ADDENDUM TO BUSINESS LOAN AGREEMENT
THIS ADDENDUM TO BUSINESS LOAN AGREEMENT ("Addendum") is made and entered into
effective as of the 5th day of February 1999, by and between U.S. BANK NATIONAL
ASSOCIATION ("Lender"), and XXXXX AND XXXXXXXXXX COMPUTER CORPORATION
("Borrower").
RECITALS:
A. Lender and Borrower entered into a Business Loan Agreement, dated November
13, 1998 (the "Loan Agreement") pursuant to which Lender agreed to advance to
Borrower an unsecured revolving line of credit in the maximum line amount of
$20,000,000.00 (the "Loan"). B. Lender and Borrower desire to amend certain
provisions of the Loan Agreement and to make corresponding changes to the other
documents evidencing Borrower's obligations to Lender under the Loan, as set
forth below in this Addendum. NOW, THEREFORE, in consideration of the mutual
promises contained in this Addendum, and for other good and valuable
consideration. the receipt and legal sufficiency of which are hereby
acknowledged, Lender and Borrower agree as follows:
1. Loan Documents. As used in this Addendum, the term "Loan Documents" refers to
the following documents, dated effective as of November 13, 1998, signed by
Borrower relating to the Loan:
(a) The Loan Agreement;
(b) The Alternative Rate Options Promissory Note (Prime Rate, LIBOR), in
the maximum principal amount of $20,000,000.00;
(c) The Negative Pledge Agreement (the "Negative Pledge Agreement");
(d) The Corporate Resolution to Borrow; and (e) The Loan Checklist.
2. Definition of Borrower. The definition of the term "Borrower" set forth in
the Loan Agreement is deleted in its entirety and replaced by the following:
Borrower. The word "Borrower" means XXXXX AND XXXXXXXXXX COMPUTER
CORPORATION. The foregoing definition shall amend all references to Borrower in
all of the Loan Documents.
3. Actions by Lender. In the Loan Documents, whenever Lender is granted a right
to take action against Borrower as a result of a default, act, or omission by or
on the part of Borrower, or to otherwise exercise its judgment or discretion
under the Loan Documents, unless Lender, under the express terms of the Loan
Documents, is required to act under a higher standard of care, such as "good
faith," Lender shall be required to act reasonably.
4. Materiality. In the event Borrower does not satisfy the requirements of any
affirmative or negative covenant contained in any of the Loan Documents, or in
the event a representation or warranty given by Borrower in any of the Loan
Documents proves to be or to have been incorrect when made, such circumstance
shall not be deemed an event of default under the Loan Documents: (a) so long as
there is no outstanding balance under the Note; or (b) if there is a balance
under the Note (1) so long as Borrower is in compliance with all covenants and
financial ratios contained in the Loan Agreement both before and after giving
effect to such circumstance, or (2) unless the same results in a material
impairment of Borrower's ability to repay the Loan, or would disqualify Borrower
From receiving credit from Lender based on Lender's then current underwriting
standards. Nothing contained in this paragraph shall be deemed a waiver of any
condition precedent to an advance of Loan proceeds as described in the Loan
Agreement.
5. Grace Period. Upon the occurrence of an event of default under any of the
Loan Documents, Lender shall give Borrower notice and an opportunity to cure the
default in accordance with the following:
(a) Monetary Default. Borrower shall not be entitled to any notice
regarding defaults with respect to regularly scheduled payments of
principal and accrued interest under the Note. However, in the event of
any other monetary default, Borrower shall have 15 days following
receipt of written notice from Lender in which to cure such default.
(b) Nonmonetary Default. In the event of a nonmonetary default,
Borrower shall have 30 days after receipt of written notice from Lender
specifying the nonmonetary default in which to effect a cure. However,
if the nonmonetary default cannot reasonably be corrected within such
30-day period, Borrower shall have an additional 30 days to remedy such
nonmonetary default if Borrower notifies Lender of the manner in which
the nonmonetary default shall be cured, and if appropriate corrective
action is instituted within the original 30-day period and is
diligently pursued thereafter.
Occurrence of an event of default under any of the Loan Documents shall not
entitle Lender to exercise its rights and remedies under the Loan Documents or
applicable law, unless such event is not cured within the applicable notice and
cure period.
6. Financial Covenants and Ratios. Unless otherwise expressly defined in the
Loan Agreement, all financial covenants and ratios described in the Loan
Agreement shall be calculated using Borrower's consolidated financial statements
and the definitions and standards imposed by generally accepted accounting
principles. Borrower's financial reporting requirements shall be satisfied by
Borrower submitting consolidated financial statements and information as set
forth in the Loan Agreement.
7. Cash Flow Requirements. The cash flow requirements covenant contained in the
"Affirmative Covenants" section of the Loan Agreement is deleted in its entirety
and replaced by the following:
Cash Flow Requirements. Maintain Cash Flow at not less than the
following level: Debt Service Coverage (DSC) ratio of greater than or
equal to 3.50 to 1.00. DSC ratio is defined as earnings before
interest, taxes, depreciation, amortization, and all other noncash
expenses divided by current portion long-term debt plus interest plus
dividends. DSC ratio will be calculated on a rolling four-quarter
basis. Additionally, for calculation of this ratio, the $27,925,000
loss from the write-off of capitalized R&D expenses will be excluded
through September of 1999.
8. Indebtedness and Liens. The negative covenant in the Loan Agreement regarding
"Indebtedness and Liens" is deleted in its entirety and replaced by the
following:
Indebtedness and Liens. (a) Except for trade debts and capital leases
incurred or entered into in the normal course of business and
indebtedness to Lender contemplated by this Agreement, create, incur or
assume indebtedness for borrowed money, (b) except as allowed as a
Permitted Lien or otherwise accomplished in the normal course of
business, sell, transfer, mortgage, assign, pledge, lease grant a
security interest in, or encumber any of Borrower's assets, or (c) sell
with recourse any of Borrower's accounts, except to Lender.
9. Net Worth Ratio. The net worth ratio covenant contained in the "Additional
Financial Covenants and Ratios" section of the Loan Agreement is deleted in its
entirety and replaced by the following:
Net Worth Ratio. Maintain a ratio of Total Liabilities to Tangible Net
Worth of less than .65 to 1.00. Net Worth Ratio is defined as total
liabilities minus subordinated debt divided by tangible net worth plus
subordinated debt.
10. Subsidiaries and Affiliates of Borrower. The miscellaneous provision in the
Loan Agreement regarding "Subsidiaries and Affiliates of Borrower" is deleted in
its entirety and replaced by the following:
Subsidiaries and Affiliates of Borrower. Under no circumstances shall
this Agreement be construed to require Lender to make any Loan or other
financial accommodation to any subsidiary or affiliate of Borrower, nor
shall any affirmative or negative covenant or any representation or
warranty contained in the Loan Documents be construed to be separately
applicable to any subsidiary or affiliate of Borrower.
Negative Pledge Agreement. The Negative Pledge Agreement is hereby terminated,
and neither Lender nor Borrower shall have any further duty or obligation under
the Negative Pledge Agreement.
12. Unsecured Line of Credit. Lender and Borrower acknowledge and agree that the
Loan is an unsecured revolving line of credit. All references in the Loan
Documents to collateral, security interests and remedies with respect to
collateral are inapplicable, except to the extent that any advance of credit to
Borrower under the Loan Documents is actually secured by Borrower's grant of a
security interest in favor of Lender.
13. Effect of Addendum. This Addendum amends all of the Loan Documents. In the
event of a conflict in the provisions of this Addendum and any of the Loan
Documents the provisions of this Addendum shall control, and the inconsistent
Loan Document shall be deemed modified to be consistent here with.
14. Reaffirmation. Except as modified by this Addendum, Borrower reaffirms
Borrower's obligations to Lender under the Loan Documents, and agrees to abide
by the terms covenants and conditions thereof.
15. Successors and Assigns. This Addendum shall inure to the benefit of and
shall be binding upon Lender, Borrower and their respective successors and
assigns.
DATED effective as of the date first above written.
LENDER:
/S/ XXXXXX WHITMUR
U.S. BANK NATIONAL ASSOCIATION
BORROWER:
/S/ XXXX X. XXXXXX
XXXXX AND XXXXXXXXXX COMPUTER CORPORATION
