1
EXHIBIT 10.26
LINE OF CREDIT AGREEMENT
THIS LINE OF CREDIT AGREEMENT (the "Agreement") is made and entered into as
of this 4th day of March, 1998 by and between SANWA BANK CALIFORNIA (the "Bank")
and XXXXXXX TECHNOLOGIES, INC. (the "Borrower").
SECTION I
AGREEMENT TO LEND
1.01 COMMITMENT TO LEND. Subject to the terms and conditions of this
Agreement and so long as no Event of Default occurs, the Bank agrees to extend
to the Borrower the credit accommodations that follow.
1.02 LINE OF CREDIT. The Bank agrees to make loans and advances
("Advances") to the Borrower, upon the Borrower's request therefor made prior to
the Expiration Date, up to a total principal amount from time to time
outstanding not more than $20,000,000 (the "Line of Credit"); provided that any
sums repaid under the Line of Credit may be reborrowed.
A. PURPOSE. Advances made under the Line of Credit shall be used
for general corporate purposes.
B. INTEREST. Interest shall accrue from the date of each Advance
under the Line of Credit at one of the following rates, as quoted by the Bank
and as elected by the Borrower below:
1. A variable rate per annum equivalent to an index for a
variable interest rate which is quoted, published or announced from time to time
by the Bank as its reference rate (the "Reference Rate") and as to which loans
may be made by the Bank at, below or above such Reference Rate (the "Variable
Rate"). Interest shall be adjusted concurrently with any change in the Reference
Rate. An Advance based upon the Variable Rate is hereinafter referred to as a
"Variable Rate Advance".
2. A fixed rate quoted by the Bank for 14 to 180 days or for
such other period of time that the Bank may quote and offer (provided that any
such period of time does not extend beyond the Expiration Date) [the "Interest
Period"] for Advances in the minimum amount of $100,000. Such interest rate
shall be a percentage approximately equivalent to 1.25% in excess of the rate
which the Bank's Treasury Desk determines as being the approximate rate at which
the Bank could purchase offshore U.S. dollar deposits (adjusted for any and all
assessments, surcharges and reserve requirements pertaining to the purchase by
the Bank of such U.S. dollar deposits) in an amount approximately equal to the
amount of the relevant Advance and for a period of time approximately equal to
the relevant Eurodollar Interest Period [the "Eurodollar Rate"]. An Advance
based upon the Eurodollar Rate is hereinafter referred to as a "Eurodollar
Advance".
3. A fixed rate quoted by the Bank for 1, 2, 3, or 6 months or
for such other period of time that the Bank may quote and offer (provided that
any such period of time does not extend beyond the Expiration Date) [the "LIBOR
Interest Period"] for Advances in the minimum amount of $100,000. Such interest
rate shall be a percentage approximately equivalent to 1.25% in excess of the
Bank's LIBOR Rate which is that rate determined by the Bank's Treasury Desk as
being the arithmetic mean (rounded upwards, if necessary, to the nearest whole
multiple of one-sixteenth of one percent (1/16%)) of the U.S. dollar London
Interbank Offered Rates for such period appearing on page 3750 (or such other
page as may replace page 3750 of the Telerate screen at or about 11:00 a.m.
(London time) on the second Business Day prior to the first days of such period
(adjusted for any and all assessments, surcharges and reserve requirements) [the
"LIBOR Rate"]. An Advance based upon the LIBOR Rate is hereinafter referred to
as a "LIBOR Advance".
Interest on any Advance shall be computed on the basis of 360
days per year, but charged on the actual number of days elapsed.
Interest on Variable Rate Advances shall be paid in monthly
installments commencing on the last day of the month following the date of the
first such Advance and continuing on the last day of each month thereafter.
Interest on any Eurodollar Advance or LIBOR Advance with an
Interest Period or LIBOR Interest Period of 90 days or less on the last day of
the relevant Interest Period or LIBOR Interest Period. The Borrower further
-1-
2
promises and agrees to pay the Bank interest on any Eurodollar Advance or LIBOR
Advance with an Interest Period or LIBOR Interest Period in excess of 90 days on
a quarterly basis (i.e., on the last day of each 90-day period occurring in such
Interest Period or LIBOR Interest Period) and on the last day of the relevant
Interest Period or LIBOR Interest Period.
If interest is not paid as and when it is due, it shall be added
to the principal, become and be treated as a part thereof, and shall thereafter
bear like interest.
C. NOTICE OF BORROWING: Upon telephonic notice which shall be
received by the Bank at or before 2:00 p.m. (California time) on a business
day, the Borrower may borrow under the Line of Credit by requesting:
1. A Variable Rate Advance. A Variable Rate Advance may be made
on the day notice is received by the Bank; provided, however, that if the Bank
shall not have received notice at or before 2:00 p.m. on the day such Advance is
requested to be made, such Variable Rate Advance may, at the Bank's option, be
made on the next business day.
2. A Eurodollar Advance or LIBOR Advance. Notice of any
Eurodollar Advance or LIBOR Advance shall be received by the Bank no later
than two business days prior to the day (which shall be a Business Day) on
which the Borrower requests such Advance to be made.
D. NOTICE OF ELECTION TO ADJUST INTEREST RATE: Upon telephonic notice
which shall be received by the Bank at or before 2:00 p.m. (California time) on
a business day, the Borrower may elect:
1. That interest on a Variable Rate Advance shall be adjusted to
accrue at the Eurodollar Rate or LIBOR Rate; provided, however, that such
notice shall be received by the Bank no later than two business days prior to
the day (which shall be a business day) on which the Borrower requests that
interest be adjusted to accrue at the Eurodollar Rate or LIBOR Rate.
2. That interest on a Eurodollar Advance or LIBOR Advance shall
continue to accrue at a newly quoted Eurodollar Rate or LIBOR Rate or shall be
adjusted to commerce to accrue at the Variable Rate; provided, however, that
such notice shall be received by the Bank no later than two business days prior
to the last day of the Eurodollar Interest Period pertaining to such Eurodollar
Advance or LIBOR Advance. If the Bank shall not have received notice (as
prescribed herein) of the Borrower's election that interest on any Eurodollar
Advance or LIBOR Advance shall continue to accrue at the newly quoted Eurodollar
Rate or LIBOR Rate, the Borrower shall be deemed to have elected that interest
thereon shall be adjusted to accrue at the Variable Rate upon the expiration of
the relevant Interest Period pertaining to such Advance.
E. PREPAYMENT: The Borrower may prepay any Advance in whole or in
part, at any time and without penalty, provided, however, that: (i) any partial
prepayment shall first be applied, at the Bank's option, to accrued and unpaid
interest and next to the outstanding principal balance; and (ii) during any
period of time in which the interest is accruing on any Advance on the basis
of the Eurodollar Rate or LIBOR Rate, no prepayment shall be made on any
Advance bearing interest at the Eurodollar Rate or LIBOR Rate except on a day
which is the last day of the relevant Interest Period pertaining thereto. If
the whole or any part of any Eurodollar Advance or LIBOR Advance is prepaid by
reason of acceleration or otherwise, the Borrower shall, upon the Bank's
request, promptly pay to and indemnify the Bank for all costs, expenses and any
loss (including loss of future interest income) actually incurred by the Bank
and any loss (including loss of profit resulting from the re-employment of
funds) deemed sustained by the Bank as a consequence of such prepayment.
The Bank shall be entitled to fund all or any portion of its Advance in any
manner it may determine in its sole discretion, but all calculations and
transactions hereunder shall be conducted as though the Bank actually funded all
Advances through the purchase of dollar deposits in the Eurodollar Interbank
Market in the amount of the relevant Advance and in maturities corresponding to
the then applicable Interest Period.
F. INDEMNIFICATION FOR EURODOLLAR RATE OR LIBOR RATE COSTS: During
any period of time in which interest on any Advance is accruing on the basis of
the Eurodollar Rate or LIBOR Rate, the Borrower shall, upon the Bank's request,
promptly pay to and reimburse the Bank for all costs incurred and payments made
by the Bank by reason of any future assessment, reserve, deposit or similar
requirement or any surcharge, tax or fee imposed upon the Bank or as a result
of the Bank's compliance with any directive or requirement of any regulatory
authority pertaining to funds used by the Bank in quoting and determining the
Eurodollar rate or LIBOR Rate.
G. CONVERSION FROM EURODOLLAR RATE OR LIBOR RATE TO VARIABLE RATE: In
the event that the Bank shall at
-2-
3
any time determine that the accrual of interest on the basis of the Eurodollar
Rate or LIBOR rate (i) is infeasible because the Bank is unable to determine the
Eurodollar Rate or LIBOR Rate due to the unavailability of U.S. dollar deposits,
contracts of certificates of deposit in an amount approximately equal to the
amount of the relevant Advance and for a period of time approximately equal to
relevant Interest Period or (ii) is or has become unlawful or infeasible by
reason of the Bank's compliance with any new law, rule, regulation, guideline or
order, or any new interpretation of any present law, rule, regulation, guideline
or order, then the Bank shall give telephonic notice thereof (confirmed in
writing) to the Borrower, in which event the Advance bearing interest at the
Eurodollar Rate or LIBOR Rate shall be deemed to be a Variable Rate Advance and
interest shall thereupon immediately accrue at the Variable Rate.
H. PRINCIPAL. Unless sooner due in accordance with the terms of
this Agreement, on the Expiration Date, the Borrower hereby promises and agrees
to pay to the Bank in full the aggregate unpaid principal amount of all Advances
then outstanding, together with all accrued and unpaid interest thereon.
I. EXPIRATION OF LINE OF CREDIT. Unless earlier terminated in
accordance with the terms of this Agreement, the Bank's commitment to make
Advances to the Borrower hereunder shall automatically expire on January 31,
2000 (the "Expiration Date").
J. COMMITMENT FEE. Borrower agrees to pay to Bank a commitment fee
of .125% per annum on the unused portion of the Line of Credit, payable
quarterly in arrears on the last day of each January, April, July and October
and computed on a year of 360 days for actual days elapsed.
K. LINE ACCOUNT:
1. The Bank shall maintain on its books a record of account
in which the Bank shall make entries for each Advance and such other debts and
credits as shall be appropriate in connection with the Line of Credit (the "Line
Account"). The Bank shall provide the Borrower with a monthly statement of the
Borrower's Line Account upon the Borrower's request therefor from time to time,
which statement shall be considered to be correct and conclusively binding on
the Borrower unless the Borrower notifies the Bank to the contrary within 30
days after the Borrower's receipt of any such statement which it deems to be
incorrect.
2. The Borrower hereby authorizes the Bank, if and to the
extent payment owed to the Bank under this Agreement is not made when due, to
charge, from time to time, against any or all of the Borrower's deposit accounts
with the Bank any amount so due.
3. If any payment required to be made by the Borrower
hereunder becomes due and payable on a day other than a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and interest
thereon shall be payable at the then applicable rate during such extension. All
payments required to be made hereunder shall be made to the office of the Bank
designated for the receipt of notices herein or such other office as Bank shall
from time to time designate.
L. LATE PAYMENT. In addition to any other rights the Bank may have
hereunder, if any payment of principal (other than a principal payment due
pursuant to Section 1.02H.) or interest, or any portion thereof, under this
Agreement is not paid when due, a late payment charge equal to five percent (5%)
of such past due payment may be assessed and shall be immediately payable.
M. DISBURSEMENT OF PROCEEDS FROM ADVANCES. Any Advance made
hereunder shall be conclusively presumed to have been made to and for the
Borrower's benefit when the proceeds of such Advance are disbursed in accordance
with the Borrower's instructions or deposited into a checking account of the
Borrower maintained at the Bank.
1.03 LETTER OF CREDIT SUB-FACILITY: Subject to the terms of the Agreement
and those contained herein, the Bank agrees to issue commercial letters of
credit of up to $5,000,000 and standby letters of credit of up to $20,000,000
(each a "Letter of Credit") on behalf of the Borrower for general corporate
purposes. At no time, however, shall the total face amount of all standby
Letters of Credit outstanding and 50% of all commercial Letters of Credit
outstanding, less any partial draws paid by the Bank, exceed the sum of
$20,000,000 and, together with the total principal amount of all Advances exceed
the Line of Credit.
A. Upon the Bank's request, the Borrower shall promptly pay to the
Bank issuance fees of 1.50% per annum
-3-
4
for standby letters of credit and standard fees as quoted by the Bank in
its sole discretion from time to time for commercial letters of credit and
such other fees, commissions, costs and any out-of-pocket expenses charged
or incurred by the Bank with respect to any Letter of Credit.
B. The commitment by the Bank to issue Letters of Credit shall,
unless earlier terminated in accordance with the terms of the Agreement,
automatically terminate on the Expiration Date and no standby Letter of
Credit shall expire on a date which is 365 days after the Expiration Date
and no commercial Letter of Credit shall expire on a date which is 90 days
after the Expiration Date.
C. Each Letter of Credit shall be in form and substance satisfactory
to the Bank and in favor of beneficiaries satisfactory to the Bank,
provided that the Bank may refuse to issue a Letter of Credit due to the
nature of the transaction or its terms or in connection with any
transaction where the Bank, due to the beneficiary or the nationality or
residence of the beneficiary, would be prohibited by any applicable law,
regulation or order from issuing such Letter of Credit.
D. Prior to the issuance of each Letter of Credit, but in no event
later than 10:00 a.m. (California time) on the day such Letter of Credit
is to be issued (which shall be a Business Day), the Borrower shall
deliver to the Bank a duly executed form of the Bank's standard form of
application for issuance of a Letter of Credit with proper insertions.
E. The Borrower shall, upon the Bank's request, promptly pay to and
reimburse the Bank for all costs incurred and payments made by the Bank by
reason of any future assessment, reserve, deposit or similar requirement
or any surcharge, tax or fee imposed upon the Bank or as a result of the
Bank's compliance with any directive or requirement of any regulatory
authority pertaining or relating to any Letter of Credit.
In the event that Borrower fails to pay any drawing under any
Letter of Credit or the balances in the depository account or accounts
maintained by the Borrower with Bank are insufficient to pay such drawing,
without limiting the rights of Bank hereunder or waiving any Event of Default
caused thereby, Bank may, and Borrower hereby authorizes Bank to create an
Advance bearing interest at the rate provided in Section 1.02 hereof to pay
such drawing.
1.04 FOREIGN EXCHANGE FACILITY. Borrower may from time to time request
Bank to purchase or sell foreign currency in a specified amount, at a fixed
price, and for delivery at a future date no greater than 365 days from the date
of purchase (each a "Foreign Exchange Contract"). At no time, however, shall
15% of the aggregate settlement price of all Foreign Exchange Contracts
outstanding exceed $750,000 as determined by Bank at the time of entering into
each Foreign Exchange Contract.
A. REQUESTS FOR FOREIGN EXCHANGE CONTRACTS. Each request for a
Foreign Exchange Contract shall be made by telephone or rapifax, confirmed in
writing (each a "Request"). Each Request shall be delivered or communicated to
the Bank no later than 3:00 p.m. (California time) on the day (which shall be a
Business Day) on which the Foreign Exchange Contract is requested. By making
any such Request, Borrower agrees that all matters relating to each such
Foreign Exchange Contract shall be governed by this Agreement and Borrower
restates all warranties and representations made by Borrower herein as if made
on the date the Foreign Exchange Contract is entered into.
B. EXPIRATION DATE. The commitment by the Bank to enter into
Foreign Exchange Contracts shall, unless earlier terminated in accordance with
this Agreement, automatically terminate on the Expiration Date and no Foreign
Exchange Contract shall expire on a date which is more than 365 days after the
Expiration Date.
C. AVAILABILITY. Bank may refuse to enter into a Foreign Exchange
Contract with the Borrower where the Bank, in its sole discretion, determines
that such foreign currency is unavailable, or where Bank would be prohibited by
any applicable law, regulation or order from purchasing such foreign currency.
D. PURPOSE. The Foreign Exchange Contract shall be used to hedge
foreign exchange exposure and/or risk.
E. PAYMENT. Payment is due on the settlement date of any Foreign
Exchange Contract (the "Payment Date"). Bank is hereby authorized by Borrower
to charge the full settlement price of any Foreign Exchange Contract against
the depository account or accounts maintained by the Borrower with Bank on the
Payment Date.
-4-
5
F. ASSESSMENTS. Borrower shall, upon the Bank's request, promptly pay
to and reimburse the Bank for all costs incurred and payments made by the Bank
by reason of any assessment, reserve, deposit, capital maintenance or similar
requirement or any surcharge, tax or fee imposed upon the Bank or as a result of
the Bank's compliance with any directive or requirement of any regulatory
authority pertaining or relating to any Foreign Exchange Contract.
1.05 EXISTING TERM LOANS. The Borrower is presently indebted to the Bank
under a certain promissory note dated May 28, 1992 in the original principal sum
of $2,000,000.00 (the "Existing Term Notes"). It is hereby understood and agreed
that the Existing Term Notes shall be and are subject to the terms and
conditions of this Agreement.
SECTION II
CONDITIONS PRECEDENT
2.01 CONDITIONS PRECEDENT TO FIRST ADVANCE. Prior to the first Advance or
disbursement of the Term Loan hereunder, the Borrower shall deliver or cause to
be delivered to the Bank, in form and substance satisfactory to the Bank:
A. AUTHORITY TO BORROW. Evidence relating to the duly given approval
and authorization of the execution, delivery and performance of this Agreement,
all other documents, instruments and agreements required under this Agreement
and all other actions to be taken by the Borrower hereunder or thereunder.
B. LOAN DOCUMENTS. All other documents, instruments and agreements
required or necessary to consummate the transactions contemplated under this
Agreement (collectively the "Loan Documents"), all fully executed.
C. GUARANTIES. Continuing guaranty(ies) in favor of the Bank executed
by I-Bus, Inc., Xxxxxxx Federal Division, Inc., Xxxxxxx Information Systems,
Inc., Xxxxxxx Business Systems, Inc., Xxxxxxx Energy Products, Inc., and
PurePulse Technologies, Inc., together with evidence that the execution,
delivery and performance by an guarantor has been duly authorized.
D. MISCELLANEOUS DOCUMENTS. Such other documents and opinions as the
Bank may require with respect to the transactions described in this Agreement.
2.02 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of the Bank to
make each Advance (including the first Advance) is subject to the further
conditions precedent that, as of the date of each Advance and after the making
of such Advance:
A. REPRESENTATIONS AND WARRANTIES. The representations and warranties
set forth in Section IV hereof and in any other document, instrument, agreement
or certificate delivered to the Bank hereunder are true and correct.
B. EVENT OF DEFAULT. No event has occurred and is continuing which
constitutes, or, with the lapse of time or giving of notice or both, would
constitute an Event of Default as defined in Section VI hereof.
For the purposes hereof, the Borrower's acceptance of the proceeds of any
Advance shall be deemed to constitute the Borrower's representation and warranty
that the statements set forth in sections 3.02 A and 3.02 B above are true and
correct.
SECTION III
REPRESENTATIONS AND WARRANTIES
The Borrower hereby makes the following representations and warranties to
the Bank, which representations and warranties are continuing:
3.01 STATUS. The Borrower is a corporation duly organized and validly
existing under the laws of the State of Delaware and is properly licensed,
qualified to do business and in good standing in, and, where necessary to
maintain the Borrower's rights and privileges, has complied with the fictitious
name statute of every jurisdiction in which the Borrower is doing business.
3.02 AUTHORITY. The execution, delivery and performance by the Borrower of
this Agreement and the Loan
-5-
6
Documents have been duly authorized and do not and will not: (i) violate any
provision of any law, rule, regulation, writ, judgment or injunction presently
in effect affecting the Borrower, (ii) result in a breach of or constitute a
default under any material agreement to which the Borrower is a party or by
which it or its properties may be bound of affected; (iii) require any consent
or approval of its stockholders or violate any provision of its articles of
incorporation or by-laws.
3.03 LEGAL EFFECT. This Agreement constitutes, and any document,
instrument or agreement required hereunder when delivered will constitute,
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their respective terms.
3.04 FICTITIOUS TRADE STYLES. There are no fictitious trade styles used
by the Borrower in connection with its business operations. The Borrower shall
notify the Bank not less than 30 days prior to effecting any change in the
matters described herein or prior to using any other fictitious trade style at
any future date, indicating the trade style and state(s) of its use.
3.05 FINANCIAL STATEMENTS. All financial statements, information and
other data which may have been or which may hereafter be submitted by the
Borrower to the Bank are true, accurate and correct and have been or will be
prepared in accordance with generally accepted accounting principles
consistently applied and accurately represent the Borrower's financial
condition or, as applicable, the other information disclosed therein. Since the
most recent submission of any such financial statement, information or other
data to the Bank, the Borrower represents and warrants that no material adverse
change in the Borrower's financial condition or operations has occurred which
has not been fully disclosed to the Bank in writing.
3.06 LITIGATION. Except as have been disclosed to the Bank in writing,
there are no actions, suits or proceedings pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or the Borrower's
properties before any court or administrative agency which, if determined
adversely to the Borrower, would have a material adverse effect on the
Borrower's financial condition or operations.
3.07 TITLE TO ASSETS; PERMITTED LIENS. The Borrower has good and
marketable title to all of its assets and the same are not subject to any
security interest, encumbrance, lien or claim of any third person other than:
(i) liens for taxes, assessments or similar charges either not yet due or being
duly contested in good faith; (ii) liens of mechanics, materialmen,
warehousemen or other like liens arising in the ordinary course of business and
securing obligations which are not yet delinquent; (iii) liens and security
interests which, as of the date of this Agreement, have been disclosed to and
approved by the Bank in writing; (iv) purchase money liens or purchase money
security interests upon or in any property acquired or held by the Borrower in
the ordinary course of business to secure indebtedness outstanding on the date
hereof or permitted to be incurred hereunder; and (v) those liens and security
interests which in the aggregate constitute an immaterial and insignificant
monetary amount with respect to the net value of the Borrower's assets
(collectively "Permitted Liens").
3.08 ERISA. If the Borrower has a pension, profit sharing or retirement
plan subject to the Employee Retirement Income Security Act of 1974, as amended
from time to time, including any rules and regulations promulgated thereunder
("ERISA"), such plan has been and will continue to be funded in accordance with
its terms and otherwise complies with and continues to comply with the
requirements of ERISA.
3.09 TAXES. The Borrower has filed all tax returns required to be filed
and paid all taxes shown thereon to be due, including interest and penalties,
other than taxes which are currently payable without penalty or interest or
those which are being duly contested in good faith.
3.10 ENVIRONMENTAL COMPLIANCE. The Borrower has implemented and complied
in all material respects with all applicable federal, state and local laws,
ordinances, statutes and regulations with respect to hazardous or toxic wastes,
substances or related materials, industrial hygiene or environmental
conditions. There are no suits, proceedings, claims or disputes pending or, to
the knowledge of the Borrower, threatened against or affecting the Borrower or
its property claiming violations of any federal, state or local law, ordinance,
statute or regulation relating to hazardous or toxic wastes, substances or
related materials.
SECTION IV
COVENANTS
The Borrower covenants and agrees that, during the term of this Agreement,
and so long thereafter as the Borrower
-6-
7
is indebted to the Bank under this Agreement, the Borrower shall, unless the
Bank otherwise consents in writing:
4.01 PRESERVATION OF EXISTENCE; COMPLIANCE WITH APPLICABLE LAWS. Maintain
and preserve its existence and all rights and privileges now enjoyed; not
liquidate or dissolve, merge or consolidate with or into, or acquire any other
business organization other than acquisitions of up to $5,000,000 per
acquisition and $15,000,000 in the aggregate and acquisitions of companies that
are payable solely in stock issued by the Borrower or a combination of stock
and up to 30% cash per acquisition but in no event more than $15,000,000 cash
in the aggregate, provided however that cash acquisitions may not be made with
borrowed funds; and conduct its business in accordance with all applicable
laws, rules and regulations.
4.02 MAINTENANCE OF INSURANCE. Maintain insurance in such amounts and
covering such risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which the
Borrower operates and maintain such other insurance and coverages as may be
required by the Bank.
4.03 PAYMENT OF OBLIGATIONS AND TAXES. Make timely payment of all
assessments and taxes and all of its liabilities and obligations unless the same
are being contested in good faith.
4.04 INSPECTION RIGHTS. At any reasonable time and from time to time permit
the Bank or any representative thereof to examine and make copies of the records
and visit the properties of the Borrower and to discuss the business and
operations of the Borrower with any employee or representative thereof. If the
Borrower now or at any time hereafter maintains any records (including, but not
limited to, computer generated records and computer programs for the generation
of such records) in the possession of a third party, the Borrower hereby agrees
to notify such third party to permit the Bank free access to such records at all
reasonable times and to provide the Bank with copies of any records it may
request, all at the Borrower's expense, the amount of which shall be payable
immediately upon demand.
4.05 REPORTING REQUIREMENTS. Deliver or cause to be delivered to the Bank
in form and detail satisfactory to the Bank:
A. ANNUAL STATEMENTS. Not later than 120 days after the end of each of
the Borrower's fiscal years, a copy of the annual audited financial report, the
annual consolidating financial report and Securities Exchange Commission Form
10-K of the Borrower for such year, which report shall be prepared by a firm of
certified public accountants acceptable to Bank and not later than 60 days after
the end of each of the Borrower's fiscal years, a copy of the Borrower's
financial projections for the succeeding year.
B. INTERIM STATEMENTS. Not later than 45 days after the end of each
fiscal quarter, the Borrower's financial statement and Securities Exchange
Commission Form 10-Q as of the end of such quarter.
C. SEMI-ANNUAL REPORTS. Not later than 60 days after the end of each
January and July of each year, a copy of the Borrower's status report on its
fixed price contracts in excess of $500,000.00 and on its existing and new
reserves established by Borrower in connection with Borrower's business
operations and/or financial performance, such listing and summary to contain
such additional information as may be required by Bank from time to time.
D. COMPLIANCE CERTIFICATE. Concurrently with the delivery of the
financial reports required hereunder, a compliance certificate stating that the
Borrower is in compliance with all covenants contained herein and that no Event
of Default or potential Event of Default has occurred or is continuing, and
certified to by the chief financial officer of the Borrower.
E. OTHER INFORMATION. Promptly upon the Bank's request, such other
information pertaining to the Borrower or any Guarantor as the Bank may
reasonably request, including but not limited to all public documents and
notices filed with any federal or state agency.
4.06 REDEMPTION OR REPURCHASE OF STOCK. Not redeem or repurchase any class
of the Borrower's stock now or hereafter outstanding; except up to $25,000,000
of repurchased stock in the aggregate during calendar year 1998 and 1999.
4.07 PAYMENT OF DIVIDENDS: Not declare or pay any dividends on any class of
stock now or hereafter outstanding except dividends payable solely in the
Borrower's capital stock.
4.08 ADDITIONAL INDEBTEDNESS. Without prior Bank approval, not, after the
date hereof, create, incur or assume, directly or indirectly, any liability or
indebtedness other than (i) indebtedness owed or to be owed to the Bank or (ii)
-7-
8
indebtedness to trade creditors incurred in the ordinary course of the
Borrower's business or (iii) indebtedness incurred in the ordinary course of
business as purchase money financing for the purchase of equipment or
subordinated debt of up to $3,000,000 in the aggregate.
4.09 LOANS. Not make any loans or advances or extend credit to any third
person, including, but not limited to, directors, officers, shareholders,
partners, employees, affiliated entities or subsidiaries of the Borrower other
than the guarantors hereunder, except for credit extended in the ordinary
course of the Borrower's business as presently conducted and except loans of up
to $250,000 per transaction and $1,000,000 in the aggregate.
4.10 LIENS AND ENCUMBRANCES. Not create, assume or permit to exist any
security interest, encumbrance, mortgage, deed of trust or other lien
including, but not limited to, a lien of attachment, judgment or execution)
affecting any of the Borrower's properties, or execute or allow to be filed any
financing statement or continuation thereof affecting any such properties,
except for Permitted Liens and as otherwise provided in this Agreement and
except for purchase money security interests securing indebtedness of up to
$3,000,000.
4.11 TRANSFER ASSETS. Not sell, contract for sale, transfer, convey,
assign, lease or sublet any of its assets except for the sale of the Borrower's
real property and except in the ordinary course of business as presently
conducted by the Borrower, and then, only for full, fair and reasonable
consideration.
4.12 CHANGE IN THE NATURE OF BUSINESS. Not make any material change in its
financial structure or in the nature of its business as existing or conducted
as of the date of this Agreement.
4.13 FINANCIAL CONDITION. Maintain at all times:
A. NET WORTH. A minimum effective tangible net worth of not less
than $73,000,000.00 as such amount may be reduced by (i) stock repurchases as
provided for in Section 4.06 hereof and (ii) non-cash charges in connection
with acquisitions.
B. DEBT TO NET WORTH RATIO. A debt to effective tangible net worth
ratio of not more than 1.5 to 1.
C. PROFITABILITY. A minimum net profit after tax of at least $1.00
at the end of each fiscal quarter.
D. CURRENT RATIO. A ratio of current assets to current liabilities
of not less than 1.5 to 1.
For purposes of the foregoing, the term "effective tangible net worth"
shall mean the Borrower's stated net worth less all its intangible assets
(i.e., goodwill, trademarks, patents, copyrights, organization expense and
similar intangible items) but including leaseholds and leasehold improvements
and plus indebtedness subordinated (by its terms or by written agreement) to
indebtedness owed by the Borrower to the Bank and plus non-majority-owned equity
investments and the term "debt" shall mean all of the Borrower's direct or
contingent liabilities excluding indebtedness subordinated (by its terms or by
written agreement) to indebtedness owed by the Borrower to the Bank.
4.14 NOTICES. Give prompt written notice to the Bank of any and all (i)
Events of Default, (ii) litigation, arbitration or administrative proceedings
to which the Borrower is a party and in which the claim or liability exceeds
$1,000,000.00.
4.15 CAPITAL EXPENSE. Without prior Bank approval, not make any fixed
capital expenditure or any commitment therefor, including, but not limited to,
incurring liability for leases which would be, in accordance with generally
accepted accounting principles, reported as capital leases, or purchase any
real or personal property in an aggregate amount exceeding $10,000,000 in any
one fiscal year.
4.16 ENVIRONMENTAL COMPLIANCE. The Borrower shall:
A. Implement and comply in all material respects with all
applicable federal, state and local laws, ordinances, statutes and regulations
with respect to hazardous or toxic wastes, substances or related materials,
industrial hygiene or to environmental conditions.
B. Give prompt written notice of any discovery of or suit,
proceeding, claim, dispute, threat, inquiry or filing respecting hazardous or
toxic wastes, substances or related materials.
-8-
9
C. At all times indemnify and old harmless Bank from and against
any and all liability arising out of the use, generation, manufacture, storage,
handling, treatment, disposal or presence of hazardous or toxic wastes,
substances or related materials.
SECTION V
EVENTS OF DEFAULT
Any one or more of the following described events shall constitute an
event of default (an "Event of Default") under this Agreement.
5.01 NON-PAYMENT. The Borrower shall fail to pay any payment of principal
or interest or any other sum referred to in this Agreement within 5 days of
when due.
5.02 PERFORMANCE UNDER THIS AGREEMENT. The Borrower shall fail in any
material respect to perform or observe any term, covenant or agreement contained
in this Agreement or in any document, instrument or agreement relating to this
Agreement and any such failure shall continue unremedied for more than 30 days
after the occurrence thereof.
5.03 OTHER AGREEMENTS. If there is a default under any agreement to which
Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness.
5.04 REPRESENTATIONS AND WARRANTIES; FINANCIAL STATEMENTS. Any
representation or warranty made by the Borrower under or in connection with
this Agreement or any financial statement given by the Borrower or any
Guarantor shall prove to have been incorrect in any material respect when made
or given or when deemed to have been made or given.
5.05 INSOLVENCY. The Borrower or any Guarantor shall: (i) become insolvent
or be unable to pay its debts as they mature; (ii) make an assignment for the
benefit of creditors or to an agent authorized to liquidate any substantial
amount of its properties or assets; (iii) file a voluntary petition in
bankruptcy or seeking reorganization or to effect a plan or other arrangement
with creditors; (iv) file an answer admitting the material allegations of an
involuntary petition relating to bankruptcy or reorganization or join in any
such petition; (v) become or be adjudicated a bankrupt; (vi) apply for or
consent to the appointment of, or consent that an order be made, appointing any
receiver, custodian or trustee for itself or any of its properties, assets or
businesses; or (vii) any receiver, custodian or trustee shall have been
appointed for all or a substantial part of its properties, assets or businesses
and shall not be discharged within 30 days after the date of such appointment.
5.06. EXECUTION. Any writ of execution or attachment or any judgment lien
shall be issued against any property of the Borrower and shall not be
discharged or bonded against or released within 30 days after the issuance or
attachment of such writ or lien.
5.07 REVOCATION OR LIMITATION OF GUARANTY. Any Guaranty shall be revoked
or limited or its enforceability or validity shall be contested by any
Guarantor, by operation of law, legal proceeding or otherwise or any Guarantor
who is a natural person shall die.
5.08 SUSPENSION. The Borrower shall voluntarily suspend the transaction of
business or allow to be suspended, terminated, revoked or expired any permit,
license or approval of any governmental body necessary to conduct the
Borrower's business as now conducted.
5.09 CHANGE IN OWNERSHIP. There shall occur a sale, transfer, disposition
or encumbrance (whether voluntary or involuntary), or an agreement shall be
entered into to do so, with respect to more than 20% of the issued and
outstanding capital stock of the Borrower.
-9-
10
SECTION VI
REMEDIES ON DEFAULT
Upon the occurrence of any Event of Default, the Bank may, at its sole
election, without demand and upon only such notice as may be required by law;
6.01 ACCELERATION. Declare any or all of the Borrower's indebtedness
owing to the Bank, whether under this Agreement or under any other document,
instrument or agreement, immediately due and payable, whether or not
otherwise due and payable.
6.02 CEASE EXTENDING CREDIT. Cease making Advances or otherwise extending
credit to or for the account of the Borrower under this Agreement or under any
other agreement now existing or hereafter entered into between the Borrower and
the Bank.
6.03 TERMINATION. Terminate this Agreement as to any future obligation of
the Bank without affecting the Borrower's obligations to the Bank or the Bank's
rights and remedies under this Agreement or under any other document,
instrument or agreement.
6.04 LETTERS OF CREDIT. Require the Borrower to pay immediately to the
Bank, for application against drawings under any outstanding Letters of Credit,
the outstanding principal amount of any such Letters of Credit which have not
expired. Any portion of the amount so paid to the Bank which is not applied to
satisfy draws under any such Letters of Credit or any other obligations of the
Borrower to the Bank shall be repaid to the Borrower without interest.
6.05 FOREIGN EXCHANGE CONTRACTS. Require the Borrower to pay immediately
to the Bank, for application against the future settlement price under any
outstanding Foreign Exchange Contracts, the outstanding face amount of any such
Foreign Exchange Contracts which have not matured or settled and Borrower
hereby grants to Bank a security interest in and to such funds. Any portion of
the amount so paid to the Bank which is not subsequently applied to satisfy
repayment on any such matured Foreign Exchange Contracts or any other
obligations of the Borrower to the Bank shall be repaid to the Borrower without
interest.
6.06 NON-EXCLUSIVITY OF REMEDIES. Exercise one or more of the Bank's
rights set forth herein or seek such other rights or pursue such other
remedies as may be provided by law, in equity or in any other agreement now
existing or hereafter entered into between the Borrower and the Bank, or
otherwise.
SECTION VII
MISCELLANEOUS PROVISIONS
7.01 AMOUNTS PAYABLE ON DEMAND. If the Borrower fails to pay on demand any
amount so payable under this Agreement, the Bank may, at its option and without
any obligation to do so and without waiving any default occasioned by the
Borrower's failure to pay such amount, create an Advance in an amount equal to
the amount so payable, which Advance shall thereafter bear interest as provided
under the Line of Credit.
7.02 DEFAULT INTEREST RATE: If an Event of Default, or an event which,
with notice or passage of time could become an event of Default, has occurred
or is continuing, the Borrower shall pay to the Bank interest on any
Indebtedness or amount payable under this Agreement at a rate which is 3% in
excess of the rate or rates then in effect under this Agreement.
7.03 DISPUTE RESOLUTION. It is understood and agreed that upon the
request of any party to this agreement any dispute, claim, or controversy of
any kind, whether in contract or in tort, statutory or common law, legal or
equitable now existing or hereinafter arising between the parties in any way
arising out of, pertaining to or in connection with: (1) this Agreement, or
any related agreements, documents, or instruments, (2) all past and present
loans, credits, accounts, deposit accounts (whether demand deposits or time
deposits), safe deposit boxes, safekeeping agreements, guarantees, letters of
credit, goods or services, or other transactions, contracts or agreements of
any kind, (3) any incidents, omissions, acts, practices, or occurrences
causing injury to either party whereby the other party or its agents, employees
or representatives may be liable, in whole or in part, or (4) any aspect of
the past or present relationships of the parties, shall be resolved through a
two-step dispute resolution process administered by Judicial Arbitration &
Mediation Services, Inc. ("J*A*M*S") as follows:
a) Step 1 -- Mediation: At the request of any party to the dispute,
claim or controversy of the matter shall be
-10-
11
referred to the nearest office of J*A*M*S for mediation, that is, an
informal, non-binding conference or conferences between the parties in
which a retired judge or justice for the J*A*M*S panel will seek to guide
the parties to a resolution of the case.
b) Step ll - Unsecured Contracts - Arbitration: Should any dispute,
claim or controversy remain unresolved at the conclusion of the Step l
Mediation Phase then all such remaining matters shall be resolved by final
and binding arbitration before a different judicial panelist, unless the
parties shall agree to have the mediator panelist act as arbitrator. The
hearing shall be conducted at a location determined by the arbitrator in
San Diego County and shall be administered by and in accordance with the
then existing Rules of Practice and Procedure of Judicial Arbitration &
Mediation Services, Inc., and judgement upon any award rendered by the
arbitrator may be entered by any State or Federal Court having jurisdiction
thereof. The arbitrator shall determine which is the prevailing party and
shall include in the award that party's reasonable attorneys fees and
costs. This subparagraph (b) shall apply only if, at the time of the
submission of the matter to J*A*M*S, the dispute(s) or issue(s) do(es) not
arise out of a transaction(s) which is/are secured by real property
collateral or, if so secured, all parties consent to such submission.
As soon as practicable after selection of the arbitrator, the
arbitrator or his/her designated representative shall determine a
reasonable estimate of anticipated fees and costs of the Arbitrator, and
render a statement to each party setting forth that party's pro-rata share
of said fees and costs. Thereafter each party shall, within 10 days of
receipt of said statement, deposit said sum with the Arbitrator. Failure of
any party to make such a deposit shall result in a forfeiture by the
non-depositing party of the right to prosecute or defend the claim which is
the subject of the arbitration, but shall not otherwise serve to xxxxx,
stay or suspend the arbitration proceedings.
c) Step ll - Contracts Secured By Real Estate - Trial by Court
Reference [Section 638 (1)] Code of Civil Procedure): If the dispute, claim
or controversy is not one required or agreed to be submitted to arbitration
as provided by subparagraph (b) and has not been resolved by Step l
mediation, them any remaining dispute, claim or controversy shall be
submitted for determination by a trial on Order of Reference conducted by a
retired judge or justice from the panel of J*A*M*S appointed pursuant to
the provisions of California Code of Civil Procedure Section 638(1) or any
amendment, addition or successor section thereto to hear the case and
report a statement of decision thereon. The parties intend this general
reference agreement to be specifically enforceable in accordance with said
section. If this parties are unable to agree upon a member of the J*A*M*S
panel to act as referee then one shall be appointed by the Presiding Judge
of the county wherein the hearing is to be held. The parties shall pay in
advance, to the referee, the estimated reasonable fees and costs of the
reference, as may be specified in advance by the referee. The parties shall
initially share equally, by paying their proportionate amount of the
estimated fees and costs of the reference. Failure of any party to make
such a fee deposit shall result in a forfeiture by the non-depositing party
of the right to prosecute or defend the cause(s) of action which is(are)
the subject of the reference, but shall not otherwise serve to xxxxx, stay
or suspend the reference proceeding.
d) Provisional Remedies. Self Help and Foreclosure: No provision of,
or the exercise of any right(s) under subparagraph (b), nor any other
provision of this Dispute Resolution Provision, shall limit the right of
any party to exercise self help remedies such as set off, to foreclose
against any real or personal property collateral, or obtain provisional or
ancillary remedies such as injunctive relief or the appointment of a
receiver from any court having jurisdiction before, during or after the
pendency of any arbitration. At Bank's option, foreclosure under a deed of
trust or mortgage may be accomplished either by exercise of power of sale
under the deed of trust or mortgage, or by judicial foreclosure. The
institution and maintenance of an action for provisional remedies pursuit
of provisional or ancillary remedies or exercise of self help remedies
shall not constitute a waiver of the right of any party, including the
plaintiff, to submit the controversy or claim to arbitration.
7.04 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. THE BORROWER AND THE BANK EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
-11-
12
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
7.05 ACCOUNTING AND OTHER TERMS. All references to financial statements,
assets, liabilities and similar accounting terms not specifically defined in
this Agreement shall mean such financial statements prepared and such terms
determined in accordance with generally accepted accounting principles
consistently applied. Except where otherwise specified in this Agreement, all
financial data submitted or to be submitted to the Bank pursuant to this
Agreement shall be prepared in accordance with generally accepted accounting
principles consistently applied. Terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the California Uniform
Commercial Code.
7.06 RELIANCE. Each warranty, representation, covenant and agreement
contained in this Agreement shall be conclusively presumed to have been relied
upon by the Bank regardless of any investigation made or information possessed
by the Bank and shall be cumulative and in addition to any other warranties,
representations, covenants or agreements which the Borrower shall now or
hereafter give, or cause to be given, to the Bank.
7.07 ATTORNEYS' FEES. Borrower shall pay to the Bank all costs and
expenses, including but not limited to reasonable attorneys fees, incurred by
Bank in connection with the administration, enforcement, including any
bankruptcy, appeal or the enforcement of any judgment or any refinancing or
restructuring of this Agreement or any document, instrument or agreement
executed with respect to, evidencing or securing the indebtedness hereunder.
7.08 NOTICES. All notices, payments, requests, information and demands
which either party hereto may desire, or may be required to give or make to the
other party shall be given or made to such party by hand delivery or through
deposit in the United States mail, postage prepaid, or by Western Union
telegram, addressed to the address set forth below such party's signature to
this Agreement or to such other address as may be specified from time to time
in writing by either party to the other.
7.09 WAIVER. Neither the failure nor delay by the Bank in exercising any
right hereunder or under any document, instrument or agreement mentioned herein
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right hereunder or under any document, instrument or agreement mentioned
herein preclude other or further exercise thereof or the exercise of any other
right; nor shall any waiver of any right or default hereunder or under any
other document, instrument or agreement mentioned herein constitute a waiver of
any other right or default or constitute a waiver of any other default of the
same or any other term or provision.
7.10 CONFLICTING PROVISIONS. To the extent that any of the terms or
provisions contained in this Agreement are inconsistent with those contained
in any other document, instrument or agreement executed pursuant hereto, the
terms and provisions contained herein shall control. Otherwise, such provisions
shall be considered cumulative.
7.11 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Bank and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the Bank's prior
written consent. The Bank may sell, assign or grant participations in all or any
portion of its rights and benefits hereunder. The Borrower agrees that, in
connection with any such sale, grant or assignment, the Bank may deliver to the
prospective buyer, participant or assignee financial statements and other
relevant information relating to the Borrower.
7.12 JURISDICTION. This Agreement, any notes issued hereunder, and any
documents, instruments or agreements mentioned or deferred to herein shall be
governed by and construed according to the laws of the State of California, to
the jurisdiction of whose courts the parties hereby submit.
7.13 HEADINGS. The headings set forth herein are solely for the purpose
of identification and have no legal significance.
7.14 ENTIRE AGREEMENT. This Agreement and the Loan Documents shall
constitute the entire and complete understanding of the parties with respect to
the transactions contemplated hereunder. All previous conversations, memoranda
and writings between the parties or pertaining to the transactions contemplated
hereunder that are not incorporate or referenced in this Agreement or the Loan
Documents are superseded hereby.
-12-
13
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first hereinabove written.
BANK: BORROWER:
SANWA BANK CALIFORNIA XXXXXXX TECHNOLOGIES, INC.
By: By: /s/ XXXX XXXXXXXX
------------------------------ -----------------------------------
VP Finance & Admin./CFO
--------------------------------- --------------------------------------
(Name/Title) (Name/Title)
Address: By:
------------------------- ---------------------------------------
--------------------------------- ---------------------------------------
(Name/Title)
---------------------------------
Address:
-------------------------------
---------------------------------------
---------------------------------------
-13-
14
FIRST AMENDMENT TO LINE OF CREDIT AGREEMENT
This First Amendment to Line of Credit Agreement (the "Amendment") is made
and entered into this 29th day of May, 1998, by and between SANWA BANK
CALIFORNIA (the "Bank") and XXXXXXX TECHNOLOGIES, INC. (the "Borrower") with
respect to the following:
This Amendment shall be deemed to be a part of and subject to that certain
Line of Credit Agreement dated as of March 4, 1998, as it may be amended from
time to time, and any and all addenda and riders thereto (collectively the
"Agreement"). Unless otherwise defined herein, all terms used in this Amendment
shall have the same meanings as in the Agreement. To the extent that any of the
terms or provisions of this Amendment conflict with those contained in the
Agreement, the terms and provisions contained herein shall control.
WHEREAS, the Borrower and the Bank mutually desire to extend and/or modify
the Agreement.
NOW THEREFORE, for value received and hereby acknowledged, the Borrower and
the Bank agree as follows:
1. MODIFICATION OF PROFITABILITY. Section 4.13C. of the Agreement is
deleted in its entirety and the following is substituted in lieu thereof:
C. PROFITABILITY. A minimum net profit after tax of at least $1.00 at
the end of each fiscal quarter, to be determined without regard to non-cash
charges as the result of corporate acquisitions.
2. REPRESENTATIONS AND WARRANTIES. The Borrower hereby reaffirms the
representations and warranties contained in the Agreement and represents that no
event, which with notice or lapse of time, could become an Event of Default, has
occurred or is continuing.
3. CONFIRMATION OF OTHER TERMS AND CONDITIONS OF THE AGREEMENT. Except
as specifically provided in this Amendment all other terms, conditions and
covenants of the Agreement [and the Deed of Trust] unaffected by this Amendment
shall remain unchanged and shall continue in full force and effect and the
Borrower hereby covenants and agrees to perform and observe all terms, covenants
and agreements provided for in this Agreement, as hereby amended.
4. GOVERNING LAW. This Amendment shall be governed and construed in
accordance with the laws of the State of California to which jurisdiction the
parties hereto hereby consent and submit.
5. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto
as of the date first hereinabove written.
BANK: BORROWER:
SANWA BANK CALIFORNIA XXXXXXX TECHNOLOGIES, INC.
By: /s/ XXXX XXXXX /s/ XXXXXX X. STUMPS
------------------ ----------------------------------
Vice President Vice President, Financial Planning
---------------------- ----------------------------------
Name/Title Name/Title
By: /s/ XXXX XXXXXXXX
------------------ ----------------------------------
CFO
---------------------- ----------------------------------
Name/Title Name/Title
-1-
15
May 22, 1998
Mr. Xxxx Xxxxxxxx
Chief Financial Officer
XXXXXXX TECHNOLOGIES, INC.
0000 Xxx Xxxx Xxxxx
Xxx Xxxxx, XX 00000
RE: Loan Agreement Amendment dated May 29, 1998.
Dear Xx. Xxxxxxxx:
In reviewing your financial statements each quarter, additional information
will be required in order to monitor compliance with the proposed change to
section 4.13C of the loan agreement as it relates to maintaining "A minimum net
profit after tax of at least $1.00 at the end of each fiscal quarter, to be
determined without regard to non-cash charges as the result of corporate
acquisitions."
Therefore, the Bank would like to request (as stipulated under section 4.05E.
Other Information) that you provide a quarterly report, not later than 45 days
after the end of each fiscal quarter, detailing 1) all non-recurring charges
for the quarter, including but not limited to, the dollar amount of the charge
and the reason for the charge and 2) non-cash charges for the quarter as the
result of acquisition(s), including but not limited to, the company name(s) of
the acquisition(s), the dollar amount of the charge(s) and the reason for the
charge(s).
This information will be extremely helpful to us and insure strong
communication as it relates to the financial performance of the company.
If you agree to the above, please sign below as evidence of your acknowledgment
and acceptance.
Sincerely,
/s/ Xxxx Xxxxx
-----------------
Xxxx Xxxxx
Vice President
Acknowledged and Accepted this 29th of May, 1998.
/s/ Xxxx Xxxxxxxx
-----------------------
Xxxx Xxxxxxxx
Chief Financial Officer