Document:

DIGITAL LIGHTWAVE EXHIBIT 10.4

Exhibit 10.4

SETTLEMENT AGREEMENT

 

THIS SETTLEMENT AGREEMENT (the “Agreement”) is made and entered into as of this 6th day of May, 2004 (the “Effective Date”), by and between Glenn Dunlap (“Dunlap”), an individual residing at 1005 Chatham Church Road, Moncure, North Carolina 27559, and Digital Lightwave, Inc. (“Digital”), a Delaware corporation.

 

RECITALS

 

WHEREAS, Dunlap and Digital have entered into the following agreements: (i) a written employment agreement dated February 22, 2001, (ii) a written addendum to the February 22, 2001 employment agreement dated July 27, 2001, (iii) a written second addendum to the February 22, 2001 employment agreement dated October 2, 2001, and (iv) a Settlement Agreement and Release dated January 3, 2003 (collectively, the “Prior Agreements”); and

 

WHEREAS, Dunlap and Digital have also entered into a Settlement of Employment Terms and Employment Letters dated January 17, 2003 (the “January 17 Agreement” and, together with the Prior Agreements and any other agreements between Dunlap and Digital not listed herein, the “Employment Agreements”); and

 

WHEREAS, the January 17 Agreement, by its express terms, terminated all of the Prior Agreements; and 

 

WHEREAS, Dunlap and Digital desire to resolve all disputes between them completely and to settle and to terminate finally and completely any and all claims, demands, liabilities and causes of action between them, including any claims of Dunlap arising under the Employment Agreements (collectively, the “Claims”).

 

NOW THEREFORE, in consideration of the covenants contained in this Agreement, and for further, good and valuable consideration, including, but not limited to, the mutual avoidance of further costs, inconvenience and uncertainties relating to the Claims, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows:

 

	
Settlement Payment. On the Effective Date, Digital shall pay to Dunlap a lump sum payment of Twenty-five Thousand Dollars ($25,000.00) (the “Settlement Payment”) in full and final satisfaction of all amounts owed by Digital to Dunlap under or relating to the Employment Agreements or the Claims or otherwise. Dunlap agrees to pay any and all local, state and federal income taxes which become due as a result of his receipt of the Settlement Payment.

	
Releases. Effective as of the Effective Date, the parties agree to release each other as follows:

	
2.1    Dunlap, by and through himself, his personal representatives, heirs, trustees, successors, and assigns (the “Dunlap Group”), hereby fully releases and does forever discharge Digital and each of its present and former parents, subsidiaries, affiliates, shareholders, officers, directors, employees, agents, successors, attorneys, and assigns and each and all of them, of and from any and all past, present or future claims, debts, rights, liabilities, damages, costs, expenses, attorneys’ fees, causes of action, and lawsuits, of every kind, nature, or description, whether known or unknown, suspected or unsuspected, fixed or contingent, which the Dunlap Group ever had, now has or may hereafter acquire, upon or by reason of any matter, cause, event or thing whatsoever accruing, occurring or arising from the beginning of the world to the Effective Date, directly or indirectly related to the Employment Agreements, the Claims, or otherwise and any and all claims based upon or in any way relating to any of the foregoing; provided, however, that this release shall not release Digital from its obligations under this Agreement.

	 
	
2.2    Digital, by and through its duly elected officers, for itself, its present and former parents, subsidiaries, affiliates, members, officers, directors, employees, agents, successors, and assigns (the “Digital Group”), hereby fully releases and does forever discharge Dunlap and his personal representatives, heirs, trustees, successors, and assigns and each and all of them, of and from any and all past, present or future claims, debts, rights, liabilities, damages, costs, expenses, attorneys’ fees, causes of action, and lawsuits, of every kind, nature, or description, whether known or unknown, suspected or unsuspected, fixed or contingent, which the Digital Group ever had, now has or may hereafter acquire, upon or by reason of any matter, cause, event or thing whatsoever accruing, occurring or arising from the beginning of the world to the Effective Date, directly or indirectly related to the Employment Agreements, the Claims or otherwise and any and all claims based upon or in any way relating to any of the foregoing; provided, however, that this release shall not release Dunlap from his obligations under this Agreement.

	
Confidentiality. Digital and Dunlap shall not voluntarily disclose to any person who is not a signatory to this Agreement any of the terms of this Agreement, except the parties may disclose this Agreement and any terms thereof (i) in response to a subpoena or other binding legal process that the party believes is lawfully issued and served, or (ii) in response to a request initiated by any state or federal regulatory agency, or (iii) to any person within their organization or professionals retained by their organization with a need to know the information, including, without limitation, senior management, internal and external counsel, auditors, regulators, etc. (provided, that in each case such party shall take reasonable measures to protect the secrecy of and avoid disclosure of the fact of this Agreement and its terms by such persons), or (iv) as otherwise required by law or SEC regulations. In the event any party is served with a subpoena or other binding legal process which calls for the disclosure of any information that is subject to this confidentiality provision, that party shall immediately notify the other party to this Agreement of the subpoena or other legal process and such other party shall take whatever action it deems necessary to protect its own interest. The parties further agree that if any party initiates any proceedings to enforce the terms of this Agreement, this Agreement and its contents shall be sealed in connection with such proceedings and shall remain confidential to the fullest extent possible by law. Nothing in this Agreement is intended by the parties to alter, eliminate, change, abrogate or reduce any disclosure requirement that any party hereto is (or at any time hereafter may be) obligated to comply with under the law.

	
Governing Law. This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of Florida with respect to their obligations under this Agreement.

	
Integration. This Agreement embodies the entire agreement of the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, including the Employment Agreements.

	
Amendment. No amendment or waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by Dunlap and Digital, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

	
Execution. This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

	
Representation by Counsel. Each of the parties represents and warrants that each of them has been represented by counsel in the negotiation of this Agreement, that each has read and understands the contents hereof, and that each has executed this Agreement knowingly, voluntarily, and willfully.

	
Disclaimer. This Agreement is made in connection with a full, final and complete satisfaction and compromise of disputed claims and matters. Neither this Agreement nor any action or acts taken in connection with this Agreement or pursuant to it constitutes an admission by any party to this Agreement or by any other entity or person that any conduct or action was unlawful or in violation of any contract, agreement, understanding, custom, or obligation among or between any of the parties, or constituted any wrongdoing whatsoever.

	
Termination of Employment Agreements. The parties agree that each of the Employment Agreements has been terminated and is null and void in all respects. Notwithstanding the preceding sentence, Digital agrees that Dunlap shall continue to have the right, through August 16, 2004, to exercise those certain options previously granted to him to purchase 66,666 shares of Digital common stock at an exercise price of $1.42 per share.

	
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

	 	 
	
 
	
/s/ Glenn Dunlap

	 	

	 	
GLENN DUNLAP 

	 	 
	 	 
	
 
	
DIGITAL LIGHTWAVE, INC.

	 	By: /s/ James R. Green 
	 	

	 	
Its: CEOExhibit 4.1

                               FIRST AMENDMENT TO
                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

         THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT is dated as of April 21, 2004 (this "Amendment"), by and among WELLS
FARGO FOOTHILL, INC. ("Lender"), ELXSI, a California corporation ("Parent"),
ELXSI (NEW HAMPSHIRE), INC., a Delaware corporation ("ELXSI NH"), BICKFORD'S
RESTAURANTS, LLC, a Delaware limited liability company ("Bickford's LLC"),
BICKFORD'S HOLDINGS COMPANY, INC., a Delaware corporation ("Holdings"), and
BICKFORD'S FAMILY RESTAURANTS, INC., a Delaware corporation ("Bickford's";
Parent, ELXSI NH, Bickford's LLC, Holdings and Bickford's are referred to
hereinafter each individually as a "Borrower", and individually and
collectively, jointly and severally, as the "Borrowers").

                                   WITNESSETH:
                                   ----------

         WHEREAS, Borrowers and Lender entered into that certain Amended and
Restated Loan and Security Agreement, dated as of January 30, 2004 (as amended,
restated, supplemented or otherwise modified through the date hereof, the "Loan
Agreement");

         WHEREAS, Borrowers have requested that the Lender consent to certain
transactions and agree to certain amendments of the Loan Agreement as more fully
set forth herein;

         NOW THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:

         SECTION 1.   Defined Terms. Unless otherwise defined herein, all
capitalized terms used herein have the meanings assigned to such terms in the
Loan Agreement, as amended hereby.

         SECTION 2.   Amendments. Upon the Amendment Effective Date (as
hereinafter defined), the Loan Agreement shall be amended as follows:

                (a)   A new paragraph (d) shall be added to Section 2.2 of the
         Loan Agreement to read in its entirety as follows:

                      "(d) Notwithstanding anything to the contrary contained in
                Section 2.4(b)(v) (which Section 2.4(b)(v) shall not be
                applicable to the sale of the Seekonk Property and the
                Burlington Property (as such terms are defined below)), in
                addition to the principal payments required to be made on Term
                Loan A and Term Loan B in Sections 2.2(a) and 2.2(b), Borrowers
                promise to pay to the order of Lender the following additional
                principal payments from the proceeds of sale of the real
                property located at 965 Fall River Avenue, Seekonk, Bristol
                County, Massachusetts (the "Seekonk Property") and 6 Cambridge
                Street, Burlington,

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                Middlesex County, Massachusetts (the "Burlington Property"): (i)
                from the proceeds of sale of the Seekonk Property, Borrowers
                promise to pay to the order of Lender an additional principal
                payment of Term Loan B in the amount of $800,000, (ii) from the
                proceeds of sale of the Burlington Property, Borrowers promise
                to pay to the order of Lender an additional principal payment of
                Term Loan B in an amount equal to the lesser of $800,000 or the
                unpaid principal balance of Term Loan B, and Borrowers promise
                to pay to the order of Lender an additional principal payment of
                Term Loan A in an amount equal to the amount by which the net
                sale proceeds from the sale of the Burlington Property exceeds
                the amount applied to Term Loan B, (iii) if the closing of the
                sale of the Burlington Property is not consummated on or before
                April 30, 2004, then on April 30, 2004, Borrowers promise to pay
                to the order of Lender the amount by which the net sale proceeds
                from the sale of the Seekonk Property exceeds $800,000 (the
                "Excess Seekonk Proceeds") for application to the unpaid
                principal of Term Loan B, until paid in full, and thereafter to
                the unpaid principal of Term Loan A, (iv) if the closing of the
                sale of the Burlington Property is consummated on or before
                April 30, 2004, and Term Loan B is paid in full on or before
                April 30, 2004, then Borrowers promise to pay to the order of
                Lender on or before July 22, 2004, an amount equal to the Excess
                Seekonk Proceeds for application to the unpaid principal of Term
                Loan A. No payments made in accordance with this paragraph shall
                reduce any scheduled principal payments on the Term Loans due
                under Sections 2.2(a) or 2.2(b)."

                (b)   Section 2.11(e)(ii) of the Loan Agreement is amended by
         replacing "March 31, 2004," with "April 30, 2004."

                (c)   Schedule 3 to the form of Compliance Certificate attached
         as Exhibit C-1 to the Loan Agreement is hereby replaced with the
         Schedule 3 attached hereto and made a part hereof.

         SECTION 3.   Waivers and Consents. On the Amendment Effective Date, and
in accordance with Section 15.1 of the Loan Agreement, Lender consents to the
following transactions and waives the Borrowers' noncompliance with the Sections
of the Loan Agreement described below:

                (a)   Lender consents to the sale of the real property located
at 965 Fall River Avenue, Seekonk, Bristol County, Massachusetts (the "Seekonk
Property") by Bickford's to The SBL Company LLC and the lease by The SBL Company
LLC of the Seekonk Property to Bickford's, subject to the terms and conditions
of a written consent to such transaction from Lender to Borrowers dated on or
before the date hereof.

                (b)   Lender consents to the sale of the real property located
at 6 Cambridge Street, Burlington, Middlesex County, Massachusetts (the
"Burlington Property"), by Bickford's to Alexander Milley or an entity
controlled by him and the lease by such purchaser to Bickford's of the
Burlington Property, subject to the terms and conditions of a written consent to
such transaction from Lender to Borrowers dated on or before the date hereof.

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<PAGE>

                (c)   Lender consents to the acquisition by ELXSI on March 11,
2004, of certain assets used in the commercial manufacturing division of
Contempo Design, Inc., from Fleet Capital Corporation, its creditor, to be used
in the business of design, production and distribution of cabinetry and kiosks
and related products for retailers, to be operated as a division of ELXSI to be
known as "Custom Commercial Environments" ("CCE Division") to be located in
Lincolnshire, Illinois. In connection with such acquisition and operations,
Lender hereby waives compliance with the following sections of the Loan
Agreement and any Events of Default relating thereto: (i) Section 6.8, to the
extent that Borrowers failed to send prior written notice of the location of
Inventory and Equipment acquired by ELXSI for the CCE Division, (ii) Section
7.6, to the extent that the CCE Division operations would be considered a change
in the principal nature of the business of ELXSI, (iii) Section 7.13, to the
extent it would prohibit the acquisition by ELXSI of assets owned by Contempo
Design, and (iv) Section 7.19, to the extent it would prohibit ELXSI's entering
into a lease of the premises in Lincolnshire, Illinois (the "Lincolnshire
Lease"), for the CCE Division's operations, so long as base rentals for such
premises shall not exceed $500,000 annually.

         SECTION 4.   Representations, Warranties and Covenants of the
Borrowers. Each of the Borrowers represents and warrants to the Lender, and
agrees that:

                (a)   the representations and warranties contained in the Loan
         Agreement (as amended hereby) and the other outstanding Loan Documents
         are true and correct in all material respects at and as of the date
         hereof as though made on and as of the date hereof, except (i) to the
         extent specifically made with regard to a particular date and (ii) for
         such changes as are a result of any act or omission specifically
         permitted under the Loan Agreement (or under any Loan Document), or as
         otherwise specifically permitted by the Lender;

                (b)   on the Amendment Effective Date, after giving effect to
         this Amendment, no Default or Event of Default will have occurred and
         be continuing;

                (c)   the execution, delivery and performance of this Amendment
         has been duly authorized by all necessary action on the part of, and
         duly executed and delivered by the Borrowers, and this Amendment is a
         legal, valid and binding obligation of the Borrowers enforceable
         against each Borrower in accordance with its terms, except as the
         enforcement thereof may be subject to the effect of any applicable
         bankruptcy, insolvency, reorganization, moratorium, or similar laws
         affecting creditors' rights generally and general principles of equity
         (regardless of whether such enforcement is sought in a proceeding in
         equity or at law); and

                (d)   the execution, delivery and performance of this Amendment
         does not conflict with or result in a breach by any Borrower of any
         term of any material contract, loan agreement, indenture or other
         agreement or instrument to which such Borrower is a party or is
         subject.

                (e)   Within forty-five (45) days after the date hereof, ELXSI
         shall deliver to Lender (i) a certified copy of the Lincolnshire Lease,
         (ii) a landlord's waiver and consent from the landlord of the
         Lincolnshire Lease acknowledging the security interest granted to

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<PAGE>

         Lender in the property of ELXSI located on the premises covered by the
         Lincolnshire Lease and waiving any statutory landlord's lien against
         such property, (iii) a certified copy of a recorded Memorandum of Lease
         evidencing the Lincolnshire Lease, (iv) a leasehold mortgage in favor
         of Lender covering ELXSI's rights as tenant under the Lincolnshire
         Lease, and (v) evidence of the authority of ELXSI to transact business
         in Illinois as a foreign corporation and the good standing of ELXSI in
         Illinois.

         SECTION 5.   Conditions Precedent to Effectiveness of Amendment.  This
Amendment shall become effective (the "Amendment Effective Date") upon
satisfaction of each of the following conditions:

                (a)   The Borrowers, Lender and Parent shall have executed and
         delivered to Lender this Amendment and such other documents as the
         Lender may reasonably request.

                (b)   All legal matters incident to the transactions
         contemplated hereby shall be reasonably satisfactory to counsel for the
         Lender.

                (c)   In consideration of Lender's execution and delivery of
         this Amendment, Borrowers shall pay to Lender a fee in the aggregate
         amount of $100,000, which fee shall be earned by Lender upon the
         execution by Lender of a counterpart of this Amendment and shall be due
         and payable as follows: (i) $34,000 on the date of execution by Lender
         of a counterpart of this Amendment, $33,000 on or before May 3, 2004,
         and $33,000 on or before June 1, 2004.

         SECTION 6.   Breach of this Amendment. Default in the performance by
any Borrower of any of Borrower's agreements set forth herein and continuance of
such default for three (3) Business Days after notice thereof to Borrower from
Lender shall constitute an Event of Default under the Loan Agreement.

         SECTION 7.   Execution in Counterparts. This Amendment may be executed
in counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and the
same instrument.

         SECTION 8.   Costs and Expenses. The Borrower hereby affirms its
obligation under the Loan Agreement to reimburse Lender for all reasonable
costs, internal charges and out-of-pocket expenses paid or incurred by Lender in
connection with the preparation, negotiation, execution and delivery of this
Amendment, including but not limited to the attorneys' fees and time charges of
attorneys for Lender with respect thereto.

         SECTION 9.   GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUCTED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO THE INTERNAL CONFLICTS OF LAWS PROVISIONS THEREOF.

         SECTION 10.  Effect of Amendment; Reaffirmation of Loan Documents.
                      ----------------------------------------------------

                (a)   The parties hereto agree and acknowledge that (i) nothing
         contained in this Amendment in any manner or respect limits or
         terminates any of the provisions of the Loan Agreement or the other

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<PAGE>

         outstanding Loan Documents other than as expressly set forth herein and
         (ii) the Loan Agreement (as amended hereby) and each of the other
         outstanding Loan Documents remain and continue in full force and effect
         and are hereby ratified and reaffirmed in all respects. Upon the
         effectiveness of this Amendment, each reference in the Loan Agreement
         to "this Agreement", "hereunder", "hereof", "herein" or words of
         similar import shall mean and be a reference to the Loan Agreement as
         amended hereby.

                (b)   The consents and waivers agreed to herein (i) are strictly
         limited to the transactions expressly referenced and, except as
         expressly set forth herein, all the other terms, provisions and
         conditions of the Loan Agreement shall remain in full force and effect,
         (ii) shall not extend nor be deemed to extend to any other Event of
         Default or Default that may now exist or hereafter arise under the Loan
         Agreement or any of the other Loan Documents, whether similar or
         dissimilar to the matters waived herein, (iii) shall not impair,
         restrict or limit any right or remedy of the Lender with respect to any
         other Default or Event of Default that may now exist or hereafter arise
         under the Loan Agreement or any of the other Loan Documents, and (iv)
         shall not constitute any course of dealing or other basis for altering
         any obligation of the Borrowers or any right, privilege or remedy of
         the Lender under the Loan Agreement or any of the other Loan Documents.

         SECTION 11.  Headings. Section headings in this Amendment are included
herein for convenience of any reference only and shall not constitute a part of
this Amendment for any other purposes.

         SECTION 12.  Release. EACH BORROWER HEREBY ACKNOWLEDGES THAT AS OF THE
DATE HEREOF IT HAS NO DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR
DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR
ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO REPAY THE LIABILITIES OR TO SEEK
AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM LENDER OR ITS
AFFILIATES, PARTICIPANTS OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, AGENTS,
EMPLOYEES OR ATTORNEYS. EACH BORROWER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES
AND FOREVER DISCHARGES LENDER, AND ITS AFFILIATES AND PARTICIPANTS, AND ITS
PREDECESSORS, AGENTS, OFFICERS, DIRECTORS, EMPLOYEES, SUCCESSORS AND ASSIGNS,
FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS,
EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT
LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS
AMENDMENT IS EXECUTED, WHICH ANY BORROWER MAY NOW OR HEREAFTER HAVE AGAINST
LENDER, ITS PREDECESSORS, AGENTS, OFFICERS, DIRECTORS, EMPLOYEES, SUCCESSORS AND
ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF
CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM
THE LIABILITIES, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN

                                       5
<PAGE>

AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS
AMENDMENT. EACH BORROWER HEREBY COVENANTS AND AGREES NEVER TO INSTITUTE ANY
ACTION OR SUIT AT LAW OR IN EQUITY, NOR INSTITUTE, PROSECUTE, OR IN ANY WAY AID
IN THE INSTITUTION OR PROSECUTION OF ANY CLAIM, ACTION OR CAUSE OF ACTION,
RIGHTS TO RECOVER DEBTS OR DEMANDS OF ANY NATURE AGAINST LENDER, ITS AFFILIATES,
AND PARTICIPANTS, AND THEIR RESPECTIVE SUCCESSORS, AGENTS, ATTORNEYS, OFFICERS,
DIRECTORS, EMPLOYEES, AND PERSONAL AND LEGAL REPRESENTATIVES ARISING ON OR
BEFORE THE DATE HEREOF OUT OF OR RELATED TO LENDERS' ACTIONS, OMISSIONS,
STATEMENTS, REQUESTS OR DEMANDS IN ADMINISTERING, ENFORCING, MONITORING,
COLLECTION OR ATTEMPTING TO COLLECT THE INDEBTEDNESS OF BORROWER TO LENDER,
WHICH INDEBTEDNESS WAS EVIDENCED BY THE LOAN AGREEMENT AND OTHER LOAN DOCUMENTS.

                            [Signature Pages Follow]

                                       6
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first written above.

                                        ELXSI,
                                        a California corporation

                                        By: /s/ DAVID DOOLITTLE
                                            ------------------------------------
                                            Name:  David Doolittle
                                            Title: Vice President

                                        ELXSI (NEW HAMPSHIRE), INC.,
                                        a Delaware corporation

                                        By: /s/ DAVID DOOLITTLE
                                            ------------------------------------
                                            Name:  David Doolittle
                                            Title: Vice President

                                        BICKFORD'S RESTAURANTS, LLC,
                                        a Delaware limited liability company

                                        By: /s/ DAVID DOOLITTLE
                                            ------------------------------------
                                            Name:  David Doolittle
                                            Title: Vice President

                                        BICKFORD'S HOLDINGS COMPANY, INC.,
                                        a Delaware corporation

                                        By: /s/ DAVID DOOLITTLE
                                            ------------------------------------
                                            Name:  David Doolittle
                                            Title: Vice President

                                        BICKFORD'S FAMILY RESTAURANTS, INC.,
                                        a Delaware corporation

                                        By: /s/ DAVID DOOLITTLE
                                            ------------------------------------
                                            Name:  David Doolittle
                                            Title: Vice President

                                       7
<PAGE>

                                        WELLS FARGO FOOTHILL, INC.,
                                        a California corporation

                                        By: /s/ DANIEL MORIHIRO
                                            ------------------------------------
                                            Name:  Daniel Morihiro
                                            Title: Vice President

                                       8
<PAGE>

                         ACKNOWLEDGMENT AND RATIFICATION

         The undersigned hereby (i) acknowledges receipt of a copy of the
foregoing First Amendment to Amended and Restated Loan and Security Agreement,
(ii) consents to all of the terms and provisions thereof, (iii) ratifies and
confirms all of the terms and provisions of the outstanding Loan Documents to
which it is a party; and (iv) acknowledges and agrees that all references in the
outstanding Loan Documents to any loan or credit agreement executed by and
between any of the Borrowers and Lender shall refer without further amendment to
the Loan Agreement as amended by the foregoing Amendment.

                                        ELXSI CORPORATION

                                        By: /s/ DAVID DOOLITTLE
                                            ------------------------------------
                                            Name:  David Doolittle
                                            Title: Vice President

                                       9
<PAGE>

                                   SCHEDULE 3

                    [to Compliance Certificate (Exhibit C-1)]

     1.  Minimum EBITDA. Borrowers' EBITDA for the twelve-month period ending
_________, 20___ is $________________, which amount [is/is not] greater than or
equal to the amount set forth in Section 7.18(a)(i) of the Loan Agreement for
the corresponding period.

     2.  Minimum Bickford's EBITDA. Bickford's EBITDA for the period from
____________, 20___, to _______________, 20___, is $_______________, which
amount [is/is not] greater than or equal to the amount set forth in Section
7.18(a)(ii) of the Loan Agreement for the corresponding period.

     3.  Leverage Ratio.

          (a)  The Leverage Ratio of Borrowers, as of the last day of the fiscal
quarter ending ______________, 20___, is calculated as follows:

               (i)    The unpaid principal amount of Term Loan A
          and the unpaid principal amount of Revolver Usage on
          such date is:                                              $__________

               (ii)   Borrower's EBITDA for the twelve-month
          period ending on such day is:                              $__________

               (iii)  Item (i) divided by Item (ii) (=Leverage
          Ratio) is:                                                 ___________

         (b)  The Leverage Ratio set forth above [is/is not] greater than or
equal to the amount set forth in Section 7.18(a)(iii) of the Loan Agreement for
the corresponding period.

     4.  Maximum Capital Expenditures.

         (a)  The aggregate amount of capital expenditures made to date in the
current fiscal year is $__________.

         (b)  The aggregate amount set forth above [is/is not] less than or
equal to the amount set forth in Section 7.18(b)(i) of the Loan Agreement for
the corresponding period.

                                      E-1

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