Exhibit 4.5
AMENDMENT NUMBER SIXTEEN TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Amendment Number Sixteen to Amended and Restated Loan and Security
Agreement ("Amendment") is entered into effective as of February 1, 2005 by and
between SHF IX, a Delaware Limited Liability Company ("Lender"), and PORTA
SYSTEMS CORP., a Delaware corporation and the affiliates that are identified in
the Consent and Joinder attached to this Amendment ("Borrower"), in light of the
following:
A. Lender is successor in interest of all obligations of Borrower owed to
XXXXX FARGO FOOTHILL, INC., a California corporation ("Foothill") pursuant to an
assignment dated as of October 7, 2004 between Foothill and Lender.
B. Borrower and Foothill have previously entered into that certain Amended
and Restated Loan and Security Agreement, dated as of November 28, 1994 (as
amended and modified, from time to time, the "Agreement").
C. Borrower has requested of Lender, as successor to Foothill to further
extend the term of the Loans and to amend the Agreement as provided for and on
the conditions herein.
NOW, THEREFORE, Borrower and Lender hereby amend the 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.
(a) Section 3.4 of the Agreement is hereby deleted in its entirety
and replaced with the following:
"3.4 Term. This Agreement shall become effective upon the execution
and delivery hereof by Borrower and Lender and shall continue in full
force and effect for a term ending on April 1, 2005, and the maturity date
of the Old Term Note and New Term Note and all interest thereon shall also
be April 1, 2005. The foregoing not withstanding, Lender 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."
(b) Section 6.13 of the Agreement is hereby deleted in its entirety
and replaced with the following:
"6.13 Financial Covenants.
(a) For each calendar quarter, commencing with the quarter ending
March 31, 2005, (i) Borrower shall generate positive net income and (ii)
The Borrower's Interest Coverage Ratio (EBIDTA, as defined in the
Agreement, less capital expenditures divided by interest expense) for the
quarter shall be not less than 1.1:1.
(b) Borrower shall deliver to Lender not later than 15 business days
after the end of each calendar month, other than the third month of the
quarter, a balance sheet and statement of operations for the month,
compiled by Borrower from its books and records in a manner consistent
with the financial statements included in its Form 10-Q Quarterly Reports
and 10-K Annual Reports (collectively, the "SEC Reports") as filed with
the Securities and Exchange Commission (the "Commission"), except that the
monthly financial statements shall not be reviewed by Borrower's
independent auditors and shall not include footnotes. Borrower shall
deliver to Lender the balance sheet and statement of income for the third
month in each calendar quarter at the same time as it delivers the
quarterly net income and Interest Coverage Ratio pursuant to Section
6.13(c).
(c) The quarterly net income and the Interest Coverage Ratio for the
quarter shall be based on the financial statements contained in the SEC
Reports and shall be provided to Lender within one business day after the
earlier of the date the SEC Reports are filed with the Commission or the
date on which the SEC Reports are required to be filed with the
Commission.
3. REPRESENTATIONS AND WARRANTIES. Borrower and each Affiliate executing
this Agreement hereby affirms to Lender:
(a) that all of Borrower's representations and warranties act
forth in the Agreement are true, complete and accurate in all
respects as of the date hereof.
(b) that during the period of this extension Borrower will not pay
any antecedent debt or obligations to any Person not in the
ordinary course of its business or the business of any
subsidiary.
4. CONDITION PRECEDENT. The effectiveness of this Amendment is expressly
conditioned upon:
(a) the receipt by Lender of an executed copy of this Amendment;
(b) payment in good funds on each of February 1, 2005 and March 1,
2005 of $75,000.00, to be applied by Lender first to interest
at the rate of 12% per annum from January 1, 2005 on the New
Term Note and then to principal of New Term Note.
(c) delivery and execution of a Blocked Account Control Agreement
(the "Blocked Account Agreement") in the form attached hereto
as Exhibit 1 between and among Lender, Borrower and with
Borrower's principal depository bank, XX Xxxxxx Chase Bank,
N.A. (the "Depository") whereby the Lender is granted a first
priority lien and security interest in all of Borrower's
deposit accounts is perfected and acknowledged by the
Depository.
5. CONDITION SUBSEQUENT. Promptly upon execution of this Amendment
Borrower shall, on behalf of Lender but at Borrower's expense, undertake to
retain, no later than March 18, 2005, an investment banker reasonably
satisfactory to Borrower and Lender to advise Lender on Borrower's financial
projections, business model and valuation information for possible sale
opportunities in calendar year 2005; provided, that Borrower shall not be
required to pay a fee to such firm exceeding $25,000 plus expenses.
6. BLOCKED ACCOUNT AGREEMENT. Lender agrees that (i) it will not execute
or deliver to the Depository, the Shifting Control Notice, as defined in the
Blocked Account Agreement, until and unless Borrower shall not be in compliance
with the provisions of Section 2(b) of this Amendment or there occurs a new
Event of Default as defined in the Agreement, and (ii) it will give written
notice to Borrower that it is delivering the Shifting Control Notice not later
than the date the Shifting Control Notice is given to the Depository.
7. FURTHER ASSURANCES. The parties recognize that it may be necessary for
Borrower and/or Lender to execute and/or file and/or record documents or
instruments in order that (i) Lender be reflected as the holder of the
obligations, (ii) that the perfection of Lender's security interest be
maintained and (iii) Lender's rights under the Agreement be accurately
evidenced. Accordingly, promptly upon request by Lender, Borrower also shall do,
execute, acknowledge, deliver, record, re-record, file re-file, register and
re-register, any and all deeds, conveyances, mortgages, deeds of trust, trust
deeds, assignments, estoppel certificates, financing statements and
continuations thereof, notices of assignment, transfers, certificates,
assurances and other instruments as Lender may reasonable require from time to
time in order (a) to carry out more effectively the purposes of the Agreement;
(b) to perfect and maintain the validity, effectiveness and priority of any
security interests intended to be created by the Agreement including without
limitation, the delivery of a landlord waiver from any landlord required by
Lender, and (c) to better assure, convey, grant, assign, transfer, preserve,
protect and confirm unto Lender the rights granted now or hereafter intended to
be granted to Lender under the Agreement or under any other instrument executed
in connection with the Agreement or that Borrower may be or become bound to
convey, mortgage or assign to Lender in order to carry out the intention or
facilitate the performance of the provisions of the Agreement. Borrower shall
furnish to Lender evidence satisfactory to Lender of every such recording,
filing or registration.
8. COSTS AND EXPENSES. Borrower shall pay to Lender all of Lender's
reasonable out-of-pocket costs and expenses (including, without limitation, the
reasonable 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.
9. LIMITED EFFECT. In the event of a conflict between the teens 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.
10. 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 end delivered shall be deemed to be an original. All
such counterparts, taken together, shall constitute one end 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
effective as of the date first set forth above.
SHF IX, a Delaware Limited
Liability Company
By: /s/ [ILLEGIBLE]
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Title: CEO
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PORTA SYSTEMS CORP.,
A Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
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Title:
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CONSENT AND JOINDER
Each of the undersigned affiliates of Porta Systems Corp. ("Porta") is
aware of the terms of the above Amendment Number Sixteen to the Amended and
Restated Loan and Security Agreement, dated as of February 1, 2005 (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 Lender as successor by
assignment of all obligations of Borrower to Xxxxx Fargo Foothill, Inc.,
including the obligation to guarantee the obligations of Porta owing to Lender
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: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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CPI HOLDING CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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CRITERION PLASTICS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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DISPLEX, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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MIROR TELEPHONY SOFTWARE, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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PORTA FOREIGN SALES CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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PORTA SYSTEMS EXPORT CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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PORTA SYSTEMS INTERNATIONAL CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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PORTA SYSTEMS LEASING CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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PORTA SYSTEMS OVERSEAS CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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LERO INDUSTRIES LTD.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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PORTA SYSTEMS, LIMITED
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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XXXXXXXXXX BUSINESS SYSTEMS LTD.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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XXXXXXXXXX COMMUNICATIONS LTD.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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PORTA SYSTEMS S.A. de C.Y.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name:
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Title:
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