AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT AXXUM TECHNOLOGIES LLC KAE HOLDINGS, INC. CLOUDBURST SECURITY LLC and MAINSTREET BANK Dated as of April 18, 2019

Exhibit 10.14a

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

AXXUM TECHNOLOGIES LLC

KAE HOLDINGS, INC.

CLOUDBURST SECURITY LLC

and

MAINSTREET BANK

Dated as of April 18, 2019

TABLE OF CONTENTS


		Page
SECTION I. DEFINITIONS AND INTERPRETATION		1
1.1.	Terms Defined	1
1.3.	Construction	14

SECTION II. THE LOANS		15
2.1.	Revolving Credit – Description	15
2.2.	Letters of Credit	15
2.3.	Term Loan - Description	18
2.4.	Advances and Payments	18
2.5.	Interest	19
2.6.	Additional Interest Provisions	20
2.7.	Fees and Charges	20
2.8.	Prepayments	21
2.9.	Use of Proceeds	21
2.10.	Capital Adequacy	21
2.11.	Borrower Representation; Reliance	22
2.12.	Concerning Joint and Several Liability of the Borrowers	22
2.13.	Limitation of Liability	24

SECTION III. COLLATERAL		24
3.1.	Collateral	24
3.2.	Lien Documents	25
3.3.	Other Actions	25
3.4.	Searches, Certificates	26
3.5.	Xxxxxxxx’s and Xxxxxxxxxxxx’s Waivers	26
3.6.	Filing Security Agreement	27
3.7.	Power of Attorney	27

SECTION IV. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES		27
4.1.	Documents	27
4.2.	Documents	28
4.3.	Absence of Certain Events	30
4.4.	Warranties and Representations at Closing	30
4.5.	Compliance with this Agreement	30
4.6.	Officers’ Certificate	30
4.7.	Closing	30
4.8.	Waiver of Rights	30
4.9.	Conditions for Future Advances	30
4.10.	Conditions to Subsidiaries Becoming Borrowers	31

SECTION V. REPRESENTATIONS AND WARRANTIES		32
5.1.	Organization and Validity	32
5.2.	Places of Business	33


5.3.	Pending Litigation	33
5.4.	Title to Properties	33
5.5.	Governmental Consent	33
5.6.	Taxes	33
5.7.	Financial Statements	34
5.8.	Full Disclosure	34
5.9.	Subsidiaries	34
5.10.	Investments, Guarantees, Contracts, etc.	34
5.11.	Government Regulations, etc.	34
5.12.	Business Interruptions	35
5.13.	Names and Intellectual Property	35
5.14.	Other Associations	36
5.15.	Environmental Matters	36
5.16.	Regulation O	37
5.17.	Capital Stock	37
5.18.	Solvency	37
5.19.	Perfection and Priority	37
5.20.	Commercial Tort Claims	37
5.21.	Letter- of-Credit Rights	37
5.22.	Deposit Accounts	37
5.23.	Anti-Terrorism Laws	38
5.24.	Debarment	38
5.25.	Contracts	38

SECTION VI. XXXXXXXX’S AFFIRMATIVE COVENANTS		38
6.1.	Payment of Taxes and Claims	39
6.2.	Maintenance of Properties and Corporate Existence	39
6.3.	Compliance with Laws	40
6.4.	Business Conducted	40
6.5.	Litigation	40
6.6.	Issue Taxes	40
6.7.	Bank Accounts	40
6.8.	Employee Benefit Plans	40
6.9.	Financial Covenant	41
6.10.	Financial and Business Information	41
6.11.	Officers’ Certificates	42
6.12.	Audits and Inspection	43
6.13.	Tax Returns, Financial Statements and Other Reports	43
6.14.	Information to Participant	43
6.15.	Material Adverse Developments	44
6.16.	Places of Business	44
6.17.	Commercial Tort Claims	44
6.18.	Letter-of-Credit Rights	44
6.19.	Contracts; Notices	44
6.20.	Contract Assignments	44
6.21.	Post-Closing Covenants	45


SECTION VII. BORROWER’S NEGATIVE COVENANTS:		45
7.1.	Merger, Consolidation, Dissolution or Liquidation	45
7.2.	Acquisitions; Subsidiaries	45
7.3.	Liens and Encumbrances	45
7.4.	Transactions With Affiliates or Subsidiaries	45
7.5.	Guarantees	46
7.6.	Distributions, Bonuses and Other Indebtedness	46
7.7.	Loans and Investments	46
7.8.	Use of Lenders’ Name	46
7.9.	Miscellaneous Covenants	47
7.10.	Jurisdiction of Organization	47

SECTION VIII. DEFAULT		47
8.1.	Events of Default	47
8.2.	Cure	50
8.3.	Rights and Remedies on Default	50
8.4.	Nature of Remedies	51
8.5.	Set-Off	51

SECTION IX. MISCELLANEOUS		52
9.1.	Governing Law	52
9.2.	Integrated Agreement	52
9.3.	Waiver	52
9.4.	Indemnity	52
9.5.	Time	53
9.6.	Expenses of Lender	53
9.7.	Brokerage	54
9.8.	Notices	54
9.9.	Headings	55
9.10.	Survival	55
9.11.	Successors and Assigns	55
9.12.	Duplicate Originals	55
9.13.	Modification	55
9.14.	Signatories	56
9.15.	Third Parties	56
9.16.	Discharge of Taxes, Xxxxxxxx’s Obligations, Etc.	56
9.17.	Withholding and Other Tax Liabilities	56
9.18.	Consent to Jurisdiction	56
9.19.	Additional Documentation	57
9.20.	Waiver of Jury Trial	57
9.21.	Consequential Damages	57
9.22.	Patriot Act Notice	57
9.23.	Amendment and Restatement	57

iii

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This Amended And Restated Loan and Security Agreement (“Agreement”) is dated this 18th day of April, 2019, by and among AXXUM TECHNOLOGIES LLC, a Virginia limited liability company (“Axxum”), KAE HOLDINGS, INC., a Delaware corporation (“KAE”), CLOUDBURST SECURITY LLC, a Virginia limited liability company (“Cloudburst”; together with Axxum, KAE and each Subsidiary (as defined below) that becomes a party to this Agreement in accordance with the provisions set forth below, individually and collectively, “Borrower”), and MAINSTREET BANK (“Lender”).

RECITALS

A.Pursuant to the terms of a certain Loan and Security Agreement dated as of November 22, 2017, by and among Axxum, KAE and Lender (as the same was amended on October 10, 2018, November 21, 2018 and March 11, 2019, the “Original Loan Agreement”), Lender made available to Axxum and KAE, jointly, inter alia, (a) a revolving line of credit not to exceed One Million Dollars ($1,000,000) and (b) a term loan in the original principal amount of Five Million Two Hundred Fifty Thousand Dollars ($5,250,000).

B.Axxum and KAE have requested that Lender modify, in certain respects, the terms of the Original Loan Agreement, including the addition of Cloudburst as a borrower and an increase in the amount of the revolving line of credit, and Xxxxxx has agreed to such modifications by amending and restating the Original Loan Agreement pursuant to this Agreement, subject to the conditions contained herein.

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

SECTION I. DEFINITIONS AND INTERPRETATION

1.1.Terms Defined: As used in this Agreement, the following terms have the following respective meanings:

Account - All of the “accounts” (as that term is defined in the UCC) of Borrower, whether now existing or hereafter arising.

Account Debtor - Any Person obligated on any Account owing to Borrower.

Advance(s) - Any monies advanced or credit extended to Borrower by Lender under the Revolving Credit, including without limitation, cash advances and the issuance of Letters of Credit.

Advance Request - Section 2.4(d).

Affiliate - With respect to any Person, (a) any Person which, directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such Person, or (b) any Person who is a director or officer (i) of such Person, (ii) of any Subsidiary of such Person, or (iii) any person described in clause (a) above. For purposes of this

definition, control of a Person shall mean the power, direct or indirect, (x) to vote 10% or more of the Capital Stock having ordinary voting power for the election of directors (or comparable equivalent) of such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. Control may be by ownership, contract, or otherwise.

Anti-Terrorism Laws - Any United States statute, treaty, law (including common law), ordinance, regulation, rule, order, opinion, release, injunction, writ, decree or award of any Unites States Governmental Authority relating to terrorism or money laundering, including Executive Order No. 13224 and the USA Patriot Act.

Asset Sale - The sale, transfer, lease, license or other disposition by Borrower, or by any Subsidiary of Borrower, to any Person other than another Borrower, of any Property now owned, or hereafter acquired, of any nature whatsoever in any transaction or series of related transactions other than the sale of Inventory in the ordinary course of business. An Asset Sale includes, but is not limited to, a merger, consolidation, division, conversion, dissolution or liquidation.

Assignment of Claims Act - The Federal Assignment of Claims Act, 31 U.S.C. § 3727 et seq., as amended from time to time.

Assumption Agreement - An Assumption Agreement, substantially in the form attached hereto as Exhibit B and reasonably acceptable by the Lender, executed by a Subsidiary that becomes a party to this Agreement in accordance with the provisions of Section 4.10 below.

At-Risk Work - 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.

Authorized Officer - Any officer (or comparable equivalent) of a Borrower authorized by such Borrower to request Advances or execute Compliance Certificates as set forth in the authorization certificate delivered to Lender substantially in the form of Exhibit “A” attached hereto.

Axxum Acquisition – The acquisition of all of the Capital Stock of Axxum by KAE pursuant to the Axxum MIPA.

Axxum MIPA – the Membership Interest Purchase Agreement, dated as of November 22, 2017, among KAE, Axxum, Xxxxxx Xxxx and Xxxxxxx Xxxxxxxx.

Bank Affiliate - With respect to Lender, any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with Lender. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 25% or more of any class of Capital Stock having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for any such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by ownership of Capital Stock, contract or otherwise.

Bankruptcy Code - Title 11 of the United States Code entitled “Bankruptcy”, as now or hereinafter in effect, or any successor statute.

Blocked Person - Section 5.23.

Borrowing Base - As of the date of determination thereof, an amount equal to the lesser of (i) the Maximum Revolving Credit Amount; or (ii) the sum (without duplication) of (A) ninety percent (90%) of amounts due with respect to Eligible Government Accounts plus (B) eighty percent (80%) of amounts due with respect to Eligible Commercial Accounts, minus (C) such reserves, in such amounts and with respect to such matters, as Lender may deem reasonably proper and necessary from time to time.

Borrowing Certificate - Section 6.10(a)(iii).

Business Day - A day other than Saturday or Sunday when Lender is open for business in Fairfax, Virginia.

Capital Stock - Any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all other ownership interests in a Person (including limited liability company membership interests) and any and all warrants or options to purchase any of the foregoing.

Capitalized Lease Obligations - Any Indebtedness represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, consistently applied.

Cash Collateral Account - Section 2.4(b).

Change of Control - The result caused by the occurrence of any event which results in (a) the Original Holders collectively owning (beneficially, legally or otherwise), directly or indirectly, less than fifty one percent (51%) of any class of the issued and outstanding Capital Stock of KAE entitled to vote or (b) KAE owning (beneficially, legally or otherwise) less than one hundred percent (100%) of any class of the issued and outstanding Capital Stock entitled to vote of Axxum, Cloudburst or any Borrower other than KAE; provided, however, that a merger of KAE into another Person pursuant to a Public Company Merger shall not result in a Change of Control.

Closing - Section 4.6.

Closing Date - Section 4.6.

Cloudburst Acquisition – The acquisition of all of the Capital Stock of Cloudburst by KAE pursuant to the Cloudburst MIPA.

Cloudburst MIPA – the Membership Interest Purchase Agreement, dated as of April 3, 2019, among KAE, Xxxxxxxxxx, Xxxxxx Xxxxxx Xxxxxxx and Xxxx X. Xxxxxxx.

Collateral - All of the Property and interests in Property described in Section 3.1 of this Agreement and all other Property and interests in Property that now or hereafter secure payment of the Obligations and satisfaction by Borrower of all covenants and undertakings contained in this Agreement and the other Loan Documents.

Collateral Assignment of Axxum Purchase Agreement – The Collateral Assignment of Acquisition Documents executed by KAE in favor of Xxxxxx and acknowledged by Xxxxxx Xxxx and Xxxxxxx Xxxxxxxx.

Collateral Assignment of Cloudburst Purchase Agreement – The Collateral Assignment of Acquisition Documents executed by XXX in favor of Xxxxxx and acknowledged by Xxxxxx Xxxxxx Xxxxxxx and Xxxx X. Xxxxxxx.

Commodity Exchange Act - the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

Compliance Certificate - Section 6.11.

Consolidated Amortization Expense - For any period, the aggregate consolidated amount of amortization expenses of Borrower, as determined in accordance with GAAP.

Consolidated Depreciation Expense - For any period, the aggregate, consolidated amount of depreciation expenses of Borrower, as determined in accordance with GAAP.

Consolidated EBITDA - For any period, Borrowers’ Consolidated Net Income (or deficit) plus (a) Consolidated Interest Expense, plus (b) Consolidated Depreciation Expense, plus (c) Consolidated Amortization Expense, plus (d) Consolidated Tax Expense, minus (e) extraordinary gains, all as determined in accordance with GAAP.

Consolidated Interest Expense - For any period (without duplication), the aggregate, consolidated amount of interest expense required to be paid or accrued during such period on all Indebtedness of Borrower outstanding during all or any part of such period, as determined in accordance with GAAP.

Consolidated Net Income - For any period, consolidated net income after taxes of Borrower as such would appear on Xxxxxxxx’s consolidated statement of income, prepared in accordance with GAAP.

Consolidated Tax Expense - For any period, the aggregate consolidated amount of income tax expenses of Borrower, as determined in accordance with GAAP.

Debt Service Coverage Ratio - For any twelve month period, the ratio of (i) Consolidated EBITDA for such twelve month period to (ii) scheduled principal payments on account of long term Indebtedness for the next succeeding twelve month period, all as determined in accordance with GAAP.

Default - Any event, act, condition or occurrence which with notice, or lapse of time or both, would constitute an Event of Default hereunder.

Disqualified Stock - Any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event (i) matures or is mandatorily redeemable for any reason, (ii) is convertible or exchangeable for Indebtedness or Capital Stock that meets the requirements of clauses (i) and (ii), or (iii) is redeemable at the option of the holder thereof, in whole or in part, in each case on or prior to the Term Loan Maturity Date.

Distribution -

x.Xxxx dividends or other cash distributions on any now or hereafter outstanding Capital Stock of Borrower;

b.The redemption, repurchase, defeasance or acquisition of such Capital Stock or of warrants, rights or other options to purchase such Capital Stock; and

c.Any loans or advances (other than salaries), to any shareholder(s), partner(s) or member(s) of Xxxxxxxx.

Eligible Accounts - All Accounts of Borrower meeting all of the following specifications: (i) the Account is lawfully and exclusively owned by Borrower and subject to no Lien (other than Permitted Liens, if applicable, and Liens granted under this Agreement) and Borrower has the right of assignment thereof and the power to grant a security interest therein; (ii) the Account is valid and enforceable representing the undisputed indebtedness of an Account Debtor not more than ninety (90) days past the original invoice date and does not represent a rebilling; (iii) not more than 50% of the aggregate balance of all Accounts owing from an Account Debtor obligated on the Account are outstanding more than ninety (90) days past their original invoice dates (excluding Accounts arising under Prime Government Contracts); (iv) the Account is not subject to any asserted defense, set-off, or counterclaim, deduction, discount, credit, chargeback, freight claim, allowance or adjustment of any kind; (v) the Account is net of any portion thereof attributable to the sale of goods that have been returned, rejected, lost or damaged; (vi) if the Account arises from the sale of goods by Borrower, such sale was an absolute sale and not on consignment or on approval or on a sale-or-return basis nor subject to any other repurchase or return agreement, and such goods have been shipped to the Account Debtor or its designee; (vii) if the Account arises from the performance of services, such services have actually been performed; (viii) the Account arose in the ordinary course of Borrower’s business; (ix) no notice of the bankruptcy, receivership, reorganization, liquidation, dissolution, or insolvency of the Account Debtor has been received by Lender or Borrower; (x) the Account is an Account for which Xxxxxx believes that the validity, enforceability or collection of the Account is not invalid or otherwise impaired; (xi) the Account Debtor is not a Subsidiary or Affiliate of any Borrower; (xii) the sale does not represent a sale pursuant to a Prime Government Contract unless Borrower has complied, for the benefit of Lender, with the Assignment of Claims Act if required hereunder or requested by Xxxxxx; (xiii) the Account is not an Account of an Account Debtor having its principal place of business or executive office outside the United States, unless the payment of such Account is guaranteed by an irrevocable letter of credit or credit insurance in each case reasonably satisfactory to Lender; (xiv) the Account is not an Account on which the Account Debtor is obligated to Borrower under any Instrument; (xv) the transaction which gave rise to the Account complies in all material respects

with all applicable laws, rules and regulations of any Governmental Authority; and (xvi) the Account meets such other reasonable specifications and requirements which may from time to time be established by Lender. Eligible Accounts shall not include At-Risk Work, cost overruns, progress payments, costs incurred in excess of approved or allowed billing rates, rebillings or retainages, Accounts arising out of a contract under which the performance of Borrower is guaranteed by a surety bond, any account receivable pursuant to which payment of any portion thereof is assigned to or for the benefit of a subcontractor, either directly or pursuant to an escrow arrangement, or that portion of an Account representing interest or finance charges for past due balances or debit memos.

Eligible Commercial Account - An Eligible Account that is not an Eligible Government Account.

Eligible Government Account - An Eligible Account arising out of a Government Contract on which the Borrower is the prime contractor.

Environmental Laws - Any and all Federal, foreign, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees and any and all common law requirements, rules and bases of liability regulating, relating to or imposing liability or standards of conduct concerning pollution, protection of the environment, or the impact of pollutants, contaminants or toxic or hazardous substances on human health or the environment, as now or may at any time hereafter be in effect.

ERISA - The Employee Retirement Income Security Act of 1974, as the same may be amended, from time to time.

Event of Default - Section 8.1.

Excess Cash Flow – For any fiscal year of Borrower, the amount by which Borrowers’ Consolidated EBITDA for such fiscal year exceeds Three Million Two Hundred Fifty Thousand Dollars ($3,250,000); provided, however, that (a) Excess Cash Flow shall never be less than $0 and (b) Excess Cash Flow for the fiscal year ending December 31, 2017 shall be calculated as provided above but then multiplied by a fraction, the numerator being the number of days between the Closing Date and December 31, 2017, inclusive, and the denominator being three hundred and sixty five (365).

Excluded Hedging Obligation - With respect to any Guarantor, any liability under an Hedging Agreement if, and to the extent that, all or a portion of the guaranty of such Guarantor of, or the grant by such Guarantor of a Lien to secure, such liability (or any guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Future Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder (determined after giving effect to any valid “keepwell, support or other agreement” for the benefit of such Guarantor and any and all guarantees of such Guarantor’s hedging liabilities by the Borrower) at the time the guaranty of such Guarantor, or a grant by such Guarantor of a security interest, becomes effective with respect to such hedging liability. Notwithstanding

anything herein to the contrary and for the avoidance of doubt, any guaranty of the Obligations and any grant of a Lien on and security interest in Collateral to secure the Obligations, to the extent provided or granted by any Guarantor that is not an “eligible contract participant” under the Commodity Exchange Act shall in no event guaranty or secure any Excluded Hedging Obligations of such Guarantor.

Excluded Property - Collectively:

(i) all voting stock of any direct Subsidiary of any Borrower that is a controlled foreign corporation (as defined in Section 957 of the Internal Revenue Code (a “CFC”)) in excess of 65% of the total combined voting power of all classes of stock of such CFC that are entitled to vote (within the meaning of Section 1.956-2(c)(2) of the Treasury Regulations);

(ii) any asset or property, to the extent and for so long as the grant of a security interest in such asset or property is prohibited by applicable law, rule or regulation or requires a consent not obtained of any Governmental Authority pursuant to such applicable law, rule or regulation, in each case after giving effect to the applicable anti-assignment provisions of the UCC and other applicable law, but excluding all Proceeds and receivables thereof (including Accounts arising under a Government Contract), the assignment of which is expressly deemed effective under the UCC or other applicable law notwithstanding such prohibition;

(iii) any lease, license or other agreement or contract or any property subject to a purchase money security interest, Lien securing a capital lease obligation or similar arrangement, in each case permitted to be incurred under this Agreement and each other Loan Document, to the extent that and for so long as the grant of a security interest therein would require a consent not obtained or violate or invalidate such lease, license or agreement or contract or purchase money arrangement, capital lease obligation or similar arrangement or create a right of termination in favor of any other party thereto (other than a Borrower or any Affiliate of a Borrower), in each case after giving effect to the applicable anti-assignment provisions of the UCC and other applicable law and other than Proceeds and receivables thereof, the assignment of which is expressly deemed effective under the UCC or other applicable law notwithstanding such prohibition;

(iv) any United States intent-to-use trademark applications to the extent that (if any), and solely during the period in which, the grant, attachment or enforcement of a security interest therein would, under applicable federal law, impair the registrability of such applications or the validity or enforceability of registrations issuing from such applications; and

(v) any bank accounts established by any Borrower used exclusively for payroll, payroll taxes or employee benefits, escrow, customs, insurance, or fiduciary purposes or compliance with legal requirements, to the extent such legal requirements prohibit the granting of a lien thereon;

provided, however, the “Excluded Property” shall not include any Proceeds, products, substitutions or replacements of any Excluded Property (unless such Proceeds, products, substitutions or replacements would themselves otherwise constitute Excluded Property).

Executive Order Xx. 00000 - Xxx Xxxxxxxxx Xxxxx Xx. 00000 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

Expenses - Section 9.6.

GAAP - United States generally accepted accounting principles as in effect on the Closing Date applied in a manner consistent with the most recent audited financial statements of Borrower furnished to Lender and described in Section 5.7 herein.

Government Acts - Section 2.2(f)

Governmental Authority - Any federal, state or local government or political subdivision, or any agency, authority, bureau, central bank, commission, department or instrumentality of either, or any court, tribunal, grand jury, or arbitration.

Government Contract - Any contract with the United States of America or any of its departments and agencies under which the Borrower is the prime contractor or a subcontractor.

Guarantor – Xxxxx XxXxxxx, Xxxx XxXxxxx, Xxxxx XxXxx XXX and any other Person who may hereafter guaranty, as surety, all or a material portion of the Obligations.

Guaranty Agreement - A guaranty agreement executed by the Guarantor in favor of Xxxxxx, in form and substance satisfactory to Lender.

Hazardous Substances - Any substances defined or designated as hazardous or toxic waste, hazardous or toxic material, hazardous or toxic substance or similar term, under any Environmental Law.

Hedging Agreements - Any Interest Hedging Instrument or any other interest rate protection agreement, foreign currency exchange agreement, commodity purchase or option agreement, or any other interest rate hedging device or swap agreement (as defined in 11 U.S.C. § 101 et. seq.).

Indebtedness - Of any Person at any date, all liabilities of such Person, including without duplication (i) all indebtedness of such Person for borrowed money (including with respect to Borrower, the Obligations) or for the deferred purchase price of property or services, (ii) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument, (iii) all accounts payable and Capitalized Lease Obligations of such Person, (iv) the face amount of all letters of credit issued for the account of such Person and all drafts drawn thereunder, (v) all obligations of other Persons which such Person has guaranteed, (vi) Disqualified Stock, (vii) all net obligations of such Person under Hedging Agreements, and (viii) all liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof.

Interest Hedging Instrument - Any documentation evidencing any interest rate swap, interest “cap” or “collar” or any other interest rate hedging device or swap agreement (as defined in 11 U.S.C. § 101 et. seq.) between Borrower and Lender (or any Affiliate of Lender).

Inventory - All of the “inventory” (as that term is defined in the UCC) of Borrower, whether now existing or hereafter acquired or created.

IRS - Internal Revenue Service.

L/C Commitment - The sum of Zero Dollars ($0).

L/C Fees - Section 2.7(d).

Letters of Credit - Standby letters of credit issued by Xxxxxx for the account of Borrower pursuant to Section 2.2 herein.

Letter of Credit Amount - The sum of (i) the aggregate undrawn amount of all Letters of Credit outstanding at any time plus (ii) the aggregate amount of all drawings under Letters of Credit for which Xxxxxx has not been reimbursed at such time.

Letter of Credit Documents - Any Letter of Credit, any amendment thereto, any documents delivered in connection therewith, any application therefor, or any other documents (all in form and substance satisfactory to Lender), governing or providing for (i) the rights and obligations on the parties concerned or at risk, or (ii) any collateral security for such obligations.

Lien - Any interest of any kind or nature in property securing an obligation owed to, or a claim of any kind or nature in property by, a Person other than the owner of the Property, whether such interest is based on the common law, statute, regulation or contract, and including, but not limited to, a security interest or lien arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt, a lease, consignment or bailment for security purposes, a trust, or an assignment. For the purposes of this Agreement, Borrower shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes.

Loan Documents - Collectively, this Agreement, the Notes, the Guaranty Agreements, the Pledge Agreement, the Collateral Assignment of Axxum Purchase Agreement, the Collateral Assignment of Cloudburst Purchase Agreement a subordination agreement from each of Xxxxxx Xxxx, Xxxxxxx Xxxxxxxx, Xxxxxx Xxxxxx Xxxxxxx and Xxxx X. Xxxxxxx, the Letter of Credit Documents, and all agreements, instruments and documents executed and/or delivered in connection therewith, all as may be supplemented, restated, superseded, amended or replaced from time to time.

Loans - Collectively, the unpaid balance of Advances under the Revolving Credit, any unreimbursed draws under any Letter of Credit and the unpaid principal balance of the Term Loan.

Material Adverse Effect - A material adverse effect with respect to (a) the business, assets, properties, financial condition, stockholders’ equity, contingent liabilities, material agreements or results of operations of Borrower, or (b) Borrower’s ability to pay the Obligations in accordance with the terms hereof, or (c) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights and remedies of Lender hereunder or thereunder.

Maximum Revolving Credit Amount - The sum of Two Million Dollars ($2,000,000).

Minimum Compliance Level - (a) on or after December 31, 2017 but prior to June 30, 2018, Negative Two Million Two Hundred Fifty Thousand Dollars (-$2,250,000), (b) on or after June 30, 2018 but prior to June 30, 2019, Negative One Million Two Hundred Fifty Thousand Dollars (-$1,250,000), (c) on or after June 30, 2019 but prior to December 31, 2019, Negative Nine Hundred Fifty Thousand Dollars (-$950,000), (d) on or after December 31, 2019 but prior to June 30, 2020, One Million Seven Hundred Fifty Thousand Dollars ($1,750,000), (e) on or after June 30, 2020 but prior to December 31, 2020, Two Million Five Hundred Thousand Dollars ($2,500,000), (f) on or after December 31, 2020 but prior to June 30, 2021, Three Million Dollars ($3,000,000), (g) on or after June 30, 2021 but prior to December 31, 2021, Three Million Five Hundred Thousand Dollars ($3,500,000) and (h) on or after December 31, 2021, Five Million Dollars ($5,000,000).

Notes - The Revolving Credit Note and the Term Loan Note.

Obligations - All existing and future debts, liabilities and obligations of every kind or nature at any time owing by Borrower to Lender or any other Bank Affiliate, whether under this Agreement, or any other existing or future instrument, document or agreement, between Borrower or Lender or any other Bank Affiliate, whether joint or several, related or unrelated, primary or secondary, matured or contingent, due or to become due (including debts, liabilities and obligations obtained by assignment), and whether principal, interest, fees, indemnification obligations hereunder or Expenses (specifically including interest accruing after the commencement of any bankruptcy, insolvency or similar proceeding with respect to Borrower, whether or not a claim for such post-commencement interest is allowed), including, without limitation, debts, liabilities and obligations in respect of the Revolving Credit, Reimbursement Obligations and Term Loan and any extensions, modifications, substitutions, increases and renewals thereof; any amount payable by Borrower or any Subsidiary of Borrower to Lender or any other Bank Affiliate pursuant to an Interest Hedging Instrument; the payment of all amounts advanced by Lender or any other Bank Affiliate to preserve, protect and enforce rights hereunder and in the Collateral; and all Expenses incurred by Lender or any other Bank Affiliate; provided that the “Obligations” of a Person which is not an “eligible contract participant” under the Commodity Exchange Act shall exclude and shall not be deemed to refer to any Excluded Hedging Obligations with respect to such Person. Without limiting the generality of the foregoing, Obligations shall include any other debts, liabilities or obligations owing to Lender or any other Bank Affiliate in connection with any lockbox, cash management, or other services (including electronic funds transfers or automated clearing house transactions) provided by Lender or any other Bank Affiliate to Borrower, as well as any other loan, advances

or extension of credit, under any existing or future loan agreement, promissory note, or other instrument, document or agreement between Borrower and Lender or any other Bank Affiliate.

Original Holders – Xxxxx XxXxxxx, Xxxx XxXxxxx and Xxxxx XxXxx XXX.

Overadvance - Section 2.1(a).

PBGC - The Pension Benefit Guaranty Corporation.

Permitted Indebtedness - (a) Indebtedness to Lender in connection with the Revolving Credit, Term Loan and Letters of Credit or otherwise pursuant to the Loan Documents; (b) trade payables incurred in the ordinary course of Borrower’s business; (c) purchase money Indebtedness (including Capitalized Lease Obligations) hereafter incurred by Borrower to finance the purchase of fixed assets; provided that, (i) the amount of such Indebtedness incurred in any fiscal year shall not exceed Two Hundred Thousand Dollars ($200,000) in the aggregate, (ii) such Indebtedness shall not exceed the purchase price of the assets funded and (iii) no such Indebtedness may be refinanced for a principal amount in excess of the principal amount outstanding at the time of such refinancing; (d) Subordinated Debt; (e)endorsement of instruments or other payment items for deposit; (f) Indebtedness consisting of (i) unsecured guarantees incurred in the ordinary course of business with respect to appeal bonds; and (ii) unsecured guarantees of Indebtedness of any other Borrower, to the extent that the Borrower that is obligated under such guaranty could have incurred such underlying Indebtedness; (g) Indebtedness incurred in the ordinary course of business under performance, surety, statutory, or appeal bonds; (h) Indebtedness owed to any Person providing property, casualty, liability, worker’s compensation, health, disability or other employee benefits insurance, or other insurance to any Borrower, so long as the amount of such Indebtedness is not in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the year in which such Indebtedness is incurred and such Indebtedness is outstanding only during such year; (i) the incurrence by any Borrower of Indebtedness under Hedging Agreements that are incurred for the bona fide purpose of hedging the interest rate, commodity, or foreign currency risks associated with Borrowers’ operations and not for speculative purposes; (j) Indebtedness incurred in the ordinary course of business in respect of credit cards, credit card processing services, debit cards, or cash management services, provided that such Indebtedness shall not exceed Fifty Thousand Dollars ($50,000) in the aggregate at any one time; (k) Indebtedness owed to Lender or any Affiliate of Lender; and (l) unsecured Indebtedness owed by one Borrower to another.

Permitted Investments - (a) investments and advances existing on the Closing Date that are disclosed in writing to Lender by Borrower on or prior to the date hereof or (b) (i) obligations issued or guaranteed by the United States of America or any agency thereof, (ii) commercial paper with maturities of not more than 180 days and a published rating of not less than A-1 or P-1 (or the equivalent rating) by a nationally recognized investment rating agency, (iii) certificates of time deposit and bankers’ acceptances having maturities of not more than 180 days and repurchase agreements backed by United States government securities of Lender, (or another commercial bank if (A) such bank has a combined capital and surplus of at least $500,000,000, or (B) its debt obligations, or those of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized

investment rating agency), and (iv) U.S. money market funds that invest solely in obligations issued or guaranteed by the United States of America or an agency thereof.

Permitted Liens - (a) Liens securing taxes, assessments or governmental charges or levies not yet due; (b) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance, social security and other like laws; (c) Liens on fixed assets secured by purchase money Indebtedness permitted under Section 7.6; provided that, (i) such Lien attached to such assets concurrently, or within 20 days of the acquisition thereof, and only to the assets so acquired, and (ii) a description of the asset acquired is furnished to Lender; (d) Liens in favor of Lender securing the Obligations; (e) judgment Liens arising solely as a result of the existence of judgments, orders, or awards that do not constitute an Event of Default under Section 8.1 of this Agreement; (f) the interests of lessors under operating leases and non-exclusive licensors under license agreements; (g) Liens on cash amounts deposited to secure any Borrower’s obligations in connection with worker’s compensation or other unemployment insurance; (h) Liens on amounts deposited to secure any Borrower’s obligations in connection with the making or entering into of bids, tenders, or leases in the ordinary course of business and not in connection with the borrowing of money; (i) Liens on amounts deposited to secure any Borrower’s reimbursement obligations with respect to appeal bonds obtained in the ordinary course of business, provided that, such amounts shall not exceed Fifty Thousand Dollars ($50,000) in the aggregate at any one time; (j) with respect to any real property, easements, rights of way, and zoning restrictions that do not materially interfere with or impair the use or operation thereof; (k) non-exclusive licenses of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business; (l) rights of setoff or bankers’ liens upon deposits of funds in favor of banks or other depository institutions, solely to the extent incurred in connection with the maintenance of such deposit accounts in the ordinary course of business; (m) Liens granted in the ordinary course of business on the unearned portion of insurance premiums securing the financing of insurance premiums to the extent the financing is permitted under the definition of Permitted Indebtedness; and (n) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods.

Person - An individual, partnership, corporation, trust, limited liability company, limited liability partnership, unincorporated association or organization, joint venture or any other entity.

Pledge Agreement – That certain Amended and Restated Pledge Agreement, dated as of the date hereof, executed by KAE for the benefit of Lender.

Prime Government Contract – A Government Contract under which Borrower is the prime contractor.

Prime Rate – The “Prime Rate” of interest as published in the “Money Rates” section of The Wall Street Journal on the applicable date (or the highest “Prime Rate” if more than one is published) as such rate may change from time to time. If The Wall Street Journal ceases to be published or goes on strike or is otherwise not published, Lender may use a similar published prime or base rate. The Prime Rate is not necessarily the lowest or best rate of interest offered by Lender to any borrower or class of borrowers.

Property - Any interest of Borrower in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

Public Company Merger – The merger of KAE into a publicly held company or the wholly-owned subsidiary of a publicly held company (the “Merger Party”), with the Merger Party being the surviving entity, if (a) no Default or Event of Default has occurred and is continuing at the time of such merger, (b) Original Holders collectively own more than fifty percent (50%) of each class of the issued and outstanding Capital Stock of the Merger Party (or if the Merger Party is a wholly-owned subsidiary of a publicly held company, such publicly held company) entitled to vote, (c) such Merger Party agrees in writing, in form and substance reasonably acceptable to Lender, that it is deemed to be a “Borrower” hereunder and that it is liable for all of the obligations of KAE under this Agreement and the other Loan Documents, and (d) each representation and warranty set forth in Section 5 and any other Loan Document in effect at the time of such merger is then true and correct in all material respects as if made on and as of such date as if the Merger Party was a Borrower (except that any representation or warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) except to the extent such representations and warranties are made only as of a specific earlier date.

Regulation D - Regulation D of the Board of Governors of the Federal Reserve System comprising Part 204 of Title 12, Code of Federal Regulations, as amended, and any successor thereto.

Reimbursement Obligations - Section 2.2(c). Related Borrower - Section 2.13.

Restatement Date – April 18, 2019.

Revolving Credit – Section 2.1(a).

Revolving Credit Fee - Section 2.7(a).

Revolving Credit Fee Amount – Ten Thousand Dollars ($10,000).

Revolving Credit Maturity Date – March 31, 2020, or such later date as Lender may, in its sole and absolute discretion, designate in writing to Borrower.

Revolving Credit Note - Section 2.1(b).

Subordinated Debt - Indebtedness of Borrower subject to payment terms and subordination provisions set forth in a written subordination agreement or intercreditor agreement acceptable to Lender in its sole discretion.

Subsidiary - With respect to any Person at any time, (i) any corporation more than fifty percent (50%) of whose voting stock is legally and beneficially owned by such Person or owned by a corporation more than fifty percent (50%) of whose voting stock is legally and beneficially owned by such Person; (ii) any trust of which a majority of the beneficial interest is

at such time owned directly or indirectly, beneficially or of record, by such Person or one or more Subsidiaries of such Person; and (iii) any partnership, joint venture, limited liability company or other entity of which ownership interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions are at such time owned directly or indirectly, beneficially or of record, by, or which is otherwise controlled directly, indirectly or through one or more intermediaries by, such Person or one or more Subsidiaries of such Person.

Tangible Net Worth - As of any date of determination, the amount by which all of Borrower’s consolidated assets (less (i) trademarks, copyrights, goodwill, covenants not to compete, and all other assets which would be classified as intangible assets under GAAP and (ii) assets owing from Affiliates, officers, directors, equity holders and employees) plus Subordinated Debt plus the value of KAE’s equity interest in any Subsidiary of KAE that is a Borrower (to the extent subtracted when calculating Borrower’s consolidated assets), exceed all of Borrower’s consolidated liabilities, all as would be shown on Borrower’s consolidated balance sheet prepared in accordance with GAAP.

Term Loan - Section 2.3(a).

Term Loan Amount - The sum of Five Million Two Hundred Fifty Thousand Dollars ($5,250,000).

Term Loan Closing Fee - Section 2.7(b).

Term Loan Maturity Date – November 22, 2021. Term Loan Note - Section 2.3 (b).

UCC - The Uniform Commercial Code as adopted in the Commonwealth of Virginia, as the same may be amended from time to time.

Other Capitalized Terms - Any other capitalized terms used without further definition herein shall have the respective meaning set forth in the UCC.

1.2.Accounting Principles: Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, this shall be done in accordance with GAAP as in effect on the Closing Date, to the extent applicable, except as otherwise expressly provided in this Agreement. If there are any changes in GAAP after the Closing Date that would affect the computation of the financial covenants in Section 6.9, such changes shall only be followed, with respect to such financial covenants, from and after the date this Agreement shall have been amended to take into account any such changes.

0.0.Xxxxxxxxxxxx: No doctrine of construction of ambiguities in agreements or instruments against the interests of the party controlling the drafting shall apply to any Loan Documents.

SECTION II. THE LOANS

2.1.

Revolving Credit – Description:

a.Subject to the terms and conditions of this Agreement, Lender hereby establishes for the benefit of Borrower a revolving credit facility (the “Revolving Credit”) which shall include cash Advances extended by Xxxxxx to or for the benefit of Borrower as well as Letters of Credit issued for the account of Borrower from time to time hereunder. The aggregate principal amount of unpaid cash Advances, plus the Letter of Credit Amount, shall not at any time exceed the Borrowing Base. Subject to such limitation, the outstanding balance of Advances under the Revolving Credit may fluctuate from time to time, to be reduced by repayments made by Xxxxxxxx, to be increased by future Advances, which may be made by Xxxxxx, to or for the benefit of Borrower and, subject to the provisions of Section VIII below, shall be due and payable on the Revolving Credit Maturity Date. If the aggregate principal amount of unpaid cash Advances, plus the Letter of Credit Amount, at any time exceeds the Borrowing Base set forth in any Borrowing Certificate (such excess referred to as “Overadvance”), Borrower shall immediately repay the Overadvance in full.

b.On the Restatement Date, Borrower shall execute and deliver an amended and restated promissory note to Lender for the Maximum Revolving Credit Amount (“Revolving Credit Note”). The Revolving Credit Note shall evidence Xxxxxxxx’s unconditional obligation to repay Lender for all Advances made under the Revolving Credit, with interest as herein provided. Each Advance under the Revolving Credit shall be deemed evidenced by the Revolving Credit Note, which is deemed incorporated herein by reference and made part hereof. The Revolving Credit Note shall be in form and substance satisfactory to Lender.

c.The term of the Revolving Credit shall expire on the Revolving Credit Maturity Date. On such date, unless having been sooner accelerated by Lender pursuant to the terms hereof, and without impairing any rights under Section 3.1, all sums owing under the Revolving Credit shall be due and payable in full, and as of and after such date Borrower shall not request and Lender shall not make any further Advances under the Revolving Credit.

2.2.

Letters of Credit:

x.Xx a part of the Revolving Credit and subject to its terms and conditions (including, without limitation, the Borrowing Base), Lender shall make available to Borrower Letters of Credit which shall not exceed, in the aggregate at any one time outstanding, the L/C Commitment. Notwithstanding the foregoing, all Letters of Credit shall be in form and substance reasonably satisfactory to Lender. No Letter of Credit shall be issued with an expiry date later than (i) three hundred sixty five (365) days from the date of issuance for a stand-by letter of credit or (ii) ten (10) Business Days prior to the Revolving Credit Maturity Date. Borrower shall execute and deliver to Lender all Letter of Credit Documents required by Lender for such purposes. Each Letter of Credit shall comply with the Letter of Credit Documents.

b.Each Letter of Credit issued from time to time under the Revolving Credit which remains undrawn (and the amounts of draws on Letters of Credit prior to payment as

hereinafter set forth) shall reduce, dollar for dollar, the amount available to be borrowed by Borrower under the Revolving Credit.

x.Xx the event of any request for drawing under any Letter of Credit by the beneficiary thereof, Lender shall promptly notify Borrower and Xxxxxxxx shall immediately reimburse Lender on the day when such drawing is honored, by either a cash payment by Borrower or, so long as no Event of Default has occurred and is continuing, in the absence of such payment by Borrower, and at Xxxxxx’s option, by Xxxxxx automatically making or having been deemed to have made (without further request or approval of Borrower) a cash Advance under the Revolving Credit on such date to reimburse Lender. Xxxxxxxx’s reimbursement obligation for draws under Letters of Credit along with the obligation to pay L/C Fees shall herein be referred to collectively as Borrower’s “Reimbursement Obligations.” All of Xxxxxxxx’s Reimbursement Obligations hereunder with respect to Letters of Credit shall apply unconditionally and absolutely to Letters of Credit issued hereunder on behalf of Xxxxxxxx.

d.The obligation of Xxxxxxxx to reimburse Lender for drawings made (or for cash Advances made to cover drawings made) under the Letters of Credit shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances including, without limitation, the following circumstances:

any lack of validity or enforceability of any Letter of Credit;

ii.the existence of any claim, setoff, defense or other right that Borrower or any other Person may have at any time against a beneficiary or any transferee of any Letter of Credit (or any persons or entities for whom any such beneficiary or transferee may be acting), Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction;

iii.any draft, demand, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

iv.payment by Xxxxxx under any Letter of Credit against presentation of a demand, draft or certificate or other document that does not comply with the terms of such Letter of Credit unless Xxxxxx shall have acted with willful misconduct or gross negligence in issuing such payment;

v.any other circumstances or happening whatsoever that is similar to any of the foregoing; or

vi.the fact that a Default or Event of Default shall have occurred and be continuing.

e.If by reason of (i) any change after the Closing Date in any applicable law, regulation, rule, decree or regulatory requirement, or any change in the interpretation or application thereof by any Governmental Authority or (ii) compliance by Lender with any direction, reasonable request or requirement (whether or not having the force of law) of any governmental or monetary authority including, without limitation, Regulation D:

i.Lender shall be subject to any tax or other levy or charge of any nature or to any variation thereof (except for changes in the rate of any tax on the net income of Lender or its applicable lending office) or to any penalty with respect to the maintenance or fulfillment of its obligations under this Section 2.2, whether directly or by such being imposed on or suffered by Lender;

ii.any reserve, deposit or similar requirement is or shall be applicable, imposed or modified in respect of any Letter of Credit issued by Lender; or

iii.there shall be imposed on Lender any other condition regarding this Section 2.2 or any Letter of Credit; and the result of the foregoing is to directly or indirectly increase the cost to Lender of issuing, creating, making or maintaining any Letter of Credit or to reduce the amount receivable in respect thereof by Lender, then and in any such case, Lender shall, after the additional cost is incurred or the amount received is reduced, notify Borrower and Borrower shall pay on demand such amounts as may be necessary to compensate Lender for such additional cost or reduced receipt, together with interest on such amount from the date demanded until payment in full thereof at a rate per annum equal at all times to the applicable interest rate under the Revolving Credit. A certificate signed by an officer of Lender as to the amount of such increased cost or reduced receipt showing in reasonable detail the basis for the calculation thereof, submitted to Borrower by Xxxxxx shall, except for manifest error and absent written notice from Borrower to Lender within ten (10) days from submission, be final, conclusive and binding for all purposes.

f.i. In addition to amounts payable as elsewhere provided in this Section 2.2, without duplication, Borrower hereby agrees to protect, indemnify, pay and save Lender harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys’ fees) which Lender may incur or be subject to as a consequence, direct or indirect, of (A) the issuance of the Letters of Credit or (b) the failure of Lender to honor a drawing under any Letter of Credit as a result of any such act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority (all such acts or omissions herein called “Government Acts”) in each case except for claims, demands, liabilities, damages, losses, costs, charges and expenses to the extent arising from acts or conduct of Xxxxxx constituting gross negligence or willful misconduct.

xx.Xx between Xxxxxxxx and Xxxxxx, Xxxxxxxx assumes all risks of the acts and omissions of or misuse of the Letters of Credit issued by Lender by the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, Lender shall not be responsible: (A) for the form, validity, sufficiency, accuracy, genuineness or legal effects of any document submitted by any party in connection with the application for and issuance if such Letters of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (C) for failure of the beneficiary of any such Letter of Credit to comply fully with conditions required in order to draw upon such Letter of Credit in the absence of gross negligence or willful misconduct on the part of Lender; (D) for errors,

omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they are in cipher, unless any of the foregoing are caused by Xxxxxx’s gross negligence or willful misconduct; (E) for errors in interpretation of technical terms; (F) for any loss or delay in the transmission of any document or required in order to make a drawing under such Letter of Credit or of the proceeds thereof, unless caused by Lender’s gross negligence or willful misconduct; (G) for the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; and (H) for any consequences arising from causes beyond the control of Lender, including, without limitation, any Government Acts. None of the above shall affect, impair or prevent the vesting of any of Xxxxxx’s rights or powers hereunder.

xxx.Xx furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by Lender in connection with the Letters of Credit issued by it or the related certificates, if taken or omitted in good faith in the absence of gross negligence, shall not create any liability on the part of Lender to Borrower.

2.3.

Term Loan - Description:

x.Xxxxxx advanced to Borrower on the Closing Date, subject to the terms and conditions of this Agreement, the sum of the Term Loan Amount (“Term Loan”).

x.Xx Closing, Xxxxxxxx executed and delivered a promissory note to Lender in the original principal amount of the Term Loan Amount (“Term Loan Note”). The Term Loan Note shall evidence Xxxxxxxx’s unconditional obligation to repay to Lender the Term Loan with interest as herein provided.

c.The principal balance of the Term Loan shall be paid in forty-eight (48) consecutive equal monthly installments of principal in the amount of One Hundred Nine Thousand Three Hundred Seventy Five Dollars ($109,375.00) commencing on November 30, 2017, and continuing on the last Business Day of each month thereafter. A final installment of all unpaid principal and all accrued and unpaid interest outstanding under the Term Loan shall be due and payable on the Term Loan Maturity Date.

2.4.

Advances and Payments:

a.Except to the extent otherwise set forth in this Agreement (or in the case of an Interest Hedging Instrument under the applicable agreements), all payments of principal and of interest on the Revolving Credit, Reimbursement Obligations, Term Loan and all Expenses, fees, indemnification obligations and all other charges and any other Obligations of Borrower, shall be made to Lender at its banking office located at 00000 Xxxxxxx Xxxx., Xxxxxxx, Xxxxxxxx 00000, in United States dollars, in immediately available funds. Lender shall have the unconditional right and discretion (and Borrower hereby authorizes Lender) to charge any of Borrower’s operating and/or deposit account(s), for all of Borrower’s Obligations as they become due from time to time under this Agreement including, without limitation, interest, principal, fees, indemnification obligations and reimbursement of Expenses. Alternatively, Lender may in its discretion (and Borrower hereby authorizes Lender to) make a cash Advance under the Revolving Credit in a sum sufficient to pay all interest accrued and payable on the

Obligations and to pay all costs, fees and Expenses owing hereunder. Borrower acknowledges that Xxxxxxxx’s failure to maintain sufficient funds in any checking, operating or deposit account for payment of any of the Obligations, or Lender’s failure to charge any such account shall not relieve Borrower of any payment obligation under this Agreement or any other Loan Document. Any payments received prior to 4:00 p.m. Eastern time on any Business Day shall be deemed received on such Business Day. Any payments (including any payment in full of the Obligations), received after 4:00 p.m. Eastern time on any Business Day shall be deemed received on the immediately following Business Day.

b.Axxum has established with Lender depository account number 2010060857 (together with any other similar depository account established and maintained by any Borrower with Lender with terms and conditions acceptable to Lender, the “Cash Collateral Account”). Each Borrower shall cause (and Lender is hereby irrevocably authorized to cause) the transfer of all payments on such Borrower’s Accounts into the Cash Collateral Account. For each Borrower (other than KAE) to achieve this, such Borrower shall amend its System for Award Management to provide that all payments due to it will be deposited into the Cash Collateral Account. Deposits into the Cash Collateral Account shall be applied by Lender daily, subject to Lender’s standard clearing procedures and clearing periods for deposited funds, to reduce the outstanding principal amount under the Revolving Credit. All collections of Accounts and proceeds of other Collateral to the extent received by Borrower shall be held in trust for the benefit of Lender and remitted, in specie, to Lender for deposit in the Cash Collateral Account immediately upon receipt by Borrower. Borrower shall have no right of access to or withdrawal from the Cash Collateral Account; provided that if there are no outstanding Advances and no Default or Event of Default has occurred and is continuing, then all collections of Accounts shall be, subject to Lender’s standard clearing procedures and clearing periods for deposited funds, transferred to a Borrower’s operating account with Lender. All funds deposited into the Cash Collateral Account shall immediately become the property of Lender.

x.Xxxx Advances which may be made by Xxxxxx from time to time under the Revolving Credit shall be made available by crediting such proceeds to a Borrower’s operating account with Lender.

d.All requests for a cash Advance under the Revolving Credit are to be pursuant to a working capital loan sweep or a written request (“Advance Request”) executed by an Authorized Officer of Axxum. Requests for Advances must be requested by 2:00 p.m., Eastern time, on the date such Advance is to be made. Upon receiving a request for an Advance in accordance with this subparagraph, and subject to the conditions set forth in this Agreement, Lender shall make the requested Advance available to Axxum (or another Borrower as instructed) as soon as is reasonably practicable thereafter on the day the requested Advance is to be made.

2.5.

Interest:

a.The unpaid principal balance of cash Advances under the Revolving Credit shall bear interest, subject to the terms hereof, at the per annum rate equal to the Prime Rate plus one hundred (100) basis points. Changes in the interest rate applicable to the Revolving Credit shall become effective on the same day that there is a change in the Prime

Rate. Interest on the Revolving Credit shall be payable monthly, in arrears, on the last Business Day of each month, beginning on November 30, 2017 and on the Revolving Credit Maturity Date.

b.The unpaid principal balance of the Term Loan shall bear interest, subject to the terms hereof, at a per annum rate equal to the Prime Rate plus two hundred (200) basis points. Changes in the interest rate applicable to the Term Loan shall become effective on the same day that there is a change in the Prime Rate. Interest on the Term Loan shall be payable monthly, in arrears, on the last Business Day of each calendar month, beginning on November 30, 2017 and on the Term Loan Maturity Date.

2.6.

Additional Interest Provisions:

a.Interest on the Loans shall be calculated on the basis of a year of three hundred sixty (360) days but charged for the actual number of days elapsed.

b.After the occurrence and during the continuance of an Event of Default hereunder, the per annum effective rate of interest on all outstanding principal under the Loans may, at the option of the Lender, be increased by five hundred (500) basis points; provided that such increase in interest rate shall automatically become effective upon the occurrence and during the continuation of an Event of Default described in Section 8.1(j), 8.1(k) or 8.1(l). All such increases may be applied retroactively to the date of the occurrence of the Event of Default. Xxxxxxxx agrees that the default rate payable to Lender is a reasonable estimate of Xxxxxx’s damages and is not a penalty.

c.All contractual rates of interest chargeable on outstanding principal under the Loans shall continue to accrue and be paid even after Default, an Event of Default, maturity, acceleration, judgment, bankruptcy, insolvency proceedings of any kind or the happening of any event or occurrence similar or dissimilar.

x.Xx no contingency or event whatsoever shall the aggregate of all amounts deemed interest hereunder and charged or collected pursuant to the terms of this Agreement exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such court determines Lender has charged or received interest hereunder in excess of the highest applicable rate, Lender shall apply, in its sole discretion, and set off such excess interest received by Lender against other Obligations due or to become due and such rate shall automatically be reduced to the maximum rate permitted by such law.

2.7.

Fees and Charges:

x.Xx Closing, Lender shall have fully earned and Borrower shall unconditionally pay to Lender, a non-refundable administrative fee with respect to the Revolving Credit (“Revolving Credit Fee”) in an amount equal to the Revolving Credit Fee Amount. An additional fee in an amount equal to the Revolving Credit Fee Amount shall be paid on the Restatement Date. A Revolving Credit Fee (equal to twice the Revolving Credit Fee Amount) is expected to be paid annually if the Revolving Credit Maturity Date is extended beyond March 31, 2020.

x.Xx or prior to Closing Borrower paid to Lender a non-refundable fee with respect to the Term Loan (“Term Loan Closing Fee”) in the amount of Sixty Five Thousand Six Hundred Twenty Five Dollars ($65,625).

x.Xxxxxxxx shall unconditionally pay to Lender a late charge equal to five percent (5%) of any and all payments of principal or interest on the Loans that are not paid within fifteen (15) days of the due date. Such late charge shall be due and payable regardless of whether Xxxxxx has accelerated the Obligations. Xxxxxxxx agrees that any late fee payable to Xxxxxx is a reasonable estimate of Xxxxxx’s damages and is not a penalty.

x.Xxxxxxxx shall pay to Lender a fee in the amount of two percent (2%) per annum of the face amount of each Letter of Credit issued by Xxxxxx. Such fee shall be payable on the date the Letter of Credit is issued. In addition, Xxxxxxxx shall pay to Lender, upon billing therefore, all of Xxxxxx’s standard commissions for the issuance of banker’s acceptances and standard charges for issuance, amendment, extension and cancellation of any Letter of Credit. All such fees and charges are referred to herein collectively as the “L/C Fees.”

2.8.

Prepayments:

x.Xxxxxxxx may voluntarily prepay the Revolving Credit in whole or in part at any time or from time to time, without penalty or premium.

b.Borrower may voluntarily prepay the Term Loan in whole or in part at any time or from time to time. Any voluntary prepayment of the Term Loan shall be in a principal amount not less than $25,000. If the Term Loan is prepaid, in whole or in part, with the proceeds of another financing, the Borrower shall pay with any such prepayment a premium equal to two percent (2%) of the amount of the Term Loan prepaid, but only if Borrower had first offered the Lender the opportunity to provide such financing and Lender declined, or was unable, to provide it.

c.If the Borrower has Excess Cash Flow in any fiscal year, the Borrower shall, within 125 days after the end of such fiscal year, prepay the Term Loan in an amount equal to 50% of the Excess Cash Flow for such fiscal year (but only to the extent the Term Loan is then outstanding).

d.Any voluntary prepayment of a Loan shall be accompanied by all accrued and unpaid interest. Any partial prepayment of the Term Loan shall be applied to installments of the Term Loan due in the inverse order of maturity.

2.9.Use of Proceeds: The extensions of credit under and proceeds of the Revolving Credit shall be used to provide working capital and cash flow support of Borrower’s performance of its contracts, and the issuance of standby letters of credit. The extensions of credit under and proceeds of the Term Loan shall be used to finance the Axxum Acquisition.

0.00.Xxxxxxx Adequacy: If any present or future law, governmental rule, regulation, policy, guideline, directive or similar requirement (whether or not having the force of law) imposes, modifies, or deems applicable any capital adequacy, capital maintenance or similar requirement which affects the manner in which Lender allocates capital resources to its

commitments (including any commitments hereunder), and as a result thereof, in the opinion of Xxxxxx, the rate of return on Lender’s capital with regard to the Loans is reduced to a level below that which Xxxxxx could have achieved but for such circumstances, then in such case and upon notice from Lender to Borrower, from time to time, Borrower shall pay Lender such additional amount or amounts as shall compensate Lender for such reduction in Lender’s rate of return. Such notice shall contain the statement of Lender with regard to of any such amount or amounts which shall, in the absence of manifest error, be binding upon Borrower. In determining such amount, Lender may use any reasonable method of averaging and attribution that it deems applicable, provided that such methodology is also used, to the extent permitted by applicable law, with respect to Xxxxxx’s other borrowers with loans similar to the Loans that are subject to provisions substantially similar to this Section 2.10. Any rules, regulations, policies, guidelines, directives or similar requirements adopted, promulgated or implemented in connection with (a) the Xxxx-Xxxxx Xxxx Street Reform and Consumer Protection Act and (b) the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or any United States Governmental Authority, in each case pursuant to Basel III, shall in all events are deemed to have been imposed, introduced and adopted after the date of this Agreement.

2.11.Borrower Representation; Reliance: Each Borrower irrevocably appoints Axxum as its agent for all purposes relevant to this Agreement and all other Loan Documents, including the giving and receipt of notices, making of Advance Requests and execution and delivery of all documents, instruments, and certificates contemplated herein and therein and all modifications hereto and thereto. Any acknowledgment, consent, direction, certification, or other action which might otherwise be valid or effective only if given, taken or received by all or any Borrower acting singly, shall be valid and effective if given, taken or received only by an authorized officer of Axxum, whether or not any of the other Borrowers joins therein, and Lender shall not have any duty or obligation to make further inquiry with respect to the authority of Axxum under this Section 2.11, provided that nothing in this Section 2.11 shall limit the effectiveness of, or the right of Lender to require and rely upon, any notice, document, instrument, certificate, acknowledgment, consent, direction, certification, or other action to be delivered by an authorized officer of each Borrower pursuant to this Agreement or the other Loan Documents. With respect to any action hereunder, Xxxxxx may conclusively rely upon, and shall incur no liability to any Borrower in acting upon, any request or other communication that Lender reasonably believes to have been given or made by an authorized officer on such or any Borrower’s behalf, whether or not such Person is listed on the incumbency certificate delivered pursuant to this Agreement. In each such case, each Borrower hereby waives the right to dispute Xxxxxx’s actions based upon such request or other communication.

2.12.

Concerning Joint and Several Liability of the Borrowers:

a.Each Borrower acknowledges that it is jointly and severally liable for all of the Obligations under the Loan Documents, and any amendment, modification, waiver, consent or other agreement which affects the Obligations shall be deemed to affect the Obligations of all Borrowers on a joint and several basis unless expressly specified otherwise. Each Borrower expressly understands, agrees and acknowledges that (i) Borrowers are all Affiliates, (ii) each Borrower desires to have the availability of one common credit facility instead of separate credit facilities, (iii) each Borrower has requested that Lender extend such a

common credit facility on the terms herein provided, (iv) Lender will be lending against, and relying on a Lien upon, all of Borrowers’ assets even though the proceeds of any particular Loan made hereunder may not be advanced directly to a particular Borrower, (v) each Borrower will nonetheless benefit by the making of all such Loans by Lender and the availability of a single credit facility of a size greater than each could independently warrant, (vi) all of the representations, warranties, covenants, obligations, conditions, agreements and other terms contained in the Loan Documents to which any Borrower is a party shall be applicable to and shall be binding upon each Borrower, unless otherwise expressly provided herein, and (vii) Borrowers have each executed this Agreement as co-obligors, and that it would not be able to obtain the credit provided by Lender without the financial support provided by the other Borrowers. Each Borrower is accepting joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by Lender under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of each other Borrower to accept joint and several liability for the Obligations. With respect to any Borrower’s Obligations arising as a result of the joint and several liability of Borrowers hereunder with respect to Loans or other extensions of credit made to any of the other Borrowers hereunder, such Borrower hereby waives, as long as any Obligations are not paid in full and the commitment of Lender under this Agreement has not been terminated, any right to enforce any right of subrogation or any remedy which Lender now has or may hereafter have against any other Borrower, or any endorser of all or any part of the Obligations, and any benefit of, and any right to participate in, any security or collateral given to Lender to secure payment of the Obligations or any other liability of any Borrower to Lender. During the existence of any Event of Default, Lender may proceed directly and at once, without notice, against any Borrower to collect and recover the full amount, or any portion of the Obligations, without first proceeding against any other Borrower or any other Person, or against any security or collateral for the Obligations. Each Borrower consents and agrees that Lender shall be under no obligation to marshal any assets in favor of any Borrower or against or in payment of any or all of the Obligations.

b.Each Borrower hereby guarantees the prompt payment and performance in full of all Obligations (including the Term Loan). Such guarantee constitutes a guarantee of payment and not of collection. Each Borrower’s guarantee under this Agreement shall, to the fullest extent permitted by law, be unconditional irrespective of (i) the validity or enforceability, avoidance or subordination of the Obligations of any other Borrower or of any promissory note or other document evidencing all or any part of the Obligations of any other Borrower, (ii) the absence of any attempt to collect the Obligations from any other Borrower, or any other security therefor, or the absence of any other action to enforce the same, (iii) the waiver, consent, extension, forbearance or granting of any indulgence by Lender with respect to any provision of any instrument evidencing the Obligations of any other Borrower or any part thereof, or any other agreement now or hereafter executed by any other Borrower and delivered to Lender, (iv) the failure by Lender to take any steps to perfect and maintain its security interest in, or to preserve its rights to, any security or collateral for the Obligations of any other Borrower, (v) Lender’s election, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security interest by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code, (vii) the disallowance of all or any portion of Xxxxxx’s claim(s) for the repayment of the Obligations of any other Borrower under Section 502 of the Bankruptcy Code or (viii) any other circumstances

which might constitute a legal or equitable discharge or defense of a guarantor or of any other Borrower (other than actual indefeasible payment in full).

2.13.Limitation of Liability: Notwithstanding any provisions contained herein to the contrary, the liability of each Borrower (each a “Related Borrower”) under this Agreement and the other Loan Documents shall be limited to an amount not to exceed as of any date of determination the amount which could be claimed by Xxxxxx from such Related Borrower under the Loan Documents without rendering such claim voidable or avoidable under Section 548 of the Bankruptcy Code (Title 11, U.S.C.) or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law (the “Avoidance Provisions”) after taking into account, among other things, such Related Borrower’s right of contribution and indemnification from other Borrowers, if any. To the extent set forth above, but only to the extent that the obligations of a Related Borrower hereunder (for each Related Borrower, the “Related Borrower Obligations”) would otherwise be subject to avoidance under the avoidance provisions, if the Related Borrower is not deemed to have received valuable consideration, fair value, fair consideration or reasonably equivalent value for its Related Borrower Obligations, or if its Related Borrower Obligations would render the Related Borrower insolvent, or leave the Related Borrower with an unreasonably small capital to conduct its business, or cause the Related Borrower to have incurred debts (or to have intended to have incurred debts) beyond its ability to pay such debts as they mature, in each case as of the time any of its Related Borrower Obligations is deemed to have incurred for the purposes if the avoidance provisions, the maximum Related Borrower Obligations for which the Related Borrower shall be liable hereunder shall be reduced to that amount which, after giving effect thereto, would not cause the Related Borrower Obligations as so reduced, to be subject to avoidance under the Avoidance Provisions.

SECTION III. COLLATERAL

3.1.Collateral: As security for the payment of the Obligations, and satisfaction by Borrower of all covenants and undertakings contained in this Agreement and the other Loan Documents, Borrower hereby assigns and grants to Lender (and to the extent applicable, confirms its prior assignment and grant pursuant to the Original Credit Agreement), a continuing Lien on and security interest in, upon and to the following Property, all whether now owned or hereafter acquired, created or arising and wherever located:

Accounts - All Accounts;

ii.

Chattel Paper - All Chattel Paper;

iii.

Documents - All Documents;

iv.

Instruments - All Instruments;

Inventory - All Inventory;

vi.

General Intangibles - All General Intangibles;

vii.

Equipment - All Equipment,

viii.

Fixtures - All Fixtures;

ix.

Deposit Accounts - All Deposit Accounts;

Goods - All Goods;

xi.

Letter-of-Credit Rights – All Letter-of-Credit Rights;

xii.

Supporting Obligations – All Supporting Obligations;

xiii.

Investment Property - All Investment Property;

xiv.Commercial Tort Claims – All Commercial Tort Claims identified and described in a writing delivered by Xxxxxxxx to Lender;

xx.Xxxxxxxx in Xxxxxx’s Possession - All Property of Borrower, now or hereafter in Xxxxxx’s possession;

xvi.Other Assets – All other Assets of Borrower; and

xvii.Proceeds - The Proceeds (including, without limitation, insurance proceeds), whether cash or non-cash, of all of the foregoing property described in clauses (i) through (xvi).

Notwithstanding anything to the contrary contained in clauses (i) through (xvi) above, the security interest created by this Agreement (and to the extent applicable, the Original Credit Agreement) shall not extend to, and the term “Collateral” shall not include, any Excluded Property; provided that, if any Excluded Property would have otherwise constituted Collateral, when such property shall cease to be Excluded Property, such property shall be deemed at all times from and after the date hereof (or earlier, if applicable) to constitute Collateral.

3.2.Lien Documents: At Closing and thereafter as Lender deems necessary, Borrower shall execute and/or deliver to Lender, or have executed and delivered (all in form and substance satisfactory to Lender and its counsel):

a.Financing statements pursuant to the UCC, which Lender may file in the jurisdiction where Borrower is organized and in any other jurisdiction that Lender deems appropriate; and

b.Any other agreements, documents, instruments and writings, including, without limitation, intellectual property security agreements, required by Lender to evidence, perfect or protect the Liens and security interests in the Collateral or as Lender may reasonably request from time to time.

3.3.

Other Actions:

x.Xx addition to the foregoing, Borrower shall do anything further that may be reasonably required by Lender to secure Lender and effectuate the intentions and objects of

this Agreement, including, without limitation, the execution and delivery of security agreements, contracts and any other documents required hereunder and the delivery of motor titles with Xxxxxx’s lien noted thereon. At Lender’s reasonable request, Borrower shall also immediately deliver (with execution by Borrower of all necessary documents or forms to reflect, implement or enforce the Liens described herein), or cause to be delivered to Lender all items for which Lender must receive possession to obtain a perfected security interest, including without limitation, all notes, stock powers, letters of credit, certificates and documents of title, Chattel Paper, Warehouse Receipts, Instruments, and any other similar instruments constituting Collateral.

b.Lender is hereby authorized to file financing statements and amendments to financing statements without Xxxxxxxx’s signature, in accordance with the UCC. Borrower hereby authorizes Lender to file all such financing statements and amendments to financing statements describing the Collateral in any filing office as Lender, in its sole discretion may determine, including financing statements listing “All Assets” (or words to similar effect) in the collateral description therein. Xxxxxxxx agrees to comply with the requests of Xxxxxx in order for Lender to have and maintain a valid and perfected first security interest in the Collateral including, without limitation, executing and using commercially reasonable efforts to cause any other Person to execute such documents as Lender may require to obtain Control (as defined in the UCC) over all Deposit Accounts, Letter-of-Credit Rights and Investment Property.

3.4.

Searches, Certificates:

x.Xxxxxx shall, prior to or at Closing, and thereafter as Lender may determine from time to time, at Xxxxxxxx’s expense, obtain the following searches (the results of which are to be consistent with the warranties made by Borrower in this Agreement):

i.UCC searches conducted with the Secretary of State (or other applicable filing office) of each Borrower’s state of formation; and

ii.Judgment, state and federal tax lien and corporate tax lien searches, in all applicable filing offices of each state where Borrower is organized, maintains its executive office, a place of business, or assets.

b.Borrower shall, prior to or at Closing and at its expense, obtain and deliver to Lender good standing certificates showing Borrower to be in good standing in its state of organization.

3.5.Xxxxxxxx’s and Warehouseman’s Waivers: Xxxxxxxx will, at Xxxxxx’s request, use commercially reasonable efforts to cause each owner of any premises occupied by a Borrower or to be occupied by a Borrower and each warehouseman of any warehouse, where, in either event Collateral is held, to execute and deliver to Lender an instrument, in form and substance satisfactory to Lender, under which such owner(s) or warehouseman subordinates its/his/their interests in and waives its/his/their right to distrain on or foreclose against the Collateral and agrees to allow Xxxxxx to remain on such premises to dispose of or deal with any Collateral located thereon.

3.6.Filing Security Agreement: A carbon, photographic or other reproduction or other copy of this Agreement or of a financing statement is sufficient as and may be filed in lieu of a financing statement where permitted by law.

3.7.Power of Attorney: Each of the officers of Xxxxxx is hereby irrevocably made, constituted and appointed the true and lawful attorney for each Borrower (without requiring any of them to act as such) with full power of substitution to do the following: (a) endorse the name of Borrower upon any and all checks, drafts, money orders and other instruments for the payment of monies that are payable to Borrower and constitute collections on Xxxxxxxx’s Accounts or proceeds of other Collateral; (b) execute and/or file in the name of Borrower any financing statements, schedules, assignments, instruments, documents and statements that Borrower is obligated to give Lender hereunder or is necessary to perfect (or continue or evidence the perfection of such security interest or Lien) Lender’s security interest or Lien in the Collateral; and (c) upon the occurrence and during the continuation of an Event of Default. do such other and further acts and deeds in the name of Borrower that Lender may reasonably deem necessary or desirable to enforce any Account or other Collateral.

SECTION IV. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES

The initial Closing under the Original Agreement was subject to the conditions precedent described in Section 4.1 and Sections 4.3 through 4.6. The execution of this Agreement by Xxxxxx is subject to the conditions precedent described in Sections 4.2 through 4.6. All instruments, documents and agreements referred to in this Section IV are to be in form and substance satisfactory to Lender and Xxxxxx’s counsel.

4.1.Documents Deliverable on Closing Date: Borrower shall have delivered, or caused to be delivered to Lender the following on the Closing Date:

a.this Agreement, the any notes required under the Original Agreement, a Guaranty Agreement signed by each Guarantor, a pledge agreement, the Collateral Assignment of Axxum Purchase Agreement, a subordination agreement from each of Xxxxxx Xxxx and Xxxxxxx Xxxxxxxx and each of the other Loan Documents required by the Original Loan Agreement, all properly executed;

b.financing statements and each of the other documents to be executed and/or delivered by Borrower or any other Person pursuant to this Agreement;

c.certified copies of (i) resolutions of Axxum’s and XXX’s board of directors, members or other governing body authorizing the execution, delivery and performance of this Agreement, the notes to be issued under the Original Loan Agreement and each of the other Loan Documents required to be delivered by the Original Loan Agreement, (ii) each Axxum’s and KAE’s articles of organization and operating agreement or certificate of incorporation and bylaws and (iii) the Axxum MIPA;

d.an incumbency certificate for each of Axxum and KAE identifying all of its Authorized Officers, with specimen signatures;

e.such financial statements, reports, certifications and other operational information as Lender reasonably required (including financial statements dated as of September 30, 2017), satisfactory in all respects to Lender;

f.certification by an officer of each Borrower that there had not occurred any material adverse change in the operations and condition (financial or otherwise) of Axxum and KAE since December 31, 2016;

g.payment by Axxum and KAE of all fees payable under the Original Loan Agreement (other than the legal fees and expenses of Xxxxxx’s outside counsel, which shall be paid within 30 days of the Closing Date);

h.searches and certificates required under Section 3.4;

x.xxxxxxxxx certificates and policies required under Section 6.2;

x.x pro forma Compliance Certificate;

k.a payoff letter from Branch Banking and Trust Company pursuant to which Branch Banking and Trust Company releases its Liens on the assets of Axxum;

l.a copy of each contract of Axxum and KAE (including each Government Contract);

m.an initial Borrowing Certificate dated as of September 30, 2017;

n.evidence that the equityholders of KAE have contributed $1,000,000 in equity to KAE;

x.Xxxxxx Xxxx has executed a consulting agreement with Axxum that (i) has a term of not less than one (1) year from the Closing Date and (ii) contains a non-compete provision having a term of not less than four (4) years from the Closing Date with respect to any contracts of Axxum and any successor solicitation or request for proposal;

x.Xxxxxxx Xxxxxxxx has executed an employment agreement with Axxum that contains a non-compete provision having a term of not less than four (4) years from the Closing Date with respect to any contracts of Axxum and any successor solicitation or request for proposal;

q.Evidence that all conditions to closing of the Axxum Acquisition have been satisfied or will be satisfied contemporaneously with the Closing;

x.Xxxxx’s and XXX’s contract status/jobs in progress/backlog report; and

s.such other documents reasonably required by Xxxxxx.

4.2.Documents Deliverable on Restatement Date: Borrower shall have delivered, or caused to be delivered to Lender the following on or before the Restatement Date:

a.this Agreement, the Notes, an amended and restated Guaranty Agreement signed by each Guarantor, the amended and restated Pledge Agreement, the Collateral Assignment of Cloudburst Purchase Agreement, a subordination agreement from each of Xxxxxx Xxxxxx Xxxxxxx and Xxxx X. Xxxxxxx and each of the other Loan Documents all properly executed;

b.financing statements and each of the other documents to be executed and/or delivered by Borrower or any other Person pursuant to this Agreement;

c.certified copies of (i) resolutions of Cloudburst’s members or other governing body authorizing the execution, delivery and performance of this Agreement, the Notes to be issued hereunder and each of the other Loan Documents required to be delivered by any Section hereof, (ii) Cloudburst’s articles of organization and operating agreement and (iii) the Cloudburst MIPA;

d.an incumbency certificate for Cloudburst identifying all of its Authorized Officers, with specimen signatures;

e.a certification from each of KAE and Axxum that the certificates it provided to Lender in connection with the Original Loan Agreement remain true and correct;

f.such financial statements, reports, certifications and other operational information as Lender may reasonably require, satisfactory in all respects to Lender;

g.certification by an officer of each Borrower that there has not occurred any material adverse change in the operations and condition (financial or otherwise) of Borrower since December 31, 2018;

h.payment by Borrower of all fees and Expenses associated with the Loans;

i.searches and certificates required under Section 3.4;

x.xxxxxxxxx certificates and policies required under Section 6.2;

k.a pro forma Compliance Certificate;

l.evidence that Chain Bridge Bank, N.A. has filed a UCC3 termination statement with the Virginia State Corporation Commission;

m.a copy of each contract of Borrower (including each Government Contract);

n.an initial Borrowing Certificate dated as of March 31, 2019 or later;

o.evidence that the equityholders of KAE have agreed to contribute at least $1,000,000 in equity to KAE by September 30, 2019;

x.Xxxx X. Xxxxxxx has executed an employment agreement with Cloudburst;

q.evidence that Cloudburst will amend within 30 days its System for Award Management to provide that all payments due to it will be deposited into the Cash Collateral Account;

r.evidence that Cloudburst has established with Lender a daily sweep with respect to any deposit account not maintained at Lender (which deposit accounts will be closed within 30 days of Closing, or such longer period as Lender may agree to);

x.Xxxxxxxx’s contract status/jobs in progress/backlog report; and

t.such other documents reasonably required by Xxxxxx.

4.3.Absence of Certain Events: On the Closing Date and the Restatement Date, no Default or Event of Default hereunder shall have occurred and be continuing.

4.4.Warranties and Representations at Closing: The warranties and representations contained in Section 5 as well as any other Section of this Agreement shall be true and correct in all material respects on the on each of the Closing Date and the Restatement Date with the same effect as though made on and as of that date. Borrower shall not have taken any action or permitted any condition to exist which would have been prohibited by any Section hereof.

4.5.Compliance with this Agreement: Borrower shall have performed and complied with all agreements, covenants and conditions contained herein including, without limitation, the provisions of Sections 6 and 7 hereof, which are required to be performed or complied with by Borrower before or at the Closing Date and the Restatement Date.

4.6.Officers’ Certificate: Lender shall have received a certificate dated the Closing Date and the Restatement Date and signed by an officer of Borrower certifying that all of the conditions specified in this Section have been fulfilled.

4.7.Closing: Subject to the conditions of this Section, the loans under the Original Loan Agreement were made available on such date (the “Closing Date”) and at such time and location as was mutually agreed to by to the parties contemporaneously with the execution of the Original Loan Agreement (“Closing”).

4.8.Waiver of Rights: By completing the Closing hereunder and executing this Agreement, or by making Advances hereunder, Xxxxxx does not thereby waive a breach of any warranty or representation made by Borrower hereunder or under any agreement, document, or instrument delivered to Lender or otherwise referred to herein, and any claims and rights of Lender resulting from any breach or misrepresentation by Borrower are specifically reserved by Xxxxxx.

4.9.Conditions for Future Advances: The making of Advances under the Revolving Credit in any form following the Closing Date is subject to the following conditions precedent

(all instruments, documents and agreements to be in form and substance satisfactory to Lender and its counsel) following the Closing Date:

a.This Agreement and each of the other Loan Documents shall be effective;

x.Xx Default or Event of Default then exists or after giving effect to the making of the Advance would exist;

c.Each Advance is within and complies with the terms and conditions of this Agreement including, without limitation, the notice provisions contained in Section 2.3 hereof;

d.Each representation and warranty set forth in Section 5 and any other Loan Document in effect at such time (as amended or modified from time to time) is then true and correct in all material respects as if made on and as of such date (except that any representation or warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) except to the extent such representations and warranties are made only as of a specific earlier date.

4.10.Conditions to Subsidiaries Becoming Borrowers: Each direct or indirect Subsidiary of KAE shall become a Borrower under this Agreement on the day of formation or acquisition, as applicable, and shall satisfy all of the following conditions on such date:

a.The Subsidiary shall execute and deliver to the Lender an Assumption Agreement.

b.All legal matters incident to such Subsidiary becoming a Borrower shall be satisfactory to counsel for the Lender, and the Subsidiary shall execute and deliver to the Lender such additional documents and certificates relating to the Loans as the Lender may reasonably request.

c.If requested by the Lender, the Lender shall have received an opinion of counsel to the Subsidiary, addressed to the Lender, covering such matters as the Lender may reasonably request, in form and substance satisfactory to the Lender.

d.Financing statements in form and substance satisfactory to the Lender shall have been properly filed in each office where necessary to perfect the security interest of the Lender in the Collateral of the Subsidiary, termination statements shall have been filed with respect to any other financing statements covering all or any portion of such Collateral (except with respect to Permitted Liens), all taxes and fees with respect to such recording and filing shall have been paid by such Subsidiary and the Lender shall have received such lien searches or reports as it shall require confirming that the foregoing filings and recordings have been completed.

e.The Subsidiary shall have delivered the following documents to the Lender, each of which shall be certified as of the date on which it is to become a Borrower, by its secretary or representative performing similar functions: (1) copies of evidence of all actions taken by the Subsidiary to authorize the execution and delivery of the Assumption Agreement and the other Loan Documents; (2) copies of the articles or certificate of incorporation and

bylaws (or comparable organizational documents) of the Subsidiary; and (3) a certificate as to the incumbency and signatures of the officers executing the Loan Documents.

f.The Lender shall have received a certificate of good standing and qualification (or similar instrument) issued by the appropriate state official of the state of formation of the Subsidiary, dated within 30 days of such date.

g.The Lender shall have received a listing and aging of Accounts, a listing of accounts payable of the Subsidiary, a report setting forth the status of all contracts relating to its Eligible Accounts, a copy of each of its contracts (subject to the limitations set forth in Section 6.19) and such other financial information of such Subsidiary as may be requested by the Lender from time to time, all of which shall be of a current date and shall be in form and substance satisfactory to the Lender.

h.If required by the Lender, the Lender shall have received a satisfactory field examination of the Collateral and internal control systems of the Subsidiary performed by a consultant selected by the Lender, and the Borrowers shall have reimbursed the Lender for the cost of such consultant.

SECTION V. REPRESENTATIONS AND WARRANTIES

To induce Xxxxxx to complete the Closing, make the initial Advances under the Revolving Credit and Loans to Borrower and enter into this Agreement, each Borrower warrants and represents to Lender that:

5.1.

Organization and Validity:

a.Each Borrower is a corporation or limited liability company, duly formed and validly existing under the laws of its state of formation. Each Borrower (i) has the appropriate power and authority to operate its business and to own its Property and (ii) is duly qualified, is validly existing and in good standing and has lawful power and authority to engage in the business it conducts in (x) each state where the nature and extent of its business requires qualification, except where the failure to so qualify does not and could not reasonably be expected to have a Material Adverse Effect and (y) its state of formation.

b.The making and performance of this Agreement, the other Loan Documents, the Axxum Acquisition, the Cloudburst Acquisition and the documents evidencing the acquisition of any other Borrower will not (i) violate any law, government rule or regulation, court or administrative order or other such order, or Borrower’s organizational documents (including, if applicable, any articles of incorporation, certificate of incorporation, bylaws, articles of organization, limited liability company agreement or operating agreement), or (ii) violate or result in a default (immediately or with the passage of time) under any contract, agreement or instrument to which Borrower is a party, or by which Borrower is bound which violation has or could reasonably be expected to have a Material Adverse Effect. No Borrower is in violation of any term of any agreement or instrument to which it is a party or by which it may be bound which violation has or could reasonably be expected to have a Material Adverse Effect, or of its organizational documents.

x.Xxxxxxxx has all requisite power and authority to enter into and perform this Agreement, to incur the obligations herein provided for, and to effectuate the Cloudburst Acquisition and the acquisition of any other Borrower, and has taken all proper and necessary action to authorize the execution, delivery and performance of this Agreement, the other Loan Documents and the documents evidencing the Cloudburst Acquisition and the acquisition of any other Borrower, as applicable.

d.This Agreement, the Notes to be issued hereunder, and all of the other Loan Documents, when delivered, will be valid and binding upon Borrower, and enforceable in accordance with their respective terms except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.

5.2.Places of Business: The only places of business of Borrower, and the places where Xxxxxxxx keeps and intends to keep its Property, are at the following addresses: 00000 Xxx Xxxxxx Xxxx, Xxxxx 000, XxXxxx, XX 00000 and 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, XX 00000.

5.3.Pending Litigation: Other than as disclosed in writing by Xxxxxxxx to the Lender prior to the Closing Date, there are no judgments or judicial or administrative orders or proceedings pending, or to the knowledge of Borrower, threatened, against Borrower in any court or before any Governmental Authority which assert or make claims in excess of One Hundred Thousand Dollars ($100,000) or could reasonably be expected to have a Material Adverse Effect. To the knowledge of Borrower, there are no investigations (civil or criminal) pending or threatened against Borrower in any court or before any Governmental Authority which assert or make claims in excess of One Hundred Thousand Dollars ($100,000) or could reasonably be expected to have a Material Adverse Effect. Borrower is not in default with respect to any order of any Governmental Authority. To the knowledge of Xxxxxxxx, no shareholder or executive officer of Xxxxxxxx has been indicted in connection with or convicted of engaging in any criminal conduct, or is currently subject to any lawsuit or proceeding or under investigation in connection with any anti-racketeering or other conduct or activity which may result in the forfeiture of any property to any Governmental Authority.

5.4.Title to Properties: Borrower has good and marketable title in fee simple (or its equivalent under applicable law) to all the Property it purports to own, free from Liens and free from the claims of any other Person, except for Permitted Liens.

5.5.Governmental Consent: Neither the nature of Borrower or of its business or Property, nor any relationship between Borrower and any other Person, nor any circumstance affecting Borrower in connection with the issuance or delivery of this Agreement, the Notes or any other Loan Documents is such as to require a consent, approval or authorization of, or filing, registration or qualification with, any Governmental Authority on the part of Borrower.

5.6.Taxes: All federal, state and other material tax returns required to be filed by Borrower in any jurisdiction have been filed, and all taxes, assessments, fees and other governmental charges upon Borrower, or upon any of its Property, income or franchises, which are shown to be due and payable on such returns have been paid, except for those taxes being

contested in good faith with due diligence by appropriate proceedings for which appropriate reserves have been maintained under GAAP and as to which no Lien has been entered. Borrower is not aware of any proposed additional tax assessment or tax to be assessed against or applicable to Borrower.

0.0.Xxxxxxxxx Statements: The annual audited consolidated balance sheet of Axxum as of December 31, 2017, and the related statements of profit and loss, owners’ equity and cash flow as of such date (complete copies of which have been delivered to Lender), and the internally-prepared consolidated balance sheet of Axxum as of December 31, 2018 and the related statements of profit and loss and owners’ equity as of such date have been prepared in accordance with GAAP and present fairly the financial position of Borrower as of such dates and the results of its operations for such periods (subject, in the case of interim financial statements, to normal year-end adjustments). The fiscal year for Xxxxxxxx currently ends on December 31.

5.8.Full Disclosure: The financial statements referred to in Section 5.7 of this Agreement do not, nor does any other written statement of Borrower to Lender in connection with the negotiation of the Loans, contain any untrue statement of a material fact. Such statements do not omit a material fact, the omission of which would make the statements contained therein misleading. There is no fact known to Borrower which has not been disclosed in writing to Lender which has or could reasonably be expected to have a Material Adverse Effect.

5.9.Subsidiaries: Borrower does not have any Subsidiaries or Affiliates (other than another Borrower), except as shown on Schedule 5.9 attached hereto and made a part hereof.

0.00.Xxxxxxxxxxx, Guarantees, Contracts, etc.:

x.Xxxxxxxx does not own or hold equity or long term debt investments in, or have any outstanding advances to, any other Person. Xxxxxxxx has not made a loan or advance to any holder of its Capital Stock except as disclosed in writing to Lender.

x.Xxxxxxxx has not entered into any leases for real or personal Property (whether as landlord or tenant or lessor or lessee), except as communicated in writing by Borrower to Lender.

c.Borrower is not a party to any contract or agreement, or subject to any charter or other corporate restriction, which has or could reasonably be expected to have a Material Adverse Effect.

d.Except as otherwise specifically provided in this Agreement, Xxxxxxxx has not agreed or consented to cause or permit any of its Property whether now owned or hereafter acquired to be subject in the future (upon the happening of a contingency or otherwise), to a Lien not permitted by this Agreement.

5.11.

Government Regulations, etc.:

a.The use of the proceeds of and Xxxxxxxx’s issuance of the Notes will not directly or indirectly violate or result in a violation of Section 7 of the Securities Exchange Act

of 1934, as amended, or any regulations issued pursuant thereto, including, without limitation, Regulations U, T and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. Borrower does not own or intend to carry or purchase any “margin stock” within the meaning of said Regulation U.

x.Xxxxxxxx has obtained all licenses, permits, franchises or other governmental authorizations necessary for the ownership of its Property and for the conduct of its business.

x.Xx of the date hereof, no employee benefit plan (“Pension Plan”), as defined in Section 3(2) of ERISA maintained by Borrower or under which Borrower could have any liability under ERISA (i) has failed to meet the minimum funding standards established in Section 302 of ERISA, (ii) has failed to comply in a material respect with all applicable requirements of ERISA and of the Internal Revenue Code, including all applicable rulings and regulations thereunder, (iii) has engaged in or been involved in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code which would subject Borrower to any material liability, or (iv) has been terminated if such termination would subject Borrower to any material liability. Xxxxxxxx has not assumed, or received notice of a claim asserted against Borrower for, withdrawal liability (as defined in Section 4207 of ERISA) with respect to any multi employer pension plan, and is not a member of any Controlled Group (as defined in ERISA). Borrower has timely made all contributions when due with respect to any multi employer pension plan in which it participates and no event has occurred triggering a claim against Borrower for withdrawal liability with respect to any multi employer pension plan in which Borrower participates.

x.Xxxxxxxx is not in violation of or receipt of written notice that it is in violation of any applicable statute, regulation or ordinance of the United States of America, or of any state, city, town, municipality, county or of any other jurisdiction, or of any agency, or department thereof, (including, without limitation, Environmental Laws or government procurement regulations), a violation of which causes or could reasonably be expected to cause a Material Adverse Effect.

x.Xxxxxxxx is current with all reports and documents required to be filed with any state or federal securities commission or similar agency and is in compliance in all material respects with all applicable rules and regulations of such commissions.

0.00.Xxxxxxxx Interruptions: Within five (5) years prior to the date hereof, none of the business, Property or operations of Borrower have been materially and adversely affected in any way by any casualty, strike, lockout, combination of workers, order of the United States of America, or any state or local government, or any political subdivision or agency thereof, directed against Borrower. There are no pending or, to Xxxxxxxx’s knowledge, threatened labor disputes, strikes, lockouts or similar occurrences or grievances affecting Borrower. No labor contract of Borrower is scheduled to expire prior to the Revolving Credit Maturity Date.

5.13.

Names and Intellectual Property:

a.Within five (5) years prior to the Closing Date, Xxxxxxxx has not conducted business under or used any other name (whether corporate or assumed).

b.Borrower is not in violation of any rights of any other Person with respect to trademarks, service marks, patents or copyrights which Borrower uses.

c.(i) Borrower does not require any copyrights, patents, trademarks or other intellectual property, or any license(s) to use any patents, trademarks or other intellectual property in order to provide services to its customers in the ordinary course of business; and (ii) Lender will not require any copyrights, patents, trademarks or other intellectual property or any licenses to use the same in order to provide such services after the occurrence of an Event of Default.

5.14.Other Associations:Borrower is not engaged and has no interest in any joint venture or partnership with any other Person except as communicated in writing to Lender.

5.15.Environmental Matters:

x.Xx the best of Xxxxxxxx’s knowledge after due inquiry, no Property presently owned, leased or operated by Borrower contains, or has previously contained, any Hazardous Substances in amounts or concentrations which (i) constitute or constituted a violation of, or (ii) could give rise to liability under, any Environmental Law.

x.Xx the best of Borrower’s knowledge after due inquiry, Borrower is in compliance, and, for the duration of all applicable statutes of limitations periods, has been in compliance with all applicable Environmental Laws, and there is no contamination at, under or about any properties presently owned, leased, or operated by Borrower or violation of any Environmental Law with respect to such properties which could reasonably be expected to interfere with any of their continued operations or reasonably be expected to impair the fair saleable value thereof.

x.Xxxxxxxx has not received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance assessment with Environmental Laws and Borrower has no knowledge that any such notice will be received or is being threatened.

x.Xxxxxxxxx Substances have not been transported or disposed of in a manner or to a location which are reasonably likely to give rise to liability of Borrower under any Environmental Law.

x.Xx judicial proceeding or governmental or administrative action is pending, or to the knowledge of Borrower, threatened under any Environmental Law to which Borrower is, or to Borrower’s knowledge will be, named as a party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding, the implementation of which is reasonably likely to have a Material Adverse Effect on any natural resources or on Borrower’s business, financial condition, Property or prospects under any Environmental Law.

5.16.Regulation O: No director, executive officer, or principal shareholder of Borrower is a director, executive officer or principal shareholder of Lender. For the purposes hereof the terms “director” “executive officer” and “principal shareholder” (when used with reference to Lender), have the respective meanings assigned thereto in Regulation O issued by the Board of Governors of the Federal Reserve System.

0.00.Xxxxxxx Stock: The authorized and outstanding Capital Stock of each Borrower and the owner thereof as of the Restatement Date is as shown on Schedule 5.17 attached hereto. All of the Capital Stock of Borrower has been duly and validly authorized and issued and is fully paid and non-assessable and has been sold and delivered to the holders thereof in compliance with, or under valid exemption from, all Federal and state laws and the rules and regulations of all Governmental Authorities governing the sale and delivery of securities. Except for the rights and obligations communicated in writing by Borrower to Lender, there are no subscriptions, warrants, options, calls, commitments, rights or agreements by which Borrower or any of the shareholders of Borrower is bound relating to the issuance, transfer, voting or redemption of shares or interests of its Capital Stock or any pre-emptive rights held by any Person with respect to the shares or interests of Capital Stock of Borrower. Except as communicated in writing by Borrower to Lender, Borrower has not issued any securities convertible into or exchangeable for shares or interests of its Capital Stock or any options, warrants or other rights to acquire such shares or interests or securities convertible into or exchangeable for such shares or interests.

5.18.Solvency: Immediately after giving effect to the transactions contemplated under this Agreement and at all times thereafter, the Borrowers, taken as a whole, are solvent, are able to pay their debts as they become due, and have capital sufficient to carry on their businesses and all businesses in which they are about to engage, and now own Property having a value both at fair valuation and at present fair salable value greater than the amount required to pay Borrowers’ debts. The Borrowers, taken as a whole, will not be rendered insolvent by the execution and delivery of this Agreement or any of the other Loan Documents executed in connection with this Agreement or by the transactions contemplated hereunder or thereunder.

5.19.Perfection and Priority: This Agreement and the other Loan Documents are effective to create in favor of Lender legal, valid and enforceable Liens in all right, title and interest of Borrower in the Collateral identified in the Loan Documents, and when financing statements have been filed under each Borrower’s name with the appropriate UCC filing office in such Borrower’s state of formation, each Borrower will have granted to Lender, and Lender will have perfected first priority Liens in such Collateral (to the extent such security interest can be perfected by such a filing), superior in right to any and all other Liens, existing or future, subject to Permitted Liens.

5.20.Commercial Tort Claims: As of the Closing Date, Borrower is not a party to any Commercial Tort Claims.

5.21.Letter- of-Credit Rights: As of the Closing Date, Borrower has no Letter-of- Credit Rights.

5.22.Deposit Accounts: All Deposit Accounts of Borrower have been identified in writing by Xxxxxxxx to Lender.

5.23.

Anti-Terrorism Laws:

a.General. Neither Borrower nor any Affiliate of Borrower is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

b.Executive Order No. 13224: Xxxxxxxx and each Affiliate of Xxxxxxxx, and to Xxxxxxxx’s knowledge, each of their respective agents acting or benefiting in any capacity in connection with the Loans, Letters of Credit or other transactions hereunder, is not any of the following (each a “Blocked Person”):

i.a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

ii.a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

iii.a Person with which Xxxxxx is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

iv.a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order No. 13224;

v.a Person that is named as a “specially designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list; or

vi.a Person who is affiliated with a Person listed above.

5.24.Debarment: No event has occurred and no condition exists that may result in the debarment or suspension of any Borrower or any Subsidiary from any Government Contracts, and any Borrower, any Subsidiary nor any Affiliate been subject to any such debarment or suspension.

5.25.Contracts: Xxxxxxxx has provided Lender with a fully-executed copy of each of Borrower’s contracts, including each Prime Government Contract (including all task orders, modifications and amendments). Each Prime Government Contract has not been assigned to any Person other than Lender (other than an assignment that has been terminated). Each Prime Government Contract is not subject to any asserted right of setoff by any other party to the contract.

SECTION VI. XXXXXXXX’S AFFIRMATIVE COVENANTS

Borrower covenants that until all of the Obligations are paid and satisfied in full and the Revolving Credit has been terminated, that:

6.1.Payment of Taxes and Claims: Borrower shall pay, before they become delinquent, all obligations, taxes, assessments and governmental charges, or levies imposed upon it, or upon Xxxxxxxx’s Property, and all claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other Persons, entitled to the benefit of statutory or common law Liens which, in any case, if unpaid, would result in the imposition of a Lien upon its Property; provided however, that Borrower shall not be required to pay any such tax, assessment, charge, levy, claim or demand if the amount, applicability or validity thereof, shall at the time, be contested in good faith and by appropriate proceedings by Borrower, and if Borrower shall have set aside on its books adequate reserves in respect thereof, if so required in accordance with GAAP; which deferment of payment is permissible so long as no Lien other than a Permitted Lien has been entered and Xxxxxxxx’s title to, and its right to use, its Property are not materially adversely affected thereby.

6.2.Maintenance of Properties and Corporate Existence:

x.Xxxxxxxx - Borrower shall maintain its Property in good condition (normal wear and tear excepted), make all necessary renewals, replacements, additions, betterments and improvements thereto and will pay and discharge when due the cost of repairs and maintenance to its Property, and will pay all rentals when due for all real estate leased by Xxxxxxxx.

x.Xxxxxxxx Insurance, Public and Products Liability Insurance - Borrower shall maintain insurance (i) on all insurable tangible Property against fire, flood, casualty and such other hazards (including, without limitation, extended coverage, workmen’s compensation, boiler and machinery, with inflation coverage by endorsement) and (ii) against public liability, product liability and business interruption, in each case in such amounts, with such deductibles and with such insurers as are customarily used by companies operating in the same industry as Borrower. At or prior to Closing, Borrower shall furnish Lender with duplicate original policies of insurance or such other evidence of insurance as Lender may require, and any certificates of insurance shall be issued on Xxxxx Form-27. In the event Borrower fails to procure or cause to be procured any such insurance or to timely pay or cause to be paid the premium(s) on any such insurance, Lender may do so for Borrower, but Borrower shall continue to be liable for the same. The policies of all such casualty insurance shall contain standard Lender’s Loss Payable Clauses (and, with respect to liability and interruption insurance, additional insured clauses) issued in favor of Lender under which all losses thereunder shall be paid to Lender as Xxxxxx’s interest may appear. Such policies shall expressly provide that the requisite insurance cannot be altered or canceled without thirty (30) days prior written notice to Lender and shall insure Lender notwithstanding the act or neglect of Borrower. Borrower hereby appoints Lender as Xxxxxxxx’s attorney-in-fact, exercisable at Lender’s option while an Event of Default has occurred and is continuing to endorse any check which may be payable to Borrower in order to collect the proceeds of such insurance and any amount or amounts collected by Lender pursuant to the provisions of this Section may be applied by Lender, in its sole discretion, to any Obligations or to repair, reconstruct or replace the loss of or damage to Collateral as Lender in its discretion may from time to time determine. Borrower further covenants that all insurance premiums owing under its current policies have been paid. Borrower shall notify Lender, immediately, upon Xxxxxxxx’s receipt of a notice of termination, cancellation, or non-renewal from its insurance company of any such policy.

x.Xxxxxxxxx Records - Borrower shall keep current and accurate books of records and accounts in which full and correct entries will be made of all of its business transactions, and will reflect in its financial statements adequate accruals and appropriations to reserves, all in accordance with GAAP. Borrower shall not change its fiscal-year end date without the prior written consent of Xxxxxx.

d.Corporate Existence and Rights - Borrower shall do (or cause to be done) all things necessary to preserve and keep in full force and effect its existence, good standing, rights and franchises, other than rights or franchises no longer used or useful in the business of Borrower.

6.3.Compliance with Laws: Borrower shall be in compliance in all material respects with any and all laws, ordinances, governmental rules and regulations, and court or administrative orders or decrees to which it is subject, whether federal, state or local, (including, without limitation, Environmental Laws and government procurement regulations) and shall obtain and maintain any and all licenses, permits, franchises or other governmental authorizations necessary to the ownership of its Property or to the conduct of its businesses. Borrower shall timely satisfy all assessments, fines, costs and penalties imposed (after exhaustion of all appeals, provided a stay has been put in effect during such appeal) by any Governmental Authority against Borrower or any Property of Borrower. Neither Borrower nor any Subsidiary shall take any action that would result in the debarment or suspension of any Borrower or any Subsidiary from contracting with the Government.

0.0.Xxxxxxxx Conducted: Borrower shall continue in the business presently operated by it using its best efforts to maintain its customers and goodwill. Borrower shall not engage, directly or indirectly, in any material respect in any line of business substantially different from the businesses conducted by Borrower immediately prior to the Closing Date.

6.5.Litigation: Borrower shall give prompt notice to Lender of any litigation claiming in excess of One Hundred Thousand Dollars ($100,000) from Borrower, or which could reasonably be expected to have a Material Adverse Effect.

6.6.Issue Taxes: Borrower shall pay all taxes (other than taxes based upon or measured by any Lender’s income or revenues or any personal property tax), if any, in connection with the issuance of the Notes and the recording of any lien documents. The obligations of Borrower hereunder shall survive the payment of Xxxxxxxx’s Obligations hereunder and the termination of this Agreement.

0.0.Xxxx Accounts: Borrower shall maintain all of its primary depository and disbursement account(s) (including its operating account) with Lender.

6.8.Employee Benefit Plans: Borrower shall (a) fund all of its Pension Plan(s) in a manner that will satisfy the minimum funding standards of Section 302 of ERISA, (b) furnish Lender, promptly upon Lender’s request, with copies of all reports or other statements filed with the United States Department of Labor, the PBGC or the IRS with respect to all Pension Plan(s), or which Borrower, or any member of a Controlled Group, may receive from the United States Department of Labor, the IRS or the PBGC, with respect to all such Pension Plan(s), and (c)

promptly advise Lender of the occurrence of any reportable event (as defined in Section 4043 of ERISA, other than a reportable event for which the thirty (30) day notice requirement has been waived by the PBGC) or prohibited transaction (under Section 406 of ERISA or Section 4975 of the Internal Revenue Code) with respect to any such Pension Plan(s) and the action which Borrower proposes to take with respect thereto. Borrower will make all contributions when due with respect to any multi employer pension plan in which it participates and will promptly advise Lender upon (x) its receipt of notice of the assertion against Borrower of a claim for withdrawal liability, (y) the occurrence of any event which, to the best of Xxxxxxxx’s knowledge, would trigger the assertion of a claim for withdrawal liability against Borrower, and (z) upon the occurrence of any event which, to the best of Borrower’s knowledge, would place Borrower in a Controlled Group as a result of which any member (including Borrower) thereof may be subject to a claim for withdrawal liability, whether liquidated or contingent.

0.0.Xxxxxxxxx Covenant: Borrower shall maintain and comply with the following financial covenants:

a.Tangible Net Worth – Borrower shall maintain Tangible Net Worth of not less than the Minimum Compliance Level, measured quarterly as of the last day of each fiscal quarter, beginning with the fiscal quarter ending December 31, 2017.

b.Debt Service Coverage Ratio – Borrower shall maintain a Debt Service Coverage Ratio of not less than 1.25:1, measured quarterly as of the last day of each fiscal quarter, on a rolling four (4) quarter basis, beginning with the fiscal quarter ending December 31, 2017.

c.Minimum Consolidated EBITDA – Borrower shall maintain Consolidated EBITDA of not less than $300,000 each fiscal quarter, measured on the last day of each fiscal quarter beginning with the fiscal quarter ending December 31, 2017.

x.Xxxxxxx Expenditures – Borrower shall not incur more than $50,000 in capital expenditures in any fiscal year.

0.00.Xxxxxxxxx and Business Information: Borrower shall deliver or cause to be delivered to Lender the following:

x.Xxxxxxxxx Statements and Collateral Reports: such data, reports, statements and information, financial or otherwise, as Lender may reasonably request, including, without limitation:

i.within thirty (30) days after the end of each calendar quarter, the consolidated and consolidating (if applicable) income and cash flow statements of Borrower and its Subsidiaries for such quarter and for the expired portion of the fiscal year ending with the end of such quarter, setting forth in comparative form the corresponding figures for the corresponding periods of the previous fiscal year, and the consolidated and consolidating (if applicable) balance sheet of Borrower and its Subsidiaries as at the end of such quarter, setting forth in comparative form the corresponding figures as at the end of the corresponding periods of the previous fiscal year, all in reasonable detail and certified by Axxum’s president or chief financial officer to have been prepared from the books and records of Borrower;

ii.within one hundred twenty (120) days after the end of each fiscal year of Borrower, the consolidated and consolidating (if applicable) income and cash flow statements of Borrower and its Subsidiaries for such year, and the consolidated and consolidating (if applicable) balance sheet of Borrower and its Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding figures as at the end of and for the previous fiscal year, all in reasonable detail, including all supporting schedules, and audited by an independent public accounting firm reasonably acceptable to Xxxxxx, and unqualifiedly certified to have been prepared in accordance with GAAP, together with copies of any management letters provided by such accountants to management of Borrower;

iii.on a monthly basis within fifteen (15) days of each month-end, a borrowing base certificate for Borrower in a form reasonably acceptable to Lender, setting forth in detail all of Borrower’s Accounts and Eligible Accounts (broken down between Eligible Commercial Accounts and Eligible Government Accounts), calculating the Borrowing Base as of each month end and providing such other information as is reasonably requested by Lender (“Borrowing Certificate”), together with (x) an accounts receivable aging report, and (y) an accounts payable aging report, each in a form reasonably acceptable to Lender as of each month end;

iv.within thirty (30) days of the end of each calendar quarter, Xxxxxxxx’s contract status/jobs in progress/backlog report, certified by Axxum’s president or chief financial officer as true and correct, all in form reasonably satisfactory to Lender; and

x.xx later than one hundred twenty (120) days after the beginning of each fiscal year, Xxxxxxxx’s annual consolidated financial statements projections for such fiscal year;

b.Notice of Event of Default - promptly upon becoming aware of the existence of any condition or event which constitutes a Default or an Event of Default under this Agreement, a written notice specifying the nature and period of existence thereof and what action Borrower is taking (and proposes to take) with respect thereto;

c.Notice of Claimed Default - promptly upon receipt by Xxxxxxxx, notice of default, oral or written, given to Borrower by any creditor for Indebtedness for borrowed money, otherwise holding long term Indebtedness of Borrower in excess of One Hundred Thousand Dollars ($100,000); and

d.Securities and Other Reports - if Borrower shall be required to file reports with the Securities and Exchange Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, promptly upon its becoming available, one copy of each financial statement, report, notice or proxy statement sent by Borrower to stockholders generally, and, a copy of each regular or periodic report, and any registration statement, or prospectus in respect thereof, filed by Borrower with any securities exchange or with federal or state securities and exchange commissions or any successor agency.

6.11.Officers’ Certificates:Along with the set of financial statements delivered to Lender at the end of each fiscal quarter pursuant to Section 6.10(a)(i) hereof and the annual

financial statements delivered pursuant to Section 6.10(a)(ii) hereof, Borrower shall deliver to Lender a certificate (“Compliance Certificate”) (in the form of Exhibit “A” attached hereto and made part hereof) from the chief financial officer, chief executive officer, or president of Borrower setting forth:

a.Event of Default - that the signer has reviewed the relevant terms of this Agreement, and has made (or caused to be made under his/her supervision) a review of the transactions and conditions of Borrower from the beginning of the accounting period covered by the financial statements being delivered therewith to the date of the certificate, and that such review has not disclosed the existence during such period of any condition or event which constitutes a Default or an Event of Default or, if any such condition or event exists, specifying the nature and period of existence thereof and what action Borrower has taken or proposes to take with respect thereto.

b.Covenant Compliance - the information (including detailed calculations) required in order to establish that Borrower is in compliance with the requirements of Section 6.9 of this Agreement, as of the end of the period covered by the financial statements delivered.

6.12.Audits and Inspection: Borrower shall permit any of Lender’s officers or other representatives to visit and inspect upon reasonable notice during business hours any of the locations of Borrower (provided that, while an Event of Default exists, Lender may make such visits and inspections at any time without prior notice) to examine and audit all of Borrower’s books of account, records (including System for Award Management), reports and other papers, to make copies and extracts therefrom and to discuss its affairs, finances and accounts with its officers, employees and independent certified public accountants all at Borrower’s expense at the standard rates charged by Lender for such activities, plus Lender’s reasonable out-of-pocket expenses (all of which amounts shall be Expenses); provided that Lender shall not, unless an Event of Default occurs, conduct more than one audit per year. Any such inspection shall be subject to contractual or legal restrictions of confidentiality binding upon Borrower.

0.00.Xxx Returns, Financial Statements and Other Reports: With respect to each calendar year, Borrower shall furnish, or shall cause to be furnished, to Lender copies of (a) the federal income tax return of each Borrower and each Guarantor within thirty (30) days of filing such return with the applicable governmental agency (and if any request for an extension of the due date for such tax return is filed, a copy of such extension request shall be promptly delivered to Lender) and (b) personal financial statement (on Xxxxxx’s form) for each Guarantor, within one hundred twenty (120) days of the end of each such calendar year. Xxxxxxxx further agrees that, if requested by Xxxxxx, it shall promptly furnish Lender with copies of all reports filed with any federal, state or local Governmental Authority.

6.14.Information to Participant: Lender may divulge to any participant, assignee or co- lender or prospective participant, assignee or co-lender it may obtain in the Revolving Credit or Term Loan or any portion thereof, all information, and furnish to such Person copies of any reports, financial statements, certificates, and documents obtained under any provision of this Agreement, or related agreements and documents.

6.15.Material Adverse Developments: Xxxxxxxx agrees that immediately upon becoming aware of any development or other information outside the ordinary course of business and excluding matters of a general economic, financial or political nature which could reasonably be expected to have a Material Adverse Effect it shall give to Lender telephonic notice specifying the nature of such development or information and such anticipated effect. In addition, such verbal communication shall be confirmed by written notice thereof to Lender on the same day such verbal communication is made or the next Business Day thereafter.

6.16.Places of Business: Borrower shall give thirty (30) days prior written notice to Lender of any changes in the location of any of its respective places of business, of the places where records concerning its Accounts or where its Inventory are kept, or the establishment of any new, or the discontinuance of any existing place of business; provided that Borrower may not establish any place of business outside of the United States.

6.17.Commercial Tort Claims: Borrower will immediately notify Lender in writing in the event that Xxxxxxxx becomes a party to or obtains any rights with respect to any Commercial Tort Claim. Such notification shall include information sufficient to describe such Commercial Tort Claim, including, but not limited to, the parties to the claim, the court in which the claim was commenced, the docket number assigned to such claim, if any, and a detailed explanation of the events that gave rise to the claim. Borrower shall execute and deliver to Lender all documents and/or agreements necessary to grant Lender a security interest in such Commercial Tort Claim to secure the Obligations. Borrower authorizes Lender to file (without Xxxxxxxx’s signature) initial financing statements or amendments, as Lender deems necessary to perfect its security interest in the Commercial Tort Claim.

6.18.Letter-of-Credit Rights: Borrower shall provide Lender with written notice of any Letters of Credit for which Xxxxxxxx is the beneficiary. Borrower shall execute and deliver (or cause to be executed or delivered) to Lender, all documents and agreements as Lender may require in order to obtain and perfect its security interest in such Letter-of-Credit Rights.

6.19.Contracts; Notices: Borrower shall provide Lender with a fully-executed copy of each of its contracts, including each Government Contract (including all task orders, modifications and amendments thereunder) to the extent permitted by law and by contractual obligations of confidentiality binding on Borrower. Borrower shall furnish to the Lender notice within three (3) Business Days of (a) the institution by the Governmental Authority of any investigation of or claim against the Borrower or any Subsidiary, (b) any final decision of a contracting officer disallowing costs aggregating more than One Hundred Thousand Dollars ($100,000) with respect to a Government Contract, (c) the results of any audit of its Government Contracts, (d) any Governmental Authority setting off amounts due to Borrower under a Government Contract for claims due to a Governmental Authority that are not related to such Government Contract, and (e) any material modifications to, or any termination of, any material contract or agreement relating to any Eligible Accounts. Borrower shall promptly furnish to the Lender copies of any reports from auditors of Government Contracts.

6.20.Contract Assignments: Borrower shall execute and deliver to the Lender such assignments and acknowledgments as it shall require with respect to the Borrower’s contracts to provide for receivable payments to be made by Account Debtors directly to the Lender, and the

Borrower shall direct all automated clearing house and other electronic payments with respect to the accounts receivable to be made to the Lender. Assignments of Prime Government Contracts shall be subject to and conform to the requirements of the Assignment of Claims Act, to the extent permitted by applicable law. Absent a Default, the Lender expects to require such assignments only for any contract with a duration of at least six (6) months and a value of at least Five Hundred Thousand Dollars ($500,000), but the Lender shall have the right at any time to require acknowledged assignments of any contract, regardless of amount or duration. For the avoidance of doubt, the failure of any Prime Government Contract to be so assigned due to no fault or omission of Borrower shall not constitute an Event of Default hereunder, but the Accounts related to such contract shall not constitute Eligible Accounts.

6.21.Post-Closing Covenants: Borrower shall comply with the following covenants after the Closing Date:

a.On or before May 31, 2019, Borrower shall provide to Lender a landlord waiver from the prime landlord (and any sub-landlord) of the Borrower’s chief executive office, in form and substance reasonably acceptable to Xxxxxx;

SECTION VII. BORROWER’S NEGATIVE COVENANTS:

Borrower covenants that until all of the Obligations are paid and satisfied in full and the Revolving Credit has been terminated, that:

7.1.

Merger, Consolidation, Dissolution or Liquidation:

a.Borrower shall not engage in any Asset Sale other than equipment that is no longer used or useful in Borrower’s business or is replaced by other equipment of comparable or superior quality and value within ninety (90) days of such Asset Sale.

b.Other than a Public Company Merger, Borrower shall not merge or consolidate with any other Person or commence a dissolution or liquidation.

7.2.Acquisitions; Subsidiaries: Borrower shall not acquire all or a material portion of the Capital Stock or assets of any Person in any transaction or in any series of related transactions or enter into any sale and leaseback transaction. If any Borrower forms or acquires a Subsidiary (which a Borrower may do only with the prior written consent of Lender), Borrower will cause such Subsidiary to (a) execute and deliver to the Lender an Assumption Agreement, and (b) satisfy all of the conditions set forth in Section 4.10 with respect to such Subsidiary.

7.3.Liens and Encumbrances: Borrower shall not: (i) execute a negative pledge agreement with any Person covering any of its Property, or (ii) cause or permit or agree or consent to cause or permit in the future (upon the happening of a contingency or otherwise), its Property (including, without limitation, the Collateral), whether now owned or hereafter acquired, to be subject to a Lien or be subject to any claim except for Permitted Liens.

7.4.

Transactions With Affiliates or Subsidiaries:

a.Borrower shall not enter into any transaction with any Subsidiary or other Affiliate, including, without limitation, the purchase, sale, or exchange of Property, or the loaning or giving of funds to any Affiliate or any Subsidiary unless: (i) such Subsidiary or Affiliate is engaged in a business substantially related to the business conducted by Borrower, is a Borrower hereunder and the transaction is in the ordinary course of and pursuant to the reasonable requirements of Borrower’s business and upon terms substantially the same and no less favorable to Borrower as it would obtain in a comparable arm’s length transactions with any Person not an Affiliate or a Subsidiary, and so long as such transaction is not prohibited hereunder; or (ii) such transaction is intended for incidental administrative purposes.

b.Borrower shall not create or acquire any Subsidiary.

7.5.Guarantees: Excepting the endorsement in the ordinary course of business of negotiable instruments for deposit or collection, Borrower shall not become or be liable, directly or indirectly, primary or secondary, matured or contingent, in any manner, whether as guarantor, surety, accommodation maker, or otherwise, for the existing or future Indebtedness of any kind of any Person other than Permitted Indebtedness.

7.6.Distributions, Bonuses and Other Indebtedness: Borrower shall not: (a) declare or pay or make any form of Distribution to holders of Borrower’s Capital Stock without the prior consent of the Lender, such consent not to be unreasonably withheld; provided, however, that without the consent of Lender, the Borrower may (i) for so long as KAE’s Series A Convertible Preferred Stock is issued and outstanding, make Distributions in the form of cash dividends with respect to such preferred stock in an annual aggregate amount not to exceed 10% per annum of the stated value of such preferred stock, so long as no Default or Event of Default has occurred and is continuing and so long as no breach of a financial covenant would result from the payment thereof on a pro forma basis and (ii) make Distributions in a fiscal year in an amount not to exceed fifty percent (50%) of the Excess Cash Flow of the prior fiscal year if no Event of Default exists and if no breach of a financial covenant would result from the payment thereof on a pro forma basis; (b) declare or pay any bonus compensation to its officers, if an Event of Default exists or if a breach of a financial covenant would result from the payment thereof on a pro form basis; (c) hereafter incur or become liable for any Indebtedness other than Permitted Indebtedness; (d) make any prepayments on any existing or future Indebtedness (other than the Obligations); or (e) make any payments on Subordinated Debt in violation of the subordination provisions thereof. Borrower shall not incur any Indebtedness in connection with a merger or acquisition unless it gives the Lender a right of first refusal with respect to such financing.

0.0.Xxxxx and Investments: Borrower shall not make or have outstanding loans, advances, extensions of credit or capital contributions to, or investments in, any Person other than Permitted Investments.

7.8.Use of Lenders’ Name: Borrower shall not use Xxxxxx’s name in connection with any of its business operations. Nothing herein contained is intended to permit or authorize Borrower to make any contract on behalf of Xxxxxx.

7.9.

Miscellaneous Covenants:

x.Xxxxxxxx shall not become or be a party to any contract or agreement which at the time of becoming a party to such contract or agreement materially impairs Borrower’s ability to perform under this Agreement, or under any other instrument, agreement or document to which Borrower is a party or by which it is or may be bound.

b.Borrower shall not carry or purchase any “margin stock” within the meaning of Regulations U, T or X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II.

x.Xx Borrower may change its name without the prior written consent of

Lender.

7.10.Jurisdiction of Organization: If a Registered Organization, Borrower shall not change its jurisdiction of organization.

SECTION VIII. DEFAULT

0.0.Xxxxxx of Default: Each of the following events shall constitute an event of default (“Event of Default”):

a.Payments - if Borrower fails to make any payment of principal or interest, including any Overadvance, under the Obligations on the date such payment is due and payable; or

b.Other Charges - if Borrower fails to pay any other charges, fees, Expenses or other monetary obligations owing to Lender arising out of or incurred in connection with this Agreement on the date such payment is due and payable and such failure continues unremedied for three (3) Business Days; or

c.Particular Covenant Defaults - if Borrower fails to perform, comply with or observe any covenant or undertaking contained in this Agreement and (other than with respect to the covenants contained in Sections 6.2(b), 6.8, 6.9, 6.10, 6.11 and VII for which no cure period shall exist), such failure continues for fifteen (15) days after Borrower has knowledge thereof; or

x.Xxxxxxxxx Information - if any statement, report, financial statement, or certificate made or delivered by Borrower or any of its officers, employees or agents, to Lender is not true and correct, in all material respects, when made; or

e.Uninsured Loss - if there shall occur any uninsured damage to or loss, theft, or destruction in excess of One Hundred Thousand Dollars ($100,000) in the aggregate with respect to any portion of any Property of Borrower; or

f.Warranties or Representations - if any warranty, representation or other statement by or on behalf of Borrower contained in or pursuant to this Agreement, the other Loan Documents or in any document, agreement or instrument furnished in compliance with,

relating to, or in reference to this Agreement, is false, erroneous, or misleading in any material respect when made; or

g.Agreements with Others - (i) if Borrower shall default beyond any grace period in the payment of principal or interest of any Indebtedness of Borrower in excess of One Hundred Thousand Dollars ($100,000) in the aggregate; or (ii) if Borrower otherwise defaults under the terms of any such Indebtedness if the effect of such default is to enable the holder of such Indebtedness to accelerate the payment of Borrower’s obligations, which are the subject thereof, prior to the maturity date or prior to the regularly scheduled date of payment;

h.Other Agreements with Lender - if Borrower breaches or violates the terms of, or if a default (and expiration of any applicable cure period), or an Event of Default, occurs under, any Interest Hedging Instrument or any other existing or future agreement (related or unrelated) (including, without limitation, the other Loan Documents) between Borrower and Lender; or

i.Judgments - if any final judgment for the payment of money in excess of Fifty Thousand Dollars ($50,000) in the aggregate (i) which is not fully and unconditionally covered by insurance or (ii) for which Borrower has not established a cash or cash equivalent reserve in the full amount of such judgment, shall be rendered by a court of record against Borrower and such judgment shall continue unsatisfied and in effect for a period of thirty (30) consecutive days without being vacated, discharged, satisfied or bonded pending appeal; or

j.Assignment for Benefit of Creditors, etc. - if Xxxxxxxx makes or proposes in writing, an assignment for the benefit of creditors generally, offers a composition or extension to creditors, or makes or sends notice of an intended bulk sale of any business or assets now or hereafter owned or conducted by Borrower; or

k.Bankruptcy, Dissolution, etc. - upon the commencement of any action for the dissolution or liquidation of Borrower, or the commencement of any proceeding to avoid any transaction entered into by Borrower, or the commencement of any case or proceeding for reorganization or liquidation of Borrower’s debts under the Bankruptcy Code or any other state or federal law, now or hereafter enacted for the relief of debtors, whether instituted by or against Borrower; provided however, that Borrower shall have sixty (60) days to obtain the dismissal or discharge of involuntary proceedings filed against it, it being understood that during such sixty

(60) day period, Xxxxxx shall not be obligated to make Advances hereunder and Xxxxxx may seek adequate protection in any bankruptcy proceeding; or

l.Receiver - upon the appointment of a receiver, liquidator, custodian, trustee or similar official or fiduciary for Borrower or for any material portion of Borrower’s Property; or

m.Execution Process, etc. - the issuance of any execution or distraint process against any Property of Borrower; or

n.Termination of Business - if Borrower ceases any material portion of its business operations as presently conducted; or

o.Pension Benefits, etc. - if Borrower fails to comply with ERISA so that proceedings are commenced to appoint a trustee under ERISA to administer Xxxxxxxx’s employee plans or the PBGC institutes proceedings to appoint a trustee to administer such plan(s), or a Lien is entered to secure any deficiency or claim or a “reportable event” as defined under ERISA occurs; or

p.Investigations - any indication or evidence received by Lender that reasonably leads it to believe Borrower may have directly or indirectly been engaged in any type of activity which, would be reasonably likely to result in the forfeiture of any material property of Borrower to any governmental entity, federal, state or local; or

q.Change of Control - if there shall occur a Change of Control; or

r.Guaranty Agreement - (i) if any breach or default occurs under any Guaranty Agreement, and if such breach or default is not a payment default, such breach or default is not cured within fifteen (15) day of Borrower learning of such breach or default, or (ii) if any Guaranty Agreement, or any obligation to perform under such agreement, is terminated, or

(iii)if any Guarantor dies and either (x) the deceased Guarantor’s estate does not assume the liabilities under the deceased Guarantor’s Guaranty Agreement within the earlier of (A) ninety

(90) days of such death or (B) forty five (45) days following the confirmation of the appointment of an executor or personal representative of such estate or (y) a substitute Guarantor acceptable to Lender in its sole discretion does not execute a new Guaranty Agreement within sixty (60) days thereof; or

s.Liens - if any Lien in favor of Lender shall cease to be valid, enforceable and perfected and prior to all other Liens other than Permitted Liens or if Borrower or any Governmental Authority shall assert any of the foregoing; or

t.Material Adverse Effect – if there is any change in Borrower’s financial condition which, in Xxxxxx’s reasonable opinion, has or could be reasonably likely to have a Material Adverse Effect; or

u.Debarment, etc. – if Borrower or any Subsidiary shall be debarred or suspended from any contracting with any Governmental Authority; or if a notice of debarment or notice of suspension shall have been issued to Borrower or any Subsidiary; or if a notice of termination for default or the actual termination for default of any Government Contract, shall have been issued to or received by Borrower or any Subsidiary; or

v.Setoff of Government Contract - if any Governmental Authority exercises a setoff (or gives notice of its intent to exercise a setoff) against amounts due to Borrower under a Government Contract for claims of a Governmental Authority;

w.Change in Executive Management– if at any time Xxxxx XxXxxxx, Xxxx XxXxxxx, Xxxxx XxXxx XXX, Xxxxxx Xxxx, Xxxx Xxxxxxxxx or Xxxxxxx Xxxxxxxx cease to be employed by and actively involved in the management of the Borrower; and, in each case, such individual is not replaced within sixty (60) days by another Person acceptable to Lender in its reasonable discretion; or

x.Other Loan Documents - if any other Person (other than Lender) party to a Loan Document, breaches or violates any term, provision or condition of such Loan Document, and if such breach or violation is not a payment default, such breach or violation is not cured within fifteen (15) day of Borrower learning of such breach or violation.

8.2.Cure: Nothing contained in this Agreement or the Loan Documents shall be deemed to compel Lender to accept a cure of any Event of Default hereunder.

8.3.Rights and Remedies on Default:

x.Xx addition to all other rights, options and remedies granted or available to Lender under this Agreement or the Loan Documents (each of which is also then exercisable by Lender), or otherwise available at law or in equity, upon or at any time after the occurrence and during the continuance of a Default or an Event of Default, Lender may, in its discretion, withhold or cease making Advances under the Revolving Credit or modify the terms of the Borrowing Base.

x.Xx addition to all other rights, options and remedies granted or available to Lender under this Agreement or the Loan Documents (each of which is also then exercisable by Lender), or otherwise available at law or in equity, upon or at any time after the occurrence and during the continuance of an Event of Default Lender may, in its discretion, terminate the Revolving Credit and declare the Obligations (other than any Obligations arising under an Interest Hedging Instrument) immediately due and payable, all without demand, notice, presentment or protest or further action of any kind (it also being understood that the occurrence of any of the events or conditions set forth in Sections 8.1(j),(k) or (l) shall automatically cause an acceleration of the Obligations (other than any Obligations arising under an Interest Hedging Instrument)).

x.Xx addition to all other rights, options and remedies granted or available to Lender, under this Agreement or the Loan Documents (each of which is also then exercisable by Xxxxxx), upon or at any time after the occurrence and during the continuance of an Event of Default, Borrower shall be obligated to deliver and pledge to Lender, cash collateral in the amount of all outstanding Letters of Credit.

x.Xx addition to all other rights, options and remedies granted or available to Lender under this Agreement or the Loan Documents (each of which is also then exercisable by Lender), or otherwise available at law or in equity, upon or at any time after the acceleration of the Obligations following the occurrence and during the continuance of an Event of Default (other than the rights with respect to clause (iv) below which Lender may exercise at any time while an Event of Default exists and regardless of whether there is an acceleration), Lender may, in its discretion, exercise all rights under the UCC and any other applicable law or in equity, and under all Loan Documents permitted to be exercised after the occurrence of an Event of Default, including the following rights and remedies (which list is given by way of example and is not intended to be an exhaustive list of all such rights and remedies):

i.The right to take possession of, send notices regarding and collect directly the Collateral, with or without judicial process (including without limitation the right to

notify the United States postal authorities to redirect mail addressed to Borrower to an address designated by Lender); or

xx.Xx its own means or with judicial assistance, enter Borrower’s premises and take possession of the Collateral, or render it unusable, or dispose of the Collateral on such premises in compliance with subsection (e) below, without any liability for rent, storage, utilities or other sums, and Borrower shall not resist or interfere with such action; or

iii.Require Borrower at Borrower’s expense to assemble all or any part of the Collateral (other than real estate or fixtures) and make it available to Lender at any place reasonably designated by Lender; or

iv.The right to reduce or modify the Borrowing Base or to modify the terms and conditions upon which Xxxxxx may be willing to consider making Advances under the Revolving Credit or to take additional reserves against the Revolving Credit; or

v.The right to enjoin any violation of Section 7.1, it being agreed that Xxxxxx’s remedies at law are inadequate.

x.Xxxxxxxx hereby agrees that a notice received by it at least ten (10) days before the time of any intended public sale or of the time after which any private sale or other disposition of the Collateral is to be made, shall be deemed to be reasonable notice of such sale or other disposition. If permitted by applicable law, any perishable inventory or Collateral which threatens to speedily decline in value or which is sold on a recognized market may be sold immediately by Lender without prior notice to Borrower. Borrower covenants and agrees not to interfere with or impose any obstacle to Xxxxxx’s exercise of its rights and remedies with respect to the Collateral, after the occurrence of an Event of Default hereunder. Lender shall have no obligation to clean up or prepare the Collateral for sale. If Lender sells any of the Collateral upon credit, Borrower will only be credited with payments actually made by the purchaser thereof, that are received by Xxxxxx. Lender may, in connection with any sale of the Collateral specifically disclaim any warranties of title or the like.

8.4.Nature of Remedies: All rights and remedies granted Xxxxxx xxxxxxxxx and under the Loan Documents, or otherwise available at law or in equity, shall be deemed concurrent and cumulative, and not alternative remedies, and Lender may proceed with any number of remedies at the same time until all Obligations are satisfied in full. The exercise of any one right or remedy shall not be deemed a waiver or release of any other right or remedy, and Lender, upon or at any time after the occurrence of an Event of Default, may proceed against Borrower, at any time, under any agreement, with any available remedy and in any order.

8.5.Set-Off:

x.Xx addition to all other rights, options and remedies granted or available to Lender under this Agreement or the Loan Documents (each of which is also then exercisable by Xxxxxx), upon or at any time after the occurrence and during the continuance of an Event of Default, Lender (and any participant) shall have and be deemed to have, without notice to Borrower, the immediate right of set-off against any bank account of Borrower with Lender, or

of Borrower with any other Bank Affiliate or subsidiary or Affiliate of any participant and may apply the funds or amount thus set-off against any of Xxxxxxxx’s Obligations hereunder.

b.If any bank account of Borrower with Lender, any other Bank Affiliate or any participant is attached or otherwise liened or levied upon by any third party, Lender (and such participant) shall have and be deemed to have, without notice to Borrower, the immediate right of set-off and may apply the funds or amount thus set-off against any of Borrower’s Obligations hereunder.

SECTION IX. MISCELLANEOUS

9.1.Governing Law: THIS AGREEMENT, AND ALL MATTERS ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND ALL RELATED AGREEMENTS AND DOCUMENTS, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE COMMONWEALTH OF VIRGINIA THE PROVISIONS OF THIS AGREEMENT AND ALL OTHER AGREEMENTS AND DOCUMENTS REFERRED TO HEREIN ARE TO BE DEEMED SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION SHALL NOT AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL CONTINUE IN FULL FORCE AND EFFECT.

9.2.Integrated Agreement: The Note, the other Loan Documents, all related agreements, and this Agreement shall be construed as integrated and complementary of each other, and as augmenting and not restricting Lender’s rights and remedies. If, after applying the foregoing, an inconsistency still exists, the provisions of this Agreement shall constitute an amendment thereto and shall control. This Agreement and all of the other associated Loan Documents represent and represent the final agreement between the parties on the subject matter thereof and may not be contradicted by evidence of prior agreements of the parties whether in writing or oral, none of which, to whatever extent they might exist, survive the execution of this Agreement.

9.3.Waiver: No omission or delay by Xxxxxx in exercising any right or power under this Agreement or any related agreements and documents will impair such right or power or be construed to be a waiver of any Default, or Event of Default or an acquiescence therein, and any single or partial exercise of any such right or power will not preclude other or further exercise thereof or the exercise of any other right, and as to Borrower no waiver will be valid unless in writing and signed by Xxxxxx and then only to the extent specified.

9.4.Indemnity:

x.Xxxxxxxx releases and shall indemnify, defend and hold harmless Lender and its respective officers, employees and agents, of and from any claims, demands, liabilities, obligations, judgments, injuries, losses, damages and costs and expenses (including, without limitation, reasonable legal fees) resulting from (i) acts or conduct of Borrower under, pursuant or related to this Agreement and the other Loan Documents, (ii) Borrower’s breach or violation of any representation, warranty, covenant or undertaking contained in this Agreement or the other Loan Documents, (iii) Borrower’s failure to comply with any or all laws, statutes,

ordinances, governmental rules, regulations or standards, whether federal, state or local, or court or administrative orders or decrees, (including without limitation Environmental Laws, etc.), and (iv) any claim by any other creditor of Borrower against Lender arising out of any transaction whether hereunder or in any way related to the Loan Documents and all costs, expenses, fines, penalties or other damages resulting therefrom, other than to the extent resulting from acts or conduct of Lender constituting willful misconduct or gross negligence.

b.Promptly after receipt by an indemnified party under subsection (a) above of notice of the commencement of any action by a third party, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof. The omission so to notify the indemnifying party shall relieve the indemnifying party from any liability which it may have to any indemnified party under such subsection only if the indemnifying party is unable to defend such actions as a result of such failure to so notify. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnified party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation.

9.5.Time: Whenever Borrower shall be required to make any payment, or perform any act, on a day which is not a Business Day, such payment may be made, or such act may be performed, on the next succeeding Business Day. Time is of the essence in Borrower’s performance under all provisions of this Agreement and all related agreements and documents.

9.6.Expenses of Lender: At Closing and from time to time thereafter, Borrower will pay upon demand of Lender all reasonable costs, fees and expenses of Lender in connection with (i) the analysis, negotiation, preparation, execution, administration, delivery and termination of this Agreement, and other Loan Documents and the documents and instruments referred to herein and therein, and any amendment, amendment and restatement, supplement, waiver or consent relating hereto or thereto, whether or not any such amendment, amendment and restatement, supplement, waiver or consent is executed or becomes effective, search costs, the reasonable fees, expenses and disbursements of counsel for Lender, any fees or expenses incurred by Lender under Section 6.12 for which Borrower is obligated thereunder, and reasonable charges of any expert consultant reasonably required by Xxxxxx, (ii) the enforcement of Lender’s rights hereunder, or the collection of any payments owing from, Borrower under this Agreement and/or the other Loan Documents or the protection, preservation or defense of the rights of Lender hereunder and under the other Loan Documents, and (iii) any refinancing or restructuring of the credit arrangements provided under this Agreement and other Loan Documents in the nature of a “work-out” or of any insolvency or bankruptcy proceedings, or otherwise (including the reasonable fees and disbursements of counsel for Lender and, with

respect to clauses (ii) and (iii), reasonable allocated costs of internal counsel) (collectively, the “Expenses”).

9.7.Brokerage: This transaction was brought about and entered into by Xxxxxx and Borrower acting as principals and without any brokers, agents or finders being the effective procuring cause hereof. Borrower represents that it has not committed Lender to the payment of any brokerage fee, commission or charge in connection with this transaction. If any such claim is made on Lender by any broker, finder or agent or other person, Borrower hereby indemnifies, defends and saves such party harmless against such claim and further will defend, with counsel reasonably satisfactory to Lender, any action or actions to recover on such claim, at Xxxxxxxx’s own cost and expense, including such party’s reasonable counsel fees. Xxxxxxxx further agrees that until any such claim or demand is adjudicated in such party’s favor, the amount demanded shall be deemed an Obligation of Borrower under this Agreement.

9.8.Notices:

a.Any notices or consents required or permitted by this Agreement shall be in writing and shall be deemed given if delivered in person to the person listed below or if sent by telecopy or by nationally recognized overnight courier, as follows, unless such address is changed by written notice hereunder:

If to Lender to:	MainStreet Bank
	10000 Xxxxxxx Xxxx.
x	Xxxxxxx, Xxxxxxxx 00000
	Attention: Xxxxxxx Xxxxxxx
	Telecopy No.: 000-000-0000

With copies to:	Holland & Knight LLP
	1600 Xxxxxx Xxxxxxxxx, Xxxxx 0000
	Tyxxxx, Xxxxxxxx 00000
	Attention: Xxxxx Xxxxxxxxxxx, Esq.
	Telecopy No.: 000-000-0000

If to any Borrower to:	KAE Holdings, Inc.
	1700 Xxx Xxxxxx Xxxx, Xxxxx 000
x	XxXxxx, Xxxxxxxx 00000
	Attn: Xxxxx XxXxx, CFO
	Telecopy No.: 000-000-0000

With copies to:	K&L Gates LLP
	200 X. Xxxxxxxx Xxxx.
	Suite 3900
	Mixxx, Xxxxxxx 00000
	Attention: Xxxx X. Xxxxx XXX
	Telecopy No.: 000-000-0000

b.Any notice sent by Xxxxxx, or Borrower by any of the above methods shall be deemed to be given when so received.

x.Xxxxxx shall be fully entitled to rely upon any telecopy transmission or other writing purported to be sent by any Authorized Officer (whether requesting an Advance or otherwise) as being genuine and authorized.

9.9.Headings: The headings of any paragraph or Section of this Agreement are for convenience only and shall not be used to interpret any provision of this Agreement.

9.10.Survival: All warranties, representations, and covenants made by Borrower herein, or in any agreement referred to herein or on any certificate, document or other instrument delivered by it or on its behalf under this Agreement, shall be considered to have been relied upon by Xxxxxx, and shall survive the delivery to Lender of the Notes regardless of any investigation made by Lender or on its behalf. All statements in any such certificate or other instrument prepared and/or delivered for the benefit of Lender shall constitute warranties and representations by Borrower hereunder. Except as otherwise expressly provided herein, all covenants made by Borrower hereunder or under any other agreement or instrument shall be deemed continuing until all Obligations are satisfied in full. All indemnification obligations under this Agreement, including under Sections 2.2, 9.4 and 9.7, shall survive the termination of this Agreement and payment of the Obligations.

9.11.Successors and Assigns: This Agreement shall inure to the benefit of and be binding upon the parties hereto and the successors and assigns of each of the parties. Borrower may not transfer, assign or delegate any of its duties or obligations hereunder. Borrower acknowledges and agrees that Lender may at any time, and from time to time, (a) sell participating interests in the Loans, and Xxxxxx’s rights hereunder to other financial institutions, and (b) sell, transfer, or assign the Loans and Xxxxxx’s rights hereunder, to any one or more additional banks or financial institutions, subject (as to Lender’s rights under this clause (b)) to Borrower’s written consent, which consent shall not be unreasonably withheld; provided that, no consent under this clause (b) shall be required if an Event of Default exists at the time of such sale, transfer or assignment.

9.12.Duplicate Originals; Effect of Facsimile and Photocopied Signatures: Two or more duplicate originals of this Agreement may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument. This Agreement (and the other Loan Documents) may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement, the Loan Documents or any counterpart thereof to produce or account for any of the other counterparts. A copy of this Agreement and the Loan Documents signed by one party and faxed or scanned and emailed to another party (as a PDF or similar image file) shall be deemed to have been executed and delivered by the signing party as though an original. A photocopy or PDF of this Agreement and the other Loan Documents shall be effective as an original for all purposes.

9.13.Modification: No modification hereof or any agreement referred to herein shall be binding or enforceable unless in writing and signed by Xxxxxxxx and Lender.

9.14.Signatories: Each individual signatory hereto represents and warrants that he is duly authorized to execute this Agreement on behalf of his principal and that he executes the Agreement in such capacity and not as a party.

9.15.Third Parties: No rights are intended to be created hereunder, or under any related agreements or documents for the benefit of any third party donee, creditor or incidental beneficiary of Xxxxxxxx. Nothing contained in this Agreement shall be construed as a delegation to Lender of Xxxxxxxx’s duty of performance, including, without limitation, Borrower’s duties under any account or contract with any other Person.

9.16.Discharge of Taxes, Xxxxxxxx’s Obligations, Etc.: Lender, in its sole discretion, shall have the right at any time, and from time to time, with at least ten (10) days prior notice to Borrower if Borrower fails to do so, to: (a) pay for the performance of any of Borrower’s obligations hereunder, and (b) discharge taxes or Liens, at any time levied or placed on Borrower’s Property in violation of this Agreement unless Borrower is in good faith with due diligence by appropriate proceedings contesting such taxes or Liens and maintaining proper reserves therefor in accordance with GAAP. Expenses and advances shall be added to the Revolving Credit, and bear interest at the rate applicable to the Revolving Credit, until reimbursed to Lender. Such payments and advances made by Xxxxxx shall not be construed as a waiver by Xxxxxx of a Default or Event of Default under this Agreement.

9.17.Withholding and Other Tax Liabilities: Lender shall have the right to refuse to make any Advances from time to time unless Borrower shall, at Xxxxxx’s request, have given to Lender evidence, reasonably satisfactory to Lender, that Borrower has properly deposited or paid, as required by law, all withholding taxes and all federal, state, city, county or other taxes due up to and including the date of the requested Advance. Copies of deposit slips showing payment shall constitute satisfactory evidence for such purpose. In the event that any Lien, assessment or tax liability against Borrower shall arise in favor of any taxing authority, whether or not notice thereof shall be filed or recorded as may be required by law, Lender shall have the right (but shall not be obligated, nor shall Lender hereby assume the duty) to pay any such Lien, assessment or tax liability by virtue of which such charge shall have arisen; provided, however, that Lender shall not pay any such tax, assessment or Lien if the amount, applicability or validity thereof is being contested in good faith and by appropriate proceedings by Borrower. In order to pay any such Lien, assessment or tax liability, Lender shall not be obliged to wait until such lien, assessment or tax liability is filed before taking such action as hereinabove set forth. Any sum or sums which Lender shall have paid for the discharge of any such Lien shall be added to the Revolving Credit and shall be paid by Borrower to Lender with interest thereon at the rate applicable to the Revolving Credit, upon demand, and Lender shall be subrogated to all rights of such taxing authority against Borrower.

9.18.Consent to Jurisdiction: Borrower and Lender each hereby irrevocably consent to the non-exclusive jurisdiction of the Courts of the Commonwealth of Virginia or the United States District Court for the Eastern District of Virginia in any and all actions and proceedings whether arising hereunder or under any other agreement or undertaking. Borrower waives any objection which Borrower may have based upon lack of personal jurisdiction, improper venue or forum non conveniens. Borrower irrevocably agrees to service of process by certified mail, return receipt requested to the address of the appropriate party set forth herein.

9.19.Additional Documentation: Xxxxxxxx shall execute and/or re-execute, and cause any Guarantor or other Person party to any Loan Document, to execute and/or re-execute and to deliver to Lender or Xxxxxx’s counsel, as may be deemed appropriate, any document or instrument signed in connection with this Agreement in order to correct any manifest error in the drafting thereof, as well as any document or instrument which should have been signed at or prior to the Closing, but which was not so signed and delivered. Xxxxxxxx agrees to comply with any written request by Xxxxxx within ten (10) days after receipt by Xxxxxxxx of such request.

9.20.Waiver of Jury Trial: XXXXXXXX AND LENDER EACH HEREBY WAIVE ANY AND ALL RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION, PROCEEDING OR COUNTERCLAIM ARISING WITH RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO OR UNDER THE LOAN DOCUMENTS OR WITH RESPECT TO ANY CLAIMS ARISING OUT OF ANY DISCUSSIONS, NEGOTIATIONS OR COMMUNICATIONS INVOLVING OR RELATED TO ANY PROPOSED RENEWAL, EXTENSION, AMENDMENT, MODIFICATION, RESTRUCTURE, FORBEARANCE, WORKOUT, OR ENFORCEMENT OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS.

9.21.Consequential Damages: Neither Lender nor agent or attorney of Lender, shall be liable for any consequential damages arising from any breach of contract, tort or other wrong relating to the establishment, administration or collection of the Obligations.

9.22.Patriot Act Notice: Lender is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-36) (signed into law October 26, 2001) (the “Act”) and hereby notifies the Borrower that pursuant to the requirements of the Act. It is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow Lender to identify the Borrower in accordance with the Act.

9.23.Amendment and Restatement: Effective immediately upon the Restatement Date, the terms and conditions of the Original Loan Agreement shall be amended and restated as set forth herein and the Original Loan Agreement shall be superseded by this Agreement. On the Restatement Date, the rights and obligations of the parties evidenced by the Original Loan Agreement shall be evidenced by this Agreement and the other Loan Documents and the grant of security interests and Liens in the Collateral under the Original Loan Agreement and the other “Loan Documents” (as defined in the Original Loan Agreement) by the Loan Parties party thereto shall continue under this Agreement and the other Loan Documents, and shall not in any event be terminated, extinguished or annulled but shall hereafter continue to be in full force and effect and be governed by this Agreement and the other Loan Documents. All Obligations (as defined in the Original Loan Agreement) under the Original Loan Agreement and the other “Loan Documents” (as defined in the Original Loan Agreement) shall continue to be outstanding except as expressly modified by this Agreement (or another Loan Document) and shall be governed in all respects by this Agreement and the other Loan Documents, it being agreed and understood that this Agreement does not constitute a novation, satisfaction, payment or reborrowing of any Obligation (as defined in the Original Loan Agreement) under the Original Loan Agreement or any other “Loan Document” (as defined in the Original Loan Agreement), nor does it operate as a waiver of any right, power or remedy of the Lender under any “Loan

Document” (as defined in the Original Loan Agreement). All references to the Original Loan Agreement in any Loan Document or other document or instrument delivered in connection therewith shall be deemed to refer to this Agreement and the provisions hereof.

[SIGNATURES TO FOLLOW ON SEPARATE PAGE]

IN WITNESS WHEREOF, the undersigned parties have executed this Agreement effective as of the day and year first above written.


AXXUM TECHNOLOGIES LLC

By:
Name:	Xxxxx XxXxx XXX
Title:	Chief Financial Officer

KAE HOLDINGS, INC.

By:
	Xxxxx XxXxx XXX
	Chief Financial Officer

CLOUDBURST SECURITY LLC.

By:	KAE HOLDINGS, INC., its sole member

	By:
	Name:	Xxxxx XxXxx XXX
	Title:	Chief Financial Officer

MAINSTREET BANK

By:
	Xxxxxxx Xxxxxxx
	Senior Vice President

(Signature Page to Amended and Restated Loan and Security Agreement)

EXHIBIT “A”

COVENANT COMPLIANCE CERTIFICATE

MainStreet Bank, 10000 Xxxxxxx Xxxx., Xxxxxxx, XX 00000

The undersigned, an officer of Axxum Technologies LLC. Cloudburst Security LLC and KAE Holdings, Inc. (“Borrower”), gives this certificate to MainStreet Bank (“Lender”), in accordance with the requirements as outlined in the Amended and Restated Loan and Security Agreement dated April 18, 2019, by and among Borrower and Lender (as amended, restated or otherwise modified from time to time, “Loan Agreement”). Capitalized terms used in this Certificate, unless otherwise defined herein, shall have the meanings ascribed to them in the Loan Agreement.

Based upon my review of the consolidated balance sheets and statements of income of Borrower, for the fiscal period ending , 20 , copies of which are attached hereto, I hereby certify that:


	Actual Amount	Required Amount
Minimum Tangible Net Worth the amount by which all of Borrower’s consolidated assets (less (i) trademarks, copyrights, goodwill, covenants not to compete, and all other assets which would be classified as intangible assets under GAAP and (ii) assets owing from Affiliates, officers, directors, equity holders and employees) plus Subordinated Debt plus the value of KAE’s equity interest in any Subsidiary of KAE that is a Borrower (to the extent subtracted when calculating Borrower’s consolidated assets), exceed all of Borrower’s consolidated liabilities, all as would be shown on Borrower’s consolidated balance sheet prepared in accordance with GAAP.	$	> Minimum Compliance Level

Debt Service Coverage Ratio		> 1.25:1

Minimum Consolidated EBITDA		> $300,000

Annual Capital Expenditures		≤ $50,000

IN WITNESS WHEREOF, the Borrower has executed and delivered this certificate, this day of , .


	Axxum Technologies LLC,
	Cloudburst Security LLC,
	KAE Holdings, Inc.

	By:

	Name:

	Title:

EXHIBIT “B”

FORM OF ASSUMPTION AGREEMENT

THIS ASSUMPTION AGREEMENT (the “Agreement”) dated as of ,

, is by and between , a (the “New Subsidiary”), and MainStreet Bank (“Lender”) in connection with that certain Amended and Restated Loan and Security Agreement, dated as of April 18, 2019, by and among Axxum Technologies LLC, a Virginia limited liability company (“Axxum”), KAE Holdings, Inc., a Delaware corporation (“KAE”), Cloudburst Security LLC, a Virginia limited liability company (“Cloudburst”; together with Axxum, KAE and each Subsidiary (as defined below) that becomes a party thereto in accordance with the provisions thereof, individually and collectively, “Borrower”), and Lender (as it may be supplemented, restated, superseded, amended or replaced from time to time, “Loan Agreement”). Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Loan Agreement.

The existing Borrowers are required by Section 7.2 of the Loan Agreement to cause the New Subsidiary to become a “Borrower” thereunder. Accordingly, the New Subsidiary hereby agrees with the Lender as follows:

1.The New Subsidiary hereby acknowledges, agrees and confirms that, by its execution of this Agreement, the New Subsidiary will be deemed to be a party to the Loan Agreement and a “Borrower” for all purposes of the Loan Agreement, and shall have all of the obligations of a Borrower thereunder as if it had executed the Loan Agreement. The New Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions applicable to each Borrower contained in the Loan Agreement. Without limiting the generality of the foregoing terms of this paragraph 1, the New Subsidiary hereby jointly and severally together with the other Borrowers, agrees to be liable for all of the Obligations and guarantees to the Lender, as primary obligor and not as surety, the prompt payment and performance of the Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in accordance with the terms thereof.

2.Without limiting generality of the foregoing terms of paragraph 1, to secure the prompt payment and performance in full when due, whether by lapse of time, acceleration, mandatory prepayment or otherwise, of the Obligations, the New Subsidiary hereby grants to the Lender a continuing security interest in, and a right of set off against any and all right, title and interest of the New Subsidiary in and to the Collateral of the New Subsidiary.

3.The New Subsidiary hereby represents and warrants to the Lender that:

(i)Set forth on Schedule 1 is a list of all real property located in the United States that is owned or leased by the New Subsidiary as of the date hereof.

(ii)Set forth on Schedule 2 is the chief executive office, U.S. taxpayer identification number and organizational identification number of the New Subsidiary and all Capital Stock owned by the New Subsidiary as of the date hereof.

(iii)The exact legal name and state of organization of the New Subsidiary is as set forth on the signature pages hereto.

(iv)Except as set forth on Schedule 3, the New Subsidiary has not during the five years preceding the date hereof (i) changed its legal name, (ii) changed its state of formation, or (iii) been party to a merger, consolidation or other change in structure.

3.The address of the New Subsidiary for purposes of all notices and other communications is the address set forth for the Borrower in Section 9.8 of the Loan Agreement.

4.The New Subsidiary hereby waives acceptance by the Lender of the guaranty by the New Subsidiary under Section 2.12 of the Loan Agreement.

5.This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute one contract.

6.This Agreement shall be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Virginia.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the New Subsidiary has caused this Joinder Agreement to be duly executed by an authorized officer, and the Lender has caused the same to be accepted by its authorized officer, as of the day and year first above written.


[NEW SUBSIDIARY]

By:
Name:
Title:

Acknowledged and accepted:

MAINSTREET BANK

By:
Name:
Title:

Schedule 5.9

Subsidiaries and Affiliates

Subsidiaries

None

Affiliates

A.	Axxum Technologies LLC

Officers

Xxxxx X. XxXxxxx, President and Chief Executive Officer

Xxxx X. XxXxxxx, Secretary and Chief Operating Officer

Xxxxx XxXxx, III, Treasurer and Chief Financial Officer

Directors

None

B.	Cloudburst Security LLC

Officers

None

Directors

None-Member Managed

C.	KAE Holdings, Inc.

Officers

Xxxxx X. XxXxxxx, President and Chief Executive Officer

Xxxx X. XxXxxxx, Secretary and Chief Operating Officer

Xxxxx XxXxx, III, Treasurer and Chief Financial Officer

Directors

Xxxxx X. XxXxxxx

Xxxx X. XxXxxxx

Xxxxx XxXxx, III

Schedule 5.17

Capital Stock

Axxum Technologies LLC

KAE Holdings, Inc. holds 100% of the membership interests.

Cloudburst Security LLC

KAE Holdings, Inc. holds 100% of the membership interests.

KAE Holdings, Inc. - As of the Closing Date

Common Stock

Xxxxx X. XxXxxxx - 1,200,000 shares

Xxxx X. XxXxxxx - 400,000 shares

Xxxxx XxXxx, III - 400,000 shares

Blue Marina Investments, LLC - 133,333 shares

M2B Funding Corp. - 133,333 shares

IQ Financial, Inc. - 133,333 shares

New Phoenix Associates, LLC - 133,333 shares

L2 Capital, LLC - 66,667 shares

Xxxx Xxxxxxx, Trustee of the BOU Trust, Dated 8/10/2005 - 66,667 shares

Series A Convertible Preferred Stock

Blue Marina Investments, LLC - 80,882 shares

M2B Funding Corp. - 80,882 shares

New Phoenix Associates, LLC - 80,882 shares

L2 Capital, LLC - 40,441 shares

MD Global Partners, LLC - 22,000 shares

Xxxx Xxxxxxx, Trustee of the BOU Trust, Dated 8/10/2005 - 40,441 shares

Warrants to Purchase Common Stock (conversion 1:1)

IQ Financial, Inc. - 106,667

MD Global Partners, LLC - 66,667

Blue Marina Investments, LLC - 40,000

M2B Funding Corp. - 40,000

New Phoenix Associates, LLC - 40,000

L2 Capital, LLC - 20,000

Xxxx Xxxxxxx, Trustee of the BOU Trust, Dated 8/10/2005 - 20,000 shares

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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT AXXUM TECHNOLOGIES LLC KAE HOLDINGS, INC. CLOUDBURST SECURITY LLC and MAINSTREET BANK Dated as of April 18, 2019

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