Exhibit 10.18
LOAN AGREEMENT
THIS AGREEMENT made and entered into as of this 31st day of December, 1998,
by and between SOFTWARE TECHNOLOGY, INC., a Florida corporation, whose address
is 0000 Xxxxx Xxxx, Xxxxxxxxx, Xxxxxxx 00000 (the "Borrower"), EXIGENT
INTERNATIONAL, INC., a Delaware corporation, and FOTOTAG, INC., a Delaware
corporation, (the "Guarantors"), and THE HUNTINGTON NATIONAL BANK, whose address
is 000 X. Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx 00000 (the "Lender").
W I T N E S S E T H:
WHEREAS, Borrower has negotiated with Lender for a revolving line of credit
loan in the principal amount of THREE MILLION DOLLARS ($3,000,000.00) (the
"Revolving Loan") and a term loan in the principal amount of FIVE HUNDRED ELEVEN
THOUSAND ONE HUNDRED ELEVEN and 22/100 DOLLARS ($511,111.22) (the "Term Loan")
to be used by Borrower to refinance and obtain additional credit to be secured
by collateral as described in Exhibit "A", attached hereto and made a part
hereof by reference. (The Revolving Loan and Term Loan are collectively referred
to as "the Loan"). The Loan will be guaranteed by the Guarantors.
WHEREAS, Borrower, Guarantors and Lender wish to enter into this Agreement
in order to set forth the terms and conditions of the disbursement of said Loan.
NOW, THEREFORE, in consideration of the premises set forth above and the
sum of TEN DOLLARS ($10.00) each to the other in hand paid, the receipt and
sufficiency of which is hereby acknowledged, Borrower, Guarantors and Lender do
hereby agree as follows:
ARTICLE I
LOAN DOCUMENTS
Prior to any disbursements, Borrower shall execute and deliver, or cause to
be executed and delivered, to Lender the following documents (hereinafter
collectively and together with this Agreement referred to as "Loan Documents"),
all in a form satisfactory to Lender:
A. Assignment of Loan Documents, Allonge Endorsements to Notes and UCC-3
Assignments to be executed by SunTrust, N.A. to Lender.
1. For Line of Credit in the amount of $l,800,000.00.
2. For Term Loan with a current principal balance of $66,666.74.
3. For Term Loan with current principal balance of $444,444.48 .
B. Notes.
1. Interim Promissory Note for Line of Credit of even date herewith
payable to the order of Lender executed by Borrower, in the principal amount of
ONE MILLION TWO HUNDRED THOUSAND AND 00/100 ($1,200,000.00) DOLLARS.
2. Consolidation Note for Line of Credit of even date herewith payable
to the order of the Lender executed by Borrower, in the principal amount of
THREE MILLION AND 00/100 ($3,000,000.00) DOLLARS.
3. Consolidation Note for Term Loans of even date herewith payable to
the order of the Lender executed by Borrower, in the principal amount of FIVE
HUNDRED ELEVEN THOUSAND ONE HUNDRED ELEVEN AND 22/100 ($511,111.22) DOLLARS.
(Each of these notes are collectively referred to as "Notes".)
C. Uniform Commercial Code-Financing Statements (Local and State). Uniform
Commercial Code-Financing Statements (local and state) covering all of
Borrower's assets including, but not limited to: accounts, inventory, deposit
accounts, general intangibles, contract rights, leasehold improvements,
machinery, equipment, intellectual property, instruments, documents, chattel
paper, trade names, trademarks and patents.
D. Opinion of Borrower's Counsel. An opinion of counsel for Borrower and
Guarantor (as hereinbelow defined) licensed in the State of Florida shall be
furnished to Lender prior to closing to the effect that: (a) all of the Loan
Documents are valid and enforceable and legally convey to and vest in Lender all
of the rights therein stated and purported to be conveyed; (b) Borrower and any
Guarantor are corporations in good standing and all requirements of the
corporate documents governing Borrower and any Guarantor have been complied with
to authorize and complete the Loan; (c) Borrower and any Guarantor have the full
right and legal authority to carry out the terms of this Agreement and any
documentation to be executed pursuant to this Agreement; and (d) Such opinion
letter shall address such other matters included in Lender's Request for Opinion
Letter.
E. Guaranties. The unqualified and unconditional guaranty of EXIGENT
INTERNATIONAL, INC., a Delaware corporation, and FOTOTAG, INC., a Delaware
corporation.
F. Security Agreement. As security for payment of the indebtedness
evidenced by the Notes, the Borrower shall execute and deliver to the Lender a
Security Agreement of even date herewith (the "Security Agreement") pursuant to
which the Borrower shall grant the Lender a first security interest in all of
the assets of the Borrower described in the Security Agreement. Borrower agrees
that all of the Liabilities of Borrower arising under the Loan Agreement shall
be secured by the Collateral. Borrower further agrees that the Lender shall have
sole discretion as to the manner of application of the sale or the disposition
of the Collateral and shall be entitled to conduct one or more sales of the
Collateral in addition to all other rights and remedies contained herein. As
additional security for payment of the indebtedness evidenced by this Loan, the
Guarantors shall execute an unconditional guarantee in favor of the Lender
described in Paragraph E. above.
G. Other Documents. Such other documents as may be required by Lender in
accordance with the terms of the Loan Commitment dated December 9, 1998 executed
by Lender and Borrower in connection with the Loan ("Loan Commitment").
ARTICLE II
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to make the Loan, the Borrower and Guarantors
make the following representations and warranties:
A. Borrower is a corporation duly organized, existing and in good standing
under the laws of the State of Florida, and has the corporate power to own
property and to carry out its businesses now being conducted, and is duly
qualified as a foreign corporation to do business in every jurisdiction in the
United States of America in which the nature of its business makes such
qualification necessary and is in good standing in such jurisdictions.
Guarantors are corporations duly organized, existing and in good standing under
the laws of the State of Delaware. Borrower and Fototag,Inc. are wholly-owned
subsidiaries of Exigent International, Inc.
B. Borrower is duly authorized under all applicable provisions of law to
execute and deliver the Notes and to execute, deliver and perform the Loan
Agreement and the Security Agreement, all corporate action on its part required
for the lawful execution, delivery and performance thereof has been duly taken
and the Loan Agreement, the Security Agreement and the Notes, upon the due
execution and delivery thereof, will be the valid and enforceable instruments
and obligations of Borrower in accordance with their terms. Neither the
execution of the Loan Agreement, the Security Agreement not the creation or
issuance of the Notes, nor the fulfillment of or compliance with their
provisions and terms will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a violation of or default under any
applicable law, regulation, order, writ or decree of the charter or bylaws of
the Borrower or any agreement or instrument to which Borrower is now a party or
create any lien, charge or encumbrance upon any of the property or assets of
Borrower pursuant to the terms of any agreement or instrument to which Borrower
is a party or by which it is bound other than the security interest contemplated
hereby.
C. No written approval of any federal, state or local governmental
authority is necessary to carry out the terms of the Loan Agreement, the
Security Agreement or the Notes and no consents or approvals are required in the
making or performance of the Loan Agreement, the Security Agreement or the
Notes.
D. The audited consolidated balance sheet of the Borrower and Guarantors,
as of January 31, 1998, is true and correct and the consolidated balance sheet
of Borrower and Guarantors, dated as of October 31, 1998, and related statement
of income for the quarter then ended, a copy of which has been provided to the
Lender, is true and correct, subject to normal, year end adjustments and fairly
presents the financial condition of the Borrower and Guarantors, all in
accordance with Generally Accepted Accounting Principles consistently applied
and since October 31, 1998, no material adverse change in Borrower's and
Guarantors' financial condition or business operation has occurred.
E. Except as previously disclosed to Lender in writing, there are no
pending or threatened actions or proceedings before any court, arbitrator or
governmental or administrative body or agency which may materially adversely
affect the properties, business or condition, financial or otherwise, of
Borrower or Guarantors or in any way adversely affect or call into question the
power and the authority of Borrower to enter into or perform the Loan Agreement,
the Notes or the Security Agreement.
F. No part of the proceeds of advances made pursuant to the Loan Agreement
will be or have been used to purchase or carry, or to reduce or retire any loan
incurred to purchase or carry, any margin stocks (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System) or to
extend credit to others for the purpose of purchasing or carrying any such
margin stocks. Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying such margin stocks. If requested by the
Lender, Borrower shall furnish to the Lender, in connection with the loan made
hereunder, a statement in conformance with the requirements of Federal Reserve
Form U-l referred to in said Regulation. In addition, no part of the proceeds of
the loans made hereunder will be used for the purchase of commodity future
contracts (or margins therefor for short sales) for any commodity not required
for the normal raw material inventory of the Borrower.
G. Borrower is now solvent and able to pay its debts as they mature and
Borrower now owns property whose fair salable value is greater than the amount
required to pay its Indebtedness.
H. Borrower has not incurred any material or accumulated funding deficiency
within the meaning of the Employee Retirement Income Security Act of 1974 or any
liability to the Pension Benefit Guarantee Corporation established under such
Act (or any successor thereto under such Act) in connection with any employee
benefit plan established or maintained by the Borrower.
I. Each of the representations and warranties of the Borrower contained in
the Security Agreement are hereby reaffirmed in all respects as of the date
hereof.
J. Neither this Loan Agreement nor any other Agreements contains any
misrepresentation or untrue statement of fact or omits to state any material
fact necessary to make any of such agreements, reports, schedules, certificates
or instruments not misleading.
K. Borrower has good, indefeasible and merchantable title to the
Collateral, free and clear of all liens, claims, security interests and
encumbrances.
L. Borrower has good and marketable title to its properties and assets,
including the properties and assets reflected in the balance sheet described
above, except for such assets as have been disposed of since the date of said
financial statements as no longer used or useful in the conduct of its business
or as have been disposed of in the ordinary course of business, and all such
properties and assets are free and clear of all liens, mortgages, pledges,
encumbrances or charges.
M. Borrower is not a party to nor is it bound by any contract or agreement
or subject to any charter or other corporate restrictions which adversely
affects the business, properties or condition, financial or otherwise, of
Borrower except as disclosed in the financial statements referenced above and
notes thereto.
N. Borrower owns, possesses or has the right to use all necessary patents,
licenses, trademarks, trademark rights, trade names, trade name rights and
copyrights material to the conduct of its businesses now conducted, without
known conflict with any patent, license, trademark, trade name or copyright of
any other Person.
The effectiveness of this Loan Agreement shall be subject to the continuing
accuracy of all representations and warranties of the Borrower and Guarantors
contained herein. Each advance made to Borrower pursuant to the Loan Agreement
shall constitute and automatic warranty and representation by Borrower and
Guarantors to the Lender that there does not exist a Default or any Event of
Default or any event or condition which, with notice, lapse of time and/or the
making of such advance, would constitute a Default or any Event of Default and a
reaffirmation as of the date of said request of all the representations and
warranties of Borrower and Guarantors contained in the Loan Agreement. Borrower
and Guarantors covenant, warrant and represent to the Lender that all
representations and warranties of Borrower and Guarantors contained in this Loan
Agreement shall be true at the time of execution of the Loan Agreement and the
Other Agreements and shall survive the execution, delivery and acceptance
thereof by the parties thereto and the closing of the transactions described
therein or related thereto.
ARTICLE III
CONDITIONS OF CLOSING
The effectiveness of the Loan Agreement shall be subject to the fulfillment
of the following conditions precedent to the first advance under the Loan:
A. Borrower shall have delivered to the Lender the fully executed Security
Agreement, Notes, financing statements and other letters, instruments and
documents as Lender shall require, including, but not limited to, a Certificate
of good standing of the Borrower certified by the Secretary of State or other
appropriate governmental authority accompanied by a certificate from the
appropriate officer of Borrower certifying that the copy attached to such
certificate of the Articles of Incorporation is complete and that the Articles
of Incorporation have not been amended, annulled, rescinded or revoked since the
date they were certified by the Secretary of State or other appropriate
governmental authority, a copy of the bylaws of the Borrower in effect on the
date of the Loan Agreement accompanied by a certificate from an appropriate
officer of Borrower that the copy is true and complete and that the Bylaws have
not been amended, annulled, rescinded or revoked since the date of the Bylaws or
the last amendment reflected in the copy, if any, and a certificate of the
Secretary certifying the names and true signatures of the Borrower authorized to
sign the Loan Agreement, the Security Agreement, the Notes and any Other
Agreements to be executed and delivered hereunder.
B. The Borrower shall provide the Lender with a list of all Indebtedness at
the time of closing.
C. All instruments and documents incident to the issuance and delivery of
the Notes shall be reasonably satisfactory in form and substance to the Lender
and Lender's counsel and the Lender shall have received the executed Loan
Agreement, the Security Agreement and all other documents which it may
reasonably request in connection therewith and copies of resolutions of Borrower
authorizing the transactions contemplated by the Loan Agreement, such
resolutions and other documents, when appropriate, to be certified by
appropriate corporate or governmental authorities.
D. The Lender shall have received the Guaranty Agreements executed by the
Guarantors.
The effectiveness of the Loan Agreement shall be further subject to the
fulfillment of the following conditions precedent to any subsequent advance to
Borrower under this Loan:
A. The Lender shall have received at the time of any subsequent advance
such other approvals, opinions or documents as the Lender may reasonably
request.
B. No event has occurred or is continuing or would result from such advance
that would constitute a Default or Event of Default as set forth below.
C. The continuing accuracy of all representations and warranties of the
Borrower contained herein.
ARTICLE IV
AFFIRMATIVE COVENANTS
The Borrower further agrees that, so long as any Liabilities remain unpaid
to Lender, it will comply with the following requirements:
A. As soon as practicable, in any event within forty-five (45) days after
the end of each calendar quarter of each calendar year, deliver or cause to be
delivered to the Lender a consolidated balance sheet of Borrower and Guarantors
as at the last day of such quarter and related consolidated statement of income
for such quarter and cumulative year to date for Borrower and Guarantors,
setting forth in each case comparative form figures for the corresponding period
in the preceding calendar Year, all in reasonable detail certified by an
authorized officer of Borrower to have been prepared in accordance with
Generally Accepted Accounting Principles applied on a consistent basis, subject
to changes resulting from normal year-end adjustments.
B. As soon as practicable and in any event within ninety (90) days after
the end of each Fiscal Year, deliver to the Lender (i) a consolidated balance
sheet of Borrower and Guarantors as at the end of such Fiscal Year, and related
consolidated statements of income and retained earnings and changes in financial
position for such Fiscal Year, setting forth in each case comparative form
figures for the corresponding period in the preceding Fiscal Year, all in
reasonable detail and satisfactory in scope to the Lender and certified by and
containing an unqualified opinion of a nationally recognized firm of independent
certified public accountants, and (ii) management letters, if any, delivered to
the Borrower by such independent certified public accountants, in connection
with their examination of such financial statements.
C. Together with each delivery of those items required by Paragraphs A. and
B., above, Borrower shall deliver to the Lender an officer's certificate setting
forth: (i) to the best of his knowledge, Borrower has kept, observed, performed
and fulfilled each and every agreement binding on and contained in this Loan
Agreement and is not at the time in default of the keeping, observance,
performance or fulfillment of any of the terms, provisions and conditions
hereof, and (ii) that no Default or Event of Default, as has been specified
below, has occurred or specifying all such Defaults or Events of Default which
they may have knowledge.
D. With reasonable promptness, deliver such additional financial or other
date as the Lender may reasonably request. The Lender is hereby authorized to
deliver a copy of any financial statements or any other information relating to
the business operations or financial condition of the Borrower and Guarantors
which may be furnished to it or come to its attention pursuant to this Loan
Agreement or otherwise, to any regulatory body or agency having jurisdiction
over the Lender or to any Person which shall, or shall have the right or
obligation, to succeed to all or any part of the Lender's interest in the Note
or Other Agreements.
E. Promptly pay or cause to be paid all taxes, assessments and other
governmental charges that may lawfully be levied or assessed upon the income or
profits of Borrower; provided, however, Borrower shall not be required to pay
any such tax, assessment, charge, levy or claim so long as the validity thereof
shall be actively contested in good faith by proper proceedings; but provided
further that any such tax, assessment, charge, levy or claim shall be paid,
stayed or bonded forthwith upon the commencement of proceedings to foreclose any
lien securing the same.
F. Do or cause to be done all things necessary to preserve and to keep in
full force and effect its corporate existence and rights.
G. At its sole cost and expense, keep and maintain the Collateral insured
for its full insurable value against loss or damage, fire, theft, explosion and
all other hazards and risk ordinarily insured against by other owners or users
of such properties in similar businesses, and maintain adequate workers'
compensation insurance, and notify the Lender promptly of any event or
occurrence causing a material loss or decline in the value of the Collateral and
the estimated (or actual, if available) amount of such loss or decline. All
policies of insurance shall be in form and with insurers recognized as adequate
by prudent business persons and all such policies shall be in such amounts as
may be satisfactory to the Lender. Upon request, Borrower shall deliver to the
Lender the original (or certified copy) of each policy of insurance and evidence
of payment of all premiums therefor. Such policies of insurance shall contain an
endorsement, in form and substance acceptable to the Lender, showing loss
payable to the Lender. Such endorsement, or an independent instrument furnished
to the Lender, shall provide that the insurance companies will give the Lender
at least thirty (30) days prior written notice before any such policy or
policies of insurance shall be altered or canceled and that no act or default of
Borrower or any other person shall affect the right of the Borrower to loss or
damage. Borrower hereby directs all insurers under such policies of insurance
where loss or damage exceeds $25,000 under any such policy of insurance to pay
all proceeds payable hereunder directly to the Lender. So long as no Default or
Event of Default exists hereunder, at the option of the Borrower, in the case of
insurance proceeds arising from the loss or damage of building and equipment,
the proceeds may be used to replace or restore same. Should the Borrower elect
not to replace or restore the lost property, any insurance proceeds shall be
applied first to any accrued interest due to the Lender, then to the principal
balance of the liabilities in such order as the Borrower may direct. Borrower
irrevocably makes, constitutes and appoints the Lender (and all officers,
employees or agents designated by the Lender) as such Borrower's true and lawful
attorney (and agent-in-fact), effective from and after the occurrence of a
Default or Event of Default, for the purpose of making, settling and adjusting
such claim under the policies of insurance (providing that the Lender shall
consult with Borrower prior to finally making, settling or adjusting claims
under such policies of insurance), endorsing the name of Borrower on any check,
draft or instrument or other item or payment for the proceeds of such policies
of insurance and for making all determinations and decisions with respect to
such policies of insurance. In the event Borrower, at any time or times
hereafter, shall fail to maintain any of the policies of insurance required
above or to pay any premium in whole or in part related thereto, then the
Lender, without waiving or releasing any obligation or default by Borrower
hereunder, may (but shall be under no obligation to do so) at any time or times
hereafter obtain and take any other action with respect thereto which the Bank
deems advisable. All sums so disbursed by the Lender, including reasonably
attorneys' fees, court costs, expenses and other charges relating thereto, shall
be payable, on demand by Borrower and shall be additional Liabilities hereunder
secured by the Collateral. The Lender agrees to give Borrower notice of payment
of each and every premium paid by Borrower to insurers as required hereunder.
H. Maintain its property in good order and repair and from time to time
make all needful and proper repairs, renewals, replacements, additions and
improvements thereto.
I. Keep true books of record and account in which full, true and correct
entries will be made of all of its dealings and transactions and set up on its
books such reserves as may be required by Generally Accepted Accounting
Principles.
J. Conform to and duly observe all laws, regulations and other valid
requirements of any regulatory authority with respect to the conduct of its
business.
K. Upon any officer of the Borrower obtaining knowledge of a Default or
Event of Default hereunder or under any other obligation of Borrower, cause such
officer or individual, as the case may be, to properly deliver to the Lender a
certificate certifying the nature thereof, the period of existence thereof, and
whatever action the Borrower proposes to take with respect thereto.
L. Upon any officer of the Borrower obtaining knowledge of a material
litigation, dispute or proceedings being instituted or threatened against
Borrower, or any attachment, levy, execution or other process being instituted
against any assets of Borrower, cause such officer or individual, as the case
may be, to promptly give the Bank written notice of such litigation, dispute,
proceeding, levy, execution or other process.
M. Use it best efforts to comply with all of the requirements of the
Employee Retirement Income Security Act of 1974 (ERISA) applicable to it and
furnished to the Lender a statement of the principal financial officer of
Borrower describing in reasonable detail any Reportable Event (as defined in
ERISA).
N. Continue at all times to maintain its chief executive offices and
principal place of business at Melbourne, Brevard County, Florida.
O. Maintain its primary operating banking accounts with the Lender.
P. With respect to the consolidated financial statements of Borrower and
the Guarantors, maintain the following financial ratios in the amounts indicated
below:
1. Maximum Total Liabilities divided by Tangible Net Worth of 2.25:l.0
at fiscal year end December 3l, l999 and quarterly thereafter.
2. Minimum Working Capital of $1,500,000.00 at fiscal year end
December 31, l998, and March 31, l999, increasing to $2,000,000.00 at June 30,
l999 and each quarter thereafter.
3. Minimum Current Ratio of l.30:l.0 at fiscal year end December 3l,
l998, and March 3l, l999, increasing to l.50:1.0 at June 30, l999 and each
quarter thereafter.
4. Minimum Debt Service Coverage l.20 times at calendar year end and
annually thereafter.
ARTICLE V
NEGATIVE COVENANTS
Except for any currently existing matter which has previously been
disclosed to Lender or unless Lender otherwise consents in writing, Borrower
covenants and further agrees that from the date hereof until payment in full of
the principal and interest under the Notes, unless the Lender otherwise consents
in writing, it will not;
A. Incur, create, assume or permit to exist any Indebtedness in excess of
$50,000.00 other than the Indebtedness to the Lender.
B. Incur, create, assume or permit to exist any mortgage, pledge, security
interest, encumbrance, lien or other charge of any kind upon any of its
properties or assets of any character under conditional sales or other title
retention agreements in excess of $50,000.00 except those mortgages, liens and
security interests granted in favor of the Lender.
C. Lend or advance money, credit or property in excess of $50,000.00 to any
employee, officer, director, stockholder, or affiliate except in the ordinary
course of the Borrower's business.
D. Guarantee, assume, endorse or otherwise become or remain liable in
connection with the obligations (including the accounts payable) of any other
Person, in excess of $50,000.00, other than the endorsements of negotiable
instruments in the ordinary course of business for deposit or collection.
E. Enter into any transaction that materially and adversely affects the
Collateral or Borrower's ability to repay the Liabilities or permit, other than
in the ordinary course of business, or agree to any extension, compromise or
settlement or make any change or modification of any kind or nature with respect
to any account including any terms relating thereto.
F. Merge or consolidate with any other corporation or sell, lease, transfer
or otherwise dispose of all or a substantial portion of its assets, outside of
the normal course of business.
ARTICLE VI
SPECIFIC PROVISIONS
A. Revolving Loan Amount. The maximum principal amount outstanding under
the Revolving Loan at any time shall not exceed the lesser of the Borrowing Base
(as defined in Exhibit 1 below) or Three Million Dollars ($3,000,000.00). On or
before the first business day of each calendar month, Borrower shall furnish to
the Lender, in a form satisfactory to the Lender, a current Borrowing Base
Certificate with all calculations and documentation necessary to determine the
current Borrowing Base and the Borrowing Base set forth therein shall be deemed
the Borrowing Base until receipt and approval by Lender of a new Borrowing Base
Certificate.
B. Revolving Loan and Term Loan Interest Rate. Except upon a Default, the
interest rate for the Revolving Loan and Term Loan may be adjusted from time to
time as follows:
1. If Borrower's most recent Form 10Q report furnished to Lender
indicates the following ratios: Total Liabilities to Total Net Worth less than
1.50:1.0 and Working Capital in excess of $2,500,000.00, then the interest rate
otherwise stated for the Revolving Loan (but not the Term Loan) shall be reduced
by 0.50% for the subsequent calendar quarter.
2. If Borrower's most recent Form 10Q report furnished to Lender
indicates the following ratios: Total Liabilities to Total Net Worth less than
1.00:1.0 and Working Capital in excess of $3,500,000.00, then the interest rate
otherwise stated for the Revolving Loan (but not the Term Loan) shall be reduced
by 0.75% for the subsequent calendar quarter.
3. For any calendar quarter, Borrower may elect that the applicable
interest rate under both the Revolving Loan and Term Loan for such calendar
quarter will be the Prime Rate or the Daily Fluctuating LIBO Rate plus 2.50% (as
such terms are defined in the Notes) by providing written notice of such
election to Lender at least fifteen (l5) days prior to the end of the preceding
calendar quarter; otherwise, the applicable interest rate for the preceding
calendar quarter shall continue to be the applicable interest rate for the
subsequent calendar quarter.
ARTICLE VII
DEFAULT
If any one or more of the following events (hereinafter referred to as
"Events of Default") shall occur:
A. If Borrower defaults in the payment of the Liabilities when due and
payable or declared due and payable; or
B. If Borrower defaults in the payment of principal or interest on any
other Liability, including any guarantee of indebtedness of another Person,
beyond any period of grace provided with respect thereto or in the performance
of any other agreement, term or condition contained in any agreement under which
any such Indebtedness is created, if the effect of such default is to cause or
permit the holder or holders of such Indebtedness (or a trustee on behalf of
such holder or holders) to cause such Indebtedness to become due prior to its
stated maturity; or
C. If Borrower defaults in the performance or observance of any agreement
or covenant contained herein or contained in any of the Other Agreements; or
D. If any representation or warranty made by Borrower herein or in any
writing furnished in connection with or pursuant to this Loan Agreement or any
Other Agreements shall be false or misleading in any material respect on the
date as of which made; or
E. In the event of the liquidation or dissolution of Borrower, or
suspension of the business of Borrower or filing by Borrower of a voluntary
petition or an answer seeking reorganization, arrangement or readjustment of its
debts or for any other relief under the Bankruptcy Code, as amended or under any
other insolvency act or law, state or federal, now or hereafter existing, or any
other action of Borrower indicating its consent to, approval of, or acquiescence
in any such petition or proceeding the application by Borrower for, or the
appointment by consent or acquiescence of, a receiver, trustee or custodian of
Borrower, for all or substantial part of its property; the making by Borrower of
an assignment for the benefit of creditors; the inability of Borrower or the
admission by Borrower in writing of its ability to pay its debts as they mature;
or
F. In the event of the filing of an involuntary petition against Borrower
in bankruptcy seeking reorganization, arrangement, readjustment of its debts or
for any other relief under the Bankruptcy Code, as amended, or under any other
insolvency act or law, state or federal, now or hereafter existing; or the
involuntary appointment of a receiver, a trustee or a custodian of Borrower for
all or a substantial part of its property; the issuance of a warrant of
attachment, execution or a similar process against any substantial part of the
property of Borrower and the continuance of any such foregoing events for sixty
(60) days undismissed or undischarged; or
G. If any order is entered in any proceeding against Borrower decreeing the
dissolution or split up of Borrower and such order remains in effect more than
sixty (60) days; or
H. If any report, certificate, financial statement or other instrument
delivered to the Lender by or in behalf of Borrower is false or misleading in
any material respect at the time given; or
I. If an uninsured final judgment, which with other outstanding uninsured
final judgments against Borrower exceeds an aggregate of $100,000 shall be
rendered against Borrower and within thirty (30) days after entry thereof such
judgment shall not have been discharged or executed thereof stayed pending
appeal, or if within thirty (30) days after the expiration of any such stay such
judgment shall not have been discharged;
then, at any time thereafter, the Lender may, at its option, declare the Notes
and all other Liabilities owing by the Borrower to the Lender to be forthwith
due and payable, whereupon the Notes and any other such Liabilities shall
forthwith become due and payable, without presentment, demand, protest or other
notice of any kind, all of which are expressly waived, anything contained herein
or in the Other Agreements to the contrary notwithstanding, and in addition the
Lender may immediately proceed to foreclose all or part of its liens on or
security interest in the Collateral in the proceeds of such foreclosure against
the Liabilities secured thereby in such manner as it shall elect and exercise
its rights under the Other Agreements and to do all other things provided for by
law or by this Agreement or by the Other Agreements.
ARTICLE VIII
GENERAL PROVISIONS
A. The Borrower further agrees to reimburse the Lender for all costs and
out-of-pocket expenses, including fees of the Lender's special counsel, incurred
in connection with the preparation, execution, delivery, modification, waiver
and amendments of this Loan Agreement, the Notes and the related documentation,
and also all reasonable expenses incurred by the Lender (including reasonable
attorneys' fees) in the collection of any Indebtedness incurred hereunder in the
event of default by Borrower.
B. Borrower agrees to pay any and all documentary, intangible stamp or
excise taxes now or after payable in respect of the Loan, this Loan Agreement or
Other Agreements or any modifications thereof and hold the Lender harmless with
respect thereto. The Borrower further agrees that the Lender may deduct from any
advance the amount of any such documentary or intangible stamp tax payable with
respect to such advance, the decision of the Lender as to the amount thereof to
be conclusive, absent manifest error. Borrower gives the Lender the authority to
debit its accounts maintained with the Lender for any principal, interest, fees
or other Liabilities becoming due hereunder.
C. This Loan Agreement sets forth the entire understanding and agreement of
the parties hereto in relation to the subject matter hereof and supersedes any
prior negotiations and agreements among the parties relative to such subject
matter. No promise, condition, representation or warranty, express or implied,
not herein set forth shall bind any party hereto, and none of them has relied on
any such promise, condition, representation or warranty. Each of the parties
hereto acknowledges that, except as in this Loan Agreement otherwise expressly
stated, no representations, warranties or commitments, express or implied, have
been made by any other party to the other. None of the terms or conditions of
this Loan Agreement may be changed, modified, waived or canceled orally or
otherwise, except by writing, signed by all the parties hereto, specifying such
change, modification, waiver or cancellation of such terms or conditions, or of
any preceding or succeeding breach thereof.
D. Notwithstanding any other provision herein, the aggregate interest rate
charged under the Notes, including all charges or fees in connection therewith
deemed in the nature of interest under Florida law, shall not exceed the maximum
rate allowed by law. In the event the stated interest rate on the Notes together
with any other charge or fee deemed in the nature of interest exceeds the
maximum legal rate, then the Lender shall have the right to make such
adjustments as are necessary to reduce the aggregate interest rate to the
maximum legal rate. The Borrower waives any right to prior notice of such
adjustment and further agrees that such adjustment may be made by the Lender
subsequent to notification from Borrower that the aggregate interest charged
exceeds the maximum legal rate.
E. This Loan Agreement, the Security Agreement and the Notes issued
hereunder shall be governed in all respects by the laws of Florida.
F. Should any one or more of the provisions of this Loan Agreement be
determined to be illegal or unenforceable as to one or more of the parties, all
other provisions nevertheless shall remain effective and binding on the parties
hereto.
G. Borrower and Lender hereby consent and agree that, in any actions
predicated upon this Agreement, venue is properly laid in Brevard County,
Florida, and that the Circuit Court for Brevard County, Florida shall have full
jurisdiction to determine all issues arising out of or in connection with the
execution and enforcement of this Agreement. Borrower waives to the fullest
extent permitted under the laws of the State of Florida, any right, power or
privilege to demand a jury trial with respect to any and all issues arising out
of or in connection with the execution and/or enforcement of this Agreement.
H. Borrower warrants and represents to and covenants with Lender that, on
and after the date of the Notes, so long as any of the indebtedness provided for
herein remains unpaid:
1. Borrower, on behalf of Borrower and any material subsidiaries of
Borrower (hereinafter referred to as the "Organization"), has: (a) undertaken a
reasonably detailed inventory, review, and assessment of all areas within and
affecting the Organization's business and operations that could be materially
and adversely affected by the failure of the Organization to be Year 2000
Compliant (as hereinafter defined) by April 15, 1999; (b) developed a reasonably
detailed plan and time line for becoming Year 2000 Compliant by June 30, 1999;
and (c) to date, implemented that plan in accordance with the specified
timetable in all material respects.
2. The Organization currently has and will maintain the human, financial
and other resources reasonably necessary to complete its Year 2000 plan by June
30, 1999 and reasonably anticipates that the Organization will be Year 2000
Compliant by September 30, l999.
3. The Organization has made written inquiry of each of the
Organization's key suppliers, vendors and customers (as hereinafter defined) as
to whether such persons will, by July 31, 1999, be Year 2000 Compliant in all
material respects and on the basis of such inquiry reasonably believes that all
such persons will be so compliant.
4. Borrower shall deliver to Lender: (a) within forty-five (45) days
after the end of each calendar quarter, a statement signed by the president or
chief financial officer of the Organization certifying that the Organization is
in compliance with terms, conditions and covenants of this Note; (b) immediately
upon becoming aware of the existence of any condition or event which constitutes
or will constitute, but for the passage of time or giving of notice or both, an
event of default, a written notice specifying the nature and period of existence
thereof and what action the Organization is taking or proposes to take with
respect thereto; (c) the Organization's Year 2000 plan and time line, (d) all
periodic internally and externally prepared evaluations and progress reports
concerning the Organization's Year 2000 plan and Year 2000 readiness, (e) any
management or other letters from the Organization's accountants addressing or
mentioning the Organization's Year 2000 Compliance, and (f) such other
information, documentation and materials as Lender may reasonably request form
time to time in order to confirm that the Organization is Year 2000 Compliant
and the method(s) used by the Organization to become Year 2000 Compliant.
As used herein, "Year 2000 Compliant" shall mean that all software,
embedded microchips and other processing capabilities utilized by the
Organization or the Organization's key suppliers, vendors and customers will
correctly process, sequence, and calculate, without interruption, all date and
date related data for all dates to, through and after January 1, 2000, including
leap year calculations, and shall recognize, store and transmit date data in a
format which clearly indicates the correct century. As used herein, "key
suppliers, vendors and customers" means those suppliers, vendors, and customers
of the Organization whose business failure or material business disruption
would, in Lender's judgment, be reasonably likely to result in a material
adverse change in the business, properties, condition (financial or otherwise),
or prospects of the Organization.
IN WITNESS WHEREOF, Borrower and Lender have hereunto caused these presents
to be executed on the date first above written.
Signed, sealed and delivered "BORROWER"
in the presence of:
SOFTWARE TECHNOLOGY, INC., a
Florida corporation
/s/ Xxxx X. Xxxx By: /s/ Xxxxx X. Xxxx
----------------------------- ---------------------------
/s/ Xxxxx X. Rochester Treasurer
-----------------------------
Two witnesses as to Borrower
(CORPORATE SEAL)
Signed, sealed and delivered "GUARANTORS"
in the presence of:
EXIGENT INTERNATIONAL, INC., a
Delaware corporation
/s/ Xxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------ ----------------------------
/s/ Xxxxx X. Rochester CFO, Senior Vice President
Two witnesses as to Exigent
International, Inc.
(CORPORATE SEAL)
FOTOTAG, INC., a
Delaware corporation
/s/ Xxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------ ----------------------------
/s/ Xxxxx X. Rochester Assistant Secretary
Two witnesses as to Fototag, Inc.
(CORPORATE SEAL)
"LENDER"
THE HUNTINGTON NATIONAL BANK
By:/s/ Xxxxx X. Rochester
-------------------------------- ----------------------------
Name: Xxxxx X. Rochester
/s/ Xxxx X. Xxxx Title: Senior Vice President
--------------------------------
Two witnesses as to Lender
EXHIBIT 1
Definitions
"Borrowing Base" will consist of up to 80% of "eligible" accounts
receivable plus up to 50% of "eligible" contract receivables plus the lesser of
$l,500,000.00 or up to 50% of "eligible" Costs in Excess of Xxxxxxxx.
"Eligible" is defined as: (l) Accounts receivable: amounts that are less
than 90 days from invoice date; (2) Contracts receivable: amounts that are fully
recoverable according to contract terms within one year. Contracts shall be
submitted to Lender prior to funding request being made. Eligibility shall be
determined by Lender in its sole discretion; (3) Costs in excess of xxxxxxxx:
amounts that are to be billed as of the end of the current month. No advance
will be made on accounts whose balance that is over 90 days from invoice date is
over 25% of the total account balance.
"Collateral" means all of the accounts, inventory, equipment and other
personal property of the Borrower described in the Security Agreement.
"Current Assets" means cash and all other assets or resources of the
Borrower and the Guarantors that are expected to be realized in cash, sold in
the ordinary course of business, or consumed within one year, all determined in
accordance with Generally Accepted Accounting Principles, including, but not
limited to, inventory supported by outstanding import letters of credit.
"Current Liabilities" means the amount of all liabilities of the Borrower
and the Guarantors that by their terms are payable within one year (including
all indebtedness payable on demand or maturing not more than one year from the
date of computation and the current portion of Indebtedness having a maturity
date in excess of one year), all determined in accordance with Generally
Accepted Accounting Principles, including, but not limited to, outstanding
letters of credit.
"Tangible Net Worth" means the depreciated book value of all assets of
Borrower and Guarantors less:
(i) intangible assets, such as (without limitation) goodwill (whether
representing the excess of cost over book value of assets acquired or
otherwise), capitalized expenses, patents, trademarks, trade names,
copyrights, franchises, licenses and deferred charges, such as (without
limitation) unamortized costs and costs of research and development.
(ii) Total Liabilities,
(iii) treasury stock, and
(iv) advances to stockholders or affiliates of the Borrower.
"Total Liabilities" means the aggregate amount of all liabilities (i.e.,
claims of creditors of Borrower and Guarantors that are to be satisfied by the
disbursement or utilization of corporate resources), including, but not limited
to, all outstanding import letters of credit and negative goodwill of Borrower
and Guarantors.
"Current Ratio" means the ratio of Current Assets to Current Liabilities.
"Default" means any event that, with the giving of notice, lapse of time,
or both, would become an Event of Default.
"Fiscal Year" means the 12-month period of the Borrower ending on December
3l of each Calendar year and commencing on January lst of each calendar year.
"Generally Accepted Accounting Principles" means those principles of
accounting set forth in Opinions of the Financial Accounting Standards Board or
the American Institute of Certified Public Accountants or which have other
substantial authoritative support and are applicable in the circumstances as of
the date of a report, as such principles are from time to time supplemented and
amended.
"Indebtedness" means with respect to any Person, all indebtedness of such
Person for borrowed money, all indebtedness of such Person for the acquisition
of property other than purchases of products and merchandise in the ordinary
course of business, indebtedness secured by any lien, pledge or other
encumbrance on the property of such Person whether or not such indebtedness is
assumed, all liability of such Person by way of endorsements (other than for
collection or deposit in the ordinary course of business); all guarantees of
Indebtedness of any other Person by such Person (including any agreement,
contingent or otherwise, to purchase any obligation representing such
indebtedness or property constituting security therefor, or to advance or supply
funds for such purpose or to maintain working capital or other balance sheet or
income statement condition, or any other arrangement in substance effecting any
of the foregoing); all leases and other items which in accordance with Generally
Accepted Accounting Principles are classified as liabilities on a balance sheet;
provided that in no event shall the term Indebtedness include capital stock,
surplus and retained earnings, minority interest in the common stock of
Subsidiaries, reserves for deferred income taxes and investment credits, other
deferred credits and reserves, and deferred compensation obligations.
"Liabilities" mean all liabilities, obligations and indebtedness of any and
every kind and nature (including, without limitation, interest, charges,
expenses, attorneys' fees and other sums chargeable to Borrower by the Lender
and future advances made to or for the benefit of Borrower), whether arising
under this Loan Agreement, or arising under the Notes or arising under any of
the Other Agreements or acquired by the Lender and from any other source,
whether heretofore, now or hereafter owing, arising, due or payable from
Borrower to the Lender and howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise,
including obligations of performance.
"Other Agreements" means the Notes, the Guaranty Agreement, the Security
Agreement and all agreements, instruments and documents, including, without
limitation, notes, guaranties, mortgages, deeds to secure debt, deeds of trust,
chattel mortgages, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, financing statements, certificates of
title, trust account agreements and all other Written matters whether
heretofore, now or hereafter executed by or on behalf of Borrower and delivered
to the Bank, with respect to this Loan Agreement, or with respect to the
transactions contemplated by this Loan Agreement.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a government agency
or political subdivision thereof.
All accounting terms not specifically defined herein shall be construed in
accordance with Generally Accepted Accounting Principles.
All of the terms defined in this Loan Agreement shall have such defined
meanings when used in the Other Agreements.
