SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 1999
DYNAMICS RESEARCH CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 0-2479 04-2211809
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
60 Frontage Road, Andover, MA 01810-5498
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (978) 475-9090
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events.
On September 30, 1999, Dynamics Research Corporation entered into an
amended and restated credit agreement with its banks. A copy of the press
release announcing this agreement filed as an Exhibit to the Form 8-K is
incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits:
10.1 Press release issued by Dynamics Research Corporation (the
"Company") on October 5, 1999.
10.2 Second Amended and Restated Revolving Credit Agreement dated
as of September 30, 1999 by and among the Company, certain of
its subsidiaries, the Lenders party to the Second Amended and
Restated Revolving Credit Agreement and Brown Brothers Harriman
& Co., as Agent for such lenders.
10.3 Security Agreement dated as of September 30, 1999 by and
between the Company and Brown Brothers Harriman & Co., as Agent
for the Lenders.
10.4 Mortgage and Security Agreement dated as of September 30, 1999
by and between the Company and Brown Brothers Harriman & Co.,
as Agent for the Lenders.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
DYNAMICS RESEARCH CORPORATION
Date: October 7, 1999 By: /s/ Albert Rand
Name: Albert Rand
Title: President
EXHIBIT INDEX
The following designated exhibits are filed herewith:
10.1 Press release issued by Dynamics Research Corporation (the "Company")
on October 5, 1999.
10.2 Second Amended and Restated Revolving Credit Agreement dated as of
September 30, 1999 by and among the Company, certain of its
subsidiaries, the Lenders party to the Second Amended and Restated
Revolving Credit Agreement and Brown Brothers Harriman & Co.,
as Agent for such lenders.
10.3 Security Agreement dated as of September 30, 1999 by and between
the Company and Brown Brothers Harriman & Co., as Agent for the Lenders.
10.4 Mortgage and Security Agreement dated as of September 30, 1999 by
and between the Company and Brown Brothers Harriman & Co., as Agent
for the Lenders.
DYNAMICS RESEARCH CORPORATION ANNOUNCES AMENDMENT TO REVOLVING
CREDIT FACILITY
Andover, Massachusetts, October 5, 1999 - Dynamics Research Corporation
(NASDAQ:DRCO) reported that on September 30, 1999 it has completed a new
revolving credit with its banks. The new agreement provides for
borrowing of up to $35,000,000, based on assets consisting of inventory,
receivables and real estate. The Company granted the banks security in
all its assets. The credit agreement will be in effect until January
31, 2000 by which date the Company plans to have alternate financing.
The Company's outstanding balance on October 1 was $22,300,000.
Dynamics Research Corporation develops and operates computer and
communication-intensive information systems provides engineering and
management support services, and produces precision manufactured
components for industrial measurement and control. For more information,
visit Dynamics Research Corporation's website at www.drc.com.
Safe harbor statement under the Private Securities Litigation
Reform Act of 1995: Certain statements in this press release relating
to efforts to obtain financing for the Company in the future are
forward-looking. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements.
Among these risks and uncertainties are the success of efforts by the
Company, negotiations and actions by banks that may consider providing
future financing, the Company's future financial performance and other
factors described in our Form 10-K for the year ended December 31, 1998
and other filings with the Securities and Exchange Commission. We do not
undertake to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of September 30, 1999
by and among
DYNAMICS RESEARCH CORPORATION,
DRC ENCODER, INC.,
DRC METRIGRAPHICS, INC.,
DRC SOFTWARE, INC. and
DRC TELECOM, INC.,
as the Borrowers,
and
THE LENDERS PARTY HERETO
and
BROWN BROTHERS HARRIMAN & CO.,
as Agent
DYNAMICS RESEARCH CORPORATION
CREDIT AGREEMENT
TABLE OF CONTENTS
SECTION PAGE
1. DEFINITIONS AND RULES OF INTERPRETATION 1
1.1. Definitions 1
1.2. Rules of Interpretation 12
2. THE CREDIT FACILITIES 13
2.1. Amounts and Terms 13
2.2. Fees 14
2.3. Reduction of Commitments 14
2.4. Revolving Credit Note 15
2.5. Reserved 15
2.6. Interest on Revolving Credit Loans 15
2.7. Requests for Revolving Credit Loans 16
2.8. Reserved 16
2.9. Funds for Revolving Credit Loans 16
3. PREPAYMENT OF THE REVOLVING CREDIT LOANS; RESERVES 17
3.1. Voluntary Prepayments 17
3.2. Mandatory Prepayments 18
4. CERTAIN GENERAL PROVISIONS 18
4.1. Funds for Payments 18
4.2. Computations 19
4.3. Reserved 19
4.4. Reserved 19
4.5. Additional Costs, Etc 19
4.6. Capital Adequacy 20
4.7. Certificate 21
4.8. Indemnity 21
4.9. Interest on Overdue Amounts 21
4.10. Mitigation 21
4.11. Joint and Several Obligations 21
5. REPRESENTATIONS AND WARRANTIES 22
5.1 Organization, Standing, etc. of the Borrowers 22
5.2 Subsidiaries 22
5.3 Qualification 22
5.4 Financial Information; Disclosure, etc. 23
5.5 Licenses, etc. 23
5.6 Material Agreements 23
5.7 Tax Returns and Payments 24
5.8 Indebtedness, Liens and Investments, etc. 24
5.9 Title to Properties; Liens 24
5.10 Litigation, etc. 24
5.11 Authorization; Compliance with Other Instruments 24
5.12 Governmental Consent 25
5.13 Regulation U, etc 25
5.14 Employee Retirement Income Security Act of 1974 25
5.15 Environmental Matters 26
5.16 Use of Proceeds 26
5.17 Investment Company Act; Public Utility Holding Company Act 26
6. AFFIRMATIVE COVENANTS OF THE BORROWERS 27
6.1 Records and Accounts 27
6.2 Financial Statements, Certificates and Information 28
6.3 Legal Existence; Compliance with Laws, etc. 30
6.4 Insurance 30
6.5 Payment of Taxes 31
6.6 Payment of Other Indebtedness, etc. 31
6.7 Further Assurances 31
6.8 Depository Account 31
6.9 Use of Proceeds 32
6.10 Negative Pledges 32
6.11 Regulation U 32
7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS 34
7.1 Indebtedness 34
7.2 Mortgages, Liens, etc. 36
7.3 Revolving Credit Loans, Guarantees and Investments 37
7.4 New Leases 38
7.5 Mergers and Consolidations 38
7.6 Sale of Assets 39
7.7 Capital Expenditures 39
7.8 Distributions 39
7.9 Compliance with ERISA 39
7.10 Transactions with Affiliates 40
7.11 Observance of Subordination Provisions, etc. 40
7.12 Environmental Liabilities 40
7.13 Subsidiaries 40
8. FINANCIAL COVENANT 40
9. DEFAULTS; REMEDIES 41
9.1 Events of Default; Acceleration 41
9.2 Remedies on Default, etc. 43
10. [RESERVED] 44
11. CONDITIONS TO ALL REVOLVING CREDIT LOANS 44
11.1. Accuracy of Representations; No Event of Default 44
11.2. No Legal Impediment 44
12. THE AGENT. 44
12.1. Appointment, Powers and Immunities 44
12.2. Reliance by Agent 45
12.3. Defaults 45
12.4. Rights as a Lender 46
12.5. Indemnification 46
12.6. Non-Reliance on Agent and Other Lenders 46
12.7. Failure to Act 47
12.8. Resignation of Agent 47
12.9. Cooperation of Lenders 47
12.10. Amendment of 12 47
12.11. Reliance 47
13. SETOFF, ETC 48
14. EXPENSES 48
15. INDEMNIFICATION 49
16. SURVIVAL OF COVENANTS, ETC 49
17. ASSIGNMENT AND PARTICIPATION 50
17.1. Assignment by the Lenders 50
17.2. Assignment by Borrowers 50
17.3. Participations by the Lenders 50
17.4 Replacement of Lender 51
18. FOREIGN LENDER 51
19. NOTICES, ETC. 52
20. GOVERNING LAW 54
21. HEADINGS 54
22. COUNTERPARTS 54
23. ENTIRE AGREEMENT, ETC 54
24. WAIVER OF JURY TRIAL 54
25. CONSENTS, AMENDMENTS, WAIVERS, ETC 55
26. CONFIDENTIALITY 56
27. SEVERABILITY 56
28. NATURE OF LENDER'S OBLIGATIONS 56
SCHEDULES AND EXHIBITS
Schedule 5.2 Subsidiaries
Schedule 5.4 Financial Statements; Disclosure
Schedule 5.5 Licenses
Schedule 5.6 Material Agreements
Schedule 5.7 Taxes
Schedule 5.8 Existing Indebtedness
Schedule 5.9 Real Property interests
Schedule 5.10 Litigation
Schedule 5.12 Consents
Schedule 5.15 Hazardous Materials
Schedule 5.18 Patents and Trademarks
Schedule 5.19 Chief Executive Offices
Schedule 5.20 Year 2000
Schedule 5.21 Filing Offices
Schedule 5.22 Government Contracts
Schedule 7.2 Encumbrances
Exhibit A Cash Flow Projections
Exhibit B Form of Revolving Credit Note
Exhibit C Form of Loan Request
Exhibit D Form of Borrowing Base Certificate
Exhibit E Form of Compliance Certificate
Exhibit F Form of Opinion of Borrowers' Counsel
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
("Agreement") is made as of the 30th day of September, 1999, by and among
DYNAMICS RESEARCH CORPORATION, a Massachusetts corporation ("DRC"), DRC
ENCODER, INC., a Massachusetts corporation ("Encoder"), DRC METRIGRAPHICS,
INC., a Massachusetts corporation ("Metrigraphics"), DRC SOFTWARE, INC., a
Massachusetts corporation ("Software"), DRC TELECOM, INC., a Massachusetts
corporation ("Telecom"), and BROWN BROTHERS HARRIMAN & CO., a New York limited
partnership ("BBH&Co"), as a Lender (as defined below), and as Agent (as
defined below) for itself and the other Lenders (as defined below),
BANKBOSTON, N.A., a national banking association ("BankBoston"), THE CHASE
MANHATTAN BANK, a New York banking corporation ("Chase"), STATE STREET BANK
AND TRUST COMPANY, a Massachusetts trust company ("State Street"), CITIZENS
BANK OF MASSACHUSETTS, a Massachusetts financial institution ("Citizens") and
the other Lenders from time to time party hereto.
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. Definitions. The following terms shall have the meanings set
forth in this 1 or elsewhere in the provisions of this Credit Agreement
referred to below:
Account Debtor. Any Person who is or may become obligated under,
with respect to or on account of, an Account.
Accounts. All currently existing and hereafter arising accounts,
accounts receivable, contract rights and all other forms of obligations owing
to any Borrower arising out of the sale or lease of goods or the rendition of
services by such Borrower.
Affected Lender. The meaning specified in 17.4.
Affiliate. As applied to any Person, a spouse of such Person, any
relative (by blood, adoption or marriage) of such Person within the third
degree, any managing member, director or officer of such Person, any
corporation, association, firm or other entity of which such Person is a
managing member, director or officer and any other Person directly or
indirectly controlling, controlled by or under direct or indirect common
control with such Person.
Agent. BBH&Co in its capacity as agent for the Lenders hereunder,
as well as its successors and assigns in such capacity pursuant to 12.8.
Argus. Argus Management Corporation, a Massachusetts
corporation.
Argus Report. The meaning specified in 6.14(a).
Assignment of Claims Act. The federal Assignment of Claims Act,
codified in 31 U.S.C. 3727 and 41 U.S.C. 15, as amended from time to time,
and any successor statute or statute.
Available Total Commitment. The Total Commitment less the sum of
the outstanding principal amounts advanced as Revolving Credit Loans.
Base Rate. For any date, a rate per annum equal to the higher of
(i) the Federal Funds Effective Rate in effect on such day plus one-half of
one percent (.50%) or (ii) the annual rate of interest publicly announced from
time to time by the Agent as its "commercial base rate" in effect on such day.
Borrower. Each of DRC, Encoder, Metrigraphics, Software and Telecom.
Borrowing Base. At any date of determination determined in
accordance with 6.2(f), the sum of (i) Eighty-five percent (85%) multiplied
by the aggregate amount of the Borrowers' Eligible Accounts, plus (ii) the
lesser of: (A) Eighty percent (80%) of the fair market value of the Real
Property as shown on the most recent MAI appraisal, if any, which may be
requested at any time after the Closing Date by the Agent or DRC, and (B)
$10,800,000, plus (iii) the lesser of : (A) Forty percent (40%) multiplied by
the aggregate amount of the Borrowers' Eligible Raw Materials, and (B)
$800,000.
Borrowing Base Certificate. A certificate in the form of Exhibit D.
Business Day. Any day on which banking institutions in Boston,
Massachusetts are open for the transaction of banking business.
Capital Expenditures. Any payment made directly or indirectly by
Borrowers or any of their Subsidiaries for the purpose of acquiring or
constructing fixed assets, real property or equipment which in accordance with
GAAP would be added as a debit to the Consolidated fixed asset account of DRC
and its Subsidiaries, including without limitation amounts paid or payable
under any conditional sale or other title retention agreement or under any
lease or other periodic payment arrangement which is of such a nature that
payment obligations of a Borrower thereunder would be required by GAAP to be
capitalized and shown as liabilities on the Consolidated balance sheet of DRC
and its Subsidiaries.
Capitalized Leases. Leases under which a Person is the lessee or
obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of such Person in accordance
with GAAP.
Change in Control. Shall be deemed to have occurred if any Person
or group (within the meaning of Rule 13d-5 of the Securities and Exchange
Commission as in effect on the date hereof) shall own directly or indirectly,
beneficially or of record, shares representing more than 50%, on a fully-
diluted basis, of the aggregate ordinary voting power of DRC.
Closing Date. The date set forth in the preamble of this Agreement.
Code. The Internal Revenue Code of 1986, as amended.
Collateral. The meaning specified in 2.10.
Commitment. As to any Lender, such Lender's portion of the Total
Commitment equal to such Lender's Percentage.
Commitment Fee. The meaning specified in 2.2(a)
Consolidated. With reference to any term herein, shall mean that
term as applied to the accounts of DRC and its Subsidiaries, consolidated in
accordance with GAAP.
Credit Agreement or Agreement. This Second Amended and Restated
Credit Agreement, including the Schedules and Exhibits hereto.
Current Lines of Business. The lines of business conducted by the
Borrowers and their Subsidiaries on the Closing Date and any business and
activities incidental thereto, including: (i) the provision of computer
systems services and other engineering and management support services to the
Department of Defense and other customers, including the development and
operation of computer-based management information systems in which software
programs are applied to collect, analyze, store and retrieve information
relating to component parts of weapons systems; and (ii) the manufacture of
position and motion sensors and other precision components, including encoders
that measure movement, and precision-patterned glass and electroformed metal
products.
Dollars or $. Dollars in lawful currency of the United States of
America.
Drawdown Date. The date on which any Revolving Credit Loan is
made or is to be made.
EBIT. For any period, the Consolidated Net Income of DRC and its
Subsidiaries for such period adjusted by adding back thereto amounts deducted
in computing such Consolidated Net Income in respect of each of (a) Interest
Expense of DRC and its Subsidiaries, (b) taxes in respect of income and
profits of DRC and its Subsidiaries, (c) expenses incurred by DRC and its
Subsidiaries, in an amount not to exceed $1,500,000 in the aggregate, in
connection with restructuring expenses (including fees and expenses payable
under Section 14, the fees and expenses of Argus, the appraiser and the
examiner referenced in Section 6.14, and fees and expenses of counsel and of
consultants for the Borrowers, and loan application fees for take-out
financing) and severance obligations to employees terminated before or during
such period, (d) the amount of the amendment fee described in 2.2(c) and (e)
non-cash charges related to employee compensation, including without
limitation executive officers.
Eligible Accounts. All Accounts created by a Borrower in the
ordinary course of business, that arise out of such Borrower's sale of goods
or rendition of services, as to which any Borrower has acquired title and the
Agent has a valid and perfected first-priority security interest under all
applicable law and as to which the Borrowers have furnished reasonably
detailed information to the Agent in a Borrowing Base Certificate, and that
are and at all times continue to be acceptable to Agent in all respects;
provided, however, that standards of eligibility may be fixed and revised from
time to time by Agent in Agent's reasonable good faith credit judgment and
further provided that, except as set forth in subsection (d) below, any lack
of compliance with the Assignment of Claims Act or any comparable provision
under state law shall not be grounds for disqualifying an Account from being
an Eligible Account. Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within
90 days of the invoice date;
(b) Accounts with respect to which the Account Debtor is an
officer, director or employee, or a spouse or any relative (by blood, adoption
or marriage within the third degree of any of the foregoing) or agent of any
Borrower;
(c) Accounts that are not payable in United States Dollars or
with respect to which the Account Debtor: (i) does not maintain its chief
executive office in the United States, or (ii) is not the United States, or
any state, municipality or other political subdivision of the United States or
any state thereof, or any department, agency, public corporation or other
political subdivision thereof, or is not organized under the laws of the
United States or any State thereof, or (iii) is the government of any foreign
country, or of any state, province, municipality, or other political
subdivision of any foreign country, or of any department, agency, public
corporation, or other instrumentality thereof, unless (x) the Account is
payable in United States Dollars, is described in the foregoing clause (i),
(ii) or (iii) and, when added with all other such Accounts described in such
clauses, represents obligations owing to Borrowers in an aggregate amount
equal to or less than $1,000,000, or (y) the Account is supported by an
irrevocable letter of credit satisfactory to Agent (as to form, substance, and
issuer or domestic confirming bank) that has been delivered to Agent and is
directly drawable by Agent, or (z) the Account is covered by credit insurance
in form and amount, and by an insurer, satisfactory to Agent;
(d) Accounts with respect to which the Account Debtor is
either (y) the United States or any department, agency, or instrumentality of
the United States or (z) any state of the United States if the Borrower has
not effected compliance with the Assignment of Claims Act or any comparable
provisions under state law with respect thereto; provided that any lack of
compliance with the Assignment of Claims Act or any comparable provision under
state law shall not be grounds for disqualifying an Account from being an
Eligible Account, so long as (i) the Agent has not requested compliance with
the Assignment of Claims Act or any comparable provision under state law (and
the Agent agrees to make such request at the direction of any Lender), or (ii)
after the Agent requests the Borrowers to comply with the Assignment of Claims
Act (or any such comparable provision under state law), either (A) the
Government Contract to which such Account relates is not a contract with
respect to which the Agent has request such compliance or (B) the aggregate
dollar amount of Accounts as to which there is not compliance with the
Assignment of Claims Act or such comparable provision under state law does not
exceed $250,000. The terms "compliance with the Assignment of Claims Act"
shall mean compliance with the procedures in FAR 32.805 (published at 48
C.F.R.);
(e) Accounts to the extent that the Account Debtor is a
creditor of a Borrower, has or has asserted a right of setoff, has disputed
its liability, or has made any claim with respect to the Account (including,
without limitation, Accounts if and to the extent that the Account Debtor has
withheld, suspended or disapproved of all or any portion thereof pursuant to
any audit, investigation or proceeding conducted by or on behalf of the
Account Debtor);
(f) Accounts with respect to which the Account Debtor is
paying pursuant to a negotiated payment plan (other than any such plan that is
in the ordinary course of such Account Debtor's business), is subject to a
bankruptcy, receivership or other form of insolvency or liquidation
proceeding, or becomes insolvent, or goes out of business; and
(g) Accounts the collection of which Agent, in its reasonable
good faith credit judgment, believes to be doubtful.
Eligible Raw Materials. An amount equal to the gross book value,
determined in accordance with the first-in, first-out method of inventory
accounting, as reflected on a Borrowers' Consolidated books and records in
accordance with GAAP consistently applied, of raw materials used to produce
the Borrowers' inventory, which raw materials are located on property owned or
leased by a Borrower and as to which the Borrower has acquired title and the
Agent has a valid and perfected first-priority security interest under all
applicable law and as to which the Borrowers have furnished reasonably
detailed information to the Agent in a Borrowing Base Certificate, after
taking into account all charges and liens (other than those of the Agent) of
all kinds against such raw materials and reductions in the market value
thereof, all as determined by the Agent in its reasonable business judgment,
which, absent manifest error, shall be final and binding upon the Borrowers.
Without limiting the generality of the foregoing, Eligible Raw Materials shall
not include any raw materials covered by a document of title or warehouse
receipt until such document of title or warehouse receipt has been delivered
to the Agent. Raw material immediately loses the status of Eligible Raw
Material if and when any Borrower sells it, otherwise passes title thereto,
consumes it, materially changes it in the course of processing the same, it is
damaged, or the Agent, at the written request of such Borrower and in the
Agent's sole discretion, releases or transfers its security interest therein.
Notwithstanding the foregoing, but without duplication, Eligible Raw
Materials shall be reduced by the amount of any specific reserve established
by any Borrower with respect to any Eligible Raw Materials.
Employee Benefit Plan. Any employee benefit plan within the
meaning of Section 3(3) of ERISA maintained or contributed to by a Borrower or
any ERISA Affiliate, or with respect to which a Borrower or any ERISA
Affiliate has actual or contingent liability, in each case other than a
Multiemployer Plan.
Environmental Laws. Any and all applicable current and future
treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any governmental authority, relating in any way to the
environment, preservation or reclamation of natural resources or human
exposure to or the management or Release or threatened Release of any
Hazardous Material.
ERISA. The Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate. Any Person which is treated as a single employer
with a Borrower under Section 414 of the Code or Section 4001 of ERISA.
ERISA Reportable Event. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of 4043 of ERISA and the
regulations promulgated thereunder as to which the requirement of notice has
not been waived.
Event of Default. The meaning specified in 9.1.
Federal Funds Effective Rate. For any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
First Restated Agreement. The meaning specified in 29.
GAAP. Generally accepted accounting principles in the United
States of America.
Government Contract. Any contract, agreement or purchase order as
to which any Borrower and the United States government or any agency or
instrumentality thereof are parties or as to which any Borrower and any State
or Commonwealth of the United States or any agency, instrumentality or
political subdivision thereof are parties.
Guaranteed Pension Plan. Any Employee Benefit Plan the benefits
of which are guaranteed on termination in full or in part by the PBGC pursuant
to Title IV of ERISA.
Hazardous Materials. All explosive or radioactive substances or
wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or
gaseous wastes, including petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls or materials or
equipment containing polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
Indebtedness. All obligations, contingent and otherwise, that in
accordance with GAAP should be classified upon a Person's balance sheet as
liabilities, including: (a) all debt and similar monetary obligations, whether
direct or indirect; (b) all liabilities secured by any mortgage, pledge,
security interest, lien, charge, or other encumbrance existing on property
owned or acquired by such Person subject thereto, whether or not the liability
secured thereby shall have been assumed; (c) all obligations in respect of
Capitalized Leases; and (d) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness owed by
others, including any obligation to supply funds to or in any manner to invest
in, directly or indirectly, the debtor, to purchase indebtedness, or to assure
the owner of indebtedness against loss, through an agreement to purchase
goods, supplies, or services for the purpose of enabling the debtor to make
payment of the indebtedness held by such owner or otherwise, and the
obligations to reimburse the issuer in respect of any letters of credit.
Interest Expense. For any period, the aggregate amount
(determined in accordance with GAAP) of interest paid or payable during such
period by any Person in respect of all Indebtedness for borrowed money,
Capitalized Leases and the deferred purchase price of property.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise), without duplication, for the acquisition of stock
or Indebtedness of, or for loans, advances, capital contributions or transfers
of property to, or in respect of any guaranties (or other commitments as
described under Indebtedness), or obligations of, any Person. In determining
the aggregate amount of Investments outstanding at any particular time: (a)
the amount of any Investment represented by a guaranty shall be taken at not
less than the principal amount of the obligations guaranteed and still
outstanding; (b) there shall be included as an Investment all interest accrued
with respect to Indebtedness constituting an Investment unless and until such
interest is paid; (c) there shall be deducted in respect of each such
Investment any amount received as a return of capital (but only by repurchase,
redemption, retirement, repayment, liquidating dividend or liquidating
distribution); (d) there shall not be deducted in respect of any Investment
any amounts received as earnings on such Investment, whether as dividends,
interest or otherwise, except that accrued interest included as provided in
the foregoing clause (b) may be deducted when paid; and (e) there shall not be
deducted from the aggregate amount of Investments any decrease in the value
thereof.
Lenders. Each Person which may from time to time own a Percentage
of the Total Commitment, including BBH&Co in its capacity as a Lender;
provided, however, that the term "Lender" shall not include any Participant.
Licenses. The meaning specified in 5.5.
Loan Documents. This Credit Agreement, the Revolving Credit Note,
the Security Documents and any other agreement, instrument or document
executed in connection herewith or therewith.
Loan Request. The meaning specified in 2.7.
Material Adverse Effect. Any event, matter or condition which
could reasonably be expected to have a material adverse effect on (a) the
business, condition (financial or otherwise), assets (including intangible
assets), properties, income or prospects of any or all of the Borrowers,
(b) the Borrowers' ability to pay and perform all of the Revolving Credit
Loans and other material obligations owing by them to the Agent and the
Lenders in accordance with the terms thereof, and/or (c) the Collateral (or
any portion thereof) or the security interests of the Agent and the Lenders in
the Collateral (or any portion thereof), or the priority of such security
interests.
Maturity Date. January 31, 2000.
Moody's. Moody's Investors Service, Inc.
Mortgage. The mortgage of even date herewith executed and
delivered by DRC to the Agent and covering the Real Property.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by a Borrower or any ERISA
Affiliate or with respect to which a Borrower or any ERISA Affiliate has
actual or contingent liability.
Net Income. Income (or loss), excluding extraordinary items of
income (or loss), of a Person for the period in question (taken as a
cumulative whole), after deducting therefrom all operating expenses, reserves
and other proper deductions (including any minority interest expense), all
determined in accordance with GAAP. For purposes hereof, the Consolidated Net
Income of DRC and its Subsidiaries (a) shall include the Net Income of any
other Persons acquired prior to the date that it either becomes a Subsidiary
of such Borrower, is merged into or consolidated with such Borrower, or such
other Person's assets are assigned, directly or indirectly, to such Borrower,
provided that, in the case of each of the foregoing, (i) the Net Income of
such other Person shall only be so included to the extent that such Net Income
is attributable to such other Person or to such assets as are acquired from
such other Person for the relevant period, all to the satisfaction of the
Agent, and (ii) any discrepancies in accounting treatment between such
Borrower and such other Person are conformed so as to make the foregoing
determination, to the satisfaction of the Agent.
Net Proceeds. The gross sales price generated by the sale of any
asset or property outside the ordinary course of business, less reasonable
fees and expenses (including commissions) customarily incurred in similar
arms-length sales and transfer taxes directly attributable to such sale less
income taxes payable from such proceeds within sixteen months after such sale.
Obligations. All indebtedness, obligations and liabilities of the
Borrowers to the Agent and the Lenders, individually or collectively, existing
on the date of this Credit Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract,
operation of law or otherwise, whether arising or incurred under the Loan
Documents or in respect of any of the Revolving Credit Loans or the Revolving
Credit Note or other instruments at any time evidencing any thereof, or
otherwise.
Outstanding. With respect to the Revolving Credit Loans, the
aggregate unpaid principal thereof as of any date of determination.
Participant. The meaning specified in 17.3.
PBGC. The Pension Benefit Guaranty Corporation created by 4002
of ERISA and any successor entity or entities having similar responsibilities.
Percentage. The meaning specified in 2.1(a).
Permitted Liens. The meaning specified in 7.2.
Person. Any individual, corporation, partnership, limited
liability company, trust, unincorporated association, joint venture,
organization, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Projections. DRC's forecasted four week statements of cash flow
for the month of October 1999 is attached hereto as Exhibit A.
Qualified Plan. A pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the IRC which a
Borrower or any ERISA Affiliate sponsors, maintains, or to which any such
Person makes, is making, or is obligated to make, contributions, or, in the
case of a multiple-employer plan (as described in Section 4064(a) of ERISA),
has made contributions at any time during the immediately preceding period
covering at least five (5) plan years, but excluding any Multiemployer Plan.
Real Property. The real property and improvements thereon known
and numbered as 60 Frontage Road, Andover, Massachusetts.
Record. The grid attached to the Revolving Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by the Agent with respect to any Revolving Credit Loan
referred to in the Revolving Credit Note.
Release. Any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
Replacement Lender. The meaning specified in 17.4.
Required Lenders. Any two or more Lenders holding in the
aggregate at least sixty-six and two-thirds percent (66 2/3%) of the amounts
Outstanding on the Revolving Credit Loans or, if no amounts are Outstanding
hereunder, of the Percentages of the Total Commitment.
Revolving Credit Loan. Any revolving credit loan made pursuant to
2.1(b).
Revolving Credit Note. The meaning specified in 2.4.
S&P. Standard & Poor's Ratings Group, a division of the McGraw
Hill Companies, Inc.
Security Documents. The Security Agreements dated as of September
30, 1999 by each Borrower in favor of the Agent, the Mortgage, the Pledge
Agreement dated as of September 30, 1999 by DRC in favor of the Agent, and any
and all notifications, agreements, documents or instruments executed by the
Borrowers necessary to satisfy the requirements of the Assignment of Claims
Act, and all agreements, instruments and documents executed and delivered by
the Borrowers in connection with any of the foregoing.
Senior Debt. All Indebtedness of a Person and its Subsidiaries
(without duplication) in respect of borrowed money, Capitalized Leases and the
deferred purchase price of property, other than Subordinated Debt.
Subordinated Debt: (a) The existing Indebtedness of the Borrowers
which is designated as "Subordinated Debt" in Schedule 5.8 attached hereto,
and (b) any other Indebtedness of a Borrower which matures in its entirety and
by its terms (or by the terms of the instrument under which it is outstanding
and to which appropriate reference is made in the instrument evidencing such
Subordinated Debt) is made subordinate and junior in right of payment to the
Revolving Credit Note and to each Borrower's other obligations to the Lenders
hereunder by provisions reasonably satisfactory in form and substance to the
Required Lenders and their counsel.
Subsidiary. Any partnership, corporation, limited liability
company, association, trust, or other business entity of which DRC shall at
any time own directly or indirectly through a Subsidiary or Subsidiaries at
least a majority (by number of votes) of the outstanding Voting Interests.
Telica. Telica, Inc., a Massachusetts corporation.
Total Commitment. The meaning specified in 2.1(a).
Unfunded Benefit Liability means the excess of a Qualified Plan's
or a Multiemployer Plan's benefit liabilities (as defined in Section
4001(a)(16) of ERISA) over the current value of such plan's assets, determined
in accordance with the assumptions used by the plan's actuaries for funding
the plan pursuant to Section 412 of the Code for the applicable plan year.
Voting Interests. Stock or similar interests, of any class or
classes (however designated), the holders of which are at the time entitled,
as such holders, to vote for the election of a majority of the directors (or
persons performing similar functions) of the partnership, corporation,
association, trust or other business entity involved, whether or not the right
so to vote exists by reason of the happening of a contingency.
1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by GAAP applied on a consistent basis by the
accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) Reference to a particular "section" refers to that section of
this Credit Agreement unless otherwise indicated.
(h) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.
(i) Except as otherwise expressly provided herein, all terms
of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect from time to time; provided that, if a Borrower notifies
the Agent that such Borrower requests an amendment to any provision hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or
in the application thereof on the operation of such provision (or if the Agent
notifies a Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.
(j) All references to the Agent shall mean "Agent, on behalf
of the Lenders."
2. THE CREDIT FACILITIES.
2.1. Amounts and Terms of the Facilities.
(a) Commitments. The Borrowers wish to establish a revolving credit
facility with the Lenders in an aggregate principal amount at any one time
outstanding not in excess of $35,000,000 (as such amount may be reduced from
time to time pursuant to 2.3) (the "Total Commitment"). Each Lender is
severally willing to establish such revolving credit facility on behalf of the
Borrowers, subject to the terms and conditions hereafter set forth, in the
aggregate maximum amounts at any one time outstanding set forth opposite each
Lender's name and in the respective percentages set forth opposite each
Lender's name which shall be applicable to such revolving credit facility
hereunder (hereinafter referred to as such Lender's "Percentage"):
Lender Commitment Percentage
of Total
Commitment
BBH&Co $9,334,500 26.67%
BankBoston $7,000,000 20.00%
Chase $7,000,000 20.00%
State Street $7,000,000 20.00%
Citizens $4,665,500 13.33%
TOTAL $35,000,000 100.00%
(b) Revolving Credit Loans. Subject to the terms and conditions set
forth in this Credit Agreement, each Lender hereby severally establishes a
revolving credit facility in favor of the Borrowers in the individual
principal amount of such Lender's Percentage of the Total Commitment. Each
Lender agrees to lend to any Borrower, and any Borrower may borrow, repay, and
reborrow from time to time prior to (but not including) the Maturity Date,
upon notice by any Borrower to the Agent given in accordance with 2.7, such
sums as are requested by such Borrower up to a maximum aggregate principal
amount outstanding (after giving effect to all amounts requested) at any one
time equal to such Lender's Percentage of the lesser of: (i) the Available
Total Commitment, and (ii) the Borrowing Base; provided, however, that the
proceeds of any and all borrowings and reborrowings hereunder shall be used
solely for the purposes described in 5.16. Each request for a Revolving
Credit Loan hereunder shall constitute a representation and warranty by each
of the Borrowers that the conditions set forth in 11 have been satisfied on
the date of such request.
(c) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS 2.1 OR IN ANY
OTHER PROVISION OF THIS AGREEMENT, THE LENDERS SHALL HAVE NO OBLIGATION TO
MAKE ANY REVOLVING CREDIT LOANS HEREUNDER UNTIL THE AGENT AND EACH LENDER
DETERMINES, IN ITS REASONABLE GOOD FAITH JUDGMENT, THAT ALL OF THE CONDITIONS
PRECEDENT IN 11 OF THIS AGREEMENT HAVE BEEN SATISFIED.
2.2. Fees.
(a) Commitment Fee. The Borrowers agree to pay to the Agent for the
ratable account of each Lender, monthly in arrears, on the first day of each
month, with the first such payment being due on October 1, 1999 for the period
commencing on the Closing Date, and on the Maturity Date, a commitment fee
(the "Commitment Fee") calculated at a rate per annum of 0.375% on the daily
average unused portion of such Lender's portion of the Available Total
Commitment during the immediately preceding month of DRC (adjusted as
appropriate for any reduction or termination of any portion of the Total
Commitment pursuant to 2.3 during the immediately preceding month or portion
thereof). The Commitment Fee shall be computed on the basis of the actual
number of days elapsed in a year of 360 days and shall be payable in arrears.
(b) Agent's Fees. The Borrowers agree to pay to the Agent, for the
Agent's own account, such other fees as DRC and the Agent have heretofore
agreed upon in writing.
(c) Amendment Fee. The Borrowers agree to pay to the Agent, for the
pro rata benefit of the Lenders, an amendment fee in the amount of $225,000.
2.3. Reduction of Commitments.
(a) Voluntary Reductions. Subject to the terms and conditions of
3, each Borrower shall have the right at any time and from time to time upon
three (3) Business Days' prior written notice to the Agent (which shall in
turn give prompt written notice to each Lender) to reduce or terminate
entirely any portion of the Total Commitment, pro rata in accordance with each
Lender's Percentage, whereupon the Total Commitment shall be reduced
accordingly or, as the case may be, terminated. Upon the effective date of
any such reduction or termination, the Borrowers shall pay to the Agent for
the ratable account of each Lender the full amount of any Commitment Fee
payable pursuant to 2.2(a) then accrued on the amount of the reduction. No
reduction of the Total Commitment pursuant to this 2.3(a) may be reinstated.
(b) Limitations on Sales of Assets. Each Borrower expressly
covenants and agrees that it will not sell or dispose of any of its assets or
properties (other than (i) sales of inventory in the ordinary course of
business and dispositions of assets and properties of negligible value no
longer used or useful in such Borrower's business and (ii) other sales and
dispositions for fair market value that, when aggregated with all other sales
and dispositions pursuant to this clause (ii), is in exchange for up to
$100,000 of gross sales proceeds received by a Borrower, provided that no
Borrower shall dispose of any portion of its books and records), regardless of
whether a particular asset or property constitutes Collateral, without the
prior consent of the Agent. The Agent's consent shall be requested no less
than ten (10) days prior to the scheduled closing date of a proposed sale.
The Net Proceeds of any sale consented to by the Agent shall be used solely to
reduce the Outstanding balance of the Revolving Credit Loans.
2.4. Revolving Credit Note. The Revolving Credit Loans made by the
Lenders hereunder shall be evidenced by a single promissory note of the
Borrowers in substantially the form of Exhibit B-1 attached hereto (the
"Revolving Credit Note"), dated as of the Closing Date and completed with
appropriate insertions. The Revolving Credit Note shall be payable to the
order of the Agent for the ratable account of each Lender in principal amounts
equal to the Total Commitment, or, if less, the aggregate outstanding amount
of all Revolving Credit Loans made by the Lenders hereunder, plus interest
accrued thereon, as set forth below. The Borrowers irrevocably authorize the
Agent to make or cause to be made, at or about the time of the Drawdown Date
of any Revolving Credit Loan or at the time of receipt of any payment of
principal or interest on the Revolving Credit Note, an appropriate notation on
its Record reflecting the making of such Revolving Credit Loan or (as the case
may be) the receipt of such payment and the respective pro-rata allocations to
each Lender in accordance with its respective Percentage of the Total
Commitment. The Agent shall record the outstanding amount of the Revolving
Credit Loans on the Record as prima facie evidence of the principal amount
thereof owing and unpaid to the Agent for the ratable account of the Lenders,
but the failure to record, or any error in so recording, any such amount on
the Record shall not limit or otherwise affect the obligations of the
Borrowers hereunder or under the Revolving Credit Note to make payments of
principal of or interest on the Revolving Credit Note when due. The Revolving
Credit Note shall be due and payable on the Maturity Date, provided that the
Maturity Date may, with the approval of all of the Lenders, be extended
annually thereafter for each of the next two twelve-month periods following
the Maturity Date.
2.5. Reserved.
2.6. Interest on Revolving Credit Loans.
(a) The Revolving Credit Loans shall bear interest at a fluctuating
rate per annum equal to the Base Rate plus two percent (2%). The effective
rate of interest payable on the unpaid principal amount of the Revolving
Credit Loans shall change each date the Base Rate changes.
(b) Reserved.
(c) Interest on each Revolving Credit Loan shall be computed on the
basis of the actual number of days elapsed in a year of 360 days.
(d) The Borrowers agree to pay to the Agent, for the pro rata
benefit of the Lenders, interest on each Revolving Credit Loan monthly in
arrears on the first day of each month, with the first such payment due
October 1, 1999 for the period commencing on the Closing Date and on the
Maturity Date.
2.7. Requests for Revolving Credit Loans. A Borrower shall give to
the Agent written notice in the form of Exhibit C hereto (or telephonic notice
confirmed in a writing in the form of Exhibit C hereto) of the Revolving
Credit Loans requested from the Lenders hereunder (a "Loan Request"), no later
than 12:00 noon, Boston time, no less than one (1) Business Day prior to the
proposed Drawdown Date. Each such notice shall be accompanied by a Borrowing
Base Certificate in the form of Exhibit D hereto, duly completed and executed
by the chief financial officer or treasurer of such Borrower, and shall
specify (i) the aggregate principal amount of the Revolving Credit Loans
requested from the Lenders (and in any event not in excess of the unused
portion of the lesser of the Available Total Commitment or the Borrowing
Base), (ii) the proposed Drawdown Date of such Revolving Credit Loans, (iii)
the purpose or purposes to which the proceeds of such Revolving Credit Loans
shall be applied, and (iv) such other matters as are set forth on Exhibit C.
Each Loan Request shall be in a minimum aggregate amount of $500,000 or a
higher integral multiple of $100,000. The Agent shall then promptly notify
each Lender by written notice of its respective Percentage of the Revolving
Credit Loans requested.
2.8. Reserved
2.9. Funds for Revolving Credit Loans. Subject to the satisfaction
of the other conditions set forth herein, to the extent applicable (including
2.7), each Lender will make available to the Agent on the proposed date of
any Revolving Credit Loan by wire transfer of immediately available funds not
later than 1:00 P.M., Boston time, the aggregate amount of its Percentage of
such Revolving Credit Loans requested by the Borrowers, and the Agent shall
credit the aggregate amount so received to the respective accounts designated
by the Borrowers or, if a Borrower does not designate any account, to DRC's
regular deposit account with the Agent.
2.10 Collateral. The Revolving Credit Note and all other
Obligations of the Borrowers hereunder and/or under the other Loan Documents
or otherwise shall be secured by and entitled to the benefits of the
following, in each case in form satisfactory to the Agent and Lenders in their
reasonable good faith judgment, subject in all cases only to Permitted Liens,
if any:
(a) A first priority perfected security interest in all presently
owned and after-acquired tangible and intangible personal property and
fixtures of each of the Borrowers, together with all of the Borrowers'
respective rights to receive payments under all insurance policies
concerning same, and collateral assignments of such contract rights of
the Borrowers as may be reasonably required by the Agent;
(b) A mortgage on the Real Property, and any other real property
acquired after the date hereof by any one of the Borrowers, which shall
be a first priority mortgage to the extent that Agent elects to record
the same; and
(c) A first priority perfected pledge of all of the shares of
capital stock owned by DRC in the other Borrowers, Empresa, Telica and
any and all other capital stock or investment property owned by any one
of the Borrowers.
All of the personal property, fixtures, real property interests and
capital stock described in clauses (a) through (e) of this subsection,
together with any additions thereto or replacements or proceeds thereof, and
any other real or personal property hereafter securing the Revolving Credit
Note and the Borrower's other Obligations to the Agent and the Lenders, are
sometimes hereinafter referred to collectively as the "Collateral." The
Borrowers agree to take such actions as may be reasonably necessary from time
to time to cause the Agent and Lenders to be secured by and entitled to the
benefits of the Security Documents and Collateral as described in this
Agreement, including, without limitation, the obtaining of consents of any
third parties. The Borrowers shall use their reasonable efforts to obtain
such third party consents except as expressly provided herein. The Security
Documents shall be satisfactory in form and substance to the Agent and the
Lenders and their counsel.
3. PREPAYMENT OF THE REVOLVING CREDIT LOANS; RESERVES.
3.1. Voluntary Prepayments. Each Borrower shall have the right, at
its election, to prepay the outstanding amount of any Revolving Credit Loans,
as a whole or in part, at any time without penalty or premium, except as
provided in 4.8. A Borrower shall give irrevocable written notice to the
Agent, no later than 12:00 noon, Boston time, one Business Day prior to any
proposed prepayment of the Revolving Credit Loans pursuant to this 3,
specifying the proposed date of prepayment of the Revolving Credit Loans and
the principal amount and accrued interest to be prepaid, and the Agent shall
promptly give notice thereof to each Lender. Each such prepayment of the
Revolving Credit Loans shall be in a minimum amount of the lesser of
(i) $500,000 and (ii) the aggregate amount outstanding under the Revolving
Credit Note being prepaid.
3.2. Mandatory Prepayments. In addition to the Borrowers'
obligations under 2.3(b) of this Agreement, if at any time the outstanding
principal amount of all Revolving Credit Loans exceeds (or, in the case of any
notice of reduction of the Total Commitment pursuant to 2.3, would exceed)
the Available Total Commitment or the then applicable Borrowing Base
(determined in accordance with Section 6.2(f)), the Borrowers will immediately
prepay the Revolving Credit Note, subject to 4.8, in an amount necessary to
cause the outstanding principal amount of all Revolving Credit Loans not to
exceed the Available Total Commitment or the Borrowing Base, as specified in
the most recent Borrowing Base Certificate, as applicable.
4. CERTAIN GENERAL PROVISIONS.
4.1. Funds for Payments.
(a) All payments of principal, interest, fees and any other
amounts due hereunder or under any of the other Loan Documents shall be made
to the Agent for the ratable account of the Lenders at 40 Water Street,
Boston, Massachusetts 02109, or at such other location as the Agent may from
time to time designate, in each case in Dollars constituting immediately
available funds.
(b) All payments by the Borrowers hereunder and under any of
the other Loan Documents shall be made without setoff or counterclaim and free
and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein unless a
Borrower is compelled by law to make such deduction or withholding or if the
taxes are based upon or measured by the income or profits of the Lenders,
including profits or receipts with respect to the Revolving Credit Loans. If
any such obligation is imposed upon a Borrower with respect to any amount
payable by it hereunder or under any of the other Loan Documents, the
Borrowers will pay to the Agent for the ratable account of the Lenders on the
date on which such amount is due and payable hereunder or under such other
Loan Document, such additional amount in Dollars as shall be necessary to
enable the Lenders to receive the same net amount which the Lenders would have
received on such due date had no such obligation been imposed upon such
Borrower. The Borrowers will deliver promptly to the Agent certificates or
other valid vouchers for all taxes or other charges deducted from or paid with
respect to payments made by the Borrowers hereunder or under such other Loan
Document. In the event any Lender receives a refund of any taxes or other
amounts for which it has received payment from a Borrower pursuant to this
4.1(b), such Lender shall, within 30 days from the date of such receipt, pay
the amount of such refund to such Borrower but only to the extent of payments
made by such Borrower pursuant to this 4.1(b) and net of all costs and
expenses of the Agent and such Lender relating thereto and without interest
(other than interest, if any, paid by the relevant government authority with
respect to such refund); provided, however, that the Borrowers upon request of
the Agent or any Lender, agree to repay the amount paid to a Borrower to the
Agent or such Lender if the Agent or such Lender is required to repay such
refund to such governmental authority.
4.2. Computations. All computations of interest on the Revolving
Credit Loans and of commitment or other fees shall be based on a 360-day year
and paid for the actual number of days elapsed. Whenever a payment hereunder
or under any of the other Loan Documents becomes due on a day that is not a
Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension.
4.3. Reserved.
4.4. Reserved.
4.5. Additional Costs, Etc. If any change in any present
applicable law or if any future applicable law, which expression, as used
herein, includes statutes, rules and regulations thereunder and
interpretations thereof by any competent court or by any governmental or other
regulatory body with the administration or the interpretation thereof and
directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Lender by any central bank or
other fiscal, monetary or other authority (whether or not having the force of
law, but only if it is mandatory that such Lender comply), shall:
(a) subject such Lender to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Credit Agreement, the other Loan Documents, or the Revolving Credit Loans
(other than taxes based upon or measured by the income or profits of such
Lender, including without limitation profits or receipts with respect to the
Revolving Credit Loans and other than any withholding tax imposed on any
payments by the Borrowers to such Lender); or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits and except for any withholding tax
imposed on any payments by the Borrowers to the Lenders) of payments to such
Lender of the principal of or the interest on any Revolving Credit Loans or
any other amounts payable to such Lender under this Credit Agreement or the
other Loan Documents; or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirements (whether or not having the force of law, but only if it
is mandatory that such Lender comply) against assets held by, or deposits in
or for the account of, or loans by, or commitments of an office of such
Lender; or
(d) impose on such Lender any other conditions or requirements
with respect to this Credit Agreement, the other Loan Documents, the Revolving
Credit Loans, or any class of loans or commitments of which any of the
Revolving Credit Loans forms a part;
and the result of any of the foregoing is to:
(i) increase the cost to such Lender of making, funding, issuing
or maintaining any of the Revolving Credit Loans or its Percentage of the
Total Commitment; or
(ii) reduce the amount of principal, interest or other amount
payable to such Lender hereunder on account of any of the Revolving Credit
Loans or its Percentage of the Total Commitment; or
(iii) require such Lender to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment or
foregone interest or other sum is calculated by reference to the gross amount
of any sum receivable or deemed received by such Lender from the Borrower
hereunder;
then, and in each such case, the Borrower will, within ten (10) Business Days
following receipt of written notice from the Agent on behalf of such Lender,
which written notice shall include a description of the relevant change in
law, calculations of the amounts payable, pay to the Agent on behalf of such
Lender such additional amounts as will be sufficient to compensate such Lender
for such additional cost, reduction, payment or foregone interest or other
sum.
4.6. Capital Adequacy. If any change in any present law,
governmental rule, regulation, policy, guideline or directive or if any future
law, governmental rule, regulation, policy, guideline or directive (in each
case whether or not having the force of law, but only if it is mandatory that
the Lender comply) or the interpretation thereof by a court or governmental
authority with appropriate jurisdiction or any change in any such law or
interpretation (including, without limitation, any change according to a
prescribed schedule of increasing requirements, whether or not known on the
date of this Credit Agreement) affects the amount of capital required or
expected to be maintained by any Lender or any corporation controlling such
Lender and such Lender determines that the amount of capital required to be
maintained by it is increased by or based upon the existence of the
Commitments or Revolving Credit Loans made pursuant hereto, then the Agent on
behalf of such Lender may notify the Borrower of such fact. To the extent
that the costs of such increased capital requirements are not reflected in the
applicable rate(s) of interest on the Revolving Credit Loans, the Borrower and
the Agent on behalf of such Lender shall thereafter attempt to negotiate in
good faith, within thirty (30) days of the day on which the Borrower receives
such notice, an adjustment payable hereunder that will adequately compensate
such Lender in light of these circumstances. If the Borrower and the Agent on
behalf of such Lender are unable to agree to such adjustment within thirty
(30) days of the date on which the Borrower receives such notice, then
commencing on the date Borrower received such notice (but not earlier than the
effective date of any such increased capital requirement), from time to time
the Borrower will pay to the Agent, on behalf of such Lender after
consultation with the affected Lender, such additional amount that will, in
the Agent's reasonable determination, provide adequate compensation to such
Lender. Such Lender shall allocate such cost increases among its customers in
good faith and on an equitable basis.
4.7. Certificate. A certificate setting forth any additional
amounts payable pursuant to 4.5, 4.6 or 4.8 and a reasonably detailed
explanation of such amounts which are due, including calculation of such
amounts, submitted by the Agent on behalf of any Lender to the Borrowers,
shall be conclusive, absent manifest error, that such amounts are due and
owing.
4.8. Indemnity. The Borrowers agree to indemnify each Lender and
to hold each Lender harmless from and against any loss, cost or expense that
such Lender may sustain or incur resulting from (a) a default by a Borrower in
payment of the principal amount of or any interest on any Revolving Credit
Loans as and when due and payable, including any such loss or expense arising
from interest or fees payable by such Lender to lenders of funds obtained by
it in order to maintain its Revolving Credit Loans, or (b) a default by a
Borrower in making a borrowing after such Borrower has given (or is deemed to
have given) a Loan Request relating thereto in accordance with 2.7.
4.9. Interest on Overdue Amounts. Overdue principal and (to the
extent permitted by applicable law) interest on the Revolving Credit Loans and
all other overdue amounts payable hereunder or under any of the other Loan
Documents shall bear interest payable on demand at a rate per annum equal to
4% plus the then prevailing Base Rate, in each case until such amount shall be
paid in full (after as well as before judgment).
4.10. Mitigation. Each Lender shall take commercially reasonable
efforts (which shall not require such Lender to incur an unreimbursed loss or
unreimbursed cost or expense or otherwise take any action inconsistent with
its internal policies or suffer any disadvantage or burden deemed by it to be
significant) to assign its rights and delegate and transfer its obligations
hereunder to another of its offices to the extent that such assignment,
delegation and transfer would reduce amounts otherwise payable by the
Borrowers to such Lender pursuant to 4.1(b), 4.5, 4.6 and 4.8. The
Borrowers agree to pay all costs and expenses incurred by any Lender in
connection with any such assignment, delegation and transfer.
4.11. Joint and Several Obligations. Notwithstanding any other
provision of this Credit Agreement, (i) each of the covenants, agreements and
obligations of any Borrower set forth in this Credit Agreement or in any other
Loan Document shall be the joint and several covenants, agreements and
obligations of all of the Borrowers, regardless of whether a Borrower was the
actual recipient of the proceeds of a Loan, (ii) all representations and
warranties of any Borrower contained in this Credit Agreement or in any other
Loan Document shall be deemed to be separately made by each of the Borrowers
and (iii) any notice, request, consent, report or other information or
agreement delivered by any Borrower shall be deemed for all purposes to be
consented to, ratified and delivered by each of the Borrowers. In furtherance
of the foregoing, each Borrower acknowledges and agrees that each covenant,
agreement and obligation of any or all of the Borrowers in this Credit
Agreement or any other Loan Document is enforceable against all Borrowers,
jointly, or against any Borrower, severally.
5. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders
to enter into this Credit Agreement and to make the Revolving Credit Loans
provided for hereunder, each Borrower makes the following representations and
warranties, which shall survive the execution and delivery hereof and of the
Revolving Credit Note:
5.1 Organization, Standing, etc. of the Borrowers. Each Borrower
is a corporation duly organized, validly existing and in good standing under
the laws of The Commonwealth of Massachusetts and has all requisite corporate
power and authority to own and operate its properties, to carry on its
business as now conducted and proposed to be conducted, to enter into this
Agreement, the other Loan Documents and all other documents to be executed by
it in connection with the transactions contemplated hereby, to issue the
Revolving Credit Note and to carry out the terms hereof and thereof. Each of
this Agreement and the other Loan Documents is the legal, valid and binding
obligation of each Borrower enforceable against such Borrower in accordance
with its terms.
5.2 Subsidiaries. Schedule 5.2 attached hereto correctly sets
forth as to each Subsidiary, its name, the jurisdiction of its incorporation,
the number of shares of its capital stock of each class outstanding and the
number of such outstanding shares owned by DRC and its other Subsidiaries.
Except as set forth in Schedule 5.2, each such Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own and operate its properties and to carry on its business as
now conducted and proposed to be conducted. All of the outstanding capital
stock of each Subsidiary is validly issued, fully-paid and nonassessable, and
is owned by DRC or its Subsidiaries as specified in Schedule 5.2, in each case
free of any mortgage, pledge, lien, security interest, charge, option or other
encumbrance, other than Permitted Liens and restrictions imposed by applicable
federal and state securities laws.
5.3 Qualification. Each Borrower and its Subsidiaries are duly
qualified or licensed and in good standing as foreign corporations duly
authorized to do business in each jurisdiction in which the character of the
properties owned or the nature of the activities conducted makes such
qualification or licensing necessary.
5.4 Financial Information; Disclosure, etc. The Borrowers have
furnished the Lenders with the financial statements and other reports listed
in Schedule 5.4 attached hereto. Such financial statements have been prepared
in accordance with GAAP applied on a consistent basis and fairly present the
financial position and results of operations of the Persons to which they
purport to relate as of the dates and for the periods indicated. Except as
set forth on Schedule 5.4, since June 30, 1999, there has not been any
material adverse change in the business, operations, condition (financial or
otherwise) or properties of Borrowers and their Subsidiaries, taken as a
whole. Neither this Agreement nor any financial statements, reports,
projections or other documents or certificates furnished to the Lenders by the
Borrowers in connection with the transactions contemplated hereby contain as
of their respective dates any untrue statement of a material fact or omit to
state any material fact necessary to make the statements herein or therein
contained not misleading. None of the Revolving Credit Loans will render any
Borrower unable to pay its debts as they become due; no Borrower is
contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency laws or, except as set forth on Schedule 5.4, the
liquidation of all or a major portion of its property; and no Borrower has
knowledge of any Person contemplating the filing of any such petition against
it.
5.5 Licenses, etc. Schedule 5.5 attached hereto accurately and
completely lists all authorizations, licenses, permits and franchises of any
public or governmental regulatory body which are necessary for the conduct of
the business of each Borrower and its Subsidiaries as now conducted and the
absence of which would result, either in any case or in the aggregate, in a
material adverse change in the business, operations, affairs, condition
(financial or otherwise) or properties of (i) DRC and its Subsidiaries, taken
as a whole, (ii) Encoder and its Subsidiaries, taken as a whole, or (iii)
Metrigraphics and its Subsidiaries, taken as a whole (such authorizations,
licenses, permits and franchises, together with any extensions or renewals
thereof, being herein sometimes referred to collectively as the "Licenses").
All of such Licenses are in full force and effect and each Borrower and its
Subsidiaries have fulfilled and performed all of their obligations with
respect thereto and have full power and authority to operate thereunder.
5.6 Material Agreements. Schedule 5.6 attached hereto accurately
and completely lists all material agreements and contracts which are presently
in effect in connection with the conduct of the business of any Borrower and
which were or are required to be filed with the Securities and Exchange
Commission as a "material contract" pursuant to Item 601(b)(10) of
Registration S-K promulgated by the Securities and Exchange Commission.
5.7 Tax Returns and Payments. Each Borrower and its Subsidiaries
have filed all tax returns required by law to be filed and have paid all
material taxes, assessments and other governmental charges levied upon any of
their respective properties, assets, income or franchises, other than those
not yet delinquent and those, not material in aggregate amount, being or about
to be contested as provided in 6.5. The charges, accruals and reserves on
the books of each Borrower and its Subsidiaries in respect of their respective
taxes are adequate in the opinion of the Borrowers, and, except as set forth
on Schedule 5.7 the Borrowers know of no unpaid assessment for additional
taxes or of any basis therefor.
5.8 Indebtedness, Liens and Investments, etc. Schedule 5.8
attached hereto sets forth, as of the date hereof, (a) the amounts of all
outstanding Indebtedness of each Borrower and its Subsidiaries in respect of
borrowed money, Capitalized Leases and the deferred purchase price of
property, (b) all existing mortgages, liens and security interests in respect
of such Indebtedness, (c) all agreements which directly or indirectly require
any Borrower or its Subsidiaries to make any material investments, loans or
advances and (d) all existing material guarantees by each Borrower and its
Subsidiaries.
5.9 Title to Properties; Liens. Each Borrower and its
Subsidiaries have good and marketable title to all of their respective
properties and assets, and none of such properties or assets is subject to any
mortgage, pledge, lien, security interest, charge or encumbrance except for
(i) Permitted Liens and (ii) minor liens and encumbrances which in the
aggregate are not substantial in amount, do not in any case materially detract
from the value of the property subject thereto or materially impair the
operations of any Borrower and its Subsidiaries and have not arisen otherwise
than in the ordinary course of business. Each Borrower and its Subsidiaries
enjoy quiet possession under all leases to which they are parties as lessees,
and, to the knowledge of each Borrower, all of such leases are valid,
subsisting and in full force and effect. None of such leases contains any
provision restricting the incurrence of indebtedness by the lessee. All real
property owned or leased by any of the Borrowers is described in Schedule 5.9
attached hereto.
5.10 Litigation, etc. Except as set forth in Schedule 5.10
attached hereto, there is no action, proceeding or investigation pending or
threatened (or any basis therefor known to any Borrower) which questions the
validity of this Credit Agreement, the Revolving Credit Note or the other
documents executed in connection herewith, or any action taken or to be taken
pursuant hereto, or which could reasonably be expected to result, either in
any case or in the aggregate, in any material adverse change in the business,
operations, affairs, condition (financial or otherwise) or properties of DRC
and the Subsidiaries, taken as a whole, or any of their respective properties
or in any material liability on the part of DRC and the Subsidiaries, taken as
a whole.
5.11 Authorization; Compliance with Other Instruments. The
execution, delivery and performance of this Agreement and the Revolving Credit
Note have been duly authorized by all necessary corporate action on the part
of each Borrower, will not result in any violation of or be in conflict with
or constitute a default under any term of the charter or by-laws of any
Borrower, or of any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to any Borrower, or result in the
creation of any mortgage, lien, charge or encumbrance upon any of the
properties or assets of any Borrower pursuant to any such term. Neither any
Borrower nor any Subsidiary is in violation of any term of its charter or
by-laws, or of any term of any material agreement or instrument to which it is
a party, or, to each Borrower's knowledge, of any judgment, decree, order,
statute, rule or governmental regulation applicable to it.
5.12 Governmental Consent. Except as specified in Schedule 5.12
attached hereto, no order, consent, approval or authorization of, or
declaration to or filing with, any governmental authority (collectively,
"Consents") is required to be obtained or made by any Borrower or by any
Subsidiary in connection with the execution and delivery of this Agreement and
the issuance and delivery of the Revolving Credit Note pursuant hereto.
Except as set forth in Schedule 5.12, all of the Consents have been obtained
and are in full force and effect.
5.13 Regulation U, etc. Neither any Borrower nor any Subsidiary
owns or has any present intention of acquiring any "margin stock" within the
meaning of Regulation U (12 CFR Part 221) of the Board of Governors of the
Federal Reserve System (herein called "margin stock"). None of the proceeds
of the Revolving Credit Loans will be used, directly or indirectly, by any
Borrower or any Subsidiary for the purpose of purchasing or carrying, or for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry, any margin stock or for any other purpose which
might constitute the transactions contemplated hereby a "purpose credit"
within the meaning of said Regulation U, or cause this Agreement to violate
Regulation U, Regulation T, Regulation X, or any other regulation of the Board
of Governors of the Federal Reserve System or the Securities Exchange Act of
1934.
5.14 Employee Retirement Income Security Act of 1974. Each
Employee Benefit Plan and, to each Borrower's knowledge, each Multiemployer
Plan, is in material compliance with applicable provisions of ERISA and the
Code. No ERISA Reportable Event has occurred or, to each Borrower's
knowledge, is imminent or likely to occur. No Borrower or ERISA Affiliate has
incurred any material liability to the PBGC or any Employee Benefit Plan or
Multiemployer Plan on account of any failure to meet the contribution
requirements of any such plan, minimum funding requirements or prohibited
transactions under ERISA or the Code, termination of a single employer plan,
partial or complete withdrawal from a Multiemployer Plan, or the insolvency,
reorganization or termination of any Multiemployer Plan, and no event has
occurred or conditions exist which present a material risk that any Borrower
or ERISA Affiliate will incur any material liability on account of any of the
foregoing circumstances. The consummation of the transactions contemplated by
this Agreement will not result in any prohibited transaction under ERISA or
the Code for which an exemption is not available.
5.15 Environmental Matters. Except as set forth in Schedule 5.15
attached hereto, neither any Borrower nor any Subsidiary nor, to each
Borrower's knowledge, any other Person has ever caused or permitted any
Hazardous Material to be disposed of on or under any real property owned,
leased or operated by any Borrower or any Subsidiary or in which any Borrower
or any Subsidiary has ever held, directly or indirectly, any legal or
beneficial interest or estate, and no such real property has ever been used
(either by any Borrower or any Subsidiary or, to each Borrower's knowledge, by
any other Person) as (i) a disposal site or permanent storage site for any
Hazardous Material or (ii) a temporary storage site for any Hazardous
Material. Each Borrower and each of its Subsidiaries have been issued and are
in compliance with all material permits, certificates, licenses, approvals and
other authorizations relating to environmental matters and necessary or
desirable for their respective businesses, and have filed or will timely file
all notifications and reports relating to chemical substances, air emissions,
underground storage tanks, effluent discharges and Hazardous Material waste
storage, treatment and disposal required in connection with the operation of
their respective businesses, the failure to have or comply with which would,
individually or in the aggregate, have a material adverse effect on any
Borrower or any Subsidiary. Except as set forth in Schedule 5.15, all
Hazardous Materials used or generated by any Borrower or any Subsidiary or any
business merged into or otherwise acquired by any Borrower or any Subsidiary
have been generated, accumulated, stored, transported, treated, recycled and
disposed of in compliance with all applicable laws and regulations, the
violation of which has any reasonable likelihood of having a material adverse
effect on any Borrower or any Subsidiary. Except as set forth in Schedule
5.15, neither any Borrower nor any Subsidiary has any liabilities with respect
to Hazardous Materials and no facts or circumstances exist which could give
rise to liabilities with respect to Hazardous Materials, which in either case,
individually or in the aggregate, could have any reasonable likelihood of
having a material adverse effect on any Borrower or any Subsidiary.
5.16 Use of Proceeds. Each Borrower will use the proceeds of the
Revolving Credit Loans solely for working capital and other general corporate
purposes permitted by this Agreement.
5.17 Investment Company Act; Public Utility Holding Company Act.
Neither any Borrower nor any Subsidiary is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
5.18 Patents and Trademarks. Schedule 5.18 attached hereto is a
true, correct and complete list of all patents, registered or common law
trademarks, trade names, service marks, copyrights, licenses and other
proprietary intellectual property rights owned by the Borrowers. Such
intellectual property and proprietary rights are adequate for the conduct of
the business of the Borrowers as now conducted and as proposed to be
conducted, and which, except as set forth on Schedule 5.18, is without any
known conflict with the rights or claimed rights of others.
5.19 Chief Executive Offices and Principals Places of Business.
Schedule 5.19 attached hereto sets forth an accurate list of the chief
executive office and principal place of business of each Borrower.
5.20 Year 2000 Compliance. The statements set forth in Schedule
5.20 are incorporated herein by this reference. Notwithstanding any matter
set forth on Schedule 5.20, there is no defect in any computer software,
data bases, hardware, controls and peripherals owned or used by any Borrower
related to the occurrence of the year 2000 or the use of any date after
December 31, 1999, in connection therewith that could reasonably be expected
to have a Material Adverse Effect.
5.21 Security Documents and Collateral. The Security Documents are
effective to grant to the Agent a valid and enforceable security interest in
the Collateral described therein to the extent a valid and enforceable
security interest in such Collateral may be created under applicable law and,
when financing statements in appropriate form are filed in the offices
specified on Schedule 5.21, or in such other locations as are set forth in a
written notice from the Borrowers to the Agent, such security interest shall
constitute a fully-perfected first priority security interest in such
Collateral to the extent a security interest in such Collateral can be
perfected under the Uniform Commercial Code or other applicable law by the
filing of financing statements. The Collateral secures any and all
Obligations of the Borrowers to the Agent and the Lenders, whether such
Obligations currently exist or hereafter arise.
5.22 Government Contracts. Each Government Contract is valid,
binding and in full force and effect, and, other than as set forth on Schedule
5.4 or 5.22, there is no event which has occurred or exists, which constitutes
or which with notice, the happening of any event and/or the passage of time,
would constitute, a default or breach under any Government Contract or would
cause the acceleration of any obligation of any party thereto or give rise to
any right of termination or cancellation thereof. Except as set forth on
Schedule 5.4 or 5.22, the Borrowers have no reason to believe that the parties
to the Government Contracts will not fulfill their obligations thereunder in
all material respects.
6. AFFIRMATIVE COVENANTS OF THE BORROWERS. Each Borrower covenants
and agrees that, so long as the Revolving Credit Note and/or any Revolving
Credit Loan is outstanding or the Lenders have any Available Total Commitment:
6.1 Records and Accounts. Each Borrower will (a) keep true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with GAAP and (b) maintain adequate accounts and
reserves for all taxes (including income taxes), depreciation, depletion,
obsolescence and amortization of its properties, contingencies, and other
reserves, all in accordance with GAAP.
6.2 Financial Statements, Certificates and Information. Each
Borrower will furnish or cause to be furnished to each Lender:
(a) Within 90 days after the end of each fiscal year of DRC, (i) the
consolidated and consolidating balance sheets of DRC and its Subsidiaries as
at the end of such year and (ii) the related consolidated and consolidating
statements of income and surplus and cash flow for such year, setting forth in
comparative form with respect to such consolidated financial statements
figures for the previous fiscal year, all in reasonable detail, together with
the opinion thereon of independent public accountants selected by DRC and
satisfactory to the Lenders, which opinion shall be in a form generally
recognized as unqualified and shall state that the financial statements have
been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with that of the preceding fiscal year (except
for changes, if any, which shall be specified and approved in such opinion)
and that the audit by such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards related to reporting; provided, however, that the Borrowers shall be
required to furnish the consolidating financial statements referred to above
only to the extent that the same are required to be prepared by GAAP or by the
Securities and Exchange Commission or by any other applicable regulatory
authority;
(b) Within 45 days after the end of each of the first three
quarterly accounting periods in each fiscal year of DRC, (i) the unaudited
consolidated and consolidating balance sheets of DRC and its Subsidiaries as
at the end of such period, and (ii) the related unaudited consolidated and
consolidating statements of income and surplus and cash flows for such period
and for the period from the beginning of the current fiscal year to the end of
such period, all in reasonable detail and signed by the chief financial
officer or treasurer of DRC; provided, however, that the Borrowers shall be
required to furnish the consolidating financial statements only to the extent
that the same are required to be prepared by GAAP or by the Securities and
Exchange Commission or by any other applicable regulatory authority;
(c) Reserved;
(d) Together with the financial statements delivered pursuant to
subparagraph (a) above, a detailed list of each Borrower's backlog of revenue-
generating government contracts showing services to be provided by each
Borrower in connection therewith as of the date of such financial statements;
(e) By the closing on business on the Tuesday of each week
(commencing on October 5, 1999), a cash flow statement for the immediately
preceding week as compared to the Projections, together with a reasonably
detailed explanation of any variance in the Borrowers' actual cash flow from
the Projections;
(f) On or before the Closing Date and the 15th day of each month
thereafter (or, with respect to any month immediately following a fiscal
quarter-end, the 22nd day of the month), a Borrowing Base Certificate in the
form of Exhibit D and a compliance certificate substantially in the form of
Exhibit E attached hereto, in each case (i) as of the last Business Day of the
immediately preceding month, (ii) subject to year-end audit adjustments and
(iii) signed by the chief financial officer or treasurer of DRC;
(g) Together with the Borrowing Base Certificate and compliance
certificate delivered pursuant to subparagraph (f) above, a report in form
reasonably satisfactory to the Agent detailing all of the Borrowers' billed
and unbilled accounts receivable;
(h) Promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by DRC
with the Securities and Exchange Commission, or any governmental authority
succeeding to any of or all of the functions of said Commission, or with any
national securities exchange, or distributed to its shareholders generally, as
the case may be (with the exhibits relating thereto to be provided, at DRC's
expense, upon the request of the Agent or any Lender);
(i) Promptly upon their becoming available, copies of any periodic
or special reports filed by any Borrower or any Subsidiary with any federal,
state or local governmental agency or authority, if such reports indicate any
material change in the business, operations, affairs or condition (financial
or otherwise) of the Borrowers and the Subsidiaries, taken as a whole, or if
copies thereof are requested by any Lender, and copies of any materially
adverse notices and communications from any federal, state or local
governmental agency or authority which specifically relate to a Borrower or
any Subsidiary;
(j) Forthwith upon any officer of any Borrower obtaining knowledge
of any condition or event which constitutes an Event of Default or which,
after notice or lapse of time or both, would constitute an Event of Default, a
certificate signed by such officer specifying in reasonable detail the nature
and period of existence thereof and what action any Borrower has taken or
proposes to take with respect thereto; and
(k) To the extent not prohibited by applicable law, such other
information regarding the business, affairs and condition of the Borrowers and
their respective Subsidiaries as such Lender may from time to time reasonably
request. To the extent not prohibited by applicable law, each Borrower will
permit each Lender to inspect the books and any of the properties or assets of
such Borrower and its Subsidiaries at such reasonable times as such Lender may
from time to time request. All costs and expenses of any Lender in connection
with or relating to any request made under this 6.2(j) shall, if no Event of
Default has occurred and is continuing, be paid by the Lender making such
request and, upon the occurrence and during the continuance of an Event of
Default, be paid by the Borrowers.
6.3 Legal Existence; Compliance with Laws, etc. Except (a) for
the dissolution of Dynamics Research Investment Corporation, a Massachusetts
corporation and wholly-owned Subsidiary, and (b) as otherwise permitted under
this Credit Agreement, each Borrower will, and will cause each Subsidiary to:
maintain its corporate existence and business; maintain all properties which
are reasonably necessary for the conduct of such business, now or hereafter
owned, in good repair, working order and condition; take all actions necessary
to maintain and keep in full force and effect its Licenses; in the case of
DRC, take all steps necessary to maintain its status as a public company and
to maintain its status as a company listed on the NASDAQ National Market or a
national stock exchange; and, except as otherwise provided herein, comply with
all applicable statutes, rules, regulations and orders of, and all applicable
restrictions imposed by, all governmental authorities in respect of the
conduct of its business and the ownership of its properties; in each case
except to the extent that the failure to comply would not, individually or in
the aggregate, have a material adverse effect on the business, operations,
affairs or condition (financial or otherwise) of the Borrowers and their
Subsidiaries, taken as a whole; or any Subsidiary; provided that neither any
Borrower nor any Subsidiary shall be required by reason of this 6.3 to comply
therewith at any time while such Borrower or such Subsidiary shall be
contesting its obligations to do so in good faith by appropriate proceedings
promptly initiated and diligently conducted, and if it shall have set aside on
its books such reserves, if any, with respect thereto as are required by GAAP
and deemed adequate by such Borrower and its independent public accountants.
Neither any Borrower nor any Subsidiary will, without the prior written
consent of the Lenders, engage in any business other than the Current Lines of
Business.
6.4 Insurance. Each Borrower will maintain or cause to be
maintained on all insurable properties now or hereafter owned by such Borrower
or any Subsidiary insurance against loss or damage by fire or other casualty
to the extent customary with respect to like properties of companies
conducting similar businesses and will maintain or cause to be maintained
public liability and workmen's compensation insurance insuring such Borrower
and its Subsidiaries to the extent customary with respect to companies
conducting similar businesses and, upon request, will furnish to the Lenders
satisfactory evidence of the same.
Each insurance policy maintained by the Borrowers pertaining to any of
the Collateral shall: (i) name the Agent as an additional insured and
additional loss payee; and (ii) provide that the Agent shall be notified of
any proposed cancellation of such policy at least thirty (30) days in advance
of such proposed cancellation. The Agent will be named as an additional
insured under all policies of liability insurance. Copies of all such
policies shall be delivered to the Agent. After the occurrence and during the
continuance of an Event of Default, in the event of a casualty loss, all
proceeds shall be applied to the Revolving Credit Loans in the manner selected
by the Agent in its sole discretion. As further assurance for the payment and
performance of the Revolving Credit Loans and all other obligations hereunder,
the Borrowers hereby assign to the Agent, on behalf of the Lenders, all sums,
including any returned or unearned premiums, which may become payable under
any policy of insurance in respect of the Collateral and the Borrowers hereby
direct each insurer issuing any such policy to make such payment of such sums
directly to the Agent. No loss or claim shall be settled by any Borrower for
an amount in excess of $10,000 without the prior written consent of the
Agent.
6.5 Payment of Taxes. Each Borrower will, and will cause each
Subsidiary to, pay and discharge promptly as they become due and payable all
taxes, assessments and other governmental charges or levies imposed upon it or
its income or upon any of its properties or assets, or upon any part thereof,
as well as all lawful claims of any kind (including claims for labor,
materials and supplies) which, if unpaid, might by law become a lien or a
charge upon its property; provided that neither any Borrower nor any
Subsidiary shall be required to pay any such tax, assessment, charge, levy or
claim if the amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings promptly initiated and
diligently conducted and if such Borrower or such Subsidiary, as the case may
be, shall have set aside on its books such reserves, if any, with respect
thereto as are required by GAAP and deemed appropriate by such Borrower and
its independent public accountants.
6.6 Payment of Other Indebtedness, etc. Except as to matters
being contested in good faith and by appropriate proceedings, each Borrower
will, and will cause each Subsidiary to, pay promptly when due, or in
conformance with customary trade terms, all other Indebtedness and obligations
incident to the conduct of its business.
6.7 Further Assurances. From time to time hereafter, each
Borrower will execute and deliver, or will cause to be executed and delivered,
such additional instruments, certificates or documents, and will take all such
actions, as the Lenders may reasonably request, for the purposes of
implementing or effectuating the provisions of this Agreement or the other
Loan Documents. Upon the exercise by the Lenders (or the Agent on their
behalf) of any power, right, privilege or remedy pursuant to this Agreement or
the other Loan Documents which requires any consent, approval, registration,
qualification or authorization of any governmental authority or
instrumentality, each Borrower will execute and deliver, or will cause the
execution and delivery of, all applications, certifications, instruments and
other documents and papers that the Lenders may be required to obtain for such
governmental consent, approval, registration, qualification or authorization.
6.8 Depository Account. Each Borrower will maintain its principal
operating accounts with one or more of the Lenders (including BBH&Co).
6.9 Use of Proceeds. Each Borrower will use the proceeds of the
Revolving Credit Loans only for the purposes not prohibited by, and subject to
the terms and conditions of, 5.13 and 5.16.
6.10 Negative Pledges. Each of the Borrowers hereby pledge,
covenant and agree that it will not: (i) create, incur, assume or suffer to
exist any mortgage, lien, security interest or other encumbrance on any of the
personal property, real property and fixtures owned by one or more of the
Borrowers, other than Permitted Liens and liens and security interests granted
to the Agent and the Lenders; or (ii) make a similar pledge, covenant or
agreement to or with any party other than the Agent and the Lenders with
respect to the matters covered by this 6.10.
6.11 Regulation U. If requested by any Lender, each Borrower will
promptly furnish such Lender with a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in said Regulation U.
6.12 Environmental Indemnification; Compliance.
(a) The Borrowers shall at all times, both before and after
repayment of the Revolving Credit Loans, at their sole cost and expense,
indemnify, exonerate, hold and save harmless the Agent and the Lenders and all
those claiming by, through or under the Agent or the Lenders (collectively,
the "Indemnified Party") against and from all damages, losses, liabilities,
obligations, penalties, claims, litigation, demands, defenses, judgments,
suits, proceedings, costs, disbursements or expenses of any kind whatsoever,
including, without limitation, reasonable attorneys' fees and expenses and
experts' fees and expenses, which may at any time (including, without
limitation, before or after discharge or foreclosure of the Agent and Lenders'
mortgages or leasehold mortgages or deeds of trust or any other instrument now
or hereafter constituting a Security Document) be imposed upon, incurred by or
asserted or awarded against the Indemnified Party and arising from or out of:
(a) any Hazardous Materials liability or other liability for damage to
person or property arising out of any Hazardous Materials released, prior to
the foreclosure of the Agent and Lenders' mortgages or leasehold mortgages or
deeds of trust or any other instrument now or hereafter constituting a
Security Document, on, upon, under, into or about any property at any time
owned, leased or operated by any of the Borrowers (including without
limitation with respect to any condition or circumstance which existed on any
such property prior to or as of the time any of the Borrowers first acquired,
leased or occupied the same) or any violation of any environmental laws by any
of the Borrowers or any of their Subsidiaries (in the case of any Subsidiary
of a Borrower, to the extent any such liability is in any way related to such
Borrower), or any contractor, sub-contractor, tenant, occupant or invitee
thereof; or (b) any act, omission, negligence or conduct of any of the
Borrowers or any Subsidiary of a Borrower or any contractor, sub-contractor,
tenant, occupant or invitee thereof. Notwithstanding any limitation which
otherwise might be imposed by any applicable statute of limitations, any cause
of action which an Indemnified Party may have against any of the Borrowers
under this subsection 6.12 may be brought against any Borrower at any time
within two (2) years following assertion of the claim against the Indemnified
Party for which indemnification or exoneration is sought (it being understood
that the foregoing shall not require any Indemnified Party to bring any claim
or action within such two (2) year period if a longer statute applies).
(b) Environmental Compliance. The Borrowers shall take all
appropriate response actions, including any removal and remedial action, in
the event of a release, emission, discharge or disposal of any hazardous
materials on, upon, under, into or about any property at any time, owned,
leased or operated by any Borrower so as to (a) remain in compliance with
subsection 5.15 and (b) keep all property at any time owned, leased or
operated by the Borrowers free from and uncontaminated by Hazardous Materials
and in compliance with Environmental Laws and other applicable law, the
failure to comply with which could have a Material Adverse Effect.
6.13 Assignment of Claims Act. The Borrowers jointly and severally
agree to take any action and to execute and deliver all documentation
reasonably requested by the Agent and the Lenders in order to allow the Agent
to (i) provide notice of its security interest in and right to payment under
all Government Contracts, and (ii) otherwise comply in all respects with the
requirements of the Assignment of Claims Act. In connection therewith, the
Borrowers shall promptly notify the Agent of any new Government Contract
entered into by Borrower after the Closing Date and provide a detailed
description of such contractual arrangement sufficient to allow the Agent and
Lenders to comply in all respects with the requirements of the Assignment of
Claims Act.
6.14 Argus; Appraiser; Examiner.
(a) The Borrowers shall continue to retain Argus on the same or
substantially similar terms as those in effect on the Closing Date. The
Borrowers shall promptly provide the Agent and the Lenders with all reports,
analyses or other written product of Argus relating to any of the Borrowers.
The Borrowers covenant and agree that the Agent and the Lenders may
communicate directly with representatives of Argus to receive information
concerning the Borrowers. Without limiting any other provision or term of
this Agreement, the Borrowers expressly acknowledge that the termination of
Argus's employment by the Borrowers after the Closing Date shall constitute an
Event of Default.
The Borrowers shall cause Argus to deliver to the Agent and the Lenders
on or before October 25, 1999 a report (such report being referred to herein
as the "Argus Report") covering the following topics in reasonable detail:
(i) A strategic review of the Current Lines of Business and
proposed actions with respect to each business segment;
(ii) A review of the Borrowers' Government Contracts that are
the 15 largest of the Borrowers' "fixed price" Government
Contracts and of the Borrower's 5 largest "time and materials"
Government Contracts (or "cost reimbursable" Government Contracts)
(in each case based on contract value) and the projected
profitability of such contracts (with particular detailed coverage
of the Borrowers' contract with the State of Colorado);
(iii) A proposed cost reduction program and the proposed
timetable for the program; and
(iv) The verification of the Borrowers' projected financial
results for the remainder of 1999.
(b) Appraiser. The Borrowers acknowledge and agree that the Lenders
have engaged an Appraiser to appraise the value of the Real Property (the
"Appraiser") on a "desk-top" basis and the Lenders have received an appraisal
satisfactory to the Agent and the Lender. The Borrowers shall, on demand, pay
the reasonable costs and expenses of such appraiser and shall permit such
appraiser access to the Real Property during regular business hours.
(c) Examiner. The Borrowers acknowledge and agree that the Agent
or, at the Agent's discretion, counsel to the Agent, shall engage an
independent commercial finance examiner after the Closing Date to review the
Borrowers' books, records, properties and assets (the "Examiner"). The
Borrowers shall, on demand, pay the reasonable costs and expenses of the
Examiner and shall permit the Examiner access to the books, records,
properties and assets of the Borrowers, to members of the management of each
Borrower, to the outside auditors and accountants of the Borrowers and their
work papers, and the Borrowers hereby direct such auditors and accountants to
provide such access, all at the Agent's prior request and during regular
business hours.
7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. Each Borrower
covenants and agrees that, so long as the Revolving Credit Note and/or any
Revolving Credit Loan is outstanding or the Lenders have any Available Total
Commitment:
7.1 Indebtedness. None of the Borrowers will, nor will any
Borrower permit any Subsidiary to, create, incur, assume or become or remain
liable in respect of any Indebtedness, except (in all cases subject to 6.10
of this Agreement):
(a) Indebtedness to the Lenders hereunder;
(b) Indebtedness existing as of the Closing Date of any wholly-owned
Subsidiary to a Borrower or any other wholly-owned Subsidiary and of a
Borrower to any wholly-owned Subsidiary; provided, however, that (i) all
moneys due from a Borrower to any Subsidiary which is not a Borrower will be
expressly constituted as Subordinated Debt and (ii) no Borrower shall repay
any such moneys due to any Subsidiary at any time unless no Event of Default
exists and no event which, with the giving of notice or lapse of time or both,
would constitute an Event of Default exists or will exist after such
repayment;
(c) Current liabilities of a Borrower or any Subsidiary (other than
for borrowed money) incurred in the ordinary course of its business and in
accordance with customary trade practices;
(d) Existing Indebtedness of a Borrower or any Subsidiary referred
to in Schedule 5.8 attached hereto, and renewals and extensions thereof,
provided that (i) the aggregate principal amount of such Indebtedness is not
at any time increased, (ii) no material terms applicable to such Indebtedness
shall be more favorable to the renewal or extension lenders than the terms
that are applicable to the holders of such Indebtedness on the date hereof and
(iii) the interest rate applicable to such Indebtedness shall be a market
interest rate as of the time of such renewal or extension;
(e) Indebtedness of a Borrower or any Subsidiary secured by Permitted Liens;
(f) Indebtedness of a Borrower or any Subsidiary in respect of
guarantees to the extent the underlying Indebtedness is permitted by this
7.1; and
(g) Subordinated Debt;
(h) Unfunded Benefit Liabilities so long as each Borrower is in
compliance with 7.9, provided that the aggregate amount thereof shall not
exceed $5,000,000;
(i) To the extent payment thereof shall not at the time be required
by 6.5, Indebtedness in respect of taxes, assessments, governmental changes
and claims for labor, material and supplies;
(j) Indebtedness in respect of judgments or awards (i) which have
been in force for less than the applicable appeal period or (ii) in respect to
which any Borrower or any Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review, and in each case such
Borrower or such Subsidiary shall have taken appropriate reserves therefor in
accordance with GAAP;
(k) Indebtedness in respect of deferred taxes arising in the
ordinary course of business; and
(l) Reserved.
7.2 Mortgages, Liens, etc. None of the Borrowers will, nor will
any Borrower permit any Subsidiary to, directly or indirectly, create, incur,
assume or suffer to exist, any mortgage, lien, charge or encumbrance on, or
security interest in, or pledge of, or conditional sale or other title
retention agreement (including any Capitalized Lease) with respect to, any
property or asset now owned or hereafter acquired by any Borrower or any
Subsidiary, except for the following (collectively, "Permitted Liens"):
(a) Reserved;
(b) The mortgages and security interests (including Capitalized
Leases) referred to in Schedule 7.2 attached hereto, or any renewal, extension
or refunding of any such mortgage or security interest in an amount not
exceeding the amount thereof remaining unpaid immediately prior to such
renewal, extension or refunding;
(c) Reserved;
(d) Liens for taxes and other amounts not yet delinquent or being
contested in good faith as provided in 6.5; liens in connection with
workmen's compensation, unemployment insurance or other social security
obligations; liens securing the performance of bids, tenders, contracts,
leases, statutory obligations, surety and appeal bonds, liens to secure
progress or partial payments and other liens of like nature arising in the
ordinary course of business; mechanics', workmen's, materialmen's or other
like liens arising in the ordinary course of business in respect of
obligations which are not yet due or which are being contested in good faith;
and other liens or encumbrances incidental to the conduct of the business of
any Borrower or any Subsidiary or to the ownership of their respective
properties or assets, which were not incurred in connection with the borrowing
of money or the obtaining of credit and which do not, individually or in the
aggregate, materially detract from the value of the properties or assets of
the Borrowers and their Subsidiaries or materially affect the use thereof in
the operation of their business;
(e) Encumbrances in the nature of (i) zoning restrictions, (ii)
easements, (iii) restrictions of record on the use of real property, (iv)
landlords' and lessors' Liens on rented premises and (v) restrictions on
transfers or assignments of leases, which in each case do not, individually or
in the aggregate, materially detract from the value of the encumbered property
or impair the use thereof in the business of any Borrower or any Subsidiary;
(f) Liens in respect of judgments or awards, to the extent that such
judgments or awards are permitted by 7.1(j);
(g) Restrictions under federal and state securities laws on the
transfer of securities;
(h) Restrictions under foreign trade regulations on the transfer or
licensing of certain assets of the Borrowers and their Subsidiaries; and
(i) Liens and security interests granted to the Agent and the
Lenders under the Security Documents.
7.3 Revolving Credit Loans, Guarantees and Investments. None of
the Borrowers will, nor will any Borrower permit any Subsidiary to, make or
permit to remain outstanding any loan or advance to, or guarantee or endorse
(except as a result of endorsing negotiable instruments for deposit or
collection in the ordinary course of business) or otherwise assume or remain
liable with respect to any obligation of, or make or own any investment in, or
acquire (except in the ordinary course of business) the properties or assets
of, any Person, except:
(a) Extensions of credit by a Borrower or any Subsidiary in the
ordinary course of business in accordance with customary trade practices;
(b) The presently outstanding investments, loans and advances, if
any, and the presently existing guarantees, if any, of any Borrower and its
Subsidiaries all to the extent set forth on Schedule 5.8 attached hereto and
any renewal, extension or refunding thereof, provided that (i) the aggregate
principal amount thereof is not at any time increased, (ii) no material terms
applicable thereto shall be more favorable to the renewal or extension
borrower or recipient, as the case may be, than the terms that are applicable
to the borrower or recipient, as the case may be, on the date hereof and
(iii) the interest rate (if any) applicable thereto shall be a market interest
rate as of the time of such renewal or extension;
(c) Direct obligations of the United States of America or any
department or agency thereof maturing not more than one year from the date of
acquisition thereof;
(d) Certificates of deposit, repurchase agreements, time deposits
(including sweep accounts), demand deposits, bankers' acceptances, money
market deposits or other similar types of investments maturing not more than
one year from the date of acquisition thereof and evidencing direct
obligations of any Lender or any lender within the United States of America
having capital surplus and undivided profits in excess of $50,000,000;
(e) Investments in commercial paper maturing within ninety (90) days
from the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from Moody's 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 Moody's or S&P;
(g) Equity investments by any Borrower's wholly-owned Subsidiaries
in any other wholly-owned Subsidiary and of a Borrower in any of its wholly-
owned Subsidiaries;
(h) Revolving Credit Loans;
(i) Reserved;
(j) Guarantees by a Borrower of Indebtedness and other obligations
incurred by Subsidiaries to the extent permitted by 7.1; and
(k) Capital Expenditures to the extent permitted by 7.7.
7.4 New Leases. None of the Borrowers will, nor will any Borrower
permit any Subsidiary to, enter into any Capitalized Lease, except as
permitted below or as otherwise permitted under 7.1 and 7.2. Each Borrower
will not, and will not permit any Subsidiary to, enter into any new lease
(including any new Capitalized Leases) as lessee if, immediately after giving
effect thereto, the aggregate rental obligations (excluding payments required
to be made by the lessee in respect of taxes and insurance whether or not
denominated as rent) of all of the Borrowers and their respective Subsidiaries
for the period from the Closing Date through the Maturity Date under all such
leases then in effect shall exceed $100,000 in the aggregate after the Closing
Date; provided, however, that to the extent rental obligations under any lease
are reimbursable by such Borrower's customer pursuant to a binding contract
between such Borrower and such customer, such rental obligations shall be
excluded from the foregoing provision of this sentence.
7.5 Mergers and Consolidations. None of the Borrowers will, nor
will any Borrower permit any Subsidiary to, enter into any merger or
consolidation, except the following:
(a) Any wholly-owned Subsidiary of a Borrower may merge or be
liquidated into a Borrower or any other wholly-owned Subsidiary of a Borrower
so long as after giving effect to any such merger to which a Borrower is a
party such Borrower shall be the surviving or resulting Person; and
(b) Mergers constituting investments permitted by 7.3(i) so long as
after giving effect to any such merger to which a Borrower is a party such
Borrower shall be the surviving or resulting Person;.
7.6 Sale of Assets. None of the Borrowers will, nor will any
Borrower permit any Subsidiary to, sell, lease or otherwise dispose of all or
any substantial part of its properties or assets, except the following:
(a) Each Borrower and its Subsidiaries may, subject to 2.3(b), sell
or otherwise dispose of (i) inventory in the ordinary course of business, (ii)
assets that are no longer used or useful in the Business of the applicable
Borrower or Subsidiary, (iii) the properties and assets constituting the
Visual Magic software business (including the licenses to the Visual Magic
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 Visual Magic software line of business to
Software and/or its telephone fraud control line of business to Telecom and
(iii) immediately before and after giving effect thereto no Event of Default
exists;
(c) Each Borrower and its Subsidiaries may license products and
intangible assets for fair market value in the ordinary course of business;
and
(d) Reserved.
7.7 Capital Expenditures. None of the Borrowers will, nor will any
Borrower permit any Subsidiary to, make any Capital Expenditures during any
fiscal year of DRC unless the aggregate amount of all Capital Expenditures
committed to be made by all Borrowers and their respective Subsidiaries in
such fiscal year does not exceed $4,600,000.
7.8 Distributions. DRC will not make any distribution or declare
or pay any cash dividends on, or purchase, acquire or redeem or retire any of
its capital stock, of any class, whether now or hereafter outstanding.
7.9 Compliance with ERISA. Each Borrower will make, and will cause
all ERISA Affiliates to make, all payments or contributions to Employee
Benefit Plans and Multiemployer Plans required under the terms thereof and in
accordance with applicable minimum funding requirements of ERISA and the Code
and applicable collective bargaining agreements. Each Borrower will cause all
Employee Benefit Plans sponsored by it or any ERISA Affiliates to be
maintained in material compliance with ERISA and the Code. None of the
Borrowers will engage, and will not permit or suffer any ERISA Affiliate or
any Person entitled to indemnification or reimbursement from a Borrower or any
ERISA Affiliate to engage, in any prohibited transaction under ERISA or the
Code for which an exemption is not available. No Borrower or ERISA Affiliate
will terminate, or permit the PBGC to terminate, any Employee Benefit Plan or
withdraw from any Multiemployer Plan, in any manner which could result in
material liability of a Borrower or any ERISA Affiliate.
7.10 Transactions with Affiliates. No Borrower will, nor will any
Borrower permit any Subsidiary to, directly or indirectly, enter into any
lease or other transaction with any Affiliate of such Borrower or such
Subsidiary (other than and excluding any transaction between such Borrower and
any other Borrower) on terms that are less favorable to such Borrower or such
Subsidiary than those which could reasonably be obtained at the time from a
non-Affiliate.
7.11 Observance of Subordination Provisions, etc. No Borrower will
make, nor will any Borrower cause or permit to be made, any payments in
respect of any Subordinated Debt, in contravention of the subordination
provisions contained in the evidence of such Subordinated Debt or in
contravention of any written agreement pertaining thereto, nor will any
Borrower (a) amend, modify or change in any manner any of such subordination
provisions or (b) amend, modify or change in any manner adverse to the
interests of the Lenders any of the other provisions set forth in the
agreements under which such Subordinated Debt is outstanding or contained in
the evidence of such Subordinated Debt.
7.12 Environmental Liabilities. No Borrower will, nor will any
Borrower permit any Subsidiary to, violate any requirement of any material
law, rule or regulation regarding Hazardous Materials; and, without limiting
the foregoing, no Borrower will, nor will any Borrower permit any Subsidiary
or any other Person to, dispose of any Hazardous Material into or onto, or
(except in accordance with applicable law) from, any real property owned,
leased or operated by any Borrower or any Subsidiary or in which any Borrower
or any Subsidiary holds, directly or indirectly, any legal or beneficial
interest or estate, nor allow any lien imposed pursuant to any law, regulation
or order relating to Hazardous Materials or the disposal thereof to be imposed
or to remain on such real property, except for liens being contested in good
faith by appropriate proceedings and for which adequate reserves have been
established and are being maintained on the books of a Borrower and its
Subsidiaries.
7.13 Subsidiaries. No Borrower will create any new Subsidiaries.
8. FINANCIAL COVENANT. Each Borrower covenants and agrees that,
so long as the Revolving Credit Note and/or any Revolving Credit Loan is
outstanding or the Lenders have any Available Total Commitment, the Borrowers
shall realize Consolidated EBIT of at least $1 for each calendar month ending
on or after the Closing Date.
9. DEFAULTS; REMEDIES.
9.1 Events of Default; Acceleration. If any of the following
events (each an "Event of Default") shall occur:
(a) Any Borrower shall default in the payment of principal of or
interest on the Revolving Credit Note or any Revolving Credit Loan, or any
other fee due hereunder, whether at maturity or at a date fixed for the
payment of any installment or prepayment thereof or otherwise, and in the case
of any such fee payment default, such default shall continue for a period of
three (3) Business Days following the date of such default; or
(b) Any Borrower shall default in the performance of or compliance
with any term contained in 6.2(g), 6.2(h), 6.2(i), 6.3, 6.9, 6.10, 6.14 (a)
and 7.1 to and including 7.14, or 8; or
(c) Any Borrower shall default in the performance of or compliance
with any term, condition, covenant or agreement (other than those listed in
9.1(b)) to be performed or observed by it under this Credit Agreement or
under any other Loan Document and such default shall continue for a period of
ten (10) days or more; or
(d) Any representation or warranty made by any Borrower herein or
pursuant hereto shall prove to have been false or incorrect in any material
respect when made or when deemed to have been made; or
(e) Any Borrower or any Subsidiary shall default in (i) the payment
of any Indebtedness in respect of borrowed money (other than the Revolving
Credit Loans), any Capitalized Lease or the deferred purchase price of any
property (which in each case shall not include the Borrowers' accounts payable
incurred in the ordinary course of the Borrowers' business) and such default
(A) shall continue after giving effect to any applicable grace periods and (B)
shall be in respect of an aggregate amount of principal (whether or not due)
and accrued interest exceeding $250,000; or (ii) the performance or compliance
with any term of any agreement or instrument relating to such Indebtedness and
such default (A) shall continue, without having been duly cured, waived or
consented to, beyond the period of grace, if any, specified in such agreement
or instrument, and (B) shall permit the acceleration of such Indebtedness
prior to its stated maturity; or
(f) Except as permitted by 6.3(a) or 7.5, any Borrower or any
Subsidiary shall discontinue its business or shall make an assignment for the
benefit of creditors, or shall fail generally to pay its debts as such debts
become due, or shall apply for or consent to the appointment of or taking
possession by a trustee, receiver or liquidator (or other similar official) of
any Borrower or such Subsidiary or any substantial part of the property of any
Borrower or such Subsidiary, or shall commence a case or have an order for
relief entered against it under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or if any Borrower or any Subsidiary shall
take any action to dissolve or liquidate any Borrower or such Subsidiary; or
(g) If, within sixty (60) days after the commencement against any
Borrower or any Subsidiary of a case under the federal bankruptcy laws, as now
or hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, such case shall have been consented to or
shall not have been dismissed or all orders or proceedings thereunder
affecting the operations or the business of any Borrower and such Subsidiary
stayed, or if the stay of any such order or proceeding shall thereafter be set
aside, or if within sixty (60) days after the entry of a decree appointing a
trustee, receiver or liquidator (or other similar official) of any Borrower or
any Subsidiary or any substantial part of the property of any Borrower or such
Subsidiary, such appointment shall not have been vacated; or
(h) A final judgment which, with other outstanding final judgments
against any or all of the Borrowers and its Subsidiaries, exceeds an aggregate
of $250,000 shall be rendered against any Borrower or any Subsidiary and if,
within sixty (60) days after entry thereof, such judgment shall not have been
discharged or execution thereof stayed pending appeal, or if, within sixty
(60) days after the expiration of any such stay, such judgment shall not have
been discharged, or if any such judgment shall not be discharged forthwith
upon the commencement of proceedings to foreclose any lien, attachment or
charge which may attach as security therefor and before any of the property or
assets of any Borrower or any Subsidiary shall have been seized in
satisfaction thereof; or
(i) Any Borrower or any Subsidiary loses, fails to keep in force,
suffers the termination or revocation of or terminates, forfeits or suffers an
amendment to any License which would have a material adverse effect on the
operations of such Borrower or such Subsidiary; or
(j) There shall have occurred a Change in Control; or
(k) If with respect to any Employee Benefit Plans or Multiemployer
Plans, there shall occur any of the following which could reasonably be
expected to have a material adverse effect on the financial condition of any
Borrower: (i) the violation of any of the provisions of ERISA; (ii) the loss
by such a plan intended to be a Qualified Plan of its qualification under
Section 401(a) of the Code; (iii) the incurrence of liability under Title IV
of ERISA; (iv) a failure to make full payment when due of all amounts which,
under the provisions of any such plan or applicable law, any Borrower or any
ERISA Affiliate is required to make; (v) the filing of a notice of intent to
terminate such a plan under Sections 4041 or 4041A of ERISA; (vi) a complete
or partial withdrawal of a Borrower or an ERISA Affiliate from any such plan;
(vii) the receipt of a notice by the plan administrator of such a plan that
the PBGC has instituted proceedings to terminate such plan or appoint a
trustee to administer such plan; (viii) a commencement or increase of
contributions to, or the adoption of or the amendment of, such a plan; and
(ix) the assessment against a Borrower or any ERISA Affiliate of a tax under
Section 4980B of the Code; or
(l) Any Event of Default shall occur under any of the Security
Documents; or
(m) There shall have occurred a Material Adverse Effect (other than
an event or condition to the extent disclosed on Schedule 5.4 or 5.22) that,
to the extent curable, is not cured within ten (10) days following the date on
which any Borrower has notice (actual or constructive);
then, and in any such event, and at any time thereafter, if any Event of
Default (other than an event described in 9(f) or 9(g) shall then be
continuing, the Required Lenders may direct the Agent to, by written notice to
any Borrower, (i) declare the principal of and accrued interest in respect of
the Revolving Credit Note to be forthwith due and payable, whereupon the
principal of and accrued interest in respect of the Revolving Credit Note, and
all other amounts then due hereunder, shall become forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by each Borrower, and/or (ii) terminate the Total
Commitment, whereupon the Total Commitment of the Lenders (and the Commitment
of each individual Lender) to make Revolving Credit Loans hereunder shall
forthwith terminate without any other notice of any kind; and with respect to
any event described in 9(f) or 9(g) above, the Commitments shall
automatically terminate and the principal of the Revolving Credit Note then
outstanding, together with accrued interest thereon and all other amounts then
due hereunder, shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by each of the Borrowers, anything contained herein or
in any other Loan Document to the contrary notwithstanding. Without limiting
any provision of this Agreement or of any Security Document, an Event of
Default under this Agreement shall also constitute an event of default under
each of the Security Documents.
9.2 Remedies on Default, etc. In case any one or more Events of
Default shall occur and be continuing, the Lenders may proceed to protect and
enforce all of their rights and remedies under the Loan Documents or
applicable law, and may commence an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement
contained herein or in any other Loan Document, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise of
any power granted hereby or thereby or by law. In case of a default in the
payment of any principal of or interest on the Revolving Credit Note or any
Revolving Credit Loan, or in the payment of any fee due hereunder, each
Borrower will pay to the Agent and the Lenders such further amount as shall be
sufficient to cover the cost and expense of collection, including the Agent's
and Lenders' attorneys' fees, expenses and disbursements. No course of
dealing and no delay on the part of the Lenders in exercising any right shall
operate as a waiver thereof or otherwise prejudice the Lenders' rights. No
right conferred hereby or by any other Loan Document upon the Agent and the
Lenders shall be exclusive of any other right referred to herein or therein or
now or hereafter available at law, in equity, by statute or otherwise.
10. [RESERVED].
11. CONDITIONS TO ALL REVOLVING CREDIT LOANS. The obligations of
the Lenders to make any Revolving Credit Loan hereunder shall also be subject
to the satisfaction of the following conditions precedent:
11.1. Accuracy of Representations; No Event of Default. After
giving effect to the Revolving Credit Loans proposed to be made on such
Drawdown Date, (i) all representations and warranties of each Borrower
contained in this Credit Agreement, the other Loan Documents or in any
document or instrument delivered pursuant to or in connection with this Credit
Agreement shall be true and correct as of the date as of which they were made
and shall also be true and correct at and as of the time of the making of such
Revolving Credit Loan, with the same effect as if made at and as of that time
(except to the extent of changes resulting from transactions contemplated or
permitted by this Credit Agreement and the other Loan Documents, or to the
extent that such representations and warranties relate expressly to an earlier
date), and (ii) no Event of Default or other event which, with the giving of
notice or passage of time or both, would constitute an Event of Default shall
have occurred and be continuing; provided, however, that, with respect to any
forward-looking statements or projections made by the Borrowers, such
statements do not constitute representations or warranties but were made in
good faith by the Borrowers based on reasonable assumptions at the time made.
On or before the date of the Revolving Credit Loans, the Agent, on behalf of
the Lenders, shall have received a certificate of DRC signed by the chief
financial officer or treasurer of DRC to such effect.
11.2. No Legal Impediment. No change shall have occurred in any
law or regulations thereunder or interpretations thereof that in the
reasonable opinion of any Lender would make it illegal for such Lender to make
such Revolving Credit Loan.
12. THE AGENT.
12.1. Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder
and under each of the Loan Documents with such powers as are specifically
delegated to the Agent by the terms of this Credit Agreement and the Loan
Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in 12.5 and the
first sentence of 12.6 shall include reference to its Affiliates and the
respective officers, directors, employees and agents of the Agent and its
Affiliates): (a) shall have no duties or responsibilities except those
expressly set forth in this Credit Agreement to be a trustee for any Lender;
(b) shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Credit Agreement, or in any
certificate or other document referred to or provided for in, or received by
any of them under, this Credit Agreement, or for the value, validity,
effectiveness, genuineness, enforceability, perfection or sufficiency of this
Credit Agreement, the Revolving Credit Note or any other document referred to
or provided for herein or for any failure by any Borrower or any other Person
to perform any of its obligations hereunder or thereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder except to the extent requested by or consented to by the Required
Lenders; and (d) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith, except for its own gross
negligence or willful misconduct. The Agent may employ agents and attorneys-
in-fact and shall not be responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. Subject
to the foregoing, the Agent shall, on behalf of the Lenders, exercise any and
all rights, powers and remedies of the Lenders under this Credit Agreement and
any other Loan Documents, including the giving of any consent or waiver or the
entering into of any amendment, subject to the provisions of 25.
12.2. Reliance by Agent. The Agent shall be entitled to rely upon
any certifications, notices or communications (including any communications by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. As to any matters not
expressly provided for by this Credit Agreement, the Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder in
accordance with the instructions of the Lenders, and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders.
12.3. Defaults. The Agent shall not be deemed to have knowledge of
the occurrence of an Event of Default (other than the nonpayment of principal
of or interest on the Revolving Credit Note) unless the Agent has received
written notice from a Borrower specifying such Event of Default. In the event
that the Agent receives such a notice of the occurrence of an Event of
Default, the Agent shall give notice thereof to the Lenders (and shall give
each Lender prompt notice of each such nonpayment). The Agent shall (subject
to the provisions of 24 and 12.7) take such action with respect to such
Event of Default as shall be directed by the Lenders, provided that, unless
and until the Agent shall have received such directions, the Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Event of Default as it shall deem advisable and
in the best interests of the Required Lenders.
12.4. Rights as a Lender. With respect to its Percentage of the
Total Commitment and the Revolving Credit Loans made by it, BBH&Co, in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
the Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. The Agent
and its Affiliates may (without having to account therefor to any Lender)
accept deposits from, lend money to and generally engage in any kind of
banking, trust or other business with any Borrower or any of its Affiliates,
as if the Agent were not acting as the agent hereunder, and the Agent may
accept fees and other consideration from any of such Persons for services as
the Agent or otherwise without having to account for the same to the Lenders.
12.5. Indemnification. The Lenders agree to indemnify the Agent
ratably in accordance with their respective Percentages for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Credit Agreement or referred to herein or
the transactions contemplated by or referred to herein or therein (including
the costs and expenses which any Borrower is obligated to pay but excluding,
unless an Event of Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms of this Credit
Agreement or of any such other documents, provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent.
12.6. Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrowers and its own
decision to enter into this Credit Agreement and that it will, independently
and without reliance upon the Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own analysis and decisions in taking or not taking action under
this Credit Agreement. The Agent shall not be required to keep itself
informed as to the performance or observance by the Borrowers of this Credit
Agreement or any other document referred to or provided for herein or to
inspect the properties or books of the Borrowers. Except for notices, reports
and other documents and information expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrowers which
may come into the possession of the Agent or any of its Affiliates.
Notwithstanding the foregoing, the Agent will use its best efforts to provide
to the Lenders any and all information reasonably requested by them and
reasonably available to the Agent promptly upon such request.
12.7. Failure to Act. Except for action expressly required of the
Agent hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall be indemnified to its satisfaction
by the Lenders against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action.
12.8. Resignation of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving notice thereof to the Lenders and DRC. Upon any such
resignation, the Lenders shall appoint a successor Agent. If no successor
Agent shall have been so appointed by the Lenders and shall have accepted such
appointment within 30 days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a Lender which has a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations hereunder. After the retiring Agent's resignation
hereunder as Agent, the provisions of this 12 shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as the Agent.
12.9. Cooperation of Lenders. Each Lender shall (a) endeavor to
and shall not be liable for any failure to promptly notify the other Lenders
and the Agent of any Events of Default known to such Lender under this Credit
Agreement and not reasonably believed to have been previously disclosed to the
other Lenders; and (b) provide the other Lenders and the Agent with such
information and documentation as such other Lender or the Agent shall
reasonably request in the performance of their respective duties hereunder,
including all information relative to the outstanding balance of principal,
interest and other sums owed to such Lender.
12.10. Amendment of 12. Each Borrower hereby agrees that the
provisions of this 12 (other than 12.8 and 12.11) generally constitute an
agreement among the Agent and the Lenders and that any and all of the
provisions of this 12 (other than 12.8 and 12.11) may be amended at any
time by the Lenders without the consent or approval of, or notice to, any
Borrower (other than the requirement of notice to DRC of the resignation of
the Agent and other than any provision in addition to 12.8 and 12.11 which
directly affects the Borrowers).
12.11. Reliance. As to any consent that is granted or any other action
that is taken by the Agent hereunder, or under the Loan Documents, the
Borrowers shall be entitled to rely upon any of the foregoing granted,
delivered or taken by the Agent and the Lenders shall be bound thereby,
without the necessity of inquiring or confirming the Agent's authority.
13. SETOFF, ETC. Regardless of the adequacy of any collateral,
during the continuance of any Event of Default, any deposits or other sums
credited by or due from any Lender to any Borrower and any securities or other
property of any Borrower in the possession of any Lender may be applied to or
set off against the pro rata payment of Obligations and any and all other
liabilities, direct, or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, of the Borrowers to the Lenders. The
Lenders agree among themselves that, with respect to all sums received by the
Lenders applicable to the payment of principal of or interest on the Revolving
Credit Note, equitable adjustment will be made among the Lenders so that, in
effect, all such sums shall be shared ratably by each of the Lenders whether
received by voluntary payment, by the exercise of the right of setoff or
banker's lien, by counterclaim or crossclaim or by the enforcement of the
Revolving Credit Note. If any Lender receives any payment of a sum or sums in
excess of its pro rata portion, then such Lender receiving such excess payment
shall purchase for cash from the other Lenders an interest in their Commitment
in such amounts as shall result in a ratable participation by each of the
Lenders in the aggregate unpaid amount of the Revolving Credit Note then
outstanding; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such Lender, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
14. EXPENSES. Whether or not the transactions contemplated hereby
shall be consummated, each Borrower agrees to pay on demand (a) the reasonable
direct, out-of-pocket costs of reproducing this Credit Agreement, the other
Loan Documents and the other agreements at and instruments mentioned herein,
(b) any taxes (including any interest and penalties in respect thereto)
payable by the Lenders (other than taxes based upon the Lender's net income)
on or with respect to the transactions contemplated by this Credit Agreement
(the Borrowers hereby agreeing to indemnify the Lenders with respect thereto),
(c) the fees, expenses and disbursements (including attorney fees and costs
for external counsel to the Agent and the Lenders and the allocated costs and
disbursements of internal counsel of the Agent and the Lenders) incurred by
the Agent and the Lenders in connection with the preparation of the Loan
Documents and other instruments mentioned herein and the reasonable fees,
expenses and disbursements of the Agent's and Lenders' internal and external
counsel in connection with any amendments, modifications, approvals, consents,
waivers or Replacement Lenders hereto or hereunder, (d) the fees, expenses and
disbursements incurred by the Agent and the Lenders in connection with the
retention of the appraiser, environmental consultant and independent
commercial finance examiner referred to in 6.14 and the recording of the
Mortgage and the purchase of title insurance in connection therewith, and (e)
all reasonable out-of-pocket expenses (including attorney fees and costs for
external counsel to the Agent and the Lenders and the allocated costs and
disbursements of internal counsel of the Agent and the Lenders) incurred by
the Agent and the Lenders in connection with (i) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrowers
or the administration thereof after the occurrence of an Event of Default or
any event which, with the giving of notice or passage of time or both, would
constitute an Event of Default, (ii) any replacement of a Lender pursuant to
17.4 and (iii) any litigation, proceeding or dispute arising hereunder;
provided, however, that the Borrowers shall have no obligation to pay for the
expenses of the Agent or the Lenders to the extent such expenses result from
the Agent's or any Lender's gross negligence, fraud or willful misconduct.
The costs, fees, expenses and disbursements referenced in this 14 shall
constitute "Obligations" of the Borrowers and shall be secured by the
Collateral.
In the event the Borrowers fail to pay on demand any such costs,
expenses, fees or disbursements, the Lenders may, in their sole discretion,
without prior notice to the Borrowers, make a Revolving Credit Loan to the
Borrowers and use the proceeds of such loan to satisfy the amount owed to the
Agent and the Lenders.
15. INDEMNIFICATION. Each Borrower agrees to indemnify and hold
harmless each Lender from and against any and all claims, actions and suits
whether groundless or otherwise, and from and against any and all liabilities,
losses, damages and expenses of every nature and character arising out of this
Credit Agreement or any of the other Loan Documents or the transactions
contemplated hereby or thereby, including (a) any actual or proposed use by
any Borrower of the proceeds of any of the Revolving Credit Loans, (b) any
Borrower entering into or performing this Credit Agreement or any of the other
Loan Documents or (c) with respect to any Borrower and its properties and
assets, the violation of any Environmental Law, the presence, disposal,
escape, seepage, leakage, spillage, discharge, emission, release or threatened
release of any Hazardous Substances or any action, suit, proceeding or
investigation brought or threatened with respect to any Hazardous Substances
(including, but not limited to claims with respect to wrongful death, personal
injury or damage to property), in each case including the reasonable fees and
disbursements of counsel for the Agent, incurred in connection with any such
investigation, litigation or other proceeding; provided, however, that no
Borrower shall have any obligation to indemnify the Agent or the Lenders for
any liabilities, losses, damages or other expenses (I) incurred in connection
with any litigation commenced by any Borrower against the Agent or any Lender,
or by the Agent or any Lender against any Borrower, which seeks enforcement of
any rights hereunder or under any other Loan Document and is determined
adversely to the Agent or the Lenders in a final nonappealable judgment or
(II) to the extent such liabilities, losses, damages or other expenses result
from the Agent's or any Lender's gross negligence, fraud or willful
misconduct. If, and to the extent that the obligations of any Borrower under
this 15 are unenforceable for any reason, each Borrower hereby agrees to make
the maximum contribution to the payment in satisfaction of such obligations
which is permissible under applicable law.
16. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein in any of the other Loan Documents
or in any documents or other papers delivered by or on behalf of each Borrower
pursuant hereto shall be deemed to have been relied upon by each Lender,
notwithstanding any investigation heretofore or hereafter made by it, and
shall survive the making by the Lenders of the Revolving Credit Loans, as
herein contemplated, and shall continue in full force and effect so long as
any amount due under this Credit Agreement or any of the other Loan Documents
remains outstanding or the Lenders have any obligation to make any Revolving
Credit Loans. All statements contained in any certificate or other paper
delivered to the Lenders at any time by or on behalf of any Borrower pursuant
hereto shall constitute representations and warranties as of the date thereof
by the Borrowers hereunder.
17. ASSIGNMENT AND PARTICIPATION.
17.1. Assignment by the Lenders. No Lender shall assign or
transfer any of its rights or obligations under any of the Loan Documents (i)
without the prior written consent of DRC, which shall not be unreasonably
withheld or delayed, and (ii) in amounts of less than $5,000,000 unless such
Lender assigns its entire remaining interest under the Loan Documents;
provided, however, that any Lender may, at any time and from time to time,
sell, transfer, assign or otherwise grant an interest in any Loan to a
Subsidiary or any Affiliate of such Lender or to a Federal Reserve Bank of the
United States; and provided, further, that upon the occurrence and during the
continuance of an Event of Default, no consent of DRC shall be required to any
assignment.
17.2. Assignment by Borrowers. No Borrower shall assign or
transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of the Lenders.
17.3. Participations by the Lenders. Any Lender may, without the
consent of any Borrower, the Agent or any other Lender, sell participations to
one or more banks or other entities (each a "Participant"?) in all or a portion
of such Lender's rights and obligations under this Credit Agreement (including
all or a portion of its Commitment and the Revolving Credit Loans owing to
it); provided, however, that (i) such Lender's obligations under this Credit
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) each Borrower, the Agent, and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Credit Agreement and (iv) such
participation shall be in an amount of not less than $5,000,000. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Credit Agreement and to approve any amendment, modification or waiver of any
provision of this Credit Agreement. Each Borrower agrees that each
Participant shall be entitled to the benefits of 4.5 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to 17.1.
17.4 Replacement of Lender. In the event that any Lender (other
than the Agent in its capacity as a Lender) or, to the extent applicable, any
Participant (the "Affected Lender"):
(a) fails to perform its obligations to fund any portion of
any Revolving Credit Loan on or after the Closing Date when required to
do so by the terms of this Credit Agreement;
(b) refuses to consent to a proposed extension of the Maturity
Date that is consented to by all of the other Lenders; or
(c) refuses to consent to a proposed amendment, modification,
waiver or other action requiring consent of all of the Lenders under 25
that is consented to by Lenders owning at least 66 2/3% of the Percentages
of the Total Commitment;
then, so long as no Event of Default exists, DRC shall have the right to seek,
at its own cost and expense, a replacement lender which is reasonably
satisfactory to the Agent and the Required Lenders (the "Replacement Lender").
The Replacement Lender shall purchase the interests of the Affected Lender in
the Revolving Credit Loans and its Commitment and shall assume the obligations
of the Affected Lender hereunder and under the other Loan Documents upon
execution by the Replacement Lender of an assignment agreement in form and
substance reasonably satisfactory to the Replacement Lender and Affected
Lender, and the tender by the Replacement Lender to the Affected Lender of a
purchase price agreed between the Replacement Lender and the Affected Lender.
Such assignment by any Affected Lender who has performed its obligations
hereunder shall be deemed an early termination of any Revolving Credit Loans
to the extent of such Affected Lender's portion thereof, and the Borrowers
will pay to such Affected Lender any resulting amounts due under 4.8. Upon
consummation of such assignment, (i) the Replacement Lender shall become party
to this Credit Agreement as a signatory hereto and shall have all the rights
and obligations of the Affected Lender under this Credit Agreement and the
other Loan Documents with a Percentage equal to the Percentage of the Affected
Lender, (ii) the Affected Lender shall be released from its obligations
hereunder and under the other Loan Documents and (iii) no further consent or
action by any party shall be required. The Borrowers shall sign such
documents and take such other actions reasonably requested by the Replacement
Lender to enable it to share in the benefits of the rights created by the Loan
Documents. Until the consummation of an assignment in accordance with the
foregoing provisions of this 17.4, the Borrowers shall continue to pay to the
Affected Lender any Obligations as they become due and payable.
18. FOREIGN LENDER. If any Lender is not incorporated or organized
under the laws of the United States of America or a state thereof, such Lender
shall deliver to DRC and the Agent the following:
(a) Two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor form, as the case may be,
certifying in each case that such Lender is entitled to receive payments
under this Credit Agreement and the Revolving Credit Note without
deduction or withholding of any United States federal income taxes;
provided, however, that if such Lender is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and cannot deliver Form 1001
or 4224, such Lender shall deliver to DRC and the Agent a certificate to
such effect; and
(b) A duly completed Internal Revenue Service Form W-8 or W-9
or successor form, as the case may be, to establish an exemption from
United States backup withholding tax.
Each such Lender that delivers to DRC and the Agent a Form 1001 or 4224
and Form W-8 or W-9 pursuant to this 18 further undertakes to deliver to DRC
and the Agent two further copies of Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable form, or other manner of certification, as the case may
be, on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to DRC and the Agent. Such Forms 1001 or 4224
shall certify that such Lender is entitled to receive payments under this
Credit Agreement without deduction or withholding of any United States federal
income taxes. The foregoing documents need not be delivered in the event any
change in treaty, law or regulation or official interpretation thereof has
occurred which renders all such forms inapplicable or which would prevent such
Lender from delivering any such form with respect to it, or such Lender
advises DRC that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax and, in the case of a Form
W-8 or W-9, establishing an exemption from United States backup withholding
tax. Until such time as DRC and the Agent have received such forms indicating
that payments hereunder are not subject to United States withholding tax or
are subject to such tax at a rate reduced by an applicable tax treaty, the
Borrowers shall withhold taxes from such payments at the applicable statutory
rate without regard to 4.1(b).
19. NOTICES, ETC. Except as otherwise expressly provided in this
Credit Agreement, all notices and other communications made or required to be
given pursuant to this Credit Agreement or the other Loan Documents shall be
in writing and shall be delivered in hand, mailed by United States registered
or certified first class mail, postage prepaid, sent by overnight courier, or
sent by telecopy, and confirmed by delivery via courier or registered or
certified first class mail, postage prepaid, addressed as follows:
(a) if to any Borrower, to such Borrower c/o Dynamics Research
Corporation, 60 Frontage Road, Andover, MA 01810, Attention: Chief Financial
Officer (Telecopy No. (978) 475-8205), 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 & Gray
One International Place
Boston, MA 02110
Telecopy No. (617) 951-7050
Attention: Mary E. Weber, Esq.
(b) if to the Agent or BBH&Co in its capacity as a Lender, at
Brown Brothers Harriman & Co., 40 Water Street, Boston, MA 02109, Attention:
Timothy T. Telman, Deputy Manager (Telecopy No. (617) 772-1138) 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:
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, MA 02109
Telecopy No. (617) 248-4000
Attention: Lyman G. Bullard, Jr., Esq.
(c) if to BankBoston, at BankBoston, N.A., 100 Federal Street,
Boston, MA 02110, Attention: Jeffrey R. Westling, Director (Mail Stop: MA BOS
01-07-04) (Telecopy No. (617) 434-5825), 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, 225 Franklin Street, Boston, MA 02110,
Attention: Mark Trachy, Vice President (Telecopy No. (617) 664-4971), 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, 999 Broad
Street, Bridgeport, CT 06604, Attention: A. Neil Sweeny, Vice President
(Telecopy No. (203) 382-6573), 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, 28
State Street, Boston, MA 02109, Attention: R.E. James Hunter, Vice President
(Telecopy No. (617) 725-5790), or such other address as Citizens shall last
have furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier
or facsimile (so long as a confirmation receipt is received) to a responsible
officer of the party to which it is directed, at the time of the receipt
thereof by such officer or the sending of such facsimile and (ii) if sent by
registered or certified first-class mail, postage prepaid, on the third
Business Day following the mailing thereof.
20. GOVERNING LAW. THIS CREDIT AGREEMENT AND EACH OF THE OTHER
LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE BORROWERS, THE AGENT
AND THE LENDERS AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF
THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON SUCH PERSON BY MAIL AT ITS ADDRESS
SPECIFIED IN 19. EACH OF THE BORROWERS, THE AGENT AND THE LENDERS HEREBY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
COURT.
21. HEADINGS. The captions in this Credit Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.
22. COUNTERPARTS. This Credit Agreement and any amendment hereof
may be executed in several counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an
original, and all of which together shall constitute one instrument. In
proving this Credit Agreement it shall not be necessary to produce or account
for more than one such counterpart signed by the party against whom
enforcement is sought.
23. ENTIRE AGREEMENT, ETC. The Loan Documents and any other
documents executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions contemplated
hereby and thereby. Neither this Credit Agreement nor any term hereof may be
changed, waived, discharged or terminated, except as provided in 25.
24. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE AGENT AND THE
LENDERS HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS CREDIT AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS
PROHIBITED BY LAW, AND, EXCEPT IN THE CASE OF THE GROSS NEGLIGENCE, FRAUD,
BAD FAITH OR WILLFUL MISCONDUCT OF THE AGENT OR ANY LENDER. EACH BORROWER
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION
REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF THE AGENT OR THE LENDERS HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT EACH OF THE AGENT AND THE LENDERS WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT EACH OF THE
LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.
25. CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as otherwise
expressly provided in this Credit Agreement, any consent or approval required
or permitted by this Credit Agreement to be given by the Lenders or the Agent
may be given, and any term of this Credit Agreement or of any other instrument
related hereto or mentioned herein may be amended, and the performance or
observance by any Borrower of any terms of this Credit Agreement or such other
instrument or the continuance of any Default or Event of Default may be waived
(either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of DRC and the written
consent of the Required Lenders. Notwithstanding the foregoing, no amendment
or waiver shall, without the prior written consent of DRC, the Agent and all
of the Lenders, (a) extend the fixed maturity or reduce the principal amount
of, or reduce the rate or extend the time of payment of interest on, or reduce
the amount or extend the time of payment of any principal or interest of, the
Revolving Credit Note (including any extensions of the Maturity Date pursuant
to 2.4); (b) change or waive the Total Commitment (other than reductions in
the Total Commitments pursuant to 2.3) or Percentage; (c) amend or waive this
25 or amend or waive the definition of Required Lenders; (d) change or waive
the amount or payment terms of any fees due hereunder; or (e) amend or waive
the definition of Borrowing Base or 9.1(a), (f) or (g) or 11. No waiver
shall extend to or affect any obligation not expressly waived nor impair any
right consequent thereon. No course of dealing or delay or omission on the
part of the Lenders in exercising any right shall operate as a waiver thereof
or otherwise be prejudicial thereto. No notice to or demand upon a Borrower
shall entitle a Borrower to other or further notice or demand in similar or
other circumstances.
26. CONFIDENTIALITY. No Lender will make any disclosure of
confidential information furnished to it any Borrower or any of its
Subsidiaries unless such information shall have become public, except:
(a) in connection with operations under or the enforcement of
or the protection of a Lender's interest in this Credit Agreement or any
other Loan Document to Persons who have a reasonable need to be
furnished such information;
(b) pursuant to any law, rule or statutory or regulatory
requirement or any court order, subpoena or other legal process;
(c) to any parent or corporate Affiliate of such Lender or to
any Participant, proposed Participant, assignee, proposed assignee,
Replacement Lender or proposed Replacement Lender; provided, however,
that any such Person shall agree to comply with the restrictions set
forth in this 26 with respect to such information;
(d) to its directors, officers, employees, agents, independent
counsel, auditors and other professional advisors and consultants with
an instruction to such Person to keep such information confidential;
(e) to any other Lender and to the Agent and any successor
Agent or prospective successor Agent; and
(f) with the prior written consent of the Borrower, to any
other Person.
27. SEVERABILITY. The provisions of this Credit Agreement are
severable and if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
in such jurisdiction, and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision of this
Credit Agreement in any jurisdiction.
28. NATURE OF LENDER'S OBLIGATIONS. The Lenders obligations to
make their respective Revolving Credit Loans are several and not joint or
joint and several. Any Lender which is not in default in the performance of
its obligations may, in its discretion, assume the obligations of any other
Lender which is in default.
29. AMENDMENT AND RESTATEMENT. This Agreement amends, restates,
replaces and supersedes the Amended and Restated Revolving Credit Agreement
made as of December 31, 1998, by and among the Borrowers, the Agent and the
Lenders, as amended by the First Amendment to Amended and Restated Revolving
Credit Agreement dated as of December 31, 1998 and the Second Amendment to
Amended and Restated Revolving Credit Agreement dated as of May 10, 1999 (as
so amended, and as otherwise amended from time to time prior to the date
hereof, the "First Restated Agreement"), provided that this Agreement does not
in any manner cancel, impair or discharge the outstanding Obligations of the
Borrowers under the First Restated Agreement, all of which are expressly
ratified and confirmed by the Borrowers as valid, binding and enforceable.
The Borrowers expressly acknowledge, agree and confirm that the Security
Documents and the Collateral granted to the Agent and the Lenders thereunder
shall secure all Obligations of the Borrowers, now existing or hereafter
arising, whether such obligations arose or arise under the First Restated
Agreement, this Agreement or otherwise. The parties hereto agree that all
financial covenants contained in 8 of the First Restated Agreement shall be
of no further force and effect following the Closing Date, and each Event of
Default that resulted from the breach of any such financial covenants prior to
the Closing Date shall, following the Closing Date, be waived hereby.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
DYNAMICS RESEARCH CORPORATION
By: /s/ Albert Rand
Name: Albert Rand
Title: President
DRC ENCODER, INC.
By: /s/ Albert Rand
Name: Albert Rand
Title: President
DRC METRIGRAPHICS, INC.
By: /s/ Albert Rand
Name: Albert Rand
Title: President
DRC SOFTWARE, INC.
By: /s/ Albert Rand
Name: Albert Rand
Title: President
DRC TELECOM, INC.
By: /s/ Albert Rand
Name: Albert Rand
Title: President
per pro BROWN BROTHERS HARRIMAN & CO.
By: /s/ Timothy T. Telman
Name: Timothy T. Telman
Title: Deputy Manager
BANKBOSTON, N.A.
By: /s/ Jeffrey Westling
Name: Jeffrey Westling
Title: Vice President
THE CHASE MANHATTAN BANK
By: /s/ A. Neil Sweeny
Name: A. Neil Sweeny
Title: Vice President
STATE STREET BANK AND TRUST COMPANY
By: /s/ Mark Trachy
Name: Mark Trachy
Title: Vice President
CITIZENS BANK OF MASSACHUSETTS
By: /s/ William S. Eakes
Name: William S. Eakes
Title: Vice President
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of September
30, 1999 by and between DYNAMICS RESEARCH CORPORATION, a Massachusetts
corporation having its principal place of business and chief executive
office at 60 Frontage Road, Andover, Massachusetts, (the "Company"), and
BROWN BROTHERS HARRIMAN & CO., a New York limited partnership (the "Secured
Party"), as agent for the Lenders from time to time party to the Credit
Agreement, and their respective successors and assigns, the "Lenders").
The Secured Party in its capacity as Agent for the Lenders, is sometimes
referred to herein as the "Agent", which term shall also be deemed to
include any other party acting as agent for the Lenders hereunder.
Preliminary Statement
WHEREAS, the Company and certain of its Affiliates (such Affiliates,
together with the Company, being referred to herein as the "Borrowers") and
the Agent and the Lenders have entered into a Second Amended and Restated
Revolving Credit Agreement of even date herewith (as amended, modified,
extended and/or supplemented from time to time, the "Credit Agreement";
capitalized terms used but not defined herein shall have the meanings given
to such terms in the Credit Agreement) pursuant to which the Lenders have
agreed, subject to the terms and conditions set forth therein, to make
certain loans to the Borrowers (collectively, the "Loans"); such Loans are
evidenced by the Borrowers' Amended and Restated Revolving Credit Note of
even date herewith payable to the order of the Agent, for the benefit of
the Lenders (as such Note may be amended, modified, supplemented and/or
extended from time to time, the "Note"); and
WHEREAS, the obligation of the Lenders to enter into the Credit
Agreement and make the Loans described therein is subject to the
conditions, among others, that the Company execute and deliver this
Agreement and grant to the Secured Party the security interest hereinafter
described;
NOW, THEREFORE, in consideration of the willingness of the Secured
Party and the Lenders to enter into the Credit Agreement and, subject to
the terms and conditions set forth therein, to make Loans to the Borrowers
pursuant to the Credit Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed as follows:
1. Certain Definitions. Unless otherwise defined herein,
capitalized terms used in this Agreement shall have the respective meanings
set forth in the Credit Agreement. In addition to the descriptions
contained in 2 hereof, the items of Collateral referred to therein shall
have all of the meanings ascribed to them in the Uniform Commercial Code as
in effect from time to time in The Commonwealth of Massachusetts (the
"UCC") .
2. Security Interest. As security for the Secured Obligations
described in 3 hereof, the Company hereby assigns, pledges and grants to
the Secured Party a continuing security interest in and lien on and pledges
and assigns for security purposes to the Secured Party, all of the
Company's right, title and interest in and to all tangible and intangible
personal property and fixtures, wherever located and whether now owned or
existing or hereafter acquired or arising, together with any and all
additions and accessions thereto and products and proceeds thereof
(hereinafter referred to collectively as the "Collateral"), including,
without limiting the generality of the foregoing, the following properties,
assets and rights of the Company:
(a) all inventory (as defined in the UCC) in all of its
forms, wherever located, now or hereafter existing, and (whether or not
included in such definition) (i) all raw materials and work in process,
finished goods, and materials used or consumed in the manufacture or
production thereof, (ii) goods in which the Company has an interest in mass
or a joint or other interest or right of any kind (including, without
limitation, goods in which the Company has an interest or right as
consignee), and (iii) goods which are returned to or repossessed by the
Company, and all accessions thereto and products thereof and documents
therefor (collectively referred to herein as "Inventory");
(b) all accounts, documents and contract rights of the
Company (as each may be defined in the UCC), and (whether or not included
in such definitions) all rights of the Company to payment for goods sold or
leased or for services rendered, all accounts receivable of the Company,
all obligations owing to the Company and evidenced by an instrument or
chattel paper, all rights of the Company to payment under a contract not
yet earned by performance and not evidenced by an instrument or chattel
paper, all obligations owed to the Company of any kind or nature including
all writings, if any, evidencing the same, including all instruments,
drafts, acceptances and chattel paper, and all proceeds of any of the
foregoing. There is further included within the term "Accounts" all right,
title and interest of the Company in and to the Inventory which gave rise
to any account (including the right of stoppage in transit), all guaranties
of, and security and liens with respect to any account (collectively
referred to herein as "Accounts");
(c) all of the following, to the extent not included in
"Accounts": agreements with each manufacturer, vendor, sales agent, sales
representative and each other Person pursuant to which the Company
receives, maintains, sells, leases or otherwise disposes of Inventory,
including all agreements permitting the use of each such Person's name,
logo, trademarks, trade names and advertising;
(d) all equipment (as defined in the UCC), and (whether or
not included in such definition) all vehicles, machinery, tools, parts,
furniture, furnishings and supplies of every nature, wherever located, all
additions, accessories and improvements thereto and substitutions therefor
and all accessories, parts and equipment which may be attached to or which
are necessary for the operation and use of such personal property, together
with all accessions thereto, and all rights under or arising out of present
or future contracts relating to the foregoing (collectively referred to
herein as "Equipment");
(e) all property so related to particular real estate that
an interest in it arises under the real estate law of the jurisdiction in
which such Collateral is located, including all equipment, fixtures and
articles of personal property now or hereafter attached to or used in or
about any building or buildings now erected or hereafter to be erected on
any real property now or hereafter owned or leased by the Company (the
"Property"), which are necessary to the complete and comfortable use and
occupancy of such building or buildings for the purposes for which they
were or are to be erected; all materials to be delivered to the Property
and used or to be used in connection with the construction of any building
to be constructed on the Property, including, but not limited to, all
masonry, siding, roof shingles, flooring, doors, windows, tile, shutters,
stoves, ovens, awnings, screens, cabinets, shades, blinds, carpets,
draperies, furniture, furnishings, plumbing, heating, air conditioning,
lighting, ventilating, refrigerating, cooking, laundry and incinerating
equipment and all fixtures and appurtenances thereto, and such other goods
and chattels and personal property as are ever used or furnished in
operating such buildings or the activities conducted therein, and all
building materials and equipment now or hereafter delivered to the Property
and intended to be installed thereon (collectively referred to herein as
"Fixtures");
(f) all general intangibles (as defined in the UCC), and
(whether or not included in such definition) all copyrights, trademarks,
trade names, service marks, patents, inventions, processes, production
methods, proprietary information and know-how, and all licenses or other
agreements granted to the Company with respect to any of the foregoing, all
information, customer lists, advertising lists, advertising contracts,
identification of suppliers, data, plans, blueprints, specifications,
designs, drawings, recorded knowledge, surveys, engineering reports, test
reports, manuals, materials standards, processing standards, performance
standards, telephone numbers and telephone listings, catalogs, books,
records, computer and automatic machinery software and programs and the
like pertaining to operations by or the business of the Company, all field
accounting information and all media in which or on which any of the
information or knowledge or data or records may be recorded or stored and
all computer programs used for the compilation or printout of such
information, knowledge, records or data, all rights to receive return of
deposits and trust payments, all rights to payment under letters of credit
and similar agreements; all tax refunds (including, without limitation, all
federal and state income tax refunds and benefits of net operating loss
carry forwards); and all causes of action, rights, claims and warranties
now or hereafter owned or acquired by the Company (collectively referred to
herein as "General Intangibles");
(g) all of the following, to the extent not included in
"General Intangibles": trade secrets, all know-how, inventions, processes,
methods, information, data, plans, blueprints, specifications, designs,
drawings, engineering reports, test reports, materials standards,
processing standards and performance standards, and all computer and
automatic machinery software and programs related thereto, and all licenses
or other agreements to which the Company is a party with respect to any of
the foregoing (collectively referred to herein as "Trade Secrets");
(h) all instruments and letters of credit (each as defined
in the UCC), and (whether or not included in such definitions) all
promissory notes, drafts, bills of exchange and trade acceptances
(collectively referred to herein as "Instruments");
(i) all writings which evidence both a monetary obligation
and a security interest in or a lease of specific goods (collectively
referred to herein as "Chattel Paper");
(j) all documents, warehouse receipts, bills of lading,
including, without limitation, documents of title (as defined in the UCC)
or other receipts covering, evidencing or representing any property
described in this 2 (collectively referred to herein as "Documents");
(k) all Accounts, Chattel Paper, Documents, Instruments,
deposit accounts, General Intangibles, and other obligations of any kind
owing to the Company, now or hereafter existing, arising out of or in
connection with, the sale or lease of goods or the rendering of services,
and all rights now or hereafter existing in and to all security agreements,
leases, and other contracts securing or otherwise relating to any such
Accounts, Chattel Paper, Documents, Instruments, deposit accounts, General
Intangibles, or obligations (any and all such Accounts, Chattel Paper,
Documents, Instruments, deposit accounts, General Intangibles, and
obligations being collectively referred to herein as the "Receivables");
(l) all authorizations, licenses, permits, franchises and
other similar rights now or hereafter owned by or assigned or granted to
the Company (collectively referred to herein as "Licenses");
(m) all rights, claims and benefits of the Company against
any Person arising out of, relating to or in connection with any property
described in this 2, including, without limitation, any such rights,
claims or benefits against any Person storing or transporting any property
described in this 2;
(n) the balance of every deposit account of the Company
(i) under control of the Secured Party, the Lenders and their respective
Affiliates or (ii) held by a third party, and any other claim of the
Company against the Secured Party or any of its Affiliates, now or
hereafter existing, liquidated or unliquidated, and all money, Instruments,
securities, Documents, Chattel Paper, credits, claims, demands, income, and
any other property, rights and interests of the Company which at any time
shall come into the possession, or custody or under the control of the
Secured Party or any of its respective agents, Affiliates or correspondents
to secure the obligations set forth in 3, and the proceeds thereof (the
Secured Party and its Affiliates shall be deemed to have possession of any
of the Collateral in transit or set apart for it or any of its agents,
Affiliates or correspondents);
(o) all investment property, security entitlements,
securities accounts and financial assets, as each such term is defined in
the UCC (collectively referred to herein as "Investment Property");
(p) payments under insurance policies (whether or not the
Secured Party is the loss payee thereof), and all insurance policies and
bonds and claims and payments thereunder;
(q) all property similar to any property or asset
described above hereafter acquired by the Company; and
(r) any indemnity, warranty or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the foregoing
Collateral and cash held by the Secured Party;
provided, however, that notwithstanding the foregoing provisions of
this 2, the payment and performance of the Secured Obligations shall not
be secured by:
(i) any contract, license, permit or franchise that
validly prohibits the creation by the Company of a security interest
in such contract, license, permit or franchise (or in any rights or
property obtained by the Company under such contract, license, permit
or franchise); provided, however, that the provisions of this clause
(i) shall not prohibit the security interests created by this
Agreement from extending to the proceeds of such contract, license,
permit or franchise (or such rights or property) or to the monetary
value of the good will and other general intangibles of the Company
relating thereto; or
(ii) any rights or property to the extent that any valid
and enforceable law or regulation applicable to such rights or
property prohibits the creation of a security interest therein;
provided, however, that the provisions of this clause (ii) shall not
prohibit the security interests created by this Agreement from
extending to the proceeds of such rights or property or to the
monetary value of the good will and other general intangibles of the
Company relating thereto.
In addition, in the event the Company disposes of assets to third
parties in a transaction permitted by the Credit Agreement, such assets,
but not the proceeds or products thereof, shall be released from the lien
of the Collateral.
3. Secured Obligations. The security interest hereby granted
shall secure the due and punctual payment and performance of the following
liabilities and obligations of the Company (herein called the "Secured
Obligations"):
(a) principal of and premium, if any, and interest on the
Note (including, without limitation, the payment of interest and other
amounts that would accrue and become due but for the filing of a petition
in bankruptcy or the operation of the automatic stay under Section 362(a)
of Title 11 of the United States Code, as amended);
(b) any and all other obligations of the Company to the
Secured Party and/or the Lenders under the Credit Agreement, the Security
Documents, the other Loan Documents or under any agreement or instrument
relating thereto, all as amended from time to time and whether executed
prior to, on or after the date hereof, whether for principal, interest,
fees, premiums, expenses, indemnification or otherwise; and
(c) any and all other obligations, liabilities and
indebtedness of the Company to the Secured Party and/or the Lenders,
whether now existing or hereafter arising.
4. Warranties and Covenants of Company. The Company hereby
warrants and covenants to the Secured Party that:
(a) The execution, delivery and performance of this
Agreement and the other Loan Documents are within the corporate powers of
the Company, have been duly authorized by the Company and all necessary
corporate actions have been taken by the Company and are not in violation
of any applicable law, and do not constitute a breach of or default under
any of the provisions contained in the Company's charter or bylaws or under
any material agreement or obligation to which the Company is a party or by
which it or any of its properties are bound.
(b) The Company is the owner of the Collateral. Except
for (i) the security interest created hereunder and (ii) liens permitted
under the Credit Agreement, the Collateral is free and clear of all claims,
mortgages, pledges, liens, security interests or encumbrances and the
Company will defend the Secured Party's security interest in and rights to
the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein.
(c) The address shown at the beginning of this Agreement
is the principal place of business and chief executive office of the
Company and will not be changed unless thirty (30) days' prior written
notice is provided to the Agent in the manner required in the Credit
Agreement. All of the Company's additional places of business, if any, and
all other locations of Collateral having an aggregate fair market value
greater than $10,000 (including without limitation any Collateral located
or stored at warehouses) are listed in Schedule I attached hereto or have
been provided to the Secured Party from time to time. The Company will not
change the location of any Collateral except under circumstances where the
Secured Party at all times retains a first priority perfected lien in the
Collateral, or make any change in the Company's name or conduct the
Company's business operations under any fictitious business or trade name,
without, in any such case, at least thirty (30) days' prior written notice
to the Secured Party in the manner required in the Credit Agreement.
(d) The Company will not, to the extent prohibited by the
Credit Agreement, sell, offer to sell, lease or otherwise transfer, convey
or dispose of any of the Collateral or any interest therein except sales of
Inventory in the ordinary course of business.
(e) The Company will not, to the extent prohibited by the
Credit Agreement, pledge, mortgage or create or suffer to exist a security
interest in or lien on the Collateral, or permit or suffer to exist the
issuance of any attachment, trustee process or execution against the
Collateral in favor of any person, other than the Secured Party.
(f) The Company will keep the Collateral in good order and
repair (ordinary wear and tear excepted) and insured as provided in the
Credit Agreement. The Company will not use the Collateral in violation of
any insurance policy thereon or any applicable law the violation of which
could reasonably be expected to have a Material Adverse Effect on the
Company. The Company will pay promptly when due all taxes, assessments and
governmental charges payable by the Company on the Collateral or for its
use or operation, except for taxes and assessments permitted to be
contested as provided in the Credit Agreement. The Secured Party may at
its option (provided that the Secured Party shall notify the Company prior
to taking any such action if an Event of Default shall not then exist and
be continuing) discharge any taxes, liens, security interests or other
encumbrances to which any Collateral is at any time subject (including in
respect of FICA and withholding taxes), and may, upon the failure of the
Company so to do in compliance with the terms of this Agreement and the
Credit Agreement, purchase insurance on any Collateral and pay for the
repair, maintenance or preservation thereof, and the Company agrees to
reimburse the Secured Party on demand for any payments made or expenses
incurred by the Secured Party pursuant to the foregoing authorization and
any unreimbursed amounts shall constitute Secured Obligations for all
purposes hereof.
(g) The Company will promptly execute and deliver to the
Secured Party such financing statements, certificates, and other
agreements, documents or instruments as the Secured Party may deem
necessary or advisable to enable the Secured Party to perfect, protect or
from time to time renew any security interest, pledge or assignment granted
hereby or purported to be granted hereby, and the priority thereof, and, to
the extent provided in the Credit Agreement, to comply with the Assignment
of Claims Act and all other applicable laws and regulations, including,
without limitation, such financing statements, certificates and other
documents as the Secured Party may deem necessary or advisable to perfect a
security interest in any additional Collateral hereafter acquired by the
Company (including but not limited to Collateral acquired in any
acquisition permitted under the Credit Agreement) or in any replacements or
proceeds thereof. The Company hereby irrevocably authorizes and appoints
the Secured Party, to the fullest extent permitted by applicable law, to
execute such financing statements, certificates and other documents in its
stead, with full power of substitution, as the Company's attorney-in-fact
provided that a copy thereof be promptly delivered to the Company. The
Company further agrees that a carbon, photographic or other reproduction of
a security agreement or financing statement is sufficient as a financing
statement under this Agreement.
(h) The Company will give the Secured Party prior notice
of each office of the Company (other than the principal place of business
set forth above) at which records of the Company pertaining to all items of
Collateral are kept. Except as such notice is given and unless otherwise
permitted by the Credit Agreement, the Company's records concerning all
Collateral are and will be kept at the address shown at the beginning of
this Agreement as the principal place of business of the Company or at the
locations set forth in Schedule I attached hereto.
(i) The Company shall accord the Secured Party and its
representatives with such access as the Secured Party may from time to time
require, upon reasonable notice, to all properties owned or leased by the
Company. The Secured Party and its representatives shall have the right and
the Company will permit the Secured Party and such representatives (upon
reasonable notice) to examine, inspect, copy and make extracts from any and
all of the Collateral.
(j) If any Inventory is in the possession of any of the
Company's agents or processors, the Company shall at Secured Party's
request notify them of the Secured Party's security interest therein and,
at the Secured Party's request following an Event of Default, instruct them
to hold the same for the Secured Party's account and subject to its
instructions. A physical listing of all the Inventory (including without
limitation equipment and machinery) shall be taken by the Company whenever
requested by the Secured Party following and during the continuance of an
Event of Default.
(k) Anything herein to the contrary notwithstanding, the
Company shall remain liable under each contract or agreement included in
the Collateral to be observed or performed by the Company thereunder. The
Secured Party shall not have any obligation or liability under any such
contract or agreement by reason of or arising out of this Agreement or any
other Security Document or the receipt by the Secured Party of any payment
relating to any of the Collateral, nor shall the Secured Party be obligated
in any manner to perform any of the obligations of the Company under or
pursuant to any such contract or agreement, to make inquiry as to the
sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action, to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Secured Party or to which the Secured Party may be entitled
at any time or times unless the Secured Party shall have foreclosed upon
such Collateral in accordance with the terms of the Loan Documents and
applicable law. The Secured Party's sole duty with respect to the custody,
safe keeping and physical preservation of the Collateral in its possession,
under 9-207 of the UCC or otherwise, shall be to deal with such Collateral
in the same manner as the Secured Party deals with similar property for its
own account.
(l) Upon the occurrence and during the continuance of any
Event of Default hereunder, the Company will (i) mark conspicuously all
items of Chattel Paper included in the Receivables and, at the request of
the Secured Party, each of its records pertaining to the Collateral with
the following legend:
THIS INSTRUMENT IS SUBJECT TO A SECURITY INTEREST AND LIEN PURSUANT
TO A SECURITY AGREEMENT DATED SEPTEMBER 30, 1999 (AS THE SAME MAY BE
AMENDED, MODIFIED OR RESTATED) IN FAVOR OF BROWN BROTHERS HARRIMAN &
CO., AS AGENT.
or such other legend, in form and substance satisfactory to and as
specified by the Secured Party, indicating that such Chattel Paper or
Collateral is subject to the pledge, assignment and security interest
granted hereby, and (ii) if any Collateral shall be evidenced by a
promissory note or other Instrument or be Chattel Paper, deliver and pledge
to the Agent such note, Instrument or Chattel Paper duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in
form and substance reasonably satisfactory to Agent. If any Collateral
shall be evidenced by a promissory note or other Instrument at anytime, the
Company shall deliver and pledge to the Secured Party hereunder such note,
or Instrument duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance reasonably satisfactory
to the Secured Party.
(m) In addition to such other information as shall be
specifically provided for herein, the Company shall, to the extent it
lawfully may, furnish to the Secured Party such other information with
respect to the Collateral as the Company may lawfully do so and as the
Secured Party may reasonably request from time to time including, without
limitation, copies of, or during the continuance of an Event of Default,
originals of all documents and things in the Company's possession, or
subject to its demand for possession, related to the production and sale by
the Company, or any subsidiary, licensee or subcontractor thereof, of
products or services sold by or under the authority of the Company,
including, without limiting any other provision of this Agreement: (i) all
lists and ancillary documents which identify and describe any of the
Company's customers, or those of its Subsidiaries or licensees, for
products sold or services rendered, including without limitation, such
existing lists and ancillary documents which contain each customer's full
name and address, the identity of the Person having the principal
responsibility on each customer's behalf for ordering products or services
of the kind supplied by the Company, and the credit, payment, discount, and
other payment terms applicable to such customer; and (ii) all product and
service specification documents. In connection with its enforcement of the
security interest, the Secured Party may use such information or transfer
it to any assignee of the Secured Party for such assignee's use.
(n) The Company shall promptly notify the Secured Party of
any material adverse change in the Company's financial condition, of the
financial condition of any Affiliate, or of any condition or event which
constitutes a breach or event of default under this Agreement or the Loan
Documents, or any litigation, arbitration proceeding, or governmental
proceeding material to the Company, in each case as provided in the Credit
Agreement.
(o) The Company represents and warrants that all Eligible
Raw Materials will be of good and merchantable quality, free of any known
defects, and shall not be subject to any licensing, patent, royalty,
trademark, trade name or copyright agreements with any third parties, and
the sale or other disposition of Eligible Raw Materials by the Secured
Party shall not require the consent of any Person and shall not constitute
a breach or default under any contract or agreement to which the Company is
a party and/or the Eligible Raw Materials is subject.
(p) The Company acknowledges and agrees that the
statements contained in the Preliminary Statement of this Agreement are
true and correct.
5. Delivery of Pledged Collateral. Pursuant to the terms hereof,
the Company has endorsed, assigned and delivered to the Secured Party all
negotiable and non-negotiable instruments (including certificated
securities but excluding any of the Company's customer contracts) pledged
by it hereunder, together with instruments of transfer or assignment duly
executed in blank. All negotiable or non-negotiable instruments (including
certificated securities) hereafter acquired by the Company shall be
promptly delivered to the Secured Party pursuant hereto, shall be in
suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, with signatures
appropriately guaranteed, and accompanied in each case by any required
transfer tax stamps, all in form and substance reasonably satisfactory to
the Secured Party. To the extent that any securities are uncertificated,
appropriate book-entry transfers reflecting the pledge of such securities
created hereby have been or, in the case of uncertificated securities
hereafter acquired by the Company, will at the time of such acquisition be,
duly made for the account of the Secured Party or one or more nominees of
the Secured Party with the issuer of such securities or other appropriate
book-entry facility or financial intermediary with the Secured Party having
at all times the right to obtain definitive certificates (in the Secured
Party's name or in the name of one or more of its nominees), all to be held
as Collateral hereunder. The Company hereby acknowledges that the Secured
Party may, in its discretion, appoint one or more financial institutions to
act as the Secured Party's agent in holding custodial account instruments
or other financial assets in which the Secured Party is granted a security
interest hereunder.
6. Special Provisions Concerning Government Contracts, Accounts
Receivable, Chattel Paper and Inventory.
(a) The Company will notify the Secured Party of any
Government Contract to which it is a party, and on request of the Secured
Party will comply with the Assignment of Claims Act, all as provided in the
Credit Agreement.
(b) The Company hereby irrevocably appoints the Secured
Party the true and lawful attorney of the Company with full power of
substitution, in the name of the Secured Party or in the name of the
Company or otherwise, for the sole benefit of the Secured Party but at the
sole expense of the Company, following notice to and demand upon the
Company: (i) to demand, collect, receive payment of, receipt for, settle,
compromise or adjust, and give discharges and releases in respect of the
Receivables or any of them; (ii) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Receivables or any of them and to enforce any
other rights in respect thereof or in respect of the goods which have given
rise thereto; (iii) to defend any suit, action or proceeding brought
against the Company with respect to any Receivables or the goods which have
given rise thereto; (iv) to settle, compromise or adjust any suit, action
or proceeding described in clause (ii) or (iii) above, and, in connection
therewith, to give such discharges or releases as the Secured Party may
deem reasonably appropriate; (v) to endorse checks, notes, drafts,
acceptances, money orders, bills of lading, warehouse receipts or other
instruments or documents evidencing or securing the Receivables or any of
them; (vi) to receive and open all mail addressed to the Company and to
notify the post office authorities to change the address of delivery of
mail addressed to the Company to such address, care of the Secured Party,
as the Secured Party may designate; and (vii) generally to sell, assign,
transfer, pledge, make any agreement in respect of or otherwise deal with
any Receivable or the goods which have given rise thereto as fully and
completely as though the Secured Party were the absolute owner thereof for
all purposes; provided, however, that the foregoing rights granted to the
Secured Party pursuant to this subsection (b) shall not be exercised by the
Secured Party unless an Event of Default shall have occurred and be
continuing. The powers conferred on the Secured Party by this Agreement
are solely to protect any interest of the Secured Party and shall not
impose any duty upon the Secured Party to exercise any such power, and if
the Secured Party shall exercise any such power, it shall be accountable
only for amounts that it actually receives as a result thereof and shall
not be responsible to the Company except for willful misconduct or gross
negligence. The Secured Party shall be under no obligation to take steps
necessary to preserve the rights in any Collateral against prior parties
but may do so at its option. The Secured Party may at its option at any
time after an Event of Default shall have occurred transfer to itself or to
its nominee any securities held as Collateral hereunder and receive the
income thereon and hold the same as Collateral hereunder to the extent
permitted by applicable law.
(c) The Company shall promptly provide the Secured Party
upon request the information necessary for the Secured Party to verify the
Company's accounts receivable. Upon the occurrence and during the
continuance of an Event of Default, the Company authorizes the Secured
Party to notify or to require the Company to notify account debtors
obligated on any or all of the Company's accounts receivable, whether now
existing or hereafter arising, to make payment directly to the Secured
Party, and, in that event, authorizes the Secured Party to take possession
of all proceeds of any Accounts in the Company's possession and to take any
other steps which the Secured Party deems necessary or advisable to collect
any or all such Receivables or other Collateral or proceeds thereof.
(d) All powers of attorney set forth in this Agreement,
are coupled with an interest and shall be irrevocable until the Secured
Obligations have been indefeasibly paid in full in cash.
7. Fixtures. It is the intention of the parties hereto that no
item of the Collateral shall become a fixture.
8. Events of Default. The Company shall be in default under
this Agreement upon the happening of any of the following events or
conditions (herein called "Events of Default"):
(a) Any Event of Default (as defined or provided in the
Credit Agreement or in any other Loan Document) shall occur; or
(b) There shall be a breach by the Company of any term or
provision (other than those contained in 8(a) above) contained herein
which is not cured within ten (10) days after written notice thereof to the
Company by Secured Party, or any representation and/or warranty made by or
on behalf of the Company in this Agreement or in any document executed or
delivered from time to time in connection herewith is untrue or misleading
in any material respect, as of the time made.
9. Rights and Remedies of Secured Party. In the event that any
Event of Default shall have occurred and be continuing, such Event of
Default not having previously been remedied or cured, and following any
notice to the Company provided under the Credit Agreement, the Secured
Party may declare all of the Secured Obligations to be immediately due and
payable and shall thereafter have the following rights and remedies, which,
except as provided herein or in the Credit Agreement, shall be without
further notice, protest, presentment, or demand, all of which are expressly
waived by the Company:
(a) all rights and remedies provided by law, including,
without limitation, those provided by the UCC;
(b) all rights and remedies provided in this Agreement; and
(c) all rights and remedies provided in the Credit
Agreement, the Security Documents or in any other Loan Document, or other
agreement, document or instrument pertaining to the Secured Obligations.
10. Right of Secured Party to Dispose of Collateral, etc.
Without limiting the scope of 9 hereof, upon the occurrence and during the
continuance of any Event of Default, such Event of Default not having
previously been remedied or cured, but subject to the provisions of the UCC
or other applicable law, the Secured Party shall have the right to take
possession of the Collateral and, in addition thereto, the right to enter
upon any premises on which the Collateral or any part thereof may be
situated and remove the same therefrom. The Secured Party may require the
Company to make the Collateral (to the extent the same is moveable)
available to the Secured Party at a place to be designated by the Secured
Party which is reasonably convenient to both parties. Unless the
Collateral threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Secured Party will give the
Company at least ten (10) days' prior written notice at the address of the
Company set forth in the Credit Agreement (or at such other address or
addresses as the Company shall specify in writing to the Secured Party) of
the time and place of any public sale of Collateral or of the time after
which any private sale or any other intended disposition of Collateral is
to be made. Any such notice shall be deemed to meet any requirement
hereunder or under any applicable law (including the UCC) that reasonable
notification be given of the time and place of such sale or other
disposition. After deducting all reasonable costs and expenses of
collection, storage, custody, sale or other disposition and delivery
(including reasonable legal costs and attorneys' fees) and all other
charges against the Collateral, the residue of the proceeds of any such
sale or disposition shall be applied to the payment of the Secured
Obligations in such order of priority as the Secured Party shall determine
and any surplus shall be returned to the Company or to any person or party
lawfully entitled thereto (including, if applicable, any subordinated
creditors of the Company). In the event the proceeds of any sale, lease or
other disposition of the Collateral hereunder are insufficient to pay all
of the Secured Obligations in full, the Company will be liable for the
deficiency, together with interest thereon, at the rate provided in the
Credit Agreement, and for the reasonable costs and expenses of collection
of such deficiency, including, without limitation, reasonable attorneys'
fees, expenses and disbursements.
The Company hereby grants to the Secured Party a non-exclusive
worldwide and royalty-free irrevocable license to, following the occurrence
and during the continuance of an Event of Default, use, apply, affix and
otherwise exploit any trademark, franchise, trade name, copyright, logo or
the like in which the Company now or hereafter has rights, such license
being with respect to the exercise by the Secured Party of its rights and
remedies. Such irrevocable license shall terminate when all of the Secured
Obligations have been paid in full in cash. All of the Secured Party's
rights and remedies hereunder are cumulative, not exclusive, and
enforceable successively, alternatively or concurrently, at such time or
times as the Secured Party deems expedient.
11. Right of Secured Party to Use and Operate Collateral.
(a) Upon the occurrence and during the continuance of any
Event of Default, but subject to the provisions of the UCC or other
applicable law, the Secured Party shall have the right and power to take
possession of all or any part of the Collateral, and to exclude the Company
and all persons claiming under the Company wholly or partly therefrom, and
thereafter to hold, store, and/or use, operate, manage and control the
same. Upon any such taking of possession, the Secured Party may, from time
to time, at the expense of the Company, make all such repairs,
replacements, alterations, additions and improvements to and of the
Collateral as the Secured Party may reasonably deem proper. In any such
case the Secured Party shall have the right to manage and control the
Collateral and to carry on the business and to exercise all rights and
powers of the Company in respect thereto as the Secured Party shall deem
best, including the right to enter into any and all such agreements with
respect to the operation of the Collateral or any part thereof as the
Secured Party may see fit; and the Secured Party shall be entitled to
collect and receive all rents, issues, profits, fees, revenues and other
income of the same and every part thereof. The reasonable costs and
expenses of collection, including, without limitation, attorneys' fees,
shall be borne by the Company. Such rents, issues, profits, fees, revenues
and other income shall be applied to pay the expenses of holding and
operating the Collateral and of conducting the business thereof, and of all
maintenance, repairs, replacements, alterations, additions and
improvements, and to make all payments which the Secured Party may be
required or may elect to make, if any, for taxes, assessments, insurance
and other charges upon the Collateral or any part thereof, and all other
payments which the Secured Party may be required or authorized to make
under any provision of this Agreement (including legal costs and reasonable
attorneys' fees). The remainder of such rents, issues, profits, fees,
revenues and other income shall be applied to the payment of the Secured
Obligations in such order of priority as the Secured Party shall determine
and, unless otherwise provided by law or by a court of competent
jurisdiction, any surplus shall be returned to the Company or to any person
or party lawfully entitled thereto (including, if applicable, any
subordinated creditors of the Company).
(b) After the occurrence and during the continuance of an
Event of Default, the Agent may seek to secure the appointment of a
receiver of the Collateral or any part of thereof (to the extent and in the
manner provided by applicable law).
12. Waivers, etc. The Company hereby waives presentment,
demand, notice, protest and, except as is otherwise provided herein, all
other demands and notices in connection with this Agreement or the
enforcement of the Secured Party's rights hereunder or in connection with
any Secured Obligations or any Collateral; consents to and waives notice of
the granting of renewals, extensions of time for payment or other
indulgences to the Company or to any account debtor in respect of any
Receivable, or substitution, release or surrender of any Collateral, the
addition or release of persons primarily or secondarily liable on any
Secured Obligation or on any Account Receivable or other Collateral, the
acceptance of partial payments on any Secured Obligation or on any
Receivable or other Collateral and/or the settlement or compromise thereof.
The Company also hereby waives, to the extent permitted under applicable
law, any rights and/or defenses the Company may have under any anti-
deficiency laws or other laws limiting, qualifying or discharging the
Secured Obligations and/or the Secured Party's remedies against the
Company, any rights, defenses and other benefits the Company may have by
reason of any election made by the Secured Party under the Massachusetts
UCC or any other applicable state's UCC or protection afforded to the
Company pursuant to the antideficiency laws of any state purporting to
limit the amount of any deficiency judgment. No delay or omission on the
part of the Secured Party in exercising any right hereunder shall operate
as a waiver of such right or of any other right hereunder. Any waiver of
any such right on any one occasion shall not be construed as a bar to or
waiver of any such right on any such future occasion. The Company further
waives, to the extent permitted under applicable law, any right it may have
under the constitution of The Commonwealth of Massachusetts (or under the
constitution of any other state in which any of the Collateral may be
located), or under the Constitution of the United States of America, to
notice (other than any requirement of notice provided herein) or to a
judicial hearing prior to the exercise of any right or remedy provided by
this Agreement to the Secured Party and waives its rights, if any, to set
aside or invalidate any sale duly consummated in accordance with the
foregoing provisions hereof on the grounds (if such be the case) that the
sale was consummated without a prior judicial hearing. The Company's
waivers under this section have been made voluntarily, intelligently and
knowingly and after the Company has been apprised and counseled by its
attorneys as to the nature thereof and its possible alternative rights.
The Secured Party shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or
other assurances of payment of, the Secured Obligations or any of them or
to resort to such collateral security or other assurances of payment in any
particular order, and all of its rights hereunder and in respect of such
collateral security and other assurances of payment shall be cumulative and
in addition to all other rights, however existing or arising. To the
extent that it lawfully may, the Company hereby agrees that it will not
invoke any law relating to the marshaling of collateral which might cause
delay in or impede the enforcement of the Secured Party's rights under this
Agreement or under any other instrument creating or evidencing any of the
Secured Obligations or under which any of the Secured Obligations is
outstanding or by which any of the Secured Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully
may, the Company hereby irrevocably waives the benefits of all such laws.
13. Termination; Assignment, etc. Subject to 14, this
Agreement and the security interest in the Collateral created hereby shall
automatically terminate when all of the Secured Obligations have been
indefeasibly paid in full in cash (provided that the Secured Party and the
Lenders are no longer obligated to make Loans under the Credit Agreement).
The Secured Party agrees to (i) waive its security interest in any
collateral sold, transferred or disposed of if such sale, transfer or
disposition is permitted under the Credit Agreement, provided that the
proceeds of any such sale must be disbursed to the Lenders to the extent
required by the Credit Agreement, and (ii) execute any filings required in
connection therewith. No waiver by the Secured Party of any default shall
be effective unless in writing nor operate as a waiver of any other default
or of the same default on a future occasion. In the event of a sale or
assignment by the Secured Party of all or any of the Secured Obligations
held by it, the Secured Party may assign or transfer its rights and
interests under this Agreement in whole or in part to the purchaser or
purchasers of such Secured Obligations as and to the extent provided in the
Credit Agreement, whereupon such purchaser or purchasers shall become
vested with all of the powers and rights of the Secured Party hereunder,
and the Secured Party shall thereafter be forever released and fully
discharged from any liability or responsibility hereunder arising from and
after the effective time of such assignment or transfer with respect to the
rights and interests so assigned.
14. Reinstatement. Notwithstanding the provisions of 13, this
Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any amount received by the Secured Party in respect of
the Collateral is rescinded or must otherwise be restored or returned by
the Secured Party upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of the Company or any other Person from time to time
liable in respect of the Secured Obligations, or upon the appointment of
any intervenor or conservator of, or trustee or similar official for, the
Company or any such other Person or any substantial part of its or their
properties, or otherwise, all as though such payments had not been made.
15. Governmental Approvals, etc. Upon the occurrence and
during the continuance of an Event of Default and the exercise by the
Secured Party of (or decision by the Secured Party to exercise) any power,
right, privilege or remedy pursuant to this Agreement which requires any
consent, approval, registration, qualification or authorization of any
governmental authority or instrumentality, the Company will, to the extent
it may lawfully do so, execute and deliver, or cause the execution and
delivery of, all applications, certificates, instruments and other
documents and papers that may be required for such governmental consent,
approval, registration, qualification or authorization. In the event the
Company fails to take any such action, the Company hereby irrevocably
authorizes and appoints the Secured Party to execute and deliver, to the
extent it may lawfully do so, such documents in its stead, with full power
of substitution, as the Company's attorney-in-fact.
16. Notices. Except as otherwise provided herein, notice to
the Company or to the Secured Party shall be deemed to have been
sufficiently given or served for all purposes hereof if given to the
parties and in the manner specified in the Credit Agreement.
17. Miscellaneous. This Agreement shall inure to the benefit
of and be binding upon the Secured Party and the Company and their
respective successors and assigns permitted under the Credit Agreement. In
case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. The
section headings in this Agreement are for convenience of reference only
and shall not be considered in construing this Agreement. This Agreement
may be executed in any number of counterparts and by the different parties
hereto on separate counterparts, each of which shall be an original, but
all of which together shall constitute one instrument. No amendment or
waiver of any provision of this Agreement, and no consent to any departure
by the Company here from, shall in any event be effective unless the same
shall be in writing and signed by the Secured Party.
18. Governing Law; Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by the internal laws of The Commonwealth of
Massachusetts (without reference to conflicts of law principles). The
Company and the Agent, to the extent that they may lawfully do so, hereby
consent to service of process, and to be sued, in The Commonwealth of
Massachusetts and consent to the jurisdiction of the courts of The
Commonwealth of Massachusetts and the United States District Court for the
District of Massachusetts, as well as to the jurisdiction of all courts to
which an appeal may be taken from such courts, for the purpose of any suit,
action or other proceeding arising out of this Agreement or any of its
obligations hereunder or with respect to the transactions contemplated
hereby, and expressly waives any and all objections it may have as to venue
in any such courts. The Company and the Agent further agree that a summons
and complaint commencing an action or proceeding in any of such courts
shall be properly served and shall confer personal jurisdiction if served
personally or by certified mail to it at their respective addresses set
forth in the Credit Agreement or as otherwise provided under the laws of
The Commonwealth of Massachusetts. Each of the Company and the Agent
irrevocably waives all right to a trial by jury in any suit, action or
other proceeding instituted by or against the Company in respect of its
obligations hereunder or the transactions contemplated hereby.
19. Indemnification. The Company shall indemnify, defend and
hold the Secured Party and the Lenders harmless of and from any claim, loss
or liability brought or threatened against the Secured Party by the
Company, any guarantor or endorser of the Secured Obligations, or any other
Person (as well as from reasonable attorneys' fees and expenses in
connection therewith) growing out of or resulting from this Agreement and
any other Loan Document except for claims, loses or liabilities related to
such person's gross negligence or willful misconduct. The Company agrees
that upon written notice by the Secured Party of the assertion of such a
claim, loss or liability, the Company shall assume and keep current all
costs and expenses incurred by the Secured Party in connection with the
defense thereof.
20. Specific Performance. The Company stipulates that the
Secured Party's remedies at law, in the event of any demand by the Secured
Party (following the expiration of 30 days after written notice to the
Company) upon the occurrence of and during the continuance of any Event of
Default by the Company in the performance of or compliance with any of the
terms and provisions of this Agreement on its part to be observed or
performed, are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any
agreement or provision contained herein or by an injunction against a
violation of any of the terms of provisions hereof or otherwise.
IN WITNESS WHEREOF, the parties have executed this Security Agreement
as a sealed instrument as of the date first above written.
DYNAMICS RESEARCH CORPORATION
By: /s/ Albert Rand
Name: Albert Rand
Title: President
Duly Authorized
per pro BROWN BROTHERS HARRIMAN & CO.,
for itself and as Agent for the Lenders
By: /s/ Timothy T. Telman
Name: Timothy T. Telman
Title: Deputy Manager
Duly Authorized
MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT (the "Mortgage"), dated the 30th
day of September, 1999, between Dynamics Research Corporation (the
"Mortgagor"), a Massachusetts corporation, having a usual place of business
at 60 Frontage Road, Andover, MA 01810, and Brown Brothers Harriman & Co.,
for itself and as agent for the ratable account of each of the Lenders (as
defined below) (the "Mortgagee"), a New York limited partnership, having an
office at 40 Water Street, Boston, MA 02109.
RECITAL
The Mortgagor is the owner of the premises described in Schedule A
hereto. The Mortgagor has executed and delivered to the Mortgagee a
Revolving Credit Note (the "Note") and a Second Amended and Restated
Revolving Credit Agreement by and between the Mortgagor and the Mortgagee,
BankBoston, N.A., the Chase Manhattan Bank, State Street Bank and Trust
Company, and Citizens Bank (collectively, the "Lenders") (the "Credit
Agreement"), each dated as of the date hereof.
CERTAIN DEFINITIONS
The Mortgagor and the Mortgagee agree that, unless the context
otherwise specifies or requires, the following terms shall have the
meanings herein specified, such definitions to be applicable equally to the
singular and the plural forms of such terms.
"Chattels" means all fixtures, fittings, appliances, apparatus,
equipment, machinery, and all building material, supplies and equipment now
or hereafter delivered to the Premises, and all other articles of tangible
personal property and replacements thereof now or at any time hereafter
affixed to, attached to, placed upon, or used in any way in connection with
the complete and comfortable use, enjoyment, occupancy or operation of the
Improvements on the Premises except those owned by lessees.
"Event of Default" means the events and circumstances described as
such in Section 2.1 hereof.
"General Intangibles" means any personal property other than goods,
accounts, chattel paper, documents, instruments and money including,
without limitation, contracts, books and records, plans and specifications,
licenses and permits, trade names, partnership interests and trust
interests.
"Improvements" means the structures or buildings, and replacements
thereof, erected or to be erected upon the Premises by the Mortgagor,
including all plant, equipment, apparatus, machinery and fixtures of every
kind and nature whatsoever forming part of said structures or buildings or
of any structures or buildings now or hereafter standing on the Premises or
on any part thereof.
"Loan" means the revolving credit arrangement evidenced by the Loan
Documents.
"Loan Documents" means the Note, the Credit Agreement, and any and
all other documents, instruments, and certificates executed in connection
with the same.
"Premises" means the premises described in Schedule A hereto
including all of the easements, rights, privileges and appurtenances
thereunto belonging or in anyway appertaining, and all of the estate,
right, title, interest, claim or demand whatsoever of the Mortgagor therein
or thereto either in law or in equity, in possession or expectancy, now or
hereafter acquired.
All terms of this Mortgage which are not defined above have the
meaning set forth in this Mortgage.
GRANTING CLAUSE
NOW, THEREFORE, the Mortgagor, in consideration of the premises and
in order to secure the payment of both the principal of and the interest
and any other sums payable on, the Note and the Credit Agreement and this
Mortgage and the performance and observance of all the provisions hereof
and of the Credit Agreement and the Note, hereby gives, grants, bargains,
sells, warrants, aliens, remises, releases, conveys, assigns, transfers,
mortgages, hypothecates, deposits, pledges, sets over and confirms unto the
Mortgagee, with MORTGAGE COVENANTS, all its estate, right, title and
interest in, to and under any and all of the following described property
(the "Mortgaged Property") whether now owned or held or hereafter acquired:
(i) the Premises;
(ii) the Improvements;
(iii) the Chattels;
(iv) the General Intangibles;
(v) all accounts, contracts, contract rights, notes, bills,
drafts, acceptances, choses in action, and all other debts, obligations and
liabilities, in whatever form, owing to or for the benefit of Mortgagor,
including without limiting the generality of the foregoing, all purchase
and sale agreements of all or portions of the Premises and all plans,
drawings and specifications, surveys, construction contracts, material
orders and invoices, and all other items, papers and documents pertaining
to the alteration, construction and completion of the Improvements, and all
sales and leasing reports, and marketing programs and arrangements in
respect to the same;
(vi) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or liquidated claims,
including, without limitation, proceeds of insurance and condemnation
awards; and
(vii) all leases of the Premises now or hereafter entered
into and all right, title and interest of the Mortgagor thereunder,
including, without limitation, cash or securities deposited thereunder to
secure performance by the lessees of their obligations thereunder, whether
such cash or securities are to be held until the expiration of the terms of
such leases or applied to one or more of the installments of rent coming
due immediately prior to the expiration of such terms, including, further,
the right upon the happening of an Event of Default, to receive and collect
the rents thereunder.
TO HAVE AND TO HOLD unto the Mortgagee, its successors and assigns
forever.
ARTICLE I
PARTICULAR COVENANTS OF THE MORTGAGOR
The Mortgagor covenants and agrees as follows:
SECTION 1.1. Title. The Mortgagor warrants that it has a good and
marketable title to an indefeasible fee estate in the Premises subject to
no lien, charge or encumbrance except such as are permitted by the Credit
Agreement; that it will own the Chattels free and clear of liens and claims
except for those permitted by the Credit Agreement; and that this Mortgage
is and will remain a valid and enforceable lien on the Mortgaged Property
subject only to the exceptions referred to above. The Mortgagor has full
power and lawful authority to mortgage the Mortgaged Property in the manner
and form herein done or intended hereafter to be done. The Mortgagor will
preserve such title, and will forever warrant and defend the same to the
Mortgagee and will forever warrant and defend the validity and priority of
the lien hereof against the claims of all persons and parties whomsoever.
SECTION 1.2. Further Assurances. The Mortgagor will, at the cost of
the Mortgagor, and without expense to the Mortgagee, do, execute,
acknowledge and deliver all and every such further acts, deeds,
conveyances, mortgages, assignments, notices of assignments, transfers and
assurances as, the Mortgagee shall from time to time require, for the
better assuring, conveying, assigning, transferring and confirming unto the
Mortgagee the property and rights hereby conveyed or assigned or intended
now or hereafter so to be, or which the Mortgagor may be or may hereafter
become bound to convey or assign to the Mortgagee, or for carrying out the
intention or facilitating the performance of the terms of this Mortgage, or
for filing, registering or recording this Mortgage and, on demand, will
execute and deliver, and hereby authorizes the Mortgagee to execute in the
name of the Mortgagor to the extent it may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments,
to evidence more effectively the lien hereof upon the Chattels.
SECTION 1.3. Recording.
1.3.1 The Mortgagor forthwith upon the execution and
delivery of this Mortgage and thereafter from time to time, will cause this
Mortgage, and any security instrument creating a lien or evidencing the
lien hereof upon the Chattels and each instrument of further assurance to
be filed, registered or recorded in such manner and in such places as may
be required by any present or future law in order to publish notice of and
fully to protect the lien hereof upon, and the interest of the Mortgagee
in, the Mortgaged Property.
1.3.2 The Mortgagor will pay all filing, registration
or recording fees, and all expenses incident to the preparation, execution
and acknowledgment of this Mortgage, any Mortgage supplemental hereto, any
security instrument with respect to the Chattels, and any instrument of
further assurance, and all federal, state, county and municipal stamp taxes
and other taxes, duties, imposts, assessments and charges arising out of or
in connection with the execution and delivery of the Note, this Mortgage,
any mortgage supplemental hereto, any security instrument with respect to
the Chattels or any instrument of further assurance.
SECTION 1.4. Payment. The Mortgagor will punctually pay the
principal and interest and all other sums to become due in respect of the
Note and the Credit Agreement at the time and place and in the manner
specified by the terms thereof, according to the true intent and meaning
thereof, all in any coin or currency of the United States of America which
at the time of such payment shall be legal tender for the payment of public
and private debts.
SECTION 1.5. Compliance with Laws. The Mortgagor will, so long as
it is owner of the Mortgaged Property, do all things necessary to preserve
and keep in full force and effect its existence, franchises, rights and
privileges as a business or stock corporation under the laws of the state
of its incorporation and will comply with all regulations, rules,
ordinances, statutes, orders and decrees of any governmental authority or
court applicable to the Mortgager or to the Mortgaged Property or any part
thereof, subject to the right of the Mortgagor to contest in good faith the
applicability or validity of the same.
SECTION 1.6. Additions to Mortgaged Property. All right, title and
interest of the Mortgagor in and to all extensions, improvements,
betterments, renewals, substitutes and replacements of, and all additions
and appurtenances to, the Mortgaged Property, hereafter acquired by, or
released to, the Mortgagor or constructed, assembled or placed by the
Mortgagor on the Premises, and all conversions of the security constituted
thereby, immediately upon such acquisition, release, construction,
assembling, placement or conversion, as the case may be, and in each such
case, without any further mortgage, conveyance, assignment or other act by
the Mortgagor, shall become subject to the lien of this Mortgage as fully
and completely, and with the same effect, as though now owned by the
Mortgagor and specifically described in the granting clause hereof, but at
any and all times the Mortgagor will execute and deliver to the Mortgagee
any and all such further assurances, mortgages, conveyances or assignments
thereof as the Mortgagee may reasonably require for the purpose of
expressly and specifically subjecting the same to the lien of this
Mortgage.
SECTION 1.7. Payment of Taxes and Liens.
1.7.1 The Mortgagor, from time to time when the same
shall become due and in any event prior to the date interest or penalties
commence to accrue for non-payment, will pay and discharge all taxes of
every kind and nature (including real and personal property taxes and
income, franchise, withholding, profits and gross receipts taxes), all
general and special assessments, levies, permits, inspection and license
fees, all water and sewer rents and charges, and all other public charges
whether of a like or different nature, imposed upon or assessed against it
or the Mortgaged Property or any part thereof or upon the revenues, rents,
issues, income and profits of the Mortgaged Property or arising in respect
of the occupancy, use or possession thereof. The Mortgagor will deliver to
the Mortgagee receipts evidencing the payment of all such taxes,
assessments, levies, fees, rents and other public charges imposed upon or
assessed against it or the Mortgaged Property or the revenues, rents,
issues, income or profits thereof.
1.7.2 The Mortgagor will pay, from time to time when
the same shall become due, all lawful claims and demands of mechanics,
materialmen, laborers, and others which, if unpaid, might result in, or
permit the creation of, a lien on the Mortgaged Property or any part
thereof, or on the revenues, rents, issues, income and profits arising
therefrom and in general will do or cause to be done everything necessary
so that the lien hereof shall be fully preserved, at the cost of the
Mortgagor, without expense to the Mortgagee.
1.7.3 If this Mortgage is now or at any time becomes
subject or subordinate to any other mortgage or encumbrance, the Mortgagor
will pay, when due, all sums due thereunder, and the Mortgagor shall not,
without the consent of the Mortgagee, agree to the modification, amendment
or extension of the terms or conditions of such prior mortgage.
1.7.4 Nothing in this Section 1.7 shall require the
payment or discharge of any obligation imposed upon the Mortgagor by this
Section so long as (i) the Mortgagor shall in good faith and at its own
expense contest the same or the validity thereof by appropriate legal
proceeding which shall operate to prevent the collection thereof or other
realization thereon and the sale or forfeiture of the Premises or any part
thereof to satisfy the same, (ii) the Mortgagor shall immediately notify
the Mortgagee of such contest and provide written progress reports of
significant developments and (iii) the Mortgagor shall establish such
reserve or other appropriate provision as shall be required by generally
accepted accounting principles; provided that during such contest the
Mortgagor shall, at the option of the Mortgagee, provide such additional
security as shall be satisfactory to the Mortgagee, assuring the discharge
of the Mortgagor's obligation hereunder and of any additional charge,
penalty or expense arising from or incurred as a result of such contest;
and provided further, that if at any time payment of any obligation imposed
upon the Mortgagor by subsection 1.7.1 hereof shall become necessary to
prevent the delivery of a tax deed conveying the Mortgaged Property or any
portion thereof because of non-payment, then Mortgagor shall pay the same
in sufficient time to prevent the delivery of such tax deed.
SECTION 1.8. Payment of Mortgagee's Taxes. If at any time before
the debt hereby secured is fully paid, any law be enacted, whereby there
shall be deducted from the value of said real estate, for the purpose of
taxation, any lien thereon and taxing said value to Mortgagee, or revising
or changing in any way the laws now in force for the taxation of mortgages
or bonds, or the debts secured thereby for state or local purposes, or the
manner of collection of such taxes, so as to increase the tax, other than
by a tax on Mortgagee's income, upon Mortgagee or affect adversely the
yield to Mortgagee from this Mortgage, then this Mortgage and the Note
hereby secured shall, at the option of said Mortgagee, become immediately
due and payable. If any such law, should be enacted and, to the extent
permitted by such law, Mortgagor shall have the opportunity of paying to
the Mortgagee the amount of any such taxes or any such sum which adversely
affects the yield to Mortgagee from this Mortgage, then, if all such sums
are lawfully paid to Mortgagee, Mortgagee shall not have the right to
accelerate this Mortgage as stated aforesaid in this Section.
SECTION 1.9. Insurance.
1.9.1 The Mortgagor will keep the Improvements and
Chattels insured against loss by fire, casualty and such other hazards as
may be specified by the Mortgagee for the benefit of the Mortgagee. Such
insurance shall be written in forms, amounts, and by companies, reasonably
satisfactory to the Mortgagee, and after the occurrence and during the
occurrence of an Event of Default, losses thereunder shall be payable to
the Mortgagee pursuant to a standard mortgagee endorsement. The policy or
policies of such insurance shall be delivered to the Mortgagee. The
Mortgagor shall give the Mortgagee prompt notice of any loss for which
coverage may be claimed under the terms of any such policy or policies,
and, after the occurrence and during the occurrence of an Event of Default,
the Mortgagee shall have the right to join the Mortgagor in adjusting any
loss in excess of $50,000. After the occurrence and during the occurrence
of an Event of Default, any moneys received as payment for any loss under
any such insurance shall be paid over to the Mortgagee to be applied at the
option of the Mortgagee either to the prepayment of the Note, without
premium, or to the reimbursement of the Mortgagor for expenses incurred by
it in the restoration of the Improvements.
1.9.2 The Mortgagor shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required to be maintained under this Section 1.9, unless the Mortgagee is
included thereon as a named insured with loss payable to the Mortgagee
under a standard mortgagee endorsement. The Mortgagor shall immediately
notify the Mortgagee whenever any such separate insurance is taken out,
specifying the insurer thereunder and full particulars as to the policies
evidencing the same.
SECTION 1.10. Advances to Satisfy Mortgagor's Obligations. If the
Mortgagor shall fail to perform any of the covenants contained in Section
1.1, 1.3, 1.7, 1.8, 1.9, 1.12 or 1.18, and such failure continues for five
(5) days after receipt of written notice thereof by Mortgagor, the
Mortgagee may make advances to perform the same in its behalf, and all sums
so advanced shall be a lien upon the Mortgaged Property and shall be
secured prior to the Note (provided, however, that in the event of an
emergency, or in the event that Mortgagee's interest in the Mortgaged
Property may be adversely affected by such failure, no notice shall be
required). The Mortgagor will repay on demand all sums so advanced on its
behalf with interest at the rate specified in the Credit Agreement. The
provisions of this Section 1.10 shall not prevent any default in the
observance of any covenant contained herein from constituting an Event of
Default.
SECTION 1.11. Compliance with Credit Agreement. Mortgagor shall
perform, observe and comply with, or cause to be performed, observed or
complied with, in a complete and timely manner (subject to all applicable
grace periods), all provisions hereof, of the Credit Agreement and the Note.
SECTION 1.12. Waste, Repairs. The Mortgagor will not commit any
waste on the Premises or make any change in the use of the Premises which
will in any way create any risk of fire or other hazard which is uninsured
in accordance with the standards of Section 1.9 of this Mortgage. The
Mortgagor will, at all times, maintain the Improvements in good operating
order and condition and will promptly make from time to time, all repairs,
renewals, replacements, additions and improvements in connection therewith
which are needful or desirable to such end. The Improvements shall not be
removed, demolished or substantially altered, nor shall any Chattels be
removed without the prior written consent of the Mortgagee, except where
appropriate replacements free of superior title, liens and claims are
immediately made of value at least equal to the value of the Chattels
removed.
SECTION 1.13. Condemnation. The Mortgagor, immediately upon
obtaining knowledge of the institution of any proceedings for the
condemnation of the Premises or any portion thereof, will notify the
Mortgagee of the pendency of such proceedings. The Mortgagee may
participate in any such proceedings and the Mortgagor from time to time
will deliver to the Mortgagee all instruments requested by it to permit
such participation. In the event of such condemnation proceedings, the
award or compensation payable is hereby assigned to and shall be paid to
the Mortgagee, it being understood that the settlement of any award shall
require the approval of both the Mortgagor and the Mortgagee. The
Mortgagee shall be under no obligation to question the amount of any such
award or compensation and may accept the same in the amount in which the
same shall be paid. In any such condemnation proceedings the Mortgagee may
be represented by counsel selected by the Mortgagee. The proceeds of any
award or compensation so received shall, at the option of the Mortgagee,
either be applied, without premium, to the prepayment of the Note in
accordance with its terms and at the rate of interest provided therein
regardless of interest payable on the award by the condemning authority, or
be paid over to the Mortgagor for restoration of the Improvements.
SECTION 1.14. Leases.
1.14.1 The Mortgagor will not (i) execute an assignment of the
rents or any part thereof from the Premises, or (ii) accept prepayments of
any installments of rents to become due and under any such lease, except
prepayments in the nature of security for the performance of the lessees
thereunder.
1.14.2 The Mortgagor will not execute any lease of all or a
substantial portion of the Premises except for actual occupancy by the
lessee thereunder, and will at all times promptly and faithfully perform,
or cause to be performed, all of the covenants, conditions and agreements
contained in all leases of the Premises now or hereafter existing, on the
part of the lessor thereunder to be kept and performed. If any of such
leases provide for the giving by the lessee of certificates with respect to
the status of such leases, the Mortgagor shall exercise its right to
request such certificates within five (5) days of any demand therefor by
the Mortgagee. All new leases shall be approved by the Mortgagee.
1.14.3 The Mortgagor shall furnish to the Mortgagee, within
thirty (30) days after a request by the Mortgagee to do so, a written
statement containing the names of all lessees of the Premises, the terms of
their respective leases, the spaces occupied and the rentals paid.
SECTION 1.15. Rent in Advance. Each lease of the Premises or of any
part thereof, shall provide that, in the event of the enforcement by the
Mortgagee of the remedies provided for by law, by this Mortgage or by any
other document given to secure the Note, any person succeeding to the
interest of the Mortgagee as a result of such enforcement shall not be
bound by any payment of rent or additional rent for more than one month in
advance.
SECTION 1.16. Alienation. In the event ownership of the
Mortgaged Property, or any part thereof, becomes vested in a person or
persons other than Mortgagor, whether with or without the prior written
approval of Mortgagee, the Mortgagee may, without notice to the Mortgagor,
waive a default, if such occurs thereby and deal with such successor or
successors in interest with reference to this Mortgage, and the Note in the
same manner as with Mortgagor, without in any way releasing, discharging or
otherwise affecting the liability of Mortgagor hereunder, or for the
Mortgage indebtedness hereby secured. No sale of the Mortgaged Property,
no forbearance on the part of Mortgagee, no extension of the time for the
payment of the Mortgage indebtedness or any change in the terms thereof
consented to by Mortgagee shall in any way whatsoever operate to release,
discharge, modify, change or affect the original liability of Mortgagor
herein, either in whole or in part, nor shall the full force and effect of
this lien be altered thereby. Any deed conveying the Mortgaged Property,
or any part thereof, shall provide that the grantee thereunder assume all
of the grantor's obligations under this Mortgage, the Note and all other
instruments or agreements evidencing or securing the repayment of the
Mortgage indebtedness. In the event such deed shall not contain such
assumption, Mortgagee shall have all rights reserved to it hereunder in the
Event of a Default or if Mortgagee shall not elect to exercise such rights
and remedies, the grantee under such deed shall nevertheless, to the extent
allowed by law, be deemed to have assumed such obligations by acquiring the
Mortgaged Property or such portion thereof subject to this Mortgage.
SECTION 1.17. No Further Mortgages. Without the prior written
consent of the Mortgagee, Mortgagor will not create or suffer to be created
any liens, mortgages, security interests or other encumbrances of any kind
whatsoever against the Premises described herein, except for (a) this
Mortgage, and (b) the liens and encumbrances permitted under the Credit
Agreement.
SECTION 1.18 Hazardous Materials.
1.18.1 Definitions.
(a) "Hazardous Materials" shall mean 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.
(b) "Environmental Laws" shall mean 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
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 or the threat of the same.
1.18.2 Warranties and Representations. The Mortgagor
represents and warrants to the Mortgagee that, except as set forth in
Schedule 5.15 to the Credit Agreement, Mortgagor nor any Subsidiary (as
defined in the Credit Agreement) nor, to the Mortgagor's knowledge, any
other person has ever caused or permitted any Hazardous Material to be
disposed of on or under the Mortgaged Property, and the Mortgaged Property
has never been used (either by any Mortgagor or any Subsidiary or, to each
Mortgagor'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. Further, the Mortgagor represents
and warrants to the Mortgagee that the Mortgagor and its Subsidiaries have
been issued and are in compliance with all material permits, certificates,
licenses, approvals and other authorizations relating to environmental
matters at the Premises and necessary or desirable for their respective
businesses conducted at the Premises, and have filed or will timely file
all notifications and reports relating to chemical substances, air
emissions, underground storage tanks, effluent discharges and Hazardous
Material waste storage, treatment and disposal required in connection with
the operation of their respective businesses at the Premises, the failure
to have or comply with which would, individually or in the aggregate, have
a material adverse effect on the Mortgaged Property. Except as set forth
in Schedule 5.15 to the Credit Agreement, all Hazardous Materials used or
generated by any Mortgagor or any Subsidiary or any business merged into or
otherwise acquired by any Mortgagor or any Subsidiary at the Premises 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 the Mortgaged Property. Except as set forth in Schedule
5.15 to the Credit Agreement, neither any Mortgagor nor any Subsidiary has
any liabilities with respect to Hazardous Materials at the Premises and no
facts or circumstances exist which could give rise to liabilities with
respect to Hazardous Materials at the Premises, which in either case,
individually or in the aggregate, could have any reasonable likelihood of
having a material adverse effect on the Mortgaged Property.
1.18.3 Compliance with Laws. The Mortgagor shall take
all appropriate response actions, including any removal and remedial
action, in the event of a release, emission, discharge or disposal of any
hazardous materials on, upon, under, into or about the Mortgaged Property
so as to (a) remain in compliance with subsection 1.18.2 and (b) keep the
Mortgaged Property free from and uncontaminated by Hazardous Materials and
in compliance with Environmental Laws and other applicable law.
1.18.4 Indemnification of the Mortgagee. The Mortgagor
shall at all times, both before and after repayment of the Loan, at its
sole cost and expense, indemnify, exonerate, hold and save harmless the
Mortgagee and all those claiming by, through or under the Mortgagee
(collectively, the "Indemnified Party") against and from all damages,
losses, liabilities, obligations, penalties, claims, litigation, demands,
defenses, judgments, suits, proceedings, costs, disbursements or expenses
of any kind whatsoever, including, without limitation, reasonable
attorneys' fees and expenses and experts' fees and expenses, which may at
any time (including, without limitation, before or after discharge or
foreclosure of this Mortgage) be imposed upon, incurred by or asserted or
awarded against the Indemnified Party and arising from or out of (a) any
Hazardous Materials liability or other liability for damage to person or
property arising out of any Hazardous Materials released, prior to the
foreclosure of this Mortgage, on, upon, under, into or about the Mortgaged
Property (including without limitation with respect to any condition or
circumstance which existed on the Mortgaged Property prior to or as of the
time any of the Mortgagor first acquired, leased or occupied the same) or
any violation of any Environmental Law by the Mortgagor or any of its
Subsidiaries, or any contractor, sub-contractor, tenant, occupant or
invitee thereof; or (b) any act, omission, negligence or conduct of any of
the Mortgagor or any Subsidiary of the Mortgagor or any contractor,
sub-contractor, tenant, occupant or invitee thereof relating to the
Mortgaged Property (a "Claim"). Notwithstanding any limitation which
otherwise might be imposed by any applicable statute of limitations, any
cause of action which an Indemnified Party may have against the Mortgagor
under this subsection may be brought against the Mortgagor at any time
within two (2) years following assertion of the claim against the
Indemnified Party for which indemnification or exoneration is sought (it
being understood that the foregoing shall not require any Indemnified Party
to bring any claim or action within such two (2) year period if a longer
statute applies). An Indemnified Party shall provide prompt written notice
of any Claim to Mortgagor.
1.18.5 Mortgagee's Right to Make Site Assessments; Take
Action. The Mortgagee is hereby specifically authorized in its reasonable
discretion to cause one or more environmental site assessments of the
Premises to be undertaken at the sole cost and expense of the Mortgagor.
Environmental site assessments may include a detailed visual inspection of
the Premises, including without limitation, all storage areas, storage
tanks, drains, drywells and leaching areas, as well as the making of ground
borings and the taking of soil samples, surface water samples and
groundwater samples, and such other investigations or analysis as is
necessary or appropriate for a complete assessment of the compliance of the
Premises and the use and operation thereof with all Environmental Laws.
Without limiting the foregoing, in the event that there shall occur a
release of Hazardous Materials on, upon, into or under the Premises, or
such a release appears imminent or probable, the Mortgagee shall have the
right (but not the obligation), upon prior notice to the Mortgagor (or
without notice in the case of emergency), to cause the release to be
contained and/or removed on behalf of the Mortgagor or to attempt to
prevent or contain such a release. The Mortgagor agrees to cooperate with
the Mortgagee and to render such assistance to the Mortgagee as may be
requested to facilitate such remedial actions (including without
limitation, such containment or removal). The Mortgagor shall be liable to
the Mortgagee for all costs and expenses, including all attorneys' fees,
incurred on account of such remedial action undertaken on the Mortgagor's
behalf and shall reimburse the Mortgagee therefor on demand.
ARTICLE II
EVENTS OF DEFAULT
SECTION 2.1. Events of Default. The occurrence of the following
shall be deemed an Event of Default under this Mortgage:
(a) if an Event of Default (as such term is defined in
the Credit Agreement) shall occur under the Credit Agreement; or
(b) if default shall be made under any junior mortgage
or lien encumbering the Property;
ARTICLE III
REMEDIES
SECTION 3.1. Remedies. If an Event of Default shall happen, the
Mortgagee may, at its option, and following notice to Mortgagor as provided
in the Credit Agreement:
3.1.1 Declare any or all indebtedness secured by this Mortgage
to be due and payable immediately;
3.1.2 Enter onto the Mortgaged Property, in person or by agent
or by court-appointed receiver, and take any and all steps which may be
desirable in the Mortgagee's judgment to complete any unfinished
construction and to manage and operate the Mortgaged Property, and the
Mortgagee may apply any rents, royalties, income or profits collected
against the indebtedness secured by this Mortgage without in any way curing
or waiving any default of the Mortgagor;
3.1.3 Foreclose this Mortgage by any process permitted by
applicable law or bring a court action to enforce its provisions or payment
of any of the indebtedness or obligations secured by this Mortgage;
3.1.4 Cause any or all of the Mortgaged Property to be sold
under the power of sale granted by this Mortgage in any manner permitted by
applicable law;
3.1.5 Exercise any other right or remedy available under law
or in equity.
SECTION 3.2. Foreclosure Sales. For any sale under the power of sale
granted by this Mortgage, Mortgagee must give all notices required by law
and then, upon the expiration of such time as is required by law, the
Mortgagee may sell the Mortgaged Property upon any terms and conditions
permitted by applicable law. The Mortgagee may postpone any sale by public
announcement at the time and place noticed for the sale. If the Mortgaged
Property consists of several lots or parcels, the Mortgagee in its
discretion may designate their order of sale or may elect to sell all of
them as an entirety, whether or not the Mortgagor objects. Any person,
including the Mortgagee and the Mortgagor may purchase at any sale. Upon
any sale, the Mortgagee will execute and deliver to the purchaser or
purchasers a deed or deeds conveying the property sold, but without any
covenant or warranty, express or implied, and the recitals in the deed or
deeds of any facts affecting the regularity or validity of the sale will be
conclusive against all persons.
SECTION 3.3. Proceeds of Sales. The proceeds of any sale under this
Mortgage will be applied in the following manner:
FIRST: Payment of the costs and expenses of the sale, including
but not limited to Mortgagee's fees, legal fees and disbursements, title
charges and transfer taxes, and payment of all expenses, liabilities and
advances of the Mortgagee, together with interest at the rate specified in
the Credit Agreement, on all advances made by the Mortgagee.
SECOND: Payment of all sums expended by the Mortgagee under
the terms of this Mortgage and not yet repaid, together with interest on
such sums at the rate specified in the Credit Agreement.
THIRD: Payment of the indebtedness and obligations of the
Mortgagor secured by this Mortgage, including interest on the unpaid
principal balance at the rate specified in the Note, in any order that the
Mortgagee chooses.
FOURTH: The remainder, if any, to the person or persons
legally entitled to it.
SECTION 3.4. Method of Sales. The Mortgagor waives all rights to
direct the order in which any of the Mortgaged Property will be sold in the
event of any sale under this Mortgage, and also any right to have any of
the Mortgaged Property marshaled upon any sale.
SECTION 3.5. Cumulative Remedies. All remedies contained in this
Mortgage are cumulative, and the Mortgagee also has all other remedies
provided by law or in any other agreement between the Mortgagor and the
Mortgagee. No delay or failure by the Mortgagee to exercise any right or
remedy under this Mortgage will be construed to be a waiver of that right
or remedy or of any default by the Mortgagor. The Mortgagee may exercise
any one or more of its rights and remedies at its option without regard to
the adequacy of its security.
SECTION 3.6. Payment of Expenses. The Mortgagor will pay all of the
Mortgagee's expenses incurred in any efforts to enforce any terms of this
Mortgage, whether or not any lawsuit is filed, including but not limited to
legal fees and disbursements, foreclosure costs and title charges.
SECTION 3.7. Uniform Commercial Code. Upon and after any Event of
Default, the Mortgagee shall have all of the remedies of a Secured Party
under the Uniform Commercial Code of the State of Massachusetts and upon
recording this Mortgage shall constitute a financing statement filed as a
fixture filing under said Uniform Commercial Code.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Severability. In the event any one or more of the
provisions contained in this Mortgage, the Credit Agreement or the Note
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall, at the
option of the Mortgagee, not affect any other provision of this Mortgage,
but this Mortgage shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein or therein.
SECTION 4.2. Notices. All notices hereunder shall be in writing and
shall be deemed to have been sufficiently given or served for all purposes
when presented personally or sent by registered mail to any party hereto at
its address above stated or at such other address of which it shall have
notified the party giving such notice in writing, and, in the case of the
Mortgagee, with a copy by regular mail to Lyman G. Bullard, Jr., Esq.,
Choate, Hall & Stewart, Exchange Place, 53 State Street, Boston, MA 02109
and, in the case of the Mortgagor, with a copy by regular mail to Mary E.
Weber, Esq., Ropes & Gray, One International Place, Boston, MA 02110.
SECTION 4.3. Waiver of Notice. Whenever in this Mortgage the giving
of notice by mail or otherwise is required, the giving of such notice may
be waived in writing by the person or persons entitled to receive such
notice.
SECTION 4.4. Successors. All of the grants, covenants, terms,
provisions and conditions herein shall run with the land and shall apply
to, bind and inure to the benefit of, the successors and assigns of the
Mortgagor and the successors and assigns of the Mortgagee.
SECTION 4.5. Counterparts. This Mortgage may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original; and all such counterparts shall together
constitute but one and the same Mortgage.
SECTION 4.6. Conflicts; Cumulative Rights. Nothing in this Mortgage
shall be construed as obligating the Mortgagee to take any action or incur
any liability with respect to the Mortgaged Property or any business
conducted thereon, and all powers given to the Mortgagee are for its
benefit and shall be exercised in the Mortgagee's discretion, as indicated
herein. All of the Mortgagee's rights hereunder are cumulative and in
addition to, and not in substitution for, the rights of the Mortgagee under
all other Loan Documents. In the event of a conflict between the rights of
the Mortgagee hereunder and the rights of the Mortgagee under any other
Loan Document, the Mortgagee may elect, at its sole discretion, to exercise
any such rights in such order and combinations as it deems appropriate.
Likewise, the Mortgagor's obligations hereunder are cumulative and are in
addition to and not in substitution for the obligations of the Mortgagor
under all other Loan Documents. In the event of a conflict between the
obligations of the Mortgagor hereunder and the obligations of the Mortgagor
under any other Loan Document, the Mortgagor shall perform and adhere to
those obligations most favorable to the Mortgagee and most restrictive upon
the Mortgagor.
SECTION 4.7. Statutory Provisions. All covenants and conditions
contained herein shall be construed as affording to the Mortgagee rights
additional to, and separate from, the rights conferred by the Mortgagor's
covenants made hereby, that this Mortgage is upon the STATUTORY CONDITION,
and for any breach of said STATUTORY CONDITION or of any other covenants
and conditions contained herein, the holder shall have the STATUTORY POWER
OF SALE, and such STATUTORY CONDITION and STATUTORY POWER OF SALE are
incorporated herein by this reference.
IN WITNESS WHEREOF, the said undersigned have caused this instrument
to be signed and sealed as of the date first above written.
Witnessed: /s/ Lori Galloti
Dynamics Research Corporation
By: /s/ Albert Rand
Name: Albert Rand
Title: President
COMMONWEALTH OF MASSACHUSETTS
Esses County, ss. September 30, 1999
Then personally appeared the above-named Albert Rand and
acknowledged the foregoing instrument to be his free act and deed, and the
free act and deed of Dynamics Research Corporation before me,
Philip Fantasia
Notary Public
My Commission Expires: June 1, 2001
[Signature page to Mortgage
and Security Agreement by
Dynamics Research Corporation
in favor of Brown Brothers
Harriman & Co.]
SCHEDULE "A"
LEGAL DESCRIPTION
A certain parcel of land, with the improvements thereon, situated on
Frontage Road in Andover, Essex County, Massachusetts, shown as "Remaining
land 17.06 Acres" on a plan entitled "Plan of Land in Andover,
Massachusetts, Owner H.F.L. Realty Trust", dated March 26, 1981, revised
July 28, 1981, and August 26, 1981, by Port Engineering Assoc., Inc.,
recorded with the Essex North District Registry of Deeds as Plan No. 8734,
bounded and described, according to said plan, as follows:
EASTERLY by Frontage Road, five hundred seventeen and 18/100
(517.18) feet;
SOUTHEASTERLY by land now or formerly of Raytheon Company,
as shown on said plan, two hundred ninety-one and
60/100 (291.60) feet;
SOUTHWESTERLY by Osgood Street, by five lines measuring,
respectively, one hundred thirty and 14/100 (130.14)
feet, one hundred ninety-eight and 83/100 (198.83)
feet, one hundred eighty and 90/100 (180.90) feet, two
hundred and 39/100 (200.39) feet, and eighty-two and
20/100 (82.20) feet;
WESTERLY by Lot A, as shown on said plan, two hundred
twenty-three and 98/100 (223.98) feet;
NORTHERLY by the same, eighty-two and 82/100 (82.82) feet;
WESTERLY again by the same, two hundred sixty and
00/100 (260.00) feet;
NORTHWESTERLY again by the same, two hundred forty-three
and 54/100 (243.54) feet;
SOUTHWESTERLY again by the same, two hundred ninety and
00/100 (290.00) feet;
NORTHERLY by land now or formerly of Endrock Associates,
as shown on said plan, two hundred fifty and 33/100
(250.33) feet;
NORTHEASTERLY by land of Raytheon Company, as shown on
said plan, by three lines measuring, respectively, two
hundred forty-two and 55/100 (242.55) feet, one
hundred eighty-nine and 52/100 (189.52) feet, and
ninety-eight and 76/100 (98.76) feet;
SOUTHEASTERLY again by the same, nine and 51/100 (9.51) feet; and
NORTHEASTERLY again by the same, one hundred fourteen and
02/100 (114.02) feet; containing 17.06 acres of land,
more or less, according to said plan.
