Exhibit 10.17
THIRD AMENDMENT TO LOAN AGREEMENT
AND FOURTH AMENDMENT
TO COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT, AND FOURTH AMENDMENT TO COLLATERAL
ASSIGNMENT AND SECURITY AGREEMENT (the "Amendment") is made effective the 2nd
day of October, 1997, by and between ELCOTEL, INC., a Delaware corporation
("Borrower"), ELCOTEL DIRECT, INC., a Delaware corporation ("Guarantor") and
NATIONSBANK, N.A. f/k/a NATIONSBANK, N.A. (SOUTH), a National Banking
Association, as successor in interest to NATIONSBANK OF FLORIDA, N.A.
("Lender").
RECITALS:
WHEREAS, Borrower being indebted to Lender, executed and delivered to Lender a
certain promissory note dated January 20, 1994, in the original principal amount
of $1,000,000.00, which
note is secured by accounts receivable, notes receivable and inventory, and
other collateral, as evidenced by, among other loan documents, a Collateral
Assignment dated January 20, 1994, and a Security Agreement dated January 20,
1994; and
WHEREAS, in connection with an additional $1,000,000.00 line of credit loan
Borrower executed a $1,000,000.00 promissory note and a $2,000,000.00
Consolidation Promissory Note, both dated August 31, 1994, as renewed by Renewal
Promissory Note dated August 31, 1995 and Renewal Promissory Note dated August
31, 1996 (as further extended by Note Modification Agreement dated August 20,
1997), and executed a Loan Agreement and an Amendment to Collateral Assignment
and Security Agreement both dated August 31, 1994 as amended by a First
Amendment to Loan Agreement and Second Amendment to Collateral Assignment and
Security Agreement dated August 31, 1995, and as further amended by a Second
Amendment to Loan Agreement and Third Amendment to Collateral Assignment and
Security Agreement dated August 31, 1996; and
WHEREAS, Borrower has requested Lender to make an additional Term loan to
Borrower in the amount of $3,050,000.00; $950,000.00 and $2,850,000.00 (the
"Additional Term Loans"); and
WHEREAS, Borrower and Lender desire to amend the terms of
the Loan Agreement, Collateral Assignment and the Security Agreement, as
previously amended, to reflect the making of the Additional Term Loans; and
Guarantor desires to join into the Loan Agreement.
NOW THEREFORE, in consideration of the premises and of the agreements herein
contained and the agreement by Lender to make the Loan, the parties hereto agree
as follows:
1. The above recitals are true and correct and are incorporated herein by
this reference.
2. The Note as defined in the Collateral Assignment shall be deemed to
include the Promissory Notes in the amount of $3,050,000.00, $950,000.00 and
$2,850,000.00 of even date herewith from Borrower.
3. The obligations secured by the Loan Agreement, Collateral Assignment and
Security Agreement shall include all debts, obligations, liabilities and
agreements of Borrower to Lender, now or hereafter existing, including but not
limited to the indebtedness evidenced by the $3,050,000.00, $950,000.00 and
$2,850,000.00 Promissory Notes of even date, and all renewals, extensions or
modifications thereof. Lender represents to the
best of its knowledge there is not currently a reserve requirement imposed by
the Federal Reserve System for establishing Lender's Floating Libor Rate, as
defined in the Notes, or any other additional costs as defined in Article 2(b)
in each of the above referenced Notes.
4. The Security Agreement is amended to provide that Borrower hereby assigns
and grants to Lender a security interest in lien in the additional collateral
described in Exhibit "A" attached hereto and made a part hereof to secure
payment and performance of all of Borrower's obligations to Lender under the
Security Agreement, including Borrower's obligations to Lender pursuant to that
certain $3,050,000.00, $950,000.00 and $2,850,000.00 Promissory Note of even
date herewith, and all renewals, extensions and modification thereof.
5. The $3,050,000.00, $950,000.00 and $2,850,000.00 term loan proceeds shall
be used solely to purchase: (1) certain assets of Lucent Technologies ("Lucent")
pursuant to that certain Asset Purchase Agreement dated September 30, 1997 and
(2) to acquire capital assets from Lucent. To the extent such acquisition may
require Lender's consent under the Loan Agreement
such consent is hereby given by Lender.
6. Paragraph 4.A.ii. is amended to provide Borrower shall maintain a Debt
Service Coverage Ratio of not less than 1.3:1.0 for the fiscal quarter end
measured on a rolling four (4) quarter basis from the annual and quarterly
financial statements, commencing September 30, 1997.
7. All references to Loan Agreement in the Security Agreement and Collateral
Assignment shall mean the Loan Agreement dated August 31, 1994, as amended by
Amendment to Loan Agreement dated August 3, 1995, and by Second Amendment to
Loan Agreement dated August 31, 1996 and by Third Amendment to Loan Agreement of
even date herewith by and between Borrower and Lender.
8. Borrower covenants and agrees that within 60 days from the date hereof,
Borrower will provide to Lender, a company prepared balance sheet for Borrower
setting forth the new loan indebtedness to Lender and the equity structure of
Borrower (including the assets acquired with the Additional Term Loans) as of
the date hereof.
9. The parties acknowledge and agree that as additional collateral for
Borrower's obligations under the Loan Agreement, Collateral Assignment and
Security Agreement, Guarantor has
executed and delivered to Lender its Continuing and Unconditional Guaranty (the
"Guaranty") dated of even date herewith of Borrower's obligations to Lender, and
as security for Borrower's obligations and the Guaranty, a Security Agreement
and UCC-1 Financing Statements granting to Lender a security interest in
Guarantor's assets. Borrower and Guarantor covenant and agree with Lender that a
default under the Guaranty or Guarantor's Security Agreement shall be a default
under the Loan Agreement, Collateral Assignment and Security Agreement and all
Notes from Borrower to Lender; and similarly, a default by Borrower under the
Notes, Loan Agreement, Collateral Assignment and Security Agreement of Borrower
shall be a default under the Guaranty and Security Agreement of Guarantor.
10. Lender agrees with Borrower that in the event Borrower is required to pay
to the State of Florida documentary stamps in connection with the Notes
evidencing the Additional Term Loans, that upon payment in full by Borrower of
the documentary stamps, including any fees or penalties in connection therewith,
Lender shall immediately refund to Borrower the advisory fee paid by Borrower to
Lender as shown on the Loan Settlement Statement of even date herewith.
11. Except as modified herein, all other terms and
conditions of the Loan Agreement, Collateral Assignment and the Security
Agreement, all as previously amended, shall remain unchanged and in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment, and
shall be conclusively deemed to have executed such on the day and year first
written above.
NATIONSBANK, N.A., f/k/a
NATIONSBANK, N.A., (SOUTH) ELCOTEL, INC., a Delaware a National Banking
Association corporation as successor in interest to NATIONSBANK OF FLORIDA, N.A.
By: /s/ Xxxxxx Xxxx By: /s/ Xxxxxx X. Xxxx
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Xxxxxx Xxxx Xxxxxx X. Xxxx
Vice President President
Address: 0000 Xxxx Xxxxxx Address: 0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
(CORPORATE SEAL) (CORPORATE SEAL)
ELCOTEL DIRECT, INC., a
Delaware corporation
By: /s/ Xxxxxx X. Xxxx,
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Xxxxxx X. Xxxx, Vice President
Address: 0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
(CORPORATE SEAL)
