AMENDMENT NUMBER FIVE TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Amendment Number Five to Amended and Restated Loan and Security
Agreement ("Amendment") is entered into as of November 30, 1997 by and between
FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), and PORTA
SYSTEMS CORP., a Delaware corporation ("Borrower"), in light of the following:
FACT ONE: Borrower and Foothill have previously entered into that certain
Amended and Restated Loan and Security Agreement, dated as of November 28, 1994,
as amended as of February 13, 1995, March 30, 1995, March 12, 1996 and August
26, 1997 (collectively, the "Agreement").
FACT TWO: Borrower and Foothill desire to further amend the Loan Agreement
as provided for and on the conditions herein.
NOW, THEREFORE, Borrower and Foothill hereby amend the Loan Agreement as
follows:
1. DEFINITIONS. All initially capitalized terms used in this Amendment
shall have the meanings given to them in the Agreement unless specifically
defined herein.
2. AMENDMENT.
2.1. Renewal and Extension of Term of Agreement. The term of the
Agreement expires on November 30, 1998. Borrower and Foothill desire to renew
the term of the Agreement and extend the expiration date of the term of the
Agreement to August 31, 1999. The Agreement is amended as follows to reflect
such renewal and extension:
A. The definition of "Renewal Date" in Section 1.1 of the Agreement
is hereby amended by deleting such definition in its entirety and replacing it
with the following definition:
"'Renewal Date' means August 31, 1999."
B. Section 3.4 of the Agreement is hereby amended by deleting such
Section in its entirety and replacing it with the following language:
"3.4 Term. This Agreement shall become effective upon the execution and
delivery hereof by Borrower and Foothill and shall continue in full force and
effect for a term ending on August 31, 1999. The foregoing notwithstanding,
Foothill shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default."
3. REPRESENTATIONS AND WARRANTIES. Borrower hereby affirms to Foothill
that all of Borrower's representations and warranties set forth in the Agreement
are true, complete and accurate in all respects as of the date hereof.
4. NO DEFAULTS. Borrower hereby affirms to Foothill that no Event of
Default has occurred and is continuing as of the date hereof.
5. CONDITIONS PRECEDENT. The effectiveness of this Amendment is expressly
conditioned upon each of the following:
(a) Receipt by Foothill of an executed copy of this Amendment, and
(b) Borrower's agreement, as evidenced by its signature on this
Amendment, to modify its outstanding Warrants dated November 28, 1994 and
March 12, 1996, respectively, as provided on Exhibit A attached hereto.
6. COSTS AND EXPENSES. Borrower shall pay to Foothill all of Foothill's
out-of-pocket costs and expenses (including, without limitation, the fees and
expenses of its counsel, which counsel may include any local counsel deemed
necessary, search fees, filing and recording fees, documentation fees, appraisal
fees, travel expenses, and other fees) arising in connection with the
preparation, execution, and delivery of this Amendment and all related
documents.
7. LIMITED EFFECT. In the event of a conflict between the terms and
provisions of this Amendment and the terms and provisions of the Agreement, the
terms and provisions of this Amendment shall govern. In all other respects, the
Agreement, as amended and supplemented hereby, shall remain in full force and
effect.
8. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which when so executed and delivered shall be deemed to be an original. All
such counterparts, taken together, shall constitute one and the same Amendment.
This Amendment shall become effective upon the execution of a counterpart of
this Amendment by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first set forth above.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By:__________________________________
Title:_______________________________
2
PORTA SYSTEMS CORP.,
a Delaware corporation
By:__________________________________
Title:_______________________________
3
Each of the undersigned affiliates of Porta Systems Corp. ("Porta") is
aware of the terms of the above Amendment Number Five to Amended and Restated
Loan and Security Agreement, dated as of November 28, 1994 (the "Loan
Agreement"), and acknowledges that all of such affiliate's obligations under any
of the Collateral Documents (as defined in the Assignment Agreement) are and
shall continue in full force and effect in favor of Foothill Capital Corporation
("Foothill"), including the obligations to guarantee the obligations of Porta
owing to Foothill and to secure such obligations pursuant to the terms of such
Collateral Documents. "Assignment Agreement" shall have the meaning given to it
in the Loan Agreement.
ASTER CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
CPI HOLDING CORP.
By:__________________________________
Name:________________________________
Title:_______________________________
CRITERION PLASTICS, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
DISPLEX, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
4
MIROR TELEPHONY SOFTWARE, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
PORTA FOREIGN SALES CORP.
By:__________________________________
Name:________________________________
Title:_______________________________
PORTA SYSTEMS EXPORT CORP.
By:__________________________________
Name:________________________________
Title:_______________________________
PORTA SYSTEMS INTERNATIONAL CORP.
By:__________________________________
Name:________________________________
Title:_______________________________
PORTA SYSTEMS LEASING CORP.
By:__________________________________
Name:________________________________
Title:_______________________________
5
PORTA SYSTEMS OVERSEAS CORP.
By:__________________________________
Name:________________________________
Title:_______________________________
LERO INDUSTRIES LTD.
By:__________________________________
Name:________________________________
Title:_______________________________
PORTA SYSTEMS, LIMITED
By:__________________________________
Name:________________________________
Title:_______________________________
XXXXXXXXXX BUSINESS SYSTEMS LTD.
By:__________________________________
Name:________________________________
Title:_______________________________
XXXXXXXXXX COMMUNICATIONS LTD.
By:__________________________________
Name:________________________________
Title:_______________________________
6
PORTA SYSTEMS S.A. de C.V.
By:__________________________________
Name:________________________________
Title:_______________________________
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Exhibit A to Amendment Number Five
1. As of November 30, 1997, Foothill holds Warrants for the adjusted number
of shares of Borrower's Common Stock, $.01 par value, exercisable at the
following prices:
Exercise
No. of Shares Price
------------- --------
November 28, 1994 Warrant 164,627 $8.9828
Xxxxx 00, 0000 Xxxxxxx 295,441 $3.3848
2. Borrower and Foothill each agrees to complete the following amendments to
each of the Warrants on or before January 15, 1998:
(a) The exercise price shall be reduced to $3.00 per share,
(b) The maturity date shall be extended to November 30, 2002,
(c) Upon written notice to Foothill, Borrower shall have the right
to require Foothill to exercise the Warrants at any time that
the closing price of Borrower's Common Stock is $6.00 or
greater on the 20 consecutive trading days immediately prior
to such notice, and
(d) Foothill shall have the right to make a cashless exercise of
the Warrants.
3. Borrower agrees to file a Registration Statement for the underlying shares
of Common Stock that are subject to the Warrants prior to March 31, 1998.
Please initial here.
Foothill Capital Corporation_____
Porta Systems Corp._____
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AMENDMENT NUMBER ONE TO WARRANT
This Amendment Number One to Warrant ("Amendment") is executed and
delivered as of January __, 1998 by and between PORTA SYSTEMS CORP. (the
"Company") and FOOTHILL CAPITAL CORPORATION ("Foothill").
RECITALS
1. Company issued a warrant to Foothill on March 12, 1996 for the right to
purchase 1,000,000 shares of Common Stock of the Company at an exercise price of
$1.00 per share (the "Warrant").
2. As a result of certain adjustments provided under the terms of the
Warrant, the Warrant is currently exercisable into 295,441 shares of the
Company's Common Stock at an adjusted exercise price of $3.3848 per share.
3. Company and Foothill have entered into Amendment Number Five dated
November 30, 1997 to that certain Amended and Restated Loan and Security
Agreement, dated as of November 28, 1994 ("Loan Amendment").
4. As a condition precedent to the Loan Amendment, the Company and
Foothill have agreed to amend the Warrant exercise price and certain other
provisions as provided for herein.
NOW, THEREFORE, Company and Foothill hereby amend the Warrant as follows:
1. The face page and first paragraph of the Warrant is hereby modified in
its entirety to read as follows:
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND
MUST BE HELD INDEFINITELY UNLESS SUBSEQUENTLY REGISTERED UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR DISPOSED
OF PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
WARRANT
TO PURCHASE COMMON STOCK OF
PORTA SYSTEMS CORP.
Void After November 30, 2002
PORTA SYSTEMS CORP., a Delaware corporation (the "Company"), hereby
certifies that, for value received the adequacy and receipt of which
are hereby acknowledged, FOOTHILL CAPITAL CORPORATION, a California
corporation ("Foothill"), or its registered assigns (collectively,
the "Warrantholders"), is entitled, subject to the terms and
conditions set forth in this Warrant (said Warrant and any warrants
issued in exchange herefor or transfer or replacements hereof are
collectively referred to as the "Warrants"), to purchase from the
Company two hundred ninety-five thousand four hundred and forty-one
(295,441) fully paid and nonassessable shares of Common Stock of the
Company, par value $.01 per share (the "Common Stock," which term is
further defined in Section 4(i) hereof) in whole or in part, at any
time or from time to time until 5 p.m. California local time on
November 30, 2002 ("Exercise Period") at a purchase price equal to
$3.00 per share (the "Exercise Price"), the number of such shares of
Common Stock and the Exercise Price being subject to adjustment as
provided herein. The Company shall have the right to redeem any or
all of the Warrants for $.0001 per share of Common Stock subject to
the Warrants if, at any time on or after November 30, 1997 the
average closing price per share of the Common Stock on any 20
consecutive trading days ending no more than 10 days prior to the
date of the notice of redemption, has been at least 200% of the
Exercise Price in effect on such date. Notice of at least 30 days
prior to the date scheduled for such redemption (the "Call Date")
shall be given to Warrantholders in accordance with the provisions
of Section 13(b). Warrantholders shall continue to have the right to
exercise the Warrants until the close of business on the fifth
business day immediately preceding the Call Date.
2. The following is added after the last sentence of Paragraph 1:
In lieu of exercising this Warrant by payment of the Exercise Price,
the Warrantholder shall have the right to exchange or convert this
Warrant, in whole or in part, to the extent that this Warrant has
not been exercised for the number of shares of Common Stock
determined by (A) multiplying (x) the number of shares as to which
this Warrant is being exercised by (y) the difference between the
current value per share of Common Stock on the date of exercise and
the Exercise Price per share, as in effect on such date, and (B)
dividing the result so obtained by the current value per share of
Common Stock on the date of exercise. The date of exercise shall
mean, for purposes of this Paragraph 1, the date on which this
Warrant accompanied by the notice of exercise is received by the
Company. The current value per share of Common Stock shall be
determined as follows:
(i) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such exchange
or listed for trading on the Nasdaq Stock Market ("Nasdaq") or other
automated quotation system which provides information as to the last
sale price, the current value shall be the average of the reported
last sale prices of one share of Common Stock on such exchange or
system on the last five (5) trading days prior to the date of
exercise of this Warrant,
2
or if, on any of such dates, no such sale is made on such day, the
average of the closing bid and asked prices for such date on such
exchange or system shall be used; or
(ii) If the Common Stock is not so listed or admitted to
unlisted trading privileges, the current value shall be the average
of the reported last bid and asked prices of one share of Common
Stock as reported by Nasdaq, the National Quotation Bureau, Inc. or
other similar reporting services, on the last five (5) trading days
prior to the date of the exercise of this Warrant; or
(iii) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the current value of one share of Common Stock shall be an
amount, not less than book value, determined in such reasonable
manner as may be prescribed by the Board of Directors of the
Company.
3. The definition of "Additional Shares of Common Stock" set forth in
Paragraph 4 of the Warrant shall be amended by changing "March 12, 1996" to
"December 31, 1997."
4. Subparagraph (b) of Section 10 is deleted in its entirety and the
following shall be inserted to read as follows:
(b) Required Registration. The Company shall promptly prepare
and file a registration statement under the Securities Act covering
the Registrable Stock no later than March 31, 1998.
5. Subparagraph (i) of Paragraph 10(d) is restated in its entirety to read
as follows:
(i) In accordance with the Securities Act and the rules and
regulations of the Commission, prepare and file with the Commission
a registration statement on the form of registration statement
appropriate with respect to such securities and use its reasonable
best efforts to cause such registration statement to become and
remain effective for such period as necessary for the securities
covered by such registration statement to be sold, and prepare and
file with the Commission such amendments to such registration
statement and supplements to the prospectus contained therein as may
be necessary to keep such registration statement effective and such
registration statement and prospectus accurate and complete;
6. Notwithstanding any provision to the contrary, for purposes of
Paragraph 4 of the Warrant, adjustments, if any, shall be calculated after
December 31, 1997. The Company represents that since December 11, 1997 no event
has occurred which would require any adjustment pursuant to Paragraph 4 of the
Warrant based upon the amended Exercise Price set forth in this Amendment.
7. Except as modified herein, the Warrant remains in full force and effect
and has not been amended or modified.
3
Company and Foothill have executed and delivered this Amendment as of the
date set forth in the first paragraph hereof.
PORTA SYSTEMS CORP.,
a Delaware corporation
By:__________________________________
Title:_______________________________
FOOTHILL CAPITAL CORPORATION
a California corporation
By:__________________________________
Title:_______________________________
4
AMENDMENT NUMBER THREE TO WARRANT
This Amendment Number Three to Warrant ("Amendment") is executed and
delivered as of January __, 1998 by and between PORTA SYSTEMS CORP. (the
"Company") and FOOTHILL CAPITAL CORPORATION ("Foothill").
RECITALS
1. Company issued a warrant to Foothill on November 28, 1994, (which was
subsequently amended on February 13, 1995 and March 12, 1996) for the right to
purchase 412,500 shares of Common Stock of the Company at an exercise price of
$5.78 per share (the "Warrant").
2. As a result of certain adjustments provided under the terms of the
Warrant, the Warrant is currently exercisable into 164,627 shares of the
Company's Common Stock at an adjusted exercise price of $8.9828 per share.
3. Company and Foothill have entered into Amendment Number Five dated
November 30, 1997 to that certain Amended and Restated Loan and Security
Agreement, dated as of November 28, 1994 ("Loan Amendment").
4. As a condition precedent to the Loan Amendment, the Company and
Foothill have agreed to amend the Warrant exercise price and certain other
provisions as provided for herein.
NOW, THEREFORE, Company and Foothill hereby amend the Warrant as follows:
1. The face page and first paragraph of the Warrant is hereby modified in
its entirety to read as follows:
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND
MUST BE HELD INDEFINITELY UNLESS SUBSEQUENTLY REGISTERED UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR DISPOSED
OF PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
WARRANT
TO PURCHASE COMMON STOCK OF
PORTA SYSTEMS CORP.
Void After November 30, 2002
PORTA SYSTEMS CORP., a Delaware corporation (the "Company"), hereby
certifies that, for value received the adequacy and receipt of which
are hereby acknowledged, FOOTHILL CAPITAL CORPORATION, a California
corporation ("Foothill"), or its registered assigns (collectively,
the "Warrantholders"), is entitled, subject to the terms and
conditions set forth in this Warrant (said Warrant and any warrants
issued in exchange herefor or transfer or replacements hereof are
collectively referred to as the "Warrants"), to purchase from the
Company one hundred sixty-four thousand six hundred twenty-seven
(164,627) fully paid and nonassessable shares of Common Stock of the
Company, par value $.01 per share (the "Common Stock," which term is
further defined in Paragraph 4(i) hereof) in whole or in part, at
any time or from time to time until 5 p.m. California local time on
November 30, 2002 ("Exercise Period") at a purchase price equal to
$3.00 per share (the "Exercise Price"), the number of such shares of
Common Stock and the Exercise Price being subject to adjustment as
provided herein. The Company shall have the right to redeem any or
all of the Warrants for $.0001 per share of Common Stock subject to
the Warrants if, at any time on or after November 30, 1997 the
average closing price per share of the Common Stock on any 20
consecutive trading days ending no more than 10 days prior to the
date of the notice of redemption, has been at least 200% of the
Exercise Price in effect on such date. Notice of at least 30 days
prior to the date scheduled for such redemption (the "Call Date")
shall be given to Warrantholders in accordance with the provisions
of Section 13. Warrantholders shall continue to have the right to
exercise the Warrants until the close of business on the fifth
business day immediately preceding the Call Date.
2. The phrase in Paragraph 1 which reads "(or in the case of the Warrants
for the additional 135,500 shares if the Company exercises its right to extend
the Renewal Date, during the portion of the Exercise Period commencing with the
Renewal Date)" is hereby deleted in its entirety.
3. The following is added after the last sentence of Paragraph 1:
In lieu of exercising this Warrant by payment of the Exercise Price,
the Warrantholder shall have the right to exchange or convert this
Warrant, in whole or in part, to the extent that this Warrant has
not been exercised for the number of shares of Common Stock
determined by (A) multiplying (x) the number of shares as to which
this Warrant is being exercised by (y) the difference between the
current value per share of Common Stock on the date of exercise and
the Exercise Price per share, as in effect on such date, and (B)
dividing the result so obtained by the current value per share of
Common Stock on the date of exercise. The date of exercise shall
mean, for purposes of this Paragraph 1, the date on which this
Warrant accompanied by the notice of exercise is received by the
Company. The current value per share of Common Stock shall be
determined as follows:
(i) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such exchange
or listed for trading on the
2
Nasdaq Stock Market ("Nasdaq") or other automated quotation system
which provides information as to the last sale price, the current
value shall be the average of the reported last sale prices of one
share of Common Stock on such exchange or system on the last five
(5) trading days prior to the date of exercise of this Warrant, or
if, on any of such dates, no such sale is made on such day, the
average of the closing bid and asked prices for such date on such
exchange or system shall be used; or
(ii) If the Common Stock is not so listed or admitted to
unlisted trading privileges, the current value shall be the average
of the reported last bid and asked prices of one share of Common
Stock as reported by Nasdaq, the National Quotation Bureau, Inc. or
other similar reporting services, on the last five (5) trading days
prior to the date of the exercise of this Warrant; or
(iii) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the current value of one share of Common Stock shall be an
amount, not less than book value, determined in such reasonable
manner as may be prescribed by the Board of Directors of the
Company.
4. The definition of "Additional Shares of Common Stock" set forth in
Paragraph 4 of the Warrant shall be amended by changing "November 28, 1994" to
"December 31, 1997."
5. Subparagraph (b) of Paragraph 10 is deleted in its entirety and the
following shall be inserted to read as follows:
(b) Required Registration. The Company shall promptly prepare
and file a registration statement under the Securities Act covering
the Registrable Stock no later than March 31, 1998.
6. Subparagraph (i) of Paragraph 10(d) is restated in its entirety to read
as follows:
(i) In accordance with the Securities Act and the rules and
regulations of the Commission, prepare and file with the Commission
a registration statement on the form of registration statement
appropriate with respect to such securities and use its reasonable
best efforts to cause such registration statement to become and
remain effective for such period as necessary for the securities
covered by such registration statement to be sold, and prepare and
file with the Commission such amendments to such registration
statement and supplements to the prospectus contained therein as may
be necessary to keep such registration statement effective and such
registration statement and prospectus accurate and complete;
7. Notwithstanding any provision to the contrary, for purposes of
Paragraph 4 of the Warrant, adjustments, if any, shall be calculated after
December 31, 1997. The Company represents
3
that since December 11, 1997 no event has occurred which would require any
adjustment pursuant to Paragraph 4 of the Warrant based upon the amended
Exercise Price set forth in this Amendment.
8. Except as modified herein, the Warrant remains in full force and effect
and has not been amended or modified.
Company and Foothill have executed and delivered this Amendment as of the
date set forth in the first paragraph hereof.
PORTA SYSTEMS CORP.,
a Delaware corporation
By:__________________________________
Title:_______________________________
FOOTHILL CAPITAL CORPORATION
a California corporation
By:__________________________________
Title:_______________________________
4
