AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of December 31, 1998
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
▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO.,
as Agent and as Swing Line Lender
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 10
2. THE CREDIT FACILITIES 11
2.1. Amounts and Terms 11
2.2. Fees 13
2.3. Reduction of Commitments 14
2.4. Revolving Credit Note 14
2.5. Swing Line Note 14
2.6. Interest on Loans 15
2.7. Requests for Loans 16
2.8. Conversion and Continuation 16
2.9. Funds for Loans 18
3. PREPAYMENT OF THE LOANS; RESERVES 18
3.1. Voluntary Prepayments 18
3.2. Mandatory Prepayments 18
4. CERTAIN GENERAL PROVISIONS 18
4.1. Funds for Payments 18
4.2. Computations 19
4.3. Inability to Determine Adjusted LIBOR 19
4.4. Illegality 20
4.5. Additional Costs, Etc 20
4.6. Capital Adequacy 21
4.7. Certificate 22
4.8. Indemnity 22
4.9. Interest on Overdue Amounts 22
4.10. Mitigation 22
4.11. Joint and Several Obligations 22
5. REPRESENTATIONS AND WARRANTIES 23
5.1 Organization, Standing, etc. of the Borrowers 23
5.2 Subsidiaries 23
5.3 Qualification 23
5.4 Financial Information; Disclosure, etc. 23
5.5 Licenses, etc. 24
5.6 Material Agreements 24
5.7 Tax Returns and Payments 24
5.8 Indebtedness, Liens and Investments, etc. 24
5.9 Title to Properties; Liens 25
5.10 Litigation, etc. 25
5.11 Authorization; Compliance with Other Instruments 25
5.12 Governmental Consent 25
5.13 Regulation U, etc 26
5.14 Employee Retirement Income Security Act of 1974 26
5.15 Environmental Matters 26
5.16 Use of Proceeds 27
5.17 Investment Company Act; Public Utility Holding Company Act 27
6. AFFIRMATIVE COVENANTS OF THE BORROWERS 27
6.1 Records and Accounts 27
6.2 Financial Statements, Certificates and Information 27
6.3 Legal Existence; Compliance with Laws, etc. 29
6.4 Insurance 29
6.5 Payment of Taxes 30
6.6 Payment of Other Indebtedness, etc. 30
6.7 Further Assurances 30
6.8 Depository Account 30
6.9 Use of Proceeds 30
6.10 No Further Negative Pledges 30
6.11 Regulation U 31
7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS 31
7.1 Indebtedness 31
7.2 Mortgages, Liens, etc. 32
7.3 Loans, Guarantees and Investments 33
7.4 Leases 34
7.5 Mergers and Consolidations 35
7.6 Sale of Assets 35
7.7 Capital Expenditures 36
7.8 Distributions 36
7.9 Compliance with ERISA 36
7.10 Transactions with Affiliates 37
7.11 Observance of Subordination Provisions, etc. 37
7.12 Environmental Liabilities 37
7.13 Subsidiaries 37
7.14 Material Adverse Change 37
8. FINANCIAL COVENANTS 37
9. DEFAULTS; REMEDIES 38
9.1 Events of Default; Acceleration 38
9.2 Remedies on Default, etc. 40
10. CLOSING CONDITIONS 41
10.1. Loan Documents, etc 41
10.2. Corporate Action 41
10.3. Incumbency Certificate 41
10.4. Opinions of Counsel 41
10.5. Payment of Fees 41
11. CONDITIONS TO ALL LOANS 41
11.1. Accuracy of Representations; No Event of Default 41
11.2. No Legal Impediment 42
12 THE AGENT 42
12.1 Appointment, Powers and Immunities 42
12.2 Reliance by Agent 42
12.3 Defaults 43
12.4 Rights as a Lender 43
12.5 Indemnification 43
12.6 Non-Reliance on Agent and Other Lenders 43
12.7 Failure to Act 44
12.8 Resignation of Agent 44
12.9 Cooperation of Lenders 44
12.10 Amendment of 12 45
12.11 Reliance 45
13. SETOFF, ETC 45
14. EXPENSES 45
15. INDEMNIFICATION 46
16. SURVIVAL OF COVENANTS, ETC 46
17. ASSIGNMENT AND PARTICIPATION 47
17.1. Assignment by the Lenders 47
17.2. Assignment by Borrowers 47
17.3 Participations by the Lenders 47
17.4 Replacement of Lender 47
18. FOREIGN LENDER 48
19. NOTICES, ETC 49
20. GOVERNING LAW 50
21. HEADINGS 51
22. COUNTERPARTS 51
23. ENTIRE AGREEMENT, ETC 51
24. WAIVER OF JURY TRIAL 51
25. CONSENTS, AMENDMENTS, WAIVERS, ETC 52
26. CONFIDENTIALITY 52
27. SEVERABILITY 53
28. NATURE OF LENDER'S OBLIGATIONS 53
SCHEDULES AND EXHIBITS
Schedule 5.2 Subsidiaries
Schedule 5.4 Financial Statements
Schedule 5.5 Licenses
Schedule 5.6 Material Agreements
Schedule 5.8 Existing Indebtedness
Schedule 5.10 Litigation
Schedule 5.12 Consents
Schedule 5.15 Hazardous Materials
Schedule 7.2 Encumbrances
Exhibit A Form of Swing Line Loan Participation Certificate
Exhibit B-1 Form of Revolving Credit Note
Exhibit B-2 Form of Swing Line Note
Exhibit C Form of Loan Request
Exhibit D Form of Compliance Certificate
Exhibit E Form of Opinion of Borrowers' Counsel
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made as of the 31st
day of December, 1998, 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 ▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO., a New York limited partnership ("BBH&Co"),
as a Lender (as defined below), as Agent (as defined below) for itself and
the other Lenders and as Swing Line Lender (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:
Additional Extraordinary Charges. Extraordinary charges by the
Borrowers in an aggregate amount of up to $4,500,000 resulting from (i)
extraordinary charges by the Borrowers on account of the discontinuance of
the telephone fraud detection and control business, (ii) any write-up or
write-down of any capital stock of Electronic Press owned by DRC, and (iii)
any write-up or write-down of any capital stock of Telica owned by DRC, but
only to the extent that all such extraordinary charges are taken on or prior
to June 30, 1999; provided, however, that the aggregate amount of such
extraordinary charges shall be calculated on a cumulative basis and shall be
net of all credits and gains resulting from such events.
Adjusted LIBOR. With respect to any LIBOR Loan for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the
next 1/100 of 1%) equal to (a) the LIBOR for such Interest Period multiplied
by (b) the Statutory Reserve Rate.
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.
Available Total Commitment. The Total Commitment less the sum of (i)
the outstanding principal amounts advanced as Revolving Credit Loans
and (ii) the outstanding principal amounts advanced as Swing Line 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.
Base Rate Loans. Loans bearing interest calculated by reference to
the Base Rate.
Base Rate Margin. The meaning specified in 2.6(a).
Borrower. Each of DRC, Encoder, Metrigraphics, Software and Telecom.
Business Day. Any day on which banking institutions in Boston,
Massachusetts are open for the transaction of banking business and, in the
case of LIBOR Loans, also a day which is a LIBOR Business Day.
Capital Expenditures. Any payment made directly or indirectly by
DRC or any of its 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.
Capitalization. As of the date of any determination thereof, the
sum of (a) Tangible Net Worth and (b) Indebtedness for borrowed money of DRC
and its Subsidiaries on a Consolidated basis.
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 first date on which the conditions set forth in
10 and 11 have been satisfied and any Loans are made.
Code. The Internal Revenue Code of 1986, as amended.
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. This Amended and Restated Credit Agreement,
including the Schedules and Exhibits hereto.
Current Lines of Business. The lines of business conducted by the
Borrower and its 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; (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; (iii) the telephone fraud detection and
control business; and (iv) the object-oriented development software
business.
Debt Coverage Certificate. The meaning specified in 2.6(a)
Debt Coverage Ratio. The meaning specified in 2.6(a).
Dollars or $. Dollars in lawful currency of the United States of
America.
Drawdown Date. The date on which any Loan is made or is to be made,
and the date on which any Loan is converted or continued in accordance with
2.8.
EBITDA. 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 (a)
Interest Expense of DRC and its Subsidiaries, (b) taxes in respect of
income and profits of DRC and its Subsidiaries and (c) depreciation and
amortization of DRC and its Subsidiaries.
Electronic Press. Electronic Press Services Group, Inc., a Delaware
corporation.
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.
GAAP. Generally accepted accounting principles in the United States
of America.
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.
Interest Payment Date. (a) As to any Base Rate Loan, March 31,
June 30, September 30 and December 31 and any date on which such Base Rate
Loan is converted to a LIBOR Loan; and (b) as to any LIBOR Loan, the last
day of the Interest Period relating to such LIBOR Loan; provided, that in
the event that such Interest Period is 180 days, the 90th day and the last
day of such Interest Period.
Interest Period. With respect to each LIBOR Loan, the period of one,
two, three or six months, as selected by a Borrower commencing on the
Drawdown Date of such LIBOR Loan; provided that the foregoing provisions
relating to Interest Periods are subject to the following:
(a) if any Interest Period would otherwise end on a day that is not
a LIBOR Business Day, that Interest Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the immediately preceding LIBOR Business
Day; and
(b) any Interest Period that would otherwise extend beyond the
Maturity Date shall end on the Maturity Date.
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 (including the Swing Line Lender) which may
from time to time own a Percentage of the Total Commitment, including
BBH&Co in its capacity as a Lender and as the Swing Line Lender; provided,
however, that the term "Lender" shall not include any Participant.
LIBOR. With respect to any LIBOR Loan for any Interest Period, the
rate appearing on Page 3750 of the Telerate Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Agent from time to time for
purposes of providing quotations of interest rates applicable to Dollar
deposits in the London interbank market) at approximately 11:00 a.m., London
time, three Business Days prior to the commencement of such Interest Period,
as the rate for U.S. dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such
time for any reason, the "LIBOR" with respect to such LIBOR Loan for such
Interest Period shall be the rate at which dollar deposits of $5,000,000 and
for a maturity comparable to such Interest Period are offered by the
principal London office of the Agent (or, if the Agent does not have such
an office, such office of any other Lender, as selected by the Agent) in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, three Business Days prior to the commencement of
such Interest Period.
LIBOR Business Day. Any Business Day on which commercial banks are
open for international business (including dealings in Dollar deposits) in
London, England.
LIBOR Loans. Loans bearing interest calculated by reference to the
Adjusted LIBOR.
LIBOR Margin. The meaning specified in 2.6(a).
Licenses. The meaning specified in 5.5.
Loan Documents. This Credit Agreement, the Notes and any other
document executed and delivered in connection herewith.
Loan Request. The meaning specified in 2.7.
Loans. The Swing Line Loans and the Revolving Credit Loans.
Maturity Date. October 1, 2000, subject to extension pursuant to 2.4.
▇▇▇▇▇'▇. ▇▇▇▇▇'▇ Investors Service, Inc.
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 and (b) shall not include Additional Extraordinary Charges,
without duplication with extraordinary items permitted to be excluded from
the calculation of income (or loss) in accordance with GAAP as set forth
above.
Notes. The Swing Line Note and the Revolving Credit Note.
Obligations. All indebtedness, obligations and liabilities of the
Borrowers to 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, arising or incurred under the Loan Documents or in respect of
any of the Loans or the Notes or other instruments at any time evidencing
any thereof.
Outstanding. With respect to the 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 balance sheets and statements of
income and surplus and cash flow, all prepared on a basis consistent with
DRC's historical financial statements, together with appropriate supporting
details and statements of underlying assumptions.
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.
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.
Refunded Swing Line Loan. The meaning specified in 2.1(c).
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 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.
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.
Statutory Reserve Rate. A fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board of Governors of the Federal
Reserve System of the United States to which any of the Lenders is subject
for eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board), as appropriately adjusted by mutual
agreement of the Agent and the Required Lenders to the extent that any
Lender is not subject to, or is subject to different reserve requirements
under, such regulations. Such reserve percentages shall include those
imposed pursuant to such Regulation D. LIBOR Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. The Statutory Reserve Rate shall
be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
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 Notes 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, 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.
Swing Line Availability. The meaning specified in 2.1(c).
Swing Line Lender. BBH&Co.
Swing Line Loan. The meaning specified in 2.1(c).
Swing Line Note. The meaning specified in 2.5.
Tangible Net Worth. As of the date of any determination thereof, the
difference of: (a) DRC's stockholders' equity; minus (b) the sum of:
(i) all intangible assets of DRC and its Subsidiaries; and (ii) all amounts
due to DRC from any of its Affiliates (other than any other Borrower), in
each case calculated on a Consolidated basis. For purposes hereof,
Consolidated Net Worth shall be increased by the amount of Additional
Extraordinary Charges, without duplication with other extraordinary items
determined in accordance with GAAP.
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.
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 $40,000,000 (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 $10,668,000 26.67%
BankBoston $8,000,000 20.00%
Chase $8,000,000 20.00%
State Street $8,000,000 20.00%
Citizens $5,332,000 13.33%
TOTAL $40,000,000 100.00%
(b) Revolving 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 between the Closing Date and 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 Available Total
Commitment; provided, however, that the proceeds of any and all borrowings
and reborrowings hereunder shall be used solely for the purposes described
in 5.16. All Revolving Credit Loans shall be made as LIBOR Loans or Base
Rate Loans, at a Borrower's option. Base Rate Loans may be converted to
LIBOR Loans; and LIBOR Loans may be continued or converted to Base Rate
Loans under the circumstances, and subject to the conditions, specified in
2.8. 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 10 and 11, in the case of the initial Revolving Credit Loans
to be made on the Closing Date, and 11, in the case of all other Revolving
Credit Loans, have been satisfied on the date of such request.
(c) Swing Line Loans.
(i) On any date prior to the Maturity Date on which the Agent
receives any Loan Request in respect of the Available Total Commitment
pursuant to 2.7, designated as a Swing Line Loan, the Agent promptly shall
notify the Swing Line Lender and, subject to the terms and conditions
hereof, the Swing Line Lender shall, on the date the Agent receives such
Loan Request, make an advance (each a "Swing Line Loan") in accordance
with any such notice. The aggregate amount of Swing Line Loans at any time
outstanding shall not exceed the lesser of (A) $3,000,000 and (B) the
Available Total Commitment ("Swing Line Availability"). Until the
Maturity Date, any Borrower may from time to time borrow, repay and reborrow
under this 2.1(c). Each Swing Line Loan shall be made pursuant to a Loan
Request in respect of the Available Total Commitment pursuant to 2.7. Each
such Loan Request must be given no later than 12:00 p.m. (Boston time) on
the Business Day of the proposed Swing Line Loan. Notwithstanding any other
provision of this Agreement or the other Loan Documents, the Swing Line
Loans shall constitute Base Rate Loans. The Borrowers shall repay the
aggregate outstanding principal amount of each Swing Line Loan upon demand
therefor by the Agent, provided that (i) absent an Event of Default or any
other event which, with the giving of notice or passage of time or both,
would constitute an Event of Default, the Agent shall not make such demand
prior to the Business Day next succeeding the date on which such Swing Line
Loan is made and (ii) all amounts of principal and accrued interest
outstanding on the Maturity Date or the earlier maturity by acceleration or
otherwise shall be paid in full on such date.
(ii) The Swing Line Lender, at any time and from time to time in
its sole and absolute discretion, may on behalf of each Borrower (and each
Borrower hereby irrevocably authorizes the Swing Line Lender to so act on
its behalf) request each Lender (including the Swing Line Lender in its
capacity as a Lender) to make a Revolving Credit Loan to such Borrower
(which shall be a Base Rate Loan) in an amount equal to such Lender's
Percentage of the aggregate principal amount of the Swing Line Loans made to
such Borrower (the "Refunded Swing Line Loan") outstanding on the date such
notice is given. Unless any of the events described in 9.1(f) or 9.1(g)
shall have occurred (in which event the procedures of 2.1(c)(iii) shall
apply) and regardless of whether the conditions precedent set forth in
this Credit Agreement to the making of a Revolving Credit Loan are then
satisfied, each Lender shall disburse directly to the Agent such Lender's
Percentage of the Refunded Swing Line Loan on behalf of the Swing Line
Lender, prior to 1:00 p.m. (Boston time), in immediately available funds on
the Business Day next succeeding the date such notice is given. The
proceeds of such Revolving Credit Loans shall be immediately paid to the
Swing Line Lender and applied to repay the Refunded Swing Line Loan.
(iii) If, prior to refunding any Swing Line Loan pursuant to
2.1(c)(ii), one of the events described in 9.1(f) or 9.1(g) shall have
occurred, then, subject to the provisions of 2.1(c)(iv) below, each
Lender will, on the date such Revolving Credit Loan was to have been made
for the benefit of a Borrower, purchase from the Swing Line Lender an
undivided participation interest in the Swing Line Loan in an amount equal
to its Percentage of such Swing Line Loan. Upon request, each Lender will
promptly transfer to the Swing Line Lender, in immediately available funds,
the amount of its participation and upon receipt thereof the Swing Line
Lender will deliver to such Lender a Swing Line Loan Participation
Certificate, substantially in the form of Exhibit A attached hereto, dated
the date of receipt of such funds and in such amount.
(iv) Each Lender's obligation to make Revolving Credit Loans and
topurchase participating interests in accordance with this 2.1(c) shall be
absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender, the Agent, any
Borrower or any other Person for any reason whatsoever, (B) the occurrence
or continuance of any Event of Default or any event which, with the giving
of notice or passage of time or both would constitute an Event of Default,
(C) any inability of a Borrower to satisfy the conditions precedent to
borrowing set forth in this Credit Agreement on the date upon which such
participating interest is to be purchased or (D) any other circumstance,
happening or event whatsoever, whether or not similar to any of the
foregoing. If any Lender does not make available to the Agent or the
Swing Line Lender, as applicable, the amount required pursuant to 2.1(c)
(ii) or 2.1(c)(iii), as the case may be, the Swing Line Lender shall be
entitled to recover such amount on demand from such Lender, together with
interest thereon for each day from the date of non-payment until such amount
is paid in full at a rate equal to the Base Rate plus the Base Rate Margin.
2.2. Fees.
(a) Commitment Fee. The Borrowers agree to pay to the Agent for
the ratable account of each Lender, on each date that DRC delivers to the
Agent a Debt Coverage Certificate pursuant to 2.6(a) 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 fiscal
quarter 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 fiscal quarter 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
$100,000.
2.3. Reduction of Commitments. 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 by
$1,000,000 or a multiple of $1,000,000 in excess thereof 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 may be reinstated.
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. Swing Line Note. The Swing Line Loans shall be evidenced by
a single promissory note in the form attached hereto as Exhibit B-2
(the "Swing Line Note"), payable to the order of the Agent for the account
of the Swing Line Lender, dated as of the Closing Date and in the aggregate
principal amount of $3,000,000 or, if less, the aggregate outstanding amount
of all Swing Line Loans.
2.6. Interest on Loans.
(a) DRC shall deliver to the Agent on the Closing Date and on or
before the 45th day immediately following the end of each fiscal quarter of
DRC a certificate duly signed by the chief financial officer or treasurer of
DRC and reasonably satisfactory in form and substance to the Lenders
(a "Debt Coverage Certificate") setting forth the ratio of (i) the
Consolidated Senior Debt of DRC and its Subsidiaries for the immediately
preceding fiscal quarter-end to (ii) Consolidated EBITDA and its
Subsidiaries for the four (4) consecutive quarters ending on such fiscal
quarter-end (the "Debt Coverage Ratio"). Loans shall bear interest at a
rate per annum equal to the Adjusted LIBOR or Base Rate, as the case may
be, plus the applicable margin set forth below based on the Debt Coverage
Ratio (which margin is referred to, in the case of Base Rate Loans, as the
"Base Rate Margin" and, in the case of LIBOR Loans, as the "LIBOR Margin").
Subject to subparagraph (b) below, each change in the applicable margin
based on a change in the Debt Coverage Ratio shall be effective, with
respect to all Loans outstanding on or after the date of delivery of a Debt
Coverage Certificate, from and including the date of delivery of such
certificate until the date immediately preceding the next date of delivery
of a Debt Coverage Certificate indicating another such change.
Debt Coverage Ratio Base Rate Margin LIBOR Margin
< 1.5 0.0% 2.00%
> 1.5 to < 2.0 0.0% 2.25%
> 2.0 to < 2.5 0.25% 2.50%
> 2.5 0.50% 3.00%
; provided, however; that if the Net Income set forth on the Consolidated
income statement delivered pursuant to clause (ii) of Section 6.2(a) for
the fiscal year ending December 31, 1999 is equal to or more than eighty
percent (80%) of the Net Income set forth on the Projections for such
fiscal year delivered by the Borrowers to the Lenders on November 2, 1998,
pursuant to Section 6.2(e), then from and after April 1, 2000, the foregoing
LIBOR Margin based on the Debt Coverage Ratio shall be replaced in its
entirety by the following:
Debt Coverage Ratio LIBOR Margin
< 1.5 1.50%
> 1.5 to < 2.0 1.75%
> 2.0 to < 2.5 2.00%
> 2.5 2.50%
(b) During any period when an Event of Default shall have
occurred and be continuing or in the event that DRC fails to provide the
Agent with the Debt Coverage Certificate for any fiscal quarter of DRC, then
until such Event of Default is cured or waived or such certificate is
provided, as the case may be, the applicable margin over the Base Rate shall
be one-half percent (0.50%) and the applicable margin over the Adjusted
LIBOR shall be three percent (3.00%).
(c) Interest on each Base Rate Loan and LIBOR Loan shall be
computed on the basis of the actual number of days elapsed in a year of 360
days, in each case without duplication of any day in successive Interest
Periods.
(d) The Borrowers agree to pay to the Agent, for the pro rata
benefit of the Lenders, interest on each Loan in arrears on each Interest
Payment Date with respect thereto.
2.7. Requests for 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 Loans requested from the
Lenders hereunder (a "Loan Request"), no later than 12:00 noon, Boston
time, (i) no less than one (1) Business Day prior to the proposed Drawdown
Date of any Base Rate Loan and (ii) no less than three (3) LIBOR Business
Days prior to the proposed Drawdown Date of any LIBOR Loans; provided,
however, that a Borrower may give to the Agent a Loan Request for a Swing
Line Loan at any time prior to 12:00 noon, Boston time on the proposed
Drawdown Date of such Swing Line Loan. Each such notice shall specify (i)
the aggregate principal amount of the Loans requested from the Lenders
specifying whether such Loans are Revolving Credit Loans or Swing Line
Loans (and in any event not in excess of the unused portion of the
Available Total Commitment), (ii) whether such Loans are to be LIBOR Loans
or Base Rate Loans, (iii) the proposed Drawdown Date of such Loans, (iv) in
the case of LIBOR Loans, the Interest Period for such Loans, (v) the purpose
or purposes to which the proceeds of such Loans shall be applied, and (vi)
such other matters as are set forth on Exhibit C. Each Loan Request shall
be in a minimum aggregate amount of $1,000,000 or a higher integral multiple
of $500,000; provided, however, that each Loan Request for a Swing Line Loan
shall be in a minimum aggregate amount of $100,000 or a higher integral
multiple of $50,000. The Agent shall then promptly notify each Lender by
written notice of its respective Percentage of the Loans requested.
2.8. Conversion and Continuation.
Each Borrower shall have the right at any time upon prior irrevocable
notice to the Agent (a) not later than 12:00 noon, Boston time, one (1)
Business Day prior to the date of conversion, to convert any LIBOR Loan into
a Base Rate Loan, (b) not later than 12:00 noon, Boston time, three (3)
LIBOR Business Days prior to conversion or continuation, to convert any Base
Rate Loan into a LIBOR Loan or to continue any LIBOR Loan as a LIBOR Loan
for an additional Interest Period, and (c) not later than 12:00 noon, Boston
time, three (3) Business Days prior to conversion, to convert the Interest
Period with respect to any LIBOR Loan to another permissible Interest
Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata among
the Lenders in accordance with the respective principal amounts of the Loans
comprising the converted or continued Loans;
(ii) if less than all the outstanding principal amount of any
Loans shall be converted or continued, then the resulting Loans shall
satisfy the limitations specified in the penultimate sentence of 2.7
regarding the principal amount of Loans;
(iii) each conversion shall be effected by the Agent by
recording for the account of each Lender the new Loan of such Lender
resulting from such conversion and reducing the Loan (or portion thereof)
of such Lender being converted by an equivalent principal amount;
(iv) accrued interest on a LIBOR Loan (or portion thereof) being
converted or continued shall be paid by the Borrowers at the time of
conversion or continuation;
(v) LIBOR Loans may only be converted at a time that is the end
of the Interest Period applicable thereto;
(vi) any portion of a Loan maturing or required to be repaid in
less than one month may not be converted into or continued as a LIBOR Loan;
(vii) any portion of a LIBOR Loan that cannot be converted into
or continued as a LIBOR Loan by reason of the immediately preceding clause
shall be automatically converted at the end of the Interest Period in effect
for such Loan into a Base Rate Loan; and
(viii) no Event of Default and no event which, with the giving of
notice or passage of time or both, would constitute an Event of Default has
occurred and is continuing; provided, however, that the condition set forth
in this clause (viii) shall not be applicable to the conversion of any LIBOR
Loan into a Base Rate Loan pursuant to 2.8(a).
Each notice pursuant to this 2.8 shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the Loan
that a Borrower requests be converted or continued, (ii) whether such Loan
is to be converted to or continued as a LIBOR Loan or a Base Rate Loan,
(iii) if such notice requests a conversion, the date of such conversion
(which shall be a LIBOR Business Day) and (iv) if such Loan is to be
converted to or continued as a LIBOR Loan, the Interest Period with respect
thereto. If no Interest Period is specified in any such notice with respect
to any conversion to or continuation as a LIBOR Loan, the Borrower shall be
deemed to have selected an Interest Period of one month's duration. The
Agent shall promptly advise the other Lenders of any notice given pursuant
to this 2.8 and of each Lender's portion of any converted or continued
Loans. If the Borrower shall not have given notice in accordance with this
2.8 to continue any LIBOR Loans into a subsequent Interest Period (and shall
not otherwise have given notice in accordance with this 2.8 to convert such
LIBOR Loans), such LIBOR Loans shall, at the end of the Interest Period
applicable thereto (unless repaid pursuant to the terms hereof),
automatically be converted into Base Rate Loans.
2.9. Funds for 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 Loan
(other than a Swing Line 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 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.
3. PREPAYMENT OF THE LOANS; RESERVES.
3.1. Voluntary Prepayments. Each Borrower shall have the right, at
its election, to prepay the outstanding amount of any 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 Base Rate Loans pursuant to this 3 and no later than 11:00
a.m., Boston time, three LIBOR Business Days prior to any proposed
prepayment of LIBOR Rate Loans pursuant to this 3, in each case specifying
the proposed date of prepayment of the 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 Base Rate Loans shall
be in a minimum amount of the lesser of (i) $1,000,000 and (ii) the
aggregate amount outstanding under the Notes being prepaid, and shall be
accompanied by the payment of accrued interest on the principal prepaid to
the date of such prepayment.
3.2. Mandatory Prepayments. If at any time the outstanding
principal amount of all Loans exceeds (or, in the case of any notice of
reduction of the Total Commitment pursuant to 2.3, would exceed) the Total
Commitment, the Borrowers will immediately prepay the applicable Note or
Notes, subject to 4.8, in an amount necessary to cause the outstanding
principal amount of all Loans not to exceed the Total Commitment.
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 ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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 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 LIBOR Loans
and the Base Rate Loans and of commitment or other fees shall be based on a
360-day year and paid for the actual number of days elapsed. Except as
otherwise provided in the definition of the term "Interest Period" with
respect to LIBOR Loans, 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. Inability to Determine Adjusted LIBOR. In the event, prior to
the commencement of any Interest Period relating to any LIBOR Loan, the
Agent shall determine that adequate and reasonable methods do not exist
in the marketplace for ascertaining the Adjusted LIBOR that would otherwise
determine the rate of interest to be applicable to any LIBOR Loan during any
Interest Period, the Agent shall give notice of such determination (which
shall be conclusive and binding on the Borrowers) to the Borrowers. In such
event (a) any Loan Request with respect to LIBOR Loans shall be
automatically withdrawn and shall be deemed a request for Base Rate Loans,
(b) each LIBOR Loan will automatically, on the last day of the then current
Interest Period thereof, become a Base Rate Loan, and (c) the obligations of
the Lenders to make LIBOR Loans shall be suspended until the Agent
determines that the circumstances giving rise to such suspension no
longer exist, whereupon the Agent shall so notify the Borrowers.
4.4. Illegality. Notwithstanding any other provisions herein, if
any present or future law, regulation, treaty or directive or change in the
interpretation or application thereof shall make it unlawful for any Lender
to make or maintain LIBOR Loans, such Lender shall forthwith give notice of
such circumstances to the Agent who shall in turn notify the Borrowers and
thereupon (a) the commitment of such Lender to make LIBOR Loans shall
forthwith be suspended and (b) the Loans then outstanding as LIBOR Loans
from such Lender, if any, shall be converted automatically to Base Rate
Loans on the last day of each Interest Period applicable to such LIBOR
Loans or within such earlier period as may be required by law. The
Borrowers hereby agree promptly to pay the Agent on behalf of such Lender,
upon demand by such Lender accompanied by a certificate setting forth in
reasonable detail such costs, any additional amounts necessary to compensate
such Lender for any costs incurred by such Lender in making any conversion
in accordance with this 4.4, including any interest or fees payable by such
Lender to lenders of funds obtained by it in order to make or maintain its
LIBOR Loans hereunder; provided, that to the extent permitted by applicable
law, each Lender shall maintain each LIBOR Loan until the last day of an
Interest Period.
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 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 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 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 Loans,
or any class of loans or commitments of which any of the 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 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 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 Loans made pursuant hereto, then
the Agent on behalf of such Lender may notify the Borrower of such fact.
To the extent the costs of such increased capital requirements are not
reflected in the applicable rate(s) of interest on the 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 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 Loans, (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 or (c) the making of any
payment or prepayment of a Loan or the conversion of any LIBOR Loan to a
Base Rate Loan on a day that is not the last day of the applicable Interest
Period with respect thereto, including interest or fees payable by such
Lender to lenders of funds obtained by it in order to maintain any such
Loans.
4.9. Interest on Overdue Amounts. Overdue principal and (to the
extent permitted by applicable law) interest on the 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 (i) in
the case of overdue principal and interest (to the extent permitted by law)
of any Loan, 2% plus the rate otherwise applicable to such Loan as provided
in 2.6 or (ii) in the case of any other amount, 2% plus the then prevailing
Base Rate plus the then prevailing applicable margin, 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), 4.4, 4.5, 4.6
and 4.8 or to make or maintain LIBOR Loans hereunder. 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 Loans provided for
hereunder, each Borrower makes the following representations and warranties,
which shall survive the execution and delivery hereof and of the Notes:
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 Notes 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. 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 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.
Since the end of the most recent fiscal period shown in such financial
statements or in the most recent financial statements delivered by DRC under
6.2(a), 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 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 6.7. 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
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.
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 Notes 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 Notes 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 Notes 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 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 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. 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. 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
Loans solely for working capital and other general corporate purposes of the
Borrowers.
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.
6. AFFIRMATIVE COVENANTS OF THE BORROWERS. Each Borrower
covenants and agrees that, so long as any Loan or Note 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) Together with the financial statements delivered pursuant to
subparagraph (a) above, a statement signed by the accountants who have
reported on the same to the effect that in connection with their examination
of such financial statements they have reviewed the provisions of this
Agreement and have no knowledge of any event or condition which constitutes
an Event of Default or which, after notice or expiration of any applicable
grace period or both, would constitute such an Event of Default or, if they
have such knowledge, specifying the nature and period of existence thereof;
provided, however, that in issuing such statement, such independent
accountants shall not be required to go beyond normal auditing procedures
conducted in connection with their opinion referred to above;
(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) Together with the financial statements delivered pursuant to
subparagraph (a) above, DRC's Projections for the next succeeding three (3)
fiscal years, year by year, and for the next succeeding fiscal year, quarter
by quarter;
(f) Together with the financial statements delivered pursuant to
subparagraphs (a) and (b) above, a compliance certificate substantially in
the form of Exhibit D attached hereto signed by the chief financial officer
or treasurer of DRC;
(g) 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);
(h) 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;
(i) 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
(j) 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. 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.
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 Loans only for the purposes not prohibited by, and subject to the terms
and conditions of, 5.13 and 5.16.
6.10 No Further Negative Pledges. Each Borrower hereby
covenants and agrees, at all times while any Loans remain outstanding or
while there is any Available Total Commitment, not to enter into any
agreement prohibiting the creation or assumption of any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in favor of the Lenders in assets or properties owned by any Borrower,
except for purchase money agreements which contain such provisions, provided
that (i) such provisions relate only to the assets being purchased
thereunder and (ii) such agreements are entered into by any Borrower in the
ordinary course of its business.
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.
7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. Each Borrower
covenants and agrees that, so long as any Loan or Note 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:
(a) Indebtedness to the Lenders hereunder;
(b) Indebtedness 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 at any one
time 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) Indebtedness of the Borrowers and their respective
Subsidiaries (other than for borrowed money) in addition to the foregoing;
provided, however, that the aggregate amount of all such Indebtedness at any
one time outstanding shall not exceed $750,000.
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) Subject to 7.1(b), any lien on property of (i) a Subsidiary
securing Indebtedness of such Subsidiary to a Borrower and (ii) a Borrower
securing Indebtedness to any other Borrower;
(b) The mortgages and security interests 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) Purchase money mortgages, liens and other security interests,
including Capitalized Leases, created in respect of property acquired by a
Borrower or any Subsidiary after the date hereof or existing in respect of
property so acquired at the time of acquisition thereof, provided that (i)
each such lien shall at all times be confined solely to the item or items
of property so acquired, and (ii) the aggregate principal amount of
Indebtedness secured by all such liens shall at no time exceed $500,000;
(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; and
(h) Restrictions under foreign trade regulations on the transfer
or licensing of certain assets of the Borrowers and their Subsidiaries.
7.3 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 ▇▇▇▇▇'▇ 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 ▇▇▇▇▇'▇ 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) Loans to the extent permitted by 7.1(b);
(i) Acquisitions by a Borrower and its Subsidiaries of all or
substantially all of the capital stock or assets of other Persons, provided
that without the consent of the Required Lenders (i) the aggregate amount
of cash consideration paid by the Borrower and the Subsidiaries in such
acquisitions shall not exceed $15,000,000 and (ii) the proceeds of any Loans
used in connection with each such acquisition are used as provided in
5.16;
(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 Leases. None of the Borrowers will, nor will any Borrower
permit any Subsidiary to, enter into any Capitalized Lease, except as
otherwise permitted under 7.1 and 7.2. Each Borrower will not, and will
not permit any Subsidiary to, enter into any lease (other than 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 any succeeding 12-month
period under all such leases then in effect shall exceed $3,500,000 in the
aggregate.
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 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 ▇▇▇▇▇▇ ▇▇▇▇▇
software business (including the licenses to the ▇▇▇▇▇▇ ▇▇▇▇▇ 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 ▇▇▇▇▇▇
▇▇▇▇▇ 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) In addition to the foregoing, so long as immediately before
and after giving effect thereto no Event of Default and no event exists
which, with the giving of notice or passage of time or both, would
constitute an Event of Default, each Borrower and its Subsidiaries may sell
assets (other than inventory) having a fair market value not exceeding, and
yielding an aggregate amount of sale proceeds not exceeding, $250,000 in any
fiscal year of DRC.
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 made by all Borrowers and their respective Subsidiaries in
such fiscal year does not exceed $6,250,000; provided, however, that the
amount of permitted Capital Expenditures in respect of any fiscal year
shall be increased by 50% of the unused permitted Capital Expenditures
for the immediately preceding fiscal year (less an amount equal to any
unused Capital Expenditures carried forward to such preceding fiscal
year).
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,
except that so long as immediately before and after giving effect thereto
no Event of Default exists, DRC may make cash distributions to its
stockholders and repurchase shares of its common stock at a price not to
exceed the then-current market value for such stock, in an aggregate
amount which shall not exceed (i) in the fiscal year ending December
31, 1998, the sum of (x) fifty percent (50%) of the Consolidated Net Income
of DRC and its Subsidiaries (if positive) for the immediately preceding
fiscal year and (y) $210,000, and (ii) in the fiscal year ending December
31, 1999 and each fiscal year thereafter, fifty percent (50%) of the
Consolidated Net Income of DRC and its Subsidiaries (if positive) for the
immediately preceding fiscal year; provided that such amount shall not
include shares of capital stock surrendered upon the exercise of any stock
options or other convertible securities; and further provided that in the
fiscal year ending December 31, 1999, if fifty percent (50%) of the
Consolidated Net Income of DRC and its Subsidiaries (if positive) for the
fiscal year ending December 31, 1998 is less than $250,000, then DRC may
repurchase shares of its common stock as aforesaid in an aggregate amount
which shall not exceed $250,000.
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 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.
7.14 Material Adverse Change. None of the Borrowers will take
nor fail to take any action that could reasonably be expected to result in
a material adverse change in a Borrower's business, assets or condition
(financial or otherwise).
8. FINANCIAL COVENANTS. Each Borrower covenants and agrees that,
so long as any Loan or Note is outstanding or the Lenders have any Available
Total Commitment, DRC and its Subsidiaries shall maintain at all times, on a
Consolidated basis, each of the following:
(a) Tangible Net Worth. Tangible Net Worth, measured on a fiscal
quarter-end basis, of the sum of (x) $34,505,000 plus (y) fifty percent
(50%) of the Net Income of DRC and its Subsidiaries (if positive) for each
fiscal quarter, including the fiscal quarter in which the Closing Date
occurs;
(b) Maximum Leverage. A ratio of Indebtedness for borrowed money
of DRC and its Subsidiaries to Capitalization of DRC and its Subsidiaries
of less than or equal to one to two (1.0:2.0), measured on a fiscal
quarter-end basis;
(c) Debt Coverage. A ratio of Senior Debt of DRC and its
Subsidiaries to EBITDA of DRC and its Subsidiaries not to exceed (i) for
each fiscal quarter ending on or before December 31, 1999, three and
one-quarter to one (3.25:1.0) and (ii) for each fiscal quarter ending
after December 31, 1999, three to one (3.0:1.0), with each such ratio
measured on a fiscal quarter-end basis and with EBITDA of DRC and its
Subsidiaries based on the period of four (4) consecutive fiscal quarters
ending on such fiscal quarter-end;
(d) Cash Flow Coverage. A ratio of (i) EBITDA of DRC and its
Subsidiaries less Capital Expenditures of DRC and its Subsidiaries not
funded by Indebtedness for borrowed money less taxes on income and profits
paid in cash by DRC and its Subsidiaries to (ii) required interest and
principal payments made by DRC and its Subsidiaries on all Indebtedness
of at least (x) for each fiscal quarter ending on or before December 31,
1999, two to one (2.0:1.0) and (y) for each fiscal quarter ending after
December 31, 1999, two and one-quarter to one (2.25:1.0), with each such
ratio measured on a fiscal quarter-end basis and based on the period of
four (4) consecutive fiscal quarters ending on such fiscal quarter-end; and
(e) Net Income. Consolidated Net Income must equal at least $1,
for each fiscal quarter that commences on or after January 1, 1999,
measured on a fiscal quarter-end basis.
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 any Note 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 and 7.1 to and including 7.14, and 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 thirty (30) 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
Loans), any Capitalized Lease or the deferred purchase price of any property
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 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 Notes to be forthwith due and payable, whereupon the
principal of and accrued interest in respect of the Notes, 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 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 Notes 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.
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 their rights by 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 any
Note, or in the payment of any fee due hereunder, each Borrower will pay
to the Lenders such further amount as shall be sufficient to cover the cost
and expense of collection, including the 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 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. CLOSING CONDITIONS. The obligations of the Lenders to make
the initial Loans shall be subject to the satisfaction of the following
conditions precedent:
10.1. Loan Documents, etc. Each of the Loan Documents shall have
been duly executed and delivered by each of the Borrowers, shall be in full
force and effect and shall be in form and substance reasonably satisfactory
to the Lenders. The Agent and each Lender shall have received a fully
executed copy of each such document.
10.2. Corporate Action. All corporate action necessary for the
valid execution, delivery and performance by each Borrower of this Credit
Agreement and the other Loan Documents shall have been duly and effectively
taken, and evidence thereof reasonably satisfactory to the Agent shall have
been provided to the Agent.
10.3. Incumbency Certificate. The Agent shall have received from
each Borrower an incumbency certificate, dated as of the Closing Date,
signed by a duly authorized officer of such Borrower and giving the name and
bearing a specimen signature of each individual who shall be authorized in
the name and on behalf of such Borrower, (a) to sign each of the Loan
Documents; (b) to make Loan Requests; and (c) to give notices and to take
other action under the Loan Documents.
10.4. Opinions of Counsel. The Agent shall have received a
favorable opinion addressed to the Lenders, dated as of the Closing Date, in
the form of Exhibit E attached hereto, from Ropes & ▇▇▇▇ as counsel for the
Borrowers.
10.5. Payment of Fees. The Borrowers shall have paid to the Agent
(i) the fees and expenses of the Agent's counsel in connection with the
documentation of the transactions described in this Credit Agreement and
(ii) all fees then due and payable pursuant to 2.2(b) and 2.2(c).
11. CONDITIONS TO ALL LOANS. The obligations of the Lenders to
make any Loan whether on or after the Closing Date, 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 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 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, would constitute an Event of Default shall have occurred
and be continuing. On or before the date of the 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 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, any 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 Notes) 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 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 the aggregate principal amount of the Notes held
by the Lenders (or, if no such principal is at the time outstanding,
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 which shall be
reasonably satisfactory to DRC. 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 and which shall be reasonably satisfactory to DRC.
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 Notes, 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 any or all of the Notes. If any Lender receives any
payment on its Notes 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 Notes in such amounts as shall
result in a ratable participation by each of the Lenders in the aggregate
unpaid amount of the Notes 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 (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 of the Agent's counsel
incurred 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 counsel and any local counsel to the Lenders in
connection with any amendments, modifications, approvals, consents, waivers
or Replacement Lenders hereto or hereunder and (d) all reasonable
out-of-pocket expenses (including attorney fees and costs for external
counsel to the Lenders and the allocated costs and disbursements of
internal counsel of the Lenders) incurred by 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.
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 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 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 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
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
Loan on or after the Closing Date when required to do so by the terms of
this Credit Agreement, or fails to provide its portion of any LIBOR Loan
pursuant to 2 or on account of any legal requirement as contemplated by
4.4;
(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 75% 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 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 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 Notes 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, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Chief
Financial Officer (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), 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 & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) if to the Agent or BBH&Co in its capacity as a Lender, at
▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Deputy Manager (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇) 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:
▇▇▇▇▇▇, Hall & ▇▇▇▇▇▇▇
Exchange Place
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
(c) if to BankBoston, at BankBoston, N.A., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President (Mail Stop:
MA BOS 01-07-04) (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), 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, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇ ▇▇▇▇▇▇, Vice President (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), 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, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: A. ▇▇▇▇ ▇▇▇▇▇▇, Vice President (Telecopy
No. (▇▇▇) ▇▇▇-▇▇▇▇), 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, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: R.E. ▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), 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 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, any 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 8(c) 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 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.
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:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President of Finance and
Chief Financial Officer
DRC ENCODER, INC.
By:
Name:
Title:
DRC METRIGRAPHICS, INC.
By:
Name:
Title:
DRC SOFTWARE, INC.
By:
Name:
Title:
DRC TELECOM, INC.
By:
Name:
Title:
per pro ▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO.
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Deputy Manager
BANKBOSTON, N.A.
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
THE CHASE MANHATTAN BANK
By:
Name: A. ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
STATE STREET BANK AND TRUST COMPANY
By:
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
CITIZENS BANK OF MASSACHUSETTS
By:
Name: R. E. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President