EXHIBIT 10.1
FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Fifth Amendment to Credit and Security Agreement (the
"AMENDMENT"), dated as of July 1, 2003, is made by and between CXR TELCOM
CORPORATION, a Delaware corporation ("CXR") and XET CORPORATION, a New Jersey
corporation ("XET") (CXR and XET 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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A. 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, that
certain Second Amendment to Credit and Security Agreement dated as of November
29, 2000, that certain Third Amendment to Credit and Security Agreement dated as
of September 20, 2001, and that certain Fourth Amendment to Credit and Security
Agreement dated as of April 17, 2002 (the "CREDIT AGREEMENT"). Capitalized terms
used herein without definition shall have the meaning ascribed to them in the
Credit Agreement.
B. 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 are being waived or modified by the terms of this Amendment.
Amendment
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NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follow:
1. Amendments to Article I - Definitions.
(a) ADDITIONAL DEFINITIONS. The following definitions are
hereby added to Section 1.1 of the Credit Agreement in alphabetical order:
"`ADDITIONAL TERM ADVANCES' has the meaning specified in
Section 2.2."
"`APPLICABLE BOOK NET WORTH AMOUNT' means at any time, the sum
of (a) Five Million Five Hundred Thousand Dollars
($5,500,000), plus (b) an amount equal to eighty percent (80%)
of the positive Net Income (after corporate allocations) of
Microtel and its subsidiaries, on a consolidated basis, earned
in each fiscal year ending after 12/31/02 (with no deduction
for a net loss in any such fiscal year)."
"`INITIAL TERM ADVANCE' has the meaning specified in Section
2.2."
2. Amendments to Article II - Amount and Terms of the Credit Facility.
(a) Section 2.2 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"SECTION 2.2 TERM ADVANCES. The Lender agrees, on the terms
and subject to the conditions herein set forth, to make a
one-time advance to XET on the Funding Date in the original
principal amount of Six Hundred Forty-Six Thousand Seven
Hundred Sixty-Five Dollars ($646,765) and to make a one-time
advance to CXR on the Funding Date in the original principal
amount of Forty Thousand Two Hundred Thirty-Five Dollars
($40,235) (collectively, the "INITIAL TERM ADVANCES");
PROVIDED, HOWEVER, that the Lender, in its sole discretion,
may make an additional one-time advance to XET on July 1,
2003, in an amount such that the aggregate amount of
outstanding advances to XET pursuant to this Section 2.2 does
not exceed One Hundred Thirty-Five Thousand Dollars
($135,000), and may make an additional one-time advance to CXR
on July 1, 2003, in an amount such that the aggregate amount
of outstanding advances to CXR pursuant to this Section 2.2
does not exceed Fifteen Thousand Dollars ($15,000)
(collectively, the "ADDITIONAL TERM ADVANCES," and together
with the Initial Term Advances, the "TERM ADVANCES"). The
Borrowers' obligation to pay the Term Advances shall be
evidenced by the Term Notes and shall be secured by the
Collateral as provided in Article III."
(b) Section 2.3(a) of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
"(a) As to the XET Term Note, beginning on September 1, 2000,
and on the first day of each month thereafter, in
substantially equal monthly installments equal to the greater
of $10,779.42 or an amount sufficient to fully amortize the
principal balance of the XET Term Note over an assumed term of
sixty (60) months; PROVIDED, HOWEVER, that after the
Additional Term Advances are made, the outstanding principal
balance of the XET Term Note shall be due and payable
beginning on August 1, 2003, and on the first day of each
month thereafter, in substantially equal monthly installments
equal to an amount sufficient to fully amortize the principal
balance of the XET Term Note over an assumed term of
twenty-five (25) months;"
(c) Section 2.3(b) of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
"(b) As to the CXR Term Note, beginning on September 1, 2000,
and on the first day of each month thereafter, in
substantially equal monthly installments equal to the greater
of $670.58 or an amount sufficient to fully amortize the
principal balance of the CXR Term Note over an assumed term of
sixty (60) months; PROVIDED, HOWEVER, that after the
Additional Term Advances are made, the outstanding principal
balance of the CXR Term Note shall be due and payable
beginning on August 1, 2003, and on the first day of each
month thereafter, in substantially equal monthly installments
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equal to an amount sufficient to fully amortize the principal
balance of the CXR Term Note over an assumed term of
twenty-five (25) months;"
(d) Section 2.3 of the Credit Agreement is hereby amended by
adding the word "and" after subsection (c) thereof and by adding new subsection
(d) which will read in its entirety as follows:
"(d) The Lender may obtain one appraisal of the Borrowers'
Equipment during any twelve (12) month period, at the
Borrowers' expense, and an appraisal of the Borrowers'
Equipment at any other time during such twelve (12) month
period, at the Lender's expense. If as of the date of
determination the aggregate outstanding principal balance of
the Term Notes exceed eighty percent (80%) of the auction
value of the Equipment as shown on the most recent appraisal
of Borrowers' Equipment, upon demand by the Lender, the
Borrowers shall immediately prepay the outstanding principal
amount of the Term Notes in the amount of such excess together
with any interest due and payable in respect to such amount
and any prepayment fee owed pursuant to Section 2.10(b)."
3. Amendments to Article VI - Borrowers' 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
Borrowers will maintain a Debt Service Coverage Ratio, on a
consolidated basis (based on the Debt Service Coverage Ratio
of XET and CXR only), measured quarterly on a trailing nine
(9) month basis, of not less than 1.25 to 1.0."
(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 Borrowers will cause
MicroTel and its subsidiaries to maintain a Book Net Worth, on
a consolidated basis, at an amount not less than the
Applicable Book Net Worth Amount for the fiscal year ending
December 31, 2002, and for each fiscal year ending December 31
thereafter."
(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 NET INCOME. The Borrowers will maintain
their Net Income after corporate allocations, on a
consolidated basis (based on Net Income of XET and CXR only),
measured quarterly on a year to date basis, of not less than
the amount set forth opposite the applicable date:
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Minimum Cumulative
Date Net Income
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March 31, 2003 $(250,000)
June 30, 2003 $(200,000)
September 30, 2003 $100,000
December 31, 2003 $100,000"
4. REFERENCES TO XIT. Any reference to the term XIT in the Credit
Agreement and each Loan Document shall mean and be a reference to XET.
5. 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 thereunder.
6. ACCOMMODATION FEE. The Borrower shall pay to the Lender in cash as
of the date hereof a fully earned, non-refundable fee in the amount of Five
Hundred Dollars ($500) in consideration of the Lender's execution of this
Amendment (the "ACCOMMODATION FEE").
7. EFFECTIVENESS OF THIS AMENDMENT. The Lender must have received the
following items, in form and content acceptable to the Lender, before this
Amendment is effective and before the Lender is required to extend any credit to
the Borrower as provided for by this Amendment.
(a) AMENDMENT. This Amendment fully executed in a sufficient
number of counterparts for distribution to the Lender and the Borrower.
(b) ACKNOWLEDGEMENT. The Acknowledgement and Agreement of
Guarantor attached to this Amendment, fully executed in a sufficient number of
counterparts for distribution to the Lender and the Borrower.
(c) ACCOMMODATION FEE. The Accommodation Fee.
(d) REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth herein and in the Credit Agreement must be true and
correct.
(e) 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 the Lender.
8. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Lender as follows:
(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.
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(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) The representations and warranties contained in each Loan
Document (other than any such representations or warranties that, by their
terms, are specifically made as of a date other than the date hereof) are
correct on and as of the date hereof as though made on and as of such date.
9. REFERENCES. Upon and after the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Agreement," "hereunder," "hereof' or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to "the Credit Agreement," "thereof' or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as modified and amended hereby.
10. 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.
11. 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.
12. 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 or 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.
13. RATIFICATION. The Borrower hereby restates, ratifies and reaffirms
each and every term and condition set forth in the Credit Agreement, as amended
hereby, and the Loan Documents effective as of the date hereof.
14. ESTOPPEL. To induce the Lender to enter into this Amendment and to
continue to make advances to the Borrower under the Credit Agreement, the
Borrower hereby acknowledges and agrees that, after giving effect to this
Amendment, as of the date hereof, there exists no Event of Default and no right
of offset, defense, counterclaim or objection in favor of the Borrower as
against the Lender with respect to the Obligations.
15. CHOICE OF LAW. The validity of this Amendment, its construction,
interpretation and enforcement, the rights of the parties hereunder, shall be
determined under, governed by, and construed in accordance with the internal
laws of the State of California governing contracts only to be performed in that
State.
16. 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. Delivery of an executed counterpart of a signature page to
this Amendment by telefacsimile shall be effective as delivery of a manually
executed counterpart of this Amendment.
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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 TELCOM CORPORATION,
a Minnesota corporation a Delaware corporation
By: /S/ XXXXXXX X. XXXXXXX By: /S/ XXXXXXXX X. XXXXX
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Name: Xxxxxxx X Xxxxxxx Name: Xxxxxxxx X. Xxxxx
Title: Asst. Vice President Title: Vice President & CFO
XET CORPORATION,
a New Jersey corporation
By: /S/ XXXXXXXX X. XXXXX
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Name: Xxxxxxxx X. Xxxxx
Title Vice President and CFO
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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS
The undersigned guarantor of the indebtedness of CXR Telcom
Corporation and XET Corporation (collectively, the "BORROWERS") to Xxxxx Fargo
Business Credit, Inc. (the "LENDER") pursuant to a Guaranty dated as of August
16, 2000 ("GUARANTY"), hereby (i) acknowledges receipt of the foregoing
Amendment; (ii) consents to the terms (including without limitation the release
set forth in paragraph 11 of the Amendment) and execution thereof; (iii)
reaffirms its obligations to the Lender pursuant to the terms of the Guaranty;
and (iv) acknowledges that the Lender may amend, restate, extend, renew or
otherwise modify the Credit Agreement and any indebtedness or agreement of the
Borrowers, or enter into any agreement or extend additional or other credit
accommodations, without notifying or obtaining the consent of the undersigned
and without impairing the liability of the undersigned under the Guaranty for
all of the Borrowers' present and future indebtedness to the Lender.
MICROTEL INTERNATIONAL INC.
By: /S/ XXXXXXXX X. XXXXX
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Name: Xxxxxxxx X. Xxxxx
Its: Senior Vice President & CFO
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