1
THIRD MODIFICATION TO AMENDED AND RESTATED BUSINESS LOAN AND SECURITY AGREEMENT
THIS THIRD MODIFICATION TO AMENDED AND RESTATED BUSINESS LOAN AND
SECURITY AGREEMENT (this "Modification") is made as of the 9th day of November,
1998, by and among (i) NATIONSBANK, N.A., a national banking association
("NationsBank"), having an office at 8300 Greensboro Drive, Suite 550, McLean,
Virginia 22102; (ii) FLEET CAPITAL CORPORATION, a Rhode Island corporation
("Fleet"), having an office at 300 Galleria Parkway Northwest, Suite 800,
Atlanta, Georgia 30339; (iii) each other person or entity hereafter becoming a
"Lender" pursuant to the hereinafter defined Loan Agreement; (iv) NATIONSBANK,
N.A., a national banking association (acting in its capacity as Agent for the
Lenders), having an office at 8300 Greensboro Drive, Suite 550, McLean, Virginia
22102; (v) BTG, INC., a Virginia corporation; BTG TECHNOLOGY SYSTEMS, INC., a
Virginia corporation formerly known as BDS, Inc.; DELTA RESEARCH CORPORATION, a
Virginia corporation; CONCEPT AUTOMATION, INC. OF AMERICA, a Virginia
corporation; and NATIONS, INC., a New Jersey corporation (collectively, the
"Borrowers"); all having principal offices at 3877 Fairfax Ridge Road, 4B,
Fairfax, Virginia 22030-7448; and (vi) each other person or entity hereafter
executing a "Joinder Agreement" pursuant to the Loan Agreement. Capitalized
terms used but not defined herein shall have the meanings attributed to such
terms in the Loan Agreement.
W I T N E S S E T H T H A T:
WHEREAS, pursuant to the terms and conditions of that certain Amended
and Restated Business Loan and Security Agreement dated October 31, 1997 (as
heretofore amended and as the same may be hereafter amended or modified, the
"Loan Agreement"), by and among the Agent, Borrowers, Lenders and Crestar Bank
(acting in its capacity as a Lender), the Borrowers obtained a loan (the "Loan")
from the Lenders in the original aggregate maximum principal amount of One
Hundred Ten Million and No/100 Dollars ($110,000,000.00), which aggregate
maximum principal amount had been heretofore reduced to Sixty Million Dollars
($60,000,000), but continues to be evidenced by two (2) separate Replacement
Revolving Promissory Notes (as defined in Exhibit A), in the aggregate original
maximum principal amount of Ninety-five Million Dollars ($95,000,000), and which
Loan is secured by, among other things, certain collateral more fully described
in Article III, Section 1 of the Loan Agreement; and
WHEREAS, the Borrowers have requested an extension of the maturity
date of the Loan, a modification of the Borrowing Base and a modification of
certain financial covenants set forth in the Loan Agreement; and
WHEREAS, the Agent and Lenders have agreed to extend the maturity date
of the Loan, modify the Borrowing Base and modify certain financial covenants
set forth in the Loan Agreement, subject to the terms of this Modification,
provided that the Loan Agreement is further modified to reduce the Commitment
Amount and increase the
2
Additional Libor Percentage applicable to amounts outstanding from time to time
on a LIBOR basis, as hereinafter provided.
NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. The foregoing recitals are hereby incorporated herein by this
reference and made a part hereof, with the same force and effect as if fully set
forth herein.
2. The maturity date of the Loan shall be August 31, 2002, unless
sooner accelerated pursuant to the terms of the Loan Agreement, the Note or any
other Loan Document. Simultaneously with the Borrowers' execution and delivery
of this Modification, the Borrowers shall execute and deliver to the Agent, for
and on behalf of the Lenders (as applicable), an Allonge and First Modification
to Replacement Revolving Promissory Note No. 1 and an Allonge and First
Modification to Replacement Revolving Promissory Note No. 2, in form and
substance reasonably acceptable to the Lenders, evidencing the extension of the
maturity date.
3. The definitions of "Commitment Amount" and "Consolidated Fixed
Charges" set forth in the "Certain Definitions" section of the Loan Agreement
are hereby deleted in their entirety and the following substituted in lieu
thereof:
""COMMITMENT AMOUNT" shall mean Fifty Million and No/100
Dollars ($50,000,000.00).
"CONSOLIDATED FIXED CHARGES" shall mean, as of the date of the
particular determination, interest expenses, plus current
maturities of long term debt, plus current maturities of
capitalized leases, plus cash payments for taxes for the fiscal
quarter of the Borrowers most recently ended (excluding,
however, taxes paid on profits from the sale of Cisco Systems,
Inc. stock), calculated on a consolidated basis in accordance
with GAAP."
4. The following definitions of "Eligible Billed Foreign Accounts
Receivable" and "Maturity Date" are hereby added to the "Certain Definitions"
section of the Loan Agreement:
""ELIGIBLE BILLED FOREIGN ACCOUNTS RECEIVABLE" shall mean
Receivables which (i) represent amounts due and owing for
products actually delivered and accepted or work or services
2
3
actually performed or rendered by or on behalf of any Borrower
pursuant to any contract or agreement now or hereafter entered
into by the particular Borrower and any unrelated and
unaffiliated non-domestic entity; (ii) have been properly
billed; (iii) arise in the ordinary course of the particular
Borrower's business; (iv) are due, owing and not subject to any
defense, set-off or counterclaim; and (v) are specifically
approved in writing in advance by the Agent.
"MATURITY DATE" shall mean the maturity date set forth in the
Notes."
5. Section 3(a) of Article I of the Loan Agreement is hereby
deleted in its entirety and the following substituted in lieu thereof:
"(a) Maximum Advances. Notwithstanding any term or provision of
this Agreement or any other Loan Document to the contrary, it
is understood and agreed that in no event whatsoever shall the
Lenders be obligated to advance any amount or have Obligations
outstanding pursuant hereto which shall exceed the lesser of:
1. The Commitment Amount, or
2. The aggregate of (the "Maximum Borrowing Base"):
(i) ninety percent (90%) of the Borrowers' Eligible
Borrowing Base Receivables representing amounts due
and owing from the Government, which are
outstanding less than one hundred twenty-one (121)
days from the date of original invoice; plus
(ii) eighty-five percent (85%) of the Borrowers'
Eligible Borrowing Base Receivables representing
amounts due and owing from domestic account debtors
(other than the Government), which are outstanding
less than ninety-one (91) days from the date of
original invoice; plus
(iii) the lesser of (y) fifty percent (50%) of the
Borrower's Eligible Unbilled Costs; or (z) Ten
Million Dollars ($10,000,000); plus
3
4
(iv) the lesser of (y) eighty percent (80%) of the
Borrower's Eligible Billed Foreign Accounts
Receivable; or (z) Three Million Dollars
($3,000,000.00).
All receivables included in the computation of the
Maximum Borrowing Base must be acceptable to the Agent
in all respects. Each request for an advance shall be
deemed a representation by the Borrowers that any
Eligible Borrowing Base Receivable, Eligible Unbilled
Cost and Eligible Billed Foreign Accounts Receivable on
which such request is based satisfies the foregoing
requirements."
6. The last sentence of Section 8 of Article I of the Loan
Agreement is hereby deleted in its entirety and the following substituted in
lieu thereof:
"Notwithstanding the foregoing, the Termination Fee
shall not be payable in connection with a permanent
reduction of the Commitment Amount, if such permanent
reduction is made (A) after the date which is
twenty-four (24) months after the date hereof, or (B) in
connection with (y) a contemporaneous bond offering,
provided that such bond offering (1) is consummated
prior to March 31, 1998, and (2) does not exceed One
Hundred Million Dollars ($100,000,000), in the
aggregate, or (z) a contemporaneous public stock
offering or public or private sale of BTG, any
Subsidiary or any of their respective collective assets
(with no new replacement indebtedness or debt
refinancing of any kind, directly or indirectly)."
7. The last sentence of Section 1 of Article II of the Loan
Agreement is hereby deleted in its entirety and the following substituted in
lieu thereof:
"No Letter of Credit shall be issued which, by its
terms, expires after the Maturity Date."
8. Section 15(a) of Article VI of the Loan Agreement is hereby
deleted in its entirety and the following substituted in lieu thereof:
"(a) Tangible Net Worth. The Borrowers, on a
consolidated basis, will maintain at all times during
the following periods, Tangible Net Worth of not less
than the following amounts:
4
5
Periods Required Tangible Net Worth
From September 30, 1998 through $21,500,000.00
December 30, 1998
From December 31, 1998 through March $23,750,000.00
30, 1999
From March 31, 1999 through the $23,750,000.00, plus 67% of
Maturity Date net income (as determined on
a consolidated basis in
accordance with GAAP at the
end of each fiscal quarter)
For purposes of this Agreement, "Tangible Net Worth"
shall mean all capital stock, paid in capital and
retained earnings, less all treasury stock, amounts due
from officers, directors, stockholders and members of
their immediate families, amounts due from affiliates
(to the extent such amounts are part of the Borrowers'
consolidated net worth), investments in non-marketable
securities, notes receivable of affiliates (to the
extent that such amounts are part of the Borrowers'
consolidated net worth), leasehold improvements,
goodwill, non-competition agreements, capitalized
organization and development costs, capitalized
expenses, loan costs, patents, trademarks, copyrights,
franchises, licenses and other intangible assets."
9. Section 6 of Exhibit 7 to the Loan Agreement is hereby deleted in
its entirety and the following substituted in lieu thereof:
"The term Additional Libor Percentage shall mean the
percentage which corresponds to the Borrowers' "Leverage
Ratio", as set forth below:
Additional
Leverage Ratio Libor Percentage
greater than or equal to 7.0 to 1.0 3.25%
5
6
greater than or equal to 6.0 to 1.0,
but less than 7.0 to 1.0 3.00%
greater than or equal to 5.0 to 1.0,
but less than 6.0 to 1.0 2.75%
greater than or equal to 4.0 to 1.0,
but less than 5.0 to 1.0 2.50%
less than 4.0 to 1.0 2.25%
For purposes hereof the Borrowers' "Leverage Ratio"
shall mean the ratio of Borrowers' Funded Debt to
Consolidated EBITDA, as calculated in accordance with
Section 15(c) of Article VI of the Loan Agreement.
Determinations of the applicable Additional Libor
Percentage shall be made quarterly, on or before the
first (1st) day of each February, May, August and
November throughout the term of the Loan (the 1st day of
each such month being herein referred to as a
"Calculation Date"), based on the quarterly financial
statements submitted by the Borrowers for the
immediately preceding calendar quarter; it being
understood and agreed that if any such quarterly
financial statements are not submitted as required
hereunder, the applicable Additional Libor Percentage
for the ensuing Quarterly Period shall be three and
one-quarter percent (3.25%). The applicable Additional
Libor Percentage so determined shall be effective for
any Interest Period which commences on or after the
applicable Calculation Date, and such rate shall
continue to be the applicable Additional Libor
Percentage until the next Calculation Date (each such
period of effectiveness being herein referred to as a
"Quarterly Period"). Each Borrower expressly
acknowledges and agrees that nothing set forth in this
Section 6 of Exhibit 7 to the Loan Agreement shall
alter, amend or modify in any respect the Borrowers'
obligations to comply with each and all of the financial
covenants set forth in Section 15 of Article VI of the
Loan Agreement."
10. Simultaneously with the effectiveness of this Modification,
Exhibit 5 to the Loan Agreement shall be deleted in its entirety and Exhibit 5
attached to this Modification shall be substituted in lieu thereof.
6
7
11. Notwithstanding anything contained in the Loan Agreement to the
contrary, the Libor Interest Election option shall not be available until and
unless Borrowers receive written notification from the Agent.
12. Each Borrower hereby acknowledges, agrees, represents and
warrants that, as of the date hereof (i) there are no set-offs or defenses
against the Notes, the Loan Agreement or any other Loan Document; (ii) except
as specifically amended hereby, all of the terms and conditions of the Notes,
the Loan Agreement and the other Loan Documents shall remain unmodified and in
full force and effect; (iii) the Notes, the Loan Agreement (as modified hereby)
and the other Loan Documents are hereby expressly approved, ratified and
confirmed; and (v) the execution, delivery and performance by each Borrower of
this Modification (a) is within its corporate powers, (b) has been duly
authorized by all necessary corporate action, and (c) does not require the
consent or approval of any other person or entity.
13. The Borrowers shall pay all of the Agent's costs and expenses
associated with this Modification and the transactions referenced herein or
contemplated hereby, including, without limitation, the Agent's reasonable
legal fees and expenses.
14. This Modification shall be governed by the laws of the
Commonwealth of Virginia and shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
15. This Modification may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall be deemed one and the same instrument.
[remainder of page intentionally left blank - signature page follows]
7
8
IN WITNESS WHEREOF, the undersigned have signed, sealed and delivered
this Modification on the day and year first above written.
BORROWERS:
----------
[Corporate Seal] BTG, INC.,
ATTEST: a Virginia corporation
By:/s/ MARILYNN D. BERSOFF By: /s/ EDWARD H. BERSOFF
---------------------------------- ------------------------------
Name: Marilynn D. Bersoff Name: Edward H. Bersoff
Title: Secretary Title: President and CEO
[Corporate Seal] BTG TECHNOLOGY SYSTEMS, INC.,
ATTEST: a Virginia corporation
By:/s/ MARILYNN D. BERSOFF By: /s/ EDWARD H. BERSOFF
---------------------------------- ------------------------------
Name: Marilynn D. Bersoff Name: Edward H. Bersoff
Title: Secretary Title: President
[Corporate Seal] DELTA RESEARCH CORPORATION,
ATTEST: a Virginia corporation
By:/s/ MARILYNN D. BERSOFF By: /s/ EDWARD H. BERSOFF
---------------------------------- ------------------------------
Name: Marilynn D. Bersoff Name: Edward H. Bersoff
Title: Secretary Title: CEO
[Corporate Seal] CONCEPT AUTOMATION, INC. OF
ATTEST: AMERICA, a Virginia corporation
By:/s/ MARILYNN D. BERSOFF By: /s/ EDWARD H. BERSOFF
---------------------------------- ------------------------------
Name: Marilynn D. Bersoff Name: Edward H. Bersoff
Title: Secretary Title: CEO
[signatures continue on the following page]
8
9
Corporate Seal] NATIONS, INC.,
ATTEST: a New Jersey corporation
By:/s/ MARILYNN D. BERSOFF By: /s/ EDWARD H. BERSOFF
---------------------------------- ------------------------------
Name: Marilynn D. Bersoff Name: Edward H. Bersoff
Title: Secretary Title: President and CEO
AGENT:
NATIONSBANK, N.A., a
national banking association, acting in its
capacity as Agent
By: /s/ DOUGLAS T. BROWN
------------------------------
Name: Douglas T. Brown
Title: Vice President
LENDER(S):
NATIONSBANK, N.A., a
national banking association
By: /s/ DOUGLAS T. BROWN
------------------------------
Name: Douglas T. Brown
Title: Vice President
FLEET CAPITAL CORPORATION, a
Rhode Island corporation
By: /s/ STUART J. SOLOMON
------------------------------
Name: Stuart J. Solomon
Title: Senior Vice President
9
10
EXHIBIT A
For purposes of this Modification, "Replacement Revolving Promissory Notes"
shall have the meaning attributed to the term "Notes" in the Loan Agreement.