EXHIBIT 10.6
Third Amendment to Security and Loan Agreement
(Accounts Receivable)
This Third Amendment ("Amendment") amends that certain Security and Loan
Agreement (Accounts Receivable) ("Security and Loan Agreement") with the
attached Addendum ("Addendum") both dated February 9, 1998, as amended (such
Security and Loan Agreement and Addendum herein referred to as "Agreement") by
and between Imperial Bank ("Bank") The Xxxxx Companies, Inc., Xxxxx Engineering,
Inc., and ESI, Engineering Services, Inc. ("Co-Borrowers") as follows:
1. The first paragraph of the Security and Loan Agreement is hereby amended to
read in full as follows:
"This Agreement is entered into between The Xxxxx Companies ("Companies"),
Xxxxx Engineering ("Engineering"), ESI, Engineering Services, Inc. ("ESI"), Xxxx
X. Xxxxxxxx & Associates, Ltd. ("Xxxxxxxx") ("Companies, Engineering, ESI and
Xxxxxxxx each a co-borrower hereunder and jointly and severally herein called
"Borrower") and IMPERIAL BANK (herein called "Bank")"
2. Xxxxxxxx is hereby added as a Borrower to the Agreement, and wherever the
term "Borrower" "Borrowers", "Co-Borrower" or "Co-Borrowers" is used in the
Agreement it shall mean each Borrower jointly and severally.
3. Paragraph 1. of the Agreement is amended by deleting the term "75.000% of
Eligible Accounts of Companies and Engineering, and 80% of Eligible Accounts of
ESI and in no event more than $5,000,000" therefrom and substituting the
following therefore "80.000% of Eligible Accounts and in no event more than
$5,500,000".
4. Paragraph 1. of the Addendum is hereby amended in full to read as follows:
"1.a. Any commitment of Bank, pursuant to the terms of the Security and
Loan Agreement, to make advances against Eligible Accounts shall expire on
APRIL 30, 1999, subject to Bank's right to renew said commitment at its
sole discretion. Any renewal of the commitment shall not be binding upon
the Bank unless it is in writing and signed by an officer of the Bank.
b. The extensions of credit under the Security and Loan Agreement shall
be available as follows:
(i). Up to $5,500,000 in direct advances.
(ii). Up to $ 150,000 for the issuance of a standby letter of credit
with a termination date of no later than January 31, 1999.
(iii) The aggregate amount of all (a) direct advances to ESI and (b) all
letters of credit issued by the Bank for the Account of ESI cannot exceed
$750,000 at any one time.
(iv) The aggregate amount of all direct advances to Xxxxxxxx cannot exceed
$450,000 at any one time.
(iv). The combined outstandings of (i) and (ii) shall not exceed
$5,500,000.
5. The following is hereby added to Paragraph 2 of the Addendum:
"e. YEAR 2000 COMPLIANCE. Borrower and its subsidiaries, as applicable,
have reviewed the areas within their operations and business which could be
adversely affected by, and have developed or are developing a program to
address on a timely basis, the Year 2000 Problem and have made related
appropriate inquiry of material suppliers and vendors, and based on such
review and program, the Year 2000 Problem will not have a material adverse
effect upon their financial condition, operations or business as now
conducted. "Year 2000 Problem" means the possibility that any computer
applications or equipment used by Borrower may be unable to recognize and
properly perform date sensitive functions involving certain dates prior to
and any dates on or after December 31, 1999."
6. Paragraph 5 of the Addendum is amended in full to read:
"As a condition precedent to Bank's obligation to make any advances to
Borrowers, Borrowers shall, among other things: cause a guarantee to be
executed by XXXX X. XXXXX in the amount of $5,500,000 in form and substance
satisfactory to Bank."
7. The following is hereby add to paragraph 8 of the Addendum:
"q. YEAR 2000 COMPLIANCE. Perform all acts reasonably necessary to ensure
that (a) Borrower and any business in which Borrower holds a substantial
interest, and (b) all customers, suppliers and vendors that are material to
Borrower's business, become Year 2000 Compliant in a timely manner. Such
acts shall include, without limitation, performing a comprehensive review
and assessment of all Borrower's systems and adopting a detailed plan, with
itemized budget, for the remediation, monitoring and testing of such
systems. As used in this paragraph, "Year 2000 Compliant" shall mean, in
regard to any entity, that all software, hardware, firmware, equipment,
goods or systems utilized by or material to the business operations or
financial condition of such entity, will properly perform date sensitive
functions before, during and after the year 2000. Borrower shall,
immediately upon request, provide to Bank such certifications or other
evidence of Borrower's compliance with the terms of this paragraph as Bank
may from time to time require."
8. Paragraph 9 of the Addendum is amended in full to read:
"The extensions of credit under the Security and Loan Agreement shall be
available as follows: Up to a) $5,500,000 in direct advances and b) $150,000 in
standby letters of credit, provided that the combined outstandings of a) and b)
do not exceed $5,500,000.
9. Paragraph 10 of the Addendum is amended by adding the following to the end
of the first paragraph: "A fee of .50% p.a. on the unused portion of the
commitment shall be due quarterly in arrears, commencing with the quarter
beginning October 1, 1998 and ending December 31, 1998, on the last $500,000.00
of the commitment."
10. Except as provided above, the Agreement remains unchanged.
11. This Amendment is effective as of October 7, 1998, and the parties hereby
confirm that the Agreement as amended is in full force and effect.
THE XXXXX COMPANIES, INC.
By: /s/ XXXX X. XXXXX
Name: Xxxx X. Xxxxx
Title: President
Signatures continued on next page.
XXXXX ENGINEERING, INC.
By: /s/ XXXX X. XXXXX
Name: Xxxx X. Xxxxx
Title: President
ESI, ENGINEERING SERVICES, INC.
By: /s/ XXXX X. XXXXX
Name: Xxxx X. Xxxxx
Title: President
XXXX X. XXXXXXXX & ASSOCIATES, LTD.
By: /s/ XXXX X. XXXXX
Name: Xxxx X. Xxxxx
Title: President
IMPERIAL BANK
By: /s/ XXXXXX XXXXXX
Name: Xxxxxx Xxxxxx
Title: Vice President
