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EXHIBIT 10.14
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is entered into as of this 16th day of
June, 1986, by and among S.T. Research Corporation, a Virginia corporation with
its principal office at 8419 H. Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000 ("S.T.
Research"), Creative Circuits, Inc., a North Carolina corporation having its
principal office at 0000 Xxxx Xxxxxx Xxxxx, Xxxx Xxxxx, Xxxxx Xxxxxxxx 00000
("Creative Circuits") and Consolidated Leasing Co., Inc., a Virginia corporation
having its principal office at 8419 H. Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000
("Consolidated Leasing") (S.T. Research, Creative Circuits and Consolidated
Leasing shall collectively be referred to as the "Borrower"), and SOVRAN BANK,
N.A., a national banking association having its principal office at Twelfth and
Xxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxx 00000 ("Bank").
In consideration of the mutual covenants and agreements hereinafter set
forth, the parties hereby agree as follows:
ARTICLE 1. LOANS.
1.1. Revolving Credit Loan. Subject to the terms and conditions set forth
in Article 3 hereof, Bank will from time to time, during the period from June
16, 1986 (the "Closing Date") until February 28, 1988, (the "Ending Date"), make
advances ("the Revolving Credit Loan") to Borrower in such amounts as Borrower
shall request by submission of a Borrowing Base Certificate in the form of the
certificate attached hereto as Exhibit A, provided that the maximum outstanding
aggregate principal amount of all such advances shall not at any time exceed an
amount which is equal to the lesser of (a) the Borrowing Base minus the
outstanding principal balance of the Term Loan (as defined in Section 1.3), and
(b) Two Million and N0/100 Dollars ($2,000,000) (the "Commitment"). Under the
Revolving Credit Loan, Borrower may borrow, repay, and reborrow, subject to the
above maximum outstanding aggregate principal amount limitation. The Revolving
Credit Loan shall be evidenced by a promissory note of Borrower (the "Revolving
Credit Note"), dated the Closing Date and in substantially the form of the
promissory note attached hereto as Exhibit B (the terms and provisions of which
Revolving Credit Note are incorporated herein by reference), and shall be
secured as hereinafter set forth.
For purposes of this Agreement; (a) "Borrowing Base" means an amount as
computed monthly, equal to (i) ninety percent (90%) of Eligible Billed
Government Accounts; plus (ii)
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eighty percent (80%) of Eligible Nongovernment Accounts; plus (iii) fifty
percent (50%) of Eligible Unbilled Government Accounts (to a maximum of
$750,000.00); (b) "Eligible Billed Government Accounts" means the net amount of
billed Government Accounts of S.T. Research and Creative Circuits for work
completed, at one hundred percent (100%) of face value after eliminating
therefrom (i) all billed Government Accounts which are more than ninety (90)
days past due under the original terms of payment, and (ii) all Government
Accounts arising under Government Contracts which contain an express prohibition
against assignment; and after deducting from the aggregate face amount of the
remaining Government Accounts all retainages, payments, adjustments, and credits
applicable thereto, and all amounts due thereon considered by Dank to be
difficult to collect or uncollectible by reason of return, rejection,
repossession, loss or damage of or to the products or goods giving rise thereto,
insolvency of the Government Account debtor, disputes, or otherwise, all as
determined by Bank in its sole discretion from time to time, which determination
shall be final and binding upon S.T. Research and Creative Circuits; provided,
however, that if any Customer of S.T. Research or Creative Circuits has more
than fifty percent (50%) of the Customer's dollar value of accounts with S.T.
Research or Creative Circuits more than ninety (90) days past due, then none of
that Customer's accounts with S.T. Research or Creative Circuits shall be
considered Eligible Billed Government Accounts; (c) "Eligible Nongovernment
Accounts" means the net amount of billed Nongovernment Accounts of S.T. Research
and Creative Circuits for work completed, at one hundred percent (100%) of face
value after eliminating therefrom all billed Nongovernment Accounts which are
intercompany (i.e., due from a Subsidiary) Nongovernment Accounts or which are
more than ninety (90) days past due under the original terms of payment; and
after deducting from the aggregate face amount of the remaining Nongovernment
Accounts all retainages, payments, adjustments, and credits applicable thereto,
and all amounts due thereon considered by Bank to be difficult to collect or
uncollectible by reason of return, rejection, repossession, loss, or damage of
or to the products or goods giving rise thereto, insolvency of the Nongovernment
Account debtor, disputes, or otherwise, all as determined by Bank in its sole
discretion from time to time, which determination shall be final and binding
upon S.T. Research and Creative Circuits; provided, however, that if any
Customer of S.T. Research or Creative Circuits has more than fifty percent (50%)
of that Customer's dollar value of Nongovemment Accounts with S.T. Research or
Creative Circuits more than ninety (90) days past due, then none of that
Customer's Nongovemment Accounts with S.T. Research or Creative Circuits shall
be considered Eligible Nongovernment Accounts; (d) "Eligible Unbilled Government
Accounts" means the net amount of unbilled Government Accounts of S.T Research
and Creative Circuits, Inc. for work completed, at one hundred percent (100%) of
face value after eliminating therefrom all Government Accounts arising under
Government Contracts which contain an express prohibition against assignment;
and after deducting from the remaining unbilled Government Accounts all
retainages, payments, adjustments and credits applicable thereto, and all
amounts due thereon considered by Bank to be difficult to collect or
uncollectible by reason of return, rejection, repossession, loss or damage of or
to the products or goods giving rise thereto, insolvency of the Government
Account debtor, disputes or otherwise, all as determined by Bank in its sole
discretion from time to time which determination shall be final and binding upon
S.T Research and Creative Circuits, Inc.; provided, however, that if any
Customer of S.T. Research or Creative Circuits has more than fifty percent (50%)
of the Customer's dollar value of billed accounts with S.T. Research or Creative
Circuits more than ninety (90) days past due, then none of that
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Customer's unbilled accounts with S.T. Research or Creative Circuits shall be
considered an Eligible Unbilled Government Account; (e) "Government Accounts"
means all Accounts (as defined in Section 6.1 hereof) arising out of any
Government Contract; (f) "Government Contracts" means all contracts with the
United States Government or with any agency thereof, and all amendments thereto;
(g) "Nongovemment Accounts" means all Accounts other than Government Accounts;
and (h) "Customer" means any governmental entity (federal, state, county,
municipal, or the like) or business entity (corporation, association,
partnership, sole proprietorship, or the like) to which S.T. Research or
Creative Circuits provides goods or services for compensation; provided,
however, that certain individual agencies of the United States Government and
certain branches of certain major corporations, as determined by Bank in its
sole discretion, shall be treated as Customers in their own right, separate and
distinct from other such agencies or branches (whichever is applicable) and from
the United States Government or the corporation (whichever is applicable) of
which they are a part.
1.3. Term Loan. Subject to the terms and conditions set forth in Article
3 hereof, on the C1osing Date Bank will make a term loan (the "Term Loan") to
Borrower in the principal amount of Six Hundred Fifty Thousand and No/100
Dollars ($650,000.00), said Term Loan to be for a fixed term of four (4) years
commencing on the Closing Date, to be evidenced by a promissory note of Borrower
(the "Term Note"), dated the Closing Date and in substantially the form of the
promissory note attached hereto as Exhibit C (the terms and provisions of which
Term Note are incorporated herein by reference), and to be secured as
hereinafter set forth. The closing of the Term Loan (the "Closing") shall be
held on the Closing Date at the offices of Xxxxx, & Xxxxxxx, 0000 Xxxxxxxxxx
Xxxxx, Xxxxx 0000, XxXxxx, Xxxxxxxx 00000, or at such other time or place as may
be agreed upon by the parties.
1.4. Use of Loan Proceeds. The proceeds of the Revolving Credit Loan and
the Term Loan (the "Loans") shall be used only to finance the performance of
Borrower's Government Contracts and the acquisition of Borrower's capital
assets, and for Borrower's short term working capital purposes.
1.5. Additional Fee. Borrower agrees to pay Bank an additional fee which
shall be based on the net collected balances in Borrower 's non-interest bearing
demand deposit accounts maintained with Bank, as hereinafter referred to in this
Section 1.5, after deduction for (a) all costs and expenses customarily assessed
by Bank in connection with deposits into, withdrawals from, and the maintenance
of such accounts, (b) items deposited into Borrower's accounts but not yet
collected by Bank, and (c) required reserves, all as determined in accordance
with Bank's standard system of analysis for similar accounts (all such net
collected balances hereinafter referred to as "Free Balances"). The fee provided
for in this Section 1.5 (the "Free Balances Deficit Fee") shall be determined as
follows. If the average daily amount (the "Actual Average") of the Free Balances
during any calendar quarter (or applicable portion thereof), from the date of
this Agreement until any and all amounts payable under the Notes (as hereinafter
defined) and under this Agreement are paid in full, shall be less than an amount
(the "Required Average") equal to five percent (5%) of the amount of the
Commitment, then the Free Balances Deficit Fee shall equal the product obtained
by multiplying: (i) a fraction, the numerator of which is the number of calendar
days during such quarter (or applicable portion thereof) and the denominator
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of which is 360, by (ii) the product determined by multiplying [the average
interest rate applicable to the Notes during such quarter] by the amount of the
difference between the required Average and the Actual Average. Borrower shall
pay such Free Balances Deficit Fee, computed as aforesaid, within ten (10)
Business Days (as defined in Section 8.14 hereof) following receipt by Borrower
from Bank of a statement of the amount of such fee applicable to the preceding
calendar quarter (or applicable portion thereof). It is understood and agreed
that nothing in this Agreement shall be deemed to require Borrower to maintain
balances in non-interest bearing demand deposit accounts with Bank and that, but
for the obligation of Borrower set forth in this Section 1.5, Borrower and Bank
would have agreed to a higher rate of interest with respect to the Notes.
Borrower acknowledges that at its request the interest rate on the Notes is
based on its agreement that it will either maintain balances in such demand
deposit accounts or in lieu thereof pay said Free Balances Deficit Fee, its
determination that the interest provisions of this Agreement as supplemented by
the obligation of Borrower set forth in this Section 1.5 represent an
arrangement more advantageous than the interest rate which would be charged
without payment of such additional fee or credit for the maintenance of balances
in such demand deposit accounts, and its election to have the interest rate
established on the basis of the payment of such additional fee or the
maintenance of balances in such demand deposit accounts.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF BORROWER.
In order to induce Bank to enter into this Agreement and to make the
Loans, Borrower hereby makes the following representations and warranties to
Bank, which representations and warranties shall survive the execution and
delivery hereof and of the Revolving Credit Note and the Term Note (the
"Notes").
2.1. Corporate Authority. Each of S.T. Research, Creative Circuits and
Consolidated Leasing (a) is a corporation duly organized, validly existing, and
in good standing under the laws of the state of its incorporation, (b) is
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions where its activities or ownership of property require such
qualification, and (c) has the full and unrestricted power and authority,
corporate and otherwise, to own, operate, and lease its properties, to carry on
its business as currently conducted, to execute and deliver and perform this
Agreement, the Notes, and any other instruments or agreements executed pursuant
hereto or thereto (this Agreement, the Notes, and such other instruments and
agreements hereinafter collectively referred to as the "Loan Documents"), to
incur the obligations provided for herein and therein, and to perform the
transactions contemplated hereby and thereby (including, without limitation, the
creation of a first lien and security interest in favor of Bank in the
Collateral (as defined in Section 6.1 hereof), all of which have been duly and
validly authorized by all proper and necessary action (all of which actions are
in full force and effect).
2.2. Approvals. No approval, consent or other action by the stockholders
of Borrower, by any governmental authority or by any other person or entity is
or will be necessary to permit the valid execution, delivery or performance by
Borrower of this Agreement or any of the other Loan Documents.
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2.3. Binding Effect, No Violations. Each of the Loan Documents, upon its
execution and delivery, will constitute a legal, valid, and binding obligation
of Borrower, enforceable against Borrower in accordance with its terms. The
execution, delivery, and performance of the Loan Documents will not (a) violate,
conflict with, or constitute a default under, any law, regulation, order or any
other requirement of any court, tribunal, arbitrator, or governmental authority,
any terms of the Articles or Certificate of Incorporation or Bylaws of Borrower,
or any contract, agreement or other arrangement binding upon or affecting
Borrower or any of its properties, or (b) result in the creation, imposition or
acceleration of any indebtedness or any mortgage, pledge, lien, charge,
reservation, covenant, restriction, security interest, or other encumbrance (an
"Encumbrance") of any nature upon, or with respect to, Borrower or any of its
properties.
2.4. Litigation. Except as set forth in Exhibit D attached hereto, there
is no claim, litigation, proceeding, or investigation pending, threatened or
reasonably anticipated against or affecting Borrower, its properties or
business, this Agreement, any of the other Loan Documents, or any of the
transactions contemplated hereby or thereby, before or by any court, tribunal,
arbitrator, or governmental authority.
2.5. Title to Assets. As of the date hereof, Borrower has good, valid,
and marketable title to all of its properties and assets (whether real or
personal), and there exist no Encumbrances on any of Borrower's properties or
assets, including, without limitation, the Collateral (as defined in Section 6.1
hereof), other than those set forth in Exhibit E attached hereto. All personal
property of Borrower is in good operating condition and repair, and is suitable
and adequate for the uses for which it is being used. All inventory of Borrower
consists of items which are good and merchantable and of a quality and quantity
presently usable or salable in the ordinary course of business. Upon the
execution and delivery of this Agreement, and upon the filing of financing
statements as referred to in Section 6.5 hereof and/or the taking by Bank of
possession of the Collateral on or prior to the date hereof, as the case may be,
Bank will have a good, valid, and perfected first lien and security interest in
the Collateral, subject to no Encumbrance in favor of any other person or
entity.
2.6. Loan Application. The statements made and the documents (including
the financial statements of Borrower for the periods ending September 30, 1985
and March 31, 1985) delivered by Borrower to Bank in connection with its
application for the Loans and in connection with this Agreement and the other
Loan Documents are true, correct and complete in all material respects; omit no
material facts and are not misleading, and present fairly the condition
(financial or otherwise) of Borrower.
2.7. No Change. No change in the business, operations, properties or
condition (financial or otherwise) of Borrower, or any other event, has occurred
since the date of the most recent balance sheet submitted to Bank by Borrower as
described in Section 2.6 hereof, which change might adversely affect the ability
of Borrower to perform or comply with all terms, conditions, and agreements to
be performed or complied with by Borrower under this Agreement or under any of
the other Loan Documents, or to perform the transactions contemplated hereby and
thereby.
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2.8. Taxes. Borrower has filed all tax returns and reports required by
any governmental authority to be filed by Borrower, and such returns and reports
are true and correct. Borrower has paid all taxes, assessments, and other
government charges imposed upon it or its income, profits or properties, or upon
any part thereof, other than those presently payable without penalty or
interest.
2.9. No Default. No Event of Default, (as defined in Section 7.1 hereof),
and no event which with notice, lapse of time or other condition would
constitute an Event of Default, has occurred and is continuing.
2.10. Compliance with Laws. Borrower has complied and is in full
compliance with all applicable laws, regulations, orders, and other requirements
of any governmental authority or arbitrator, and with all terms of Borrower's
Articles or Certificate of Incorporation and Bylaws and each agreement or other
arrangement binding upon or affecting Borrower or any of its properties.
2.11. Licenses and Contracts. All franchises, licenses, permits,
certificates, consents, approvals, authorizations, agreements, and contracts
necessary to operate Borrower's business as it currently is being operated have
been obtained, are in effect, and are free from challenge.
ARTICLE 3. CONDITIONS PRECEDENT.
3.l. Conditions Precedent to Term Loan. The obligation of Bank to make
the Term Loan is subject to the satisfaction (in the sole judgment of Bank), at
or before the Closing, of the following conditions precedent:
3.1(a). Representation and Warranties: Compliance. All representations
and warranties made by Borrower in or in connection with this Agreement or any
of the other Loan Documents or otherwise made in writing in connection herewith
or therewith shall be true and correct on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of the Closing Date. All of the agreements, terms, covenants, and
conditions required by this Agreement to be complied with and performed prior to
the Closing by Borrower shall have been complied with and performed. Borrower
shall deliver a certificate dated the Closing Date executed by a duly authorized
officer of Borrower certifying, in form and substance satisfactory to Bank, as
to the foregoing matters.
3.1(b). Documents. Borrower shall deliver to Bank copies of all documents
requested by Bank, including a complete and correct copy of the Articles or
Certificate of Incorporation of Borrower, as currently in effect, certified by
the Secretary of State of its state of incorporation, a complete and correct
copy of its Bylaws, as currently in effect, certified by Borrower's corporate
secretary, a complete and correct copy of all resolutions of Borrower's Board of
Directors authorizing the execution, delivery, and performance of this Agreement
and of the other Loan Documents, certified by Borrower's corporate secretary,
and appropriate certificates of
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incumbency for those officers of Borrower executing this Agreement or any of the
other Loan Documents, certified by Borrower's corporate secretary.
3.1(c). Executed Notes and Other Documents. Borrower shall deliver to
Bank the fully executed Notes, and fully executed copies of all documents
required by Bank with respect to the Collateral.
3.1(d). Financing Statements. All Financing Statements deemed necessary
by Bank under Article 6 hereof shall have been properly filed and shall be
effective as required by Bank.
3.l(e). Legal Opinion. Borrower shall deliver to Bank a favorable written
opinion of Xxxx X. Xxxxxxxxxx and Associates, counsel for Borrower, dated the
Closing Date and addressed to Bank, substantially in the form of the opinion
attached hereto as Exhibit F.
3.2. Conditions Precedent to Revolving Credit Loan Advances. The
obligation of Bank to make any Revolving Credit Loan advance is subject to the
satisfaction (in the sole judgment of Bank), as of the date of such Revolving
Credit Loan advance (the "Borrowing Date"), of the conditions precedent
specified in Section 3.1 hereof (substituting "Borrowing Date" for "Closing
Date" or "Closing" in Section 3.1(a), and including receipt by Bank of such
update of the opinion of Borrower's counsel referred to in Section 3.1(e) as
Bank may request and of a Borrowing Base Certificate dated the Borrowing Date
and executed by a duly authorized officer or attorney-in-fact of Borrower).
ARTICLE 4. AFFIRMATIVE COVENANTS OF BORROWER.
Until all obligations of Borrower under this Agreement and the other Loan
Documents are paid in full and performed, Borrower (and each of them) hereby
covenants and agrees that it shall, except as provided in Section 4.13 and
unless Bank otherwise consents in advance in writing;
4.1. Payment of Notes. Punctually pay the principal of and interest on
the Notes at the times and places and in the manner specified therein.
4.2. Corporate Existence. Preserve, maintain, and keep in full force and
effect its corporate existence in the jurisdiction of its incorporation.
4.3. Corporate Rights and Franchises; Qualification; Orderly Conduct of
Business. Preserve, maintain, and keep in full force and effect all franchises,
licenses, permits, certificates, consents, approvals, authorizations,
agreements, and contracts material to the operation of Borrower's business as it
currently is being conducted, whether now existing or hereafter granted to or
obtained by Borrower; qualify and remain qualified as a foreign corporation in
each jurisdiction in which such qualification is necessary or desirable in view
of its activities and ownership of property; continue to engage in a business of
the same general type as now
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conducted by it; and conduct such business in an orderly, efficient, and regular
manner consistent with the conduct of its business prior to the date of this
Agreement.
4.4. Taxes, Charges, and Obligations. Pay and discharge all taxes,
assessments, and governmental charges or levies imposed upon it or upon its
income, profits, properties or any part thereof, prior to the date on which
penalties attach thereto, as well as all claims which, if unpaid, might become
an Encumbrance upon any properties of Borrower, and pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all of the indebtedness and other obligations of whatever nature of
Borrower; provided, however, that Borrower shall not be required to pay any such
tax, assessment, charge, levy, claim, indebtedness or obligation so long as (a)
the validity thereof is being contested by Borrower in good faith and by proper
proceedings, (b) Borrower sets aside on its books adequate reserves therefor,
and (c) in the case where any such tax, assessment, charge, claim or levy might
become an Encumbrance upon any item of the Collateral or any part thereof,
Borrower makes arrangements acceptable to Bank to secure the payment thereof.
4.5. Maintenance of Property. Keep all property used or useful in its
business, including, without limitation, the Collateral, in good repair, working
order, and condition, and from time to time make all necessary or desirable
repairs, renewals, and replacements thereof.
4.6. Insurance. Maintain and keep in full force and effect, with
financially sound and reputable insurance companies acceptable to Bank,
insurance in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which Borrower operates, all such insurance policies to be
in form and substance satisfactory to Bank. Bank shall be named as an additional
insured with Borrower on all policies insuring any of the Collateral, and the
proceeds of all such insurance policies shall be payable to Bank directly and
may be applied to payment of any unpaid obligations under the Loan Documents as
Bank may direct.
4.7. Contract Obligations. Perform in accordance with its terms every
contract, agreement, or other arrangement to which Borrower is a party or by
which it or any of its property is bound.
4.8. Compliance with Laws. Comply with all applicable laws, regulations,
orders, and other requirements of any court, tribunal, arbitrator, or
governmental authority, non-compliance with which could have a material adverse
effect on the business, operations, property or condition (financial or
otherwise) of Borrower.
4.9. Books and Records. Keep and maintain adequate and proper records and
books of account, in which complete entries are made in accordance with
generally accepted accounting principles consistently applied and in accordance
with all laws, regulations, orders, and other requirements of any court,
tribunal, arbitrator, or governmental authority, reflecting all financial and
other transactions of Borrower normally and customarily included in records and
books of account of companies engaged in the same or similar businesses and
activities as Borrower.
4.10. Access to Borrower's Employees, Properties, and Books and Records.
Permit
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Bank and any agents or representatives thereof to visit and inspect the
properties of Borrower, to examine and make abstracts from any of Borrower's
books and records at any and all reasonable times and as often as the Bank or
such agents or representatives may desire, and to discuss the business,
operations, properties, and condition (financial or otherwise) of Borrower with
any of the officers, directors, employees, agents or representatives (including,
without limitation, the independent certified public accountants) of Borrower.
4.11. Financial and Other Statements Furnish to Bank (a) as soon as
available and in any event within one hundred twenty (120) days after the end of
each fiscal year of Borrower, the audited balance sheet of Borrower as of the
end of such fiscal year and the related audited statements of income, changes in
stockholders' equity and changes in financial position of Borrower for such
fiscal year, all prepared in reasonable detail and in accordance with generally
accepted accounting principles consistently applied, and certified without
qualification by an independent certified public accountant of recognized
standing and acceptable to Bank; (b) as soon as available, and in any event
within sixty (60) days after the end of each quarter of each fiscal year of
Borrower, a balance sheet and related statement of income, changes in
stockholders' equity, and changes in financial position of Borrower, as of the
end of such quarter, certified by Borrower's chief financial officer as having
been prepared in accordance with generally accepted accounting principles
consistently applied; (c) not later than twenty (20) days after each calendar
month end, a listing and aging of Borrower's Accounts (as defined in Section 6.l
hereof) for that month; and (e) such additional information, reports or
statements as Bank may from time to time reasonably request.
4.12. Collateral. Execute, deliver, and file, or cause the execution,
delivery, and filing of, any and all documents (including, without limitation,
financing statements and continuation statements), necessary or desirable for
Bank to create, perfect, preserve, validate, or otherwise protect a first lien
and security interest in the Collateral; maintain, or cause to be maintained, at
all times Bank's first lien and security interest in the Collateral; immediately
upon learning thereof, report to Bank any reclamation, return or repossession of
any goods forming a part of the Collateral, any claim or dispute asserted by any
debtor or other obligor owing an obligation to Borrower, and any other matters
affecting the value or enforceability or collectibility of any of the Collateral
against all claims and demands of all persons at any time claiming the same or
any interest therein adverse to Bank, and pay all costs and expenses (including
attorneys' fees and expenses) incurred in connection with such defense; at
Borrower's sole cost and expense (including legal costs and attorneys' fees and
expenses), settle any and all stock claims, demands, and disputes, and indemnify
and protect Bank against any liability, loss or expense arising from any such
claims, demands, or disputes or out of any such reclamation, return or
repossession of goods forming a part of the Collateral; provided, however, that
if Bank shall so elect, Bank shall have the right at all times to settle,
compromise, adjust or litigate all claims and disputes directly with the debtor
or other obligor owing an obligation to Borrower upon such terms and conditions
as Bank deems advisable, and all costs and expenses thereof (including
attorneys' fees and expenses) shall be made for the account of Borrower and
shall constitute a part of the obligations owed to Bank and secured pursuant to
this Agreement; and continue to maintain its places of business and its chief
executive office only in the locations set forth in Exhibit G attached hereto.
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4.13. Financial Requirements. Borrower shall maintain the following
financial position as determined on a consolidated basis (accounting for
Consolidated Leasing on the equity method) in accordance with generally accepted
accounting principles consistently applied: (a) a debt to net worth ratio of not
greater than 3.5 to 1; (b) a ratio of net income (after taxes and interest
expense) plus depreciation expense to the sum of all payments due within the
next twelve months under long-term debt obligations of not less than 1.5 to 1;
(c) a ratio of net income (before interest expenses and taxes) to interest
expenses of not less than 2 to 1; and (d) a ratio of current assets to current
liabilities of not less than 1.3 to 1. For purposes of this Section 4.13: (a)
"current assets" means all assets of Borrower (determined on a consolidated
basis) which would be classified, in accordance with generally accepted
accounting principles consistently applied, as current assets of a corporation
conducting a business the same as or similar to the business conducted by
Borrower; (b) "current 1iabilities" means all liabilities of Borrower
(determined on a consolidated basis) which would be classified, in accordance
with generally accepted accounting principles consistently applied, as current
liabilities of a corporation conducting a business the same as or similar to the
business conducted by Borrower; (c) "net worth" means the excess of total assets
over total liabilities of Borrower (determined on a consolidated basis), total
assets and total liabilities to be determined in accordance with generally
accepted accounting principles consistently applied; (d) "debt" means any and
all liabilities of Borrower (determined on a consolidated basis) which would be
classified, in accordance with generally accepted accounting principles
consistently applied, as liabilities of a corporation conducting a business the
same as or similar to the business conducted by Borrower, and all indebtedness
secured by any Encumbrance to which any property of Borrower is subject; (e)
"long-term debt obligations" means all debt of Borrower (determined on a
consolidated basis) which does not become due and payable in full within twelve
(12) months; (f) "net income (before interest expenses and taxes)" for any
period means the net income of Borrower (determined on a consolidated basis)
during such period, determined in accordance with generally accepted accounting
principles consistently applied for such period taken as a single accounting
period, plus the interest expenses and income taxes of Borrower for such period;
(9) "net income (after taxes and interest expense) plus depreciation expense"
for any period means the net income of Borrower (determined on a consolidated
basis) during such period after the payment of income taxes and interest
expenses for such period, plus depreciation expenses of Borrower for such
period, as determined in accordance with generally accepted accounting
principles consistently applied for such period taken as a single accounting
period.
4.14. Notice of Default and Loss. Give immediate notice to Bank upon the
occurrence of any Event of Default or event which with notice or lapse of time
or otherwise would constitute an Event of Default and of any loss or damage to
any of the Collateral.
ARTICLE 5. NEGATIVE COVENANTS OF BORROWER.
Until all obligations of Borrower under the Loan Documents are paid in
full and performed, Borrower (and each of them) hereby covenants and agree: that
it shall not, unless Bank otherwise consents in advance in writing (which
consent in the case of Section 5.6 shall not be unreasonably withheld):
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5.1. Indebtedness and Contingent Obligations. Create, incur, assume, or
suffer to exist any indebtedness, or agree to assume, guarantee, endorse or
otherwise in any way be or become responsible or liable, directly or indirectly,
for any Contingent obligation, except for (a) indebtedness under the Loan
Documents; (b) indebtedness or contingent obligations existing on the date
hereof and reflected in the financial statements referred to in Section 2.6
hereof; or (c) indebtedness incurred in the normal course of business and
payable by its terms within one (1) year after the incurrence thereof, provided
Borrower would be in compliance with Section 4.13 hereof after giving effect
thereto. For purposes of this Agreement, "contingent obligation" means, as to
any entity, any obligation of such entity guaranteeing or in effect guaranteeing
any indebtedness, leases, dividends or other obligations (" primary
obligations") of any other entity (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of such
entity, whether or not contingent: (a) to purchase any such primary obligation
or any property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (d) otherwise
to assure the owner of such primary obligation against loss in respect thereof;
provided, however, that the term "contingent obligation" shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business.
5.2. Encumbrances. Create, incur, assume or suffer to exist any
Encumbrance upon any of its properties or assets (including, without limitation,
the Collateral), whether now owned or hereafter acquired, except for those
Encumbrances set forth in Exhibit E attached hereto provided, however, that none
of the encumbrances set forth in Exhibit E which secure obligations reflected in
the financial statements referred to in Section 2.6 hereof may be spread to
cover other or additional indebtedness or property of Borrower; and provided,
further, however, that Borrower may enter into equipment lease transactions,
which, unless Bank provides prior written consent (which consent shall not be
unreasonably withheld), shall not involve total payments over the term of the
lease in excess of $25,000 in any one such transaction or $250,000 in the
aggregate for all such transactions;
5.3. Fundamental Chances. Amend its Articles or Certificate of
Incorporation by any amendment which would adversely affect Borrower's ability
to perform or comply with any of the terms, conditions or agreements to be
performed or complied with by Borrower hereunder or to perform any of the
transactions contemplated hereby, change its name, consolidate or merge with any
other corporation, or purchase, lease or otherwise acquire all or substantially
all of the assets of any other entity, including shares of stock of other
corporations, except that Borrower may own notes and other receivables acquired
in the ordinary course of business.
5.4. Transfer of Assets. Sell, lease, assign, pledge or otherwise dispose
of any of its properties or assets (including, without limitation, the
Collateral), whether now owned or hereafter acquired, except in the ordinary
course of business and for fair market value.
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5.5. Investments. Make or commit itself to make any advance, loan or
capital contribution to, or other investment in, any other person or entity
except for investments in bank deposits and other securities issued by banks,
short-term securities of the United States of America or any agency thereof, and
such other investments as Bank shall approve.
5.6. Repurchase of Securities. Purchase, redeem or otherwise acquire any
of its own capital stock or purchase, acquire, redeem, retire, or make any
payment on account of the principal of any indebtedness of Borrower, except at
the stated maturity of such indebtedness, except where payment is required by
mandatory sinking fund or prepayment provisions relating thereto, and except
payments with respect to the indebtedness created by this Agreement.
5.7. Dividends. Declare or pay any dividends (other than stock dividends)
on its capital stock.
5.8. Use of Proceeds. Use, or allow the use of, the proceeds of the Loans
for any purpose which would cause this Agreement to violate Regulations G, U, T,
or X of the Board of Governors of the Federal Reserve System; for any purpose
other than "business purposes" within the meaning of Section 6.1-330.44 of the
Code of Virginia (1950); or for any purpose other than that specified in Section
1.4 hereof.
5.9 Other Agreements. Enter into any agreement or undertaking containing
any provision which would be violated or breached by Borrower's performance of
its obligations under the Loan Documents.
ARTICLE 6. SECURITY.
6.1. Collateral. As security (a) for the punctual payment of the
principal of the Notes, together with the interest and premium, if any, thereon,
including all advances thereunder, and all modifications, renewals, extensions,
and re-amortizations thereof or any part thereof, however evidenced, (b) for the
punctual payment of all other sums and interest, if any, thereon, becoming due
or payable to Bank under the provisions hereof or of any other Loan Document or
any other agreement or document executed in connection with the transactions
contemplated hereby or thereby, including, without limitation, any future
advances, (c) for the punctual payment of any and all other indebtedness of
Borrower to Bank now existing or hereafter incurred, matured or unmatured,
direct or contingent, and whether or not such other indebtedness is related to
the transactions contemplated by this Agreement or was contemplated by Borrower
or Bank on the date hereof, including. without limitation, any extension,
renewal, modification, or re-amortization of said indebtedness, and (d) the due
performance and observance by Borrower of all of the covenants, conditions and
other provisions hereof and of the other Loan Documents and any other agreement
or document executed in connection with the transactions contemplated hereby or
thereby (all of the indebtedness and other obligations of Borrower described in
this Section 6.1 being hereinafter referred to collectively as the
"Obligations"), Borrower hereby grants to Bank a security interest (as that term
is defined in the Uniform Commercial Code as in effect in Virginia on the date
hereof) in, and assigns and pledges to Bank all of the following (the
"Collateral"): (i) all receivables now owned or hereafter acquired by Borrower;
(ii) all equipment (including items of equipment which are or become fixtures)
now owned or hereafter acquired by
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Borrower; and (iii) any and all products and proceeds (including insurance
proceeds) of the foregoing, including, without limitation, all Government
Contracts and all related Government Accounts now owned or hereafter acquired by
Borrower, and the proceeds (including insurance proceeds) thereof; provided,
however, that Bank shall not have a security interest in any Government Contract
of Borrower or in the related Government Account where the taking of such
security interest would violate an express prohibition in such Government
Contract. For purposes of this limitation, the fact that a Government Contract
is subject to, or otherwise refers to, Title 31, S 3727 or Title 00, X 00 xx xxx
Xxxxxx Xxxxxx Code, as amended, shall not be deemed an express prohibition
against assignment thereof. For purposes of this Agreement: "receivables" means
accounts, chattel paper, documents, general intangibles, and instruments; and
the terms "accounts," "chattel paper," "documents," "general intangibles,"
"instruments," "inventory," "fixtures" and "equipment" have the meanings
ascribed to them in Article 9 of the Uniform Commercial Code as in effect in the
Commonwealth of Virginia on the date hereof. The terms "Accounts" and "accounts"
as used in this Agreement mean "accounts" as defined in this Section 6.1.
6.2. Assignment of Payments Under Certain Government Contracts and
Government Accounts. On the Closing Date, and thereafter upon Bank's request,
Borrower agrees to execute and deliver to Bank specific assignments, in
substantially the form of the Assignment attached hereto as Exhibit H, of
payments under those Government Contracts described on Exhibit I (and the
related Government Accounts of Borrower) and under those Government Contracts
(and the related Government Accounts of Borrower) which call for total payments
of more than One Million and No/100 Dollars ($1,000,000), for the purpose of
better evidencing Bank's security interest therein. Payments on Government
Contracts or Government Accounts which have been specifically assigned to Bank
by means of a direct assignment, as provided for in this Section 6.2, shall be
made directly to the operating account of Borrower at Bank and shall be credited
to payment of the Revolving Credit Loan within one (1) Business Day (as defined
in Section 8.14) after receipt.
The separate assignment of specific Government Contracts to Bank, as
contemplated under this Section 6.2, shall not be deemed to limit Bank's
security interest to those particular Government Contracts and the related
Government Accounts, but rather Bank's security interest shall, as stated above,
extend to any and all Government Contracts and the related Government Accounts
and proceeds thereof, now or hereafter owned or acquired by Borrower, other than
those which expressly prohibit assignment.
6.3 Copies of Government Contracts. Borrower will furnish to Bank, at the
request of Bank, a copy of each Government Contract of Borrower in which Bank
has a security interest and a copy of each amendment thereto or modification
thereof which changes the price of such contract or the amount funded to pay for
such contract, except to the extent that furnishing such copies may be
prohibited by government security regulations.
6.4. Certain Rights of Bank. Bank shall have the right, but not the
obligation, to pay any taxes or levies on the Collateral or any costs to repair
or to preserve the Collateral, which payment shall be made for the account of
Borrower and shall constitute a part of the obligations
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owed to Bank and secured pursuant to this Agreement.
6.5. Financing Statements. At the request of Bank, Borrower will join
with Bank in executing financing statements, continuation statements, and other
documents with respect to the Collateral pursuant to the Uniform Commercial Code
and otherwise, in form satisfactory to Bank, and Borrower will pay the cost of
filing the same in all public offices wherever Bank deems filing to be necessary
or desirable. Borrower grants Bank the right, at Bank's option, to file any or
all such financing statements, continuation statements, and other documents
pursuant to the Uniform Commercial Code and otherwise, without Borrower's
signature, and irrevocably appoints Bank as Borrower's attorney-in-fact to
execute any such statements and documents in Borrower's name and to perform all
other acts which Bank deems appropriate to perfect and continue the security
interests conferred by this Agreement.
6.6. No Release. No injury to, or loss or destruction of, any item of the
Collateral shall relieve Borrower of any obligation under this Agreement or
under any of the other Loan Documents.
ARTICLE 7. EVENTS OF DEFAULT AND REMEDIES.
7.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder: (a) Borrower
shall fail to pay, when due, any sum payable under the Notes; or (b) any
representation or warranty made by or on behalf of Borrower herein or in any
other Loan Document shall prove to have been incorrect or misleading or breached
in any respect on or as of any date as of which made; or (c) Borrower shall at
any time fail to observe, satisfy or perform any of the covenants or agreements
contained in Article 4 or 5 hereof; or (d) Borrower shall fail to observe or
perform any other term, covenant or agreement contained in this Agreement or in
any other Loan Document to be observed or performed on its part; or (e) Borrower
shall default in the payment of principal of or interest on any indebtedness
(other than the Notes) or shall default in the payment of any contingent
obligation, or shall default in the observance or performance of any other
agreement contained in any instrument or agreement evidencing, securing, or
relating to any indebtedness or contingent obligation of Borrower; or (f) any
Event of Default under any of the Loan Documents shall occur; or (g) a decree or
order for relief of Borrower shall be entered by a court of competent
jurisdiction in any involuntary case involving Borrower under any bankruptcy,
insolvency, or similar law now or hereafter in effect, or a receiver,
liquidator, or other similar agent for Borrower or for any substantial part of
Borrower's assets or property shall be appointed, or the winding up or
liquidation of Borrower's affairs shall be ordered, or any action by any
creditor (other than Bank) of Borrower preparatory to or for the purpose of
commencing any such involuntary case, appointment, winding up or liquidation
shall be taken; or (h) Borrower shall commence a voluntary case under any
bankruptcy, insolvency, or similar law now or hereafter in effect, or Borrower
shall consent to the entry of an order for relief in an involuntary case under
any such law or to the appointment of or taking possession by a receiver,
liquidator or other similar agent for Borrower or for any substantial part of
Borrower's assets or property, or Borrower shall make any general assignment for
the benefit of creditors, or Borrower shall take any action preparatory to or
otherwise in furtherance of any of the foregoing, or Borrower shall fail
generally to pay its
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debts as such debts come due; or (i) one or more judgments or decrees shall be
entered against Borrower involving in the aggregate a liability (not paid or
fully covered by insurance) of $25,000 or more, and all such judgments or
decrees shall not have been vacated, discharged or stayed or bonded pending
appeal within sixty (60) days from the entry thereof; or (j) any material change
in the business, operations, prospects, property, assets, or condition
(financial or otherwise) of Borrower shall occur which adversely affects the
ability of Borrower to meet and carry out its obligations under this Agreement
or any of the other Loan Documents or to perform the transactions contemplated
herein or thereby.
7.2. Rights and Remedies of Bank. Upon the occurrence of any Event of
Default, Bank may, at its option, exercise any one or more of the following
rights and remedies: (a) declare the Commitment and Bank's obligation to make
the Loans to be terminated, and declare the entire unpaid principal amount of
the Notes, all interest accrued and unpaid thereon, and all other accounts
payable under this Agreement and the other Loan Documents to be accelerated, and
to be immediately due and payable, whereupon the Notes, all such accrued
interest, and all such amounts shall become and be immediately due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by Borrower, anything contained herein or in any of
the other Loan Documents to the contrary notwithstanding; (b) take possession or
control of, store, lease, operate, manage, sell or otherwise dispose of all or
any part of the Collateral; (c) notify all parties under the contracts and
accounts forming all or any part of the Collateral to make any payments due to
Borrower from such parties directly to Bank; (d) in Bank's own name, or in the
name of Borrower, demand, collect, receive, xxx for, and give receipts and
releases for, any and all amounts due under such contracts and accounts; (a)
endorse as the agent of Borrower any chattel paper, documents, or instruments
forming all or any part of the Collateral; (f) make formal application for the
transfer of all of Borrower's permits, licenses, approvals, agreements, and the
like relating to the Collateral or to Borrower's business to Bank or to any
assignee of Bank or to any purchaser of any of the Collateral; (g) take any
other action which Bank deems necessary or desirable to protect and realize upon
its security interest in the Collateral; and (h) in addition to the foregoing,
and not in substitution therefor, exercise any one or more of the rights and
remedies exercisable by Bank under other provisions of this Agreement, under the
Notes, under any of the other Loan Documents, or provided by applicable law
(including, without limitation, the Uniform Commercial Code as in effect in
Virginia).
7.3. Application of proceeds. Any proceeds from the collection or sale or
other disposition of the Collateral shall be applied in the following order of
priority: First, to the payment of all expenses of collecting, storing, leasing,
operating, managing, selling, or disposing of the Collateral, and to the payment
of all sums which Bank may be required or may elect to pay, if any, for taxes,
assessments, insurance, and other charges upon such Collateral or any part
thereof, and of all other payments which Bank may be required or authorized to
make under any provision of this Agreement or of any other Loan Document
(including in each such case legal costs and attorneys' fees and expenses);
Second, to the payment of all obligations under this Agreement, the Notes, and
the other Loan Documents and to the payment of all other obligations; and Third,
to the payment of any surplus then remaining to Borrower, unless otherwise
provided by law or directed by a court of competent jurisdiction; provided that
Borrower shall be liable for
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any deficiency if the proceeds are insufficient to satisfy all of the
Obligations.
ARTICLE 8. MISCELLANEOUS PROVISIONS
8.1. Additional Actions and Documents. Borrower shall take or cause to be
taken such further actions, shall execute, deliver, and file or cause to be
executed, delivered, and filed such further documents and instruments, and shall
obtain such consents as may be necessary or as Bank may reasonably request in
order fully to effectuate the purposes, terms, and conditions of this Agreement
and the other Loan Documents, whether before, at or after the closing of
transactions contemplated hereby and thereby or the occurrence of an Event of
Default hereunder.
8.2. Expenses. Borrower shall, whether or not the transactions
contemplated hereby shall be consummated, (a) reimburse Bank and save Bank
harmless against liability for the payment of all out-of-pocket expenses arising
in connection with the preparation, execution, delivery, administration or
enforcement of or the preservation or exercise or any rights (including the
right to collect and dispose of the Collateral) under, this Agreement or any of
the other Loan Documents, including, without limitation, the fees and expenses
of counsel to Bank arising in such connection; and (b) pay, and hold Bank and
each subsequent holder of the Notes harmless from and against, any and all
present and future stamp taxes or similar document taxes or recording taxes and
any and all charges with respect to or resulting from any delay in paying, or
failure to pay, such taxes.
8.3. Notices. All notices, demands, requests, or other communications
provided for herein or in the other Loan Documents shall be in writing and shall
be mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by telegram or hand delivery,
addressed as follows:
(a) If to Borrower:
S.T. Research Corporation
0000 X. Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx
with a copy (which shall not constitute notice) to:
Xxxx X. Xxxxxxxxxx and Associates
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxxxxxxx
(b) If to Bank:
Sovran Bank, N.A.
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0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxx 0000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request or communication which shall be mailed, delivered
or transmitted in the manner described above shall be deemed sufficiently given
served, sent or received for all purposes at such time as it is delivered to the
addressee, (with the return receipt, the delivery receipt, or affidavit of
messenger being deemed conclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
8.4. Severability. If fulfillment of any provision of the Loan Documents
or performance of any transaction related thereto, at the time such fulfillment
or performance shall be due, shall involve transcending the limit of validity
prescribed by law, then the obligation to be fulfilled or performed shall be
reduced to the limit of such validity; and if any clause or provision contained
in any Loan Document operates or would operate prospectively to invalidate any
Loan Document, in whole or in part, then such clause or provision only shall be
held ineffective, as though not herein or therein contained, and the remainder
of the Loan Documents shall remain operative and in full force and effect.
8.5. Survival. It is the express intention and agreement of the parties
hereto that all covenants, agreements, statement, representations, warranties,
and indemnities made by Borrower in the Loan Documents shall survive the
execution and delivery of the Loan Documents and the making of all advances and
extensions of credit thereunder.
8.6. Waivers. No waiver by Bank of, or consent by Bank to, a variation
from the requirements of any provision of the Loan Documents shall be effective
unless made in a written instrument duly executed on behalf of Bank by its duly
authorized officer, and any such waiver shall be limited solely to those rights
or conditions expressly waived.
8.7. Rights Cumulative. The rights and remedies of Bank described in any
of the Loan Documents are cumulative and not exclusive of any other rights or
remedies which Bank or the then holder of the Notes otherwise would have at law
or in equity or otherwise. No notice to or demand on Borrower in any case shall
entitle Borrower to any other notice or demand in similar or other
circumstances.
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8.8. Entire Agreement; Modification; Benefit. This Agreement, the
exhibits hereto, and the other Loan Documents constitute the entire agreement of
the parties hereto with respect to the matters contemplated herein, supersede
all prior oral and written agreements with respect to the matters contemplated
herein, and may not be modified, deleted or amended except by written instrument
executed by the parties. All terms of this Agreement and of the other Loan
Documents shall be binding upon, and shall inure to the benefit of and be
enforceable by, the parties hereto and their respective successors and assigns;
provided, however, that Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of Bank.
8.9. Setoff. In addition to any right or remedies of Bank provided by
law, upon the occurrence of any Event of Default hereunder, Bank is hereby
irrevocably authorized, at any time or times without prior notice to Borrower,
to set off, appropriate, and apply any and all deposits, credits, indebtedness
or claims at any time held or owing by Bank to or for the credit or the account
of Borrower, in such amounts as Bank may elect, against and on account of the
obligations and liabilities of Borrower to Bank hereunder or under any of the
other Loan Documents, whether or not Bank has made any demand for payment, and
although such obligations and liabilities may be contingent or unmatured.
8.10. Termination. This Agreement shall terminate upon payment in full of
all amounts payable and performance of all other obligations owed by Borrower to
Bank under this Agreement and under the other Loan Documents.
8.11. Construction. This Agreement and the other Loan Documents, the
rights and obligations of the parties hereto, and any claims or disputes
relating thereto shall be governed by and construed in accordance with the laws
of the Commonwealth of Virginia (excluding the choice of law rules thereof).
Each party hereto hereby acknowledges that all parties hereto participated
equally in the negotiation and drafting of this Agreement and that, accordingly,
no court construing this Agreement shall construe it more stringently against
one party than against the other.
8.12. Pronouns. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural, as the identity
of the person or entity may require.
8.13. Headings. Article, section and subsection headings contained in
this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.
8.14. Payments. If any payment or performance of the Notes or of any of
the other obligations under this Agreement or any of the other Loan Documents
becomes due on a day other than a Business Day, the due date shall be extended
to the next succeeding Business Day, and interest thereon (if applicable) shall
be payable at the then applicable rate during such extension. For the purposes
of this Agreement, "Business Day" means a day other than a
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Saturday, Sunday or other day on which commercial banks in Virginia are
authorized by law to close.
8.15. Execution. To facilitate execution, this Agreement and any of the
other Loan Documents may be executed in as many counterparts as may be required;
and it shall not be necessary that the signatures of, or on behalf of, each
party, or the signatures of all persons required to bind any party, appear on
each counterpart; but it shall be sufficient that the signature of, or on behalf
of, each party, or the signatures of the persons required to bind any party,
appear on one or more of the counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in making proof of this
Agreement or any other Loan Document to produce or account for any particular
number of counterparts; but rather any number of counterparts shall be
sufficient so long as those counterparts contain the respective signatures of,
or on behalf of, all of the parties hereto.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have
caused this Agreement to be duly executed on their behalf, as of the day and
year first hereinabove set forth.
BORROWER:
ATTEST: S.T. RESEARCH CORPORATION
/s/ Xxxxxxx X. Xxxxxx By: /s/ S.R. Xxxxxxx
---------------------------------- ------------------------------
/s/ Secretary /s/ President
---------------------------------- ----------------------------------
(Title)
and
ATTEST: CREATIVE CIRCUITS, INC.
/s/ Xxxxxxx X. Xxxxxx By: /s/ S.R. Xxxxxxx
---------------------------------- ------------------------------
/s/ Secretary /s/ President
---------------------------------- ----------------------------------
(Title) (Title)
and
ATTEST: CONSOLIDATED LEASING CO., INC.
/s/ Xxxxxxx X. Xxxxxx By: /s/ S.R. Xxxxxxx
---------------------------------- ------------------------------
/s/ Secretary /s/ President
---------------------------------- ----------------------------------
(Title) (Title)
LENDER:
SOVRAN BANK, N.A.
By: /s/ Xxxxx X. Xxxxx
------------------------------
Assistant Vice President
----------------------------------
(Title)
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EXHIBIT 10.14
EIGHTH REVOLVING CREDIT NOTE MODIFICATION AGREEMENT
THIS EIGHTH REVOLVING CREDIT NOTE MODIFICATION AGREEMENT is made as of
the 30th day of September, 1998, by and between SENSYS TECHNOLOGIES INC., a
Delaware corporation, (formerly known as S.T. Research Corporation, a Virginia
corporation), with its principal office at 8419 H. Terminal Road, Newington,
Virginia 22122 ("Borrower"), and NATIONSBANK, N.A. (formerly known as
"NationsBank, N.A. (Carolinas)" and successor by merger to NationsBank, N.A.,
which was formerly known as "NationsBank of Virginia, N. A.," the successor by
merger to Sovran Bank, N.A.), a national banking association ("Bank").
WHEREAS, by a revolving credit note dated May 11, 1995, as modified by a
First Revolving Credit Note Modification Agreement dated as of April 30, 1996, a
Second Revolving Credit Note Modification Agreement dated as of December 30,
1996, a Third Revolving Credit Note Modification Agreement dated as of April 30,
1997, a Fourth Revolving Credit Note Modification Agreement dated July 29, 1997,
a Fifth Revolving Credit Note Modification Agreement dated as of July 31, 1997,
a Sixth Revolving Credit Note Modification Agreement dated as of October 23,
1997 and a Seventh Revolving Credit Note Modification Agreement dated as of June
30, 1998 (as modified, supplemented, amended and restated from time to time,
collectively, the "Note"), the Borrower has become indebted to the Lender in the
principal sum of $3,000,000 or so much thereof as has been or may be advanced
pursuant to the terms and conditions of the Loan Agreement (as defined in the
Note); and
WHEREAS, the Note has matured and the Borrower has requested an extension
of the maturity of the Note; and
WHEREAS, the Lender has agreed to extend the maturity date of the Note in
accordance with the terms set forth herein.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
That in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Lender and the Borrower covenant and agree as follows:
1. The Borrower acknowledges that the present principal balance of the
Note is due and owing, subject to the terms of repayment set forth in the Note,
as amended hereby, without counterclaim, recoupment, defense or offset.
2. All capitalized terms used herein but not defined shall have the
meaning given to such terms in the Loan and Security Agreement dated June 16,
1986 by and between the Borrower and the Lender (as modified, supplemented,
amended and restated from time to time, collectively, the "Loan Agreement").
22
3. From and after the date hereof interest on the outstanding principal
balance of the Note shall accrue and be payable at the Prime Rate plus one half
of one percent (1/2%) per annum.
4. The date "September 30, 1998" contained in paragraph 1 of the Note is
hereby deleted and the date "February 28, 1999" is hereby inserted in its place.
5. The terms, provisions and covenants of the Note are in all other
respects hereby ratified and confirmed and remain in full force and effect.
6. It is expressly agreed that the indebtedness evidenced by the Note has
not been extinguished or discharged hereby. The Borrower and the Lender agree
that the execution of this Agreement is not intended to and shall not cause or
result in a novation with regard to the Note.
WITNESS the signatures and seals of the Borrower and the Lender the day
and year first above written.
WITNESS OR ATTEST: SENSYS TECHNOLOGIES INC.
/s/ Xxxxx X. Xxxxxx By: /s/ X. X. Xxxxx (SEAL)
---------------------------------- -------------------------
Xxxxxx X. Xxxxx
Chief Financial Officer
/s/ Xxxxx X. Xxxxxx By: /s/ S. Xxxx Xxxxxxxx (SEAL)
---------------------------------- -------------------------
S. Xxxx Xxxxxxxx
Vice Chairman and CEO
WITNESS: NATIONSBANK, N.A.
/s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx (SEAL)
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Xxxxxxx X. Xxxxx
Vice President
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FOURTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FOURTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT is entered into
as of the 30th day of September, 1998 (this "Amendment"), by and between SENSYS
TECHNOLOGIES INC., a Delaware corporation (formerly known as S.T. Research
Corporation, a Virginia corporation), with its principal office at 8419 H.
Terminal Road, Newington, Virginia 22122 ("Borrower"), and NATIONSBANK, N. A.
(formerly known as "NationsBank, N.A. (Carolinas)" and successor by merger to
NationsBank, N.A., which was formerly known as "NationsBank of Virginia, N. A.,"
the successor by merger to Sovran Bank, N.A.), a national banking association
("Bank").
WITNESSETH:
WHEREAS, Borrower, Creative Circuits, Inc., a North Carolina corporation
("Creative Circuits"), and Consolidated Leasing Co., Inc., a Virginia
corporation ("Consolidated Leasing"), as borrowers, and Sovran Bank, N.A., a
national banking association ("Sovran"), as lender, entered into a certain Loan
and Security Agreement, dated as of June 16, 1986, (the "Original Loan
Agreement"), pursuant to which Sovran agreed to make available a revolving line
of credit to the Borrower, Creative Circuits and Consolidated Leasing and to
make a term loan to the Borrower, Creative Circuits and Consolidated Leasing;
WHEREAS, Creative Circuits and Consolidated Leasing have been merged with
and into Borrower, with Borrower as the surviving corporation;
WHEREAS, Borrower and Sovran have heretofore entered into (i) the
Amendment to Loan and Security Agreement, dated as of September 1, 1991 (the
"First Amendment"), and (ii) the Second Amendment to Loan and Security
Agreement, dated as of December 31, 1991 (the "Second Amendment");
WHEREAS, Sovran has previously merged with and into NationsBank of
Virginia, N.A., with NationsBank of Virginia, N.A. as the surviving entity;
WHEREAS, Borrower and Bank (as survivor, through merger, with Sovran)
have heretofore entered into (i) the Third Amendment to Loan and Security
Agreement, dated as of April 1, 1992 (the "Third Amendment"), (ii) the Fourth
Amendment to Loan and Security Agreement, dated as of May 1, 1992 (the "Fourth
Amendment"), (iii) successive letter agreements, (iv) the Fifth Amendment to
Loan and Security Agreement, dated as of August 31, 1994 (the "Fifth
Amendment"), (v) the Sixth Amendment to Loan and Security Agreement dated as of
May 11, 1995 (the "Sixth Amendment"), (vi) the Seventh Amendment to Loan and
Security Agreement dated as of April 30, 1996 (the "Seventh Amendment"), (vii)
the Eighth Amendment to Loan and Security Agreement dated as of December 30,
1996 (the "Eighth Amendment"), (viii) the Ninth Amendment to Loan and Security
Agreement dated as of April 30, 1997 (the "Ninth Amendment"), (ix) the Tenth
Amendment to Loan and Security Agreement dated as of July 29, 1997 (the "Tenth
Amendment"; (x) the Eleventh Amendment to Loan and Security
24
Agreement dated as of July 31, 1997 (the "Eleventh Amendment"); (xi) the Twelfth
Amendment to Loan and Security Agreement dated as of October 23, 1997 (the
"Twelfth Amendment") and (xii) the Thirteenth Amendment to Loan and Security
Agreement dated as of June 30, 1998 (the "Thirteenth Amendment"); such letter
agreements, together with the Original Loan Agreement, the First Amendment, the
Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment, the
Ninth Amendment, the Tenth Amendment, the Eleventh Amendment, the Twelfth
Amendment and the Thirteenth Amendment, the "Loan Agreement") for the purpose of
extending the term of the Revolving Credit Loan (as defined in the Loan
Agreement);
WHEREAS, Borrower has been acquired by a public company known as Daedalus
Corporation and has merged into such company and, as the surviving corporation
has changed its name as noted in the opening paragraph of this Agreement;
WHEREAS, the Borrower has requested that Bank amend the Loan Agreement to
extend the maturity date of the Revolving Credit Loan; and
WHEREAS, Bank is willing to extend the maturity date of the Revolving
Credit Loan, subject to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants contained herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged by Borrower,
Borrower and Bank hereby agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
shall have the meanings given to such terms in the Loan Agreement.
2. Amendment of Section 1.1 of the Loan Agreement-Revolving Credit Loan.
The first paragraph of Section 1.1 of the Loan Agreement is hereby amended by
deleting such paragraph in its entirety and inserting the following paragraph in
its place:
"1.1. Revolving Credit Loan. Subject to the terms and conditions
set forth in Article 3 of this Agreement, the Bank will from time to time
from June 16, 1986 (the "Closing Date") until February 28, 1999 (the
"Ending Date"), make advances (the "Revolving Credit Loan") to the
Borrower in such amounts as Borrower shall request by submission of a
Borrowing Base Certificate in the form of the certificate attached hereto
as Exhibit A, provided that the maximum outstanding aggregate principal
amount of all such advances and the Outstanding Letter of Credit
Obligations (as hereinafter defined) shall not at any time exceed an
amount which is equal to the lesser of (a) the aggregate of (i) the
Borrowing Base and (b) Three Million Dollars ($3,000,000) (the
"Commitment"). Under the Revolving Credit Loan, Borrower may borrow,
repay, and reborrow, subject to the above maximum outstanding aggregate
principal amount limitation. The Revolving Credit Loan shall be evidenced
by a promissory note of Borrower (as amended, supplemented, modified or
extended from time to time, the "Revolving Credit Note"), dated the
Closing Date and in substantially the form of the promissory note
attached
25
hereto as Exhibit B (the terms and provisions of which Revolving Credit
Note are incorporated herein by reference), and shall be secured as
hereinafter set forth."
3. Amendments of Section 4.13 of the Loan Agreement--Financial
Requirements.
(a) Clauses (a) and (b) of Section 4.13 of the Loan Agreement are hereby
amended by deleting such clauses in their entirety and inserting the following
clauses in substitution therefor:
"(a) a debt to net worth ratio of not greater than 2.0 to 1.0; (b)
a minimum tangible net worth of no less than $6,800,000 at any time up to
and including February 28, 1999;" and
(b) Clause (d) of Section 4.13 of the Loan Agreement is hereby amended by
deleting such clause in its entirety and inserting the following clause in
substitution therefor:
"(d) a ratio of earnings before payment of interest, taxes,
depreciation and amortization expense divided by (ii) the aggregate of
interest expense, the current maturities of long term debt and the
current payments under capitalized leases of not less than 1.5 to 1.0
measured as of the end of each fiscal quarter commencing September 30,
1998."
4. Representations, Warranties Etc. Borrower hereby represents, warrants,
acknowledges and agrees to and with Bank as follows:
(a) Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is duly qualified as a
foreign corporation in good standing in every other state wherein the conduct of
its business or the ownership of its property requires such qualification;
(b) Borrower has the corporate power and authority to execute and deliver
this Amendment and perform its obligations hereunder and has taken all necessary
and appropriate corporate action to authorize the execution, delivery and
performance of this Amendment;
(c) The execution, delivery and performance by Borrower of this Amendment
will not violate the terms of any instrument, document or agreement to which
Borrower is a party, either individually or jointly, or by which Borrower or any
of the property of Borrower is bound, or be in conflict with, result in a breach
of or constitute (without giving of notice or lapse of time or both) a default
under any such instrument, document or agreement, or result in the creation or
imposition of any lien upon any of the property or assets of Borrower;
(d) The Loan Agreement, as heretofore amended and as amended by this
Amendment, and each other Loan Document remains in full force and effect, and
each constitutes the valid and legally binding obligation of Borrower,
enforceable in accordance with its terms;
26
(e) No consent or approval or authorization of any governmental
authority, bureau or agency is required in connection with the execution,
delivery or performance of this Amendment by Borrower or the validity and
enforceability of this Amendment as to Borrower;
(f) All of Borrower's representations and warranties contained in the
Loan Agreement and the other Loan Documents are true and correct on and as of
the date of Borrower's execution of this Amendment; and
(g) No Event of Default and no event which, with notice, lapse of time or
both would constitute an Event of Default, has occurred and is continuing under
the Loan Agreement or the other Loan Documents which has not been waived in
writing by Bank.
5. Expenses. Borrower agrees to pay, immediately upon demand by Bank, all
costs, expenses, attorneys' fees, and other charges and expenses actually
incurred by Bank in connection with the negotiation, preparation, execution and
delivery of this Amendment and any other instrument, document, agreement or
amendment executed in connection with this Amendment.
6. Existing Defaults. The Lender hereby waives defaults under Section
4.13 (d) (debt service coverage ratio) and Section 5.10 (Profitability) that
existed prior to the execution of this Agreement; provided, however, that this
Section shall not be deemed to waive any defaults under such sections after the
date of this Agreement, or any other defaults arising out of noncompliance by
the Borrower with the Financing Agreement, whether or not the events, facts or
circumstances giving rise to such non-compliance existed on or prior to the date
hereof.
7. Defaults Hereunder. The breach of any representation, warranty or
covenant contained herein or in any document executed in connection herewith, or
the failure to observe or comply with any term or agreement contained herein or
in any document executed in conjunction herewith, shall constitute an Event of
Default under the Loan Agreement and Bank shall be entitled to exercise all
rights and remedies it may have under the Loan Agreement, the other Loan
Documents and applicable law.
8. Effect of Amendment. Except as expressly set forth herein, this
Amendment shall not be deemed (a) to waive, amend or modify any term or
condition of the Loan Agreement or the other Loan Documents, each of which (i)
is hereby ratified, reaffirmed and reinstated; (ii) shall remain in full force
and effect; and (iii) is incorporated herein by reference, nor (b) to serve as a
consent to any matter prohibited by the terms and conditions thereof. This
Amendment is supplemental to that certain Security Agreement dated as of
February 24, 1989, that certain Security Agreement dated as of April 7, 1987,
and that certain Security Agreement dated as of December 10, 1986, each of which
is hereby ratified and reaffirmed and each of which secures the prompt payment
and performance of the Obligations.
9. No Claims, Offset. Borrower hereby represents, warrants, acknowledges
and agrees to and with Bank that (a) Borrower neither holds nor claims any right
of action, claim, cause of action or damages either at law or in equity, against
Bank which arises from, may arise from, allegedly arise from, are based upon or
are related in any manner whatsoever to the Loan
27
Agreement and the other Loan Documents or which are based upon acts or omissions
of Bank in connection therewith, and (b) the Obligations are absolutely owed to
Bank, without offset, deduction or counterclaim.
10. Counterparts. This Amendment may be executed in any number of
counterparts, and any party hereto may execute any counterpart, each of which
when executed and delivered will be deemed to be an original and all of which
taken together will be deemed to be but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment under
seal as of the date first above written.
WITNESS: NATIONSBANK, N.A.
/s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx (SEAL)
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Xxxxxxx X. Xxxxx
Vice President
WITNESS: SENSYS TECHNOLOGIES INC.
/s/ Xxxxx X. Xxxxxx By: /s/ X. X. Xxxxx (SEAL)
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Xxxxxx X. Xxxxx
Chief Financial Officer
/s/ Xxxxx X. Xxxxxx By: /s/ S. Xxxx Xxxxxxxx (SEAL)
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S. Xxxx Xxxxxxxx
Vice Chairman and CEO
