EXHIBIT 10.6
THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Third Amendment to Credit and Security Agreement (the
"AMENDMENT"), dated as of September 20, 2001, is made by and between CXR TELECOM
CORPORATION, a Delaware corporation ("CXR") and XET CORPORATION, a New Jersey
corporation ("XET") (CXR and XIT shall collectively be referred to herein as the
"BORROWER"), and XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the
"LENDER").
RECITALS
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The Borrower and the Lender have entered into a Credit and Security
Agreement dated as of August 16, 2000 as amended by that certain First Amendment
to Credit and Security Agreement dated as of September 29, 2000 and that certain
Second Amendment to Credit and Security Agreement dated as of November 29, 2000
(the "CREDIT AGREEMENT"). Capitalized terms used in these recitals have the
meanings given to them in the Credit Agreement unless otherwise specified.
The Lender is willing to amend the Credit Agreement pursuant to the
terms and conditions set forth herein. The Borrower is entering into this
Amendment with the understanding and agreement that, except as specifically
provided herein, none of the Lender's rights or remedies as set forth in the
Credit Agreement is being waived or modified by the terms of this Amendment.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. DEFINED TERMS. Capitalized terms used in this Amendment which are
defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein.
2. AMENDMENTS TO ARTICLE I - DEFINITIONS
(a) Section 1.1 of the Credit Agreement is hereby amended and
restated to include the following definitions:
"BOOK NET WORTH" means the aggregate of the common and
preferred stockholders' equity in the Borrower, determined in
accordance with GAAP.
"NET INCOME" means the fiscal year-to-date after-tax net
income from continuing operations as determined in accordance with
GAAP.
3. AMENDMENTS TO ARTICLE VI - BORROWER'S AFFIRMATIVE COVENANTS
(a) MINIMUM DEBT SERVICE COVERAGE RATIO. Section 6.12 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
"Section 6.12 MINIMUM DEBT SERVICE COVERAGE RATIO. The Borrower will
maintain a Debt Service Coverage Ratio, measured quarterly on a
consolidated basis, of not less than 1.00 to 1.00 during each fiscal
quarter for the fiscal year ending December 31, 2001."
(b) MINIMUM BOOK NET WORTH. Section 6.13 of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:
"Section 6.13 MINIMUM BOOK NET WORTH. The Borrower will cause MicroTel
and its subsidiaries to maintain a Book Net Worth, on a consolidated
basis, of not less than Six Million Two Hundred Fifty Thousand Dollars
($6,250,000) for the fiscal year ending December 31, 2001."
(c) MINIMUM CUMULATIVE NET INCOME. Section 6.14 of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:
"Section 6.14 MINIMUM CUMULATIVE NET INCOME. The Borrower will maintain
its Cumulative Net Income, on a consolidated basis, of not less than
the amount set forth opposite the applicable date:
Minimum Cumulative
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Date Net Income
---- ----------
March 31, 2001 $200,000
June 30, 2001 $250,000
September 30, 2001 $150,000
December 31, 2001 $125,000"
(d) Section 6.15 of the Credit Agreement is hereby deleted in
its entirety.
4. NO OTHER CHANGES. Except as explicitly amended by this Amendment,
all of the terms and conditions of the Credit Agreement shall remain in full
force and effect and shall apply to any Advance or Letter of Credit thereunder.
5. EFFECTIVENESS OF THIS AMENDMENT. Lender must have received the
following items, in form and content acceptable to Lender, before this Amendment
is effective and before Lender is required to extend any credit to Borrower as
provided for by this Amendment.
(a) AMENDMENT. This Amendment fully executed in a sufficient
number of counterparts for distribution to Lender and Borrower.
(b) CONSENT. The Consent attached to this Amendment, fully
executed in a sufficient number of counterparts for distribution to Lender and
Borrower.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth herein and in the Credit Agreement must be true and
correct.
(d) OTHER REQUIRED DOCUMENTATION. All other documents and
legal matters in connection with the transaction contemplated by this Amendment
shall have been delivered or executed or recorded and shall be in form and
substance satisfactory to Lender.
6. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Lender as follows:
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(a) The Borrower has all requisite power and authority to
execute this Amendment and to perform all of its obligations hereunder, and this
Amendment has been duly executed and delivered by the Borrower and constitutes
the legal, valid and binding obligation of the Borrower, enforceable in
accordance with its terms.
(b) The execution, delivery and performance by the Borrower of
this Amendment have been duly authorized by all necessary corporate action and
do not (i) require any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation or of any
order, writ, injunction or decree presently in effect, having applicability to
the Borrower, or the articles of incorporation or by-laws of the Borrower, or
(iii) result in a breach of or constitute a default under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which the
Borrower is a party or by which it or its properties may be bound or affected.
(c) All of the representations and warranties contained in
Article V of the Credit Agreement are correct on and as of the date hereof as
though made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date.
7. REFERENCES. All references in the Credit Agreement to "this
Agreement" shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all references in the Loan Documents to the Credit Agreement shall
be deemed to refer to the Credit Agreement as amended hereby.
8. NO WAIVER. The execution of this Amendment and acceptance of any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or breach, default or event of
default under any Loan Document or other document held by the Lender, whether or
not known to the Lender and whether or not existing on the date of this
Amendment.
9. RELEASE. The Borrower, and Guarantor by signing the Acknowledgment
and Agreement of Guarantor set forth below, each hereby absolutely and
unconditionally releases and forever discharges the Lender, and any and all
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing, from any and all claims, demands or causes of action of
any kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which the
Borrower or Guarantor has had, now has or has made claim to have against any
such person for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of this
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown. It is the intention of the parties in executing
this release that the same shall be effective as a bar to each and every claim,
demand and cause of action specified and in furtherance of this intention each
waives and relinquishes all rights and benefits under Section 1542 of the Civil
Code of the State of California, 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 might have materially
affected his settlement with the debtor."
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The parties acknowledge that each may hereafter discover facts
different from or in addition to those now known or believed to be true with
respect to such claims, demands, or causes of action and agree that this
instrument shall be and remain effective in all respects notwithstanding any
such differences or additional facts
10. COSTS AND EXPENSES. The Borrower hereby reaffirms its agreement
under the Credit Agreement to pay or reimburse the Lender on demand for all
costs and expenses incurred by the Lender in connection with the Credit
Agreement, the Loan Documents and all other documents contemplated thereby,
including without limitation all reasonable fees and disbursements of legal
counsel. Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses.
11. MISCELLANEOUS. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
XXXXX FARGO BUSINESS CREDIT, INC., CXR TELECOM CORPORATION
a Minnesota corporation
By: /S/ XXXXXXX X. XXXXXXX By: /S/ XXXXXXXX X. XXXXX
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Name: XXXXXXX X. XXXXXXX Name: XXXXXXXX X. XXXXX
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Title: ASST. VICE PRESIDENT Title: VP - CFO
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XET CORPORATION
By: /S/ XXXXXXXX X. XXXXX
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Name: XXXXXXXX X. XXXXX
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Title: VP - CFO
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