Exhibit 4.7
THIRD AMENDMENT TO SIXTH AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO SIXTH AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (the "Amendment"), dated as of July 5, 2000, is made by and
among HALIFAX CORPORATION, a Virginia corporation (the "Company"),
HALIFAX ENGINEERING, INC., a Virginia corporation ("Engineering") and
HALIFAX REALTY, INC., a Virginia corporation ("Realty," and together with
the Company and Engineering, collectively, the "Borrowers"), and SunTrust
BANK, a Georgia banking corporation, successor by merger to CRESTAR BANK
(the "Lender").
RECITALS
The Borrowers and the Lender are parties to the Sixth Amended and
Restated Loan and Security Agreement, dated as of September 1, 1999, as
amended by the First Amendment to Sixth Amended and Restated Loan and
Security Agreement, dated as of September 30, 1999 and by the Second
Amendment to Sixth Amended and Restated Loan and Security Agreement,
dated as of December 21, 1999 (as further amended, modified or
supplemented from time to time, the "Loan Agreement"). By virtue of the
closing of the HTSI Sale, Technical is no longer a party to the Loan
Documents. Capitalized terms defined in the Loan Agreement and undefined
herein shall have the same defined meanings when such terms are used in
this Amendment.
The Company is in default of the financial covenant contained in Section
6.11(c) of the Loan Agreement for the Company's fiscal quarter ended on
March 31, 2000 (the "Net Profit Covenant Default").
The Borrowers have requested that the Lender waive the Net Profit
Covenant Default and amend certain provisions of the Loan Agreement. The
Lender has agreed to do so, subject to the terms and conditions hereof.
Accordingly, for valuable consideration, the receipt and sufficiency of
which are acknowledged, the Borrowers and the Lender agree as follows:
AMENDMENT
Notwithstanding anything to the contrary contained in the Loan Documents,
the Lender waives its right to declare an Event of Default under the Loan
Documents as a result of the Net Profit Covenant Default. The parties
hereto acknowledge and agree that the foregoing sentence shall not
constitute a waiver, either express or implied, of any other default,
covenant, term or provision of the Loan Documents, nor shall it create
any obligation of the Lender to waive any existing or future default or
violation of any other covenant, term or provision of the Loan Documents.
The parties hereto agree that Lender shall be entitled to require strict
compliance by the Borrowers with the Loan Documents, notwithstanding the
limited express waiver and amendment contained herein, and this waiver
and amendment shall not be deemed to establish a course of action or a
course of dealing with respect to requests by the Borrowers for a waiver
or amendment of any default, covenant, term or provision of any Loan
Document.
The Loan Agreement is amended as follows:
The Termination Date is extended to July 1, 2001.
The Maximum Amount is permanently reduced to $6,000,000. The Borrowers
shall prepay the Revolving Loans to the extent that the aggregate amount
of outstanding Revolving Loans and Letters of Credit exceeds the Maximum
Amount (as reduced hereby), the Borrowing Base or both.
On the date of this Agreement, the Borrowers shall make a $425,000
principal prepayment (the "$425,000 Curtailment") of Term Loan Two and
Term Loan One (with such amount being applied first to Term Loan Two and
then to Term Loan One). The parties hereto acknowledge and agree that
upon payment by the Borrowers of the $425,000 Curtailment, the $125,000
installment of Term Loan One and Term Loan Two due June 15, 2000 will be
deemed to be paid in full. Upon the first to occur of (a) July 20, 2000
or (b) the date of availability for application to the Obligations of
funds of the Borrowers in an amount not less than $650,000 theretofore
held in any cash collateral account maintained with the Lender and
securing any Letter of Credit (or the date of receipt of such funds from
the purchaser of Technical pursuant to the HTSI Sale, if such cash
collateral cannot be made available for such application), the Borrowers
shall make an additional $450,000 principal prepayment of Term Loan Two
and Term Loan One (with such amount being applied first to Term Loan Two
and then to Term Loan One). On or before August 1, 2000, the Borrowers
shall make an additional $200,000 principal prepayment of Term Loan Two
and Term Loan One (with such amount being applied first to Term Loan Two
and then to Term Loan One).
The Borrowers shall prepay Term Loan Two and Term Loan One (with such
amount being applied first to Term Loan Two and then to Term Loan One) in
an amount equal to 50% of the proceeds received by the Borrowers with
respect to any Recoveries, including without limitation Recoveries
arising from the settlement of claims of the Borrowers against Ernst &
Young, LLP ("E&Y") in connection with, relating to or arising from the
Embezzlement, with each such prepayment being made promptly upon receipt
by the Borrowers of the applicable Recoveries. The Borrowers agree that
the Lender has the right (but not the obligation) to provide written
notice to E&Y of the Borrowers' assignment of such percentage of such
Recoveries, which notice may direct E&Y to pay such percentage of such
Recoveries directly to the Lender.
Notwithstanding anything to the contrary contained in the Loan Agreement
or any other Loan Document, the Borrowers shall furnish to the Lender not
later than the date of this Amendment the current draft of the Company's
Form 10-K Annual Report for the Company's fiscal year ended on March 31,
2000, to be filed with the Securities and Exchange Commission (the "Draft
10-K"). The Draft 10-K shall be in form and substance satisfactory to
the Lender in its sole discretion.
Notwithstanding anything to the contrary contained in the Loan Agreement
or any other Loan Documents, as soon as available and in any event not
later than July 31, 2000, the Borrowers shall furnish the Lender with
consolidated and consolidating balance sheets, income statements and cash
flows of the Borrowers setting forth projections for each fiscal quarter
of the Company's fiscal year ending on March 31, 2001, and setting forth
in reasonable detail the assumptions underlying such projections.
The Borrowers shall pay to the Lender a closing fee in the aggregate
amount of $100,000, the first $50,000 of which (the "First Installment")
shall be due and payable on the date of this Amendment and the remaining
$50,000 of which (the "Second Installment") shall be due and payable on
August 1, 2000. Notwithstanding the foregoing, the Second Installment
shall not be due and payable, and the closing fee shall be limited to the
First Installment, if all outstanding Obligations evidenced by Term Note
One and Term Note Two are paid in full by the Borrowers to the Lender on
or before August 1, 2000. In addition, if all Obligations have not been
paid in full by the Borrowers to the Lender by January 1, 2001, the
Borrowers shall pay to the Lender, on January 2, 2001 and on the first
day of each calendar month thereafter until all Obligations have been
paid in full, an availability fee in an amount equal to $25,000 per
month.
The payment to the Lender by the Borrowers of the Revolving Loan
prepayment described in Paragraph 2(b) of this Amendment, the $425,000
Curtailment and the First Installment shall be conditions precedent to
the effectiveness of this Amendment. In addition, receipt, review and
approval by the Lender of the Draft 10-K shall be a condition precedent
to the effectiveness of this Amendment.
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 agree that each reference in the Loan Documents to the
Termination Date shall be deemed to be a reference to such Termination
Date as extended hereby, each reference in the Loan Documents to the
Maximum Amount shall be deemed to be a reference to such Maximum Amount
as reduced hereby and each reference in the Loan Documents to any
particular Loan Document shall be deemed to be a reference to such Loan
Document as amended hereby. The Borrowers acknowledge and agree that
this Amendment only amends the terms of the Loan Agreement and is not a
novation, and the Borrowers ratify and confirm the remaining terms and
provisions of the Loan Documents in all respects. The Borrowers
acknowledge and agree that the prior grant of a security interest in the
Collateral continues to secure the Obligations, is in full force and
effect, and is ratified and confirmed by the Borrowers in all respects.
Nothing in this Amendment shall require the Lender to grant any further
amendments to the terms of the Loan Documents.
Each Borrower represents and warrants that this Amendment has been duly
authorized, executed and delivered by it in accordance with resolutions
adopted by its board 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.
This Amendment shall be governed by the laws of the Commonwealth of
Virginia, without reference to conflict of laws principles.
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.
[SIGNATURES ON FOLLOWING PAGE]
WITNESS the following signatures.
LENDER:
SunTrust BANK, a Georgia banking
corporation, successor by merger to
CRESTAR BANK
By: ___________________________
Timothy J. Duggan
Senior Vice President
BORROWERS:
HALIFAX CORPORATION, a Virginia
corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
HALIFAX ENGINEERING, INC.,
a Virginia corporation
By: _____________________________
Name: ___________________________
Title: ____________________________
HALIFAX REALTY, INC.,
a Virginia corporation
By: _____________________________
Name: ___________________________
Title: ____________________________