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EXHIBIT 10.32
EXECUTION COPY
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") dated as of
April 11, 1997, by and among PNI SYSTEMS, LLC, a Georgia limited liability
company (the "Company"), PREFERRED NETWORKS, INC., a Delaware corporation (the
"Parent", the Parent, together with the Company, the "Borrowers"), and
NATIONSBANK, N.A. (SOUTH) (the "Lender").
WHEREAS, the Borrowers and the Lender have entered into that certain
Credit Agreement dated as of August 8, 1996, as amended as of December 20, 1996
and as of March 12, 1997 (the "Credit Agreement");
WHEREAS, the Parent advised the Lender that the Parent has entered into
a letter agreement dated April 9, 1997 (the "Letter Agreement"), by and among
the Parent and PNC Capital Corp., Centennial Fund IV, L.P., Fleet Equity
Partners, Inc., Saugatuck Capital III and Primus Venture Fund III (the
"Investors"), outlining the basic terms on which (a) the Investors have agreed
to purchase from the Parent, and the Parent has agreed to issue to the
Investors, shares of the Parent's Class A Redeemable Preferred Stock (the
"Preferred Stock") and (b) the Parent has agreed to issue to the Investors
warrants (the "Warrants") to purchase up to 11,500,000 shares of Common Stock
of the Parent, in each case, subject to the terms and conditions to be
contained in definitive documentation evidencing such transactions (which
conditions will include approval of certain aspects of such transactions by the
shareholders of the Parent);
WHEREAS, the Parent has advised the Lender that the Investors are
willing to make a $10,000,000 bridge loan to the Parent (the "Investor Loan")
which will be due and payable in full on the earlier of the date of issuance of
the Preferred Stock or June 30, 1997;
WHEREAS, in connection with the foregoing transactions, the Borrowers
have requested that the Lender consent to such transactions and agree to amend
certain provisions of the Credit Agreement, all on, and subject to, the terms
and conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
Section 1. General Amendments to Credit Agreement. The parties hereto
agree that the Credit Agreement is amended as follows:
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(a) The Credit Agreement is amended by deleting from Section 1.1
thereof the definition of the term "Company Commitment" in its entirety and
substituting in its place the following:
"Company Commitment" shall mean the obligation of the Lender to
make Company Loans to the Company in an aggregate principal amount at
any one time outstanding up to but not exceeding $9,250,000.
(b) The Credit Agreement is amended by deleting Section 9.12 in its
entirety and substituting in its place the following:
"The Parent shall fail to raise an aggregate amount of Net
Proceeds of Equity Issuances and Subordinated Debt greater than or
equal to (a) $15,000,000 during the period commencing on the date hereof
and ending on July 1, 1997 and (b) $20,000,000 (including amounts raised
during the period referred to in the preceding clause (a)) during the
period commencing on date hereof and ending on January 31, 1998."
Section 2. Conditions Precedent to Effectiveness of this Amendment. The
effectiveness of this Amendment is subject to receipt by the Lender of each of
following, each in form and substance satisfactory to the Lender:
(a) A counterpart of this Amendment duly executed by the Company,
the Parent and each Guarantor; and
(b) Such other documents, instruments and agreements as the Lender
may reasonably request.
Section 3. Amendments to Credit Agreement Regarding the Purchase
Agreement.
(a) Subject to the immediately following subsection (b), the Credit
Agreement is amended by deleting from Section 1.1 thereof the definition of the
term "Change of Control" in its entirety and substituting in its place the
following:
"Change in Control" shall mean any of the following: (i) if any
Person or two or more Persons (other than Xxxx Xxxxxxx) acting in
concert, shall acquire "beneficial ownership" within the meaning of Rule
13d-3 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), directly or indirectly, of capital stock or securities of the
Parent representing 20% or more of the aggregate voting power of all
classes of capital stock and securities of the Parent on a fully diluted
basis; or (ii) if, (x) in any twelve-month period, any member of the
Management Group shall terminate his employment with the Parent or
otherwise cease to be employed by the Parent in a senior management
position and (y) within 120 days after such member shall terminate his
employment or shall
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otherwise cease to be so employed, the Parent shall fail to replace
such member with an individual having comparable industry experience.
(b) The effectiveness of the amendment provided for in the
immediately preceding subsection (a), is subject to satisfaction of the
following conditions:
(i) The Lender being reasonably satisfied with the terms and
conditions of the Purchase Agreement (as defined below) and the
Warrants, which satisfaction the Lender agrees to evidence by way of a
letter to such effect from the Lender to the Parent; and
(ii) Receipt by the Lender of each of the following in form
and substance reasonably satisfactory to the Lender:
(A) A copy of the fully executed Letter Agreement;
(B) A fully executed copy of the definitive
purchase agreement (the "Purchase Agreement") entered into by
the Parent and the Investors relating to the acquisition by the
Investors of the Preferred Stock and the Warrants, together with
all exhibits, schedules and other attachments thereto, the terms
and conditions of which Purchase Agreement must be substantially
responsive to the terms of the Letter Agreement;
(C) A copy of the Certificate of Designations
regarding the Preferred Stock certified as of a recent date by
the Secretary of State of the jurisdiction of incorporation of
the Parent;
(D) A fully executed copy of each warrant agreement
and warrant certificate relating to the Warrants issued to each
Investor; and
(E) Such other documents, instruments and agreements
relating to the transactions contemplated by the Purchase
Agreement as the Lender may reasonably request:
Section 4. Lender's Consent to Investor Loan.
(a) Subject to the immediately following subsection (b), the Lender
agrees that notwithstanding Section 7.3 of the Credit Agreement, the Parent may
incur Indebtedness owing to the Investors in any aggregate principal amount not
to exceed $10,000,000 at any one time outstanding.
(b) The effectiveness of the immediately preceding subsection (a),
is subject to satisfaction of the following conditions:
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(i) The Lender being reasonably satisfied with the terms of
the Investor Loan, which satisfaction the Lender agrees to evidence by
way of a letter to such effect from the Lender to the Parent; and
(ii) Receipt by the Lender of each of the following in form
and substance reasonably satisfactory to the Lender:
(A) A copy of the fully executed loan agreement,
promissory note (or notes), and all other documents or
instruments evidencing or relating to the Investor Loan;
(B) A Subordination Agreement executed by the
Investors subordinating the Investor Loan on term and conditions
satisfactory to the Lender in its sole and absolute discretion;
and
(C) Such other documents, instruments and agreements
relating to the Investor Loan as the Lender may reasonably
request.
Section 5. Representations. Each of the Borrowers represents and
warrants to the Lender that:
(a) Authorization, No Conflict. The execution and delivery by the
Borrowers of this Amendment and the performance by the Borrowers of this
Amendment and the Credit Agreement, as amended by this Amendment, in accordance
with their respective terms (a) have been duly authorized by all requisite
corporate and, to the extent required, stockholder action (or membership action
in the case of a limited liability company) on the part of each Borrower and
(b) will not (i) violate any provision of Applicable Law, or any order of any
Governmental Authority or any provision of the certificate in incorporation,
articles of organization or other comparable organizational instrument or
by-laws or operating agreement of either Borrower, (ii) violate, conflict with,
result in a breach of or constitute (alone or with notice or lapse of time or
both) a default or an event of default under any Material Contract to which
either Borrower is a party or by which each Borrower or any of its property is
or may be bound, or (iii) result in the creation or imposition of any Lien upon
any property or assets of the Borrowers.
(b) Enforceability. This Amendment has been fully executed and
delivered by a duly authorized officer of each Borrower and each of this
Amendment and the Credit Agreement, as amended by this Amendment, is a legal,
valid and binding obligation of the Borrowers enforceable against the Borrowers
in accordance with its respective terms except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other laws affecting generally the enforcement of creditors' rights and by
general principles of equity (regardless of whether considered in a proceeding
in equity or at law).
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Section 6. Reaffirmation by Borrowers. Each Borrower hereby repeats and
reaffirms all representations and warranties made by such Borrower to the Lender
in the Credit Agreement and the other Loan Documents to which it is a party on
and as of the date hereof with the same force and effect as if such
representations and warranties were set forth in this Amendment in full.
Section 7. Reaffirmation by Guarantors. Each of the Guarantor reaffirms
its continuing obligations to the Lender under its Guaranty, and agrees that
this Amendment shall not in any way effect the validity and enforceability of
such Guaranty, or reduce, impair or discharge the obligations of such Guarantor
thereunder.
Section 8. Certain References. Each reference to the Credit Agreement in
any of the Loan Documents shall be deemed to be a reference to the Credit
Agreement as amended by this Amendment.
Section 9. Expenses. The Company shall reimburse the Lender upon demand
for all costs and expenses (including attorneys' fees) incurred by the Lender in
connection with the preparation, negotiation and execution of this Amendment
and the other agreements and documents executed and delivered in connection
herewith.
Section 10. Benefits. This Amendment shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
Section 11. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
Section 12. Effect. Except as expressly herein amended, the terms and
conditions of the Credit Agreement and the other Loan Documents remain in full
force and effect. The amendments contained herein shall be deemed to have
prospective application only, unless otherwise specifically stated herein.
Section 13. Counterparts. This Agreement may be executed in any number
of counterparts, each of which need not contain the signature of more than one
party and all of which taken together shall constitute one and the same
original instrument.
Section 14. Definitions. All capitalized terms not otherwise defined
herein are used herein with the respective definitions given them in the Credit
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to Credit Agreement to be executed as of the date first above written.
THE LENDER:
NATIONSBANK, N.A. (SOUTH)
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: Assistant Vice President
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THE PARENT:
PREFERRED NETWORKS, INC.
By: /s/ Xxx Xxxxx Xxxxxx
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Name: Xxx Xxxxx Xxxxxx
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Title: Chief Financial Officer
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THE COMPANY:
PNI SYSTEMS, LLC
By: Preferred Networks, Inc., its Manager
By: /s/ Xxx Xxxxx Xxxxxx
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Name: Xxx Xxxxx Xxxxxx
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Title: Chief Financial Officer
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[Signatures Continued on Next Page]
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[SIGNATURE PAGE TO THIRD AMENDMENT TO CREDIT AGREEMENT DATED
AS OF APRIL 11, 1997 FOR PREFERRED NETWORKS, INC.]
THE GUARANTORS
PNI SPECTRUM, LLC PREFERRED TECHNICAL
SERVICES, INC.
By: Preferred Networks, Inc., its Manager
By: /s/ Xxx Xxxxx Xxxxxx
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By: /s/ Xxx Xxxxx Xxxxxx Name: Xxx Xxxxx Xxxxxx
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Name: Xxx Xxxxx Xxxxxx Title: Chief Financial Officer
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Title: Chief Financial Officer
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PNI GEORGIA, INC. EPS WIRELESS, INC.
By: /s/ Xxx Xxxxx Xxxxxx By: /s/ Xxx Xxxxx Xxxxxx
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Name: Xxx Xxxxx Xxxxxx Name: Xxx Xxxxx Xxxxxx
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Title: Vice President Title: Vice President
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MERCURY PAGING & HTB COMMUNICATIONS, INC.
COMMUNICATIONS, INC.
By: /s/ Xxx Xxxxx Xxxxxx By: /s/ Xxx Xxxxx Xxxxxx
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Name: Xxx Xxxxx Xxxxxx Name: Xxx Xxxxx Xxxxxx
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Title: Chief Financial Officer Title: Chief Financial Officer
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CUSTOM PAGE, INC. M.P.C. DISTRIBUTORS, INC.
By: /s/ Xxx Xxxxx Xxxxxx By: /s/ Xxx Xxxxx Xxxxxx
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Name: Xxx Xxxxx Xxxxxx Name: Xxx Xxxxx Xxxxxx
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Title: Chief Financial Officer Title: Chief Financial Officer
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