Exhibit 10.28
FOURTH AMENDMENT TO BUSINESS LOAN AGREEMENT
AND SECOND AMENDMENT TO ONE CERTAIN PROMISSORY NOTE
THIS FOURTH AMENDMENT TO BUSINESS LOAN AGREEMENT AND SECOND AMENDMENT TO
ONE CERTAIN PROMISSORY NOTE ("Fourth Amendment"), made and entered into as of
the 31st day of May, 1998, by and among XXXX GROUP, INC., a Delaware corporation
(formerly known as Xxxx Group Newco, Inc. and successor in interest to Xxxx
Systems, Inc.) ("TGI"), XXXX SYSTEMS INTERNATIONAL, INC., a Delaware corporation
(formerly known as Xxxx Group, Inc.) ("TSII"), and UNION BANK OF CALIFORNIA,
N.A., a national banking association ("Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Bank and TGI are parties to that certain Business Loan Agreement,
dated as of June 19, 1997 (as amended by those certain First, Second and Third
Amendments to Loan Agreement, dated as of February 12, 1998, April 27, 1998 and
May 8, 1998, respectively, the "Loan Agreement"), which Loan Agreement governs
(a) that certain Promissory Note (Base Rate) of TGI in a principal amount not to
exceed $4,500,000.00, dated February 6, 1998 (the "Revolving Note"), and (b)
that certain Promissory Note (Base Rate) of TGI in the original principal amount
of $1,000,000.00, dated June 20, 1997 (the "Term Note"); and
WHEREAS, TSII has guarantied the payment and performance of TGI's
obligations to Bank pursuant to the terms and conditions of that certain
Continuing Guaranty, dated May 18, 1998, executed by TSII in favor of Bank (the
"Continuing Guaranty"); and
WHEREAS, TGI and TSII have entered into or will enter into a corporate
reorganization pursuant to which (a) the various shareholders of TSII have
exchanged or will exchange their stock in TSII for stock in TGI all as more
particularly provided in those certain Subscription Agreements and Letters of
Investment Intent entered into by and between such shareholders and TSII and, as
a consequence, TSII has become or will become a wholly owned subsidiary of TGI,
and (b) each of TGI and TSII has assigned and transferred or will assign and
transfer all of its business assets to the other, and each of TGI and TSII has
assumed or will assume all of the obligations and liabilities of the other, all
as more particularly provided in that certain Xxxx of Sale and Assignment and
Assumption Agreement, dated as of May 31, 1998, by and between TSII and TGI (the
"Reorganization"); and
WHEREAS, under Section 4.14 of the Loan Agreement and under Section 3(d) of
that certain Security Agreement, dated May 18, 1998, executed by TGI in favor of
Bank, TGI has agreed not to enter into any consolidation or merger, not to sell
all or the greater part of its assets or business, not to purchase all or the
greater part of the assets or business of another and not to change its
composition as a business entity, in each case without the prior written consent
of Bank, and, accordingly, has requested that Bank provide its written consent
to the Reorganization; and
WHEREAS, under Section 3(d) of that certain Security Agreement, date May
18, 1998, executed by TSII in favor of Bank, TSII has agreed not to change its
composition as a business entity without the prior written consent of Bank and,
accordingly, has requested that Bank provide its written consent to the
Reorganization; and
WHEREAS, Bank is willing to consent to the Reorganization, subject,
however, to the terms and conditions of this Fourth Amendment; and
WHEREAS, TGI, TSII and Bank desire to amend the Loan Agreement and the Term
Note (a) to reflect certain changes effected by the Reorganization, (b) to
extend the maturity of the Borrowing Base Loan through and including June 30,
1999, and (c) to provide for certain other matters;
NOW, THEREFORE, for and in consideration of the premises hereof, and other
good and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms used in this Fourth Amendment shall, unless
otherwise defined herein or unless the context otherwise requires, have the
meanings given thereto in the Loan Agreement or the Term Note, as the context
may require.
2. Bank hereby consents to the Reorganization upon the terms and subject
to the conditions of this Fourth Amendment.
3. From and after the date on which this Fourth Amendment becomes
effective as provided in Xxxxxxxxx 0, xxxxx, each reference to "Xxxx Group, Inc.
(formerly known as Xxxx Group Newco, Inc. and successor in interest to Xxxx
Systems, Inc.)," "Borrower" or "Debtor" which is contained in the Loan
Agreement, the Term Note or any other document, instrument or agreement entered
into in connection with the Loan Agreement, the Term Note or any transaction
contemplated by either of the same (including without limitation any application
and agreement relating to the issuance of a standby letter of credit under the
Loan Agreement), shall be and be deemed to be a reference to "Xxxx Systems
International, Inc. (successor in interest to Xxxx Group, Inc."). In connection
therewith, (a) the Loan Agreement is amended by deleting the name "Xxxx Group,
Inc. (formerly known as Xxxx Group Newco, Inc. and successor in interest to Xxxx
Systems, Inc.)" where it appears in the second line of the introductory
paragraph thereof and in the signature line thereof and by substituting in lieu
thereof in each such instance the name "Xxxx Systems International, Inc.
(successor in interest to Xxxx Group, Inc.)", and (b) the Term Note is amended
by deleting the name "Xxxx Group, Inc. (formerly known as Xxxx Group Newco, Inc.
and successor in interest to Xxxx Systems, Inc.)" where it appears at the top of
the first page thereof and in the signature line thereof and by substituting in
lieu thereof in each such instance the name "Xxxx Systems International, Inc.
(successor in interest to Xxxx Group, Inc.)".
4. Upon the consummation of the Reorganization, (a) TSII agrees to, and
shall, (i) assume all liabilities, duties and obligations of TGI under the Loan
Agreement, the Revolving Note, the Term Note and the other Loan Documents
(including without limitation all liabilities, duties and obligations arising
under any application and agreement relating to the issuance of a standby letter
of credit under the Loan Agreement), and (ii) succeed to all rights of TGI under
the Loan Agreement, the Revolving Note, the Term Note and the other Loan
Documents, and (b) TGI agrees to, and shall, (i) assume all liabilities, duties
and obligations of TSII under the Continuing Guaranty and all other documents,
instruments and agreements entered into by TSII in connection with the
Continuing Guaranty and the transactions contemplated by the Loan Agreement, and
(ii) succeed to all rights of TSII under the Continuing Guaranty and such other
documents, instruments and agreements.
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5. The Loan Agreement is further amended as follows:
(a) By deleting the first sentence of the first paragraph of Section 1.2
and by substituting in lieu thereof the following:
An amount of the Loan equal to Four Million Five Hundred Thousand
Dollars ($4,500,000.00), evidenced by a separate Note, is a revolving loan
subject to a borrowing base ("Borrowing Base Loan").
(b) By deleting the date "June 30, 1998" where it appears in the last line
of the first paragraph of Section 1.2 and by substituting in lieu thereof
the date June 30, 1999;
(c) By deleting the name "Xxxx Group, Inc." where it appears in the third
line of Section 1.7 and by substituting in lieu thereof the name "Xxxx
Group, Inc. (successor in interest to Xxxx Systems International, Inc.)";
and
(d) By adding a new Section 1.9 to read as follows:
1.9 FEES. Without in any way limiting the rights and remedies of
Bank under this Agreement, including without limitation the right to
call a default, to accelerate the balance owing under the Note, and to
assess the default rate of interest on all or a portion of the
principal and interest due under the Note, Borrower agrees to pay to
Bank, in immediately available funds, a fee of Two Thousand Five
Hundred Dollars ($2,500.00) per violation for the violation of any of
the financial covenants set forth in Subsections 4.1(c), (d), (e), (f)
and (g) of this Agreement. For the purpose of this Section 1.9,
compliance with the covenants set forth in Subsections 4.19(c), (d),
(e) and (f) shall be measured as at the end of each fiscal quarter of
Borrower, and compliance with the covenant set forth in Subsection
4.1(g) shall be measured as at the end of each fiscal year of
Borrower.
6. The consent granted by Bank in Paragraph 2 of this Fourth Amendment
and the other provisions of this Fourth Amendment shall become effective upon
the satisfaction of the following conditions precedent:
(a) The Reorganization shall have been consummated in accordance with all
applicable laws, rules and regulations; and
(b) Bank shall have received the following, each in form and substance
satisfactory to Bank and its counsel;
(i) This Fourth Amendment, duly executed by TGI and TSII;
(ii) A replacement Revolving Note on Bank's standard form, dated the
date the Reorganization is consummated (the "Closing Date"), duly
executed by "Xxxx Systems International, Inc. (successor in interest
to Xxxx Group, Inc.)";
(iii) A Security Agreement on Bank's standard form, dated the
Closing Date, duly executed by "Xxxx Systems International, Inc.
(successor in interest to Xxxx Group, Inc.)";
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(iv) A Continuing Guaranty of the obligations of "Xxxx Systems
International, Inc. (successor in interest to Xxxx Group, Inc.)" to
Bank, on Bank's standard form, dated the Closing Date, duly executed
by "Xxxx Group, Inc. (successor in interest to Xxxx Systems
International, Inc.)";
(v) A Security Agreement on Bank's standard form, dated the Closing
Date, duly executed by "Xxxx Group, Inc. (successor in interest to
Xxxx Systems International, Inc.)";
(vi) A written opinion of Xxxxxxxxxxx, Xxxxx & Xxxxxxxx LLP, counsel
to TGI and TSII, in the form appended hereto as Exhibit I, dated the
Closing Date and addressed to Bank;
(vii) A documentation fee in the amount of Four Thousand Five
Hundred Dollars ($4,500.00); and
(viii)Such other documents, instruments and agreements as Bank may
reasonably require to effectuate the purposes of this Fourth
Amendment.
7. Except as expressly provided herein, the Loan Agreement and the Term
Note are unchanged and shall remain in full force and effect, and such Loan
Agreement and such Term Note are hereby ratified and confirmed by TGI and TSII.
8. This Fourth Amendment shall be governed by and construed in accordance
with the laws of the State of California.
9. This Fourth Amendment may be executed in any number of identical
counterparts, any set of which signed by all parties hereto shall be deemed to
constitute a complete, executed original for all purposes.
IN WITNESS WHEREOF, the parties have executed this Fourth Amendment as of
the day and year first above written.
XXXX SYSTEMS INTERNATIONAL, INC. UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxxx Xxxxxxx
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Title: Chief Executive Officer Title: Vice President
------------------------- -------------------------
By: /s/ Xxxxx Xxxxxxx
----------------------------
Title: Assistant Vice President
-------------------------
XXXX GROUP, INC.
By: /s/ Xxxxxxx X. Xxxx
----------------------------
Title: Chief Executive Officer
-------------------------
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EXHIBIT I
[Xxxxxxxxxxx, Xxxxx & Xxxxxxxx LLP Letterhead]
______________________, 0000
Xxxxx Xxxx xx Xxxxxxxxxx, X.X.
Xxxxxx Xxxxxx Commercial Portfolio Administration
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxxxx X. Xxxxxxx
Re: Xxxx Group, Inc./Xxxx Systems International, Inc.
Ladies and Gentlemen:
We have acted as counsel for Xxxx Group, Inc., a Delaware corporation ("TGI"),
and Xxxx Systems International, Inc., a Delaware corporation ("TSII"), in
connection with the corporate reorganization effected by TGI and TSII pursuant
to which (a) the various shareholders of TSII exchanged their stock in TSII for
stock in TGI all as more particularly provided in those certain Subscription
Agreements and Letters of Investment Intent entered into by and between such
shareholders and TSII, and (b) each of TGI and TSII assigned and transferred all
of its business assets to the other, and each of TGI and TSII assumed all of the
obligations and liabilities of the other, all as more particularly provided in
that certain Xxxx of Sale and Assignment and Assumption Agreement, dated as of
May 31, 1998, by and between TSII and TGI (the "Reorganization"). This opinion
is furnished to Union Bank of California, N.A., a national banking association
("Bank"), in its capacity as a creditor of TGI pursuant to a Business Loan
Agreement (the "Loan Agreement"), dated as of June 19, 1997, as amended, and all
other documents, instruments and agreements delivered to Bank in connection with
the Loan Agreement (including without limitation the Continuing Guaranty of the
obligations of TGI to Bank, dated __________________, 1998, executed by TSII in
favor of Bank).
We have examined such documents, records and matters of law as we have deemed
necessary for purposes of this opinion, and based thereon we are of the opinion
that:
1. The Reorganization has been consummated in accordance with all
applicable laws, rules and regulations.
2. As a result of the Reorganization, TSII became a wholly owned
subsidiary of TGI.
3. Upon consummation of the Reorganization, TSII acquired all assets
and assumed all liabilities and obligations of TGI, and TGI acquired all
assets and assumed all liabilities and obligations of TSII.
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4. Upon consummation of the Reorganization, (a) all rights of Bank
against TGI were preserved unimpaired against TSII, and all debts,
liabilities and obligations of TGI to Bank attached to TSII and may be
enforced against TSII to the same extent as if such debts, liabilities and
obligations had originally been incurred or contracted by TSII rather than
by TGI, and (b) all rights of Bank against TSII were preserved unimpaired
against TGI, and all debts, liabilities and obligations of TSII to Bank
attached to TGI and may be enforced against TGI to the same extent as if
such debts, liabilities and obligations had originally been incurred or
contracted by TGI rather than by TSII.
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