EXHIBIT 10.1
 
EXECUTION
 
AMENDMENT NO. 2 TO CREDIT AGREEMENT
 
THIS AMENDMENT NO. 2 dated as of June 29, 2012 (this “Amendment No. 2”) to that
certain Credit Agreement referred to below is entered into by and among Dynamics
Research Corporation, a Massachusetts corporation (the “Borrower”), the
Guarantors, each Lender party hereto, and Bank of America, N.A., as
administrative agent (in such capacity, the “Administrative Agent”), Swing Line
Lender and an L/C Issuer.
 
STATEMENT OF PURPOSE
 
The Borrower is a party to that certain Credit Agreement, dated as of June 30,
2011, by and among the Borrower, each financial institution party thereto as a
lender (collectively, the “Lenders” and, each individually, a “Lender”) and Bank
of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer
(as amended by that certain Amendment No. 1, dated September 16, 2011, and as
otherwise further amended, restated, supplemented or modified prior to the date
hereof, the “Credit Agreement”).
 
The Borrower now requests that the Credit Agreement be amended in order to grant
certain accommodations to and for the benefit of the Borrower, all as more
particularly described herein.
 
Subject to the terms and conditions of this Amendment No. 2, the Administrative
Agent and the Lenders party hereto have agreed to grant such requests of the
Borrower.
 
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
 
SECTION 1.                      Capitalized Terms.  All capitalized undefined
terms used in this Amendment No. 2 (including, without limitation, in the
Statement of Purpose hereto) shall have the meanings assigned thereto in the
Credit Agreement.  This Amendment No. 2 shall be a “Loan Document” for all
purposes of the Credit Agreement and the other Loan Documents.
 
SECTION 2.                      Amendments.  The parties hereto hereby agree
that as of the Amendment No. 2 Effective Date (as defined below):
 
(a)           Section 1.01 of the Credit Agreement is hereby amended by adding
the following defined terms in appropriate alphabetical order:
 
“ESPP Rescission Offer” means the Borrower’s offer to repurchase from certain of
its employees up to 148,644 shares of the Borrower’s common stock which were
sold to such employees during the period from July 31, 2007 to May 31, 2011
pursuant to the Borrower’s 2000 Employee Stock Purchase Plan, it being
understood and agreed that (a) the total aggregate consideration to be paid by
the Borrower in connection with such offer shall not exceed $1,500,000, and (b)
such offer shall be made only to individuals who purchased shares of the
Borrower’s common stock pursuant to the Borrower’s 2000 Employee Stock Purchase
Plan that are not currently registered under one or more applicable securities
laws.
 
(b)           Section 1.01 of the Credit Agreement is hereby amended by deleting
clause (g) of the definition of “Indebtedness” and replacing it with the
following:
 
 
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(g)           all obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any Equity Interest in such
Person or any other Person or any warrant, right or option to acquire such
Equity Interest, valued, in the case of a redeemable preferred interest, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; provided that any such obligations of the Borrower shall not
constitute “Indebtedness” hereunder if arising solely from (i) the ESPP
Rescission Offer or (ii) any deemed distributions in respect of cashless net
exercises of options or warrants to purchase shares of the Borrower’s common
stock; and
 
(c)           Section 1.01 of the Credit Agreement is hereby amended by deleting
the definition of “Restricted Payment” in its entirety and replacing it with the
following:
 
“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such capital stock or other Equity Interest, or on account of
any return of capital to the Borrower’s stockholders, partners or members (or
the equivalent Person thereof); provided that no distribution made by the
Borrower in connection with the ESPP Rescission Offer shall constitute a
“Restricted Payment” hereunder.
 
(d)           Section 2.05(b)(iv) of the Credit Agreement is hereby amended by
deleting the second proviso thereof in its entirety and replacing it with the
following:
 
provided further that (X) so long as no Default has occurred and is continuing,
no prepayment shall be required from the Net Cash Proceeds of any sale or
issuance of Equity Interests the proceeds of which are used to finance a
Permitted Acquisition and (Y) it is understood and acknowledged that no past,
present or future sale or issuance of Equity Interests solely as part of a
compensation arrangement for employment services in connection with an employee
stock purchase plan of the Borrower shall have required or shall require a
prepayment under this Section 2.05(b)(iv).
 
(e)           Section 7.03 of the Credit Agreement is hereby amended by deleting
the “and” following subsection (j) thereof, replacing the period at the end of
subsection (k) thereof with “; and” and adding the following subsection (l)
thereto:

(l)           Secured Cash Management Agreements to the extent incurred in the
ordinary course of business and not for speculative purposes.

(f)           Section 7.06(d) of the Credit Agreement is hereby amended by
replacing each reference to “2.5 to 1.0” therein with “3.0 to 1.0.”

(g)           Section 7.06 of the Credit Agreement is hereby amended by deleting
the “and” following subsection (c) thereof, replacing the period at the end of
subsection (d) thereof with “; and” and adding the following subsection (e)
thereto:

(e)           the Borrower may make deemed distributions in respect of cashless
net exercises of options or warrants to purchase shares of the Borrower’s common
stock.
 
 
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SECTION 3.                      Conditions Precedent to Effectiveness.
 
(a)           This Amendment No. 2 shall be effective upon the satisfaction of
each of the following conditions (the date of such satisfaction, the “Amendment
No. 2 Effective Date”):
 
(i)           Executed Amendment. The Administrative Agent shall have received
counterparts of this Amendment No. 2 executed by the Borrower, the Guarantors,
the Administrative Agent and the Required Lenders.
 
(ii)           Amendment to Subordinated Note Agreement.  Contemporaneously with
the effectiveness of this Amendment No. 2, the Borrower and the Subordinated
Noteholders shall have entered into an amendment to the Subordinated Note
Agreement (the “Subordinated Debt Amendment”) on terms substantially similar to
those of this Amendment No. 2, in form and substance satisfactory to the
Administrative Agent.
 
(iii)           Other Closing Documents.  The Administrative Agent shall have
received such other instruments, documents and certificates as the
Administrative Agent shall reasonably request in connection with the execution
of this Amendment No. 2.
 
(iv)           Payment of Fees and Expenses.  The Borrower shall have paid all
out-of-pocket expenses incurred by the Administrative Agent (including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent) with respect to this Amendment No. 2.
 
(b)             For purposes of determining compliance with the conditions
specified in this Section 3, each Lender that has signed this Amendment No. 2
shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to a Lender unless the Administrative
Agent shall have received notice from such Lender prior to the proposed
Amendment No. 2 Effective Date specifying its objection thereto.
 
SECTION 4.                      Effect of the Agreement.  Except as expressly
provided herein, the Credit Agreement and the other Loan Documents shall remain
unmodified and in full force and effect.  Except as expressly set forth herein,
this Amendment No. 2 shall not be deemed (a) to be a waiver of, or consent to, a
modification or amendment of, any other term or condition of the Credit
Agreement or any other Loan Document, (b) to prejudice any other right or rights
which the Administrative Agent or the Lenders may now have or may have in the
future under or in connection with the Credit Agreement or the other Loan
Documents or any of the instruments or agreements referred to therein, as the
same may be amended, restated, supplemented or otherwise modified from time to
time, (c) to be a commitment or any other undertaking or expression of any
willingness to engage in any further discussion with the Borrower or any other
Person with respect to any waiver, amendment, modification or any other change
to the Credit Agreement or the Loan Documents or any rights or remedies arising
in favor of the Lenders or the Administrative Agent, or any of them, under or
with respect to any such documents or (d) to be a waiver of, or consent to or a
modification or amendment of, any other term or condition of any other agreement
by and among the Borrower, on the one hand, and the Administrative Agent or any
other Lender, on the other hand.  References in the Credit Agreement to “this
Amendment No. 2” (and indirect references such as “hereunder”, “hereby”,
“herein”, and “hereof”) and in any Loan Document to the Credit Agreement shall
be deemed to be references to the Credit Agreement as modified hereby.
 
SECTION 5.                      Representations and Warranties.  By its
execution hereof, each Loan Party hereby represents and warrants as follows:
 
 
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(a)           such Loan Party has the right, power and authority and has taken
all necessary corporate and other action to authorize the execution, delivery
and performance of this Amendment No. 2 and each other document executed in
connection herewith to which it is a party in accordance with their respective
terms;
 
(b)           this Amendment No. 2 and each other document executed in
connection herewith has been duly executed and delivered by its duly authorized
officers, and each such document constitutes the legal, valid and binding
obligation of such Loan Party, enforceable in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar state or federal debtor relief laws from time to time in
effect which affect the enforcement of creditors’ rights in general and the
availability of equitable remedies;
 
(c)           each representation and warranty contained in the Credit Agreement
and the other Loan Documents is true, correct and complete in all material
respects as of the Amendment No. 2 Effective Date as if fully set forth herein,
except for any representation and warranty made as of an earlier date, which
representation and warranty shall remain true, correct and complete in all
material respects as of such earlier date; provided that any representation or
warranty that is qualified by materiality or by reference to Material Adverse
Effect shall be true, correct and complete in all respects as of the applicable
date; and
 
(d)           no Default has occurred and is continuing as of the Amendment No.
2 Effective Date or would result after giving effect to the transactions
contemplated by this Amendment No. 2.
 
SECTION 6.                      Reaffirmation, Ratification and
Acknowledgment.  Each Loan Party (a) agrees that the transactions contemplated
by this Amendment No. 2 shall not limit or diminish the obligations of such
Person under, or release such Person from any obligations under, the Collateral
Agreement, the Guaranty, the Subordination Agreement and each other Collateral
Document to which it is a party, (b) confirms and reaffirms its obligations
under the Collateral Agreement, the Guaranty, the Subordination Agreement and
each other Collateral Document to which it is a party and (c) agrees that the
Collateral Agreement, the Guaranty, the Subordination Agreement and each other
Collateral Document to which it is a party remain in full force and effect and
are hereby ratified and confirmed.
 
SECTION 7.                      Miscellaneous.
 
(a)           Counterparts.  This Amendment No. 2 may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and shall be binding
upon all parties, their successors and assigns, and all of which taken together
shall constitute one and the same agreement.
 
(b)           Governing Law.  This Amendment No. 2, unless otherwise expressly
set forth herein, shall be governed by, construed and enforced in accordance
with the laws of the State of New York, without reference to the conflicts or
choice of law principles thereof.
 
(c)           Electronic Transmission.  A facsimile, telecopy or other
reproduction of this Amendment No. 2 may be executed by one or more parties
hereto, and an executed copy of this Amendment No. 2 may be delivered by one or
more parties hereto by facsimile or similar instantaneous electronic
transmission device pursuant to which the signature of or on behalf of such
party can be seen, and such execution and delivery shall be considered valid,
binding and effective for all purposes.  At the request of any party hereto, all
parties hereto agree to execute an original of this Amendment No. 2 as well as
any facsimile, telecopy or other reproduction hereof.
 
 
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(d)           Entire Agreement. This Amendment No. 2 is the entire agreement,
and supersedes any prior agreements and contemporaneous oral agreements, of the
parties concerning its subject matter.
 
(e)           Successors and Assigns.  This Amendment No. 2 shall be binding on
and inure to the benefit of the parties and their heirs, beneficiaries,
successors and assigns.
 
[Signature Pages Follow]
 
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be
duly executed by their respective authorized officers as of the day and year
first above written.

 
BORROWER:

 
DYNAMICS RESEARCH CORPORATION,

 
as Borrower

 
 
By:
/s/ Richard A. Covel     Name: Richard A. Covel     Title: VP, Secretary and
General Counsel  

 
 
Amendment No. 2
to
Dynamics Research Corporation Credit Agreement
 
 
 
 

      GUARANTORS:

 
DRC INTERNATIONAL CORPORATION

 

 
By:
/s/ Richard A. Covel
   
Name:
Richard A. Covel
   
Title:
Secretary
 

 

 
H.J. FORD ASSOCIATES, INC.

 

 
By:
/s/ Richard A. Covel
   
Name:
Richard A. Covel
   
Title:
VP and Secretary
 

 

 
KADIX SYSTEMS, LLC

 

 
By:
/s/ Richard A. Covel
   
Name:
Richard A. Covel
   
Title:
VP, Secretary and Asst. Treasurer
 

 
 
HIGH PERFORMANCE TECHNOLOGIES, INC.

 

 
By:
/s/ Richard A. Covel
   
Name:
Richard A. Covel
   
Title:
Secretary
 

 

Amendment No. 2
to
Dynamics Research Corporation Credit Agreement
 
 
 
 

 
BANK OF AMERICA, N.A.,

 
as Administrative Agent

 

 
By:
/s/ Kristine Thennes
   
Name:
Kristine Thennes
   
Title:
Vice President
 

 
 

Amendment No. 2
to
Dynamics Research Corporation Credit Agreement
 
 
 
 

 
BANK OF AMERICA, N.A.,

 
as a Lender, L/C Issuer and Swing Line Lender

 

 
By:
/s/ Christopher P. Busconi
   
Name:
Christopher P. Busconi
   
Title:
Vice President
 

 
 
Amendment No. 2
to
Dynamics Research Corporation Credit Agreement
 
 
 
 

BROWN BROTHERS HARRIMAN & CO.,
as a Lender
 

 
By:
/s/ J. Edward Hall
   
Name:
J. Edward Hall
   
Title:
Managing Director
 

 

Amendment No. 2
to
Dynamics Research Corporation Credit Agreement
 
 
 
 

CITIZENS BANK OF PENNSYLVANIA,
as a Lender
 

 
By:
/s/ Leslie Grizzard
   
Name:
Leslie Grizzard
   
Title:
SVP
 

 

Amendment No. 2
to
Dynamics Research Corporation Credit Agreement
 
 
 
 

SUNTRUST BANK,
as a Lender
 

 
By:
/s/ William W. Palmer
   
Name:
William W. Palmer
   
Title:
S.V.P.
 

 

Amendment No. 2
to
Dynamics Research Corporation Credit Agreement
 
 
 
 

ARES CREDIT STRATEGIES FUND III, L.P., as a Lender

 
By:
Ares CSF III Investment Management LLC, its Manager

 

 
By:
/s/ Scott Lem
   
Name:
Scott Lem
   
Title:
Authorized Signatory
 

 
 
Amendment No. 2
to
Dynamics Research Corporation Credit Agreement