EXHIBIT 10.9
EXTENSION AND MODIFICATION OF LOANS AGREEMENT
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SOUTHTRUST BANK, a state banking corporation, formerly known as SouthTrust
Bank, N.A. and SouthTrust Bank, National Association, whose address is ▇▇▇ ▇.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Bank"); ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual
whose place of residence is ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(collectively, the "Guarantor"); and Spectrum Science & Software, Inc., a
Florida corporation having its principal place of business at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company") hereby enter into this Extension
and Modification of Loans Agreement (this "Agreement") on this 31st day of
January, 2003 (the "Effective Date"). The Bank, the Guarantor, and the Company
are sometimes referred to collectively as the "Parties" and the Guarantor and
the Company are sometimes referred to collectively as the "Obligors".
IN CONSIDERATION of Ten and No/100 Dollars and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged and agreed,
the Parties agree as follows:
1. BACKGROUND FACTS. The following facts are true and correct as of the
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date hereof:
A. The Parties previously entered into a certain Forbearance Agreement
dated February 28, 2002, a Second Forbearance Agreement dated June 13,
2002 and a Third Forbearance Agreement dated November 4, 2002 (the
"Prior Agreements"). Copies of the Prior Agreements are attached
hereto as, collectively, Exhibit "A".
B. The loans which are outstanding as between the Bank and Obligors are
more specifically described in the First Forbearance Agreement,
described in 1A above, and are sometimes referred to hereinafter as
the First $1,000,000.00 Line, the Second $1,000,000.00 Line, the
Hundred Thousand Dollar ($100,000.00) Note, the Equipment Term Note,
the Real Estate Note and the One Hundred Ninety Eight Thousand Dollar
($198,000,00) Note and One Hundred Forty Five Thousand ($145,000.00)
Note, (referred to collectively herein as the "Notes" and individually
as a "Note") and the indebtedness evidenced by each Note being
referred to as a "Loan" and collectively as "the Loans", and all
documents relating to and evidencing the Loans referred to herein as
the "Loan Documents". The First $1,000,000.00 Line, the Second
$1,000,000.00 Line, the $100,000.00 Note and the $145,000.00 Note are
the Loans being hereby extended and modified and are referred to
collectively as the "Priority Loans."
C. Each of the Loans and all of the obligations thereunder were and
continue to be guaranteed by the Guarantor.
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D. The Obligors' obligations under the terms of the Loans and the Loan
Documents are and continue to be secured by grants and pledges of
mortgage lien and other security interests and certain collateral,
(collectively "the Collateral") all as is more fully set forth in the
First Forbearance Agreement and in the Loan Documents.
E. As of January 15, 2003, the total amounts due and owning on the Notes
as principal and interest are described on Exhibit "A" hereto. The
amounts shown on Exhibit "A" do not include late fees, attorney's fees
and costs of collection and other obligations associated with the
Notes or Loans.
F. As of the date of this Agreement, the Obligors are in default under
all of the Priority Loans and the Bank has the right to foreclose on
the Collateral and to proceed to collect the debt owed to it by the
Obligors by legal process or through other remedies available to it
pursuant to the Loan Documents and applicable law.
G. The Obligors have requested that the Bank enter into an agreement
whereby the Bank will agree to extend and modify the Priority Loans
upon the terms expressed herein, in exchange for certain
considerations extended by the Obligors, all as is more particularly
set forth in this Agreement.
2. EXTENSION OF MATURITY DATE OF LOANS. The maturity date of each of the
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Priority Loans is hereby extended through and until close of business, July 25,
2003, (the "Extended Maturity Date"), at which time all then unpaid principal
plus all accrued and unpaid interest under the Priority Loans shall be due and
payable by the Obligors to the Bank.
3. PAYMENTS ON THE LOANS.
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A. Obligors shall make one (1) lump-sum payment per month in the amount
of Sixty Thousand Dollars ($60,000.00) on the Priority Loans, with the
first payment being due February 25, 2003 and like payments due on the
25th day of March, April, May and June, 2003 ("Monthly Payments"), and
with a final payment due July 25, 2003 as described in paragraph 2
above. The Bank will apply the Monthly Payments first to accrued and
unpaid interest then to principal, and will apply the Monthly Payments
to the Priority Loans in the priority and proportion as determined by
the Bank in its sole discretion.
B. The Bank shall have the right but not the obligation to set off from
the Spectrum Demand Deposit Account No. ▇▇▇▇▇▇▇▇ (the "DDA Account")
the amount of the Monthly Payments, however any such set off from the
DDA Account and application of payments shall not relieve the Obligors
of the obligation of insuring that the Monthly Payments are timely
made to the Bank.
C. During the period from the date of this Agreement through the Extended
Maturity Date, the Obligors shall maintain current all regularly
scheduled payments of principal and interest on all Loans other than
the Priority Loans.
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D. The Bank acknowledges that Borrower, as of the date of this Agreement,
has paid interest current on the Priority Loans through January 25,
2003 and that all Loans other than the Priority Loans are current as
of date of this Agreement.
4. DRAW DOWN. From date of this Agreement through and until the Extended
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Maturity Date, the Company will not be entitled to draw down any further funds,
or receive any additional funds on or on account of any of the Loans.
5. CROSS-DEFAULT. Guarantor and the Company each expressly agree that all
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of the Loans are cross-defaulted with one another, and Obligors agree that the
occurrence of an Event of Default as defined in, and pursuant to any one of the
Notes or the Loan Documents pertaining to such Loan, which is not cured within
applicable grace or curative periods, shall constitute an immediate Event of
Default (without need of notice or the expiration of any additional cure period
other than specified in such Loan Documents) under the other Notes and Loan
Documents.
6. CROSS-COLLATERALIZATION. Guarantor and the Company each expressly agree
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that all of the Loans are cross-collateralized with one another, and Obligors
agree that the collateral described in each of the Loan Documents shall continue
to secure each of the Loans, and shall secure, in addition to the Loan it
relates to, the obligations of Obligors under the other Loan Documents
including, without limitation, the Company's obligation to pay the principal and
interest on each of the other Loans, as the same may hereafter be renewed,
modified, amended or extended, and to pay all other indebtedness and other
agreed charges and to perform all of the terms and conditions under the other
Loan Documents.
7. RAYTHEON RENTAL PAYMENTS. All rental payments to the Company which are
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due or which are to be made to the Company from the Company's tenant, Raytheon,
will continue be paid directly to SouthTrust, deposited into the Company's
account, and will be available for use by the Company for legitimate business
operating expenses. If Obligors have not as of date of this Agreement done so,
the Obligors shall cause Raytheon to deliver to SouthTrust, within ten (10) days
of the Effective Date of this Agreement, a letter of attornment and estoppel,
all in form acceptable to SouthTrust, regarding the lease obligations and
payments.
8. PRIOR AGREEMENT PROVISION. The Bank and the Obligors reaffirm the
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continuing effectiveness of paragraph 6 of the February 28, 2002 Forbearance
Agreement.
9. ADDITIONAL OBLIGATIONS. The Obligors understand and agree that
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obligations which are due under the terms of the Loans shall and do include,
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without limitation, all attorneys' fees and costs associated with negotiation
and preparation of this Agreement, the Prior Agreements, and all documents
associated therewith.
10. IMPAIRMENT OF COLLATERAL. From date of this Agreement through and until
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the Extended Maturity Date, the Obligors shall take no action whatsoever to
impair any of the Bank's Collateral as described in any of the Loan Documents,
in this Agreement or in the Prior Agreements.
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11. NO WAIVER. The Bank has not waived and it is not now waiving (nor is
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anyone acting on its behalf) any default on Obligors' part which may have
occurred prior to date of this Agreement under any of the Loan Documents, and no
act or omission by the Bank or on its behalf shall constitute or be construed as
a waiver of any past or presently existing or hereafter arising default (whether
or not similar to Obligors' past or present conduct), nor as a waiver or
modification of any remedies now or hereafter available to the Bank. Without
limiting the generality of the foregoing, the Bank specifically reserves the
right to insist on strict compliance with the terms of the Loan Documents, and
this Agreement and the Obligors expressly acknowledge hereby such reservation of
rights by the Bank. Further, the Bank specifically reserves all rights to all
remedies available to it under applicable law regarding all prior defaults under
the Loan Documents.
12. RELEASE OF CLAIMS. Obligors, jointly and severally, hereby waive,
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relinquish and release all claims, counterclaims, causes of action and defenses
of every kind or nature, at law or in equity, whether known or unknown,
liquidated or contingent, foreseen or unforeseen, in contract, tort or
otherwise, now or arising out of or relating to any agreement, transaction or
dealing between Obligors and the Bank (on or before the date of this Agreement)
and hereby release the Bank and its stockholders, directors, officers,
employees, insurers, contractors, subcontractors, attorneys and agents in
respect of any such claims, counterclaims, causes of action and defenses from
the beginning of the world to the date of this Agreement. Without limiting the
generality of the foregoing, Obligors have no defenses, counterclaims, right of
offset or similar rights or claims against the Bank. Obligors also agree that
the Bank shall be entitled to relief from any automatic stay imposed by Section
362 of Title 11 of the United States Code, as amended or otherwise, on or
against the exercise of the rights and remedies otherwise available to the Bank
under this Agreement or any other agreement, and as otherwise provided by law,
and Obligors hereby waive the benefits of such automatic stay and consent and
agree to raise no objection to such relief.
13. GOVERNING LAW. The validity, interpretation, enforcement and effect of
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this Agreement shall be governed by, and construed in accordance with the laws
of the State of Florida.
14. DEFAULT. Notwithstanding anything to the any other provision hereof,
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this Agreement and the Bank's obligations hereunder shall automatically
terminate and become null and void, and the Notes and the Obligations evidenced
thereby, and all security instruments securing same, shall immediately become
due, payable and enforceable if any of the following events shall occur: the
Company or the Guarantor becomes insolvent; the Company or the Guarantor
executes an assignment for the benefit of creditors; a receiver is appointed for
the Company's or the Guarantor's property; a petition is filed under any
provision of the United States Bankruptcy Code by or against the Company or the
Guarantor; any of the Company's or the Guarantor's property (including without
limitation the Collateral) is attached. Any default under any of the terms of
the Loan Documents shall also constitute a default under the terms of this
Agreement.
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15. SEVERABILITY. Should any paragraph, provision or clause in this
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Agreement be found to be ineffective, invalid, or unenforceable, the remainder
of this Agreement shall be valid and enforceable, and the Parties shall
negotiate, in good faith, a substitute, valid and enforceable provision which
most nearly effects the Parties' intent in entering into this Agreement.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
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the Parties as to the subject matter hereof. Except as expressly modified by
this Agreement, the terms, provisions, covenants and conditions of the Loan
Documents shall remain unchanged and are hereby ratified and confirmed as being
in full force and effect.
17. VOLUNTARY EXECUTION. This Agreement is executed voluntarily and without
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any duress or undo influence on the part or behalf of the Parties hereto. The
Parties acknowledge that:
(a) They have read this Agreement;
(b) They have been represented in the preparation, negotiation and
execution of this Agreement by legal counsel of their own choice, or
they have voluntarily declined to seek such counsel;
(c) They understand the terms and consequences of this Agreement and of
the releases and waivers it contains;
(d) They are fully aware of the legal and binding effect of this
Agreement.
18. VENUE. If any action shall be brought by any of the Parties under the
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terms of or seeking to enforce this Agreement, the Parties hereby expressly
agree that venue and jurisdiction shall be proper only in the Circuit Courts of
Bay County in Florida. The Parties hereby expressly waive any right they may
have to require venue or jurisdiction to lie in any other place or locale.
19. NOTICES. Any notice, request, instruction, or other document to be
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delivered hereunder shall be deemed sufficiently given if in writing and
delivered personally or mailed by certified mail, postage prepaid, to the
addresses for the parties first appearing above. All payments due from the
Company to the Bank shall be made by cash, certified check or other good funds
and delivered on or before the due date.
20. WAIVER. No delay or failure by any Party to exercise any right under
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this Agreement, and no partial or single exercise of that right, shall
constitute a waiver of that or any other right, unless otherwise expressly
provided herein.
21. TIME OF THE ESSENCE. Time is of the essence as to this Agreement and
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all performances hereunder.
22. GENDER. The use of any gender in this Agreement shall include all other
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genders. The singular shall include the plural.
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23. COUNTERPARTS. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
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together shall constitute one and the same instrument.
24. BINDING EFFECT. This Agreement shall be binding upon and inure to the
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benefit of the Parties hereto and their respective heirs, estates, legal and
personal representatives, successors and assigns.
25. ATTORNEYS FEES. In the event of any litigation or other enforcement
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action of any type pertaining in any way to this Agreement, the transactions
contemplated hereby, or any other agreement related hereto, the prevailing Party
shall be entitled to the payment of his, her or its attorneys' fees and court
costs incurred at all trial and appellate levels of the litigation or other
proceeding, or any enforcement action by the non-prevailing Party.
26. FUTURE ASSURANCES. Each Party hereto covenants and agrees that he or it
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will at any time and from time to time do such acts and execute, acknowledge and
deliver, or cause to be delivered, such documents as may be necessary or
desirable in order to carry out fully and effectuate the accommodations and
agreements contemplated by this Agreement.
27. WAIVER OF JURY TRIAL. THE BANK AND THE OBLIGORS MUTUALLY AGREE THAT
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THEY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY DISPUTE OR COURT
ACTION ARISING FROM, GROWING OUT OF, OR RELATED TO THIS AGREEMENT OR THE LOANS.
THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A SIGNIFICANT CONSIDERATION TO, AND
A MATERIAL, INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.
28. SPECIAL PROVISIONS. In addition to any prohibitions, restrictions or
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events of default contained in any of the Loan Documents relating to the
contents of this paragraph 28, the Obligors hereby specifically agree that they
shall not, without the prior written consent of the Bank, which may be
unreasonably withheld, take any further action whatsoever to: merge the Company
into another company; or merge another company into the Company or; cause the
Company to become a wholly owned subsidiary or owned subsidiary of another
company or entity; or cause any change in control of more than 25% of the common
stock or preferred stock of the Company; or initiate any further action
whatsoever which if completed would result in a change of name of the Company;
or initiate any further action related to the status of the stock of the Company
with respect to its trade either "over the counter" or on one of the recognized
national exchanges in the United States or abroad; or initiate any action which
would if completed result in a reorganization of any kind whatsoever of the
Company; or cause a change in the management or officers or directors of the
Company. Any breach of any of the terms and conditions of this paragraph, or
any similar provision in any of the Loan Documents, will constitute a default
under the terms of the Loan Documents entitling the Bank, without further
notice, to take advantage of such remedies as are available to it at law or in
equity with respect to the Loan Documents. Nothing herein shall be construed as
a waiver of any default on Obligors' part which may have occurred prior to the
date of this Agreement under any of the Loan Documents.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the first date set forth above.
Signed, sealed and delivered
in the presence of:
SOUTHTRUST BANK
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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(name) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
GUARANTOR
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇ /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------- --------------------------
(name) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇
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(name)
SPECTRUM SCIENCES & SOFTWARE, INC.
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------- --------------------------
(name) (name) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
(name)
and
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/S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ By: /S/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
------------------------------- ----------------------------
(name) (name) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Chief Operating Officer
/S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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(name)
STATE OF FLORIDA
COUNTY OF BAY
The foregoing instrument was acknowledged before me this _______ day of
___________, 2003, by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Senior Vice President of the Bank,
on behalf of the Bank, who: (notary MUST check applicable line)
_____ is personally known to me.
_____ produced a current Florida driver's license as identification.
_____ produced _____________________________ as identification.
/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Notary Public
My Commission Expires:
STATE OF
COUNTY OF
The foregoing instrument was acknowledged before me this ______ day of
________, 2003, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, individually, who: (notary MUST check
applicable line)
_____ is personally known to me.
_____ produced a current driver's license as identification.
_____ produced _____________________________ as identification.
/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------
Notary Public
My Commission Expires:
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STATE OF FLORIDA
COUNTY OF
The foregoing instrument was acknowledged before me this ______ day of
________, 2002, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as President of Spectrum Sciences &
Software, Inc., a Florida corporation, on behalf of the corporation, who:
(notary MUST check applicable line)
_____ is personally known to me.
_____ produced a current Florida driver's license as identification.
_____ produced _____________________________ as identification.
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Notary Public
My Commission Expires:
STATE OF
COUNTY OF
The foregoing instrument was acknowledged before me this _______ day of
________, 2003, by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Operating Officer of Spectrum
Sciences, who: (notary MUST check applicable line)
_____ is personally known to me.
_____ produced a current driver's license as identification.
_____ produced _____________________________ as identification.
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Notary Public
My Commission Expires:
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