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EXHIBIT 10.1
SECOND AGREEMENT CONCERNING AMENDMENT
TO CREDIT AGREEMENT
This Agreement dated as of December 9, 1999 by and among PNI
Systems, LLC, a Georgia limited liability company (the "Company"), Preferred
Networks, Inc., formerly a Delaware corporation and presently reincorporated in
the State of Georgia (the "Parent"), each of the undersigned "Guarantors" and
Bank of America, N.A., successor in interest to NationsBank, N.A. (the
"Lender").
W I T N E S S E T H:
WHEREAS, the Parent and the Company (hereinafter sometimes
collectively referred to as "Borrowers") and the Lender entered into that
certain Credit Agreement dated as of August 8, 1996 as amended by Amendments
dated December 20, 1996, March 12, 1997, April 11, 1997, March 19, 1998 and
November 12, 1998 and an Agreement concerning Amendment to Credit Agreement
dated May 27, 1999 (as so amended the "Credit Agreement");
WHEREAS, the indebtedness and obligations of the Borrowers under and
related to the Credit Agreement are secured by, among other things, assets of
each of the Guarantors;
WHEREAS, the Borrowers and the Guarantors wish to obtain Lender's
consent to the proposed sale, assignment and transfer of all of the issued and
outstanding stock and other equity interests, of EPS Wireless, Inc., one of the
Guarantors, ("EPS") and wish Lender to release the security interest in and to
the assets, the share certificates representing the shares of stock pledged to
Lender together with the stock powers related thereto, the release of EPS as a
Guarantor of the Borrower's obligations, and release of the Letter of Credit
pursuant to Section 10.21 of the Credit Agreement.
WHEREAS, Lender is willing to enter into this Agreement in return for
and in reliance on Borrowers' and Guarantors' covenants, reaffirmations and
obligations, contained herein;
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants contained herein, Ten Dollars ($10.00) in hand paid by Lender to each
of Borrowers and Guarantors, Lender's reliance hereon and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms not otherwise specifically
defined herein shall have the same meaning as given them in the Credit
Agreement.
2. Amendments to the Credit Agreement and Notes Effective only upon
Timely Fulfillment of the "Amendment Conditions". Upon, but not only upon,
Lender's determination, in its sole discretion, that each and all of the
"Amendment Conditions" (as that term is defined in Section 4 below) have been
fulfilled in accordance with the terms and conditions hereof by no
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later than December 15, 1999, the Credit Agreement and the Notes shall,
effective upon such fulfillment, be amended as follows:
a) The Credit Agreement is amended by deleting from
Section 1.1 thereof the definition of the term
"Parent Commitment" and "Termination Date" in their
entirety and substituting in their respective places
the following:
"Parent Commitment" shall mean the
obligation of the Lender to make Parent
Loans to the Parent in an aggregate
principal amount at any one time
outstanding up to but not exceeding
$2,000,000.
"Termination Date" shall mean March 31,
2001.
b) Sections 8.1 through 8.6 of the Credit Agreement
shall be deleted and shall be replaced by the
following new Sections 8.1 through 8.4:
8.1 The Parent and its Subsidiaries'
must on the last day of each calendar
month, hold on a consolidated basis cash
and Cash Equivalents in an aggregate amount
inclusive of the unused availability under
the Parent Commitment, greater than or
equal to (a) $3,100,000 for the period
beginning December 31, 1999 and ending
Xxxxx 00, 0000, (x) $2,000,000 for the
period beginning March 31, 2000 and ending
June 29, 2000, (c) $1,300,000 for the
period beginning June 30, 2000 and ending
September 29, 2000, (d) $1,100,000 for the
period beginning September 30, 2000 and
ending on December 30, 2000, and (e)
$1,100,000 for the period beginning
December 31, 2000 and ending on March 31,
2001.
8.2 Borrowers shall submit weekly
Borrowing Base certification for use in
determining availability of further draws
or mandatory pay downs under the Credit
Agreement.
8.3 Borrower will allow Lender to
perform, at Borrower's expense, such
comprehensive monitoring of borrowing base
collateral (including but not limited to
field exams) as Lender deems reasonably
necessary or appropriate and Borrower shall
cooperate fully with same;
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c) The Maturity Date of the Parent Note shall be
changed from April 30, 2000 to March 31, 2001; and,
accordingly, the "Termination Date" as redefined in
the Fourth Amendment of the Credit Agreement shall
mean March 31, 2001. Section 2.13 of the Credit
Agreement concerning extension of Termination Date
shall be deleted and the Letter of Credit pledged
herewith will be deleted.
d) Section 10.21 of the Credit Agreement shall be
deleted and the Letter of Credit pledged herewith
will be released.
e) The following Section 2.8(f) shall be added to and
included in the Credit Agreement:
2.8(f) Fees. Borrowers agree to pay Lender
a restructure fee of Twenty Five Thousand
Dollars ($25,000) at the closing of the
sale of EPS. Borrower agrees to pay Lender
an exit fee of $50,000 upon payment in full
of the Parent Note but Lender will waive
said fee if the Parent Note is paid in full
by June 30, 2000 or will reduce said fee to
$25,000 if the Parent Note is paid in full
prior to December 31, 2000. If the Parent
Note is not paid by December 31, 2000 and
the above Exit Fee is unpaid as of that
date, the Exit Fee, at the Bank's option,
will be added as principal to the Parent
Note and the terms of its repayment will be
governed thereunder.
The foregoing amendments to the Credit Agreement shall become effective
automatically and without the need for any further documentation at such time
as Lender has determined in its sole discretion that each and all of the
Amendment Conditions have been timely fulfilled in strict accordance with the
terms and conditions hereof, which determination shall be evidenced by the
"Triggering Event" as hereinafter defined in Section 3 below.
3. Consent and Release. Upon Lender's determination, in its sole
discretion, that each and all of the Amendment Conditions have been timely
performed in strict accordance with the terms and conditions hereof, Lender
shall consent to the sale of the shares of EPS as described on Schedule 1
hereto and shall release its security interest in and to EPS' assets and shares
by executing a Consent and Release in the form attached hereto as Schedule 2
and appropriate UCC-3s terminating its security interest in and to the assets
and shares of capital stock of EPS (together with the stock powers related
thereto) as a matter of record. For purposes of this Agreement Lender's
execution of the aforesaid Consent and Release and UCC-3s and delivery thereof
to the Borrowers shall be deemed to be the "Triggering Event". To the extent
the Amendment Conditions require a payment to Lender of certain of the proceeds
from the sale of shares of EPS, assuming all other Amendment Conditions have
been fulfilled, Lender will execute
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and deliver the aforesaid Consent and Release and UCC-3s simultaneously with
delivery to it of such proceeds in immediately available funds.
4. Amendment Conditions. For purposes of this Agreement the
following shall constitute the "Amendment Conditions":
a) There shall be no default or Event of Default
existing under the terms of the Credit Agreement;
b) Borrowers shall have delivered to Lender evidence
satisfactory to Lender that the net proceeds paid by
buyer to Borrower from the sale of the assets of EPS
will be an amount of at least $13,000,000;
c) Borrowers shall have caused to be made a principal
payment against the Parent Note out of the proceeds
of the sale of the assets of EPS in the amount of
$2,000,000.00 in immediately available funds and
shall pay the Company Note in full;
d) Borrowers and Parent shall have paid any past due
interest;
e) Borrowers shall have caused to be made a payment to
Lender of a loan fee out of the proceeds of the sale
of the assets of EPS in the amount of $25,000.00;
and
f) Borrowers shall have received at least $2,569,425
cash out of the proceeds of the sale of the assets
of EPS for operating capital which are to be placed
in a Lender account.
7. Waiver of Claims.
Borrowers warrant and represent to the Lender that the Note is not
subject to any credits, charges, claims, or rights of offset or deduction of
any kind or character whatsoever; Borrowers and Guarantors release and
discharge Lender from any and all claims and causes of action, whether known or
unknown and whether now existing or hereafter arising, including without
limitation, any usury claims, that have at any time been owned, or that are
hereafter owned, in tort or in contract by Borrowers and their affiliates and
Guarantors and that arise out of any one or more circumstances or events that
occurred prior to the date of this Agreement. Moreover, Borrowers and their
affiliates and Guarantors, jointly and severally, waive any and all claims now
or hereafter arising from or related to any delay by Lender in exercising any
rights or remedies under the Loan Documents, including, without limitation, any
delay in foreclosing any collateral securing any of the Notes.
8. Bankruptcy.
(a) In entering into this Agreement, Borrowers, Guarantors and
Lender hereby stipulate, acknowledge and agree that Lender
gave up valuable rights and agreed to forbear from exercising
legal remedies available to it in exchange for the
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promises, representations, acknowledgements and warranties of
Borrower and Guarantor as contained herein and that Lender
would not have entered into this Agreement but for such
promises, representations, acknowledgements, agreements, and
warranties, all of which have been accepted by Lender in good
faith, the breach of which by Borrower or Guarantor in any
way, at any time, now or in the future, would admittedly and
confessedly constitute cause for dismissal of any such
bankruptcy petition pursuant to 11 U.S.C. ss.1112(b).
(b) As additional consideration for Lender agreeing to forbear
from immediately enforcing its rights and remedies under the
Credit Agreement and in the Loan Documents, including but not
limited to the institution of foreclosing proceedings,
Borrowers and Guarantors agree that in the event a bankruptcy
petition under any Chapter of the Bankruptcy Code (11 U.S.C.
ss.101, et seq.) is filed by or against Borrowers at any time
after the execution of this Agreement, Lender shall be
entitled to the immediate entry of an order from the
appropriate bankruptcy court granting Lender complete relief
from the automatic stay imposed by ss.362 of the Bankruptcy
Code (11 U.S.C. ss.362) to exercise its foreclosure and other
rights, including but not limited to obtaining a foreclosure
judgement and foreclosure sale, upon the filing with the
appropriate court of a motion for relief from the automatic
stay with a copy of this Agreement attached thereto. Borrowers
and Guarantors specifically agree (i) that upon filing a
motion for relief from the automatic stay, Lender shall be
entitled to relief from the stay without the necessity of an
evidentiary hearing and without the necessity or requirement
of the Lender to establish or prove the value of the Property,
the lack of adequate protection of its interest in the
Property, or lack of equity in the Property; (ii) that the
lifting of the automatic stay hereunder by the appropriate
bankruptcy court shall be deemed to be "for cause" pursuant to
ss. 362(d)(1) of the Bankruptcy Code (11 U.S.C. ss.362(d)(1));
and (iii) that Borrowers and Guarantors will not directly or
indirectly oppose or otherwise defend against Lender's efforts
to gain relief from the automatic stay. This provision is not
intended to preclude Borrowers or Guarantors from filing for
protection under any Chapter of the Bankruptcy Code. The
remedies prescribed in this paragraph are not exclusive and
shall not limit Lender's rights under the Loan Documents, this
Agreement or under any law.
(c) All of the above terms and conditions have been freely
bargained for and are all supported by reasonable and
adequate consideration and the provisions herein are material
inducements for Lender entering into this Agreement.
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9. Miscellaneous.
a) Expenses. Borrowers hereby jointly and severally agree to pay
any and all reasonable expenses of the Lender in anyway
relating to this Agreement or to the Credit Agreement or
loans evidenced thereby, including but not limited to actual
attorneys' fees simultaneously with the closing of the sale
of assets and stock of EPS described above out of ongoing
operations, as appropriate.
b) Reaffirmation. Each of the Guarantors hereby acknowledges and
reaffirms its obligations and liabilities under its Guaranty
and consents to the modifications made and which may be made
to the Credit Agreement and the Notes pursuant to the terms
of this Agreement.
c) Time is of the essence.
d) Full Force and Effect. Except as expressly here and amended,
the terms and conditions of the Credit Agreement and the
other Loan Documents remain in full force and effect.
e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which need not contain the signatures
of more than one party and all of which taken together shall
constitute one in the same original same instruments.
BORROWER
PNI SYSTEMS, LLC
By: Preferred Networks, Inc., its manager
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Chief Executive Officer
PREFERRED NETWORKS, INC.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Chief Executive Officer
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GUARANTORS
PNI SPECTRUM, LLC HTB COMMUNICATIONS, INC.
By: Preferred Networks, Inc., its Manager
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
By: /s/ Xxxx X. Xxxxx Chief Executive Officer
-----------------------------------
Xxxx X. Xxxxx
Secretary
PNI GEORGIA, INC. M.P.C. DISTRIBUTORS, INC.
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxx
--------------------------------------- -----------------------------
Xxxx X. Xxxxxxx Xxxx X. Xxxxxxx
Chief Executive Officer Chief Executive Officer
MERCURY PAGING & CUSTOM PAGE, INC.
COMMUNICATIONS, INC.
By: /s/ Xxxx X. Xxxxxxx
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By: /s/ Xxxx X. Xxxxxxx Xxxx X. Xxxxxxx
--------------------------------------- Chief Executive Officer
Xxxx X. Xxxxxxx
Chief Executive Officer
PREFERRED TECHNICAL SERVICES, INC.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Chief Executive Officer
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LENDER
BANK OF AMERICA, N.A.
By: /s/ Xxxxxxx X. Xxx
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Name: Xxxxxxx X. Xxx
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Title: Assistant Vice President
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SECOND AGREEMENT CONCERNING AMENDMENT TO CREDIT AGREEMENT
SCHEDULE OF ASSETS
On the terms and subject to the conditions set forth in that certain
Share Purchase Agreement, dated December 10, 1999, by and between Preferred
Networks, Inc. ("Vendor"), a Georgia corporation, and Celestica Corporation
("Purchaser"), a Delaware corporation, Vendor transfers, assigns and delivers
to Purchaser all of Vendor's right, title, and interest in and to the following
assets:
1. All of the issued and outstanding common stock, and other
equity interests of EPS Wireless, Inc.;
2. Cash;
3. Accounts Receivable and accounts;
4. Prepaid expenses;
5. Other current assets;
6. Deposits;
7. Chattel Paper and Negotiable Instruments;
8. Books and Records, including but not limited to customer
lists;
9. Contracts and Licenses;
10. Equipment, Fixed Assets, Leasehold Improvements, Furniture
and Fixtures, Computer Equipment and Software;
11. Inventory;
12. General Intangibles;
13. Insurance Proceeds;
14. Intellectual Property, including the Intellectual Property
set forth on Section 3.17 and the Schedule 3.17 of the Share
Purchase Agreement;
15. Leased Real and Personal Property, including the Leased Real
Property set forth in Section 3.13 and Schedule 3.13 of the
Share Purchase Agreement;
16. All other assets utilized in the business operations of EPS
Wireless, Inc.
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SCHEDULE 2
FORM OF CONSENT AND RELEASE
Bank of America, N.A.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Celestica Corporation
000 Xxx Xxxxx Xxxx, 00/000
Xxxxx Xxxx, Xxxxxxx X0X 0X0
Reference is hereby made to the Credit Agreement dated as of August 8,
1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") by and among Preferred Networks, Inc. ("PNI"), PNI Systems,
LLC and Bank of America, N.A., as successor in interest to NationsBank, N.A.
(the "Lender"). All capitalized terms used herein and not defined herein shall
have the meanings given to such terms in the Credit Agreement.
Pursuant to Section 7.1 of the Credit Agreement, PNI and its
Subsidiaries may not sell any of their assets (other than in the ordinary
course of business) without the consent of Lender. It is contemplated that PNI
will sell all of the outstanding shares of EPS WIRELESS, INC. ("EPS"), a
wholly-owned subsidiary of PNI and a Guarantor under the Credit Agreement (the
"Sale") to Celestica Corporation ("Celestica") pursuant to that certain Share
Purchase Agreement dated as of December 10, 1999 ("Share Purchase Agreement").
This letter constitutes the consent of the Lender to the Sale pursuant to the
Share Purchase Agreement, provided that the "Amendment Conditions" set forth in
that certain Second Agreement Concerning Amendment to Credit Agreement between
Lender and PNI (the "Agreement") have been satisfied or waived by December 15,
1999. Upon certification of same, the Lender will by notice to PNI confirm the
effectiveness of the release and discharge EPS from any and all obligations
under the Credit Agreement.
Upon and effective as of the time the Amendment Conditions are
satisfied or waived, all of the liens and security interests held by the Lender
in any and all of the property of EPS pursuant to the Loan Documents shall be
deemed to be released and terminated, and EPS shall be released and discharged
from any liability or obligation as Guarantor of the Borrowers' obligations
under the Loan Documents.
The Lender will deliver to EPS (or such other party as PNI may
designate), at PNI's expense, as soon as practicable following the satisfaction
of the Amendment Conditions, executed Uniform Commercial Code termination
statements and such other instruments of release and discharge pertaining to
any liens and security interests of the Lender in any of the property of EPS
and the shares of common stock of EPS (including, without limitation, stock
certificates representing shares of stock of EPS pledged to the Lender,
together with stock powers related thereto) as counsel to PNI or Celestica
reasonably deem necessary to release and discharge all
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such liens and security interests. The Lender further agrees, at PNI's expense,
to execute such other termination statements or documents as PNI may reasonably
request from time to time in order to evidence the release and termination by
the Lender of its security interest and liens in any of the property of EPS and
EPS' release and discharge from any liability or obligation as a Guarantor of
the Borrowers' obligations under the Loan Documents.
This agreement may be executed by one or more of the parties hereto on
any number of separate counterparts (including by facsimile), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
This agreement shall be governed by and construed in accordance with
the laws of the State of Georgia.
Very truly yours,
BANK OF AMERICA, N.A.
By: /s/ Xxxxxxx X. Xxx
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Name: Xxxxxxx X. Xxx
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Title: Assistant Vice President
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Accepted and Agreed to:
PREFERRED NETWORKS, INC.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, Chief Executive Officer
EPS WIRELESS, INC.
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx, Secretary
CELESTICA CORPORATION
By:
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Name:
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Title:
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