SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of September 30, 1999
by and among
DYNAMICS RESEARCH CORPORATION,
DRC ENCODER, INC.,
DRC METRIGRAPHICS, INC.,
DRC SOFTWARE, INC. and
DRC TELECOM, INC.,
as the Borrowers,
and
THE LENDERS PARTY HERETO
and
XXXXX BROTHERS XXXXXXXX & CO.,
as Agent
DYNAMICS RESEARCH CORPORATION
CREDIT AGREEMENT
TABLE OF CONTENTS
SECTION PAGE
1. DEFINITIONS AND RULES OF INTERPRETATION 1
1.1. Definitions 1
1.2. Rules of Interpretation 12
2. THE CREDIT FACILITIES 13
2.1. Amounts and Terms 13
2.2. Fees 14
2.3. Reduction of Commitments 14
2.4. Revolving Credit Note 15
2.5. Reserved 15
2.6. Interest on Revolving Credit Loans 15
2.7. Requests for Revolving Credit Loans 16
2.8. Reserved 16
2.9. Funds for Revolving Credit Loans 16
3. PREPAYMENT OF THE REVOLVING CREDIT LOANS; RESERVES 17
3.1. Voluntary Prepayments 17
3.2. Mandatory Prepayments 18
4. CERTAIN GENERAL PROVISIONS 18
4.1. Funds for Payments 18
4.2. Computations 19
4.3. Reserved 19
4.4. Reserved 19
4.5. Additional Costs, Etc 19
4.6. Capital Adequacy 20
4.7. Certificate 21
4.8. Indemnity 21
4.9. Interest on Overdue Amounts 21
4.10. Mitigation 21
4.11. Joint and Several Obligations 21
5. REPRESENTATIONS AND WARRANTIES 22
5.1 Organization, Standing, etc. of the Borrowers 22
5.2 Subsidiaries 22
5.3 Qualification 22
5.4 Financial Information; Disclosure, etc. 23
5.5 Licenses, etc. 23
5.6 Material Agreements 23
5.7 Tax Returns and Payments 24
5.8 Indebtedness, Liens and Investments, etc. 24
5.9 Title to Properties; Liens 24
5.10 Litigation, etc. 24
5.11 Authorization; Compliance with Other Instruments 24
5.12 Governmental Consent 25
5.13 Regulation U, etc 25
5.14 Employee Retirement Income Security Act of 1974 25
5.15 Environmental Matters 26
5.16 Use of Proceeds 26
5.17 Investment Company Act; Public Utility Holding Company Act 26
6. AFFIRMATIVE COVENANTS OF THE BORROWERS 27
6.1 Records and Accounts 27
6.2 Financial Statements, Certificates and Information 28
6.3 Legal Existence; Compliance with Laws, etc. 30
6.4 Insurance 30
6.5 Payment of Taxes 31
6.6 Payment of Other Indebtedness, etc. 31
6.7 Further Assurances 31
6.8 Depository Account 31
6.9 Use of Proceeds 32
6.10 Negative Pledges 32
6.11 Regulation U 32
7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS 34
7.1 Indebtedness 34
7.2 Mortgages, Liens, etc. 36
7.3 Revolving Credit Loans, Guarantees and Investments 37
7.4 New Leases 38
7.5 Mergers and Consolidations 38
7.6 Sale of Assets 39
7.7 Capital Expenditures 39
7.8 Distributions 39
7.9 Compliance with ERISA 39
7.10 Transactions with Affiliates 40
7.11 Observance of Subordination Provisions, etc. 40
7.12 Environmental Liabilities 40
7.13 Subsidiaries 40
8. FINANCIAL COVENANT 40
9. DEFAULTS; REMEDIES 41
9.1 Events of Default; Acceleration 41
9.2 Remedies on Default, etc. 43
10. [RESERVED] 44
11. CONDITIONS TO ALL REVOLVING CREDIT LOANS 44
11.1. Accuracy of Representations; No Event of Default 44
11.2. No Legal Impediment 44
12. THE AGENT. 44
12.1. Appointment, Powers and Immunities 44
12.2. Reliance by Agent 45
12.3. Defaults 45
12.4. Rights as a Lender 46
12.5. Indemnification 46
12.6. Non-Reliance on Agent and Other Lenders 46
12.7. Failure to Act 47
12.8. Resignation of Agent 47
12.9. Cooperation of Lenders 47
12.10. Amendment of 12 47
12.11. Reliance 47
13. SETOFF, ETC 48
14. EXPENSES 48
15. INDEMNIFICATION 49
16. SURVIVAL OF COVENANTS, ETC 49
17. ASSIGNMENT AND PARTICIPATION 50
17.1. Assignment by the Lenders 50
17.2. Assignment by Borrowers 50
17.3. Participations by the Lenders 50
17.4 Replacement of Lender 51
18. FOREIGN LENDER 51
19. NOTICES, ETC. 52
20. GOVERNING LAW 54
21. HEADINGS 54
22. COUNTERPARTS 54
23. ENTIRE AGREEMENT, ETC 54
24. WAIVER OF JURY TRIAL 54
25. CONSENTS, AMENDMENTS, WAIVERS, ETC 55
26. CONFIDENTIALITY 56
27. SEVERABILITY 56
28. NATURE OF LENDER'S OBLIGATIONS 56
SCHEDULES AND EXHIBITS
Schedule 5.2 Subsidiaries
Schedule 5.4 Financial Statements; Disclosure
Schedule 5.5 Licenses
Schedule 5.6 Material Agreements
Schedule 5.7 Taxes
Schedule 5.8 Existing Indebtedness
Schedule 5.9 Real Property interests
Schedule 5.10 Litigation
Schedule 5.12 Consents
Schedule 5.15 Hazardous Materials
Schedule 5.18 Patents and Trademarks
Schedule 5.19 Chief Executive Offices
Schedule 5.20 Year 2000
Schedule 5.21 Filing Offices
Schedule 5.22 Government Contracts
Schedule 7.2 Encumbrances
Exhibit A Cash Flow Projections
Exhibit B Form of Revolving Credit Note
Exhibit C Form of Loan Request
Exhibit D Form of Borrowing Base Certificate
Exhibit E Form of Compliance Certificate
Exhibit F Form of Opinion of Borrowers' Counsel
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
("Agreement") is made as of the 30th day of September, 1999, by and among
DYNAMICS RESEARCH CORPORATION, a Massachusetts corporation ("DRC"), DRC
ENCODER, INC., a Massachusetts corporation ("Encoder"), DRC METRIGRAPHICS,
INC., a Massachusetts corporation ("Metrigraphics"), DRC SOFTWARE, INC., a
Massachusetts corporation ("Software"), DRC TELECOM, INC., a Massachusetts
corporation ("Telecom"), and XXXXX BROTHERS XXXXXXXX & CO., a New York limited
partnership ("BBH&Co"), as a Lender (as defined below), and as Agent (as
defined below) for itself and the other Lenders (as defined below),
BANKBOSTON, N.A., a national banking association ("BankBoston"), THE CHASE
MANHATTAN BANK, a New York banking corporation ("Chase"), STATE STREET BANK
AND TRUST COMPANY, a Massachusetts trust company ("State Street"), CITIZENS
BANK OF MASSACHUSETTS, a Massachusetts financial institution ("Citizens") and
the other Lenders from time to time party hereto.
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. Definitions. The following terms shall have the meanings set
forth in this 1 or elsewhere in the provisions of this Credit Agreement
referred to below:
Account Debtor. Any Person who is or may become obligated under,
with respect to or on account of, an Account.
Accounts. All currently existing and hereafter arising accounts,
accounts receivable, contract rights and all other forms of obligations owing
to any Borrower arising out of the sale or lease of goods or the rendition of
services by such Borrower.
Affected Lender. The meaning specified in 17.4.
Affiliate. As applied to any Person, a spouse of such Person, any
relative (by blood, adoption or marriage) of such Person within the third
degree, any managing member, director or officer of such Person, any
corporation, association, firm or other entity of which such Person is a
managing member, director or officer and any other Person directly or
indirectly controlling, controlled by or under direct or indirect common
control with such Person.
Agent. BBH&Co in its capacity as agent for the Lenders hereunder,
as well as its successors and assigns in such capacity pursuant to 12.8.
Argus. Argus Management Corporation, a Massachusetts
corporation.
Argus Report. The meaning specified in 6.14(a).
Assignment of Claims Act. The federal Assignment of Claims Act,
codified in 31 U.S.C. 3727 and 41 U.S.C. 15, as amended from time to time,
and any successor statute or statute.
Available Total Commitment. The Total Commitment less the sum of
the outstanding principal amounts advanced as Revolving Credit Loans.
Base Rate. For any date, a rate per annum equal to the higher of
(i) the Federal Funds Effective Rate in effect on such day plus one-half of
one percent (.50%) or (ii) the annual rate of interest publicly announced from
time to time by the Agent as its "commercial base rate" in effect on such day.
Borrower. Each of DRC, Encoder, Metrigraphics, Software and Telecom.
Borrowing Base. At any date of determination determined in
accordance with 6.2(f), the sum of (i) Eighty-five percent (85%) multiplied
by the aggregate amount of the Borrowers' Eligible Accounts, plus (ii) the
lesser of: (A) Eighty percent (80%) of the fair market value of the Real
Property as shown on the most recent MAI appraisal, if any, which may be
requested at any time after the Closing Date by the Agent or DRC, and (B)
$10,800,000, plus (iii) the lesser of : (A) Forty percent (40%) multiplied by
the aggregate amount of the Borrowers' Eligible Raw Materials, and (B)
$800,000.
Borrowing Base Certificate. A certificate in the form of Exhibit D.
Business Day. Any day on which banking institutions in Boston,
Massachusetts are open for the transaction of banking business.
Capital Expenditures. Any payment made directly or indirectly by
Borrowers or any of their Subsidiaries for the purpose of acquiring or
constructing fixed assets, real property or equipment which in accordance with
GAAP would be added as a debit to the Consolidated fixed asset account of DRC
and its Subsidiaries, including without limitation amounts paid or payable
under any conditional sale or other title retention agreement or under any
lease or other periodic payment arrangement which is of such a nature that
payment obligations of a Borrower thereunder would be required by GAAP to be
capitalized and shown as liabilities on the Consolidated balance sheet of DRC
and its Subsidiaries.
Capitalized Leases. Leases under which a Person is the lessee or
obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of such Person in accordance
with GAAP.
Change in Control. Shall be deemed to have occurred if any Person
or group (within the meaning of Rule 13d-5 of the Securities and Exchange
Commission as in effect on the date hereof) shall own directly or indirectly,
beneficially or of record, shares representing more than 50%, on a fully-
diluted basis, of the aggregate ordinary voting power of DRC.
Closing Date. The date set forth in the preamble of this Agreement.
Code. The Internal Revenue Code of 1986, as amended.
Collateral. The meaning specified in 2.10.
Commitment. As to any Lender, such Lender's portion of the Total
Commitment equal to such Lender's Percentage.
Commitment Fee. The meaning specified in 2.2(a)
Consolidated. With reference to any term herein, shall mean that
term as applied to the accounts of DRC and its Subsidiaries, consolidated in
accordance with GAAP.
Credit Agreement or Agreement. This Second Amended and Restated
Credit Agreement, including the Schedules and Exhibits hereto.
Current Lines of Business. The lines of business conducted by the
Borrowers and their Subsidiaries on the Closing Date and any business and
activities incidental thereto, including: (i) the provision of computer
systems services and other engineering and management support services to the
Department of Defense and other customers, including the development and
operation of computer-based management information systems in which software
programs are applied to collect, analyze, store and retrieve information
relating to component parts of weapons systems; and (ii) the manufacture of
position and motion sensors and other precision components, including encoders
that measure movement, and precision-patterned glass and electroformed metal
products.
Dollars or $. Dollars in lawful currency of the United States of
America.
Drawdown Date. The date on which any Revolving Credit Loan is
made or is to be made.
EBIT. For any period, the Consolidated Net Income of DRC and its
Subsidiaries for such period adjusted by adding back thereto amounts deducted
in computing such Consolidated Net Income in respect of each of (a) Interest
Expense of DRC and its Subsidiaries, (b) taxes in respect of income and
profits of DRC and its Subsidiaries, (c) expenses incurred by DRC and its
Subsidiaries, in an amount not to exceed $1,500,000 in the aggregate, in
connection with restructuring expenses (including fees and expenses payable
under Section 14, the fees and expenses of Argus, the appraiser and the
examiner referenced in Section 6.14, and fees and expenses of counsel and of
consultants for the Borrowers, and loan application fees for take-out
financing) and severance obligations to employees terminated before or during
such period, (d) the amount of the amendment fee described in 2.2(c) and (e)
non-cash charges related to employee compensation, including without
limitation executive officers.
Eligible Accounts. All Accounts created by a Borrower in the
ordinary course of business, that arise out of such Borrower's sale of goods
or rendition of services, as to which any Borrower has acquired title and the
Agent has a valid and perfected first-priority security interest under all
applicable law and as to which the Borrowers have furnished reasonably
detailed information to the Agent in a Borrowing Base Certificate, and that
are and at all times continue to be acceptable to Agent in all respects;
provided, however, that standards of eligibility may be fixed and revised from
time to time by Agent in Agent's reasonable good faith credit judgment and
further provided that, except as set forth in subsection (d) below, any lack
of compliance with the Assignment of Claims Act or any comparable provision
under state law shall not be grounds for disqualifying an Account from being
an Eligible Account. Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within
90 days of the invoice date;
(b) Accounts with respect to which the Account Debtor is an
officer, director or employee, or a spouse or any relative (by blood, adoption
or marriage within the third degree of any of the foregoing) or agent of any
Borrower;
(c) Accounts that are not payable in United States Dollars or
with respect to which the Account Debtor: (i) does not maintain its chief
executive office in the United States, or (ii) is not the United States, or
any state, municipality or other political subdivision of the United States or
any state thereof, or any department, agency, public corporation or other
political subdivision thereof, or is not organized under the laws of the
United States or any State thereof, or (iii) is the government of any foreign
country, or of any state, province, municipality, or other political
subdivision of any foreign country, or of any department, agency, public
corporation, or other instrumentality thereof, unless (x) the Account is
payable in United States Dollars, is described in the foregoing clause (i),
(ii) or (iii) and, when added with all other such Accounts described in such
clauses, represents obligations owing to Borrowers in an aggregate amount
equal to or less than $1,000,000, or (y) the Account is supported by an
irrevocable letter of credit satisfactory to Agent (as to form, substance, and
issuer or domestic confirming bank) that has been delivered to Agent and is
directly drawable by Agent, or (z) the Account is covered by credit insurance
in form and amount, and by an insurer, satisfactory to Agent;
(d) Accounts with respect to which the Account Debtor is
either (y) the United States or any department, agency, or instrumentality of
the United States or (z) any state of the United States if the Borrower has
not effected compliance with the Assignment of Claims Act or any comparable
provisions under state law with respect thereto; provided that any lack of
compliance with the Assignment of Claims Act or any comparable provision under
state law shall not be grounds for disqualifying an Account from being an
Eligible Account, so long as (i) the Agent has not requested compliance with
the Assignment of Claims Act or any comparable provision under state law (and
the Agent agrees to make such request at the direction of any Lender), or (ii)
after the Agent requests the Borrowers to comply with the Assignment of Claims
Act (or any such comparable provision under state law), either (A) the
Government Contract to which such Account relates is not a contract with
respect to which the Agent has request such compliance or (B) the aggregate
dollar amount of Accounts as to which there is not compliance with the
Assignment of Claims Act or such comparable provision under state law does not
exceed $250,000. The terms "compliance with the Assignment of Claims Act"
shall mean compliance with the procedures in FAR 32.805 (published at 48
C.F.R.);
(e) Accounts to the extent that the Account Debtor is a
creditor of a Borrower, has or has asserted a right of setoff, has disputed
its liability, or has made any claim with respect to the Account (including,
without limitation, Accounts if and to the extent that the Account Debtor has
withheld, suspended or disapproved of all or any portion thereof pursuant to
any audit, investigation or proceeding conducted by or on behalf of the
Account Debtor);
(f) Accounts with respect to which the Account Debtor is
paying pursuant to a negotiated payment plan (other than any such plan that is
in the ordinary course of such Account Debtor's business), is subject to a
bankruptcy, receivership or other form of insolvency or liquidation
proceeding, or becomes insolvent, or goes out of business; and
(g) Accounts the collection of which Agent, in its reasonable
good faith credit judgment, believes to be doubtful.
Eligible Raw Materials. An amount equal to the gross book value,
determined in accordance with the first-in, first-out method of inventory
accounting, as reflected on a Borrowers' Consolidated books and records in
accordance with GAAP consistently applied, of raw materials used to produce
the Borrowers' inventory, which raw materials are located on property owned or
leased by a Borrower and as to which the Borrower has acquired title and the
Agent has a valid and perfected first-priority security interest under all
applicable law and as to which the Borrowers have furnished reasonably
detailed information to the Agent in a Borrowing Base Certificate, after
taking into account all charges and liens (other than those of the Agent) of
all kinds against such raw materials and reductions in the market value
thereof, all as determined by the Agent in its reasonable business judgment,
which, absent manifest error, shall be final and binding upon the Borrowers.
Without limiting the generality of the foregoing, Eligible Raw Materials shall
not include any raw materials covered by a document of title or warehouse
receipt until such document of title or warehouse receipt has been delivered
to the Agent. Raw material immediately loses the status of Eligible Raw
Material if and when any Borrower sells it, otherwise passes title thereto,
consumes it, materially changes it in the course of processing the same, it is
damaged, or the Agent, at the written request of such Borrower and in the
Agent's sole discretion, releases or transfers its security interest therein.
Notwithstanding the foregoing, but without duplication, Eligible Raw
Materials shall be reduced by the amount of any specific reserve established
by any Borrower with respect to any Eligible Raw Materials.
Employee Benefit Plan. Any employee benefit plan within the
meaning of Section 3(3) of ERISA maintained or contributed to by a Borrower or
any ERISA Affiliate, or with respect to which a Borrower or any ERISA
Affiliate has actual or contingent liability, in each case other than a
Multiemployer Plan.
Environmental Laws. Any and all applicable current and future
treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any governmental authority, relating in any way to the
environment, preservation or reclamation of natural resources or human
exposure to or the management or Release or threatened Release of any
Hazardous Material.
ERISA. The Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate. Any Person which is treated as a single employer
with a Borrower under Section 414 of the Code or Section 4001 of ERISA.
ERISA Reportable Event. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of 4043 of ERISA and the
regulations promulgated thereunder as to which the requirement of notice has
not been waived.
Event of Default. The meaning specified in 9.1.
Federal Funds Effective Rate. For any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
First Restated Agreement. The meaning specified in 29.
GAAP. Generally accepted accounting principles in the United
States of America.
Government Contract. Any contract, agreement or purchase order as
to which any Borrower and the United States government or any agency or
instrumentality thereof are parties or as to which any Borrower and any State
or Commonwealth of the United States or any agency, instrumentality or
political subdivision thereof are parties.
Guaranteed Pension Plan. Any Employee Benefit Plan the benefits
of which are guaranteed on termination in full or in part by the PBGC pursuant
to Title IV of ERISA.
Hazardous Materials. All explosive or radioactive substances or
wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or
gaseous wastes, including petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls or materials or
equipment containing polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
Indebtedness. All obligations, contingent and otherwise, that in
accordance with GAAP should be classified upon a Person's balance sheet as
liabilities, including: (a) all debt and similar monetary obligations, whether
direct or indirect; (b) all liabilities secured by any mortgage, pledge,
security interest, lien, charge, or other encumbrance existing on property
owned or acquired by such Person subject thereto, whether or not the liability
secured thereby shall have been assumed; (c) all obligations in respect of
Capitalized Leases; and (d) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness owed by
others, including any obligation to supply funds to or in any manner to invest
in, directly or indirectly, the debtor, to purchase indebtedness, or to assure
the owner of indebtedness against loss, through an agreement to purchase
goods, supplies, or services for the purpose of enabling the debtor to make
payment of the indebtedness held by such owner or otherwise, and the
obligations to reimburse the issuer in respect of any letters of credit.
Interest Expense. For any period, the aggregate amount
(determined in accordance with GAAP) of interest paid or payable during such
period by any Person in respect of all Indebtedness for borrowed money,
Capitalized Leases and the deferred purchase price of property.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise), without duplication, for the acquisition of stock
or Indebtedness of, or for loans, advances, capital contributions or transfers
of property to, or in respect of any guaranties (or other commitments as
described under Indebtedness), or obligations of, any Person. In determining
the aggregate amount of Investments outstanding at any particular time: (a)
the amount of any Investment represented by a guaranty shall be taken at not
less than the principal amount of the obligations guaranteed and still
outstanding; (b) there shall be included as an Investment all interest accrued
with respect to Indebtedness constituting an Investment unless and until such
interest is paid; (c) there shall be deducted in respect of each such
Investment any amount received as a return of capital (but only by repurchase,
redemption, retirement, repayment, liquidating dividend or liquidating
distribution); (d) there shall not be deducted in respect of any Investment
any amounts received as earnings on such Investment, whether as dividends,
interest or otherwise, except that accrued interest included as provided in
the foregoing clause (b) may be deducted when paid; and (e) there shall not be
deducted from the aggregate amount of Investments any decrease in the value
thereof.
Lenders. Each Person which may from time to time own a Percentage
of the Total Commitment, including BBH&Co in its capacity as a Lender;
provided, however, that the term "Lender" shall not include any Participant.
Licenses. The meaning specified in 5.5.
Loan Documents. This Credit Agreement, the Revolving Credit Note,
the Security Documents and any other agreement, instrument or document
executed in connection herewith or therewith.
Loan Request. The meaning specified in 2.7.
Material Adverse Effect. Any event, matter or condition which
could reasonably be expected to have a material adverse effect on (a) the
business, condition (financial or otherwise), assets (including intangible
assets), properties, income or prospects of any or all of the Borrowers,
(b) the Borrowers' ability to pay and perform all of the Revolving Credit
Loans and other material obligations owing by them to the Agent and the
Lenders in accordance with the terms thereof, and/or (c) the Collateral (or
any portion thereof) or the security interests of the Agent and the Lenders in
the Collateral (or any portion thereof), or the priority of such security
interests.
Maturity Date. January 31, 2000.
Moody's. Xxxxx'x Investors Service, Inc.
Mortgage. The mortgage of even date herewith executed and
delivered by DRC to the Agent and covering the Real Property.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by a Borrower or any ERISA
Affiliate or with respect to which a Borrower or any ERISA Affiliate has
actual or contingent liability.
Net Income. Income (or loss), excluding extraordinary items of
income (or loss), of a Person for the period in question (taken as a
cumulative whole), after deducting therefrom all operating expenses, reserves
and other proper deductions (including any minority interest expense), all
determined in accordance with GAAP. For purposes hereof, the Consolidated Net
Income of DRC and its Subsidiaries (a) shall include the Net Income of any
other Persons acquired prior to the date that it either becomes a Subsidiary
of such Borrower, is merged into or consolidated with such Borrower, or such
other Person's assets are assigned, directly or indirectly, to such Borrower,
provided that, in the case of each of the foregoing, (i) the Net Income of
such other Person shall only be so included to the extent that such Net Income
is attributable to such other Person or to such assets as are acquired from
such other Person for the relevant period, all to the satisfaction of the
Agent, and (ii) any discrepancies in accounting treatment between such
Borrower and such other Person are conformed so as to make the foregoing
determination, to the satisfaction of the Agent.
Net Proceeds. The gross sales price generated by the sale of any
asset or property outside the ordinary course of business, less reasonable
fees and expenses (including commissions) customarily incurred in similar
arms-length sales and transfer taxes directly attributable to such sale less
income taxes payable from such proceeds within sixteen months after such sale.
Obligations. All indebtedness, obligations and liabilities of the
Borrowers to the Agent and the Lenders, individually or collectively, existing
on the date of this Credit Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract,
operation of law or otherwise, whether arising or incurred under the Loan
Documents or in respect of any of the Revolving Credit Loans or the Revolving
Credit Note or other instruments at any time evidencing any thereof, or
otherwise.
Outstanding. With respect to the Revolving Credit Loans, the
aggregate unpaid principal thereof as of any date of determination.
Participant. The meaning specified in 17.3.
PBGC. The Pension Benefit Guaranty Corporation created by 4002
of ERISA and any successor entity or entities having similar responsibilities.
Percentage. The meaning specified in 2.1(a).
Permitted Liens. The meaning specified in 7.2.
Person. Any individual, corporation, partnership, limited
liability company, trust, unincorporated association, joint venture,
organization, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Projections. DRC's forecasted four week statements of cash flow
for the month of October 1999 is attached hereto as Exhibit A.
Qualified Plan. A pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the IRC which a
Borrower or any ERISA Affiliate sponsors, maintains, or to which any such
Person makes, is making, or is obligated to make, contributions, or, in the
case of a multiple-employer plan (as described in Section 4064(a) of ERISA),
has made contributions at any time during the immediately preceding period
covering at least five (5) plan years, but excluding any Multiemployer Plan.
Real Property. The real property and improvements thereon known
and numbered as 00 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx.
Record. The grid attached to the Revolving Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by the Agent with respect to any Revolving Credit Loan
referred to in the Revolving Credit Note.
Release. Any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
Replacement Lender. The meaning specified in 17.4.
Required Lenders. Any two or more Lenders holding in the
aggregate at least sixty-six and two-thirds percent (66 2/3%) of the amounts
Outstanding on the Revolving Credit Loans or, if no amounts are Outstanding
hereunder, of the Percentages of the Total Commitment.
Revolving Credit Loan. Any revolving credit loan made pursuant to
2.1(b).
Revolving Credit Note. The meaning specified in 2.4.
S&P. Standard & Poor's Ratings Group, a division of the McGraw
Hill Companies, Inc.
Security Documents. The Security Agreements dated as of September
30, 1999 by each Borrower in favor of the Agent, the Mortgage, the Pledge
Agreement dated as of September 30, 1999 by DRC in favor of the Agent, and any
and all notifications, agreements, documents or instruments executed by the
Borrowers necessary to satisfy the requirements of the Assignment of Claims
Act, and all agreements, instruments and documents executed and delivered by
the Borrowers in connection with any of the foregoing.
Senior Debt. All Indebtedness of a Person and its Subsidiaries
(without duplication) in respect of borrowed money, Capitalized Leases and the
deferred purchase price of property, other than Subordinated Debt.
Subordinated Debt: (a) The existing Indebtedness of the Borrowers
which is designated as "Subordinated Debt" in Schedule 5.8 attached hereto,
and (b) any other Indebtedness of a Borrower which matures in its entirety and
by its terms (or by the terms of the instrument under which it is outstanding
and to which appropriate reference is made in the instrument evidencing such
Subordinated Debt) is made subordinate and junior in right of payment to the
Revolving Credit Note and to each Borrower's other obligations to the Lenders
hereunder by provisions reasonably satisfactory in form and substance to the
Required Lenders and their counsel.
Subsidiary. Any partnership, corporation, limited liability
company, association, trust, or other business entity of which DRC shall at
any time own directly or indirectly through a Subsidiary or Subsidiaries at
least a majority (by number of votes) of the outstanding Voting Interests.
Telica. Telica, Inc., a Massachusetts corporation.
Total Commitment. The meaning specified in 2.1(a).
Unfunded Benefit Liability means the excess of a Qualified Plan's
or a Multiemployer Plan's benefit liabilities (as defined in Section
4001(a)(16) of ERISA) over the current value of such plan's assets, determined
in accordance with the assumptions used by the plan's actuaries for funding
the plan pursuant to Section 412 of the Code for the applicable plan year.
Voting Interests. Stock or similar interests, of any class or
classes (however designated), the holders of which are at the time entitled,
as such holders, to vote for the election of a majority of the directors (or
persons performing similar functions) of the partnership, corporation,
association, trust or other business entity involved, whether or not the right
so to vote exists by reason of the happening of a contingency.
1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by GAAP applied on a consistent basis by the
accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) Reference to a particular "section" refers to that section of
this Credit Agreement unless otherwise indicated.
(h) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.
(i) Except as otherwise expressly provided herein, all terms
of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect from time to time; provided that, if a Borrower notifies
the Agent that such Borrower requests an amendment to any provision hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or
in the application thereof on the operation of such provision (or if the Agent
notifies a Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.
(j) All references to the Agent shall mean "Agent, on behalf
of the Lenders."
2. THE CREDIT FACILITIES.
2.1. Amounts and Terms of the Facilities.
(a) Commitments. The Borrowers wish to establish a revolving credit
facility with the Lenders in an aggregate principal amount at any one time
outstanding not in excess of $35,000,000 (as such amount may be reduced from
time to time pursuant to 2.3) (the "Total Commitment"). Each Lender is
severally willing to establish such revolving credit facility on behalf of the
Borrowers, subject to the terms and conditions hereafter set forth, in the
aggregate maximum amounts at any one time outstanding set forth opposite each
Lender's name and in the respective percentages set forth opposite each
Lender's name which shall be applicable to such revolving credit facility
hereunder (hereinafter referred to as such Lender's "Percentage"):
Lender Commitment Percentage
of Total
Commitment
BBH&Co $9,334,500 26.67%
BankBoston $7,000,000 20.00%
Chase $7,000,000 20.00%
State Street $7,000,000 20.00%
Citizens $4,665,500 13.33%
TOTAL $35,000,000 100.00%
(b) Revolving Credit Loans. Subject to the terms and conditions set
forth in this Credit Agreement, each Lender hereby severally establishes a
revolving credit facility in favor of the Borrowers in the individual
principal amount of such Lender's Percentage of the Total Commitment. Each
Lender agrees to lend to any Borrower, and any Borrower may borrow, repay, and
reborrow from time to time prior to (but not including) the Maturity Date,
upon notice by any Borrower to the Agent given in accordance with 2.7, such
sums as are requested by such Borrower up to a maximum aggregate principal
amount outstanding (after giving effect to all amounts requested) at any one
time equal to such Lender's Percentage of the lesser of: (i) the Available
Total Commitment, and (ii) the Borrowing Base; provided, however, that the
proceeds of any and all borrowings and reborrowings hereunder shall be used
solely for the purposes described in 5.16. Each request for a Revolving
Credit Loan hereunder shall constitute a representation and warranty by each
of the Borrowers that the conditions set forth in 11 have been satisfied on
the date of such request.
(c) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS 2.1 OR IN ANY
OTHER PROVISION OF THIS AGREEMENT, THE LENDERS SHALL HAVE NO OBLIGATION TO
MAKE ANY REVOLVING CREDIT LOANS HEREUNDER UNTIL THE AGENT AND EACH LENDER
DETERMINES, IN ITS REASONABLE GOOD FAITH JUDGMENT, THAT ALL OF THE CONDITIONS
PRECEDENT IN 11 OF THIS AGREEMENT HAVE BEEN SATISFIED.
2.2. Fees.
(a) Commitment Fee. The Borrowers agree to pay to the Agent for the
ratable account of each Lender, monthly in arrears, on the first day of each
month, with the first such payment being due on October 1, 1999 for the period
commencing on the Closing Date, and on the Maturity Date, a commitment fee
(the "Commitment Fee") calculated at a rate per annum of 0.375% on the daily
average unused portion of such Lender's portion of the Available Total
Commitment during the immediately preceding month of DRC (adjusted as
appropriate for any reduction or termination of any portion of the Total
Commitment pursuant to 2.3 during the immediately preceding month or portion
thereof). The Commitment Fee shall be computed on the basis of the actual
number of days elapsed in a year of 360 days and shall be payable in arrears.
(b) Agent's Fees. The Borrowers agree to pay to the Agent, for the
Agent's own account, such other fees as DRC and the Agent have heretofore
agreed upon in writing.
(c) Amendment Fee. The Borrowers agree to pay to the Agent, for the
pro rata benefit of the Lenders, an amendment fee in the amount of $225,000.
2.3. Reduction of Commitments.
(a) Voluntary Reductions. Subject to the terms and conditions of
3, each Borrower shall have the right at any time and from time to time upon
three (3) Business Days' prior written notice to the Agent (which shall in
turn give prompt written notice to each Lender) to reduce or terminate
entirely any portion of the Total Commitment, pro rata in accordance with each
Lender's Percentage, whereupon the Total Commitment shall be reduced
accordingly or, as the case may be, terminated. Upon the effective date of
any such reduction or termination, the Borrowers shall pay to the Agent for
the ratable account of each Lender the full amount of any Commitment Fee
payable pursuant to 2.2(a) then accrued on the amount of the reduction. No
reduction of the Total Commitment pursuant to this 2.3(a) may be reinstated.
(b) Limitations on Sales of Assets. Each Borrower expressly
covenants and agrees that it will not sell or dispose of any of its assets or
properties (other than (i) sales of inventory in the ordinary course of
business and dispositions of assets and properties of negligible value no
longer used or useful in such Borrower's business and (ii) other sales and
dispositions for fair market value that, when aggregated with all other sales
and dispositions pursuant to this clause (ii), is in exchange for up to
$100,000 of gross sales proceeds received by a Borrower, provided that no
Borrower shall dispose of any portion of its books and records), regardless of
whether a particular asset or property constitutes Collateral, without the
prior consent of the Agent. The Agent's consent shall be requested no less
than ten (10) days prior to the scheduled closing date of a proposed sale.
The Net Proceeds of any sale consented to by the Agent shall be used solely to
reduce the Outstanding balance of the Revolving Credit Loans.
2.4. Revolving Credit Note. The Revolving Credit Loans made by the
Lenders hereunder shall be evidenced by a single promissory note of the
Borrowers in substantially the form of Exhibit B-1 attached hereto (the
"Revolving Credit Note"), dated as of the Closing Date and completed with
appropriate insertions. The Revolving Credit Note shall be payable to the
order of the Agent for the ratable account of each Lender in principal amounts
equal to the Total Commitment, or, if less, the aggregate outstanding amount
of all Revolving Credit Loans made by the Lenders hereunder, plus interest
accrued thereon, as set forth below. The Borrowers irrevocably authorize the
Agent to make or cause to be made, at or about the time of the Drawdown Date
of any Revolving Credit Loan or at the time of receipt of any payment of
principal or interest on the Revolving Credit Note, an appropriate notation on
its Record reflecting the making of such Revolving Credit Loan or (as the case
may be) the receipt of such payment and the respective pro-rata allocations to
each Lender in accordance with its respective Percentage of the Total
Commitment. The Agent shall record the outstanding amount of the Revolving
Credit Loans on the Record as prima facie evidence of the principal amount
thereof owing and unpaid to the Agent for the ratable account of the Lenders,
but the failure to record, or any error in so recording, any such amount on
the Record shall not limit or otherwise affect the obligations of the
Borrowers hereunder or under the Revolving Credit Note to make payments of
principal of or interest on the Revolving Credit Note when due. The Revolving
Credit Note shall be due and payable on the Maturity Date, provided that the
Maturity Date may, with the approval of all of the Lenders, be extended
annually thereafter for each of the next two twelve-month periods following
the Maturity Date.
2.5. Reserved.
2.6. Interest on Revolving Credit Loans.
(a) The Revolving Credit Loans shall bear interest at a fluctuating
rate per annum equal to the Base Rate plus two percent (2%). The effective
rate of interest payable on the unpaid principal amount of the Revolving
Credit Loans shall change each date the Base Rate changes.
(b) Reserved.
(c) Interest on each Revolving Credit Loan shall be computed on the
basis of the actual number of days elapsed in a year of 360 days.
(d) The Borrowers agree to pay to the Agent, for the pro rata
benefit of the Lenders, interest on each Revolving Credit Loan monthly in
arrears on the first day of each month, with the first such payment due
October 1, 1999 for the period commencing on the Closing Date and on the
Maturity Date.
2.7. Requests for Revolving Credit Loans. A Borrower shall give to
the Agent written notice in the form of Exhibit C hereto (or telephonic notice
confirmed in a writing in the form of Exhibit C hereto) of the Revolving
Credit Loans requested from the Lenders hereunder (a "Loan Request"), no later
than 12:00 noon, Boston time, no less than one (1) Business Day prior to the
proposed Drawdown Date. Each such notice shall be accompanied by a Borrowing
Base Certificate in the form of Exhibit D hereto, duly completed and executed
by the chief financial officer or treasurer of such Borrower, and shall
specify (i) the aggregate principal amount of the Revolving Credit Loans
requested from the Lenders (and in any event not in excess of the unused
portion of the lesser of the Available Total Commitment or the Borrowing
Base), (ii) the proposed Drawdown Date of such Revolving Credit Loans, (iii)
the purpose or purposes to which the proceeds of such Revolving Credit Loans
shall be applied, and (iv) such other matters as are set forth on Exhibit C.
Each Loan Request shall be in a minimum aggregate amount of $500,000 or a
higher integral multiple of $100,000. The Agent shall then promptly notify
each Lender by written notice of its respective Percentage of the Revolving
Credit Loans requested.
2.8. Reserved
2.9. Funds for Revolving Credit Loans. Subject to the satisfaction
of the other conditions set forth herein, to the extent applicable (including
2.7), each Lender will make available to the Agent on the proposed date of
any Revolving Credit Loan by wire transfer of immediately available funds not
later than 1:00 P.M., Boston time, the aggregate amount of its Percentage of
such Revolving Credit Loans requested by the Borrowers, and the Agent shall
credit the aggregate amount so received to the respective accounts designated
by the Borrowers or, if a Borrower does not designate any account, to DRC's
regular deposit account with the Agent.
2.10 Collateral. The Revolving Credit Note and all other
Obligations of the Borrowers hereunder and/or under the other Loan Documents
or otherwise shall be secured by and entitled to the benefits of the
following, in each case in form satisfactory to the Agent and Lenders in their
reasonable good faith judgment, subject in all cases only to Permitted Liens,
if any:
(a) A first priority perfected security interest in all presently
owned and after-acquired tangible and intangible personal property and
fixtures of each of the Borrowers, together with all of the Borrowers'
respective rights to receive payments under all insurance policies
concerning same, and collateral assignments of such contract rights of
the Borrowers as may be reasonably required by the Agent;
(b) A mortgage on the Real Property, and any other real property
acquired after the date hereof by any one of the Borrowers, which shall
be a first priority mortgage to the extent that Agent elects to record
the same; and
(c) A first priority perfected pledge of all of the shares of
capital stock owned by DRC in the other Borrowers, Empresa, Telica and
any and all other capital stock or investment property owned by any one
of the Borrowers.
All of the personal property, fixtures, real property interests and
capital stock described in clauses (a) through (e) of this subsection,
together with any additions thereto or replacements or proceeds thereof, and
any other real or personal property hereafter securing the Revolving Credit
Note and the Borrower's other Obligations to the Agent and the Lenders, are
sometimes hereinafter referred to collectively as the "Collateral." The
Borrowers agree to take such actions as may be reasonably necessary from time
to time to cause the Agent and Lenders to be secured by and entitled to the
benefits of the Security Documents and Collateral as described in this
Agreement, including, without limitation, the obtaining of consents of any
third parties. The Borrowers shall use their reasonable efforts to obtain
such third party consents except as expressly provided herein. The Security
Documents shall be satisfactory in form and substance to the Agent and the
Lenders and their counsel.
3. PREPAYMENT OF THE REVOLVING CREDIT LOANS; RESERVES.
3.1. Voluntary Prepayments. Each Borrower shall have the right, at
its election, to prepay the outstanding amount of any Revolving Credit Loans,
as a whole or in part, at any time without penalty or premium, except as
provided in 4.8. A Borrower shall give irrevocable written notice to the
Agent, no later than 12:00 noon, Boston time, one Business Day prior to any
proposed prepayment of the Revolving Credit Loans pursuant to this 3,
specifying the proposed date of prepayment of the Revolving Credit Loans and
the principal amount and accrued interest to be prepaid, and the Agent shall
promptly give notice thereof to each Lender. Each such prepayment of the
Revolving Credit Loans shall be in a minimum amount of the lesser of
(i) $500,000 and (ii) the aggregate amount outstanding under the Revolving
Credit Note being prepaid.
3.2. Mandatory Prepayments. In addition to the Borrowers'
obligations under 2.3(b) of this Agreement, if at any time the outstanding
principal amount of all Revolving Credit Loans exceeds (or, in the case of any
notice of reduction of the Total Commitment pursuant to 2.3, would exceed)
the Available Total Commitment or the then applicable Borrowing Base
(determined in accordance with Section 6.2(f)), the Borrowers will immediately
prepay the Revolving Credit Note, subject to 4.8, in an amount necessary to
cause the outstanding principal amount of all Revolving Credit Loans not to
exceed the Available Total Commitment or the Borrowing Base, as specified in
the most recent Borrowing Base Certificate, as applicable.
4. CERTAIN GENERAL PROVISIONS.
4.1. Funds for Payments.
(a) All payments of principal, interest, fees and any other
amounts due hereunder or under any of the other Loan Documents shall be made
to the Agent for the ratable account of the Lenders at 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, or at such other location as the Agent may from
time to time designate, in each case in Dollars constituting immediately
available funds.
(b) All payments by the Borrowers hereunder and under any of
the other Loan Documents shall be made without setoff or counterclaim and free
and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein unless a
Borrower is compelled by law to make such deduction or withholding or if the
taxes are based upon or measured by the income or profits of the Lenders,
including profits or receipts with respect to the Revolving Credit Loans. If
any such obligation is imposed upon a Borrower with respect to any amount
payable by it hereunder or under any of the other Loan Documents, the
Borrowers will pay to the Agent for the ratable account of the Lenders on the
date on which such amount is due and payable hereunder or under such other
Loan Document, such additional amount in Dollars as shall be necessary to
enable the Lenders to receive the same net amount which the Lenders would have
received on such due date had no such obligation been imposed upon such
Borrower. The Borrowers will deliver promptly to the Agent certificates or
other valid vouchers for all taxes or other charges deducted from or paid with
respect to payments made by the Borrowers hereunder or under such other Loan
Document. In the event any Lender receives a refund of any taxes or other
amounts for which it has received payment from a Borrower pursuant to this
4.1(b), such Lender shall, within 30 days from the date of such receipt, pay
the amount of such refund to such Borrower but only to the extent of payments
made by such Borrower pursuant to this 4.1(b) and net of all costs and
expenses of the Agent and such Lender relating thereto and without interest
(other than interest, if any, paid by the relevant government authority with
respect to such refund); provided, however, that the Borrowers upon request of
the Agent or any Lender, agree to repay the amount paid to a Borrower to the
Agent or such Lender if the Agent or such Lender is required to repay such
refund to such governmental authority.
4.2. Computations. All computations of interest on the Revolving
Credit Loans and of commitment or other fees shall be based on a 360-day year
and paid for the actual number of days elapsed. Whenever a payment hereunder
or under any of the other Loan Documents becomes due on a day that is not a
Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension.
4.3. Reserved.
4.4. Reserved.
4.5. Additional Costs, Etc. If any change in any present
applicable law or if any future applicable law, which expression, as used
herein, includes statutes, rules and regulations thereunder and
interpretations thereof by any competent court or by any governmental or other
regulatory body with the administration or the interpretation thereof and
directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Lender by any central bank or
other fiscal, monetary or other authority (whether or not having the force of
law, but only if it is mandatory that such Lender comply), shall:
(a) subject such Lender to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Credit Agreement, the other Loan Documents, or the Revolving Credit Loans
(other than taxes based upon or measured by the income or profits of such
Lender, including without limitation profits or receipts with respect to the
Revolving Credit Loans and other than any withholding tax imposed on any
payments by the Borrowers to such Lender); or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits and except for any withholding tax
imposed on any payments by the Borrowers to the Lenders) of payments to such
Lender of the principal of or the interest on any Revolving Credit Loans or
any other amounts payable to such Lender under this Credit Agreement or the
other Loan Documents; or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirements (whether or not having the force of law, but only if it
is mandatory that such Lender comply) against assets held by, or deposits in
or for the account of, or loans by, or commitments of an office of such
Lender; or
(d) impose on such Lender any other conditions or requirements
with respect to this Credit Agreement, the other Loan Documents, the Revolving
Credit Loans, or any class of loans or commitments of which any of the
Revolving Credit Loans forms a part;
and the result of any of the foregoing is to:
(i) increase the cost to such Lender of making, funding, issuing
or maintaining any of the Revolving Credit Loans or its Percentage of the
Total Commitment; or
(ii) reduce the amount of principal, interest or other amount
payable to such Lender hereunder on account of any of the Revolving Credit
Loans or its Percentage of the Total Commitment; or
(iii) require such Lender to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment or
foregone interest or other sum is calculated by reference to the gross amount
of any sum receivable or deemed received by such Lender from the Borrower
hereunder;
then, and in each such case, the Borrower will, within ten (10) Business Days
following receipt of written notice from the Agent on behalf of such Lender,
which written notice shall include a description of the relevant change in
law, calculations of the amounts payable, pay to the Agent on behalf of such
Lender such additional amounts as will be sufficient to compensate such Lender
for such additional cost, reduction, payment or foregone interest or other
sum.
4.6. Capital Adequacy. If any change in any present law,
governmental rule, regulation, policy, guideline or directive or if any future
law, governmental rule, regulation, policy, guideline or directive (in each
case whether or not having the force of law, but only if it is mandatory that
the Lender comply) or the interpretation thereof by a court or governmental
authority with appropriate jurisdiction or any change in any such law or
interpretation (including, without limitation, any change according to a
prescribed schedule of increasing requirements, whether or not known on the
date of this Credit Agreement) affects the amount of capital required or
expected to be maintained by any Lender or any corporation controlling such
Lender and such Lender determines that the amount of capital required to be
maintained by it is increased by or based upon the existence of the
Commitments or Revolving Credit Loans made pursuant hereto, then the Agent on
behalf of such Lender may notify the Borrower of such fact. To the extent
that the costs of such increased capital requirements are not reflected in the
applicable rate(s) of interest on the Revolving Credit Loans, the Borrower and
the Agent on behalf of such Lender shall thereafter attempt to negotiate in
good faith, within thirty (30) days of the day on which the Borrower receives
such notice, an adjustment payable hereunder that will adequately compensate
such Lender in light of these circumstances. If the Borrower and the Agent on
behalf of such Lender are unable to agree to such adjustment within thirty
(30) days of the date on which the Borrower receives such notice, then
commencing on the date Borrower received such notice (but not earlier than the
effective date of any such increased capital requirement), from time to time
the Borrower will pay to the Agent, on behalf of such Lender after
consultation with the affected Lender, such additional amount that will, in
the Agent's reasonable determination, provide adequate compensation to such
Lender. Such Lender shall allocate such cost increases among its customers in
good faith and on an equitable basis.
4.7. Certificate. A certificate setting forth any additional
amounts payable pursuant to 4.5, 4.6 or 4.8 and a reasonably detailed
explanation of such amounts which are due, including calculation of such
amounts, submitted by the Agent on behalf of any Lender to the Borrowers,
shall be conclusive, absent manifest error, that such amounts are due and
owing.
4.8. Indemnity. The Borrowers agree to indemnify each Lender and
to hold each Lender harmless from and against any loss, cost or expense that
such Lender may sustain or incur resulting from (a) a default by a Borrower in
payment of the principal amount of or any interest on any Revolving Credit
Loans as and when due and payable, including any such loss or expense arising
from interest or fees payable by such Lender to lenders of funds obtained by
it in order to maintain its Revolving Credit Loans, or (b) a default by a
Borrower in making a borrowing after such Borrower has given (or is deemed to
have given) a Loan Request relating thereto in accordance with 2.7.
4.9. Interest on Overdue Amounts. Overdue principal and (to the
extent permitted by applicable law) interest on the Revolving Credit Loans and
all other overdue amounts payable hereunder or under any of the other Loan
Documents shall bear interest payable on demand at a rate per annum equal to
4% plus the then prevailing Base Rate, in each case until such amount shall be
paid in full (after as well as before judgment).
4.10. Mitigation. Each Lender shall take commercially reasonable
efforts (which shall not require such Lender to incur an unreimbursed loss or
unreimbursed cost or expense or otherwise take any action inconsistent with
its internal policies or suffer any disadvantage or burden deemed by it to be
significant) to assign its rights and delegate and transfer its obligations
hereunder to another of its offices to the extent that such assignment,
delegation and transfer would reduce amounts otherwise payable by the
Borrowers to such Lender pursuant to 4.1(b), 4.5, 4.6 and 4.8. The
Borrowers agree to pay all costs and expenses incurred by any Lender in
connection with any such assignment, delegation and transfer.
4.11. Joint and Several Obligations. Notwithstanding any other
provision of this Credit Agreement, (i) each of the covenants, agreements and
obligations of any Borrower set forth in this Credit Agreement or in any other
Loan Document shall be the joint and several covenants, agreements and
obligations of all of the Borrowers, regardless of whether a Borrower was the
actual recipient of the proceeds of a Loan, (ii) all representations and
warranties of any Borrower contained in this Credit Agreement or in any other
Loan Document shall be deemed to be separately made by each of the Borrowers
and (iii) any notice, request, consent, report or other information or
agreement delivered by any Borrower shall be deemed for all purposes to be
consented to, ratified and delivered by each of the Borrowers. In furtherance
of the foregoing, each Borrower acknowledges and agrees that each covenant,
agreement and obligation of any or all of the Borrowers in this Credit
Agreement or any other Loan Document is enforceable against all Borrowers,
jointly, or against any Borrower, severally.
5. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders
to enter into this Credit Agreement and to make the Revolving Credit Loans
provided for hereunder, each Borrower makes the following representations and
warranties, which shall survive the execution and delivery hereof and of the
Revolving Credit Note:
5.1 Organization, Standing, etc. of the Borrowers. Each Borrower
is a corporation duly organized, validly existing and in good standing under
the laws of The Commonwealth of Massachusetts and has all requisite corporate
power and authority to own and operate its properties, to carry on its
business as now conducted and proposed to be conducted, to enter into this
Agreement, the other Loan Documents and all other documents to be executed by
it in connection with the transactions contemplated hereby, to issue the
Revolving Credit Note and to carry out the terms hereof and thereof. Each of
this Agreement and the other Loan Documents is the legal, valid and binding
obligation of each Borrower enforceable against such Borrower in accordance
with its terms.
5.2 Subsidiaries. Schedule 5.2 attached hereto correctly sets
forth as to each Subsidiary, its name, the jurisdiction of its incorporation,
the number of shares of its capital stock of each class outstanding and the
number of such outstanding shares owned by DRC and its other Subsidiaries.
Except as set forth in Schedule 5.2, each such Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own and operate its properties and to carry on its business as
now conducted and proposed to be conducted. All of the outstanding capital
stock of each Subsidiary is validly issued, fully-paid and nonassessable, and
is owned by DRC or its Subsidiaries as specified in Schedule 5.2, in each case
free of any mortgage, pledge, lien, security interest, charge, option or other
encumbrance, other than Permitted Liens and restrictions imposed by applicable
federal and state securities laws.
5.3 Qualification. Each Borrower and its Subsidiaries are duly
qualified or licensed and in good standing as foreign corporations duly
authorized to do business in each jurisdiction in which the character of the
properties owned or the nature of the activities conducted makes such
qualification or licensing necessary.
5.4 Financial Information; Disclosure, etc. The Borrowers have
furnished the Lenders with the financial statements and other reports listed
in Schedule 5.4 attached hereto. Such financial statements have been prepared
in accordance with GAAP applied on a consistent basis and fairly present the
financial position and results of operations of the Persons to which they
purport to relate as of the dates and for the periods indicated. Except as
set forth on Schedule 5.4, since June 30, 1999, there has not been any
material adverse change in the business, operations, condition (financial or
otherwise) or properties of Borrowers and their Subsidiaries, taken as a
whole. Neither this Agreement nor any financial statements, reports,
projections or other documents or certificates furnished to the Lenders by the
Borrowers in connection with the transactions contemplated hereby contain as
of their respective dates any untrue statement of a material fact or omit to
state any material fact necessary to make the statements herein or therein
contained not misleading. None of the Revolving Credit Loans will render any
Borrower unable to pay its debts as they become due; no Borrower is
contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency laws or, except as set forth on Schedule 5.4, the
liquidation of all or a major portion of its property; and no Borrower has
knowledge of any Person contemplating the filing of any such petition against
it.
5.5 Licenses, etc. Schedule 5.5 attached hereto accurately and
completely lists all authorizations, licenses, permits and franchises of any
public or governmental regulatory body which are necessary for the conduct of
the business of each Borrower and its Subsidiaries as now conducted and the
absence of which would result, either in any case or in the aggregate, in a
material adverse change in the business, operations, affairs, condition
(financial or otherwise) or properties of (i) DRC and its Subsidiaries, taken
as a whole, (ii) Encoder and its Subsidiaries, taken as a whole, or (iii)
Metrigraphics and its Subsidiaries, taken as a whole (such authorizations,
licenses, permits and franchises, together with any extensions or renewals
thereof, being herein sometimes referred to collectively as the "Licenses").
All of such Licenses are in full force and effect and each Borrower and its
Subsidiaries have fulfilled and performed all of their obligations with
respect thereto and have full power and authority to operate thereunder.
5.6 Material Agreements. Schedule 5.6 attached hereto accurately
and completely lists all material agreements and contracts which are presently
in effect in connection with the conduct of the business of any Borrower and
which were or are required to be filed with the Securities and Exchange
Commission as a "material contract" pursuant to Item 601(b)(10) of
Registration S-K promulgated by the Securities and Exchange Commission.
5.7 Tax Returns and Payments. Each Borrower and its Subsidiaries
have filed all tax returns required by law to be filed and have paid all
material taxes, assessments and other governmental charges levied upon any of
their respective properties, assets, income or franchises, other than those
not yet delinquent and those, not material in aggregate amount, being or about
to be contested as provided in 6.5. The charges, accruals and reserves on
the books of each Borrower and its Subsidiaries in respect of their respective
taxes are adequate in the opinion of the Borrowers, and, except as set forth
on Schedule 5.7 the Borrowers know of no unpaid assessment for additional
taxes or of any basis therefor.
5.8 Indebtedness, Liens and Investments, etc. Schedule 5.8
attached hereto sets forth, as of the date hereof, (a) the amounts of all
outstanding Indebtedness of each Borrower and its Subsidiaries in respect of
borrowed money, Capitalized Leases and the deferred purchase price of
property, (b) all existing mortgages, liens and security interests in respect
of such Indebtedness, (c) all agreements which directly or indirectly require
any Borrower or its Subsidiaries to make any material investments, loans or
advances and (d) all existing material guarantees by each Borrower and its
Subsidiaries.
5.9 Title to Properties; Liens. Each Borrower and its
Subsidiaries have good and marketable title to all of their respective
properties and assets, and none of such properties or assets is subject to any
mortgage, pledge, lien, security interest, charge or encumbrance except for
(i) Permitted Liens and (ii) minor liens and encumbrances which in the
aggregate are not substantial in amount, do not in any case materially detract
from the value of the property subject thereto or materially impair the
operations of any Borrower and its Subsidiaries and have not arisen otherwise
than in the ordinary course of business. Each Borrower and its Subsidiaries
enjoy quiet possession under all leases to which they are parties as lessees,
and, to the knowledge of each Borrower, all of such leases are valid,
subsisting and in full force and effect. None of such leases contains any
provision restricting the incurrence of indebtedness by the lessee. All real
property owned or leased by any of the Borrowers is described in Schedule 5.9
attached hereto.
5.10 Litigation, etc. Except as set forth in Schedule 5.10
attached hereto, there is no action, proceeding or investigation pending or
threatened (or any basis therefor known to any Borrower) which questions the
validity of this Credit Agreement, the Revolving Credit Note or the other
documents executed in connection herewith, or any action taken or to be taken
pursuant hereto, or which could reasonably be expected to result, either in
any case or in the aggregate, in any material adverse change in the business,
operations, affairs, condition (financial or otherwise) or properties of DRC
and the Subsidiaries, taken as a whole, or any of their respective properties
or in any material liability on the part of DRC and the Subsidiaries, taken as
a whole.
5.11 Authorization; Compliance with Other Instruments. The
execution, delivery and performance of this Agreement and the Revolving Credit
Note have been duly authorized by all necessary corporate action on the part
of each Borrower, will not result in any violation of or be in conflict with
or constitute a default under any term of the charter or by-laws of any
Borrower, or of any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to any Borrower, or result in the
creation of any mortgage, lien, charge or encumbrance upon any of the
properties or assets of any Borrower pursuant to any such term. Neither any
Borrower nor any Subsidiary is in violation of any term of its charter or
by-laws, or of any term of any material agreement or instrument to which it is
a party, or, to each Borrower's knowledge, of any judgment, decree, order,
statute, rule or governmental regulation applicable to it.
5.12 Governmental Consent. Except as specified in Schedule 5.12
attached hereto, no order, consent, approval or authorization of, or
declaration to or filing with, any governmental authority (collectively,
"Consents") is required to be obtained or made by any Borrower or by any
Subsidiary in connection with the execution and delivery of this Agreement and
the issuance and delivery of the Revolving Credit Note pursuant hereto.
Except as set forth in Schedule 5.12, all of the Consents have been obtained
and are in full force and effect.
5.13 Regulation U, etc. Neither any Borrower nor any Subsidiary
owns or has any present intention of acquiring any "margin stock" within the
meaning of Regulation U (12 CFR Part 221) of the Board of Governors of the
Federal Reserve System (herein called "margin stock"). None of the proceeds
of the Revolving Credit Loans will be used, directly or indirectly, by any
Borrower or any Subsidiary for the purpose of purchasing or carrying, or for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry, any margin stock or for any other purpose which
might constitute the transactions contemplated hereby a "purpose credit"
within the meaning of said Regulation U, or cause this Agreement to violate
Regulation U, Regulation T, Regulation X, or any other regulation of the Board
of Governors of the Federal Reserve System or the Securities Exchange Act of
1934.
5.14 Employee Retirement Income Security Act of 1974. Each
Employee Benefit Plan and, to each Borrower's knowledge, each Multiemployer
Plan, is in material compliance with applicable provisions of ERISA and the
Code. No ERISA Reportable Event has occurred or, to each Borrower's
knowledge, is imminent or likely to occur. No Borrower or ERISA Affiliate has
incurred any material liability to the PBGC or any Employee Benefit Plan or
Multiemployer Plan on account of any failure to meet the contribution
requirements of any such plan, minimum funding requirements or prohibited
transactions under ERISA or the Code, termination of a single employer plan,
partial or complete withdrawal from a Multiemployer Plan, or the insolvency,
reorganization or termination of any Multiemployer Plan, and no event has
occurred or conditions exist which present a material risk that any Borrower
or ERISA Affiliate will incur any material liability on account of any of the
foregoing circumstances. The consummation of the transactions contemplated by
this Agreement will not result in any prohibited transaction under ERISA or
the Code for which an exemption is not available.
5.15 Environmental Matters. Except as set forth in Schedule 5.15
attached hereto, neither any Borrower nor any Subsidiary nor, to each
Borrower's knowledge, any other Person has ever caused or permitted any
Hazardous Material to be disposed of on or under any real property owned,
leased or operated by any Borrower or any Subsidiary or in which any Borrower
or any Subsidiary has ever held, directly or indirectly, any legal or
beneficial interest or estate, and no such real property has ever been used
(either by any Borrower or any Subsidiary or, to each Borrower's knowledge, by
any other Person) as (i) a disposal site or permanent storage site for any
Hazardous Material or (ii) a temporary storage site for any Hazardous
Material. Each Borrower and each of its Subsidiaries have been issued and are
in compliance with all material permits, certificates, licenses, approvals and
other authorizations relating to environmental matters and necessary or
desirable for their respective businesses, and have filed or will timely file
all notifications and reports relating to chemical substances, air emissions,
underground storage tanks, effluent discharges and Hazardous Material waste
storage, treatment and disposal required in connection with the operation of
their respective businesses, the failure to have or comply with which would,
individually or in the aggregate, have a material adverse effect on any
Borrower or any Subsidiary. Except as set forth in Schedule 5.15, all
Hazardous Materials used or generated by any Borrower or any Subsidiary or any
business merged into or otherwise acquired by any Borrower or any Subsidiary
have been generated, accumulated, stored, transported, treated, recycled and
disposed of in compliance with all applicable laws and regulations, the
violation of which has any reasonable likelihood of having a material adverse
effect on any Borrower or any Subsidiary. Except as set forth in Schedule
5.15, neither any Borrower nor any Subsidiary has any liabilities with respect
to Hazardous Materials and no facts or circumstances exist which could give
rise to liabilities with respect to Hazardous Materials, which in either case,
individually or in the aggregate, could have any reasonable likelihood of
having a material adverse effect on any Borrower or any Subsidiary.
5.16 Use of Proceeds. Each Borrower will use the proceeds of the
Revolving Credit Loans solely for working capital and other general corporate
purposes permitted by this Agreement.
5.17 Investment Company Act; Public Utility Holding Company Act.
Neither any Borrower nor any Subsidiary is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
5.18 Patents and Trademarks. Schedule 5.18 attached hereto is a
true, correct and complete list of all patents, registered or common law
trademarks, trade names, service marks, copyrights, licenses and other
proprietary intellectual property rights owned by the Borrowers. Such
intellectual property and proprietary rights are adequate for the conduct of
the business of the Borrowers as now conducted and as proposed to be
conducted, and which, except as set forth on Schedule 5.18, is without any
known conflict with the rights or claimed rights of others.
5.19 Chief Executive Offices and Principals Places of Business.
Schedule 5.19 attached hereto sets forth an accurate list of the chief
executive office and principal place of business of each Borrower.
5.20 Year 2000 Compliance. The statements set forth in Schedule
5.20 are incorporated herein by this reference. Notwithstanding any matter
set forth on Schedule 5.20, there is no defect in any computer software,
data bases, hardware, controls and peripherals owned or used by any Borrower
related to the occurrence of the year 2000 or the use of any date after
December 31, 1999, in connection therewith that could reasonably be expected
to have a Material Adverse Effect.
5.21 Security Documents and Collateral. The Security Documents are
effective to grant to the Agent a valid and enforceable security interest in
the Collateral described therein to the extent a valid and enforceable
security interest in such Collateral may be created under applicable law and,
when financing statements in appropriate form are filed in the offices
specified on Schedule 5.21, or in such other locations as are set forth in a
written notice from the Borrowers to the Agent, such security interest shall
constitute a fully-perfected first priority security interest in such
Collateral to the extent a security interest in such Collateral can be
perfected under the Uniform Commercial Code or other applicable law by the
filing of financing statements. The Collateral secures any and all
Obligations of the Borrowers to the Agent and the Lenders, whether such
Obligations currently exist or hereafter arise.
5.22 Government Contracts. Each Government Contract is valid,
binding and in full force and effect, and, other than as set forth on Schedule
5.4 or 5.22, there is no event which has occurred or exists, which constitutes
or which with notice, the happening of any event and/or the passage of time,
would constitute, a default or breach under any Government Contract or would
cause the acceleration of any obligation of any party thereto or give rise to
any right of termination or cancellation thereof. Except as set forth on
Schedule 5.4 or 5.22, the Borrowers have no reason to believe that the parties
to the Government Contracts will not fulfill their obligations thereunder in
all material respects.
6. AFFIRMATIVE COVENANTS OF THE BORROWERS. Each Borrower covenants
and agrees that, so long as the Revolving Credit Note and/or any Revolving
Credit Loan is outstanding or the Lenders have any Available Total Commitment:
6.1 Records and Accounts. Each Borrower will (a) keep true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with GAAP and (b) maintain adequate accounts and
reserves for all taxes (including income taxes), depreciation, depletion,
obsolescence and amortization of its properties, contingencies, and other
reserves, all in accordance with GAAP.
6.2 Financial Statements, Certificates and Information. Each
Borrower will furnish or cause to be furnished to each Lender:
(a) Within 90 days after the end of each fiscal year of DRC, (i) the
consolidated and consolidating balance sheets of DRC and its Subsidiaries as
at the end of such year and (ii) the related consolidated and consolidating
statements of income and surplus and cash flow for such year, setting forth in
comparative form with respect to such consolidated financial statements
figures for the previous fiscal year, all in reasonable detail, together with
the opinion thereon of independent public accountants selected by DRC and
satisfactory to the Lenders, which opinion shall be in a form generally
recognized as unqualified and shall state that the financial statements have
been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with that of the preceding fiscal year (except
for changes, if any, which shall be specified and approved in such opinion)
and that the audit by such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards related to reporting; provided, however, that the Borrowers shall be
required to furnish the consolidating financial statements referred to above
only to the extent that the same are required to be prepared by GAAP or by the
Securities and Exchange Commission or by any other applicable regulatory
authority;
(b) Within 45 days after the end of each of the first three
quarterly accounting periods in each fiscal year of DRC, (i) the unaudited
consolidated and consolidating balance sheets of DRC and its Subsidiaries as
at the end of such period, and (ii) the related unaudited consolidated and
consolidating statements of income and surplus and cash flows for such period
and for the period from the beginning of the current fiscal year to the end of
such period, all in reasonable detail and signed by the chief financial
officer or treasurer of DRC; provided, however, that the Borrowers shall be
required to furnish the consolidating financial statements only to the extent
that the same are required to be prepared by GAAP or by the Securities and
Exchange Commission or by any other applicable regulatory authority;
(c) Reserved;
(d) Together with the financial statements delivered pursuant to
subparagraph (a) above, a detailed list of each Borrower's backlog of revenue-
generating government contracts showing services to be provided by each
Borrower in connection therewith as of the date of such financial statements;
(e) By the closing on business on the Tuesday of each week
(commencing on October 5, 1999), a cash flow statement for the immediately
preceding week as compared to the Projections, together with a reasonably
detailed explanation of any variance in the Borrowers' actual cash flow from
the Projections;
(f) On or before the Closing Date and the 15th day of each month
thereafter (or, with respect to any month immediately following a fiscal
quarter-end, the 22nd day of the month), a Borrowing Base Certificate in the
form of Exhibit D and a compliance certificate substantially in the form of
Exhibit E attached hereto, in each case (i) as of the last Business Day of the
immediately preceding month, (ii) subject to year-end audit adjustments and
(iii) signed by the chief financial officer or treasurer of DRC;
(g) Together with the Borrowing Base Certificate and compliance
certificate delivered pursuant to subparagraph (f) above, a report in form
reasonably satisfactory to the Agent detailing all of the Borrowers' billed
and unbilled accounts receivable;
(h) Promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by DRC
with the Securities and Exchange Commission, or any governmental authority
succeeding to any of or all of the functions of said Commission, or with any
national securities exchange, or distributed to its shareholders generally, as
the case may be (with the exhibits relating thereto to be provided, at DRC's
expense, upon the request of the Agent or any Lender);
(i) Promptly upon their becoming available, copies of any periodic
or special reports filed by any Borrower or any Subsidiary with any federal,
state or local governmental agency or authority, if such reports indicate any
material change in the business, operations, affairs or condition (financial
or otherwise) of the Borrowers and the Subsidiaries, taken as a whole, or if
copies thereof are requested by any Lender, and copies of any materially
adverse notices and communications from any federal, state or local
governmental agency or authority which specifically relate to a Borrower or
any Subsidiary;
(j) Forthwith upon any officer of any Borrower obtaining knowledge
of any condition or event which constitutes an Event of Default or which,
after notice or lapse of time or both, would constitute an Event of Default, a
certificate signed by such officer specifying in reasonable detail the nature
and period of existence thereof and what action any Borrower has taken or
proposes to take with respect thereto; and
(k) To the extent not prohibited by applicable law, such other
information regarding the business, affairs and condition of the Borrowers and
their respective Subsidiaries as such Lender may from time to time reasonably
request. To the extent not prohibited by applicable law, each Borrower will
permit each Lender to inspect the books and any of the properties or assets of
such Borrower and its Subsidiaries at such reasonable times as such Lender may
from time to time request. All costs and expenses of any Lender in connection
with or relating to any request made under this 6.2(j) shall, if no Event of
Default has occurred and is continuing, be paid by the Lender making such
request and, upon the occurrence and during the continuance of an Event of
Default, be paid by the Borrowers.
6.3 Legal Existence; Compliance with Laws, etc. Except (a) for
the dissolution of Dynamics Research Investment Corporation, a Massachusetts
corporation and wholly-owned Subsidiary, and (b) as otherwise permitted under
this Credit Agreement, each Borrower will, and will cause each Subsidiary to:
maintain its corporate existence and business; maintain all properties which
are reasonably necessary for the conduct of such business, now or hereafter
owned, in good repair, working order and condition; take all actions necessary
to maintain and keep in full force and effect its Licenses; in the case of
DRC, take all steps necessary to maintain its status as a public company and
to maintain its status as a company listed on the NASDAQ National Market or a
national stock exchange; and, except as otherwise provided herein, comply with
all applicable statutes, rules, regulations and orders of, and all applicable
restrictions imposed by, all governmental authorities in respect of the
conduct of its business and the ownership of its properties; in each case
except to the extent that the failure to comply would not, individually or in
the aggregate, have a material adverse effect on the business, operations,
affairs or condition (financial or otherwise) of the Borrowers and their
Subsidiaries, taken as a whole; or any Subsidiary; provided that neither any
Borrower nor any Subsidiary shall be required by reason of this 6.3 to comply
therewith at any time while such Borrower or such Subsidiary shall be
contesting its obligations to do so in good faith by appropriate proceedings
promptly initiated and diligently conducted, and if it shall have set aside on
its books such reserves, if any, with respect thereto as are required by GAAP
and deemed adequate by such Borrower and its independent public accountants.
Neither any Borrower nor any Subsidiary will, without the prior written
consent of the Lenders, engage in any business other than the Current Lines of
Business.
6.4 Insurance. Each Borrower will maintain or cause to be
maintained on all insurable properties now or hereafter owned by such Borrower
or any Subsidiary insurance against loss or damage by fire or other casualty
to the extent customary with respect to like properties of companies
conducting similar businesses and will maintain or cause to be maintained
public liability and workmen's compensation insurance insuring such Borrower
and its Subsidiaries to the extent customary with respect to companies
conducting similar businesses and, upon request, will furnish to the Lenders
satisfactory evidence of the same.
Each insurance policy maintained by the Borrowers pertaining to any of
the Collateral shall: (i) name the Agent as an additional insured and
additional loss payee; and (ii) provide that the Agent shall be notified of
any proposed cancellation of such policy at least thirty (30) days in advance
of such proposed cancellation. The Agent will be named as an additional
insured under all policies of liability insurance. Copies of all such
policies shall be delivered to the Agent. After the occurrence and during the
continuance of an Event of Default, in the event of a casualty loss, all
proceeds shall be applied to the Revolving Credit Loans in the manner selected
by the Agent in its sole discretion. As further assurance for the payment and
performance of the Revolving Credit Loans and all other obligations hereunder,
the Borrowers hereby assign to the Agent, on behalf of the Lenders, all sums,
including any returned or unearned premiums, which may become payable under
any policy of insurance in respect of the Collateral and the Borrowers hereby
direct each insurer issuing any such policy to make such payment of such sums
directly to the Agent. No loss or claim shall be settled by any Borrower for
an amount in excess of $10,000 without the prior written consent of the
Agent.
6.5 Payment of Taxes. Each Borrower will, and will cause each
Subsidiary to, pay and discharge promptly as they become due and payable all
taxes, assessments and other governmental charges or levies imposed upon it or
its income or upon any of its properties or assets, or upon any part thereof,
as well as all lawful claims of any kind (including claims for labor,
materials and supplies) which, if unpaid, might by law become a lien or a
charge upon its property; provided that neither any Borrower nor any
Subsidiary shall be required to pay any such tax, assessment, charge, levy or
claim if the amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings promptly initiated and
diligently conducted and if such Borrower or such Subsidiary, as the case may
be, shall have set aside on its books such reserves, if any, with respect
thereto as are required by GAAP and deemed appropriate by such Borrower and
its independent public accountants.
6.6 Payment of Other Indebtedness, etc. Except as to matters
being contested in good faith and by appropriate proceedings, each Borrower
will, and will cause each Subsidiary to, pay promptly when due, or in
conformance with customary trade terms, all other Indebtedness and obligations
incident to the conduct of its business.
6.7 Further Assurances. From time to time hereafter, each
Borrower will execute and deliver, or will cause to be executed and delivered,
such additional instruments, certificates or documents, and will take all such
actions, as the Lenders may reasonably request, for the purposes of
implementing or effectuating the provisions of this Agreement or the other
Loan Documents. Upon the exercise by the Lenders (or the Agent on their
behalf) of any power, right, privilege or remedy pursuant to this Agreement or
the other Loan Documents which requires any consent, approval, registration,
qualification or authorization of any governmental authority or
instrumentality, each Borrower will execute and deliver, or will cause the
execution and delivery of, all applications, certifications, instruments and
other documents and papers that the Lenders may be required to obtain for such
governmental consent, approval, registration, qualification or authorization.
6.8 Depository Account. Each Borrower will maintain its principal
operating accounts with one or more of the Lenders (including BBH&Co).
6.9 Use of Proceeds. Each Borrower will use the proceeds of the
Revolving Credit Loans only for the purposes not prohibited by, and subject to
the terms and conditions of, 5.13 and 5.16.
6.10 Negative Pledges. Each of the Borrowers hereby pledge,
covenant and agree that it will not: (i) create, incur, assume or suffer to
exist any mortgage, lien, security interest or other encumbrance on any of the
personal property, real property and fixtures owned by one or more of the
Borrowers, other than Permitted Liens and liens and security interests granted
to the Agent and the Lenders; or (ii) make a similar pledge, covenant or
agreement to or with any party other than the Agent and the Lenders with
respect to the matters covered by this 6.10.
6.11 Regulation U. If requested by any Lender, each Borrower will
promptly furnish such Lender with a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in said Regulation U.
6.12 Environmental Indemnification; Compliance.
(a) The Borrowers shall at all times, both before and after
repayment of the Revolving Credit Loans, at their sole cost and expense,
indemnify, exonerate, hold and save harmless the Agent and the Lenders and all
those claiming by, through or under the Agent or the Lenders (collectively,
the "Indemnified Party") against and from all damages, losses, liabilities,
obligations, penalties, claims, litigation, demands, defenses, judgments,
suits, proceedings, costs, disbursements or expenses of any kind whatsoever,
including, without limitation, reasonable attorneys' fees and expenses and
experts' fees and expenses, which may at any time (including, without
limitation, before or after discharge or foreclosure of the Agent and Lenders'
mortgages or leasehold mortgages or deeds of trust or any other instrument now
or hereafter constituting a Security Document) be imposed upon, incurred by or
asserted or awarded against the Indemnified Party and arising from or out of:
(a) any Hazardous Materials liability or other liability for damage to
person or property arising out of any Hazardous Materials released, prior to
the foreclosure of the Agent and Lenders' mortgages or leasehold mortgages or
deeds of trust or any other instrument now or hereafter constituting a
Security Document, on, upon, under, into or about any property at any time
owned, leased or operated by any of the Borrowers (including without
limitation with respect to any condition or circumstance which existed on any
such property prior to or as of the time any of the Borrowers first acquired,
leased or occupied the same) or any violation of any environmental laws by any
of the Borrowers or any of their Subsidiaries (in the case of any Subsidiary
of a Borrower, to the extent any such liability is in any way related to such
Borrower), or any contractor, sub-contractor, tenant, occupant or invitee
thereof; or (b) any act, omission, negligence or conduct of any of the
Borrowers or any Subsidiary of a Borrower or any contractor, sub-contractor,
tenant, occupant or invitee thereof. Notwithstanding any limitation which
otherwise might be imposed by any applicable statute of limitations, any cause
of action which an Indemnified Party may have against any of the Borrowers
under this subsection 6.12 may be brought against any Borrower at any time
within two (2) years following assertion of the claim against the Indemnified
Party for which indemnification or exoneration is sought (it being understood
that the foregoing shall not require any Indemnified Party to bring any claim
or action within such two (2) year period if a longer statute applies).
(b) Environmental Compliance. The Borrowers shall take all
appropriate response actions, including any removal and remedial action, in
the event of a release, emission, discharge or disposal of any hazardous
materials on, upon, under, into or about any property at any time, owned,
leased or operated by any Borrower so as to (a) remain in compliance with
subsection 5.15 and (b) keep all property at any time owned, leased or
operated by the Borrowers free from and uncontaminated by Hazardous Materials
and in compliance with Environmental Laws and other applicable law, the
failure to comply with which could have a Material Adverse Effect.
6.13 Assignment of Claims Act. The Borrowers jointly and severally
agree to take any action and to execute and deliver all documentation
reasonably requested by the Agent and the Lenders in order to allow the Agent
to (i) provide notice of its security interest in and right to payment under
all Government Contracts, and (ii) otherwise comply in all respects with the
requirements of the Assignment of Claims Act. In connection therewith, the
Borrowers shall promptly notify the Agent of any new Government Contract
entered into by Borrower after the Closing Date and provide a detailed
description of such contractual arrangement sufficient to allow the Agent and
Lenders to comply in all respects with the requirements of the Assignment of
Claims Act.
6.14 Argus; Appraiser; Examiner.
(a) The Borrowers shall continue to retain Argus on the same or
substantially similar terms as those in effect on the Closing Date. The
Borrowers shall promptly provide the Agent and the Lenders with all reports,
analyses or other written product of Argus relating to any of the Borrowers.
The Borrowers covenant and agree that the Agent and the Lenders may
communicate directly with representatives of Argus to receive information
concerning the Borrowers. Without limiting any other provision or term of
this Agreement, the Borrowers expressly acknowledge that the termination of
Argus's employment by the Borrowers after the Closing Date shall constitute an
Event of Default.
The Borrowers shall cause Argus to deliver to the Agent and the Lenders
on or before October 25, 1999 a report (such report being referred to herein
as the "Argus Report") covering the following topics in reasonable detail:
(i) A strategic review of the Current Lines of Business and
proposed actions with respect to each business segment;
(ii) A review of the Borrowers' Government Contracts that are
the 15 largest of the Borrowers' "fixed price" Government
Contracts and of the Borrower's 5 largest "time and materials"
Government Contracts (or "cost reimbursable" Government Contracts)
(in each case based on contract value) and the projected
profitability of such contracts (with particular detailed coverage
of the Borrowers' contract with the State of Colorado);
(iii) A proposed cost reduction program and the proposed
timetable for the program; and
(iv) The verification of the Borrowers' projected financial
results for the remainder of 1999.
(b) Appraiser. The Borrowers acknowledge and agree that the Lenders
have engaged an Appraiser to appraise the value of the Real Property (the
"Appraiser") on a "desk-top" basis and the Lenders have received an appraisal
satisfactory to the Agent and the Lender. The Borrowers shall, on demand, pay
the reasonable costs and expenses of such appraiser and shall permit such
appraiser access to the Real Property during regular business hours.
(c) Examiner. The Borrowers acknowledge and agree that the Agent
or, at the Agent's discretion, counsel to the Agent, shall engage an
independent commercial finance examiner after the Closing Date to review the
Borrowers' books, records, properties and assets (the "Examiner"). The
Borrowers shall, on demand, pay the reasonable costs and expenses of the
Examiner and shall permit the Examiner access to the books, records,
properties and assets of the Borrowers, to members of the management of each
Borrower, to the outside auditors and accountants of the Borrowers and their
work papers, and the Borrowers hereby direct such auditors and accountants to
provide such access, all at the Agent's prior request and during regular
business hours.
7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. Each Borrower
covenants and agrees that, so long as the Revolving Credit Note and/or any
Revolving Credit Loan is outstanding or the Lenders have any Available Total
Commitment:
7.1 Indebtedness. None of the Borrowers will, nor will any
Borrower permit any Subsidiary to, create, incur, assume or become or remain
liable in respect of any Indebtedness, except (in all cases subject to 6.10
of this Agreement):
(a) Indebtedness to the Lenders hereunder;
(b) Indebtedness existing as of the Closing Date of any wholly-owned
Subsidiary to a Borrower or any other wholly-owned Subsidiary and of a
Borrower to any wholly-owned Subsidiary; provided, however, that (i) all
moneys due from a Borrower to any Subsidiary which is not a Borrower will be
expressly constituted as Subordinated Debt and (ii) no Borrower shall repay
any such moneys due to any Subsidiary at any time unless no Event of Default
exists and no event which, with the giving of notice or lapse of time or both,
would constitute an Event of Default exists or will exist after such
repayment;
(c) Current liabilities of a Borrower or any Subsidiary (other than
for borrowed money) incurred in the ordinary course of its business and in
accordance with customary trade practices;
(d) Existing Indebtedness of a Borrower or any Subsidiary referred
to in Schedule 5.8 attached hereto, and renewals and extensions thereof,
provided that (i) the aggregate principal amount of such Indebtedness is not
at any time increased, (ii) no material terms applicable to such Indebtedness
shall be more favorable to the renewal or extension lenders than the terms
that are applicable to the holders of such Indebtedness on the date hereof and
(iii) the interest rate applicable to such Indebtedness shall be a market
interest rate as of the time of such renewal or extension;
(e) Indebtedness of a Borrower or any Subsidiary secured by Permitted Liens;
(f) Indebtedness of a Borrower or any Subsidiary in respect of
guarantees to the extent the underlying Indebtedness is permitted by this
7.1; and
(g) Subordinated Debt;
(h) Unfunded Benefit Liabilities so long as each Borrower is in
compliance with 7.9, provided that the aggregate amount thereof shall not
exceed $5,000,000;
(i) To the extent payment thereof shall not at the time be required
by 6.5, Indebtedness in respect of taxes, assessments, governmental changes
and claims for labor, material and supplies;
(j) Indebtedness in respect of judgments or awards (i) which have
been in force for less than the applicable appeal period or (ii) in respect to
which any Borrower or any Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review, and in each case such
Borrower or such Subsidiary shall have taken appropriate reserves therefor in
accordance with GAAP;
(k) Indebtedness in respect of deferred taxes arising in the
ordinary course of business; and
(l) Reserved.
7.2 Mortgages, Liens, etc. None of the Borrowers will, nor will
any Borrower permit any Subsidiary to, directly or indirectly, create, incur,
assume or suffer to exist, any mortgage, lien, charge or encumbrance on, or
security interest in, or pledge of, or conditional sale or other title
retention agreement (including any Capitalized Lease) with respect to, any
property or asset now owned or hereafter acquired by any Borrower or any
Subsidiary, except for the following (collectively, "Permitted Liens"):
(a) Reserved;
(b) The mortgages and security interests (including Capitalized
Leases) referred to in Schedule 7.2 attached hereto, or any renewal, extension
or refunding of any such mortgage or security interest in an amount not
exceeding the amount thereof remaining unpaid immediately prior to such
renewal, extension or refunding;
(c) Reserved;
(d) Liens for taxes and other amounts not yet delinquent or being
contested in good faith as provided in 6.5; liens in connection with
workmen's compensation, unemployment insurance or other social security
obligations; liens securing the performance of bids, tenders, contracts,
leases, statutory obligations, surety and appeal bonds, liens to secure
progress or partial payments and other liens of like nature arising in the
ordinary course of business; mechanics', workmen's, materialmen's or other
like liens arising in the ordinary course of business in respect of
obligations which are not yet due or which are being contested in good faith;
and other liens or encumbrances incidental to the conduct of the business of
any Borrower or any Subsidiary or to the ownership of their respective
properties or assets, which were not incurred in connection with the borrowing
of money or the obtaining of credit and which do not, individually or in the
aggregate, materially detract from the value of the properties or assets of
the Borrowers and their Subsidiaries or materially affect the use thereof in
the operation of their business;
(e) Encumbrances in the nature of (i) zoning restrictions, (ii)
easements, (iii) restrictions of record on the use of real property, (iv)
landlords' and lessors' Liens on rented premises and (v) restrictions on
transfers or assignments of leases, which in each case do not, individually or
in the aggregate, materially detract from the value of the encumbered property
or impair the use thereof in the business of any Borrower or any Subsidiary;
(f) Liens in respect of judgments or awards, to the extent that such
judgments or awards are permitted by 7.1(j);
(g) Restrictions under federal and state securities laws on the
transfer of securities;
(h) Restrictions under foreign trade regulations on the transfer or
licensing of certain assets of the Borrowers and their Subsidiaries; and
(i) Liens and security interests granted to the Agent and the
Lenders under the Security Documents.
7.3 Revolving Credit Loans, Guarantees and Investments. None of
the Borrowers will, nor will any Borrower permit any Subsidiary to, make or
permit to remain outstanding any loan or advance to, or guarantee or endorse
(except as a result of endorsing negotiable instruments for deposit or
collection in the ordinary course of business) or otherwise assume or remain
liable with respect to any obligation of, or make or own any investment in, or
acquire (except in the ordinary course of business) the properties or assets
of, any Person, except:
(a) Extensions of credit by a Borrower or any Subsidiary in the
ordinary course of business in accordance with customary trade practices;
(b) The presently outstanding investments, loans and advances, if
any, and the presently existing guarantees, if any, of any Borrower and its
Subsidiaries all to the extent set forth on Schedule 5.8 attached hereto and
any renewal, extension or refunding thereof, provided that (i) the aggregate
principal amount thereof is not at any time increased, (ii) no material terms
applicable thereto shall be more favorable to the renewal or extension
borrower or recipient, as the case may be, than the terms that are applicable
to the borrower or recipient, as the case may be, on the date hereof and
(iii) the interest rate (if any) applicable thereto shall be a market interest
rate as of the time of such renewal or extension;
(c) Direct obligations of the United States of America or any
department or agency thereof maturing not more than one year from the date of
acquisition thereof;
(d) Certificates of deposit, repurchase agreements, time deposits
(including sweep accounts), demand deposits, bankers' acceptances, money
market deposits or other similar types of investments maturing not more than
one year from the date of acquisition thereof and evidencing direct
obligations of any Lender or any lender within the United States of America
having capital surplus and undivided profits in excess of $50,000,000;
(e) Investments in commercial paper maturing within ninety (90) days
from the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from Xxxxx'x or S&P;
(f) Any mutual fund or other pooled investment vehicle which invests
principally in obligations described in subparagraphs (c), (d) or (e) above
and having, at the date of investment in such fund or vehicle, one of the two
highest credit ratings from Xxxxx'x or S&P;
(g) Equity investments by any Borrower's wholly-owned Subsidiaries
in any other wholly-owned Subsidiary and of a Borrower in any of its wholly-
owned Subsidiaries;
(h) Revolving Credit Loans;
(i) Reserved;
(j) Guarantees by a Borrower of Indebtedness and other obligations
incurred by Subsidiaries to the extent permitted by 7.1; and
(k) Capital Expenditures to the extent permitted by 7.7.
7.4 New Leases. None of the Borrowers will, nor will any Borrower
permit any Subsidiary to, enter into any Capitalized Lease, except as
permitted below or as otherwise permitted under 7.1 and 7.2. Each Borrower
will not, and will not permit any Subsidiary to, enter into any new lease
(including any new Capitalized Leases) as lessee if, immediately after giving
effect thereto, the aggregate rental obligations (excluding payments required
to be made by the lessee in respect of taxes and insurance whether or not
denominated as rent) of all of the Borrowers and their respective Subsidiaries
for the period from the Closing Date through the Maturity Date under all such
leases then in effect shall exceed $100,000 in the aggregate after the Closing
Date; provided, however, that to the extent rental obligations under any lease
are reimbursable by such Borrower's customer pursuant to a binding contract
between such Borrower and such customer, such rental obligations shall be
excluded from the foregoing provision of this sentence.
7.5 Mergers and Consolidations. None of the Borrowers will, nor
will any Borrower permit any Subsidiary to, enter into any merger or
consolidation, except the following:
(a) Any wholly-owned Subsidiary of a Borrower may merge or be
liquidated into a Borrower or any other wholly-owned Subsidiary of a Borrower
so long as after giving effect to any such merger to which a Borrower is a
party such Borrower shall be the surviving or resulting Person; and
(b) Mergers constituting investments permitted by 7.3(i) so long as
after giving effect to any such merger to which a Borrower is a party such
Borrower shall be the surviving or resulting Person;.
7.6 Sale of Assets. None of the Borrowers will, nor will any
Borrower permit any Subsidiary to, sell, lease or otherwise dispose of all or
any substantial part of its properties or assets, except the following:
(a) Each Borrower and its Subsidiaries may, subject to 2.3(b), sell
or otherwise dispose of (i) inventory in the ordinary course of business, (ii)
assets that are no longer used or useful in the Business of the applicable
Borrower or Subsidiary, (iii) the properties and assets constituting the
Xxxxxx Xxxxx software business (including the licenses to the Xxxxxx Xxxxx
software), (iv) the properties and assets constituting the telephone fraud
detection and control business and (v) capital stock of Software and Telecom;
provided, however, that, in the case of the foregoing clauses (iii), (iv) and
(v), immediately before and after giving effect thereto no Event of Default
exists and no event exists which, with the giving of notice or passage of time
or both, would constitute an Event of Default;
(b) DRC may sell, lease or otherwise transfer any of its properties
or assets to any other Borrower, provided that (i) the Borrowers provide a
notice thereof to the Agent prior to each such transfer (which notice shall
include a description and a good faith estimate of the fair market value of
the property or assets being so transferred and, to the extent applicable, the
revenues that were generated by such property or assets in the immediately
preceding fiscal year of DRC), (ii) such transfers relate solely to a transfer
by DRC of its encoder line of business to Encoder, its metrigraphics line of
business to Metrigraphics, its Xxxxxx Xxxxx software line of business to
Software and/or its telephone fraud control line of business to Telecom and
(iii) immediately before and after giving effect thereto no Event of Default
exists;
(c) Each Borrower and its Subsidiaries may license products and
intangible assets for fair market value in the ordinary course of business;
and
(d) Reserved.
7.7 Capital Expenditures. None of the Borrowers will, nor will any
Borrower permit any Subsidiary to, make any Capital Expenditures during any
fiscal year of DRC unless the aggregate amount of all Capital Expenditures
committed to be made by all Borrowers and their respective Subsidiaries in
such fiscal year does not exceed $4,600,000.
7.8 Distributions. DRC will not make any distribution or declare
or pay any cash dividends on, or purchase, acquire or redeem or retire any of
its capital stock, of any class, whether now or hereafter outstanding.
7.9 Compliance with ERISA. Each Borrower will make, and will cause
all ERISA Affiliates to make, all payments or contributions to Employee
Benefit Plans and Multiemployer Plans required under the terms thereof and in
accordance with applicable minimum funding requirements of ERISA and the Code
and applicable collective bargaining agreements. Each Borrower will cause all
Employee Benefit Plans sponsored by it or any ERISA Affiliates to be
maintained in material compliance with ERISA and the Code. None of the
Borrowers will engage, and will not permit or suffer any ERISA Affiliate or
any Person entitled to indemnification or reimbursement from a Borrower or any
ERISA Affiliate to engage, in any prohibited transaction under ERISA or the
Code for which an exemption is not available. No Borrower or ERISA Affiliate
will terminate, or permit the PBGC to terminate, any Employee Benefit Plan or
withdraw from any Multiemployer Plan, in any manner which could result in
material liability of a Borrower or any ERISA Affiliate.
7.10 Transactions with Affiliates. No Borrower will, nor will any
Borrower permit any Subsidiary to, directly or indirectly, enter into any
lease or other transaction with any Affiliate of such Borrower or such
Subsidiary (other than and excluding any transaction between such Borrower and
any other Borrower) on terms that are less favorable to such Borrower or such
Subsidiary than those which could reasonably be obtained at the time from a
non-Affiliate.
7.11 Observance of Subordination Provisions, etc. No Borrower will
make, nor will any Borrower cause or permit to be made, any payments in
respect of any Subordinated Debt, in contravention of the subordination
provisions contained in the evidence of such Subordinated Debt or in
contravention of any written agreement pertaining thereto, nor will any
Borrower (a) amend, modify or change in any manner any of such subordination
provisions or (b) amend, modify or change in any manner adverse to the
interests of the Lenders any of the other provisions set forth in the
agreements under which such Subordinated Debt is outstanding or contained in
the evidence of such Subordinated Debt.
7.12 Environmental Liabilities. No Borrower will, nor will any
Borrower permit any Subsidiary to, violate any requirement of any material
law, rule or regulation regarding Hazardous Materials; and, without limiting
the foregoing, no Borrower will, nor will any Borrower permit any Subsidiary
or any other Person to, dispose of any Hazardous Material into or onto, or
(except in accordance with applicable law) from, any real property owned,
leased or operated by any Borrower or any Subsidiary or in which any Borrower
or any Subsidiary holds, directly or indirectly, any legal or beneficial
interest or estate, nor allow any lien imposed pursuant to any law, regulation
or order relating to Hazardous Materials or the disposal thereof to be imposed
or to remain on such real property, except for liens being contested in good
faith by appropriate proceedings and for which adequate reserves have been
established and are being maintained on the books of a Borrower and its
Subsidiaries.
7.13 Subsidiaries. No Borrower will create any new Subsidiaries.
8. FINANCIAL COVENANT. Each Borrower covenants and agrees that,
so long as the Revolving Credit Note and/or any Revolving Credit Loan is
outstanding or the Lenders have any Available Total Commitment, the Borrowers
shall realize Consolidated EBIT of at least $1 for each calendar month ending
on or after the Closing Date.
9. DEFAULTS; REMEDIES.
9.1 Events of Default; Acceleration. If any of the following
events (each an "Event of Default") shall occur:
(a) Any Borrower shall default in the payment of principal of or
interest on the Revolving Credit Note or any Revolving Credit Loan, or any
other fee due hereunder, whether at maturity or at a date fixed for the
payment of any installment or prepayment thereof or otherwise, and in the case
of any such fee payment default, such default shall continue for a period of
three (3) Business Days following the date of such default; or
(b) Any Borrower shall default in the performance of or compliance
with any term contained in 6.2(g), 6.2(h), 6.2(i), 6.3, 6.9, 6.10, 6.14 (a)
and 7.1 to and including 7.14, or 8; or
(c) Any Borrower shall default in the performance of or compliance
with any term, condition, covenant or agreement (other than those listed in
9.1(b)) to be performed or observed by it under this Credit Agreement or
under any other Loan Document and such default shall continue for a period of
ten (10) days or more; or
(d) Any representation or warranty made by any Borrower herein or
pursuant hereto shall prove to have been false or incorrect in any material
respect when made or when deemed to have been made; or
(e) Any Borrower or any Subsidiary shall default in (i) the payment
of any Indebtedness in respect of borrowed money (other than the Revolving
Credit Loans), any Capitalized Lease or the deferred purchase price of any
property (which in each case shall not include the Borrowers' accounts payable
incurred in the ordinary course of the Borrowers' business) and such default
(A) shall continue after giving effect to any applicable grace periods and (B)
shall be in respect of an aggregate amount of principal (whether or not due)
and accrued interest exceeding $250,000; or (ii) the performance or compliance
with any term of any agreement or instrument relating to such Indebtedness and
such default (A) shall continue, without having been duly cured, waived or
consented to, beyond the period of grace, if any, specified in such agreement
or instrument, and (B) shall permit the acceleration of such Indebtedness
prior to its stated maturity; or
(f) Except as permitted by 6.3(a) or 7.5, any Borrower or any
Subsidiary shall discontinue its business or shall make an assignment for the
benefit of creditors, or shall fail generally to pay its debts as such debts
become due, or shall apply for or consent to the appointment of or taking
possession by a trustee, receiver or liquidator (or other similar official) of
any Borrower or such Subsidiary or any substantial part of the property of any
Borrower or such Subsidiary, or shall commence a case or have an order for
relief entered against it under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or if any Borrower or any Subsidiary shall
take any action to dissolve or liquidate any Borrower or such Subsidiary; or
(g) If, within sixty (60) days after the commencement against any
Borrower or any Subsidiary of a case under the federal bankruptcy laws, as now
or hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, such case shall have been consented to or
shall not have been dismissed or all orders or proceedings thereunder
affecting the operations or the business of any Borrower and such Subsidiary
stayed, or if the stay of any such order or proceeding shall thereafter be set
aside, or if within sixty (60) days after the entry of a decree appointing a
trustee, receiver or liquidator (or other similar official) of any Borrower or
any Subsidiary or any substantial part of the property of any Borrower or such
Subsidiary, such appointment shall not have been vacated; or
(h) A final judgment which, with other outstanding final judgments
against any or all of the Borrowers and its Subsidiaries, exceeds an aggregate
of $250,000 shall be rendered against any Borrower or any Subsidiary and if,
within sixty (60) days after entry thereof, such judgment shall not have been
discharged or execution thereof stayed pending appeal, or if, within sixty
(60) days after the expiration of any such stay, such judgment shall not have
been discharged, or if any such judgment shall not be discharged forthwith
upon the commencement of proceedings to foreclose any lien, attachment or
charge which may attach as security therefor and before any of the property or
assets of any Borrower or any Subsidiary shall have been seized in
satisfaction thereof; or
(i) Any Borrower or any Subsidiary loses, fails to keep in force,
suffers the termination or revocation of or terminates, forfeits or suffers an
amendment to any License which would have a material adverse effect on the
operations of such Borrower or such Subsidiary; or
(j) There shall have occurred a Change in Control; or
(k) If with respect to any Employee Benefit Plans or Multiemployer
Plans, there shall occur any of the following which could reasonably be
expected to have a material adverse effect on the financial condition of any
Borrower: (i) the violation of any of the provisions of ERISA; (ii) the loss
by such a plan intended to be a Qualified Plan of its qualification under
Section 401(a) of the Code; (iii) the incurrence of liability under Title IV
of ERISA; (iv) a failure to make full payment when due of all amounts which,
under the provisions of any such plan or applicable law, any Borrower or any
ERISA Affiliate is required to make; (v) the filing of a notice of intent to
terminate such a plan under Sections 4041 or 4041A of ERISA; (vi) a complete
or partial withdrawal of a Borrower or an ERISA Affiliate from any such plan;
(vii) the receipt of a notice by the plan administrator of such a plan that
the PBGC has instituted proceedings to terminate such plan or appoint a
trustee to administer such plan; (viii) a commencement or increase of
contributions to, or the adoption of or the amendment of, such a plan; and
(ix) the assessment against a Borrower or any ERISA Affiliate of a tax under
Section 4980B of the Code; or
(l) Any Event of Default shall occur under any of the Security
Documents; or
(m) There shall have occurred a Material Adverse Effect (other than
an event or condition to the extent disclosed on Schedule 5.4 or 5.22) that,
to the extent curable, is not cured within ten (10) days following the date on
which any Borrower has notice (actual or constructive);
then, and in any such event, and at any time thereafter, if any Event of
Default (other than an event described in 9(f) or 9(g) shall then be
continuing, the Required Lenders may direct the Agent to, by written notice to
any Borrower, (i) declare the principal of and accrued interest in respect of
the Revolving Credit Note to be forthwith due and payable, whereupon the
principal of and accrued interest in respect of the Revolving Credit Note, and
all other amounts then due hereunder, shall become forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by each Borrower, and/or (ii) terminate the Total
Commitment, whereupon the Total Commitment of the Lenders (and the Commitment
of each individual Lender) to make Revolving Credit Loans hereunder shall
forthwith terminate without any other notice of any kind; and with respect to
any event described in 9(f) or 9(g) above, the Commitments shall
automatically terminate and the principal of the Revolving Credit Note then
outstanding, together with accrued interest thereon and all other amounts then
due hereunder, shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by each of the Borrowers, anything contained herein or
in any other Loan Document to the contrary notwithstanding. Without limiting
any provision of this Agreement or of any Security Document, an Event of
Default under this Agreement shall also constitute an event of default under
each of the Security Documents.
9.2 Remedies on Default, etc. In case any one or more Events of
Default shall occur and be continuing, the Lenders may proceed to protect and
enforce all of their rights and remedies under the Loan Documents or
applicable law, and may commence an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement
contained herein or in any other Loan Document, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise of
any power granted hereby or thereby or by law. In case of a default in the
payment of any principal of or interest on the Revolving Credit Note or any
Revolving Credit Loan, or in the payment of any fee due hereunder, each
Borrower will pay to the Agent and the Lenders such further amount as shall be
sufficient to cover the cost and expense of collection, including the Agent's
and Lenders' attorneys' fees, expenses and disbursements. No course of
dealing and no delay on the part of the Lenders in exercising any right shall
operate as a waiver thereof or otherwise prejudice the Lenders' rights. No
right conferred hereby or by any other Loan Document upon the Agent and the
Lenders shall be exclusive of any other right referred to herein or therein or
now or hereafter available at law, in equity, by statute or otherwise.
10. [RESERVED].
11. CONDITIONS TO ALL REVOLVING CREDIT LOANS. The obligations of
the Lenders to make any Revolving Credit Loan hereunder shall also be subject
to the satisfaction of the following conditions precedent:
11.1. Accuracy of Representations; No Event of Default. After
giving effect to the Revolving Credit Loans proposed to be made on such
Drawdown Date, (i) all representations and warranties of each Borrower
contained in this Credit Agreement, the other Loan Documents or in any
document or instrument delivered pursuant to or in connection with this Credit
Agreement shall be true and correct as of the date as of which they were made
and shall also be true and correct at and as of the time of the making of such
Revolving Credit Loan, with the same effect as if made at and as of that time
(except to the extent of changes resulting from transactions contemplated or
permitted by this Credit Agreement and the other Loan Documents, or to the
extent that such representations and warranties relate expressly to an earlier
date), and (ii) no Event of Default or other event which, with the giving of
notice or passage of time or both, would constitute an Event of Default shall
have occurred and be continuing; provided, however, that, with respect to any
forward-looking statements or projections made by the Borrowers, such
statements do not constitute representations or warranties but were made in
good faith by the Borrowers based on reasonable assumptions at the time made.
On or before the date of the Revolving Credit Loans, the Agent, on behalf of
the Lenders, shall have received a certificate of DRC signed by the chief
financial officer or treasurer of DRC to such effect.
11.2. No Legal Impediment. No change shall have occurred in any
law or regulations thereunder or interpretations thereof that in the
reasonable opinion of any Lender would make it illegal for such Lender to make
such Revolving Credit Loan.
12. THE AGENT.
12.1. Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder
and under each of the Loan Documents with such powers as are specifically
delegated to the Agent by the terms of this Credit Agreement and the Loan
Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in 12.5 and the
first sentence of 12.6 shall include reference to its Affiliates and the
respective officers, directors, employees and agents of the Agent and its
Affiliates): (a) shall have no duties or responsibilities except those
expressly set forth in this Credit Agreement to be a trustee for any Lender;
(b) shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Credit Agreement, or in any
certificate or other document referred to or provided for in, or received by
any of them under, this Credit Agreement, or for the value, validity,
effectiveness, genuineness, enforceability, perfection or sufficiency of this
Credit Agreement, the Revolving Credit Note or any other document referred to
or provided for herein or for any failure by any Borrower or any other Person
to perform any of its obligations hereunder or thereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder except to the extent requested by or consented to by the Required
Lenders; and (d) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith, except for its own gross
negligence or willful misconduct. The Agent may employ agents and attorneys-
in-fact and shall not be responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. Subject
to the foregoing, the Agent shall, on behalf of the Lenders, exercise any and
all rights, powers and remedies of the Lenders under this Credit Agreement and
any other Loan Documents, including the giving of any consent or waiver or the
entering into of any amendment, subject to the provisions of 25.
12.2. Reliance by Agent. The Agent shall be entitled to rely upon
any certifications, notices or communications (including any communications by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. As to any matters not
expressly provided for by this Credit Agreement, the Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder in
accordance with the instructions of the Lenders, and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders.
12.3. Defaults. The Agent shall not be deemed to have knowledge of
the occurrence of an Event of Default (other than the nonpayment of principal
of or interest on the Revolving Credit Note) unless the Agent has received
written notice from a Borrower specifying such Event of Default. In the event
that the Agent receives such a notice of the occurrence of an Event of
Default, the Agent shall give notice thereof to the Lenders (and shall give
each Lender prompt notice of each such nonpayment). The Agent shall (subject
to the provisions of 24 and 12.7) take such action with respect to such
Event of Default as shall be directed by the Lenders, provided that, unless
and until the Agent shall have received such directions, the Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Event of Default as it shall deem advisable and
in the best interests of the Required Lenders.
12.4. Rights as a Lender. With respect to its Percentage of the
Total Commitment and the Revolving Credit Loans made by it, BBH&Co, in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
the Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. The Agent
and its Affiliates may (without having to account therefor to any Lender)
accept deposits from, lend money to and generally engage in any kind of
banking, trust or other business with any Borrower or any of its Affiliates,
as if the Agent were not acting as the agent hereunder, and the Agent may
accept fees and other consideration from any of such Persons for services as
the Agent or otherwise without having to account for the same to the Lenders.
12.5. Indemnification. The Lenders agree to indemnify the Agent
ratably in accordance with their respective Percentages for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Credit Agreement or referred to herein or
the transactions contemplated by or referred to herein or therein (including
the costs and expenses which any Borrower is obligated to pay but excluding,
unless an Event of Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms of this Credit
Agreement or of any such other documents, provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent.
12.6. Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrowers and its own
decision to enter into this Credit Agreement and that it will, independently
and without reliance upon the 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 analysis and decisions in taking or not taking action under
this Credit Agreement. The Agent shall not be required to keep itself
informed as to the performance or observance by the Borrowers of this Credit
Agreement or any other document referred to or provided for herein or to
inspect the properties or books of the Borrowers. Except for notices, reports
and other documents and information expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrowers which
may come into the possession of the Agent or any of its Affiliates.
Notwithstanding the foregoing, the Agent will use its best efforts to provide
to the Lenders any and all information reasonably requested by them and
reasonably available to the Agent promptly upon such request.
12.7. Failure to Act. Except for action expressly required of the
Agent hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall be indemnified to its satisfaction
by the Lenders against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action.
12.8. Resignation of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving notice thereof to the Lenders and DRC. Upon any such
resignation, the Lenders shall appoint a successor Agent. If no successor
Agent shall have been so appointed by the Lenders 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, appoint a
successor Agent which shall be a Lender which has a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations hereunder. After the retiring Agent's resignation
hereunder as Agent, the provisions of this 12 shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as the Agent.
12.9. Cooperation of Lenders. Each Lender shall (a) endeavor to
and shall not be liable for any failure to promptly notify the other Lenders
and the Agent of any Events of Default known to such Lender under this Credit
Agreement and not reasonably believed to have been previously disclosed to the
other Lenders; and (b) provide the other Lenders and the Agent with such
information and documentation as such other Lender or the Agent shall
reasonably request in the performance of their respective duties hereunder,
including all information relative to the outstanding balance of principal,
interest and other sums owed to such Lender.
12.10. Amendment of 12. Each Borrower hereby agrees that the
provisions of this 12 (other than 12.8 and 12.11) generally constitute an
agreement among the Agent and the Lenders and that any and all of the
provisions of this 12 (other than 12.8 and 12.11) may be amended at any
time by the Lenders without the consent or approval of, or notice to, any
Borrower (other than the requirement of notice to DRC of the resignation of
the Agent and other than any provision in addition to 12.8 and 12.11 which
directly affects the Borrowers).
12.11. Reliance. As to any consent that is granted or any other action
that is taken by the Agent hereunder, or under the Loan Documents, the
Borrowers shall be entitled to rely upon any of the foregoing granted,
delivered or taken by the Agent and the Lenders shall be bound thereby,
without the necessity of inquiring or confirming the Agent's authority.
13. SETOFF, ETC. Regardless of the adequacy of any collateral,
during the continuance of any Event of Default, any deposits or other sums
credited by or due from any Lender to any Borrower and any securities or other
property of any Borrower in the possession of any Lender may be applied to or
set off against the pro rata payment of Obligations and any and all other
liabilities, direct, or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, of the Borrowers to the Lenders. The
Lenders agree among themselves that, with respect to all sums received by the
Lenders applicable to the payment of principal of or interest on the Revolving
Credit Note, equitable adjustment will be made among the Lenders so that, in
effect, all such sums shall be shared ratably by each of the Lenders whether
received by voluntary payment, by the exercise of the right of setoff or
banker's lien, by counterclaim or crossclaim or by the enforcement of the
Revolving Credit Note. If any Lender receives any payment of a sum or sums in
excess of its pro rata portion, then such Lender receiving such excess payment
shall purchase for cash from the other Lenders an interest in their Commitment
in such amounts as shall result in a ratable participation by each of the
Lenders in the aggregate unpaid amount of the Revolving Credit Note then
outstanding; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such Lender, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
14. EXPENSES. Whether or not the transactions contemplated hereby
shall be consummated, each Borrower agrees to pay on demand (a) the reasonable
direct, out-of-pocket costs of reproducing this Credit Agreement, the other
Loan Documents and the other agreements at and instruments mentioned herein,
(b) any taxes (including any interest and penalties in respect thereto)
payable by the Lenders (other than taxes based upon the Lender's net income)
on or with respect to the transactions contemplated by this Credit Agreement
(the Borrowers hereby agreeing to indemnify the Lenders with respect thereto),
(c) the fees, expenses and disbursements (including attorney fees and costs
for external counsel to the Agent and the Lenders and the allocated costs and
disbursements of internal counsel of the Agent and the Lenders) incurred by
the Agent and the Lenders in connection with the preparation of the Loan
Documents and other instruments mentioned herein and the reasonable fees,
expenses and disbursements of the Agent's and Lenders' internal and external
counsel in connection with any amendments, modifications, approvals, consents,
waivers or Replacement Lenders hereto or hereunder, (d) the fees, expenses and
disbursements incurred by the Agent and the Lenders in connection with the
retention of the appraiser, environmental consultant and independent
commercial finance examiner referred to in 6.14 and the recording of the
Mortgage and the purchase of title insurance in connection therewith, and (e)
all reasonable out-of-pocket expenses (including attorney fees and costs for
external counsel to the Agent and the Lenders and the allocated costs and
disbursements of internal counsel of the Agent and the Lenders) incurred by
the Agent and the Lenders in connection with (i) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrowers
or the administration thereof after the occurrence of an Event of Default or
any event which, with the giving of notice or passage of time or both, would
constitute an Event of Default, (ii) any replacement of a Lender pursuant to
17.4 and (iii) any litigation, proceeding or dispute arising hereunder;
provided, however, that the Borrowers shall have no obligation to pay for the
expenses of the Agent or the Lenders to the extent such expenses result from
the Agent's or any Lender's gross negligence, fraud or willful misconduct.
The costs, fees, expenses and disbursements referenced in this 14 shall
constitute "Obligations" of the Borrowers and shall be secured by the
Collateral.
In the event the Borrowers fail to pay on demand any such costs,
expenses, fees or disbursements, the Lenders may, in their sole discretion,
without prior notice to the Borrowers, make a Revolving Credit Loan to the
Borrowers and use the proceeds of such loan to satisfy the amount owed to the
Agent and the Lenders.
15. INDEMNIFICATION. Each Borrower agrees to indemnify and hold
harmless each Lender from and against any and all claims, actions and suits
whether groundless or otherwise, and from and against any and all liabilities,
losses, damages and expenses of every nature and character arising out of this
Credit Agreement or any of the other Loan Documents or the transactions
contemplated hereby or thereby, including (a) any actual or proposed use by
any Borrower of the proceeds of any of the Revolving Credit Loans, (b) any
Borrower entering into or performing this Credit Agreement or any of the other
Loan Documents or (c) with respect to any Borrower and its properties and
assets, the violation of any Environmental Law, the presence, disposal,
escape, seepage, leakage, spillage, discharge, emission, release or threatened
release of any Hazardous Substances or any action, suit, proceeding or
investigation brought or threatened with respect to any Hazardous Substances
(including, but not limited to claims with respect to wrongful death, personal
injury or damage to property), in each case including the reasonable fees and
disbursements of counsel for the Agent, incurred in connection with any such
investigation, litigation or other proceeding; provided, however, that no
Borrower shall have any obligation to indemnify the Agent or the Lenders for
any liabilities, losses, damages or other expenses (I) incurred in connection
with any litigation commenced by any Borrower against the Agent or any Lender,
or by the Agent or any Lender against any Borrower, which seeks enforcement of
any rights hereunder or under any other Loan Document and is determined
adversely to the Agent or the Lenders in a final nonappealable judgment or
(II) to the extent such liabilities, losses, damages or other expenses result
from the Agent's or any Lender's gross negligence, fraud or willful
misconduct. If, and to the extent that the obligations of any Borrower under
this 15 are unenforceable for any reason, each Borrower hereby agrees to make
the maximum contribution to the payment in satisfaction of such obligations
which is permissible under applicable law.
16. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein in any of the other Loan Documents
or in any documents or other papers delivered by or on behalf of each Borrower
pursuant hereto shall be deemed to have been relied upon by each Lender,
notwithstanding any investigation heretofore or hereafter made by it, and
shall survive the making by the Lenders of the Revolving Credit Loans, as
herein contemplated, and shall continue in full force and effect so long as
any amount due under this Credit Agreement or any of the other Loan Documents
remains outstanding or the Lenders have any obligation to make any Revolving
Credit Loans. All statements contained in any certificate or other paper
delivered to the Lenders at any time by or on behalf of any Borrower pursuant
hereto shall constitute representations and warranties as of the date thereof
by the Borrowers hereunder.
17. ASSIGNMENT AND PARTICIPATION.
17.1. Assignment by the Lenders. No Lender shall assign or
transfer any of its rights or obligations under any of the Loan Documents (i)
without the prior written consent of DRC, which shall not be unreasonably
withheld or delayed, and (ii) in amounts of less than $5,000,000 unless such
Lender assigns its entire remaining interest under the Loan Documents;
provided, however, that any Lender may, at any time and from time to time,
sell, transfer, assign or otherwise grant an interest in any Loan to a
Subsidiary or any Affiliate of such Lender or to a Federal Reserve Bank of the
United States; and provided, further, that upon the occurrence and during the
continuance of an Event of Default, no consent of DRC shall be required to any
assignment.
17.2. Assignment by Borrowers. No Borrower shall assign or
transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of the Lenders.
17.3. Participations by the Lenders. Any Lender may, without the
consent of any Borrower, the Agent or any other Lender, sell participations to
one or more banks or other entities (each a "Participant"?) in all or a portion
of such Lender's rights and obligations under this Credit Agreement (including
all or a portion of its Commitment and the Revolving Credit Loans owing to
it); provided, however, that (i) such Lender's obligations under this Credit
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) each Borrower, the 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 Credit Agreement and (iv) such
participation shall be in an amount of not less than $5,000,000. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Credit Agreement and to approve any amendment, modification or waiver of any
provision of this Credit Agreement. Each Borrower agrees that each
Participant shall be entitled to the benefits of 4.5 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to 17.1.
17.4 Replacement of Lender. In the event that any Lender (other
than the Agent in its capacity as a Lender) or, to the extent applicable, any
Participant (the "Affected Lender"):
(a) fails to perform its obligations to fund any portion of
any Revolving Credit Loan on or after the Closing Date when required to
do so by the terms of this Credit Agreement;
(b) refuses to consent to a proposed extension of the Maturity
Date that is consented to by all of the other Lenders; or
(c) refuses to consent to a proposed amendment, modification,
waiver or other action requiring consent of all of the Lenders under 25
that is consented to by Lenders owning at least 66 2/3% of the Percentages
of the Total Commitment;
then, so long as no Event of Default exists, DRC shall have the right to seek,
at its own cost and expense, a replacement lender which is reasonably
satisfactory to the Agent and the Required Lenders (the "Replacement Lender").
The Replacement Lender shall purchase the interests of the Affected Lender in
the Revolving Credit Loans and its Commitment and shall assume the obligations
of the Affected Lender hereunder and under the other Loan Documents upon
execution by the Replacement Lender of an assignment agreement in form and
substance reasonably satisfactory to the Replacement Lender and Affected
Lender, and the tender by the Replacement Lender to the Affected Lender of a
purchase price agreed between the Replacement Lender and the Affected Lender.
Such assignment by any Affected Lender who has performed its obligations
hereunder shall be deemed an early termination of any Revolving Credit Loans
to the extent of such Affected Lender's portion thereof, and the Borrowers
will pay to such Affected Lender any resulting amounts due under 4.8. Upon
consummation of such assignment, (i) the Replacement Lender shall become party
to this Credit Agreement as a signatory hereto and shall have all the rights
and obligations of the Affected Lender under this Credit Agreement and the
other Loan Documents with a Percentage equal to the Percentage of the Affected
Lender, (ii) the Affected Lender shall be released from its obligations
hereunder and under the other Loan Documents and (iii) no further consent or
action by any party shall be required. The Borrowers shall sign such
documents and take such other actions reasonably requested by the Replacement
Lender to enable it to share in the benefits of the rights created by the Loan
Documents. Until the consummation of an assignment in accordance with the
foregoing provisions of this 17.4, the Borrowers shall continue to pay to the
Affected Lender any Obligations as they become due and payable.
18. FOREIGN LENDER. If any Lender is not incorporated or organized
under the laws of the United States of America or a state thereof, such Lender
shall deliver to DRC and the Agent the following:
(a) Two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor form, as the case may be,
certifying in each case that such Lender is entitled to receive payments
under this Credit Agreement and the Revolving Credit Note without
deduction or withholding of any United States federal income taxes;
provided, however, that if such Lender is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and cannot deliver Form 1001
or 4224, such Lender shall deliver to DRC and the Agent a certificate to
such effect; and
(b) A duly completed Internal Revenue Service Form W-8 or W-9
or successor form, as the case may be, to establish an exemption from
United States backup withholding tax.
Each such Lender that delivers to DRC and the Agent a Form 1001 or 4224
and Form W-8 or W-9 pursuant to this 18 further undertakes to deliver to DRC
and the Agent two further copies of Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable form, or other manner of certification, as the case may
be, on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to DRC and the Agent. Such Forms 1001 or 4224
shall certify that such Lender is entitled to receive payments under this
Credit Agreement without deduction or withholding of any United States federal
income taxes. The foregoing documents need not be delivered in the event any
change in treaty, law or regulation or official interpretation thereof has
occurred which renders all such forms inapplicable or which would prevent such
Lender from delivering any such form with respect to it, or such Lender
advises DRC that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax and, in the case of a Form
W-8 or W-9, establishing an exemption from United States backup withholding
tax. Until such time as DRC and the Agent have received such forms indicating
that payments hereunder are not subject to United States withholding tax or
are subject to such tax at a rate reduced by an applicable tax treaty, the
Borrowers shall withhold taxes from such payments at the applicable statutory
rate without regard to 4.1(b).
19. NOTICES, ETC. Except as otherwise expressly provided in this
Credit Agreement, all notices and other communications made or required to be
given pursuant to this Credit Agreement or the other Loan Documents shall be
in writing and shall be delivered in hand, mailed by United States registered
or certified first class mail, postage prepaid, sent by overnight courier, or
sent by telecopy, and confirmed by delivery via courier or registered or
certified first class mail, postage prepaid, addressed as follows:
(a) if to any Borrower, to such Borrower c/o Dynamics Research
Corporation, 00 Xxxxxxxx Xxxx, Xxxxxxx, XX 00000, Attention: Chief Financial
Officer (Telecopy No. (000) 000-0000), or at such other address for notice as
such Borrower shall last have furnished in writing to the Person giving the
notice;
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telecopy No. (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
(b) if to the Agent or BBH&Co in its capacity as a Lender, at
Xxxxx Brothers Xxxxxxxx & Co., 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, Attention:
Xxxxxxx X. Xxxxxx, Deputy Manager (Telecopy No. (000) 000-0000) or such other
address for notice as BBH&Co shall last have furnished in writing to the
Person giving the notice;
with a copy to:
Xxxxxx, Hall & Xxxxxxx
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Telecopy No. (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Xx., Esq.
(c) if to BankBoston, at BankBoston, N.A., 000 Xxxxxxx Xxxxxx,
Xxxxxx, XX 00000, Attention: Xxxxxxx X. Xxxxxxxx, Director (Mail Stop: MA BOS
01-07-04) (Telecopy No. (000) 000-0000), or such other address for notice as
BankBoston shall last have furnished in writing to the Person giving the
notice;
(d) if to State Street, at State Street Bank and Trust
Company, High Technology Group, 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000,
Attention: Xxxx Xxxxxx, Vice President (Telecopy No. (000) 000-0000), or such
other address as State Street shall last have furnished in writing to the
Person giving the notice;
(e) if to Chase, at The Chase Manhattan Bank, 000 Xxxxx
Xxxxxx, Xxxxxxxxxx, XX 00000, Attention: A. Xxxx Xxxxxx, Vice President
(Telecopy No. (000) 000-0000), or such other address as Chase shall last have
furnished in writing to the Person giving the notice; and
(f) if to Citizens, at Citizens Bank of Massachusetts, 00
Xxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: R.E. Xxxxx Xxxxxx, Vice President
(Telecopy No. (000) 000-0000), or such other address as Citizens shall last
have furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier
or facsimile (so long as a confirmation receipt is received) to a responsible
officer of the party to which it is directed, at the time of the receipt
thereof by such officer or the sending of such facsimile and (ii) if sent by
registered or certified first-class mail, postage prepaid, on the third
Business Day following the mailing thereof.
20. GOVERNING LAW. THIS CREDIT AGREEMENT AND EACH OF THE OTHER
LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE BORROWERS, THE AGENT
AND THE LENDERS AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF
THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON SUCH PERSON BY MAIL AT ITS ADDRESS
SPECIFIED IN 19. EACH OF THE BORROWERS, THE AGENT AND THE LENDERS HEREBY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
COURT.
21. HEADINGS. The captions in this Credit Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.
22. COUNTERPARTS. This Credit Agreement and any amendment hereof
may be executed in several counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an
original, and all of which together shall constitute one instrument. In
proving this Credit Agreement it shall not be necessary to produce or account
for more than one such counterpart signed by the party against whom
enforcement is sought.
23. ENTIRE AGREEMENT, ETC. The Loan Documents and any other
documents executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions contemplated
hereby and thereby. Neither this Credit Agreement nor any term hereof may be
changed, waived, discharged or terminated, except as provided in 25.
24. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE AGENT AND THE
LENDERS HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS CREDIT AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS
PROHIBITED BY LAW, AND, EXCEPT IN THE CASE OF THE GROSS NEGLIGENCE, FRAUD,
BAD FAITH OR WILLFUL MISCONDUCT OF THE AGENT OR ANY LENDER. EACH BORROWER
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION
REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF THE AGENT OR THE LENDERS HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT EACH OF THE AGENT AND THE LENDERS WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT EACH OF THE
LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.
25. CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as otherwise
expressly provided in this Credit Agreement, any consent or approval required
or permitted by this Credit Agreement to be given by the Lenders or the Agent
may be given, and any term of this Credit Agreement or of any other instrument
related hereto or mentioned herein may be amended, and the performance or
observance by any Borrower of any terms of this Credit Agreement or such other
instrument or the continuance of any Default or Event of Default may be waived
(either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of DRC and the written
consent of the Required Lenders. Notwithstanding the foregoing, no amendment
or waiver shall, without the prior written consent of DRC, the Agent and all
of the Lenders, (a) extend the fixed maturity or reduce the principal amount
of, or reduce the rate or extend the time of payment of interest on, or reduce
the amount or extend the time of payment of any principal or interest of, the
Revolving Credit Note (including any extensions of the Maturity Date pursuant
to 2.4); (b) change or waive the Total Commitment (other than reductions in
the Total Commitments pursuant to 2.3) or Percentage; (c) amend or waive this
25 or amend or waive the definition of Required Lenders; (d) change or waive
the amount or payment terms of any fees due hereunder; or (e) amend or waive
the definition of Borrowing Base or 9.1(a), (f) or (g) or 11. No waiver
shall extend to or affect any obligation not expressly waived nor impair any
right consequent thereon. No course of dealing or delay or omission on the
part of the Lenders in exercising any right shall operate as a waiver thereof
or otherwise be prejudicial thereto. No notice to or demand upon a Borrower
shall entitle a Borrower to other or further notice or demand in similar or
other circumstances.
26. CONFIDENTIALITY. No Lender will make any disclosure of
confidential information furnished to it any Borrower or any of its
Subsidiaries unless such information shall have become public, except:
(a) in connection with operations under or the enforcement of
or the protection of a Lender's interest in this Credit Agreement or any
other Loan Document to Persons who have a reasonable need to be
furnished such information;
(b) pursuant to any law, rule or statutory or regulatory
requirement or any court order, subpoena or other legal process;
(c) to any parent or corporate Affiliate of such Lender or to
any Participant, proposed Participant, assignee, proposed assignee,
Replacement Lender or proposed Replacement Lender; provided, however,
that any such Person shall agree to comply with the restrictions set
forth in this 26 with respect to such information;
(d) to its directors, officers, employees, agents, independent
counsel, auditors and other professional advisors and consultants with
an instruction to such Person to keep such information confidential;
(e) to any other Lender and to the Agent and any successor
Agent or prospective successor Agent; and
(f) with the prior written consent of the Borrower, to any
other Person.
27. SEVERABILITY. The provisions of this Credit Agreement are
severable and if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
in such jurisdiction, and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision of this
Credit Agreement in any jurisdiction.
28. NATURE OF LENDER'S OBLIGATIONS. The Lenders obligations to
make their respective Revolving Credit Loans are several and not joint or
joint and several. Any Lender which is not in default in the performance of
its obligations may, in its discretion, assume the obligations of any other
Lender which is in default.
29. AMENDMENT AND RESTATEMENT. This Agreement amends, restates,
replaces and supersedes the Amended and Restated Revolving Credit Agreement
made as of December 31, 1998, by and among the Borrowers, the Agent and the
Lenders, as amended by the First Amendment to Amended and Restated Revolving
Credit Agreement dated as of December 31, 1998 and the Second Amendment to
Amended and Restated Revolving Credit Agreement dated as of May 10, 1999 (as
so amended, and as otherwise amended from time to time prior to the date
hereof, the "First Restated Agreement"), provided that this Agreement does not
in any manner cancel, impair or discharge the outstanding Obligations of the
Borrowers under the First Restated Agreement, all of which are expressly
ratified and confirmed by the Borrowers as valid, binding and enforceable.
The Borrowers expressly acknowledge, agree and confirm that the Security
Documents and the Collateral granted to the Agent and the Lenders thereunder
shall secure all Obligations of the Borrowers, now existing or hereafter
arising, whether such obligations arose or arise under the First Restated
Agreement, this Agreement or otherwise. The parties hereto agree that all
financial covenants contained in 8 of the First Restated Agreement shall be
of no further force and effect following the Closing Date, and each Event of
Default that resulted from the breach of any such financial covenants prior to
the Closing Date shall, following the Closing Date, be waived hereby.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
DYNAMICS RESEARCH CORPORATION
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: President
DRC ENCODER, INC.
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: President
DRC METRIGRAPHICS, INC.
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: President
DRC SOFTWARE, INC.
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: President
DRC TELECOM, INC.
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: President
per pro XXXXX BROTHERS XXXXXXXX & CO.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Deputy Manager
BANKBOSTON, N.A.
By: /s/ Xxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
THE CHASE MANHATTAN BANK
By: /s/ A. Xxxx Xxxxxx
Name: A. Xxxx Xxxxxx
Title: Vice President
STATE STREET BANK AND TRUST COMPANY
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Vice President
CITIZENS BANK OF MASSACHUSETTS
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Vice President
