AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT
THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT (this "Amendment"), dated as of the 31st day
of May , 1997 is made by and among QUESTECH, INC., a
Virginia corporation ("QuesTech"), QUESTECH SERVICE COMPANY, a
Virginia corporation formerly known as Engineering Resources,
Inc. ("QTSC"), QUESTECH PACKAGING, INC., a Virginia corporation
("QTPI"; QuesTech, QTSC and QTPI are referred to individually as
a "Borrower" and collectively as the "Borrowers") and SIGNET
BANK, a Virginia banking corporation (the "Lender").
RECITALS
A. The Lender and the Borrowers entered into a Amended and
Restated Loan and Security Agreement dated as of June 3, 1996 (as
amended through the date hereof, the "Agreement") pursuant to
which the Lender has agreed to extend credit to the Borrowers,
and the Borrowers have agreed to obtain credit from the Lender,
on the terms and conditions set forth in such Agreement.
B. The Borrowers have requested that the Lender make certain
modifications to the Agreement, including extending the
Termination Date, and the Lender has consented to such request
subject to the execution of this Amendment and the satisfaction
of the conditions specified herein.
C. The Borrowers and the Lender now desire to execute this
Amendment to set forth their agreements with respect to the
modifications to the Agreement.
Accordingly, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Lender and the Borrowers agree as follows:
SECTION 1. Definitions. Capitalized terms used in this
Amendment and not defined herein are defined in the Agreement.
SECTION 2. Amendments to Agreement. The Agreement is
hereby amended as follows:
2.1 Amendments to Section 1. Section 1 of the
Agreement is amended by replacing the definition of the term
Termination Date in its entirety with the following definition:
"Termination Date" means May 31, 1998, and any
extension or extensions thereof granted by the Lender in its sole
discretion.
2.2 Amendment to Section 2. Section 2 of the
Agreement is amended by replacing Paragraph 2.2 Interest in its
entirety with the following paragraph:
2.2 Interest. Each Loan shall bear interest on
the unpaid principal balance thereof from time to time
outstanding, for each day from the date such Loan is made until
it becomes due, at a per annum rate equal to the Prime Rate.
Payments of interest on each Loan shall be made on each Interest
Payment Date beginning on the Interest Payment Date next
succeeding the date of disbursement of such Loan. At the option
of the Lender, the Loans shall bear interest at the Default Rate,
payable on demand, for each day during any period of Default
hereunder.
2.3 Amendment to Section 5. Section 5 of the Agreement
is amended by replacing Paragraph 5.12(c) Profitability in its
entirety with the following paragraph:
(c) Profitability. At all times, ensure that
QuesTech's consolidated net income (after the payment or
provision for payment of income taxes) as depicted in QuesTech's
consolidated income statements required to be delivered to the
Lender under the terms of this Agreement shall be at least One
Dollar ($1).
SECTION 3. Representations and Warranties of Borrowers. The
Borrowers represent and warrant to the Lender that:
(a) They have the power and authority to enter into and to
perform this Amendment, to execute and deliver all documents
relating to this Amendment, and to incur the obligations provided
for in this Amendment, all of which have been duly authorized and
approved in accordance with the Borrower's corporate documents;
(b) This Amendment, together with all documents executed
pursuant hereto, shall constitute when executed the valid and
legally binding obligations of the Borrowers in accordance with
their respective terms;
(c) Except with respect to events or circumstances
occurring subsequent to the date thereof and known to the Lender,
all representations and warranties made in the Agreement are true
and correct as of the date hereof, with the same force and effect
as if all representations and warranties were fully set forth
herein;
(d) The Borrowers' obligations under the Loan Documents
remain valid and enforceable obligations, and the execution and
delivery of this Amendment and the other documents executed in
connection herewith shall not be construed as a novation of the
Agreement or any of the other Loan Documents; and
(e) As of the date hereof, the Borrowers have no offsets or
defenses against the payment of any of the Obligations.
SECTION 5. Conditions of Effectiveness. This Amendment shall
become effective when, and only when, the Lender shall have
received this Amendment executed and completed by the Borrowers.
SECTION 6. Miscellaneous.
6.1 Reference To Agreement. Upon the effectiveness of this
Amendment, each reference in the Agreement to "this Agreement"
and each reference in the other Loan Documents to the Agreement,
shall mean and be a reference to the Agreement as amended hereby.
6.2 Effect on Loan Documents. Except as specifically
amended above, the Agreement and all other Loan Documents shall
remain in full force and effect and are hereby ratified and
confirmed. Without limiting the generality of the foregoing, all
Collateral given to secure the Obligations of the Borrowers under
the Agreement and the other Loan Documents prior to the date
hereof does and shall continue to secure all Obligations of the
Borrowers under the Agreement, as amended hereby and the other
Loan Documents, and, except as provided in the Agreement and the
other Loan Documents, no such Collateral shall be released until
all Obligations are satisfied and completely discharged.
6.3 No Waiver. The execution, delivery and effectiveness of
this Amendment shall not operate as a waiver of any right, power
or remedy of the Lender under any of the Loan Documents, nor
constitute a waiver of any provision of any of the Loan
Documents.
6.4 Costs, Expenses and Taxes. The Borrowers agree to pay
on demand all costs and expenses of the Lender in connection with
the preparation, reproduction, execution and delivery of this
Amendment and the other instruments and documents to be delivered
hereunder, including the reasonable fees and out-of-pocket
expenses of counsel for the Lender with respect thereto.
6.5 Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the Commonwealth of
Virginia, without giving effect to conflict of law provisions.
IN WITNESS WHEREOF, the Borrowers and the Lender have caused
this Amendment to be signed by their duly authorized
representatives under seal all as of the day and year first above
written.
QUESTECH, INC., a Virginia corporation
ATTEST:
J. P. O'Connell, Jr. By: V. L. Salvatori
(Asst. Secretary) Vincent L. Salvatori, Chairman
[corporate seal]
QUESTECH SERVICE COMPANY, a Virginia
corporation
ATTEST:
J. P. O'Connell, Jr. By: V. L. Salvatori
(Asst. Secretary) Vincent L. Salvatori, Chairman
[corporate seal]
QUESTECH PACKAGING, INC., a Virginia
corporation
ATTEST:
J. P. O'Connell, Jr. By: V. L. Salvatori
(Asst. Secretary) Vincent L. Salvatori, Chairman
[corporate seal]
SIGNET BANK, a Virginia banking
corporation
By: Loriana Cipolletti
Loriana Cipolletti, Vice President