Exhibit 10.11

 

FIRST MODIFICATION AGREEMENT

 

THIS FIRST MODIFICATION AGREEMENT (the “Agreement”) is made and entered into
this  28th day of July, 2006, by and between First Keystone Bank (the “Bank”),
chartered under the Laws of the United States of America, having its principal
office at 22 West State Street, Media, Pennsylvania, 19063, Spitz, Inc., a
Delaware corporation (the “Borrower”), with an address of P.O. Box 198, Route 1,
Chadds Ford, Pennsylvania, 19317, and Evans & Sutherland Computer Corporation, a
Utah corporation (the “Guarantor”).

 

Background

 

A.                                    Bank extended to Borrower a line of credit
facility on April 28, 2006, (the “Loan”) in the maximum principal sum of Three
Million Dollars ($3,000,000.00) evidenced by that certain Line of Credit Note
(the “Note”) made by Borrower and delivered to Bank on April 28, 2006. The Loan
is to be advanced pursuant to the terms of a Line of Credit Agreement between
Bank, Borrower and Guarantor dated June 12, 1997 (the “Line of Credit
Agreement”).

 

B.                                    The Line of Credit Agreement sets forth
certain financial covenants of the Borrower, including without limitation a
covenant to maintain at all times during the term of the Loan a minimum Tangible
Net Worth (as defined in the Line of Credit Agreement) of One Million Seven
Hundred Thousand Dollars ($1,700,000.00), and a covenant to deliver to Bank
within thirty (30) days of each calendar quarter end, management prepared
quarterly financial statements for the immediately preceding quarter.

 

C.                                    Borrower has requested that: (i) the
computation of Tangible Net Worth exclude any and all loans from the Guarantor
to the Borrower; (ii) Borrower shall have sixty (60) days from the end of each
calendar quarter to deliver management prepared quarterly financial statements
for the immediately preceding quarter; and (iii) the first measurement of
Tangible Net Worth will be as of the calendar quarter ending September 30, 2006.

 

D.                                    As of the date hereof the outstanding
principal balance of the Line of Credit is Five Hundred Ninety Nine Thousand
Nine Hundred Eighty Dollars and Six Cents ($599,980.06).

 

E.                                      Bank has no obligation to modify the
terms of the Loan. Bank is willing to grant Borrower’s aforementioned requests
on the terms and conditions set forth in this Agreement, including without
limitation the reduction of the Maximum Credit Limit (as defined in the Line of
Credit Agreement) to the lesser of (i) One Million One Hundred Thousand Dollars
($1,100,000.00), or (ii) the sum of (a) eighty (80%) percent of the Borrower’s
Qualified Accounts Receivable and (b) fifty (50%) percent of Borrower’s
Qualified Inventory (as the terms Qualified Accounts Receivable and Qualified
Inventory are defined in the Line of Credit Agreement).

 

 

JONES, STROHM & GUTHRIE

 

10 Beatty Road

A Professional Corporation

 

Media, Pennsylvania 19063

Attorneys At Law

 

Telephone (610) 565-7100

 

 

Fax (610) 565-7180

 

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Agreement

 

NOW THEREFORE, in consideration of the sum of One ($1.00) Dollar and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby covenant and agree as follows:

 

1.                                      The Background recitals are incorporated
herein by reference.

 

2.                                      Contemporaneous with the execution of
this Agreement, Borrower shall pay to Bank on account of the outstanding
principal balance of the Loan an amount sufficient to reduce the outstanding
principal balance of the Loan to an amount not in excess of the Maximum Credit
Limit as reduced pursuant to the terms of this Agreement.

 

3.                                      For purposes of determining Borrower’s
compliance the Tangible Net Worth covenant set in Section 4.1.20 of the Line of
Credit Agreement, any and all loans from the Guarantor to the Borrower shall be
excluded from the computation of Borrower’s Tangible Net Worth.

 

4.                                      Section 4.1.6.1 of the Line of Credit
Agreement is amended to increase the period of time within which Borrower must
deliver management prepared quarterly financial statements for the immediately
preceding quarter from thirty (30) days to sixty (60) days.

 

5.                                      The first measurement of Borrower’s
Tangible Net Worth for purposes of determining Borrower’s compliance the
Tangible Net Worth covenant set in Section 4.1.20 of the Line of Credit
Agreement will be as of the calendar quarter ending September 30, 2006.

 

6.                                      Effective the date of this Agreement,
the Maximum Credit Limit shall equal the lesser of (i) One Million One Hundred
Thousand Dollars ($1,100,000.00), or (ii) the sum of (a) eighty (80%) percent of
the Borrower’s Qualified Accounts Receivable and (b) fifty (50%) percent of
Borrower’s Qualified Inventory.

 

7.                                      Borrower and Guarantor hereby ratify and
affirm all of the terms, conditions and provisions of the Line of Credit
Agreement, the Note, and all other documents executed and delivered by Borrower
or Guarantor in connection with the Loan, to the extent the same are not
otherwise expressly modified herein. It is expressly agreed and understood that
except as expressly provided in this Agreement, the terms, conditions and
provisions set forth in the Line of Credit Agreement, the Note, and all other
documents executed and delivered by Borrower or Guarantor in connection with the
Loan shall remain in full force and effect in accordance with their respective
terms, conditions and provisions. Without limiting the generality of the
foregoing, nothing in this Agreement shall be construed to:

 

(i)                                    impair the validity, perfection or
priority of any lien or security interest securing the Loan;

 

(ii)                                waive or impair any rights, powers or
remedies of Bank under the Line of Credit Agreement, the Note, and all other
documents executed and delivered by Borrower or Guarantor in connection with the
Loan with respect to any defaults thereunder which may occur;

 

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(iii)                            require Bank to hereafter amend or modify the
terms of the Line of Credit Agreement, the Note, or any other documents executed
and delivered by Borrower or Guarantor in connection with the Loan; or

 

(iv)                               make any other loan or other extension of
credit to Borrower or Guarantor.

 

In the event of any inconsistency between the terms of this Agreement and the
Line of Credit Agreement, this Agreement shall govern. Borrower and Guarantor
each acknowledge that it has consulted with counsel in connection with the
negotiation and delivery of this Agreement. This Agreement shall be construed
without regard to any presumption or rule requiring that it be construed against
the party causing this Agreement or any part of this Agreement to be drafted.

 

8.                                      Borrower and Guarantor hereby
acknowledge and agree that no setoff or counterclaim to Borrower’s and
Guarantor’s obligations evidenced by the Line of Credit Agreement, the Note, and
all other documents executed and delivered by Borrower or Guarantor in
connection with the Loan exists, and no agreement has been made with any person
under which any deduction or discount may be claimed, that to the best of
Borrower’s and Guarantor’s knowledge, information and belief, no Event of
Default (as defined in the Line of Credit Agreement) has occurred which is
continuing and no event has occurred which with the passage of time or the
giving of notice or both, could become an Event of Default under the Line of
Credit Agreement.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the day and year first above written.

 

 

BANK:

 

FIRST KEYSTONE BANK

 

 

 

BY:

/s/ Robert Latshaw

 

 

 

BORROWER:

 

SPITZ, INC., A Delaware Corporation

 

 

/s/ Vera L. Camillo

 

BY:

/s/ Jonathan Shaw

 

Witness

 

 

 

 

/s/ Vera L. Camillo

 

ATTEST:

/s/ Paul L. Dailey

 

Witness

 

 

 

 

[Corporate Seal]

 

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GUARANTOR:

 

 

EVANS & SUTHERLAND COMPUTER
CORPORATION, a Utah Corporation

 

 

 

 

/s/ Carol Young

 

BY:  

/s/ David Bateman

 

Witness

 

 

 

 

/s/ Carol Young

 

ATTEST:  

/s/ Lance Sessions

 

Witness

 

 

 

 

 

 

[Corporate Seal]

 

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