|
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
|
|
A.
|
|
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").
|
|
|
B.
|
|
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").
|
|
|
C.
|
|
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").
|
|
|
D.
|
|
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.
|
|
|
E.
|
|
Capitalized terms used in this Amendment and not defined herein
have the meanings ascribed to them in the Loan Agreement.
|
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:
|
1.
|
|
Recitals . The Recitals to this Amendment are
incorporated herein by reference and made a part hereof.
|
|
2.
|
|
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:
|
|
|
a.
|
|
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.
|
|
|
b.
|
|
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.
|
|
|
c.
|
|
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.
|
|
|
d.
|
|
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.
|
|
|
e.
|
|
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.
|
|
3.
|
|
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.
|
|
4.
|
|
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:
|
-
"" 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."
|
5.
|
|
Future Advances; Compliance Certificate . The
following new subsection f. entitled Compliance Certificate is
added to Section 3.2 of the Loan Agreement:
|
-
"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."
|
6.
|
|
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:
|
|
|
1.
|
|
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
|
|
|
2.
|
|
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
|
|
|
3.
|
|
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
|
|
|
4.
|
|
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)."
|
|
7.
|
|
Minimum EBITDA Covenant . Subsection a. of
Section 6.14 of the Loan Agreement entitled " Minimum
EBITDA " is hereby deleted in its entirety.
|
|
8.
|
|
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:
|
|
|
1.
|
|
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;
|
|
|
2.
|
|
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
|
|
|
3.
|
|
of at least Thirteen Million and 00/100 Dollars ($13,000,000.00)
at all times after December 30, 2006.
|
|
9.
|
|
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:
|
-
"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."
|
10.
|
|
Transfer of Assets . Section 7.5 of the Loan
Agreement entitled " Transfer of Assets " is hereby deleted
in its entirety and restated as follows:
|
-
"7.5 Transfer of Assets . Sell, lease, assign, pledge or
otherwise dispose of any of its properties, stock or assets
(including without limitation, the Collateral), whether now owned
or hereafter acquired, except in the ordinary cours
|
