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Amended & Restated Rev. Credit & Term Loan Agt.

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Sectors: Services
Governing Law: Maryland, View Maryland State Laws
Effective Date: August 27, 1999
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AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT


dated as of
August 27, 1999


by and between


GRC INTERNATIONAL, INC.


(the "Borrower")


and


MERCANTILE-SAFE DEPOSIT
AND TRUST COMPANY


(the "Bank")


TABLE OF CONTENTS


Section Page - ------- ----


Credit Facility
---------------


1.1 Revolving Credit Loan; Letters of Credit 2 1.2 Advances and Payments 2 1.3 Election of Fluctuating Rate 3 1.4 General Loan Provisions 4 1.5 Notice and Manner of Borrowing 7 1.6 Method of Payment 7 1.7 Use of Loan Proceeds 7 1.8 Fees 7 1.9 Collateral Security 8


Definitions
-----------


2.1 Definitions 8 2.2 Amendments, etc. Included 14


Representations and Warranties


3.1 Organization and Authority; Conflicting Laws and Agreements 15 3.2 Subsidiaries 15 3.3 Margin Stock 15 3.4 Financial Statements 15 3.5 Financial Condition 15 3.6 Litigation; Tax Returns; Governmental Approvals 15 3.7 Liens 16 3.8 Enforceability 16 3.9 No Defaults 16 3.10 ERISA 16 3.11 Commercial Loan 17 3.12 Hazardous Materials 17 3.13 Assignments under the Federal Assignment of Claims Act 17


Section Page - ------- ----


Covenants
---------


4.1 Payment of Taxes and Other Claims 17 4.2 Maintenance of Properties 17 4.3 Corporate Existence 18 4.4 Maintenance of Insurance 18 4.5 Financial Information, Tax Returns and Reports 18 4.6 Indebtedness 20 4.7 Liens 21 4.8 Disposition of Stock and Indebtedness 21 4.9 Investments, Loans, Advances, Guarantees and Contingent Liabilities 22 4.10 Merger and Sale of Assets 22 4.11 Dealings with Affiliates 23 4.12 Limitations on Certain Contracts 23 4.13 ERISA 23 4.14 Issuance of Stock 24 4.15 Financial Ratio 24 4.16 Obligations of the Borrower Unconditional 24 4.17 Businesses 24 4.18 Compliance with Laws 24 4.19 Hazardous Materials 25 4.20 Material Agreements 25 4.21 Assignments under the Federal Assignment of Claims Act 25 4.22 Additional Subsidiaries 25


Events of Default and Remedies
------------------------------


5.1 Events of Default 26 5.2 Acceleration 28 5.3 Costs of Collection 28 5.4 Consent to Jurisdiction; Waiver of Jury Trial 28 5.5 Service of Process 29 5.6 Acceleration of Other Obligations to Bank 29 5.7 Remedies Cumulative 29


Section Page - ------- ----


Conditions Precedent to Lending
-------------------------------


6.1 Conditions to the Making of the Initial
Advance under the Revolving Credit Loan 29 6.2 Conditions to the Making of Each Advance under
the Revolving Credit Loan 30


Collateral Security
-------------------


7.1 Security Documents 31 7.2 Deposit Balances 31


Miscellaneous
-------------


8.1 Exercise of Rights 31 8.2 Payment Due on Banking Day 32 8.3 Assessments 32 8.4 Survival 32 8.5 Notices 32 8.6 Counterparts 32 8.7 Successors and Assigns; Governing Law; Amendments 33 8.8 Section Headings; Construction 33 8.9 Transaction Expenses 33 8.10 Estoppel Certificates 33 8.11 Indemnification 34 8.12 Publicity 34


Exhibit A -- Form of Consolidated, Amended and Restated - ---------
Revolving Credit Master Note


AMENDED AND RESTATED
--------------------
REVOLVING CREDIT AGREEMENT
--------------------------


THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this "Agreement") is dated as of the 27th day of August, 1999, by and between GRC INTERNATIONAL, INC., a Delaware corporation (the "Borrower"), and MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY, a Maryland banking institution (the "Bank").


W I T N E S S E T H:
- - - - - - - - - -


WHEREAS, pursuant to (i) that certain Amended and Restated Revolving Credit and Term Loan Agreement dated as of February 12, 1996 by and among the Bank, the Borrower, SWL Inc. and General Research Corporation, as amended by that certain First Confirmation and Amendment effective as of March 31, 1996, that certain Second Confirmation and Amendment effective as of June 30, 1996, that certain Third Confirmation and Amendment effective as of June 30, 1996, that certain Fourth Confirmation and Amendment effective as of December 31, 1996, that certain Fifth Confirmation and Amendment effective as of April 30, 1997 and that certain Sixth Confirmation and Amendment effective as of March 31, 1997 (collectively, the "1996 Loan Agreement"), (ii) that certain Amended and Restated Revolving Credit Master Note dated July 18, 1996 in the face principal amount of $22,000,000 executed by the Borrower in favor of the Bank (the "1996 Revolving Credit Note") and (iii) that certain Term Loan Note dated February 12, 1996 in the face principal amount of $2,200,000, that certain Term Loan Note dated March 8, 1996 in the face principal amount of $400,000 and that certain Secured Note (Commercial) dated June 7, 1996 in the face principal amount of $2,600,000, all as subsequently amended (collectively, the "1996 Term Notes"), the Bank has established a $22,000,000 revolving credit facility and an $8,000,000 standby credit facility in favor of the Borrower, with the current aggregate outstanding principal balance under the 1996 Revolving Credit Note and the 1996 Term Notes being $___________; and


WHEREAS, the Borrower has requested and the Bank has agreed to amend and restate the 1996 Loan Agreement for the purpose, among other things, of consolidating the revolving credit and standby credit facilities referred to above and the aggregate principal outstanding balances thereunder and of increasing the maximum aggregate availability under such facilities from $30,000,000 to $35,000,000 (such indebtedness, as so consolidated and increased, the "Revolving Credit Loan") by having the Borrower execute and deliver to the Bank a Consolidated, Amended and Restated Revolving Credit Master Note in the form attached as Exhibit A hereto (the "Revolving Credit Note").


NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, the parties hereby agree as follows:


1. CREDIT FACILITY.
---------------


1.1. Revolving Credit Loan; Letters of Credit. (a) On the date that the Borrower shall have satisfied all of the conditions precedent set forth in Section 6.1 hereof but in no event later than August 31, 1999 (the "Closing Date"), the Borrower shall execute and deliver to the Bank the Revolving Credit Note. The Revolving Credit Loan shall bear interest at a fluctuating rate of interest established from time to time in the manner set forth in Section 1.3 hereof. During such period(s) as the Revolving Credit Loan or a component thereof is a Prime Rate Loan, accrued interest on such component shall be payable monthly on the first day of each calendar month. During such period(s) as the Revolving Credit Loan or a component thereof is a Eurodollar Loan, accrued interest on such component shall be payable on the last day of the applicable Interest Period; provided that in the case of an Interest Period of six months, accrued interest shall also be payable on the day which is three months after the first day of such Interest Period. The Bank is hereby authorized to indicate by notation on its internal loan accounting system, with appropriate reference to the customer number assigned by the Bank, all advances of the Revolving Credit Loan made pursuant to this Agreement and all payments of principal. Such notations shall be presumptive as to the aggregate unpaid principal balance of the Revolving Credit Loan, but the failure of the Bank to make any such notation shall not affect the obligations of the Borrower hereunder or in connection with the Revolving Credit Loan. The entire, then outstanding principal balance of the Revolving Credit Loan, together with the accrued and unpaid interest thereon, shall be due and payable on August 27, 2001 (the "Maturity Date").


(b) Subject to the terms and conditions hereof, the Bank agrees to issue letters of credit for the account of the Borrower on any Banking Day prior to the Maturity Date, in such form as may be approved from time to time by the Bank; provided that the Bank shall have no obligation to issue any letter of credit if, after giving effect to such issuance, the aggregate amount of all letters of credit so issued and outstanding, when added to the then outstanding principal balance of the Revolving Credit Loan, would exceed the Commitment. Each letter of credit shall be issued pursuant to the Bank's standard letter of credit application, reimbursement agreement and/or such other documentation as the Bank may require, and shall be in such amount(s) and subject to such duration, draw and other conditions as are acceptable to the Bank in its sole discretion.


1.2. Advances and Payments. The aggregate amount of all advances under the Revolving Credit Loan at any one time outstanding shall not exceed the Commitment. The Borrower shall from time to time make such payments of principal, together with accrued interest on the principal so paid, to the Bank as shall be necessary in order to maintain the outstanding balance of such advances at or below the Commitment.


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1.3. Election of Fluctuating Rate. (a) Commencing as of the Closing Date, the Revolving Credit Loan may from time to time be a Prime Rate Loan or a Eurodollar Loan, at the election of the Borrower upon notice to the Bank prior to 12 noon on the Banking Day immediately preceding the date of advance of any such Prime Rate Loan or Eurodollar Loan. During any period(s) that the Borrower has not made an effective election under this Section 1.3, the Revolving Credit Loan shall be a Prime Rate Loan.


(b) The Borrower may elect from time to time to convert any Eurodollar Loan to a Prime Rate Loan, by giving notice of such election to the Bank prior to 12 noon on the Banking Day immediately preceding the date of conversion, provided that any such conversion may only be made on the last day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert any Prime Rate Loan to a Eurodollar Loan by giving notice of such election to the Bank prior to 12 noon on the Banking Day immediately preceding the date of conversion. Any such notice of conversion to a Eurodollar Loan shall specify the length of the initial Interest Period therefor. Notwithstanding the foregoing, no Prime Rate Loan may be converted into a Eurodollar Loan when any Default or Event of Default shall have occurred and be continuing and the Bank shall have determined that such a conversion is not appropriate.


(c) Any Eurodollar Loan may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving notice to the Bank, in accordance with the applicable provisions of the defined term "Interest Period" set forth in Section 2.1 hereof, of the length of the next Interest Period to be applicable to such Eurodollar Loan, provided that no Eurodollar Loan may be continued as such when any Default or Event of Default shall have occurred and be continuing and the Bank shall have determined that such continuation is not appropriate.


(d) Any notice of conversion to or continuation of any Eurodollar Loan pursuant to Section 1.3(b) or 1.3(c) hereof may, subject to the applicable provisions of the term determined "Interest Period" set forth in Section 2.1 hereof, specify more than one Interest Period for different portions of such Eurodollar Loan; provided that if the Borrower elects to split any Eurodollar Loan into more than one Interest Period for different portions thereof, then each such Interest Period portion of such Eurodollar Loan shall be in an amount of at least $500,000 and may be amounts greater than $500,000 which are whole multiples of $100,000 (for example, $600,000, $700,000, etc.). In addition, the Borrower may in any such notice elect to split the Revolving Credit Loan into a Prime Rate Loan component and a Eurodollar Loan component, so long as the Eurodollar Loan component of the Revolving Credit Loan is in an amount of at least $500,000 and may be amounts greater than $500,000 which are whole multiples of $100,000 (for example, $600,000, $700,000, etc.). In no event shall there be more than ten (10) different Eurodollar Loans outstanding at any time.


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(e) The fluctuating rate of interest applicable to all Eurodollar Loans shall be the Eurodollar Rate plus the Applicable Margin. The fluctuating rate of interest applicable to all Prime Rate Loans shall be the Prime Rate plus the Applicable Margin.


(f) All elections by the Borrower under this Section 1.3 may be made in such manner as the Bank from time to time deems reasonable and appropriate under the circumstances.


1.4. General Loan Provisions. (a) Inability to Determine Eurodollar Rate. In the event that prior to the first day of any Interest Period the Bank shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Base Rate for such Interest Period, the Bank shall give notice thereof to the Borrower as soon as practicable thereafter. If such notice is given, (x) any Eurodollar Loan requested to be made on the first day of such Interest Period shall be made as a Prime Rate Loan, (y) any Prime Rate Loan that was to have been converted on the first day of such Interest Period to a Eurodollar Loan shall be continued as a Prime Rate Loan, and (z) any Eurodollar Loan that on the first day of such Interest Period was to have been continued as, or converted to, a Eurodollar Loan shall be converted to or continued as a Prime Rate Loan. Until such notice has been withdrawn by the Bank, no further Eurodollar Loans shall be made or continued as such, nor shall the Borrower have the right to convert any Prime Rate Loan to a Eurodollar Loan.


(b) Illegality. Notwithstanding any other provision herein, if any change in any law, rule or regulation or order of court applicable to the Bank or the Borrower, or in the interpretation or application thereof, shall make it unlawful for the Bank to make or maintain a Eurodollar Loan as contemplated by this Agreement, (x) the commitment of the Bank hereunder to make a Eurodollar Loan, continue a Eurodollar Loan as such and convert a Prime Rate Loan to a Eurodollar Loan shall forthwith be cancelled and (y) any portion of the Revolving Credit Loan then outstanding as a Eurodollar Loan shall be converted automatically to a Prime Rate Loan on the last day of the then current Interest Period with respect to such portion of the Revolving Credit Loan or within such earlier period as required by law. If any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Bank such amounts, if any, as may be required pursuant to Section 1.4(e) hereof.


(c) Requirements of Law. (x) In the event that any change in any law, rule or regulation or order of court applicable to the Bank or the Borrower, or in the interpretation or application thereof, or compliance by the Bank with any request or directive (whether or not having the force of law) from any central bank or other governmental authority made subsequent to the date hereof:


(i) shall subject the Bank to any tax of any kind whatsoever with respect to this Agreement, any Note, or any Eurodollar Loan made by it, or change


4


the basis of taxation of payments to the Bank in respect thereof (except for taxes covered by Section 1.4(d) hereof and changes in the rate of tax on the overall net income of the Bank); or


(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of the Bank which is not otherwise included in the determination of the Eurodollar Rate hereunder; or


(iii) shall impose on the Bank any other condition;


and the result of any of the foregoing is to increase the cost to the Bank, by an amount which the Bank deems to be material, of making, converting into, continuing or maintaining a Eurodollar Loan or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay the Bank, upon demand, any additional amounts necessary to compensate the Bank for such increased cost or reduced amount receivable. If the Bank becomes entitled to claim any additional amounts pursuant to this Section 1.4(c), it shall promptly notify the Borrower of the event by reason of which it has become so entitled. The Bank also agrees to use its best efforts to notify the Borrower of any event that could reasonably be expected to result in a claim for additional amounts pursuant to this Section 1.4(c); provided that the failure to give any such notice shall not in any way have any adverse effect upon the rights of the Bank hereunder. A certificate as to any additional amounts payable pursuant to this Section 1.4(c) submitted by the Bank to the Borrower shall be conclusive in the absence of manifest error.


(y) In the event that the Bank shall have determined that any change in any law, rule or regulation or order of court applicable to the Bank or the Borrower regarding capital adequacy or in the interpretation or application thereof, or compliance by the Bank or any corporation controlling the Bank with any request or directive regarding capital adequacy (whether or not having the force of law) from any governmental authority made subsequent to the date hereof, does or shall have the effect of reducing the rate of return on the Bank's or such corporation's capital as a consequence of its obligations hereunder (whether in respect of a Prime Rate Loan, a Eurodollar Loan, a letter of credit or otherwise) to a level below that which the Bank or such corporation could have achieved, but for such change or compliance (taking into consideration the Bank's or such corporation's policies with respect to capital adequacy), by an amount deemed by the Bank to be material, then from time to time, after submission by the Bank to the Borrower of a written request therefor, the Borrower shall pay to the Bank the additional amount or amounts as will compensate the Bank for such reduction.


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(z) The covenants set forth in this Section 1.4(c) shall survive the termination of this Agreement and the payment of the Revolving Credit Note and all other amounts payable hereunder and under the Loan Documents.


(d) Taxes. All payments made by the Borrower under this Agreement and the Note shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any governmental authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Bank as a result of a present or former connection between the jurisdiction of the government or taxing authority imposing such tax and the Bank (excluding a connection arising solely from the Bank having executed, delivered or performed its obligations or receive a payment under, or enforced, any of the Loan Documents) or any political subdivision or taxing authority thereof or therein (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called "Taxes"). If any Taxes are required to be withheld from any amounts payable to the Bank hereunder or under the Note, the amounts so payable to the Bank shall be increased to the extent necessary to yield to the Bank (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Note. Whenever any Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Bank a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Bank the required receipts or other required documentary evidence, the Borrower shall indemnify the Bank for any incremental taxes, interest or penalties that may become payable by the Bank as a result of any such failure. The agreements in this Section 1.4(d) shall survive the termination of this Agreement and the payment of the Note and all other amounts payable hereunder and under the Loan Documents.


(e) Indemnity. The Borrower agrees to indemnify the Bank and to hold the Bank harmless from any loss or expense which the Bank may sustain or
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