THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
DATED FEBRUARY 10, 2000 AMONG
DYNAMICS RESEARCH CORPORATION, DRC ENCODER, INC., DRC METRIGRAPHICS, INC., DRC
SOFTWARE, INC., AND DRC TELECOM, INC.
AND
XXXXX BROTHERS XXXXXXXX & CO., AS ADMINISTRATIVE AGENT AND AS A LENDER, AND
FIRST MASSACHUSETTS BANK, N.A., F/K/A FAMILY BANK, FSB, AS COLLATERAL AGENT AND
AS A LENDER
This Third Amendment to Loan and Security Agreement (hereinafter, the
"Amendment") is made as of the 30th day of June, 2001 by and between DYNAMICS
RESEARCH CORPORATION, DRC ENCODER, INC., DRC METRIGRAPHICS, INC., DRC SOFTWARE,
INC., AND DRC TELECOM, INC., Massachusetts corporations with their principal
executive offices at 00 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx (hereinafter,
individually and collectively, jointly and severally, the "Borrowers") and
XXXXX BROTHERS XXXXXXXX & CO., as administrative agent and as a lender, and
FIRST MASSACHUSETTS BANK, N.A., F/K/A FAMILY BANK, FSB, as collateral agent and
as a lender (hereinafter, individually and collectively, the "Lenders"), in
consideration of the mutual covenants contained herein and the benefits to be
derived herefrom. Unless otherwise specified herein, all capitalized terms shall
have the same meaning as set forth in the Loan Agreement (as defined herein
below).
W I T N E S S E T H:
WHEREAS, the Borrowers executed and delivered to the Lenders a certain Loan
and Security Agreement dated February 10, 2000,as amended by a certain Amendment
to Loan and Security Agreement dated as of March 31, 2000 (hereinbefore and
hereinafter, as amended, the "Loan Agreement") pursuant to which, among other
things, the Lenders extended in favor of the Borrowers a Revolving Credit in the
original maximum principal amount of $20,000,000.00 and a Term Loan in the
current maximum principal amount of $10,000,000.00; and
WHEREAS, the Borrowers have requested that the Lenders (i) release certain
Collateral, and (ii) otherwise modify the Loan Agreement as set forth herein;
and
WHEREAS, the Lenders have indicated their willingness to do so, BUT ONLY on
the terms and conditions contained in this Amendment; and
WHEREAS, the Borrowers have determined that this Amendment is in the
Borrowers' respective best interests.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. The Borrowers hereby certify to the Lenders that, to the best of the
Borrowers' knowledge and belief after due inquiry, the representations and
warranties contained in the Loan Agreement, as modified by this Amendment, are
true as of the date hereof and that no Event of Default under the Loan Agreement
or any document executed in connection therewith has occurred and is continuing.
2. The Loan Agreement is hereby amended to release the Lenders' security
interests in the personal property Collateral of the Borrowers granted pursuant
to Article 5 of the Loan Agreement. In connection therewith, the Lenders shall
execute and deliver to the Borrowers
UCC-3 Termination Statements terminating the Lenders' security interests in such
Collateral. Section 7-30 of the Loan Agreement is hereby deleted in its
entirety, and the Lenders shall provide releases of any all claims assigned by
the Borrowers thereunder. The Borrowers hereby confirm, reaffirm, covenant and
agree that each of them shall hereafter remain the owner of all of their present
and future assets free and clear of all Encumbrances other than Permitted Liens
as further set forth in Section 7-6 of the Loan Agreement, and shall not
mortgage, pledge, lease, assign, hypothecate or otherwise grant a security
interest, lien or attachment in or on any of its assets to any party other than
the Lenders. The Borrowers further agree not to enter into a negative pledge
agreement, or similar agreement, with any party other than the Lenders.
3. Section 7-31 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following:
"7-31. Capital Expenditures. None of the Borrowers will, nor
will any Borrower permit any Subsidiary to make any Capital
Expenditures during any fiscal year of the Lead Borrower unless
the aggregate amount of all Capital Expenditures committed to be
made by all Borrowers and their Subsidiaries in such year does
not exceed $5,000,000.00 (exclusive of Capital Expenditures in
fiscal year 2001 and fiscal year 2002 related to the
refurbishment of the Lead Borrower's premises located at 00
Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx.)"
4. Section 11-7 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following:
"11-7. Consolidated Operating Cash Flow to Total Debt Service. The
Borrowers shall at all times maintain a ratio of Consolidated
Operating Cash Flow to Total Debt Service, of greater than (a) 1.20 to
1.00 for any quarter (calculated on a cumulative basis for fiscal year
2000) ending on or prior to December 31, 2000, and (b) 2.00 to 1.00
for each quarter end thereafter, calculated on a rolling four (4)
quarter basis."
5. The Lenders hereby confirm that, for the purposes of Section 3-9 of the
Loan Agreement, the LIBOR Condition has been satisfied.
6. The Agents and the Lenders hereby acknowledge and agree that,
notwithstanding the provisions of Section 3-8(c) of the Loan Agreement, any
proceeds of sales of any equity securities of the Borrowers under any employee
stock option, employee stock purchase or other incentive plan, or the exercise
of any stock options issued under any equity incentive programs or employment
contracts, shall not be paid to the Administrative Agent and may be retained by
the Borrowers.
7. The Agents and the Lenders acknowledge and agree that Section 7-25 of
the Loan Agreement shall not be deemed to prohibit the issuance or sale of
equity securities by the Borrowers to officers and/or directors of the Borrowers
in accordance with employee stock option, employee stock purchase or other
incentive plans, nor shall such subsection be deemed to prohibit other normal
and customary forms of employee compensation or similar option plan arrangements
for the benefit of employees, officers, and directors of the Borrowers. In
addition,
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the Agents and the Lenders hereby acknowledge and agree that, notwithstanding
any provision of the Loan Agreement, if the Lead Borrower shall, on the first
Business Day of any February, May, August or November, issue shares of its
common stock pursuant to its employee stock purchase program, then the Lead
Borrower may, during the first five Business Days of such month, repurchase an
aggregate number of shares of its common stock that is less than or equal to the
number of shares of common stock issued by the Lead Borrower on the first
Business Day of such month pursuant to its employee stock purchase program.
8. The Lenders agree that, notwithstanding the terms of Section 11-4(e) of
the Loan Agreement, the Lenders shall only require delivery of Borrowing Base
Certificates (i) quarterly, within fifteen (15) days of the end of each fiscal
quarter of the Lead Borrower, in the event the aggregate balance of the
Revolving Credit plus amounts then undrawn on all outstanding L/Cs or
acceptances is less than or equal to $2,500,000.00, or (ii) monthly, within
fifteen (15) days of the end of each month, in the event the aggregate balance
of the Revolving Credit plus amounts then undrawn on all outstanding L/Cs or
acceptances is greater than $2,500,000.00.
9. This Amendment shall become effective as of June 30, 2001 upon
satisfaction of the following conditions:
(a) Corporate Proceedings of Borrowers. The Lenders shall have
received resolutions of the Borrowers authorizing the execution, delivery
and performance of this Agreement and all transactions contemplated hereby,
in form and substance reasonably satisfactory to the Lenders.
(b) Opinion of Counsel. The Lenders shall have received an opinion of
counsel to the Borrowers concerning the transactions contemplated hereby in
form and substance reasonably satisfactory to the Lenders.
10. This Amendment and all other documents, instruments or agreements
executed in connection herewith incorporate all discussions and negotiations
between the Borrowers and the Lenders, either expressed or implied, concerning
the matters included herein, any statute, custom, or usage to the contrary
notwithstanding. No such discussions or negotiations shall limit, modify or
otherwise affect the provisions hereof. No modification, amendment, or waiver of
any provision of this Amendment or the Loan Agreement or any provision under any
other agreement, document or instrument between the Borrowers and the Lenders
shall be effective unless executed in writing by the party to be charged with
such modification, amendment or waiver, and if such party be the Lenders, then
by a duly authorized officer of each Lender.
11. Except as specifically modified herein, the Loan Agreement shall remain
in full force and effect as originally written and the Borrowers hereby ratify
and confirm all terms and conditions contained therein and further ratify and
reaffirm all representations and warranties made therein as of the date hereof.
12. This Amendment shall be construed in accordance with and governed by
the laws of the Commonwealth of Massachusetts and shall take effect as a sealed
instrument.
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IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as
of the date first written above.
DYNAMICS RESEARCH CORPORATION
By: /s/Xxxxx X. Xxxxxxx
Title: Treasurer
DRC ENCODER, INC.
By: /s/Xxxxx X. Xxxxxxx
Title: Treasurer
DRC METRIGRAPHICS, INC.
By: /s/Xxxxx X. Xxxxxxx
Title: Treasurer
DRC SOFTWARE, INC.
By: /s/Xxxxx X. Xxxxxxx
Title: Treasurer
DRC TELECOM, INC.
By: /s/Xxxxx X. Xxxxxxx
Title: Treasurer
ACKNOWLEDGED AND AGREED:
XXXXX BROTHERS XXXXXXXX & CO.,
as administrative agent and as a lender
By: /s/Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Senior Vice President
FIRST MASSACHUSETTS BANK, N.A. f/k/a
FAMILY BANK, FSB,
as collateral agent and as a lender
By: /s/C. Xxx Xxxxxxxxxx
Name: C. Xxx Xxxxxxxxxx
Title: Vice President
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