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EXHIBIT 10.05
SECOND AMENDMENT TO LOAN DOCUMENTS
THIS SECOND AMENDMENT TO LOAN DOCUMENTS ("Second Amendment") is made and
entered into as of December 28, 1998 by and among EDIFY CORPORATION, a Delaware
corporation ("Borrower"), and IMPERIAL BANK ("Bank").
RECITALS
A. Bank agreed to make revolving loans to Borrower in the maximum
principal amount of $8,000,000.00 ("Commitment") pursuant to the terms of that
certain Credit Terms and Conditions with Addendum dated December 30, 1996, as
previously amended, ("Credit Terms Agreement"), entered into between Borrower
and Bank. The Commitment is evidenced by that certain Note dated December 30,
1996, as previously amended, ("Note"), made by Borrower and payable to Bank in
the original principal amount of the Commitment.
B. The termination date of the Commitment and the maturity date of the
Note was extended to December 28, 1998, pursuant to the terms of the First
Amendment dated December 29, 1998 ("First Amendment"), entered into between
Borrower and Bank upon the terms and conditions contained therein.
C. The Commitment terminated on December 28, 1998, and Borrower
desires to extend the termination date of the Commitment as provided for in
this Second Amendment, and Bank is willing to make such accommodation to
Borrower, subject to the terms and conditions set forth herein.
D. The Credit Terms Agreement, the Note (as amended hereby), the First
Amendment, and this Second Amendment, together with all other documents entered
into or delivered pursuant to any of the foregoing, in each case as originally
executed or as the same may from time to time be modified, amended,
supplemented, restated or superseded are hereinafter collectively referred to
as the "Loan Documents".
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants herein set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, Borrower and Bank hereby agree to amend the Loan Documents as
follows:
1. DEFINITIONS. Unless otherwise defined herein, all terms used in the
Credit Terms Agreement have the same meaning when used herein.
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2. AMENDMENTS TO CREDIT TERMS AGREEMENT.
a. Section 5 of the Credit Terms Agreement is hereby amended in full to
read as follows:
"5. ACQUISITION OR SALE OF BUSINESS; MERGER OR CONSOLIDATION. Purchase or
otherwise acquire the assets or business of any person or other entity,
provided Borrower may purchase or acquire the assets or business of any
person as long as an event of default does not exist hereunder and as long
as such purchase or acquisition does not cause an event of default
hereunder; or liquidate, dissolve, merge or consolidate, or commence any
proceedings therefor, or sell any assets except in the ordinary and normal
course of its business as now conducted; or sell, lease, assign, or
transfer any substantial part of its business or fixed assets, or any
property or other assets necessary for the continuance of its business as
now conducted, including without limitation the selling of any property or
other asset accompanied by the leasing back of the same."
b. The Termination Date contained in the COMMITMENT Section of the
Addendum to the Credit Terms and Conditions is hereby extended from December 28,
1998 to "December 27, 1999".
c. The Addendum to the Credit Terms Agreement is amended by adding the
following as subsection 4) to the Section entitled REPORTING:
"4) At the following times: (i) while any advances, letters of credit or
foreign exchange contracts are outstanding hereunder, within 45 days after
the end of each quarter and fiscal year of Borrower, and (ii) not later
than 20 days prior to any advance request by Borrower, including letters
of credit, Borrower shall provide Bank, in form and substance satisfactory
to Bank, a certificate of an authorized officer of Borrower, stating that
Borrower has performed and observed each and every covenant contained in
this Agreement to be performed by it and that no event has occurred and no
condition then exists which constitutes an event of default hereunder or
would constitute such an event of default upon the lapse of time or upon
the giving of notice and the lapse of time specified herein; or, if any
such event has occurred or any such condition exists, specifying the
nature thereof."
d. The Addendum to the Credit Terms Agreement is further amended by
replacing the existing subsection 3) to the Section entitled OTHER CONDITIONS
with the following:
"3) At Bank's option, but no less than once per year, Bank may require an
audit by Bank's representatives at Borrower's expense, with results
satisfactory to Bank."
e. The Addendum to the Credit Terms Agreement is hereby further amended
to add the following sections:
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"YEAR 2000 COMPLIANCE"
Borrower affirmatively covenants that it will 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.
REPRESENTATION REGARDING YEAR 2000 COMPLIANCE
Borrower and its subsidiaries, as applicable, represent and warrant
that they 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."
3. AMENDMENT TO NOTE. The stated maturity date of the Note is hereby
extended from December 28, 1998 to December 27, 1999.
4. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants that
its representations and warranties in the Loan Documents continue to be true
and complete in all material respects as of the date hereof after giving effect
to this Second Amendment (except to the extent such specifically relate to
another date or as specifically described on EXHIBIT A attached hereto and
incorporated herein by this reference) and that the execution, delivery and
performance of this Second Amendment are duly authorized, do not require the
consent or approval of any governmental body or regulatory authority and are
not in contravention of or in conflict with any law or regulation or any term
or provision of any other agreement entered into by Borrower.
5. CONDITIONS PRECEDENT. The legal effectiveness of this Second
Amendment is subject to the satisfaction of all of the following conditions
precedent:
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a. PAYMENT OF ACCRUED INTEREST. Bank shall have received
all unpaid interest accrued under the Note from December 1, 1997 through and
including December 28, 1998 at the rate of interest and computed in accordance
with the terms of the Note.
b. EXECUTED AMENDMENT. Bank shall have received this
Second Amendment duly executed and delivered by Borrower.
c. RESOLUTIONS AND OTHER CORPORATE DOCUMENTS OF BORROWER.
Bank shall have received resolutions of the Board of Directors of Borrower
authorizing Borrower to enter into this Second Amendment and such other
corporate documents as Bank shall reasonably request.
d. FINANCIAL CONDITION. There shall have occurred no
material adverse change in the financial condition or prospects of Borrower as
shown on the most recent financial statements submitted to Bank or disclosed to
Bank, respectively, and relied upon by Bank in entering into this Second
Amendment.
e. NO DEFAULT. There shall have occurred no Event of
Default that remains uncured and is continuing under any of the Loan Documents.
f. PAYMENT OF FEES. Bank shall have received
reimbursement from Borrower of its costs and expenses incurred (including,
without limitation, its attorneys' fees and expenses) in connection with this
Second Amendment and the transactions contemplated hereby.
g. OTHER DOCUMENTS. Bank shall have received such other
documents, information and items from Borrower as it shall reasonably request
to effectuate the transactions contemplated hereby.
6. RELEASE AND WAIVER.
a. Borrower hereby acknowledges and agrees that: (1) it
has no claim or cause of action against Bank or any parent, subsidiary or
affiliate of Bank, or any of Bank's officers, directors, employees, attorneys
or other representatives or agents (all of which parties other than Bank being,
collectively, "Bank's Agents") in connection with the Loan Documents, the loans
thereunder or the transactions contemplated therein and herein; (2) it has no
offset or defense against any of its respective obligations, indebtedness or
contracts in favor of Bank; and (3) it recognizes that Bank has heretofore
properly performed and satisfied in a timely manner all of its obligations to
and contracts with Borrower.
b. Although Bank regards its conduct as proper and does
not believe Borrower to have any claim, cause of action, offset or defense
against Bank or any of Bank's Agents in connection with the Loan Documents, the
loans thereunder or the transactions contemplated therein, Bank wishes and
Borrower agrees to eliminate any possibility that any past conditions, acts,
omissions, events, circumstances or matters could impair or otherwise affect
any rights, interests, contracts or remedies of Bank. Therefore, Borrower
unconditionally releases and waives (1) any and all liabilities, indebtedness
and obligations, whether known or unknown, of any kind to Bank or of any of
Bank's Agents to Borrower, except the obligations remaining to be performed by
Bank as expressly stated in the Credit Terms Agreement, the First Amendment,
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this Second Amendment, and the other Loan Documents executed by Bank; (2) any
legal, equitable or other obligations or duties, whether known or unknown, of
Bank or of any of Bank's Agents to Borrower (and any rights of Borrower against
Bank) besides those expressly stated in the Credit Terms Agreement, the First
Amendment, this Second Amendment, and the other Loan Documents; (3) any and all
claims under any oral or implied agreement, obligation or understanding with
Bank or any of Bank's Agents, whether known or unknown, which is different from
or in addition to the express terms of the Credit Terms Agreement, the First
Amendment, this Second Amendment, or any of the other Loan Documents; and (4)
all other claims, causes of action or defenses of any kind whatsoever (if any),
whether known or unknown, which Borrower might otherwise have against Bank or
any of Bank's Agents, on account of any condition, act, omission, event,
contract, liability, obligation, indebtedness, claim, cause of action, defense,
circumstance or matter of any kind whatsoever which existed, arose or occurred
at any time prior to the execution and delivery of this Second Amendment or
which could arise concurrently with the effectiveness of this Second Amendment.
c. Borrower agrees that it understands the meaning and effect of
Section 1542 of the California Civil Code, which provides:
Section 1542. Certain Claims Not Affected by General Release.
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
BORROWER AGREES TO ASSUME THE RISK OF ANY AND ALL UNKNOWN, UNANTICIPATED OR
MISUNDERSTOOD DEFENSES, CLAIMS, CAUSES OF ACTION, CONTRACTS, LIABILITIES,
INDEBTEDNESS AND OBLIGATIONS WHICH ARE RELEASED BY THIS SECOND AMENDMENT IN
FAVOR OF BANK AND BANK'S AGENTS, AND BORROWER HEREBY WAIVES AND RELEASES ALL
RIGHTS AND BENEFITS WHICH IT MIGHT OTHERWISE HAVE UNDER THE AFOREMENTIONED
SECTION 1542 OF THE CALIFORNIA CIVIL CODE WITH REGARD TO THE RELEASE OF SUCH
UNKNOWN, UNANTICIPATED OR MISUNDERSTOOD DEFENSES, CLAIMS, CAUSES OF ACTION,
CONTRACTS, LIABILITIES, INDEBTEDNESS AND OBLIGATIONS. TO THE EXTENT (IF ANY)
WHICH ANY SUCH LAWS MAY BE APPLICABLE, BORROWER WAIVES AND RELEASES (TO THE
MAXIMUM EXTENT PERMITTED BY LAW) ANY RIGHT OR DEFENSE WHICH IT MIGHT OTHERWISE
HAVE UNDER ANY OTHER LAW OF ANY APPLICABLE JURISDICTION WHICH MIGHT LIMIT OR
RESTRICT THE EFFECTIVENESS OR SCOPE OF ANY OF ITS WAIVERS OR RELEASES UNDER THIS
SECOND AMENDMENT.
7. FULL FORCE AND EFFECT; ENTIRE AGREEMENT. Except to the extent
expressly provided in this Second Amendment, the terms and conditions of the
Credit Terms Agreement, the First Amendment and the other Loan Documents shall
remain in full force and effect. This Second Amendment and the other Loan
Documents constitute and contain the entire agreement of the parties hereto and
supersede any and all prior agreements, negotiations, correspondence,
understandings and communications between the parties, whether written or oral,
respecting the subject matter hereof. The parties hereto further agree that the
Loan Documents comprise the
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entire agreement of the parties thereto and supersede any and all prior
agreements, negotiations, correspondence, understandings and other
communications between the parties thereto, whether written or oral respecting
the extension of credit by Bank to Borrower and/or its affiliates.
8. COUNTERPARTS; EFFECTIVENESS. This Second Amendment may be executed
in any number of counterparts, each of which when so delivered shall be deemed
an original, but all such counterparts taken together shall constitute but one
and the same instrument. Each such agreement shall become effective upon the
execution of a counterpart hereof or thereof by each of the parties hereto and
telephonic notification that such executed counterparts has been received by
Borrower and Bank.
IN WITNESS WHEREOF, each of the parties hereto has caused this Second Amendment
to be executed and delivered by its duly authorized officer as of the date
first written above.
BANK BORROWER
IMPERIAL BANK EDIFY CORPORATION,
a Delaware corporation
By: /s/ XXXX X. XXXXX By: /s/ XXXXXXXXX XXXXXXX
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Xxxx X. Xxxxx Xxxxxxxxx Xxxxxxx
Assistant Vice President Chief Financial Officer
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EXHIBIT A
Schedule of Exceptions to Representations and Warranties
(List or indicate "NONE")
NONE
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