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Exhibit 10.49
AMENDMENT NO. 4 TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT ("Amendment") is
dated as of January 1, 2000 and is entered into by and between Bank of America,
N.A. ("Lender") (formerly known as Bank of America National Trust and Savings
Association which was the successor-in-interest to BankAmerica Business Credit,
Inc.) and Paradyne Corporation ("Borrower"). All capitalized terms used herein
but not otherwise defined shall have the meanings ascribed to them in the
Agreement (as hereinafter defined).
WITNESSETH
WHEREAS, the Borrower and the Lender have entered into that certain
Loan and Security Agreement dated as of July 31, 1996, as amended and
supplemented (the "Agreement"); and
WHEREAS, the Borrower desires to amend the Agreement and the Lender is
willing to do so, subject to the terms and conditions stated herein;
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Borrower and Lender hereby agree as follows:
SECTION 1. Amendment to the Agreement. The Lender and Borrower agree
that the Agreement shall be amended as follows:
A. Amendment to Section 1. The definition of "Availability"
contained in Section 1 of the Agreement is amended by deleting the
words "Thirty-Five Million Dollars ($35,000,000)" and inserting in lieu
thereof the words "Thirty Million Dollars ($30,000,000)".
B. Amendment to Section 1. The definition of "Stated
Termination Date" contained in Section 1 of the Agreement is amended in
its entirety to read as follows:
"Stated Termination Date' means January 31, 2001."
C. Amendment to Section 1. Section 1 of the Agreement is
amended to add the following definitions:
"'Borrowing Base' means at any time the lesser of: (a) the
amount of Thirty Million Dollars ($30,000,000") or (b) the sum
of: (i) eighty-five percent (85%) of the Net Amount of
Eligible Accounts, and (ii) the least of: a) $6,000,000; b)
forty percent (40%) of the value of Eligible Inventory; and c)
the amount of the M&E Appraisal Less: (a) the Base Reserve
Amount; (b) the amount, if any, by which the Reserve
Calculation Amount exceeds eighty percent (80%) of the M&E
Appraisal; (c) the ACH Settlement Risk Reserve;
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and (d) all other reserves which the Lender in its reasonable
discretion deems necessary or desirable to maintain with
respect to the Borrower's account, including, without
limitation, any amounts which the Lender may be obligated to
pay in the future for the account of the Borrower, and any tax
or other reserve relating to the Canadian Guaranty or any
Canadian Collateral.
"Revolver Outstandings means, at the time of
determination, the sum of the Revolving Loans outstanding and
the face amount of all issued and outstanding Letters of
Credit."
D. Amendment to Section 2. The first sentence of Section 2.1
of the Agreement is amended to read as follows:
"Subject to all of the terms and conditions of this
Agreement, the Lender shall make available a total credit
facility of up to $30,000,000 (the "Total Facility") for
Borrower's use from time to time during the term of this
Agreement."
E. Amendment to Section 3. Section 3.3 of the Agreement is
amended in its entirety to read as follows:
"Unused Line Fee. For every month during the term of
this Agreement, the Borrower shall pay the Lender a fee (the
"Unused Line Fee") in an amount equal to one-quarter of one
percent (0.25%) per annum multiplied by the average daily
amount by which $30,000,000 exceeded the sum of (a) the
average daily outstanding amount of Revolving Loans and (b)
the average daily undrawn face amount of all outstanding
Letters of Credit during such month, with the unpaid balance
of Revolving Loans calculated for this purpose by applying
payments immediately upon receipt. The Unused Line Fee, if
any, shall be calculated on the basis of a year of three
hundred sixty (360) days and actual days elapsed and shall be
payable to the Lender on the first day of each month with
respect to the prior month."
F. Amendment to Section 7. Section 7.2 of the Agreement is
amended by deleting the amount "$100,000" which appears in the third
sentence from the end of the section and inserting in lieu thereof the
amount "$250,000".
G. Amendment to Section 7. The second sentence of Section
7.3(b) of the Agreement is amended to read as follows:
"The Borrower covenants and agrees that neither it nor
Paradyne Canada will maintain any Collateral having a value in
excess of $250,000 in the aggregate or Canadian Collateral
having a value in excess of $250,000 in the aggregate at any
location other than those listed on Schedule 7.3, and neither
it nor Paradyne Canada will otherwise change or add to any of
such locations, unless the Borrower gives the Lender at least
30 days' prior written notice thereof and the Borrower or
Paradyne Canada executes any and all financing
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statements and other documents that the Lender requests in
connection therewith."
H. Amendment to Section 7. Section 7.5 of the Agreement is
amended in its entirety to read as follows:
"Appraisals. Whenever a Default or Event of Default
exists, and at such other times (but not more frequently than
once a year) when the Revolver Outstandings at any time during
the prior 12 months exceeded $15,000,000, the Borrower shall,
and shall cause Paradyne Canada to, at the Borrower's expense
and upon the Lender's request, provide the Lender with
appraisals or updates thereof, including, without limitation,
M&E Appraisals, of any or all of the collateral and the
Canadian Collateral from an appraiser acceptable to the Lender
in its sole discretion."
I. Amendment to Section 7. The first sentence of Section 7.8
of the Agreement is amended to read as follows:
"Collateral Reporting. The Borrower will provide the
Lender with, and will cause Paradyne Canada to provide the
Lender with, the following documents at the following times in
form satisfactory to the Lender: (a) (i) monthly in the event
the Revolver Outstandings are ever less than $10,000,000 and
the Revolver Outstandings are less than fifty percent (50%) of
the Borrowing Base, or (ii) twice a month in the event the
Revolver Outstandings are ever greater than $10,000,000 (but
not greater than $15,000,000) or the Revolver Outstandings
ever exceed fifty percent (50%) of the Borrowing Base, or
(iii) at all other times at least three times a week, the
following: a schedule of credit memos and reports, a schedule
of collections of accounts receivable, a schedule of Accounts
created since the last such schedule and a report of the
inventory balance (by location and major categories) based on
the perpetual inventory reports as of the latest fiscal month
end; (b) upon request, copies of invoices, credit memos,
shipping and delivery documents; (c) monthly agings of
accounts receivable no later than the 10th business day of the
following month; (d) monthly inventory reports by category no
later than the 10th business day of the following month; (e)
monthly agings of accounts payable no later than the 10th
business day of the following month; (f) upon request, copies
of purchase orders, invoices, and delivery documents for
Inventory and Equipment acquired by the Borrower; (g) such
other reports as to the Collateral and the Canadian Collateral
as the Lender shall request from time to time; and (h)
certificates of an officer of the Borrower or Paradyne Canada
certifying as to the foregoing."
J. Amendment to Section 7. Sections 7.9(b), 7.9(d) and 7.9(e)
of the Agreement are amended by deleting the amount "$100,000" wherever
it appears and inserting in lieu thereof the amount "$250,000".
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K. Amendment to Section 7. The fist, second, third and fourth
sentences of Section 7.10 of the Agreement are deleted and in lieu
thereof the following inserted:
"The Borrower shall immediately, upon receipt thereof, deposit
all proceeds of the Collateral (including all payments
received in connection with the Accounts) into a Payment
Account, which Payment Account shall be subject to the terms
of a blocked accounts agreement, on terms acceptable to
Lender, between the Borrower, the Lender and the bank. In the
event the Revolver Outstandings are at any time equal to or
greater than $15,000,000 or the Availability is less than
fifty percent (50%) of the Borrowing Base ("Triggering
Events"), the Borrower's right to withdraw funds from the
Payment Account shall terminate and only the Lender shall have
right to withdraw funds from the Payment Account. The Borrower
authorizes the Lender to notify the bank at which the Payment
Account is located upon the happening of a Triggering Event
that all funds deposited into the Payment Account are subject
solely to the direction of the Lender. In the event that
Availability is less than $2,000,000 or at any other time as
the Lender in its sole discretion shall determine, the
Borrower agrees, at the request of the Lender, to cause
Paradyne Canada to deliver all collection of Canadian
Collateral into a bank account subject to the terms of a
blocked account agreement acceptable to the Lender."
L. Amendment to Section 8. Section 8.2(c) of the Agreement is
amended in its entirety to read as follows:
"(c) With each of the annual audited Financial
Statements delivered pursuant to Section 8.2(a) and each of
the unaudited Financial Statements delivered pursuant to
Section 8.2(b) at the end of the month succeeding the close of
each fiscal quarter, a certificate of the chief executive or
chief financial officer of the Borrower (i) stating that,
except as explained in reasonable detail in such certificate,
no Default or Event of Default then exists or existed during
the period covered by such Financial Statements and (ii) if
such certificate relates to annual audited Financial
Statements, describing and analyzing in reasonable detail all
material trends, changes and developments in such Financial
Statements, and (iii) if such certificate relates to a fiscal
month which is the last month of a fiscal quarter, setting
forth in reasonable detail the calculations required to
establish the Borrower's Fixed Charge Coverage Ratio during
such fiscal quarter. Notwithstanding the foregoing no
certificate shall be required for the first and third quarter
if the Revolver Outstandings were as of the end of such
quarter less than $15,000,000. In addition to the foregoing,
the certificate which is delivered in connection with the
annual audited Financial Statements and the fiscal quarter
ending on June 30 shall state that, except as explained in
reasonable detail in such certificate, all of the
representations and warranties of the Borrower contained in
this Agreement and the other Loan Documents are correct and
complete as of the date of the certificate as if made at such
time. If such certificate discloses that a
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representation or warranty is not correct or complete, or that
a covenant has not been complied with, or that a Default or
Event of Default existed or exists, such certificate shall set
forth what action the Borrower has taken or proposes to take
with respect thereto."
M. Amendment to Section 8. Section 8.2(e) of the Agreement is
amended by deleting the words "30 days" and inserting in lieu thereof
the words "90 days".
N. Amendment to Section 10. Section 10.10 of the Agreement is
amended by deleting the amount "$500,000" and inserting in lieu thereof
the following "$2,000,000, provided, however, Borrower shall give
written notice to Lender of such Guarantees."
SECTION 2. Conditions. The effectiveness of this Amendment is subject
to the satisfaction of the following conditions precedent:
A. Amendment. Fully executed copies of this Amendment signed
by the Borrower and a ratification signed by the Guarantor shall be
delivered to Lender.
B. Resolution. A certificate executed by the Secretary or
Assistant Secretary of Borrower certifying that the Borrower's Board of
Directors has adopted resolutions authorizing the execution, delivery
and performance by Borrower of the Amendment shall be delivered to
Lender.
C. Other Documents. Borrower shall have executed and delivered
to Lender such other documents and instruments as Lender may require.
SECTION 3. Miscellaneous.
A. Survival of Representations and Warranties. All
representations and warranties made in the Agreement or any other
document or documents relating thereto, including, without limitation,
any Loan Document furnished in connection with this Amendment, shall
survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by Lender or any closing shall affect
the representations and warranties or the right of Lender to rely
thereon.
B. Reference to Agreement. The Agreement, each of the Loan
Documents, and any and all other agreements, documents or instruments
now or hereafter executed and delivered pursuant to the terms hereof,
or pursuant to the terms of the Agreement as amended hereby, are hereby
amended so that any reference therein to the Agreement shall mean a
reference to the Agreement as amended hereby.
C. Agreement Remains in Effect. The Agreement and the Loan
Documents remain in full force and effect and the Borrower ratifies and
confirms its agreements and covenants contained therein. The Borrower
hereby confirms that, after giving effect to this Amendment, no Event
of Default or Default exists as of such date.
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D. Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall
not impair or invalidate the remainder of this Amendment and the effect
thereof shall be confined to the provision so held to be invalid or
unenforceable.
E. APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE
PERFORMABLE IN THE STATE OF CALIFORNIA AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
F. Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Lender and Borrower and their respective
successors and assigns; provided, however, that Borrower may not assign
or transfer any of its rights or obligations hereunder without the
prior written consent of Lender.
G. Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and
the same instrument.
H. Headings. The headings, captions and arrangements used in
this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
I. Expenses. The Borrower agrees to pay a legal documentation
fee of $1,500, which Borrower authorizes Lender to charge to Borrower's
Loan Account.
J. NO ORAL AGREEMENTS. THIS AMENDMENT, TOGETHER WITH THE OTHER
LOAN DOCUMENTS AS WRITTEN, REPRESENTS THE FINAL AGREEMENT BETWEEN
LENDER AND BORROWER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN LENDER AND BORROWER.
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IN WITNESS WHEREOF, the parties have executed this Amendment under seal
on the date first written above.
PARADYNE CORPORATION
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: Chief Financial Officer
BANK OF AMERICA, N.A.
By: /s/ Xxxx Xxxxxxxx
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Name: Xxxx Xxxxxxxx
Title: Vice President
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CONSENTS AND REAFFIRMATIONS
The undersigned hereby consents to the terms and conditions of that
Amendment No. 4 to Loan and Security Agreement dated as of January 1, 2000,
between Paradyne Corporation and Bank of America, N.A. (formerly known as Bank
of America National Trust and Savings Association) ("Creditor") and reaffirms
its obligations under a Guaranty dated as of July 31, 1996 (the "Guaranty") made
by the undersigned in favor of the Creditor and acknowledges and agrees that the
Guaranty remains in full force and effect.
Dated as of January 1, 2000.
PARADYNE CANADA, LTD.
By: /s/ [ILLEGIBLE]
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Name:
Title:
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PARADYNE CORPORATION
SECRETARY'S CERTIFICATE
The undersigned, Secretary of Paradyne Corporation, a corporation
organized under the laws of the state of Delaware, hereby certifies that by
action of the Board or Directors of Paradyne Corporation, the following
resolutions were adopted by unanimous written consent of all of the Directors of
the Company. Said resolutions were adopted as of January 12, 2000 and remain in
full force and effect as of the date of this certificate.
NOW, THEREFORE, BE IT RESOLVED, that this Company shall enter
into an Amendment No. 4 to its Loan and Security Agreement with Bank of
America, N.A. (formerly Bank of America National Trust and Savings
Association), and
RESOLVED FURTHER, that the officers of the Company be, and
each of them hereby is, authorized and directed to execute and deliver
on behalf of this Company such amendments and documents and to perform
such acts and make such filings as may be deemed necessary or advisable
to implement the foregoing resolution.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of said
Paradyne Corporation, this 12 day of January 2000.
/s/ [ILLEGIBLE]
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(SEAL) Secretary
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