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EXHIBIT 2.3
AGREEMENT CONCERNING AMENDMENT
TO CREDIT AGREEMENT
This Agreement dated as of May 27, 1999 by and among PNI Systems, LLC,
a Georgia limited liability company (the "Company"), Preferred Networks, Inc.,
formerly a Delaware corporation and presently reincorporated in the State of
Georgia (the "Parent"), each of the undersigned "Guarantors" and NationsBank,
N.A. (the "Lender").
W I T N E S S E T H:
WHEREAS, the Parent and the Company (hereinafter sometimes collectively
referred to as "Borrowers") and the Lender entered into that certain Credit
Agreement dated as of August 8, 1996 as amended by Amendments dated December 20,
1996, March 12, 1997, April 11, 1997, March 19, 1998 and November 12, 1998 (as
so amended the "Credit Agreement");
WHEREAS, the indebtedness and obligations of the Borrowers under and
related to the Credit Agreement are secured by, among other things, assets of
each of the Guarantors;
WHEREAS, Borrowers are in default under certain of the financial
covenants set out in Section 8 of the Credit Agreement (the "Covenant
Defaults");
WHEREAS, Borrowers wish to modify the terms of the Credit Agreement so
that, among other things, they will no longer be in default because of the
Covenant Defaults;
WHEREAS, the Borrowers and the Guarantors wish to obtain Lender's
consent to a proposed sale of the assets of Preferred Technical Services, Inc.,
one of the Guarantors ("PTS"), and wish the Lender to release its security
interest in and to said assets;
WHEREAS, Lender is willing to enter into this Agreement in return for
and in reliance on Borrowers' and Guarantors' covenants, reaffirmations and
obligations, contained herein;
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants contained herein, Ten Dollars ($10.00) in hand paid by Lender to each
of Borrowers and Guarantors, Lender's reliance hereon and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms not otherwise specifically defined
herein shall have the same meaning as given them in the Credit Agreement.
2. Covenant Defaults. Borrowers acknowledge that they are in default
under certain of the covenants in Section 8 of the Credit Agreement and that
nothing herein shall constitute a waiver of such Covenant Defaults by Lender nor
an agreement by Lender to forbear from taking any action or resorting to any
remedy on account thereof.
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3. Amendments to the Credit Agreement Effective Now. It is hereby
acknowledged and agreed that the Credit Amendment shall be and is hereby amended
effective as of the date of this Agreement as follows:
a) The following Section 10.19 shall be and is hereby
added to and included in the Credit Agreement:
10.19 Venue. Each of Borrowers and
Guarantors hereby acknowledges and agrees
that the proper venue for any suit or action
filed by or against them in connection with
this Agreement and in any way related
thereto shall be in the applicable court of
competent jurisdiction in Atlanta, Georgia
and specifically agrees to submit itself to
the jurisdiction of such court and hereby
waives any and all defenses it may have to
improper venue of any suite filed against it
in said court.
b) The following language contained in the first and second
lines of Section 9.1 shall be deleted:
"The Company and any Guarantor shall default
in a payment when due any principal of any
loan".
There shall be and is hereby inserted in lieu and in
replacement of the aforesaid deleted language the following
language:
"Any one or more of the Parent, the Company
or any Guarantor shall default in the
payment when due of any principal of any of
the Loans or under any Guaranty".
c) The phrase "or the Parent" shall be inserted after the
words "The Company" in the second sentence of Section
9.1.
d) The following Section 10.20 shall be and is hereby added
to and included in the Credit Agreement:
10.20 Cross Collaterization. Each of the
Borrowers hereby acknowledges and agrees
that any and all collateral security pledged
to or in which a security interest has been
granted to Lender as security for the Parent
Note shall also constitute security for the
Company Note and all collateral or security
pledged to or in which a security interest
has been granted to Lender as security for
the Company Note shall also
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secure the Parent Note; and each of the
Borrowers hereby covenants and agrees
immediately to cause to be modified all
Guaranties to provide that the Guarantors
therein absolutely, irrevocably and
unconditionally Guaranty due and punctual
payment and performance when due of all the
Obligations, including both those of the
Company and of the Parent.
4. Amendments to the Credit Agreement and Notes Effective only upon
Timely Fulfillment of the "Amendment Conditions". Upon, but not only upon,
Lender's determination, in its sole discretion, that each and all of the
"Amendment Conditions" (as that term is defined in Section 6 below) have been
fulfilled in accordance with the terms and conditions hereof by no later than
May 28, 1999, the Credit Agreement and the Notes shall, effective upon such
fulfillment, be amended as follows and all prior defaults thereunder shall be
waived, including the Event of Default that has occurred pursuant to Section
9.4(i) of the Credit Agreement arising by reason of the Parent's failure to
perform its obligations pursuant to Section 8 of the Credit Agreement during the
fiscal quarters of the Parent ending March 31, 1999 and through the date of this
Agreement:
a) Sections 8.1 through 8.4 of the Credit Agreement shall be
deleted and shall be replaced by the following new Sections
8.1 through 8.6:
8.1 The Parent and its Subsidiaries'
must on the last day of each calendar month
hold on a consolidated basis Cash and Cash
Equivalents in an aggregate amount greater
than or equal to $2,000,000.00, inclusive of
the $1,500,000.00 certificate of deposit
securing the Letter of Credit described in
Section 10.21 below.
8.2 The Parent's and its Subsidiaries,
on a consolidated basis, EBITDA (which shall
be defined as the existing definitions of
EBITDA as set forth in the Credit Agreement
excluding the following: interest expense,
income taxes, depreciation, amortization,
gains or losses resulting from changes in
accounting principles or methods or
extraordinary items, including but not
limited to non-cash charges relating to the
application of Statement of Financial
Accounting Standard No. 121 relating to the
impairment of long lived assets) shall be no
less than negative seven hundred and fifty
thousand dollars (-$750,000) for the quarter
ending June 30, 1999, negative two hundred
thousand
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dollars (-$200,000) for the quarter ending
September 30, 1999, four hundred thousand
dollars ($400,000) for the quarter ending
December 31, 1999, and seven hundred fifty
thousand dollars ($750,000) for the quarter
ending March 31, 2000;
8.3 Borrowers shall submit weekly
Borrowing Base certification for use in
determining availability of further draws or
mandatory pay downs under the Credit
Agreement.
8.4 Borrower's Controlled Disbursement
Accounts Preferred Networks, Inc. (CDA),
Account #000-000-0000 (Georgia Account), and
EPS Wireless, Controlled Disbursement,
Account #233-022-6419 (Texas Account), at
the Lender must be closed by June 30, 1999;
8.5 Borrower will allow Lender to
perform, at Borrower's expense, such
comprehensive monitoring of borrowing base
collateral (including but not limited to
field exams) as Lender deems reasonably
necessary or appropriate and Borrower shall
cooperate fully with same;
8.6 Borrower will pay, as and when
received by Borrower, fifty percent (50%) of
all funds released from reserves of
$250,000.00 held at closing of the sale of
the assets of PTS for "true ups", after
payment of normal and customary closing
costs, including expenses set forth in
Section 7(a) hereof.
b) The interest rate under each of the Company Note and the
Parent Note shall be effective as of April 1, 1999 to and
through September 30, 1999 the Prime Rate of Lender as the
same may vary from time to time plus 1 1/2% per annum, and
effective as of and including October 1, 1999 through April
30, 2000 the Prime Rate of Lender as the same may vary from
time to time plus 2% per annum; and Section 2.5(a) of the
Credit Agreement shall be modified accordingly. In addition
the Maturity Date of each of the Company Note and the Parent
Note shall be changed from July 30, 2000 to April 30, 2000;
and, accordingly, the "Termination Date" as redefined in the
Fourth Amendment of the Credit Agreement shall mean April
30, 2000.
c) The following Section 10.21 shall be added to and included
in the Credit Agreement:
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10.21 Letter of Credit. Borrowers have
delivered to Lender an unconditional,
irrevocable stand-by Letter of Credit in
form and content satisfactory to Lender and
issued by a national bank acceptable to
Lender in the amount of $1,500,000, which
Letter of Credit has an expiration date of
July 15, 2000 and which Letter of Credit
according to its terms may be drawn upon in
full by Lender's presenting to the issuing
national bank a certificate executed by an
officer of Lender stating that one or more
Events of Default has occurred under the
Credit Agreement. The Letter of Credit shall
serve as security for the Borrowers
indebtedness and obligations under and
related to the Credit Agreement, including
but not limited to the indebtedness of the
Parent under the Parent Note and the
indebtedness of the Company under the
Company Note. Any payments made to Lender
under the Letter of Credit shall be applied
against such indebtedness and obligations in
such order as Lender in its sole discretion
may determine.
d) The reference to "$750,000" in subsection (iii) (B) of the
definition of "Borrowing Base" in Section 1.1 of the Credit
Agreement shall be replaced by a reference to "$500,000".
The foregoing amendments to the Credit Agreement shall become effective
automatically and without the need for any further documentation at such time as
Lender has determined in its sole discretion that each and all of the Amendment
Conditions have been timely fulfilled in strict accordance with the terms and
conditions hereof, which determination shall be evidenced by the "Triggering
Event" as hereinafter defined in Section 5 below.
5. Consent and Release. Upon Lender's determination, in its sole
discretion, that each and all of the Amendment Conditions have been timely
performed in strict accordance with the terms and conditions hereof, Lender
shall consent to the sale of those of the assets of PTS listed on Schedule 1
hereto and shall release its security interest in and to such assets by
executing a Consent and Release in the form attached hereto as Schedule 2 and an
appropriate UCC-3 terminating its security interest as a matter of record. For
purposes of this Agreement Lender's execution of the aforesaid Consent and
Release and UCC-3 and delivery thereof to the Borrowers shall be deemed to be
the "Triggering Event". To the extent the Amendment Conditions require a payment
to Lender of certain of the proceeds from the sale of assets of PTS, assuming
all other Amendment Conditions have been fulfilled, Lender will execute and
deliver the aforesaid Consent and Release and UCC-3 simultaneously with delivery
to it of such proceeds in immediately available funds.
6. Amendment Conditions. For purposes of this Agreement the
following shall constitute the "Amendment Conditions":
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a) There shall be no default or Event of Default existing under
the terms of the Credit Agreement except for the previously
admitted Covenant Defaults;
b) Borrowers shall have delivered the Letter of Credit referred
to in Section 4(c) above in form and content and issued by a
national bank satisfactory to Lender;
c) Borrowers shall have delivered to Lender evidence
satisfactory to Lender that the net proceeds paid by buyer
to Borrower from the sale of the assets of PTS will be an
amount of at least $2,750,000.00;
d) Borrowers shall have caused to be made a principal payment
against the Company Note out of the proceeds of the sale of
the assets of PTS in the amount of $1,000,000.00 in
immediately available funds;
e) Borrowers shall have caused to be made a principal payment
against the Parent Note out of the proceeds of the sale of
the assets of PTS in the amount of $750,000.00 in
immediately available funds;
f) Borrowers and Parent shall have paid any past due interest
due on account of the retroactive increase in the interest
rates under the Company and Parent Notes pursuant to Section
4(b) above; and
g) Borrowers shall have caused each of Glenayre Electronics,
Inc. ("Glenayre") and Associates Commercial Corporation and
Associates Capitol Services Corporation, and to have
executed pursuant to due authorization, and delivered to
Lender a valid enforceable modification of its Intercreditor
Agreement with Lender satisfactory to Lender in its sole
discretion.
h) Company shall execute collateral assignments of the
Transition Services Agreement and Maintenance Services
Agreement between it and Wireless Services Operating
Corporation, its successors and assigns ("Wireless") and
shall assign and pledge to Bank all agreements between it
and Wireless, provided that such assignment will recognize
that it is subject to any valid defenses of Wireless,
including defenses under such agreements or other agreements
(including without limitation, rights of setoff, recoupement
and reduction).
7. Waiver of Claims.
Borrowers warrant and represent to the Lender that the Note is not
subject to any credits, charges, claims, or rights of offset or deduction of any
kind or character whatsoever; Borrowers and Guarantors release and discharge
Lender from any and all claims and causes of action, whether known or unknown
and whether now existing or hereafter arising, including without limitation, any
usury claims, that have at any time been owned, or that are hereafter owned, in
tort
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or in contract by Borrowers and their affiliates and Guarantors and that arise
out of any one or more circumstances or events that occurred prior to the date
of this Agreement. Moreover, Borrowers and their affiliates and Guarantors,
jointly and severally, waive any and all claims now or hereafter arising from or
related to any delay by Lender in exercising any rights or remedies under the
Loan Documents, including, without limitation, any delay in foreclosing any
collateral securing any of the Notes.
8. Bankruptcy.
(a) In entering into this Agreement, Borrowers, Guarantors and Lender
hereby stipulate, acknowledge and agree that Lender gave up
valuable rights and agreed to forbear from exercising legal
remedies available to it in exchange for the promises,
representations, acknowledgements and warranties of Borrower and
Guarantor as contained herein and that Lender would not have
entered into this Agreement but for such promises,
representations, acknowledgements, agreements, and warranties,
all of which have been accepted by Lender in good faith, the
breach of which by Borrower or Guarantor in any way, at any time,
now or in the future, would admittedly and confessedly constitute
cause for dismissal of any such bankruptcy petition pursuant to
11 U.S.C.ss.1112(b).
(b) As additional consideration for Lender agreeing to forbear from
immediately enforcing its rights and remedies under the Credit
Agreement and in the Loan Documents, including but not limited to
the institution of foreclosing proceedings, Borrowers and
Guarantors agree that in the event a bankruptcy petition under
any Chapter of the Bankruptcy Code (11 U.S.C.ss.101, et -- seq.)
is filed by or against Borrowers at any time after the execution
of this Agreement, Lender shall be entitled to the immediate
entry of an order from the appropriate bankruptcy court granting
Lender complete relief from the automatic stay imposed byss.362
of the Bankruptcy Code (11 U.S.C.ss.362) to exercise its
foreclosure and other rights, including but not limited to
obtaining a foreclosure judgement and foreclosure sale, upon the
filing with the appropriate court of a motion for relief from the
automatic stay with a copy of this Agreement attached thereto.
Borrowers and Guarantors specifically agree (i) that upon filing
a motion for relief from the automatic stay, Lender shall be
entitled to relief from the stay without the necessity of an
evidentiary hearing and without the necessity or requirement of
the Lender to establish or prove the value of the Property, the
lack of adequate protection of its interest in the Property, or
lack of equity in the Property; (ii) that the lifting of the
automatic stay hereunder by the appropriate bankruptcy court
shall be deemed to be "for cause" pursuant to ss.362(d)(1) of the
Bankruptcy Code (11 U.S.C.ss.362(d)(1)); and (iii) that Borrowers
and Guarantors will not directly or indirectly oppose or
otherwise defend against Lender's efforts to gain relief from the
automatic stay. This provision is not intended to preclude
Borrowers or Guarantors from filing for protection under any
Chapter of the Bankruptcy Code. The remedies prescribed in this
paragraph are not exclusive and shall not limit Lender's rights
under the Loan Documents, this Agreement or under any law.
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(c) All of the above terms and conditions have been freely bargained
for and are all supported by reasonable and adequate
consideration and the provisions herein are material inducements
for Lender entering into this Agreement.
9. Miscellaneous.
a) Expenses. Borrowers hereby jointly and severally agree to pay any
and all reasonable expenses of the Lender in anyway relating to
this Agreement, including but not limited to appraisal fees, lien
and title search fees, borrowing base monitoring fees and actual
attorneys' fees simultaneously with the closing of the sale of
assets of PTS described above out of ongoing operations, as
appropriate.
b) Reaffirmation. Each of the Guarantors hereby acknowledges and
reaffirms its obligations and liabilities under its Guaranty and
consents to the modifications made and which may be made to the
Credit Agreement and the Notes pursuant to the terms of this
Agreement.
c) Time is of the essence.
d) Full Force and Effect. Except as expressly here and amended, the
terms and conditions of the Credit Agreement and the other Loan
Documents remain in full force and effect.
e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which need not contain the signatures of
more than one party and all of which taken together shall
constitute one in the same original same instruments.
BORROWER
PNI SYSTEMS, LLC
By: Preferred Networks, Inc., its manager
By: /s/ Xxxx X. Xxxxxxx
Title: Chief Executive Officer
PREFERRED NETWORKS, INC.
By: /s/ Xxxx X. Xxxxxxx
Title: Chief Executive Officer
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GUARANTORS
PNI SPECTRUM, LLC PREFERRED TECHNICAL SERVICES, INC.
By: Preferred Networks, Inc., its Manager
By: /s/ Xxxx X. Xxxxxxx
By: /s/ Xxxx X. Xxxxx Title: Chief Executive Officer
Title: Secretary
PNI GEORGIA, INC. EPS WIRELESS, INC.
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxx
Title: Chief Executive Officer Title: Secretary
MERCURY PAGING & HTB COMMUNICATIONS, INC.
COMMUNICATIONS, INC.
By: /s/ Xxxx X. Xxxxxxx
By: /s/ Xxxx X. Xxxxxxx Title: Chief Executive Officer
Title: Chief Executive Officer
CUSTOM PAGE, INC. M.P.C. DISTRIBUTORS, INC.
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxx
Title: Chief Executive Officer Title: Chief Executive Officer
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LENDER
NATIONSBANK, N.A.
By: /s/ Xxxxxxx X. Xxx
Title: Assistant Vice President
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