FOURTH AMENDMENT TO TERM CREDIT AGREEMENT
Exhibit
10.16
FOURTH
AMENDMENT TO TERM CREDIT AGREEMENT
THIS
FOURTH AMENDMENT TO TERM CREDIT AGREEMENT ("Fourth Amendment")
is made and entered into as of March 30, 2005 by and among XXXXXXX XXXXXXXX,
XXX., x Xxxxxxxx xxxxxxxxxxx ("Xxxxxxxx"), XXXX XXXX LEAGUE CENTRAL
CREDIT UNION, in its capacity as a lender under the Credit Agreement (as
hereinafter
defined) ("Hong Kong League"), HIT CREDIT UNION, in its capacity as a lender
under the
Credit Agreement ("HIT"), BRIGHTLINE BRIDGE PARTNERS I, LLC, in its capacity
as a lender under the Credit Agreement ("Brightline"), XXXXXXX XXXXXXXX
("XxXxxxxx"),
in his capacity as a lender under the Credit Agreement, (Hong Kong League,
HIT,
Brightline and XxXxxxxx shall herein be collectively referred to as the
"Lenders" and, individually, as a "Lender") and SBI ADVISORS, LLC, a California
limited liability company, in its
capacity as agent for Lenders ("Agent"), and is made with reference to the
following:
A. Agent,
Hong Kong League, HIT, Xxxxxx Xxxxxxx ("Xxxxxxx"), and Borrower have
entered
into that certain Term Credit Agreement, dated as of January 30, 2004, as
amended by the First
Amendment to Term Credit Agreement, dated May 14, 2004, as further amended by
the Second
Amendment to Term Credit Agreement, dated October 1, 2004, and as further
amended by the
Third Amendment to Term Credit Agreement, dated January 29, 2005 (as the same
may hereafter
be amended, modified, extended and/or restated from time to time, the "Credit
Agreement").
Pursuant to the Credit Agreement, Hong Kong League, HIT, Brightline, Xxxxxxx,
XxXxxxxx
and Xxxxxxx have made certain Term Loans to Borrower, the repayment of which
Term
Loans is secured by certain assets of Borrower pledged to Agent for the ratable
benefit of Lenders
pursuant to the Security Agreement (as hereinafter defined).
B. Borrower
has requested that the Maturity Date (as defined in Section
2(b) of the
Credit
Agreement) be extended to July
31,
2005.
C. Lenders
have agreed to amend the Credit Agreement to extend the Maturity Date
to
July
31,
2005.
D. Borrower
has requested that the interest rate be reduced to 10% per annum and
the
balance of 14% to be Paid In Kind ("PIK"). The PIK shall be computed and
compounded monthly. The Lenders have agreed to amend the Credit Agreement as
such.
E. As a
condition to the execution of this Fourth Amendment by Borrower, Trilogy
Capital Partners has offered to cancel its letter of engagement dated
November
10, 2004, return all fees paid to it by the Borrower for the months of January
2005 and
February 2005, and the 10,000,000 warrants issued to it on November 10, 2004.
The Borrower
shall hereby and separately notify Trilogy Capital Partners ("Trilogy") that it
accepts its offer fully. Lenders agree to provide reasonable efforts to Borrower
to facilitate the return of the
Trilogy warrants and fees; however, Borrower acknowledges and understands that
Lenders and Agent
have no authority to bind or enter into any agreements on behalf of Trilogy, and
that neither
Lender or Agent have any ability to cause Trilogy to return said warrants or
fees, and that Lender has any interest or ownership in Trilogy.
F.
Upon
repayment of all amounts payable under the terms of the Term Notes, a portion of
any unexercised Warrants issued to SBI Advisors, LLC or its designees will be
returned to the Borrower on terms more particularly described herein.
NOW,
THEREFORE, in consideration of the premises and the agreements, conditions and
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Terms
Defined in Credit Agreement.
All
capitalized terms used in this Fourth Amendment
and not otherwise defined herein shall have the meanings assigned to them in
the
Credit
Agreement.
2. For
purposes hereof, "Fourth Effective Date" means the date on which each of the
conditions
set forth in Section
6 hereof is
fully satisfied to the satisfaction of Agent in its sole and
absolute discretion.
3. Effective
as of the Fourth Effective Date, the following terms are added to Section
1 of the
Credit Agreement in their proper alphabetical sequence:
"Fourth
Amendment" means
that certain Fourth Amendment to Term Credit
Agreement dated as of March 30,
2005, by and among the Borrower, the Lenders named therein, and the
Agent.
"Fourth
Effective Date" means
the date on which each of the conditions set forth
in Section
5 of the
Fourth Amendment is fully satisfied to the satisfaction
of Agent in its sole and absolute discretion.
4. Effective
as of the Fourth Effective Date, Section
2(b) of the
Credit Agreement is hereby
deleted in it entirety and the following is inserted in lieu
thereof:
"Term.
All
unpaid principal and accrued but unpaid interest of the Term Loan
shall, subject to subsection (c) below, be payable in full on July
31,
2005 (the
"Maturity Date")."
5. Conditions
Precedent. The
satisfaction of the following shall be conditions precedent
to the effectiveness of this Fourth Amendment:
5.1
Amendment.
Agent
shall have received this Fourth Amendment, duly executed by
Borrower.
5.2
Representations
and Warranties. Each
representation and warranty made by
Borrower in Section
3 of the
Credit Agreement shall be true and correct on and as of the Fourth Effective
Date as though made as of the Fourth Effective Date, except to the extent such
representations and warranties relate solely to an earlier date.
6. General
Amendment. Effective
as of the Fourth Effective Date, the Credit Agreement,
the Security Agreement, and each document delivered to Lenders in
connection
therewith
(collectively, the "Loan Documents") are hereby further amended and modified to
the extent
necessary to give effect to the terms and conditions of the amendments to the
Credit Agreement
effected by the Fourth Amendment.
7. Upon
repayment of all amounts payable under the terms of the Term Notes, Lenders will
retain 5,000,000
Warrants issued to SBI Advisors, LLC or its designees, and the balance of
unexercised Warrants held by such parties at the time of repayment of the Term
Notes will be returned to Borrower. These
parties and their warrants holdings are as follows: (1) 3,500,000 with XxXxxxxx
Living Trust; (2) 3,650,000 with Xxx Xxxxxxx; (3) 3,250,000 with Xxxxx X. Xxxxx;
and (4) 3,500,000 with Crestwood Children’s Trust. The
warrants retained by SBI or its designees shall be the then lowest priced
warrants owned by SBI Advisors, LLC or its designees.
8. Full
Force and Effect. Effective as of the Fourth Effective Date, each of the Loan
Documents is hereby amended such that all references to the Credit Agreement
contained in any such
documents shall be deemed to be references to the Credit Agreement, as further
amended by this
Fourth Amendment. Except as
amended hereby, the Credit Agreement and the other Loan Documents shall remain
unaltered and in full force and effect, and each party to this Fourth Amendment
agrees that this Fourth Amendment represents the entire agreement of the parties
with
regard to the subject matter hereof, and Borrower waives any and all claims or
defenses relating to the repayment of the Term Loans.
Further, except for the repayment of debt owing by Borrower as set forth herein,
the parties (including those persons or entities set forth in paragraph 7
hereof), for themselves and
any
persons
which they control within the meaning of the Securities Act of 1933, as amended,
and their respective officer, directors, employees, attorneys, agents,
successors and representatives hereby fully, completely and forever discharge
and release each other from any and all claims, demands, obligations,
liabilities, indebtedness, breaches of duty, acts, omissions, misfeasance,
malfeasance, causes of action, and expenses of every type, kind, nature,
description or
character,
and irrespective of how, why or by reason of what facts, whether known or
unknown, suspected or unsuspected, liquidated or unliquidated, each as though
fully set forth herein at length, arising prior
to the
date hereof.
With
regard to the releases set forth immediately above, the parties specifically
waive the provisions of California
Civil Code §1542, which
provides:
"A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the
debtor."
Each of
the parties acknowledges that they may hereafter discover facts different from
or in addition to those which it now knows or believes to be true with respect
to the released claims, and each of the parties hereby assumes the risk that
this agreement will constitute a waiver of causes of action arising out of the
released claims, regardless of their nature or value, which subsequently may
become known to that party. Each of the parties hereby agrees that this
agreement and the releases provided for herein shall remain in effect in all
respects and shall not be subject to termination or rescission, notwithstanding
the existence or discovery of such different or additional facts, provided,
however, that the promises, warranties, covenants, and obligations contained
herein shall survive the releases set forth herein. Each of the parties
acknowledges that in entering into the releases set forth in this paragraph 8,
they have not relied on any representations of any other party except as
specifically set forth in this Fourth Amendment.
9. Counterparts.
This Fourth Amendment may be executed in multiple counterparts, each of
which shall constitute an original and all of which, taken together, shall
constitute but one and
the same instrument.
10. Governing
Law. This Fourth Amendment shall be governed by, and construed in accordance
with, the laws of the State of California.
(Signature
Page to Follow)
IN
WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment by their
respective duly authorized officers as of the date first above
written.
"BORROWER" |
ENTRADA
NETWORKS, INC., a Delaware corporation |
By:
/s/
Xxxxxx X. X. Xxxxxx |
Name: Xxxxxx
X. X. Xxxxxx |
Its: President
& CEO |
"AGENT" |
SBI
ADVISORS, LLC, solely in its capacity as Agent hereunder |
By:
/s/
Xxxxxx
Xxxxxxx |
Name:
Xxxxxx
Xxxxxxx |
Its:
Manager |
"HONG
KONG LEAGUE" |
HONG
KONG LEAGUE CENTRAL CREDIT UNION |
By:
/s/
Xxxxxx Xxxxxxx |
Name:
Xxxxxx
Xxxxxxx |
Its:
Agent |
"HIT” |
HIT
CREDIT UNION |
By:
/s/
Xxxxxx Xxxxxxx |
Name:
Xxxxxx
Xxxxxxx |
Its:
Agent |
"BRIGHTLINE" |
BRIGHTLINE
BRIDGE PARTNERS I, LLC |
By:
/s/
Xxx Xxxxxxx |
Name: Xxx
Xxxxxxx |
Its:
Manager |
”XXXXXXXX" |
/s/
Xxxxxxx XxXxxxxx |
XXXXXXX
XXXXXXXX |
Acknowledged
and Agreed: |
/s/
Xxx Xxxxxxx |
XXX
XXXXXXX |
/s/
Xxxxx X. Xxxxx |
XXXXX
X. XXXXX |