AMENDMENT NO. 1
TO
LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 1 to Loan and Security Agreement dated and
effective as of the 23rd day of October 1998 (the "Amendment") by and between
Compu-XXXX, Inc., a Delaware Corporation ("Lender") and LocalNet Communications,
Inc., a Florida corporation ("Borrower").
RECITALS
WHEREAS, Lender and Borrower entered into a Loan and Security
Agreement dated October 6, 1998 (the "Loan and Security Agreement") pursuant to
which Lender agreed to loan up to $500,000 to Borrower.
WHEREAS, Borrower desires to borrow from Lender and Lender
desires to loan to Borrower up to an additional amount of $500,000 or an
aggregate of up to $1,000,000 in principal.
WHEREAS, Lender and Borrower desire to amend the Loan and
Security Agreement upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the respective
representations, warranties, agreements and covenants in this Amendment, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and subject to the conditions contained in this Amendment,
the parties intending to be legally bound, hereby agree as follows:
SECTION 1
DEFINITIONS
1. Capitalized terms used but not defined herein, shall have been meaning
ascribed to them in the Loan and Security Agreement.
SECTION 2
AMENDMENTS
2.1 Section 1.1(m) of the Loan and Security Agreement is amended in its
entirety to read as follows: ""Loan" shall mean each loan or any other loan
or loans made by Lender to Borrower pursuant to this Agreement as amended."
2.2 Section 1.1 (n)(ii) of the Loan and Security Agreement is amended to
replace the word "Note" for the phrase "Secured Promissory Note."
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2.3 Section 1.1(o) of the Loan and Security Agreement is amended in its
entirety to read as follows: " "Notes" shall mean (A) The $500,000 Secured
Promissory Note dated October 6, 1998 executed by Borrower pursuant to the
terms of the Loan and Security Agreement and (B) the $500,000 Secured
Promissory Note of even date (the "Second Note") executed by Borrower
pursuant to the terms of the Loan and Security Agreement as amended hereby,
collectively and singly.
2.4 The amount provided for in Section 2.1 of the Loan and Security Agreement
is amended to read One Million Dollars ($1,000,000) and the defined term
"Amount" shall mean such $1,000,000.
2.5 The date "September __, 1999" in section 2.2 of the Loan and Security
Agreement is amended to October 6, 1999."
2.6 Section 3.2 of the Loan and Security Agreement is amended in its entirety
to read as follows:
"Pledge of Securities. As additional security to ensure prompt
payment and performance of all Obligations, Xxxx X. Theale,
Jr., the Chief Executive Officer of the Borrower, and Xxxxxx
X. Xxxxxx, XX (collectively, the "Pledgors"), have each agreed
to pledge his respective equity interest in the Borrower as
more particularly set forth under the terms and conditions of
the Pledge Agreement."
2.7 Section 5.5 of the Loan and Security Agreement is amended to change the
reference to Schedule 3.1 therein to Schedule 5.5, which Schedule 5.5 is
attached hereto.
2.8 Section 8.10 of the Loan and Security Agreement is amended to eliminate the
phrase ", subject to the provisions of an Intercreditor Agreement among the
Lender, [Beacon] and the Borrower of even date herewith."
2.9 Section 11.1(b) of the Loan and Security Agreement shall be amended to add
the phrase "or any other agreement between Lender and Borrower" between the
phrases "other Loan Document" and "or any loan or lease" in the second line
of Section 11.1 (b).
2.10 In Section 12.1 (a) of the Loan and Security Agreement is amended such that
the phrase the "companion Pledge Agreement" means the Pledge Agreements of
the Pledgors jointly and severally.
2.11 Section 12.1 (c) of the Loan and Security Agreement shall be amended such
that reference therein to Schedule 3.1 shall be Schedule 12.1(c), which
Schedule 12.1(c) is attached hereto.
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SECTION 3
ADDITIONAL CONDITIONS TO ADVANCES
3.1 In addition to the conditions set forth in Sections 2.6 and 2.7 of the Loan
and Security Agreement, Lender's obligation to make each Advance on or
after the date hereof is conditioned upon, and is subject to, the
fulfillment of each of the following conditions. Lender shall have received
each of the following, in form and substance satisfactory to Lender:
(a) The duly executed copy of the Second Note.
(b) An amendment to the Boca Research, Inc. ("Boca") Subordination
Agreement pursuant to which Boca agrees to subordinate any security
interest it may have in the Collateral to Compu-DAWN's security
interest in such Collateral to the extent of the principal amount of
at least $1,000,000 (plus any amount which Lender is required to pay
to Boca pursuant to a guaranty under a Tripartite Agreement between
Lender, Borrower and Boca of even date) plus interest accrued thereon
plus any costs incurred by the Lender in the collection of such
amounts.
(c) A duly executed Pledge Agreement from Xxxxxx X. Xxxxxx, XX, along with
all of the certificates representing his capital stock in Borrower
together with a stock power executed in blank, which stock
certificates and stock power shall be delivered to the escrow agent
named in such Pledge Agreement (the Escrow Agent") pursuant to the
terms of such Pledge Agreement.
(d) A duly executed Amendment No. 1 to the Pledge Agreement between Xxxx
X. Theale and Lender, together with a stock power relating to his
stock certificates representing his pledged LocalNet Common Shares,
which stock certificates were previously delivered to the Escrow Agent
pursuant to the terms of such Pledge Agreement.
(e) A Consulting Agreement between Borrower and Lender pursuant to which,
among other things, Compu-XXXX will act as Borrower's exclusive agent
to negotiate agreements between Borrowers and certain
telecommunication services providers and Borrower will guarantee
certain payments by certain telecommunication providers to Lender.
(f) Certified copy of all corporate (including stockholder, if required),
action taken by Borrower to authorize (a) this Amendment to the Loan
and Security Agreement, (b) the Borrowings pursuant to this Amendment
and (c) the execution, delivery and performance in accordance with the
respective terms of this Amendment and any other document execution in
connection with this Amendment.
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(g) An agreement between UniDial Incorporated ("UniDial") and Lender
providing for UniDial to pay Compu-XXXX an amount equal to five
percent (5%) of the amount upon which commissions payable by UniDial
to Borrower under an Agent's Agent between UniDial and Borrower is
determined.
[Rest of Page is Intentionally Left Blank. Signature Page follows]
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IN WITNESS WHEREOF, Borrower and Lender have executed this
Amendment by the duly authorized officers as of the date first above written.
LENDER:
ATTEST: Compu-XXXX, Inc.
_____________________________ By: /s/ Xxxx Xxxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxxx
Chief Executive Officer
BORROWER:
ATTEST: LocalNet Communications, Inc.
By:/s/ Xxxx X. Theale, Jr.
----------------- ------------------------------------
Xxxx X. Theale, Jr.
Chief Executive Officer
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Schedule 5.5
All Account Debtors of Borrower
Schedule 12.1 (c)
See Schedule 5.5
