FIRST AMENDMENT
TO
REVOLVING LINE OF CREDIT LOAN AGREEMENT AND SECURITY
AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING
LINE OF CREDIT LOAN AGREEMENT AND SECURITY AGREEMENT (this
“Amendment”) is made effective as of November 30,
2006, by and among Horne Engineering Services, LLC, a Virginia
limited liability company (“Horne, LLC”), having an
address at 2677 Prosperity Avenue, Suite 300, Fairfax,
Virginia 22031 and Horne International, Inc. (formerly known as
Spectrum Sciences & Software Holdings Corp.), a Delaware
corporation (“Horne, Inc.” and together with Horne,
LLC, jointly and severally, the “Existing Borrowers”),
having an address at 2677 Prosperity Avenue, Suite 300,
Fairfax, Virginia 22031, Spectrum Sciences & Software, Inc., a
Florida corporation (“Spectrum”), having an address at
91 Hill Avenue, N.W., Fort Walton Beach, Florida 32548 and Coast
Engine & Equipment Company, Inc., a Florida corporation
(“Coast”), having an address at 8985 Columbia Road,
Suite A, Cape Canaveral, Florida 32920; and Bank of America,
N.A., a national banking association (the
“Lender”).
RECITALS
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A.
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The Existing Borrowers and the Lender are
parties to that certain Revolving Line of Credit Loan Agreement and
Security Agreement, dated as of March 2, 2006 (the “Loan
Agreement”).
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B.
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Pursuant to the Loan Agreement, Lender made a
revolving line of credit loan to the Existing Borrowers, jointly
and severally, in the maximum principal amount of Six Million and
00/100 Dollars ($6,000,000.00) (the “Revolving
Loan”).
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C.
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The Revolving Loan is evidenced by that
certain Revolving Note, dated as of March 2, 2006, executed
jointly and severally by the Existing Borrowers and made payable to
the order of Lender in the maximum principal amount of Six Million
and 00/100 Dollars ($6,000,000.00) (the “Revolving
Note”).
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D.
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The Existing Borrowers, Spectrum, Coast and
Lender have agreed to amend the Loan Agreement to, among other
things, add Spectrum and Coast as co-borrowers thereunder, and for
certain additional purposes.
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E.
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Capitalized terms used in this Amendment and
not defined herein have the meanings ascribed to them in the Loan
Agreement.
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AGREEMENTS
NOW, THEREFORE, in consideration of
the premises, the mutual agreements herein contained, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Existing Borrowers, Spectrum,
Coast and the Lender hereby agree as follows:
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1.
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Recitals . The Recitals to this
Amendment are incorporated herein by reference and made a part
hereof.
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2.
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Representations and Warranties .
To induce the Lender to enter into this Amendment, each of the
Existing Borrowers, Spectrum and Coast jointly and severally
warrants and represents to the Lender that:
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a.
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No litigation is pending or, to our knowledge,
threatened against any of the Existing Borrowers, Spectrum or Coast
of which Lender has not been informed in writing.
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b.
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Each of the Existing Borrowers, Spectrum and
Coast has the power and authority to execute, deliver and perform
its obligations under this Amendment and all other documents
executed in connection herewith or pursuant hereto, and to incur
the obligations provided for herein and therein, all of which have
been duly authorized and approved in accordance with its respective
organizational documents. Spectrum is a corporation duly organized,
validly existing and its status is active under the laws of
Florida, Spectrum’s state of incorporation, and Spectrum is
also qualified to do business as a foreign corporation and is in
good standing in all jurisdictions where its activities or
ownership of property require such qualification, except for such
jurisdictions where failure to be so qualified would not have a
material adverse effect on Spectrum. Coast is a corporation duly
organized, validly existing and its status is active under the laws
of Florida, Coast’s state of incorporation, and Coast is also
qualified to do business as a foreign corporation and is in good
standing in all jurisdictions where its activities or ownership of
property require such qualification, except for such jurisdictions
where failure to be so qualified would not have a material adverse
effect on Coast.
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c.
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This Amendment and all other documents
executed by any of the Existing Borrowers, Spectrum and Coast in
connection herewith or pursuant hereto, constitute the valid and
legally binding obligations of the Existing Borrowers, Spectrum and
Coast, as the case may be, enforceable against the Existing
Borrowers, Spectrum and Coast, as the case may be, in accordance
with their respective terms, except where enforceability may be
limited by bankruptcy, insolvency or other similar laws relating to
the enforcement of creditors’ rights generally, and except
that equitable remedies provided in the Loan Documents are subject
to the court’s discretion under principles governing the
exercise of equitable jurisdiction.
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d.
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The obligations of the Existing Borrowers,
Spectrum and Coast under the Loan Documents to which the Existing
Borrowers, Spectrum and/or Coast, as the case may be, is a party,
as amended by this Amendment and all other documents executed in
connection herewith or related hereto, are valid and enforceable
obligations of the Existing Borrowers, Spectrum and Coast, except
where enforceability may be limited by bankruptcy, insolvency or
other similar laws relating to the enforcement of creditors’
rights generally, and except that equitable remedies provided in
the Loan Documents are subject to the court’s discretion
under principles governing the exercise of equitable jurisdiction.
The execution and delivery of this Amendment and all other
documents executed in connection herewith or pursuant hereto, shall
not be construed as a novation of the Loan Agreement, any other
Loan Document, or any indebtedness evidenced thereby.
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e.
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Immediately after giving effect to the
transactions contemplated by this Amendment and all other documents
executed in connection herewith or pursuant hereto (i) none of
the Existing Borrowers, Spectrum or Coast shall be in default of
any of the terms and provisions of the Loan Agreement or any other
Loan Document to which any of such entities is a party, in each
case as amended hereby, or pursuant to any document executed in
connection herewith or pursuant hereto; (ii) all
representations and warranties of the Existing Borrowers, Spectrum
and/or Coast set forth in the Loan Agreement or any other Loan
Document to which any of such entities is a party, in each case as
amended hereby, or pursuant to any document executed in connection
herewith or pursuant hereto, shall be true and correct in all
material respects; and (iii) each of the Existing Borrowers,
Spectrum and Coast shall be in compliance with all covenants set
forth in the Loan Agreement and the other Loan Documents to which
it is a party, in each case as amended hereby or pursuant to any
document executed in connection herewith or pursuant hereto.
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3.
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Addition of Spectrum and Coast as
Co-Borrowers . By executing this Amendment each of the
Existing Borrowers, Spectrum and Coast acknowledge and agree that,
effective as of the date hereof (i) each of Spectrum and Coast
shall become a party to and co-borrower under the Loan Agreement
and shall for all purposes be deemed to be a “Borrower”
under the Loan Agreement; and (ii) the obligations and
liabilities of the Existing Borrowers, Spectrum and Coast under the
Loan Agreement and the other Loan Documents, in each case as
amended hereby, or pursuant to any document executed in connection
herewith or pursuant hereto, shall hereby be the joint and several
obligations of the Existing Borrowers, Spectrum and Coast.
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4.
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Definition of Borrower .
Section 1.1 of the Loan Agreement is hereby amended to delete
the definition of Borrower set forth therein and to substitute the
following therefor:
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"" Borrower ” means
Horne Engineering Services, LLC, a Virginia limited liability
company, Horne International, Inc. (formerly known as Spectrum
Sciences & Software Holdings Corp.), a Delaware corporation,
Spectrum Sciences & Software, Inc., a Florida corporation, and
Coast Engine & Equipment Company, Inc., a Florida corporation,
and to each such Person or to all of them, as the context may
require, and the representations, warranties, covenants, grants,
liabilities and obligations hereunder of the Persons comprised by
the term “Borrower” shall be joint and several. For
purposes of testing compliance with the financial covenants
hereinafter, the negative covenants hereinafter, and the unused fee
provided hereinafter, financial information concerning the Borrower
shall mean financial information for Horne Engineering Services,
LLC, Horne International, Inc., Spectrum Sciences & Software,
Inc., and Coast Engine & Equipment Company, Inc., stated on a
consolidated basis.”
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5.
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Future Advances; Compliance
Certificate . The following new subsection f. entitled
Compliance Certificate is added to Section 3.2 of the Loan
Agreement:
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“f. Compliance
Certificate . Lender shall have received a Compliance
Certificate, in form and substance satisfactory to Lender, which is
to include, among other things, the calculation by Borrower of the
financial covenants set forth in Section 6.14 of the Loan
Agreement.”
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6.
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Monthly Reports . Subsection e.
of Section 6.11 of the Loan Agreement entitled “
Monthly Reports ” is hereby deleted in its entirety
and restated as follows:
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“e. Monthly Reports .
Borrower shall deliver to the Lender the following financial
reports, prepared on a consolidated basis:
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1.
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as soon as available, but not later than
twenty (20) days after the end of each month, an accounts
payable report in intervals of not more than thirty (30) days;
and
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2.
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as soon as available, but not later than
twenty (20) days after the end of each month, an accounts
receivable aging schedule in intervals of not more than thirty
(30) days; and
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3.
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as soon as available, but not later than forty
five (45) days after the end of each month, management
prepared financial statements, including balance sheets, profit and
loss statements and cash flow statements, with supporting
schedules, along with a Compliance Certificate, executed by an
authorized officer of the Borrower familiar with the financial
condition and operation of the Borrower; and
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4.
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as soon as available, but not later than
twenty (20) days after the end of each month, a listing of any
and all cash disbursements made by Borrower in the preceding month
which exceed the sum of Two Hundred Fifty Thousand and 00/100
Dollars ($250,000.00).”
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7.
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Minimum EBITDA Covenant .
Subsection a. of Section 6.14 of the Loan Agreement entitled
“ Minimum EBITDA ” is hereby deleted in its
entirety.
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8.
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Tangible Net Worth Covenant .
Subsection b. of Section 6.14 of the Loan Agreement entitled
“ Tangible Net Worth ” is hereby deleted in its
entirety and the following is substituted therefor:
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“b. Tangible Net Worth
. A minimum Tangible Net Worth, as follows:
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1.
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of at least Fourteen Million Five Hundred
Thousand and 00/100 Dollars ($14,500,000.00) at all times from
June 30, 2006 through September 29, 2006;
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2.
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of at least Thirteen Million Five Hundred
Thousand and 00/100 Dollars ($13,500,000.00) at all times from
September 30, 2006 through December 30, 2006; and
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3.
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of at least Thirteen Million and 00/100
Dollars ($13,000,000.00) at all times after December 30,
2006.
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Compliance with financial covenant
6.14 b. will be subject to calculation at all times.”
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9.
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Liquidity Covenant . The
following is hereby added as Subsection a. of Section 6.14 to
the Loan Agreement, in the place of the “Minimum
EBITDA” covenant deleted pursuant to the terms of this
Amendment:
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“a. Liquidity Covenant
. Effective as of June 30, 2006, Borrower shall maintain at
all times a minimum Liquidity of Two Million and 00/100 Dollars
($2,000,000.00). “Liquidity” is hereby defined as all
of Borrower’s right, title and interest in cash (and such
cash equivalents deemed acceptable by Lender), subject to no
ownership right or interest of any Person other than Borrower, and
subject to no encumbrance or lien of any Person other than as may
have been granted or provided by Borrower for the benefit of
Lender.”
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10.
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Transfer of Assets .
Section 7.5 of the Loan Agreement entitled “ Transfer
of Assets ” is hereby deleted in its entirety and
restated as follows:
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“7.5 Transfer of Assets
. Sell, lease, assign, pledge or otherwise dispose of any of its
properties, stock or assets (inclu
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