Exhibit 10.87
FIRST AMENDMENT TO
FINANCING AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO FINANCING AND SECURITY AGREEMENT (this
"Agreement") made as of the 30th day of April, 1997 by and among VERSAR, INC., a
corporation organized under the laws of the State of Delaware ("Versar") and
GEOMET TECHNOLOGIES, INC., a corporation organized under the laws of the State
of Delaware (collectively, the "Borrowers" and each a "Borrower"), and
NATIONSBANK, N.A., a national banking association, its successors and assigns
(the "Lender").
RECITALS
A. The Borrowers are parties to a certain Financing and Security Agreement,
along with the Lender dated March 31, 1997 (as thereafter amended, modified and
renewed from time to time, the "Financing Agreement"), pursuant to which the
Lender has agreed to make available to the Borrowers a guidance line of credit
in the maximum principal amount of Five Million Dollars ($5,000,000) to be used
by the Borrowers to finance Permitted Acquisitions and a revolving credit
facility in the maximum principal amount of Three Million Dollars ($3,000,000)
to be used by the Borrowers to finance Receivables all as more fully described
in the Financing Agreement. Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings given to such terms in the Financing
Agreement.
B. The Borrowers have requested that the Lender make an Acquisition Loan in
the amount of Two Million Dollars ($2,000,000) for the purpose of acquiring not
less than seventy percent (70%) of the issued and outstanding stock of Science
Management Corporation, a Delaware corporation (together with its subsidiaries,
"SMC") and to amend the Financing Agreement in accordance with the terms and
conditions set forth below.
1
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrowers and the Lender do hereby agree as follows:
1. Recitals. The parties hereto acknowledge and agree that the above
Recitals are true and correct in all material respects and that the same are
incorporated herein and made a part hereof by reference.
2. Borrowing Base. Subject to the terms and conditions set forth herein
from the date hereof through the earlier of: (i) October 31, 1997, or (ii) the
date on which Versar closes on the sale of its operations located in the State
of Utah (such date being called, the "Borrowing Base Conversion Date"), the
parties hereto agree that the definition of "Borrowing Base" set forth in
Section 1.01 of the Financing Agreement shall be as follows:
"Borrowing Base" means the sum of (a) ninety percent (90%) of Eligible
Government Receivables, plus (b) eighty five percent (85%) of Eligible
Subcontractor Receivables, plus (c) eighty percent (80%) Eligible
Commercial Receivables, plus (d) the lesser of (i) fifty percent (50%) of
Eligible Unbilled Borrowing Base Receivables, or (ii) $1,500,000, minus the
sum of (y) the then outstanding balance of the Acquisitions Notes, and (z)
the then outstanding balance of the Sarnia Note.
From and after the Borrowing Base Conversion Date, the parties hereto agree that
without further notice to the Borrowers, the definition of "Borrowing Base"
shall automatically be as follows:
"Borrowing Base" means the sum of (a) ninety percent (90%) of Eligible
Government Receivables, plus (b) eighty five percent (85%) of Eligible
Subcontractor Receivables, plus (c) eighty percent (80%) Eligible
Commercial Receivables, less the sum of (y) the then outstanding balance of
the Acquisitions Notes, and (z) the then outstanding balance of the Sarnia
Note.
From and after the date hereof, for purposes of the Financing Agreement,
"Eligible Unbilled Borrowing Base Receivables@ means all Accounts arising out of
work actually performed by either
2
Borrowers which (i) are eligible to be billed in accordance with the applicable
contract within thirty (30) days of the Aas of@ date of the applicable Borrowing
Base Certificate (with no additional performance required by any Person, and no
condition to payment by the account debtor, other than receipt of an appropriate
invoice). The Borrowers understand and agree that any sums outstanding under the
Revolving Loan in excess of the Borrowing Base shall be due and payable in full
on demand.
3. Period to Complete Acquisition. None of the Accounts of SMC may be
included by the Borrowers in the calculation of the Borrowing Base until such
date as the Borrowers satisfy the requirements of Sections 4 and 5 of this
Agreement and all of the following conditions have been satisfied in the
Lender's sole and absolute discretion (such date being called the "Joinder
Date"):
(a) The Lender shall have received from the Borrower evidence that all
of the unsecured bankruptcy creditors of SMC have either been paid in full
and fully released their liens on any and all of the assets of SMC, or have
entered into one or more subordination agreements in form and substance
satisfactory in all respects to the Lender and its counsel.
(b) The Borrowers shall have provided the Lender with fully executed
Subordination Agreements by and among Versar, SMC, and any and all existing
secured administrative claim lienholders of SMC (the "Subordinated
Creditors") and the Lender in form and substance satisfactory in all
respects to the Lender and its counsel (the "Administrative Claim
Subordination").
From and after the Joinder Date, all Accounts of SMC which in the Lender's sole
and absolute discretion meet the Eligibility Standards and are otherwise
acceptable to the Lender in its sole and absolute discretion, may be included by
the Borrowers in the Borrowing Base.
3
4. Joinder of SMC. As soon as possible, but in no event later than June 30,
1997, the Borrowers and SMC shall execute and deliver to the Lender such
promissory notes, financing statements, security agreements and such other
documents as the Lender and its counsel may require to (i) add SMC as a co-maker
of the Obligations, (ii) add SMC as a party to the Financing Agreement and such
other Financing Documents as the Lender may require, and (iii) cause SMC to
grant to the Lender a valid and perfected first lien security interest on
substantially all of the assets of SMC to secure the Obligations.
5. Audit Period. As soon as possible, but in no event later than June 30,
1997, the Borrowers will permit, and cause SMC to permit, any Person designated
by the Lender to enter the premises of the Borrower and SMC and examine, audit
and inspect the books and records of SMC at the Borrowers' expense. The results
of such audit must be satisfactory to the Lender in all material respects.
6. Fee. In addition to the Acquisition Loan fee described in this Agreement
and in the Financing Agreement, in consideration of the Lender's agreement to
amend the Revolving Loan, the Borrowers agree to pay the Lender a fee in the
amount of One Thousand Dollars ($1,000) in each month where advances are made
against Eligible Unbilled Borrowing Base Receivables. This fee shall be paid in
arrears on the first day of each calendar month.
7. Representations. The Borrowers hereby represent to the Lender, that upon
the funding of the Acquisition Loan described herein, the Borrowers are in
compliance with all of the
4
provisions of Section 8.04 of the Financing Agreement, and that no Event of
Default has occurred or is continuing immediately prior to or upon the execution
of this Agreement.
8. Conditions Precedent. This Agreement shall become effective on the date
the Lender receives the following documents, each of which shall be satisfactory
in form and substance to the Lender in its sole and absolute discretion:
(a) A fully executed Acquisition Note in the form of Exhibit A-1
attached hereto in the principal amount of $2,000,000;
(b) Payment of the Acquisition Loan fee in the amount of $10,000 by
the Borrowers;
(c) A fully executed copy of the Administrative Claim Subordination;
(d) True, correct and complete copies of all documents being executed
and delivered in connection with the acquisition of SMC;
(e) True, correct and complete copies of all notes, security
agreements, guaranties, documents or other instruments previously or now
executed and delivered by SMC and/or the Borrower to or from the
Subordinated Creditors;
(f) Proof that the Borrowers have paid all costs and expenses to the
Lender in connection with this Agreement, including but not limited to all
the Lender's attorneys fees; and
(g) Such other information, instruments, opinions, documents,
certificates and reports as the Lender may deem necessary.
9. Counterparts. This Agreement may be executed in any number of duplicate
originals or counterparts, each of which duplicate original or counterpart shall
be deemed to be an original and all taken together shall constitute one and the
same instrument.
5
10. Financing Documents; Governing Law; Etc. This Agreement is one of the
Financing Documents defined in the Financing Agreement and shall be governed and
construed in accordance with the laws of the Commonwealth of Virginia. The
headings and captions in this Agreement are for the convenience of the parties
only and are not a part of this Agreement.
11. Acknowledgments. The Borrowers hereby confirm to the Lender the
enforceability and validity of each of the Financing Documents. In addition, the
Borrowers hereby agree to the execution and delivery of this Agreement and the
terms and provisions, covenants or agreements contained in this Agreement shall
not in any manner release, impair, lessen, modify, waive or otherwise limit the
joint and several liability and obligations of the Borrowers under the terms of
any of the Financing Documents, except as otherwise specifically set forth in
this Agreement. The Borrowers each issue, ratify and confirm the
representations, warranties and covenants contained in the Financing Documents.
12. Modifications. This Agreement may not be supplemented, changed, waived,
discharged, terminated, modified or amended, except by written instrument
executed by the parties.
13. Full Force and Effect. Except as expressly set forth above, the
provisions of the Financing Agreement shall continue in full force and effect
and are hereby ratified and confirmed. A default under this Agreement shall be a
default under the Financing Agreement. This Agreement may be executed and
delivered in any number of counterparts, all of which, taken together, shall
constitute one agreement and any party hereto may execute this Agreement by
signing any counterpart.
6
IN WITNESS WHEREOF the parties hereto have signed and sealed this Agreement
on the day and year first above written.
WITNESS OR ATTEST: VERSAR, INC.
/s/ Xxxx Xxxxxx By: /s/ Xxxxxxxx X. Xxxxxxx (SEAL)
-------------------------- --------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: V.P. and CFO
WITNESS OR ATTEST: GEOMET TECHNOLOGIES, INC.
/s/ Xxxx Xxxxxx By: /s/ Xxxxxxxx X. Xxxxxxx (SEAL)
-------------------------- --------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Treasurer
LENDER:
WITNESS: NATIONSBANK, N.A.
By: (SEAL)
-------------------------- --------------------------
Xxxxxxxx Xxxxxxx
Commercial Lending Officer
7
