MODIFICATION AGREEMENT
Borrower: Lender:
Xxxxx & Xxxxxxxxxx Computer Corporation First Security Bank, N.A.
000 Xxxxx Xxxxx Xxxxxxxxxx Xxxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000 15 East 000 Xxxxx, 0xx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
First Security Bank, N.A. ("Lender") has extended credit (the "Loan") to Xxxxx &
Xxxxxxxxxx Computer Corporation (individually and collectively "Borrower")
pursuant to a promissory note dated March 2, 1998 (the "Note") in the stated
principal amount of $5,000,000.00. The Loan is unsecured.
The Note and any loan agreements, guaranties, subordinations, Collateral
Documents, and other instruments and documents executed in connection therewith,
together with any previous modifications to any of those instruments or
documents, shall be referred to as the "Loan Documents."
Borrower has requested certain modifications to the Loan Documents and Lender is
willing to grant such modifications on the following terms and conditions:
1. Provided that all conditions stated herein are satisfied, the terms of
the Loan Documents are hereby modified as follows:
Modifications to the Term of the Note:
This Agreement does not constitute a repayment or extinguishment of the
Note, but only a modification thereof.
Other Modifications to the Loan Documents:
The Loan Documents shall be amended as follows:
Several portions of Section 1 of the Commercial Credit and
Security Agreement dated March 2, 1998 (the "Credit Agreement")
shall be modified in the following manner:
Subsection 1.1 shall remain unchanged.
The main heading of Subsection 1.2 shall be amended to read:
"1.2 The Loan shall consist of the following facility:"
Thereafter, changes shall be made to subitem (a) so that the
maximum amount of the L/C Line shall be changed to Five Million
Dollars ($5,000,000.00) and the fee charged for each letter of
credit issued under the line shall be modified to be 0.70% of the
amount of each letter of credit issued, plus the standard per item
charges assessed by First Security; and all references to subitem
(b) concerning the FX Line shall be deleted from the Agreement,
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and any further dealings concerning a foreign exchange line shall
be dealt with in a separate agreement.
Subsection 1.3 shall be amended by delaying subitem (b) in its
entirety.
Subsection 1.4 shall be amended to state:
"1.4 The facility shall be stated to mature on September 30, 2000,
after which no further letters of credit may be issued."
Subsection 1.8 shall be modified to amend the names of the
individuals eligible to request an advance under the Loan, and
thus shall read:
1.8 Any of the following persons is authorized to make a written
or oral request to Lender to advance funds under this Agreement:
Xxxx Xxxxxx and Xxxxxxx X. Xxxxxx. Lender is under no obligation
to verify the identity of an individual representing to be one of
the foregoing persons. Any advance made pursuant to said written
or oral request is irrebuttably presumed to be made for Borrower's
benefit. Lender shall make disbursements on the Loan to Borrower
or for the account of Borrower unless Borrower directs otherwise
in writing.
The warranty and representation rehearsed by Borrower in Section
3.7 of the Credit Agreement concerning the absence of any actions,
suits or proceedings against Borrower which may have an adverse
effect upon its financial condition is modified so as to disclose
to Lender the existence of one lawsuit threatened against Borrower
by CAE, the details of which are attached hereby to this
Modification Agreement as Exhibit "A."
Section 4.7 of the Credit Agreement shall be deleted in its
entirety.
Section 4.8 of the Credit Agreement shall be deleted in its
entirety.
Section 4.9 of the Credit Agreement shall be restated to read as
follows:
4.9 Borrower shall immediately notify Lender in writing of any
change in the location of Borrower's business or any change in
Borrower's name, any change in the key management of Borrower or
any change in the agreements affecting the structure of Borrower
or the operation of its business. Furthermore, Borrower shall not
commingle its funds with any other entity.
Subitem 5.1 (h) shall be restated to read as follows:
(h) Borrower shall sell, transfer or assign substantially all of
its assets, which shall mean more than fifty percent (50%) of such
assets, to any third party, or all or any material part of the
assets of Borrower is attached, levied, or otherwise seized by
legal process, and such attachment, levy, or seizure is not
quashed, stayed or released within sixty (60) days of the date
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thereof. Borrower and Lender acknowledge, however, that Borrower
is currently seeking additional financing from other sources in
the approximate aggregate amount of $60,000,000.00 (the
"Financing"), which Financing may be secured by assignments from
time to time of Borrower's accounts receivable, inventory, real
estate, or other personal property assets. Borrower and Lender
further agree and acknowledge that any pledge, mortgage,
assignment, sale, transfer or hypothecation of the
above-referenced assets of Borrower to provide collateral security
for the Financing shall be disregarded with respect to the
determination of the foregoing default provisions. In the event
that Borrower secures the Financing, Borrower consents that it
shall (i) at all times during the term of the Loan maintain on an
undrawn basis, a portion of the available commitment amount of the
Financing equal to or greater than the aggregate credit then
outstanding under the L/C Line and FX Line and (ii) submit to
Lender on a monthly basis, a compliance certificate in form and
content reasonably acceptable to Lender, indicating the aggregate
undrawn commitment available under the Financing.
Subitem 5.1 (i) shall be further clarified to define a material
adverse change in the financial condition of Borrower to mean any
change which would have an effect on Borrower exceeding
$10,000,000.00.
Subsection 5.1 (j) shall be deleted in its entirety as an event of
default.
2. As preconditions to the terms of this Agreement, Borrower shall complete
or provide the following:
Borrower shall pay or shall have paid all reasonable fees, costs, and
expenses, of whatever kind or nature, incurred by Lender in connection
with this Agreement, including but not limited to attorney's fees, lien
search fees, title reports and policies, and recording and filing fees.
3. It is the intention and agreement of Borrower and Lender that: (i) all
collateral security in which Lender has acquired a security interest or
other lien pursuant to the Loan Documents shall continue to serve as
collateral security for payment and performance of all the obligations
of the Borrower under the Loan Documents, and (ii) all agreements,
representations, warranties, and covenants contained in the Loan
Documents are hereby reaffirmed in full by Borrower except as
specifically modified by this Agreement.
4. Borrower hereby acknowledges that: (i) the Loan Documents are in full
force and effect, as modified by this Agreement, and (ii) by entering
into this Agreement, Lender does not waive any existing default or any
default hereunder occurring or become obligated to waive any condition
or obligation under the Loan Documents.
5. Borrower hereby acknowledges that Borrower has no claim, demand,
lawsuit, cause of action, claim for relief, remedy, or defense against
enforcement of the Loan Documents that could be asserted against
Lender, its affiliates, directors, officers, employees, or agents,
whether known or unknown, for acts, failures to act (whether such act
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or failure to act is intentional or negligent), representations,
commitments, statements or warranties, including without limitation
any such conduct arising out of or in any way connected with the Loan
Documents. Notwithstanding the foregoing, Borrower hereby waives,
releases, and relinquishes any and all claims, demands, lawsuits,
causes of action, claims for relief, remedies, or defenses against
enforcement of the Loan Documents that could be asserted against
Lender, its affiliates, directors, officers, employees, or agents,
whether known or unknown.
6. In addition to this Agreement, the Loan Documents, and any additional
documents that this Agreement requires, this finance transaction may
include other written closing documentation such as resolutions,
waivers, certificates, financing statements, filings, statements,
closing or escrow instructions, loan purposes statements and all other
documents that Lender may customarily use in such transactions. Such
documents are incorporated herein by this reference. All the documents
to which this paragraph makes reference express, embody, and supersede
any previous understandings, agreements, or promises (whether oral or
written) with respect to this finance transaction, and represent the
final expression of the agreement between Lender and Borrower, the
terms and conditions of which cannot hereafter be contradicted by any
oral understanding (if any) not reduced to writing and identified
above.
FINAL AGREEMENT. Borrower understands that the loan documents signed in
connection with this loan are the final expression of the agreement between
Lender and Borrower and may not be contradicted by evidence of any alleged oral
agreement.
Effective as of February 22, 2000.
LENDER:
First Security Bank, N.A.
By: /s/ Xxxx Xxxxx
Authorized Officer
BORROWER:
Xxxxx & Xxxxxxxxxx Computer Corporation
By: /s/ Xxxx Xxxxxx
Xxxx Xxxxxx, Vice President and Treasurer
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EXHIBIT "A"
TO
MODIFICATION AGREEMENT
Reference is made to that certain Commercial Credit and Security
Agreement, dated March 2, 1998 (as amended and modified from time to time, the
"Agreement"), as the same was amended effective as of February 22, 2000,
pursuant to that certain Modification Agreement ("Modification") to which this
Exhibit "A" is attached and hereby incorporated into in its entirety.
Section 3.7 of the Agreement, as amended and supplemented by the
Modification, references a certain lawsuit by CAE Electronics, Ltd. ("CAE")
against Borrower. Borrower and Lender hereby acknowledge that such reference is
in error and that there are no "existing actions, suits, or proceedings pending
or threatened against Borrower" to the best of the actual knowledge of
Borrower's directors and officers.
However, Borrower hereby discloses to Lender that CAE has asserted that
certain monetary amounts constituting liquidated damages are owing from Borrower
to CAE pursuant to the provisions of one or more agreements between Borrower and
CAE. In addition to the liquidated damages provisions of such contracts, the
contracts provide for arbitration of disputes among the parties thereto.
However, no such arbitration proceeding has been commenced as of the date
hereof. Moreover, Borrower and CAE are currently negotiating to mutually resolve
the amount of any such liquidated damages, the purported disputes or breaches of
contract related to the assertion that liquidated damages are owing and any
other claims or disputes among the parties.
Borrower and Lender further agree and acknowledge that Section 3.7 of
the Agreement, as amended by the Modification, is hereby amended to be
consistent with the foregoing.
All capitalized terms used without definition shall have the meaning
given to such terms in the Agreement.
Dated as of March 15, 2000.
Xxxxx and Xxxxxxxxxx Computer Corporation
a Utah corporation
By:/S/ X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and Chief Financial Officer
First Security Bank, N.A.
a Utah corporation
By: /s/ XXXX XXXXX
Name Xxxx Xxxxx
Title: Vice President
