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EXHIBIT 10.1
THIRD AMENDMENT TO CREDIT AUTHORIZATION AGREEMENT
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THIS THIRD AMENDMENT TO CREDIT AUTHORIZATION AGREEMENT, dated as of May
20, 1998 ( this "Amendment" ) by and between INTERFACE SYSTEMS, INC., a Delaware
Corporation, the ("Borrower" ), and NBD BANK, a Michigan banking corporation
(the "Bank" ).
RECITALS
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A. The Borrower and the Bank are parties to a Credit Authorization
Agreement dated as of August 31, 1997, as amended by a First
Amendment To Credit Authorization Agreement dated as of December
10, 1997 and a Letter Agreement dated March 11, 1998 (as amended
the "Agreement" ).
B. The Borrower has defaulted under the Agreement due to a breach of
the NET WORTH covenant in Section 9.3(H), for the period ended
March 31, 1998.
C. The Borrower has requested that the Bank waive such covenant
default, and the Bank is willing to do so strictly in accordance
with the terms hereof, and provided the Agreement is amended as
set forth herein, and the Borrower has agreed to such amendment.
AGREEMENT
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Based upon these recitals, the parties agree as follows:
1. Upon satisfaction of the conditions set forth in paragraph 4
hereof, the Agreement shall hereby be amended as of the effective
date hereof as follows:
A. Section 3.1 "Borrowing Base" definition shall be amended
to include the following subsection 3.1(C):
C. 100% of the Borrower's "refundable income taxes" as
recorded on its balance sheet as of the fiscal quarter
ended March 31, 1998. "Refundable income taxes" will cease
to be an addition to the Borrowing Base upon collection of
the amount recorded at March 31, 1998.
B. The definition of " Net Worth " in section 9.3(H) shall be
deleted in its entirety and the following shall be
inserted in place thereof:
Net Worth . Permit its Net Worth at any time to be less
than $7,300,000 and increasing by the sum of (A)
$7,300,000 plus (B) 75% of quarterly net income, without
reduction for any loss periods, for each fiscal quarter,
commencing with the quarterly period ending June 30,
1998.
C. Section 4.2 "Out-of-Pocket Expenses is amended to
include the addition of the following sentences:
"Furthermore, Borrower also acknowledges and agrees that it
shall be responsible to pay all fees, expenses, and
out-of-pocket disbursements incurred by NBD, including legal
fees and expenses, including, without limitation: (1) fees
incurred in connection with audits by NBD of
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the Borrower's facilities, books and records or the
collateral, which audits NBD may conduct as frequently as it
reasonably desires; (2) all fees and expenses of NBD and
counsel for NBD for the preparation, examination, approval,
negotiation, execution, and delivery of this Agreement; (3)
all fees and out-of-pocket disbursements incurred, in any way
arising from or in connection with any action taken by NBD to
monitor, advise, administer, enforce or collect any of the
obligations of the Borrower under the Agreement; and (4) all
costs, expenses, and fees incurred by NBD or its counsel in
connection with consultants, expert witnesses or other
professionals retained by NBD or its counsel , to assist,
advise, appraise, or give testimony with respect to any matter
relating to the collateral, the obligations, the Loan
Documents, or the business relationship between NBD, on the
one hand, and the Borrower, on the other hand. All of the
foregoing costs, expenses, reimbursement obligations , and
indemnification obligations are part of the borrowings and
other obligations and are secured by all of the Collateral.
2. From and after the effective date of this Amendment, references to
the "Agreement" in the Credit Authorization Agreement, the Note, the Security
Documents, and all other documents executed pursuant to the Credit Authorization
Agreement shall be deemed references to the Credit Authorization Agreement as
amended hereby.
3. The Borrower represents to the Bank that:
(a) (i) The execution, delivery and performance of this
amendment by the Borrower and all agreements and documents
delivered pursuant hereto by the Borrower have been duly
authorized by all necessary action and do not and will not
require any consent or approval of its shareholders,
violate any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award
presently in effect having applicability to it or of its
articles of incorporation or by-laws; (ii) no
authorization, consent, approval, license, exemption of or
filing a registration with any court or governmental
department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be
necessary to the valid execution, delivery, or performance
by the Borrower of this amendment and all agreements and
documents delivered pursuant hereto and (iii) this
Amendment and all agreements and documents delivered
pursuant hereto by the Borrower are the legal, valid
binding obligations of the Borrower enforceable against it
in accordance with the terms thereof.
(b) After giving effect to the amendment contained herein and
effected pursuant hereto, the representations and
warranties contained in Section 10.0 of the Agreement are
true and correct on and as of the effective date hereof
with the same force and effect as if made on and as of
such effective date.
(c) Other than the Existing Default, as defined in and to be
waived pursuant to paragraph 5, no Events of Acceleration
(as defined in Section 11.0 of the Agreement) and no
default shall have occurred and be continuing or will
exist under the Agreement as of the effective date hereof.
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4. This Amendment shall not become effective until it shall be duly
executed by the Borrower and the Bank and the Borrower shall have
paid to the Bank an amendment fee of $10,000, which the Borrower
acknowledges has been earned by the Bank .
5. The Borrower acknowledges that an Event of Acceleration has
occurred because the Borrower has breached a covenant contained in
Section 9.3(H) of the Agreement for the period of the Borrower
ended March 31, 1998 ( the "Existing Default" ). The Borrower
acknowledges that the Bank has the ability to accelerate all
indebtedness and exercise all of its rights and remedies under the
Agreement. In consideration of the execution of this Amendment and
subject to the satisfaction of the condition required by Paragraph
4 hereof, the Bank agrees to waive the Existing Default, provided
that such waiver shall waive only the Existing Default and does
not waive any other Events of Acceleration, including without
limitation any future Events of Acceleration caused by any
violation of Section 9.3(H). This waiver shall not be deemed to be
a waiver, or a consent to any modification or amendment, of any
other term or condition of the Agreement or any term or condition
of any agreement, instrument, or document referred to therein or
executed pursuant thereto, or to prejudice any present or future
right or rights which the Bank now has or may have hereunder.
6. The terms used but not defined herein shall have the respective
meanings ascribed thereto in the Agreement. Except as expressly
contemplated hereby, the Agreement, and all related notes,
guaranties, certificates, instruments and other documents, are
hereby ratified and confirmed and shall remain in full force and
effect, and the Borrower acknowledges that it has no defense,
offset, or counterclaim thereunder.
7. This Amendment shall be governed by and in accordance with the
laws of the State of Michigan.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the day and year first written
above.
NBD BANK INTERFACE SYSYEMS, INC.
By: /S/ Michael Kelly By: /S/ John Ternes
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Its: First Vice President Its: Chief Financial Officer
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