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Exhibit 4.2
SECOND AMENDMENT AGREEMENT
THIS SECOND AMENDMENT AGREEMENT (the "Agreement") is entered as of May
1, 2000 between SHARED TECHNOLOGIES CELLULAR, INC., a Delaware corporation, with
its principal place of business at 000 Xxxxx Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxxxx, Xxxxxxxxxxx 00000 (the "Borrower") and CITIZENS BANK OF
MASSACHUSETTS, a Massachusetts Bank, having an office and place of business at
00 Xxxxx Xxxxxx, Xxxxxx, XX 00000 (the "Bank").
RECITALS:
On July 7, 1999, the Bank and the Borrower entered into a Loan
Agreement, as amended by that certain First Amendment Agreement dated as of
December 3, 1999 (referred to herein collectively as the "Credit Agreement")
pursuant to which the Bank extended to the Borrower a Revolving Credit Facility
which is presently existing in the maximum aggregate line availability of
$10,000,000.00. The Borrower has executed and delivered to the Bank on July 7,
1999 a Secured Revolving Credit Promissory Note in the original principal amount
of Ten Million Dollars ($10,000,000.00) (the "Original Note").
The Borrower and the Bank have agreed to amend the Credit Agreement
upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the provisions herein contained,
Borrower and the Bank, each intending to be legally bound hereby, agree as
follows:
SECTION I. AMENDMENTS TO CREDIT AGREEMENT.
The Credit Agreement is amended hereby as follows:
1. SECTION 1.1 OF THE CREDIT AGREEMENT IS AMENDED BY AMENDING AND
RESTATING IN ITS ENTIRETY THE DEFINITION OF "REVOLVING CREDIT COMMITMENT" AS
FOLLOWS:
""Revolving Credit Commitment" shall mean Five Million Dollars
($5,000,000.00)."
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2. SECTION 5.6 OF THE CREDIT AGREEMENT IS AMENDED AND RESTATED IN
ITS ENTIRETY AS FOLLOWS:
"5.6 Minimum Prepaid Lines. Maintain Minimum Prepaid Lines
commencing May 1, 2000, as follows, to be tested as follows:
Time Period Minimum Prepaid Lines
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as of April 28, 2000 115,000
as of May 31, 2000 130,000
as of June 30, 2000 145,000
as of the last day of each Fiscal Quarter after June 30, 2000,
the Borrower shall increase its Minimum Prepaid Lines by
25,000 over the amount of Minimum Prepaid Lines for the prior
Fiscal Quarter."
3. SECTION 5.8 OF THE CREDIT AGREEMENT IS AMENDED AND RESTATED IN
ITS ENTIRETY AS FOLLOWS:
"5.8 Maximum Net Loss/Minimum Net Income. Maintain Maximum Net
Loss/Minimum Net Income for each Fiscal Quarter, commencing
with the Fiscal Quarter ending March 30, 2000, as follows, to
be tested quarterly:
Time Period Minimum Net Income
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Fiscal Quarter ending March 30, 2000 ($4,500,000.00) Maximum Net Loss
Fiscal Quarter ending June 30, 2000 ($3,000,000.00) Maximum Net Loss
Fiscal Quarter ending September 30, 2000 ($500,000.00) Maximum Net Loss
Each Fiscal Quarter thereafter + $500,000.00 Minimum Net Income"
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4. SECTION 5.10 OF THE CREDIT AGREEMENT IS AMENDED AND RESTATED
IN ITS ENTIRETY AS FOLLOWS:
"5.10 Minimum Total Stockholder's Equity. Maintain for each
fiscal quarter commencing with the quarter ending March 30,
2000, a Minimum Total Stockholder's Equity as follows, to be
tested quarterly:
Time Period Minimum Total Stockholder's Equity
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Fiscal Quarter ending March 30, 2000 ($6,200,000.00)
Fiscal Quarter ending June 30, 2000 ($2,000,000.00)
Fiscal Quarter Ending September 30, 2000 ($2,500,000.00)
as of the last day of each Fiscal Quarter after September 30,
2000, the Borrower shall increase its Minimum Total
Stockholder's Equity by $500,000.00 over the amount of Minimum
Total Stockholders's Equity for the prior Fiscal Quarter."
5. THE CREDIT AGREEMENT IS FURTHER AMENDED BY ADDING A NEW
SECTION 5.22 THERETO AS FOLLOWS:
"5.22 Minimum Additional Capital. The Borrower shall have
raised from the date hereof through June 30, 2000 a minimum
additional capital and equity contribution of Seven Million
Five Hundred Thousand Dollars ($7,500,000.00), provided
however that evidence thereof to be received by the Bank on or
before June 30, 2000 shall consist of the following:
a) a written agreement by the equity contributor
outlining the terms and conditions of said
contribution; and
b) evidence delivered to the Bank reasonably
satisfactory to it in its sole discretion as to the
financial substance and resources of said equity
contributor; and
c) any and all conditions and contingencies for said
equity contribution shall be reasonably satisfactory
to the Bank in its sole discretion; and
d) the date by which said contingency shall have
satisfied and said funds shall have been contributed
to the Bank shall reasonably acceptable to the Bank
in its sole discretion."
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SECTION II. AMENDMENT TO THE ORIGINAL NOTE.
The Original Note is amended and restated in its entirety by the
Borrower's execution and delivery to the Bank of that certain Amended and
Restated Revolving Credit Promissory Note in the original principal amount of
Five Million Dollars ($5,000,000.00) a form of which is attached hereto as
Exhibit A, with all blanks completed, and duly executed by the Borrower
(referred to herein as the "Successor Note").
SECTION III. CONDITIONS.
A. CONDITION PRECEDENT - DELIVERY OF DOCUMENTS.
The Bank shall have no obligation to make advances under the
Credit Agreement unless the following conditions are satisfied or waived by the
Bank:
1. The Borrower has delivered to the Bank the following
documents in form and substance satisfactory to the Bank, the receipt
of which is hereby acknowledged (the "Amendment Documents"):
a) the Successor Note, duly executed by the
Borrower;
b) Certificate of No Default from the Borrower,
duly executed by the Borrower;
c) Corporate Borrowing Authorization and
Certificate of Incumbency of Officers and
Directors - the Borrower;
d) Corporate Guaranty Authorization and
Certificate of Incumbency of Officers and
Directors and Identification of Shareholders
- The Cellular Hotline, Inc.; and
e) a Fifteen Thousand Dollar ($15,000.00) fee,
payable on even date, for the Waiver by the
Bank dated March 28, 2000 of certain loan
covenant defaults; and
f) the delivery of such other documents
reflected in that certain Closing Agenda
attached hereto as Exhibit A and
incorporated herein by reference, as may be
reasonably required by the Bank in
connection with the transaction contemplated
hereby.
2. All legal matters incident to this Agreement and the
transactions contemplated hereby shall be satisfactory to the Bank and
its counsel.
B. RECONFIRMATION OF COVENANTS, REPRESENTATIVES AND WARRANTIES.
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1. The Borrower further reaffirms all of its
obligations, as amended hereby, under the Credit Agreement, and under the
Security Documents.
2. The Borrower acknowledges that upon its delivery to
the Bank of the duly executed Amendment Documents, that all representations,
warranties and covenants set forth in the Credit Agreement are deemed to be made
again as of the date of the delivery hereof, and that the Borrower does not have
any information contrary to (a) any of the conclusions reflected in that certain
set of projections prepared by Borrower and delivered to Lender; or (b) any of
the assumptions or premises upon which said projections were based.
C. RESERVATION OF RIGHTS.
The Bank and the Borrower agree that:
a) This Agreement evidences solely the amendment of
the terms and provisions of the Borrower's obligations under the Credit
Agreement and the Original Note, and is not a novation or discharge
thereof;
b) Notwithstanding the terms hereof: the Bank hereby
reserves its rights against the Borrower under the Credit Agreement and
the Original Note, as provided under the Commonwealth of Massachusetts
law and judicial precedent, as in effect from time to time;
c) There are no other understandings, express or
implied between the Bank and the Borrower regarding the Credit
Agreement and the Original Note; and d) Notwithstanding any prior
course of practice or conduct, the Borrower acknowledges that the Bank
has not waived, and has no obligation to waive, any subsequent Events
of Default under the Credit Agreement and the Original Note, or under
this Agreement.
D. EFFECT OF AMENDMENT.
1. Except as amended hereby, the Credit Agreement and
the Original Note and all other documents entered into in connection therewith
shall:
a) remain in full force and effect in accordance with
their original terms and nothing herein shall be deemed to modify, abrogate,
waive or extend any other provision in the Credit Agreement and the Original
Note or in any other document, agreement or instrument executed in connection
therewith or pursuant thereto prior to the execution of this Agreement,
including without limitation any of the Borrower's liabilities to the Bank or
any of the Bank's rights with respect to such liabilities; and
2) be in all respects ratified and affirmed.
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Notwithstanding the foregoing, any amendments of the Credit
Agreement and the Original Note to which the parties hereto have agreed
previously and which are not incorporated herein by reference or otherwise,
shall be deemed of no further force and effect upon the execution hereof.
2. The Borrower acknowledges that all of the liabilities
and obligations of the Borrower to the Lender now existing and hereafter
incurred are secured by the security described in the Security Documents defined
in the Credit Agreement and by the security described in the Amendment
Documents; the Borrower further acknowledges that the Bank is relying upon the
security described above, both as entered into on July 9, 1999 and as entered
into from time to time thereafter, as security for the financing represented by
the Liabilities and as security for all other obligations of the Borrower to the
Bank.
E. GENERAL.
1. CONSTRUCTION Incorporated herein by reference are the
representations, warranties, agreements, affirmative and negative, definitions,
terms and conditions all as set forth in (i) the Credit Agreement and the
Original Note and all documents executed in connection therewith or pursuant
thereto and (ii) the Amendment Documents. This Agreement and the Credit
Agreement and the Original Note, and the Amendment Documents shall be construed
collectively and in the event that any term, provision or condition of any of
such documents is inconsistent with or contradictory to any term, provision or
condition of any other such document, the terms, provisions and conditions of
this Agreement shall supersede and control the terms, provisions and conditions
of the Credit Agreement and the Original Note and the Amendment Documents.
2. GOVERNING LAW. This Agreement, the Successor Note,
the Original Note and the Credit Agreement and all Security Documents
thereunder, and the rights and obligations of the parties hereunder, shall in
all respects be governed by, and interpreted and determined in accordance with,
the laws of the Commonwealth of Massachusetts (excluding the laws applicable to
conflicts or choice of law).
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3. SECURITY DOCUMENTS. The Borrower and The Cellular
Hotline, Inc., by its signature hereto, agree that:
a) the Security Documents (defined in the Credit Agreement) are amended
to reflect that the obligations and liabilities secured thereby are
deemed amended pursuant to this Amendment Agreement, as incorporated
therein by reference; and
b) except as specifically amended hereby, the Security Documents, and
all indebtedness incurred pursuant thereto shall remain in full force
and effect, in accordance with their original terms as previously
amended, and nothing herein shall be deemed to modify, abrogate, waive
or extend any other provision in the Security Documents, except as
previously amended, or in any other document, agreement, or instrument
executed in connection therewith or pursuant thereto prior to the
execution of this Agreement, including without limitation any of the
Borrower's or The Cellular Hotline, Inc.'s liabilities to the Bank or
any of the Bank's rights with respect to such liabilities; and
c) the Security Documents, as amended hereby, shall continue to secure
the Borrower's obligations under the Credit Agreement, the Original
Note and all other obligations of the Borrower and of The Cellular
Hotline, Inc. to the Bank, whether now existing or hereafter arising.
3. WAIVER OF TRIAL BY JURY. BORROWER AND BANK MUTUALLY
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY CLAIM BASED HEREIN, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR BANK TO ACCEPT THIS AGREEMENT AND TO AMEND
THE REVOLVING CREDIT FACILITY.
IN WITNESS WHEREOF, the Bank and the Borrower have caused their duly
authorized officers to execute this Agreement as of the day and year first above
written as an instrument under seal.
WITNESS: SHARED TECHNOLOGIES CELLULAR, INC.
________________________________ By: /s/ Xxxxxxx XxXxxxxxxx
Title: CFO
SIGNATURES CONTINUED ON THE NEXT PAGE
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SIGNATURES CONTINUED FROM THE PRIOR PAGE
CITIZENS BANK OF MASSACHUSETTS
________________________________ By:/s/ Xxxxxxx X. St. Xxxx
Xxxxxxx X. St.Xxxx
Title: Vice President
CONSENT AND CONFIRMATION
The undersigned consents to the amendment of the Credit Agreement
pursuant to the Second Amendment Agreement, and the terms of the Second
Amendment Agreement, including but not limited to Section III. E. 3. thereof,
and of all underlying documents referred to therein and all documents entered
into pursuant thereto or in connection therewith.
The undersigned confirms its obligations under that certain Guaranty
dated as of July 7, 1999 (the "Guaranty"), executed by the undersigned, of all
Liabilities (as defined in the Guaranty), as amended hereby, of the Borrower to
the Bank, and confirms its obligations under all documents securing the
Guaranty.
IN WITNESS WHEREOF, the undersigned has caused its duly authorized
officer to execute this Consent and Confirmation as of the ____ day of April,
2000.
WITNESS: THE CELLULAR HOTLINE, INC.
________________________________ By:________________________________
Its:
STATE OF CONNECTICUT
COUNTY OF HARTFORD
In Whethersfield on the ______ day of April, 2000, before me personally
appeared the above-named ________________________________________,
___________________________________ of SHARED TECHNOLOGIES CELLULAR, INC. to me
known and known by me to be the party executing the foregoing instrument on
behalf of said corporation and acknowledged said instrument so executed to be
his free act and deed in said capacity and the free act and deed of said
corporation.
__________________________________
Notary Public
My Commission Expires:
NOTARIZATIONS CONTINUED ON NEXT PAGE
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NOTARIZATIONS CONTINUED FROM PRIOR PAGE
STATE OF CONNECTICUT
COUNTY OF HARTFORD
In Whethersfield on the ______ day of April , 2000, before me
personally appeared the above-named ________________________________________,
________________________________________ of THE CELLULAR HOTLINE, INC. to me
known and known by me to be the party executing the foregoing instrument on
behalf of said corporation and acknowledged said instrument so executed to be
his free act and deed in said capacity and the free act and deed of said
corporation.
__________________________________
Notary Public
My Commission Expires:
STATE OF MASSACHUSETTS
COUNTY OF SUFFOLK
In Boston on the ______ day of April, 2000, before me personally
appeared the above-named Xxxxxxx X. St. Xxxx, Vice President of CITIZENS BANK OF
MASSACHUSETTS, of Boston, Massachusetts to me known and known by me to be the
party executing the foregoing instrument on behalf of said Massachusetts Bank
and acknowledged said instrument so executed to be his free act and deed in said
capacity and the free act and deed of said Massachusetts Bank.
__________________________________
Notary Public
My Commission Expires:
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