First Amendment to Amended and Restated Loan and Security Agreement by and among the Registrant, Axxum Technologies LLC, Cloudburst Security LLC, and Mainstreet Bank, dated March 30, 2020
Exhibit 10.14b
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (“Amendment”) is dated as of March 30, 2020, by and among AXXUM TECHNOLOGIES LLC, a Virginia limited liability company (“Axxum”), KAE HOLDINGS, INC., a Delaware corporation (“KAE”), CLOUDBURST SECURITY LLC, a Virginia limited liability company (“Cloudburst”; together with Axxum and KAE, individually and collectively, “Borrower”), and MAINSTREET BANK (“Lender”).
BACKGROUND
A.Pursuant to the terms of a certain Amended and Restated Loan and Security Agreement dated April 18, 2019, by and among Lender and Borrower (as the same has been or may be supplemented, restated, superseded, amended or replaced from time to time, the “Loan Agreement”), Lender made available to Borrower, inter alia, (a) a revolving line of credit not to exceed Two Million Dollars ($2,000,000) and (b) a term loan in the original principal amount of Five Million Two Hundred Fifty Thousand Dollars ($5,250,000) (collectively, the “Loan”). All capitalized terms used herein without further definition shall have the respective meaning set forth in the Loan Agreement and all other Loan Documents, and this Amendment shall be deemed to be a Loan Document.
B.The Loan is secured by, inter alia, continuing perfected security interests in the Collateral.
C.Borrower has requested that Lender modify, in certain respects, the terms of the Loan Agreement, and Lender has agreed to such modifications in accordance with and subject to the satisfaction of the conditions hereof.
NOW, THEREFORE, with the foregoing Background incorporated by reference and intending to be legally bound hereby, the parties agree as follows:
1.Section 1 of the Loan Agreement shall be amended by deleting the definitions of Revolving Credit Maturity Date and Term Loan Maturity Date and replacing each as follows:
Revolving Credit Maturity Date – April 30, 2020, or such later date as Lender may, in its sole and absolute discretion, designate in writing to Borrower.
Term Loan Maturity Date – February 22, 2022.
2.Section 2.3(c) of the Loan Agreement shall be amended by deleting such section in its entirety and replacing it as follows:
c. The principal balance of the Term Loan shall be paid in forty-eight (48) consecutive equal monthly installments of principal in the amount of One Hundred Nine Thousand Three Hundred Seventy Five Dollars ($109,375.00) on the 22nd day of each month (but excluding payments otherwise due on February 22, 2020, March 22, 2020 and April 22, 2020). A final installment of all unpaid principal and all accrued and unpaid
interest outstanding under the Term Loan shall be due and payable on the Term Loan Maturity Date.
3.A new Section 6.22 shall be added to the Loan Agreement, which shall read as follows:
6.22. New Equity: Borrower shall cause KAE to issue new Capital Stock (the terms of which Capital Stock shall be in form and substance acceptable to Lender) during the period between March 25, 2020 and April 30, 2020 which results in KAE receiving net cash proceeds from the issuance of such Capital Stock in an amount not less than Five Hundred Thousand Dollars ($500,000).
4.Section 8.1(c) of the Loan Agreement shall be amended by deleting the phrase “6.11 and VII” and replacing it with the phrase “6.11, 6.22 and VII”.
5.ACKNOWLEDGMENT OF CERTAIN EVENTS OF DEFAULT. BORROWER HEREBY ACKNOWLEDGES AND CONFIRMS THAT CERTAIN EVENTS OF DEFAULT HAVE OCCURRED UNDER THE LOAN AGREEMENT AS A RESULT OF BORROWER (a) NOT MAINTAINING TANGIBLE NET WORTH OF AT LEAST ONE MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($1,750,000) AS OF DECEMBER 31, 2019, AS REQUIRED BY SECTION 6.9(A) OF THE LOAN AGREEMENT AND (b) NOT MAINTAINING A DEBT SERVICE COVERAGE RATIO OF NOT LESS THAN 1.25:1 AS OF DECEMBER 31, 2019, AS REQUIRED BY SECTION 6.9(B) OF THE LOAN AGREEMENT (COLLECTIVELY, THE “EXISTING DEFAULTS”). FOLLOWING THE EFFECTIVENESS OF THIS AMENDMENT, UPON BORROWER TIMELY SATISFYING THE TERMS OF SECTION 6.22 OF THE LOAN AGREEMENT, IF NO DEFAULTS OR EVENTS OF DEFAULT EXIST AT SUCH TIME (OTHER THAN THE EXISTING DEFAULTS), LENDER SHALL BE DEEMED TO HAVE WAIVED THE EXISTING DEFAULTS, PROVIDED THAT LENDER’S WAIVER SHALL NOT BE DEEMED TO BE A WAIVER OF ANY SUBSEQUENT VIOLATIONS OF ANY COVENANT REFERENCED IN SECTION 6.9 OF THE LOAN AGREEMENT OR A WAIVER OF ANY OTHER DEFAULTS OR EVENTS OF DEFAULTS WHICH MAY HAVE OCCURRED BUT WHICH ARE NOT SPECIFICALLY IDENTIFIED ABOVE.
6.Representations and Warranties.Borrower warrants and represents to Lender that:
a. | Prior Representations. By execution of this Amendment, Borrower reconfirms all warranties and representations made to Lender under the Loan Agreement and the other Loan Documents respectively and restate such warranties and representations as of the date hereof, all of which shall be deemed continuing until all of the obligations due to Lender are indefeasibly paid and satisfied in full. |
b. | Authorization. The execution and delivery by Borrower of this Amendment and the performance by Borrower of the transactions herein contemplated (i) are and will be within its powers, (ii) have been duly |
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authorized by all necessary action on behalf of Borrower and (iii) are not and will not be in contravention of any order of court or other agency of government, of law or of any indenture, agreement or undertaking to which Borrower is a party or by which the property of Borrower is bound, or be in conflict with, result in a breach of or constitute (with due notice and/or lapse of time) a default under any such indenture, agreement or undertaking, or result in the imposition of any lien, charge or encumbrance of any nature on any of the properties of the Borrower.
c. | Valid, Binding and Enforceable. This Amendment and any assignment or other instrument, document or agreement executed and delivered in connection herewith, will be valid, binding and enforceable in accordance with their respective terms. |
d. | No Default. Other than the Existing Defaults, no non-compliance, Default or Event of Default exists. |
7.Ratification of Loan Documents. This Amendment is hereby incorporated into and made a part of the Loan Agreement and all other Loan Documents respectively, the terms and provisions of which, except to the extent modified by this Amendment, are each ratified and confirmed and continue unchanged in full force and effect. Any reference to the Loan Agreement and all other Loan Documents respectively in this or any other instrument, document or agreement related thereto or executed in connection therewith shall mean the Loan Agreement and all other Loan Documents respectively as amended by this Amendment. As security for the payment of the Obligations, and satisfaction by Borrower of all covenants and undertakings contained in the Loan Agreement, Borrower hereby confirms its prior grant to Lender of a continuing first lien on and security interest in, upon and to all of Borrower’s now owned or hereafter acquired, created or arising Collateral as described in Section 3 of the Loan Agreement.
8.Confirmation of Guarantor. By his signature below, each Guarantor hereby consents to and acknowledges the terms and conditions of this Amendment and agrees that the Amended and Restated Guaranty dated as of April 18, 2019 executed by such Guarantor is ratified and confirmed and shall continue in full force and effect and shall continue to cover all obligations of Borrower outstanding from time to time under the Loan Agreement as amended hereby.
9.Effectiveness Conditions. This Amendment shall become effective upon the following:
a. | Execution by Borrower and each Guarantor of this Amendment and delivery of same to Lender; and |
b. | Execution by Lender of this Amendment. |
10.Governing Law. THIS AMENDMENT, AND ALL RELATED AGREEMENTS AND DOCUMENTS, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS SET FORTH IN SECTION 9.1 OF THE LOAN AGREEMENT. THE PROVISIONS OF THIS AMENDMENT AND ALL OTHER
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AGREEMENTS AND DOCUMENTS REFERRED TO HEREIN ARE TO BE DEEMED SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION SHALL NOT AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL CONTINUE IN FULL FORCE AND EFFECT.
11.Modification. No modification hereof or any agreement referred to herein shall be binding or enforceable unless in writing and signed by Borrower and Lender.
12.Duplicate Originals; Counterparts. Two or more duplicate originals of this Amendment may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument. This Amendment may be executed in as many counterparts as necessary or convenient, and by the different parties on separate counterparts each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same agreement. Delivery of an executed counterpart of this Amendment (or of any agreement or document required by this Amendment) by telecopy or other electronic imaging means shall be as effective as delivery of a manually executed counterpart of this Amendment.
13.Waiver of Jury Trial. BORROWER AND LENDER EACH HEREBY WAIVE ANY AND ALL RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION, PROCEEDING OR COUNTERCLAIM ARISING WITH RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO OR UNDER THE LOAN DOCUMENTS OR WITH RESPECT TO ANY CLAIMS ARISING OUT OF ANY DISCUSSIONS, NEGOTIATIONS OR COMMUNICATIONS INVOLVING OR RELATED TO ANY PROPOSED RENEWAL, EXTENSION, AMENDMENT, MODIFICATION, RESTRUCTURE, FORBEARANCE, WORKOUT, OR ENFORCEMENT OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS.
14.Confession of Judgment. Borrower hereby acknowledges and confirms that each confession of judgment previously executed in connection with any of the Loan Documents remains in full force and effect, and that Borrower, pursuant to the terms of such confession of judgment, empowers any clerk, or attorney of any court of record to appear for Borrower after any Event of Default in any and all actions which may be brought under the Loan Documents and confess judgment against Borrower for all, or any part of, the unpaid principal balance of the Obligations and accrued interest, together with other expenses incurred in connection therewith and attorneys’ fees of in no event less than three thousand dollars ($3,000).
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IN WITNESS WHEREOF, the undersigned parties have executed this Amendment the day and year first above written.
| BORROWER: | |
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| AXXUM TECHNOLOGIES LLC | |
| | |
| By: | |
| | Alvin McCoy III |
| | Chief Financial Officer |
| KAE HOLDINGS, INC. | |
| | |
| By: | |
| | Alvin McCoy III |
| | Chief Financial Officer |
| CLOUDBURST SECURITY LLC | ||
| | ||
| By: | KAE HOLDINGS, INC., its sole member | |
| | | |
| | By: | |
| | Name: | Alvin McCoy III |
| | Title: | Chief Financial Officer |
| LENDER: | |
| | |
| MAINSTREET BANK | |
| | |
| By: | |
| | Michael Ferrell |
| | Senior Vice President |
| Agreed to and Accepted: |
| |
| GUARANTORS: |
| |
| |
| Emmit McHenry |
| |
| |
| Kurt McHenry |
| |
| |
| Alvin McCoy III |
(Signature Page to First Amendment to Amended and Restated Loan and Security Agreement)
Certificate Of Completion | | |
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Envelope Id: 9AA65D1C1A1C4926BACD40F7E87B5A4F | Status: Completed | |
Subject: Please DocuSign: 1st Amendment- Axxum- final.pdf | | |
Source Envelope: | | |
Document Pages: 5 | Signatures: 7 | Envelope Originator: |
Certificate Pages: 5 | Initials: 0 | Suha Siam |
AutoNav: Enabled | | 10089 Fairfax Blvd |
EnvelopeId Stamping: Enabled | | Fairfax, VA 22030 |
Time Zone: (UTC-05:00) Eastern Time (US & Canada) | ***@*** | |
| | IP Address: 24.249.33.228 |
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Record Tracking | | |
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Status: Original | Holder: Suha Siam | Location: DocuSign |
3/30/2020 2:20:50 PM | ***@*** | |
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Signer Events | Signature | Timestamp |
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Alvin McCoy | Sent: 3/30/2020 2:27:08 PM | |
***@*** | | Viewed: 3/30/2020 2:27:47 PM |
Security Level: Email, Account Authentication (Optional) | | Signed: 3/30/2020 2:28:47 PM |
| Signature Adoption: Pre-selected Style | |
| Using IP Address: 100.36.103.4 | |
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Electronic Record and Signature Disclosure: | | |
Accepted: 3/30/2020 2:27:47 PM | | |
ID: 4144001a-c898-4f24-9639-a57f99aceebe | | |
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Emmit McHenry | Sent: 3/30/2020 2:27:08 PM | |
***@*** | | Viewed: 3/30/2020 2:52:21 PM |
Security Level: Email, Account Authentication (Optional) | | Signed: 3/30/2020 2:54:45 PM |
| Signature Adoption: Pre-selected Style | |
| Using IP Address: 173.79.209.138 | |
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Electronic Record and Signature Disclosure: | | |
Accepted: 3/11/2019 3:39:47 PM | | |
ID: 667a5299-8381-4f74-ae2a-c61a1809d76f | | |
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Kurt Mchenry | Sent: 3/30/2020 2:27:08 PM | |
***@*** | | Viewed: 3/30/2020 2:41:22 PM |
Security Level: Email, Account Authentication (Optional) | | Signed: 3/30/2020 2:42:56 PM |
| Signature Adoption: Pre-selected Style | |
| Using IP Address: 72.86.47.197 | |
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Electronic Record and Signature Disclosure: | | |
Accepted: 3/30/2020 2:41:22 PM | | |
ID: 0b4af0ec-bba2-4916-992a-02f6e0dc5601 | | |
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Michael A Ferrell | Sent: 3/30/2020 2:27:08 PM | |
***@*** | | Viewed: 3/30/2020 2:28:54 PM |
SVP, Government Contract Lender | | Signed: 3/30/2020 2:29:56 PM |
MainStreet Bank | Signature Adoption: Pre-selected Style | |
Security Level: Email, Account Authentication (Optional) | Using IP Address: 104.129.194.195 | |
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Electronic Record and Signature Disclosure: | | |
Not Offered via DocuSign | | |
In Person Signer Events | Signature | Timestamp |
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Editor Delivery Events | Status | Timestamp |
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Agent Delivery Events | Status | Timestamp |
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Intermediary Delivery Events | Status | Timestamp |
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Witness Events | Signature | Timestamp |
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Notary Events | Signature | Timestamp |
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Envelope Summary Events | Status | Timestamps |
Envelope Sent | Hashed/Encrypted | 3/30/2020 2:27:09 PM |
Certified Delivered | Security Checked | 3/30/2020 2:52:21 PM |
Signing Complete | Security Checked | 3/30/2020 2:54:45 PM |
Completed | Security Checked | 3/30/2020 2:54:45 PM |
Payment Events | Status | Timestamps |
Electronic Record and Signature Disclosure |
Electronic Record and Signature Disclosure created on: 5/1/2017 8:57:33 AM
Parties agreed to: Alvin McCoy, Emmit McHenry, Kurt Mchenry
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