SECOND MODIFICATION AGREEMENT
BY THIS SECOND MODIFICATION AGREEMENT (the "Agreement"), made and
entered into as of the 22nd day of December, 0000, XXXXX XXXXXXXXXX XXXX XX
XXXXXXX, X.X., whose address is Xxxx Xxxxxx Xxx 00000, Xxxxxxx, Xxxxxxx
00000-0000, Corporate Banking Division (hereinafter called "Lender"), and
THREE-FIVE SYSTEMS, INC., a Delaware corporation, whose address is 0000 Xxxxx
Xxxxxx Xxxxx, Xxxxx, Xxxxxxx 00000-0000 (hereinafter called "Borrower"), in
consideration of the mutual covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby confirm and agree as follows:
1. RECITALS.
1.1 Borrower and Lender entered into a Loan Agreement dated
July 11, 1994 (the "Loan Agreement"), which provided for a revolving line of
credit by Lender to Borrower in the amount of $5,000,000.00 (the "Revolving
Commitment Amount") upon the terms and conditions contained therein (the
"Revolving Credit Loan").
1.2 The Loan was evidenced by a Revolving Promissory Note
dated July 11, 1994, executed by Borrower, payable to the order of Lender, in
the principal amount of $5,000,000.00 (the "Revolving Note"). (Hereinafter the
Loan Agreement and the Revolving Note are referred to as the "Loan Documents.")
1.3 Lender and Borrower have executed and delivered previously
a Modification Agreement dated June 28, 1995 (the "Modification") modifying the
terms of the Loan Documents. Hereinafter, "Revolving Note," and "Loan Agreement"
shall mean such documents as modified in the Modification.
1.4 Borrower and Lender desire to modify the Loan Documents as
set forth herein.
1.5 All undefined capitalized terms used herein shall have the
meaning given them in the Loan Agreement.
2. REVOLVING NOTE.
As of the date hereof, prior to the effect of the modifications
contained herein, the outstanding principal balance of the Revolving Note is
$-0-.
3. LOAN AGREEMENT.
3.1 The Loan Agreement is hereby amended as follows:
(a) The following definitions is Section 2.1 of the
Loan Agreement are amended to read as follows:
"RLC Commitment Amount" means $15,000,000.00.
"RLC Note" means that Revolving Promissory Note
executed and delivered concurrently herewith in the face
amount equal to the RLC Commitment Amount made by Borrower
payable to the order of Lender, evidencing the RLC, and
extensions, modifications and renewals thereof.
(b) Section 7.12 of the Loan Agreement is to read as
follows:
Section 7.12 Permit the ratios of Borrower's Current
Liabilities at the end of any fiscal quarter of Borrower to be
less than 1.1 to 1. In the ratio, Current Assets is defined as
cash plus its accounts receivable. In the ratio, Current
Liabilities is defined as current liabilities.
3.2 The Revolving Note is to be executed and delivered
concurrently herewith.
4. OTHER MODIFICATIONS, RATIFICATIONS AND AGREEMENTS.
4.1 All references to the Loan Agreement in the Revolving Note
are hereby amended to refer to the Loan Agreement as hereby amended.
4.2 Borrower acknowledges that the indebtedness evidenced by
the Revolving Note is just and owing, that the balance thereof is correctly
shown in the records of Lender as of the date hereof, and Borrower agrees to pay
the indebtedness evidenced by the Revolving Note according to the terms thereof,
as herein modified.
4.3 Borrower hereby reaffirms to Lender each of the
representations, warranties, covenants and agreements of Borrower set forth in
the Revolving Note and the Loan Agreement, with the same force and effect as if
each were separately stated herein and made as of the date hereof.
4.4 Borrower hereby ratifies, reaffirms, acknowledges, and
agrees that the Revolving Note and the Loan Agreement, 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 Lender
and its 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 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 Revolving Note or
the Loan Agreement.
4.5 All terms, conditions and provisions of the Revolving Note
and the Loan Agreement are continued in full force and effect and shall remain
unaffected and unchanged except as specifically amended hereby. The Revolving
Note and the Loan Agreement, as amended hereby, are hereby ratified and
reaffirmed by Borrower, and Borrower specifically acknowledges the validity and
enforceability thereof.
5. GENERAL.
5.1 This Agreement in no way acts as a release or
relinquishment of those rights securing payment of the RLC. Such rights are
hereby ratified, confirmed, renewed and extended by Borrower in all respects.
5.2 The modifications contained herein shall not be binding
upon Lender until Lender shall have received all of the following:
(a) An original of this Agreement fully executed by
the Borrower.
(b) Such resolutions or authorizations and such other
documents as Lender may require relating to the existence and
good standing of the Borrower and the authority of any person
executing this Agreement or other documents on behalf of the
Borrower.
5.3 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.
5.4 Borrower shall pay all costs and expenses, including, but
not limited to, reasonable attorneys' fees incurred by Lender in connection
herewith, whether or not all of the conditions described in Paragraph 5.2 above
are satisfied. Lender, at its option, but without any 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 Revolving Note and shall be due and payable upon demand.
5.5 Notwithstanding anything to the contrary contained herein
or in any other instrument executed by Borrower or Lender, or in any other
action or conduct undertaken by Borrower or Lender on or before the date hereof,
the agreements, covenants and provisions contained herein shall constitute the
only evidence of Lender's consent to modify the terms and provisions of the
Revolving Note or the Loan Agreement. 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 Lender's execution of
this Agreement. Further, Lender's 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 Revolving Note or the Loan Agreement,
shall require the express written approval of Lender; no such approval (either
express or implied) has been given as of the date hereof.
5.6 Time is hereby declared to be of the essence hereof of the
RLC, of the Revolving Note and of the Loan Agreement, and Lender requires, and
Borrower agrees to, strict performance of each and every covenant, condition,
provision and agreement hereof, of the Revolving Note and the Loan Agreement.
5.7 This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their heirs, personal representatives,
successors and assigns.
5.8 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.
5.9 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.
FIRST INTERSTATE BANK OF ARIZONA, N.A.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
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Its: Vice President
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LENDER
THREE-FIVE SYSTEMS, INC., a Delaware
corporation
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxx
-------------------------
Its: V.P. Finance & C.F.O.
------------------------------
BORROWER
REVOLVING PROMISSORY NOTE
$15,000,000.00 Phoenix, Arizona
December 22 , 1995
FOR VALUE RECEIVED, the undersigned THREE-FIVE SYSTEMS, INC., a
Delaware corporation ("Maker"), promises to pay to the order of FIRST INTERSTATE
BANK OF ARIZONA, N.A. (the "Payee"; Payee and each subsequent transferee and/or
owner of this Note, whether taking by endorsement or otherwise, are herein
successively called "Holder"), at Xxxx Xxxxxx Xxx 00000, Xxxxxxx, Xxxxxxx
00000-0000, or at such other place as Holder may from time to time designate in
writing, the principal sum of FIFTEEN MILLION AND NO/100 DOLLARS
($15,000,000.00) or so much thereof as Holder may advance to or for the benefit
of Maker plus interest calculated on a daily basis (based on a 360-day year)
from the date hereof on the principal balance from time to time outstanding as
hereinafter provided, principal, interest and all other sums payable hereunder
to be paid in lawful money of the United States of America as follows:
(a) Interest. Interest shall accrue on the unpaid principal of
each RLC Advance:
(i) At the Prime Rate if it is a Prime Rate RLC Advance.
(ii) At the applicable LIBOR Rate if it is a LIBOR Rate RLC
Advance.
(b) Interest Payment. All accrued interest shall be due and
payable on the RLC Payment Date.
(c) Principal Payment. The entire outstanding principal
balance, all accrued and unpaid interest and all other sums which may
have become payable thereunder shall be due and payable in full on the
RLC Maturity Date.
(d) Definitions. The capitalized terms used and not otherwise
defined herein shall have the same meanings as defined in the Loan
Agreement (defined below).
The principal balance of this Note represents a revolving credit all or
any part of which may be advanced to Maker, repaid by Maker, and readvanced to
Maker from time to time, subject to the other terms hereof and the conditions,
if any, contained in the Loan Agreement and provided that the principal balance
outstanding at any one time shall not exceed the face amount hereof.
Maker agrees to an effective rate of interest that is the rate stated
above plus any additional rate of interest resulting from any other charges in
the nature of interest paid or to be paid by or on behalf of Maker, or any
benefit received or to be received by Holder, in connection with this Note.
If any payment required under this Note is not paid within five (5)
Business Days when due, then, at the option of Holder, Maker shall pay a "late
charge" equal to three percent (3%) of the amount of that payment to compensate
Holder for administrative expenses and other costs of delinquent payments. This
late charge may be assessed without notice, shall be immediately due and payable
and shall be in addition to all other rights and remedies available to Holder.
All payments on this Note shall be applied first to the payment of any
costs, fees or other charges incurred in connection with the indebtedness
evidenced hereby, next to the payment of accrued interest and then to the
reduction of the principal balance.
This Note is issued pursuant to that Loan Agreement dated of even date
herewith between Maker and Payee (as amended from time to time, the "Loan
Agreement").
Time is of the essence of this Note. At the option of Holder, the
entire unpaid principal balance, all accrued and unpaid interest and all other
amounts payable hereunder shall become immediately due and payable without
notice upon the failure to pay any sum due and owing hereunder as provided
herein or upon the occurrence of any event of default under the Loan Agreement
or any Security Documents.
After maturity, including maturity upon acceleration, the unpaid
principal balance, all accrued and unpaid interest and all other amounts payable
hereunder shall bear interest at that rate that is five percent (5%) above the
rate that would otherwise be payable under the terms hereof. Maker shall pay all
costs and expenses, including reasonable attorneys' fees and court costs,
incurred in the collection or enforcement of all or any part of this Note. Such
court costs and attorneys' fees shall be set by the court and not by jury, shall
be included in any judgment obtained by Holder.
Maker shall have the option to prepay this Note, in full or in part, at
any time. Maker shall pay to Holder such amount or amounts as shall be
sufficient to compensate for any losses (including without limitations loss of
anticipated profit), costs or expenses which Holder may incur as a result of
payment or Conversion of any LIBOR Rate RLC Advance other than on the last
Business Day of the Interest Period for such RLC Advance.
Failure of Holder to exercise any option hereunder shall not constitute
a waiver of the right to exercise the same in the event of any subsequent
default or in the event of continuance of any existing default after demand for
strict performance hereof.
Maker and all sureties, guarantors and/or endorsers hereof (or of any
obligation hereunder) and accommodation parties hereon (severally each
hereinafter called a "Surety") each: (a) agree that the liability under this
Note of all parties hereto is joint and several; (b) severally waive any and all
formalities in connection with this Note to the maximum extent allowed by law,
including (but not limited to) demand, diligence, presentment for payment,
protest and demand, and notice of extension, dishonor, protest, demand and
nonpayment of this Note; and (c) consent that Holder may extend the time of
payment or otherwise modify the terms of payment of any part or the whole of the
debt evidenced by this Note, at the request of any other person liable hereon,
and such consent shall not alter nor diminish the liability of any person
hereon.
In addition, each Surety waives and agrees not to assert: (a) any right
to require Holder to proceed against Maker or any other Surety, to proceed
against or exhaust any security for the Note, to pursue any other remedy
available to Holder, or to pursue any remedy in any particular order or manner;
(b) the benefit of any statute of limitations affecting its liability hereunder
or the enforcement hereof; (c) the benefits of any legal or equitable doctrine
or principle of marshalling; (d) notice of the existence, creation or incurring
of new or additional indebtedness of Maker to Holder; (e) the benefits of any
statutory provision limiting the liability of a surety, including without
limitation the provisions of Sections 12-1641, et seq., of the Arizona Revised
Statutes; and (f) any defense arising by reason of any disability or other
defense of Maker or by reason of the cessation from any cause whatsoever (other
than payment in full) of the liability of Maker for payment of the Note. Until
payment in full of the Note, no Surety shall have any right of subrogation and
each hereby waives any right to enforce any remedy which Holder now has, or may
hereafter have, against Maker or any other Surety, and waives any benefit of,
and any right to participate in, any security now or hereafter held by Holder.
Maker agrees that to the extent Maker or any Surety makes any payment
to Holder in connection with the indebtedness evidenced by this Note, and all or
any part of such payment is subsequently invalidated, declared to be fraudulent
or preferential, set aside or required to be repaid by Holder or paid over to a
trustee, receiver or any other entity, whether under any bankruptcy act or
otherwise (any such payment is hereinafter referred to as a "Preferential
Payment"), then the indebtedness of Maker under this Note shall continue or
shall be reinstated, as the case may be, and, to the extent of such payment or
repayment by Holder, the indebtedness evidenced by this Note or part thereof
intended to be satisfied by such Preferential Payment shall be revived and
continued in full force and effect as if said Preferential Payment had not been
made.
Without limiting the right of Holder to bring any action or proceeding
against Maker or any Surety or against any property of Maker or any Surety (an
"Action") arising out of or relating to this Note or any indebtedness evidenced
hereby in the courts of other jurisdictions, Maker and each Surety hereby
irrevocably submit to the jurisdiction, process and venue of any Arizona State
or Federal court sitting in Phoenix, Arizona, and hereby irrevocably agree that
any Action may be heard and determined in such Arizona State court or in such
Federal court. Maker and all Sureties each hereby irrevocably waives, to the
fullest extent it may effectively do so, the defenses of lack of jurisdiction
over any person, inconvenient forum or improper venue, to the maintenance of any
Action in any jurisdiction.
This Note shall be binding upon Maker and its successors and assigns
and shall inure to the benefit of Payee, and any subsequent holders of this
Note, and their successors and assigns.
All notices required or permitted in connection with this Note shall be
given at the place and in the manner provided in the Loan Agreement for the
giving of notices.
This Note shall be construed according to the laws of the State of
Arizona.
IN WITNESS WHEREOF, this Revolving Promissory Note has been executed as
of the date first written above.
THREE-FIVE SYSTEMS, INC., a Delaware
corporation
By /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
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Its V.P. Finance & C.F.O.
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MAKER
