EXHIBIT 10.20
SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
DATED JUNE 28, 2002 AMONG
DYNAMICS RESEARCH CORPORATION, DRC ENCODER, INC., DRC
METRIGRAPHICS, INC., DRC SOFTWARE, INC.,DRC TELECOM, INC.,
DYNAMICS RESEARCH INVESTMENT CORPORATION, DRC
INTERNATIONAL CORPORATION, X.X. XXXX ASSOCIATES, INC. AND XXXXXXXX
CORPORATION AND
XXXXX BROTHERS XXXXXXXX & CO., AS ADMINISTRATIVE AGENT
AND LENDER, BANKNORTH, N.A., AS DOCUMENTATION AGENT AND
LENDER, AND KEY CORPORATE CAPITAL INC., AS SYNDICATION AGENT AND LENDER
This Second Amendment to Amended and Restated Loan Agreement
(hereinafter, this "Amendment") is made as of the 26th day of March, 2003 by and
among Dynamics Research Corporation, DRC Encoder, Inc., DRC Metrigraphics, Inc.,
DRC Software, Inc., DRC Telecom, Inc., Dynamics Research Investment Corporation,
DRC International Corporation, X.X. Xxxx Associates, Inc., and Xxxxxxxx
Corporation, each of which is a Massachusetts corporation (other than X.X. Xxxx
Associates, Inc. and Xxxxxxxx Corporation which are Delaware corporations) with
their principal executive offices at 00 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx
(hereinafter, individually and collectively, jointly and severally, the
"Borrowers") and Xxxxx Brothers Xxxxxxxx & Co., as administrative agent and as a
lender, Banknorth, N.A., as documentation agent and as a lender, and Key
Corporate Capital Inc., as syndication agent and as a lender (hereinafter,
individually and collectively, the "Lenders"), in consideration of the mutual
covenants contained herein and the benefits to be derived herefrom. Unless
otherwise specified herein, all capitalized terms used herein shall have the
same meaning as set forth in the Credit Agreement (as defined hereinbelow).
W I T N E S S E T H:
WHEREAS, the Borrowers executed and delivered to the Lenders a certain
Amended and Restated Loan Agreement dated June 28, 2002, as amended by a certain
Amendment dated December 16, 2002 (hereinbefore and hereinafter, as amended, the
"Credit Agreement") pursuant to which, among other things, the Lenders extended
in favor of the Borrowers a Revolving Credit in the maximum principal amount of
$50,000,000.00 and a Term Loan in the maximum principal amount of
$10,000,000.00; and
WHEREAS, the Borrowers have requested that the Lenders (i) waive
compliance with the Consolidated Tangible Net Worth covenant set forth in
Section 11-8 of the Credit Agreement at December 31, 2002, (ii) replace said
covenant with a "Consolidated Total Net Worth" covenant (As defined
hereinbelow), and (iii) otherwise modify the terms and conditions of the Credit
Agreement as set forth herein; and
WHEREAS, the Lenders have indicated their willingness to do so, but
only on the terms and conditions contained in this Amendment; and
WHEREAS, the Borrowers have determined that this Amendment is in the
Borrowers' respective best interests.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Waiver of Covenant Default. The Borrowers have advised the
Lenders that an Event of Default has occurred as a result of the Borrowers
Consolidated Tangible Net Worth being less than the amount required by Section
11-8 of the Credit Agreement for the fiscal quarter ending December 31, 2002
(the "Covenant Default"), and have requested that the Lenders waive the Covenant
Default. The Lenders hereby waive the Covenant Default, and, in connection with
such limited waiver the Borrowers each hereby covenant and agree as follows:
(a) Nothing contained in the foregoing limited waiver shall
be construed to imply a willingness on the part of the Lenders to grant
any similar or other future waiver of any of the terms and conditions of
the Credit Agreement or the other Loan Documents; and
(b) The foregoing limited waiver is limited strictly to its
terms and shall apply only to the specific provision described above,
shall not extend to or affect any other obligations of the Borrowers
contained in the Credit Agreement or any other Loan Documents and shall
not impair or prejudice any rights consequent thereto.
2. Amendments to the Credit Agreement.
(a) Article 1 of the Credit Agreement is hereby amended as
follows:
(i) By deleting the definition of "Consolidated Tangible Net
Worth" contained therein in its entirety; and
(ii) By inserting the following new definitions of
"Consolidated Total Net Worth" and "Equity Issuance" in their
proper alphabetical sequence:
"Consolidated Total Net Worth" shall mean the difference between
total assets of the Lead Borrower and its Subsidiaries and total
liabilities of the Lead Borrower and its Subsidiaries (in each
instance, exclusive of pension asset gains or losses), plus all
indebtedness subordinated to the Liabilities on terms acceptable
to the Lenders less the sum of:
(a) the value of minority equity interests of the
Lead Borrower and its Subsidiaries in unconsolidated,
affiliated entities; and
(b) the aggregate amount of all loans made by the
Lead Borrower and its Subsidiaries to any officer,
employee or shareholder thereof.
"Equity Issuance" shall mean the sale or issuance by any
Borrower of any shares of its stock, options or warrants for the
purchase of any of its stock, or other equity or equity
instruments.
(b) Section 11-8 of the Credit Agreement is hereby
deleted in its entirety and the following text is inserted in its stead:
11-8. Consolidated Total Net Worth. The Borrowers
shall not at any time during the term of the Revolving Credit
permit their Consolidated Total Net Worth to be less than that
amount which is equal to the aggregate of (i)
-2-
$39,000,000.00, plus (ii) an amount equal to fifty percent (50%)
of the Borrowers' Consolidated Net Income for each fiscal
quarter on a cumulative basis with no reduction for loss, plus
(iii) an amount equal to seventy-five percent (75%) of the Net
Proceeds from (a) any Equity Issuance after the date hereof
and/or (b) the incurrence of any subordinated debt by the
Borrower after the date hereof, on a cumulative basis, to be
tested as of the end of each fiscal quarter of the Lead
Borrower.
(c) Section 17-17 of the Credit Agreement is hereby amended
by deleting the reference to "Consolidated Tangible Net Worth" where it
appears in Section 17-17(c)(vi), and inserting in its stead a reference
to "Consolidated Total Net Worth".
3. Amendment Fee. Upon the execution of this Amendment, the
Borrowers shall be liable to the Lenders for an amendment fee in the amount of
$35,000 (the "Amendment Fee"). The Amendment Fee shall (i) be paid to the
Administrative Agent concurrently with the execution and delivery of this
Amendment by the Borrowers, (ii) be deemed fully earned as of the date hereof,
and (iii) in all events, constitute a fee and shall not be applied in reduction
of any of the other Liabilities of the Borrowers. Upon the Administrative
Agent's receipt of the Amendment Fee, the Amendment Fee shall be distributed to
the Lenders on a pro rata basis.
4. Conditions to Effectiveness. This Amendment shall become
effective upon satisfaction of the following conditions:
(a) The Lenders shall have received resolutions of the
Borrowers authorizing the execution, delivery and performance of this
Agreement and all transactions contemplated hereby, in form and
substance reasonably satisfactory to the Lenders.
(b) The Administrative Agent shall have received the
Amendment Fee.
5. Representations; No Events of Default. The Borrowers hereby
certify to the Lenders that, to the best of the Borrowers' knowledge and belief
after due inquiry, the representations and warranties contained in the Credit
Agreement, as modified by this Amendment, are true as of the date hereof and
that, after the effectiveness of this Amendment, no Event of Default has
occurred and is continuing under the Credit Agreement or any document executed
in connection therewith.
6. Incorporation of Discussions; Modifications. This Amendment and
all other documents, instruments or agreements executed in connection herewith
incorporate all discussions and negotiations between the Borrowers and the
Lenders, either expressed or implied, concerning the matters included herein,
any statute, custom, or usage to the contrary notwithstanding. No such
discussions or negotiations shall limit, modify or otherwise affect the
provisions hereof. No modification, amendment, or waiver of any provision of
this Amendment or the Credit Agreement or any provision under any other
agreement, document or instrument between the Borrowers and the Lenders shall be
effective unless executed in writing by the party to be charged with such
modification, amendment or waiver, and if such party be the Lenders, then by a
duly authorized officer of each Lender.
-3-
7. Ratification of Credit Agreement. Except as specifically
modified herein, the Credit Agreement shall remain in full force and effect as
originally written and the Borrowers hereby ratify and confirm all terms and
conditions contained therein and further ratify and reaffirm all representations
and warranties made therein as of the date hereof.
8. Governing Law. This Amendment shall be construed in accordance
with and governed by the laws of the Commonwealth of Massachusetts and shall
take effect as a sealed instrument.
[remainder of this page intentionally left blank]
-4-
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
as of the date first written above.
DYNAMICS RESEARCH CORPORATION
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Title: VP and CFO
DRC ENCODER, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Title: VP and CFO
DRC METRIGRAPHICS, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Title: VP and CFO
DRC SOFTWARE, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Title: VP and CFO
DRC TELECOM, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Title: VP and CFO
DYNAMICS RESEARCH INVESTMENT CORPORATION
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Title: VP and CFO
DRC INTERNATIONAL CORPORATION
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Title: VP and CFO
X.X. XXXX ASSOCIATES, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Title: VP and CFO
XXXXXXXX CORPORATION
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Title: VP and CFO
-5-
ACKNOWLEDGED AND AGREED:
XXXXX BROTHERS XXXXXXXX & CO.,
as administrative agent and as a lender
By: /s/ Xxxxxxx Xxxxxxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Vice President
BANKNORTH, N.A.,
as documentation agent and as a lender
By: /s/ Xxx Xxxxxxxxx
------------------------------------------
Name: Xxx Xxxxxxxxx
Title: Senior Vice President
KEY CORPORATE CAPITAL INC.,
as syndication agent and as a lender
By: /s/ Xxxx Xxxxxx
-------------------------------------------
Name: Xxxx Xxxxxx
Title: Senior Vice President
-6-
