EXHIBIT 10.1
FIRST COMMERCIAL BANK OF HUNTSVILLE
LOAN AGREEMENT
(Financial Covenants)
Date: ______05/26/2005_____________________
In consideration of the sum of ten dollars in hand paid to each of the
undersigned (hereinafter referred to as "Obligor", whether one or more) and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the Obligor, and in order to induce First Commercial Bank
of Huntsville (hereinafter referred to as "Bank") to extend to Digital Fusion,
Inc. and Digital Fusion Solutions, Inc. (hereinafter cumulatively referred to as
the "Borrower") and Digital Fusion, Inc., Digital Fusion Solutions, Inc., Summit
Research Corporation, Roy E. Crippen, III and Gary S. Ryan (hereinafter
cumulatively referred to as the "Guarantors") from time to time such extensions
of credit, advances and forbearances as the Bank in its sole discretion may deem
prudent and wise (all such indebtedness, obligations and liabilities of the
Borrower to the Bank of every kind, character and description whatsoever, direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred, contracted or arising, joint or several, liquidated or
un-liquidated, regardless of how they arise or by what agreement or instrument
they may be evidenced or whether they are evidenced by any agreement or
instrument, and whether incurred as maker, drawer, endorser, surety, guarantor
or otherwise, including without limitation obligations of the Borrower purchased
by the Bank, and obligations incurred in connection with the issuance of a
letter of credit, and any and all extensions and renewals of all or any part of
the same are herein collectively referred to as the "Liabilities"), the Obligor,
the Borrower and the Bank agree as follows:
DEFINITIONS
For purposes of this Agreement, except as otherwise expressly provided or unless
the context otherwise requires:
"Accounts" shall have that meaning defined in the Alabama Uniform Commercial
Code.
"Collateral" shall mean any property or assets of Borrower or Obligor or other
security pledged or granted to Bank as security for the Liabilities.
"Debt" shall mean all of Obligor's total liabilities less Subordinated Debt.
"Loan Documents" shall mean any note, loan agreement (other than this Agreement)
or other instrument, document or paper evidencing, securing, guaranteeing, or
executed in connection with all or any part of the Liabilities.
"Subordinated Debt" shall mean indebtedness of the Obligor described in and
unconditionally subordinated to the Bank in any subordination agreement executed
by a subordinate creditor and delivered to the Bank.
"Tangible Net Worth" shall mean Obligor's net worth plus Subordinated Debt less
(i) any and all loans and other advances to affiliates, subsidiaries, owners,
parent, employees, officers, stockholders, directors or other related entities
of Obligor; (ii) notes, notes receivable, accounts, accounts receivable,
inter-company receivables, and other amounts owing from affiliates,
subsidiaries, owners, parent, employees, officers, stockholders, directors or
other related entities of Obligor; and (iii) any and all intangibles of Obligor.
Accounting terms used in this Agreement, such as "accounts receivable,""current
maturities of long term debt," "inventory," "net income," "net worth" and "total
liabilities" shall have the meanings normally given them by, and shall be
calculated, both as to amounts and classification of items, in accordance with,
generally accepted accounting principles in the United States. Singular terms
shall include the plural as well as the singular and vice versa.
REPRESENTATIONS AND WARRANTIES
Obligor represents and warrants to Bank, at all times while any Liabilities
remain unsatisfied, as follows: (1) If Obligor is a corporation, partnership or
limited liability company, Obligor is duly organized, validly existing, and in
good standing under the laws of the jurisdiction in which Obligor was organized,
and Obligor is duly qualified and in good standing (and will remain so qualified
and in good standing) in every state in which it is or shall be doing business
or in which the failure so to qualify and remain in good standing would or could
have an adverse effect on its business or properties or Bank; (2) There are no
actions, suits or proceedings pending or, to Obligor's best knowledge,
threatened against or affecting Obligor or the Collateral that involve any of
the transactions contemplated in this Agreement or the possibility of any
judgment or liability that may result in a material adverse change in Obligor's
operations or condition or the Collateral; (3) Obligor is not a party to any
instrument, or subject to any restriction, that materially and adversely affects
Obligor's operations or condition, and Obligor is not in default in any of the
obligations contained in any instrument to which Obligor is a party that could
have a material adverse effect upon Obligor's operations or condition; and (4)
Obligor has full right, power and authority to enter into the Loan Documents to
which it or (s)he is a party and to consummate the transactions contemplated
thereby and has taken all necessary action to authorize the execution, delivery
and performance of such Loan Documents and the documents contemplated to be
executed and delivered thereby.
COVENANTS
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Obligor and Borrower covenant and agree with Bank, at all times while any
Liabilities remain unsatisfied, as follows:
1. Obligor shall submit or cause to be submitted to Bank such financial and
other information which Bank shall reasonably request regarding Borrower, the
Collateral and Obligor when and as requested by Bank, including without
limitation: (i) Obligor's and Borrower's monthly financial statements within
forty-five (45) days after the close of each calendar month in each fiscal year
including a balance sheet as of the close of such period and a fiscal year to
date income statement in accordance with generally accepted accounting
principles and attested to by an authorized officer of Obligor or Borrower, as
the case may be; (ii) Obligor's and Borrower's audited fiscal year-end financial
statements within one hundred twenty (120) days after the close of each fiscal
year, including a balance sheet as of the close of such period, an income
statement, and a reconciliation of stockholders' equity prepared by a certified
public accountant acceptable to Bank in accordance with generally accepted
accounting principles; (iii) annual personal financial statements of any
guarantor of the Liabilities (as of December 31 of each year) within ninety (90)
days of the close of each calendar year; and (iv) a borrowing base compliance
certificate per the attached exhibit "A" along with an aging of accounts
receivables within 15 days of month end (v) any other financial information as
Bank may request from time to time, including but not limited to that
information as may be required for Bank to determine Obligor's or Borrower's
compliance with the terms of this Agreement.
2. Obligor shall (i) maintain insurance (written by insurance companies
reasonably acceptable to Bank) in form, amount and substance reasonably
acceptable to Bank, including, without limitation, worker's compensation,
general liability insurance, property "all risk" insurance upon Obligor's
property (in an amount at least equal to its full insurable value) and insurance
on all facets of its businesses and all the Collateral; (ii) furnish to Bank,
upon request, a statement of the insurance coverage.
3. Obligor does and shall comply with all laws, ordinances, rules and
regulations of any governmental authority or entity governing or affecting
Obligor, any of its property, the Collateral or any part thereof, and shall
immediately notify Bank of any and all alleged or asserted violations of any
such laws, ordinances or regulations.
4. Obligor shall not sell, transfer, lease, pledge, abandon, grant any lien
on or security interest in, or otherwise encumber or dispose of any of its
accounts receivable, including without limitation the Collateral or any interest
therein, and Obligor shall not permit or suffer to exist any lien, security
interest or other encumbrance on any of its accounts receivable.
5. Guarantors shall not guarantee, endorse or assume, either directly or
indirectly, any indebtedness greater than $200,000 in aggregate of any other
corporation, person, or entity without prior written consent of the bank.
6. Obligor will not incur, create, assume or permit to exist any debt of
Obligor other than (a) existing debt reflected in the most recent balance sheet
of Obligor delivered to Bank on or prior to the date hereof, (b) debt to the
Bank, (c) trade payables and other current liabilities incurred or accrued by
the Obligor in the ordinary course of business, (d) the extension or receipt of
normal trade terms with respect to customers and suppliers, (e) any specific
debt in connection with a special transaction for which advance approval is
sought and obtained from the Bank, (f) unsecured debt to the owners of the
Obligor that is payable on terms as favorable to the Obligor as those that would
be available to the Obligor in arms-length commercial transactions with
commercial bank lenders, (g) leases of equipment and real estate incurred in the
ordinary course of the Obligor's business, and (h) debt incurred solely for the
purchase of fixed assets acquired or held by Obligor in the ordinary course of
business.
7. Obligor shall permit Bank or any persons duly designated by Bank to call
at the places of business of Obligor at any reasonable time, and without
hindrance or delay to visit, inspect, audit and check any of Obligor's
properties, books, records, journals, orders, receipts and any correspondence or
other data relating to Obligor's business or any other transactions between or
among the parties hereto, and to make copies thereof and take extracts there
from, and to discuss Obligor's financial affairs with Obligor's financial
officers and accountants.
8. Obligor shall comply with all applicable present and future local, state
and federal laws, including, without limitation, environmental laws and
regulations.
9. Obligor shall maintain its principal transaction account with Bank.
10. In the event Obligor has a revolving loan or line of credit with Bank,
the sum of ninety percent (90%) of its eligible accounts receivable as
determined by the bank (excluding any accounts receivable that are aged 120 days
or greater) will at all times exceed the sum of the outstanding principal
balance of said revolving loan or line of credit. Furthermore, advances against
eligible accounts receivable due to Summit Research Corporation will be limited
to $2,000,000.00 (Two Million and no/100 U.S. Dollars). In the event of default
Obligor agrees upon Bank request to cooperate in the filing and perfection of
assignment of claims documents on all Federal Government contracts.
11. Funded Debt (total outstanding funded loans to banks, capital lease
obligations, seller notes and notes due to stockholders) to EBITDA shall be less
than 12.00 to 1.00 as of June 30, 2005 (Q2), 8.10 to 1.00 as of September 30,
2005 (Q3) and 5.60 to 1.00 as of December 31, 2005 (Q4).
12. Tangible Net Worth to increase by fifty percent (50%) of net income
earned in each year.
EVENTS OF DEFAULT; ACCELERATION.
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Any or all of the Liabilities shall be, at the option of Bank and
notwithstanding any time or credit allowed by any instrument evidencing any of
the Liabilities or under any of the Loan Documents, immediately due and payable
without notice or demand, and the obligate
on of Bank to make advances under any revolving line of credit, or other
loan shall immediately cease and terminate upon the occurrence of any of the
following events of default (singularly an "Event of Default"): (1) default in
the payment or performance, when due or payable, of any of the Liabilities, or
of any liability or obligation (whether now or hereafter existing, arising or
incurred, direct or indirect, conditional or unconditional) of any endorser,
guarantor, or surety for any of the Liabilities (severally a "Promisor"); (2)
failure by Obligor, Borrower or any other person or entity, as applicable, to
(a) pay or perform any act or obligation imposed hereby or by any of the other
Loan Documents, or (b) comply with any of the terms, conditions, covenants or
requirements described herein or contained or referenced in one or more of the
Loan Documents; (3) failure of Obligor, Borrower or any other person or entity,
as applicable, to pay when due (a) any tax (subject to the right of Obligor to
contest same as provided in paragraph 17 hereof), or (b) any premium on (i) any
insurance policy assigned to Bank, or (ii) any insurance covering any
Collateral; (4) if any warranty or representation contained herein shall prove
false or misleading with respect to a material fact or if Obligor or Borrower or
any Promissory made or makes any other misrepresentation to Bank for the purpose
of obtaining credit or any extension of credit; (5) failure of Obligor, Borrower
or any Promisor to furnish financial information or to permit the inspection of
the books or records or Collateral of Obligor, Borrower or of any Promisor; (6)
the loss, theft, damage, sale, destruction or encumbrance of any uninsured
material portion of the Collateral, or the sale or encumbrance or the issuance
of any execution or the making of any levy, seizure or attachment thereof or
thereon; (7) the insolvency, dissolution, liquidation, suspension of business or
death of the Obligor or the Borrower or of any Promisor, or of any of the
Obligor's or the Borrower's or such Promissor's principal officers if a
corporation, or of any of the Obligor's or the Borrower's general partners if a
partnership; (8) the Obligor or the Borrower or any Promisor shall (i) fail or
admit in writing the inability of the Obligor or the Borrower or any Promisor to
pay the Obligor's or the Borrower's or such Promisor's debts generally as they
become due, (ii) make a general assignment for the benefit of creditors or have
an order for relief entered against the Obligor or the Borrower or any Promisor
in any proceeding under the Federal bankruptcy code, or (iii) file a voluntary
petition in bankruptcy, or a petition or an answer seeking reorganization or an
arrangement with creditors or take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or statute, or
an answer admitting the material allegations of a petition filed against the
Obligor or the Borrower or such Promisor in any proceeding under any such law,
or if corporate or partnership action should be taken by the Obligor or the
Borrower or any Promisor for the purpose of effecting any of the foregoing; (9)
the appointment of a receiver trustee, liquidator or custodian of the Obligor or
the Borrower or any Promisor or of any of their respective properties or assets;
(10) the filing of a petition without the application, approval or consent of
the Obligor or the Borrower or any Promisor in any court of competent
jurisdiction, seeking the bankruptcy or reorganization of the Obligor or the
Borrower or of any Promisor or of all or a substantial part of their respective
properties or assets, or seeking an arrangement with the creditors of any of
them, and such petition shall not be dismissed within 30 days after the filing
thereof; (11) any change in the ownership nature, management or control of
Borrower or Obligor without the prior written consent of Bank; (12) failure of
Obligor or Borrower or any other person or entity to maintain any insurance
required hereunder and/or assigned or pledged to Bank in connection with any of
the Loan Documents; (13) fraud or misrepresentation by or on behalf of Obligor
or Borrower in Obligor's or Borrower's transactions with Bank; (14) violation of
or failure to abide by any covenant, term or provision of this Agreement or any
of the Loan Documents; or the termination, cancellation or revocation of any
Loan Document without Bank's consent or the determination that any of the Loan
Documents is void, voidable or unenforceable; (15) any default or event of
default under any of the Loan Documents; or (16) any default or event of default
of Obligor or Borrower under any other loan or indebtedness owing by Obligor or
Borrower to Bank, whether or not arising under the Loan Documents.
Notwithstanding the foregoing, Obligor or Borrower shall have sixty (60)
calendar days to cure any Event of Default without penalty, termination or
payment demand of this Loan Agreement.
Digital Fusion, Inc.,
Obligor
Digital Fusion, Inc., Borrower
By: /s/ Gary S. Ryan
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Gary S. Ryan
Its: President
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By: /s/ Roy E. Crippen, III
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Roy E Crippen, III
Its: CEO
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Digital Fusion Solutions, Inc., Borrower
Digital Fusion Solutions, Inc., Obligor
By: /s/ Roy E. Crippen, III
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Roy E Crippen, III
Its: President
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Summit Research Corporation, Obligor
Summit Research Corporation, Guarantor
By: /s/ Roy E. Crippen, III
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Roy E Crippen, III
Its: President/Secretary
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/s/ Roy E. Crippen, III
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Roy E. Crippen, III, Guarantor
/s/ Gary S. Ryan
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Gary S. Ryan, Guarantor
First Commercial Bank of Huntsville, Bank
By: /s/ Andy Kattos
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Its: Senior Vice President
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Loan Number 69404234 / 50
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DIGITAL FUSION, INC. FIRST COMMERCIAL BANK Date 05/26/2005
DIGITAL FUSION SOLUTIONS, INC. OF HUNTSVILLE ----------
4940 CORPORATE DRIVE NW 301 WASHINGTON STREET Maturity Date 05/20/2006
SUITE A HUNTSVILLE, AL 35801 ----------
HUNTSVILLE, AL 35808 Loan Amount $ 3,500,000.00
--------------
00102
BORROWER'S NAME AND ADDRESS LENDER'S NAME AND ADDRESS -----
"I" includes each borrower above, "You" means the lender, its successors Fed. Tax ID 13-3817344
jointly and severally. and assigns. ----------
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For value received, I promise to pay to you, or your order, at your address
above the PRINCIPAL sum of **THREE MILLION FIVE HUNDRED THOUSAND DOLLARS AND
ZERO CENTS** Dollars $3,500,000.00
|_| Single Advance: I will receive all of this principal sum on ___________. No
additional advances are contemplated under this note.
|X| Multiple Advances: The principal sum shown above is the maximum amount of
principal I can borrow under this note. On May 26, 2005, I will receive the
amount of $988,570.00 and future principal advances are contemplated.
Conditions: The conditions for future advances are SEE LOAN AGREEMENT DATE
05/26/2005.________________________________________________________________
___________________________________________________________________________
|X| Open End Credit: You and I agree that I may borrow under this Note,
prepay this Note in whole or in part, and borrow again under this
Note, so long as the aggregate unpaid principal amount owed under this
Note at any time does not exceed the amount of the principal sum set
forth above. My right to borrow is subject to all other conditions of
this Note expires on May 20, 2006.
|_| Closed End Credit: You and I agree that I may borrow in aggregate an
amount not to exceed the principal sum shown above. Amounts I repay
under this Note may not be re-borrowed later. My right to borrow is
subject to all other conditions and expires on _________________.
|X| INTEREST: I agree to pay interest on the outstanding principal balance from
May 26, 2005 at the rate of 6.000000% per year until the index rate
changes. Variable Rate: This rate may then change as stated below.
|X| Index rate: The future rate will be 0.000% ABOVE the following index
rate:_________________ LENDER'S PRIME, WHICH IS THE BASE RATE USED BY
LENDER TO SET INTEREST RATES AT WHICH LOANS ARE MADE TO VARIOUS
CUSTOMERS. LOANS MAY BE MADE AT, ABOVE OR BELOW SAID PRIME RATE.
|_| No Index: The future rate will not be subject to any internal or
external index. It will be entirely in your control.
|X| Frequency and Timing: The rate on this note may change as often as
DAILY . A change in the interest rate will take effect WHEN THE INDEX
RATE CHANGES.
|X| Limitations: During the term of this loan, the applicable .annual
interest rate will not be more than ________ % or less than 5.00% The
rate may not change more than __________________% each N/A.
Effect of Variable Rate: A change in the Interest rate will have the
following effect on the payments:
|X| The amount of each scheduled payment will change.
|_| The amount of the final payment will change.
|_| ______________________________________________________________________
ACCRUAL METHOD: Interest will be calculated on an ACTUAL # DAYS/360 - DAY YEAR
basis.
POST MATURITY RATE: I agree to pay Interest on the unpaid balance of this note
owing after maturity, and until paid in full, as stated below:
|X| on the same fixed or variable rate basis in effect before maturity (as
indicated above).
|_| at a rate equal to___________________________________________________.
|X| LATE CHARGE: I agree to pay a late charge on the portion of any payment not
made within 10 days after it is due equal to 5% OF THE UNPAID AMOUNT WITH A
MINIMUM OF $25.00.
|X| ADDITIONAL CHARGES: In addition to interest, I agree to pay the following
charges which |_| are |X| are not included in the principal amount above:
$250.00 BANK PROCESSING
PAYMENTS: I agree to pay this note as follows:
|X| Interest: l agree to pay accrued Interest MONTHLY Beginning June 20, 2005
________________________________________________________________________________
|X| Principal: I agree to pay the principal May 20, 2006
________________________________________________________________________________
|_| Installments: I agree to pay this note in ________ payments. The first
payment of $_________ will be due ___________________ . A payment of $
_____________will be due _______ thereafter. The final payment of the entire
unpaid balance of principal and interest will be due ______.
PURPOSE: The purpose of this loan is WORKING CAPITAL
ADDITIONAL TERMS:
THIS LOAN IS DUE ON DEMAND, BUT IF NO DEMAND IS MADE, THEN ON 05/20/2006. THIS
LOAN IS ALSO SECURED BY BUT NOT LIIMITED TO THE FOLLOWING: LOAN AGREEMENT DATED
05/26/2005; SUBORDINATION AGREEMENT DATED 06/30/2004; SECURITY AND SUBORDINATION
AGREMENT DATED 01/03/2005; COMMERCIAL SECURITY AGREEMENT DATED 03/10/2005.
SECURITY AGREEMENT
SECURITY INTEREST: I grant you a security interest in all of the Property
described below that I now own and that I may own in the future including, but
not limited to, all parts, accessories, repairs, improvements, and accessions to
the Property, wherever the Property is or may be located, and all cash and
non-cash proceeds and products from the Property, and all supporting obligations
that relate to or arise out of any of the Property (including things In action)
described below, all documents that now or hereafter evidence any of the
Property described below or the right to receive, hold, or dispose of any of
that Property.
|_| Inventory: All Inventory, whether now owned or hereafter acquired by Debtor,
Including all goods, other than farm, which now or hereafter:
(a) are leased by Debtor as lessor;
(b) are held by Debtor for sale or lease or to be furnished under a contract of
service;
(c) are furnished by Debtor under a contract of service; or
(d) consist of raw materials, work in process, or materials used or consumed in
Debtor's business.
|_| Equipment: All equipment, whether now owned or hereafter acquired by Debtor,
Including 811 goods now or hereafter owned by Debtor other than inventory, farm
products, and consumer goods, and Including all machinery, motor vehicles,
furniture, trade or business fixtures, manufacturing equipment, mobile
equipment, farm machinery and equipment, shop equipment, office equipment,
record-keeping equipment, parts and tools, computer and printing equipment, and
all goods which are, or are to become, fixtures. All equipment described in any
list or schedule which Debtor gives to Secured Party is also included in the
Property, but delivery of such a list is not necessary for the attachment of
Secured Party's security interest in Debtor's equipment as described above, and
Secured Party's security interest is not limited to the Property described in
any such list or schedule.
|_| Farm Products: All farm products, whether now owned or hereafter acquired by
Debtor, including all goods, other than standing timber, with respect to which
Debtor Is engaged in raising, cultivating, propagating, fattening, grazing or
any other farming, livestock, or aqua cultural operation and which are:
(a) crops grown, growing, or to be grown, including:
(i) crops produced on trees, vines, and/or bushes; and
(ii) aquatic goods produced in aquaculture operations;
(b) livestock born or unborn, Including aquatic goods produced in acquacultural
operations;
(c) feed, seed, fertilizer, medicines, or other supplies used or produced in
Debtor's farming operation: or
(d) products of crops or livestock in their unmanufactured states.
|X| Accounts: All accounts of debtor, whether now owned or existing or hereafter
acquired or arising, including all rights of Debtor to payment of a monetary
obligation, whether or not earned by performance, and whether originally owed to
Debtor or acquired by Debtor after the obligation came into existence:
(a) for property that has been or is to be sold, leased, licensed, asslgned, or
otherwise disposed of:
(b) for services rendered or to be rendered;
(c) for a policy of insurance issued or to be issued;
(d) for a secondary obligation incurred or to be incurred:
(e) for energy provided or to be provided;
(f) for the use or hire of a vessel under a charter or other contract;
(g} arising out of the use of a credit or charge card or information contained
on or for use with the card;
(h) as winnings in a lottery or other game of chance operated or sponsored by a
State, governmental unit of a State, or person licensed or authorized to
operate the game by a State or governmental unit of a State; and
(i) arising out of an interest in or claim under a policy or policies of
Insurance for healthcare goods or services provided.
|_| Instruments (Including Promissory Notes), Documents, Chattel Paper
(including Electronic Chattel Paper), Letter-of-Credit Rights, and Other Rights
to Payment: All of Debtor's right. title, and interest, whether now owned or
existing or hereafter arising or acquired, in and to all instruments, documents,
chattel paper, letter-of-credit rights, and other rights to payment. Including:
(a) all negotiable instruments, including promissory notes and any other
writings that evidence a right to payment of a monetary obligation and are
not themselves a security agreement or lease, and that are of a type that
in ordinary course of business are transferred by delivery with any
necessary endorsement or assignment, but not including investment property,
letters of credit, or writings that evidence a right to payment arising out
of the use of a credit or charge card or information contained on or for
use with the card;
(b) all documents of title and all receipts of the type described in Section
7-201(2) of the Uniform Commercial Code;
(c) all chattel paper, including any record or records that evidence both a
monetary obligation and a security interest In specific goods, a security
interest in specific goods and software used in the goods, a lease of
specific goods, or a lease of specific goods and license of software used
in the goods (but not including charters or other contracts involving the
use or hire of a vessel or records that evidence a right to payment arising
out of the use of a credit or charge card or information contained on or
for use with the card), and including all chattel paper evidenced by a
record or records consisting of information stored in an electronic medium;
and
(d) all letters of credit and letter-of-credit rights, including all rights of
Debtor to payment or performance under a letter-of-credit, whether or not
the beneficiary has demanded or is at the time entitled to demand payment
or performance.
|_| General Intangibles: All general intangibles, whether now owned or
hereafter acquired by Debtor, including any personal property, things in
action, payment intangibles, tax refunds, applications for patents,
patents, copyrights, trademarks, trade names, trade secrets, service marks.
Goodwill, customer lists, permits and franchises, licenses, software, the
right to use Debtor's name and likeness, and all property and rights
described under the heading "Government Payments and Programs" below (which
description is incorporated herein by this reference), but not Including
accounts, chattel paper, commercial tort claims, deposit accounts,
documents, goods, instruments, investment property, letter-of-credit
rights, letters of credit, money. or oil, gas, or other minerals before
extraction (as those terms are defined or used in Article 9 of the Uniform
Commercial Code).
|_| Deposit Accounts: All deposit accounts, whether now owned or hereafter
acquired by Debtor, including all demand, time, savings, passbook., or
similar accounts maintained with a bank, or other financial institution,
but not including investment property or accounts evidenced by an
instrument.
|_| Investment Property: All of Debtor's investment property, whether now owned
or hereafter acquired, including all securities, whether certificated or
uncertificated, securities entitlements, securities accounts, commodity
contracts, and commodity accounts.
|_| Commercial Tort Claims: All rights of Debtor now existing or hereafter
arising in that certain tort claim more particularly described as follows
(provide description of tort claim):
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|_|Government Payments and Programs: All payments, accounts, general
intangibles, or other benefits (including, but not limited to, payments in and
conservation reserve payments) in which Debtor now has and in the future may
have any rights or interest and which arise under or as a result of any
pre-existing, current or future federal or state governmental program
(including, but not limited to, all programs administered by the Commodity
Credit Corporation and ASCS).
|X|Specific Property: All of Debtor's right, title and interest, whether now
owned or hereafter acquired, in the following property (all without limiting the
generality of the applicable descriptions set forth above: ALL INVOICES,
ACCOUNTS RECEIVABLE, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS THEREBY AND ALL
PROCEEDS THEREOF OF THE DEBTOR'S BUSINESS WHETHER NOW OR HEREAFTER EXISTING OR
ACQUIRED.
|_| Standing Timber: All of Debtor's right, title and interest, whether now
owned or hereafter acquired, in standing timber located on the real property
described below, and all cutting rights with respect thereto:
|_| As Extracted Collateral: All of Debtor's rights, title, and interest,
whether now owned or hereafter acquired, in all oil, gas, and other minerals
extracted from the real property described below, and all accounts arising out
of the safe at the wellhead, mine head, or mine of oil, gas, or other minerals
from such real property.
|_|Where the property Includes goods that are or are to become fixtures, or
standing timber, or as-extracted collateral: The legal description of the real
property on which such Property is or will be located is (provide legal
description of the or other sufficient description of real property:
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The record owner of the real property, (if other than Debtor) is (provide name
of record owner of real property, (other than Debtor)
If this agreement covers timber to be cut, minerals (including oil and gas),
fixtures or crops growing or to be grown, the legal description is:
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If checked, the file this agreement on the real estate records. Record owner (if
not me) ___________
ADDITIONAL TERMS OF THE SECURITY AGREEMENT
GENERALLY - This agreement secures this note and any other debt I have with you,
now or later. However, it will not secure other debts if you fail this security
agreement or if you fail to give any required notice of the right of rescission.
If property described in this agreement is located in another state, this
agreement may also, in some circumstances, be governed by the law of the state
in which the Property is located. All locations referenced to "this note" or
"this agreement" or "this loan" shall mean this Universal Note and Security
Agreement.
OWNERSHIP AND DUTIES TOWARD PROPERTY: I represent that I own all of the
Property, or to the extent, this is a purchase money security interest, I will
acquire ownership of the Property with the proceeds of the loan. I will defend
it against any other claim. Your claim to the Property is ahead of the claims of
any other creditor. I agree to do whatever you require to protect the loan your
security interest and to keep your claim in the Property ahead of the claims of
other creditors. I will not do anything to harm your position.
I will keep books, records, and accounts about the Property and my business in
general. I will let you examine these records at any reasonable time. I will
prepare any report or accounting you request, which deals with the Property.
I will keep the Property in my possession and will keep it in good repair and
use it only for the purpose(s) described on page 1 of this written permission. I
represent that I am the original owner of the Property and, if I am not, that I
have provided you with a list of prior owners of the Property.
I will keep the Property at my address listed on page 1 of this agreement,
unless we agree I may keep it at another location. If the Property is to be used
in another state, I will give you a list of those states. I will not try to sell
the Property unless it is inventory or I receive your written permission to do
so. If I sell the Property I will have the payment made payable to the order of
you and me.
I will pay all taxes and charges on the Property as they become due. You have
the right of reasonable access in order to inspect the Property. I will
immediately inform you of any loss or damage to the Property.
If I fail to perform any of my duties under this security agreement, or any
mortgage, deed of trust, lien or other security interest, you may without notice
to me perform the duties or cause them to be performed. Your right to perform
for me shall not create an obligation to perform and your failure to perform
will not preclude you from exercising any of your other rights under the law or
this security agreement.
PURCHASE MONEY SECURITY INTEREST - For the sole purpose of determining the
extent of a purchase money security interest arising under this security
agreement: (a) payments on any non-purchase money loan also secured by this
agreement will not be deemed to apply to the Purchase Money Loan, and (b)
payments on the Purchase Money Loan will be deemed to apply first to the
non-purchase money portion of the loan, if any, and then to the purchase money
obligations in the order in which the items of collateral were acquired or if
acquired at the same time, in the order selected by you. No security interest
will be terminated by application of this formula. "Purchase Money Loan" means
any loan the proceeds of which, in whole or in part, are used to acquire any
collateral securing the loan and all extensions, renewals, consolidations and
refinancing of such loan.
PAYMENTS BY LENDER - You are authorized to pay, on my behalf, charges I am or
may become obligated to pay to preserve or protect the secured property (such as
property insurance premiums). You may treat those payments as advances and add
them to the unpaid principal under the note secured by this agreement or you may
demand immediate payment of the amount advanced.
INSURANCE - I agree to buy insurance on the Property against the risks and for
the amounts you require and to furnish you continuing proof of coverage. I will
have the insurance company name you as loss payee on any such policy. You may
require added security if you agree that insurance proceeds may be used to
repair or replace the Property. I will buy insurance from a firm licensed to do
business in the state where the property is located. The firm will be reasonably
acceptable to you. The insurance will remain in force until the Property is
released from this agreement. If I fail to buy or maintain the insurance (or
fail to name you as loss payee) you may purchase it yourself.
WARRANTIES AND REPRESENTATIONS - If this agreement includes accounts, I will not
settle any account for less than its full value without your written permission.
I will collect all accounts until you tell me otherwise. I will keep in trust
for you the proceeds from all the accounts and any goods which are returned to
me or which I take back. I will not mix them with any other property of mine. I
will deliver them to you at your request. If you ask me to pay you the full
price on any returned items or items retaken by myself, I will do so.
If this agreement covers inventory, I will not dispose of it except in my
ordinary course of business at the fair market value for the Property, or at a
minimum price established between you and me.
If this agreement covers farm products I will provide you, at your request,
a written list of the buyers, commission merchants, or selling agents to or
through whom I may sell my farm products. In addition to those parties named on
this written list, I authorize you to notify at your sole discretion any
additional parties regarding your security interest in my farm products. I
remain subject to all applicable penalties for selling my farm products in
violation of my agreement with you and the Food Security Act. In this paragraph
the terms farm products, buyers, commission merchants and selling agents have
the meanings given to the in the Federal Food Security Act of 1985.
REMEDIES - I will be in default on this security agreement if I am in default on
any note this agreement secures or if I fail to keep any promise contained in
the terms of this agreement. If I default, you have all of the rights and
remedies provided in the note and under the Uniform Commercial Code. You may
required me to make the secured property available to you at a place which is
reasonably convenient. You may take possession of the secured property and sell
it as provided by law. The proceeds will be applied first to your expenses and
then to the debt. I agree that 10 days written notice sent to my last known
address by first class mail will be reasonable notice under the Uniform
Commercial Code. My current address is on page 1. I agree to inform you in
writing of any change of my address. You may demand immediate payment of the
debt(s) if the debtor is not a natural person and without your prior written
consent; (1) a beneficial interest in the debtor is sold or transferred, or (2)
there is a change in either the identity or number of members of a partnership,
or (3) there is a change in ownership of more than 25 percent of the voting
stock of a corporation.
FILING - A carbon, photographic or other reproduction of this security agreement
or the financing statement covering the Property described in this agreement may
be used as a financing statement where allowed by law. Where permitted by laws,
you may file a financing statement which does not contain my signature, covering
the Property secured by this agreement.
ADDITIONAL TERMS OF THE NOTE
DEFINITIONS - As used on pages 1, 2, and 3, "terms" means the terms that apply
to this load. "I", "me", or "my" means each Borrower who signs this note and
each other person or legal entity (including guarantors, endorsers, and
sureties) who agrees to pay this note (together referred to as "us"). "You" or
"your" means the Lender and its successors and assigns.
APPLICABLE LAW - The laws of the United States and, to the extent not
inconsistent therewith, the laws of the state of Alabama. Any term of this
agreement, which is contrary to applicable laws, will not be effective, unless
the law permits you and me to agree to such a variation. If any provision of
this agreement cannot be enforced according to its terms, this fact will not
affect the enforceability of the remainder of this agreement. No modification of
this note or any agreement securing this note is effective unless the
modification is in writing and signed by you and me. Time is of the essence in
this agreement.
PAYMENTS - Each payment of principal and interest I make on this note will first
reduce the amount I owe you for charges, which are neither interest nor
principal. The remainder of each payment will then reduce accrued unpaid
interest, and then unpaid principal. If you and I agree to a different
application of payments, we will describe our agreement on this note. I may
prepay a part of, or the entire balance of this loan without penalty, unless we
specify to the contrary on this note. Any partial prepayment will not excuse or
reduce any later scheduled payment until this note is paid in full (unless, when
I make the prepayment, you and I agree in writing to the contrary).
INTEREST - Interest accrues on the principal remaining unpaid from time to time,
until paid in full. If I receive the principal in more than one advance, each
advance will start to earn interest only when I receive the advance. The
interest rate in effect on this note at any given time will apply to the entire
principal sum outstanding at that time. Notwithstanding anything to the
contrary, I don not agree to pay and you do not intend to charge any rate of
interest that is higher than the maximum rate of interest you could charge under
applicable law for the extension of credit that is agreed to in this note
(either before or after maturity). If any notice of interest accrual is sent and
is in error, we mutually agree to correct it, and if you actually collect more
interest than allowed by law and this agreement, you agree to refund it to me.
INDEX RATE - The index will serve only as a device for setting the interest rate
on this note. You do not guarantee by selecting this index or the margin, that
the interest rate on this note will be the same rate you charge on any other
loans or class of loans you make to me or other borrowers.
POST MATURITY DATE - For purposes of deciding when the "Post Maturity Rate"
(shown on page 1) applies, the term "maturity" means the date of the last
scheduled payment indicated on page 1 of this note or the date you accelerate
payment on the note, whichever is earlier.
SINGLE ADVANCE LOAND - If this is a single advance loan, you and I expect that
you will make only one advance of principal. However, you may add other amounts
to the principal if you make any payments described in the "PAYMENTS BY LENDER"
paragraph herein.
MULTIPLE ADVANCE LOANS - If this is a multiple advance loan, you and I expect
that you will make more than one advance of principal. If this is closed end
credit, repaying a part of the principal will not entitle me to additional
credit.
SET-OFF - I agree that you may set off any amount due and payable under this
note against any right I have to receive money from you.
"Right to receive money from you" means:
(1) any deposit account balance I have with you;
(2) any money owed to me on an item presented to you or in your possession
for collection or exchange; and
(3) any repurchase agreement or other nondeposit obligation.
"Any amount due and payable under this note" means the total amount of
which you are entitled to demand payment under the terms of this note at the
time you set off. This total includes any balance the due date for which you
properly accelerate under this note.
If my right to receive money from you is also owned by someone who has not
agreed to pay this note, your right of set-off will apply to my interest in the
obligation and to any other amounts I could withdraw on my sole request or
endorsement. Your right of set-off does not apply to an account or other
obligation where my rights are only as a representative. It also does not apply
to any Individual Retirement Account or other tax-deferred retirement account.
You will not be liable for the dishonor of any check when the dishonor
occurs because you set off this debt against any of my accounts. I agree to hold
you harmless from any such claims arising as a result of your exercise of your
right to set-off.
DEFAULT - I will be in default if any one or more of the following occur:
(1) I fail to make a payment on time or in the amount due; (2) I fail to keep
the Property insured, if required; (3) I fail to pay, r keep any promise,
on any debt or agreement I have with you; (4) any other creditor of mine
attempts to collect any debt I owe him through court proceedings; (5) I
die, am declared incompetent, make an assignment for the benefit of
creditors, or become insolvent (either because my liabilities exceed my
assets or I am unable to pay my debts as they become due); (6) I make any
written statement or provide any financial information that is untrue or
inaccurate at the time it was provided; (7) I do or fail to do something
which causes you to believe you will have difficulty collecting the amount
I owe you; (8) any collateral securing this note is used in a manner or for
a purpose which threatens confiscation by a legal authority; (9) I change
my name or assume an additional name without first notifying you before
making such a change; (10) I fail to plant, cultivate and harvest crops in
due season; (11) any loan proceeds are used for a purpose that will
contribute to excessive erosion of highly erodible land or the conversion
of wetlands to produce and agricultural commodity, as further explained 7
C.F.R. Part 1940, Subpart G, Exhibit M.
REMEDIES - If I am in default on this note you have, but are not limited to, the
following the following remedies:
(1) You may demand immediate payment of all I owe you under this note
(principal, accrued unpaid interest and other accrued unpaid charges).
(2) You may set off this debt against any right I have to the payment of
money from you, subject to the terms of the "SET-OFF" paragraph
herein.
(3) You may demand security, additional security, or additional parties to
be obligated to pay this note as a condition for not using any other
remedy.
(4) You may refuse to make advances to me or allow purchases on credit by
me.
(5) You may use any remedy you have under state or federal law.
(6) You may make use of any remedy given to you in any agreement securing
this note.
By selecting any one or more of these remedies you do not give up your
right to use later any other remedy. By waiving your right to declare an event
to be a default, you do not waive your right to consider later the event a
default if it continues or happens again.
COLLECTION COSTS AND ATTORNEYS' FEES - I agree to pay you all reasonable costs
you incur to collect this debt or realize on any security. This includes, if the
amount financed is more than $300.00 your reasonable attorneys' fees of up to
15% of the unpaid debt if you refer collection of the note to an attorney who is
not your salaried employee. This provision also shall apply if I file a petition
or any other claim for relief under any bankruptcy rule or laws of the United
States, or if such petition or other claim for relief is filed against me by
another.
WAIVER - I give up my rights to required you to do certain things. I will not
require you to:
(1) demand payment of amounts due (presentment)
(2) obtain official certification of nonpayment (protest); or
(3) give notice that amounts due have not been paid (notice of dishonor).
I waive any defenses I have based on surety ship or impairment of
collateral to the extent permitted by law, I also waive all personal property
exemptions in the property securing this loan.
OBLIGATIONS INDEPENDENT - I understand that I must pay this note even if someone
else has also agreed to pay it (by, for example, signing this form or a separate
guarantee or endorsement). You may sue me alone, or anyone else who is obligated
on this note, or any number of us together, to collect this note. You may
without notice release any party to this agreement without releasing any other
party. If you give up any of your rights, with or without notice, it will not
affect my duty to pay this note. Any extension of new credit to any of us, or
renewal of this note by all or less than all of us will not release me from my
duty to pay it. (Of course, you are entitled to only one payment in full.) I
agree that you may at your option extend this note or the debt represented by
this note, or any portion of the note or debt, from time to time without limit
or notice and for any term without affecting my liability for payment of the
note. I will not assign my obligation under this agreement without your prior
written approval.
CREDIT INFORMATION - I agree and authorize you to obtain credit information
about me from time to time (for example, by requesting a credit report) and to
report to others your credit experience with me (such as a credit reporting
agency). I agree to provide you, upon request, any financial statement or
information you may deem necessary. I warrant that the financial statements and
information I provide to you are or will be accurate, correct and complete.
SIGNATURES: I AGREE TO THE TERMS OF THIS NOTE (INCLUDING THOSE ON PAGES 1, 2,
AND 3). I have received a copy on today's date.
CAUTION - IT IS IMPORTANT THAT YOU THOROUGHLY READ THE CONTRACT BEFORE YOU
SIGN IT.
DIGITAL FUSION, INC. DIGITAL FUSION SOLUTIONS, INC.
BY: /s/ Gary S. Ryan BY: /s/ Roy E. Crippen, III
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GARY S. RYAN PRESIDENT ROY E. CRIPPEN, III PRESIDENT
BY: /s/ Roy E. Crippen, III
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ROY E. CRIPPEN, III CEO SIGNATURE FOR LENDER
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