EXHIBIT 10.22





NOTE AND LOAN MODIFICATION AGREEMENT





THIS NOTE AND LOAN MODIFICATION AGREEMENT (“Agreement”) is made and effective as of August 20, 2010, by and between SUTRON CORPORATION, a Virginia corporation (“Borrower”) and BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation and successor by merger to Branch Banking and Trust Company of Virginia (“Lender”).





RECITALS





WHEREAS, on July 29, 2004, Lender made a commercial line of credit loan in the amount of One Million Six Hundred Twenty-Five Thousand and 00/100 Dollars ($1,625,000.00) (as subsequently modified, the “Loan”) to the Borrower, evidenced by, inter alia, (i) the Borrower’s Commercial Promissory Note of same date in the amount of the Loan (as subsequently modified, the “Note”), (ii) that certain first lien Security Agreement of same date executed by the Borrower for the benefit of the Lender (as subsequently modified, the “Security Agreement”), and (iii) that Loan Agreement and Schedule DD thereto, each of same date executed by the Borrower and the Lender (as subsequently modified, collectively, the “Loan Agreement”) (the Note, Security Agreement, Loan Agreement, Schedule GC (as defined below), and all other documents evidencing or securing the Loan, as subsequently modified, are sometimes collectively referred to herein as “Loan Documents”); and





WHEREAS, by Loan Modification Agreement and Release of Guarantors dated as of August 5, 2005, the Lender and the Borrower agreed, inter alia, to (i) increase the principal amount of the Loan to Two Million and 00/100 Dollars ($2,000,000.00), (ii) extend the maturity date of the Loan, and (iii) release the Guarantors, as defined therein, from their obligations under the Guaranty, as defined therein; and





WHEREAS, by Loan Modification Agreement dated as of August 5, 2006, the Lender and the Borrower agreed, inter alia, to (i) increase the principal amount of the Loan to Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00), and (ii) extend the maturity date of the Loan; and





WHEREAS, by Loan Modification Agreement dated as of June 26, 2007, the Lender and the Borrower agreed, inter alia, to (i) increase the principal amount of the Loan to Three Million and 00/100 Dollars ($3,000,000.00), (ii) extend the maturity date of the Loan, and (iii) amend Schedule DD to the Loan Agreement; and





WHEREAS, by Loan Modification Agreement dated as of August 4, 2008, the Lender and the Borrower agreed, inter alia, to extend the maturity date of the Loan; and





WHEREAS, by Loan Modification Agreement dated as of September 2, 2009, the Lender and the Borrower agreed, inter alia, to (i) extend the maturity date of the Loan, and (ii) replace Schedule DD to the Loan Agreement with that certain Amended and Restated Schedule “GC” to BB&T Loan Agreement dated September 2, 2009 (“Schedule GC”); and





WHEREAS, the Borrower has requested that Lender (i) further extend the maturity date of the Loan; and (ii) make certain other modifications to the Loan terms; and





WHEREAS, the Lender has agreed to grant Borrower’s request, subject to Borrower’s execution and delivery of, and performance of the terms and conditions set forth in, this Agreement.





NOW THEREFORE, for and in consideration of the above recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:





1.           Recitals.  The above recitals are incorporated herein and made a part hereof.





2.           Loan Statement.  Borrower and Lender hereby confirm that as of the date hereof, (i) there is no accrued and unpaid interest under the Loan, and (ii) there is no outstanding principal balance under the Loan.  The maximum principal amount of the Note is $3,000,000.00.





3.           Note Payments/Maturity Date.  Commencing September 5, 2010 and continuing on the fifth (5th) day of each and every calendar month during the term of the Loan, payments of interest only shall continue to be due and payable.  The Loan maturity date is hereby extended to August 5, 2011.





4.           Letters of Credit.  The maximum aggregate face amount of standby letters of credit that the Lender agrees to issue for the account of the Borrower (as referenced in the Note and the Loan Agreement) is hereby increased to Three Million and 00/100 Dollars ($3,000,000.00).





5.           Schedule GC to Loan Agreement.  The last two (2) sentences of Section GC.01(ii) of Schedule GC are hereby deleted in their entirety and replaced the following:





A limit of up to $3,000,000.00 shall be available for the issuance of Letters of Credit.  The outstanding Letter of Credit exposure within this limit shall be reserved from the Collateral Loan Value (to the extent that the Letter of Credit is secured by accounts and inventory) and the Line of Credit Commitment Amount.





6.           Modification of Loan Documents.





A.
The Note, Security Agreement, Loan Agreement, Schedule GC and remaining Loan Documents are hereby modified to reflect and incorporate the terms and provisions of the Loan modifications as described in paragraphs 3 through 5 above.








B.
The terms “Note”, “Security Agreement”, “Loan Agreement”, “Schedule GC”, and all other defined documents as referenced in the Loan Documents, shall be deemed to mean such documents, as modified by this Agreement.  In addition, this Agreement shall be deemed to be a Loan Document.





7.           Modification Costs.  Borrower further agrees to pay to Lender at the time of the execution of this Agreement, a Loan extension fee in the amount of $1,500.00.





8.           Ratification and Renewal.  The Borrower hereby ratifies and renews its covenants and agreements to pay the Loan in accordance with the terms and provisions of the Note, as modified by this Agreement; and the Borrower otherwise hereby ratifies and renews its covenants and agreements to perform, comply with and be bound by all other terms and provisions of the Note and the Loan Documents, all as modified by this Agreement.  The Borrower also hereby confirms that the Security Agreement continues to secure repayment of the Note, as modified by this Agreement.  Further, the Borrower covenants and warrants that each and every provision of the Note and Loan Documents, as modified by this Agreement, are in full force and effect and are the lawful and binding obligations of Borrower, enforceable in accordance with their respective terms.





9.           Waiver.  The Borrower acknowledges Lender as the owner and holder of the Note, and the secured party under the Security Agreement, and covenants and agrees that there are no defenses, set-offs, or counter-claims against Lender, with respect to the Note and the Loan Documents, as modified by the terms of this Agreement, or otherwise, or with respect to the Loan or with respect to the collection or enforcement of any of the same.  The parties to this Agreement do not intend this Agreement to be construed as a novation of the Note.





10.           Further Assurances.  The parties agree to execute and deliver any and all instruments and documents reasonably necessary or required from time to time to effect the terms and intent of this Agreement.





11.           Entire Agreement.  This Agreement contains the entire agreement of the parties hereto with respect to the modification of the Loan, and no other agreement, statement or promise made by any party hereto, or any employee, officer, agent, or attorney of any party hereto, shall be valid or binding.





12.           Binding Effect.  Each and every of the terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, successors, personal representatives and assigns.





13.           Governing Law.  This Agreement shall be governed by, construed under, and interpreted and enforced in accordance with the laws of the Commonwealth of Virginia, but without regard for Virginia’s laws or rules regarding conflict or choice of laws.





14.           Severability.  If any term, covenant or condition of this Agreement, or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant or condition to other persons or circumstances, shall not be affected hereby, and each term, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law.





15.           Headings.  The captions and headings herein are for convenience of reference only and in no way define or limit the scope or content of this Agreement or in any way affect its provisions.





16.           Modification.   The terms of this Agreement may not be changed, waived, discharged or terminated orally, but only by an instrument in writing, signed by the party against which enforcement of the change, waiver, discharge or termination is asserted.





17.           Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together will constitute one instrument.








SIGNATURES ON FOLLOWING PAGES





IN WITNESS WHEREOF, the parties have executed this Note and Loan Modification Agreement as of the date and year first written above.





BORROWER:





SUTRON CORPORATION, a Virginia corporation





By: Sidney C. Hooper


Treasurer











COMMONWEALTH OF VIRGINIA      )


)


COUNTY OF LOUDON                         ) to-wit:








The foregoing was subscribed and sworn to before me on this 20day of August, 2010, by Sidney C. Hooper, as Treasurer of SUTRON CORPORATION, a Virginia corporation, on behalf of the corporation.





Leonard C. Lewan


Notary Public








My commission Expires: January 31, 2011


Notary Registration No:  127916














[signature of Lender of following page]













BRANCH BANKING AND TRUST COMPANY, a


North Carolina banking corporation








By: Leonard C. Lewan


Senior Vice President








COMMONWEALTH OF VIRGINIA       )


)


COUNTY OF FAIRFAX                         ) to wit:





The foregoing instrument was acknowledged before this 20 day of August, 2010, by Leonard C. Lewan, as Senior Vice President of BRANCH BANKING AND TRUST COMPANY, a North Carolina corporation, on behalf of the corporation.





Norma H. Ricketts


Notary Public





My Commission Expires:  09/30/2010


Notary Registration No.:   268459