Exhibit 10.38
CONSENT, WAIVER AND AMENDMENT AGREEMENT
This CONSENT, WAIVER AND AMENDMENT AGREEMENT (this "Consent"), dated as of
December 28, 2005, is entered into by and between DYNAMICS RESEARCH CORPORATION,
a Massachusetts corporation, DRC INTERNATIONAL CORPORATION, a Massachusetts
corporation, and X.X. XXXX ASSOCIATES, INC., a Delaware corporation, with their
principal executive offices at 00 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx
(hereinafter, individually and collectively, jointly and severally, the
"Borrowers") and XXXXX BROTHERS XXXXXXXX & CO., as administrative agent and as a
lender, TD BANKNORTH, N.A, FORMERLY KNOWN AS BANKNORTH, N.A., as documentation
agent and as a lender, KEYBANK NATIONAL ASSOCIATION, as co-syndication agent and
as a lender, and BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO FLEET NATIONAL
BANK, A BANK OF AMERICA company as co-syndication agent and as a lender
(hereinafter, individually and collectively, the "Lenders").
WHEREAS, the Borrowers and the Lenders are parties to that certain Second
Amended and Restated Loan Agreement dated as of September 1, 2004 (as may be
amended and in effect from time to time, the "Credit Agreement"), pursuant to
which the Lenders, upon certain terms and conditions, agreed to make loans to,
and to issue letters of credit for the benefit of, the Borrowers;
WHEREAS, the Borrowers have requested that the Lenders consent to the sale
of Dynamics Research Corporation's real property located at 00 Xxxxxxxx Xxxx,
Xxxxxxx, Xxxxxxxxxxxxx (the "Premises") pursuant to that certain Offer Letter
dated October 28, 2005 and that certain Purchase and Sale Agreement entered into
on or about November 18, 2005 (singly and collectively, the "Purchase
Agreement") attached hereto and specifically incorporated by reference herein;
WHEREAS, the Lenders have agreed, on the terms and subject to the
conditions set forth herein, to consent to such transaction;
NOW, THEREFORE, for good and valuable consideration, the parties hereto
hereby agree as follows:
1. Defined Terms. Capitalized terms which are used herein without definition
and which are defined in the Credit Agreement shall have the same meanings
herein as in the Credit Agreement.
2. Consent. The Borrowers have informed the Lenders that Dynamics Research
Corporation intends to sell the Premises and enter into a sale/leaseback
arrangement with respect to the Premises pursuant to Purchase Agreement
(the "Transaction") to be consummated upon terms substantially similar to
those contained in the Purchase Agreement. In reliance upon the
representations of the Borrowers herein and therein, the Lenders hereby
consent to the consummation of the Transaction, subject to each of the
following terms and conditions:
a. Subject to Section 3 of this Consent, no Event of Default shall
have occurred and be continuing at the time of the consummation
of the Transaction;
b. The Transaction shall be consummated on or before December 31,
2005 upon terms substantially similar to those contained in the
Purchase Agreement and without any material amendment or
modification thereto (it being agreed that any amendment or
modification to the Purchase Agreement which may be adverse to
the interests of the Lenders shall be deemed to be material and
that the net cash consideration received by Dynamics Research
Corporation (the "Net Cash Proceeds") from the consummation of
the Transaction must exceed $15,000,000);
c. All Net Cash Proceeds shall immediately be remitted by Dynamics
Research Corporation to the Administrative Agent, for the ratable
benefit of the Lenders, to be applied by the Administrative Agent
first to the amounts outstanding under the Term Loan until repaid
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in full and, second, in reduction of the outstanding principal
balance of the Acquisition Term Loan, in inverse order of
maturity; and
d. The Borrowers shall deliver to the Lender true and complete
copies of all documents, instruments and agreements executed in
connection with the Transaction promptly after consummation of
the Transaction.
Upon receipt of the Net Cash Proceeds by the Administrative Agent in
accordance with the terms of this Consent, the Administrative Agent shall
execute and deliver to Dynamics Research Corporation a discharge of its
mortgage interest in and to the Premises pursuant to a certain Mortgage,
Security Agreement and Assignment dated as of February 10, 2000, as amended
and in effect, recorded with the Essex County Registry of Deeds at Book
5676, Page 217.
3. Waiver. In connection with the consummation of the Transaction, the
Borrowers have requested that the Lenders waive certain Events of Default
which may arise as a result thereof. Accordingly, the Lenders hereby waive
any defaults arising under the Credit Agreement arising solely from the
consummation of the Transaction. The waiver herein shall constitute a
one-time waiver and shall relate only to the specific Events of Default
which may occur as a result of the consummation of the Transaction, and
shall not be deemed to constitute a waiver of any other Event of Default,
whether now existing or hereafter arising.
4. Amendment. The Borrowers and the Lenders acknowledge and agree that
effective as of the date of this Consent, the Credit Agreement shall be
amended by deleting the following text appearing in Section 4-4(b)(i) of
the Credit Agreement in its entirety:
"(b) In addition to the principal payments required pursuant to
subsection (a) above, the Borrowers shall also make the following
payments of principal:
(i) commencing with the fiscal year ending December 31, 2005, the
Borrowers shall pay annually to the Administrative Agent, for the
ratable benefit of the Lenders, by no later than February 15 of
each year, fifty percent (50%) of its Excess Cash Flow for the
most recently completed fiscal year (each an "EXCESS CASH FLOW
PAYMENT"). Each such Excess Cash Flow Payment shall be applied as
follows:
(A) First, to the outstanding principal balance of the
Revolving Credit Loans, provided, however, the outstanding
principal balance of the Revolving Credit Loans on the last day
of the subject fiscal year compared with the outstanding
principal balance of the Revolving Credit Loans on the last day
of the previous fiscal year does not already reflect such a
reduction;
(B) Second, to the outstanding principal balance of the
Acquisition Term Loan, in inverse order of maturity until the
Acquisition Term Loan is paid in full; and
(C) Third, to the outstanding principal balance of the Term
Loan, in inverse order of maturity until the Term Loan is paid in
full.
Application of each such Excess Cash Flow Payment shall not
postpone or relieve the Borrowers of their obligations to make
the scheduled principal payments required by subsection (a)
above; and"
And substituting the following text therefor:
"(b) In addition to the principal payments required pursuant to
subsection (a) above, the Borrowers shall also make the following
payments of principal:
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(i) intentionally omitted."
5. Representations and Warranties. The Borrowers hereby represent and warrant
to the Lenders as follows:
a. The execution and delivery of this Consent by the Borrowers and
the performance by the Borrowers of their obligations and
agreements under this Consent and the Credit Agreement as amended
hereby are within the corporate authority of the Borrowers, have
been duly authorized by all necessary corporate proceedings on
behalf of the Borrowers and do not and will not contravene any
provision of law, statute, rule or regulation to which the
Borrowers are subject or the Borrowers' charters, other
incorporation papers, by-laws or any stock provision or any
amendment thereof or of any agreement or other instrument binding
upon the Borrowers.
b. This Consent and the Credit Agreement as modified hereby
constitute legal, valid and binding obligations of the Borrowers,
enforceable against the Borrowers in accordance with their
respective terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditors' rights in general, and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
c. No approval or consent of, or filing with, any governmental
agency or authority is required to make valid and legally binding
the execution, delivery or performance by the Borrowers of this
Consent or the Credit Agreement as modified hereby.
6. Waiver of Claims: The Borrowers hereby acknowledge and agree that they do
not have any offsets, defenses, claims, or counterclaims against the
Lenders or any of their respective officers, directors, employees,
affiliates, attorneys, representatives, predecessors, successors, or
assigns with respect to the Credit Agreement or any of the other Loan
Documents, the Liabilities, or otherwise, and that if the Borrowers now
have, or ever did have, any such offsets, defenses, claims, or
counterclaims against the Lenders or any of their respective officers,
directors, employees, attorneys, representatives, predecessors, successors,
or assigns, whether known or unknown, at law or in equity, from the
beginning of the world through this date and through the time of execution
of this Consent, all of them are hereby expressly WAIVED, and the Borrowers
hereby RELEASE the Lenders and their respective officers, directors,
employees, affiliates, attorneys, representatives, predecessors,
successors, and assigns from any liability therefor.
7. Miscellaneous Provisions.
a. Except as otherwise expressly provided by this Consent, all of
the terms, conditions and provisions of the Credit Agreement
shall remain the same. It is declared and agreed by each of the
parties hereto that the Credit Agreement, as modified hereby,
shall continue in full force and effect, and that this Consent
and the Credit Agreement shall be read and construed as one
instrument.
b. This Consent is intended to take effect as an agreement under
seal and shall be construed according to and governed by the laws
of the Commonwealth of Massachusetts.
c. This Consent may be executed in any number of counterparts, but
all such counterparts shall together constitute but one
instrument. In making proof of this Consent it shall not be
necessary to produce or account for more than one counterpart
signed by each party hereto by and against which enforcement
hereof is sought.
(remainder of page intentionally left blank)
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IN WITNESS WHEREOF, the parties hereto have executed this Consent as of the
date first written above.
BORROWERS:
DYNAMICS RESEARCH CORPORATION
By /s/ Xxxxx Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------
Title: Senior VP and CFO
---------------------------------
DRC INTERNATIONAL CORPORATION
By /s/ Xxxxx Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------
Title: Vice President
---------------------------------
X.X. XXXX ASSOCIATES, INC.
By /s/ Xxxxx Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------
Title: Treasurer
---------------------------------
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ACKNOWLEDGED AND AGREED
LENDERS:
XXXXX BROTHERS XXXXXXXX & CO.
("ADMINISTRATIVE AGENT AND LENDER")
By /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: SVP
---------------------------------
TD BANKNORTH, N.A., FORMERLY KNOWN AS
BANKNORTH, N.A.
("DOCUMENTATION AGENT AND LENDER")
By /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
----------------------------------
Title: Senior Vice President
---------------------------------
KEYBANK NATIONAL ASSOCIATION
("CO-SYNDICATION AGENT AND LENDER")
By /s/ Xxxxxx XxXxxxx
-------------------------------------
Name: Xxxxxx XxXxxxx
----------------------------------
Title: Assistant Vice President
---------------------------------
BANK OF AMERICA, N.A., SUCCESSOR BY
MERGER TO FLEET NATIONAL BANK,
A BANK OF AMERICA COMPANY
("CO-SYNDICATION AGENT AND LENDER")
By /s/ Xxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxxx
----------------------------------
Title: Senior Vice President
---------------------------------
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