AMENDMENT NO. 2 TO LOAN & SECURITY AGREEMENT (ACCOUNTS AND INVENTORY)
This Amendment dated as of October 1, 2000 among Xxxx Group, Inc.
("Xxxx"), Xxxx Systems International, Inc. ("TSI"), Xxxx XCD, Inc. ("Xxxx
XCD") and each other Person which becomes a signatory hereto (collectively
"Borrower") and Comerica Bank - California ("Bank").
RECITALS:
A. Troy, TSI, Xxxx XCD and Bank executed that certain Loan and
Security Agreement dated as of October 20, 1998 as supplemented by
(i) Addendum A to Loan & Security Agreement (LIBOR), (ii) Addendum B to
Loan & Security Agreement, (iii) Environmental Rider, (iv) Addendum A to
Environmental Rider, (v) Equipment Rider and (vi) Inventory Rider (Revolving
Advance), each dated as of October 20, 1998 (as so supplemented and as
amended by Amendment No. 1 (as defined below), the "Agreement").
B. Borrower and Bank executed that certain Amendment No. 1 to Loan
and Security Agreement (Accounts and Inventory) dated as of October 28, 1999
("Amendment No. 1").
C. Troy, TSI, Xxxx XCD and Bank further desire to amend the
Agreement as set forth below.
The parties agree as follows:
1. Section 0.xx of the Agreement is amended in its entirety to read
as follows:
"2.1a (1) IN ADDITION TO THE LOAN MADE BY BANK FROM TIME TO
TIME UNDER SECTION 2.1 OF THIS AGREEMENT, UPON THE REQUEST OF BORROWER
MADE AT ANY TIME AND FROM TIME TO TIME FROM THE DATE HEREOF THROUGH
OCTOBER 1, 2001, AND SO LONG AS NO EVENT OF DEFAULT HAS OCCURRED, BANK
SHALL LEND TO BORROWER SUMS NOR TO EXCEED TEN MILLION DOLLARS
($10,000,000) IN AGGREGATE PRINCIPAL AMOUNT ("ACQUISITION COMMITMENT
AMOUNT"), SUBJECT TO THE TERMS OF THIS AGREEMENT. THE PROCEEDS OF THE
ACQUISITION LOAN SHALL BE USED SOLELY TO FINANCE PERMITTED
ACQUISITIONS. THE FIRST $3,000,000 OF ADVANCES OF THE ACQUISITION LOAN
MAY BE USED BY BORROWER TO FINANCE UP TO 100% OF THE PURCHASE PRICE OF
PERMITTED ACQUISITIONS, AND THEREAFTER, IN RESPECT OF THE PROCEEDS OF
THE ACQUISITION LOAN IN EXCESS OF $3,000,000, THE AGGREGATE ADVANCES
MADE BY BANK IN RESPECT OF EACH PERMITTED ACQUISITION SHALL NOT EXCEED
50% OF THE PURCHASE PRICE OF SUCH PERMITTED ACQUISITION.
"(2) THE INDEBTEDNESS OUTSTANDING UNDER THE ACQUISITION LOAN
SHALL BE EVIDENCED BY THE ACQUISITION NOTE. THE PRINCIPAL INDEBTEDNESS
OUTSTANDING UNDER THE ACQUISITION NOTE SHALL BE REPAID IN SIXTY (60)
INSTALLMENTS EACH EQUAL TO 1/60TH OF THE PRINCIPAL AMOUNT OUTSTANDING
UNDER THE ACQUISITION NOTE ON THE OCTOBER 1, 2001, COMMENCING ON
NOVEMBER 1, 2001 AND ON THE FIRST DAY OF EACH MONTH THEREAFTER UNTIL
OCTOBER 1, 2006 WHEN THE ENTIRE UNPAID BALANCE OF PRINCIPAL AND
INTEREST THEREON SHALL BE DUE AND PAYABLE IN FULL. INTEREST SHALL BE
PAYABLE MONTHLY ON THE FIRST DAY OF EACH MONTH. PREPAYMENTS OF THE
ACQUISITION LOAN SHALL BE APPLIED TO INSTALLMENTS DUE THEREUNDER IN THE
INVERSE ORDER OF THEIR MATURITIES.
"(3) COMPANY SHALL PAY BANK A NONREFUNDABLE UNUSED FEE EQUAL
TO ONE QUARTER OF ONE PERCENT (.25%) TIMES THE AVERAGE DAILY UNUSED
PORTION OF THE ACQUISITION COMMITMENT AMOUNT. THE UNUSED FEE SHALL
ACCRUE FROM OCTOBER 1, 2000 THROUGH THE OCTOBER 1, 2001. THE UNUSED FEE
SHALL BE PAYABLE QUARTERLY IN ARREARS COMMENCING ON JANUARY 1, 2001 AND
ON APRIL 1, 2001, JULY 1, 2001, AND OCTOBER 1, 2001."
"(4) IN ADDITION TO THE BASE RATE OPTION AND THE LIBOR RATE
OPTION, COMMENCING OCTOBER 1, 2001, BORROWER SHALL HAVE THE OPTION TO
SELECT THE FIXED RATE AS THE APPLICABLE INTEREST RATE FOR THE ENTIRE
INDEBTEDNESS OUTSTANDING UNDER THE ACQUISITION LOAN. IN THE EVENT
BORROWER SELECTS THE FIXED RATE AS THE APPLICABLE INTEREST RATE WITH
RESPECT TO THE ACQUISITION LOAN, THE FIXED RATE SHALL BE THE APPLICABLE
INTEREST RATE UNTIL THE MATURITY DATE OF THE ACQUISITION LOAN.
"(5) IN THE EVENT THE BORROWER SELECTS THE FIXED RATE AS THE
APPLICABLE INTEREST RATE WITH RESPECT TO THE ACQUISITION LOAN, THE BANK
DOES NOT HAVE TO ACCEPT ANY PREPAYMENT OF PRINCIPAL UNDER THE
ACQUISITION NOTE EXCEPT AS DESCRIBED BELOW OR AS REQUIRED UNDER
APPLICABLE LAW. THE BORROWER MAY PREPAY PRINCIPAL OF THE ACQUISITION
NOTE IN INCREMENTS OF $50,000 AT ANY TIME AS LONG AS THE BANK IS
PROVIDED WRITTEN NOTICE OF THE PREPAYMENT. THE NOTICE OF PREPAYMENT
SHALL CONTAIN THE FOLLOWING INFORMATION: (a) THE DATE OF PREPAYMENT
(THE "PREPAYMENT DATE") AND (b) THE AMOUNT OF PRINCIPAL TO BE PREPAID.
ON THE PREPAYMENT DATE, THE BORROWER WILL PAY TO THE BANK, IN ADDITION
TO THE OTHER AMOUNTS THEN DUE ON THE ACQUISITION NOTE UNDER THE
AGREEMENT, THE PREPAYMENT AMOUNT DESCRIBED BELOW. THE BANK, IN ITS SOLE
DISCRETION, MAY ACCEPT ANY PREPAYMENT OF PRINCIPAL EVEN IF NOT REQUIRED
TO DO SO UNDER THE AGREEMENT AND MAY DEDUCT FROM THE AMOUNT TO BE
APPLIED AGAINST PRINCIPAL THE OTHER AMOUNTS REQUIRED AS PART OF THE
PREPAYMENT AMOUNT.
"(6) IF THE BANK EXERCISES ITS RIGHT TO ACCELERATE THE PAYMENT
OF THE ACQUISITION NOTE PRIOR TO MATURITY, THE BORROWER WILL PAY TO THE
BANK, IN ADDITION TO THE OTHER AMOUNTS THEN DUE UNDER THE AGREEMENT, ON
THE DATE SPECIFIED BY THE BANK AS THE PREPAYMENT DATE, THE PREPAYMENT
AMOUNT. THE BANK'S DETERMINATION OF THE PREPAYMENT AMOUNT WILL BE
CONCLUSIVE IN THE ABSENCE OF OBVIOUS ERROR OR FRAUD.
"(7) THE PREPAYMENT AMOUNT IS THE SUM OF: (i) THE AMOUNT OF
PRINCIPAL WHICH THE BORROWER HAS ELECTED TO PREPAY OR THE AMOUNT OF
PRINCIPAL WHICH THE BANK HAS REQUIRED THE BORROWER TO PREPAY BECAUSE OF
ACCELERATION, AS THE CASE MAY BE (THE "PREPAID PRINCIPAL AMOUNT"),
(ii) INTEREST ACCRUING ON THE PREPAID PRINCIPAL AMOUNT UP TO, BUT NOT
INCLUDING, THE PREPAYMENT DATE, (iii) FIVE HUNDRED DOLLARS ($500) PLUS
(iv) THE PRESENT VALUE, DISCOUNTED AT THE REINVESTMENT RATES (AS
DEFINED BELOW), OF THE POSITIVE AMOUNT BY WHICH (A) THE INTEREST THE
BANK WOULD HAVE EARNED HAD THE PREPAID PRINCIPAL AMOUNT BEEN PAID
ACCORDING AT THE ACQUISITION NOTE'S AMORTIZATION SCHEDULE AT THE
ACQUISITION NOTE'S INTEREST RATE EXCEEDS (B) THE INTEREST THE BANK
WOULD EARN BY REINVESTING THE PREPAID PRINCIPAL AMOUNT AT THE
REINVESTMENT RATES.
"(8) "REINVESTMENT RATES" MEAN THE PER ANNUM RATES OF INTEREST
EQUAL TO ONE HALF PERCENT (1/2%) ABOVE THE RATES OF INTEREST REASONABLY
DETERMINED BY THE BANK TO BE IN EFFECT NOT MORE THAN SEVEN DAYS PRIOR
TO THE PREPAYMENT DATE IN THE SECONDARY MARKET
FOR UNITED STATES TREASURY OBLIGATIONS IN AMOUNT(S) AND WITH
MATURITY(IES) WHICH CORRESPOND (AS CLOSELY AS POSSIBLE) TO THE
PRINCIPAL INSTALLMENT AMOUNT(S) AND THE PAYMENT DATE(S) AGAINST WHICH
THE PREPAID PRINCIPAL AMOUNT WILL BE APPLIED."
2. This Amendment shall be effective as of October 1, 2000.
3. Except as expressly set forth herein, all of the terms and
conditions of the Agreement shall remain in full force and effect.
COMERICA BANK - CALIFORNIA XXXX GROUP, INC.
XXXX SYSTEMS INTERNATIONAL, INC.
XXXX XCD, INC.
By: /s/ Xxxxxxx Xxxxxx By: /s/ Del Xxxxxx
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Its: Vice President The CFO of each of the Borrowers
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