1
LOAN AGREEMENT
THIS LOAN AGREEMENT between Essex Corporation
("Borrower") and SIGNET BANK ("Lender") is made on the
following terms and conditions. Borrower has received
prior commercial loans from Lender or has applied to
Lender for a commercial loan or loans and other financial
accommodations, including those which may be described on
any exhibit or schedule attached to this Agreement. All
such loans and financial accommodations, together with
all future loans and financial accommodations from Lender
to Borrower, are referred to In this Agreement
Individually as the "Loan" and collectively as the
"Loans." Borrower understands and agrees that: (a) in
granting, renewing, or extending any Loan, Lender is
relying upon Borrower's representations, warranties, and
agreements, as set forth In this Agreement; (b) the
granting, renewing, or extending of any Loan by Lender at
all times shall be subject to Lender's sole judgment and
discretion; and (c) all such Loans shall be and shall
remain subject to the following terms and conditions of
this Agreement.
TERM. This Agreement shall be effective as of 11/29/95,
and shall continue thereafter until all Indebtedness of
Borrower to Lender has been performed in full and the
parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the
following meanings when used in this Agreement. Terms
not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform
Commercial Code. All references to dollar amounts shall
mean amounts in lawful money of the United States of
America.
Agreement. The word "Agreement" means this Loan
Agreement, as this Loan Agreement may be amended or
modified from time to time, together with all exhibits
and schedules attached to this Loan Agreement from time
to time.
Account. The word "Account" means a trade account,
account receivable, or other right to payment for goods
sold or services rendered owing to Borrower (or to a
third party grantor acceptable to Lender).
Account Debtor. The words "Account Debtor" mean the
person or entity obligated upon an Account.
Advance. The word "Advance" means a disbursement of Loan
funds under this Agreement.
Borrower. The word "Borrower" means Essex Corporation
and its successors and assigns. The word "Borrower" also
includes, as applicable, all subsidiaries and affiliates
of Borrower as provided below in the paragraph titled
"Subsidiaries and Affiliates."
Borrowing Base. The words "Borrowing Base" mean at the
time in question, the sum of (a) 80.0% of Eligible Billed
Government Receivables and Commercial Receivables as
approved by the Lender, and (b) 0.00% of Eligible Billed
Commercial Receivables as depicted in a Borrowing Base
Certificate received by Lender pursuant to the terms of
this Agreement, provided, however, that (i) the Borrowing
Base shall be reduced by the sum of the aggregate face
amount of Letters of Credit outstanding on the date the
Borrowing Base is being calculated plus the aggregate
amount of all drafts drawn under or purporting to be
drawn under the Letters of Credit that have been paid by
Lender and for which Lender has not been reimbursed
pursuant hereto, (ii) at all times the Borrowing Base
shall remain subject to verification by Lender, and (iii)
in no event shall the Borrowing Base attributable to the
Eligible Billed Commercial Receivables described in (b)
of this definition of "Borrowing Base" exceed One Million
Five Hundred Thousand and No/100 Dollars ($1,500,000.00).
CERCLA. The word "CERCLA" means the Comprehensive
Environmental Response, Compensation, and Liability Act
of 1980, as amended.
Collateral. The word "Collateral" means and includes
without limitation all property and assets granted as
collateral security for a Loan, whether real or personal
property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the
form of a security interest, mortgage, deed of trust,
assignment, pledge, chattel mortgage, chattel trust,
factor's lien, equipment trust, conditional sale, trust
receipt, lien, charge, lien or title retention contract,
lease or consignment intended as a security device, or
any other security or lien interest whatsoever, whether
created by law, contract, or otherwise. The word
"Collateral" includes without limitation all collateral
described below in the section titled "COLLATERAL."
Eligible Accounts. The words "Eligible Accounts" mean,
at any time, all of Borrower's Accounts which contain
selling terms and conditions acceptable to Lender. The
net amount of any Eligible Account against which Borrower
may borrow shall exclude all returns, discounts, credits,
and offsets of any nature. Unless otherwise agreed to by
Lender in writing, Eligible Accounts do not include:
(a) Accounts with respect to which the Account Debtor is
an officer, an employee or agent of Borrower.
(b) Accounts with respect to which the Account Debtor is
a subsidiary of, or affiliated with or related to
Borrower or its shareholders, officers, or directors.
(c) Accounts with respect to which goods are placed on
consignment, guaranteed sale, or other terms by reason of
which the payment by the Account Debtor may be
conditional.
(d) Accounts with respect to which Borrower is or may
become liable to the Account Debtor for goods sold or
services rendered by the Account Debtor to Borrower.
(e) Accounts which are subject to dispute, counterclaim,
or setoff.
(f) Accounts with respect to which the goods have not
been shipped or delivered, or the services have not been
rendered, to the Account Debtor.
(g) Accounts with respect to which Lender, in its sole
discretion, deems the creditworthiness or financial
condition of the Account Debtor to be unsatisfactory.
(h) Accounts of any Account Debtor who has filed or has
had filed against it a petition in bankruptcy or an
application for relief under any provision of any state
or federal bankruptcy, insolvency, or debtor-in--relief
acts; or who has had appointed a trustee, custodian, or
receiver for the assets of such Account Debtor; or who
has made an assignment for the benefit of creditors or
has become insolvent or fails generally to pay its debts
(including its payrolls) as such debts become due.
(i) Accounts which have not been paid in full within 90
days from the invoice date. The entire balance of any
Account of any single Account debtor will be ineligible
whenever the portion of the Account which has not been
paid within 90 days from the invoice date is in excess of
2
50.000% of the total amount outstanding on the Account.
(j) Accounts which are defined as Government Final
Invoice Receivables.
ERISA. The word "ERISA" means the Employee Retirement
Income Security Act of 1974, as amended.
Event of Default. The words "Event of Default" mean and
include without limitation any of the Events of Default
set forth below in the section titled "EVENTS OF
DEFAULT."
Expiration Date. The words "Expiration Date" mean the
date of termination of Lender's commitment to lend under
this Agreement.
Grantor. The word "Grantor" means and includes without
limitation each and all of the persons or entities
granting a Security Interest in any Collateral for the
Indebtedness, and their personal representatives,
successors and assigns.
Guarantor. The word "Guarantor" means and includes
without limitation each and all of the guarantors,
sureties, and accommodation parties in connection with
any Indebtedness and their personal representatives,
successors and assigns.
Indebtedness. The word "Indebtedness" means and includes
without limitation all Loans, including ail principal,
interest and other fees, costs and charges, if any,
together with all other present and future liabilities
and obligations of Borrower, or any one or more of them,
to Lender, whether direct or indirect, matured or
unmatured, and whether absolute or contingent, joint,
several, or joint and several, and no matter how the same
may be evidenced or shall arise.
Lender. The word "Lender" means SIGNET BANK, its
successors and assigns.
Line of Credit. The words "Line of Credit" mean the
credit facility described in the Section titled "LINE OF
CREDIT" below.
Loan. The word "Loan" or "Loans" means and includes
without limitation any and all commercial loans and
financial accommodations from Lender to Borrower, whether
now or hereafter existing, and however evidenced,
including without limitation those loans and financial
accommodations described herein or described on any
exhibit or schedule attached to this Agreement from time
to time.
Note. The word "Note" means and includes without
limitation Borrower is promissory note or notes, if any,
evidencing Borrowees Loan obligations in favor of Lender,
as well as any substitute, replacement or refinancing
note or notes therefor.
Permitted Liens. The words "Permitted Liens" mean: (a)
liens and security interests securing Indebtedness owed
by Borrower to Lender; (b) liens for taxes, assessments,
or similar charges either not yet due or being contested
in good faith; (c) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in
the ordinary course of business and securing obligations
which are not yet delinquent; (d) purchase money liens or
purchase money security interests upon or in any property
acquired or held by Borrower in the ordinary course of
business to secure indebtedness outstanding on the date
of this Agreement or permitted to be incurred under the
paragraph of this Agreement titled "Indebtedness and
Liens"; (e) liens and security interests which, as of the
date of this Agreement, have been disclosed to and
approved by the Lender in writing; and (f) those liens
and security interests which in the aggregate constitute
an immaterial and insignificant monetary amount with
respect to the net value of Borrower's assets.
Related Documents. The words "Related Documents" mean
and include without limitation all promissory notes,
credit agreements, loan agreements, environmental
agreements, guaranties, security agreements, mortgages,
deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in
connection with the Indebtedness.
Security Agreement. The words "Security Agreement" mean
and include without limitation any agreements, promises,
covenants, arrangements, understandings or other
agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or
creating a Security Interest.
Security Interest. The words "Security Interest" mean
and include without limitation any and all types of liens
and encumbrances, whether created by law, contract, or
otherwise.
XXXX. The word "XXXX" means the Superfund Amendments and
Reauthorization Act of 1986 as now or hereafter amended.
LINE OF CREDIT. Lender agrees to make Advances to
Borrower from time to time from the date of this
Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not
exceed the Borrowing Base. Within the foregoing limits,
Borrower may borrow, partially or wholly prepay, and
reborrow under this Agreement as follows.
Conditions Precedent to Each Advance. Lender's
obligation to make any Advance to or for the account of
Borrower under this Agreement is subject to the following
conditions precedent, with all documents, instruments,
opinions, reports, and other items required under this
Agreement to be in form and substance satisfactory to
Lender:
(a) Lender shall have received evidence that this
Agreement and all Related Documents have been duly
authorized, executed, and delivered by Borrower to
Lender.
(b) Lender shall have received such opinions of counsel,
supplemental opinions, and documents as Lender may
request.
c) The security interests in the Collateral shall have
been duly authorized, created, and perfected with first
lien priority and shall be in full force and effect.
(d) All guaranties required by Lender for the Line of
Credit shall have been executed by each Guarantor,
delivered to Lender, and be in full force and effect.
(e) Lender, at its option and for its sole benefit, shall
have conducted an audit of Borrower's Accounts, books,
records, and operations, and Lender shall be satisfied as
to their condition.
(f) Borrower shall have paid to Lender all fees, costs,
and expenses specified in this Agreement and the Related
Documents as are then due and payable.
(g) There shall not exist at the time of any Advance a
condition which would constitute an Event of Default
under this Agreement, and Borrower shall have delivered
to Lender the compliance certificate called for in the
paragraph below titled "Compliance Certificate."
Making Loan Advances. Advances under the credit
facility, as well as directions for payment from
Borrower's accounts, shall be requested in writing by
authorized persons. Each Advance shall be conclusively
deemed to have been made at the request of and for the
benefit of Borrower (a) when credited to any deposit
account of Borrower maintained with Lender or (b) when
advanced in accordance with the instructions of an
authorized person. Lender. at its option, may set a
cutoff time, after which all requests for Advances will
be treated as having been requested on the next
succeeding Business Day. Under no circumstances shall
Lender be required to make an Advance in an amount less
than $1,000.
Mandatory Loan Repayments. If at any time the aggregate
principal amount of the outstanding Advances shall exceed
the applicable Borrowing Base, Borrower, immediately upon
written or oral notice from Lender, shall pay to Lender
an amount equal to the difference between the
3
outstanding principal balance of the Advances and the
Borrowing Base. On the Expiration Date, Borrower shall
pay to Lender in full the aggregate unpaid principal
amount of all Advances then outstanding and all accrued
unpaid interest, together with all other applicable fees,
costs and charges, if any, not yet paid.
Loan Account. Lender shall maintain on its books a
record of account in which Lender shall make entries for
each Advance and such other debits and credits as shall
be appropriate in connection with the credit facility.
Lender shall provide Borrower with periodic statements of
Borrower's account, which statements shall be considered
to be correct and conclusively binding on Borrower unless
Borrower notifies Lender to the contrary within thirty
(30) days after Borrower's receipt of any such statement
which Borrower deems to be incorrect.
COLLATERAL. To secure payment of the Line of Credit and
performance of all other Loans, obligations and duties
owed by Borrower to Lender, Borrower (and others, if
required) shall grant to Lender Security Interests in
such property and assets as Lender may require (the
"Collateral"), including without limitation Borrower's
present and future Accounts and general intangibles.
Lender's Security Interests in the Collateral shall be
continuing liens and shall include the proceeds and
products of the Collateral, including without limitation
the proceeds of any insurance. With respect to the
Collateral, Borrower agrees and represents and warrants
to Lender:
Perfection of Security Interests. Borrower agrees to
execute such financing statements and to take whatever
other actions are requested by Lender to perfect and
continue Lender's Security Interests in the Collateral.
Upon request of Lender, Borrower will deliver to Lender
any and all of the documents evidencing or constituting
the Collateral, and Borrower will note Lender's interest
upon any and all chattel paper if not delivered to Lender
for possession by Lender. Contemporaneous with the
execution of this Agreement, Borrower will execute one or
more UCC financing statements and any similar statements
as may be required by applicable law, and will file such
financing statements and all such similar statements in
the appropriate location or locations. Borrower hereby
appoints Lender as its irrevocable attorney-in-fact for
the purpose of executing any documents necessary to
perfect or to continue any Security Interest. Lender may
at any time, and without further authorization from
Borrower, file a carbon, photograph, facsimile, or other
reproduction of any financing statement for use as a
financing statement. Borrower will reimburse Lender for
all expenses for the perfection, termination, and the
continuation of the perfection of Lender's security
interest in the Collateral. Borrower promptly will
notify Lender of any change in Borrower's name including
any change to the assumed business names of Borrower.
Borrower also promptly will notify Lender of any change
in Borrower's Social Security Number or Employer
Identification Number. Borrower further agrees to notify
Lender in writing prior to any change in address or
location of Borrower's principal governance office or
should Borrower merge or consolidate with any other
entity.
Collateral Records. Borrower does now, and at all times
hereafter shall, keep correct and accurate records of the
Collateral, all of which records shall be available to
Lender or Lender's representative upon demand for
inspection and copying at any reasonable time. With
respect to the Accounts, Borrower agrees to keep and
maintain such records as Lender may require, including
without limitation information concerning Eligible
Accounts and Account balances and agings.
Collateral Schedules. Concurrently with the execution
and delivery of this Agreement, Borrower shall execute
and deliver to Lender a schedule of Accounts and Eligible
Accounts, in form and substance satisfactory to the
Lender. Thereafter Borrower shall execute and deliver to
Lender such supplemental schedules of Eligible Accounts
and such other matters and information relating to
Borrower's Accounts as Lender may request. Supplemental
schedules shall be delivered according to the following
schedule: no less than monthly, within 10 days after the
end of each month end, but In any event at such other
frequency as Lender may require. Supplemental schedules
shall include, but not limited to, an accounts receivable
aging and a schedule of accounts payable.
Representations and Warranties Concerning Accounts. With
respect to the Accounts, Borrower represents and warrants
to Lender: (a) Each Account represented by Borrower to
been Eligible Account for purposes of this Agreement
conforms to the requirements of the definition of an
Eligible Account; (b) All Account information listed on
schedules delivered to Lender will be true and correct,
subject to immaterial variance; and (c) Lender, its
assigns, or agents shall have the right at any time and
at Borrower's expense to inspect, examine, and audit
Borrowees records and to confirm with Account Debtors the
accuracy of such Accounts.
Remittance Account. Borrower agrees that Lender may at
any time require Borrower to institute procedures whereby
the payments and other proceeds of the Accounts shall be
paid by the Account Debtors under a remittance account or
lock box arrangement with Lender, or Lender's agent, or
with one or more financial institutions designated by
Lender. Borrower further agrees that, if no Event of
Default exists under this Agreement, any and all of such
funds received under such a remittance account or lock
box arrangement shall, at Lender's sole election and
discretion, either be (a) paid or turned over to
Borrower; (b) deposited into one or more accounts for the
benefit of Borrower (which deposit accounts shall be
subject to a security assignment in favor of Lender); (c)
deposited into one or more accounts for the joint benefit
of Borrower and Lender (which deposit accounts shall
likewise be subject to a security assignment in favor of
Lender); (d) paid or turned over to Lender to be applied
to the Indebtedness in such order and priority as Lender
may determine within its sole discretion; or (e) any
combination of the foregoing as Lender shall determine
from time to time. Borrower further agrees that, should
one or more Events of Default exist, any and all funds
received under such a remittance account or lock box
arrangement shall be paid or turned over to Lender to be
applied to the Indebtedness, again in such order and
priority as Lender may determine within its sole
discretion.
REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Lender, as of the date of this Agreement, as
of the date of each disbursement of Loan proceeds, as of
the date of any renewal, extension or modification of any
Loan, and at all times any Indebtedness exists:
Organization. Borrower is a corporation which is duly
organized, validly existing, and in good standing under
the laws of the Commonwealth of Virginia and is validly
existing and in good standing in all states in which
Borrower is doing business. Borrower has the full power
and authority to own its properties and to transact the
businesses in which it is presently engaged or presently
proposes to engage. Borrower also is duly qualified as
a foreign corporation and is in good standing in all
states in which the failure to so qualify would have a
material adverse effect on its businesses or financial
condition.
Authorization. The execution, delivery, and performance
of this Agreement and all Related Documents by Borrower,
to the extent to be executed, delivered or performed by
Borrower, have been duly authorized by all necessary
action by Borrower; do not require the consent or
approval of any other person, regulatory authority or
governmental body; and do not conflict with, result in a
violation of, or constitute a default under (a) any
provision of its articles of incorporation or
organization, or bylaws, or any agreement or other
instrument binding upon Borrower or (b) any law,
governmental regulation, court decree, or order
applicable to Borrower.
Financial Information. Each financial statement of
Borrower supplied to Lender truly and completely
disclosed Borrower's financial condition as of the date
of the statement, and there has been no material adverse
change in Borrower's financial condition subsequent to
the date of the most recent financial statement supplied
to Lender. Borrower has no material contingent
obligations except as disclosed in such financial
statements.
Legal Effect. This Agreement constitutes, and any
instrument or agreement required hereunder to be given by
Borrower when delivered will constitute, legal, valid and
binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.
Properties. Except for Permitted Liens, Borrower owns
and has good title to all of Borrower's properties free
and clear of all Security Interests, and has not executed
any security documents or financing statements relating
to such properties. All of Borrowees properties are
titled in Borrowees legal name, and Borrower has not
used, or filed a financing statement under, any other
name for at least the last five (5) years.
Hazardous Substances. The terms "hazardous waste,"
"hazardous substance," "disposal," "release," and
"threatened release," as used in this
4
Agreement, shall have the same meanings as set forth in
the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, 42 U.S.C. Section
9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499
("XXXX"), the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq., the Resource Conservation
and Recovery Act, 49 U.S.C. Section 6901, et seq., or
other applicable state or Federal laws, rules, or
regulations adopted pursuant to any of the foregoing.
Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that: (a)
During the period of Borrower's ownership of Borrower's
properties, there has been no use, generation,
manufacture, storage, treatment, disposal, release or
threatened release of any hazardous waste or substance by
any person on, under, or about any such properties. (b)
Borrower has no knowledge of, or reason to believe that
there has been (i) any use, generation, manufacture,
storage, treatment, disposal, release, or threatened
release of any hazardous waste or substance by any prior
owners or occupants of any such properties, or (ii) any
actual or threatened litigation or claims of any kind by
any person relating to such matters. (c) Neither Borrower
nor any tenant, contractor, agent or other authorized
user of any such properties shall use, generate,
manufacture, store, treat, dispose of, or release any
hazardous waste or substance on, under, or about any such
properties; and any such activity shall be conducted in
compliance with all applicable federal, state, and local
laws, regulations, and ordinances, including without
limitation those laws, regulations and ordinances
described above. Borrower authorizes Lender and its
agents to enter upon such properties to make such
inspections and tests as Lender may deem appropriate to
determine compliance of such properties with this section
of the Agreement. Any inspections or tests made by
Lender shall be for Lender's purposes only and shall not
be construed to create any responsibility or liability on
the part of Lender to Borrower or to any other person.
The representations and warranties contained herein are
based on Borrower's due diligence in investigating such
properties for hazardous waste. Borrower hereby (a)
releases and waives any future claims against Lender for
indemnity or contribution in the event Borrower becomes
liable for cleanup or other costs under any such laws,
and (b) agrees to indemnify and hold harmless Lender
against any and all claims, losses, liabilities, damages,
penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from a breach of
this section of the Agreement or as a consequence of any
use, generation, manufacture, storage, disposal, release
or threatened release occurring prior to Borrower's
ownership or interest in such properties, whether or not
the same was or should have been known to Borrower. The
provisions of this section of the Agreement, including
the obligation to indemnify, shall survive the payment of
the Indebtedness and the termination or expiration of
this Agreement and shall not be affected by Lender's
acquisition of any interest in any such properties,
whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim,
investigation, administrative proceeding or similar
action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has
occurred which may materially adversely affect Borrower's
financial condition or properties, other than litigation,
claims, or other events, if any, that have been disclosed
to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all tax
returns and reports of Borrower that are or were required
to be filed, have been filed, and all taxes, assessments
and other governmental charges have been paid in full,
except those presently being or to be contested by
Borrower in good faith in the ordinary course of business
and for which adequate reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to
Lender in writing, Borrower has not entered into or
granted any Security Agreements, or permitted the filing
or attachment of any Security Interests on or affecting
any of the Collateral directly or indirectly securing
repayment of Borrower's Loan and Note, that would be
prior or that may in any way be superior to Lender's
Security Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security
Agreements directly or indirectly securing repayment of
Borrower's Loan and Note and all of the Related Documents
are binding upon Borrower as well as upon Borrower's
successors, representatives and assigns, and are legally
enforceable in accordance with their respective terms.
Commercial Purposes. Borrower intends to use the Loan
proceeds solely for business or commercial related
purposes.
Employee Benefit Plans. Each employee benefit plan as to
which Borrower may have any liability complies in all
material respects with all applicable requirements of law
and regulations, and (I) no Reportable Event nor
Prohibited Transaction (as defined in ERISA) has occurred
with respect to any such plan, (ii) Borrower has not
withdrawn from any such plan or initiated steps to do so,
and (iii) no steps have been taken to terminate any such
plan.
Location of Borrower's Offices and Records. Borrower's
place of business, or Borrower's Chief executive office,
if Borrower has more than one place of business, is
located at 0000 Xxxxxxxx Xxxx, Xxxxxxxx, XX 00000-0000.
Unless Borrower has designated otherwise in writing this
location is also the office or offices where Borrower
keeps its records concerning the Collateral.
Information. All information heretofore or
contemporaneously herewith furnished by Borrower to
Lender for the purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and
all information hereafter furnished by or on behalf of
Borrower to Lender will be, true and accurate in every
material respect on the date as of which such information
is dated or certified; and none of such information is or
will be incomplete by omitting to state any material fact
necessary to make such information not misleading.
Survival of Representations and Warranties. Borrower
understands and agrees that Lender, without independent
investigation, is relying upon the above representations
and warranties in extending Loan Advances to Borrower.
Borrower further agrees that the foregoing
representations and warranties shall be continuing in
nature and shall remain in full force and effect until
such time as Borrower's Indebtedness shall be paid in
full, or until this Agreement shall be terminated in the
manner provided above, whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees
with Lender that, while this Agreement is in effect,
Borrower will:
Litigation. Promptly inform Lender in writing of (a) all
material adverse changes in Borrower's financial
condition, and (b) all existing and all threatened
litigation, claims, investigations, administrative
proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial
condition of Borrower or the financial condition of any
Guarantor.
Financial Records. Maintain its books and records in
accordance with generally accepted accounting principles,
applied on a consistent basis, and permit Lender to
examine and audit Borrower's books and records at all
reasonable times.
Financial Statements. Furnish Lender with, as soon as
available, but in no event later than ninety (90) days
after the end of each fiscal year, Borrower's balance
sheet and income statement for the year ended, audited by
a certified public accountant satisfactory to Lender, who
shall state that such financial statements present fairly
the consolidated financial position of Borrower as of the
date of such financial statements and the results of its
operations for the period covered by such financial
statements in conformity with generally accepted
accounting principles applied on a consistent basis
(except for changes in the application of which such
accountants concur) and shall not contain any "going
concern" or like qualification or exception or
qualifications arising out of the scope of the audit,
and, as soon as available, but in no event later than ten
(10) days after the end of each month, Borrower's balance
sheet and profit and loss statement for the period ended,
prepared and certified as correct to the best knowledge
and belief by Borrower's chief financial officer or other
officer or person acceptable to Lender. All financial
reports required to be provided under this Agreement
shall be prepared in accordance with generally accepted
accounting principles, applied on a consistent basis, and
certified by Borrower as being true and correct.
Additional Information. Furnish such additional
information and statements, lists of assets and
liabilities, agings of receivables and payables,
inventory schedules, budgets, forecasts, tax returns, and
other reports with respect to Borrower's financial
condition and business operations as Lender may request
from time to time.
5
Insurance. Maintain fire and other risk insurance,
public liability insurance, and such other insurance as
Lender may from time to time reasonably require with
respect to Borrower's properties and operations, in form,
amounts, coverages and with insurance companies
acceptable to Lender. Borrower, upon request of Lender,
will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender,
including stipulations that coverages will not be
canceled or diminished without at least thirty (30) days'
prior written notice to Lender. Each insurance policy
also shall include an endorsement providing that coverage
in favor of Lender will not be impaired in any way by any
act, omission or default of Borrower or any other person.
In connection with all policies covering assets in which
Lender holds or is offered a security interest for the
Loans, Borrower will provide Lender with such loss
payable or other endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of
Lender, reports on each existing insurance policy showing
such information as Lender may reasonably request,
including without limitation the following: (a) the name
of the insurer; (b) the risks insured; (c) the amount of
the policy; (d) the properties insured; (e) the then
current property values on the basis of which insurance
has been obtained, and the manner of determining those
values; and (f) the expiration date of the policy. In
addition, upon request of Lender (however not more often
than annually), Borrower will have an independent
appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of
any Collateral. The cost of such appraisal shall be paid
by Borrower.
Other Agreements. Comply with all terms and conditions
of all other agreements, whether now or hereafter
existing, between Borrower and any other party and notify
Lender immediately in writing of any default in
connection with any other such agreements.
Loan Fees and Charges. In addition to all other agreed
upon fees and charges, pay the following: (a)
Administrative Fee. The obligation of Borrower to pay
the Administrative Fee shall commence on the date hereof
and shall continue until the Loans have been fully and
completely paid and discharged. Commencing on the last
day of the month after the date hereof and continuing on
the last day of each subsequent month, until the Loans
have been fully and completely paid and discharged,
Borrower shall pay the Administrative Fee due for the
month (or partial month). Any accrued and unpaid portion
of this fee shall be paid on the Termination Date. (b)
Commitment Fee. The obligation of Borrower to pay the
Commitment Fee shall commence on the date hereof and
shall continue until the Indebtedness has been fully and
completely paid and discharged. Commencing on the last
day of the quarter following the date hereof and
continuing on each subsequent quarter thereafter until
the Indebtedness has been fully and completely
discharged, Borrower shall pay the Commitment Fee due for
the quarter (or portion thereof). Any accrued and unpaid
portion of this fee shall be paid on the Termination
Date.
Loan Proceeds. Use all Loan proceeds solely for
Borrower's business operations, unless specifically
consented to the contrary by Lender in writing.
Taxes, Charges and Liens. Pay and discharge when due all
of its indebtedness and obligations, including without
limitation all assessments, taxes, governmental charges,
levies and liens, of every kind and nature, imposed upon
Borrower or its properties, income, or profits, prior to
the date on which penalties would attach, and all lawful
claims that, if unpaid, might become a lien or charge
upon any of Borrower's properties, income, or profits.
Provided however, Borrower will not be required to pay
and discharge any such assessment, tax, charge, xxxx,
xxxx or claim so long as (a) the legality of the same
shall be contested in good faith by appropriate
proceedings, and (b) Borrower shall have established on
its books adequate reserves with respect to such
contested assessment, tax, charge, levy, lien, or claim
in accordance with generally accepted accounting
practices. Borrower, upon demand of Lender, will furnish
to Lender evidence of payment of the assessments, taxes,
charges, levies, liens and claims and will authorize the
appropriate governmental official to deliver to Lender at
any time a written statement of any assessments, taxes,
charges, levies, liens and claims against Borrower's
properties, income, or profits.
Performance. Perform and comply with all terms,
conditions, and provisions set forth in this Agreement
and in the Related Documents in a timely manner, and
promptly notify Lender if Borrower learns of the
occurrence of any event which constitutes an Event of
Default under this Agreement or under any of the Related
Documents.
Operations. Maintain executive and management personnel
with substantially the same qualifications and experience
as the present executive and management personnel;
provide written notice to Lender of any change in
executive and management personnel; conduct its business
affairs in a reasonable and prudent manner and in
compliance with all applicable federal, state and
municipal laws, ordinances, rules and regulations
respecting its properties, charters, businesses and
operations, including without limitation, compliance with
the Americans With Disabilities Act and with all minimum
funding standards and other requirements of ERISA and
other laws applicable to Borrower's employee benefit
plans.
Inspection. Permit employees or agents of Lender at any
reasonable time to inspect any and all Collateral for the
Loan or Loans and Borrower's other properties and to
examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books,
accounts, and records. If Borrower now or at any
time hereafter maintains any records (including without
limitation computer generated records and computer
software programs for the generation of such records) in
the possession of a third party, Borrower, upon request
of Lender, shall notify such party to permit Lender free
access to such records at all reasonable times and to
provide Lender with copies of any records it may request,
all at Borrower's expense.
Compliance Certificate. Unless waived in writing by
Lender, provide Lender at least annually and at the time
of each disbursement of Loan proceeds with a certificate
executed by Borrower's chief financial officer, or other
officer or person acceptable to Lender, certifying that
the representations and warranties set forth in this
Agreement are true and correct as of the date of the
certificate and further certifying that, as of the date
of the certificate, no Event of Default exists under this
Agreement.
Environmental Compliance and Reports. Borrower shall
comply in all respects with all environmental protection
federal, state and local laws, statutes, regulations and
ordinances; not cause or permit to exist, as a result of
an intentional or unintentional action or omission on its
part or on the part of any third party, on property owned
and/or occupied by Borrower, any environmental activity
where damage may result to the environment, unless such
environmental activity is pursuant to and in compliance
with the conditions of a permit issued by the appropriate
federal, state or local governmental authorities; shall
furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy of any notice,
summons, lien, citation, directive, letter or other
communication from any governmental agency or
instrumentality concerning any intentional or
unintentional action or omission on Borrower's part in
connection with any environmental activity whether or not
there is damage to the environment and/or other natural
resources.
Additional Assurances. Make, execute and deliver to
Lender such promissory notes, mortgages, deeds of trust,
security agreements, financing statements, instruments,
documents and other agreements as Lender or its attorneys
may reasonably request to evidence and secure the Loans
and to perfect all Security Interests.
RECOVERY OF ADDITIONAL COSTS. If the imposition of or
any change in any law, rule, regulation or guideline, or
the interpretation or application of any thereof by any
court or administrative or governmental authority
(including any request or policy not having the force of
law) shall impose, modify or make applicable any taxes
(except U.S. federal, state or local income or franchise
taxes imposed on Lender), reserve requirements, capital
adequacy requirements or other obligations which would
(a) increase the cost to Lender for extending or
maintaining the credit facilities to which this Agreement
relates, (b) reduce the amounts payable to Lender under
this Agreement or the Related Documents, or (c) reduce
the rate of return on Lenders capital as a consequence of
Lender's obligations with respect to the credit
facilities to which this Agreement relates, then Borrower
agrees to pay Lender such additional amounts as will
compensate Lender therefor, within five (5) days after
Lender's written demand for such payment, which demand
shall be accompanied by an explanation of such imposition
or charge and a calculation in reasonable detail of the
additional amounts payable by Borrower, which explanation
and calculations shall be conclusive in the absence of
manifest error.
6
NEGATIVE COVENANTS. Borrower covenants and agrees with
Lender that while this Agreement is in effect, Borrower
shall not, without the prior written consent of Lender:
(Consent of Lender shall not be unreasonably withheld)
Indebtedness and Liens. (a) Except for trade debt
incurred in the normal course of business and
indebtedness to Lender contemplated by this Agreement,
create, incur or assume indebtedness for borrowed money,
including capital leases, (b) except as allowed as a
Permitted Lien, sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of
Borrower's assets, or (c) sell with recourse any of
Borrower's accounts, except to Lender.
Continuity of Operations. (a) Engage in any business
activities substantially different than those in which
Borrower is presently engaged, (b) cease operations,
liquidate, merge, transfer, acquire or consolidate with
any other entity, change ownership, change its name,
dissolve or transfer or sell Collateral out of the
ordinary course of business, or (c) purchase or retire
any of Borrower's outstanding shares or alter or amend
Borrower's capital structure.
Loans, Acquisitions and Guaranties. (a) Loan, invest in
or advance money or assets over $50,000 in aggregate (b)
purchase, create or acquire any interest in another
enterprise or entity, or (c) incur any obligation as
surety or guarantor other than in the ordinary course of
business.
CESSATION OF ADVANCES. If Lender has made any commitment
to make any Loan to Borrower, whether under this
Agreement or under any other agreement, Lender shall have
no obligation to make Loan Advances or to disburse Loan
proceeds if: (a) Borrower or any Guarantor is in default
under the terms of this Agreement or any of the Related
Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor
becomes insolvent, files a petition in bankruptcy or
similar proceedings, or is adjudged a bankrupt; (c) there
occurs a material adverse change in Borrowees financial
condition, in the financial condition of any Guarantor,
or in the value of any Collateral securing any Loan; (d)
any Guarantor seeks, claims or otherwise attempts to
limit, modify or revoke such Guarantor's guaranty of the
Loan or any other loan with Lender; or (e) Lender in good
xxxxx xxxxx itself insecure, even though no Event of
Default shall have occurred.
REQUESTS FOR LOAN ADVANCES AND LETTERS OF CREDIT. (a) Any
requests for an Advance must be received by Lender not
later than 1:00 p.m. (Washington, D. C. time) on the date
prior to the Advance is to be made. Each request must
specify the amount of the Advance, and at the option of
Lender, shall be accompanied by a current Borrowing Base
Certificate, which may be transmitted by telecopy to
Lender at (000) 000-0000, or such other number as Lender
may designate in written notice to Borrower. If a
Borrowing Base Certificate is transmitted by telecopy,
the Borrower shall maintain the original of such
Borrowing Base Certificate as a permanent record for so
long as any of the Advances remain outstanding and shall
allow Lender to inspect such Borrowing Base Certificate
and shall provide copies of such original to Lender upon
its request therefor. The proceeds of the Advances will
be credited to the Operating Account. Advances may be
requested by those individuals designated by Borrower
from time to time in written instructions delivered t
Lender; provided, however, that Borrower shall remain
liable with respect to any Loan disbursed by Lender i
good faith hereunder, even if such an Advance is
requested by an individual who has not been designated.
Borrower agrees to confirm in writing from time to time,
when and as requested by Lender, the purpose for which
the proceeds of each Advance are used. Each request for
and Advance must also be accompanied by copy(ies) of the
supporting invoice(s), which are to be confirmed by an
authorized representative of the United States Government
or commercial entity prior to funding the requested
Advance. (b) Any request for a letter of credit to be
issued must be made by delivery to Lender, not later than
five (5) Business Days prior to the date of issuance of
such requested letter of credit, of a properly completed
and executed application and agreement (the
"Application") in form and content satisfactory to
Lender. The fee for each Letter of Credit shall be an
amount equal to an opening fee of $0.00, plus a
non-refundable commission of 0.00% per annum of the
undrawn portion of the Letter of Credit, payable in
advance upon issuance and thereafter on each anniversary
of the date of issuance of such Letter of Credit. Lender
is authorized to advance on behalf of Borrower as a loan
all sums required to be paid by Borrower to Lender in
respect of any such Letter of Credit pursuant to the
terms of the Application (including the fee set forth
above), provided that Lender may, but shall not be
obligated to make such Loans, if, after the disbursement
thereof, the aggregate principal amount of the Loans then
outstanding would exceed the Maximum Amount. The
provisions of the Application are deemed incorporated in
this Agreement by this reference and shall be binding
upon Lender and Borrower as if fully set forth herein.
If a conflict exists between the terms of the Application
and any other Loan Document, the terms of the Application
shall control with respect to any Letter of Credit issued
pursuant to such Application but not as to other matters
governed by this Agreement.
ADDITIONAL DEFINITIONS.
Administrative Fee. The words "Administrative Fee" means
the fee in the amount of $750.00 for each calendar month
(or partial month) to be paid by Borrower to Lender
pursuant to the paragraph entitled Loan Fees and Charges
in consideration of the expenses incurred by Lender in
connection with administering the Loans and monitoring
the Collateral.
Borrowing Base Certificate. The words "Borrowing Base
Certificate" mean a certificate of Borrower, in form and
substance satisfactory to Lender, containing a
computation of the Borrowing Base as of the date depicted
therein and a certification that no Default or Event of
Default has occurred or is continuing.
Closing. The word "Closing" means the date on which the
initial disbursement of the Loans is made. Commercial
Customer. The words "Commercial Customer" mean any
Customer other than the Government.
Commitment Fee. The words "Commitment Fee" mean the
quarterly fee to be paid by Borrower to Lender pursuant
to the paragraph entitled Loan Fees and Charges in
consideration of the commitment by Lender to make Loans
hereunder. The Commitment Fee due for each calendar
quarter (or portion thereof) shall equal the product of
the Commitment Fee Rate in effect for such quarter (or
portion thereof) multiplied by the difference between
$1,500,000.00 and the sum of the average daily principal
balance of the Loans during such quarter (or applicable
portion thereof) plus the average daily face amount of
all Letters of Credit outstanding during such quarter (or
applicable portion thereof).
Commitment Fee Rate. The words "Commitment Fee Rate"
mean the rate, expressed as a percentage, calculated as
by multiplying 0.50% by a fraction, the numerator of
which is the number of days in the calendar quarter, or
shorter period, for which the Commitment Fee Rate is
being calculated and denominator of which is 360.
Customer. The word "Customer" means any Person obligated
on an Account.
7
Eligible Billed Commercial Receivable. The words
"Eligible Billed Commercial Receivable" mean any Eligible
Billed Receivable which does not arise out of a prime
contract between Borrower and the Government; provided
that, for so long as more than 50% of the Eligible
Accounts due from any Commercial Customer remains unpaid
for more than 90 days following the date of initial
invoice to such Commercial Customer for such Eligible
Accounts, then no Accounts of such Commercial Customer
may be included as Eligible Billed Commercial
Receivables.
Eligible Billed Government Receivable. The words
"Eligible Billed Government Receivable" mean any Eligible
Billed Receivable which arises out of a prime contract
between Borrower and the Government.
Eligible Billed Receivable. The words "Eligible Billed
Receivable" mean any Eligible Account that has been
billed to the appropriate Customer and is aged less than
90 days from the date of the initial invoice.
General Intangibles. "General Intangibles" means
collectively and includes all of the following, whether
now owned or hereafter acquired by Borrower: chooses in
action, causes in action and all other intangible
property of every kind and nature, including, without
limitation, corporate or other business records,
inventions, designs, trademarks, trademark application,
trade names, trade secrets, goodwill, registrations,
copyrights, licenses, franchises, customer lists, tax
refunds, tax refunds claims, rights of claims against
carriers and shippers, leases and rights to
indemnification, together with all property which is
included with all property which is included within the
definition of "General Intangibles" as set forth in the
UCC except for patents and patent applications.
Government Final Invoice Receivable. The words
"Government Final Invoice Receivable" mean any Account
relating to the last payment due to Borrower under a
prime contract between Borrower and the Government unless
(a) such contract is a "Fixed Price Contract (as defined
in Federal Acquisition Regulation Part 16.2, or any
successor regulation) which does not include any
provisions for progress payments, incentive arrangements,
or price redetermination or (b) Lender has consented in
writing to the exclusion of such Account from the
category of Government Final Invoice Receivables.
Government. The word "Government" means the United
States of America or any agency or instrumentality
thereof.
Maximum Amount. The words "Maximum Amount" mean, at any
time, the lesser of (a)$1,500,000-00 or (b) the then
applicable Borrowing Base.
Operating Account. The words "Operating Account" mean
the demand deposit account maintained with Lender by
Borrower on which Borrower draws checks to pay its
operating expenses.
Person. The word "Person" means an individual,
partnership, corporation, business trust, joint stock
company, trust, unincorporated association, joint
venture, government authority or other entity of whatever
nature.
Termination Date. The words "Termination Date" mean
November 30, 1996, and any extension or extensions
thereof granted by Lender in its sole discretion.
ADDITIONAL AFFIRMATIVE COVENANTS.
Dividend Payments. Borrower may pay cash dividends on
its stock from time to time so long as no Event of
Default has occurred and is continuing or would result
from the payment of dividends.
Payroll Tax Payments. Borrower will furnish Lender
within fifteen (15) days of the end of each quarter,
copies of the Borrower's 941 tax statements.
SEC Reports and Filings. Borrower will furnish Lender
within fifteen (15) days of filing with the SEC, copies
of all filed reports.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon
and rights of setoff against the moneys, securities or
other property of Borrower given to Lender by law, Lender
shall have, with respect to Borrower's obligations to
Lender under this Agreement and to the extent permitted
by law, a contractual possessory security interest in and
a right of setoff against, and Borrower hereby assigns,
conveys, delivers, pledges, and transfers to Lender all
of Borrower's right, title, and interest in and to all
deposits, moneys, securities, and other property of
Borrower now or hereafter in the possession of or on
deposit with Lender, whether held in a general or special
account or deposit, whether held jointly with someone
else, or whether held for safekeeping or otherwise,
excluding however all XXX, Xxxxx, and trust accounts.
Every such security interest and right of setoff may be
exercised without demand upon or notice to Borrower. No
security interest or right of setoff shall be deemed to
have been waived by any act or conduct on the part of
Lender or by any neglect to exercise such right of setoff
or to enforce such security interest or by any delay in
so doing. Every right of setoff and security interest
shall continue in full force and effect until such right
of setoff or security interest is specifically waived or
released by an instrument in writing executed by Lender.
EVENTS OF DEFAULT. Each of the following shall
constitute an Event of Default under this Agreement:
Default on Indebtedness. Failure of Borrower to make any
payment when due on the Indebtedness.
Other Defaults. Failure of Borrower or any Grantor to
comply with or to perform when due any other term,
obligation, covenant or condition contained in this
Agreement or in any of the Related Documents, or failure
of Borrower to comply with or to perform any other term,
obligation, covenant or condition contained in any other
agreement between Lender and Borrower.
Default In Favor of Third Parties. Should Borrower or
any Grantor default under any loan, extension of credit,
security agreement, purchase or sales agreement, or any
other agreement, in favor of any other creditor or person
that may materially affect any of Borrowers property or
Borrower's or any Grantor's ability to repay the Loans or
perform their respective obligations under this Agreement
or any of the Related Documents.
False Statements. Any warranty, representation or
statement made or furnished to Lender by or on behalf of
Borrower or any Grantor under this Agreement or the
Related Documents is false or misleading in any material
respect at the time made or furnished, or becomes false
or misleading at any time thereafter.
Defective Collateralization. This Agreement or any of
the Related Documents ceases to be in full force and
effect (including failure of any Security Agreement to
create a valid and perfected Security Interest) at any
time and for any reason.
Insolvency. The dissolution or termination of Borrower's
existence as a going business, or a trustee or receiver
is appointed for Borrower or for all or a substantial
portion of the assets of Borrower, or Borrower makes a
general assignment for the benefit of Borrowers
creditors, or Borrower files for bankruptcy, or an
involuntary bankruptcy petition is filed against Borrower
and such involuntary petition remains undismissed for
sixty (60)days.
Creditor or Forfeiture Proceedings. Commencement of
foreclosure or forfeiture proceedings, whether by
judicial proceeding, self-help, repossession or any other
method, by any creditor of Borrower, any creditor of any
Grantor against any collateral securing the Indebtedness,
or by any governmental agency. This includes a
garnishment, attachment, or levy on or of any of
Borrower's deposit accounts with Lender.
Events Affecting Guarantor. Any of the preceding events
occurs with respect to any Guarantor of any of the
Indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness.
8
Change In Ownership. Any change in ownership of
twenty-five percent (25%) or more of the common stock of
Borrower.
Adverse Change. A material adverse change occurs in
Borrower's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is
impaired.
Insecurity. Lender, in good faith, deems itself
insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default
shall occur, except where otherwise provided in this
Agreement or the Related Documents, all commitments and
obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will
terminate (including any obligation to make Loan Advances
or disbursements), and, at Lender's option, all sums
owing in connection with the Loans, including all
principal, interest, and all other fees, costs and
charges, if any, will become immediately due and payable,
all without notice of any kind to Borrower, except that
in the case of an Event of Default of the type described
in the "Insolvency" subsection above, such acceleration
shall be automatic and not optional. In addition, Lender
shall have all the rights and remedies provided in the
Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable
law, all of Lender's rights and remedies shall be
cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy
shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall
not affect Lender's right to declare a default and to
exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous
provisions are a part of this Agreement:
Amendments. This Agreement, together with any Related
Documents, constitutes the entire understanding and
agreement of the parties as to the matters set forth in
this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and
signed by the party or parties sought to be charge for
bound by the alteration or amendment.
Applicable Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the
Commonwealth of Virginia. Lender and Borrower hereby
waive the right to any jury trial in any action,
proceeding, or counterclaim brought by either party
against the other.
Caption Headings. Caption headings in this Agreement are
for convenience purposes only and are not to be used to
interpret or define the provisions of this Agreement.
Multiple Parties; Corporate Authority. All obligations
of Borrower under this Agreement shall be joint and
several, and all references to Borrower shall mean each
and every Borrower. This means that each of the
Borrowers signing below is responsible for all
obligations in this Agreement.
Consent to Loan Participation. Borrower agrees that
Lender may at any time grant participating interests in
the Loans to one or more purchasers (each a
"Participant"). In such event, whether or not upon
notice to Borrower, Lender shall remain responsible for
the performance of its obligations hereunder, and Lender
shall continue to deal solely and directly with Borrower
in connection with Lender's rights and obligations under
this Agreement. Any agreement pursuant to which Lender
may grant such a participation interest shall provide
that Lender shall retain the sole right and
responsibility to enforce the obligations of Borrower
hereunder including, without limitation, the right to
approve any amendment, modification or waiver of any
provision of concerning the Loans; provided that such
participation agreement may provide that Lender will not
agree to any such modification, amendment or waiver which
would have the effect increasing or extending the term
hereof or subjecting Lender to any additional obligation,
reducing the principal of or rate of interest on any
Loan, postponing the date fixed for any payment of
principal or of interest on any Loan or fees hereunder
without the consent of the Participant. Lender may at
any time assign all or any portion of its rights with
respect to the Loans to a Federal Reserve Bank. No such
assignment shall release Lender from its obligations
hereunder. Lender may furnish any information concerning
Borrower in its possession from time to time to
Participants (including prospective Participants) and may
furnish such information in response to credit inquiries
consistent with general banking practice.
Costs and Expenses. Borrower agrees to pay upon demand
all of Lender's out-of-pocket expenses incurred in
connection with this Agreement or in connection with the
Loans made pursuant to this Agreement. Subject to any
limits under applicable law, if Lender hires an attorney
to help enforce this Agreement or to collect any
Indebtedness, Borrower agrees to pay Lender's attorney
fees equal to 25.000% of the principal balance due on the
Note, and all of Lender's other collection expenses,
whether or not there is a lawsuit and including legal
expenses for bankruptcy proceedings.
Notices. All notices required to be given under this
Agreement shall be given in writing, may be sent by
telefacsimilie, and shall be effective when actually
delivered if hand delivered or when deposited with a
nationally recognized overnight courier or deposited as
certified or registered mail in the United States
mail,first class, postage prepaid, addressed to the party
to whom the notice is to be given at the address shown
above. Any party may change its address for notices
under this Agreement by giving formal written notice to
the other parties, specifying that the purpose of the
notice is to change the party's address. To the extent
permitted by applicable law, if there is more than one
Borrower, notice to any Borrower will constitute notice
to all Borrowers. For notice purposes, Borrower agrees
to keep Lender informed at all times of Borrower's
current address(es).
Severability. If a court of competent jurisdiction finds
any provision of this Agreement to be invalid or
unenforceable as to any person or circumstance, such
finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances.
If feasible, any such offending provision shall be deemed
to be modified to be within the limits of enforceability
or validity; however, if the offending provision cannot
be so modified, it shall be stricken and all other
provisions of this Agreement in all other respects shall
remain valid and enforceable.
Subsidiaries and Affiliates of Borrower. To the extent
the context of any provisions of this Agreement makes it
appropriate, including without limitation any
representation, warranty or covenant, the word "Borrower"
as used herein shall include all subsidiaries and
affiliates of Borrower. Notwithstanding the foregoing
however, under no circumstances shall this Agreement be
construed to require Lender to make any Loan or other
financial accommodation to any subsidiary or affiliate of
Borrower.
Successors and Assigns. All covenants and agreements
contained by or on behalf of Borrower shall bind its
successors and assigns and shall inure to the benefit of
Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this
Agreement or any interest therein, without the prior
written consent of Lender.
Survival. All warranties, representations, and
agreements of Borrower in this Agreement shall survive
the making of the Loan or Loans contemplated hereby, and
shall be deemed made and redated by Borrower at the time
of the making of each disbursement of Loan proceeds.
Time Is of the Essence. Time is of the essence in the
performance of this Agreement.
Waiver. Indulgence by Lender with respect to any of the
terms and conditions of this Agreement or the failure of
Lender to exercise any of its rights under this Agreement
shall not constitute a waiver thereof, and Borrower shall
remain liable for the strict performance of such terms
and conditions until this Agreement shall be terminated.
No provision of this Agreement may be waived or modified
orally, but all such waivers or modifications shall be in
writing. Whenever the consent of Lender is required
under this Agreement, the granting of such consent by
Lender in one instance shall not constitute Lender's
continuing consent in subsequent instances, and in all
cases such consent may be granted or withheld in the sole
discretion of Lender.
9
THIS LOAN AGREEMENT IS SIGNED, SEALED AND DELIVERED
EFFECTIVE IN ALL RESPECTS AS OF 11/29/95.
-------------------
BORROWER:
Essex Corporation
BY: Xxxxxx X. Xxxxx, Xx.
-------------------- (SEAL)
Name and Title (Print)
Xxxxxx X. Xxxxx, Xx. - VP/Treasurer
LENDER:
SIGNET BANK
BY: Xxxxxxx X. Xxxxxxxx
----------------------
Authorized Officer
10
COMMERCIAL SECURITY AGREEMENT
THIS COMMERCIAL SECURITY AGREEMENT Is entered Into
between Essex Corporation (referred to below
as "Grantor"); and SIGNET BANK (referred to below as
"Lender"). For valuable consideration, Grantor grants
to Lender a security Interest In the Collateral to secure
the Indebtedness and agrees that Lender shall have the
rights stated in this Agreement with respect to the
Collateral, In addition to all other rights which Lender
may have by law.
DEFINITIONS. The following words shall have the
following meanings when used in this Agreement. Terms
not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform
Commercial Code. All references to dollar amounts shall
mean amounts in lawful money of the United States of
America.
Agreement. The word "Agreement" means this Commercial
Security Agreement, as this Commercial Security
Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to
this Commercial Security Agreement from time to time.
Collateral. The word "Collateral" means the following
described property of Grantor, whether now owned or
hereafter acquired, whether now existing or hereafter
arising, and wherever located:
All chattel paper, accounts and general Intangibles,
together with the following specifically described
property: General lntangibles excludes patents and
patent applications
In addition, the word "Collateral" includes all the
following, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever
located:
(a) All accessions, accessories, increases, and
additions to and all replacements of and substitutions
for any property described above.
(b) All products and produce of any of the property
described in this Collateral section.
(c) All accounts, contract rights, general intangibles,
instruments, rents, monies, payments, and all other
rights, arising out of a sale, lease,
or other disposition of any of the property described in
this Collateral section.
(d) All proceeds (including insurance proceeds) from the
sale, destruction, loss, or other disposition of any of
the property described in this Collateral section.
All records and data relating to any of the property
described in this Collateral section, whether in the form
of a writing, photograph, microfilm, microfiche, or
electronic media, together with all of Grantor's right,
title, and interest in and to all computer software
required to utilize, create, maintain, and process any
such records or data on electronic media.
Event of Default. The words "Event of Default" mean and
include without limitation any of the Events of
Default set forth below in the section titled "Events of
Default."
Grantor. The word "Grantor" means Essex Corporation, its
successors and assigns.
Guarantor. The word "Guarantor" means and includes
without limitation each and all of the guarantors,
sureties, and accommodation parties in connection with
the Indebtedness and their personal representatives,
successors and assigns.
Indebtedness. The word "Indebtedness" means the
indebtedness evidenced by the Note, including all
principal, interest, and fees, costs, and expenses, if
any, together with all modifications of and renewals,
replacements and substitutions for any of the foregoing.
"Indebtedness" also includes all other present and future
liabilities and obligations of Grantor to Lender, whether
direct or indirect, matured or unmatured, and whether
absolute or contingent, joint, several or joint and
several, and no matter how the same may be evidenced or
shall arise.
Lender. The word "Lender" means SIGNET BANK, its
successors and assigns.
Note. The word "Note" means the note or credit agreement
dated , 11-29-95 in the principal amount of
$1,500,000.00 from Grantor to Lender, together with all
modifications of and renewals, replacements, and
substitutions for the note or credit agreement.
Related Documents. The words "Related Documents" mean
and include without limitation all promissory notes,
credit agreements, loan agreements, environmental
agreements, guaranties, security agreements, mortgages,
deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in
connection with the Indebtedness.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon
and rights of setoff against the moneys,
securities or other property of Grantor given to Lender
by law, Lender shall have, with respect to Grantor's
obligations to Lender under this Agreement and to the
extent permitted by law, a contractual possessory
security interest in and a right of setoff against, and
Grantor hereby assigns, conveys, delivers, pledges, and
transfers to Lender all of Grantor's right, title, and
interest in and to all deposits, moneys, securities, and
other property of Grantor now or hereafter in the
possession of or on deposit with Lender, whether held in
a general or special account or deposit, whether held
jointly with someone else, or whether held for
safekeeping or otherwise, excluding however all XXX,
Xxxxx, and trust accounts. Every such security interest
and right of setoff may be exercised without demand upon
or notice to Grantor. No security interest or right of
setoff shall be deemed to have been waived by any act or
conduct on the part of Lender or by any neglect to
exercise such right of setoff or to enforce such security
interest or by any delay in so doing. Every right of
setoff and security interest shall continue in full force
and effect until such right of setoff or security
interest is specifically waived or released by
an instrument in writing executed by Lender.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants
to Lender as follows:
Perfection of Security Interest. Grantor agrees to
execute such financing statements and to take whatever
other actions are requested by Lender to perfect and
continue Lender's security interest in the Collateral.
Upon request of Lender, Grantor will deliver to Lender
any and all of the documents evidencing or constituting
the Collateral, and Grantor will note Lender's interest
upon any and all chattel paper if not delivered to Lender
for possession by Lender. Grantor hereby appoints Lender
as its irrevocable attorney-in-fact for the purpose of
executing any documents necessary to perfect or to
continue the security interest granted in this Agreement.
Lender may at any time, and without further authorization
from Grantor, file a carbon, photographic or other
reproduction of any financing statement or of this
Agreement for use as a
11
financing statement. Grantor will reimburse Lender for
all expenses for the perfection and the continuation of
the perfection of Lender's security interest in the
Collateral. Grantor promptly will notify Lender before
any change in Grantor's name including any change to the
assumed business names of Grantor. This Is a continuing
Security Agreement and will continue In effect even
though all or any part of the Indebtedness is paid In
full and even though for a period of time Grantor may not
be Indebted to Lender.
No Violation. The execution and delivery of this
Agreement will not violate any law or agreement governing
Grantor or to which Grantor is a party, and its
certificate or articles of incorporation and bylaws do
not prohibit any term or condition of this Agreement.
Enforceable of Collateral. To the extent the Collateral
consists of accounts, chattel paper, or general
intangibles, the Collateral is enforceable in accordance
with its terms, is genuine, and complies with applicable
laws concerning form, content and manner of preparation
and execution, and all persons appearing to be obligated
on the Collateral have authority and capacity to contract
and are in fact obligated as they appear to be on the
Collateral. At the time any account becomes subject to
a security interest in favor of Lender, the account shall
be a good and valid account representing an undisputed,
bona fide indebtedness incurred by the account debtor,
for merchandise held subject to delivery instructions or
theretofore shipped or delivered pursuant to a contract
of sale, or for services theretofore performed by Grantor
with or for the account debtor; there shall be no setoffs
or counterclaims against any such account; and no
agreement under which any deductions or discounts may be
claimed shall have been made with the account debtor
except those disclosed to Lender in writing.
Removal of Collateral. Grantor shall keep the Collateral
(or to the extent the Collateral consists of intangible
property such as accounts, the records concerning the
Collateral) at Grantor's address shown above, or at such
other locations as are acceptable to Lender. Except in
the ordinary course of its business, including the sales
of inventory, Grantor shall not remove the Collateral
from its existing locations without the prior written
consent of Lender. To the extent that the Collateral
consists of vehicles, or other titled property, Grantor
shall not take or permit any action which would require
application for certificates of title for the vehicles
outside the Commonwealth of Virginia, without the prior
written consent of Lender.
Transactions Involving Collateral. Except for inventory
sold or accounts collected in the ordinary course of
Grantor's business, Grantor shall not sell, offer to
sell, or otherwise transfer or dispose of the Collateral.
Grantor shall not pledge, mortgage, encumber or otherwise
permit the Collateral to be subject to any lien, security
interest, encumbrance, or charge, other than the security
interest provided for in this Agreement, without the
prior written consent of Lender. This includes security
interests even if junior in right to the security
interests granted under this Agreement. Unless waived by
Lender, all proceeds from any disposition of the
Collateral (for whatever reason) shall be held in trust
for Lender and shall not be commingled with any other
funds; provided however, this requirement shall not
constitute consent by Lender to any sale or other
disposition. Upon receipt, Grantor shall immediately
deliver any such proceeds to Lender.
Title. Grantor represents and warrants to Lender that it
holds good and marketable title to the Collateral, free
and clear of all liens and encumbrances except for the
lien of this Agreement. No financing statement covering
any of the Collateral is on file in any public office
other than those which reflect the security interest
created by this Agreement or to which Lender has
specifically consented. Grantor shall defend Lender's
rights in the Collateral against the claims and demands
of all other persons.
Collateral Schedules and Locations. As often as Lender
shall require, and insofar as the Collateral consists of
accounts and general intangibles, Grantor shall deliver
to Lender schedules of such Collateral, including such
information as Lender may require, including without
limitation names and addresses of account debtors and
agings of accounts and general intangibles. Such
information shall be submitted for Grantor and each of
its subsidiaries or related companies.
Maintenance and Inspection of Collateral. Grantor shall
maintain all tangible Collateral in good condition and
repair. Grantor will not commit or permit damage to or
destruction of the Collateral or any part of the
Collateral. Lender and its designated representatives
and agents shall have the right at all reasonable times
to examine, inspect, and audit the Collateral wherever
located.
Taxes, Assessments and Liens. Grantor will pay when due
all taxes, assessments and liens upon the Collateral,
its use or operation, upon this Agreement, upon any
promissory note or notes evidencing the Indebtedness, or
upon any of the other Related Documents. Grantor may
withhold any such payment or may elect to contest any
lien if Grantor is in good faith conducting an
appropriate proceeding to contest the obligation to pay
and so long as Lender's interest in the Collateral is not
jeopardized in Lender's sole opinion. If the Collateral
is subjected to a lien which is not discharged within
fifteen (15) days, Grantor shall deposit with Lender
cash, a sufficient corporate surety bond or other
security satisfactory to Lender in an amount adequate to
provide for the discharge of the lien plus any interest,
costs, attorneys' fees or other charges that could accrue
as a result of foreclosure or sale of the Collateral. In
any contest Grantor shall defend itself and Lender and
shall satisfy any final adverse judgment before
enforcement against the Collateral. Grantor shall name
Lender as an additional obligee under any surety bond
furnished in the contest proceedings.
Compliance With Governmental Requirements. Grantor shall
comply promptly with all laws, ordinances, rules and
regulations of all governmental authorities, now or
hereafter in effect, applicable to the ownership,
production, disposition, or use of the Collateral.
Grantor may contest in good faith any such law, ordinance
or regulation and withhold compliance during any
proceeding, including appropriate appeals, so long as
Lender's interest in the Collateral, in Lender's opinion,
is not jeopardized.
Hazardous Substances. Grantor represents and warrants
that the Collateral never has been, and never will be so
long as this Agreement remains a lien on the Collateral,
used for the generation, manufacture, storage,
transportation, treatment, disposal, release or
threatened release of any hazardous waste or substance,
as those terms are defined in the Comprehensive
Environmental Response, Compensation, and Liability Act
of 1980, as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986, Pub. L. No. 99-499 ("XXXX), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., the Resource Conservation and Recovery Act, 49
U.S.C. Section 6901, et seq., or other applicable state
or Federal laws, rules, or regulations adopted pursuant
to any of the foregoing. The terms "hazardous waster and
"hazardous substance" shall also include, without
limitation, petroleum and petroleum by-products or any
fraction thereof and asbestos. The representations and
warranties contained herein are based on Grantor's due
diligence in investigating the Collateral for hazardous
wastes and substances. Grantor hereby (a) releases and
waives any future claims against Lender for indemnity or
contribution in the event Grantor becomes liable for
cleanup or other costs under any such laws, and (b)
agrees to indemnify and hold harmless Lender against any
and all claims and losses resulting from a breach of this
provision of this Agreement. This obligation to
indemnity shall survive the payment of the Indebtedness
and the satisfaction of this Agreement.
Maintenance of Casualty Insurance. Grantor shall procure
and maintain all risks insurance, including without
limitation fire, theft and liability coverage together
with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages
and basis acceptable to Lender and issued by a company or
companies acceptable to Lender. Grantor, upon request of
Lender, will deliver to Lender from time to time the
policies or certificates of insurance in form
satisfactory to Lender, including stipulations that
coverages will not be canceled or diminished without at
least thirty (30) days' prior written notice to Lender
and not including any disclaimer of the insurer's
liability for failure to give such a notice. Each
insurance policy also shall include an
endorsement providing that coverage in favor of Lender
will not be impaired in any way by any act, omission or
default of Grantor or any other person. In connection
with all policies covering assets in which Lender holds
or is offered a security interest, Grantor will provide
Lender with such loss payable or other endorsements as
Lender may require. If Grantor at any time fails to
obtain or maintain any insurance as required under this
Agreement, Lender may (but shall not be obligated to)
obtain such insurance as Lender deems appropriate,
including if it so chooses "single interest insurance,"
which will cover only Lendees interest in the Collateral.
12
Application of Insurance Proceeds. Grantor shall
promptly notify Lender of any loss or damage to the
Collateral. Lender may make proof of loss if Grantor
fails to do so within fifteen (15) days of the casualty.
All proceeds of any insurance on the Collateral,
including accrued proceeds thereon, shall be held by
Lender as part of the Collateral. If Lender consents to
repair or replacement of the damaged or destroyed
Collateral, Lender shall, upon satisfactory proof of
expenditure, pay or reimburse Grantor from the proceeds
for the reasonable cost of repair or restoration. If
Lender does not consent to repair or replacement of the
Collateral, Lender shall retain a sufficient amount of
the proceeds to pay all of the Indebtedness, and shall
pay the balance to Grantor. Any proceeds which have not
been disbursed within six (6) months after their receipt
and which Grantor has not committed to the repair or
restoration of the Collateral shall be used to prepay the
Indebtedness.
Insurance Reports. Grantor, upon request of Lender,
shall furnish to Lender reports on each existing policy
of insurance showing such information as Lender may
reasonably request including the following: (a) the name
of the insurer; (b) the risks insured; (c) the amount of
the policy; (d) the property insured; (a) the then
current value on the basis of which insurance has been
obtained and the manner of determining that value; and (9
the expiration date of the policy. In addition, Grantor
shall upon request by Lender (however not more often than
annually) have an independent appraiser satisfactory to
Lender determine, as applicable, the cash value or
replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS.
Until default and except as otherwise provided below with
respect to accounts, Grantor may have possession of the
tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not
inconsistent with this Agreement or the Related
Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral
where possession of the Collateral by Lender is required
by law to perfect Lender's security interest in such
Collateral. Until otherwise notified by Lender, Grantor
may collect any of the Collateral consisting of accounts.
At any time and even though no Event of Default exists,
Lender may exercise its rights to collect the accounts
and to notify account debtors to make payments directly
to Lender for application to the Indebtedness. If Lender
at any time has possession of any Collateral, whether
before or after an Event of Default, Lender shall be
deemed to have exercised reasonable care in the custody
and preservation of the Collateral if Lender takes such
action for that purpose as Grantor shall request or as
Lender, in Lender's sole discretion, shall
deem appropriate under the circumstances, but failure to
honor any request by Grantor shall not of itself be
deemed to be a failure to exercise reasonable care.
Lender shall not be required to take any steps necessary
to preserve any rights in the Collateral against prior
parties, nor to protect, preserve or maintain any
security interest given to secure the Indebtedness.
EXPENDITURES BY LENDER. If not discharged or paid when
due, Lender may (but shall not be obligated
to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement,
including without limitation all taxes, liens, security
interests, encumbrances, and other claims, at any time
levied or placed on the Collateral. Lender also may (but
shall not be obligated to) pay all costs for insuring,
maintaining and preserving the Collateral. All such
expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the
Note from the date incurred or paid by Lender to the date
of repayment by Grantor. All such expenses shall become
a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of
the Note and be apportioned among and be payable with any
installment payments to become due during either (i) the
term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a
balloon payment which will be due and payable at the
Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all
other rights and remedies to which Lender may be entitled
upon the occurrence of an Event of Default.
EVENTS OF DEFAULT. Each of the following shall
constitute an Event of Default under this Agreement:
Default on Indebtedness. Failure of Grantor to make any
payment when due on the Indebtedness.
Other Defaults. Failure of Grantor to comply with or to
perform any other term, obligation, covenant or
condition contained in this Agreement or in any of the
Related Documents or in any other agreement between
Lender and Grantor.
Insolvency. The dissolution or termination of Grantor's
existence as a going business, the insolvency of Grantor,
the appointment of a receiver for any part of Grantor's
property, any assignment for the benefit of creditors,
any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by
or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of
foreclosure or forfeiture proceedings, whether by
judicial proceeding, self-help, repossession or any other
method, by any creditor of Grantor or by any governmental
agency against the Collateral or any other collateral
securing the Indebtedness. This includes a garnishment
of any of Grantor's deposit accounts with Lender.
Events Affecting Guarantor. Any of the preceding events
occurs with respect to any Guarantor of any of the
Indebtedness or such Guarantor dies or becomes
incompetent.
Adverse Change. A material adverse change occurs in
Grantor's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is
impaired.
Insecurity. Lender, in good faith, deems itself
insecure.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default
occurs under this Agreement, at any time thereafter,
Lender shall have all the rights of a secured party under
the Virginia Uniform Commercial Code. In addition and
without limitation, Lender may exercise any one or more
of the following rights and remedies:
Accelerate Indebtedness. Lender may declare the entire
Indebtedness, including any prepayment penalty which
Grantor would be required to pay, immediately due and
payable, without notice.
Assemble Collateral. Lender may require Grantor to
deliver to Lender all or any portion of the Collateral
and any and all certificates of title and other documents
relating to the Collateral. Lender may require Grantor
to assemble the Collateral and make it available to
Lender at a place to be designated by Lender. Lender
also shall have full power to enter upon the property of
Grantor to take possession of and remove the Collateral.
If the Collateral contains other goods not covered by
this Agreement at the time of repossession, Grantor
agrees Lender may take such other goods, provided that
Lender makes reasonable efforts to return them to Grantor
after repossession.
Sell the Collateral. Lender shall have full power to
sell, lease, transfer, or otherwise deal with the
Collateral or proceeds thereof in its own name or that of
Grantor. Lender may sell the Collateral at public
auction or private sale. Unless the Collateral threatens
to decline speedily in value or is of a type customarily
sold on a recognized market, Lender will give Grantor
reasonable notice of the time after which any private
sale or any other intended disposition of the Collateral
is to be made. The requirements of reasonable notice
shall be met if such notice is given at least ten (10)
days before the time of the sale or disposition. All
expenses relating to the disposition of the Collateral,
including without limitation the expenses of retaking,
holding, issuing, preparing for sale and selling the
Collateral, shall become a part of the Indebtedness
secured by this Agreement and shall be payable on
demand, with interest at the Note rate from date of
expenditure until repaid.
Appoint Receiver. To the extent permitted by applicable
law, Lender shall have the following rights and
remedies regarding the appointment of a receiver: (a)
Lender may have a receiver appointed as a matter of
right, (b) the receiver may be an employee of Lender and
may serve without bond, and (c) all fees of the receiver
and his or her attorney shall become part of the
Indebtedness secured by this Agreement and shall be
payable on demand, with interest at the Note rate from
date of expenditure until repaid.
Collect Revenues, Apply Accounts. Lender, either itself
or through a receiver, may collect the payments, rents,
income, and revenues from the Collateral. Lender may at
any time in its discretion transfer any Collateral into
its own name or that of its nominee and receive the
payments,
13
rents, income, and revenues therefrom and hold the same
as security for the Indebtedness or apply it to payment
of the Indebtedness in such order of preference as Lender
may determine. Insofar as the Collateral consists of
accounts, general intangibles, insurance policies,
instruments, chattel paper, chooses in action, or similar
property, Lender may demand, collect, receipt for,
settle, compromise, adjust, xxx for, foreclose, or
realize on the Collateral as Lender may determine,
whether or not Indebtedness or Collateral is then due.
For these purposes, Lender may, on behalf of and in the
name of Grantor, receive, open and dispose of mail
addressed to Grantor; change any address to which mail
and payments are to be sent; and endorse notes, checks,
drafts, money orders, documents of title, instruments and
items pertaining to payment, shipment, or storage of any
Collateral. To facilitate collection, Lender may notify
account debtors and obligers on any Collateral to make
payments directly to Lender.
Obtain Deficiency. If Lender chooses to sell any or all
of the Collateral, Lender may obtain a judgment against
Grantor for any deficiency remaining on the Indebtedness
due to Lender after application of all amounts received
from the exercise of the rights provided in this
Agreement. Grantor shall be liable for a deficiency even
if the transaction described in this subsection is a sale
of accounts or chattel paper.
Other Rights and Remedies. Lender shall have all the
rights and remedies of a secured creditor under the
provisions of the Uniform Commercial Code, as may be
amended from time to time. In addition, Lender shall
have and may exercise any or all other rights and
remedies it may have available at law, in equity, or
otherwise.
Cumulative Remedies. All of Lender's rights and
remedies, whether evidenced by this Agreement or the
Related Documents or by any other writing, shall be
cumulative and may be exercised singularly or
concurrently.
Election by Lender to pursue any remedy shall not exclude
pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation
of Grantor under this Agreement, after Grantor's failure
to perform, shall not affect Lender's right to declare a
default and to exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous
provisions are a part of this Agreement:
Amendments. This Agreement, together with any Related
Documents, constitutes the entire understanding and
agreement of the parties as to the matters set forth in
this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and
signed by the party or parties sought to be charged or
bound by the alteration or amendment.
Applicable Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of
the Commonwealth of Virginia. Lender and Grantor hereby
waive the right to any jury trial in any action,
proceeding, or counterclaim brought by either party
against the other.
Attorneys' Fees; Expenses. Grantor agrees that if Lender
hires an attorney to help enforce this Agreement or to
collect any sums owing under this Agreement, Grantor will
pay, subject to any limits under applicable law,
Lender's attorney fees equal to 25.000% of the principal
balance due on the Note, and all of Lender's other
collection expenses, whether or not there is a lawsuit
and including without limitation additional legal
expenses for bankruptcy proceedings.
Caption Headings. Caption headings in this Agreement are
for convenience purposes only and are not to be used
to interpret or define the provisions of this Agreement.
Multiple Parties; Corporate Authority. All obligations
of Grantor under this Agreement shall be joint and
several, and all references to Grantor shall mean each
and every Grantor. This means that each of the Borrowers
signing below is responsible for all obligations in this
Agreement.
Notices. All notices required to be given under this
Agreement shall be given in writing, may be sent by
telefacsimilie, and shall be effective when actually
delivered if hand delivered or when deposited with a
nationally recognized overnight courier or deposited as
certified or registered mail in the United States mail,
first class, postage prepaid, addressed to the party to
whom the notice is to be given at the address shown
above. Any party may change its address for notices
under this Agreement by giving formal written notice to
the other parties, specifying that the purpose of the
notice is to change the party's address. To the extent
permitted by applicable law, if there is more than one
Grantor, notice to any Grantor will constitute notice to
all Grantors. For notice purposes, Grantor agrees to
keep Lender informed at all times of Grantor's current
address(es).
Power of Attorney. Grantor hereby appoints Lender as its
true and lawful attorney-in-fact, irrevocably, with full
power of substitution to do the following: (a) to demand,
collect, receive, receipt for, xxx and recover all sums
of money or other property which may now or hereafter
become due, owing or payable from the Collateral; (b) to
execute, sign and endorse any and all claims,
instruments, receipts, checks, drafts or warrants issued
in payment for the Collateral; (c) to settle or
compromise any and all claims arising under the
Collateral, and, in the place and stead of Grantor, to
execute and deliver its release and settlement for the
claim; and (d) to file any claim or claims or to take any
action or institute or take part in any proceedings,
either in its own name or in the name of Grantor, or
otherwise, which in the discretion of Lender may seem to
be necessary or advisable. This power is given as
security for the Indebtedness, and the authority hereby
conferred is and shall be irrevocable and shall remain in
full force and effect until renounced by Lender.
Severability. If a court of competent jurisdiction finds
any provision of this Agreement to be invalid or
unenforceable as to any person or circumstance, such
finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances.
If feasible, any such offending provision shall be
deemed to be modified to be within the limits of
enforceability or validity; however, if the offending
provision cannot be so modified, it shall be stricken and
all other provisions of this Agreement in all other
respects shall remain valid and enforceable.
Successor Interests. Subject to the limitations set
forth above on transfer of the Collateral, this Agreement
shall be binding upon and inure to the benefit of the
parties, their successors and assigns.
Waiver. Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is
given in writing and signed by Lender. No delay or
omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other
right. A waiver by Lender of a provision of this
Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with
that provision or any other provision of this Agreement.
No prior waiver by Lender, nor any course of dealing
between Lender and Grantor, shall constitute a waiver of
any of Lender's rights or of any of Grantor's obligations
as to any future transactions. Whenever the consent of
Lender is required under this Agreement, the granting of
such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances
where such consent is required and in all cases such
consent may be granted or withheld in the sole discretion
of Lender.
14
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF
THIS COMMERCIAL SECURITY AGREEMENT, AND GRANTOR
AGREES TO ITS TERMS. THIS AGREEMENT IS DATED 11-29-95 .
--------
GRANTOR:
Essex Corporation
BY: Xxxxxx X. Xxxxx, Xx.
-------------------- (SEAL)
Name and Title (Print)
Xxxxxx X. Xxxxx, Xx. - VP/Treasurer
LENDER:
SIGNET BANK
BY: Xxxxxxx X. Xxxxxxxx
----------------------
Authorized Officer
15
PROMISSORY NOTE
Principal Amount: $1,500,000.00 Initial Rate: 11.750%
Date of Note: 11-29-95
--------
PROMISE TO PAY. Essex Corporation ("Borrower") promises
to pay to SIGNET BANK ("Lender"), or order,
In lawful money of the United States of America, the
principal amount of One Million Five Hundred Thousand
& 00/100 Dollars ($1,500,000.00) or so much as may be
outstanding, together with Interest on the unpaid
outstanding principal balance of each advance. Interest
shall be calculated from the date of each advance until
repayment of each advance.
PAYMENT. Borrower will pay this loan In one payment of
all outstanding principal plus all accrued unpaid
Interest on November 30, 1996. In addition, Borrower
will pay regular monthly payments of accrued unpaid
interest beginning December 30, 1995, and all subsequent
interest payments are due on the same day of each
month after that. Interest on this Note is computed on
a 365/360 simple interest basis; that is, by applying the
ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal
balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as
Lender may designate in writing. Unless otherwise
agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to
principal, and any remaining amount to any unpaid
collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note
is subject to change from time to time based on
changes in an index which is Lender's Prime Rate (the
"Index). This is the rate of interest announced from
time to time by Lender as its "Prime Rate." Borrower and
each other party liable under this Note in any capacity,
whether as maker, endorser, surety, guarantor or
otherwise, acknowledge and agree that the Prime Rate is
a reference used by Lender in determining interest rates
on certain loans and is not intended to be the lowest
rate of interest charged on any extension of credit to
any customer. Lender will tell Borrower the current
Index rate upon Borrower's request. Borrower understands
that Lender may make loans based on other rates as well.
The interest rate change will not occur more often than
each day. The Index currently Is 8.750% per annum. The
Interest rate to be applied to the unpaid principal
balance of this Note will be at a rate of 3.000
percentage points over the Index, resulting in an Initial
rate of 11.750% per annum. ONCE: Under no circumstances
will the interest rate on this Note be more than the
maximum rate allowed by applicable law.
PREPAYMENT. Borrower may pay without penalty all or a
portion of the amount owed earlier than it is due.
Easy payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to
continue to make payments of accrued unpaid interest.
Rather, they will reduce the principal balance due.
DEFAULT. Borrower will be in default if any of the
following happens: (a) the failure of any "Party" (which
term shall mean and include each Borrower, endorser,
surety and guarantor of this Note) to make any payment
on this Note or on any other indebtedness due Lender when
due; (b) if any asset(s) of a Party are attached,
levied upon, seized or repossessed or if any asset(s) of
a Party should come into the possession of a receiver,
trustee, custodian or assignee for the benefit of
creditors, or if a Party makes an assignment for the
benefit of creditors; (c) the failure of a Party to
observe or perform any obligation or covenant contained
in any agreement, document or instrument furnished in
connection herewith or in any other agreement between a
Party and Lender; (d) any representation or warranty at
any time made by a Party to Lender in connection herewith
or in any other agreement between a Party and Lender, or
in any document or instrument delivered to Lender in
connection herewith or pursuant to such other agreement,
shall have been materially false at the time it was
made, (e) the termination or withdrawal of a Party's
guaranty with respect to any indebtedness due Lender; (f)
any Party files a petition in bankruptcy, petitions or
applies to any tribunal for any receiver or any trustee
of a Party or any substantial part of its property, or
commences any proceeding relating to such party under any
insolvency, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; (g) if,
within 30 days after the filing of a petition in
bankruptcy against a Party or the commencement of any
proceeding against a Party seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future
statute, law or regulation, such petition or proceeding
shall not have dismissed, or, if, within 30 days after
the appointment, without the consent or acquiescence of
a Party, of any trustee, receiver or liquidator of such
Party or of all or any substantial part of the properties
of the such Party, such appointment shall not have been
vacated; (h) the application for the appointment of a
receiver for a party or for property of a Party; (i) the
making or sending of a notice of an intended bulk sale by
a Party; 0) commencement of any foreclosure, levy,
seizure or forfeiture proceeding, whether by judicial,
self-help, repossession, or any other method, by any
creditor of a Party, any creditor of the owner of any
collateral securing this Note, or by any governmental
agency with respect to a Party or such collateral, (k) if
any event occurs which is or, with the passage of time
and/or the giving of notice, could be a default under or
breach of the terms of any instrument or document
evidencing a debt or obligation of a Party to any third
party and is not cured within five (5) days after the
occurrence thereof; (1) any judgment against a Party or
any attachment against it or its property remains unpaid,
undischarged, unbonded or undismissed for a period of 30
days, unless and to the extent that such judgment is
appealed in good faith in a court of higher jurisdiction
and such appeal remains pending; (m) if any proceeding is
filed for the dissolution or liquidation of a Party; (n)
if any Party shall be enjoined or restrained in any
manner from conducting its business in whole or in part,
and such injunction shall not be dismissed or dissolved
within thirty (30) days after the filing thereof; (o) if
any tax lien or notice thereof is filed against a Party
or any of the assets of a Party and remains
undismissed, unpaid or unbonded for a period of thirty
(30) days; (p) if, without Lender's prior written
consent, any Party which is not a natural person enters
into or becomes a party to any merger, consolidation or
share exchange or if any Party sells, transfers, conveys
or leases, except in the ordinary course of business, any
significant part of its assets or properties or (if not
a natural person) alters its capital structure, business
activities or scope of operations; (q) if, without
Lender's prior written consent, there is a sale, exchange
or transfer of the voting control or any significant
portion of the stock or ownership interests of any Party
which is not a natural person; (r) if any Party who is a
natural person shall die or become incompetent; or (s)
the good faith determination by Lender that it deems
itself insecure or that a material adverse change in the
financial condition of a Party has occurred since the
date hereof or that Lendees prospect of payment hereunder
has been materially impaired.
LENDER'S RIGHTS. Upon default, Lender may declare the
entire unpaid principal balance on this Note and all
accrued unpaid interest, together with all other
applicable fees costs and charges if any immediately due
and payable without notice and then Borrower will pay
that amount. Upon
16
default, including failure to pay upon final maturity,
Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on
this Note to 6.000 percentage points over the Index. The
interest rate will not exceed the maximum rate permitted
by applicable law. Furthermore, subject to any limits
under applicable law, upon default, Borrower also agrees
to pay Lendees attorney fees equal to 25.000% of the
principal balance due on the Note, and all of Lender's
other collection expenses, whether or not there is a
lawsuit and including without limitation legal
expenses for bankruptcy proceedings. This Note shall be
governed by, construed and enforced in accordance
with the laws of the Commonwealth of Virginia. Lender
and Borrower hereby waive the right to any jury trial
in any action, proceeding, or counterclaim brought by
either party against the other.
CONFESSION OF JUDGMENT. Upon a default in payment of the
Indebtedness at maturity, whether by acceleration or
otherwise, Borrower hereby irrevocably authorizes and
empowers Xxxxxx X. Xxxxxxxxx or Xxxxxx X. Xxxxx as
Borrower's attorney-in-fact to appear in the City of
Richmond clerk's office and to confess judgment against
Borrower for the unpaid amount of this Note as evidenced
by an affidavit signed by an officer of Lender setting
forth the amount then due, plus attorneys' fees as
provided in this Note, plus costs of suit, and to release
all errors, and waive all rights of appeal. if a copy of
this Note, verified by an affidavit, shall have been
filed in the proceeding, it will not be necessary to file
the original as a warrant of attorney. Borrower waives
the right to any stay of execution and the benefit of all
exemption laws now or hereafter in effect. No single
exercise of the foregoing warrant and power to confess
judgment will be deemed to exhaust the power, whether or
not any such exercise shall be held by any court to be
invalid, voidable, or void; but the power will continue
undiminished and may be exercised from time to time as
Lender may elect until all amounts owing on this Note
have been paid in full.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender
of $15.00 if Borrower makes a payment on Borrower's loan
and the check or preauthorized charge with which Borrower
pays is later dishonored.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon
and rights of setoff against the moneys, securities or
other property of Borrower given to Lender by law, Lender
shall have, with respect to Borrower's obligations to
Lender under this Note and to the extent permitted by
law, a contractual possessory security interest in and a
right of setoff against, and Borrower hereby assigns,
conveys, delivers, pledges, and transfers to Lender all
of Borrower's Right, title, and interest in and to all
deposits, moneys, securities, and other property of
Borrower now or hereafter in the possession of or on
deposit with Lender, whether held in a general or special
account or deposit, whether held jointly with someone
else, or whether held for safekeeping or otherwise,
excluding however all XXX, Xxxxx, and trust accounts.
Every such security interest and night of setoff may be
exercised without demand upon or notice to Borrower. No
security interest or right of setoff shall be deemed to
have been waived by any act or conduct on the part of
Lender or by any neglect to exercise such right of setoff
or to enforce such security interest or by any delay in
so doing. Every right of setoff and security interest
shall continue in full force and effect until such right
of setoff or security interest is specifically waived or
released by an instrument in writing executed by Lender.
LINE OF CREDIT. This Note evidences a revolving line of
credit. Advances hereunder shall be conclusively
presumed to have been made to and for the benefit of and
at the request of Borrower when: (1) deposited or
credited to an account of Borrower with Lender,
notwithstanding that such advance was requested, orally
or in writing, by someone other than the person(s)
signing below or that someone other than the person(s)
signing below is authorized to draw on such account and
may or does withdraw the whole or part of any such
advance; or (2) made in accordance with oral or written
instructions of Borrower or anyone signing below for or
on behalf of Borrower. Lender is hereby authorized to
maintain records of the date and amount of each advance,
the date and amount of any payment of principal or
interest and the principal balance then remaining unpaid
hereon. Borrower hereby agrees that the amount so
evidenced in such records shall, for all purposes,
constitute prima facie evidence thereof and shall be
binding upon Borrower, absent manifest error.
LATE CHARGE. Borrower agrees to pay to Lender on demand
a late charge not to exceed 5% of the amount of any
payment of principal or interest, or both, that is more
than ten (10) days past due.
GENERAL PROVISIONS. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without
losing them. Borrower and any other person who signs,
guarantees or endorses this Note, to the extent allowed
by law, waive presentment, demand for payment, protest
and notice of dishonor. Upon any change in the terms of
this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker,
guarantor, accommodation maker or endorser, shall be
released from liability. All such parties agree that
Lender may renew or extend (repeatedly and for any length
of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect
Lender's security interest in the collateral; and take
any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the
consent of or notice to anyone other than the party with
whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD
ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE
INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS
OF THE NOTE.
BORROWER:
Essex Corporation
BY: Xxxxxx X. Xxxxx, Xx.
-------------------- (SEAL)
Name and Title (Print)
Xxxxxx X. Xxxxx, Xx. - VP/Treasurer
