CUSIP NO. 67082B 10 5 SCHEDULE 13D Page 17 of 39
EXHIBIT 7(a)
VOTING AGREEMENT AND IRREVOCABLE PROXY
This VOTING AGREEMENT AND IRREVOCABLE PROXY, dated as of October 22,
2001 (this "AGREEMENT"), is entered into by and among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an
individual residing in the State of Florida ("▇▇▇▇▇▇"), OAO Corporation, a
Maryland corporation of which ▇▇▇▇▇▇ owns 95% of the issued and outstanding
capital stock ("OAOC," and collectively with ▇▇▇▇▇▇, the "STOCKHOLDERS," and
each, a "STOCKHOLDER"), Terrapin Partners Subsidiary LLC, a Delaware limited
liability company (the "SUBSIDIARY"), and Terrapin Partners Holding Company LLC,
a Delaware limited liability company and the managing member of the Subsidiary
(the "HOLDING COMPANY").
W I T N E S S E T H
WHEREAS, on the date hereof, pursuant to the terms of that certain
Contribution Agreement, dated the date hereof, by and among ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, J. ▇▇▇▇▇▇▇ ▇▇▇ and the Holding Company (the "CONTRIBUTION AGREEMENT"),
▇▇▇▇▇▇ contributed to the Holding Company 450,000 shares (the "CONTRIBUTED
SHARES") of the common stock of OAO Technology Solutions, Inc., a Delaware
corporation ("OAO"), in exchange for a like number of Common Units of the
Holding Company;
WHEREAS, on the date hereof, ▇.▇. ▇▇▇▇▇▇ Equity Investors I, L.P., a
Delaware limited partnership ("JFLEI"), and JFL Co-Invest Partners II, L.P., an
affiliate of JFLEI ("JFL CO-INVEST," and collectively with JFLEI, the "JFL
GROUP"), made a cash contribution to the Holding Company of $10,500,000 in
exchange for the issuance to the JFL Group of an aggregate of 6,363,636 Common
Units of the Holding Company;
WHEREAS, on the date hereof, the Holding Company then contributed
the $10,500,000 of cash, the Contributed Shares and 919,458 additional shares of
OAO common stock obtained pursuant to the Contribution Agreement to the
Subsidiary in exchange for 7,733,094 Common Units of the Subsidiary;
WHEREAS, on the date hereof, the Subsidiary then acquired 5,729,356
shares of OAO common stock from Safeguard Scientifics, Inc. and certain of its
affiliates (collectively, "SAFEGUARD") in exchange for (i) $9,453,437 in cash
and (ii) 2,006 of the Series A 4% Cumulative Convertible Redeemable Preferred
Units of the Subsidiary;
WHEREAS, as a result of the foregoing transactions, the Subsidiary
will hold 7,098,814 shares of OAO common stock;
WHEREAS, in addition, ▇▇▇▇▇▇ owns:
(i) beneficially and of record 1,250,000 shares of OAO
common stock (of which 1,100,000 shares have been sold, transferred and
assigned by ▇▇▇▇▇▇ to OAOC and another 55,000 shares held by OAOC were
purchased by OAOC on the open market) that are subject to (A) the Demand
Note (amending the Promissory Note executed on October 2, 1998), dated
December 21, 1999, made by OAOC in favor of OAO in the
CUSIP NO. 67082B 10 5 SCHEDULE 13D Page 18 of 39
principal amount of $2,520,021 (the "DEMAND NOTE") and (B) the Guarantee
and Pledge Agreement, dated October 2, 1998, made by ▇▇▇▇▇▇ in favor of
OAO (the "OAO PLEDGE Agreement") (such 1,250,000 shares, the "OAO PLEDGED
SHARES"). The OAO Pledge Agreement permits ▇▇▇▇▇▇ to vote the OAO Pledged
Shares unless and until a formal declaration of default is declared by
OAO, at which time OAO will have all voting powers;
(ii) beneficially and of record 200,000 shares of OAO common
stock that are subject to that certain Collateral Agreement, dated as of
December 1, 1998, in favor of U.S. Bank Leasing (the "U.S. BANK PLEDGE
AGREEMENT") (such 200,000 shares, the "U.S. BANK PLEDGED SHARES"). The
U.S. Bank Pledge Agreement does not prohibit Stockholder from voting the
U.S. Bank Pledged Shares unless and until U.S. Bank Leasing transfers the
U.S. Bank Pledged shares to its name; and
(iii) beneficially and of record, as of the date hereof, an
additional 376,400 shares of OAO common stock that are either owned free
and clear of any encumbrances or are pledged to secure certain obligations
of Stockholder or his affiliates (the "Other Shares," and together with
the OAO Pledged Shares and the U.S. Bank Pledged Shares, aggregating
1,826,400 shares of OAO common stock, are sometimes collectively referred
to herein as the "SHARES").
WHEREAS, as an essential inducement and condition to entering into
the transactions described above, including the Contribution Agreement, the JFL
Group's cash contribution of $10,500,000 to the Holding Company and the
Subsidiary's purchase of 5,729,356 shares of OAO common stock from Safeguard,
the Holding Company and the Subsidiary have requested that Stockholders agree,
and Stockholders have agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. VOTING AGREEMENT. Stockholders hereby agree with the Holding
Company and the Subsidiary that, at any meeting of OAO's stockholders, however
called, or in connection with any written consent of OAO's stockholders,
Stockholders shall vote the Shares or execute a written consent in accordance
with the voting instructions of the Subsidiary as provided to Stockholders
reasonably in advance of the date of such vote.
2. IRREVOCABLE PROXY.
(a) For purposes of Section 2(c) below, Stockholders hereby
constitute and appoint the Subsidiary (the "PROXY HOLDER"), with full power of
substitution, their true and lawful proxy and attorney-in-fact to vote the
Shares at any meeting (and any adjournment or postponement thereof) of OAO's
stockholders, or to execute a written consent of stockholders with respect to
the Shares in lieu of any such meeting.
(b) This proxy and power of attorney (i) is granted in
consideration of (A) the Holding Company's agreement to consummate the
transactions contemplated by the Contribution Agreement and to issue Common
Units to Stockholder in exchange for the
CUSIP NO. 67082B 10 5 SCHEDULE 13D Page 19 of 39
Contributed Shares under the terms of the Limited Liability Company Operating
Agreement of the Holding Company, dated the date hereof (the "HC OPERATING
AGREEMENT"), all on the terms and conditions set forth in the Contribution
Agreement and the HC Operating Agreement, (B) the JFL Group's agreement to
contribute $10,500,000 of cash to the Holding Company on the terms and
conditions set forth in the HC Operating Agreement and (C) the Subsidiary's
agreement to purchase 5,729,356 shares of OAO common stock from Safeguard using
a portion of the proceeds contributed to the Holding Company by the JFL Group,
and (ii) is coupled with an interest sufficient in law to support an irrevocable
proxy. This proxy revokes all prior proxies granted by Stockholder. Stockholders
shall not grant any proxy to any Person (as defined below) that conflicts with
the proxy granted herein, and any attempt to do so shall be void. The power of
attorney granted herein is a durable power of attorney and shall survive the
death or incapacity of Stockholder. "PERSON" means a natural person, partnership
(whether general or limited and whether domestic or foreign), limited liability
company, foreign limited liability company, trust, estate, association,
corporation, custodian, nominee or any other individual or entity in its own or
representative capacity.
(c) If Stockholders fail for any reason to vote the Shares
in accordance with the requirements of Section 1 hereof, then the Proxy Holder
shall have the right to vote the Shares at any meeting of OAO's stockholders and
in any action by written consent of OAO's stockholders in accordance with the
provisions of this Section 2. The vote of the Proxy Holder shall control in any
conflict between the Proxy Holder's vote of the Shares and either Stockholder's
vote of the Shares.
3. EFFECT UPON FORECLOSURE. The voting agreement in Section 1 and
the irrevocable proxy granted in Section 2 are subject to (i) the restrictions
on ▇▇▇▇▇▇'▇ voting rights in the OAO Pledge Agreement in the event OAO makes a
formal declaration of default and (ii) U.S. Bank Leasing transferring the U.S.
Bank Pledged shares into its name under the U.S. Bank Pledge Agreement.
4. DIRECTOR MATTERS EXCLUDED. The Holding Company and the
Subsidiary acknowledge and agree that no provision of this Agreement shall limit
or otherwise restrict ▇▇▇▇▇▇ with respect to any act or omission that ▇▇▇▇▇▇ may
undertake or authorize in his capacity as a director of OAO, including, without
limitation, any vote that ▇▇▇▇▇▇ may make as a director of OAO with respect to
any matter presented to the Board of Directors of OAO.
5. REPRESENTATIONS AND WARRANTIES. Each Stockholder hereby
represents and warrants to the Holding Company and Subsidiary as follows:
(a) Ownership of Shares. Other than as set forth herein,
▇▇▇▇▇▇ is the record and beneficial owner of the Shares, and has sole
investment power and voting rights with respect to the Shares (other than
as provided in this Agreement). There are no limitations, qualifications
or restrictions on Stockholders' voting rights with respect to the Shares.
(b) Power; Binding Agreement. Each Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery
and performance of this Agreement by such Stockholder will not violate any
applicable law or any agreement or any court order to which such
Stockholder is a party or is subject including, without
CUSIP NO. 67082B 10 5 SCHEDULE 13D Page 20 of 39
limitation, the Demand Note, the OAO Pledge Agreement, the U.S. Bank
Pledge Agreement or any other pledge or collateral agreement
(collectively, the "▇▇▇▇▇▇ DOCUMENTS"), or any voting agreement or voting
trust. This Agreement has been duly and validly executed and delivered by
such Stockholder and constitutes the legal, valid and binding obligation
of such Stockholder, enforceable against such Stockholder in accordance
with its terms.
6. OTHER COVENANTS AND AGREEMENTS. Each Stockholder hereby
further covenants to and agrees with the Holding Company and the Subsidiary as
follows:
(a) Restriction on Transfer, Proxies and Non-Interference.
Except as expressly permitted by this Agreement, such Stockholder shall
not, directly or indirectly:
(i) other than as currently pledged and encumbered
under the ▇▇▇▇▇▇ Documents, offer for sale, sell, transfer, tender,
pledge, encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect
to or consent to the offer for sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of the
Shares or any interest therein, to any Person other than the
Subsidiary;
(ii) grant any proxies or powers of attorney or deposit
any Shares into a voting trust or enter into a voting agreement with
respect to any Shares; or
(iii) take any action that would make any representation
or warranty of such Stockholder contained herein untrue or incorrect
or have the effect of preventing or disabling such Stockholder from
performing any of Stockholder's obligations under this Agreement.
(b) Contribution of Shares to the Holding Company. Upon the
termination of the restrictions contained in any of the ▇▇▇▇▇▇ Documents
as to Stockholder's ability to freely transfer any Shares, Stockholder
shall promptly contribute any and all of such freely transferable Shares
to the Holding Company in exchange for a like number of Common Units of
the Holding Company at an agreed upon capital contribution value of $1.65
per Share so contributed (subject to equitable adjustment in accordance
with Section 7.2.3 of the HC Operating Agreement in the event the Common
Units of the Holding Company are subdivided into a greater number of
Common Units, combined into a smaller number of Common Units, or any
similar transaction were to occur); provided, however, that with respect
to the OAO Pledged Shares that are beneficially owned by OAOC, the
Stockholders shall have until (i) 45 days from the date all encumbrances
on those Shares are removed or (ii) March 31, 2002, whichever is later, to
contribute such shares to the Holding Company, although they shall use
their reasonable best efforts to contribute such Shares to the Holding
Company at such earlier time if they are able to do so. For the sake of
clarity and by way of example, if the OAO Pledged Shares became freely
transferable and the other Shares remained pledged or otherwise
encumbered, Stockholder shall contribute the freely transferable OAO
Pledged Shares to the Holding Company and shall transfer other Shares to
the Holding Company as they become freely transferable.
CUSIP NO. 67082B 10 5 SCHEDULE 13D Page 21 of 39
(c) Further Assurances. Each Stockholder hereby covenants
and agrees to, upon the request of either the Holding Company or the
Subsidiary, execute and deliver any additional documents and take such
further actions as may be deemed by the Holding Company or the Subsidiary
to be necessary or desirable to carry out the provisions of this
Agreement.
(d) Reliance by the Holding Company and the Subsidiary. Each
Stockholder understands and acknowledges that the Holding Company and the
Subsidiary are entering into the transactions described in the recitals to
this Agreement and in Section 2(b) above in reliance upon such
Stockholder's execution and delivery of this Agreement and the performance
of his obligations hereunder.
7. STOP TRANSFER. Each Stockholder agrees with, and covenants to,
the Holding Company and the Subsidiary that such Stockholder shall not request
that OAO register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any Shares, unless such transfer is made
pursuant to and in compliance with this Agreement.
8. CHANGE IN OAO COMMON STOCK; DIVIDENDS. In the event of a stock
dividend or distribution, or any change in OAO common stock by reason of any
stock dividend, split-up, recapitalization, combination, exchange of shares or
the like, the term "SHARES" shall be deemed to refer to and include the Shares
as well as all such stock dividends and distributions and any shares into which
or for which any or all of the Shares may be changed or exchanged.
9. TERMINATION. This Agreement shall terminate in its entirety on
the earliest of the date on which (a) the Subsidiary or its permitted assignee
sells or otherwise disposes of all or substantially all of its ownership
interest in the common stock of OAO, (b) OAO effects the sale, lease or transfer
of all or substantially all of its assets to any Person or group other than the
Holding Company, the Subsidiary or their Affiliates (as such term is defined in
the HC Operating Agreement) and (c) all of the Shares have been contributed to
the Holding Company in accordance with the terms of this Agreement. Nothing set
forth herein shall relieve either Stockholder of any liability for any breach of
any representation, warranty, covenant, agreement or obligation set forth in
this Agreement arising prior to such termination of this Agreement.
10. MISCELLANEOUS.
(a) Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
(b) Certain Events. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to the Shares and shall be
binding upon any Person to whom legal or beneficial ownership of any Shares
shall pass, whether by operation of law or otherwise. Notwithstanding any
transfer of Shares, the transferor shall remain liable for the performance of
all obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
party; provided, however, that the
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Subsidiary may, in its sole discretion, assign its rights and obligations
hereunder to the Holding Company or any other direct or indirect wholly owned
subsidiary of the Holding Company, and the Holding Company may, in its sole
discretion, assign its rights and obligations hereunder to any other direct or
indirect wholly owned subsidiary of the Holding Company.
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly received if so given) by hand delivery, by telecopy,
by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any nationally-recognized overnight courier service, such as
United Parcel Service or Federal Express, providing proof of delivery. Any such
notice or communication shall be deemed to have been delivered and received (i)
in the case of hand delivery, on the date of such delivery, (ii) in the case of
telecopy, on the date sent if confirmation of receipt is received, (iii) in the
case of a nationally-recognized overnight courier service, in circumstances
under which such courier guarantees next business day delivery, on the next
business day after the date when sent and (iv) the case of mailing, on the third
business day following that on which the piece of mail containing such
communication is posted. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to either Stockholder: c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ # ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holding Company or the Terrapin Partners Holding Company LLC
Subsidiary: Terrapin Partners Subsidiary LLC
c/o ▇.▇. ▇▇▇▇▇▇ & Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the matter set forth above.
(f) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
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(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damage for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity.
(h) No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(i) Governing Law.
(1) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND
IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF. The parties hereby irrevocably submit
to the jurisdiction of the courts of the State of Delaware and the Federal
courts of the United States of America located in the State of Delaware
solely in respect of the interpretation and enforcement of the provisions
of this Agreement, and in respect of the transactions contemplated hereby,
and hereby waive, and agree not to assert, as a defense in any action,
suit or proceeding for the interpretation or enforcement hereof or of any
such document, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or
that the venue thereof may not be appropriate or that this Agreement or
any such document may not be enforced in or by such courts, and the
parties hereto irrevocably agree that all claims with respect to such
action or proceeding shall be heard and determined in such a Delaware
State or Federal court. The parties hereby consent to and grant any such
court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers
in connection with any such action or proceeding in the manner provided in
Section 10(e) in such other manner as may be permitted by Applicable Law,
shall be valid and sufficient service thereof.
(2) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
CUSIP NO. 67082B 10 5 SCHEDULE 13D Page 24 of 39
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS IN THIS SECTION 10(i).
(j) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
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CUSIP NO. 67082B 10 5 SCHEDULE 13D Page 25 of 39
IN WITNESS WHEREOF, the Holding Company, the Subsidiary and
Stockholders have caused this Agreement to be duly executed as of the day and
year first above written.
TERRAPIN PARTNERS SUBSIDIARY LLC
By: Terrapin Partners Holding Company LLC,
its managing member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Member
TERRAPIN PARTNERS HOLDING COMPANY
LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Member
OAO CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇