Exhibit 99(b)
BNP PARIBAS
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019
July 24, 2001
Sirsi Corporation
101 Washington St. SE
Huntsville, AL 35801
Attn.: Larry Smith
Chief Financial Officer
RE: ACQUISITION FINANCING
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Ladies and Gentlemen:
You have advised BNP Paribas that a newly formed subsidiary ("McGuire
Acquisition Inc.") of Sirsi Holdings Corp. ("Holdings") intends to make a tender
offer (the "Tender Offer") for all the outstanding common stock of Data Research
Associates, Inc. ("DRA") for $11.00 per share in cash, resulting in a total
purchase price of approximately $49.7 million. Following completion of the
Tender Offer, McGuire Acquisition Inc. will be merged into DRA (the "Merger",
and together with the Tender Offer, the "Acquisition"), at which time any shares
of DRA not tendered will be converted into the right to receive in cash the
Tender Offer price. All terms and conditions of the Tender Offer and Merger, and
the structure thereof, will be consistent with the provisions of the Agreement
and Plan of Merger, dated as of May 16, 2001 (the "Merger Agreement"), among
DRA, McGuire Acquisition Inc. and Holdings, as in effect on the date hereof, and
otherwise shall be satisfactory to BNP Paribas.
BNP Paribas understands that all funding required to effect the
Acquisition, to pay fees and expenses in connection therewith (which fees and
expenses shall not exceed $4.0 million) and to refinance (the "Refinancing") the
current senior debt (not more than approximately $11.25 million of which shall
be funded, less any amounts amortized prior to the Closing Date (as defined
below)) of Sirsi Corporation ("Sirsi") will be provided solely through (i) the
incurrence by Sirsi of $45.0 million of senior secured facilities (the "Senior
Secured Facilities") more fully described in the term sheet attached hereto as
Exhibit A (the "Term Sheet"), (ii) the use of cash on hand of Sirsi and DRA
(which cash will be loaned, to the extent needed, to Holdings pursuant to a
subordinated credit facility (the "DRA Facility") acceptable to BNP Paribas),
(iii) at least $2.2 million of additional proceeds of new common equity
contributions from existing equity holders of Holdings (the "Additional Equity
Investment") and (iv) the proceeds of at least $1.0 million of additional
subordinated loans to Holdings in the form of an increase in the existing
Holdings seller note (the "Additional Seller Note Financing" and, together with
the Senior Secured Facilities, the DRA Facility and the Additional Equity
Investment, the "Financing Transactions", and the Financing Transactions,
together with the Acquisition and the Refinancing, the "Transaction"); PROVIDED
that the amount of the Additional Seller Note Financing required to be issued
shall be reduced, and to the extent such permitted reduction would otherwise
exceed $1.0 million, the amount of the
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Additional Equity Investment shall be reduced to the extent of such excess, by
an amount equal to the amount by which the aggregate proceeds of the Financing
Transactions available to pay amounts owing in connection with the Transaction
and to pay fees and expenses incurred or expected to be incurred in connection
therewith (including for this purpose the full amount of the Additional Equity
Investment and the Additional Seller Note Financing, but including only that
portion of the Senior Secured Facilities otherwise available for such purpose to
the extent Holdings' pro-forma (after giving effect to the Transaction and
assuming that 100% of the common equity of DRA had been acquired) consolidated
leverage ratio (calculated on a latest twelve month basis without giving effect
to Holdings' existing seller notes, the Additional Seller Note Financing or the
DRA Facility and otherwise in a manner acceptable to BNP Paribas) would not
exceed 3.30:1.00 on the Closing Date (as defined below)) exceed the aggregate
amount required to fund the Transaction and to pay such fees and expenses.
BNP Paribas is pleased to confirm that it (i) is willing to provide,
on, and subject to the terms and conditions set forth herein and in the Term
Sheet , 100% of the Senior Secured Facilities and (ii) will act as sole
administrative agent (the "Agent") under the Senior Secured Facilities. BNP
Paribas (or an affiliate designated by BNP Paribas) shall act as, and be
designated as, lead arranger with respect to the Senior Secured Facilities. You
agree that no other agents, co-agents or arrangers will be appointed, no other
titles will be awarded, and no compensation (other than that expressly
contemplated by the Term Sheet and the Fee Letter referred to below) will be
paid in connection with the Senior Secured Facilities, unless you and we shall
so agree.
BNP Paribas reserves the right, prior to or after execution of the
definitive credit documentation, to syndicate all or part of its commitment
hereunder to one or more financial institutions (collectively with BNP Paribas,
the "Lenders") that will become party to such definitive credit documentation
pursuant to a syndication to be managed by BNP Paribas. BNP Paribas will
commence syndication promptly after the execution of this letter by you and you
agree to actively assist BNP Paribas in achieving a syndication that is
satisfactory to BNP Paribas and you. Such syndication will be accomplished by a
variety of means, including direct contact during the syndication between senior
management and advisors of Holdings, Sirsi and (to the extent practicable) DRA
and the proposed syndicate members. To assist BNP Paribas in its syndication
efforts, you hereby agree (a) to provide and cause your advisors to provide BNP
Paribas and the other syndicate members upon request with all reasonable
information deemed necessary by us to complete syndication, including but not
limited to information and evaluations prepared by Holdings, Sirsi, McGuire
Acquisition Inc., DRA, or any of your or their respective advisors, relating to
the Transaction and the other transactions contemplated hereby, (b) to assist
BNP Paribas upon request in the preparation of an Information Memorandum to be
used in connection with the syndication of the Senior Secured Facilities and (c)
to make available the senior officers and representatives of Holdings, Sirsi,
McGuire Acquisition, Inc. and (to the extent practicable) DRA, in each case from
time to time and to attend and make presentations regarding the business and
prospects of Sirsi and DRA and their respective subsidiaries at a meeting or
meetings of Lenders or prospective Lenders.
BNP Paribas' commitment hereunder is subject to (a) there not occurring
or becoming known to BNP Paribas any material adverse condition or material
adverse change in or affecting the business, property, assets, liabilities,
condition (financial or otherwise) or prospects of Holdings, DRA and their
respective subsidiaries taken as a whole, (b) BNP Paribas not becoming aware
after the date hereof of any information not previously known to BNP Paribas
which BNP Paribas reasonably believes is materially negative information with
respect to the Transaction, the business, property, assets, liabilities,
condition (financial or otherwise) or prospects of Holdings, DRA and their
respective subsidiaries taken
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as a whole, or which is inconsistent in a material and adverse manner with any
such information or other matter disclosed to BNP Paribas prior to the date
hereof, (c) there not having occurred, after the date hereof, a change in the
financial, banking or capital markets generally that, in BNP Paribas' reasonable
judgment, would materially and adversely affect the syndication of the Senior
Secured Facilities, (d) BNP Paribas' reasonable satisfaction that prior to and
during the syndication of the Senior Secured Facilities there shall be no
competing offering, placement or arrangement of any debt securities or bank
financing (other that the DRA Facility) by or on behalf of Holdings or DRA, or
any of their respective subsidiaries or affiliates, and (e) the other conditions
set forth or referred to in the Term Sheet.
To induce BNP Paribas to issue this letter, to proceed with its
syndication efforts, and to proceed with the documentation of the proposed
financing, you hereby agree that all fees and expenses (including the reasonable
fees and expenses of counsel and consultants (including the costs and expenses
of David McQueston, an independent consultant whose fees we estimate to be
between $10,000 and $15,000)) of BNP Paribas and its affiliates (collectively
"BNPP") arising in connection with this letter, our due diligence efforts, and
in connection with the Transaction and the other transactions described herein
shall be for your account, whether or not the Senior Secured Facilities are made
available or definitive credit documents are executed. You further agree to
indemnify and hold harmless each Lender (including in any event BNPP) and each
director, officer, employee and affiliate thereof (each an "indemnified person")
from and against any and all actions, suits, proceedings (including any
investigations or inquiries), claims, losses, damages, liabilities or expenses
of any kind or nature whatsoever which may be incurred by or asserted against or
involve any Lender or any other such indemnified person as a result of or
arising out of or in any way related to or resulting from this letter and, upon
demand, to pay and reimburse each Lender and each other indemnified person for
any reasonable legal or other out-of-pocket expenses incurred in connection with
investigating, defending or preparing to defend any such action, suit,
proceeding (including any inquiry or investigation) or claim (whether or not any
Lender or any other such person is a party to any action or proceeding out of
which any such expenses arise); PROVIDED, HOWEVER, that you shall not have to
indemnify any indemnified person against any loss, claim, damage, expense or
liability to the extent same resulted from the gross negligence or wilful
misconduct of the respective indemnified person as finally and judicially
decided by a court of competent jurisdiction. This letter and the Term Sheet
(collectively, the "Commitment Letter") is issued for your benefit and the
benefit of McGuire Acquisition Inc. only and no other person or entity may rely
hereon or thereon. Neither BNP Paribas nor any other indemnified person shall be
responsible or liable to you or any other person for consequential damages which
may be alleged as a result of this letter or the financing contemplated hereby.
BNP Paribas reserves the right to employ the services of its affiliates
in providing services contemplated by this letter and to allocate, in whole or
in part, to its affiliates certain fees payable to BNP Paribas in such manner as
BNP Paribas and its affiliates may agree in their sole discretion. You also
agree that BNP Paribas may at any time and from time to time assign all or any
portion of its commitments hereunder to one or more of its affiliates. You
further acknowledge that BNP Paribas may share with any of its affiliates any
information related to the Transaction, DRA, Holdings, Sirsi, and your and their
respective subsidiaries and affiliates, or any of the matters contemplated
hereby. BNP Paribas agrees to treat, and cause any such affiliate to treat, all
non-public information provided to it by Holdings, Sirsi or DRA as confidential
information in accordance with customary banking industry practices. You
acknowledge that BNP Paribas and its affiliates may be providing debt financing,
equity capital or other services (including financial advisory services) to
other companies in respect of which you may have conflicting interests. Neither
BNP Paribas nor its affiliates will use confidential information obtained from
you in relation to the Transaction or its other relationships with you in
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connection with the performance by BNP Paribas or any affiliate thereof of
services for other companies, and none of BNP Paribas and its affiliates will
furnish any such information to other companies. You also acknowledge that BNP
Paribas and its affiliates do not have any obligation to use in connection with
the Transaction, or to furnish to you, confidential information obtained by BNP
Paribas or any affiliate thereof from other companies.
You agree that this Commitment Letter is for your confidential use only
and that neither its existence nor the terms hereof will be disclosed by you to
any person other than your officers, directors, employees, accountants,
attorneys and other advisors, and then only on a "need to know" basis in
connection with the transactions contemplated hereby and on a confidential
basis, except that you may disclose it to DRA and/or its agents in connection
with the proposed Transaction. Notwithstanding the foregoing, following your
acceptance of the provisions hereof and your return of an executed counterpart
of this Commitment Letter and the related Fee Letter to us as provided below,
(i) you may make public disclosure of the existence and amount of the
commitments hereunder and of the identity of the Agent, (ii) you may file a copy
of this Commitment Letter (but not the Fee Letter) in any public record in which
it is required by law to be filed and (iii) you may make such other public
disclosure of the terms and conditions hereof as, and to the extent, you are
required by law, based upon the good faith advice of your counsel, to make.
Except as otherwise required by law or unless BNP Paribas has otherwise
consented, you are not authorized prior to your acceptance of this letter as
provided below to show or circulate this letter to any other person or entity
(other than your legal or financial advisors in connection with your evaluation
hereof). If this letter is not accepted by you as provided below, please
immediately return this letter (and any copies hereof) to the undersigned.
This letter may be executed in any number of counterparts, and by the
different parties hereto on separated counterparts, each of which when executed
and delivered shall be an original, but all of which shall together constitute
one and the same instrument. THIS LETTER AND THE TERM SHEET AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS LETTER
IS HEREBY WAIVED.
The provisions of the four immediately preceding paragraphs shall
survive any termination of this letter.
BNP Paribas' commitment to provide the Senior Secured Facilities as set
forth above will terminate on the first to occur of (i) October 5, 2001, unless
on or prior to such date the initial borrowings shall have occurred under a
definitive credit agreement evidencing the Senior Secured Facilities (the
"Credit Agreement"), reflecting terms consistent with those set forth herein and
in the Term Sheet and otherwise in form satisfactory to BNP Paribas and (ii) any
time prior to the consummation of the Acquisition that you shall inform BNP
Paribas that you have terminated your negotiations in respect of the
Acquisition.
* * * *
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If you are in agreement with the foregoing, please sign and
return to BNP Paribas the enclosed copy of this letter, together with a copy of
the enclosed Fee Letter, no later than 5:00 P.M. (New York time) on July 24,
2001. Unless this letter and the related Fee Letter are signed and returned in
accordance with the immediately preceding sentence, this letter shall terminate
at such time and date.
Very truly yours,
BNP PARIBAS
/s/ Edward Irwin /s/ Judith A. Keane
------------------- ----------------------
Edward Irwin Judith A. Keane
Managing Director Vice President
Agreed to and Accepted this
24th day of July, 2001
SIRSI CORPORATION
By: /s/ Larry Smith
--------------------------------
Larry Smith
Title: Chief Financial Officer
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EXHIBIT A
SIRSI CORPORATION
SENIOR SECURED FACILITIES
INDICATIVE SUMMARY OF PRINCIPAL TERMS AND CONDITIONS1
I. DESCRIPTION OF SENIOR SECURED FACILITIES
Borrower: Sirsi Corporation or other entity acceptable to BNP
Paribas (the "Borrower").
Guarantors: Sirsi Holdings Corp. ("Holdings") and all direct and
indirect domestic subsidiaries of Holdings other than
the Borrower (but including DRA and its domestic
subsidiaries only after the Merger).
Agent: BNP Paribas.
Lenders: A group of financial institutions to be arranged by the
Agent.
Senior Secured
Facilities: The Senior Secured Facilities will be comprised of two
separate facilities:
A. A term loan facility (the "Term Loan Facility") in
an aggregate principal amount of $37.0 million;
and
B. A revolving loan facility (the "Revolving Loan
Facility") in an aggregate principal amount of up
to $8.0 million. A sub-limit of $1.50 million of
the Revolving Loan Facility will be available for
the issuance of letters of credit ("Letters of
Credit").
A. TERM LOAN FACILITY
Availability: Loans made pursuant to the Term Loan Facility (the "Term
Loans") may be borrowed upon (x) the initial closing
date for the Tender Offer (the "Closing Date"), (y) up
to two times after the Closing Date and prior to the
date on which the Merger is consummated (the "Merger
Date"), and (z) the Merger Date. Term Loans that are
repaid or prepaid may not be re-borrowed.
Use of Proceeds: The proceeds of Term Loans will be used solely (x) to
refinance the outstanding senior debt of the Borrower
not in excess of $11.25 million, (y) to finance, in
part, the purchase of DRA shares tendered pursuant to
the Tender Offer and the cash-out of any untendered DRA
shares pursuant to the Merger and (z) to pay transaction
costs (including severance expenses and payments to
certain option holders of DRA stock) and expenses
incurred in connection with the Transaction.
- ----------
(1) Capitalized terms used herein and not otherwise defined shall have the
meaning set forth in the Retainer Letter to which this Summary of Certain Terms
and conditions is attached.
1
EXHIBIT A
Amortization: The Term Loans shall be subject to quarterly
amortization payments commencing on December 31, 2001 in
accordance with the following schedule:
------------------------------------------------
Quarter Ending Amortization
------------------------------------------------
December 31, 2001 $800,000
March 31, 2002 $1,150,000
June 30, 2002 $1,150,000
September 30, 2002 $1,150,000
December 31, 2002 $1,150,000
March 31, 2003 $1,700,000
June 30, 2003 $1,700,000
September 30, 2003 $1,700,000
December 31, 2003 $1,700,000
March 31, 2004 $1,950,000
June 30, 2004 $1,950,000
September 30, 2004 $1,950,000
December 31, 2004 $1,950,000
March 31, 2005 $2,050,000
June 30, 2005 $2,050,000
September 30, 2005 $2,050,000
December 31, 2005 $2,050,000
March 31, 2006 $2,200,000
June 30, 2006 $2,200,000
September 30, 2006 $2,200,000
December 31, 2006 $2,200,000
------------------------------------------------
Total $37,000,000
------------------------------------------------
Maturity: The final maturity of the Term Loans shall be December
31, 2006 (the "Maturity Date").
B. REVOLVING FACILITY
Availability: Loans made pursuant to the Revolving Loan Facility (the
"Revolving Loans" and together with the Term Loans, the
"Loans") may be borrowed repaid and reborrowed on and
after the Closing Date and prior to the Maturity Date;
PROVIDED that (i) Revolving Loans may only be used to
fund the Transaction and to pay fees and expenses in
connection therewith to the extent Holdings' pro-forma
(after giving effect to the Transaction and assuming
that 100% of the common equity of DRA had been acquired)
consolidated leverage ratio (calculated on a latest
twelve
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EXHIBIT A
month basis without giving effect to Holdings' existing
seller notes, the Additional Seller Note Financing or
the DRA Facility and otherwise in a manner acceptable to
BNP Paribas) would not exceed 3.30:1.00 on the Closing
Date and (ii) not more than (x) the amount of Revolving
Loans determined in accordance with clause (i) above
MINUS (y) $11.00 multiplied by the number of outstanding
shares of DRA not tendered and acquired on the Closing
Date pursuant to the Tender ----- Offer, may be used on
the Closing Date to fund the Transaction and to pay
costs and expenses in connection therewith. In addition,
the Borrower shall be required to maintain availability
under the Revolving Loan Facility after the Closing Date
sufficient (when combined with the Borrower's available
cash and remaining undrawn Term Loan commitments) to
finance the purchase or cash-out of any DRA shares
remaining after consummation of the Tender Offer.
Use of Proceeds: The proceeds of all Revolving Loans shall be used for
general corporate and working capital purposes of the
Borrower and its subsidiaries; PROVIDED that proceeds of
Revolving Loans may only be used to finance the
Transaction and to pay costs and expenses incurred in
connection therewith to the extent provided above under
"Availability".
Maturity: All Revolving Loans will mature, and the remaining
commitments of the Lenders under the Revolving Loan
Facility will terminate, on the Maturity Date.
II. GENERAL TERMS APPLICABLE TO THE SENIOR SECURED FACILITIES
Guaranties: Holdings and all domestic subsidiaries of Holdings other
than the Borrower, including McGuire Acquisition Inc.,
but including DRA and its subsidiaries only on and after
the Merger Date (collectively, the "Guarantors") shall
be required to provide unconditional and irrevocable
guaranties of all amounts owing under the Senior Secured
Facilities.
Security: The obligations under the Senior Secured Facilities and
the Guaranties described above will be secured by (i) a
first priority perfected pledge of all capital stock
(limited in the case of foreign subsidiaries, to a
pledge of 65% of all voting stock and 100% of all
non-voting stock), notes and securities owned by the
Borrower and each Guarantor (each a "Credit Party") and
(ii) first priority liens on and security interests in
all other tangible and intangible assets (including,
without limitation, receivables, intellectual property,
contract rights, real property, leasehold interests,
inventory and equipment) owned by each Credit Party,
subject to such exceptions as may be satisfactory to the
Agent. For purposes of Regulation U of the Board of
Governors of the Federal Reserve System ("Regulation
U"), the portion of the Term Loans used to finance the
Tender Offer will be secured by a first lien on the
shares of DRA purchased pursuant to the Tender Offer and
a second lien on all other Collateral
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EXHIBIT A
(the "Other Collateral"), with the remainder of the
Senior Secured Facilities to be secured by a first lien
on the Other Collateral and a second lien on the DRA
shares. The Collateral must satisfy the requirements of
Regulation U. On and after the Merger Date, all
outstandings will be secured PARI PASSU by all
Collateral.
Commitment Fees: 1/2 of 1% per annum on the unused commitments of
each Lender under the Senior Secured Facilities, as in
effect from time to time, commencing on the Closing Date
to and including the termination of such commitments,
payable quarterly in arrears and upon such termination
of the respective commitments. All commitment fees and
interest shall be computed on a 360-day basis.
Interest Rates: At the Borrowers' option, the interest rates per annum
shall be LIBOR (adjusted for maximum reserves) or Base
Rate plus, in each case, the Applicable Margin, as
follows:
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CONSOLIDATED SENIOR DEBT/CONSOLIDATED EBITDA LIBOR BASE RATE
(TRAILING TWELVE MONTHS) MARGIN MARGIN
---------------------------------------------------------------------------------
X is greater than 2.50:1 3.50% 2.25%
2.50:1 is equal to or greater than 3.00% 1.75%
X is greater than 2.00:1
2.00:1 is equal to or greater than
X is greater than 1.50:1 2.75% 1.50%
X is less than or equal to 1.50:1 2.50% 1.25%
---------------------------------------------------------------------------------
Regardless of the actual level of the ratio of
Consolidated Senior Debt to Consolidated EBITDA (the
"Leverage Ratio"), the highest Applicable Margins will
remain in effect until receipt of a compliance
certificate for the period ending nine months following
the Merger Date (with the consolidated EBITDA of DRA and
its subsidiaries to be included only for the portion of
such period commencing on the Merger Date).
The Borrower may elect whether borrowings will be Base
Rate borrowings or 1-, 2-, 3- or 6-month adjusted LIBOR
borrowings; provided, however, only Base Rate or 2-week
LIBOR borrowings may be incurred prior to the 90th day
after the Closing Date. Interest shall be payable at the
end of each interest period and, in any event, at least
every three months. Calculation of interest shall be on
the basis of actual days elapsed in a year of 360 days.
The Base Rate shall be the higher of (i) the Federal
Funds Rate plus 1/2 of 1% and (ii) the Prime Commercial
Lending Rate of the Chase Manhattan Bank, N.A., as
announced from time to time.
Fees: The Borrower shall pay all fees as have been separately
agreed to with the Agent.
Optional Prepayment: All or any portion of the outstanding Loans may be
prepaid at any time and commitments may be terminated in
whole or in part at the option of the Borrower upon
customary written notice, without premium or penalty,
except that LIBOR-based loans can only be voluntarily
prepaid at the end of the applicable interest period
unless customary breakage fees are paid. All optional
prepayments of Term Loans will be applied
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EXHIBIT A
to the remaining scheduled principal payments of Term
Loans on a pro-rata basis.
Mandatory Prepayment: Subject to exceptions and reinvestment rights consistent
with those in the existing credit agreement among Sirsi,
the lenders party thereto from time to time, and BNP
Paribas, as agent (the "Existing Credit Agreement"),
Term Loans shall be prepaid (and once all Term Loans
have been repaid, the commitments under the Revolving
Loan Facility will be reduced) in an amount equal to:
(i) 100% of the net cash proceeds of all asset sales
or other dispositions (except inventory in the
ordinary course of business) by Holdings or any
subsidiary;
(ii) The percentage specified below of Excess Cash Flow
(the "Cash Flow Sweep"), which is as follows:
(a) 75% of Excess Cash Flow when the Leverage
Ratio is 2.00:1 or greater at fiscal year
end; and
(b) 50% of Excess Cash Flow when the Leverage
Ratio is less than 2.00:1 at fiscal year
end.
(iii) 100% of the net cash proceeds of any debt or
equity financings for Holdings or any of its
subsidiaries; and
(iv) 100% of all insurance proceeds.
In addition, on any date that the aggregate principal
amount of Revolving Loans outstanding, plus Letter of
Credit outstandings, exceeds the Revolving Loan
Commitments as in effect at such time, Revolving Loans
shall be required to be repaid (and, to the extent
necessary, letters of credit shall be required to be
cash collateralized) in an amount equal to such excess.
Seller Note: The Borrower will be permitted to pay dividends to
Holdings to service interest payments on the existing
$22 million Seller Note and the Additional Seller Note
Financing (if any) (collectively the "Holdco Notes"),
subject to (i) cash interest on the Holdco Notes being
capped at 7.0% per annum at all times prior to March 31,
2004 and 9.0% per annum thereafter, (ii) the absence of
any default or event of default under the Credit
Agreement, (iii) the availability of cash to service
such payment determined on the same basis as provided in
the Existing Credit Agreement as in effect on the date
hereof and (iv) the Agent's satisfaction with all terms
and conditions of the Holdco Notes (including any
variations from those contained in the existing Seller
Note. In any event, the Holdco Notes shall remain a
liability of Holdings and shall be capitalized as equity
on the balance sheet of the Borrower. Beginning in 2004
(and in each case after giving effect to the Excess Cash
Flow Sweep determined in accordance with the audited
financial statements of
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EXHIBIT A
Holdings and its subsidiaries for the most recently
ended fiscal year of Holdings), the Borrower will be
permitted to pay dividends to Holdings in an amount
equal to the Excess Cash Flow for such most recently
ended fiscal year less the Cash Flow Sweep, so long as
such dividends are promptly applied to reduce the
outstanding obligations under the Holdco Notes.
Representations
and Warranties: The Credit Agreement will contain representations and
warranties comparable to those in the Existing Credit
Agreement (updated where appropriate) and others deemed
by the Agent as appropriate to the transaction.
Covenants: The Credit Agreement will contain negative, affirmative
and financial covenants and reporting requirements
comparable to those in the Existing Credit Agreement
(updated where appropriate). In any event, financial
covenants will include minimum interest coverage,
minimum fixed charge coverage, maximum leverage, minimum
EBITDA and maximum capital expenditures (including,
without limitation, restrictions on capitalization of
software development expenses). Any changes to the
historical accounting practices of Holdings and its
subsidiaries and/or DRA and its subsidiaries shall be
required to be satisfactory to BNP Paribas.
Conditions Precedent
to the Initial Loans: The conditions to the funding of the initial advances
under the Senior Secured Facilities shall be those
customarily found in the Agent's loan agreements for
similar senior financings and others deemed by the Agent
to be appropriate to the specific transaction, and in
any event including, without limitation:
1. Negotiation and execution of a definitive Credit
Agreement and related credit documentation
(including, without limitation, guaranties and
security documents) satisfactory to the Agent;
2. No material adverse change to the business,
assets, operations, liabilities, condition
(financial or otherwise) or prospects of Holdings,
DRA and their respective subsidiaries taken as a
whole (a "Material Adverse Effect");
3. There not having occurred, after the date hereof,
a change in the financial, banking or capital
markets generally that, in BNP Paribas' reasonable
judgment, would materially and adversely affect
the syndication of the Senior Secured Facilities,
and Holdings and the Borrower shall have fully
cooperated in the syndication efforts;
4. No pending or threatened litigation that the Agent
determines would be reasonably likely to have a
Material Adverse Effect;
5. Receipt of such environmental and hazardous
substance analyses
6
EXHIBIT A
as may have been requested by the Agent, and the
Agent's satisfaction therewith.
6. Compliance in all material respects with laws and
regulations (including Regulation U), and absence
of defaults or material conflicts with other
agreements;
7. Receipt of all necessary governmental (domestic
and foreign) and third party approvals and/or
consents in connection with the Transaction and
the other transactions contemplated by the Senior
Secured Facilities, and expiration of all
applicable waiting periods without any action
being taken which, in the judgment of the Agent,
restrains, prevents, or imposes materially adverse
conditions upon, the consummation of the
Transaction or the transactions contemplated by
the Senior Secured Facilities;
8. Receipt by the Agent of satisfactory legal
opinions;
9. Agent's satisfaction with insurance coverage of
Credit Parties;
10. Agent's satisfaction with any modifications to the
Seller Notes;
11. Agent's satisfaction with all terms of, and
documentation for, the Tender Offer, Merger (to
the extent of any inconsistencies with the Merger
Agreement as in effect on the date hereof and
previously delivered to BNP Paribas) and all other
aspects of the transactions contemplated hereby,
including, without limitation, that at least 75%
of the outstanding common stock of DRA (on a fully
diluted basis) is acquired pursuant to the Tender
Offer on the Closing Date;
12. Receipt by Holdings of all required proceeds from
the Additional Equity Investment and the
Additional Seller Note Financing (with the amount
of such required proceeds to be determined in
accordance with the second paragraph of the
Commitment Letter, including the proviso thereto),
in each case on terms and conditions, and subject
to documentation, satisfactory to BNP Paribas (it
being understood that the Additional Seller Note
Financing shall be issued on terms substantially
identical to those governing the existing Seller
Note, with such changes thereto as may be
acceptable to BNP Paribas), and the Additional
Equity Investment and the Additional Seller Note
Financing shall have been consummated in
accordance with the documentation therefor and all
applicable laws, and all conditions precedent
thereto shall have been satisfied in all material
respects without any waivers or amendments thereto
unless consented to by BNP Paribas.
13. The DRA Facility shall have been authorized,
executed and delivered on terms acceptable to the
Agent (it being understood that the draft form
thereof dated July __, 2001 and previously
delivered to the Agent shall be satisfactory, with
any changes thereto to be subject to the prior
approval of BNP Paribas), and
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all proceeds of the Additional Equity Investment,
the Additional Seller Note Financing and the DRA
Facility shall have been used to effect the
Transaction before any proceeds of Loans are used
for such purpose;
14. There shall on the Closing Date be unrestricted
cash on hand of the Borrower and unrestricted cash
on hand of DRA in each case in amounts reasonably
satisfactory to the Agent, which, when added to
(i) the aggregate amount of the Additional Equity
Investment, (ii) the Additional Seller Note
Financing, (iii) Term Loans incurred on the
Closing Date, (iv) Term Loan commitments remaining
undrawn on the Closing Date, and (v) commitments
in respect of Revolving Loans to the extent
Holdings' pro-forma (after giving effect to the
Transaction and assuming that 100% of the common
equity of DRA had been acquired) consolidated
leverage ratio (calculated on a latest twelve
month basis without giving effect to Holdings'
existing seller notes, the Additional Seller Note
Financing or the DRA Facility and otherwise in a
manner acceptable to BNP Paribas) would not exceed
3.30:1.00 on the Closing Date, shall be sufficient
to effect the Transaction and to pay fees and
expenses in connection therewith;
15. Receipt of a solvency certificate satisfactory to
the Agent;
16. The Agent's satisfaction that the Borrower's
pro-forma leverage ratio (calculated on a latest
twelve month basis without giving effect to the
Holdco Notes or the DRA Facility, and otherwise in
a manner acceptable to the Agent) on the Closing
Date shall not exceed 3.30:1.00, and Holdings and
its subsidiaries shall not have outstanding any
debt for borrowed money other than the Senior
Secured Facilities, the DRA Facility, the Holdco
Notes and such other indebtedness as may be
satisfactory to the Agent;
17. Receipt of satisfactory historical and PRO FORMA
balance sheets and related financial statements;
and
18. Payment of all costs, fees and expenses
(including, without limitation, legal fees and
expenses) and other compensation payable to the
Agent and/or the Lenders in respect of the
Transaction to the extent due.
Conditions Precedent
to All Loans: 1. All representations and warranties shall be true
and correct on and as of the date of the borrowing
(although any representations and warranties which
expressly relate to a given date or period shall
be required to be true and correct as of the
respective date or for the respective period, as
the case may be), before and after giving effect
to such borrowing and to the application of the
proceeds therefrom, as though made on and as
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EXHIBIT A
of such date; and
2. No Event of Default, or event which with the
giving of notice or lapse of time or both would be
an Event of Default, shall have occurred and be
continuing, or would result from such borrowing.
Assignments/
Participations: Assignments of commitments and/or Loans may be made by
the Lenders at any time at or after closing, subject to
minimum amounts acceptable to Agent. Customary
participation rights will be available to all Lenders.
Events of Default: Events of Default shall include those events of default
in the Existing Credit Agreement (updated where
appropriate) and others deemed by the Agent as
appropriate to this transaction, including, but not
limited to, a cross default and a change of control.
Interest Rate
Protection: Interest rate protection satisfactory to the Agent shall
be obtained within 60 days after the Merger Date.
Miscellaneous: The Credit Documents will include standard yield
protection (including compliance with risk-based capital
guidelines, increased costs, payments free and clear of
withholding taxes and interest period breakage
indemnities), Eurodollar illegality and similar
provisions.
Governing Law: State of New York.
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