Loan and Security Agreement [Amendment] - SunTrust Bank, ANADAC Inc. and Legislative Demographic Services Inc.
JUNE 2001 AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS JUNE 2001 AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment"),
dated and effective as of June 26, 2001, made by and between SUNTRUST BANK, a
Georgia banking corporation, successor in interest to CRESTAR BANK, a Virginia
bank corporation, (the "Lender"), ANADAC, INC., a Virginia corporation (the
"Parent"), and LEGISLATIVE DEMOGRAPHIC SERVICES, INC., a Delaware corporation,
formerly known as System Dynamics, Inc., a Delaware corporation, and each other
Subsidiary (as defined below) that becomes a party to this Amendment in
accordance with the provisions set forth below (together with the Parent, LDS,
collectively, the Borrowers, and individually, a Borrower), recites and
provides:
RECITALS
The Parent, Defense Systems Concepts, Inc., a Maryland corporation ("DSC"),
and the Lender are parties to a Loan and Security Agreement, dated as of January
9, 1991 (the "Original Loan Agreement"). LDS subsequently became a party to the
Original Loan Agreement in accordance with the terms thereof, and DSC
subsequently was released as a party to the Original Loan Agreement. The
Original Loan Agreement has been amended by amendments dated August 5, 1992,
October 23, 1992, July 26, 1993, January 31, 1995, May 26, 1995, June 21, 1995,
May 24, 1996, December 31, 1996, October 31, 1997, November 10, 1998, and
February 4, 1999 (the "Substantive Amendments"). In addition, the Termination
Date, as defined in the Original Loan Agreement, has been extended from time to
time pursuant to various letter agreements (the "Extension Letters"). The
Original Loan Agreement, as amended to the date hereof by the Substantive
Amendments and the Extension Letters, and as further amended, modified or
supplemented from time to time, shall be referred to as the "Loan Agreement."
Terms defined in the Loan Agreement shall have the same defined meanings when
such terms are used in this Amendment.
The Borrowers and the Lender have agreed to amend the terms of the Loan
Agreement. Accordingly, for valuable consideration, the receipt and sufficiency
of which are acknowledged, the Borrowers and the Lender agree as follows:
AGREEMENT
1. The following definitions in Section 1 of the Loan Agreement are
amended to read in their entirety as follows:
"Debt" means, collectively, and includes, without duplication, with
respect to any specified Person, (a) indebtedness or liability for borrowed
money (whether by loan, the issuance and sale of debt securities or the sale of
assets to another Person subject to an understanding or agreement, contingent or
otherwise to repurchase such assets from such Person) or for the deferred
purchase price of property or services; (b) obligations as a lessee under a
Capital Lease; (c) obligations to reimburse the issuer of letters of credit or
acceptances; (d) all guaranties, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any other
Person or otherwise to assure a creditor against loss; (e) obligations under
interest rate swap,
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cap or collar agreements or similar agreements or arrangements designed to
protect that Person against fluctuations in interest rates; (f) obligations
under any foreign exchange contract, currency swap or other similar agreements
or arrangements designed to protect that Person against fluctuations in
currency values; (g) all preferred stock or similar equity interests issued by
such Person which by the terms thereof could be (at the request of the holders
thereof or otherwise) subject to mandatory sinking fund payments, redemption or
acceleration at any time during the term of this Agreement; and (h) the amount
of contingent obligations of such Person incurred in connection with
acquisitions (including, without limitation, obligations to make earnout
payments), in each case determined in accordance with GAAP; and (i) obligations
secured by any Lien on property owned by the specified Person, whether or not
the obligations have been assumed.
"Subsidiary" as to any Person, means a corporation, partnership,
limited partnership, limited liability company or other entity of which shares
of stock or other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such entity are at the time owned, or the management of which
is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Parent.
"Termination Date" means June 30, 2002, and any extension or
extensions thereof granted by the Lender in accordance with the provisions of
Section 2.1 (h).
2. The following definitions are added to Section 1 of the Loan
Agreement:
"Adjusted EBITDA" means, for any period, EBITDA for such period,
plus, to the extent deducted to determine consolidated Net Income for such
period, extraordinary or unusual losses or other losses not incurred in the
ordinary course of business during the fiscal year ending June 30, 2001 up to a
maximum of $1,500,000 in the aggregate, minus, to the extent added to determine
such consolidated Net Income, extraordinary or unusual gains or other gains not
incurred in the ordinary course of business, in each case determined in
accordance with GAAP.
"EBITDA" means, for any period, (a) consolidated Net Income of the
Parent and its Subsidiaries for such period plus, (b) to the extent deducted to
determine such consolidated Net Income, the sum of (1) depreciation expense,
(2) interest expense, (3) amortization expense, and (4) tax expense, in each
case determined in accordance with GAAP.
"Fixed Charges Coverage Ratio" means, for each 12-month period ending
on the last day of each fiscal quarter of the Parent, the ratio of (a) Adjusted
EBITDA for such period to (b) the sum of (1) interest expense for such period
plus (2) current maturities of long-term Debt outstanding on the last day of
such period, including, without limitation, the current maturity components of
Capital Lease and Synthetic Lease payments plus (3) cash taxes; paid during
such period. The foregoing shall be determined on a consolidated basis for the
Parent and its Subsidiaries in accordance with GAAP.
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"Net Income" means, for any Person for any period, the consolidated
gross revenues of such Person and its Subsidiaries for such period less all
consolidated operating and non-operating expenses (including taxes) or such
Person and its Subsidiaries for such period, all as determined in accordance
with GAAP.
3. Section 6.6 of the Loan Agreement is deleted in its entirety and
replaced with the following provision:
"Section 6.6 Dividends. No Borrower will declare or pay any
dividends; or purchase, redeem, retire or otherwise acquire for value any of
its capital stock now or hereafter outstanding; or make any distribution of
assets to its stockholders as such whether in cash, assets or obligations of
such Borrower; or allocate or otherwise set apart any sum for the payment of
any dividend or distribution on, or for the purchase, redemption or retirement
of, any shares of its capital stock; or make any other distribution by
reduction of capital or otherwise in respect of any shares of its capital
stock; or permit any of its Subsidiaries to purchase or otherwise acquire for
value any stock of such Borrower or another Subsidiary, except that, subject to
the compliance by the Borrowers with the provisions of Section 7 below, (a) a
Borrower may declare and deliver dividends and make distributions payable in
common stock of such Borrower, (b) a Borrower may purchase or otherwise acquire
shares of its capital stock by exchange for or out of the proceeds received
from a substantially concurrent issue of new shares of its capital stock, and
(c) the Parent or any Subsidiary may pay dividends to IDENTIX, the Parent or to
another Subsidiary after three days' prior written notice to the Lender,
provided that both and after giving effect to such payment, the Borrowers have
not violated the financial covenants contained in Section 7 hereof."
4. Section 7.1 of the Loan Agreement is deleted in its entirety and is
replaced with the following provision:
Section 7.1 Minimum Tangible Net Worth. The Parent will maintain at
all times a Tangible Net Worth of not less than $7,500,000."
5. Section 7.3 of the Loan Agreement is deleted in its entirety and
replaced with the following provision:
Section 7.3 Minimum Net Income. Beginning on July 1, 2001 the Parent
shall not permit the consolidated Net Income of the Parent and its
Subsidiaries for each year to date calendar quarter to be less than $1."
6. Section 7.4 of the Loan Agreement is inserted with the following
provision:
Section Fixed Charges Coverage Ratio. At all times the Parent shall
not permit the Fixed Charges Coverage Ratio as of the end of each of its
fiscal quarters to be less than 1.20 to 1."
7. Except for the amendments to the Loan Agreement set forth above, the
Loan Documents shall remain in full force and effect. The Borrowers acknowledge
and
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agree that this Amendment effects an extension of the Termination Date, among
other amendments, and is not a novation, and the Borrowers ratify and confirm
the remaining terms and provisions of the Loan Documents in all respects.
8. The Borrowers represent and warrant that this Amendment has been
duly authorized, executed and delivered by each of them in accordance with
resolutions adopted by their respective boards of directors. All other
representations and warranties made by the Borrowers in the Loan Documents are
incorporated by reference in this Amendment and are deemed to have been
repeated as of the date of this Amendment, with the same force and effect as if
set forth in this Amendment, except that any representation or warranty
relating to any financial statements shall be deemed to be applicable to the
financial statements most recently delivered to the Lender in accordance with
the provisions of the Loan Documents.
9. The Borrowers jointly and severally agree to pay all costs and
expenses incurred by the Lender in connection with this Amendment, including,
but not limited to, reasonable attorneys' fees.
10. This Amendment shall be governed by the laws of the Commonwealth of
Virginia, without reference to conflict of laws principles.
11. This Amendment may be executed by the parties individually or in
any combination, in one or more counterparts, each of which shall be an
original and all of which together constitute one and the same instrument.
12. The Borrowers acknowledge and agree that there are no defenses,
counterclaims or setoffs against any of their respective obligations under the
Loan Documents.
[SIGNATURES ON FOLLOWING PAGE]
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WITNESS the following signatures.
ANADAC, INC.
a Virginia corporation
By: /s/ MELINDA K. JENSEN
------------------------------
Name: Melinda K. Jensen
------------------------------
Title: CFO
------------------------------
LEGISLATIVE DEMOGRAPHIC
SERVICES, INC., a Delaware corporation,
formerly known as System Dynamics, Inc.,
a Delaware corporation
By: /s/ P.J. BULGER
------------------------------
Name: P.J. Bulger
------------------------------
Title: CEO
------------------------------
SUNTRUST BANK,
a Georgia banking corporation, formerly
known as Crestar Bank, a Virginia banking
corporation
By: /s/ BRIAN HAGGERTY
------------------------------
Name: Brian Haggerty
------------------------------
Title: Vice President
------------------------------
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8245 Boone Boulevard
Vienna, Virginia 22182-2604
Fax 703-902-9075
____________________________________________________________________________
[SUNTRUST LOGO]
April 10, 2001
Ms. Mindy Jensen
Chief Financial Officer
Anadac, Inc.
Suite 900
2200 Clarendon Boulevard
Arlington, Virginia 22201
Dear Mindy:
Reference is made to the Loan and Security Agreement, dated as of January 9,
1991 (the "Original Loan Agreement"), by and between SUNTRUST BANK, a Georgia
banking corporation, successor in interest to CRESTAR BANK, a Virginia banking
corporation (the "Lender"), ANADAC, INC., a Virginia corporation (the
"Parent"), and LEGISLATIVE DEMOGRAPHIC SERVICES, INC., a Delaware corporation,
formerly known as System Dynamics, Inc., a Delaware corporation ("LDS," and
together with the Parent, the "Borrowers"). The Original Loan Agreement, as
amended to the date hereof by the Substantive Amendments and the Extension
Letters, and as further amended, modified or supplemented from time to time,
shall be referred to as the "Loan Agreement." Terms defined in the Loan
Agreement shall have the same defined meanings when such terms are used herein.
Per the terms of the Loan Agreement the Termination Date is presently defined
as March 31, 2001. The Borrower and the Lender are currently working to modify
certain terms and conditions of the Loan Agreement in conjunction with the
annual extension of the Termination Date. To facilitate this process and insure
that the Borrowers continue to have benefit of the credit facilities outlined
in the Loan Agreement the definition of the Termination Date is hereby
modified to mean June 30, 2001.
At this time our expectation is that we will come to mutual agreement
concerning the modified terms and conditions of the Loan Agreement within a
short period of time and that this will be followed with a longer-term
extension. Thank-you for your patience during this period and we look forward
to the completion of this process.
Sincerely
By /s/ BRIAN HAGGERTY
-----------------------
Brian Haggerty
Vice President
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CRESTAR BANK
8245 Boone Boulevard
Vienna, Virginia 22182-3871
____________________________________________________________________________
May 1, 2000 [CRESTAR LOGO]
Ms. Mindy K. Jensen
Chief Financial Officer
Anadac, Inc.
2200 Clarendon Boulevard Suite 900,
Arlington, Virginia 22201
Dear Ms. Jensen:
Reference is made to the Loan and Security Agreement, dated as of January 9,
1991 (the "Original Loan Agreement"), by and between CRESTAR BANK, a Virginia
banking corporation (the "Lender"), ANADAC, INC., a Virginia banking corporation
(the "Parent"), and LEGISLATIVE DEMOGRAPHIC SERVICES, INC., a Delaware
corporation, formerly known as System Dynamics, Inc., a Delaware corporation
("LDS," and together with the Parent, the "Borrowers"). The Original Loan
Agreement, as amended to the date hereof by the Substantive Amendments and the
Extension Letters, and as further amended, modified or supplemented from time to
time, shall be referred to as the "Loan Agreement." Terms defined in the Loan
Agreement shall have the same defined meanings when such terms are used herein.
Please consider the correspondence as confirmation of the Bank's agreement
to modify the definition of the Termination Date from April 30, 2000 to March
31, 2001. All other terms and conditions of the Loan Agreement shall remain
in full force and effect.
As you know from our conversation of last week the Bank is interested in
reaching a mutual understanding with regard to a modification in the Minimum
Tangible Net Worth Covenant, more fully described in Section 7.1 of the
Agreement. We are also aware of your desire to have the Termination Date extend
for a period of up to two years. Please be advised of our intent to work in good
faith to come a satisfactory resolution on these issues over the course of the
next few weeks. During the interim we ask that you acknowledge your acceptance
of the terms and conditions outlined herein, in the space provided below. Should
you have any questions and or comments please do not hesitate to contact me at
703-902-9070.
Sincerely,
CRESTAR BANK
By: /s/ BRIAN HAGGERTY
------------------------
Brian Haggerty
Vice President
ACKNOWLEDGEMENTS ON FOLLOWING PAGE
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BORROWER
ANADAC, INC.
By: /s/ MELINDA K. JENSEN
-----------------------------
Name: Melinda K. Jensen
-----------------------------
Title: Chief Financial Officer
-----------------------------