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Exhibit 10.23
THIRD LOAN MODIFICATION AGREEMENT
This Third Loan Modification Agreement ("this Agreement") is made as of
February 12, 1999 between Xionics Document Technologies, Inc., a Delaware
corporation (the "Borrower") and Fleet National Bank (the "Bank") (being the
successor by merger to Fleet Bank of Massachusetts, N.A.). For good and valuable
consideration, receipt and sufficiency of which are hereby acknowledged, the
Borrower and the Bank act and agree as follows:
1. Reference is made to: (i) that certain letter agreement dated
September 27, 1995 among the Borrower, Xionics, Inc. ("Xionics") and Fleet Bank
of Massachusetts, N.A., as amended by letter dated May 9, 1996, by Loan
Modification Agreement dated as of August 21, 1996 and by Second Loan
Modification Agreement dated as of December 31, 1997 (as so amended, the "Letter
Agreement"), the Bank having succeeded to the rights of Fleet Bank of
Massachusetts, N.A. thereunder and Xionics having been merged with and into the
Borrower; (ii) that certain $4,000,000 face principal amount promissory note
dated December 31, 1997 (the "1997 Revolving Note") made by the Borrower and
payable to the order of the Bank; (iii) that certain $2,000,000 face principal
amount promissory note dated December 31, 1997 (the "1997 Term Note") made by
the Borrower and payable to the order of the Bank; (iv) that certain Inventory,
Accounts Receivable and Intangibles Security Agreement dated September 27, 1995,
as amended (as so amended, the "IAR Security Agreement") given by the Borrower
to Fleet Bank of Massachusetts, N.A., the Bank having succeeded to the rights of
Fleet Bank of Massachusetts, N.A. thereunder; (v) that certain Supplementary
Security Agreement - Security Interest in Goods and Chattels dated September 27,
1995, as amended (as so amended, the "Supplementary Security Agreement") given
by the Borrower to Fleet Bank of Massachusetts, N.A., the Bank having succeeded
to the rights of Fleet Bank of Massachusetts, N.A. thereunder; (vi) that certain
Notice of Security Interest in Trademarks dated September 27, 1995, as amended
(as so amended, the "Trademark Notice") given by the Borrower to Fleet Bank of
Massachusetts, N.A., the Bank having succeeded to the rights of Fleet Bank of
Massachusetts, N.A. thereunder; (vii) that certain Collateral Assignment of
License dated September 27, 1995, as amended (as so amended, the "Xionics
License Assignment") relating to the "Xionics" name and ▇▇▇▇ given by the
Borrower to Fleet Bank of Massachusetts, N.A., the Bank having succeeded to the
rights of Fleet Bank of Massachusetts, N.A. thereunder; (viii) that certain
Agreement and Consent to Collateral Assignment of License dated September 27,
1995, as amended (as so amended, the "Xionics Consent") relating to the
"Xionics" name and ▇▇▇▇ given by Xionics Limited, an English corporation, to
Fleet Bank of Massachusetts, N.A., the Bank having succeeded to the rights of
Fleet Bank of Massachusetts, N.A. thereunder; (ix) that certain Notice of
Collateral Assignment of License dated September 27, 1995, as amended (as so
amended, the "Xionics License Notice") relating to the "Xionics" name and ▇▇▇▇
given by the Borrower to Fleet Bank of Massachusetts, N.A., the Bank having
succeeded to the rights of Fleet Bank of Massachusetts, N.A. thereunder; (x)
that certain Collateral Assignment of License dated September 27, 1995, as
amended (as so amended, the "Phoenix License Assignment") relating to the
"PhoenixPage" name and ▇▇▇▇ given by the Borrower to Fleet Bank of
Massachusetts, N.A., the Bank having succeeded to the rights of Fleet Bank of
Massachusetts, N.A. thereunder; (xi) that certain Agreement and Consent to
Collateral Assignment of License dated September 21, 1995, as
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amended (as so amended, the "Phoenix Agreement") between Phoenix Technologies
Ltd.("Phoenix") and Fleet Bank of Massachusetts, N.A., the Bank having succeeded
to the rights of Fleet Bank of Massachusetts, N.A. thereunder; (xii) that
certain Notice of Collateral Assignment of License dated September 27, 1995, as
amended (as so amended, the "Phoenix License Notice") relating to the
"PhoenixPage" name and ▇▇▇▇ given by the Borrower to Fleet Bank of
Massachusetts, N.A., the Bank having succeeded to the rights of Fleet Bank of
Massachusetts, N.A. thereunder; (xiii) that certain Notice of Security Interest
in Patents dated September 27, 1995, as amended (as so amended, the "Patent
Notice") given by the Borrower to Fleet Bank of Massachusetts, N.A., the Bank
having succeeded to the rights of Fleet Bank of Massachusetts, N.A. thereunder;
(xiv) that certain $5,000,000 face principal amount promissory note of even date
herewith (the "1999 Revolving Note") made by the Borrower and payable to the
order of the Bank; and (xv) that certain $1,000,000 face principal amount term
note of even date herewith (the "1999 Term Note") made by the Borrower and
payable to the order of the Bank. The Letter Agreement, the IAR Security
Agreement, the Supplementary Security Agreement, the Trademark Notice, the
Xionics License Assignment, the Xionics Consent, the Xionics License Notice, the
Phoenix License Assignment, the Phoenix Agreement, the Phoenix License Notice,
the Patent Notice, the 1999 Revolving Note and the 1999 Term Note are
hereinafter collectively referred to as the "Financing Documents". The aforesaid
Loan Modification Agreement dated as of August 21, 1996 is hereinafter referred
to as the "First Modification"; and the aforesaid Second Loan Modification
Agreement dated as of December 31, 1997 is hereinafter referred to as the
"Second Modification".
2. The Letter Agreement is hereby amended, effective as of the date
hereof:
a. By deleting in its entirety clause (i) of Section 1.1 of the
Letter Agreement (said clause having been amended by the Second Modification)
and by substituting in its stead the following:
"(i) that certain $5,000,000 face principal amount promissory
note (the `Revolving Note') dated February 12, 1999 made by the
Borrower and payable to the order of the Bank,"
As a result, all references in the Letter Agreement to a "Revolving Note" will
be deemed to refer to the 1999 Revolving Note.
b. By deleting in its entirety clause (ii) of Section 1.1 of the
Letter Agreement (said clause having been amended by the Second Modification)
and by substituting in its stead the following:
"(ii) that certain $1,000,000 face principal amount promissory
note (the `Term Note') dated February 12,1999 made by the
Borrower and payable to the order of the Bank,"
As a result, all references in the Letter Agreement to a "Term Note" will be
deemed to refer to the 1999 Term Note.
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c. By adding to Section 1.2 of the Letter Agreement, at the end of
such Section, the following:
"Overdue principal of any Revolving Loan and, to the extent
permitted by law, overdue interest shall bear interest at a
fluctuating rate per annum which at all times shall be equal to
the sum of (i) four (4%) percent per annum PLUS (ii) the per
annum rate otherwise payable under the Revolving Note (but in no
event in excess of the maximum rate from time to time permitted
by then applicable law), compounded monthly and payable on
demand. The Borrower hereby irrevocably authorizes the Bank to
make or cause to be made, on a schedule attached to the
Revolving Note or on the books of the Bank, at or following the
time of making each Revolving Loan and of receiving any payment
of principal, an appropriate notation reflecting such
transaction and the then aggregate unpaid principal balance of
the Revolving Loans. The amount so noted shall constitute
presumptive evidence as to the amount owed by the Borrower with
respect to principal of the Revolving Loans. Failure of the Bank
to make any such notation shall not, however, affect any
obligation of the Borrower or any right of the Bank hereunder or
under the Revolving Note."
d. By deleting in their entireties Sections 1.4 and 1.5 of the
Letter Agreement and by substituting in their stead the following:
"1.4. TERM LOANS; TERM NOTE. In addition to the foregoing, the
Bank may make one or more loans (the `Term Loans') to the
Borrower in an aggregate principal amount up to $100,000. A
Term Loan shall be made, no more than once per calendar quarter
(except that more than one Term Loan may be made in any calendar
quarter provided that any additional Term Loan in any one
calendar quarter is in an amount of at least $100,000), in
order to finance costs of Qualifying Equipment acquired by the
Borrower within the 60 days preceding the request for such Term
Loan (except that Term Loans made prior to March 10, 1999 may be
used by the Borrower to reimburse the acquisition costs of
Qualifying Equipment acquired at any time after October 1,
1998), each such Term Loan to be in such amount as may be
requested by the Borrower; provided that (i) no Term Loan will
be made after the earlier of (A) March 31, 2000 or (B) the
earlier termination of the within-described term loan facility
pursuant to Section 5.2 or Section 6.7; (ii) the aggregate
original principal amounts of all Term Loans will not exceed
$1,000,000; and (iii) no Term Loan will be in an amount more
than 80% of the invoiced actual costs of the items of Qualifying
Equipment with respect to which such Term Loan is made
(excluding taxes, shipping, installation charges, training fees
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and other `soft costs' and excluding software except as
expressly permitted by the next following sentence). The
Borrower may include within `Qualifying Equipment' copies of
software (not including `shrink-wrapped' software) purchased by
the Borrower for use in connection with the equipment otherwise
included in `Qualifying Equipment'; provided that the total
amount of the Term Loans advanced for such software will never
exceed 30% of the total principal amount of the Term Loans
outstanding. Prior to the making of each Term Loan, and as a
precondition thereto, the Borrower will provide the Bank with:
(i) invoices supporting the costs of the relevant Qualifying
Equipment; (ii) such evidence as the Bank may reasonably require
showing that the Qualifying Equipment has been delivered to and
installed at the Borrower's Burlington, MA premises, has become
fully operational, has been paid for by the Borrower and is
owned by the Borrower free of all liens and interests of any
other Person (other than the security interest of the Bank
pursuant to the Security Agreement); (iii) Uniform Commercial
Code financing statements, if needed, reflecting the relevant
Qualifying Equipment with respect to which such Term Loan is
being made; and (iv) evidence satisfactory to the Bank that the
Qualifying Equipment is fully insured against casualty loss,
with insurance naming the Bank as secured party and first loss
payee. The Term Loans will be evidenced by the Term Note.
Interest on the Term Loans shall be payable at the times and at
the rate provided for in the Term Note. Overdue principal of any
Term Loan and, to the extent permitted by law, overdue interest
shall bear interest at a fluctuating rate per annum which at all
times shall be equal to the sum of (i) four (4%) percent per
annum PLUS (ii) the per annum rate otherwise payable under the
Term Note (but in no event in excess of the maximum rate from
time to time permitted by then applicable law), compounded
monthly and payable on demand. The Borrower hereby irrevocably
authorizes the Bank to make or cause to be made, on a schedule
attached to the Term Note or on the books of the Bank, at or
following the time of making each Term Loan and of receiving any
payment of principal, an appropriate notation reflecting such
transaction and the then aggregate unpaid principal balance of
the Term Loans. The amount so noted shall constitute presumptive
evidence as to the amount owed by the Borrower with respect to
principal of the Term Loans. Failure of the Bank to make any
such notation shall not, however, affect any obligation of the
Borrower or any right of the Bank hereunder or under the Term
Note.
1.5. PRINCIPAL REPAYMENT OF TERM LOANS. The Borrower shall repay
principal of the Term Loans in 35 equal consecutive monthly
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installments (each in an amount equal to 1/36th of the aggregate
principal amount of the Term Loans outstanding at the close of
business on March 31, 2000), such installments to commence April
1, 2000 and to continue thereafter on the first day of each
month through and including February 1, 2003, PLUS a 36th and
final payment due and payable on March 1, 2003 in an amount
equal to all principal of the Term Loans then remaining
outstanding and all interest accrued but unpaid thereon. The
Borrower may prepay, at any time or from time to time, without
premium or penalty, the whole or any portion of any Term Loan;
provided that each such principal prepayment shall be
accompanied by payment of all interest on the sum so prepaid
accrued but unpaid to the date of payment. Any partial
prepayment of principal of the Term Loans will be applied to
installments of principal of the Term Loans thereafter coming
due in inverse order of normal maturity. Amounts repaid or
prepaid with respect to the Term Loans are not available for
reborrowing."
e. By deleting from the first sentence of Section 1.7 of the Letter
Agreement the amount "$4,000,000" (such amount having been inserted by the First
Modification) and by substituting in its stead the following:
"$5,000,000"
f. By adding to Section 2.1 of the Letter Agreement, at the end of
such Section, the following:
"(n) The Borrower's IPS/2000 products generally do not have date
and time dependent functions. To the extent that any ancillary
functions contain date operators, 4-digit representations of
year dates are used. It is therefore believed that the
Borrower's ISP/2000 software will not encounter problems
executing any of its functions at least until the year 9999. The
Borrower has also reviewed certain critical software systems
which it uses in its business operations (i.e., phone systems,
etc.) for `Year 2000' compliance, and, based upon the
information received by the Borrower to date, the Borrower
believes that such software systems will continue to function in
the manner intended, without material interruption of service or
other difficulty resulting from the `Year 2000' problem. The
Borrower is also in the process of contacting others of its
critical customers, suppliers, financial institutions and
development partners to determine if other operations and the
products and services that they provide to the Borrower are
`Year 2000' compliant. However, it should be noted that there
could be undetected, unknown and/or unforeseen problems
(including failure
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of systems, equipment, software, firmware and/or devices to
operate properly with regard to dates in the year 2000 and
after) in the Borrower's own IPS/2000 products and the software
which the Borrower utilizes in its business operations, as well
as that of its critical customers, suppliers, financial
institutions and development partners. The Borrower will, at the
request of the Bank, provide such reports and other information
in its possession as the Bank may reasonably request in order to
evidence such Year 2000 compliance."
g. By deleting from clause (i) of Section 3.6 of the Letter
Agreement the words "120 days" and by substituting in their stead the following:
"90 days"
h. By adding to clause (v) of Section 3.6 of the Letter Agreement,
at the end of such clause, the following:
"The Borrower will deliver to the Bank on an annual basis a
`management letter' prepared by the Borrower's accountants (in
whatever form same appears, including as a section of another
report), with the management letter for the fiscal year ended
June 30, 1998 to be delivered prior to February 16, 1999."
i. By deleting their entireties Sections 3.7, 3.8, 3.9 and 3.10 of
the Letter Agreement and by substituting in their stead the following:
"3.7. DEBT TO WORTH. The Borrower will maintain as at the end of
each fiscal quarter of the Borrower (commencing with its results
as at December 31, 1998) on a consolidated basis a Leverage
Ratio of not more than 1.0 to 1. As used herein, `Leverage
Ratio' means, as at any date when same is to be determined, the
ratio of(x) the outstanding consolidated Senior Debt of the
Borrower and its Subsidiaries to (y) the Borrower's consolidated
Capital Base at such date.
3.8. CAPITAL BASE. The Borrower will maintain as at the end of
each fiscal quarter of the Borrower (commencing with its results
as at December 31, 1998) a consolidated Capital Base which shall
not be less than the then-effective Capital Base Requirement. As
used in this Section 3.8, the `Capital Base Requirement' will be
deemed to have been $17,000,000 as at September 30, 1998; and as
at the last day of each fiscal quarter thereafter (beginning
with December 31, 1998) the Capital Base Requirement will be
deemed to become an amount equal to the sum of: (i) that Capital
Base Requirement which had
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been in effect on the last day of the immediately preceding
fiscal quarter, PLUS (ii) 75% of the net proceeds of any equity
securities sold by the Borrower during the fiscal quarter then
ended and 75% of the net proceeds of any Subordinated Debt
issued by the Borrower and/or any of its Subsidiaries during
said fiscal quarter then ended (nothing contained herein being
deemed to approve the issuance of any such Subordinated Debt),
PLUS (iii) 75% of the consolidated quarterly Net Income of the
Borrower and Subsidiaries for said fiscal quarter then ended
(but without giving effect to any such quarterly Net Income
which is less than zero as to any fiscal quarter).
3.9. QUICK RATIO. The Borrower will maintain as at the end of
each fiscal quarter (commencing with its results as at December
31, 1998) a Quick Ratio of not less than 1.75 to 1. As used in
this Section 3.9, `Quick Ratio' means, as at any date when same
is to be determined the ratio of (x) the Borrower's Net Quick
Assets to (y) Current Liabilities of the Borrower and/or its
Subsidiaries then outstanding.
3.10. PROFITABILITY. The Borrower will achieve consolidated
quarterly Net Income of at least $250,000 for its fiscal quarter
ending March 31, 1999 and for each fiscal quarter thereafter.
Without limitation of the foregoing, the Borrower will achieve
consolidated annual Net Income of at least $1,000,000 for its
fiscal year ending June 30, 1999 and will achieve consolidated
annual Net Income of at least $2,000,000 for its fiscal year
ending June 30, 2000 and for each fiscal year thereafter."
j. By deleting from clause (i) of Section 5.1 of the Letter
Agreement the amount "$150,000" and by substituting in its stead the following:
"$300,000"
k. By deleting the last sentence of Section 5.3 of the Letter
Agreement and by substituting in its stead the following:
"The Borrower hereby grants to the Bank a lien, security
interest and right of setoff as security for all liabilities and
obligations to the Bank, whether now existing or hereafter
arising, upon and against all deposits, credits, collateral and
property, now or hereafter in the possession, custody,
safekeeping or control of the Bank or any entity under the
control of Fleet Financial Group, Inc. or in transit to any of
them. At any time after the occurrence and during the
continuance of an Event of Default, without further demand or
notice, the Bank may set off the same or any part thereof and
apply
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the same to any liability or obligation of the Borrower, even
though unmatured and regardless of the adequacy of any other
collateral securing any of the Loans or other Obligations. ANY
AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES ANY
LOAN OR OTHER OBLIGATION PRIOR TO EXERCISING ITS RIGHT OF SETOFF
WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE
BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED."
1. By deleting the period at the end of the first sentence of
Section 6.3 of the Letter Agreement (as amended by the First Modification) and
by substituting in its stead the following:
"; and further provided that, notwithstanding the foregoing
provisions of this sentence, commencing with the quarterly
facility fee payment due April 1, 1999 the quarterly facility
fee shall be $4,687.50 per calendar quarter (appropriately
prorated for any partial calendar quarter) and the Borrower will
also pay on February 12, 1999 the sum of $500, representing the
prorated increased facility fee (resulting from the increase in
maximum amount of revolving credit available) for the period
February 12, 1999 - March 31,1999."
m. By changing the notice of address of the Borrower, pursuant to
Section 6.6 of the Letter Agreement, to the following:
"Xionics Document Technologies, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President,
Finance and Administration"
n. By changing the Bank's notice address, pursuant to Section 6.6
of the Letter Agreement, to:
"Fleet National Bank
High Technology Division
One Federal Street
Mail Code: MA ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Vice President"
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o. By inserting into Section 6.7 of the Letter Agreement,
immediately after the fourth sentence of such Section, the following:
"Without limitation of the foregoing generality,
(i) The Bank may at any time pledge all or any portion of its
rights under the Loan Documents (including any portion of any
Note) to any of the 12 Federal Reserve Banks organized under
Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No
such pledge or the enforcement thereof by any party shall
release the Bank from its obligations under any of the Loan
Documents.
(ii) The Bank shall have the unrestricted right at any time
and from time to time, and without the consent of or notice to
the Borrower, to grant to one or more banks or other financial
institutions (each, a `Participant') participating interests in
the Bank's obligation to lend hereunder and/or any or all of the
Loans held by the Bank hereunder. In the event of any such grant
by the Bank of a participating interest to a Participant,
whether or not upon notice to the Borrower, notwithstanding any
such grant of a participation to a Participant the Bank shall
remain fully responsible for the performance of its obligations
hereunder and the Borrower shall continue to deal solely and
directly with the Bank in connection with the Bank's rights and
obligations hereunder. The Bank may furnish any information
concerning the Borrower in its possession from time to time to
prospective assignees and Participants; provided that the Bank
shall require any such prospective assignee or Participant to
agree in writing to maintain the confidentiality of such
information to the same extent as the Bank would be required to
maintain such confidentiality."
p. By inserting into Article VI of the Letter Agreement, at the end
of such Article, the following:
"6.10. REPLACEMENT NOTES. Upon receipt of an affidavit of an
officer of the Bank as to the loss, theft, destruction or
mutilation of any Note or of any other Loan Document which is
not of public record and, in the case of any such mutilation,
upon surrender and cancellation of the relevant Note or other
Loan Document, the Borrower will issue, in lieu thereof, a
replacement Note or other Loan Document in the same principal
amount (as to any Note) and upon the same terms and conditions.
6.11. USURY. All agreements between the Borrower and the Bank
are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of any
Note or otherwise, shall the amount paid or agreed to be paid to
the Bank for the use or the forbearance of the Indebtedness
represented by any Note exceed the
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maximum permissible under applicable law. In this regard, it is
expressly agreed that it is the intent of the Borrower and the
Bank, in the execution, delivery and acceptance of the Notes, to
contract in strict compliance with the laws of The Commonwealth
of Massachusetts. If, under any circumstances whatsoever,
performance or fulfillment of any provision of any Note or any
of the other Loan Documents at the time such provision is to be
performed or fulfilled shall involve exceeding the limit of
validity prescribed by applicable law, then the obligation so to
be performed or fulfilled shall be reduced automatically to the
limit of such validity, and if under any circumstances
whatsoever the Bank should ever receive as interest an amount
which would exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of
the principal balance evidenced by the Notes and not to the
payment of interest. The provisions of this Section 6.11 shall
control every other provision of this Agreement and of each
Note.
6.12. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY MUTUALLY WAIVE THE
RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LETTER
AGREEMENT, ANY NOTE OR ANY OTHER LOAN DOCUMENTS OR OUT OF ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR THE BANK TO ENTER INTO THIS LETTER
AGREEMENT AND TO MAKE LOANS AS CONTEMPLATED HEREIN."
q. By deleting from the definition of "Expiration Date" appearing
in Section 7.1 of the Letter Agreement the date "December 1, 1998" (said date
having been inserted by the Second Modification) and by substituting in its
stead the following:
"December 1, 1999"
As a result, from and after the date hereof, for the purposes of the Letter
Agreement and the other Financing Documents, the "Expiration Date" will be
deemed to be December 1, 1999.
r. By deleting from the definition of "Maximum Revolving Amount"
appearing in Section 7.1 of the Letter Agreement the amount "$4,000,000" (said
amount having been inserted by the First Modification) and by substituting in
its stead the following:
"$5,000,000"
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s. By deleting from the definition of "Qualifying Equipment"
appearing in Section 7.1 of the Letter Agreement the date "September 1, 1997"
(such date having been inserted by the Second Modification) and by substituting
in its stead the following:
"October 1, 1998"
t. By inserting into the definition of "Qualifying Equipment"
appearing in Section 7.1 of the Letter Agreement, at the end of such definition,
the following:
"The Borrower may include within the `equipment' described in
clauses (i)-(iii) above software (not including `shrink-wrapped'
software) relating to the tangible items of equipment purchased
with proceeds of the Term Loans; provided that the total cost of
software financed by the Term Loans shall at no time exceed 30%
of the outstanding principal amount of the Term Loans."
3. Wherever in any Financing Document, or in any certificate or
opinion to be delivered in connection therewith, reference is made to a "letter
agreement" or to the "Letter Agreement", from and after the date hereof same
will be deemed to refer to the Letter Agreement, as hereby amended.
4. Simultaneously with the execution and delivery of this
Agreement, the Borrower is executing and delivering to the Bank the 1999
Revolving Note, in substitution for the 1997 Revolving Note. The 1999 Revolving
Note is a $5,000,000 promissory note of the Borrower, substantially in the form
attached hereto as Exhibit 1. Wherever in any of the Financing Documents, or in
any certificate or opinion to be delivered in connection therewith, reference is
made to a "Revolving Note", from and after the date hereof same will be deemed
to refer to the 1999 Revolving Note. Promptly after the Borrower has duly
executed and delivered the 1999 Revolving Note and has given the Bank all
opinions, certificates and other documentation reasonably requested by the Bank
in connection therewith and has paid all interest then accrued under the 1997
Revolving Note, the Bank will ▇▇▇▇ the 1997 Revolving Note "cancelled" and will
return same to the Borrower.
5. Simultaneously with the execution and delivery of this
Agreement, the Borrower is executing and delivering to the Bank the 1999 Term
Note, in substitution for the 1997 Term Note. The 1999 Term Note is a $1,000,000
promissory note of the Borrower, substantially in the form attached hereto as
Exhibit 2. Wherever in any of the Financing Documents, or in any certificate or
opinion to be delivered in connection therewith, reference is made to a "Term
Note", from and after the date hereof same will be deemed to refer to the 1999
Term Note. The Bank will, promptly after the execution and delivery of this
Agreement, cancel the 1997 Term Note and return same to the Borrower.
6. In consideration of the term loan facility to be represented by
the 1999 Term Note, the Borrower is paying to the Bank, at the date of this
Agreement, a facility fee of $5,000. This fee is non-refundable and is not to be
reduced by, nor applied against, any interest, fees,
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charges or other amounts now or hereafter paid or payable by the Borrower under
or in connection with the Letter Agreement and/or any promissory notes now or
hereafter issued under the Letter Agreement.
7. By its execution below, Xionics International Limited represents
to the Bank that it has become the assignee of the "Xionics" name and ▇▇▇▇,
subject to the license to such name and ▇▇▇▇ theretofore given to the Borrower
by Xionics Limited. Xionics Limited International confirms that such license to
the Borrower remains in full force and effect and confirms the Bank's rights
under the Xionics License Assignment. Xionics International Limited acknowledges
and agrees that the Xionics Consent remains in full force and effect for the
benefit of the Bank, and agrees to be bound thereby as effectively as if it has
been an original party thereto.
8. In order to induce the Bank to enter into this Agreement, the
Borrower further represents and warrants as follows:
a. The execution, delivery and performance of this Agreement, the
1999 Revolving Note and the 1999 Term Note have been duly authorized by the
Borrower by all necessary corporate and other action, will not require the
consent of any third party (except any such consents which have already been
received) and will not conflict with, violate the provisions of, or cause a
default or constitute an event which, with the passage of time or the giving of
notice or both, could cause a default on the part of the Borrower under its
charter documents or by-laws or under any contract, agreement, law, rule, order,
ordinance, franchise, instrument or other document, or result in the imposition
of any lien or encumbrance (except in favor of the Bank) on any property or
assets of the Borrower.
b. The Borrower has duly executed and delivered each of this
Agreement, the 1999 Revolving Note and the 1999 Term Note.
c. Each of this Agreement, the 1999 Revolving Note and the 1999
Term Note is the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its respective terms.
d. Giving effect to the amendments contained in this Agreement and
except as heretofore disclosed to the Bank, the statements, representations and
warranties made in the Letter Agreement, in the IAR Security Agreement and/or in
the Supplementary Security Agreement continue to be correct as of the date
hereof; except as amended, updated and/or supplemented by the attached
Supplemental Disclosure Schedule.
e. Giving effect to the amendments contained in this Agreement and
except as heretofore disclosed to the Bank, the covenants and agreements of the
Borrower contained in the Letter Agreement, in the IAR Security Agreement and/or
in the Supplementary Security Agreement have been complied with on and as of the
date hereof.
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13
f. Giving effect to the amendments contained in this Agreement and
except as heretofore disclosed to the Bank, no event which constitutes or which,
with notice or lapse of time, or both, could constitute, an Event of Default (as
defined in the Letter Agreement) has occurred and is continuing.
g. No material adverse change has occurred in the financial
condition of the Borrower from that disclosed in the financial statements of the
Borrower dated September 30, 1998, heretofore furnished to the Bank.
9. Except as expressly affected hereby, the Letter Agreement and
each of the other Financing Documents remains in full force and effect as
heretofore.
10. Nothing contained herein will be deemed to constitute a waiver
or a release of any provision of any of the Financing Documents. Nothing
contained herein will in any event be deemed to constitute an agreement to give
a waiver or release or to agree to any amendment or modification of any
provision of any of the Financing Documents on any other or future occasion.
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14
Executed, as an instrument under seal, as of the day and year first
above written.
XIONICS DOCUMENT
TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Sr. VP/CFO
XIONICS INTERNATIONAL LIMITED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
Accepted and agreed:
FLEET NATIONAL BANK
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: VP
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