EXHIBIT 10.13
SECOND MODIFICATION AGREEMENT
BY THIS SECOND MODIFICATION AGREEMENT, made and entered into and effective
as of September 30, 2001, THREE-FIVE SYSTEMS, INC., a Delaware corporation (the
"Company"), all present and future Subsidiaries of the Company (with the
Company, the "Borrower"), the banks listed from time to time in the Credit
Agreement (defined below) (the "Banks"), and COMERICA BANK-CALIFORNIA, successor
by merger to Imperial Bank, a California banking corporation, as administrative
agent for the Banks (in such capacity, the "Agent") and as Issuing Bank, confirm
and agree as follows:
SECTION 1. RECITALS.
1.1 Borrower, the Banks and the Agent entered into a Credit Agreement
dated January 21, 2000 (as amended from time to time, the "Credit Agreement"),
which as amended provides for a revolving line of credit (the "RLC") by the
Banks to Borrower in the amount of $15,000,000.00 upon the terms and conditions
contained therein. The Credit Agreement was previously amended by that
Modification Agreement dated as of February 1, 2001. All undefined capitalized
terms used herein shall have the meaning given them in the Credit Agreement.
1.2 The RLC is evidenced by Revolving Promissory Notes executed by
Borrower in the aggregate amended principal amount of $15,000,000.00 (the "RLC
Notes").
1.3 Borrower, the Banks and the Agent desire to modify the Credit
Agreement and the other Credit Documents as set forth herein.
SECTION 2. MODIFICATION OF CREDIT DOCUMENTS.
2.1 Section 1.1 of the Credit Agreement is hereby amended by the addition
of the following definition:
"Liquidity" means the sum of Borrower's consolidated cash balances
and/or cash equivalent balances, and its short-term and long-term
investments classified as available for sale as defined by GAAP and
as described in the Borrower's filings with the Securities and
Exchange Commission.
2.2 Section 8.11 of the Credit Agreement is hereby amended to read as
follows:
8.11 Financial Covenants. Unless otherwise agreed to by the Agent in
writing, it will not permit on a consolidated basis its Liquidity to
be less than $80,000,000.00 at the end of any fiscal quarter,
commencing with that fiscal quarter ending September 30, 2001.
SECTION 3. OTHER MODIFICATIONS, RATIFICATIONS AND AGREEMENTS.
3.1 All references to the Credit Agreement and the RLC Notes in the Credit
Documents and the other Credit Documents are hereby amended to refer to the
Credit Agreement and the RLC Notes as hereby amended.
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3.2 Borrower acknowledges that the indebtedness evidenced by the RLC Notes
is just and owing, that the aggregate balance thereof is in the amount of $0 as
of September 30, 2001, and Borrower agrees to pay the indebtedness evidenced by
the RLC Notes, according to the terms thereof, as herein modified.
3.3 Borrower hereby reaffirms to the Banks each of the representations,
warranties, covenants and agreements of Borrower set forth in the RLC Notes, the
Credit Agreement and all other Credit Documents, with the same force and effect
as if each were separately stated herein and made as of the date hereof.
3.4 Borrower hereby ratifies, reaffirms, acknowledges, and agrees that the
RLC Notes, the Credit Agreement and the other Credit Documents represent valid,
enforceable and collectible obligations of Borrower, and that there are no
existing claims, defenses, personal or otherwise, or rights of setoff whatsoever
with respect to any of these documents or instruments. In addition, Borrower
hereby expressly waives, releases and absolutely and forever discharges the
Agent, the Banks and their present and former shareholders, directors, officers,
employees and agents, and their separate and respective heirs, personal
representatives, successors and assigns, from any and all liabilities, claims,
demands, damages, action and causes of action, whether known or unknown and
whether contingent or matured, that Borrower may now have, or has had prior to
the date hereof, or that may hereafter arise with respect to acts, omissions or
events occurring prior to the date hereof and, without limiting the generality
of the foregoing, from any and all liabilities, claims, demands, damages,
actions and causes of action, known or unknown, contingent or matured, arising
out of, or in any way connected with, the RLC. Borrower further acknowledges and
represents that, except as acknowledged above, no event has occurred and no
condition exists that, after notice or lapse of time, or both, would constitute
a default under this Agreement, the RLC Notes, the Credit Agreement or any other
Credit Document. The preceding representation shall be to the actual knowledge
of Borrower with respect to default by the Banks.
3.5 All terms, conditions and provisions of the RLC Notes, the Credit
Agreement and the other Credit Documents are continued in full force and effect
and shall remain unaffected and unchanged except as specifically amended hereby.
The RLC Notes, the Credit Agreement and the other Credit Documents, as amended
hereby, are hereby ratified and reaffirmed by Borrower, and Borrower
specifically acknowledges the validity and enforceability thereof.
SECTION 4. GENERAL.
4.1 This Agreement in no way acts as a release or relinquishment of those
rights securing payment of the RLC.
4.2 The modifications contained herein shall not be binding upon the Agent
and the Banks until the Agent shall have received all of the following:
(a) An original of this Agreement fully executed by the Borrower and
the Banks; and
(b) Such other documents as the Agent and the Banks may reasonably
require.
4.3 Borrower shall execute and deliver such additional documents and do
such other acts as Lender may reasonably require to fully implement the intent
of this Agreement.
4.4 Borrower shall pay all costs and expenses, including, but not limited
to, reasonable attorneys' fees incurred by the Agent and the Banks in connection
herewith, whether or not all of the conditions described in Paragraph 4.2 above
are satisfied. The Banks, at their option, but without any
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obligation to do so, may advance funds to pay any such costs and expenses that
are the obligation of the Borrower, and all such funds advanced shall bear
interest at the highest rate provided in the RLC Notes, shall be due and payable
upon demand.
4.5 Notwithstanding anything to the contrary contained herein or in any
other instrument executed by Borrower, the Banks or the Agent, or in any other
action or conduct undertaken by Borrower, the Banks or the Agent on or before
the date hereof, the agreements, covenants and provisions contained herein shall
constitute the only evidence of the Banks' consent to modify the terms and
provisions of the RLC Notes, the Credit Agreement or any other Credit Documents.
Accordingly, no express or implied consent to any further modifications
involving any of the matters set forth in this Agreement or otherwise shall be
inferred or implied by the Banks' or the Agent's execution of this Agreement.
Further, the Banks' execution of this Agreement shall not constitute a waiver
(either express or implied) of the requirement that any further modification of
the RLC or of the RLC Notes, the Credit Agreement or any other Credit Document
shall require the express written approval of the Banks; no such approval
(either express or implied) has been given as of the date hereof.
4.6 Notwithstanding any prior forbearance, actual or implied, of any
nature by the Banks, time is hereby declared to be of the essence hereof, of the
RLC, of the RLC Notes, of the Credit Agreement and of all Credit Documents, and
the Banks require, and Borrower agrees to, strict performance of each and every
covenant, condition, provision and agreement hereof, of the RLC Notes, of the
Credit Agreement and of all other Credit Documents.
4.7 This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their heirs, personal representatives, successors and
assigns.
4.8 This Agreement is made for the sole protection and benefit of the
parties hereto, and no other person or entity shall have any right of action
hereon.
4.9 This Agreement shall be governed by and construed according to the
laws of the State of Arizona.
IN WITNESS WHEREOF, these presents are executed as of the date indicated
above.
THREE-FIVE SYSTEMS, INC., a Delaware
corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
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Title: Executive VP, CFO
---------------------------------
COMPANY
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THREE-FIVE SYSTEMS, (BEIJING), LTC., a
wholly foreign owned enterprise organized
under the laws of the People's Republic
of China.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
----------------------------------
Title: Director
---------------------------------
THREE-FIVE SYSTEMS PACIFIC, INC., a
Philippine corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
----------------------------------
Title: Director
---------------------------------
THREE-FIVE SYSTEMS LIMITED, a corporation
organized under the laws of the United
Kingdom.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
----------------------------------
Title: Director
---------------------------------
CO-BORROWERS
COMERICA BANK-CALIFORNIA, successor by
merger to Imperial Bank, a California
banking corporation
By: /s/ Xxxxxx X. Xxxxxx, Xx.
------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
----------------------------------
Title: Vice President
---------------------------------
AGENT AND BANK
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