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Exhibit 10.11
MAXIMUS
HELPING GOVERNMENT SERVE THE PEOPLE
January 30, 1997
Xx. Xxxx X. Xxxxxx
Crestar Bank
0000 Xxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Re: Consents and Extension Request
Dear Xxxx:
MAXIMUS, Inc. (the "Borrower") currently has a $10,000,000.00 revolving
line of credit (the "Line") with Crestar Bank (the "Bank"). The Line is
evidenced by a commercial note (the "Note") dated April 10, 1996 and is
governed by the letter agreement dated June 29, 1995, as amended by the letter
amendment dated April 10, 1996 (collectively, the "Agreement"). The Borrower is
writing to request (i) certain waiver and consents under the Note and
Agreement in connection with the Borrower's proposed Offering (defined below)
and (ii) an extension of the term of the Line. Capitalized terms used herein
and not otherwise defined herein shall have the meanings set forth in the
Agreement and Note.
1. Request for Waiver and Consents
The Borrower anticipates making an initial public offering of its Common
Stock in March 1997 (the "Offering"). In connection with and prior to the
Offering, the Borrower will make a distribution to its current shareholders of
all or a portion of the Borrower's retained earnings on which taxes have been
paid, or will be due, to date (the "Distribution"). In order for the Borrower
to effect both the Distribution and the Offering, the Bank needs to grant
certain waiver and consents. By executing a copy of this letter the Bank agrees
as follows:
1.1 Waiver of Notice and Consent to the Distribution: The Bank hereby
waives the requirement, under subsection (h) of the Section entitled
"Covenants" in the Agreement, that the Borrower must notify the Bank in
writing, 60 days prior to the payment of the Distribution described in this
letter. And, further, the Bank consents to such Distribution subject to (a) the
Borrower closing the Offering simultaneously with the Distribution and (b) the
Borrower's stockholders equity (as defined per GAAP) does not decline as a
result of the Distribution and Offering.
1.2 Consent of the Offering to the Public: The Bank hereby consents to
the Offering of shares of Common Stock of the Borrower to the public, which
Offering shall not be deemed an event triggering default of the line under
subsection (g), or any other subsection, of the section entitled "Default,
Acceleration and Setoff" in the Note.
2. Request for an Extension of the Term of the Line
The Line is currently due to terminate on March 31, 1997 (the
"Termination Date"). By Execution of this letter, the Bank agrees to the
Termination Date of the line, as defined in the second paragraph of the
Agreement, to mean April 30, 1997.
MAXIMUS OFFICE CENTER - 0000 XXXXXXX XXXX/XxXXXX, XXXXXXXX 00000 - (000) 000-0000 - FAX (000) 000-0000
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Please execute a copy of this letter in the space provided below.
Sincerely,
MAXIMUS, Inc.
By: /s/ X. Xxxxxx Xxxxxx
----------------------------
Title: Chief Financial Officer
-------------------------
Accepted and Agreed:
Crestar Bank
By: /s/ Xxxx X. Xxxxxx
------------------------
Title: Vice President
---------------------
MAXIMUS
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Crestar Bank
0000 Xxxxx Xxxxxxxxx
Xxxxxx, XX 00000-0000
April 10, 1996
Xx. Xxxxx X. Xxxxxxx
Chief Executive Officer
MAXIMUS, Inc.
0000 Xxxxxxx Xxxx
XxXxxx, Xxxxxxxx 00000
Dear Xxxxx:
The purpose of this letter amendment (the Amendment) is to amend certain
provisions of the letter agreement, dated June 29, 1995 (as amended from time to
time, the Agreement), between Crestar Bank, a Virginia banking corporation (the
Bank), and MAXIMUS, Inc., a Virginia corporation (the Borrower). Terms defined
in the Agreement shall have the same defined meanings when such terms are used
in this Amendment.
The Borrower has requested that the Bank amend certain terms of the
Agreement. The Bank has agreed to do so, subject to the terms and conditions of
this Amendment. Accordingly, by signing below, the Bank and the Borrower agree
as follows:
1. The first sentence of the first paragraph of the Agreement is deleted
in its entirety and is replaced with the following language:
"Crestar Bank (the BANK) is pleased to advise you that it has
established a $10,000,000 revolving line of credit (the LINE), under which
up to $5,000,000 in letters of credit (the LC SUBFACILITY) may be issued,
for MAXIMUS, Inc., a Virginia corporation (the BORROWER), subject to the
terms, covenants and conditions set forth in this letter agreement (as
amended from time to time, the AGREEMENT)."
2. The second paragraph of the Agreement, entitled "AMOUNT," is deleted in
its entirety and is replaced with the following language:
"AMOUNT. The aggregate principal amount of Advances under the Line
outstanding at any time shall not exceed the lesser of the Borrowing Base
or $10,000,000 (the MAXIMUM AMOUNT); provided, however, that the Maximum
Amount shall be reduced by an amount equal to the aggregate of the face
amounts of the Letters of Credit, whether such Letters of Credit are now
outstanding or hereafter issued. Within this limit, the Borrower may
borrow, repay and reborrow until
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March 31, 1997 (the TERMINATION DATE); provided, however, that no Advance
shall be disbursed and no Letter of Credit shall be issued by the Bank if,
after such disbursement or issuance, the aggregate outstanding principal
amount of the Advances and the aggregate outstanding face amounts of the
Letters of Credit would exceed the Borrowing Base. The Borrower shall
immediately prepay the Advances to the extent that the aggregate
outstanding principal amount of the Advances and the aggregate outstanding
face amounts of the Letters of Credit exceed the Borrowing Base at any
time, and if no Advances are then outstanding, the Borrower shall cash
collateralize any Letter of Credit exceeding the then-applicable Borrowing
Base in a manner satisfactory to the Bank. The Bank in its sole discretion
may continue to make Advances or issue Letters of Credit after the
Termination Date, but it shall have no obligation to do so. Advances made
or Letters of Credit issued after the Termination Date on any one or more
occasions shall not be deemed to be an extension of the Termination Date
and shall not obligate the Bank to make Advances or issue Letters of
Credit on any subsequent occasion. The Bank shall have the right to cancel
the Line at any time upon written notice to the Borrower given at least 30
days prior to the effective date of such cancellation. Any Advances made
or Letters of Credit issued subsequent to the giving of such notice shall
be made in the sole and absolute discretion of the Bank."
3. The third paragraph of the Agreement, entitled "INTEREST," is deleted
in its entirety and replaced with the following language:
"INTEREST. Advances shall bear interest at a per annum rate equal to
LIBOR plus 2.00%. Accrued interest shall be payable monthly, in arrears,
on the first day of each month, and on the Termination Date. Interest
shall be calculated on the basis of a year of 360 days and for actual days
elapsed."
4. The fifth paragraph of the Agreement, entitled "LC FACILITY," together
with its caption, is deleted in its entirety and replaced with the following
language:
"LC SUBFACILITY. The Borrower may request that the Bank issue
Letters of Credit for the account of the Borrower from time to time prior
to the Termination Date, the aggregate principal face amounts of which
shall not exceed $5,000,000 at any one time outstanding; provided,
however, that no Letter of Credit will be issued by the Bank if, after
such issuance, the aggregate principal amount of the outstanding Advances
and the aggregate outstanding face amounts of the Letters of Credit would
exceed the Borrowing Base. The purpose, form and substance of each Letter
of Credit must be acceptable to the Bank. Unless otherwise approved by the
Bank in its sole discretion, the initial term of a Letter of Credit shall
not exceed 12 months and may be renewable annually thereafter, subject to
the Bank's prior cancellation of such Letter of Credit, in its sole
discretion, within 30 days prior to the anniversary date of the issuance
of such Letter of Credit. At least three days prior to the issuance of a
Letter of Credit, the Borrower shall execute and deliver to the Bank an
Application and Agreement for Irrevocable Standby
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Letter of Credit on the Bank's standard form. The Bank shall be reimbursed
on demand by the Borrower for any draws paid by the Bank under a Letter of
Credit, together with interest from the date of such demand at the Prime
Rate. Subject to the terms of this Agreement, the Borrower may use the
proceeds of an Advance to pay any Indebtedness arising out of a Letter of
Credit. The Borrower shall pay (a) a nonrefundable commission to the Bank
for each Letter of Credit, payable quarterly in advance, beginning on the
date of issuance of each Letter of Credit and on the first day of each
calendar quarter thereafter, equal to (1) 1.25% per annum of the face
amount if such Letter of Credit is not cash collateralized, and (2) 0.75%
per annum of the face amount if such Letter of Credit is cash
collateralized in a manner satisfactory to the Bank, and (b) a
non-refundable opening fee for all Letters of Credit of $200, payable in
advance on the date of issuance of each Letter of Credit."
5. The tenth paragraph of the Agreement, entitled "LC FACILITY FEE,"
together with its caption, is deleted in its entirety and replaced with the
following language:
"LC SUBFACILITY FEE. The Borrower agrees to pay to the Bank a
subfacility fee of $2,500 per year, due at closing and on any renewal of
the LC Subfacility."
6. Subclause (j)(2) of the thirteenth paragraph of the Agreement, entitled
"COVENANTS," is deleted in its entirety and replaced with the following
language:
"(2) Tangible Net Worth of not less than $10,500,000, and"
7. The definition of "Indebtedness" contained in the SCHEDULE OF
DEFINITIONS to the Agreement is deleted in its entirety and replaced with the
following language:
"`Indebtedness' means all indebtedness, liabilities and obligations
of the Borrower to the Bank, whether now existing or arising in the
future, direct or indirect, fixed or contingent, whether related or
unrelated to the Line or the LC Subfacility, and whether of a similar or
different class, including, without limitation, overdrafts, guaranties and
obligations to reimburse the Bank for amounts paid by it under Letters of
Credit."
8. The following definition is added to the SCHEDULE OF DEFINITIONS to the
Agreement:
"`LIBOR' shall have the meaning given such term in EXHIBIT A
attached to the Note."
9. Simultaneously with the execution of this Amendment, the Borrower
agrees to execute and deliver to the Bank a new Note, in the principal amount of
$10,000,000 and otherwise in form and substance satisfactory to the Bank. Each
reference in the Agreement and any other Loan Document to the Note shall be a
reference to the Note as amended,
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restated and replaced by the Note required hereunder, and each reference in the
Loan Documents to the Agreement shall be deemed to be a reference to the
Agreement as amended hereby. Except for these amendments, the remaining terms of
the Agreement and other Loan Documents shall remain in full force and effect,
and are ratified and affirmed by the Borrower in all respects.
10. The Borrower represents and warrants that this Amendment has been duly
authorized, executed and delivered by it in accordance with resolutions adopted
by its board of directors. All other representations and warranties made by the
Borrower in the Loan Documents are incorporated by reference in this Amendment
and are deemed to have been repeated as of the date of this Amendment with the
same force and effect as if set forth in this Amendment, except that any
representation or warranty relating to any financial statements shall be deemed
to be applicable to the financial statements most recently delivered to the Bank
in accordance with the provisions of the Loan Documents.
11. The Borrower acknowledges and agrees that this Amendment and the new
Note required by paragraph 9 above only amend certain terms of the Loan
Documents and do not effect a novation, and the Borrower ratifies and confirms
the terms and provisions of, and its obligations under, the Agreement and each
other Loan Document in all respects. The Borrower acknowledges and agrees that
(a) there are no defenses, counterclaims or setoffs against any of its
obligations under the Loan Documents, and (b) the prior grant of a security
interest in the Collateral created by the Security Agreement continues to secure
the Indebtedness (including, but not limited to, the new Note required by
paragraph 9 above), is in full force and effect, and is ratified and confirmed
by the Borrower in all respects.
12. The Borrower agrees to pay all reasonable attorney's fees and expenses
incurred by the Bank in connection with this Amendment.
13. This Amendment shall be governed by the laws of the Commonwealth of
Virginia, without reference to conflict of laws principles.
Please sign below to indicate your acceptance of these terms and return an
executed copy of this Amendment to me by April 26, 1996. Upon our receipt of the
executed copy, this Amendment will become a binding agreement between the Bank
and the Borrower.
Sincerely yours,
CRESTAR BANK
By: /s/ Xxxx X. Xxxxxx
------------------------------
Xxxx X. Xxxxxx
Vice President
ACCEPTED AND AGREED as of April 10, 1996
BORROWER:
--------
MAXIMUS, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx
Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxx
Chairman of the Board
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Crestar Bank
0000 Xxxxx Xxxxxxxxx
Xxxxxx, XX 00000-0000
June 29, 1995
Xx. Xxxxx X. Xxxxxxx
Chief Executive Officer
MAXIMUS, Inc.
0000 Xxxxxxx Xxxx
XxXxxx, Xxxxxxxx 00000
Dear Xxxxx:
Crestar Bank (the BANK) is pleased to advise you that it has established a
$5,000,000 revolving line of credit (the Line) and a $5,000,000 letter of credit
facility (the LC Facility) for MAXIMUS, Inc., a Virginia corporation (the
BORROWER), subject to the terms, covenants and conditions set forth in this
letter agreement (as amended from time to time, the AGREEMENT). Certain
capitalized terms used in this Agreement are defined on the attached Schedule of
Definitions.
AMOUNT. The aggregate principal amount of Advances under the Line
outstanding at any time shall not exceed the lesser of the Borrowing Base or
$5,000,000. Within this limit, the Borrower may borrow, repay and reborrow until
March 31, 1996 (the TERMINATION DATE); provided, however, that no Advance shall
be disbursed and no Letter of Credit shall be issued by the Bank if, after such
disbursement or issuance, the aggregate principal amount of the Advances and 50%
of the outstanding face amounts of the Letters of Credit would exceed the
Borrowing Base. The Bank may in its sole discretion continue to make Advances
after the Termination Date, but it shall have no obligation to do so. Advances
made after the Termination Date on any one or more occasions shall not be deemed
to be an extension of the Termination Date and shall not obligate the Bank to
make Advances on any subsequent occasion. The Bank shall have the right to
cancel the Lien at any time upon written notice to the Borrower given at least
30 days prior to the effective date of such cancellation. Any Advances
subsequent to the giving of such notice shall be made in the sole and absolute
discretion of the Bank.
INTEREST. Advances shall bear interest at a per annum rate equal to the
Prime Rate. Accrued interest shall be payable monthly, in arrears, on the first
day of each month, and on the Termination Date. Interest shall be calculated on
the basis of a year of 360 days and for actual days elapsed. The interest rate
shall be adjusted daily when and as the Prime Rate is changed.
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USE OF PROCEEDS. The proceeds of Advances shall be used to pay current
operating expenses, carry accounts receivable and for other short-term working
capital needs of the Borrower.
LC FACILITY. The Borrower may request that the Bank issue Letters of
Credit for the account of the Borrower from time to time prior to the
Termination Date, the aggregate principal face amounts of which shall not exceed
$5,000,000 at any one time outstanding; provided, however, that no Letter of
Credit will be issued by the Bank if, after such issuance, the aggregate
principal amount of the outstanding Advances and 50% of the outstanding face
amounts of the Letters of Credit would exceed the Borrowing Base. The purpose,
form and substance of each Letter of Credit must be acceptable to the Bank.
Unless otherwise approved by the Bank in its sole discretion, the initial term
of a Letter of Credit shall not exceed 12 months and may be renewable annually
thereafter subject to the Bank's cancellation of such Letter of Credit, in its
sole discretion, within 30 days prior to the anniversary date of the issuance of
such Letter of Credit. At least three days prior to the issuance of a Letter of
Credit, the Borrower shall execute and deliver an Application and Agreement for
Irrevocable Standby letter of Credit on the Bank's standard form. The Bank shall
be reimbursed on demand by the Borrower for any draws paid by the Bank under a
Letter of Credit, together with interest from the date of such demand at the
Prime Rate. The Borrower shall pay a nonrefundable commission to the Bank for
each Letter of Credit equal to (a) 1.50% per annum of the face amount if such
Letter of Credit is not cash collateralized, and (b) 0.75% per annum of the face
amount if such Letter of Credit is cash collateralized in a manner satisfactory
to the Bank, such fees, as applicable, to be payable quarterly in advance on the
date of issuance and each quarter thereafter and a non-refundable opening fee
for all Letters of Credit of $200.
PREPAYMENTS. The Borrower shall immediately prepay the Advances to the
extent that the aggregate unpaid principal balance of the Advances plus 50% of
the outstanding face amounts of the Letters of Credit at any time exceeds the
Borrowing Base. If, after prepayment of all advances, 50% of the aggregate
outstanding face amount of the Letters of Credit exceeds the Borrowing Base, the
Borrower, within seven days of the Bank's demand therefor, shall pledge cash
collateral to the Bank in an amount equal to the difference between 50% of the
aggregate face amount of the Letters of Credit then outstanding and the
Borrowing Base, and any such cash deposited by the Borrower shall be held by the
Bank in the Cash Collateral Account.
PAYMENTS. Advances shall be repaid on demand, or if demand is not sooner
made, on the Termination Date. The Borrower agrees that the Bank may demand
payment even if an Event of Default has not occurred.
COLLATERAL. The Indebtedness shall be secured by a security interest in
all accounts, chattel paper, general intangibles, instruments and inventory of
the Borrower, as described in the Security Agreement.
ADMINISTRATIVE FEE. The Borrower agrees to pay to the Bank an audit and
administrative fee of $2,500 per year, due at closing and on any renewal of the
Termination Date.
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LC FACILITY FEE. The Borrower agrees to pay to the Bank a facility fee of
$2,500 per year, due at closing and on any renewal of the LC Facility.
CONDITIONS. The following are conditions precedent to each advance or the
issuance of each Letter of Credit:
(a) LOAN DOCUMENTS. Receipt by the Bank of all Loan Documents, duly
executed by all applicable parties;
(b) ORGANIZATIONAL DOCUMENTS. Receipt by the Bank of certified
copies of resolutions and organizational documents of the Borrower, a
certificate as to the incumbency and signatures of the authorized officers or
representatives of the Borrower, and current good standing certificates issued
by the appropriate public officials in the Borrower's state of formation and
each jurisdiction in which it does business;
(c) PERFECTION. Financing statements perfecting the Bank's security
interest in the Collateral shall be filed, all conflicting financing statements
shall be terminated and all other actions required by the Bank to perfect its
Liens in the Collateral shall be completed to the Bank's satisfaction.
(d) INSURANCE. Receipt by the Bank of certificates or policies of
insurance confirming that all insurance required by the Loan Documents has been
obtained;
(e) COLLATERAL/SYSTEMS REPORT. Completion by the Bank of a
satisfactory examination report of the Collateral and the Borrower's systems;
(f) LANDLORD WAIVERS. Receipt by the Bank of such landlord and
mortgagee waivers as it deems to be necessary to protect its security interest
in the Collateral;
(g) SATISFACTORY DOCUMENTS. All documents, certificates and opinions
delivered under this Agreement must be in form and substance satisfactory to the
Bank and its counsel; and
(h) NO DEFAULTS. No default shall be continuing.
REPRESENTATIONS AND WARRANTIES. In order to induce the Bank to extend
credit to the Borrower, the Borrower represents and warrants as follows:
(a) EXECUTION OF DOCUMENTS. The Borrower has the power and has taken
all of the necessary actions to execute, deliver and perform the terms of the
Loan Documents. When executed and delivered, the Loan Documents will be binding
obligations of the Borrower, enforceable in accordance with their terms and will
not violate any provisions of law or conflict with, result in a breach of or
constitute a default under the organizational documents of the Borrower or under
any other agreement to which the Borrower is a party.
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(b) FINANCIAL STATEMENTS. All financial statements and information
delivered to the Bank by the Borrower in connection with this Agreement are
correct and complete and present fairly the financial condition, and reflect all
known liabilities, contingent or otherwise, of the Borrower as of the dates of
such statements and information, were prepared in accordance with GAAP in the
case of the Borrower and, since such dates, no material adverse change in the
assets, liabilities, financial condition, business or operations of the Borrower
has occurred.
(c) NO LITIGATION. There is no action, suit or proceeding pending
or, to the knowledge of the Borrower, threatened against or affecting the
Borrower that may, either in any case or in the aggregate, result in any
material adverse change in the business, properties or assets or in the
condition, financial or otherwise, of the Borrower, or that may result in any
material liability on the part of the Borrower.
(d) DEBARMENT. No event has occurred and no condition exists that is
likely to result in the debarment or suspension of the Borrower from any
Government Contracts, and the Borrower has not, nor has any Affiliate, been
subject to any such debarment or suspension.
(e) COMPLIANCE WITH LAWS. The Borrower is in compliance in all
material respects with all federal, state and local laws, regulations and
ordinances.
(f) DEBT. The Borrower is not in default with respect to any debt.
(g) SUBSIDIARIES. The Borrower does not have any subsidiaries.
COVENANTS. In consideration of credit extended or to be extended by the
Bank, the Borrower covenants and agrees that, unless the Bank otherwise consents
in writing:
(a) FINANCIAL REPORTING REQUIREMENTS. The Borrower shall deliver to
the Bank (1) within 90 days after the close of each of its fiscal years, audited
financial statements of the Borrower, prepared in accordance with GAAP,
including a balance sheet, income statement, statements of stockholders' equity
and of cash flows, prepared by an independent certified public accounting firm
acceptable to the Bank and accompanied by an unqualified opinion of such firm;
(2) within 30 days after the end of each calendar month (I) unaudited financial
statements of the Borrower, including a balance sheet and income statement,
prepared in accordance with GAAP, except as it relates to the Borrower's
practice of accruing undeclared dividends, (ii) an appropriately completed
Borrowing Base Certificate setting forth a calculation of the Borrowing Base as
of the end of the preceding calendar month, (iii) agings of accounts receivable
of the Borrower, and (iv) a report listing by contract any Billings in Excess of
Cost and Cost in Excess of Billings for work under the Borrower's contracts; (3)
within 30 days after the end of each calendar quarter, a Covenant Compliance
Certificate of the Borrower's chief financial officer and status and backlog
reports relating to the Borrower's contracts; (4) promptly upon receipt, copies
of any reports submitted to the Borrower by its independent certified public
accountants in connection with examinations of the Borrower's financial
statements; and (5) such other information concerning the Collateral or the
financial condition of the Borrower as the Bank from time to time may reasonably
request. All financial statements and reports shall be in form and detail
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acceptable to the Bank and shall be certified to be accurate by a duly
authorized officer of the Borrower.
(b) NOTICES. The Borrower shall furnish to the Bank prompt written
notice of (1) the occurrence of each Default or an Event of Default, (2) the
institution of any material litigation concerning the Borrower, (3) any final
decision of a contracting officer disallowing costs aggregating more than
$75,000 with respect to a Government Contract, and (4) any material
modifications to, or any termination of, any contract or agreement relating to
any Eligible Receivables.
(c) COLLATERAL/SYSTEMS EXAMINATIONS. The Bank shall have the right
to perform Collateral and systems examinations from time to time in accordance
with its standard procedures.
(d) COMPLIANCE WITH LAWS. The Borrower shall comply with all
applicable laws and regulations and shall pay all taxes, assessments or
governmental charges lawfully levied or imposed on or against it or any of its
properties. The Borrower shall not take any action that would result in the
debarment or suspension of the Borrower from contracting with the Government.
(e) LIENS. The Borrower shall not permit any Lien to attach to any
of its assets other than Permitted Liens.
(f) GUARANTIES. The Borrower shall not guarantee, endorse, become
contingently liable upon or assume the obligations of any Person, except by the
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.
(g) DEBT. The Borrower shall not permit to exist any debt other than
Permitted Debt.
(h) DIVIDENDS AND DISTRIBUTIONS. The Borrower shall notify the Bank
in writing 60 days prior to (1) the declaration or payment of any dividend or
any other distribution to its equity owners or (2) the issuance, redemption,
repurchase or retirement of any of its equity interests; provided, however, that
if the Borrower is a Subchapter S Corporation, a limited liability company or a
limited partnership, the Borrower may without notification pay distributions to
its equity owners in amounts sufficient to allow such owners to pay income taxes
on their respective shares of the net taxable income of the Borrower.
(i) LOANS AND INVESTMENTS. Without the Bank's consent, the Borrower
shall not make or permit to exist any loans to, or debt or equity investments
in, acquire all or substantially all of the assets of, or merge or consolidate
with any Person, other than accounts receivable that arise in the ordinary
course of business. This not withstanding, the Borrower may make advances or
loans of up to $100,000 to any individual shareholder as long as the total sum
of all such outstanding advances or loans does not exceed $500,000 at any one
time.
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Without limiting the generality of the foregoing, the Borrower shall not acquire
or form any subsidiary, enter into any joint venture agreement, or become a
partner in any partnership; provided that, with the consent of the Bank, the
Borrower may enter into joint venture or teaming agreements with other Persons
to perform contracts.
(j) FINANCIAL COVENANTS. The Borrower shall maintain at all times
(1) a ratio of current assets to current liabilities of not less than 1.25 to 1,
(2) Tangible Net Worth of not less than $8,500,000, and (3) a ratio of total
liabilities to Tangible Net Worth of not more than 1.75 to 1.
(k) KEY MAN LIFE INSURANCE. The Borrower shall maintain life
insurance in an amount acceptable to the Bank on Xxxxx X. Xxxxxxx and Xxxxxxx X.
Xxxxx with the Borrower as the beneficiary.
DEFAULT. Upon the occurrence of an Event of Default, any obligation of the
Bank to make Advances or issue Letters of Credit shall terminate and the Bank,
at its option, by written notice to the Borrower, may declare all Indebtedness
to the Bank to be immediately due and payable. Upon the occurrence of an Event
of Default, the Bank also may require the Borrower to pay, and the Borrower
agrees to pay, to the Bank an amount of cash equal to the aggregate face amount
of the Letters of Credit then outstanding, and any amounts paid by the Borrower
shall be held by the Bank in the Cash Collateral Account.
ACCOUNTING TERMS. Each accounting term used in this Agreement, not
otherwise defined, will have the meaning given to it under GAAP as in effect on
the date of this Agreement, applied on a consistent basis.
NOTICES. All notices, requests, demands or other communications provided
for in this Agreement or any other Loan Document shall be in writing and shall
be delivered by hand, sent prepaid by a recognized overnight delivery service or
sent by the United States mail, certified, postage prepaid, return receipt
requested, to the Bank or to the Borrower at their addresses set forth in this
Agreement.
SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and inure to
the benefit of the Bank and the Borrower, and their respective successors and
assigns, provided that the Borrower may not assign or transfer its rights under
this Agreement.
SOLE AGREEMENT. This Agreement and the other Loan Documents represent the
entire agreement between the Bank and the Borrower, and supersede all prior
commitments and may be modified only by an agreement in writing. The other Loan
Documents shall contain such terms as the Bank customarily requires for
financings of the type described in this Agreement.
SURVIVAL OF AGREEMENT. All terms contained in this Agreement shall survive
the delivery of this Agreement and the other Loan Documents, the making of the
Advances and the issuance of the Letters of Credit and shall remain in full
force and effect until the Indebtedness is fully discharged.
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GOVERNING LAW. This Agreement will be governed by the laws of the
Commonwealth of Virginia, without reference to conflict of laws principles.
EXPENSES. Whether or not any Advances are made or Letters of Credit issued
under this Agreement, the Borrower shall pay all out-of-pocket expenses incurred
by the Bank in connection with the preparation of this Agreement and the other
Loan Documents and the transactions contemplated by this Agreement.
COUNTERPARTS. This Agreement may be executed in counterparts, and all such
counterparts together shall constitute one and the same Agreement.
The Borrower may accept this Agreement by signing below and returning an
executed copy to the Bank prior to July 21, 1995. Upon receipt by the Bank of
such executed copy prior to such date, this Agreement will become a binding
agreement between the Bank and the Borrower.
Sincerely yours,
CRESTAR BANK
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Xxxx X. Xxxxxx
Vice President
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
14
ACCEPTED: July 10, 1995
MAXIMUS, INC., a Virginia Corporation
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx 7/5/95
---------------------------- --------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer Title: Chairman of the Board
15
SCHEDULE OF DEFINITIONS
The following terms shall have the meanings set forth below when such
terms are used in the Loan Documents:
"Advance" means any advance of funds under the Line.
"Affiliate" means any Person in which the Borrower has an ownership
interest, whether direct or indirect, and any joint venture to which the
Borrower is a party.
"At-Risk Work" means work performed under Government Contracts, or any
other contract, (a) for which funds have not been appropriated and allocated,
(b) that have not been awarded or (c) for which all required contract documents,
including any documents required to modify or renew a contract previously
awarded, have not been executed.
"Bonded Receivables" means any account receivable arising out of a
contract under which the performance of the Borrower is guaranteed by a surety
bond.
"Borrowing Base" means, at the time in question, 90% of Eligible
Receivables.
"Borrowing Base Certificate" means a certificate of the Borrower
containing a computation of the Borrowing Base and certifying that no Default
has occurred and is continuing, in form and substance satisfactory to the Bank.
"Cash Collateral Account" means an account established with the Bank in
the name of the Borrower, over which the Bank has the exclusive right of
withdrawal, which account serves as additional security for the repayment of the
Indebtedness.
"Collateral" means any real or personal property securing any Indebtedness
at any time.
"Contras" means any account receivable of the Borrower that is due from a
Customer to whom the Borrower is indebted.
"Covenant Compliance Certificate" means a certificate setting forth
calculations and otherwise reflecting compliance by the Borrower with the
covenants in the Loan Documents, in form and substance acceptable to the Bank.
"Customer" means any Person obligated on an account receivable of the
Borrower.
"Default" means any Event of Default or any event that with the giving of
notice, or lapse of time, or both, would constitute an Event of Default.
"Eligible Receivables" means such accounts receivable of the Borrower that
are and at all times continue to be acceptable to the Bank in all respects.
Criteria for eligibility shall be fixed and revised by the Bank from time to
time in its sole discretion. In general, an account receivable shall not be an
Eligible Receivable unless (a) it represents a valid obligation of the
16
Customer to pay for goods sold or services rendered, (b) it has been
appropriately billed in accordance with the terms of the applicable contract and
no more than 90 days have elapsed from the initial invoice date, (c) the goods
or services have been finally accepted by the Customer, (d) all payments,
setoffs, bad debt reserves, discounts, allowances and credits have been
deducted, (e) it conforms to the representations and warranties contained in the
Security Agreement, (f) the Customer is not an Affiliate, a foreign Person or a
creditor of the Borrower, (g) the Bank is satisfied with the credit standing of
the Customer ,and (h) if it arises out of a Government Contract, such receivable
arises out of a Government Contract on which the borrower is the prime
contractor. Eligible Receivables shall not include At-Risk Work, Bonded
Receivables that are not subordinated to the Bank on terms acceptable to the
Bank, Contras, cost overruns, progress payments, costs incurred in excess of
approved or allowed billing rates, rebillings or retainages. No Eligible
Receivable shall be included in more than three month-end Borrowing Base
calculations.
"Event of Default" means the occurrence of a default or event of default
under any Loan Document after the expiration of all applicable grace periods.
"FACA" means, collectively, the Federal Assignment of Claims Act of 1940,
as amended, 31 U.S.C. ss. 3727, 41 U.S.C. ss. 15, any applicable rules,
regulations and interpretations issued pursuant thereto, and any amendments to
any of the foregoing.
"GAAP" means generally accepted accounting principles consistently
applied.
"Government" means the United States of America and any of its departments
and agencies.
"Government Contracts" means any contract with the Government under which
the Borrower is the prime contractor or a subcontractor.
"Indebtedness" means all indebtedness, liabilities and obligations of the
Borrower to the Bank, whether now existing or arising in the future, direct or
indirect, fixed or contingent, whether related or unrelated to the Line or the
LC Facility, and whether of a similar or different class, including, without
limitation, overdrafts, guaranties and obligations to reimburse the Bank for
amounts paid by it under letters of credit issued by the Bank for the account of
the Borrower.
"Letter of Credit" means, collectively and individually, any letter of
credit issued by the Bank for the account of the Borrower pursuant to the
Agreement, as any of the same may be amended, modified or supplemented, renewed
or extended from time to time.
"Lien" means any mortgage, deed of trust, assignment, pledge, lien,
security interest, charge or encumbrance of any kind or nature, including the
interest of a lessor under a capitalized lease.
"Loan Documents" means the Agreement, the Note, the Security Agreement and
any other document that evidences, secures, governs or otherwise relates to any
of the Indebtedness, including, without limitation, any letter of credit
application and agreement,
17
negative pledge agreement, deed of trust, mortgage security agreement, pledge
agreement or assignment.
"Note" means a promissory note, on the Bank's standard form, in the
principal amount of the Line, made by the Borrower, and evidencing the
obligation of the Borrower to repay the Advances, together with accrued
interest, and any amendments to or replacements of such promissory note.
"Permitted Debt" means (a) the Indebtedness, (b) purchase money financing
and capitalized lease obligations for fixed assets not exceeding $250,000 in the
aggregate outstanding at any time, (c) Subordinated Debt, and (d) ordinary and
customary trade accounts payable.
"Permitted Liens" means (a) Liens securing the Indebtedness, and (b) Liens
securing any purchase money financing or capitalized lease obligations described
in the definition of Permitted Debt.
"Person" means any individual, partnership, limited liability company,
joint venture, corporation, trust, governmental subdivision or agency or any
other entity of any nature.
"Prime Rate" means the rate established by the Bank from time to time and
recorded in its Credit Administration Division as a reference for fixing the
lending rate on certain commercial loans. The Prime Rate is not necessarily the
lowest or most favorable interest rate charged by the Bank.
"Security Agreement" means a security agreement from the Borrower on the
Bank's standard form, creating a first priority security interest in the
Collateral.
"Subordinated Debt" means debt of the Borrower subordinated to the
Indebtedness on terms acceptable to the Bank.
"Tangible Net Worth" means, at any time, amounts that would be included
under stockholders' equity on the balance sheet of the Borrower in accordance
with GAAP consistently applied, provided that, in any event, such amounts are to
be net of amounts carried on the books of the Borrower for (1) any write-up in
the book value of any assets of the Borrower resulting from a revaluation
subsequent to the date of this Agreement, (2) treasury stock, (3) unamortized
debt discount expense, (4) any cost of investments in excess of net assets
acquired at any time of acquisition by the Borrower, (5) loans, advances or
other amounts owed to the Borrower by any Affiliate or investments in any
Affiliate, (6) unmarketable securities, and (7) patents, patent applications,
copyrights, trademarks, trade names, goodwill, research and development costs,
organizational expenses, capitalized software costs and other like intangibles.
18
EXHIBIT A
INTEREST RATE PROVISIONS
THIS EXHIBIT A is attached to and forms a part of that certain Commercial
Note (as amended, modified, supplemented or replaced from time to time, the
Note), dated April 10, 1996, in the principal amount of $10,000,000 made by
MAXIMUS, INC., a Virginia corporation (the Borrower), and payable to the order
of CRESTAR BANK, a Virginia banking corporation (the Bank). Terms defined in the
Note and not otherwise defined in Paragraph 5 below shall have the same defined
meanings when such terms are used herein.
1. INTEREST RATE. On the terms and subject to the conditions set forth
below and in the Agreement, any amounts outstanding, or to be disbursed, under
the Note shall bear interest at a per annum rate equal to LIBOR plus 2.00% (the
LIBOR Option). Interest based on the LIBOR Option shall be adjusted on the first
day of each calendar month, beginning on May 1, 1996, to reflect LIBOR then in
effect (each, an Interest Period). Notwithstanding any contrary provision of the
note or this EXHIBIT A, interest shall be calculated on the basis of the Prime
Rate if (i) the Bank, in good faith, is unable to ascertain the LIBOR Option by
reason of circumstances then affecting the applicable money market or otherwise,
(ii) dollar deposits are not available in the applicable money market or are not
available in sufficient quantities for the Bank, in its sole discretion, to
ascertain the LIBOR Option, (iii) in the sole judgment of the Bank, it becomes
unlawful or impracticable for the Bank to maintain loans based upon the LIBOR
Option for any reason, including, without limitation, the introduction of or any
change in any applicable law, rule or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive (whether or not having the force of law) of any such
authority, or (iv) the Bank, in good faith, determines that it is impracticable
to maintain loans based on the LIBOR Option because of increased taxes,
regulatory costs, reserve requirements, expenses or any other costs or charges
that affect such interest rate option. Upon the occurrence of any of the above
events, the outstanding principal balance of the Note immediately (or at any
time thereafter at the option of the Bank), without further action of the
Borrower or the Bank, shall accrue interest at the Prime Rate, adjusted on the
same days on which the Bank changes its Prime Rate.
2. ADVANCES. The Borrower authorizes the Bank to make advances under the
Note from time to time in amounts sufficient to pay checks drawn on the
Borrower's operating account with the Bank, subject to the limitations set forth
in the paragraph entitled, "Amount," in the Agreement. In addition, the Borrower
may request an advance under the Note (each, a Request) by telephonic notice to
the Bank no later than 10:00 a.m. (Washington, D.C. time) on the Business Day on
which such advance is to be made. If required by the Bank, Requests made by
telephone shall be confirmed in writing and delivered to the Bank within three
Business Days after the date of the Request.
3. PREPAYMENTS. The Borrower may prepay amounts owing under the Note at
any time and from time to time, without premium or penalty.
19
4. INDEMNITY. The Borrower agrees to indemnify the Bank and to hold the
Bank harmless from, and to reimburse the Bank on demand for, any loss, cost,
liability or expense that the Bank may sustain or incur as a result of (a) any
failure by the Borrower to make a borrowing or prepayment after the Borrower has
given notice thereof, if applicable, including, without limitation, any loss
incurred in liquidating or employing deposits from third parties and loss of
profit for the period after failure to borrow or prepay, or (b) any domestic or
foreign taxes, regulatory costs, reserve requirements, assessments, expenses or
other costs or charges that increase the cost to the Bank of making available to
the Borrower funds at the LIBOR Option. A written statement of the Bank to the
Borrower of such loss or expense shall be conclusive and binding, absent
manifest error, for all purposes. Notwithstanding the foregoing, the Bank may
require by notice to the Borrower that the Borrower pay directly to the
appropriate governmental authority any tax, levy, impost or any other charge of
any nature whatsoever as set forth herein in lieu of reimbursing the Bank for
said costs and expenses. This covenant shall survive repayment of the Note and
payment by the Borrower of all obligations arising under this EXHIBIT A.
5. DEFINED TERMS. The following terms as used in this EXHIBIT A shall have
the following meanings:
AGREEMENT means the letter agreement dated June 29, 1995, between the
Borrower and the Bank, as the same may be amended, modified or supplemented from
time to time.
BUSINESS DAY shall mean a day on which commercial banks are open for
business and dealing in deposits in Washington, D.C., Richmond, Virginia, and
New York, New York.
LIBOR shall mean the rate per annum quoted by the Bank from time to
time, as determined by the Bank based upon the rates of interest at which
one-month deposits would be offered to the Bank, in the amount of the aggregate
outstanding principal balance of the Note (as adjusted upwards, if necessary, if
such adjustment is required for the Bank to determine such rate) at the LIBOR
Option, by major banks in the London or Nassau inter- bank market (whichever is
greater) upon request of such banks at 11:00 a.m. (London or Nassau time, as the
case may be) on the day that is two Business Days prior to the first day of each
Interest Periods, as adjusted from time to time in the Bank's sole discretion,
for then-applicable reserve requirements, deposit insurance assessment rates,
broker's commissions and other regulatory costs.
PRIME RATE shall have the meaning ascribed to it in the Note.
6. FUNDING. The Bank shall be entitled, but not obligated, to fund all or
any portion of the Note in any manner it may determine in its sole discretion,
including, without limitation, in the Grand Cayman inter-bank market, the Nassau
inter-bank market, the London inter-bank market and within the United States,
but all calculations and transactions hereunder shall be conducted as though the
Bank actually funds all such amounts through the purchase in London or Nassau,
as the case may be, of one-month offshore dollar deposits in the relevant
principal amount.
20
IN WITNESS WHEREOF, the Borrower has caused this Exhibit A to be executed
by its duly authorized representatives as of April 10, 1996.
MAXIMUS, INC., a Virginia Corporation
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx
Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Xxxxxxx X. Xxxxx
Chairman of the Board
21
COMMERCIAL NOTE - CRESTAR BANK
BORROWER: MAXIMUS, Inc.
LOAN AMOUNT: Ten Million Dollars and No Cents ($10,000,000.00)
XXXXXXXX'S ADDRESS: 0000 Xxxxxxx Xxxx, Xxxxx 000
XxXxxx, XX 00000-0000
OFFICER: Xxxx X. Xxxxxx X.X.(initials) DATE: April 10, 1996
ACCOUNT NO: 04300022378842 NOTE NO: 4003 NOTE TYPE: Renewal Loan
-------------------------------------------------------------------------------
For Value Received, the undersigned (whether one or more) jointly and severally
promise to pay to the order of Crestar Bank (the "Bank") at any of its offices,
or at such place as the Bank may designate in writing, without offset and in
immediately available funds, the Loan Amount shown above, including or plus
interest, and any other amounts due, upon the terms specified below.
LOAN TYPE AND REPAYMENT TERMS
-----------------------------
LOAN TYPE: Revolving Master Borrowing Line
This is an open end revolving line of credit. You may borrow an
aggregate principal amount up to the Loan Amount shown above
outstanding at any one time.
REPAYMENT TERMS
Principal on demand, plus interest, but the undersigned shall be
liable for only so much of the Loan Amount as shall be equal to the
total advanced to or for the undersigned, or any of them, by the Bank
from time to time, less all payments made by or for the undersigned
and applied by the Bank to principal, plus interest on each such
advance, and any other amounts due all as shown on the Bank's books
and records, which shall be prima facie evidence of the amount owed.
This Master Borrowing arrangement will terminate upon written notice
from the Bank to the undersigned, or if such notice is not sooner
given, 12 months from the date of this Note, unless an alternate
termination date is indicated in the"Agreement," as defined below.
THE BANK SHALL HAVE THE RIGHT TO DEMAND PAYMENT AT ANY TIME EVEN IF AN
EVENT OF DEFAULT (AS OUTLINED IN THIS NOTE) HAS NOT OCCURRED.
ADDITIONAL TERMS AND CONDITIONS:
This Note is governed by additional terms and conditions contained in a(n)
Letter Agreement between the undersigned and the Bank dated June 29, 1995, and
any modifications, renewals, extensions or replacements thereof (the
"Agreement"), which is incorporated in this Note by reference. In the event of a
conflict between any term or condition contained in this Note and in the
Agreement, such term or condition of the Agreement shall control.
22
INTEREST
Accrued interest will be payable on the first day of each month beginning on May
1, 1996.
Interest will accrue daily on an actual/360 basis (that is, on the actual number
of days elapsed over a year of 360 days).
Each scheduled payment made on this Note will be applied to accrued interest
before it is applied to principal. Interest will accrue from the date of this
Note on the unpaid balance and will continue to accrue after maturity, whether
by acceleration or otherwise, until this Note is paid in full. If this is a
variable rate transaction, the interest rate is prospectively subject to
increase or decrease without prior notice, and if this is a Term-Variable
Payment loan, adjustments in the payment schedule will be made as necessary. If
the stated Rate (as defined below) is based on a Prime Rate of Crestar Bank, the
interest rate is subject to increase or decrease at the sole option of the Bank.
Subject to the above, interest per annum on this Note (the "Rate") will be the
applicable Rate as outlined in Exhibit A, incorporated herein by reference.
Adjustments to the Rate shall be effective as of in accordance with Exhibit A.
===============================================================================
IMPORTANT NOTICE
THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A
WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS THE CREDITOR TO
OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.
===============================================================================
This Note includes a renewal and refinance of the balance owed on note number
043000223788424003 dated July 5, 1995, in the original principal amount of
$5,000,000.00
COLLATERAL
Any collateral pledged to the Bank to secure any of the undersigned's existing
or future liabilities to the Bank shall secure this Note. To the extent
permitted by law, each of the undersigned grants to the Bank a security interest
in and a lien upon all deposits or investments maintained by the undersigned
with, and all indebtedness owed to the undersigned by, the Bank or any of its
affiliates.
This Note is also secured by the following collateral and proceeds thereof;
All inventory, accounts general intangibles, leases, contracts, proceeds, lease
payments and insurance proceeds now existing or hereafter acquired and all
proceeds and products thereof as more particularly described in a Security
Agreement by MAXIMUS, Inc. dated July 5, 1995.
All of this security is referred to collectively as the "Collateral." The
Collateral is security for the payment of this Note and any other liability
(including overdrafts and future advances) of the undersigned to the Bank,
however evidenced, now existing or hereafter incurred, matured or unmatured,
direct or indirect, absolute or contingent, several, joint, or joint and
several, including any extensions, modifications or renewals. The proceeds of
any Collateral may be applied against the liabilities of the undersigned to the
Bank in any order at the option of the Bank.
23
LOAN PURPOSE AND UPDATED FINANCIAL INFORMATION REQUIRED
-------------------------------------------------------
The undersigned warrant and represent that the loan evidenced by this Note is
being made solely for the purpose of acquiring or carrying on a business,
professional or commercial activity or acquiring real or personal property as an
investment (other than a personal investment or for carrying on an investment
activity (other than a personal investment activity). The undersigned agree to
provide to the Bank updated financial information, including but not limited to,
tax returns, current financial statements in form satisfactory to the Bank, as
well as additional information, reports or schedules (financial or otherwise),
all as the Bank may from time to time request.
DEFAULT, ACCELERATION AND SETOFF
--------------------------------
Any one of the following shall constitute an event of default under the terms of
this Note: (1) the failure to make when due any installment or other payment,
whether of principal, interest, late charges or other authorized charges due
under this Note, or the failure to pay the amount demanded by the Bank if this
Note is payable on demand; (2) the death, dissolution, merger, acquisition,
consolidation or termination of existence of the undersigned, any guarantor of
the indebtedness of any of the undersigned to the Bank, any endorser, or any
other party to this Note (collectively called a "Party"); (3) the insolvency or
inability to pay debts as they mature of any Party, or the application for the
appointment of a receiver for any Party or the filing of a petition under any
provision of the Bankruptcy Code or other insolvency law, statute or proceeding
by or against any Party or any assignment for the benefit of creditors by or
against any Party; (4) the entry of a judgment against any Party or the issuance
or service of any attachment, levy or garnishment against any Party or the
property of any Party, or the repossession or seizure of property of any Party;
(5) a determination by the Bank that it deems itself insecure or that a material
adverse change in the financial condition of any Party or decline or
depreciation in the value or market value of any Collateral has occurred since
the date of this Note or is reasonably anticipated; (6) the failure of any Party
to perform any other obligation to the Bank under this Note or under any other
agreement with the Bank; (7) the occurrence of an event of default with respect
to any existing or future indebtedness of any Party to the Bank or any other
creditor of the Party; (8) a material change in the ownership, control or
management of any Party that is an entity, unless such change is approved by the
Bank in its sole discretion; (9) if any Party gives notice to the Bank
purporting to terminate such Party's obligations under or with respect to this
Note; (10) the sale or transfer by a Party of all or substantially all of such
Party's assets other than in the ordinary course of business; or (11) any Party
commits fraud or makes a material misrepresentation at any time in connection
with this Note. If an event of default occurs, or in the event of non-payment of
this Note in full at maturity, the entire unpaid balance of this Note will, at
the option of the Bank, become immediately due and payable, without notice or
demand. Upon the occurrence of an event of default, the Bank shall be entitled
to interest on the unpaid balance at the stated Rate plus 2.00% (the "Default
Rate"), unless otherwise required by law, until paid in full. To the extent
permitted by law, upon default, the Bank will have the right, in addition to all
other remedies permitted by law, to set off the amount due under this Note or
due under any other obligation to the Bank against any and all accounts, whether
checking or savings or otherwise, credits, money, stocks, bonds or other
security or property of any nature whatsoever on deposit with, held by, owed by,
or in the possession of, the Bank or any of its affiliates to the credit of or
for the account of any Party, without notice to or consent by any Party. The
remedies provided in this Note and any other agreement between the Bank and any
Party are cumulative and not exclusive of any remedies provided by law.
CAPITAL ADEQUACY
----------------
Should the Bank, after the date hereof, determine that the adoption of any law
or regulation regarding capital adequacy, or any change in the interpretation or
administration, has or would have the effect of reducing the Bank's rate of
return hereunder to a level below that which the Bank could have achieved but
for such adoption or change, by an amount which the Bank considers to be
material, then, from time to time, 30 days after written demand by the Bank, the
undersigned shall pay to the Bank such additional amounts as will compensate the
Bank for such reduction. Each demand by the Bank shall be made in good faith and
shall be accompanied by a certificate claiming compensation under this paragraph
and stating the amounts to be paid to it hereunder and the basis therefor.
LATE CHARGES AND OTHER AUTHORIZED CHARGES
-----------------------------------------
24
If any portion of a payment is at least ten (10) days past due, the undersigned
agree to pay a late charge of 5.00% of the amount which is past due. Unless
prohibited by applicable law, the undersigned agree to pay the fee established
by the Bank from time to time for returned checks if a payment is made on this
Note with a check and the check is dishonored for any reason after the second
presentment. In addition, as permitted by applicable law, the undersigned agree
to pay the following: (1) all expenses, including, without limitation, all court
or collection costs, and attorney's fees of 25% of the unpaid balance of this
Note, or actual attorneys' fees if in excess of such amount, whether suit be
brought or not, incurred in collecting this note; (2) all costs incurred in
evaluating, preserving or disposing of any Collateral granted as security for
the payment of this Note, including the cost of any audits, appraisals,
appraisal updates, reappraisals or environmental inspections which the Bank from
time to time in its sole discretion may deem necessary; (3) any premiums for
property insurance purchased on behalf of the undersigned or on behalf of the
owner(s) of the Collateral pursuant to any security instrument relating to the
Collateral; (4) any expenses or costs incurred in defending any claim arising
out of the execution of this Note or the obligation which it evidences, or
otherwise involving the employment by the Bank of attorneys with respect to this
Note and the obligations it evidences; and (5) any other charges permitted by
applicable law. The undersigned agree to pay these authorized charges on demand
or, at the Bank's option, the charges may be added to the unpaid balance of the
Note and will accrue interest at the stated Rate. Upon the occurrence of an
event of default, interest will accrue at the Default Rate.
WAIVERS
-------
The undersigned and each other Party waive presentment, demand, protest, notice
of protest and notice of dishonor and waive all exemptions, whether homestead or
otherwise, as to the obligations evidenced by this note. The undersigned and
each other Party waive any rights to require the Bank to proceed against any
other Party or person or any Collateral before proceeding against the
undersigned or any of them, or any other Party, and agree that without notice to
any Party and without affecting any Party's liability, the Bank, at any time or
times, may grant extensions of the time for payment or other indulgences to any
Party or permit the renewal or modification of this Note, or permit the
substitution, exchange or release of any Collateral for this Note and may add or
release any Party primarily or secondarily liable. The undersigned and each
other Party agree that the Bank may apply all monies made available to it from
any part of the proceeds of the disposition of any Collateral or by exercise of
the right of setoff either to the obligations under this Note or to any other
obligations of any Party to the Bank, as the Bank may elect from time to time.
The undersigned also waive any rights afforded to them by Sections 49-25 and
49-26 of the Code of Virginia of 1950 as amended. TO THE EXTENT LEGALLY
PERMISSIBLE, THE UNDERSIGNED WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LITIGATION
RELATING TO TRANSACTIONS UNDER THIS NOTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE.
JUDGMENT BY CONFESSION
----------------------
The undersigned hereby duly constitute and appoint Xxxxx X. Xxxxx or X.X.
Xxxxxxxx or Xxxx X. Xxxxxxx as the true and lawful attorney-in-fact for them in
any or all of their names, place and stead, and upon the occurrence of an event
of default, to confess judgment against them, or any of them, in the Circuit
Court for the County of Fairfax, Virginia, upon this Note and all amounts owed
hereunder, including all costs of collection, attorney's fees equal to 25% of
the unpaid principal balance hereof and court costs, hereby ratifying and
confirming the acts of said attorney-in-fact as if done by themselves, expressly
waiving benefit of any homestead or other exemption laws.
SEVERABILITY, AMENDMENTS AND NO WAIVER BY BANK
----------------------------------------------
Any provision of this Note which is prohibited or unenforceable will be
ineffective to the extent of the prohibition or unenforceability without
invalidating the remaining provisions of this Note. No amendment, modification,
termination or waiver of any provision of this Note, nor consent to any
departure by the undersigned from any term of this Note, will in any event be
effective unless it is in writing and signed by an authorized employee of the
Bank, and then the waiver or consent will be effective only in the specific
instance and for the specific purpose for which given. If the interest Rate is
tied to an external index and the index becomes unavailable during the term of
this loan, the Bank may designate a substitute index with notice to Borrower. No
failure or delay on the part of the Bank to exercise any right, power or remedy
under this Note may be construed as a waiver of the right to exercise the same
or any other right at any time.
25
LIABILITY, SUCCESSORS AND ASSIGNS AND GOVERNING LAW
Each of the undersigned shall be jointly and severally obligated and liable on
this Note. This Note shall apply to and bind each of the undersigned's heirs,
personal representatives, successors and assigns and shall inure to the benefit
of the Bank, its successors and assigns. This Note shall be governed by the
internal laws of the Commonwealth of Virginia and applicable federal law.
By signing below, the undersigned agree to the terms of this Note and
acknowledge receipt of a loan in the Loan Amount shown above.
MAXIMUS, Inc.
By: /s/ Xxxxx X. Xxxxxxx (SEAL)
-----------------------------------------
Xxxxx X. Xxxxxxx, Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxx (SEAL)
-----------------------------------------
Xxxxxxx X. Xxxxx, Chairman of the Board
26
SECURITY AGREEMENT
This Security Agreement is made by XXXXXXX, INC. (the Owner) for the use and
benefit of Crestar Bank (the Bank).
1. SECURITY AGREEMENT. In order to induce the Bank from time to time to
extend or continue to extend credit to MAXIMUS, INC. (the Borrower), the Owner
(which may include the Borrower) hereby grants the Bank, its successors and
assigns, a security interest in the collateral and all proceeds, products, rents
and profits thereof and all revenues from the right to use the collateral as
described below (the Collateral) to secure the payment of all present and future
indebtedness of every kind and description, however evidenced, of the borrower
to the Bank, whether such indebtedness is direct or indirect, fixed or
contingent, liquidated or unliquidated, including any extensions, modifications
or renewals thereof (the Indebtedness) and to secure the performance by the
Owner of the agreements and warranties contained in this Security Agreement.
2. COLLATERAL. As used in this Security Agreement, the term "Collateral,"
whether now existing or hereafter acquired, shall mean (check all that are
applicable):
IF THE COLLATERAL IS NOT SPECIFICALLY DESIGNATED BY A CHECK MARK, THEN THE OWNER
GRANTS THE BANK A BLANKET SECURITY INTEREST.
[ ] Blanket All accounts ("Accounts"), inventory ("Inventory"),
Security furniture, fixtures and equipment ("Equipment"),
Interest general intangibles ("General Intangibles"),
instruments, documents and chattel paper, including,
without limitation, all goods represented thereby and
all goods that may be reclaimed or repossessed from
or returned by account debtors and all proceeds,
products, rents and profits thereof (as all such
terms are defined in the Uniform Commercial Code).
[ ] All or a portion of the Collateral will be
attached as a fixture to realty located at
----------------------------------------------
--------------------------------.
[ ] Accounts and All of the Owner's rights, now existing or arising
General in the future, to payment for goods sold or leased
Intangibles or for services rendered, whether or not earned by
performance, and whether or not such right to payment
is evidenced by an instrument, document or chattel
paper (the "Accounts"), together with all interest of
the Owner in goods, the sale or lease of which shall
have given rise or may give rise to any Account,
including Notes Receivable and all of the Owner's
personal property,including things in action, all
returned goods, reclaimed and repossessed goods,
chattel paper, documents, instruments and money,
including, without limitation, returned and unearned
insurance premiums, tax refunds, contract rights and
causes in action of any kind and nature whatsoever
("General Intangibles") and all proceeds and products
thereof and all substitutions and replacements
therefore.
27
[X] Inventory, All goods of every nature which are held for sale or
Accounts, and furnished or are to be furnished under contracts of
General service or sale of lease, supplies, stock- in-trade,
Intangibles all raw materials, work-in-process, finished goods,
all items of personal property, and all returned,
reclaimed and repossessed goods, whether now in the
Owner's possession or control, in transit, in
storage, or hereafter acquired by way of replacement,
substitution, addition or otherwise and all other
inventory as defined in the Uniform Commercial Code
("Inventory"), all accounts as defined in the Uniform
Commercial Code ("Accounts"), General Intangibles and
all proceeds, products, rents and profits thereof.
[ ] Furniture, All of the Owner's furniture, fixtures, equipment,
Fixtures, and and leasehold improvements including all equipment
Equipment as defined in the Uniform Commercial Code
("Equipment"), and including, but not limited to,
any leases, rental agreements, chattel paper, rental
payments and insurance proceeds together with all
accessories, accessions, attachments, parts,
replacements, substitutions, improvements, repairs
installed in or affixed to any Equipment, and all
proceeds and products thereof.
[ ] All or a portion of the Collateral will e
attached as a fixture to realty located at
----------------------------------------------
--------------------------------.
[ ] Equipment and All of the following Equipment or Consumer Goods:
Consumer
Goods Body Serial Number/
Make Type Year Model Motor Number
---- ---- ---- ----- -------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
-------------
including, but not limited to, any leases, rental
agreements, chattel paper, rental payments and
insurance proceeds together with all licenses, tires,
tools, equipment, accessories and other accessions
now or hereafter installed in or affixed to the
Equipment or Consumer Goods and all substitutions,
renewals and replacements thereof, and all proceeds,
products, rents and profits thereof.
[ ] All or a portion of the Collateral will be
attached as a fixture to realty located at
----------------------------------------------
--------------------------------.
28
[ ] Securities, The following securities, instruments, including
Instruments, unsecured notes and notes secured by deeds of trust
Certificates of or otherwise, certificates of deposit,documents,
Deposit, including documents of title, documentary drafts,
Documents, accounts, letters of credit, chattel paper, general
Chattel Paper, intangibles, including interests in estates and
and General trusts, and other property described as:____________
Intangibles ____________________________________________________
____________________________________________________
_____________________________________________and all
proceeds and products thereof and all substitutions
and replacements therefore.
The Owner also grants the Bank a security interest in all rights to
which an owner of the Collateral is now or may become entitled by
virtue of owning such Collateral including, without limitation,
interest, cash dividends, stock dividends and stock rights, all of
which shall, when received, and upon request by the Bank, be delivered
to the bank with written authority to sell, transfer or rehypothecate
the same.
If the Collateral includes all rights, title and interest in an Estate
or Trust, the security interest shall not apply to any shares of
capital stock of Crestar Financial Corporation or any of its
affiliates, or to any units of participation in the Bank's Common Trust
Fund held by the Estate or Trust, but shall apply to any proceeds from
the sale of such stocks and units or cash dividends thereof.
3. ACCOUNTS. If the Collateral includes Accounts:
--------
a) The Owner warrants that each and every Account, now owned or
hereafter acquired, is a bona fide existing obligation, valid
and enforceable against the account debtor, for goods sold or
leased and delivered or services rendered in the ordinary
course of business; it is subject to no dispute, defense or
offset; the Owner has good title to the Account and has full
right and power to grant the Bank a security interest in the
Collateral;
b) The Owner will immediately notify the Bank of any Account to
which the above warranties are or become untrue;
c) The Owner will prepare and deliver to the Bank, at the Bank's
request, a listing and aging of all Accounts and any further
schedules or information that the Bank may require.
d) The Bank shall have the right at any time to notify account
debtors of its security interest in the Accounts and require
payments to be made directly to the Bank. The Owner hereby
appoints the Bank and any officer or employee of the Bank, as
the Bank may from time to time designate, as its
attorneys-in-fact for the Owner, to sign and endorse in the
name of the Owner, to give notice in the name of the Owner,
and to perform all other actions necessary or desirable at the
reasonable discretion of the Bank to effect these provisions
and carry out the intent hereof, all at the cost and expense
of the Owner. The Owner hereby ratifies and approves all acts
of such attorneys-in-fact and neither the Bank nor any other
such attorneys-in-fact will be liable for any acts of
commission or omission nor for any error of judgment or
mistake of fact or law. This power being coupled with an
interest is irrevocable so long as any Account or General
Intangible assigned to the Bank remains unpaid and the
Borrower has any Indebtedness to the Bank. The costs of such
collection and enforcement, including attorneys' fees and
out-of-pocket expenses, shall be borne solely by the Owner
whether the same are incurred by the Bank or the Owner;
e) At the option of the Bank, all payments on the Accounts
received by the Owner shall be remitted to the Bank in their
original form on the day of receipt; all notes, checks, drafts
and other instruments so received shall be duly endorsed to
the order of the Bank. At the Bank's election, the payments
shall be deposited into a special deposit account ("Special
Account") maintained with the Bank. The Bank may designate
with each such deposit the
29
particular Account upon which payment was made. The Special
Account shall be held by the Bank as security for the
Indebtedness. Prior to depositing payments on the Accounts
into the Special Account, the Owner agrees that it will not
commingle such payments with any of the Owner's funds or
property, but will hold them separate and apart and in trust
for the Bank. The Bank will have the power to withdraw from
the Special Account. The Bank may at any time and from time to
time,in its sole discretion, apply any part of the funds in
the Special Account to the Indebtedness whether or not the
same is due. Upon full and final satisfaction of the
Indebtedness plus termination of any commitment to extend
additional funds, the Bank will pay to the Owner any excess
funds, whether received by the Bank as a deposit in the
Special Account or as a direct payment on any of the
Indebtedness;
f) If any of the Owner's Accounts arise out of contracts with the
United States or any department, agency, or instrumentality
thereof, the Owner will immediately notify the Bank in writing
and execute any instruments and take any steps required by the
Bank in order that all monies due and to become due under such
contracts shall be assigned to the Bank and in order that
proper notice be given under the Federal Assignment of Claims
Act;
g) The Bank shall not be liable and shall suffer no loss on
account of loss or deprivation of any Account due to acts or
omissions of the Bank unless the Bank's conduct is willful and
malicious, and the Bank shall have no duty to take any action
to preserve the Collateral or collect Account.
4. INVENTORY. If the Collateral includes Inventory:
---------
a) The Owner agrees to maintain books and records pertaining to
the Inventory in such detail, form and scope as the Bank shall
require. The Owner shall promptly advise the Bank of any
substantial changes relating to the type, quality or quantity
of the Inventory or any event which would have a material
effect on the value of the Inventory or on the security
interest granted to the Bank. Upon reasonable notice by the
Bank, the Owner shall assemble and make readily available for
inspection and examination of the Inventory and all books and
records pertaining to the Inventory at any time;
b) If the Inventory remains in the possession or control of any
of the Owner's agents or processors, the Owner shall notify
such agents or processors of the Bank's security interest, and
upon request, instruct them to hold such Inventory for the
Bank's account and subject to the Bank's instructions;
c) The Owner will prepare and deliver to the Bank, at the Bank's
request, a listing of all Inventory and such information
regarding the Inventory as the Bank may require.
5. SECURITIES, INSTRUMENTS, CERTIFICATES OF DEPOSIT, DOCUMENTS, CHATTEL
PAPER AND GENERAL INTANGIBLES. If the Collateral includes securities,
instruments, certificates of deposit, documents, chattel paper or general
intangibles:
a) The Owner represents and warrants, as may be applicable that
(i) The Owner has good and marketable title to the Collateral. The
Collateral is valid and genuine and represents a bona fide,
binding, legal obligation of the maker, issuer, or grantor,
and all signatures are genuine;
(ii) The Collateral is in full force and effect and is not in
default and no prepayments have been made;
(iii) The Collateral is not represented by a judgment or any other
document not provided to the Bank;
30
(iv) The Collateral is not subject to any assignment, claim, lien,
right of setoff or security interest of any other party;
(v) Unless otherwise stated, the face amount on the Collateral is
the correct amount actually and unconditionally due or to
become due according to the terms of the Collateral, and such
amount is not disputed or subject to any setoff, credit,
deduction, or counterclaim;
(vi) With respect to the security on the Collateral, the lien or
security interest represented thereby is not subject to prior
claim, lien, or security interest of any other party, unless
otherwise stated herein, or in the document evidencing such
security;
(vii) With respect to the security on the Collateral, it has been
properly perfected by the filing or recording of all necessary
financing statements, deeds of trust or other documents and
the payment of all recording, transfer and other taxes and
fees made in the appropriate public offices.
b) At any time, and from time to time, whether before or after
default, without notice, and at the expense of the Owner, the
Bank in its name or in the name of its nominee or of the
Owner, may, but shall not be obligated to:
(i) Notify the obligors on any Collateral to make payment to the
Bank of any or all dividends, interest, principal payments and
other sums now or hereafter payable upon or on account of the
Collateral, may collect the same by legal proceedings or
otherwise, and may perform any contract or endorse in the name
of the Owner any checks, drafts, notes, instruments or other
documents which constitute the Collateral:
(ii) Enter into any extension, reorganization, deposit, merger or
consolidation agreement or any agreement in any way relating
to or affecting the Collateral and in connection therewith may
deposit or surrender control of the Collateral, accept other
property in exchange for the Collateral and do and perform
such acts and things as it may deem proper, and any money or
property received in exchange for the Collateral may be either
applied to any Indebtedness or may be held by the Bank
pursuant to the provisions of this Security Agreement:
(iii) Make any compromise or settlement it deems desirable or proper
with reference to the Collateral;
(iv) Insure, process and preserve the Collateral;
(v) Cause the Collateral to be transferred to its name or the name
of its nominee;
(vi) Exercise as to the Collateral all the rights, powers and
remedies of an owner.
6. REPRESENTATIONS AND WARRANTIES. The Owner represents and warrants to
the Bank as follows:
a) The Owner is and will continue to be the absolute owner of the
Collateral and that there are no other liens or security
interests affecting the Collateral other than the security
interest granted in this Security Agreement except those
previously disclosed to the Bank in writing by the Owner; if
the Owner is acting in the capacity of trustee, administrator
or executor of an estate, such fact shall be disclosed and
evidence of capacity shall be provided to the Bank:
b) The Owner will defend the Collateral against the claims and
demands of all parties. The Owner will not, without prior
written consent of the Bank, grant any security interest in
the Collateral and will keep it free from any lien,
encumbrance or security interest;
31
c) The Owner represents and warrants that the Collateral never
has been, and never will be so long as this Agreement remains
a lien on the Collateral, used for the generation, collection,
manufacture, storage, treatment, disposal, release or
threatened release of any hazardous substance, as those terms
are defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C.
Section 9601, et seq. ("CERCLA"), Superfund Amendments and
Reauthorization Act ("XXXX"), applicable state laws, or
regulations adopted pursuant to either of the foregoing. The
Owner agrees to comply with any federal, state or local law,
statute, ordinance or regulation, court or administrative
order or decree or private agreement regarding materials which
require special handling in collection, storage, treatment or
disposal because of their impact on the environment
("Environmental Requirements"). The Owner agrees to indemnify
and hold the Bank harmless against any and all claims, losses
and expenses resulting from a breach of this provision of this
Agreement and the Owner will pay or reimburse the Bank for all
costs and expenses for expert opinions or investigations
required or requested by the Bank which, in the Bank's sole
discretion, are necessary to ensure compliance with this
provision of this Agreement. This obligation to indemnify
shall survive the payment of the indebtedness and the
satisfaction of the Agreement;
d) The Collateral is and will be used or bought for use primarily
for the following purpose:
[ ] personal, family or household; [ ] farm; [ ] business;
e) The Owner warrants and represents that all Collateral has been
produced in compliance with the Fair Labor Standards Act or
other applicable wage and employee law, rule, regulation or
order, and that no existing or future liability shall occur as
a result thereof. The Owner may contest, in good faith, the
applicability of any such law, rule, regulation or order,
including prosecuting any appeals, so long as the Bank's
interest in the Collateral, in the opinion of the Bank, is not
jeopardized thereby;
f) The Owner, if an individual, is above the age of majority and
has the legal capacity to enter into this Security Agreement;
g) If an individual, the Owner's home address is
--------------------------------------------------------;
h) The Owner, if a corporation, is duly organized and existing
under the laws of the Commonwealth of Virginia is duly
qualified and in good standing as a foreign corporation in
every jurisdiction where such qualification is necessary; the
execution and performance of this Security Agreement have been
duly authorized by action of its Board of Directors, no action
of its shareholders being necessary; the execution and
performance of this Security Agreement will not violate or
contravene any provisions of law or regulation or its Articles
of Incorporation, Shareholder Agreement, By-Laws or other
agreements to which it is a party or by which it is bound; and
that no consent or approval of any governmental agency or
authority is required in making or performing the obligations
under this Security Agreement;
i) The Owner, if a partnership, is duly qualified and in good
standing to do business in every jurisdiction where such
qualification is necessary; the execution and performance of
this Security Agreement have been duly authorized by its
partners, no further actions of its partners is necessary; the
execution and performance of this Security Agreement will not
violate or contravene any provisions of law or regulation or
its Partnership Agreement or other agreements to which it is a
party or by which it is bound; and that no consent or approval
of any governmental agency or authority is required in making
or performing the obligations under this Security Agreement;
32
j) If a corporation, partnership or proprietorship, the location
of the Owner's principal place of business in Virginia
(Jurisdiction) is Fairfax (County) and it does |_| does not
|X| have a place of business in another city or county in that
jurisdiction (list other jurisdiction if applicable);
k) The Collateral will be located at see below* ;
l) The Owner will maintain the Collateral in the above locations.
The collateral shall not be moved from the above locations
without the prior written consent of the Bank. The Owner must
notify the Bank in writing at least 30 days prior to any
change of its name, corporate structure or identity;
m) The Owner maintains its books of account and records only at
0000 Xxxxxxx Xxxx, XxXxxx, XX 00000
n) All information supplied and statements made to the Bank in
any financial or credit statement or application are true,
correct, complete, valid and genuine in all material respects.
The Owner further represents (check if applicable)
[ ] The Collateral is being acquired with funds simultaneously advanced
to the Borrower by the Bank, and such funds will be used for no
other purpose.
7. COVENANTS.
a) The Owner shall maintain complete and accurate books of
account and records, and its principal books of account and
records, including all records concerning Accounts and
contract rights, shall be kept and maintained at the place(s)
specified above. The Owner shall not move such books of
account and records without giving the Bank at least 30 days
prior written notice and executing and delivering to the Bank
financing statements satisfactory to the Bank prior to any
such move. All accounting records and financial reports
furnished to the Bank shall be maintained and prepared in
accordance with generally accepted accounting principles
consistently applied. It is specifically agreed that the Bank
shall have and the Owner hereby grants to the Bank a security
interest in all books of account and records of the Owner and
shall have access to them at any time for inspection,
verification, examination and audit;
b) The Owner shall furnish to the Bank such financial and
business information and reports in form and content
satisfactory to the Bank as and when the Bank may from time to
time require;
c) The Owner, if a corporation, shall maintain its corporate
existence in good standing and shall not consolidate or merge
with or acquire the stock of any other corporation without the
prior written consent of the Bank. If the Owner is a
corporation, the Owner shall, at the request of the Bank,
qualify as a foreign corporation and obtain all requisite
licenses and permits in each jurisdiction where the Owner does
business. The Owner shall not discontinue business, liquidate,
sell, transfer, assign or otherwise dispose of any of its
assets, except with the prior written permission of the Bank,
provided, however, that it may sell in the ordinary course of
business and for a full consideration in money or money's
worth, any product, merchandise or service produced or
marketed by it. The Bank's security interest shall attach to
all proceeds of all sales or dispositions of the Collateral;
33
d) The Owner shall maintain all of the Collateral in good
condition and repair. The Bank shall have the right to inspect
the Collateral at any reasonable time and shall have the right
to obtain such appraisals, reappraisals, appraisal updates or
environmental inspections as the Bank, in its sole discretion,
may deem necessary from time to time.
e) The Owner shall at all times keep insurable Collateral insured
against any and all risks, including, without limitation,
fire, and such other insurance as may be required by the Bank
from time to time; and in such amounts as may be satisfactory
to the Bank. The Bank shall be named as Loss Payee on any such
insurance policies. Insurance may be purchased from an insurer
of the Owner's choice, except as otherwise required by law.
The Owner shall pay and discharge all taxes, assessments and
charges of every kind prior to the date when such taxes,
assessments or charges shall become delinquent and provide
proof of such payments to the Bank, upon request. However,
nothing contained in this Security Agreement shall require the
Owner to pay any such taxes, assessments and charges so long
as it shall contest its validity in good faith and shall post
any bond or security required by the Bank against the payment.
Upon the failure of the Owner to pay such required amounts,
the Bank, at its option, and at the Owner's expense, may
obtain such insurance or pay such taxes, assessments or
charges with the costs or premiums becoming part of the
Indebtedness at the option of the Bank, such amounts may be
payable on demand. Any insurance obtained by the Bank, at its
option, may be single or dual interest, protecting its rights,
rights of the Owner or joint rights. Any insurance obtained by
the Bank may provide, at its option, that such insurance will
pay the lesser of the unpaid balance of the indebtedness or
the repair or replacement value of the Collateral. The Owner
authorizes the Bank to give effect to any of these options
without prior notice to Owner or further consent from Owner.
No matter which insurance coverage or repayment options the
Bank chooses, the collateral will secure payment of these
amounts. The Bank may use the proceeds of any insurance
obtained by Owner or by the Bank to repair or replace the
collateral or, if the Bank elects to do so, to repay part or
all of the indebtedness, and the Borrowers will still be
responsible to repay any remaining unpaid balance of the
indebtedness. Owner assigns to the Bank all amounts payable
under the insurance, including unearned premiums, directing
the insurer to make payment to the Bank, and Owner appoints us
attorney-in-fact to endorse any draft.
f) The Owner will not pledge or grant any security interest in
any of the Collateral to anyone except the Bank, or permit any
lien or encumbrance to attach to any of the Collateral, or any
levy to be made on the Collateral, or any financing statement
(except financing statements in favor of the Bank) to be on
file against the Collateral;
g) The Owner agrees that it will not permit any return of
merchandise, the sale of which gave rise to any of the
Accounts, except in the usual and regular course of business.
8. DEFAULT. In addition to any right which the Bank may have to demand
payment of the Indebtedness under any other agreement, upon the occurrence of
any of the following events of default, the Bank, at its option, may declare any
or all of the Indebtedness immediately due and payable and may exercise any and
all of the rights and remedies of default of a secured party under the Uniform
Commercial Code and other applicable law and all rights provided herein, all of
which rights and remedies shall, to the full extent permitted by law, be
cumulative;
a) If the Borrower fails to pay when due any Indebtedness or
shall otherwise be in default under any agreement of the
Borrower with the Bank or with Crestar Financial Corporation,
or any subsidiary or affiliate of Crestar Financial
Corporation, or any subsidiary or affiliate of such subsidiary
or affiliate (whether now existing or hereafter organized or
acquired); or
b) The failure of the Owner to observe or perform any of the
terms or provisions of this Security Agreement, or any such
default by the Borrower, any endorser, or any guarantor of any
Indebtedness of the Borrower to the Bank (a Party); or
34
c) The breach of any of the Owner's representations or warranties
in this Security Agreement or any other agreement with the
Bank; or
d) The death, dissolution, merger, consolidation or termination
of existence of the Owner or any Party; or
e) The insolvency or inability to pay debts as they mature of the
Owner or any Party, or the application for the appointment of
a receiver for any of them, or the filing of a petition under
any provision of the Bankruptcy Code or other insolvency law,
statute or proceeding by or against any of them, or any
assignment for the benefit of creditors by or against any of
them; or
f) The entry of a judgment against the Owner or any Party or the
issuance or service of any attachment, levy or garnishment
against the Owner or any Party or the property of any of them
or the repossession or seizure of property of the Owner or any
Party;
g) Any deterioration or impairment of the Collateral or any part
of the Collateral or any decline or depreciation in the value
or market value of the Collateral (whether actual or
reasonably anticipated), which causes the Collateral, in the
judgment of the Bank, to become unsatisfactory as to character
or value; or
h) A determination by the Bank that a material adverse change in
the financial condition of the Owner or any Party has occurred
since the date of this Security Agreement; or
i) The Owner or any Party commits fraud or makes a material
misrepresentation at any time in connection with this Security
Agreement.
The Bank may require the Owner to assemble the Collateral and make it available
to the Bank at a place to be designated by the Bank which is reasonably
convenient to the Bank and the Owner. The Bank may take possession of the
Collateral without a court order. The Owner shall pay to the Bank on demand all
legal expenses and reasonable attorneys' fees (not to exceed 15% of Indebtedness
then owed if the Bank is Crestar Bank, N.A. or Crestar Bank MD or 25% of
Indebtedness then owed if the Bank is Crestar Bank) if the Bank refers this
Security Agreement to an attorney who is not a salaried employee of the Bank,
appraisal fees and all expenses incurred or paid by the Bank, in protecting and
enforcing the rights of the Bank under this Security Agreement, including the
Bank's right to take possession of the Collateral and its proceeds, and to hold,
prepare for sale, sell and dispose of the Collateral. Any required notice by the
Bank of sale or other disposition on default, when placed in the mail and
addressed to or left upon the premises of the Owner, at the address specified
next to the Owner's signature below or such other address of the Owner as may
from time to time be shown on the Bank's records, at least ten days prior to
such action shall constitute reasonable notice to the Owner.
9. TERM. This Security Agreement shall be a continuing agreement and shall
remain in full force and effect irrespective of any interruptions in the
business relations of the Borrower with the Bank and shall apply to any ultimate
balance which shall remain due by the Borrower to the Bank; provided, however,
that the Owner may be written notice terminate this Security Agreement with
respect to all Indebtedness of the Borrower incurred or contracted by the
Borrower or acquired by the Bank after the date on which such notice is
personally delivered to or mailed via registered mail and accepted by the
Borrower's lending officer.
10. EXECUTION BY MORE THAN ONE PARTY. The term "Owner" as used in this
Security Agreement shall, if this instrument is signed by more than one Party,
mean the "Owner and each of them" and each shall be jointly and severally
obligated and liable. If any Party shall be a partnership, the agreements and
obligations on the part of the Owner shall remain in force and applicable
regardless of any changes in the individuals composing the partnership and the
term "Owner" shall include any altered or successive partnerships and the
predecessor partnerships and their partners shall not be released from any
obligation or liability.
35
11. WAIVERS BY THE OWNER. The Owner hereby waives (1) notice of acceptance
of this Security Agreement and of any extension or renewals of credit by the
Bank to the Borrower; (2) presentment and demand for payment of the
Indebtedness; (3) protest and notice of dishonor or default to the Owner or to
any other party with respect to the Indebtedness; (4) all other notices to which
the Owner might otherwise be entitled; and (5) if for business purposes, the
benefit of the Homestead Exemption. The Owner further waives any right to
require that any action be brought against the Borrower or any other party, to
require that resort be had to any security or to any balance of any deposit
account or credit on the books of the Bank in favor of the Borrower or any other
party. The Owner further agrees that it shall not be subrogated and will not
enforce on its part or behalf any right of action which the Bank may have
against the Borrower until every Indebtedness secured under this Security
Agreement is paid in full.
12. NO OBLIGATIONS TO EXTEND CREDIT. This Contract shall not be construed
to impose any obligation on the Bank to extend or continue to extend any credit
at any time.
13. INDEMNITY. The Owner agrees to indemnify and hold harmless the Bank and
its subsidiaries, affiliates, successors, parents, and assigns and their
respective agents, directors, employees, and officers from and against any and
all complaints, claims, defenses, demands, actions, bills, causes of action
(including, without limitation, costs and attorneys' fees), and losses of every
nature and kind whatsoever, which may be raised or sustained by any directors,
officers, employees, shareholders, creditors, regulators, successors in
interest, or receivers of the Borrower or any third party as a result of or
arising out of, directly or indirectly, the Bank extending credit as evidenced
by the Indebtedness to the Borrower, and taking the Collateral as security for
the Indebtedness, and the Owner further agrees to be liable for any and all
judgments which may be recovered in any such action, claim, proceeding, suit, or
bill, including any compromise or settlement thereof, and defray any and all
expenses, including, without limitation, costs and attorneys' fees, that may be
incurred in or by reason of such actions, claims, proceedings, suits, or bills.
14. FINANCING STATEMENTS. The Owner will deliver such instruments of
further assignment or assurance as the Bank may from time to time request to
carry out the intent of this Security Agreement, and will join with the Bank in
executing financing statements and other documents in form satisfactory to the
Bank and pay the cost of filing the same, including all recordation, transfer
and other taxes and fees, continuation statements and any other documents in any
public office deemed advisable by the Bank. The Owner agrees that a carbon,
photographic or other reproduction of a financing statement or this Security
Agreement shall be sufficient as a financing statement.
15. SUCCESSOR IN INTEREST. This Security Agreement shall be binding upon
the Owner, its successors and assigns, and the benefits hereof shall inure to
the Bank, its successors and assigns.
16. WAIVER BY THE BANK. The Bank may waive any default or remedy any
default without waiving the default remedied or any other prior or subsequent
default. The Bank's failure to exercise any right or take any action under this
Security Agreement shall not constitute a waiver of that or any other right or
action.
17. WAIVER OF JURY TRIAL. To the extent legally permissible, the Owner
waives all right to trial by jury in any litigation relating to transactions
under this Security Agreement, whether sounding in contract, tort or otherwise.
18. GOVERNING LAW. The laws of the jurisdiction in which the Bank is
located shall govern the construction of this Security Agreement and the rights
and duties of the Owner and Parties.
The undersigned have executed or caused this Security Agreement to be
executed, under seal, as of this 5th day of July, 1995
0000 Xxxxxxx Xxxx XXXXXXX, Inc. (SEAL)
------------------------ ----------------------------------
Street and Number Owner
McLean, VA 22101 By /s/ Xxxxx X. Xxxxxxx
------------------------ -------------------------------
City State Zip (Name and Title)
(SEAL)
------------------------ ----------------------------------
Street and Number Owner
By /s/ Xxxxxxx X. Xxxxx, Chairman
------------------------ -------------------------------
City State Zip (Name and Title)
36
McLean, VA 22101 By /s/ Xxxxx X. Xxxxxxx
------------------------ ----------------------------------
City State Zip (Name and Title)
(SEAL)
------------------------ ----------------------------------
Street and Number Owner
By /s/ Xxxxxxx X. Xxxxx, Chairman
------------------------ ----------------------------------
City State Zip (Name and Title)
