Exhibit 10.53
SEVENTH AMENDMENT TO CREDIT AGREEMENT
THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT ("Seventh Amendment") is
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effective as of June 29, 1999, and is entered into by and among P-COM, INC., a
Delaware corporation ("Borrower"); the financial institutions signatory hereto
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(each individually a "Lender" and collectively the "Lenders"); UNION BANK OF
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CALIFORNIA, N.A., for itself, as a Lender, and as administrative agent for
Lenders (in such capacity, "Agent"); and BANK OF AMERICA NATIONAL TRUST AND
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SAVINGS ASSOCIATION (for itself, as a Lender, and as syndication agent for
Lenders (in such capacity, "Syndication Agent").
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RECITALS
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A. Borrower, Lenders, Agent, and Syndication Agent have entered into
that certain Credit Agreement dated as of May 15, 1998, as amended
(collectively, the "Credit Agreement"), pursuant to which Agent, Syndication
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Agent, and Lenders agreed to provide financial accommodations to or for the
benefit of Borrower upon the terms and conditions contained therein. Unless
otherwise defined herein, capitalized terms or matters of construction defined
or established in the Credit Agreement shall be applied herein as defined or
established therein.
B. Borrower has requested that Agent, Syndication Agent, and Lenders
consent to various matters, including matters related to the conversion of
certain equity securities from preferred stock to common stock, and make certain
amendments to the Credit Agreement in connection therewith. Agent, Syndication
Agent, and Lenders are willing to do so subject to the terms and conditions of
this Seventh Amendment.
AGREEMENT
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NOW, THEREFORE, in consideration of the continued performance by
Borrower of its promises and obligations under the Credit Agreement and the
other Loan Documents, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Borrower, Lenders, Agent, and
Syndication Agent hereby agree as follows:
1. Ratification and Incorporation of Credit Agreement and Other Loan
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Documents. Except as expressly modified under this Seventh Amendment, (a)
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Borrower hereby acknowledges, confirms, and ratifies all of the terms and
conditions set forth in, and all of its obligations under, the Credit Agreement
and the other Loan Documents, and (b) all of the terms and conditions set forth
in the Credit Agreement and the other Loan Documents are incorporated herein by
this reference as if set forth in full herein. Without limiting the generality
of the foregoing, each of Borrower and each other Loan Party acknowledges and
agrees that as of June 29, 1999, the sum of (i) the aggregate outstanding
principal amount of all Loans, plus (ii) the aggregate outstanding Letter of
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Credit Usage was $49,750,000.00. Each of Borrower and each other Loan Party
represents that it has no offset, defense, counterclaim, dispute or disagreement
of any kind or nature whatsoever with respect to the amount of such Debt.
2. Amendments to Credit Agreement.
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a. Section 6.2(d) is hereby deleted in its entirety and the
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following is substituted therefor:
(d) Profitability. Permit Consolidated Pre-Tax Income of
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the Borrower and its consolidated Subsidiaries to reflect a loss
exceeding the correlative amount listed below for any fiscal quarter
of Borrower commencing with the fiscal quarter ended June 30, 1999;
provided, that any profit recognized from any exchange from time to
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time by Borrower of certain shares of its Common Stock for certain of
the Notes issued pursuant to the Indenture shall be excluded from
Consolidated Pre-Tax Income for purposes of this Section 6.2(d):
June 29, 1999 $(13,000,000)
September 30, 1999 $( 4,000,000)
December 31, 1999 $ (1).
b. Clause (iii) of Section 6.2(h) is hereby deleted in its
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entirety and the phrase "Borrower may make the redemption payments permitted
under Section 3(c) of the Seventh Amendment to Credit Agreement" is substituted
therefor.
c. Section 6.2(w) is hereby deleted in its entirety and the
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following is substituted therefor:
(w) Minimum Consolidated EBITDA. Permit Consolidated
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EBITDA to be less than the correlative amount listed below for any
fiscal quarter of Borrower commencing with the fiscal quarter ended
June 30, 1999:
June 29, 1999 $( 5,500,000)
September 30, 1999 $ 2,000,000
December 31, 1999 $ 5,000,000.
d. Schedule 5.1(m) (Ventures, Subsidiaries and Affiliates;
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Outstanding Stock and Indebtedness) to the Credit Agreement is hereby deleted in
its entirety and replaced by Schedule 5.1(m) attached hereto.
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3. Consent. Notwithstanding any contrary term or provision set forth
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in the Credit Agreement, Agent and Lenders hereby consent, subject to the terms
and conditions set forth herein, to the following:
a. Borrower's execution of the following agreements:
(i) P-Com, Inc. Stock Purchase Warrant dated June 4,
1999, made by Borrower in favor of Xxxxxxxx Capital
Management, Inc.;
(ii) P-Com, Inc. Stock Purchase Warrant dated June 4,
1999, made by Borrower in favor of Capital Ventures
International;
(iii) P-Com, Inc. Stock Purchase Warrant dated June 4,
1999, made by Borrower in favor of Castle Creek
Technology Partners LLC;
(iv) Exchange Agreement dated June 4, 1999, between
Xxxxxxxx Capital Management, Inc. and Borrower;
(v) Exchange Agreement dated June 4, 1999, between
Capital Ventures International and Borrower; and
(vi) Exchange Agreement dated June 4, 1999, between Castle
Creek Technology Partners LLC and Borrower (the
exchange agreements referenced in subparagraphs (iv),
(v) and (vi) shall be collectively referred to as the
"Exchange Agreements").
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b. Borrower's revocation of that certain Designations,
Preferences and Rights of Series B Convertible Participating Preferred Stock of
P-Com, Inc. executed on December 21, 1998, as amended (collectively, the
"Certificate of Designation").
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c. Borrower's redemption of shares of the Borrower's Common
Stock pursuant to Section 5 of the Exchange Agreements (the term "Common Stock,"
as used in this subsection (c), shall have the meaning set forth in the Exchange
Agreements); provided that (i) at the time of and immediately following any such
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redemption payment there shall exist no condition or event that constitutes an
Event of Default or Potential Event of Default; (ii) the Borrower shall not make
any redemption payment that is optional or otherwise not required to be made
pursuant to the Exchange Agreements; and (iii) the aggregate of any such
redemption payments shall not in any event exceed Five Million Dollars
($5,000,000). Prior to making any redemption payment under this Section 3.c.,
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Borrower shall deliver a certificate signed by a responsible officer of Borrower
setting forth Borrower's intention to make such redemption payment and
certifying that the conditions set forth in Section 3.c. have been satisfied,
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which certificate shall be in form satisfactory to Agent.
4. Conditions to Effectiveness. This Seventh Amendment shall become
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effective on June 29, 1999 (the "Effective Date"), only upon satisfaction of
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each of the following conditions:
a. receipt by Agent of this Seventh Amendment duly executed by
Borrower, Bank of America National Trust and Savings Association, as Syndication
Agent and Lender, and Union Bank of California, N.A., as Agent and Lender;
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b. receipt by Agent of the attached Guarantor Consents
(individually, a "Guarantor Consent" and collectively, the "Guarantor
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Consents"), duly executed by each Guarantor;
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c. receipt by Agent of a certificate issued by the Secretary of
State of Delaware, certifying the filing with such office of resolutions adopted
by the Board of Directors of Borrower or other authorizing documents, in form
and substance satisfactory to Agent and its counsel, which documents revoke the
Certificate of Designation in its entirety, rendering it null and of no further
force or effect;
d. receipt by Agent of copies of resolutions, in form and
substance satisfactory to Agent and its counsel, of the Board of Directors or
other authorizing documents of Borrower, authorizing the execution and delivery
of this Seventh Amendment; and
e. absence of any Potential Events of Default or Events of
Default.
5. Representations and Warranties. In order to induce the Lenders
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to enter into this Seventh Amendment, Borrower represents and warrants to Agent,
Syndication Agent, and Lenders that the following statements are true, correct
and complete as of the Effective Date of this Seventh Amendment:
a. Corporate Power and Authority. Borrower has all requisite
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corporate power and authority to enter into this Seventh Amendment and to carry
out the transactions contemplated by, and perform its obligations under, the
Credit Agreement as amended by this Seventh Amendment (the "Amended Agreement").
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The Certificate of Incorporation and Bylaws of Borrower (after giving effect to
the certificate referenced in Section 4.c. of this Seventh Amendment) have not
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been amended since the copies previously delivered to Agent, Syndication Agent,
and Lenders.
b. Authorization of Agreements. The execution and delivery of
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this Seventh Amendment and the performance by Borrower of the Amended Agreement
have been duly authorized by all necessary corporate action on the part of
Borrower.
c. No Conflict. The execution and delivery by Borrower of this
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Seventh Amendment do not and will not contravene (i) any law or any governmental
rule or regulation applicable to Borrower, except to the extend not resulting in
a Material Adverse Effect, (ii) the Certificate of Incorporation or Bylaws of
Borrower, (iii) any order, judgment or decree of any court or other agency of
government binding on Borrower, or (iv) any material agreement or instrument
binding on Borrower, except to the extent not resulting in a Material Adverse
Effect.
d. Governmental Consents. Except for the certificate
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referenced in Section 4.c. of this Seventh Amendment, the execution and delivery
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by Borrower of this Seventh Amendment and the performance by Borrower of the
Amended Agreement do not and will not
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require any registration with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or
regulatory body (except routine reports required pursuant to the Securities
Exchange Act of 1934, as amended (as such act is applicable to any Loan Party),
which reports will be made in the ordinary course of business).
e. Binding Obligation. This Seventh Amendment and the Amended
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Agreement have been duly executed and delivered by Borrower and are the binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms, except in each case as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws and equitable principles relating to or affecting creditors' rights.
f. Incorporation of Representations and Warranties From Credit
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Agreement. The representations and warranties contained in Section 5.1 of the
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Credit Agreement are correct in all material respects on and as of the Effective
Date of this Seventh Amendment as though made on and as of such date, except (a)
to the extent that a particular representation or warranty by its terms
expressly applies only to an earlier date, (b) to the extent that Borrower or
any other Loan Party, as applicable, has previously advised Agent in writing as
contemplated under the Credit Agreement, or (c) for matters that are to be the
subject of updated disclosure in the schedule to be delivered pursuant to
Section 2 of this Seventh Amendment.
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g. Absence of Default. After giving effect to this Seventh
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Amendment, no event has occurred and is continuing or will result from the
consummation of the transactions contemplated by this Seventh Amendment that
would constitute an Event of Default or a Potential Event of Default.
6. Release.
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a. Each Loan Party acknowledges that Agent, Syndication Agent,
and Lenders would not enter into this Seventh Amendment without the Loan
Parties' assurance that each Loan Party has no claims against Agent, Syndication
Agent, or Lenders, or any of such parties' shareholders, officers, directors,
employees, agents, or attorneys arising out of or related to the Loan Documents
or any other agreement between any Loan Party and any Lender. Except for the
obligations arising hereafter under the Amended Agreement, each Loan Party, for
itself and on behalf of its successors, assigns, and present and future
shareholders, officers, directors, employees, agents, and attorneys, hereby
remises, releases and forever discharges each of Agent, Syndication Agent, and
each Lender and their respective present and former shareholders, officers,
directors, employees, agents, attorneys, successors and assigns from any and all
claims, rights, actions, causes of action, suits, liabilities, defenses, damages
and costs that both (a) exist or may exist as of the Effective Date and (b)
arise from or are otherwise related to the Credit Agreement or the other Loan
Documents, any transaction contemplated thereby, the administration of the Loans
and other financial accommodations made thereunder, the collateral security
given in connection therewith, or any related discussions or negotiations, in
each case whether known or unknown, suspected or unsuspected. Each Loan Party
waives the provisions of California Civil Code section 1542, which states:
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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.
b. The provisions, waivers and releases set forth in this
section are binding upon each Loan Party and each Loan Party's shareholders,
agents, employees, assigns and successors in interest. The provisions, waivers
and releases of this section shall inure to the benefit of each Lender, Agent,
Syndication Agent, and each such party's shareholders, agents, employees,
officers, directors, assigns and successors in interest as parties to the Credit
Agreement.
c. The provisions of this section shall survive payment in full
of the obligations, full performance of all the terms of this Seventh Agreement
and the Loan Documents, or Agent's or any Lender's actions to exercise any
remedy available under the Loan Documents or otherwise.
d. Each Loan Party warrants and represents that each such Loan
Party is the sole and lawful owner of all right, title and interest in and to
all of the claims released hereby and each such Loan Party has not heretofore
voluntarily, by operation of law or otherwise, assigned or transferred or
purported to assign or transfer to any Person any such claim or any portion
thereof. Each Loan Party shall indemnify and hold harmless each Lender, Agent,
and Syndication Agent, from and against any claim, demand, damage, debt,
liability (including payment of reasonable attorneys' fees and costs actually
incurred whether or not litigation is commenced) based on or arising out of any
assignment or transfer.
7. Entire Agreement. This Seventh Amendment, together with the
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Credit Agreement and the other Loan Documents, is the entire agreement between
the parties hereto with respect to the subject matter hereof. This Seventh
Amendment supersedes all prior and contemporaneous oral and written agreements
and discussions with respect to the subject matter hereof.
8. Miscellaneous.
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a. Counterparts. This Seventh Amendment may be executed in
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identical counterpart copies, each of which shall be an original, but all of
which shall constitute one and the same agreement; signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. Delivery of an executed counterpart of a signature page to this
Seventh Amendment by facsimile transmission shall be effective as delivery of a
manually executed counterpart thereof.
b. Headings. Section headings used herein are for convenience
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of reference only, are not part of this Seventh Amendment, and are not to be
taken into consideration in interpreting this Seventh Amendment.
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c. Recitals. The recitals set forth at the beginning of this
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Seventh Amendment are true and correct, and such recitals are incorporated into
and are a part of this Seventh Amendment.
d. Governing Law. THIS SEVENTH AMENDMENT SHALL BE GOVERNED BY,
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AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT
REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS.
e. Effect. Upon the effectiveness of this Seventh Amendment,
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from and after the date hereof, each reference in the Credit Agreement to "this
Agreement," "hereunder," "hereof," or words of like import shall mean and be a
reference to the Credit Agreement as amended hereby and each reference in the
other Loan Documents to the Credit Agreement, "thereunder," "thereof," or words
of like import shall mean and be a reference to the Credit Agreement as amended
hereby.
f. No Novation. Except as expressly provided in this Seventh
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Amendment, the execution, delivery, and effectiveness of this Seventh Amendment
shall not (i) limit, impair, constitute a waiver of, or otherwise affect any
right, power, or remedy of Agent or any Lender under the Credit Agreement or any
other Loan Document, (ii) constitute a waiver of any provision in the Credit
Agreement or in any of the other Loan Documents, or (iii) alter, modify, amend,
or in any way affect any of the terms, conditions, obligations, covenants, or
agreements contained in the Credit Agreement, all of which are ratified and
affirmed in all respects and shall continue in full force and effect.
g. Conflict of Terms. In the event of any inconsistency
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between the provisions of this Seventh Amendment and any provision of the Credit
Agreement, the terms and provisions of this Seventh Amendment shall govern and
control.
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IN WITNESS WHEREOF, this Seventh Amendment to Credit Agreement has
been duly executed as of the date first written above.
P-COM, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Vice President Finance and
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Administration
UNION BANK OF CALIFORNIA, N.A.,
as Agent and a Lender
By /s/ Xxxxxxxx Xxx
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Name: Xxxxxxxx Xxx
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Title: Vice President
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Syndication Agent
and a Lender
By: /s/ M. Xxxxxx XxXxxx
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Name: M. Xxxxxx XxXxxx
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Title: Managing Director
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GUARANTOR CONSENTS
Each of the undersigned hereby (i) ratifies and reaffirms, as of the
date hereof, all of the provisions of that certain Subsidiary Guaranty in favor
of Agent dated as of May 15, 1998 (the "Guaranty"), (ii) acknowledges receipt of
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a copy of the Seventh Amendment to Credit Agreement dated as of June 29, 1999
(the "Seventh Amendment"), (iii) consents to all of the provisions of the
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Seventh Amendment, and (iv) acknowledges and agrees that nothing contained in
the Seventh Amendment in any way affects the validity and enforceability of the
Guaranty.
Effective as of June 29, 1999 CONTROL RESOURCES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Secretary
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Effective as of June 29, 1999 P-COM NETWORK SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name Xxxxxx X. Xxxxxxx
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Title: Secretary
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Effective as of June 29, 1999 P-COM FINANCE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Secretary
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Effective as of June 29, 1999 P-COM UNITED KINGDOM, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Secretary
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Effective as of June 29, 1999 TELEMATICS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Secretary
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SCHEDULE 5.1(m)
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(6/30/99)
VENTURES, SUBSIDIARIES AND AFFILIATES:
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OUTSTANDING STOCK AND INDEBTEDNESS
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Direct Subsidiaries of Borrower
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Geritel S.p.A., an Italian company
P-Com Network Services, Inc., a Delaware corporation
P-Com Network Services (UK) Ltd., an English company
P-Com United Kingdom, Inc., a Delaware corporation
P-Com GmbH, a German company
Technosystem S.p.A., an Italian company
P-Com Finance Corporation, a Delaware corporation
Control Resources Corporation, a Delaware corporation
P-Com (BARBADOS) FSC Limited, Barbados company
P-Com Corpl, Int'l (Cayman) Ltd., a Cayman Islands company
Indirect Subsidiaries of Borrower
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Telematics, Inc., a Virginia corporation
R T Masts Ltd., an English company
Elbas SRL, an Italian company
Technosystem Poland, a Polish company
R T Ltd., an English company (dormant)
Sky Masts, Ltd. an English company (dormant)
Cemetel S.r.L., an Italian company
Material Subsidiaries of Borrower
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Geritel S.p.A
Technosystem S.p.A.
P-Com Network Services, Inc.
Control Resources Corporation
Stock Ownership
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(a) Borrower -- Borrower's issued and outstanding capital stock is publicly
traded on the Nasdaq National Market.
(b) Subsidiaries of Borrower -- Except for, in certain cases, nominal
shareholdings by directors and/or nominees, all of the issued and
outstanding capital stock of each of Borrower's direct and indirect
subsidiaries is wholly-owned by Borrower.
Outstanding rights to purchase, options, warrants, or similar rights pertaining
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to capital stock or other equity securities of Borrower or its subsidiaries
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(a) Borrower has issued and will in the future issue capital stock pursuant to
its employee stock purchase and incentive compensation programs,
including without limitation those transactions described in paragraphs
(c) and (d) below.
(b) On November 5, 1997, the Borrower issued $100,000,000 in 4-1/4%
Convertible Subordinated Notes (the "Notes") due November 1, 2002. The
Notes are convertible at the option of the holder into shares of the
Borrower's common stock at a conversion price of $27.46 per share at any
time. The Notes are redeemable by the Borrower, beginning on November
5, 1000, upon 30 days notice, subject to a declining redemption price.
Interest on the Notes will be paid semiannually on May 1 and November 1
of each year.
(c) On December 23, 1998, the Borrower issued Series B Convertible
Participating Preferred Stock, convertible into the Borrower's Common
Stock, par value $0.0001 per share ("Series B Preferred Stock") and
Warrants entitling holders to purchase a certain number of shares of the
Borrower's Common Stock (the "Warrants," together with the Series B
Preferred Stock, the "Securities") to the holders (the "Holders") as
further described below:
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Name of Holder Securities
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Xxxxxxxx Capital Management, Inc. 1,118,030 (1)
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Castle Creek Technology Partners LLC 1,366,482 (2)
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Capital Ventures International 1,242,257 (3)
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(1) Consists of 745,353 shares of Borrower's Common Stock issuable upon
the conversion of the Series B Preferred Stock and 372,677 shares of
the Borrower's Common Stock issuable upon the exercise of the
Warrants.
(2) Consists of 910,988 shares of Borrower's Common Stock issuable upon
the conversion of Series B Preferred Stock and 455,494 shares of the
Borrower's Common Stock issuable upon the exercise of the Warrants.
(3) Consists of 828,171 shares of Borrower's Common Stock issuable upon
the conversion of Series B Preferred Stock and 414,086 shares of the
Borrower's Common Stock issuable upon the exercise of the Warrants.
(d) On June 4, 1999, the Company separately negotiated and entered into
separate agreements with each of the Holders, as a result of which the
Company exchanged all 15,000 shares of Series B Preferred Stock for
5,134,795 shares of the Company's common stock. The Company also exchanged
outstanding warrants to purchase 1,242,257 shares of the Company's common
stock held by the Holders, for new warrants with an exercise price of $3.00
per share rather than $3.47 per share. In connection with the exchange, the
Company agreed to register the 5,134,795 shares of its common stock
exchanged for the Series B Preferred Stock and the 1,242,257 shares of
common stock subject to the warrants.
