | 12/11/07 | 10/01/08 | USD | $ | 150,000.00 | |||||||
JP Morgan Chase Manhattan Bank |
T-247850 Financial | ACE—Workers’ Comp Guarantee | 04/28/04 | Open-Ended | USD | $ | 845,585.00 | |||||||
Schedule 6.3(f)
to Mezzanine Credit Agreement
to Mezzanine Credit Agreement
Existing Liens
| Secured | Original | Original | ||||||||||||
| Debtor | Jurisdiction | Filing | Party | Collateral | File Date | File No. | ||||||||
Booz Allen Hamilton
Inc.
|
Delaware Secretary of State | UCC Continuation | BLC Corporation | Leased equipment | 02/09/06 | 60494369 | ||||||||
Booz Allen Hamilton
Inc.
|
Delaware Secretary of State | UCC Continuation | BLC Corporation | Leased equipment | 01/03/07 | 70024322 | ||||||||
Booz Allen Hamilton
Inc.
|
Delaware Secretary of State | UCC Continuation | Financial Leasing Corporation | Leased equipment | 01/03/07 | 70024199 | ||||||||
Booz Allen Hamilton
Inc.
|
Delaware Secretary of State | UCC Continuation | BLC Corporation | Leased equipment | 09/18/07 | 73516696 | ||||||||
Booz Allen Hamilton
Inc.
|
Delaware Secretary of State | UCC-1 | McGrath Rentcorp and TRS-Rentelco | Leased equipment | 07/11/08 | 20082384954 | ||||||||
Liens of Booz Allen Transportation Inc. arising from New York State franchise tax returns
missing and franchise tax payments past due for the following periods: 9/30/1989 and 10/31/2002
including 9/30/2002, 9/30/2003 and 3/31/2006 MTA Surcharge Reports.
The patent application for “Apparatus, method and computer readable medium for evaluating a network
of entities and assets” has not yet been assigned to Booz Allen Hamilton Inc. An assignment to
Booz Allen Hamilton Inc. will be filed within 30 days after the date hereof.
Schedule 6.7
to Mezzanine Credit Agreement
to Mezzanine Credit Agreement
Existing Investments
Wholly-Owned Unrestricted Subsidiaries: Booz Allen Hamilton Intellectual Property Holdings, LLC
Fee for Equity:
| Net | ||||||||||||||||||
| Asset | Number of | |||||||||||||||||
| Company Name | Cost Basis | Reserve | Value | Class of Equity Interests | Interests | |||||||||||||
Vocatus
|
$ | 152,722.80 | (152,722.80 | ) | $ | 0 | Undetermined | 5,916.00 | ||||||||||
Dotphone Company
|
$ | 66,960.60 | (66,960.60 | ) | $ | 0 | B Ordinary | 26,100.00 | ||||||||||
Sharemax I (1)
|
$ | 629,615.10 | (629,615.10 | ) | $ | 0 | Common Stock 5/22/00 | 251,776.80 | ||||||||||
| Series C Preferred 1/29/01 | 2,037,598.20 | |||||||||||||||||
| Common Stock 1/31/01 | 283,248.90 | |||||||||||||||||
| Common Stock 1/31/01 | 509,399.40 | |||||||||||||||||
| Series C Preferred 1/31/01 | 5,784,061.80 | |||||||||||||||||
Sharemax II
|
$ | 161,040.00 | (161,040.00 | ) | $ | 0 | See above | |||||||||||
Sharemax PH II
|
$ | 270,000.00 | (270,000.00 | ) | $ | 0 | See above | |||||||||||
Greyhound
|
$ | 300,523.20 | (300,523.20 | ) | $ | 0 | Preferred Stock | 226,752.60 | ||||||||||
Transportmax (2)
|
$ | 1,500,000.00 | (1,500,000.00 | ) | $ | 0 | N.A. | N.A. | ||||||||||
Clearforest
|
$ | 59,441.40 | (59,441.40 | ) | $ | 0 | Series B3 Preferred | 56,341.80 | ||||||||||
Daleen
|
$ | 8,949.60 | (8,949.60 | ) | $ | 0 | Options on Common Stock Expires 2/9/2010 |
1,800.00 | ||||||||||
Schema
|
$ | 36,405.00 | (36,405.00 | ) | $ | 0 | Ordinary Shares | 10,638.00 | ||||||||||
Quentra
|
$ | 75,000.00 | (75,000.00 | ) | $ | 0 | Common Stock | 11,242.50 | ||||||||||
Oceanconnect
|
$ | 180,661.50 | (180,661.50 | ) | $ | 0 | Common Stock | 60,000.00 | ||||||||||
Cci (Convergence
Communications,
Inc.)
|
$ | 36,000.00 | (36,000.00 | ) | $ | 0 | ||||||||||||
Eutex
|
$ | 409,257.60 | (409,257.60 | ) | $ | 0 | Common Stock | 5,638.50 | ||||||||||
Eyematic PH I and II
|
$ | 142,070.40 | (142,070.40 | ) | $ | 0 | Series C Preferred | 70,406.70 | ||||||||||
| Warrants (Expiry 5/20/2012 or five years after IPO) |
34,265.70 | |||||||||||||||||
Minority Equity:
| Net Asset | Number of | |||||||||||
| Company Name | Cost Basis | Reserve | Value | Class of Equity Interests | Interests | |||||||
Panthea |
$1,205,920 | $(1,080,000) | $125,920 | Series A | 228,021.00 | |||||||
| Series B | 443,979.00 | |||||||||||
Logispring |
$ 851,281 | $ 0 | $851,281 | Preferred B Shares | 7.50 | |||||||
| Common B Shares | 1,500.00 | |||||||||||
| (1) | Shares represent amounts for all Sharemax tranches | |
| (2) | Not Applicable — Not a Minority Equity Stake |
EXECUTION COPY
EXHIBIT A
EXHIBIT A
FORM OF GUARANTEE AGREEMENT
GUARANTEE AGREEMENT
among
EXPLORER INVESTOR CORPORATION,
EXPLORER MERGER SUB CORPORATION,
as the Initial Borrower,
BOOZ ALLEN HAMILTON INC.,
as the Surviving Borrower,
and the Subsidiary Guarantors party hereto
and
CREDIT SUISSE,
as Administrative Agent
Dated as of ____ __, 20__
A-1
TABLE OF CONTENTS
| Page | ||||||
SECTION 1. |
DEFINED TERMS | 1 | ||||
1.1 |
Definitions | 1 | ||||
1.2 |
Other Definitional Provisions | 2 | ||||
SECTION 2. |
GUARANTEE | 2 | ||||
2.1 |
Guarantee | 2 | ||||
2.2 |
Right of Contribution | 3 | ||||
2.3 |
No Subrogation | 3 | ||||
2.4 |
Amendments, etc. with respect to the Borrower Obligations | 4 | ||||
2.5 |
Guarantee Absolute and Unconditional | 4 | ||||
2.6 |
Reinstatement | 5 | ||||
2.7 |
Payments | 5 | ||||
SECTION 3. |
REPRESENTATIONS AND WARRANTIES | 5 | ||||
3.1 |
Representations in Mezzanine Credit Agreement | 5 | ||||
SECTION 4. |
COVENANTS | 5 | ||||
4.1 |
Covenants in Mezzanine Credit Agreement | 6 | ||||
SECTION 5. |
REMEDIAL PROVISIONS | 6 | ||||
5.1 |
Application of Proceeds | 6 | ||||
SECTION 6. |
MISCELLANEOUS | 6 | ||||
6.1 |
Amendments in Writing | 6 | ||||
6.2 |
Notices | 6 | ||||
6.3 |
No Waiver by Course of Conduct; Cumulative Remedies | 6 | ||||
6.4 |
Enforcement Expenses; Indemnification | 7 | ||||
6.5 |
Successors and Assigns | 7 | ||||
6.6 |
Set-Off | 7 | ||||
6.7 |
Counterparts | 7 | ||||
6.8 |
Severability | 7 | ||||
6.9 |
Section Headings | 7 | ||||
6.10 |
Integration | 7 | ||||
6.11 |
GOVERNING LAW | 8 | ||||
6.12 |
Submission To Jurisdiction; Waivers | 8 | ||||
6.13 |
Acknowledgements | 8 | ||||
6.14 |
Additional Guarantors | 8 | ||||
6.15 |
Releases | 9 | ||||
6.16 |
WAIVER OF JURY TRIAL | 9 | ||||
SCHEDULES |
||||||
Schedule 1 |
Subsidiary Guarantors | |||||
Schedule 2 |
Notice Addresses | |||||
A-2
| ANNEXES | ||||||
Annex I |
Assumption Agreement |
A-3
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT, dated as of ____ __, 20___, among Explorer Investor Corporation, a
Delaware corporation (“Holdings”), Explorer Merger Sub Corporation, a Delaware corporation
(the “Initial Borrower”), Booz Allen Hamilton Inc., a Delaware corporation into which the
Initial Borrower shall be merged (“Booz Allen” or the “Surviving Borrower”), the
Subsidiaries of the Surviving Borrower listed on Schedule 1 hereto, and Credit Suisse, as
Administrative Agent (in such capacity, the “Administrative Agent”) for the banks and other
financial institutions or entities (the “Lenders”) from time to time parties to the
Mezzanine Credit Agreement, dated as of July 31, 2008 (as amended, supplemented or otherwise
modified from time to time, the “Mezzanine Credit Agreement”), among Holdings, the Initial
Borrower, Booz Allen, the Lenders, Credit Suisse, as Administrative Agent, Credit Suisse Securities
(USA) LLC, Banc of America Securities LLC, and Lehman Brothers Inc., as Joint Lead Arrangers and
Joint Bookrunners.
W I T N E S S E T H:
WHEREAS, pursuant to the Mezzanine Credit Agreement, the Lenders have severally agreed to make
extensions of credit to the Borrower (as defined below) upon the terms and subject to the
conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies that includes each
Guarantor (as defined below);
WHEREAS, the proceeds of the extensions of credit under the Mezzanine Credit Agreement will be
used in part to enable the Borrower to make valuable transfers to one or more of the Guarantors in
connection with the operation of their respective businesses;
WHEREAS, the Borrower and the Guarantors are engaged in related businesses, and each Guarantor
will derive substantial direct and indirect benefit from the making of the extensions of credit
under the Mezzanine Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective
extensions of credit to the Borrower under the Mezzanine Credit Agreement that the Guarantors shall
have executed and delivered this Agreement to the Administrative Agent;
NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and
the Lenders to enter into the Mezzanine Credit Agreement and to induce the Lenders to make their
respective extensions of credit to the Borrower thereunder, each Guarantor hereby agrees with the
Administrative Agent as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined in the Mezzanine Credit Agreement and used
herein shall have the meanings given to them in the Mezzanine Credit Agreement.
(b) The following terms shall have the following meanings:
A-4
“Agreement”: this Guarantee Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.
“Borrower”: (a) at any time prior to the consummation of the Merger Transactions, the
Initial Borrower and (b) upon and at any time after the consummation of the Merger Transactions,
the Surviving Borrower.
“Borrower Obligations”: the collective reference to the unpaid principal of and
interest on the Loans and all other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the Mezzanine Credit
Agreement after the maturity of the Loans and interest accruing at the then applicable rate
provided in the Mezzanine Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed or allowable in such
proceeding) to the Administrative Agent or any Lender, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, in each case, which may
arise under, out of, or in connection with, the Mezzanine Credit Agreement, this Agreement, the
other Loan Documents or any other document made, delivered or given in connection therewith, in
each case whether on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to the Lenders that are required to be paid by the Borrower pursuant
to the terms of any of the foregoing agreements).
“Guarantor Obligations”: with respect to any Guarantor, all obligations and
liabilities of such Guarantor which may arise under or in connection with this Agreement
(including, without limitation, Section 2) or any other Loan Document to which such Guarantor is a
party, in each case whether on account of guarantee obligations, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to the Lenders that are required to be paid
by such Guarantor pursuant to the terms of this Agreement or any other Loan Document).
“Guarantors”: the collective reference to Holdings and the Subsidiary Guarantors that
may become a party hereto as provided herein.
“Obligations”: (i) in the case of the Borrower, the Borrower Obligations and (ii) in
the case of each Guarantor, its Guarantor Obligations.
“Subsidiary Guarantors”: the Subsidiaries of the Borrower listed on Schedule 1
hereto and any other Subsidiary of the Borrower that may become a party hereto as provided herein.
1.2 Other Definitional Provisions. (a)The words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular provision
of this Agreement, and Section and Schedule references are to this Agreement unless otherwise
specified.
(b) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.
SECTION 2. GUARANTEE
2.1 Guarantee.
A-5
(a) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably,
guarantees to the Administrative Agent for the ratable benefit of the Administrative Agent, the
Lenders and their respective permitted successors, indorsees, transferees and assigns, the prompt
and complete payment and performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary notwithstanding, the
maximum liability of each Guarantor hereunder and under the other Loan Documents shall in no event
exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws
relating to the insolvency of debtors (after giving effect to the right of contribution established
in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any time and from time to
time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee
contained in this Section 2 or affecting the rights and remedies of the Administrative Agent or any
Lender hereunder.
(d) The guarantee contained in this Section 2 shall remain in full force and effect until
all the Borrower Obligations and the obligations of each Guarantor under the guarantee contained in
this Section 2 shall have been satisfied by payment in full (other than contingent or
indemnification obligations not then due) and the Commitments shall have been terminated,
notwithstanding that from time to time during the term of the Mezzanine Credit Agreement the
Borrower may be free from any Borrower Obligations, provided that any Guarantor shall be
released from its guarantee contained in this Section 2 as provided in Section 6.15.
(e) No payment (other than payment in full) made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the Administrative Agent or any
Lender from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue
of any action or proceeding or any set-off or appropriation or application at any time or from time
to time in reduction of or in payment of the Borrower Obligations shall be deemed to modify,
reduce, release or otherwise affect the liability of any Guarantor hereunder which shall,
notwithstanding any such payment (other than any payment made by such Guarantor in respect of the
Borrower Obligations or any payment received or collected from such Guarantor in respect of the
Borrower Obligations), remain liable for the Borrower Obligations up to the maximum liability of
such Guarantor hereunder until the Borrower Obligations shall have been paid in full (other than
contingent or indemnification obligations not then due) and the Commitments shall have been
terminated, provided that any Guarantor shall be released from its guarantee contained in
this Section 2 as provided in Section 6.15.
2.2 Right of Contribution. Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than
its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder which has not paid its
proportionate share of such payment. Each Guarantor’s right of contribution shall be subject to
the terms and conditions of Section 2.3. The provisions of this Section 2.2 shall in no respect
limit the obligations and
liabilities of any Guarantor to the Administrative Agent and the Lenders, and each Guarantor
shall remain liable to the Administrative Agent and the Lenders for the full amount guaranteed by
such Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any set-off or application
of funds of any Guarantor by the Administrative Agent or any Lender, no Guarantor shall be entitled
to be subrogated to any of the rights of the Administrative Agent or any Lender against the
Borrower or any other Guarantor or any collateral security or guarantee or right of offset held by
the
A-6
Administrative Agent or any Lender for the payment of the Borrower Obligations, nor shall any
Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to
the Administrative Agent and the Lenders by the Borrower on account of the Borrower Obligations
shall have been paid in full (other than contingent or indemnification obligations not then due)
and the Commitments shall have been terminated. If any amount shall be paid to any Guarantor on
account of such subrogation rights at any time when all of such Borrower Obligations shall not have
been paid in full, such amount shall be held by such Guarantor in trust for the Administrative
Agent and the Lenders, segregated from other funds of such Guarantor, and shall, forthwith upon
receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by
such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if required), to be
applied against the Borrower Obligations, whether matured or unmatured, in such order as the
Administrative Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further assent by any
Guarantor, any demand for payment of any of the Borrower Obligations made by the Administrative
Agent or any Lender may be rescinded by the Administrative Agent or such Lender and any of the
Borrower Obligations continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or
any Lender, and the Mezzanine Credit Agreement and the other Loan Documents and any other documents
executed and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required Lenders, or the
Supermajority Lenders, or all Lenders, or all Lenders directly affected thereby, as the case may
be) may deem advisable from time to time, and any collateral security, guarantee or right of
set-off at any time held by the Administrative Agent or any Lender for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any
of the Borrower Obligations and notice of or proof of reliance by the Administrative Agent or any
Lender upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in
this Section 2; the Borrower Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 2; and all dealings between the Borrower and any of the
Guarantors, on the one hand, with respect to the Loan Documents and the Administrative Agent and
the Lenders, on the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives
diligence, presentment, protest, demand for payment and notice of
default or nonpayment to or upon the Borrower or any of the Guarantors with respect to the Borrower
Obligations. Each Guarantor understands and agrees that the guarantee of such Guarantor contained
in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of
payment without regard to (a) the validity or enforceability of the Mezzanine Credit Agreement or
any other Loan Document, any of the Borrower Obligations or any collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to time held by the
Administrative Agent or any Lender, (b) any defense, set-off or counterclaim (other than a defense
of payment or performance) which may at any time be available to or be asserted by the Borrower or
any other Person against the Administrative Agent or any Lender, or (c) any other circumstance
whatsoever (other than a defense of payment or performance) (with or without notice to or knowledge
of the Borrower or any Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower from the Borrower Obligations, or of such Guarantor
under the guarantee of such Guarantor contained in this Section 2, in bankruptcy or in any
A-7
other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder
against any Guarantor, the Administrative Agent or any Lender may, but shall be under no obligation
to, make a similar demand on or otherwise pursue such rights and remedies as it may have against
the Borrower, any other Guarantor or any other Person or against any collateral security or
guarantee for the Borrower Obligations or any right of offset with respect thereto, and any failure
by the Administrative Agent or any Lender to make any such demand, to pursue such other rights or
remedies or to collect any payments from the Borrower, any other Guarantor or any other Person or
to realize upon any such collateral security or guarantee or to exercise any such right of offset,
or any release of the Borrower, any other Guarantor or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or
liability hereunder, and shall not impair or affect the rights and remedies, whether express,
implied or available as a matter of law, of the Administrative Agent or any Lender against any
Guarantor. For the purposes hereof “demand” shall include the commencement and continuance of any
legal proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall continue to be effective, or be reinstated,
as the case may be, if at any time payment, or any part thereof, of any of the Borrower Obligations
is rescinded or must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of,
or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Administrative
Agent without set-off or counterclaim at the Funding Office.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the Mezzanine Credit
Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower,
each Guarantor hereby represents and warrants to each of the Administrative Agent and each other
Lender that:
3.1 Representations in Mezzanine Credit Agreement. In the case of each Guarantor, the representations and warranties set forth in Section 3 of
the Mezzanine Credit Agreement to the extent they refer to such Guarantor or to the Loan Documents
to which such Guarantor is a party, each of which is hereby incorporated herein by reference, are
true and correct in all material respects, and each of the Administrative Agent and each other
Lender shall be entitled to rely on each of them as if they were fully set forth herein;
provided that each reference in each such representation and warranty to the Borrower’s
knowledge shall, for the purposes of this Section 3.1, be deemed to be a reference to such
Guarantor’s knowledge.
SECTION 4. COVENANTS
Each Guarantor covenants and agrees with the Administrative Agent and the other Lenders that,
from and after the date of this Agreement until the Obligations shall have been paid in full (other
than contingent and indemnification obligations not yet due and owing) and the Commitments shall
have been terminated:
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4.1 Covenants in Mezzanine Credit Agreement. In the case of each Guarantor, to the extent applicable, such Guarantor shall take, or
shall refrain from taking, as the case may be, each action that is necessary to be taken or not
taken, as the case may be, so that no Default or Event of Default is caused by the failure to take
such action or to refrain from taking such action by such Guarantor or any of its Subsidiaries.
SECTION 5. REMEDIAL PROVISIONS
5.1 Application of Proceeds. If an Event of Default shall have occurred and be continuing and the Loans shall have been
accelerated pursuant to Section 7 of the Mezzanine Credit Agreement, at any time at the
Administrative Agent’s election, the Administrative Agent may apply any proceeds of the guarantee
set forth in Section 2 in payment of the Obligations, and shall make any such application in the
following order:
First, to pay incurred and unpaid reasonable, out-of-pocket fees and expenses
of the Agents under the Loan Documents;
Second, to the Administrative Agent, for application by it towards payment of
amounts then due and owing and remaining unpaid in respect of the Obligations, pro
rata among the Lenders according to the amounts of the Obligations then due and
owing and remaining unpaid to each of them; and
Third, any balance of such proceeds remaining after the Obligations shall have
been paid in full (other than contingent or indemnification obligations not then due) and
the Commitments shall have been terminated, shall be paid over to the Borrower or to
whomsoever shall be lawfully entitled to receive the same.
SECTION 6. MISCELLANEOUS
6.1 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except in accordance with Section 9.1 of the Mezzanine Credit Agreement.
6.2 Notices. All notices, requests and demands to or upon the Administrative Agent or any Guarantor
hereunder shall be effected in the manner provided for in Section 9.2 of the Mezzanine Credit
Agreement; provided that any such notice, request or demand to or upon any Guarantor shall
be addressed to such Guarantor at its notice address set forth on Schedule 2 or at such
other address pursuant to notice given in accordance with Section 9.2 of the Mezzanine Credit
Agreement.
6.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 6.1), delay, indulgence, omission or otherwise be deemed to have
waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No
failure to exercise, nor any delay in exercising, on the part of the Administrative Agent or any
Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which the Administrative Agent or such Lender would
A-9
otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any other rights or remedies provided
by law.
6.4 Enforcement Expenses; Indemnification. Each Guarantor agrees to pay, and to save the Administrative Agent and the Lenders
harmless from, any and all out-of-pocket liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration of this Agreement
to the extent the Borrower would be required to do so pursuant to Section 9.5 of the Mezzanine
Credit Agreement. The agreements in this Section 6.4 shall survive repayment of the Obligations
and all other amounts payable under the Mezzanine Credit Agreement and the other Loan Documents.
6.5 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of each Guarantor and shall
inure to the benefit of the Administrative Agent and the Lenders and their successors and assigns;
provided, that no Guarantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of the Administrative Agent (it being understood
that Dispositions permitted under the Mezzanine Credit Agreement shall not be subject to this
proviso).
6.6 Set-Off. Each Guarantor hereby irrevocably authorizes the Administrative Agent and each Lender at
any time and from time to time while an Event of Default shall have occurred and be continuing,
without notice to such Guarantor or any other Guarantor, any such notice being expressly waived by
each Guarantor, to the extent permitted by applicable law, upon any amount becoming due and payable
by each Guarantor (whether at the stated maturity, by acceleration or otherwise after the
expiration of any applicable grace periods) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or final but excluding
trust accounts), in any currency, and any other credits, indebtedness or claims, in any currency,
in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by the Administrative Agent or such Lender to or for the credit or the account of
such Guarantor. The Administrative Agent and each Lender shall notify such Guarantor promptly of
any such set-off made by it and the application made by it of the proceeds thereof, provided that
the failure to give such notice shall not affect the validity of such set-off and application.
6.7 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any
number of separate counterparts (including by telecopy or electronic (i.e., “pdf”) transmission),
and all of said counterparts taken together shall be deemed to constitute one and the same
instrument.
6.8 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
6.9 Section Headings. The Section headings used in this Agreement are for convenience of reference only and are
not to affect the construction hereof or be taken into consideration in the interpretation hereof.
6.10 Integration. This Agreement and the other Loan Documents represent the agreement of the Guarantors, the
Administrative Agent and the Lenders with respect to the subject matter hereof and thereof.
A-10
6.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE SAME ARE NOT MANDATORILY
APPLICABLE BY STATUTE AND THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
6.12 Submission To Jurisdiction; Waivers. Each party hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the
State of New York, the courts of the United States of America for the Southern District of New York, and appellate
courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such Guarantor at its address referred to in Section 6.2 or at such other
address of which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.
6.13 Acknowledgements. Each Guarantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;
(b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or
duty to any Guarantor arising out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Guarantors, on the one hand, and the Administrative
Agent and the Lenders, on the other hand, in connection herewith or therewith is solely that of
debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Administrative Agent and the Lenders or
among the Guarantors and the Administrative Agent and the Lenders.
6.14 Additional Guarantors. Each Restricted Subsidiary of the Borrower that is required to become a party to this
Agreement pursuant to Section 5.8 of the Mezzanine Credit Agreement shall
A-11
become a Guarantor for
all purposes of this Agreement upon execution and delivery by such Restricted Subsidiary of an
Assumption Agreement in the form of Annex I hereto.
6.15 Releases.
(a) At such time as the Loans and the other Obligations (other than contingent or
indemnification obligations not then due) shall have been paid in full in cash and the Commitments
shall have been terminated, this Agreement and all obligations (other than those expressly stated
to survive
such termination) of the Administrative Agent and each Guarantor hereunder shall automatically
terminate, all without delivery of any instrument or performance of any act by any party.
(b) A Guarantor shall be automatically released from its obligations hereunder in the event
that all the Capital Stock of such Guarantor shall be sold, transferred or otherwise disposed of in
a transaction permitted by the Mezzanine Credit Agreement, or upon the designation of such
Guarantor as an Unrestricted Subsidiary as permitted under the Mezzanine Credit Agreement, and the
Administrative Agent, at the request and sole expense of the Borrower, shall execute and deliver to
the Borrower all releases or other documents reasonably necessary or desirable to evidence the
release of such obligations. All releases or other documents delivered by the Administrative Agent
pursuant to this Section 6.15(b) shall be without recourse to, or warranty by, the Administrative
Agent.
(c) Obligations of Guarantors hereunder shall terminate as set forth in Section 9.15 of the
Mezzanine Credit Agreement.
6.16 WAIVER OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, EACH OF THE ADMINISTRATIVE AGENT
AND EACH LENDER, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
A-12
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee Agreement to be duly
executed and delivered as of the date first above written.
| CREDIT SUISSE, CAYMAN ISLANDS BRANCH as Administrative Agent |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
A-13
| EXPLORER MERGER SUB CORPORATION, as Initial Borrower |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
A-14
| BOOZ ALLEN HAMILTON INC., as Surviving Borrower |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
A-15
| EXPLORER INVESTOR CORPORATION, as Guarantor |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| ASE, INC., as Guarantor |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| AESTIX, INC., as Guarantor |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| BOOZ ALLEN TRANSPORTATION INC., as Guarantor |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
A-16
Schedule 1
SUBSIDIARY GUARANTORS
A-17
Schedule 2
NOTICE ADDRESSES OF GUARANTORS
Annex I to
Guarantee Agreement
Guarantee Agreement
ASSUMPTION AGREEMENT
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies as follows:
| 1. | I am the [TITLE] of Booz Allen Hamilton Inc., a Delaware corporation (the “Company”). | ||
| 2. | I have reviewed the terms of that certain Mezzanine Credit Agreement, dated as of July 31, 2008 (as it may be amended, supplemented or otherwise modified, the “Mezzanine Credit Agreement”; unless otherwise defined herein, terms defined in the Mezzanine Credit Agreement and used herein shall have the meanings given to them in the Mezzanine Credit Agreement), among Explorer Investor Corporation, a Delaware corporation, Explorer Merger Sub Corporation, a Delaware corporation, the Company, the several banks and other financial institutions or entities from time to time parties thereto, Credit Suisse, as Administrative Agent (in such capacity, the “Administrative Agent”) and Credit Suisse Securities (USA) LLC, Banc of America Securities LLC and Lehman Brothers Inc., as Joint Lead Arrangers and Joint Bookrunners, and I have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and condition of the Company and its Subsidiaries during the accounting period covered by the attached financial statements. A description of all new Subsidiaries (if any) during the period covered by this Compliance Certificate is set forth in a separate attachment to this Compliance Certificate. | ||
| 3. | The examination described in paragraph 2 above did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Default or Default not previously disclosed in writing to the Administrative Agent during or at the end of the accounting period covered by the attached financial statements or as of the date of this Compliance Certificate, except as set forth in a separate attachment, if any, to this Compliance Certificate, describing in detail the nature of the condition or event, the period during which it has existed and the action which the Company has taken, is taking, or proposes to take with respect to each such condition or event. |
The foregoing certifications, together with the financial statements delivered with this
Compliance Certificate in support hereof, are made and delivered on behalf of the Company and not
individually, on [MM/DD/YY] pursuant to Section 5.2(b) of the Mezzanine Credit Agreement.
| BOOZ ALLEN HAMILTON, INC. |
||||
| By: | ||||
| Title: | ||||
B-1
EXHIBIT C
FORM OF CLOSING CERTIFICATE
July 31, 2008
July 31, 2008
Pursuant to Section 4.1(d) of the Mezzanine Credit Agreement, dated as of July 31, 2008 (the
“Mezzanine Credit Agreement”; unless otherwise defined herein, terms defined in the
Mezzanine Credit Agreement and used herein shall have the meanings given to them in the Mezzanine
Credit Agreement), among Explorer Investor Corporation, a Delaware corporation, Explorer Merger Sub
Corporation, a Delaware corporation, Booz Allen Hamilton Inc., a Delaware corporation, the several
banks and other financial institutions or entities from time to time parties thereto, Credit
Suisse, as Administrative Agent (in such capacity, the “Administrative Agent”) and Credit
Suisse Securities (USA) LLC, Banc of America Securities LLC and Lehman Brothers Inc., as Joint Lead
Arrangers and Joint Bookrunners, the undersigned [•], [insert title of officer if
Borrower/Holdings] [Secretary/Assistant Secretary] of (the “Company”),
hereby certifies on behalf of the Company (and not individually) as follows:
| [1. | The Specified Representations of [the Company and its Subsidiaries]1 [the Company]2 are true and correct in all material respects. | ||
| [2. | No material provision of the Merger Agreement and the related disclosure schedules and exhibits thereto has been waived or amended (other than any such waivers or amendments (including, without limitation, with respect to any representations and warranties in the Merger Agreement) as are not materially adverse to the Lenders or the Lead Arrangers (including, without limitation, the definition of “Company Material Adverse Effect” therein and the representation and warranty set forth in Section 4.8(c) thereof)), other than such waivers or amendments consented to by the Lead Arrangers. | ||
| 3. | The transactions described in Section 4.1(b)(ii) of the Mezzanine Credit Agreement have been consummated, in accordance with the terms set forth in such Section 4.1(b)(ii).]3 | ||
| 3. | is the duly elected and qualified Secretary of the Company and the signature set forth for such officer below is such officer’s true and genuine signature. |
The undersigned Secretary of the Company hereby certifies as follows:] [Borrower/Holdings
only]
| 1. | Attached hereto as Exhibit [A] is a copy of a certificate of good standing or the equivalent from the Company’s jurisdiction of organization dated as of a recent date prior to the date hereof. |
| 1 | Surviving Borrower certificate only. | |
| 2 | Holdings and Merger Sub certificate only. | |
| 3 | Surviving Borrower certificate only. |
C-1
| 2. | Attached hereto as Exhibit [B] is a true and complete copy of [a unanimous written consent duly adopted by the Board of Directors of the Company]4 [resolutions duly adopted at a meeting of the Board of Directors]5, and such [unanimous written consent has][resolutions have] not in any way been amended, modified, revoked or rescinded, [has/have] been in full force and effect since [its/their] adoption to and including the date hereof and [is/are] now in full force and effect. | ||
| 3. | Attached hereto as Exhibit [C] is a true and complete copy of the bylaws of the Company as in effect on the date hereof. | ||
| 4. | Attached hereto as Exhibit [D] is a true and complete certified copy of the Certificate of Incorporation of the Company as in effect on the date hereof, and such Certificate of Incorporation has not been amended, repealed, modified or restated. | ||
| 5. | The following persons are now duly elected and qualified officers of the Company holding the offices indicated next to their respective names, and the signatures appearing opposite their respective names are the true and genuine signatures of such officers, and each of such officers is duly authorized to execute and deliver on behalf of the Company each of the Loan Documents to which it is a party and any certificate or other document to be delivered by the Company pursuant to the Loan Documents to which it is a party: |
| Name and Title | Signature | |||
[Name] [Title] |
||||
[Name] [Title] |
||||
[Name] [Title] |
||||
[Name] [Title] |
||||
[Name] [Title] |
| 4 | Holdings, Merger Sub and Booz Allen Transportation Inc. only. | |
| 5 | Borrower, ASE, Inc. and Aestix, Inc. only. |
C-2
[Name] [Title] |
IN WITNESS WHEREOF, the undersigned have hereunto set our names as of the date set forth
above.
[COMPANY] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
[I, [NAME], [TITLE] of the Company, do hereby certify that [NAME] is the duly elected,
qualified and [TITLE] of the Company, and that [his/her] signature set forth above is [his/her]
genuine signature.
| Name: Title:]6 |
||||
| 6 | Subsidiary Guarantor certificates only. |
C-3
Exhibit A
to Closing Certificate
to Closing Certificate
[Certificate of Good Standing]
C-4
Exhibit B
to Closing Certificate
to Closing Certificate
[Unanimous Written Consent/Resolutions]
C-5
Exhibit C
to Closing Certificate
to Closing Certificate
[Bylaws]
C-6
Exhibit D
to Closing Certificate
to Closing Certificate
[Certificate/Articles of Incorporation]
C-7
EXHIBIT D
FORM OF
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the
“Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used
but not defined herein shall have the meanings given to them in the Mezzanine Credit Agreement
identified below (as amended, restated, supplemented or otherwise modified from time to time, the
“Mezzanine Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto (the
“Standard Terms and Conditions”) are hereby agreed to and incorporated herein by reference
and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Mezzanine Credit Agreement, as of
the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the
Assignor’s rights and obligations in its capacity as a Lender under the Mezzanine Credit Agreement
and any other documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding rights and obligations
of the Assignor under the Mezzanine Credit Agreement and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under
or in connection with the Mezzanine Credit Agreement, any other documents or instruments delivered
pursuant thereto or the loan transactions governed thereby or in any way based on or related to any
of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and
all other claims at law or in equity related to the rights and obligations sold and assigned
pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i)
and (ii) above being referred to herein collectively as the “Assigned Interest”). Such
sale and assignment is without recourse to the Assignor and, except as expressly provided in this
Assignment and Assumption, without representation or warranty by the Assignor.
1.
|
Assignor: | |||
2.
|
Assignee: | |||
| [and is an Affiliate/Approved Fund of [identify Lender]7] | ||||
3.
|
Borrowers: | Explorer Merger Sub Corporation, a Delaware corporation (the “Initial Borrower”) and Booz Allen Hamilton Inc., a Delaware corporation (the “Surviving Borrower”) | ||
4.
|
Administrative Agent: | Credit Suisse, as the administrative agent under the Mezzanine Credit Agreement |
| 7 | Select as applicable. |
D-1
5.
|
MezzanineCredit Agreement: | The $550,000,000 Mezzanine Credit Agreement, dated as of July31, 2008, among Explorer Investor Corporation, a Delaware corporation, Explorer Merger Sub Corporation, a Delaware corporation, Booz Allen Hamilton Inc., a Delaware corporation (the “Borrower”), the several banks and other financial institutions or entities from time to time parties thereto (the “Lenders”), Credit Suisse, as Administrative Agent, and Credit Suisse Securities (USA) LLC, Banc of America Securities LLC and Lehman Brothers Inc., as Joint Lead Arrangers and Joint Bookrunners | ||
6.
|
Assigned Interest: |
| Aggregate Amount of | Amount of | |||||||
| Commitment/Loans | Commitment/Loans | Percentage Assigned of | ||||||
| for all Lenders | Assigned3 | Commitment/Loans8 | ||||||
$ |
$ | % | ||||||
$ |
$ | % | ||||||
$ |
$ | % | ||||||
Effective Date: , 20 [TO BE INSERTED BY ADMINISTRATIVE AGENT IN ACCORDANCE
WITH THE MEZZANINE CREDIT AGREEMENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]
The Assignee agrees to deliver to the Administrative Agent a completed Administrative Questionnaire
in which the Assignee designates one or more credit contacts to whom all syndicate-level
information (which may contain material non-public information about the Loan Parties and their
related parties or their respective securities) will be made available and who may receive such
information in accordance with the Assignee’s compliance procedures and applicable laws, including
Federal and state securities laws.
The terms set forth in this Assignment and Assumption are hereby agreed to:
| ASSIGNOR [NAME OF ASSIGNOR] |
||||
| By: | ||||
| Title: | ||||
| ASSIGNEE [NAME OF ASSIGNEE] |
||||
| By: | ||||
| Title: | ||||
| 8 | Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder. |
D-2
[Consented to and]9 Accepted:
CREDIT SUISSE, CAYMAN ISLANDS BRANCH,
as Administrative Agent
as Administrative Agent
| By: | ||||
| Title: | ||||
| By: | ||||
| Title: | ||||
[Consented to:10
[BOOZ ALLEN HAMILTON INC.]
| By | ||||
| Title:] | ||||
| 9 | To be added only if the consent of the Administrative Agent is required by the terms of the Mezzanine Credit Agreement. | |
| 10 | To be added only if the consent of the Borrower is required by the terms of the Mezzanine Credit Agreement. |
D-3
ANNEX 1
The $550,000,000 Mezzanine Credit Agreement, dated as of July 31, 2008 (the “Mezzanine Credit
Agreement”), among Explorer Investor Corporation, a Delaware corporation, Explorer Merger Sub
Corporation, a Delaware corporation, Booz Allen Hamilton Inc., a Delaware corporation (the
“Borrower”), the several banks and other financial institutions or entities from time to
time parties thereto (the “Lenders”), Credit Suisse, as Administrative Agent, and Credit
Suisse Securities (USA) LLC, Banc of America Securities LLC and Lehman Brothers Inc., as Joint Lead
Arrangers and Joint Bookrunners. Capitalized terms used but not defined herein have the meanings
given to them in the Mezzanine Credit Agreement.
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any
lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Mezzanine Credit
Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents, (iii) the financial condition of any
Borrower, any Subsidiary or Affiliate thereof or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by any Borrower, any Subsidiary or Affiliate thereof
or any other Person of any of their respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) repeats each Lender representation set forth in
Section 8.6 of the Mezzanine Credit Agreement; (b) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Mezzanine Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Mezzanine
Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest
and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions
of the Mezzanine Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has received and/or had the
opportunity to review a copy of the Mezzanine Credit Agreement to the extent it has in its sole
discretion deemed necessary, together with copies of the most recent financial statements delivered
pursuant to Section 5.1 thereof, as applicable, and such other documents and information as it has
in its sole discretion deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it
has made such analysis and decision independently and without reliance on the Administrative Agent
or any other Lender, and (v) if it is a Non-US Lender, attached to the Assignment and Assumption is
any documentation required to be delivered by it pursuant to the terms of the Mezzanine Credit
Agreement, duly completed and executed by the Assignee; (c) agrees that (i) it will, independently
and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on
such documents and information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform
in accordance with their terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender; and (d) appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers and discretion under
the Mezzanine Credit
D-4
Agreement, the other Loan Documents and any other instrument or document furnished pursuant hereto
or thereto as are delegated to the Administrative Agent by the terms thereof, together with such
powers as are incidental thereto.
2. Payments. From and after the Effective Date, the Administrative Agent shall make
all payments in respect of the Assigned Interest (including payments of principal, interest, fees
and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective
Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption. This Assignment and Assumption and the rights and
obligations of the parties under this Assignment and Assumption shall be governed by, and construed
and interpreted in accordance with, the law of the State of New York without regard to principles
of conflicts of laws to the extent that the same are not mandatorily applicable by statute and the
application of the laws of another jurisdiction would be required thereby.
D-5
EXHIBIT E-1
FORM OF LEGAL OPINION
OF DEBEVOISE & PLIMPTON LLP
OF DEBEVOISE & PLIMPTON LLP
E-1-1
EXHIBIT E-2
FORM OF LEGAL OPINION
OF MORRIS, NICHOLS, ARSHT & TUNNELL LLP
OF MORRIS, NICHOLS, ARSHT & TUNNELL LLP
E-2-1
EXHIBIT F
FORM OF EXEMPTION CERTIFICATE
Reference is made to the Mezzanine Credit Agreement, dated as of July 31, 2008 (as amended,
restated, supplemented or otherwise modified from time to time, the “Mezzanine Credit
Agreement”), among Explorer Investor Corporation, a Delaware corporation, Explorer Merger Sub
Corporation, a Delaware corporation, Booz Allen Hamilton Inc., a Delaware corporation (the
“Borrower”), the several banks and other financial institutions or entities from time to
time parties thereto, Credit Suisse, as Administrative Agent (in such capacity, the
“Administrative Agent”) and Credit Suisse Securities (USA) LLC, Banc of America Securities
LLC and Lehman Brothers Inc., as Joint Lead Arrangers and Joint Bookrunners. Unless otherwise
defined herein, terms defined in the Mezzanine Credit Agreement and used herein shall have the
meanings given to them in the Mezzanine Credit Agreement.
(the “Non-US Lender”) is providing this certificate pursuant to
Section 2.10(d) of the Mezzanine Credit Agreement. The Non-US Lender hereby represents and
warrants that:
1. The Non-US Lender is the sole record and beneficial owner of the Loans or the obligations
evidenced by Note(s) in respect of which it is providing this certificate.
2. The income from the Loans held by the Non-US Lender is not effectively connected with the
conduct of a trade or business within the United States.
3. The Non-US Lender is not a “bank” as such term is used in Section 881(c)(3)(A) of the Code.
In this regard, the Non-US Lender further represents and warrants that:
(a) the Non-US Lender is not subject to regulatory or other legal requirements as a
bank in any jurisdiction; and
(b) the Non-US Lender has not been treated as a bank for purposes of any tax,
securities law or other filing or submission made to any Governmental Authority, any
application made to a rating agency or qualification for any exemption from tax, securities
law or other legal requirements.
4. The Non-US Lender is not a “10-percent shareholder” of the Borrower within the meaning of
Section 881(c)(3)(B) of the Code.
5. The Non-US Lender is not a controlled foreign corporation receiving interest from a related
person within the meaning of Section 881(c)(3)(B) of the Code.
We have furnished you with a certificate of our non-U.S. person status on Internal Revenue
Service Form W-8BEN. By executing this certificate, the Non-US Lender agrees that (1) if the
information provided on this certificate changes, the Non-US Lender shall inform the Borrower (for
the benefit of the Borrower and the Administrative Agent) in writing within 30 days of such change
and (2) the Non-US Lender shall furnish the Borrower (for the benefit of the Borrower and the
Administrative Agent) a properly completed and currently effective certificate in either the
calendar year in which payment is to be made by the Borrower to the Non-US Lender, or in either of
the two calendar years preceding such payment.
F-1
IN WITNESS WHEREOF, the undersigned has duly executed this certificate.
| [NAME OF NON-US LENDER] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
Date:
F-2
EXHIBIT G
FORM OF SOLVENCY CERTIFICATE
July 31, 2008
July 31, 2008
Pursuant to Section 4.1(c) of the Mezzanine Credit Agreement, dated as of July 31, 2008 (the
“Mezzanine Credit Agreement”; unless otherwise defined herein, terms defined in the
Mezzanine Credit Agreement and used herein shall have the meanings given to them in the Mezzanine
Credit Agreement), among Explorer Investor Corporation, a Delaware corporation
(“Holdings”), Explorer Merger Sub Corporation, a Delaware corporation, Booz Allen Hamilton
Inc., a Delaware corporation, the several banks and other financial institutions or entities from
time to time parties thereto, Credit Suisse, as Administrative Agent and Credit Suisse Securities
(USA) LLC, Banc of America Securities LLC and Lehman Brothers Inc., as Joint Lead Arrangers and
Joint Bookrunners, the undersigned hereby certifies that he is the duly elected and acting Chief
Financial Officer of Holdings and that as such he is authorized to execute and deliver this
Solvency Certificate on behalf of Holdings (and not as an individual).
Holdings further certifies that on the date hereof, it and each of the Loan Parties (on a
consolidated basis) is, and after giving effect to the Transactions will be, Solvent.
[Remainder of page intentionally left blank]
G-1
IN WITNESS WHEREOF, the undersigned has caused this Solvency Certificate to be executed as of
the date set forth above.
| EXPLORER INVESTOR CORPORATION |
||||
| By: | ||||
| Name: | ||||
| Title: | Chief Financial Officer | |||
G-2
EXHIBIT H
FORM OF
TERM LOAN NOTE
TERM LOAN NOTE
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE TERMS AND PROVISIONS OF THE MEZZANINE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS
NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE
ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH MEZZANINE CREDIT AGREEMENT.
| $ | New York, New York | |
| , 20 |
FOR VALUE RECEIVED, the undersigned, Booz Allen Hamilton Inc., a Delaware corporation
(“Booz Allen”, and, together with any assignee of, or successor by merger to, Booz Allen
Hamilton Inc.’s rights and obligations under the Mezzanine Credit Agreement (as hereinafter
defined) as provided therein, the “Borrower”), hereby unconditionally promises to pay to
(the “Lender”) or its registered assigns at the Funding Office specified
in the Mezzanine Credit Agreement in Dollars and in immediately available funds, the principal
amount of (a) DOLLARS ($ ), or, if less, (b) the aggregate unpaid principal
amount of all Term Loans owing to the Lender under the Mezzanine Credit Agreement. The principal
amount shall be paid in the amounts and on the dates specified in Section 2.3 of the
Mezzanine Credit Agreement. The Borrower further agrees to pay interest in like money at such
office on the unpaid principal amount hereof from time to time outstanding at the rates and on the
dates specified in the Mezzanine Credit Agreement.
This Note (a) is one of the Notes issued pursuant to the Mezzanine Credit Agreement, dated as
of July 31, 2008 (as amended, restated, supplemented or otherwise modified from time to time, the
“Mezzanine Credit Agreement”), among Explorer Investor Corporation, a Delaware corporation,
Explorer Merger Sub Corporation, a Delaware corporation, the Borrower, the several banks and other
financial institutions or entities from time to time parties thereto, Credit Suisse, Cayman Islands
Branch, as administrative agent (in such capacity, the “Administrative Agent”) and Credit
Suisse Securities (USA) LLC, Banc of America Securities LLC and Lehman Brothers Inc., as Joint Lead
Arrangers and Joint Bookrunners, (b) is subject to the provisions of the Mezzanine Credit
Agreement, which are hereby incorporated by reference, (c) is subject to optional and mandatory
prepayment in whole or in part as provided in the Mezzanine Credit Agreement and (d) is guaranteed
as provided in the Loan Documents. Reference is hereby made to the Mezzanine Credit Agreement for
a statement of all the terms and conditions under which the Term Loans evidenced hereby are made
and are to be repaid. In the event of any conflict or inconsistency between the terms of this Note
and the terms of the Mezzanine Credit Agreement, to the fullest extent permitted by applicable law,
the terms of the Mezzanine Credit Agreement shall govern and be controlling.
Upon the occurrence of any one or more Events of Default, all principal and all accrued
interest then remaining unpaid on this Note shall become, or may be declared to be, immediately due
and payable, all as and to the extent provided in the Mezzanine Credit Agreement. No failure in
exercising any rights hereunder or under the other Loan Documents on the part of the Lender shall
operate as a waiver of such rights.
H-1
All parties now and hereafter liable with respect to this Note, whether maker, principal,
surety, guarantor, indorser or otherwise, hereby expressly waive, to the fullest extent permitted
by applicable law, presentment, demand, protest and all other similar notices or similar
requirements.
Unless otherwise defined herein, terms defined in the Mezzanine Credit Agreement and used
herein shall have the meanings given to them in the Mezzanine Credit Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE MEZZANINE CREDIT
AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE
REGISTRATION AND OTHER PROVISIONS OF SECTION 9.6 OF THE MEZZANINE CREDIT AGREEMENT.
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
AND THE RULES AND REGULATIONS THEREUNDER, THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT.
THE ISSUE PRICE, AMOUNT OF THE ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY OF THE
NOTE CAN BE OBTAINED BY WRITTEN REQUEST TO BOOZ ALLEN HAMILTON INC., CHIEF FINANCIAL OFFICER, AT
8283 GREENSBORO DRIVE, McLEAN, VA 22102.
[Remainder of page intentionally left blank]
H-2
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND THE LENDER HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
| BOOZ ALLEN HAMILTON INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
H-3
Exhibit 10.8
EXPLORER HOLDING CORPORATION
OFFICERS’ ROLLOVER STOCK PLAN
The Officers’ Rollover Stock Plan (the “Plan”) is established by the Board of
Directors of Explorer Holding Corporation (the “Company”) as a program to provide
incentives for Officers of the Company and its Subsidiaries to continue to serve as Officers and
contribute to the growth of the Company through the grant of shares of the Company’s Common Stock
and options representing the right to purchase shares of the Company’s Common Stock in exchange for
the surrender and cancellation of shares purchased and rights to purchase shares granted under the
Booz Allen Hamilton Inc. Officers’ Stock Rights Plan (the “Prior Plan”).
1. Definitions
As used in this description of the Plan, the following terms shall have the following meaning:
| (a) | “2008 Rights” shall mean rights to purchase BAH Class A Shares granted pursuant to the Prior Plan that were, in the absence of the Merger, originally scheduled to vest and be exercised in 2008. | ||
| (b) | “Administrator” shall mean the Board or any committee appointed by the Board to administer the Plan. | ||
| (c) | “Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with, such Person where “control” shall have the meaning given such term under Rule 405 of the Securities Act. For the purposes of this Plan, Affiliates of the Company shall include all Principal Stockholders. | ||
| (d) | “Applicable Laws” shall mean the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Company Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where New Options are granted under the Plan. | ||
| (e) | “Award” shall mean the Rollover Shares, Company Special Voting Stock, Restricted Stock or New Options issued or granted pursuant to the Plan. | ||
| (f) | “Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing an Award, including through an electronic medium. |
| (g) | “BAH” means Booz Allen Hamilton Inc., a Delaware corporation. | ||
| (h) | “BAH Class A Shares” shall mean BAH Common Shares and BAH Class A Non-Voting Common Shares. | ||
| (i) | “BAH Class A Non-Voting Common Shares” shall mean shares of Class A Non-Voting Common Stock of BAH, par value $0.25 per share. | ||
| (j) | “BAH Class B Common Shares” shall mean shares of Class B Common Stock of BAH, par value $0.25 per share, and BAH Class B Non-Voting Common Shares. | ||
| (k) | “BAH Class B Non-Voting Common Shares” shall mean shares of Class B Non-Voting Common Stock of BAH, par value $0.25 per share. | ||
| (l) | “BAH Common Shares” shall mean shares of BAH’s Common Stock, par value $0.25 per share. | ||
| (m) | “BAH Shares” shall mean the BAH Class A Shares, the BAH Class B Common Shares and the Old Rights. | ||
| (n) | “Board of Directors” or the “Board” shall mean the Board of Directors of the Company. | ||
| (o) | “Book Value” or Book Value per share shall have the meaning set forth in the Prior Plan. | ||
| (p) | “Cause” shall mean any of the following: (i) the Officer’s commission of a material act of fraud, embezzlement, misappropriation, misconduct against the Company or any of its Affiliates, or the conviction of, or plea of no contest to, or imposition of unadjudicated probation for any crime that is a felony (or a comparable classification in a jurisdiction that does not use these terms) other than as a result of a traffic violation (unless such traffic violation results in a formal sentencing of the Officer to prison time), or the Officer’s commission of a crime or other material act of misconduct that results in such Officer’s loss of any government security clearance that is reasonably necessary to perform his or her material employment-related duties; (ii) the Officer’s willful failure to substantially perform his or her material employment-related duties (other than any such failure resulting from the Officer’s Disability) or the Officer’s willful failure to carry out, or comply with, any lawful and reasonable directive of the Board or the Officer’s immediate supervisor which is not remedied within ten (10) business days (or such longer period as provided below) after receipt of written notice from the Company specifying such failure; (iii) |
2
| the Officer’s material violation of any material Company policy as in effect from time to time or material breach of the Officer’s fiduciary duties to the Company or any of its Affiliates which is not remedied within ten (10) business days (or such longer period as provided below) after receipt of written notice from the Company specifying such violation; (iv) the Officer’s material breach of the Stockholders Agreement, the Plan, or any Exchange Agreement, Award agreement, or employment, non-competition, nondisclosure or non-solicitation agreement between the Company or any of its Subsidiaries and the Officer which is not remedied within ten (10) business days (or such longer period as provided below) after receipt of written notice from the Company specifying such breach; or (v) the Officer’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s (or any Affiliate’s) premises or while performing the Officer’s duties and responsibilities. The determination as to whether “Cause” has occurred shall be made by the Board, acting in good faith, which shall have the authority to waive the consequences under the Plan in the event of the existence or occurrence of any of the events, acts or omissions constituting “Cause.” The Board must notify an Officer of any event alleged to constitute “Cause” within six months following the Board’s knowledge of its existence or such event shall not constitute “Cause” for purposes of the Plan. A termination for Cause shall be deemed to include a determination following an Officer’s termination of employment for any reason if the circumstances existing prior to such termination would have entitled the Company or one of its Subsidiaries to have terminated such Officer’s employment for Cause; provided, however, that this sentence shall not apply if, prior to termination of employment, the Board determined, following conclusion of an investigation, that such termination was not for Cause unless new facts regarding the Officer’s conduct are revealed to the Board following termination of employment that result in a change in the Board’s determination. The ten (10) business day period described above may be extended for such longer period as the Chief Personnel Officer or, with respect to the Chief Personnel Officer, the Chief Executive Officer shall determine, in his sole discretion. | |||
| (q) | “Change in Control” means the first to occur of the following events after the Closing Date: |
| i. | the acquisition, directly or indirectly, by any person, entity or “group” (as defined in Section 13(d) of the Exchange Act) (other than the Company, any Subsidiary, any Principal Stockholder or any Affiliate thereof, an employee benefit plan maintained by the Company, or a Person that, prior to such transaction, directly or |
3
| indirectly controls, is controlled by, or is under common control with, the Company) of 50 percent or more of the total combined voting power of the Company’s then outstanding voting securities; | |||
| ii. | the merger or consolidation of the Company, as a result of which persons who were shareholders of the Company immediately prior to such merger or consolidation, together with the Principal Stockholders, do not, immediately thereafter, own, directly or indirectly, more than 50 percent of the combined voting power entitled to vote generally in the election of directors of the merged or consolidated company; | ||
| iii. | the liquidation or dissolution of the Company other than a liquidation or dissolution of the Company into a Subsidiary or for the purposes of effecting a corporate restructuring or reorganization as a result of which persons who were shareholders of the Company immediately prior to such liquidation or dissolution, together with the Principal Stockholders, continue to own immediately thereafter, directly or indirectly, more than 50 percent of the combined voting power entitled to vote generally in the election of directors of the entity that owns, directly or indirectly, substantially all of the assets of the Company following such transaction; or | ||
| iv. | the sale, transfer or other disposition of all or substantially all of the assets of the Company to one or more persons or entities that are not, immediately prior to such transaction, Affiliates of the Company, or any employee benefit plan of the Company (other than by way of a transaction that would not be deemed a Change in Control pursuant to clauses (i) or (ii) above); |
in each case, provided that such event constitutes a “change in control” within the
meaning of Section 409A of the Code.
(r) “Change in Control Price” means the price per Share of Company Common Stock
offered in conjunction with any transaction resulting in a Change in Control. If any part
of the offered price is payable other than in cash, the Change in Control Price shall be
determined in good faith by the Administrator as constituted immediately prior to the
Change in Control.
| (s) | “Closing Date” shall mean the date the Merger is consummated. | ||
| (t) | “Code” shall mean the Internal Revenue Code of 1986, as amended. | ||
| (u) | “Company” shall mean Explorer Holding Corporation, a Delaware corporation, and any successor. |
4
| (v) | “Company Approved Termination” shall mean a termination of employment that the Company (through the members of its senior management), in its sole discretion, determines to be in the best interest of the Company and the Company’s approval of such termination as a Company Approved Termination is approved or ratified by the Board of Directors. | ||
| (w) | “Company Class A Common Stock” shall mean the Class A common stock, par value $0.01 per Share, of the Company. | ||
| (x) | “Company Common Stock” shall mean the Company Class A Common Stock and the Merger Rolling Stockholder Stock; provided, however, that with respect to Shares issuable upon exercise of a New Option, Company Common Stock shall mean Company Class A Common Stock. | ||
| (y) | “Company Non-Voting Common Stock” means shares of the Company’s Class B Common Stock, par value $0.01 per share. | ||
| (z) | “Company Shares” shall mean the Company Common Stock, the Restricted Stock, the Company Special Voting Stock and the New Options. | ||
| (aa) | “Company Special Voting Stock” means shares of Class E Common Stock, par value $0.03 per share, of the Company, each share of which shall be entitled to the same voting rights as a share of Company Common Stock. | ||
| (bb) | “Competitive Activity” shall mean directly or indirectly, engaging in or providing, or owning , investing in, managing, joining, operating or controlling, or participating in the ownership, management, operation or control of or being connected as a director, officer, employee, partner, member, consultant, or otherwise with, any business enterprise (whether for profit or not for profit) which is engaged in the business of providing consulting services, either management or technical, staff augmentation, or any related services which the Company or any of its divisions or subsidiaries provides for any U.S. Governmental Entity or any other business activities that, as of the date of the Officer’s termination of employment, are directly competitive, in any geographic area in which the Company or any of its divisions or subsidiaries engages in business activities, with the business activities of the Company or any of its divisions, subsidiaries or affiliates (including any material business activities that, to the knowledge of the Officer, the Company or any of its respective divisions, subsidiaries or affiliates were planning to engage in prior to the Officer’s termination of employment as evidenced by |
5
| reasonably documented plans and actions and that, to the Officer’s knowledge, were still being actively pursued by the Company as of the date of such termination), in each case that is not approved in writing by the Administrator; provided, however, that (i) direct employment as an employee of (and not as a consultant or advisor to) any U.S. federal, state or local Governmental Entity shall not be considered a Competitive Activity; (ii) the Officer’s acquisition of a passive stock or equity interest in such a business, which represents not more than five percent (5%) of the outstanding interest in such business shall not be considered a Competitive Activity; and (iii) employment by a competitor shall not be considered a Competitive Activity if (and only if) (A) the competitor has more than one discrete business unit and, at the time of the Officer’s employment with the competitor, the businesses of the competitor that do not compete with the Company and its Subsidiaries are responsible for 75% or more of the revenue of such competitor; (B) the Officer’s duties relate solely to one or more business units that do not compete directly or indirectly with the Company or any of its Subsidiaries; (C) the Officer is not providing any services or charged with any duties (including reporting duties) with respect to the business unit that is in competition with the Company or any of its Subsidiaries; and (D) if requested by the Company, the Officer certifies in writing to the Company within thirty (30) days of receipt of such request that the position satisfies the requirements of clause (iii) of this proviso. In the event any court of competent jurisdiction shall find that any provision hereof relating to Competitive Activity is not enforceable in accordance with its terms, the court shall reform such provisions such that the provisions shall be enforceable to the maximum extent permissible by law. | |||
| (cc) | “Cost” shall mean $100 per Share or, if higher, the exercise price paid by the Officer for a Share upon exercise of a New Option plus the Withholding Taxes paid by the Officer with respect to such exercise. | ||
| (dd) | “Disability” shall mean “disability”, as such term is defined in Section 22(e)(3) of the Code. | ||
| (ee) | “Eligible Representative” shall mean an Officer’s personal representative or such other person as is empowered under the deceased Officer’s will or the then applicable laws of descent and distribution to represent the Officer hereunder. | ||
| (ff) | “Excess Options” shall mean New Options granted in exchange for Old Rights that have been designated as Excess Options pursuant to an Exchange Agreement. |
6
| (gg) | “Excess Rollover Shares” shall mean Rollover Shares that have been designated as Excess Rollover Shares pursuant to an Exchange Agreement and Shares received on exercise of an Excess Option. | ||
| (hh) | “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. | ||
| (ii) | “Exchange Agreement” shall mean the exchange agreements entered into by the Company and certain Rolling Stockholders in accordance with the Merger Agreement. | ||
| (jj) | “Fair Market Value” shall mean, with respect to the Company Common Stock, (i) if the Company Common Stock is listed on any established stock exchange or a national market system, the closing sales price for a Share of such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination, as reported in The Wall Street Journal or, if not so reported, such other source as the Administrator deems reliable; (ii) if the Company Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the mean between the high bid and low asked prices for a Share of the Company Common Stock on the date of determination; or (iii) in the absence of an established market for the Company Common Stock, the Fair Market Value shall be determined in good faith by the Administrator with reference to the most recent valuation of the Company Common Stock performed by an independent valuation consultant or appraiser of nationally recognized standing (which valuation shall be prepared not less frequently than annually). | ||
| (kk) | “IPO” shall have the meaning set forth in the Merger Agreement. | ||
| (ll) | “Merger” shall mean the merger of Explorer Merger Sub Corporation, a Delaware Corporation and wholly owned Subsidiary of Explorer Investor Corporation, with and into BAH pursuant to the terms of the Merger Agreement. | ||
| (mm) | “Merger Agreement” shall mean the Agreement and Plan of Merger entered into on May 15, 2008 by and among, BAH, the Company, Explorer Investor Corporation, Explorer Merger Sub Corporation, and Booz & Company Inc., as Seller Representative. | ||
| (nn) | “Merger Rolling Stockholder Stock”means shares of Class D Common Stock, par value $0.01 per share, of the Company. |
7
| (oo) | “New Options” shall mean options to purchase Shares of Company Common Stock granted pursuant to the terms of the Plan in exchange for the surrender of Old Rights pursuant to an Exchange Agreement or the Merger Agreement. | ||
| (pp) | “Non-Qualified Stock Option” shall mean an option which is not an “incentive stock option” under Section 422 of the Code. | ||
| (qq) | “Non-Voting Restricted Stock” shall mean the Class F Common Stock, par value $0.01 per share, of the Company. | ||
| (rr) | “Officer” shall mean a Rolling Stockholder (excluding any Rolling Stockholder that is a Newco Employee (as defined in the Merger Agreement)), who is exchanging BAH Shares for an Award of Company Shares under the Plan, in each case, pursuant to an Exchange Agreement or the Merger Agreement, including such Officer’s permitted successors, assignees and Eligible Representatives. | ||
| (ss) | “Old Rights” shall mean rights to purchase BAH Class A Shares granted under the Prior Plan, which are scheduled to vest after 2008 and which will be exchanged for New Options pursuant to an Exchange Agreement or the Merger Agreement. | ||
| (tt) | “Option Price” shall mean the price at which a Share of Company Common Stock may be purchased by an Officer pursuant to a New Option. | ||
| (uu) | “Person” shall mean an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or any other entity of whatever nature. | ||
| (vv) | “Plan” shall mean the Explorer Holding Corporation Officers’ Rollover Stock Plan. | ||
| (ww) | “Principal Stockholders” shall mean (i) the Initial Carlyle Stockholders (as defined in the Stockholders Agreement), and (ii) any of their Affiliates to which (a) any Principal Stockholders identified in clause (i) or any other Person transfers Company Common Stock or (b) the Company issues Company Common Stock. | ||
| (xx) | “Prior Plan” shall mean the Booz Allen Hamilton Inc. Officers’ Stock Rights Plan. |
8
| (yy) | “Related Individual” shall mean, with respect to any entity or Related Trust, the Officer who initially transferred, assigned or otherwise granted to such Related Trust (i) Company Shares or (ii) BAH Shares or rights to acquire BAH Shares that were exchanged for Company Shares. | ||
| (zz) | “Related Trust” shall mean, for any Officer, any trusts or entities to which such Officer transferred, assigned or otherwise granted (i) Company Shares or (ii) BAH Shares or rights to acquire BAH Shares that were exchanged for Company Shares. | ||
| (aaa) | “Restricted Stock” shall mean the Class C Common Stock, par value $0.01 per share, of the Company, granted to Officers under the Plan in exchange for the 2008 Rights pursuant to an Exchange Agreement or the Merger Agreement, and, any shares of Non-Voting Restricted Stock issued in exchange upon conversion or exchange thereof pursuant to Section 10(e). | ||
| (bbb) | “Retirement Eligible” shall mean eligible for retirement from employment by the Company or its Subsidiaries as of December 31, 2008 in accordance with the Officer Retirement Policy as in effect on the Closing Date. | ||
| (ccc) | “Rolling Stockholder” shall have the meaning set forth in the Merger Agreement. | ||
| (ddd) | “Rollover Shares” shall mean Shares of Company Common Stock acquired pursuant to the Plan in exchange for the surrender and cancellation of BAH Class A Shares pursuant to an Exchange Agreement or the Merger Agreement. | ||
| (eee) | “Section 83(b) Election” shall mean an election pursuant to Section 83(b) of the Code to recognize tax upon the issuance of Shares or any similar election under the Applicable Law of any applicable jurisdiction. | ||
| (fff) | “Securities Act” shall mean the Securities Act of 1933, as amended. | ||
| (ggg) | “Shares” means shares of Company Common Stock (including Restricted Stock). | ||
| (hhh) | “Stockholders Agreement” shall mean that certain agreement by and between each Officer, the Principal Stockholders, the Company and the other parties thereto, which contains certain restrictions and limitations applicable to Rollover Shares, Restricted Stock, New Options and the |
9
| Shares acquired upon exercise of a New Option, as may be amended from time to time. | |||
| (iii) | “Subsidiary” or collectively “Subsidiaries” means any company, domestic or foreign, at least a majority of the ownership interest of which is owned or controlled directly or indirectly, by the Company or one or more of its subsidiaries. | ||
| (jjj) | “Withholding Taxes” shall mean any federal, state, local or foreign income taxes, withholding taxes or employment taxes required to be withheld under Applicable Law. |
2. Eligibility and Administration
(a) Eligibility. Officers who have entered into Exchange Agreements or who are
required, pursuant to the terms of the Merger Agreement, to exchange BAH Shares held as of the
Closing Date for Company Shares granted by the Company under the Plan are eligible to participate
in this Plan.
(b) Administration.
(i) The Plan shall be administered by the Administrator. Subject to the provisions of the
Plan, the Administrator shall have the authority in its discretion to: (1) determine the
Fair Market Value; (2) determine all matters and questions related to the termination of
employment of an Officer with respect to any Award granted to him or her hereunder, including all
questions of whether a termination of employment of a particular Officer resulted from discharge
for Cause; (3) approve forms of agreement for use under the Plan, which need not be
identical for each Officer; (4) prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to sub-plans established for the purpose of
satisfying applicable foreign laws; (5) construe and interpret the terms of the Plan and
Awards granted pursuant to the Plan; and (6) make all other decisions and determinations
that may be required pursuant to the Plan or as the Administrator deems necessary or advisable to
administer the Plan.
(ii) The Administrator may receive such compensation for its services hereunder as may be
determined by the Board. All expenses and liabilities incurred by the Administrator in connection
with the administration of the Plan shall be borne by the Company. The Administrator may employ
attorneys, consultants, accountants, appraisers, brokers or other persons. The Administrator shall
be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken
and all decisions, interpretations and determinations made by the Administrator in good faith shall
be final and binding upon all Officers, the Company and all other interested persons. The
Administrator shall not be personally liable for any action, determination or interpretation
10
made with respect to the Plan or any Awards, and the Administrator shall be fully protected by
the Company with respect to any such action, determination or interpretation.
3. Shares Subject to the Plan.
(a) Number of Shares. Subject to the adjustment provisions in Section 9 below, the
aggregate number of Shares which may be issued under the Plan is equal to the number of shares of
Buyer Parent issuable in exchange for the BAH Common Shares and 2008 Rights rolled over by the
Officers and their Related Trusts and upon exercise of the New Options. The Shares may be
authorized but unissued, or reacquired Company Common Stock. The aggregate number of shares of
Company Special Voting Stock that may be issued under the Plan is equal to the number of Shares
issuable upon exercise of the New Options.
(b) Company Shares Subject to Forfeited Awards. To the extent that an Award
terminates, is forfeited, repurchased, or expires, or is otherwise surrendered, any Company Shares
subject to the Award shall revert to the Company and will no longer be available for issuance under
the Plan.
4. Rollover Shares.
(a) Grant of Rollover Shares. Pursuant to the terms of the Exchange Agreements and
the Merger Agreement, Officers (or their Related Trusts) may exchange BAH Class A Shares for Shares
of Company Common Stock. The number of Shares received in exchange for the surrender and
cancellation of BAH Class A Shares shall be determined in accordance with the Exchange Agreement or
Section 3.3(c)(ii) of the Merger Agreement, as applicable. The grant of Rollover Shares shall be
subject to the execution and delivery by the Officer (or his or her Related Trust) of the
Stockholders Agreement and a Section 83(b) Election. Rollover Shares (including Rollover Shares
that are held by a Related Trust) shall be fully vested but shall be subject to the Stockholders
Agreement, the Plan, the repurchase rights by the Company set forth in Section 10 and other
restrictions on transferability as may be imposed by the Administrator pursuant to the Plan.
(b) Certificates for Rollover Shares. Rollover Shares (including Rollover Shares that
are held by a Related Trust) granted pursuant to the Plan may be evidenced in such manner as the
Administrator shall determine. If certificates representing Rollover Shares are registered in the
name of an Officer or his or her Related Trust, certificates must bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Rollover Shares, and the
Company may, at its discretion, retain physical possession of the certificate until such time as
all applicable restrictions lapse.
11
5. Restricted Stock.
(a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan,
pursuant to the terms of the Exchange Agreement or the Merger Agreement, as applicable, the
Administrator shall grant Restricted Stock to Officers in exchange for the surrender of 2008 Rights
on the Closing Date. The grant shall be subject to (i) the execution and delivery by the
Officer of the Stockholders Agreement, (ii) the making by the Officer of a Section 83(b)
Election, and (iii) the payment by the Officer to the Company (in cash or by delivery of a
certified or bank cashier check or by any other means of payment approved by the Administrator) of
the amount necessary to satisfy any and all Withholding Taxes arising in connection with the 2008
Rights and the grant of Restricted Stock.
(b) Vesting. Except as otherwise provided herein, with respect to Retirement Eligible
Officers, the Shares of Restricted Stock will vest in equal annual installments on each of June 30,
2009, 2010 and 2011, and with respect to other Officers, 50% of the Shares of Restricted Stock
shall vest on June 30, 2011, and 25% shall vest on each of June 30, 2012 and 2013, in each case,
subject to the continued employment of the Officer through the applicable vesting date. The
Company may, in its sole discretion, allow Retirement Eligible Officers to elect the same vesting
schedule as other Officers provided that such election is made on the date of grant.
(c) Termination of Employment – Treatment of Unvested Restricted Stock. In the event
that an Officer’s employment with the Company and its Subsidiaries is terminated for any reason
other than a termination by the Company without Cause, by reason of death or Disability or in a
Company Approved Termination, or if during or following an Officer’s termination of employment with
the Company or any of its Subsidiaries, the Officer engages in Competitive Activity, the Company
shall have the right, but not the obligation, to repurchase all unvested Shares of Restricted Stock
held by the Officer or any Related Trust of such Officer for a purchase price per Share equal to
the lower of (i) the exercise price of the 2008 Right with respect to which the Restricted
Stock was granted plus any Withholding Taxes paid by the Officer relating to the surrender of 2008
Rights or the grant of the Shares of Restricted Stock as set forth in Section 5(a)(i) or
(ii) 50% of the Fair Market Value. In the event that an Officer’s employment is terminated
by the Company without Cause, by reason of Disability or in a Company Approved Termination, all
Shares of Restricted Stock shall continue to vest without regard to his termination of employment
with the Company (as if he had continued to be actively employed by the Company following such
termination of employment); provided that if following such a termination of employment the Officer
engages in Competitive Activity, the Company shall have the right, but not the obligation, to
repurchase all unvested Shares of Restricted Stock held by the Officer or any Related Trust of such
Officer for a purchase price per Share equal to the lower of (i) the exercise price of the
2008 Right with respect to which the Restricted Stock was
12
granted plus any Withholding Taxes paid by the Officer relating to the surrender of 2008
Rights or the grant of the Shares of Restricted Stock as set forth in Section 5(a)(i) and
(ii) 50% of the Fair Market Value. In the event that an Officer’s employment is terminated
due to death, all of such Officer’s Shares of Restricted Stock shall become vested as of the date
of such termination of employment. For the avoidance of doubt, in the event any Shares of
Restricted Stock are held by or transferred to a Related Trust, the provisions of this Section 5(c)
shall be applicable, mutatis mutandis, to any Shares of Restricted Stock held by such Related Trust
upon the termination of employment of any Related Individual or upon any Related Individual’s
engagement in a Competitive Activity, as applicable.
(d) Issuance and Restrictions. Restricted Stock (including Restricted Stock that is
held by a Related Trust) shall be subject to the Stockholders Agreement, the Plan, the repurchase
rights by the Company set forth in Section 10 and such restrictions on transferability and other
restrictions as the Administrator may impose pursuant to the Plan. These restrictions may lapse
separately or in combination at such times, pursuant to such circumstances, in such installments,
or otherwise, as the Administrator determines at the time of the grant of the Restricted Stock or
thereafter.
(e) Certificates for Restricted Stock. Restricted Stock (including Restricted Stock
that is held in a Related Trust) granted pursuant to the Plan may be evidenced in such manner as
the Administrator shall determine. If certificates representing Shares of Restricted Stock are
registered in the name of an Officer (or his or her Related Trust), certificates must bear an
appropriate legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.
6. New Options.
(a) Grant of New Options. Subject to the terms and provisions of the Plan, the
Administrator shall grant New Options to Officers in exchange for the surrender and cancellation of
Old Rights as provided in the Exchange Agreement or Merger Agreement, as applicable. All New
Options shall be Non-Qualified Stock Options and shall be subject to the terms and provisions of
the Plan and any applicable written award agreement.
(b) Grant of Company Special Voting Stock. Subject to the terms and provisions of the
Plan, and to the execution and delivery by the Officer of the Stockholders Agreement, the
Administrator shall issue and grant Company Special Voting Stock to Officers. The number of shares
of Company Special Voting Stock granted to each Officer shall be equal to the number of Shares
underlying the New Option granted to such Officer. All Company Special Voting Stock shall be
subject to
13
the terms and provisions of the Stockholders Agreement, the Plan, the repurchase rights by the
Company set forth in Section 6(e) and 6(g) and other restrictions on transferability as may be
imposed by the Administrator pursuant to the Plan.
(c) Number of Shares and Option Price. The number of Shares underlying each New
Option and the Option Price for each New Option granted under the Plan shall be determined by the
Administrator as provided in the Exchange Agreement or Section 3.3(c)(i) and 3.3(c)(ii) of the
Merger Agreement, as applicable.
(d) Vesting of New Options. Subject to Section 12, New Options granted to Officers
who are Retirement Eligible and who have not elected in their Award Agreement to receive Regular
Options (“Retirement Options”) that have not been forfeited as provided in Section 6(g)
shall vest in equal annual installments on June 30, 2009, 2010 and 2011. Subject to Section 12,
New Options granted to Officers who are not Retirement Eligible or who have elected in their Award
Agreement to receive Regular Options (“Regular Options”) that have not been forfeited as
provided in 6(g) shall vest with respect to 50% on June 30, 2011, and 25% on each of June 30, 2012
and 2013. Notwithstanding the foregoing, the Administrator may, on such terms and conditions as it
deems appropriate, accelerate the time at which any such New Option or portion thereof may vest;
provided, that such acceleration shall not change the date of exercise of such New Option.
The Excess Options shall be fully vested as of the date of grant.
(e) Exercise of New Options.
(i) Time of Exercise.
(1) Retirement Options. Subject to Section 12, each Officer (or Eligible
Representative) holding Retirement Options shall exercise his or her vested Retirement Options
(that have not been forfeited as provided in Section 6(g) and that are scheduled to vest on each
June 30 (disregarding any acceleration of vesting)) in the percentages (rounded down to the nearest
ten-thousandth of a Share, except in the case of the final vesting date for such New Options, when
all remaining New Options with such original vesting date shall be exercised) and prior to the end
of the calendar year in which each of the dates set forth in the following table occur (provided
that unless an Officer receives written consent from the Administrator, all vested New Options must
be exercised within the sixty (60) day period following each of the dates set forth in the table
below):
| June 30 | June 30 | June 30 | June 30 | June 30 | June 30 | |||||||||||||||||||
| Exercise Commencement Date | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | ||||||||||||||||||
Percentage of New
Options with June
30, 2009 original
vesting date to be
exercised |
60 | % | 20 | % | 20 | % | — | — | — | |||||||||||||||
Percentage of New
Options with June
30, 2010 original
vesting date to be
exercised |
— | 50 | % | 20 | % | 20 | % | 10 | % | |||||||||||||||
Percentage of New
Options with June
30, 2011 original
vesting date to be
exercised |
— | — | 20 | % | 20 | % | 30 | % | 30 | % | ||||||||||||||
14
The Officer (or his or her Related Trust) shall, at the time of each such exercise, sell
to the Company, and the Company shall repurchase, at par value, one Share of Company Special Voting
Stock for each Retirement Option exercised. No fractional Shares shall be issued upon the exercise
of any New Option, and the Company shall pay to the Officer (or his or her Related Trust) at the
time of such exercise an amount equal to the Fair Market Value of any fractional New Option
exercised (it being understood that all fractional New Options exercised at the same time will be
aggregated into the maximum number of whole Shares, and any remaining fractional New Option will be
exchanged for a cash payment).
(2) Regular Options. Subject to Section 12, each Officer (or Eligible Representative)
holding Regular Options shall exercise his or her vested Regular Options (that have not been
forfeited as provided in Section 6(g) and that are scheduled to vest on each June 30 (disregarding
any acceleration of vesting)) in the percentages (rounded down to the nearest ten-thousandth of a
Share, except in the case of the final vesting date for such New Options, when all remaining New
Options with such original vesting date shall be exercised) and prior to the end of the calendar
year in which each of the dates set forth in the following table occur (provided that unless an
Officer receives written consent from the Administrator, all vested New Options must be exercised
within the sixty (60) day period following each of the dates set forth in the table below):
| June 30 | June 30 | June 30 | June 30 | June 30 | ||||||||||||||||
| Exercise Commencement Date | 2011 | 2012 | 2013 | 2014 | 2015 | |||||||||||||||
Percentage of New
Options with June
30, 2011 original
vesting date to be
exercised |
20 | % | 20 | % | 20 | % | 20 | % | 20 | % | ||||||||||
Percentage of New
Options with June
30, 2012 original
vesting date to be
exercised |
— | 25 | % | 25 | % | 25 | % | 25 | % | |||||||||||
Percentage of New
Options with June
30, 2013 original
vesting date to be
exercised |
— | — | 33 | % | 33 | % | 34 | % | ||||||||||||
15
The Officer or his or her Related Trust shall, at the time of each such exercise, sell to the
Company, and the Company shall repurchase, at par value, one Share of Company Special Voting Stock
for each Regular Option exercised. No fractional Shares shall be issued upon the exercise of any
New Option, and the Company shall pay to the Officer or his or her Related Trust at the time of
such exercise an amount equal to the Fair Market Value of any fractional New Option exercised (it
being understood that all fractional New Options exercised at the same time will be aggregated into
the maximum number of whole Shares, and any remaining fractional New Option will be exchanged for a
cash payment).
(3) Excess Options. Subject to Section 12, each Officer (or Eligible Representative)
holding Excess Options shall exercise such Excess Options in the same percentages and during the
same periods set forth above with respect to Retirement Options or Regular Options, as applicable,
as if such Excess Options had been subject to the same vesting and exercise schedule as the
Retirement Options or Regular Options, as applicable, held by such Officer (although, for the
avoidance of doubt, Excess Options shall be fully vested as of the date of grant as set forth in
Section 6(d)). The Officer or his or her Related Trust shall, at the time of each such exercise,
sell to the Company, and the Company shall repurchase, at par value, one Share of Company Special
Voting Stock for each Excess Option exercised. No fractional Shares shall be issued upon the
exercise of any Excess Option, and the Company shall pay to the Officer or his or her Related Trust
at the time of such exercise an amount equal to the Fair Market Value of any fractional Excess
Option exercised (it being understood that all fractional Excess Options exercised at the same time
will be aggregated into the maximum number of whole Shares, and any remaining fractional Excess
Option will be exchanged for a cash payment).
(ii) Manner of Exercise. New Options shall be exercised within the time frame set
forth above, solely by delivery to the Secretary of all of the following prior to the end of the
relevant sixty-day exercise period:
(1) Subject to any conditions that may be imposed by the Administrator, notice
in writing signed by the Officer or his or her Eligible Representative, stating
that such New Options are exercised, and specifically stating whether the New
Option is being exercised for the full amount of Shares with respect to which the
New Option relates or through a cashless exercise (as provided below);
(2) If the Officer or Eligible Representative is not a party to the
Stockholders Agreement, a copy of the Stockholders Agreement signed by the Officer
or Eligible Representative, if applicable;
16
(3) Full payment of the aggregate Option Price of the Shares with respect to
which such New Options are thereby exercised in (A) cash (through wire
transfer only) or by personal, certified, or bank cashier check); (B) with
the consent of the Administrator, Shares owned by the Officer duly endorsed for
transfer to the Company; (C) Shares issuable to the Officer upon exercise
of the New Options, with a Fair Market Value on the date of exercise equal to the
aggregate Option Price of the Shares with respect to which such New Options that
are thereby exercised; or (D) with the consent of the Administrator, any
form of payment permitted by Applicable Laws and any combination of the foregoing
methods of payment;
(4) A Section 83(b) Election;
(5) The payment to the Company (in cash or by personal, certified or bank
cashier check or by any other means of payment approved by the Administrator) of
all minimum amounts necessary to satisfy any and all Withholding Taxes arising in
connection with the exercise of the New Options; and
(6) Such representations and documents as the Administrator deems necessary or
advisable to effect compliance with all applicable provisions of any federal or
state securities laws or regulations. The Administrator may, in its sole
discretion, also take whatever additional actions it deems appropriate to effect
such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer orders to transfer agents and registrars.
(iii) Failure to Exercise New Options. If an Officer fails to complete the purchase
of the Shares of Company Common Stock within the applicable time period set forth in Section 6(e)
and the applicable Award agreement or fails to file the 83(b) Election with the Internal Revenue
Service within thirty (30) days after exercise, the applicable portion of such New Option shall be
deemed to not have been exercised and such unexercised portion of the New Option held by such
Officer shall be forfeited and, in such event, the Officer (or his or her Related Trust) shall sell
to the Company and the Company shall repurchase, at par value, the related number of shares of
Company Special Voting Stock acquired by the Officer. For the avoidance of doubt, no such
forfeiture shall apply to any unexercised portion of the New Option that is scheduled to become
exercisable on a subsequent date.
(f) Rights as Stockholders. The holder of a New Option shall not be, nor have any of
the rights or privileges of, a stockholder of the Company in respect of any
17
Shares purchasable upon the exercise of any part of a New Option unless and until certificates
representing such Shares have been issued by the Company to such holder.
(g) Termination of Employment.
(i) Cause or Competitive Activity. In the event that an Officer’s employment is
terminated by the Company for Cause or during or following an Officer’s termination of employment
with the Company or any of its Subsidiaries the Officer engages in Competitive Activity, all
unvested New Options shall be immediately forfeited and canceled effective as of the date of
termination. Notwithstanding the foregoing, in the event of such termination, the Company shall
have the right, in its sole discretion, to convert all or any portion of any vested but unexercised
New Options other than the Excess Options into the right to receive upon exercise, in lieu of
Shares of Company Common Stock, a cash payment equal to (A) until June 30, 2016, the
excess, if any, of (x) the lower of (1) 50% of the Fair Market Value of such Shares
subject to the New Options as of the date of termination and (2) the Cost over (y)
the per Share Option Price and (B) after June 30, 2016, the excess, if any, of (x) the
lower of (1) 90% of the Fair Market Value of such Shares subject to the New Options as of
the date of termination and (2) the Cost over (y) the per Share Option Price. In
addition, notwithstanding the foregoing, in the event of such termination, the Company shall have
the right, in its sole discretion, to convert all or any portion of any vested but unexercised
Excess Options into the right to receive upon exercise, in lieu of Shares of Company Common Stock,
a cash payment equal to the excess, if any, of the Fair Market Value of such Shares subject to the
Excess Option as of the date of termination over the per Share Option Price, which, in each case,
shall be paid to the Officer at the time such New Option would have otherwise been required to be
exercised pursuant to Section 6(e)(i) or Section 12.
(ii) Without Cause, by reason of Disability or a Company Approved Termination. In the
event that an Officer’s employment is terminated by the Company without Cause, by reason of
Disability or in a Company Approved Termination, any New Options held by such Officer (or his or
her Eligible Representative) and not previously expired or exercised, shall, to the extent
exercisable on the date of termination, be exercisable by the Officer or the Eligible
Representative of such Officer on the applicable exercise date as set forth in Section 6(e)(i) or
Section 12. Unvested New Options shall continue to vest in accordance with Section 6(d) and shall
be subject to the forfeiture provisions provided in Section 6(g)(i). Notwithstanding the
foregoing, in the event of such termination, the Company shall have the right, in its sole
discretion, to convert all or any portion of any unexercised New Options into the right to receive
upon vesting and exercise, in lieu of Shares of Company Common Stock, a cash payment equal to
(x) for New Options other than the Excess Option, the excess, if any, of (1) in the
Company’s discretion, (A) the Fair Market Value of such Shares subject to the New Options
as of the date of termination or (B) the Cost over (2) the per Share Option Price
for such Shares,
18
and (y) for Excess Options, the excess, if any of the Fair Market Value of such Shares
subject to the Excess Options as of the date of termination over the per Share Option Price, which,
in each case, shall be paid to the Officer at the time such New Option would have otherwise been
required to be exercised pursuant to Section 6(e)(i) or Section 12.
(iii) By reason of Death. In the event that an Officer’s employment is terminated by
reason of death, any unvested portion of any New Options held by such Officer (or his or her
Eligible Representative) and not previously expired or exercised, shall immediately vest in full.
Any New Options held by such Officer (or his or her Eligible Representative) and not previously
expired or exercised, shall, to the extent vested on the date of termination, be exercisable by the
Eligible Representative of such Officer during the calendar year following the year of the
Officer’s death or, if earlier, at such time that the New Option would have otherwise been required
to be exercised pursuant to Section 6(e) or Section 12. Notwithstanding the foregoing, in the
event of such termination, the Company shall have the right, in its sole discretion, to convert all
or any portion of any unexercised New Options into the right to receive upon vesting and exercise,
in lieu of Shares of Company Common Stock, a cash payment equal to (a) for New Options
(other than the Excess Option), the excess, if any, of (1) in the Company’s discretion,
(A) the Fair Market Value of such Shares subject to the New Option as of the date of
termination or (B) the Cost over (2) the per Share Option Price for such Shares,
and (b) for the Excess Option, the excess, if any of the Fair Market Value of such Shares
subject to the Excess Option as of the date of termination over the per Share Option Price, which,
in each case, shall be paid to the Officer’s Eligible Representative during the calendar year
following the year of such Officer’s death or, if earlier, at the time such New Option would have
otherwise been required to be exercised pursuant to Section 6(e) or Section 12. Any New Option
that is not so exercised or converted into the right to receive a cash payment shall terminate at
the end of the calendar year following the year of the Officer’s death or, if earlier, the end of
the calendar year in which would have otherwise been required to be exercised pursuant to Section
6(e) or Section 12.
(iv) Termination for any other Reason. In the event of an Officer’s termination of
employment for any reason other than those set forth in (i), (ii) and (iii) above, any New Option
granted to such Officer under this Plan and not previously exercised or expired, to the extent
vested on the date of such termination, shall be exercisable on the applicable exercise date as set
forth in Section 6(e)(i) or Section 12. All unvested New Options shall be immediately forfeited
and canceled effective as of the date of termination. Notwithstanding the foregoing, in the event
of such termination, the Company shall have the right to convert all or any portion of any vested
but unexercised New Options into the right to receive upon exercise, in lieu of Shares of Company
Common Stock, a cash payment equal to (x) for New Options other than the Excess Options,
the excess, if any, of (1) the lower of (A) the Fair Market Value of such Shares
subject to the New Options as of the date of termination or (B) the Cost over (2)
the per Share Option Price, and (y) for Excess Options, the excess, if any of the Fair
Market
19
Value of such Shares subject to the Excess Options as of the date of termination over the per
Share Option Price, which, in each case, shall be paid to the Officer at the time such New Option
would have otherwise been required to be exercised pursuant to Section 6(e) or Section 12.
(v) The Company shall exercise its right to convert any unexercised New Options into the right
to receive a cash payment pursuant to Section 6(g) by delivery to the Officer or his or her
Eligible Representative, if applicable, of one or more written notices (each, a “Conversion
Notice”) specifying the New Options to be converted; provided that each such Conversion Notice
must be delivered within nine months following the later of the termination of employment and, if
applicable, the Company’s discovery that the Officer has engaged in Competitive Activity and, in
any event, prior to June 30, 2016. If following the delivery of a Conversion Notice the Officer
engages in Competitive Activity, the provisions of paragraph 6(g)(i) shall apply to such New
Option.
(vi) Upon the forfeiture of any New Option or the conversion of any New Option into the right
to receive cash in lieu of Shares pursuant to this Section 6(g), the Officer shall sell to the
Company, and the Company shall repurchase, at the par value thereof, one share of Company Special
Voting Stock for each underlying Share of the New Option so forfeited or converted.
7. Officer Representations. The Administrator, in its sole discretion, may require an
Officer (or his or her Related Trust) to make certain representations or acknowledgements, on or
prior to the purchase of any Shares under this Plan, in respect thereof including, without
limitation, that the Officer (or his or her Related Trust) is acquiring the Shares for an
investment purpose and not for resale, and, if the Officer (or his or her Related Trust) is an
Affiliate, additional acknowledgements regarding when and to what extent any transfers of such
Shares may occur.
8. Stockholders Agreement. All Company Shares (including Company Shares held by a Related
Trust) issued pursuant to the Plan shall be subject to the terms and conditions of a Stockholders
Agreement, whether or not the Officer (or his or her Related Trust) is a party thereto. Unless
otherwise agreed to in writing by the Administrator, no Award or interest or right therein or part
thereof shall be liable for the debts, contracts or engagements of the Officer or his or her
successors in interest or shall be subject to disposition by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law, by judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be
null and void and of no effect; provided, however, that nothing in this Section 8 or the
Stockholders Agreement shall prevent transfers by will, by the applicable laws of descent and
distribution, or to trusts for the benefit of an Officer or any member of such Officer’s immediate
family or lineal descendents thereof; and, provided, further, nothing in this
20
Section 8 shall prevent an Officer (or his or her Related Trust), to the extent permitted by
applicable law, from pledging or otherwise using Shares of Company Common Stock to secure financing
from a lender (a “Lender”) in connection with payment of the Option Price upon exercise of
any New Option or the payment of any withholding or other taxes due in connection with any Award
issued hereunder; provided, however, that the Lender shall be acceptable to the
Company and the terms of any such pledge or other financing shall (i) provide that the Lender or
any person (a “Foreclosure Transferee”) to whom ownership of the pledged Shares is
transferred upon default, foreclosure or like events (the “Foreclosed Shares”) shall upon
taking ownership of any such Foreclosed Shares become a party to, and be subject to the terms and
provisions of, the Stockholders Agreement, this Plan, and any award agreement to which the
Foreclosed Shares transferred to the Foreclosure Transferee were subject immediately prior to such
Transfer; (ii) provide that upon and following any such transfer of ownership of any such
Foreclosed Shares the Company may, without any action or consent of the Lender or any holder or
owner thereof, convert any such Shares constituting Company Common Stock to Company Non-Voting
Common Stock, (iii) in addition to any right to repurchase the Foreclosed Shares pursuant to the
terms of Section 5(c) and Section 10, provide the Company with the right to repurchase the
Foreclosed Shares at their Fair Market Value during the period beginning on the date the Company
becomes aware of the transfer of the Foreclosed Shares and ending on the date nine (9) months
thereafter, and (iv) be otherwise reasonably acceptable to the Company. Any such repurchase shall
be subject to the same notice and delay provisions as Shares purchased by the Company pursuant to
Section 10.
9. Adjustment in Capitalization. In the event that the Administrator determines that any
recapitalization (including a leveraged recapitalization), reclassification, stock split, reverse
stock split, reorganization, merger, consolidation, acquisition, disposition, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or any disposition
of all or substantially all of the capital stock or assets of the Company (including, but not
limited to, a Change in Control), exchange of Company Common Stock or other securities of the
Company, issuance of warrants or other rights to purchase Company Common Stock or other securities
of the Company, the acquisition or disposition of any material assets or business or other similar
corporate transaction or event, in the Administrator’s sole discretion, affects the Company Shares
such that an adjustment to the Awards or Plan is determined by the Administrator to be appropriate
in order to prevent dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to an Award, then the Administrator shall, in such
manner as it may deem equitable, adjust any or all of: (i) the number and kind of Shares
(or other securities or property) with respect to which an Award may be granted under the Plan
(including, but not limited to, adjustments of the limitations in Section 2.1(a) on the maximum
number and kind of Shares which may be issued); (ii) the number and kind of Shares (or
other securities or property) subject to outstanding
21
Awards; (iii) the grant or exercise price per Share for any outstanding Awards under the
Plan; (iv) the Cost, or (v) the terms and conditions of any outstanding Awards.
10. Repurchase upon Termination.
(a) Rights of the Company. In the event an Officer’s employment with the Company or
any of its Subsidiaries terminates for any reason, the Company shall have the right, but not the
obligation, to purchase all or any portion of the Shares held by such Officer or any Related Trust
of such Officer that are not forfeited as a result of such termination at the purchase prices set
forth below:
(i) Termination for Cause or Competitive Activity. If the Officer’s employment is
terminated by the Company for Cause or during or following an Officer’s termination from employment
with the Company or any of its Subsidiaries the Officer engages in a Competitive Activity, the
purchase price for any Shares other than Excess Rollover Shares shall equal (A) until June
30, 2016, the lower of (x) 50% of the Fair Market Value of such Shares as of the date of
the Repurchase Notice (the “Repurchase Date”) and (y) the Cost and (B)
after June 30, 2016, 90% of the Fair Market Value of such Shares as of the Repurchase Date.
(ii) Termination for death, Disability or Company Approved Termination. If the
Officer’s employment is terminated by the Company without Cause, by reason of such Officer’s death,
or Disability, or in a Company Approved Termination, the purchase price for any Shares other than
Excess Rollover Shares shall equal, in the Administrator’s sole discretion based on facts and
circumstances surrounding the termination, either (x) the Fair Market Value of such Shares
as of the Repurchase Date or (y) the Cost.
(iii) Other Termination. If the Officer’s employment terminates for any other reason,
the purchase price for any Shares other than Excess Rollover Shares shall equal in the Company’s
sole discretion based on the facts and circumstances surrounding the termination, either
(x) the Fair Market Value of such Shares as of the Repurchase Date or (y) the Cost.
(iv) Excess Rollover Shares. The purchase price for Excess Rollover Shares shall
equal the Fair Market Value of such Shares as of the Repurchase Date.
(v) Foreclosed Shares. If the Officer’s employment terminates or the Officer engages
in Competitive Activity following a transfer of Foreclosure Shares by such Officer or his or her
Related Trust, any such Foreclosure Shares shall be subject to the repurchase right provided in
this Section 10 and, if any such Foreclosure Shares were previously purchased pursuant to Section 8
at a price in excess of the price that would be payable upon exercise of the Company’s repurchase
rights with respect to such
22
Foreclosure Shares pursuant to this Section 10, then any purchase price payable upon the
exercise of the Company’s repurchase right for any remaining Shares shall be reduced (but not below
zero) by the excess of the purchase price paid by the Company for the Foreclosed Shares pursuant to
Section 8 over the price that would have otherwise been payable for the purchase of such Foreclosed
Shares pursuant to this Section 10.
If and to the extent the Company exercises its right to repurchase any such Shares pursuant to
this Section 10(a), any such Officer or his or her Related Trust shall be obligated to sell such
Shares to the Company.
(b) Repurchase Notice. The Company shall exercise its right to purchase Shares
pursuant to Section 5(c) or Section 10(a) by delivery to the Officer or his or her Eligible
Representative, if applicable, and/or his or her Related Trusts, as applicable, one or more written
notices (the “Repurchase Notices”) specifying the number and type of Shares to be purchased
and the applicable purchase price for such Shares; provided that each such Repurchase Notice must
be delivered within nine months following the later of termination of employment and the Company’s
discovery that the Officer has engaged in Competitive Activity. The repurchase right pursuant to
Section 5(c) or this Section 10 may be exercised more than once. Any Shares that are not so
repurchased shall remain subject to all of the other provisions of the Plan and the Stockholders
Agreement.
(c) Time of Repurchase. The repurchase of Shares pursuant to Section 5(c) or this
Section 10 shall, subject to Section 10(d), take place on a date specified by the Company, but in
no event later than sixty (60) days following the date of the exercise of such repurchase right or,
if later, within ten (10) days following the receipt by the Company of all necessary governmental
approvals. On such date, such Officer shall transfer the Shares to be repurchased to the Company,
free and clear of all liens and encumbrances, by delivering to the Company the certificates or
other documents representing the Shares to be purchased, duly endorsed for transfer to the Company
or accompanied by a stock power duly executed in blank, in each case reasonably acceptable to the
Company, and the Company shall pay to such Officer (and/or his or her Related Trust) the purchase
price in cash or by bank or cashier’s check.
(d) Certain Restrictions on Repurchases; Delay of Repurchase.
(i) Notwithstanding any other provision of the Plan, the Company shall not be permitted or
obligated to make any payment with respect to a repurchase of any Company Shares from an Officer
(and/or his or her Related Trust) if (A) such repurchase (or the payment of a dividend by a
Subsidiary to the Company to fund such repurchase) would result in a violation of the terms or
provisions of, or result in a default or an event of default under any guaranty, financing or
security agreement or document entered into by the Company or any Subsidiary from time to time (the
“Financing Agreements”), (B) such repurchase would violate any of the terms or
provisions of the Certificate of
23
Incorporation of the Company or (C) the Company has no funds legally available to make such
payment under the General Corporation Law of the State of Delaware. The events described in (A)
through (C) above each constitute a “Repurchase Disability.” In the event of a Repurchase
Disability, the Company shall notify in writing the Officer (and/or his or her Related Trust) with
respect to whom the repurchase right has been exercised (a “Disability Notice”). The
Disability Notice shall specify the nature of the Repurchase Disability
(ii) If a repurchase by the Company otherwise permitted under this Section 10 is prevented by
a Repurchase Disability: (A) the purchase and payment of the applicable purchase price
shall be postponed and will take place at the first opportunity thereafter when the Company has
funds legally available to make such payment and when such payment will not result in any default,
event of default or violation under any of the Financing Agreements or in a violation of any term
or provision of the Certificate of Incorporation of the Company, (B) such repurchase
obligation shall rank against other similar repurchase obligations with respect to Shares
according to priority in time of the termination date giving rise to such repurchase
(provided that any repurchase commitment arising from a termination of employment because
of Disability or death shall have priority over any other repurchase obligation) and (C)
the applicable purchase price (except in the case of a termination for Cause or following the
Officer engaging in Competitive Activity) shall be increased by an amount equal to interest on such
purchase price for the period during which payment is delayed at the applicable federal rate;
provided, however, that if the Company has not repurchased Shares pursuant to this
Section 10(d) within four years following delivery of a Disability Notice, the Company shall have
no right or obligation to repurchase such Shares; provided, further, that the
foregoing proviso of this Section 10(d) shall not apply to the repurchase of any Shares pursuant to
Section 5(c) unless the Company in its sole discretion shall so determine.
(e) If an Officer’s employment with the Company is terminated other than (x) by the Company
without Cause, (y) by reason of the Officer’s death or Disability or (z) in a Company Approved
Termination, the Company shall have the option, for so long as it has a right to purchase Shares
pursuant to Section 5(c) or Section 10(a) with respect to such Officer and his or her Related
Trust, either in lieu of exercising such repurchase right or upon or following such exercise if a
Repurchase Disability has occurred and is continuing, (i) to convert such Officer’s (or
Related Trust’s) Company Common Stock to Company Non-Voting Common Stock, (ii) to convert
such Officer’s Restricted Stock to Non-Voting Restricted Stock, and (iii) to purchase each
share of Company Special Voting Stock held by such Officer (or his or her Related Trust) from such
Officer (or his or her Related Trust) for a purchase price equal to the par value of such share.
The Company’s rights under this Section 10(e) shall be exercised by written notice to such Officer
given in accordance with Section 10(b) on or prior to the last day on which the Company’s right to
repurchase Shares pursuant to Section 5(c) or Section 10(a), as applicable, may be exercised by the
Company.
24
(f) No Officer or Related Trust shall have any rights against the Company because of the
Company’s election to waive, in its sole discretion, any of the Company’s rights with respect to
the repurchase or conversion provisions set forth in this Section 10.
(g) For the avoidance of doubt, the provisions set forth in this Section 10 shall be
applicable, mutatis mutandis, to any Company Shares held by a Related Trust upon the termination of
employment of any Related Individual or upon any Related Individual’s engagement in a Competitive
Activity, as applicable.
11. Company Repurchase Program. During each fiscal year beginning June 30, 2014, the
Company shall offer to repurchase outstanding Shares held by the Officers (or Related Trusts) at a
purchase price equal to the Fair Market Value by delivery of a notice (a “Liquidity
Notice”) to each Officer (or Related Trust) holding vested Shares of the offer, including the
proposed purchase price, the aggregate number of Shares proposed to be repurchased from all
Officers (and Related Trusts) and the terms and conditions of the offer. The number of Shares to
be purchased in each such year shall be limited to (a) 10% of EBITDA (as defined below) for the
prior fiscal year, or such greater percentage as the Board, in its sole discretion shall determine,
divided by (b) the per share Fair Market Value (the “Annual Repurchase Amount”);
provided, that (i) such repurchases shall be subject to the Repurchase Disability
provisions set forth in Section 10(d) and (ii) the Company shall have no obligation to repurchase
such Shares to the extent such repurchase would or would reasonably be expected to, in the good
faith judgment of the Board of Directors, adversely affect the Company’s (as considered on a
consolidated basis with its Subsidiaries) ability to meet its obligations under any Financing
Agreement or other material financial obligations during the 12 month period following each
applicable June 30; provided, further, that if, with respect to a given fiscal
year, the Company is prevented from repurchasing a number of Shares equal to the full Annual
Repurchase Amount due to the application of clause (i) or (ii) above, the Company shall purchase
the maximum number of Shares permissible with respect to such year without triggering the
application of clause (i) or (ii) above. The Officer (or Related Trust) may elect to participate
in the purchase by delivery to the Company of a written request made within 30 days after such
notice (which request shall specify the vested Shares intended to be disposed of by such Officer
(or Related Trust)). Each such request shall also contain an undertaking from the Officer (or
Related Trust) to provide all such information and material and to take all actions as may be
reasonably required by the Company in order to permit the Company to comply with all applicable
federal and state securities laws. Any Officer (or Related Trust) who validly elects to
participate will be entitled to sell to the Company at the Fair Market Value and on the terms and
conditions described in the Liquidity Notice the number of vested Shares requested;
provided, that, if the number of Shares requested to be sold in such offer by the Officers
(or Related Trusts) exceeds the aggregate number of Shares which the Company had proposed to
repurchase, the Administrator shall reduce the number of Shares to be purchased from the requesting
Officers (or Related Trusts) in such manner as it determines to be appropriate.
25
For purposes of this Plan, EBITDA will be determined by the Administrator, in its sole discretion,
and for a given fiscal year shall mean consolidated earnings of the Company and its consolidated
subsidiaries before interest, taxes, depreciation, amortization, stock-option based and other
equity-based compensation expenses, and adjusting for certain extraordinary and non-recurring items
as determined by the Administrator. In the event of an IPO, this provision shall terminate and
cease to have any further effect.
12. Change in Control. Upon a Change in Control, (a) each unvested New Option
shall vest in full, all New Options shall become immediately exercisable, and (b) in
connection with the foregoing, the Administrator (as constituted immediately prior to the Change in
Control) may provide that each New Option shall be canceled in exchange for a payment in an amount
or with a value equal to the number of Shares covered by New Option times the excess, if any, of
the Change in Control Price over any applicable Option Price for such New Option. Each New Option
that is not canceled in exchange for a payment as provided in the preceding sentence
(“Continuing Options”) shall be required to be exercised no later than the earlier of 90
days after such Change in Control and the end of the calendar year of such Change in Control. Any
Continuing Options that are not exercised within such 90 day period shall be immediately forfeited.
The Officer (or his or her Related Trust) shall, at the time of such exercise or, if the
Continuing Option is not exercised at the end of such 90 day exercise period, sell to the Company,
and the Company shall repurchase, at par value, all Company Special Voting Stock held by the
Officer. Any unvested Shares of Restricted Stock (other than Shares as to which a Notice of
Repurchase shall have been delivered pursuant to Section 5(c)) shall vest in full upon a Change in
Control.
13. Legend of Stock Certificates. Certificates representing Shares held by shareholders
shall have imprinted, typed, stamped, or otherwise affixed thereon the following legend”
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”),
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND SAID LAWS OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS THEREOF.”
“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE REPURCHASE
RIGHTS, ADDITIONAL RESTRICTIONS ON TRANSFER AND
26
CERTAIN OTHER AGREEMENTS SET FORTH IN THE EXPLORER HOLDING
CORPORATION OFFICERS’ ROLLOVER STOCK PLAN AND A STOCKHOLDERS
AGREEMENT BETWEEN THE ISSUER AND THE STOCKHOLDERS AND
OPTIONHOLDERS OF THE ISSUER, DATED AS OF JULY 30, 2008. A COPY OF
SUCH PLAN AND AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE
ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”
14. Successors — Community Property. Any Officer who now or hereafter resides in a
jurisdiction where such Officer’s spouse may have or may acquire an interest in the Officer’s
Shares by virtue of community property or similar laws shall, upon request of the Company, provide
to the Company an agreement executed by said spouse, in consideration of the provisions of the Plan
set forth herein, stating that such spouse’s interest in the Shares is subject to the terms and
conditions of this Plan.
15. Effect on Benefit Programs. The economic benefits realized by an Officer as a result
of participation in this Plan shall not be deemed to be compensation for the purposes of
determining any Officer’s eligibility for, or participation in, the Company’s retirement,
insurance, or other benefit programs.
16. Amendment or Termination. The Plan may be wholly or partially amended or otherwise
modified, suspended or terminated at any time or from time to time by the Administrator. Except as
provided in Section 9, neither the amendment, suspension nor termination of the Plan shall, without
the consent of the holder of the Award or Shareholder Approval, adversely alter or impair any
rights or obligations under any Award theretofore granted. Except as provided in Section 9,
notwithstanding the foregoing, the Administrator may at any time, and from time to time, amend the
terms of any one or more existing equity award agreements; provided however that the rights of an
Officer under an equity award agreement shall not be adversely impaired without the Officer’s
written consent or Shareholder Approval. The Company shall provide an Officer with notice of any
amendment made to such Officer’s existing equity award agreement in accordance with the terms of
this Section 16. For purposes of this Section 16, “Shareholder Approval” shall mean
approval by such number of shareholders as shall then own not less than three-fourths of the
aggregate number of Shares and Company Special Voting Stock issued under the Plan and outstanding
at the time of such amendment, suspension or termination.
17. Section 409A Compliance. The Plan is intended to be administered in a manner
consistent with the requirements, where applicable, of Section 409A of the Code and,
notwithstanding anything to the contrary contained in the Plan, the Plan, any Award granted under
the Plan and any equity award agreement may be amended in accordance
27
with Section 16 to the extent necessary or appropriate to comply with Section 409A of the Code.
The Plan shall be administered and interpreted in a manner to avoid the imposition on Officers of
immediate tax recognition and additional taxes pursuant to Section 409A of the Code.
Notwithstanding the foregoing, none of the Company or the Administrator shall have any liability to
any person in the event Section 409A of the Code applies to any payments hereunder in a manner that
results in adverse tax consequences for the Officer or any of his beneficiaries or transferees.
Notwithstanding anything else contained in this Plan, any equity award agreement or the
Stockholder’s Agreement to the contrary, if an Officer is a Specified Employee (as defined in
Section 409A of the Code) any payment required to be made to Officer hereunder upon or following
his Separation from Service (as such term is defined in Section 409A of the Code) shall be delayed
until after the six month anniversary of Officer’s Separation from Service to the extent necessary
to comply with, and avoid imposition on such Officer of any tax penalty imposed under, Section 409A
of the Code. Should payments be delayed in accordance with the preceding sentence, the accumulated
payment that would have been made but for the period of the delay shall be paid in a single lump
sum during the ten day period following the six month anniversary of the Separation from Service.
18. Withholding Taxes. In addition to any rights or obligations with respect to
Withholding Taxes under the Plan, the Company or any Subsidiary employing an Officer and/or any
Related Trust shall have the right to withhold from the Officer, or otherwise require the Officer
and/or any Related Trust or an assignee to pay, any Withholding Taxes arising as a result of
exercise of the New Options, grant of Restricted Stock or any other taxable event occurring
pursuant to the Plan including, but not limited to, to the extent permitted by law, the right to
deduct any such Withholding Taxes from any payment of any kind otherwise due to the Officer and/or
any Related Trust or to take such other actions (including, but not limited to, withholding any
Shares or cash deliverable pursuant to the Plan or any Award) as may be necessary to satisfy such
Withholding Taxes; provided, however, that in the event that the Company withholds
Shares issuable to the Officer upon the exercise of the New Option (or any portion thereof)) to
satisfy the Withholding Taxes, the Company shall withhold a number of whole Shares having a Fair
Market Value, determined as of the date of exercise, not in excess of the minimum of tax required
to be withheld by law (or such lower amount as may be necessary to avoid liability award
accounting).
19. Effect of Plan Upon Other Award and Compensation Plans. The adoption of this Plan
shall not affect any other compensation or incentive plans in effect for the Company or any of its
Subsidiaries. Nothing in this Plan shall be construed to limit the right of the Company or any of
its Subsidiaries (a) to establish any other forms of incentives or compensation for
Officers or (b) to grant or assume options or restricted stock other than under this Plan
in connection with any proper corporate purpose, including, but not by way of limitation, the grant
or assumption of options or restricted stock in connection
28
with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock
or assets of any corporation, firm or association.
20. At-Will Employment. Nothing in the Plan, the Stockholders Agreement or any equity
award agreement hereunder shall confer upon the Officer any right to continue as an Officer of the
Company or any of its Subsidiaries or shall interfere with or restrict in any way the rights of the
Company and any of its Subsidiaries, which are hereby expressly reserved, to discharge any Officer
at any time for any reason whatsoever, with or without Cause, except to the extent expressly
provided otherwise in a written employment or other written agreement between the Officer and the
Company or any of its Subsidiaries.
21. Titles. Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.
22. Conformity to Securities Laws. The Plan is intended to conform to the extent necessary
with all provisions of the Securities Act and the Exchange Act and any and all regulations and
rules promulgated under any of the foregoing, to the extent the Company, any of its Subsidiaries or
any Officer is subject to the provisions thereof. Notwithstanding anything herein to the contrary,
the Plan shall be administered, and Awards shall be granted and may be exercised, only in such a
manner as to conform to such laws, rules and regulations. To the extent permitted by applicable
law, the Plan and Awards granted hereunder shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.
23. Unfunded Plan; Plan Not Subject to ERISA. The Plan is an unfunded plan and Officers
shall have the status of unsecured creditors of the Company. The Plan is not intended to be
subject to the Employee Retirement Income and Security Act of 1974, as amended.
24. Governing Law. To the extent not preempted by federal law, the Plan shall be construed
in accordance with and governed by the laws of the State of Delaware regardless of the application
of the rules of conflict law that would apply to the laws of any other jurisdictions.
25. Severability. In the event any portion of the Plan or any action taken pursuant
thereto shall be held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the
illegal or invalid provisions had not been included, and the illegal or invalid action shall be
null and void.
26. Governing Documents. In the event of any contradiction between the Plan and any equity
award agreement or any other written agreement between an Officer and the
29
Company or any Subsidiary of the Company that has been approved by the Administrator, the terms of
the Plan shall govern, unless it is expressly specified in such equity award agreement or other
written document that a specific provision of the Plan shall not apply.
27. Notices. Except as provided otherwise in an Award Agreement, all notices and other
communications required or permitted to be given under this Plan or any Award Agreement shall be in
writing and shall be deemed to have been given if delivered personally, sent by email or any other
form of electronic transfer approved by the Administrator, sent by certified or express mail,
return receipt requested, postage prepaid, or by any recognized international equivalent of such
delivery, (i) in the case of notices and communications to the Company, to 1001 Pennsylvania Ave
NW, Suite 220 South, Washington, DC 20004 to the attention of Peter Clare, or (ii) in the case of a
Officer, to the last known address, or email address or, where the individual is a an employee of
the Company or one of its subsidiaries, to the individual’s workplace address or email address or
by other means of electronic transfer acceptable to the Administrator. All such notices and
communications shall be deemed to have been received on the date of delivery, if sent by email or
any other form of electronic transfer, at the time of dispatch or on the third business day after
the mailing thereof.
30
Exhibit 10.9
FORM OF EXPLORER HOLDING CORPORATION
ROLLOVER STOCK OPTION AGREEMENT
ROLLOVER STOCK OPTION AGREEMENT
GRANT NOTICE
Unless otherwise defined herein, the terms defined in the Explorer Holding Corporation Officers’
Rollover Stock Plan (the “Plan”) shall have the same defined meanings in this Rollover
Stock Option Agreement, which includes the terms in this Grant Notice (the “Grant Notice”)
and Appendix A attached hereto (collectively, the “Agreement”).
You have been granted Company Special Voting Stock and a New Option to purchase Shares of Company
Common Stock in exchange for your Old Rights and BAH Class B Common Shares, subject to the terms
and conditions of the Plan and this Agreement, as follows:
Name of Optionee: |
«Name» | |
Vesting Schedule: |
This New Option will vest and become exercisable in accordance with the vesting | |
| schedule set forth in Section 6(d) of the Plan. |
| Number of | ||||||||||
| Associated Shares | ||||||||||
| Original Number of | of Company Special | |||||||||
| BAH Common Shares | Number of Company | Voting Stock | ||||||||
| Original Grant | Original Per Share | subject to BAH | Shares subject to | Granted with the | New Per Share | |||||
| Date | Exercise Price | Option Exchanged | the New Option | New Option | Exercise Price | |||||
| See column entitled “Grant Date” in the Section entitled “Outstanding Stock Rights by Grant Date” in the attached spreadsheet. |
See column entitled “Per Share Grant Book Value” in the Section entitled “Outstanding Stock Rights by Grant Date” in the attached spreadsheet. |
See column entitled “Rights Outstanding” in the Section entitled “Outstanding Stock Rights by Grant Date” in the attached spreadsheet. |
See column entitled “Exchange Options” in the Section entitled “Exchange Equity” in the attached spreadsheet. |
See column entitled “Buyer Parent Special Voting Stock” in the Section entitled “Exchange Equity” in the attached spreadsheet. |
See column entitled “New Per Share Exercise Price” in the Section entitled “Exchange Equity” in the attached spreadsheet. |
This Company Special Voting Stock and this New Option are being granted to you in exchange for
the surrender and cancellation of BAH Class B Shares and Old Rights granted to you
pursuant to the
Booz Allen Hamilton Inc. Officers’ Stock Rights Plan. The number of Shares underlying the New
Option and the Exercise Price of the New Option were determined as provided in the Exchange
Agreement or Section 3.3(d)(i) of the Merger Agreement. The number of shares of Company Special
Voting Stock was determined as provided in Section 6(b) of the Plan.
By accepting this Company Special Voting Stock and this New Option, you hereby acknowledge that you
shall no longer be entitled to receive any benefits with respect to your BAH Class B Shares or Old
Rights and such BAH Class B Shares and Old Rights have been terminated and have no further effect.
Your grant of this New Option, the Company Special Voting Stock and, if applicable, the issuance of
any Shares upon the exercise of this New Option shall be subject to your execution of the
Stockholders Agreement, which is attached hereto as Appendix B.
You acknowledge that you have reviewed with your own tax advisors the federal, state, local and
foreign tax consequences of the transactions contemplated by this Agreement. You understand that
you (and not the Company) shall be responsible for your own tax liability that may arise as a
result of the transactions contemplated by this Agreement. You understand that you are required,
as a condition to exercise, to elect to be taxed as of the date you exercise the New Option, rather
than when the restrictions set forth in the Plan and the Stockholders Agreement lapse, by filing an
election under Section 83(b) of the Internal Revenue Code of 1986, as amended (a “Section 83(b)
Election”), with the Internal Revenue Service within 30 days from the exercise date. You will
be required to deliver a copy of the Section 83(b) Election to the Company promptly after filing
such election with the Internal Revenue Service. A form of Section 83(b) Election (along with
filing instructions applicable thereto) is attached hereto as Appendix C.
[signature page follows]
2
Your signature below indicates your agreement and understanding that the Company Special Voting
Stock, this New Option and any Shares issued to you pursuant to the exercise of this New Option are
subject to all of the terms and conditions contained in the Agreement (including this Grant Notice
and Appendix A to the Agreement), the Plan and the Stockholders Agreement. ACCORDINGLY,
PLEASE BE SURE TO READ ALL OF THE PLAN, APPENDIX A, APPENDIX B AND APPENDIX C WHICH CONTAIN THE
SPECIFIC TERMS AND CONDITIONS WITH RESPECT TO THE COMPANY SPECIAL VOTING STOCK AND NEW OPTION
GRANTED HEREUNDER. Any facsimile copies hereof or signature hereon shall, for all purposes, be
deemed originals.
| EXPLORER HOLDING CORPORATION | OPTIONEE | |||||
By |
||||||
| Title: | ||||||
APPENDIX C
ROLLOVER STOCK NEW OPTION AGREEMENT
ARTICLE I
GRANT OF NEW OPTION
GRANT OF NEW OPTION
Section 1.1 Grant of New Option. The Company hereby grants and issues to
the Optionee the Company Special Voting Stock and the New Option to purchase all or any part of the
Shares set forth in the Grant Notice pursuant to which this Appendix is attached, upon the terms
and conditions set forth in the Plan and this Agreement and in exchange for Old Rights and BAH
Class B Common Shares held by the Optionee.
Section 1.2 Exercise Price. The Exercise Price of the Shares covered by
the New Option shall be the Exercise Price per Share as set forth in the Grant Notice (without
commission or other charge).
ARTICLE II
VESTING SCHEDULE; EXERCISABILITY
VESTING SCHEDULE; EXERCISABILITY
Section 2.1 Vesting and Exercisability of New Option.
(a) Vesting. Except as provided below, the New Option shall vest in accordance with
the schedule set forth in Section 6(d) of the Plan.
(b) Change in Control. All of the New Option shall become fully vested and
exercisable upon a Change in Control and shall, in such event, be treated in accordance with
Section 13 of the Plan.
(c) Discretionary Vesting. The Administrator may, in its sole discretion, accelerate
the vesting of any portion of the New Option; provided that such acceleration shall not change the
date of exercise of such New Option.
Section 2.2 Exercisability of the New Option. The Optionee shall not have the
right to exercise the New Option until the date the applicable portion of the New Option becomes
vested pursuant to Section 2.1 and exercisable pursuant to Section 6(e)(i) or Section 13 of the
Plan. The exercise of the New Option shall be governed by the terms of this Agreement and the
terms of the Plan, including, but not limited to, the provisions of Section 6(e)(ii) of the Plan.
The date that the applicable portion of the vested New Option becomes exercisable is set forth in
Section 6(e)(i), Section 6(g) or Section 13 of the Plan, which shall be referred to herein as the
“Exercise Commencement Date.” The applicable portion of the New Option shall remain
exercisable until the last day of the calendar year in which the Exercise Commencement Date occurs
(or such shorter period as may be applicable to a New Option that becomes exercisable pursuant to
Section 13 of the Plan); provided, however, that, all New Options must be exercised within sixty
(60) days following the Exercise Commencement Date unless written consent is received by the
Company to extend such period through the end of the year. In the event the Optionee fails to
exercise the applicable portion of any New Option in full within the applicable period following
the Exercise Commencement Date, such applicable portion of the New Option shall be forfeited
immediately in accordance with Section 6(e)(iii) of the Plan. As provided in Section 6(e)(i) of
the Plan, the Optionee shall, at the time of such exercise, sell to the Company, and the Company
shall repurchase, at par value, one share of Company Special Stock for each Share subject to the
applicable portion of the New Option so exercised.
Section 2.3 Partial Exercise. Any exercisable portion of the New Option or the
entire New Option, if then wholly exercisable, may be exercised in whole or in part at any time
prior to the time when the New Option or portion thereof becomes unexercisable.
Section 2.4 Termination of Employment. In the event of a termination of
employment, the New Option and the Company Special Stock shall be subject to the terms and
conditions set forth in Sections 6(g) and 13 of the Plan, and, if applicable, the Shares purchased
on exercise of the New Option shall be subject to the repurchase provisions set forth in Section 10
of the Plan.
Section 2.5 Manner of Exercise; Tax Withholding.
(a) Unless determined otherwise by the Administrator, as a condition to the exercise of the
New Option, the Optionee shall (i) notify the Company at least fifteen (15) days prior to
exercise that the Optionee intends to exercise, (ii) concurrently with the exercise of the
New Option, execute the Stockholders Agreement, unless the Optionee has already executed the
Stockholders Agreement, (iii) provide the Company with payment of the Exercise Price of the
New Option, together with any required Withholding Taxes, which shall be payable to the Company in
full as set forth in Section 2.5(b) or Section 2.5(c) below, as applicable, and (iv) deliver to the
Company the Company Special Voting Stock required to be sold in connection with such exercise duly
endorsed in blank or accompanied by duly executed stock powers.
(b) To the extent permitted by law or the applicable listing rules, if any, the Optionee may
pay for the Shares with respect to which such New Option or portion of such New Option is exercised
through (i) payment in cash; (ii) with the consent of the Administrator, the
delivery of Shares which are owned by the Optionee, duly endorsed for transfer to the Company with
a Fair Market Value on the date of delivery equal to the aggregate Exercise Price of the exercised
portion of the New Option; (iii) with the consent of the Administrator, through the
surrender of Shares then issuable upon exercise of the New Option having a Fair Market Value on the
date of the exercise of the New Option equal to the aggregate Exercise Price of the exercised
portion of the New Option; or (iv) with the consent of the Administrator, delivery of a
notice that the Optionee has placed a market sell order with a broker with respect to Shares
then-issuable upon exercise of the New Option, and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate
Exercise Price; provided, that payment of such proceeds is then made to the Company upon settlement
of such sale.
(c) As a condition to exercise, the Optionee must make appropriate arrangements for the
payment to the Company (or its Subsidiary, as applicable) in cash or by delivery of a certified
or bank cashier check, or by any other means of payment approved by the Administrator, of the
amount which the Company (or its Subsidiary, as applicable) is required to withhold under
applicable law in connection with the exercise of the New Option.
5
Section 2.6 Conditions to Issuance of Stock Certificates. The Administrator may, in good
faith in the reasonable exercise of its discretion, take whatever additional actions it deems
appropriate to effect compliance by the Company and the Optionee with the Securities Act, Exchange
Act and any other federal or state securities laws or regulations, including, without limitation,
placing legends on share certificates. A certificate of shares will be delivered to the Optionee
at the Company’s principal place of business following the receipt by the Company of the executed
documents and payments referenced in Section 2.5, unless an earlier date is agreed upon.
Notwithstanding the above, the Company shall not be required to issue or deliver any certificate or
certificates for Shares purchased prior to (i) the Company obtaining any approval or other
clearance from any state or federal governmental agency which the Administrator shall, in good
faith, in the reasonable exercise of its discretion, determine to be necessary or advisable and
(ii) the Optionee filing a Section 83(b) election with the Internal Revenue Service within
thirty (30) days following each purchase of Shares. If the Optionee fails to make such 83(b)
election, the applicable portion of the New Option shall be deemed to not have been exercised and
no Shares will be issued to the Optionee.
ARTICLE III
OTHER PROVISIONS
OTHER PROVISIONS
Section 3.1 Optionee Representation; Not a Contract of Service. The Optionee
hereby represents that the Optionee’s execution of this Agreement and participation in the Plan is
voluntary and that the Optionee has in no way been induced to enter into this Agreement in exchange
for or as a requirement of the expectation of service with the Company or any of its Subsidiaries.
Nothing in this Agreement or in the Plan shall confer upon the Optionee any right to continue as an
Officer of the Company, or shall interfere with or restrict in any way the rights of the Company or
its Subsidiaries, which are hereby expressly reserved, to discharge the Optionee at any time for
any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in
a written employment or other agreement between the Officer and the Company or any of its
Subsidiaries.
Section 3.2 Shares Subject to Plan and Stockholders Agreement; Restrictions on the
Transfer of New Option and Company Common Stock. The Optionee acknowledges that this Company
Special Stock, this New Option and any Shares acquired upon exercise of the New Option are subject
to the terms of the Plan and the Stockholders Agreement including, but not limited to, the transfer
restrictions, the option conversion and cash payment provisions set forth in Section 6(g) of the
Plan, the share repurchase provisions set forth in Section 10 of the Plan, and the conversion
provisions set forth in Section 13 of the Plan.
Section 3.3 Registration Legend. The Company may postpone the issuance and
delivery of Company Common Stock upon any exercise of the New Options until such Shares may be
issued in compliance with any applicable state or federal law, rule, or regulation. The Optionee
shall make such representations and furnish such information as may, in the opinion of counsel for
the Company, be appropriate to permit the Company, in light of the then existence or non-existence
with respect to such Shares of an effective Registration Statement under the Securities Act of
1933, as amended from time to time, to issue the Company Common Stock in compliance with the
provisions of that or any comparable act.
6
The Company may cause the following or a similar legend to be set forth on each certificate
representing Company Common Stock or any other security issued or issuable upon exercise of the New
Option unless counsel for the Company is of the opinion as to any such certificate that such legend
is unnecessary:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND SAID LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
THEREOF.”
“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN
THE EXPLORER HOLDING CORPORATION OFFICERS’ ROLLOVER STOCK PLAN AND A
STOCKHOLDERS AGREEMENT BETWEEN THE ISSUER AND THE STOCKHOLDERS OF
THE ISSUER, DATED AS OF JULY 30, 2008. A COPY OF SUCH AGREEMENTS
SHALL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF
UPON WRITTEN REQUEST.”
Section 3.4 Construction. This Agreement shall be administered, interpreted and
enforced under the laws of the State of Delaware regardless of the application of rules of conflict
of law that would apply the laws of any other jurisdiction.
Section 3.5 Conformity to Securities Laws. The Optionee acknowledges that the Plan
is intended to conform to the extent necessary with all provisions of the Securities Act and the
Exchange Act and any and all regulations and rules promulgated thereunder by the Securities and
Exchange Commission. Notwithstanding anything herein to the contrary, the Plan, the Stockholders
Agreement and this Agreement shall be administered, and the New Option is granted and may be
exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent
necessary to conform to such laws, rules and regulations.
Section 3.6 Amendment, Suspension and Termination. The New Option may be wholly or
partially amended or otherwise modified, suspended or terminated at any time or from time to time
by the Administrator or the Board, provided that, except as provided by Section 9 of the Plan,
neither the amendment, modification, suspension nor termination of this Agreement (including the
Grant Notice) shall, without the consent of the Optionee or Shareholder Approval,
materially alter or impair any rights or obligations under the New Option.
Section 3.8 Withholding Taxes. In addition to any rights or obligations with
respect to Withholding Taxes under this Agreement or the Plan, the Company shall have the right to
7
withhold from the Optionee, or otherwise require the Optionee or an assignee to pay, any
Withholding Taxes arising as a result of exercise of the New Option, or any other taxable event
occurring pursuant to the Plan or this Agreement, including, but not limited to, to the extent
permitted by law, the right to deduct any such Withholding Taxes from any payment of any kind
otherwise due to the Optionee or to take such other actions (including, but not limited to,
withholding any Shares or cash deliverable pursuant to the Plan or this Agreement) as may be
necessary to satisfy such Withholding Taxes; provided, however, that in the event
that the Company withholds Shares issuable to the Optionee upon the exercise of the Option (or any
portion thereof)) to satisfy the Withholding Taxes, the Company shall withhold a number of whole
Shares having a Fair Market Value, determined as of the date of exercise, not in excess of the
minimum of tax required to be withheld by law (or such lower amount as may be necessary to avoid
liability award accounting). The Optionee shall be responsible for all Withholding Taxes and other
tax consequences of this New Option and grant of Company Special Voting Stock.
Section 3.9 Miscellaneous.
(a) The Optionee shall not be, nor have any of the rights or privileges of, a stockholder of
the Company in respect of any Company Special Stock or Shares purchasable upon the exercise of any
part of the New Option unless and until certificates representing such Company Special Stock or
Shares have been issued by the Company to such Optionee.
(b) This Agreement shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or United States or foreign securities exchanges as may
be required.
(c) This Agreement shall be governed by the laws of the State of Delaware, excluding any
conflicts or choice of law rule or principle that might otherwise refer construction or
interpretation of this Agreement to the substantive law of another jurisdiction.
(d) All obligations of the Company under this Agreement and the Plans, with respect to the New
Option, shall be binding on any successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company.
(e) In the event any provision of this Agreement shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of this Agreement, and
this Agreement shall be construed and enforced as if the illegal or invalid provision had not been
included.
(f) This Agreement, together with the Plan and the Stockholders Agreement, constitutes the
entire agreement and understanding between the Optionee and the Company with
respect to the subject matter hereof and shall supersede any and all other prior agreements
and understandings, whether oral or written, relating thereto or to the Old Rights or BAH Shares
granted pursuant to the Prior Plan cancelled in exchange for Company Shares granted pursuant to
this Agreement.
8
Exhibit 10.10
EQUITY INCENTIVE PLAN OF
EXPLORER HOLDING CORPORATION
FORM OF STOCK OPTION AGREEMENT
GRANT NOTICE
Unless otherwise defined herein, the terms defined in the Equity Incentive Plan of Explorer Holding
Corporation (the “Plan”) shall have the same defined meanings in this Stock Option
Agreement, which includes the terms in this Grant Notice (the “Grant Notice”) and
Appendix A attached hereto (collectively, the “Agreement”).
You have been granted an Option to purchase Company Common Stock of the Company, subject to the
terms and conditions of the Plan and this Agreement, as follows:
Name of Optionee:
|
«Name» | |
Total Number of Shares |
||
Subject to the Option:
|
«Shares» | |
Exercise Price per Share:
|
$___ | |
Grant Date: |
||
Type of Option:
|
Non-Qualified Stock Option | |
Final Expiration Date: |
||
Vesting Schedule:
|
This Option will vest and become exercisable in accordance with the vesting schedule set forth in Appendix A, depending on the classification of the Option as follows: | |
| Time Option: «Time Shares» | ||
| Performance Option: «Performance Shares» |
1
Your grant of this Option and, if applicable, the issuance of any Shares upon the exercise of this
Option shall be subject to your execution of the Stockholders Agreement.
Your signature below indicates your agreement and understanding that this Option is subject to all
of the terms and conditions contained in the Agreement (including this Grant Notice, Appendix
A , Appendix B, and Appendix C to the Agreement), the Plan and the Stockholders
Agreement. ACCORDINGLY, PLEASE BE SURE TO READ ALL OF THE PLAN, APPENDIX A, APPENDIX B AND
APPENDIX C WHICH CONTAIN THE SPECIFIC TERMS AND CONDITIONS OF THIS OPTION.
| EXPLORER HOLDING CORPORATION | OPTIONEE | ||||
| By | |||||
| Name: | |||||
| Title: | |||||
2
APPENDIX A TO STOCK OPTION AGREEMENT
ARTICLE I.
GRANT OF OPTION
GRANT OF OPTION
Section 1.1 Grant of Option. The Company hereby grants to the Optionee
the Option to purchase any part or all of an aggregate of the Shares set forth in the Grant Notice
pursuant to which this Appendix is attached, upon the terms and conditions set forth in the Plan
and this Agreement (including the Grant Notice, this Appendix and Appendix B). The
Optionee hereby agrees that, except as required by law, he or she will not disclose to any Person
other than the Optionee’s spouse and/or tax or financial advisor (if any) the grant of the Option
or any of the terms or provisions hereof without prior approval from the Administrator.
Section 1.2 Option Subject to Plan. The Option granted hereunder is
subject to the terms and provisions of the Plan, including, but not limited to, Article V and
Article VIII thereof.
Section 1.3 Exercise Price. The Exercise Price of the Shares covered by
the Option shall be the Exercise Price per Share as set forth in the Grant Notice (without
commission or other charge).
ARTICLE II.
VESTING SCHEDULE; EXERCISABILITY
VESTING SCHEDULE; EXERCISABILITY
Section 2.1 Vesting and Exercisability of the Time Option.
(a) Vesting. Except as provided below, the Time Option shall become vested and exercisable,
so long as the Optionee remains continuously in service as a Service Provider, from the date hereof
through each relevant date set forth below, as follows:
(i) 20% of the Time Option shall become vested and exercisable on ___, 20___;
(ii) 20% of the Time Option shall become vested and exercisable on ___, 20___;
(iii) 20% of the Time Option shall become vested and exercisable on ___, 20___;
(iv) 20% of the Time Option shall become vested and exercisable on ___, 20___; and
(v) 20% of the Time Option shall become vested and exercisable on ___, 20___.
(b) Liquidity Event Vesting. Any Time Option shall become fully vested and exercisable
immediately prior to the effective date of the first Liquidity Event.
(c) Discretionary Vesting. The Administrator in its sole discretion may accelerate the
vesting of any portion of the Time Option that does not otherwise vest pursuant to this Section
2.1.
Section 2.2 Vesting and Exercisability of the Performance Option.
(a) Performance Based Vesting. Subject to the provisions set forth below, the Performance
Option shall vest and become exercisable as follows: 20% of the Performance
3
Option
shall vest and become exercisable on ___ of each year beginning on ___, 20___
and ending on ___, 20___ if, in each case, on such date (or, if the audited financial statements
for the Company have not been finalized by such date, within 30 days thereafter), the Administrator
determines that the following conditions are met as of the end of the immediately preceding Fiscal
Year (each such Fiscal Year through Fiscal Year 20___, an “Applicable Year” and, such
vesting, the “Yearly Performance Based Vesting”):
(i) If EBITDA for the Applicable Year equals or exceeds the EBITDA Target for the
Applicable Year, then 65% of such installment (consisting of 13% of the Performance Option)
shall become vested and exercisable (“EBITDA Vesting”) and if the EBITDA for the
Applicable Year is less than 90% of the EBITDA Target for the Applicable Year, then 65% of
such installment (consisting of 13% of the Performance Option) shall terminate and shall not
become exercisable; and
(ii) If the Cumulative Cash Flow for the Applicable Year equals or exceeds the
Cumulative Cash Flow Target for such Applicable Year, then the remaining 35% of such
installment (consisting of 7% of the Performance Option) shall become vested and exercisable
(“Cumulative Cash Flow Vesting”). In addition, if the Cumulative Cash Flow for an
Applicable Year equals or exceeds the Cumulative Cash Flow Target for such Applicable Year,
any portion of the Performance Option subject to Cumulative Cash Flow Vesting that did not
vest and become exercisable with respect to a prior Applicable Year shall become vested and
exercisable on the ___ following such Applicable Year for which the Cumulative Cash Flow
Target is achieved. Any Performance Option subject to Cumulative Cash Flow Vesting that has
not vested as of ___, 20___ shall terminate and shall not become exercisable.
(b) Catch-up Vesting. Except as provided below, the Performance Option subject to EBITDA
Vesting which would otherwise fail to become vested and exercisable in accordance with Section
2.2(a)(i) shall be eligible for vesting in accordance with this Section 2.2(b). If EBITDA for the
Applicable Year is less than the EBITDA Target for such Applicable Year but at least 90% of the
EBITDA Target for such Applicable Year (the “EBITDA Missed Year”), that portion of the
Performance Option that was subject to EBITDA Vesting with respect to the EBITDA Missed Year shall
become exercisable on the ___ following the first Fiscal Year or second Fiscal Year thereafter,
(or in the event the EBITDA Missed Year is Fiscal Year 20___, ___, 20___) (any such year, the
“EBITDA Cumulative Catch Up Year”) if, on such date (or, if the audited financial
statements for the Company have not been finalized by such date, within 30 days thereafter), the
Administrator determines that in the EBITDA Cumulative Catch Up Year: (i) EBITDA equals or exceeds
the EBITDA Target for the EBITDA Cumulative Catch Up Year; and (ii) the Cumulative EBITDA equals or
exceeds the Cumulative EBITDA Target for the EBITDA Cumulative Catch Up Year, and any Performance
Option subject to EBITDA Vesting that does not vest as of
___ of the Fiscal Year after the
final EBITDA Cumulative Catch Up Year with respect to such Option shall terminate and shall not
become exercisable.
(c) Liquidity Event Vesting. Any Performance Option that is scheduled to vest and become
exercisable with respect to any Applicable Year ending after the effective date of the first
Liquidity Event but that have not yet become vested and exercisable as of the occurrence of the
first Liquidity Event (including, without limitation, any Performance Option that remains subject
to catch up vesting pursuant to Section 2.2(a)(ii) or 2.2.(b)), shall, immediately prior to the
effective date of such Liquidity Event, automatically become vested and exercisable in full if the
Administrator determines that, as of the effective date of the Liquidity Event, (i) the Internal
4
Rate of Return is equal to or greater than 25% or (ii) the Investment Proceeds are at least
2.5 times the Invested Capital and, except with respect to any Liquidity Event described in Section
4.21(b), based solely on the Invested Capital and Investment Proceeds with respect to the equity
securities (as such securities may be adjusted for the occurrence of a Corporate Event) received by
the Principal Stockholders in respect of their Invested Capital that are or have been sold or
otherwise disposed of by the Principal Stockholders prior to and in such Liquidity Event. Any
Performance Option that does not vest upon the occurrence of a Liquidity Event shall, subject to
Section 2.2(e), continue to vest in accordance with Sections 2.2(a) and 2.2(b) above.
(d) Discretionary Vesting. The Administrator in its sole discretion may accelerate the
vesting of any portion of the Performance Option that does not otherwise vest pursuant to this
Section 2.2.
(e) Liquidity Event Payments. In connection with a Liquidity Event, the Board or
Administrator (as constituted immediately prior to the Liquidity Event) in its sole discretion may
determine that (i) each Option shall, to the extent it has not or will not by its terms vest before
or in connection with such Liquidity Event, be canceled, provided, however, that this clause (i)
shall not apply in the event the Liquidity Event is a Public Offering, and/or (ii) each vested
Option (including any Option that becomes vested as a result of such Liquidity Event) shall be
canceled in exchange for a payment for each vested Option in an amount or with a value equal to the
number of Shares covered by such vested Option times the excess, if any, of the per Share
Investment Proceeds received by the Principal Stockholders in such Liquidity Event over any
applicable Option Price for such Option.
Section 2.3 Administrator Determination of Targets. The Administrator
shall make the determination as to whether the respective EBITDA Targets, Cumulative EBITDA Targets
and Cumulative Cash Flow Targets, have been met, and shall determine the extent, if any, to which
the Option has become exercisable, on any such date as the Administrator in its sole discretion
shall determine; provided, however, that with respect to each Fiscal Year such date shall not be
later than the 120th day following the end of such Fiscal Year.
Section 2.4 No Vesting of the Option. Notwithstanding anything to the
contrary in this Agreement, any portion of the Option that has not become vested pursuant to
Sections 2.1 or 2.2 on or prior to the date of the Optionee’s termination of service as a Service
Provider or, if earlier, the date on which the Service Provider enters into a transition phase to
cease employment with the Company, shall be forfeited and shall not thereafter become vested or
exercisable; provided, however, that any portion of the Option that was scheduled to vest or may
vest under a catch-up vesting provision based on the achievement of performance goals at the end of
the fiscal year prior to the year of such termination of service as a Service Provider or entrance
into the transition phase to cease employment with the Company (the “Final Performance
Option”) shall remain outstanding if the Administrator has not determined whether the
performance goals have been achieved for the fiscal year in question, unless the Optionee is
terminated for Cause, until the date that the Administrator determines whether such performance
goals have been achieved for the fiscal year in question; provided, further, that the Final
Performance Option shall in no event become vested and exercisable unless it is determined by the
Administrator that such performance goals were actually achieved for the fiscal year in question (a
“Final Performance Goal Determination”). The Final Performance Option that do not become
vested and exercisable shall be forfeited on the date of the Final Performance Goal Determination
and the Final Performance Option that become vested and exercisable shall remain exercisable as
provided in Section 2.6.
5
Section 2.5 Exercisability of the Option. The Optionee shall not have
the right to exercise the Option until the date the applicable portion of the Option becomes vested
pursuant to Sections 2.1, 2.2, or 2.3. The date that the applicable portion of the Option becomes
exercisable is referred to herein as the “Exercise Commencement Date.” Subject to Section
8.1 of the Plan, following the Exercise Commencement Date, the applicable portion of the Option
shall remain exercisable until it becomes unexercisable under Section 2.6. Once the Option becomes
unexercisable, it shall be forfeited immediately.
Section 2.6 Expiration of Option.
(a) The Option may not be exercised to any extent by anyone after the first to occur of the
following events:
(i) The Final Expiration Date;
(ii) Except for such longer period of time as the Administrator may otherwise approve,
in the event of a termination of the Optionee’s service as a Service Provider for any reason
other than Cause, death or Disability, the later of (i) sixty (60) days following the date
of the Optionee’s termination of service as a Service Provider for any reason other than
Cause, death or Disability, or (ii) with respect to the Final Performance Option, sixty (60)
days following the Final Performance Goal Determination, in which case such Final
Performance Option may become Non-Qualified Stock Option;
(iii) Except as the Administrator may otherwise approve, the date that the Company
terminates the Optionee’s service as a Service Provider for Cause; or
(iv) Except for such longer period of time as the Administrator may otherwise approve,
twelve (12) months following the Optionee’s termination of service as a Service Provider by
reason of the Optionee’s death or Disability.
(b) If, pursuant to the terms of the Stockholders Agreement, the Company has a right to
repurchase the Optionee’s Option and/or Shares, the Company may exercise such call right regardless
of whether the Optionee continues to have a right to exercise the Option under Section 2.6.
(c) For the purposes of the Plan and this Agreement, the date of the Optionee’s termination of
service as a Service Provider shall be the last day that the Optionee provided service as a Service
Provider, as determined by the Administrator, whether such day is selected by agreement with the
Optionee or unilaterally by the Company or its Subsidiaries and whether with or without advance
notice. For the avoidance of doubt, except as expressly provided in Section 2.4, no period of
notice that is given or that ought to have been given to the Optionee under applicable law in
respect of such termination of service as a Service Provider will be utilized in determining
entitlement under the Plan, the Stockholders Agreement or this Agreement. Any action by the
Company or its Subsidiaries taken in accordance with the terms of the Plan and this Agreement as
set out aforesaid shall be deemed to fully and completely satisfy any liability or obligation of
the Company or its Subsidiaries to the Optionee in respect of the Plan or this Agreement arising
from or in connection with the Optionee’s termination of service as a Service Provider, including
in respect of any period of notice given or that ought to have been given under applicable law in
respect of such termination of service as a Service Provider.
Section 2.7 Partial Exercise. Any exercisable portion of the Option or
the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time
prior to the time when the Option or portion thereof becomes unexercisable.
6
Section 2.8 Exercise of Option. The exercise of the Option shall be
governed by the terms of this Agreement and the terms of the Plan, including, without limitation,
the provisions of Article V of the Plan.
Section 2.9 Manner of Exercise; Tax Withholding.
(a) Unless determined otherwise by the Administrator, as a condition to the exercise of the
Option, the Optionee shall (i) notify the Company at least thirty (30) days prior to exercise and
no earlier than ninety (90) days prior to exercise that the Optionee intends to exercise, (ii)
concurrently with the exercise of the Option, execute the Stockholders Agreement, unless the
Optionee has already executed the Stockholders Agreement, and (iii) provide the Company with
payment of the Exercise Price of the Option, together with any Withholding Tax payment required by
Section 3.10 below, which shall be payable to the Company in full as set forth in Section 2.9(b) or
Section 2.9(c) below, as applicable; provided that the provisions of clauses (i) and (ii) of this
Section 2.9(a) shall not apply if the Shares underlying the Option are registered on Form S-8.
(b) To the extent permitted by law or the applicable listing rules, if any, the Optionee may
pay for the Shares with respect to which such Option or portion of such Option is exercised through
(i) payment in cash; (ii) with the consent of the Administrator, the delivery of Shares which are
owned by the Optionee, duly endorsed for transfer to the Company with a Fair Market Value on the
date of delivery equal to the aggregate Exercise Price of the exercised portion of the Option;
(iii) with the consent of the Administrator, through the surrender of Shares then issuable upon
exercise of the Option having a Fair Market Value on the date of the exercise of the Option equal
to the aggregate Exercise Price of the exercised portion of the Option; or (iv) with the consent of
the Administrator, delivery of a notice that the Optionee has placed a market sell order with a
broker with respect to Shares then-issuable upon exercise of the Option, and that the broker has
been directed to pay a sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the aggregate Exercise Price; provided, that payment of such proceeds is then made
to the Company upon settlement of such sale. Notwithstanding the foregoing, the consent of the
Administrator shall not be required with respect to clauses (iii) and (iv) of this subsection
2.9(b) if the Optionee exercises such Option on or after the date of the Optionee’s Retirement.
(c) As a condition to exercise, the Optionee must make appropriate arrangements for the
payment to the Company (or its Subsidiary, as applicable) in cash or by delivery of a certified or
bank cashier check, or by any other means of payment approved by the Administrator, of the amount
which the Company (or its Subsidiary, as applicable) is required to withhold under applicable law
in connection with the exercise of the Option. With the consent of the Administrator and subject
to any applicable legal conditions or restrictions, the Company shall, upon the Optionee’s request,
withhold from the Shares issuable to the Optionee upon the exercise of the Option (or any portion
thereof) a number of whole Shares having a Fair Market Value, determined as of the date of
exercise, not in excess of the minimum of tax required to be withheld by law (or such lower amount
as may be necessary to avoid liability award accounting). Any adverse consequences to the Optionee
arising in connection with the Share withholding procedure set forth in the preceding sentence
shall be the sole responsibility of the Optionee
ARTICLE III.
OTHER PROVISIONS
OTHER PROVISIONS
Section 3.1 Optionee Representation; Not a Contract of Service. The
Optionee hereby represents that the Optionee’s execution of this Agreement and participation in the
Plan is
7
voluntary and that the Optionee has in no way been induced to enter into this Agreement in exchange
for or as a requirement of the expectation of service with the Company or any of its Subsidiaries.
Nothing in this Agreement or in the Plan shall confer upon the Optionee any right to continue as a
Service Provider, or shall interfere with or restrict in any way the rights of the Company or its
Subsidiaries, which are hereby expressly reserved, to discharge the Optionee at any time for any
reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a
written employment or other agreement between the Optionee and the Company or any of its
Subsidiaries.
Section 3.2 Notification of Disposition. To the extent the transfer of
Shares is permitted under the Plan, this Agreement and the Stockholders Agreement, the Optionee
shall give prompt notice to the Company of any disposition or other transfer of any Shares acquired
under this Agreement if such disposition or transfer is made (a) within two (2) years from the date
hereof with respect to such Shares or (b) within one (1) year after the date the Optionee acquired
such Shares hereunder. Such notice shall specify the date of such disposition or other transfer
and the amount realized, in cash, other property, assumption of indebtedness or other
consideration, by the Optionee in such disposition or other transfer.
Section 3.3 Shares Subject to Plan and Stockholders Agreement; Restrictions
on the Transfer of Option and Company Common Stock. The Optionee acknowledges that this Option
and any Shares acquired upon exercise of the Option are subject to the terms of the Plan and the
Stockholders Agreement including, without limitation, the restrictions set forth in Sections 5.6
and 5.7 of the Plan, Section 2 of the Stockholders Agreement and the repurchase and other
provisions set forth in Section 8 of the Stockholders Agreement.
Section 3.4 Registration Legend. The Company may postpone the issuance
and delivery of Company Common Stock upon the exercise of the Option until such Shares may be
issued in compliance with any applicable state or federal law, rule or regulation. The Optionee
shall make such representations and furnish such information as may, in the opinion of counsel for
the Company, be appropriate to permit the Company, in light of the then existence or non-existence
with respect to such Shares of an effective Registration Statement under the Securities Act of
1933, as amended from time to time, to issue the Company Common Stock in compliance with the
provisions of that or any comparable act.
The Company may cause the following or a similar legend to be set forth on each certificate
representing Company Common Stock or any other security issued or issuable upon exercise of the
Option unless counsel for the Company is of the opinion as to any such certificate that such legend
is unnecessary:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND SAID LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
THEREOF.”
8
“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN
THE EQUITY INCENTIVE PLAN OF EXPLORER HOLDING CORPORATION AND A
STOCKHOLDERS AGREEMENT BETWEEN THE ISSUER AND THE STOCKHOLDERS OF
THE ISSUER, DATED AS OF JULY 30 2008. A COPY OF SUCH PLAN AND
AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE
HOLDER HEREOF UPON WRITTEN REQUEST.”
Section 3.5 Construction. This Agreement shall be administered,
interpreted and enforced under the laws of the State of Delaware.
Section 3.6 Conformity to Securities Laws. The Optionee acknowledges
that the Plan is intended to conform to the extent necessary with all provisions of the Securities
Act and the Exchange Act and any and all regulations and rules promulgated thereunder by the
Securities and Exchange Commission, including without limitation Rule 16b-3. Notwithstanding
anything herein to the contrary, the Plan, the Stockholders Agreement and this Agreement shall be
administered, and the Option is granted and may be exercised, only in such a manner as to conform
to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this
Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and
regulations.
Section 3.7
Adjustments in EBITDA and Cumulative Cash Flow Targets. The
EBITDA Targets (including the Cumulative EBITDA Targets) and the Cumulative Cash Flow Targets
specified in Appendix B (collectively the “Financial Targets”) are based upon (i) certain
revenue and expense assumptions about the future business of the Company, (ii) a model agreed to by
the management of the Company for the projected financial performance of the Company, which
incorporates the desired internal rate of return on the investment by the Principal Stockholders in
debt and equity securities or instruments of the Company and its Subsidiaries, and (iii) the
continued application of accounting policies used by the Company as of the date the Option is
granted. Accordingly, in the event that, after such date, any acquisition or disposition of any
significant business or assets by the Company, any reorganization, merger, consolidation, split-up,
spin-off or combination, any major capital investment program or any changes in generally accepted
accounting principles related to equity-based compensation or promulgated by accounting standards
applicable to the Company (or the accounting policies used by the Company) (if such accounting
standards or policies materially affected the assumptions used in determining the initial Financial
Targets), occurs, or the Company utilizes capital leases or other financial mechanisms other than
operating leases for the purchase of property, plant and equipment, (each, a “Corporate
Transaction”), that is reasonably expected to materially affect EBITDA or Cash Flow, the EBITDA
Target for such year and the Cumulative EBITDA Target and Cumulative Cash Flow Target for such year
and subsequent years, as applicable, will be adjusted, fairly and appropriately, by the amount
determined by the Administrator, in the exercise of its good faith judgment, after consultation
with the Company’s Chief Executive Officer and accountants, to be reasonably necessary to
accurately reflect the expected direct and measurable effect such event has on such Financial
Targets. In the event of any Corporate Transaction, such adjustment shall reflect the change in
EBITDA and/or Cash Flow resulting
9
from such Corporate Transaction as presented to the Board or other decision-making party at the
time the Corporate Transaction is approved by the Board or other decision making party. The intent
of such adjustments is to keep the probability of achieving the Financial Targets the same as if
the event triggering such adjustment had not occurred. The Administrator’s determination of such
necessary adjustment shall be made within 60 days following the completion or closing of the
Corporate Transaction, and shall be based on the Company’s accounting as set forth in its books and
records and in accordance with its financial statements (prepared in accordance with applicable
generally accepted accounting principles) and on the Company’s financial plan pursuant to which the
applicable Financial Targets were originally established. All determinations and adjustments made
by the Administrator in good faith pursuant to this Section 3.7 shall be final and binding on the
Company and the Optionee.
Section 3.8 Amendment, Suspension and Termination. The Option may be
wholly or partially amended or otherwise modified, suspended or terminated at any time or from time
to time by the Administrator or the Board, provided that, except as provided by Section 8.1 of the
Plan, neither the amendment, modification, suspension nor termination of this Agreement (including
the Grant Notice) shall, without the consent of the Optionee, materially alter or impair any rights
or obligations under the Option.
Section 3.9 Data Privacy Consent. As a condition of the Option grant if
the Optionee is a Non-U.S. Optionee, the Optionee explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of personal data as described in this
paragraph by and among, as applicable, the Company and its Subsidiaries and Affiliates for the
exclusive purpose of implementing, administering and managing the Optionee’s participation in the
Plan. The Optionee understands that the Company and its Subsidiaries and Affiliates hold certain
personal information about the Optionee, including the Optionee’s name, home address and telephone
number, date of birth, social insurance number or other identification number, salary, nationality,
job title, any shares of stock or directorships held in the Company, details of all restricted
stock or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or
outstanding in the Optionee’s favor, for the purpose of implementing, managing and administering
the Plan (the “Data”). The Optionee further understands that the Company and its
Subsidiaries and Affiliates may transfer the Data amongst themselves as necessary for the purpose
of implementation, administration and management of the Optionee’s participation in the Plan, and
that the Company and its Subsidiaries and Affiliates may each further transfer the Data to any
third parties assisting the Company in the implementation, administration and management of the
Plan. The Optionee understands that these recipients may be located in the Optionee’s country, or
elsewhere, and that the recipient’s country may have different data privacy laws and protections
than the Optionee’s country. The Optionee understands that he or she may request a list with the
names and addresses of any potential recipients of the Data by contacting his or her local human
resources representative. The Optionee authorizes such recipients to receive, possess, use, retain
and transfer the Data, in electronic or other form, for the purposes of implementing, administering
and managing the Optionee’s participation in the Plan, including any requisite transfer of such
Data as may be required to a broker or other third party with whom the Optionee may elect to
deposit any Shares. The Optionee understands that the Data will be held only as long as is
necessary to implement, administer, and manage the Optionee’s participation in the Plan. The
Optionee understands that he or she may, at any time, view the Data, request additional information
about the storage and processing of the Data, require any necessary amendments to the Data, or
refuse or withdraw the consents herein in writing, in any
10
case without cost, by contacting his or her local human resources representative. The Optionee
understands that refusal or withdrawal of consent may affect the Optionee’s ability to participate
in the Plan. For more information on the consequences of refusal to consent or withdrawal of
consent, the Optionee understands that he or she may contact his or her local human resources
representative.
Section 3.10 Withholding Taxes. In addition to any rights or obligations
with respect to Withholding Taxes under this Agreement or the Plan, the Company shall have the
right to withhold from the Optionee, or otherwise require the Optionee or an assignee to pay, any
Withholding Taxes arising as a result of exercise of the Option, or any other taxable event
occurring pursuant to the Plan or this Agreement, including, but not limited to, to the extent
permitted by law, have the right to deduct any such Withholding Taxes from any payment of any kind
otherwise due to the Optionee or to take such other action (including, but not limited to,
withholding Shares or cash deliverable pursuant to the Plan or any Option) as may be necessary to
satisfy such Withholding Taxes; provided, however, that in the event that the
Company withholds Shares issuable to the Optionee upon the exercise of the Option (or any portion
thereof) to satisfy the Withholding Taxes, the Company shall withhold a number of whole Shares
having a Fair Market Value, determined as of the date of exercise, not in excess of the minimum of
tax required to be withheld by law (or such lower amount as may be necessary to avoid liability
award accounting). The Optionee shall be responsible for all Withholding Taxes and other tax
consequences of this Award.
Section 3.11 Miscellaneous.
(a) The Optionee shall have no rights as a stockholder of the Company with respect to the
shares of Company Common Stock subject to this Agreement until such time as the purchase price has
been paid and the other requirements of Section 2.9 above have been satisfied, and the shares of
Company Common Stock have been issued and delivered to the Optionee.
(b) This Agreement shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or United States or foreign securities exchanges as may
be required.
(c) This Agreement shall be governed by the laws of the State of Delaware regardless of the
application of rules of conflict of law that would apply the laws of any other jurisdiction.
(d) All obligations of the Company under this Agreement and the Plan, with respect to the
Option, shall be binding on any successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company.
(e) In the event any provision of this Agreement shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of this Agreement, and
this Agreement shall be construed and enforced as if the illegal or invalid provision had not been
included.
11
(f) By executing this Agreement, the Optionee hereby consents to the delivery of information
(including, without limitation, information required to be delivered to the Optionee pursuant to
applicable securities laws) regarding the Company and the Subsidiaries, the Plan, and the Options
via the Company web site or other electronic delivery.
ARTICLE IV.
DEFINITIONS
DEFINITIONS
Whenever the following terms are used in this Agreement (including the Grant Notice), they
shall have the meaning specified below unless the context clearly indicates to the contrary.
Capitalized terms used in this Agreement and not defined below shall have the meaning given such
terms in the Plan. The singular pronoun shall include the plural, where the context so indicates.
Section 4.1 “Adjusted Working Capital” as of any given date shall mean
(i) accounts receivable (net) less (ii) accounts payable, less (iii) other accrued expenses, all as
reflected on the Company’s audited consolidated balance sheet as of such date.
Section 4.2 “Cash Flow” for a given Fiscal Year shall mean (i) EBITDA for
such Fiscal Year less (ii) the increase in Adjusted Working Capital in such Fiscal Year (which may
be a positive or a negative number) less (iii) any overruns in the annual budget for capital
expenditures in the financial plan approved by the Board of Directors for that Fiscal Year.
Section 4.3 “Company” shall mean Explorer Holding Corporation, a Delaware
corporation.
Section 4.4 “Company Sale” shall mean the consummation of any transaction
or series of transactions (including, without limitation, any merger, recapitalization,
reorganization, sale of stock or other similar transaction) pursuant to which one or more Persons
or group of Persons (other than any Principal Stockholder) acquires shares of common stock of the
Company possessing the voting power (without taking into account the Stockholders Agreement or any
other agreement or proxy limiting the voting power of the holder of such securities) sufficient to
elect a majority of the members of the Board or the board of directors of the successor to the
Company.
Section 4.5 “Cumulative Cash Flow” as of a given date shall mean the
total Cash Flow from and after April 1, 20___ through such date. In determining whether Cash Flow
targets have been met, the Administrator shall take into account any large, unusual non-recurring
capital expenditures approved by the Board of Directors.
Section 4.6 “Cumulative Cash Flow Target” for any given year shall be as
set forth in Appendix B of this Agreement, adjusted as provided in Appendix B and subject to the
provisions of Section 3.7, determined as provided in Section 4.5.
Section 4.7
“EBITDA” for a given Fiscal Year shall have the meaning set
forth in Appendix C.
Section 4.8 “Cumulative EBITDA” as of a given date shall mean the total
EBITDA from and after April 1, 20___ through such date.
Section 4.9 “EBITDA Target” and “Cumulative EBITDA Target” for
any given year shall be as set forth in Appendix B of this Agreement, subject to the
provisions of Section 3.7.
Section 4.10 “Effective Date” shall mean July 31, 2008.
Section 4.11 “Exchange Act” shall mean the Securities and Exchange Act of
1934, as amended.
12
Section 4.12 “Exercise Price” shall mean the per Share price set forth in
the Grant Notice, as may be adjusted pursuant to the Plan.
Section 4.13 “Fiscal Year” shall mean the fiscal year of the Company, as
in effect from time to time.
Section 4.14 “Final Expiration Date” shall mean the date set forth in the Grant Notice.
Section 4.15 “Grant Date” shall be the date set forth in the Grant Notice
Section 4.16 “Grant Notice” shall mean the Grant Notice referred to in
Section 1.1 of this Agreement, which Grant Notice is for all purposes a part of the Agreement.
Section 4.17 “Initial Investment” shall mean the shares of Company Common
Stock acquired by the Principal Stockholders in connection with their investment in the Company on
the Effective Date.
Section 4.18 “Internal Rate of Return” shall mean the internal rate of
return realized by the Principal Stockholders on the Invested Capital as a result of the Investment
Proceeds realized, or, in the case of any Liquidity Event described in Section 4.21(b), deemed
realized, by the Principal Stockholders, calculated without reduction for any taxes imposed on such
Investment Proceeds and after giving effect to the vesting of any Awards (including any Awards that
vest as a result of the Liquidity Event). The Internal Rate of Return shall be determined in
respect of any Liquidity Event described in Section 4.21(b) as if the Principal Shareholders
liquidated their entire remaining Invested Capital in such Liquidity Event for a price equal to the
fair market value of the remaining Invested Capital on the date of the Liquidity Event, as
reasonably determined by the Administrator. In determining the Internal Rate of Return as of any
date, (a) all Investment Proceeds theretofore received by the Principal Stockholders in respect of
their Invested Capital shall be taken into account, and no other amounts theretofore received by
the Principal Stockholders shall be taken into account, and (b) Investment Proceeds shall be
allocated among each class of securities held by the Principal Stockholders in respect of their
Invested Capital on a pro-rata basis with respect to each class of securities disposed pursuant to
such Liquidity Event. The Administrator shall determine the Internal Rate of Return in good faith.
Section 4.19 “Invested Capital” shall mean the dollar amount paid by the
Principal Stockholders for the Initial Investment and any subsequent investment by the Principal
Stockholders, including any fees and expenses paid by any Principal Stockholder.
Section 4.20 “Investment Proceeds” shall mean the aggregate fair market
value of the consideration received by the Principal Stockholders in respect of their Invested
Capital, net of any management fees and expenses paid or payable to any Principal Stockholder and
any fees or expenses paid or payable to any third party. In connection with a Liquidity Event
described in Section 4.21(b), the Fair Market Value of any equity securities of the Company held by
the Principal Stockholders (as implied by the Liquidity Event) that are not disposed of shall be
treated as Investment Proceeds, but shall not be treated as Investment Proceeds in any other
circumstance.
Section 4.21 “Liquidity Event” shall mean either (a) the consummation of
the sale, transfer, conveyance or other disposition in one or a series of transactions, of the
equity securities of the Company or its successor held, directly or indirectly, by all of the
Principal Stockholders in exchange for cash, or in the case of any transaction resulting in the
exchange for consideration other than cash (“non-cash consideration”) the receipt of cash upon the
disposition of such non-cash consideration, such that immediately following such transaction or
disposition (or series of related transactions or dispositions), the total number of all equity
securities held, directly or indirectly, by all of the Principal Stockholders and any Affiliate of
any Principal Stockholders is,
13
in the aggregate, less than 30% of the total number of equity securities (as such securities may be
adjusted for the occurrence of a corporate event) received by all of the Principal Stockholders and
any Affiliate of any Principal Stockholders in respect of their Invested Capital; (b) the
consummation of any Company Sale in which more than 60% of the consideration to the Principal
Stockholders in such Company Sale is paid in cash or Publicly Traded Securities; or (c) the
consummation of the sale, lease, transfer, conveyance or other disposition (other than by way of
merger, recapitalization, sale of stock, equity purchase or consolidation), in one or a series of
transactions, of all or substantially all of the assets of the Company, or the Company and its
Subsidiaries taken as a whole, to any “person ” (as such term is defined in Section 13(d)(3) of the
Exchange Act) other than to any Principal Stockholders or an Affiliate of any Principal
Stockholders.
Section 4.22 “Option” shall mean the option to purchase Company Common
Stock granted under this Agreement.
Section 4.23 “Optionee” shall be the Person designated as such in the
Grant Notice.
Section 4.24 “Performance Option” shall mean the portion of the Option
designated as a Performance Option in the Grant Notice.
Section 4.25 “Plan” shall mean the Equity Incentive Plan of Explorer
Holding Corporation.
Section 4.26 “Principal Stockholder” means Explorer Coinvest LLC, a
Delaware limited liability company and any of its affiliates to which Explorer Coinvest LLC or any
other Person transfers Company Common Stock or to which the Company issues Company Common Stock.
Section 4.27 “Public Offering” shall mean any sale, conveyance or other
disposition of equity securities by the Principal Stockholders in an underwritten public offering
or effected in, on, or through the facilities of an established securities market.
Section 4.28 “Publicly Traded Securities” means any class of securities
that are readily tradable on an established securities market (or any class of securities that is
immediately convertible into such securities).
Section 4.29 “Retirement” shall have the meaning set forth in the
Company’s Retirement Policy.
Section 4.30 “Securities Act” shall mean the Securities Act of 1933, as amended.
Section 4.31 “Shares” shall mean shares of Company Common Stock.
Section 4.32 “Time Option” shall mean the portion of the Option
designated as a Time Option in the Grant Notice.
Section 4.33 “Withholding Taxes” means any federal, state, local, or
foreign income taxes, withholding taxes, or employment taxes required to be withheld under
Applicable Law.
***
14
APPENDIX B TO STOCK OPTION AGREEMENT
EBITDA AND CUMULATIVE CASH FLOW TARGETS
(US$ Millions)
As of the end of the fiscal year, subject to any applicable adjustments
| Performance Measure | 20__ | 20__ | 20__ | 20__ | 20__ | |||||||||||||||
EBITDA Target |
||||||||||||||||||||
Cumulative EBITDA Target |
||||||||||||||||||||
Cumulative Cash Flow Target
(adjusted as provided in the
following paragraph) |
||||||||||||||||||||
In addition to any adjustments that may be made pursuant to Section 3.7, the Cash Flow Targets
shall be adjusted as follows: (i) in the event that the growth in net revenue in any
relevant Fiscal Year is greater than 12%, the Cash Flow Target with respect to such Fiscal Year
shall be reduced by 3.4% for each 1% of growth in excess of 12% and (ii) in the event that
the growth in net revenue in any relevant Fiscal Year is less than 12%, the Cash Flow Target with
respect to such Fiscal Year shall be increased by 3.4% for each 1% of growth below 12%.
15
APPENDIX C TO STOCK OPTION AGREEMENT
For purposes of this Appendix C, capitalized terms not defined in the Plan or the Agreement
shall have the respective meanings ascribed to such terms in the Credit Agreement, dated as of July
31, 2008, among Explorer Investor Corporation, Explorer Merger Sub Corporation, as the Initial
Borrower, Booz Allen Hamilton Inc. as the Surviving Borrower, the Several Lenders from time to time
parties thereto, Credit Suisse, as Administrative Agent and Collateral Agent, Bank of America,
N.A., as Syndication Agent, Lehman Brothers Commercial Bank and C.I.T. Leasing Corporation and
Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit Suisse, as Issuing Lender and
Banc Of America Securities LLC, Credit Suisse Securities (USA) LLC and Lehman Brothers Inc. as
Joint Lead Arrangers and Joint Bookrunners.
“EBITDA”: of any Person for any period, Consolidated Net Income of such Person and its
Restricted Subsidiaries for such period plus, without duplication and, if applicable, to the extent
reflected as a charge in the statement of such Consolidated Net Income (regardless of
classification) for such period, the sum of:
(a) provisions for taxes based on income (or similar taxes in lieu of income taxes), profits,
capital (or equivalents), including federal, foreign, state, local, franchise, excise and similar
taxes and foreign withholding taxes of such Person paid or accrued during such period;
(b) Consolidated Net Interest Expense and, to the extent not reflected in such Consolidated
Net Interest Expense, any net losses on hedging obligations or other derivative instruments entered
into for the purpose of hedging interest rate risk, amortization or write-off of debt discount and
debt issuance costs and commissions, discounts and other fees and charges associated with
Indebtedness (including commitment, letter of credit and administrative fees and charges with
respect to the Facilities and the Mezzanine Loan Facility);
(c) depreciation and amortization expense and impairment charges (including deferred financing
fees, capitalized software expenditures, intangibles (including goodwill), organization costs and
amortization of unrecognized prior service costs and actuarial gains and losses related to pensions
and other post-employment benefits);
(d) any extraordinary, unusual or non-recurring expenses or losses (including losses on sales
of assets outside of the ordinary course of business and restructuring and integration costs or
reserves, including any severance costs, costs associated with office and facility openings,
closings and consolidations, relocation costs and other non-recurring business optimization
expenses);
(e) any other non-cash charges, expenses or losses (except to the extent such charges,
expenses or losses represent an accrual of or reserve for cash expenses in any future period or an
amortization of a prepaid cash expense paid in a prior period);
16
(f) stock-option based and other equity-based compensation expenses (incurred pursuant to the
Explorer Holding Corporation Officers Rollover Stock Plan, the Equity Incentive Plan of Explorer
Holding Corporation or any new equity incentive plans adopted by the Company);
(g) adjustments related to the impact of the purchase accounting treatment for the
Transactions, including but not limited to accounting for contract award fees and deferred rent;
(h) savings in borrowing costs (i.e. possible reductions in interest expense) associated with
any new deferred compensation programs, including but not limited to the Booz Allen Hamilton Inc.
Executive Performance Plan;
(i) transaction costs, fees, losses and expenses (whether or not any transaction is actually
consummated) (including those relating to the Merger Transactions, the transactions contemplated
hereby and by the Mezzanine Loan Documents (including any amendments or waivers of the Loan
Documents or the Mezzanine Loan Documents), and those payable in connection with the sale of
Capital Stock, the incurrence of Indebtedness permitted by Section 7.2 of the Credit Agreement,
transactions permitted by Section 7.4 of the Credit Agreement, Dispositions permitted by Section
7.5 of the Credit Agreement, or any Permitted Acquisition or other Investment permitted by Section
7.7 of the Credit Agreement (in each case whether or not successful));
(j) all fees and expenses paid pursuant to the Management Agreement;
(k) proceeds from any business interruption insurance (to the extent not reflected as revenue
or income in such statement of such Consolidated Net Income);
(l) cash expenses relating to earn-outs and similar obligations;
(m) charges, losses, lost profits, expenses or write-offs to the extent indemnified or insured
by a third party, including expenses covered by indemnification provisions in any agreement in
connection with the Merger Transactions, a Permitted Acquisition or any other acquisition permitted
by Section 7.7 of the Credit Agreement;
(n) losses recognized and expenses incurred in connection with the effect of currency and
exchange rate fluctuations on intercompany balances and other balance sheet items;
minus, to the extent reflected as income or a gain in the statement of such Consolidated Net Income
for such period, the sum of:
(a) any extraordinary, unusual or non-recurring income or gains (including gains on the sales
of assets outside of the ordinary course of business);
(b) any other non-cash income or gains (other than the accrual of revenue in the ordinary
course), but excluding any such items (i) in respect of which cash was received in a prior period
or will be received in a future period or (ii) which represent the reversal in such period of any
17
accrual of, or reserve for, anticipated cash charges in any prior period where such accrual or
reserve is no longer required, all as determined on a consolidated basis; and
(c) gains realized and income accrued in connection with the effect of currency and exchange
rate fluctuations on intercompany balances and other balance sheet items;
provided that for purposes of calculating EBITDA of the Borrower and its Restricted
Subsidiaries for any period, (A) the EBITDA of any Person or Properties constituting a division or
line of business of any business entity, division or line of business, in each case, acquired by
the Borrower or any of the Restricted Subsidiaries during such period and assuming any synergies,
cost savings and other operating improvements to the extent certified by the Borrower as having
been determined in good faith to be reasonably anticipated to be realizable within 12 months
following such acquisition, or of any Subsidiary designated as a Restricted Subsidiary during such
period, shall be included on a pro forma basis for such period (but assuming the consummation of
such acquisition or such designation, as the case may be, occurred on the first day of such period)
and (B) the EBITDA of any Person or Properties constituting a division or line of business of any
business entity, division or line of business, in each case, Disposed of by the Borrower or any of
the Restricted Subsidiaries during such period, or of any Subsidiary designated as an Unrestricted
Subsidiary during such period, shall be excluded for such period (assuming the consummation of such
Disposition or such designation, as the case may be, occurred on the first day of such period).
With respect to each Subsidiary that is not a wholly-owned Subsidiary or any joint venture, for
purposes of calculating EBITDA, the amount of income attributable to such Subsidiary or joint
venture, as applicable, that shall be counted for such purposes shall equal the product of (x) the
Borrower’s direct and/or indirect percentage ownership of such Subsidiary or joint venture and (y)
the aggregate amount of the applicable item of such Subsidiary or joint venture, as applicable,
except to the extent the application of GAAP already takes into account the non-wholly owned
subsidiary relationship. Notwithstanding the forgoing, EBITDA shall be calculated without giving
effect to the effects of purchase accounting or similar adjustments required or permitted by GAAP
in connection with the Transactions, any Investment (including any Permitted Acquisition) and any
other acquisition or Investment.
18
Exhibit 10.11
EQUITY INCENTIVE PLAN OF
EXPLORER HOLDING CORPORATION
FORM OF STOCK OPTION AGREEMENT
GRANT NOTICE
Unless otherwise defined herein, the terms defined in the Equity Incentive Plan of Explorer Holding
Corporation (the “Plan”) shall have the same defined meanings in this Stock Option
Agreement, which includes the terms in this Grant Notice (the “Grant Notice”) and
Appendix A attached hereto (collectively, the “Agreement”).
You have been granted an Option to purchase Company Common Stock of the Company, subject to the
terms and conditions of the Plan and this Agreement, as follows:
Name of Optionee:
|
«Name» | |
Total Number of Shares |
||
Subject to the Option: |
||
Exercise Price per Share: |
||
Grant Date:
|
20___ | |
Type of Option:
|
Non-Qualified Stock Option | |
Final Expiration Date:
|
20___ |
Vesting Schedule:
|
This Option will vest and become exercisable in accordance with the vesting schedule set forth in Appendix A, depending on the classification of the Option as follows: | |
| Time Option: | ||
| Performance Option: |
1
Your grant of this Option and, if applicable, the issuance of any Shares upon the exercise of this
Option shall be subject to your execution of the Stockholders Agreement, which is attached hereto.
Your signature below indicates your agreement and understanding that this Option is subject to all
of the terms and conditions contained in the Agreement (including this Grant Notice, Appendix A , Appendix B and Appendix C to the Agreement), the Plan and the Stockholders
Agreement. ACCORDINGLY, PLEASE BE SURE TO READ ALL OF THE PLAN, APPENDIX A, APPENDIX B AND
APPENDIX C WHICH CONTAIN THE SPECIFIC TERMS AND CONDITIONS OF THIS OPTION.
| EXPLORER HOLDING CORPORATION | OPTIONEE | |||
By |
||||
Name: |
||||
Title: |
||||
2
APPENDIX A TO STOCK OPTION AGREEMENT
ARTICLE I.
GRANT OF OPTION
GRANT OF OPTION
Section 1.1 Grant of Option. The Company hereby grants to the Optionee
the Option to purchase any part or all of an aggregate of the Shares set forth in the Grant Notice
pursuant to which this Appendix is attached, upon the terms and conditions set forth in the Plan
and this Agreement (including the Grant Notice, this Appendix, Appendix B and Appendix
C). The Optionee hereby agrees that, except as required by law, he or she will not disclose to
any Person other than the Optionee’s spouse and/or tax or financial advisor (if any) the grant of
the Option or any of the terms or provisions hereof without prior approval from the Administrator.
Section 1.2 Option Subject to Plan. The Option granted hereunder is
subject to the terms and provisions of the Plan, including, but not limited to, Article V and
Article VIII thereof.
Section 1.3 Exercise Price. The Exercise Price of the Shares covered by
the Option shall be the Exercise Price per Share as set forth in the Grant Notice (without
commission or other charge).
ARTICLE II.
VESTING SCHEDULE; EXERCISABILITY
VESTING SCHEDULE; EXERCISABILITY
Section 2.1 Vesting and Exercisability of the Time Option.
(a) Vesting. Except as provided below, the Time Option shall become vested and exercisable,
so long as the Optionee remains continuously in service as a Service Provider, from the date hereof
through each relevant date set forth below, as follows:
(i) One-third of the Time Option shall become vested and exercisable on , 20___;
(ii) One-third of the Time Option shall become vested and exercisable on , 20___;
and
(iii) One-third of the Time Option shall become vested and exercisable on , 20___.
(b) Liquidity Event Vesting. Any Time Option shall become fully vested and exercisable
immediately prior to the effective date of the first Liquidity Event.
(c) Discretionary Vesting. The Administrator in its sole discretion may accelerate the
vesting of any portion of the Time Option that does not otherwise vest pursuant to this Section
2.1.
Section 2.2 Vesting and Exercisability of the Performance Option.
(a) Performance Based Vesting. Subject to the provisions set forth below, the Performance
Option shall vest and become exercisable as follows: One-third of the Performance Option shall
vest and become exercisable on of each year beginning on , 20___and ending on
, 20___if, in each case, on such date (or, if the audited financial statements for the
Company have not been finalized by such date, within 30 days thereafter), the Administrator
determines that the following conditions are met as of the end of the immediately
3
preceding Fiscal Year (each such Fiscal Year through Fiscal Year 20___, an “Applicable
Year” and, such vesting, the “Yearly Performance Based Vesting”):
(i) If EBITDA for the Applicable Year equals or exceeds the EBITDA Target for the
Applicable Year, then 65% of such installment (consisting of approximately 22% of the
Performance Option) shall become vested and exercisable (“EBITDA Vesting”) and if
the EBITDA for the Applicable Year is less than 90% of the EBITDA Target for the Applicable
Year, then 65% of such installment (consisting of approximately 22% of the Performance
Option) shall terminate and shall not become exercisable; and
(ii) If the Cumulative Cash Flow for the Applicable Year equals or exceeds the
Cumulative Cash Flow Target for such Applicable Year, then the remaining 35% of such
installment (consisting of approximately 11% of the Performance Option) shall become vested
and exercisable (“Cumulative Cash Flow Vesting”). In addition, if the Cumulative
Cash Flow for an Applicable Year equals or exceeds the Cumulative Cash Flow Target for such
Applicable Year, any portion of the Performance Option subject to Cumulative Cash Flow
Vesting that did not vest and become exercisable with respect to a prior Applicable Year
shall become vested and exercisable on the following such Applicable Year for which
the Cumulative Cash Flow Target is achieved. Any Performance Option subject to Cumulative
Cash Flow Vesting that has not vested as of , 20___shall terminate and shall not
become exercisable.
(b) Catch-up Vesting. Except as provided below, the Performance Option subject to EBITDA
Vesting which would otherwise fail to become vested and exercisable in accordance with Section
2.2(a)(i) shall be eligible for vesting in accordance with this Section 2.2(b). If EBITDA for the
Applicable Year is less than the EBITDA Target for such Applicable Year but at least 90% of the
EBITDA Target for such Applicable Year (the “EBITDA Missed Year”), that portion of the
Performance Option that was subject to EBITDA Vesting with respect to the EBITDA Missed Year shall
become exercisable on the following the first Fiscal Year or second Fiscal Year thereafter,
(or in the event the EBITDA Missed Year is Fiscal Year 20___, , 20___) (any such year, the
“EBITDA Cumulative Catch Up Year”) if, on such date (or, if the audited financial
statements for the Company have not been finalized by such date, within 30 days thereafter), the
Administrator determines that in the EBITDA Cumulative Catch Up Year: (i) EBITDA equals or exceeds
the EBITDA Target for the EBITDA Cumulative Catch Up Year; and (ii) the Cumulative EBITDA equals or
exceeds the Cumulative EBITDA Target for the EBITDA Cumulative Catch Up Year, and any Performance
Option subject to EBITDA Vesting that does not vest as of of the Fiscal Year after the
final EBITDA Cumulative Catch Up Year with respect to such Option shall terminate and shall not
become exercisable.
(c) Liquidity Event Vesting. Any Performance Option that is scheduled to vest and become
exercisable with respect to any Applicable Year ending after the effective date of the first
Liquidity Event but that have not yet become vested and exercisable as of the occurrence of the
first Liquidity Event (including, without limitation, any Performance Option that remains subject
to catch up vesting pursuant to Section 2.2(a)(ii) or 2.2.(b)), shall, immediately prior to the
effective date of such Liquidity Event, automatically become vested and exercisable in full if the
Administrator determines that, as of the effective date of the Liquidity Event, (i) the Internal
Rate of Return is equal to or greater than 25% or (ii) the Investment Proceeds are at least 2.5
times the Invested Capital and, except with respect to any Liquidity Event described in Section
4.21(b), based solely on the Invested Capital and Investment Proceeds with respect to the equity
securities (as such securities may be adjusted for the occurrence of a Corporate Event) received
4
by the Principal Stockholders in respect of their Invested Capital that are or have been sold
or otherwise disposed of by the Principal Stockholders prior to and in such Liquidity Event. Any
Performance Option that does not vest upon the occurrence of a Liquidity Event shall, subject to
Section 2.2(e), continue to vest in accordance with Sections 2.2(a) and 2.2(b) above.
(d) Discretionary Vesting. The Administrator in its sole discretion may accelerate the
vesting of any portion of the Performance Option that does not otherwise vest pursuant to this
Section 2.2.
(e) Liquidity Event Payments. In connection with a Liquidity Event, the Board or
Administrator (as constituted immediately prior to the Liquidity Event) in its sole discretion may
determine that (i) each Option shall, to the extent it has not or will not by its terms vest before
or in connection with such Liquidity Event, be canceled, provided, however, that this clause (i)
shall not apply in the event the Liquidity Event is a Public Offering, and/or (ii) each vested
Option (including any Option that becomes vested as a result of such Liquidity Event) shall be
canceled in exchange for a payment for each vested Option in an amount or with a value equal to the
number of Shares covered by such vested Option times the excess, if any, of the per Share
Investment Proceeds received by the Principal Stockholders in such Liquidity Event over any
applicable Option Price for such Option.
Section 2.3 Administrator Determination of Targets. The Administrator
shall make the determination as to whether the respective EBITDA Targets, Cumulative EBITDA Targets
and Cumulative Cash Flow Targets, have been met, and shall determine the extent, if any, to which
the Option has become exercisable, on any such date as the Administrator in its sole discretion
shall determine; provided, however, that with respect to each Fiscal Year such date shall not be
later than the 120th day following the end of such Fiscal Year.
Section 2.4 No Vesting of the Option. Notwithstanding anything to the
contrary in this Agreement, any portion of the Option that has not become vested pursuant to
Sections 2.1 or 2.2 on or prior to the date of the Optionee’s termination of service as a Service
Provider or, if earlier, the date on which the Service Provider enters into a transition phase to
cease employment with the Company, shall be forfeited and shall not thereafter become vested or
exercisable; provided, however, that any portion of the Option that was scheduled to vest or may
vest under a catch-up vesting provision based on the achievement of performance goals at the end of
the fiscal year prior to the year of such termination of service as a Service Provider or entrance
into the transition phase to cease employment with the Company (the “Final Performance
Option”) shall remain outstanding if the Administrator has not determined whether the
performance goals have been achieved for the fiscal year in question, unless the Optionee is
terminated for Cause, until the date that the Administrator determines whether such performance
goals have been achieved for the fiscal year in question; provided, further, that the Final
Performance Option shall in no event become vested and exercisable unless it is determined by the
Administrator that such performance goals were actually achieved for the fiscal year in question (a
“Final Performance Goal Determination”). The Final Performance Option that do not become
vested and exercisable shall be forfeited on the date of the Final Performance Goal Determination
and the Final Performance Option that become vested and exercisable shall remain exercisable as
provided in Section 2.6.
Section 2.5 Exercisability of the Option. The Optionee shall not have
the right to exercise the Option until the date the applicable portion of the Option becomes vested
pursuant to Sections 2.1, 2.2, or 2.3. The date that the applicable portion of the Option becomes
exercisable is referred to herein as the “Exercise Commencement Date.” Subject to Section
8.1 of the Plan,
5
following the Exercise Commencement Date, the applicable portion of the Option shall remain
exercisable until it becomes unexercisable under Section 2.6. Once the Option becomes
unexercisable, it shall be forfeited immediately.
Section 2.6 Expiration of Option.
(a) The Option may not be exercised to any extent by anyone after the first to occur of the
following events:
(i) The Final Expiration Date;
(ii) Except for such longer period of time as the Administrator may otherwise approve,
in the event of a termination of the Optionee’s service as a Service Provider for any reason
other than Cause, death or Disability, the later of (i) sixty (60) days following the date
of the Optionee’s termination of service as a Service Provider for any reason other than
Cause, death or Disability, or (ii) with respect to the Final Performance Option, sixty (60)
days following the Final Performance Goal Determination, in which case such Final
Performance Option may become Non-Qualified Stock Option;
(iii) Except as the Administrator may otherwise approve, the date that the Company
terminates the Optionee’s service as a Service Provider for Cause; or
(iv) Except for such longer period of time as the Administrator may otherwise approve,
twelve (12) months following the Optionee’s termination of service as a Service Provider by
reason of the Optionee’s death or Disability.
(b) If, pursuant to the terms of the Stockholders Agreement, the Company has a right to
repurchase the Optionee’s Option and/or Shares, the Company may exercise such call right regardless
of whether the Optionee continues to have a right to exercise the Option under Section 2.6.
(c) For the purposes of the Plan and this Agreement, the date of the Optionee’s termination of
service as a Service Provider shall be the last day that the Optionee provided service as a Service
Provider, as determined by the Administrator, whether such day is selected by agreement with the
Optionee or unilaterally by the Company or its Subsidiaries and whether with or without advance
notice. For the avoidance of doubt, except as expressly provided in Section 2.4, no period of
notice that is given or that ought to have been given to the Optionee under applicable law in
respect of such termination of service as a Service Provider will be utilized in determining
entitlement under the Plan, the Stockholders Agreement or this Agreement. Any action by the
Company or its Subsidiaries taken in accordance with the terms of the Plan and this Agreement as
set out aforesaid shall be deemed to fully and completely satisfy any liability or obligation of
the Company or its Subsidiaries to the Optionee in respect of the Plan or this Agreement arising
from or in connection with the Optionee’s termination of service as a Service Provider, including
in respect of any period of notice given or that ought to have been given under applicable law in
respect of such termination of service as a Service Provider.
Section 2.7 Partial Exercise. Any exercisable portion of the Option or
the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time
prior to the time when the Option or portion thereof becomes unexercisable.
Section 2.8 Exercise of Option. The exercise of the Option shall be
governed by the terms of this Agreement and the terms of the Plan, including, without limitation,
the provisions of Article V of the Plan.
6
Section 2.9 Manner of Exercise; Tax Withholding.
(a) Unless determined otherwise by the Administrator, as a condition to the exercise of the
Option, the Optionee shall (i) notify the Company at least thirty (30) days prior to exercise and
no earlier than ninety (90) days prior to exercise that the Optionee intends to exercise, (ii)
concurrently with the exercise of the Option, execute the Stockholders Agreement, unless the
Optionee has already executed the Stockholders Agreement, and (iii) provide the Company with
payment of the Exercise Price of the Option, together with any Withholding Tax payment required by
Section 3.10 below, which shall be payable to the Company in full as set forth in Section 2.9(b) or
Section 2.9(c) below, as applicable; provided that the provisions of clauses (i) and (ii) of this
Section 2.9(a) shall not apply if the Shares underlying the Option are registered on Form S-8.
(b) To the extent permitted by law or the applicable listing rules, if any, the Optionee may
pay for the Shares with respect to which such Option or portion of such Option is exercised through
(i) payment in cash; (ii) with the consent of the Administrator, the delivery of Shares which are
owned by the Optionee, duly endorsed for transfer to the Company with a Fair Market Value on the
date of delivery equal to the aggregate Exercise Price of the exercised portion of the Option;
(iii) with the consent of the Administrator, through the surrender of Shares then issuable upon
exercise of the Option having a Fair Market Value on the date of the exercise of the Option equal
to the aggregate Exercise Price of the exercised portion of the Option; or (iv) with the consent of
the Administrator, delivery of a notice that the Optionee has placed a market sell order with a
broker with respect to Shares then-issuable upon exercise of the Option, and that the broker has
been directed to pay a sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the aggregate Exercise Price; provided, that payment of such proceeds is then made
to the Company upon settlement of such sale. Notwithstanding the foregoing, the consent of the
Administrator shall not be required with respect to clauses (iii) and (iv) of this subsection
2.9(b) if the Optionee exercises such Option on or after the date of the Optionee’s Retirement.
(c) As a condition to exercise, the Optionee must make appropriate arrangements for the
payment to the Company (or its Subsidiary, as applicable) in cash or by delivery of a certified or
bank cashier check, or by any other means of payment approved by the Administrator, of the amount
which the Company (or its Subsidiary, as applicable) is required to withhold under applicable law
in connection with the exercise of the Option. With the consent of the Administrator and subject
to any applicable legal conditions or restrictions, the Company shall, upon the Optionee’s request,
withhold from the Shares issuable to the Optionee upon the exercise of the Option (or any portion
thereof) a number of whole Shares having a Fair Market Value, determined as of the date of
exercise, not in excess of the minimum of tax required to be withheld by law (or such lower amount
as may be necessary to avoid liability award accounting). Any adverse consequences to the Optionee
arising in connection with the Share withholding procedure set forth in the preceding sentence
shall be the sole responsibility of the Optionee
ARTICLE III.
OTHER PROVISIONS
OTHER PROVISIONS
Section 3.1 Optionee Representation; Not a Contract of Service. The
Optionee hereby represents that the Optionee’s execution of this Agreement and participation in the
Plan is voluntary and that the Optionee has in no way been induced to enter into this Agreement in
exchange for or as a requirement of the expectation of service with the Company or any of its
Subsidiaries. Nothing in this Agreement or in the Plan shall confer upon the Optionee any right to
continue as a Service Provider, or shall interfere with or restrict in any way the rights of the
7
Company or its Subsidiaries, which are hereby expressly reserved, to discharge the Optionee at any
time for any reason whatsoever, with or without Cause, except to the extent expressly provided
otherwise in a written employment or other agreement between the Optionee and the Company or any of
its Subsidiaries.
Section 3.2 Notification of Disposition. To the extent the transfer of
Shares is permitted under the Plan, this Agreement and the Stockholders Agreement, the Optionee
shall give prompt notice to the Company of any disposition or other transfer of any Shares acquired
under this Agreement if such disposition or transfer is made (a) within two (2) years from the date
hereof with respect to such Shares or (b) within one (1) year after the date the Optionee acquired
such Shares hereunder. Such notice shall specify the date of such disposition or other transfer
and the amount realized, in cash, other property, assumption of indebtedness or other
consideration, by the Optionee in such disposition or other transfer.
Section 3.3 Shares Subject to Plan and Stockholders Agreement; Restrictions
on the Transfer of Option and Company Common Stock. The Optionee acknowledges that this Option
and any Shares acquired upon exercise of the Option are subject to the terms of the Plan and the
Stockholders Agreement including, without limitation, the restrictions set forth in Sections 5.6
and 5.7 of the Plan, Section 2 of the Stockholders Agreement and the repurchase and other
provisions set forth in Section 8 of the Stockholders Agreement.
Section 3.4 Registration Legend. The Company may postpone the issuance
and delivery of Company Common Stock upon the exercise of the Option until such Shares may be
issued in compliance with any applicable state or federal law, rule or regulation. The Optionee
shall make such representations and furnish such information as may, in the opinion of counsel for
the Company, be appropriate to permit the Company, in light of the then existence or non-existence
with respect to such Shares of an effective Registration Statement under the Securities Act of
1933, as amended from time to time, to issue the Company Common Stock in compliance with the
provisions of that or any comparable act.
The Company may cause the following or a similar legend to be set forth on each certificate
representing Company Common Stock or any other security issued or issuable upon exercise of the
Option unless counsel for the Company is of the opinion as to any such certificate that such legend
is unnecessary:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND SAID LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
THEREOF.”
“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN
THE EQUITY INCENTIVE PLAN OF EXPLORER HOLDING CORPORATION AND A
STOCKHOLDERS AGREEMENT
8
BETWEEN THE ISSUER AND THE STOCKHOLDERS OF THE ISSUER, DATED AS OF
JULY 31, 2008. A COPY OF SUCH PLAN AND AGREEMENT SHALL BE FURNISHED
WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN
REQUEST.”
Section 3.5 Construction. This Agreement shall be administered,
interpreted and enforced under the laws of the State of Delaware.
Section 3.6 Conformity to Securities Laws. The Optionee acknowledges
that the Plan is intended to conform to the extent necessary with all provisions of the Securities
Act and the Exchange Act and any and all regulations and rules promulgated thereunder by the
Securities and Exchange Commission, including without limitation Rule 16b-3. Notwithstanding
anything herein to the contrary, the Plan, the Stockholders Agreement and this Agreement shall be
administered, and the Option is granted and may be exercised, only in such a manner as to conform
to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this
Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and
regulations.
Section 3.7 Adjustments in EBITDA and Cumulative Cash Flow Targets.The
EBITDA Targets (including the Cumulative EBITDA Targets) and the Cumulative Cash Flow Targets
specified in Appendix B (collectively the “Financial Targets”) are based upon (i) certain
revenue and expense assumptions about the future business of the Company, (ii) a model agreed to by
the management of the Company for the projected financial performance of the Company, which
incorporates the desired internal rate of return on the investment by the Principal Stockholders in
debt and equity securities or instruments of the Company and its Subsidiaries, and (iii) the
continued application of accounting policies used by the Company as of the date the Option is
granted. Accordingly, in the event that, after such date, any acquisition or disposition of any
significant business or assets by the Company, any reorganization, merger, consolidation, split-up,
spin-off or combination, any major capital investment program or any changes in generally accepted
accounting principles related to equity-based compensation or promulgated by accounting standards
applicable to the Company (or the accounting policies used by the Company) (if such accounting
standards or policies materially affected the assumptions used in determining the initial Financial
Targets), occurs, or the Company utilizes capital leases or other financial mechanisms other than
operating leases for the purchase of property, plant and equipment, (each, a “Corporate
Transaction”), that is reasonably expected to materially affect EBITDA or Cash Flow, the EBITDA
Target for such year and the Cumulative EBITDA Target and Cumulative Cash Flow Target for such year
and subsequent years, as applicable, will be adjusted, fairly and appropriately, by the amount
determined by the Administrator, in the exercise of its good faith judgment, after consultation
with the Company’s Chief Executive Officer and accountants, to be reasonably necessary to
accurately reflect the expected direct and measurable effect such event has on such Financial
Targets. In the event of any Corporate Transaction, such adjustment shall reflect the change in
EBITDA and/or Cash Flow resulting from such Corporate Transaction as presented to the Board or
other decision-making party at the time the Corporate Transaction is approved by the Board or other
decision making party. The intent of such adjustments is to keep the probability of achieving the
Financial Targets the same as if the event triggering such adjustment had not occurred. The
Administrator’s determination of such necessary adjustment shall be made within 60 days following
the completion or closing of
9
the Corporate Transaction, and shall be based on the Company’s accounting as set forth in its books
and records and in accordance with its financial statements (prepared in accordance with applicable
generally accepted accounting principles) and on the Company’s financial plan pursuant to which the
applicable Financial Targets were originally established. All determinations and adjustments made
by the Administrator in good faith pursuant to this Section 3.7 shall be final and binding on the
Company and the Optionee.
Section 3.8 Amendment, Suspension and Termination. The Option may be
wholly or partially amended or otherwise modified, suspended or terminated at any time or from time
to time by the Administrator or the Board, provided that, except as provided by Section 8.1 of the
Plan, neither the amendment, modification, suspension nor termination of this Agreement (including
the Grant Notice) shall, without the consent of the Optionee, materially alter or impair any rights
or obligations under the Option.
Section 3.9 Data Privacy Consent. As a condition of the Option grant if
the Optionee is a Non-U.S. Optionee, the Optionee explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of personal data as described in this
paragraph by and among, as applicable, the Company and its Subsidiaries and Affiliates for the
exclusive purpose of implementing, administering and managing the Optionee’s participation in the
Plan. The Optionee understands that the Company and its Subsidiaries and Affiliates hold certain
personal information about the Optionee, including the Optionee’s name, home address and telephone
number, date of birth, social insurance number or other identification number, salary, nationality,
job title, any shares of stock or directorships held in the Company, details of all restricted
stock or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or
outstanding in the Optionee’s favor, for the purpose of implementing, managing and administering
the Plan (the “Data”). The Optionee further understands that the Company and its
Subsidiaries and Affiliates may transfer the Data amongst themselves as necessary for the purpose
of implementation, administration and management of the Optionee’s participation in the Plan, and
that the Company and its Subsidiaries and Affiliates may each further transfer the Data to any
third parties assisting the Company in the implementation, administration and management of the
Plan. The Optionee understands that these recipients may be located in the Optionee’s country, or
elsewhere, and that the recipient’s country may have different data privacy laws and protections
than the Optionee’s country. The Optionee understands that he or she may request a list with the
names and addresses of any potential recipients of the Data by contacting his or her local human
resources representative. The Optionee authorizes such recipients to receive, possess, use, retain
and transfer the Data, in electronic or other form, for the purposes of implementing, administering
and managing the Optionee’s participation in the Plan, including any requisite transfer of such
Data as may be required to a broker or other third party with whom the Optionee may elect to
deposit any Shares. The Optionee understands that the Data will be held only as long as is
necessary to implement, administer, and manage the Optionee’s participation in the Plan. The
Optionee understands that he or she may, at any time, view the Data, request additional information
about the storage and processing of the Data, require any necessary amendments to the Data, or
refuse or withdraw the consents herein in writing, in any case without cost, by contacting his or
her local human resources representative. The Optionee understands that refusal or withdrawal of
consent may affect the Optionee’s ability to participate in the Plan. For more information on the
consequences of refusal to consent or withdrawal of consent, the Optionee understands that he or
she may contact his or her local human resources representative.
10
Section 3.10 Withholding Taxes. In addition to any rights or obligations
with respect to Withholding Taxes under this Agreement or the Plan, the Company shall have the
right to withhold from the Optionee, or otherwise require the Optionee or an assignee to pay, any
Withholding Taxes arising as a result of exercise of the Option, or any other taxable event
occurring pursuant to the Plan or this Agreement, including, but not limited to, to the extent
permitted by law, have the right to deduct any such Withholding Taxes from any payment of any kind
otherwise due to the Optionee or to take such other action (including, but not limited to,
withholding Shares or cash deliverable pursuant to the Plan or any Option) as may be necessary to
satisfy such Withholding Taxes; provided, however, that in the event that the
Company withholds Shares issuable to the Optionee upon the exercise of the Option (or any portion
thereof) to satisfy the Withholding Taxes, the Company shall withhold a number of whole Shares
having a Fair Market Value, determined as of the date of exercise, not in excess of the minimum of
tax required to be withheld by law (or such lower amount as may be necessary to avoid liability
award accounting). The Optionee shall be responsible for all Withholding Taxes and other tax
consequences of this Award.
Section 3.11 Miscellaneous.
(a) The Optionee shall have no rights as a stockholder of the Company with respect to the
shares of Company Common Stock subject to this Agreement until such time as the purchase price has
been paid and the other requirements of Section 2.9 above have been satisfied, and the shares of
Company Common Stock have been issued and delivered to the Optionee.
(b) This Agreement shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or United States or foreign securities exchanges as may
be required.
(c) This Agreement shall be governed by the laws of the State of Delaware regardless of the
application of rules of conflict of law that would apply the laws of any other jurisdiction.
(d) All obligations of the Company under this Agreement and the Plan, with respect to the
Option, shall be binding on any successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company.
(e) In the event any provision of this Agreement shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of this Agreement, and
this Agreement shall be construed and enforced as if the illegal or invalid provision had not been
included.
11
ARTICLE IV.
DEFINITIONS
DEFINITIONS
Whenever the following terms are used in this Agreement (including the Grant Notice), they
shall have the meaning specified below unless the context clearly indicates to the contrary.
Capitalized terms used in this Agreement and not defined below shall have the meaning given such
terms in the Plan. The singular pronoun shall include the plural, where the context so indicates.
Section 4.1 “Adjusted Working Capital” as of any given date shall mean
(i) accounts receivable (net) less (ii) accounts payable, less (iii) other accrued expenses, all as
reflected on the Company’s audited consolidated balance sheet as of such date.
Section 4.2 “Cash Flow” for a given Fiscal Year shall mean (i) EBITDA for
such Fiscal Year less (ii) the increase in Adjusted Working Capital in such Fiscal Year (which may
be a positive or a negative number) less (iii) any overruns in the annual budget for capital
expenditures in the financial plan approved by the Board of Directors for that Fiscal Year.
Section 4.3 “Company” shall mean Explorer Holding Corporation, a Delaware
corporation.
Section 4.4 “Company Sale” shall mean the consummation of any transaction
or series of transactions (including, without limitation, any merger, recapitalization,
reorganization, sale of stock or other similar transaction) pursuant to which one or more Persons
or group of Persons (other than any Principal Stockholder) acquires shares of common stock of the
Company possessing the voting power (without taking into account the Stockholders Agreement or any
other agreement or proxy limiting the voting power of the holder of such securities) sufficient to
elect a majority of the members of the Board or the board of directors of the successor to the
Company.
Section 4.5 “Cumulative Cash Flow” as of a given date shall mean the
total Cash Flow from and after April 1, 2008 through such date. In determining whether Cash Flow
targets have been met, the Administrator shall take into account any large, unusual non-recurring
capital expenditures approved by the Board of Directors.
Section 4.6 “Cumulative Cash Flow Target” for any given year shall be as
set forth in Appendix B of this Agreement, adjusted as provided in Appendix B and subject to the
provisions of Section 3.7, determined as provided in Section 4.5.
Section 4.7
“EBITDA” for a given Fiscal Year shall have the meaning set
forth in Appendix C.
Section 4.8 “Cumulative EBITDA” as of a given date shall mean the total
EBITDA from and after April 1, 2008 through such date.
Section 4.9 “EBITDA Target” and “Cumulative EBITDA Target” for
any given year shall be as set forth in Appendix B of this Agreement, subject to the
provisions of Section 3.7.
Section 4.10 “Effective Date” shall mean July 31, 2008.
Section 4.11 “Exchange Act” shall mean the Securities and Exchange Act of
1934, as amended.
Section 4.12 “Exercise Price” shall mean the per Share price set forth in
the Grant Notice, as may be adjusted pursuant to the Plan.
Section 4.13 “Fiscal Year” shall mean the fiscal year of the Company, as
in effect from time to time.
Section 4.14
“Final Expiration Date” shall mean the date set forth in the Grant Notice.
Section 4.15
“Grant Date” shall be the date set forth in the Grant Notice
Section 4.16 “Grant Notice” shall mean the Grant Notice referred to in
Section 1.1 of this Agreement, which Grant Notice is for all purposes a part of the Agreement.
12
Section 4.17 “Initial Investment” shall mean the shares of Company Common
Stock of the Company acquired by the Principal Stockholders in connection with their investment in
the Company on the Effective Date.
Section 4.18 “Internal Rate of Return” shall mean the internal rate of
return realized by the Principal Stockholders on the Invested Capital as a result of the Investment
Proceeds realized, or, in the case of any Liquidity Event described in Section 4.21(b), deemed
realized, by the Principal Stockholders, calculated without reduction for any taxes imposed on such
Investment Proceeds and after giving effect to the vesting of any Awards (including any Awards that
vest as a result of the Liquidity Event). The Internal Rate of Return shall be determined in
respect of any Liquidity Event described in Section 4.21(b) as if the Principal Shareholders
liquidated their entire remaining Invested Capital in such Liquidity Event for a price equal to the
fair market value of the remaining Invested Capital on the date of the Liquidity Event, as
reasonably determined by the Administrator. In determining the Internal Rate of Return as of any
date, (a) all Investment Proceeds theretofore received by the Principal Stockholders in respect of
their Invested Capital shall be taken into account, and no other amounts theretofore received by
the Principal Stockholders shall be taken into account, and (b) Investment Proceeds shall be
allocated among each class of securities held by the Principal Stockholders in respect of their
Invested Capital on a pro-rata basis with respect to each class of securities disposed pursuant to
such Liquidity Event. The Administrator shall determine the Internal Rate of Return in good faith.
Section 4.19 “Invested Capital” shall mean the dollar amount paid by the
Principal Stockholders for the Initial Investment and any subsequent investment by the Principal
Stockholders, including any fees and expenses paid by any Principal Stockholder.
Section 4.20 “Investment Proceeds” shall mean the aggregate fair market
value of the consideration received by the Principal Stockholders in respect of their Invested
Capital, net of any management fees and expenses paid or payable to any Principal Stockholder and
any fees or expenses paid or payable to any third party. In connection with a Liquidity Event
described in Section 4.21(b), the Fair Market Value of any equity securities of the Company held by
the Principal Stockholders (as implied by the Liquidity Event) that are not disposed of shall be
treated as Investment Proceeds, but shall not be treated as Investment Proceeds in any other
circumstance.
Section 4.21 “Liquidity Event” shall mean either (a) the consummation of
the sale, transfer, conveyance or other disposition in one or a series of transactions, of the
equity securities of the Company or its successor held, directly or indirectly, by all of the
Principal Stockholders in exchange for cash, or in the case of any transaction resulting in the
exchange for consideration other than cash (“non-cash consideration”) the receipt of cash upon the
disposition of such non-cash consideration, such that immediately following such transaction or
disposition (or series of related transactions or dispositions), the total number of all equity
securities held, directly or indirectly, by all of the Principal Stockholders and any Affiliate of
any Principal Stockholders is, in the aggregate, less than 30% of the total number of equity
securities (as such securities may be adjusted for the occurrence of a corporate event) received by
all of the Principal Stockholders and any Affiliate of any Principal Stockholders in respect of
their Invested Capital; (b) the consummation of any Company Sale in which more than 60% of the
consideration to the Principal Stockholders in such Company Sale is paid in cash or Publicly Traded
Securities; or (c) the consummation of the sale, lease, transfer, conveyance or other disposition
(other than by way of merger, recapitalization, sale of stock, equity purchase or consolidation),
in one or a series of transactions, of all or substantially all of the assets of the Company, or
the Company and its
13
Subsidiaries taken as a whole, to any “person “ (as such term is defined in Section 13(d)(3) of the
Exchange Act) other than to any Principal Stockholders or an Affiliate of any Principal
Stockholders.
Section 4.22 “Option” shall mean the option to purchase Company Common
Stock granted under this Agreement.
Section 4.23 “Optionee” shall be the Person designated as such in the
Grant Notice.
Section 4.24 “Performance Option” shall mean the portion of the Option
designated as a Performance Option in the Grant Notice.
Section 4.25 “Plan” shall mean the Equity Incentive Plan of Explorer
Holding Corporation.
Section 4.26 “Public Offering” shall mean any sale, conveyance or other
disposition of equity securities by the Principal Stockholders in an underwritten public offering
or effected in, on, or through the facilities of an established securities market.
Section 4.27 “Publicly Traded Securities” means any class of securities
that are readily tradable on an established securities market (or any class of securities that is
immediately convertible into such securities).
Section 4.28 “Retirement” shall have the meaning set forth in the
Company’s Retirement Policy.
Section 4.29
“Securities Act” shall mean the Securities Act of 1933, as amended.
Section 4.30
“Shares” shall mean shares of Company Common Stock.
Section 4.31 “Time Option” shall mean the portion of the Option
designated as a Time Option in the Grant Notice.
Section 4.32 “Withholding Taxes” means any federal, state, local, or
foreign income taxes, withholding taxes, or employment taxes required to be withheld under
Applicable Law.
***
14
APPENDIX B TO STOCK OPTION AGREEMENT
EBITDA AND CUMULATIVE CASH FLOW TARGETS
(US$ Millions)
As of the end of the fiscal year, subject to any applicable adjustments
| Performance Measure | 20__ | 20__ | 20__ | |||||||||
EBITDA Target |
||||||||||||
Cumulative EBITDA Target |
||||||||||||
Cumulative Cash Flow Target
(adjusted as provided
in the following paragraph) |
||||||||||||
In addition to any adjustments that may be made pursuant to Section 3.7, the Cash Flow Targets
shall be adjusted as follows: (i) in the event that the growth in net revenue in any
relevant Fiscal Year is greater than 12%, the Cash Flow Target with respect to such Fiscal Year
shall be reduced by 3.4% for each 1% of growth in excess of 12% and (ii) in the event that
the growth in net revenue in any relevant Fiscal Year is less than 12%, the Cash Flow Target with
respect to such Fiscal Year shall be increased by 3.4% for each 1% of growth below 12%.
15
APPENDIX C TO STOCK OPTION AGREEMENT
For purposes of this Appendix C, capitalized terms not defined in the Plan or the Agreement
shall have the respective meanings ascribed to such terms in the Credit Agreement, dated as of July
31, 2008, among Explorer Investor Corporation, Explorer Merger Sub Corporation, as the Initial
Borrower, Booz Allen Hamilton Inc. as the Surviving Borrower, the Several Lenders from time to time
parties thereto, Credit Suisse, as Administrative Agent and Collateral Agent, Bank of America,
N.A., as Syndication Agent, Lehman Brothers Commercial Bank and C.I.T. Leasing Corporation and
Sumitomo Mitsui Banking Corporation, as Documentation Agents, Credit Suisse, as Issuing Lender and
Banc Of America Securities LLC, Credit Suisse Securities (USA) LLC and Lehman Brothers Inc. as
Joint Lead Arrangers and Joint Bookrunners.
“EBITDA”: of any Person for any period, Consolidated Net Income of such Person and its
Restricted Subsidiaries for such period plus, without duplication and, if applicable, to the extent
reflected as a charge in the statement of such Consolidated Net Income (regardless of
classification) for such period, the sum of:
(a) provisions for taxes based on income (or similar taxes in lieu of income taxes), profits,
capital (or equivalents), including federal, foreign, state, local, franchise, excise and similar
taxes and foreign withholding taxes of such Person paid or accrued during such period;
(b) Consolidated Net Interest Expense and, to the extent not reflected in such Consolidated
Net Interest Expense, any net losses on hedging obligations or other derivative instruments entered
into for the purpose of hedging interest rate risk, amortization or write-off of debt discount and
debt issuance costs and commissions, discounts and other fees and charges associated with
Indebtedness (including commitment, letter of credit and administrative fees and charges with
respect to the Facilities and the Mezzanine Loan Facility);
(c) depreciation and amortization expense and impairment charges (including deferred financing
fees, capitalized software expenditures, intangibles (including goodwill), organization costs and
amortization of unrecognized prior service costs and actuarial gains and losses related to pensions
and other post-employment benefits);
(d) any extraordinary, unusual or non-recurring expenses or losses (including losses on sales
of assets outside of the ordinary course of business and restructuring and integration costs or
reserves, including any severance costs, costs associated with office and facility openings,
closings and consolidations, relocation costs and other non-recurring business optimization
expenses);
(e) any other non-cash charges, expenses or losses (except to the extent such charges,
expenses or losses represent an accrual of or reserve for cash expenses in any future period or an
amortization of a prepaid cash expense paid in a prior period);
16
(f) stock-option based and other equity-based compensation expenses (incurred pursuant to the
Explorer Holding Corporation Officers Rollover Stock Plan, the Equity Incentive Plan of Explorer
Holding Corporation or any new equity incentive plans adopted by the Company);
(g) adjustments related to the impact of the purchase accounting treatment for the
Transactions, including but not limited to accounting for contract award fees and deferred rent;
(h) savings in borrowing costs (i.e. possible reductions in interest expense) associated with
any new deferred compensation programs, including but not limited to the Booz Allen Hamilton Inc.
Executive Performance Plan;
(i) transaction costs, fees, losses and expenses (whether or not any transaction is actually
consummated) (including those relating to the Merger Transactions, the transactions contemplated
hereby and by the Mezzanine Loan Documents (including any amendments or waivers of the Loan
Documents or the Mezzanine Loan Documents), and those payable in connection with the sale of
Capital Stock, the incurrence of Indebtedness permitted by Section 7.2 of the Credit Agreement,
transactions permitted by Section 7.4 of the Credit Agreement, Dispositions permitted by Section
7.5 of the Credit Agreement, or any Permitted Acquisition or other Investment permitted by Section
7.7 of the Credit Agreement (in each case whether or not successful));
(j) all fees and expenses paid pursuant to the Management Agreement;
(k) proceeds from any business interruption insurance (to the extent not reflected as revenue
or income in such statement of such Consolidated Net Income);
(l) cash expenses relating to earn-outs and similar obligations;
(m) charges, losses, lost profits, expenses or write-offs to the extent indemnified or insured
by a third party, including expenses covered by indemnification provisions in any agreement in
connection with the Merger Transactions, a Permitted Acquisition or any other acquisition permitted
by Section 7.7 of the Credit Agreement;
(n) losses recognized and expenses incurred in connection with the effect of currency and
exchange rate fluctuations on intercompany balances and other balance sheet items;
minus, to the extent reflected as income or a gain in the statement of such Consolidated Net Income
for such period, the sum of:
(a) any extraordinary, unusual or non-recurring income or gains (including gains on the sales
of assets outside of the ordinary course of business);
(b) any other non-cash income or gains (other than the accrual of revenue in the ordinary
course), but excluding any such items (i) in respect of which cash was received in a prior period
or will be received in a future period or (ii) which represent the reversal in such period of any
17
accrual of, or reserve for, anticipated cash charges in any prior period where such accrual or
reserve is no longer required, all as determined on a consolidated basis; and
(c) gains realized and income accrued in connection with the effect of currency and exchange
rate fluctuations on intercompany balances and other balance sheet items;
provided that for purposes of calculating EBITDA of the Borrower and its Restricted
Subsidiaries for any period, (A) the EBITDA of any Person or Properties constituting a division or
line of business of any business entity, division or line of business, in each case, acquired by
the Borrower or any of the Restricted Subsidiaries during such period and assuming any synergies,
cost savings and other operating improvements to the extent certified by the Borrower as having
been determined in good faith to be reasonably anticipated to be realizable within 12 months
following such acquisition, or of any Subsidiary designated as a Restricted Subsidiary during such
period, shall be included on a pro forma basis for such period (but assuming the consummation of
such acquisition or such designation, as the case may be, occurred on the first day of such period)
and (B) the EBITDA of any Person or Properties constituting a division or line of business of any
business entity, division or line of business, in each case, Disposed of by the Borrower or any of
the Restricted Subsidiaries during such period, or of any Subsidiary designated as an Unrestricted
Subsidiary during such period, shall be excluded for such period (assuming the consummation of such
Disposition or such designation, as the case may be, occurred on the first day of such period).
With respect to each Subsidiary that is not a wholly-owned Subsidiary or any joint venture, for
purposes of calculating EBITDA, the amount of income attributable to such Subsidiary or joint
venture, as applicable, that shall be counted for such purposes shall equal the product of (x) the
Borrower’s direct and/or indirect percentage ownership of such Subsidiary or joint venture and (y)
the aggregate amount of the applicable item of such Subsidiary or joint venture, as applicable,
except to the extent the application of GAAP already takes into account the non-wholly owned
subsidiary relationship. Notwithstanding the forgoing, EBITDA shall be calculated without giving
effect to the effects of purchase accounting or similar adjustments required or permitted by GAAP
in connection with the Transactions, any Investment (including any Permitted Acquisition) and any
other acquisition or Investment.
18
Exhibit 10.13
FORM OF RESTRICTED STOCK AGREEMENT
This Restricted Stock Agreement, dated as of the Grant Date set forth on the signature page
hereof, between Explorer Holding Corporation, a Delaware corporation (the “Company”), and
the participant whose name appears on the signature page hereof (the “Participant”), is
being entered into pursuant to the Equity Incentive Plan of Explorer Holding Corporation (the
“Plan”). Capitalized terms used herein without definition have the meaning given in the
Plan.
1. Grant of Restricted Shares. Subject to the terms and conditions of this Agreement and
the Plan, and subject to (i) the Participant becoming a party to the Stockholders Agreement
if the Participant is not already a party to such agreement and (ii) the Participant’s
delivery to the Company of duly executed and undated instruments of transfer or assignment in
blank, to be used by the Company only for transfers required under the Plan, this Agreement or the
Stockholders Agreement, the Company hereby evidences and confirms its grant to the Participant,
effective as of the Grant Date of the number of shares of restricted stock set forth on the
signature page hereof (the “Restricted Shares”). Upon grant, one or more stock
certificates registered in the Participant’s name and representing the Restricted Shares, which
certificates shall bear the legends set forth in Section 5(c), will be delivered on behalf of the
Participant to the Secretary of the Company, to be held in custody until the later of the date
(i) they become vested in accordance with Section 3(a) and (ii) the Participant
requests such instrument from the Company.
2. Forfeiture Risk. The Participant hereby (i) appoints the Company as the limited
attorney-in-fact of the Participant to take such actions as may be necessary or appropriate solely
to effectuate a transfer of the record ownership of any such shares that are unvested and forfeited
hereunder and (ii) agrees to sign such stock powers and take such other actions as the
Company may reasonably request to accomplish the transfer of any unvested Restricted Shares that
are forfeited hereunder. The Company does hereby indemnify and hold harmless the Participant from
any wrongful use of the power of attorney granted above.
| 3. | Vesting of Restricted Shares. |
(a) Restricted Period. One-third of the Restricted Shares granted pursuant to this
Agreement shall be fully vested as of the date hereof and, subject to the continued service of the
Participant as a Director of the Company through the applicable vesting date, one-third of such
Restricted Shares shall vest on each of September 30, 20 and March 31, 20 .
(b) Termination of Employment. Notwithstanding anything contained in this Agreement
to the contrary, if the Participant’s service as a director of the Company
terminates for any reason prior to the applicable vesting date, any unvested Restricted Shares
shall be forfeited.
4. Restrictions on Transfer. The Restricted Shares are subject to the transfer
restrictions contained in the Stockholders Agreement. In addition, unvested Restricted Shares may
not be transferred, other than by will or by the laws of descent and distribution and provided that
the deceased Participant’s beneficiary or the representative of his or her estate acknowledges and
agrees in writing, in a form reasonably acceptable to the Company, to be bound by the provisions of
the Plan and this Agreement as if such beneficiary or estate were the Participant. Upon the
vesting of the Restricted Shares, the Company shall cause Shares without the restrictions referred
to in this Section 4 (“unrestricted Common Stock”) to be issued to the Participant.
5. Participant’s Representations, Warranties and Covenants.
(a) Participant Intent. Participant is acquiring the Restricted Shares for investment
for Participant’s own account, not as a nominee or agent, and not with the view to, or for resale
in connection with, any distribution thereof.
(b) No Conflicts; No Consents. The execution and delivery by Participant of this
Agreement, the consummation of the transactions contemplated hereby and the performance of
Participant’s obligations hereunder do not and will not (a) materially conflict with or result in a
material violation or breach of any term or provision of any Law applicable to either Participant
or the Restricted Shares or, (b) violate in any material respect, conflict with in any material
respect or result in any material breach of, or constitute (with or without notice or lapse of time
or both) a material default under, or require either Participant to obtain any consent, approval or
action of, make any filing with or give any notice to any Person as a result or under the terms of,
any contract, agreement, instrument, commitment, arrangement, or understanding to which Participant
is a party.
(c) Legends. The Participant acknowledges and agrees that the Restricted Shares
received hereby and represented by physical certificate(s) will bear the following legend (or one
to substantially similar effect):
“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN
THE EQUITY INCENTIVE PLAN OF BOOZ ALLEN HAMILTON HOLDING
CORPORATION AND A RESTRICTED STOCK AGREEMENT BETWEEN THE ISSUER
AND THE HOLDER OF THIS CERTIFICATE DATED AS OF . A COPY
OF SUCH PLAN AND AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY
THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”
(d) Compliance with Rule 144. If any of the Restricted Shares are to be disposed of
in accordance with Rule 144, the Participant shall transmit to the Company an executed copy of Form
144 (if required by Rule 144) no later than the time such form is required to be transmitted to the
Commission for filing and such other documentation as the Company may reasonably require to assure
compliance with Rule 144 in connection with such disposition.
(e) Participant Status. The Participant represents and warrants that, as of the date
hereof, the Participant is an officer, employee or director of the Company or a Subsidiary.
(f) Section 83(b) Election. The Participant agrees that, within 20 days of the date
of this Agreement, the Participant shall give notice to the Company as to whether or not the
Participant has made an election pursuant to Section 83(b) of the Internal Revenue Code of 1986, as
amended, with respect to the Restricted Shares acquired hereunder (an “83(b) election”). Any such
83(b) election shall use as the value of the Restricted Shares the Fair Market Value of the
Restricted Shares on the Grant Date determined as provided in the Plan, and the Participant shall
take a consistent position on the Participant’s tax returns.
6. Liquidity Event.
(a) Accelerated Vesting. Upon the occurrence of a Liquidity Event, any unvested
Restricted Shares shall become fully vested.
(b) Definitions. For purposes of this Section 6, the following terms will have the
definitions set forth below:
“Liquidity Event” shall mean either (a) the consummation of the sale, transfer,
conveyance or other disposition in one or a series of transactions, of the equity securities of the
Company or its successor held, directly or indirectly, by all of the Principal Stockholders in
exchange for cash, or in the case of any transaction resulting in the exchange for consideration
other than cash (“non-cash consideration”) the receipt of cash upon the disposition of such
non-cash consideration, such that immediately following such transaction or disposition (or series
of related transactions or dispositions), the total number of all equity securities held, directly
or indirectly, by all of the Principal Stockholders and any Affiliate of any Principal Stockholders
is, in the aggregate, less than 30% of the total number of equity securities (as such securities
may be adjusted for the occurrence of a corporate event) received by all of the Principal
Stockholders and any Affiliate of any Principal Stockholders in respect of their Invested Capital;
(b) the
consummation of any Company Sale in which more than 60% of the consideration to the Principal
Stockholders in such Company Sale is paid in cash or Publicly Traded Securities; or (c) the
consummation of the sale, lease, transfer, conveyance or other disposition (other than by way of
merger, recapitalization, sale of stock, equity purchase or consolidation), in one or a series of
transactions, of all or substantially all of the assets of the Company, or the Company and its
Subsidiaries taken as a whole, to any “person “ (as such term is defined in Section 13(d)(3) of the
Exchange Act) other than to any Principal Stockholders or an Affiliate of any Principal
Stockholders.
“Company Sale” shall mean the consummation of any transaction or series of
transactions (including, without limitation, any merger, recapitalization, reorganization, sale of
stock or other similar transaction) pursuant to which one or more Persons or group of Persons
(other than any Principal Stockholder) acquires shares of common stock of the Company possessing
the voting power (without taking into account the Stockholders Agreement or any other agreement or
proxy limiting the voting power of the holder of such securities) sufficient to elect a majority of
the members of the Board or the board of directors of the successor to the Company.
“Initial Investment” shall mean the shares of Common Stock acquired by the Principal
Stockholders in connection with their investment in the Company on the Effective Date.
“Invested Capital” shall mean the dollar amount paid by the Principal Stockholders for
the Initial Investment and any subsequent investment by the Principal Stockholders, including any
fees and expenses paid by any Principal Stockholder.
“Principal Stockholder” means Explorer Coinvest LLC, a Delaware limited liability
company and any of its affiliates to which Explorer Coinvest LLC or any other Person transfers
Company Common Stock or to which the Company issues Company Common Stock.
7. Dividends, etc. The Participant shall be entitled to (i) receive all dividends or other
distributions at the time (and in the same calendar year as) such dividends or distributions are
paid with respect to those vested and unvested Restricted Shares of which the Participant is the
record owner on the record date for such dividend or other distribution, and (ii) subject to the
terms of the Stockholders Agreement, vote any Restricted Shares of which the Participant is the
record owner on the record date for such vote; provided, however, that any property (other
than cash) distributed with respect to a Restricted Share (the “Associated Share”) acquired
hereunder, including without limitation a distribution of Restricted Shares by reason of a stock
dividend, stock split or otherwise, or a distribution of other securities with respect to an
Associated Share, shall be subject to the restrictions of this Agreement in the same manner and for
so long as the
Associated Share remains subject to such restrictions, and shall be promptly forfeited if and when
the Associated Share is so forfeited.
8. Miscellaneous.
(a) Tax Withholding. Whenever any cash or other payment is to be made hereunder or
with respect to the Restricted Shares, the Company or any Subsidiary shall have the power to
withhold an amount (in cash or in Common Stock granted hereunder upon vesting) sufficient to
satisfy federal, state, and local withholding tax requirements relating to such transaction and the
Company or such Subsidiary may defer the payment of cash or other payment until such requirements
are satisfied; provided, however, that in the event that the Company withholds
shares issuable to the Participant (or any portion thereof) to satisfy any applicable withholding
taxes, the Company shall withhold a number of whole shares having a Fair Market Value, determined
as of the date of vesting, not in excess of the minimum of tax required to be withheld by law (or
such lower amount as may be necessary to avoid liability award accounting). The Participant shall
be responsible for all withholding taxes and other tax consequences of this award of Restricted
Shares.
(b) No Right to Continued Service. Nothing in the Plan or this Agreement shall
interfere with or limit in any way the right of the Company or any of its Subsidiaries to terminate
the Participant’s service as a member of the Board at any time, or confer upon the Participant any
right to continue as a member of the Board.
(c) Binding Effect; Benefits. This Agreement shall be binding upon and inure to the
benefit of the parties to this Agreement and their respective successors and assigns. Nothing in
this Agreement, express or implied, is intended or shall be construed to give any person other than
the parties to this Agreement or their respective successors or assigns any legal or equitable
right, remedy or claim under or in respect of any agreement or any provision contained herein.
(d) Amendment. This Agreement may not be amended, modified or supplemented orally,
but only by a written instrument executed by the Participant and the Company.
(e) Assignability. Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable by the Company or the
Participant without the prior written consent of the other party,
provided that the Company
may assign all or any portion of its rights or obligations under this Agreement to one or more
persons or other entities designated by it.
(f) Applicable Law. This Agreement shall be construed in accordance with and governed
by the laws of the State of Delaware, without reference to principles of conflict
of laws which would give rise to the applicable of the substantive law of another
jurisdiction.
(g) Severability; Blue Pencil. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall not be affected
thereby.
(h) Consent to Electronic Delivery. By executing this Agreement, the Participant
hereby consents to the delivery of information (including, without limitation, information required
to be delivered to the Participant pursuant to applicable securities laws) regarding the Company
and the Subsidiaries, the Plan, and the Restricted Shares via the Company web site or other
electronic delivery.
(i) Section and Other Headings, etc. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(j) Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly
given or made upon receipt) by delivery in person, by courier service, by cable, by facsimile, by
telegram, by telex or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses (or at such other address for a party as shall
be specified in a notice given in accordance with this Section 8(j):
| (i) | if to the Company: | ||
| Explorer Holding Corporation 1001 Pennsylvania Ave NW Suite 220 South Washington, DC 20004 Attention: Ian Fujiyama Facsimile No.: (202) 347-9250 |
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| with a copy to: Debevoise & Plimpton LLP 919 Third Avenue New York, NY 10022 Attention: Jeffrey J. Rosen Facsimile No.: (212) 909-6836 |
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| (ii) | if to the Participant, to the address set forth on the signature page hereof. |
(k) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which together shall constitute one and the
same instrument.
– Signature page follows –
IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement as of the
Grant Date.
| EXPLORER HOLDING CORPORATION |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| PARTICIPANT |
||||
| Name: | ||||
| Address of Participant: | ||||
| Facsimile: | ||||
| Email: | ||||
Grant Date
|
, 20 | |||||
Restricted Shares |
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Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption “Experts” and to the use of our report
dated June 18, 2010, in Amendment No. 1 to the Registration Statement (Form S-1 No. 333-167645) and
related Prospectus of Booz Allen Hamilton Holding Corporation for the registration of shares of its
Class A common stock.
/s/ Ernst & Young LLP
McLean, Virginia
July 26, 2010