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Exhibit 10.1
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
It is hereby agreed as of the 6th day of July, 2006, by and
between HALIFAX CORPORATION, a Virginia corporation ("Halifax"),
HALIFAX ENGINEERING, INC., a Virginia corporation
("Engineering"), MICROSERV LLC, a Delaware limited liability
company ("Microserv") and HALIFAX ALPHANATIONAL ACQUISITION,
INC., a Delaware corporation ("AlphaNational"; collectively with
Halifax, Engineering and Microserv, "Borrower"), and PROVIDENT
BANK, a Maryland banking corporation ("Bank"), of Baltimore,
Maryland, and the successor by merger to Southern Financial Bank
that this Third Amended and Restated Loan and Security Agreement
(the "Agreement") combines, amends and replaces the Second
Amended and Restated Loan and Security Agreement dated June 29,
2005 executed by Borrower and Bank, as amended. The terms of
the Agreement are as follows:
I. DEFINITIONS
A. Specific Definitions. The following terms have the
following definitions (each definition is equally
applicable to the singular and plural forms of the terms
used, as the context requires):
1."Account Debtor" means any person or entity who is or who
may become obligated to make payments to Borrower, including,
but not limited to, payments owed to Borrower under, with
respect to, or on account of Receivables.
2."Assignment of Claims Act" means, collectively, the
Assignment of Claims Act of 1940, as amended, 31 U.S.C. Section
3727, 41 U.S.C. Section 15, any applicable rules, regulations
and interpretations issued pursuant thereto, and any amendments
to any of the foregoing.
3."Auxiliary Borrowing Base" has the meaning ascribed to such
term in the Formula Advance Addendum executed the date hereof by
and between Borrower and Bank.
4."Auxiliary Maximum Credit Amount" means One Million Dollars
($1,000,000).
5."Auxiliary Revolver Facility" means the revolver loan
facility extended by Bank to Borrower pursuant to Paragraph
II.A.2 of this Agreement and otherwise in accordance with the
terms of this Agreement.
6."Borrowing Base" has the meaning ascribed to such term in
the Formula Advance Addendum executed the date hereof by and
between Borrower and Bank.
7."Collateral" means all of the now owned and hereafter
acquired assets, properties and property rights of Borrower with
respect to which Borrower has at any time granted a security
interest or lien to Bank or has at any time otherwise assigned
or pledged to Bank as security for any of the Obligations.
8."Equipment" means all of the now owned and hereafter
acquired machinery, equipment, furniture, fixtures (whether or
not attached to real property), vehicles, supplies and other
personal property of Borrower other than inventory, including
any leasehold interests therein and all substitutions,
replacement parts and annexations thereto, and including all
improvements and accessions thereto and all spare parts, tools,
accessories and attachments now owned or hereafter acquired in
connection therewith, and any maintenance agreements applicable
thereto, and all proceeds and products thereof, including sales
proceeds, and all rights thereto.
9. "G.A.A.P." means, with respect to any date of
determination, generally accepted accounting principles as used
by the Financial Accounting Standards Board and/or the American
Institute of Certified Public Accountants consistently applied
and maintained throughout the periods indicated.
10. "Government" means the United States of America or any
agency or instrumentality thereof.
11. "Government Contract" means any contract with the
Government under which Borrower is the prime contractor.
12. "Inventory" means all of Borrower's now owned and hereafter
acquired inventory, wherever located, including, but not limited
to, goods, wares, merchandise, materials, raw materials, parts,
containers, goods in process, finished goods, work in progress,
bindings or component materials, packaging and shipping
materials and other tangible or intangible personal property
held for sale or lease or furnished or to be furnished under
contracts of service or which contribute to the finished
products or the sale, promotion, storage and shipment thereof,
all goods returned for credit, repossessed, reclaimed or
otherwise reacquired by Borrower, whether located at facilities
owned or leased by Borrower, in the course of transport to or
from Account Debtors, placed on consignment, or held at storage
locations, and all proceeds and products thereof and all rights
thereto, including, but not limited to all sales proceeds, all
chattel paper related to any of the foregoing and all documents,
including, but not limited to, documents of title, bills of
lading and warehouse receipts related to any of the foregoing.
13. "Line of Credit" means any line of credit facility extended
by Bank to Borrower pursuant to Paragraph II.A.1 of this
Agreement and otherwise in accordance with the terms of this
Agreement.
14. "Loan" means one or more credit facilities, including any
Line of Credit and the Auxiliary Revolver Facility, provided by
Bank to Borrower pursuant to the terms of this Agreement and all
accompanying Loan documents, including, but not limited to, one
or more promissory notes of Borrower payable to the order of
Bank, as the same may be amended, modified, extended, renewed,
supplemented, restated or replaced from time to time.
15. "Maximum Line of Credit Amount" means Twelve Million
Dollars ($12,000,000) less any amounts outstanding pursuant to
the Auxiliary Revolver Facility.
16. "Obligations" means collectively the obligations of
Borrower to pay to Bank: (i) any and all sums due to Bank under
or pursuant to the Loan or otherwise under the terms of this
Agreement or any accompanying Loan documents; (ii) any and all
sums advanced by Bank to preserve or protect the Collateral or
to preserve, protect, or perfect Bank's security interests and
liens in the Collateral; (iii) the expenses of retaking,
holding, preparing for sale, selling or otherwise disposing of
or realizing on the Collateral, or of any exercise by Bank of
Bank's rights in the event of a default by Borrower, together
with Bank's attorneys' fees, expenses of collection, and court
costs; and (iv) any other indebtedness or liability of Borrower
to Bank, whether direct or indirect (by way of endorsement,
guaranty, pledge or otherwise), liquidated or unliquidated,
joint or several, absolute or contingent, contemplated or
uncontemplated, or otherwise arising from any loan, note, letter
of credit, guaranty, overdraft, or any other duty owed by
Borrower to Bank, now existing or hereafter arising.
17. "Other Obligor" means any person or entity that is now or
hereafter liable, directly, contingently or otherwise, upon or
in connection with any of the Obligations or that has granted
any lien or security interest to or for the benefit of Bank to
secure any of the Obligations, including, but not limited to,
any guarantor, surety, endorser, or co-maker of any of the
Obligations.
18. "Receivables" means all of Borrower's now owned and
hereafter acquired and/or created Accounts, accounts receivable,
contracts, contract rights, Instruments, Documents, Chattel
Paper, Deposit Accounts, notes, notes receivable, drafts,
acceptances, General Intangibles (including, but not limited to,
trademarks, tradenames, licenses, copyrights and patents), and
other choses in action (not including salary or wages), and all
proceeds and products thereof, and all rights thereto,
including, but not limited to, proceeds of Inventory and
returned goods and proceeds arising from the sale or lease of or
the providing of Inventory, goods, or services by Borrower, as
well as all other rights of any kind, contingent or non-
contingent, of Borrower to receive payment, benefit, or credit
from any person or entity, including, but not limited to, the
right to receive tax refunds or tax rebates.
19. "VDOT Contract" means Contract #844 between Halifax
Technology Services Company (predecessor by merger to Halifax)
and Virginia Department of Transportation and Virginia
Retirement Systems for Provision of Services for Information
Technology/Enterprise Architecture, dated November 1, 1998, as
amended.
20. "VDOT Vendor Liens/Assignments" means liens on or
assignments of receivables from the VDOT Contract given to
vendors supplying equipment and software provided by Borrower to
the customer pursuant to the VDOT Contract, but only to the
extent they relate to the acquisition of such equipment and
software.
B. UCC Definitions. The terms "Accounts," "As-Extracted
Collateral," "Chattel Paper," "Deposit Accounts,"
"Documents," "Electronic Chattel Paper," "Fixtures,"
"General Intangibles," "Goods," "Investment Property,"
Instruments, " "Letter-of-Credit Rights," "Payment
Intangibles," "Software" and "Tangible Chattel Paper" have
the respective meanings given to those terms in Maryland
Uniform Commercial Code - Secured Transactions, Title 9,
Commercial Law Article, Annotated Code of Maryland, as
amended ("Article 9").
C. Accounting Terms. The accounting terms used in this
Agreement have the meanings customarily given them in
accordance with G.A.A.P., unless this Agreement expressly
provides a different meaning.
II. BASIC TERMS OF LOAN
A.1 Line of Credit. Subject to the continued compliance
of Borrower with the terms of this Agreement and all other
accompanying Loan documents and the continued absence of
any default by Borrower or any Other Obligor hereunder and
thereunder, Bank may advance to Borrower, for use by
Borrower as hereafter provided, such sums as Borrower may
request, but which shall not exceed in the aggregate at
any one time outstanding the lesser of the Borrowing Base
or the Maximum Line of Credit Amount. Borrower shall not
request any advance of proceeds of the Line of Credit
which exceeds the Maximum Line of Credit Amount or the
Borrowing Base or which would cause the aggregate amount
of advances made and outstanding under the Line of Credit
to exceed the Maximum Line of Credit Amount or the
Borrowing Base. If the aggregate amount of advances made
and outstanding under the Line of Credit shall at any time
and for any reason exceed the Maximum Line of Credit
Amount or the Borrowing Base, Borrower shall immediately
pay Bank the excess. Each advance shall be by automatic
credit. Bank shall make all advances by depositing funds
in Borrower's commercial account number 20-▇▇▇▇▇▇▇▇ or
such Bank account as may be agreed upon by Borrower and
Bank. Borrower shall use the proceeds of the Line of
Credit for short term working capital purposes including
the financing of Borrower's contracts and accounts
receivable. Within such limitations and subject to all of
the terms and conditions set forth herein and in the other
accompanying Loan documents, Borrower may borrow, repay,
and reborrow funds under the Line of Credit in accordance
with the terms and conditions of this Agreement.
A.2Auxiliary Revolver Facility. Subject to the continued
compliance of Borrower with the terms of this Agreement
and all other accompanying Loan documents and the
continued absence of any default by Borrower or any Other
Obligor hereunder and thereunder, Bank may advance to
Borrower, for use by Borrower as hereafter provided, such
sums as Borrower may request, but which shall not exceed
in the aggregate at any one time outstanding the lesser of
the Auxiliary Borrowing Base or the Auxiliary Maximum
Credit Amount. Borrower shall not request any advance of
proceeds of the Auxiliary Revolver Facility which exceeds
the Auxiliary Maximum Credit Amount or the Auxiliary
Borrowing Base or which would cause the aggregate amount
of advances made and outstanding under the Auxiliary
Revolver Facility to exceed the Auxiliary Maximum Credit
Amount or the Auxiliary Borrowing Base. If the aggregate
amount of advances made and outstanding under the
Auxiliary Revolver Facility shall at any time and for any
reason exceed the Auxiliary Maximum Credit Amount or the
Auxiliary Borrowing Base, Borrower shall immediately pay
Bank the excess. Each advance shall be by automatic
credit. Bank shall make all advances by depositing funds
in Borrower's commercial account number 20-▇▇▇▇▇▇▇▇ or
such Bank account as may be agreed upon by Borrower and
Bank. Borrower shall use the proceeds of the Auxiliary
Revolver Facility for costs related to the commencement of
any new contract (a "Permitted Auxiliary Use"). Within
such limitations and subject to all of the terms and
conditions set forth herein and in the other accompanying
Loan documents, Borrower may borrow, repay, and reborrow
funds under the Auxiliary Revolver Facility in accordance
with the terms and conditions of this Agreement.
Notwithstanding the foregoing, the Borrower cannot request
any advances under the Auxiliary Revolver Facility after
March 31, 2007, and one-third of the principal amount
outstanding on such date shall be paid on each of May 1,
2007, June 1, 2007 and July 1, 2007.
B. Advance Procedure. With respect to each advance and all
matters and transactions in connection therewith, Borrower
hereby irrevocably authorizes Bank to accept, rely upon,
act upon and comply with any oral or written instructions,
requests, confirmations and orders of any employee or
representative of Borrower who is so authorized or
designated as a signer of Loan documents under the
provisions of Borrower's most recent Banking and Borrowing
Resolutions or similar document on file with Bank.
Borrower acknowledges that the transmission between
Borrower and Bank of any such instructions, requests,
confirmations and orders involves the possibility of
errors, omissions, mistakes and discrepancies and agrees
to adopt such internal measures and operational procedures
as may be necessary to protect its interest. By reason
thereof, Borrower hereby assumes all risk of loss and
responsibility for, releases and discharges Bank from any
and all responsibility or liability for, and agrees to
indemnify, reimburse on demand and hold Bank harmless
from, any and all claims, actions, damages, losses,
liability and expenses by reason of, arising out of, or in
any way connected with or related to: (i) Bank's
accepting, relying and acting upon, complying with or
observing any such instruction, request, confirmation or
order; and (ii) any such error, omission, mistake, or
discrepancy, provided such error, omission, mistake or
discrepancy is not the result of negligence on the part of
Bank. Borrower may request an advance under the Auxiliary
Revolver Facility only if such request is accompanied with
documents, acceptable to the Bank in its sole discretion,
supporting the request and indicating that the proceeds of
such advance will be used only for a Permitted Auxiliary
Use.
C. Evidence of Loan; Terms of Repayment. The interest rates
on the Loan and the method of calculating interest upon
the Loan, the term of the Loan, the method and times of
repayment, and other conditions pertaining to the
repayment of the Loan shall at the option of Bank be
evidenced by Bank's form of promissory note or as
otherwise set forth in appropriate writings between the
parties as determined by Bank. The Loans shall be subject
to annual internal reviews of the Bank concurrent with the
delivery of the Borrowers' annual modified financial
statements. In the absence of a promissory note or other
applicable writing, the Loan shall be deemed to be
otherwise conclusively evidenced by Bank's record of
advances of proceeds of the Loan and Bank's record of
receipt of repayments and other bookkeeping entries
reflecting the payment of principal and interest, and
interest shall be deemed to accrue at the interest rate
reflected on Bank's records.
D. Statement of Account. Bank may at any time or from time
to time render a statement or statements of account to
Borrower for the Obligations or any portion thereof. Each
such statement shall be deemed to be correct and
conclusively binding on Borrower unless Borrower notifies
Bank to the contrary in writing within thirty (30) days
from the date of any such statement which Borrower deems
to be incorrect.
E. ARTS Fee. Borrower shall pay Bank a monthly ARTS fee of
$1,000 per month subject to change as announced by the
Bank from time to time. Bank may debit Borrower's
operating account to effectuate such payment, payable in
arrears.
F. Unused Commitment Fee. Borrower agrees to pay an unused
commitment fee on any difference between the Maximum Line
of Credit Amount and the amount of advances under the Line
of Credit, determined by the average of the daily amount
of credit outstanding during the specified period. The
fee will be calculated by multiplying such difference by
one-quarter percent (0.25%). This fee is due on September
30, 2006, and on the last day of each following quarter
until the Line of Credit has been terminated, payable in
arrears. Bank may debit Borrower's operating account to
effectuate such payment.
G. Commitment Fee. Prior to the execution of this Agreement,
Borrower has paid Bank a non-refundable commitment fee of
Thirty Thousand Dollars ($30,000).
III. GRANT OF SECURITY INTEREST
A. Collateral. As collateral security for all Obligations
of Borrower to Bank, and in consideration of advances from
Bank to Borrower, Borrower hereby confirms and restates
its prior grant and pledge to Bank of, a continuing
security interest in all of the following property:
1. All of Borrower's Equipment;
2. All of Borrower's Receivables;
3. All of Borrower's Inventory;
4. All of Borrower's now owned or hereafter acquired Goods,
Chattel Paper (including without limitation all Electronic
Chattel Paper and Tangible Chattel Paper), Instruments,
Documents, Investment Property, General Intangibles (including
without limitation all Payment Intangibles and Software),
Deposit Accounts, Letter-of-Credit Rights, As-Extracted
Collateral and Fixtures.
5. Other: Federal Assignment Claims Act assignment on all
U.S. Government contracts in excess of $100,000.00 and for a
term of six (6) months or more.
Borrower also confirms and restates its prior grant and
pledge to Bank of a continuing security interest in: (i)
all proceeds (including insurance proceeds) and products
of the above-described Collateral; (ii) any of Borrower's
assets in which Bank has been or is hereafter granted a
security interest under any other security agreements,
notes or other obligations or liabilities between Borrower
and Bank; (iii) any accounts, property, securities,
Investment Property or monies of Borrower which may at any
time be maintained at, assigned to, delivered to, or come
into possession of, Bank, as well as all proceeds and
products thereof; and (iv) all of the books and records
pertaining to any of the above-described items of
Collateral.
B. Borrower's Obligations. Borrower's Obligations under this
Agreement are irrevocable, absolute and unconditional, and
direct, immediate and primary.
IV. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
A. Accuracy. All information, financial statements and data
submitted to Bank by Borrower or any Other Obligor are
true, accurate and complete in all material respects.
B. Authority. Halifax is duly organized and existing in good
standing under the laws of the Commonwealth of Virginia.
Engineering, Microserv and AlphaNational are each duly
organized and existing in good standing under the laws of
the State of Delaware. Borrower is qualified to do
business and in good standing in all jurisdictions where
it conducts its business or its Receivables are located,
and has all requisite power, authority, licenses and
permits to own its property and carry on its business, and
Borrower shall deliver to Bank a written opinion of
counsel to such effect if requested by Bank. None of the
terms and conditions herein, or of any other agreement
executed by Borrower, are in violation of the charter or
by-laws, or other organizational documents of Borrower,
any contractual obligation Borrower may have with any
third party, or any order or decree by which Borrower is
bound, and the execution and delivery of this Agreement
have been duly authorized by appropriate corporate,
limited liability company or partnership action, and
Borrower shall deliver to Bank a written opinion of
counsel to such effect if requested by Bank.
C. Litigation. No litigation or other proceeding before any
court or administrative agency is pending, or to the
knowledge of Borrower, is threatened against Borrower, the
outcome of which could materially impair Borrower's
financial condition or its ability to carry on its
business. Borrower is not the subject of any pending
bankruptcy proceeding nor subject to the continuing
jurisdiction of a bankruptcy court as the result of an
approved plan of reorganization.
D. Financing Statements. No financing statement relating to
any of the Collateral is on file in any place, except for
any financing statement, (i) naming Bank as secured party
or (ii) which solely identifies VDOT Vendor
Liens/Assignments.
E. Assurance of Title. Borrower is the owner of all of the
Collateral, or, if proceeds of any note or notes secured
hereby are being used to purchase the Collateral, Borrower
shall be the owner thereof, free and clear of all claims,
encumbrances, charges and liens, except for VDOT Vendor
Liens/Assignments, purchase money security interests or as
herein provided.
F. Addresses. The principal place of business of Borrower,
the books and records relating to Borrower's business and
the Collateral, and the Collateral (other than trunk
stock) are located at the address(es) set forth on Exhibit
A to this Agreement.
G. Hazardous Substances. Borrower has never received any
notification, citation, complaint or notice of
investigation relating to the making, storing, handling,
generating or transporting of any materials or substances
which under applicable laws require special handling in
collection, storage, treatment or disposal ("Hazardous
Substances"), and Borrower does not own, make, store,
handle, dispose of or transport any Hazardous Substances
in violation of any applicable laws.
H. ERISA. Borrower and each of its affiliates and
subsidiaries ("ERISA Affiliates") which are under common
control, or are part of a controlled group, within the
meaning of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), are in compliance with all
applicable provisions of ERISA with regard to each of its
employee benefit plans (as defined in ERISA) ("Employee
Benefit Plans"). Neither a reportable event (as defined
in ERISA) nor a prohibited transaction (as defined in
ERISA) has occurred with respect to any Employee Benefit
Plan of Borrower or any ERISA Affiliate. Immediately upon
the occurrence of any such reportable event, Borrower
shall promptly furnish to Bank notice thereof, as filed
with Pension Benefit Guaranty Corporation ("PBGC").
Neither Borrower nor any ERISA Affiliate has completely or
partially withdrawn from any multiemployer plan and no
such multiemployer plan is in reorganization, all as
provided by ERISA. Borrower and each ERISA Affiliate has
met its minimum funding requirements and has no
unfulfilled obligations under ERISA to contribute to any
Employee Benefit Plan. Borrower shall promptly notify
Bank of any assertion by PBGC of liability of Borrower or
any ERISA Affiliate under Title IV of ERISA. The failure
of Borrower to pay within 30 days the amount of any
liability under Title IV of ERISA demanded by PBGC shall
constitute a default hereunder.
I. Taxes. There are no unpaid Federal, State, city, county,
or other taxes owed by Borrower, there are no Federal,
State, city, county or other tax liens presently filed
against Borrower, and there are no outstanding personal
property taxes of any kind.
J. Debarment and Suspension. No event has occurred and, to
the knowledge of Borrower, no condition exists that may
result in the debarment or suspension of Borrower from any
contracting with the Government, and neither Borrower nor
any affiliate of Borrower has been subject to any such
debarment or suspension prior to the date of this
Agreement.
K. Subsidiaries. Except for Engineering, AlphaNational and
Microserv, Halifax does not have any subsidiaries with
assets having a value in excess of $100. None of
Engineering, AlphaNational and Microserv has any
subsidiaries with assets having a value in excess of $100.
Halifax Realty Inc. ("Realty") is a wholly-owned
subsidiary of Halifax that has assets worth less than
$100.
L. VDOT Contract. Borrower has provided Bank a true and
complete copy of the VDOT Contract (including any
amendments to the original contract).
V. COVENANTS
Borrower covenants that:
A. Costs. Borrower shall pay all costs and expenses incident
to the making of the Loan and perfection of Bank's
security interests hereunder, including, but not limited
to, all attorneys' fees (to the extent not prohibited by
law) and all recordation costs and taxes incident to
filing of financing statements and continuation statements
in respect thereof.
B. Further Documents. Borrower shall execute and deliver to
Bank from time to time any instruments or documents,
including, but not limited to, financing statements,
amendments, continuation statements, mortgages, loss
payable endorsements for insurance policies, and
assignments of insurance policies and proceeds, and shall
do all things necessary or convenient to carry into effect
the provisions of this Agreement. Borrower designates
Bank or any of its officers as attorney-in-fact to sign
Borrower's name on any such instruments or documents, to
file the same as may be appropriate, and to request and
endorse Borrower's name to any and all requests described
in Section 9-210 of Article 9. Borrower agrees that filed
photocopies of financing statements and continuation
statements shall be sufficient to perfect Bank's security
interest hereunder.
C. Taxes. Borrower shall pay and discharge, when due, all
taxes, levies, liens, and other charges on any of its
assets and shall pay promptly, when due, all other taxes,
including withholding taxes.
D. Laws. Borrower shall comply at all times with all laws,
ordinances, rules and regulations of any Federal, State,
municipal or other public authorities having jurisdiction
over Borrower, the Collateral or any of Borrower's other
assets, including, but not limited to, ERISA and all laws
relating to Hazardous Substances.
E. Name and Location. Borrower shall immediately advise Bank
in writing of the opening of any new place of business or
the closing of any of its existing places of business, and
of any change in Borrower's name or the location of the
places where the Collateral, or books and records
pertaining to the Collateral, are kept.
F. Books and Records. Borrower shall maintain such records
with respect to the Collateral and the condition
(financial and otherwise) and operation of Borrower's
business as Bank may request from time to time, and shall
furnish Bank such information with respect to the
Collateral, Account Debtors, and the condition (financial
and otherwise) and operation of Borrower's business,
including, but not limited to, balance sheets, operating
statements, and other financial information, as Bank may
request from time to time. Bank may at any time and
without prior notice to Borrower and without the consent
of Borrower directly contact Account Debtors and verify or
confirm the status of the Receivables. Borrower shall
furnish Bank or cause to be furnished to Bank such
financial information with respect to any Other Obligor,
including, but not limited to, balance sheets, operating
statements, personal financial statements and other
financial information, as Bank may request from time to
time. Bank may discuss the affairs, finances and accounts
of Borrower with any of Borrower's officers and directors
and its independent accountants.
G. Field Examination. Bank or any of its agents or
representatives may from time to time, during normal
business hours, inspect, check, make copies of or extracts
from the books, records and files of Borrower, and visit
and inspect Borrower's offices and any of the Collateral
wherever located. Borrower shall make same available at
any time for such purposes, and shall pay all expenses
related to such inspections. Unless an Event of Default
has occurred and is continuing, such examinations will not
be conducted more frequently than semi-annually.
H. Reporting Requirements. In addition to such other
information (financial and otherwise) as Bank may require
from time to time, Borrower shall submit to Bank all
information to be submitted pursuant to the Reporting
Requirements Addendum attached hereto, as amended from
time to time.
I. Misrepresentation. Borrower shall not make or furnish
Bank any representation, warranty, or certificate in
connection with or pursuant to this Agreement which is
materially false.
J. Insurance. Borrower has and shall maintain insurance on
all of its assets and properties, including, but not
limited to, the Collateral, at all times and against
hazards, with companies, in amounts and in form acceptable
to Bank. Borrower shall annually submit to Bank original
insurance certificates providing that such insurance
policies have a Lenders Loss Payable Clause and Additional
Insured, and shall be noncancellable unless thirty (30)
days prior notice of cancellation is provided to Bank. In
event of any loss thereunder, the carriers named therein
are hereby directed to make such payment for loss solely
to Bank, and not to Borrower and Bank jointly or to any
other person. If any insurance losses are paid by check,
draft or other instruments payable to Borrower or to
Borrower and Bank jointly, Bank may endorse the name of
Borrower thereon and do such other things as Bank may deem
advisable in order to reduce the same to cash. In
addition, Borrower shall maintain at all times, public
liability insurance and all other coverages required by
Bank, naming Bank as additional insured, with companies,
in amounts and in form acceptable to Bank. All loss
recoveries received by Bank upon any insurance may be
applied and credited by Bank at its discretion to the
Obligations.
K. Bank's Duty of Care. Except as provided in this Paragraph
V.K., Bank's sole duty with respect to the Collateral
shall be to use reasonable care in the custody, use,
operation and preservation of the Collateral in its
possession, and Borrower shall reimburse Bank for all
costs and expenses, including insurance costs, taxes and
other charges, incurred in connection with the custody,
use, operation, care or preservation of the Collateral,
such reimbursement to be secured as provided above in
Paragraph III. In the event that Bank takes possession of
the Collateral by foreclosure as provided in Paragraph
VII.C. herein or otherwise, Bank may, but shall be under
no obligation to, take such actions as it may deem
appropriate to protect the Collateral by insurance or
otherwise, and any expense so incurred shall likewise be
reimbursed and secured as provided above in Paragraph III.
Bank shall incur no liability to Borrower for any failure
to provide adequate protection or insurance for the
Collateral acquired by Bank. Bank shall not be obligated
to take any steps necessary to preserve any rights in any
of the Collateral against prior parties, and Borrower
hereby agrees to take such steps. Borrower hereby waives
the defense of unjustifiable impairment of collateral with
respect to the Collateral and any other collateral for any
of the Obligations.
L. Equipment. If the Collateral includes Equipment, then the
covenants in this Paragraph ▇.▇. apply:
1. Repair. Borrower shall keep and maintain the
Equipment in good order and repair and in working
condition.
2. Personalty. The Equipment shall be and shall remain
personal property and nothing shall affect the
character of the same or cause the same to become
realty without the written consent of Bank, or
prevent Bank in its option from removing same from
premises on which they may become attached, in event
of default hereunder.
3. No Sale of Equipment. Without the prior written
consent of Bank, Borrower shall not sell or otherwise
dispose of any of the Equipment, except that items of
Equipment may be sold or exchanged if such Equipment
either (a) is replaced in the ordinary course of
Borrower's business to the satisfaction of Bank by
Equipment of a similar value and which is subject to
a security interest of Bank that is prior to all
liens other than purchase money security interests or
(b) has a fair market value (in the aggregate) of
less than Ten Thousand Dollars ($10,000).
4. Vehicles. If the Collateral includes a motor vehicle
for which a certificate of title is issuable,
Borrower shall deliver to Bank the certificate of
title issued with respect to such vehicle and shall
cause a statement of Bank's security interest to be
noted as a lien on such certificate of title.
M. Receivables. If the Collateral includes Receivables, then
the covenants in this Paragraph V.M. apply:
1. Bona Fide. Each and every Receivable shall (i) be
bona fide, be for a certain undisputed claim or
demand for the amount Borrower represented to be
owing thereon, (ii) represent a sale and delivery of
personal property sold or work and labor done, (iii)
not be subject to any set-off, counterclaim, or
contingent liability upon the fulfillment of any
contract or condition whatsoever, and (iv) shall not
be subject to any prohibition or limitation upon
assignment except as required by the Assignment of
Claims Act.
2. Books. If requested by Bank, Borrower shall make all
necessary entries in its books to disclose the grant
of a security interest in Receivables to Bank, and
permit Bank to verify Receivables.
3. Mail. Upon demand, Borrower shall open all mail only
in the presence of a representative of Bank, who may
take therefrom any remittance on Receivables securing
the Obligations. Bank is also granted the power of
attorney to have mail delivered to Bank, and not to
Borrower, and to open all mail and take therefrom any
remittance on any Receivables.
4. Signatures. Bank or its representative may endorse
or sign the name of Borrower on remittances in
respect of Receivables, invoices, assignments,
financing statements, notices to Account Debtors,
bills of lading, storage receipts, or other
instruments or documents in respect of Receivables or
the property covered thereby.
5. Collections. Borrower shall notify all Account
Debtors to make payment of their Receivables to Bank
for the deposit to the Cash Collateral Account as
herein provided. Each Account Debtor shall be
instructed to pay its Receivables (i) if by paper
check, by mailing such check to the following
address: Halifax Corporation, ▇.▇. ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and (ii) if by electronic funds
transfer, by wiring funds to Halifax Corporation, a/c
# 76-▇▇▇▇▇▇▇▇, Provident Bank ABA # 2520 7301 8. If
Borrower receives any payment of a Receivable, it
shall receive such payments on accounts as agent of
and for Bank and shall transmit to Bank, on the day
thereof, or at other mutually agreed upon intervals,
all original checks, drafts, acceptances, notes and
other evidences of payment received in payment of or
on account of Receivables, including all cash monies
similarly received by Borrower. For such purpose,
Borrower does hereby grant to Bank access to any post
office boxes in which mail is received. Until
delivery of all such remittances to Bank, Borrower
shall keep the same separate and apart from
Borrower's own funds, capable of identification as
the property of Bank, and shall hold the same in
trust for Bank. Further, Borrower agrees that Bank
may pay, for the account of Borrower, any taxes,
levies, or other charges affecting Borrower's assets,
including, but not limited to, Inventory or Equipment
which Borrower fails to pay, including all other
taxes and levies, and any such payment shall
constitute a liability of Borrower. Bank shall have
the right to receive, indorse, assign and deliver in
Bank's name or Borrower's name any and all checks,
drafts and other instruments for the payment of money
relating to the Receivables, and Borrower hereby
waives notice of presentment, protest and non-payment
of any instrument so endorsed. Borrower constitutes
Bank or Bank's designee as Borrower's attorney-in-
fact with power with respect to the Receivables: (i)
to endorse Borrower's name upon any notes,
acceptances, checks, drafts, money orders or other
evidences of payment of Collateral that may come into
Bank's possession; (ii) to sign Borrower's name on
any invoices relating to any of the Receivables,
drafts against Account Debtors, assignments and
verifications of Receivables and notices to Account
Debtors; (iii) to notify the post office authorities
to change the address for delivery of mail addressed
to Borrower to such address as Bank may designate;
(iv) to receive, open, and dispose of mail addressed
to Borrower; (v) to do all other acts and things
necessary, proper, or convenient to carry out the
terms and conditions and purposes and intent of this
Agreement. The power of attorney hereby granted,
being coupled with an interest, is irrevocable while
any of the Obligations remain unpaid or unperformed.
Bank may, without notice to or consent from Borrower
and without affecting Borrower's obligations
hereunder, ▇▇▇ upon or otherwise collect, extend the
time of payment of or compromise or settle for cash,
credit or otherwise upon any terms, any of the
Receivables or any securities, guaranties,
instruments or insurances applicable thereto or
release the obligor thereon. Bank is authorized and
empowered to accept the return of any Collateral
represented by any of the Receivables without notice
to or consent by Borrower, all without discharging or
in any way affecting Borrower's liability to Bank.
Bank does not, by anything herein or in any
assignment or otherwise, assume any of Borrower's
obligations under any contract or agreement assigned
to Bank, and Bank shall not be responsible in any way
for the performance by Borrower of any of the terms
and conditions thereof.
6. Cash Collateral Account. All remittances in payment
of the Receivables securing the Obligations shall be
deposited with Bank (or any other bank designated by
Bank) in an account designated as "Provident Bank
(name of Borrower), Cash Collateral Account", if the
Bank should desire. Such deliveries and deposits
shall be made daily and each deposit shall be
accompanied by a report in such form as Bank shall
require. All funds held in the Cash Collateral
Account may be applied against the Obligations at the
discretion of Borrower. In the event any checks or
drafts deposited in the Cash Collateral Account are
dishonored, Bank is hereby irrevocably authorized to
debit any other account of Borrower at Bank in an
amount equal to the amount of the checks or drafts
dishonored and deposit such sums in the Cash
Collateral Account. If thereafter the dishonored
check or draft is honored and Bank receives
immediately available funds therefore, Bank shall
deposit such funds into the account of Borrower which
was previously debited. If any checks or drafts
deposited in the Cash Collateral Account are drawn on
a financial institution located outside of the United
States of America, Bank is hereby irrevocably
authorized to debit any other account of Borrower at
Bank in an amount equal to the United States dollar
equivalent of the amount of such checks or drafts and
deposit such sums in the Cash Collateral Account.
Upon receipt of immediately available funds for any
such checks or drafts Bank shall deposit the
collected funds into Borrower's account at Bank which
was previously debited. All of the Borrower's
primary operating accounts shall be maintained with
the Bank as long as this Agreement is in effect.
7. Cancellation of Contracts. Borrower shall notify Bank in
writing of any cancellation of a contract having annual
revenues in excess of $250,000.
8. Government Contracts. In the event any Receivables
arise out of contracts with the Government, Borrower
shall assign to Bank all Government Contracts with
amounts payable of $100,000 or greater and in
duration of six (6) months or longer, and execute all
other agreements, instruments and documents and shall
perform all further acts that Bank may require to
ensure compliance with the Assignment of Claims Act
with respect to such Government Contracts.
9. VDOT Contract Amendments. Borrower shall promptly
provide Bank with copies of all amendments to the
VDOT Contract.
10. VDOT Vendor Liens/Assignments. Upon request,
Borrower shall promptly provide Bank with copies of
all documents effectuating or related to any VDOT
Vendor Liens/Assignments.
N. Inventory. If the Collateral includes Inventory, then the
covenants in this Paragraph V.N. apply:
1. Signatures. Bank or its representative may endorse
or sign the name of Borrower on remittances in
respect to Inventory, assignments, invoices,
financing statements, notices to debtors, bills of
lading, notices to suppliers, storage or other
instruments or documents in respect to Inventory or
the property covered thereby.
2. Audit. Bank or its representative may from time to
time verify Inventory, through actual count or
otherwise, and Borrower shall make same available at
any time for such purpose.
3. Sales. So long as neither Borrower nor any Other
Obligor is in default of any of the Obligations,
Inventory subject to Bank's continuing security
interests may be sold by Borrower in the ordinary
course of business, but shall not otherwise be taken
or removed from Borrower's premises.
O. Investment Property. If the Collateral includes stocks,
bonds or other Investment Property of Borrower, then the
covenants in this Paragraph V.O. apply:
1. Transfers. All certificates or instruments
representing or evidencing such investment property
shall be in suitable form for transfer by delivery,
shall be in form and substance satisfactory to Bank
and shall be delivered to and held by or on behalf of
Bank; Bank is hereby authorized, at its option and
without any obligation to do so, to transfer to or to
register in the name of its nominee(s) all of any
part of such Investment Property, and to do so before
or after default or the maturity of the Obligations
secured hereby, with or without notice to Borrower;
Bank shall have the right at any time to exchange
certificates or instruments representing or
evidencing such Investment Property for certificates
or instruments of smaller or larger denominations;
Bank shall have control over any securities accounts
or security entitlements which constitute Collateral,
pursuant to terms acceptable to Bank.
2. Dividends. In the event that a stock dividend is
declared, or any stock split-up made, with respect to
any security pledged hereunder, or cash or other
property is distributed in connection with a partial
or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-
in surplus, or property other than cash is
distributed as a dividend, all the certificates for
the shares representing such stock dividend or stock
split-up, and all of such cash and other property,
shall be delivered, duly endorsed, to Bank as
additional security hereunder.
3. Attorney-in-Fact. Borrower hereby appoints Bank
Borrower's attorney-in-fact with full authority in
the place and stead of Borrower and in the name of
Borrower or otherwise, from time to time in Bank's
discretion to take any action and to execute any
instrument which Bank may deem necessary or advisable
to accomplish the purposes of this Agreement,
including, but not limited to, receiving, endorsing
and collecting all checks and other Instruments made
payable to Borrower representing any dividend,
interest payment, or other distribution in respect of
the pledged Investment Property or any part thereof
and giving full discharge for the same.
P. Government Contract Audits. Promptly after Borrower's
receipt thereof, Borrower shall furnish Bank with notice
of any final decision of a contracting officer disallowing
costs aggregating more than $100,000 which disallowed
costs arise out of any audit of Government Contracts of
Borrower.
Q. Subsidiaries. If any Borrower creates or acquires a
subsidiary containing assets having a value in excess of $100,
Borrower shall cause such subsidiary to become a Borrower or
Other Obligor hereunder (in a form acceptable to Bank).
Borrower will not transfer or permit the transfer of any assets
to Realty, and will cause Realty to be liquidated as soon as
practicable.
R. Change in Control or Sale. Without the prior written
consent of Bank, Borrower shall not permit a change in ownership
of more than 25% of the stock or other equity interests of
Halifax, Engineering, AlphaNational, Microserv or any other
entity constituting a Borrower, or permit any such entity to
enter into any merger or consolidation, or sell or lease
substantially all of its assets.
S. Sale or Assignment of Contract or Subsidiary. Without the
prior written consent of Bank, Borrower shall not sell or assign
any or all interest in any (i) contract or (ii) any subsidiary
of Halifax, Engineering, AlphaNational, Microserv or any other
entity constituting a Borrower.
T. Dividends. Without the prior written consent of Bank,
Borrower shall not make any distributions on behalf of equity or
pay any dividends.
U. Payments of Debt. Without the prior written consent of
Bank, Borrower shall not make any payments of debt to any person
or entity, or make any distributions (including loans or
withdrawals) of any kind to any officers, employees or members,
other than (i) purchase money financings permitted hereunder,
(ii) payments to employees (including loans and travel advances)
made in the ordinary course of business, and (iii) payments to
the Bank.
V. Further Covenants. Without the prior written consent of
Bank, Borrower shall not: (i) other than purchase money
security interests or VDOT Vendor Liens/Assignments, pledge or
grant any security interest in any Collateral to anyone except
Bank, nor permit any financing statement (except Bank's
financing statement) to be on file in any public office with
respect thereto; (ii) other than purchase money security
interests or VDOT Vendor Liens/Assignments, permit or suffer any
lien, levy or other encumbrance to attach to any of the
Collateral or to any other assets of Borrower, except for liens
and encumbrances in favor of Bank; (iii) permit a material
change in any Receivable, or a material change in the terms of
any contract giving rise to a Receivable; (iv) make any
agreement, compromise, settlement, bulk sale, lease or transfer
of assets other than in the normal course of business;
(v) create, incur or assume any liability for borrowed money,
except borrowings from Bank, trade debt, and purchase money
financings not to exceed $250,000 in any one year; (vi) assume,
guarantee, endorse or otherwise become liable in connection with
the obligations of any person, firm or corporation, except by
endorsement of instruments for deposit or collection or similar
transactions in the ordinary course of business; or
(vii) purchase or acquire substantially all of the assets or the
obligations or stock of any person, firm or corporation or other
enterprises whatsoever, other than the direct obligations of the
United States or Bank.
VI. EVENTS OF DEFAULT. The following shall constitute a
default hereunder if existing ten (10) days after written
notice thereof has been given to the Borrower; provided,
however, that the occurrence of an event under Paragraphs
VI.C, VI.D, VI.F, VI.H, VI.I or VI.J or a failure by Borrower
to comply with Paragraph V.M.6 or make any payment hereunder
when due shall automatically be a default hereunder:
A. Nonperformance. Default by Borrower under, or breach of
any provision, covenant or warranty of, this Agreement,
any other instrument, agreement or document in connection
with any of the Obligations, or any other instrument,
agreement or document of Borrower with Bank, whether such
instrument, agreement or document presently exists or is
hereafter executed; or default by any Other Obligor under,
or breach of any provision or warranty of, this Agreement,
any other instrument, agreement or document in connection
with any of the Obligations, or any other instrument,
agreement or document of any Other Obligor with Bank,
whether such instrument, agreement or document presently
exists or is hereafter executed;
B. Representations and Warranties. Any warranty,
representation, or statement made to Bank by or on behalf
of Borrower or any Other Obligor proving to have been
incorrect in any material respect when made or furnished;
C. Financial Condition. A determination by Bank in good
faith, but in its sole discretion, that the financial
condition of Borrower or any Other Obligor is
unsatisfactory; insolvency of Borrower or any Other
Obligor; suspension of business, or commission of an act
amounting to business failure by Borrower or any Other
Obligor;
D. Assignments. Any assignment made by Borrower or any Other
Obligor for the benefit of creditors;
E. Judgments. The entry of any final judgment against
Borrower or any Other Obligor for the payment of money in
excess of $100,000.00;
F. Bankruptcy. Institution of bankruptcy, insolvency,
reorganization or receivership proceedings by or against
Borrower or any Other Obligor in any State or Federal
court or the appointment of a receiver, assignee,
custodian, trustee or similar official under any Federal
or State insolvency or creditors' rights law for any
property of Borrower or any Other Obligor; provided that
Borrower shall have sixty (60) days to dismiss any
involuntary bankruptcy proceeding to which it does not
consent;
G. Extraordinary Acts. A dissolution, liquidation or
reorganization of Borrower or any Other Obligor which is a
corporation, partnership, limited liability company or
other legal entity;
H. Attachments. The levy upon or attachment of any property
of Borrower or any Other Obligor, or the recordation of
any Federal, State or local tax lien against Borrower or
any Other Obligor that has not been removed or satisfied
within thirty (30) days;
I. Change in Ownership. A change in more than 25% of the
ownership of Halifax without the prior written consent of
Bank;
J. Cross-Default. The occurrence of any event which is, or
would be with the passage of time or the giving of notice
or both, a default under any indebtedness in excess of
$100,000 of Borrower or any Other Obligor to Bank or to
any person other than Bank;
K. Loss or Damage; Transfer or Encumbrance. Any material
loss, theft or substantial damage not fully insured for
the benefit of Bank to any of the assets of Borrower or
any Other Obligor or the transfer or encumbrance of any
material part of the assets of Borrower or any Other
Obligor other than in the ordinary course of business of
Borrower or such Other Obligor;
L. Debarment or Suspension. The debarment or suspension of
Borrower or any Other Obligor from any contracting with
the Government; or
M. Financial Information. The failure of Borrower or any Other
Obligor to furnish Bank such financial information as Bank may
require from time to time.
VII. REMEDIES
A. Specific Rights and Remedies. In addition to all other
rights and remedies provided by law and the Loan
documents, Bank, on the occurrence of any default, may:
(i) accelerate and call due and payable any and all of the
Obligations, including all principal, accrued interest and
other sums due as of the date of default; (ii) impose the
default rate of interest provided in any promissory note
evidencing the Loan, with or without acceleration; (iii)
file suit against Borrower or against any Other Obligor;
(iv) seek specific performance or injunctive relief to
enforce performance of the Obligations, whether or not a
remedy at law exists or is adequate; (v) exercise any
rights of a secured creditor under the Uniform Commercial
Code, including the right to take possession of the
Collateral without the use of judicial process or hearing
of any kind and the right to require Borrower to assemble
the Collateral at such place as Bank may specify; (vi)
cease making advances or extending credit to Borrower and
stop and retract the making of any advance which may have
been requested by Borrower; and (vii) reduce the Maximum
Line of Credit Amount. Borrower also hereby authorizes
Bank, upon a default, but without prior notice to or
demand upon Borrower and without prior opportunity of
Borrower to be heard, to institute an action for replevin,
with or without bond as Bank may elect, to obtain
possession of any of the Collateral. In such action for
replevin, a copy of this Agreement verified by affidavit
of Bank or sworn on behalf of Bank shall constitute
evidence of Bank's right to possession of the Collateral.
B. Costs of Collection. Upon the occurrence of any default,
Bank shall be entitled to recover from Borrower reasonable
attorneys' fees, plus court costs and other expenses which
may be incurred by Bank in the enforcement or attempted
enforcement of its rights hereunder, whether against any
third party, Borrower, or any Other Obligor. Expenses
recoverable from Borrower shall (to the extent not
prohibited by law) include costs of collection, including
such portion of Bank's overhead as Bank shall allocate to
collection and enforcement of the Obligations in Bank's
sole but reasonable discretion, salaries, out-of-pocket
travel, living expenses and the hiring of agents,
consultants, accountants, or otherwise. All sums of money
thus expended, and all other monies expended by Bank to
protect its interest in the Collateral (including
insurance, taxes or repairs) shall be repayable by
Borrower to Bank on demand, such repayment to be secured
as provided in Paragraph III hereof.
C. Foreclosure. Upon the occurrence of any default, in
addition to other remedies provided under the Uniform
Commercial Code, Bank at any time then or thereafter, in
its discretion, may lawfully enter any of Borrower's
premises or the premises where the Collateral is located,
and with or without judicial process, lawfully remove,
under Section 9-609 of the Uniform Commercial Code, the
Collateral or records thereof to such place as Bank may
deem advisable, or require Borrower to assemble and make
any or all such Collateral available at such reasonable
place as Bank may direct, and realize upon (by public or
private sale or in any other manner) all or any part of
the Collateral and, unless the Collateral is perishable or
threatens to decline speedily in value, or is of a type
customarily sold on a recognized market, Bank shall give
Borrower, and other parties entitled to notice, reasonable
notice in writing before the sale of the Collateral or any
part thereof at public auction or private sale, in one or
more sales, at such price or prices, and upon such terms
either for cash or credit or future delivery as Bank may
elect, and at any such public sale Bank may bid for and
become the purchaser of any or all of such Collateral;
and/or Bank may foreclose its security interest in the
Collateral in any way permitted by law. In connection with
any notices to be given pursuant to this Paragraph VII.C.,
it is agreed in all instances that five (5) business days
notice constitutes reasonable notice. Any such notice
shall be deemed given when delivered or deposited in the
U.S. mail with first class postage. The net proceeds of
any such sale or sales and any amounts received in
liquidation of the Collateral, less all costs and expenses
incurred in connection therewith, including the costs of
collection described in Paragraph VII.B above and, at the
option of Bank or as required by law, less any prior lien
claims, shall be applied against the Obligations in the
order that Bank in its sole discretion shall decide, and
Borrower or other party entitled thereto shall be entitled
to any surplus resulting therefrom. No action taken by
Bank pursuant hereto shall affect Borrower's continuing
liability to Bank for any deficiency remaining after any
foreclosure. It is mutually agreed that it is
commercially reasonable for Bank to disclaim all
warranties which arise with respect to the disposition of
the Collateral.
D. Redemption. The purchaser at any such sale shall
thereafter hold the Collateral absolutely free from any
claim or right of whatsoever kind including any equity of
redemption of Borrower, and such demand, notice or right
in equity are hereby expressly waived and released by
Borrower.
E. Offset. Upon the occurrence of any default, Bank is
authorized to charge the sum then due to Bank against any
and all monies held by or on deposit with Bank on account
of Borrower or its affiliates, and to offset any amounts
against any demand or depository accounts which Borrower,
or its affiliates, may have with Bank and to enforce such
other remedies as may be available at law or in equity,
without necessity of election.
F. Alternative Remedies. Bank may exercise its rights and
remedies hereunder either alternatively or concurrently
with its rights under any and all other agreements between
Bank and Borrower and shall have the full right to realize
upon all available Collateral, collecting on the same or
instituting proceedings in connection therewith, until
Bank receives payment in full of all amounts owing to Bank
under any of its agreements with Borrower, including
principal, interest, costs and expenses, and costs of
enforcement or attempted enforcement of this or any other
agreement among or between Bank and Borrower or any Other
Obligors. Bank shall be under no obligation to pursue
Bank's rights against any Other Obligor or any of the
collateral of any Other Obligor securing any of the
Obligations before pursuing Bank's rights against
Borrower, or the Collateral.
VIII.GENERAL PROVISIONS
A. Continuity and Termination. This Agreement shall become
effective immediately and remain in effect so long as any
of the Obligations are outstanding and unpaid, provided
that the security interests hereunder shall continue in
full force and effect and are noncancellable by Borrower
prior to the termination of this Agreement. This
Agreement may be terminated by Borrower upon actual
delivery of written notice to Bank of such intention, and
payment in full of all then existing Obligations;
provided, however, that such notice and payment shall in
no way affect, and this Agreement shall remain fully
operative with respect to, any Obligations (including
contingent Obligations), or commitments which may become
Obligations, entered into between Borrower and Bank prior
to receipt of such notice or payment, whichever is later.
B. Right of Bank to Act with Respect to Other Obligors and
Collateral. Borrower hereby assents to any and all terms
and agreements between Bank and any Other Obligor, and all
amendments and modifications thereof, whether presently
existing or hereafter made and whether oral or in writing.
Bank may, without compromising, impairing, diminishing, or
in any way releasing Borrower from the Obligations and
without notifying or obtaining the prior approval of
Borrower, at any time or from time to time: (i) waive or
excuse any default by any Other Obligor, or delay in the
exercise by Bank of any or all of Bank's rights or
remedies with respect to such default; (ii) grant
extensions of time for payment or performance by any Other
Obligor; (iii) release, substitute, exchange, surrender,
or add collateral of any Other Obligor, or waive, release,
or subordinate, in whole or in part, any lien or security
interest held by Bank on any real or personal property
securing payment or performance, in whole or in part, of
the obligations of any Other Obligor; (iv) release any
Other Obligor; (v) apply payments made by any Other
Obligor, to any sums owed by any Other Obligor to Bank, in
any order or manner, or to any specific account or
accounts, as Bank may elect; and (vi) modify, change,
renew, extend, or amend, in any respect Bank's agreement
with any Other Obligor, or any document, instrument, or
writing, embodying, or reflecting the same.
C. Waivers By Borrower. Borrower waives: (i) any and all
notices whatsoever with respect to this Agreement or with
respect to any of the obligations of any Other Obligor to
Bank, including, but not limited to, notice of: (a)
Bank's acceptance hereof or Bank's intention to act, or
Bank's action, in reliance hereon; (b) the present
existence or future incurring of any of the obligations of
any Other Obligor to Bank or any terms or amounts thereof
or any change therein; (c) any default by any Other
Obligor; and (d) the obtaining or release of any guaranty
or surety agreement, pledge, assignment, or other security
for any of the obligations of any Other Obligor to Bank;
(ii) presentment and demand for payment of any sum due
from any Other Obligor and protest of nonpayment; (iii)
demand for performance by any Other Obligor; and
(iv) defenses based on suretyship or impairment of
collateral.
D. Information Concerning Collateral or Other Obligors. Bank
shall have no present or future duty or obligation to
discover or to disclose to Borrower any information,
financial or otherwise, concerning any Other Obligor or
any collateral securing the Obligations. Borrower waives
any right to claim or assert any such duty or obligation
on the part of Bank. Borrower agrees to obtain all
information which Borrower considers appropriate or
relevant to this Agreement from sources other than Bank
and to become and remain at all times current and
continuously apprised of all information concerning Other
Obligors and any Collateral which is material and relevant
to the Obligations of Borrower under this Agreement.
E. Other Documents. The Obligations are or shall be
evidenced by notes, guaranties, addenda or other documents
which are separate agreements and may be negotiated by
Bank without releasing Borrower, any Collateral or any
Other Obligor. Without limitation of the foregoing,
Borrower may have executed and delivered to Bank a Formula
Advance Addendum, a Reporting Requirements Addendum and/or
a Financial Covenants Addendum which modify and supplement
this Agreement and Borrower's obligations hereunder. This
Agreement specifically incorporates by reference all of
the language and provisions of such notes, guaranties,
addenda or other documents. Borrower consents to any
extension of time of payment of any Obligations. If there
is more than one Borrower or Other Obligor, the obligation
of each of them shall be primary, joint and several.
F. Remedies Cumulative. All rights, remedies and powers of
Bank hereunder are irrevocable and cumulative, and not
alternative or exclusive, and shall be in addition to all
other rights, remedies and powers of Bank whether in or by
any other instruments, agreements or any laws, including,
but not limited to, the Uniform Commercial Code, now
existing or hereafter enacted.
G. Non-Waiver. No indulgence or delay on the part of Bank in
exercising any power, privilege or right hereunder or
under any other agreement executed by Borrower to Bank in
connection herewith shall operate as a waiver thereof. No
single or partial exercise of any power, privilege or
right shall preclude other or further exercise thereof, or
the exercise of any other power, privilege or right.
H. Governing Law; Severability. This Agreement shall be
construed and governed by the laws of the State of
Maryland, If any part of this Agreement shall be adjudged
invalid or unenforceable as of any term of court, then
such partial invalidity or unenforceability shall not
cause the remainder of this Agreement to be or become
invalid or unenforceable, and if a provision hereof is
held invalid or unenforceable in one or more of its
applications, that provision shall remain in effect in all
valid or enforceable applications that are severable from
the invalid or unenforceable application or applications.
I. Litigation. In the event of any litigation with respect
to this Agreement, the promissory note(s) or other
agreements evidencing and securing the Obligations, the
Collateral, or any other document or agreement applicable
thereto, Borrower waives all defenses (including the
defense of statute of limitations). Borrower consents to
the jurisdiction and venue of the courts of any county or
city in the State of Maryland and to the jurisdiction and
venue of the United States District Court for the District
of Maryland in any action or judicial proceeding brought
to enforce, construe or interpret this Agreement.
J. Construction. All accounting terms not otherwise defined
in this Agreement shall be interpreted in accordance with
G.A.A.P. The captions are inserted only as a matter of
convenience and for reference and in no way define, limit
or describe the scope of this Agreement nor the intent of
any provision thereof. If this Agreement is signed by two
or more parties as Borrowers, the term "Borrower" shall
mean each and every party signing this Agreement as a
Borrower. The use of singular herein may also refer to
the plural, and vice versa, and the use of the neuter or
any gender shall be applicable to any other gender or the
neuter.
K. Assignment. None of the parties shall be bound by any
assignment not expressed in writing. This Agreement shall
inure to and be binding upon the heirs, personal
representatives, successors, and assigns of Borrower and
Bank, and the terms "Borrower" and "Bank" shall include
and mean, respectively, the successors and assigns of
Borrower and Bank.
L. Time. Time is of the essence of all Obligations.
M. Joint And Several Obligations. In the event there is more
than one Borrower hereunder, all obligations and
liabilities under this Agreement shall be joint and
several obligations and liabilities of each Borrower. In
addition, all covenants and agreements of Borrower
hereunder shall be applicable to each Borrower
individually and all Borrowers collectively. The
occurrence of any event or occurrence set forth herein as
a default to any one Borrower shall constitute a default
under this Agreement as to all Borrowers.
N. Notices. Any notice or demand required or permitted by or
in connection with this Agreement or any other loan
document shall be in writing and shall be made by hand
delivery, by Federal Express or other similar overnight
delivery service, or by certified mail, unrestricted
delivery, return receipt requested, postage prepaid,
addressed to the respective parties at the appropriate
address set forth on the signature page hereof or to such
other address as may be hereafter specified by written
notice by the respective parties. Notice shall be
considered given as of the date of facsimile or hand
delivery, one (1) calendar day after delivery to Federal
Express or similar overnight delivery service, or three
(3) calendar days after the date of mailing, independent
of the date of actual delivery or whether delivery is ever
in fact made, as the case may be, provided the giver of
notice can establish the fact that notice was given as
provided herein. If notice is tendered pursuant to the
provisions of this section and is refused by the intended
recipient thereof, the notice, nevertheless, shall be
considered to have been given and shall be effective as of
the date herein provided. Notwithstanding anything to the
contrary, all notices and demands for payment from the
holder actually received in writing by Borrower shall be
considered to be effective upon the receipt thereof by
Borrower regardless of the procedure or method utilized to
accomplish delivery thereof to Borrower.
IX. ADDITIONAL COVENANTS
A. Primary Depository. As long as this Agreement or any
other credit agreement between Borrower and Bank remains
in effect, Borrower shall make Bank its primary depository
and cash management financial institution. All of
Borrower's Operating accounts shall provide for automatic
payments of interest, late charges and service charges.
X. ADDRESSES
Address of Chief Executive Office of Borrower:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Address of Location of Books and Records
Relating to Collateral: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
XI. Waiver of Trial by Jury. Borrower and Bank agree that any
suit, action, or proceeding, whether claim or counterclaim,
brought or instituted by or against either party hereto or any
successor or assign of either party on or with respect to this
Agreement or any other Loan document or which in any relates,
directly or indirectly, to the Obligations or any event,
transaction or the dealings of the parties with respect
thereto, shall be tried only by a court and not by a jury.
BORROWER AND BANK HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL
BY JURY IN ANY SUCH SUIT, ACTION, OR PROCEEDING. Borrower and
Bank acknowledge and agree that this provision is a specific
and material aspect of this Agreement between the parties and
that Bank would not extend the Loan to Borrower if this waiver
of jury trial provision were not a part of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, and intending to be legally bound
hereby, Borrower has executed this Agreement under seal as of
the day and year first above written at Baltimore, Maryland.
WITNESS OR ATTEST*:
*Note: Attestation of a corporate officer's capacity to sign by
another corporate officer is required in all corporate
transactions.
HALIFAX CORPORATION
_______________ By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇(SEAL)
(Signature) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Financial Officer
HALIFAX ENGINEERING, INC.
______________________ By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇(SEAL)
(Signature) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President, Secretary and
Treasurer
MICROSERV LLC
_____________________ By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (SEAL)
(Signature) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President, Secretary and
Treasurer
HALIFAX ALPHANATIONAL ACQUISITION, INC.
_____________________ By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (SEAL)
(Signature) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President, Secretary and
Treasurer
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Federal Tax Identification
No.▇▇-▇▇▇▇▇▇▇
ACCEPTED AT FALLS CHURCH, VIRGINIA,
AS OF THE DATE HEREOF:
PROVIDENT BANK
By: /s/E. Gay ▇▇▇▇▇▇▇(SEAL)
E. ▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President
EXHIBIT A
LOCATIONS OF BOOKS, RECORDS AND COLLATERAL
# 3869482_v4
