FIFTH AMENDMENT OF LINE OF CREDIT DOCUMENTS
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THIS AMENDMENT is made October 1, 2001 by and among AM COMMUNICATIONS,
INC., a Delaware corporation (the "Original Borrower"), AM BROADBAND SERVICES,
INC., a Delaware corporation ("Broadband"), and SRS COMMUNICATIONS CORPORATION,
a Connecticut corporation ("SRS") (each of Broadband, and SRS being an
"Additional Borrower" and, together with the Original Borrower, the "Borrowers")
and PROGRESS BANK, a federally chartered savings bank (the "Bank").
Background
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The Original Borrower and the Bank entered into a line of credit and
security agreement dated September 12, 1997 (the "Original Line of Credit
Agreement") pursuant to the terms of which the Bank agreed to make available to
the Original Borrower a revolving line of credit facility in the principal
amount outstanding of up to $1,000,000 (the "Original Line of Credit") as
evidenced by that certain Line of Credit Note dated September 12, 1997 in the
original maximum principal amount of One Million Dollars ($1,000,000) executed
and delivered by Original Borrower to Bank (as amended and as the same may be
further amended, supplemented or restated from time to time, being referred to
herein as the "Line of Credit Note"). The Liabilities are secured by a security
interest in certain property of the Original Borrower more particularly
described in the Original Line of Credit Agreement (the "Collateral") and
perfected by the filing of UCC-1 Financing Statements executed by the Original
Borrower in favor of the Bank (the "UCC's").
The Bank and the Original Borrower entered into an amendment of line of
credit documents dated as of August 1, 1998 (the "First Amendment"), a second
amendment of line of credit documents dated as of August 1, 1999 (the "Second
Amendment"), a third amendment of line of credit documents dated as of August 1,
2000 (the "Third Amendment") and a fourth amendment of line of credit documents
dated January 24, 2001 (the "Fourth Amendment").
The First Amendment, the Second Amendment, the Third Amendment and the
Fourth Amendment are sometimes collectively referred to herein as the "Prior
Amendment." The Original Line of Credit, as amended by the Prior Amendments, is
hereafter referred to herein as the "Line of Credit" and the Original Line of
Credit Agreement, as amended, is hereafter referred to as the "Line of Credit
Agreement." The Line of Credit Agreement, the Line of Credit Note, the UCC's and
any other document executed and delivered in connection with the Line of Credit,
all as amended by the Prior Amendments, are sometimes collectively referred to
herein as the "Line of Credit Documents."
The Original Borrower has requested that the Bank increase the maximum
amount of the Line of Credit to $3,000,000, extend the availability of the Line
of Credit to September 30, 2002, add as borrowers the Additional Borrowers (and
make available advances of the Line of Credit available to the Additional
Borrowers), provide for a $470,000 term loan, and amend certain other provisions
of the Line of Credit, including in connection with the Stock Purchase (as such
term is defined below), and the Bank has agreed to do so in accordance with the
terms of this Amendment. Capitalized terms not otherwise defined herein shall
have the same meanings ascribed to them in the Line of Credit Agreement and the
Prior Amendments, as applicable.
Broadband intends to complete a purchase (the "Stock Purchase") on
October 1, 2001 pursuant to the terms of the Stock Purchase Agreement dated
September 7, 2001, as amended to the date hereof, (a copy of which has been
delivered to the Bank in final form prior to the date hereof) all of the
outstanding stock of SRS Communications Corporation, a Connecticut corporation
("SRS") and EDJ Communications, Inc., a Connecticut corporation ("EDJ").
Contemporaneously with the Stock Purchase, SRS and EDJ will, pursuant to a Plan
of Merger (the "Merger Agreement"), merge, with SRS being the surviving entity.
Broadband will on the date hereof pledge to the Bank as Collateral 100% of the
outstanding stock of SRS pursuant to a Stock Pledge Agreement dated the date
hereof and Original Borrower will on the date hereof pledge to the Bank as
Collateral 100% of the outstanding stock of Broadband pursuant to a Stock Pledge
Agreement dated the date hereof.
Incident to the Stock Purchase, Original Borrower shall deliver to the
sellers its subordinated Seller Notes (the "Subordinated Notes") in the
aggregate principal amount of $3,000,000 providing for twelve (12) equal,
quarterly installments of $250,000 each through December 1, 2004 and bearing
interest at 5.0% per annum and subject in all events to the Subordination
Agreement dated the date hereof by and among the Bank, the Borrowers and the
sellers. (Also incident to the Stock Purchase the Borrower shall deliver to the
sellers 9,000,000 restricted unregistered shares of the Original Borrower's
common stock.)
Agreement
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NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
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1. Availability of Line to Additional Borrowers.
(a) The Additional Borrowers may also borrow, repay and reborrow the
proceeds of the Line of Credit and the Term Loan in accordance with the terms
and conditions of the Line of Credit Agreement. All references in the Line of
Credit Agreement and the Prior Amendments to the "Borrower" shall hereafter be
deemed to refer to the Original Borrower and the Additional Borrowers,
collectively. The Additional Borrowers hereby agree to be bound by all of the
terms and conditions of the Line of Credit Agreement, as amended by the Prior
Amendments, as if they had executed the Line of Credit Agreement and the Prior
Amendments at the same time that the Original Borrower executed it. The
Additional Borrowers shall be subject to all the same conditions and
restrictions of the availability of the Line of Credit that are contained in the
Line of Credit Agreement.
(b) The Additional Borrowers hereby agree to become (and hereby are)
jointly and severally liable with the Original Borrower for all payments due to
the Bank, pursuant to the Line of Credit Note, as amended by the Prior
Amendments and hereby. All references in the Line of Credit Note to the "Maker"
shall be deemed to refer to the Original Borrower and the Additional Borrowers,
collectively. The Additional Borrowers hereby agree to be (and hereby are) bound
by all of the terms and conditions of the Line of Credit Note, as amended by the
Prior Amendments and hereby and other Line of Credit Documents, as amended, as
if it had executed the Line of Credit Note and the Prior Amendments at the same
time that the Original Borrower executed them. Additional Borrowers join in all
of the representations, warranties and waivers of Original Borrower under the
Line of Credit Note and the other Line of Credit Documents and agree to be bound
by the covenants and other provisions thereof as if additional Borrowers were an
original signatory to each of such documents.
(c) EACH BORROWER HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF RECORD, OR THE PROTHONOTARY
OR CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO
APPEAR FOR BORROWERS, OR ANY OF THEM, AT ANY TIME OR TIMES, AFTER THE OCCURRENCE
OF AN EVENT OF DEFAULT UNDER THE LINE OF CREDIT DOCUMENTS OR THIS AMENDMENT THAT
CONTINUES BEYOND THE EXPIRATION OF APPLICABLE NOTICE AND GRACE PERIODS SET FORTH
THEREIN OR HEREIN, IN ANY SUCH COURT IN ANY ACTION BROUGHT AGAINST BORROWERS, OR
ANY OF THEM, BY BANK WITH RESPECT TO THE AGGREGATE AMOUNTS PAYABLE HEREUNDER AND
UNDER THE OTHER LINE OF CREDIT DOCUMENTS, WITH OR WITHOUT DECLARATION FILED, AS
OF ANY TERM, AND THEREIN TO CONFESS OR ENTER JUDGMENT AGAINST BORROWERS, OR ANY
OF THEM, FOR ALL SUMS PAYABLE BY BORROWERS TO BANK UNDER THE LINE OF CREDIT
DOCUMENTS, AS EVIDENCED BY AN AFFIDAVIT SIGNED BY A DULY AUTHORIZED DESIGNEE OF
BANK SETTING FORTH SUCH AMOUNT THEN DUE FROM BORROWERS TO BANK, PLUS A
REASONABLE ATTORNEY'S COMMISSION WITH COSTS OF SUIT, RELEASE OF PROCEDURAL
ERRORS, AND WITHOUT RIGHT OF APPEAL. IF A COPY OF THIS AMENDMENT, VERIFIED BY AN
AFFIDAVIT, SHALL HAVE BEEN FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO
FILE THE ORIGINAL AS A WARRANT OF ATTORNEY. BORROWERS HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVE THE RIGHT TO ANY STAY OF
EXECUTION, THE BENEFIT OF ALL EXEMPTION LAWS NOW OR HEREAFTER IN EFFECT AND ANY
AND ALL RIGHTS TO PRIOR NOTICE AND HEARING WITH RESPECT TO THE GARNISHMENT OR
ATTACHMENT OF ANY PROPERTY PURSUANT TO A JUDGMENT ENTERED HEREUNDER. NO SINGLE
EXERCISE OF THE FOREGOING WARRANT AND POWER TO BRING ANY ACTION OR CONFESS
JUDGMENT THEREIN SHALL BE DEEMED TO EXHAUST THE POWER, BUT THE POWER SHALL
CONTINUE UNDIMINISHED AND MAY BE EXERCISED FROM TIME TO TIME AS OFTEN AS BANK
SHALL ELECT UNTIL ALL AMOUNTS PAYABLE TO BANK UNDER THE LINE OF CREDIT DOCUMENTS
SHALL HAVE BEEN PAID IN FULL. THE EXERCISE BY BANK OF ITS RIGHTS AND REMEDIES
AND THE ENTRY OF ANY JUDGMENT BY BANK UNDER THIS PARAGRAPH 1(c) SHALL NOT AFFECT
IN ANY WAY THE INTEREST RATE PAYABLE UNDER THE NOTE OR UNDER ANY OF THE OTHER
LINE OF CREDIT DOCUMENTS OR ANY AMOUNTS DUE TO BANK, BUT INTEREST SHALL CONTINUE
TO ACCRUE ON SUCH AMOUNTS AT THE DEFAULT RATE.
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(d) The "Background" section hereof is a part of this Amendment.
2. Amendment to Line of Credit Documents.
(a) The "definitions" section of the Line of Credit is hereby
amended as follows:
(i) The definition of "Borrowing Base" is hereby amended and
restated to read in its entirety as follows:
Borrowing Base. At any time, an amount equal to (x) eighty
percent of Qualified Accounts minus (y) fifty percent
(50%) of the principal amount of the Term Loan outstanding
as of the date of determination.
(ii) The definition of "Line of Credit" is hereby amended by
adding a second sentence thereto to read as follows:
The principal amount outstanding under the Line of Credit
may in no event exceed the Borrowing Base.
(iii) The definition of "Line of Credit Termination Date" is
hereby amended and restated to read in its entirety as follows:
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Line of Credit Termination Date shall mean September 30,
2002.
(iv) The definition of Note is hereby amended and restated to
read in its entirety as follows:
Note. The Line of Credit Note and the Term Note,
collectively with respect to the Liabilities and the
Borrower's obligations thereunder and individually as the
context may otherwise require.
(v) The following definitions are hereby added:
Wall Street Journal Prime Rate. The rate per annum
announced from time to time in the Wall Street Journal
(New York edition) as the "Prime Rate" and used by the
Bank as reference therefor.
Leverage Ratio. The ratio of (x) total liabilities minus
subordinated debt to (y) shareholders equity plus
subordinated debt minus intangible assets, calculated as
of the end of each fiscal quarter in accordance with GAAP.
Line of Credit Note. The amended and restated line of
credit note executed by the Borrowers on the 2001
Amendment Date in the maximum principal amount of
$3,000,000 and evidencing the Borrower's obligation to
repay Advances.
2001 Amendment Date. October 1, 2001.
Term Loan. The $470,000 term loan made on the 2001
Amendment Date pursuant to Section 2A.1.
Term Loan Commitment. The understanding by the Bank to
provide to the Borrowers the Term Loan on the 2001
Amendment Date in the amount of $470,000.
Term Loan Maturity Date. September 30, 2005.
Term Note. The Term Note dated the 2001 Amendment Date
evidencing the Borrower's obligations to repay the Term
Loan and all accrued interest thereon. The Term Note is
one of the "Line of Credit Documents."
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(b) A new Section 2.1(g) is hereby added to the Credit Agreement to
read in its entirety as follows:
All payments by the Borrowers under the Notes shall be made to the
Bank at the address set forth herein, or such other place or places
as the Bank may direct in writing prior to 2:00 p.m., Philadelphia,
Pennsylvania time, on the date of payment (or, if the date of
payment is not a Business Day, the next Business Day) in funds which
are immediately available to the Borrowers. The Borrowers
acknowledge and agree that (a) any payments received hereunder shall
be applied first to accrued and unpaid interest, then to any other
sums which may be payable to the Bank under the Line of Credit
Documents up to the date of such payment and then to the principal
sum due hereunder, and (b) the acceptance of any such payment when
there is an event of default in existence hereunder shall not
constitute a waiver, release or accord and satisfaction thereof or
of any rights with respect thereto by the Bank. Absent a default or
event of default under any of the Line of Credit Documents, and
prior to expiration of the Line of Credit, amounts borrowed under
the Line of Credit and repaid may be reborrowed.
(c) A new Article 2A is hereby added to the Credit Agreement to read
in its entirety as follows:
2A.1 Term Loan.
(a) Term Loan Commitment. Subject to the terms and conditions
hereof, and in reliance on the representations and
warranties herein set forth, the Bank agrees to make a term
loan (the "Term Loan") to the Borrower on the 2001
Amendment Date in such principal amount as the Borrower
shall request up to but not exceeding the Term Loan
Commitment. The Bank shall have no obligation to make Term
Loans hereunder after the Closing Date. The Term Loan
Commitment is not a revolving credit commitment and the
Borrowers shall not have the right to reborrow any sums
repaid under this Section 2A.
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(b) Term Note. The Term Loan shall be evidenced by the Term
Note, payable to the Bank. The Term Note shall be dated
as of the 2001 Amendment Date and shall be due and payable
as provided in the Term Note and the Term Loan Maturity
Date, or on the acceleration of the Liabilities under and
pursuant to Section 8.2, whichever is earlier, shall
evidence the Liabilities of the Borrower to the Bank of an
amount equal to the Term Loan Commitment, and shall bear
interest as provided herein.
(c) Term Loan Interest Rate. The Term Loan shall bear interest
on the average daily outstanding balance of principal at an
annual rate equal to two percent (2%) plus the Wall Street
Journal Prime Rate, payable monthly in arrears.
(d) Term Loan Miscellaneous. The obligation under the Term Note
shall be among the Liabilities. The proceeds of the Term
Loan shall be used to repay on the 2001 Amendment Date in
full any Borrower's outstanding obligations to the Small
Business Administration.
(e) All Advances to Constitute One Loan. Notwithstanding the
limitations on the Line of Credit and the Term Loan set
forth herein, all loans and advances by the Bank to the
Borrower under this Agreement and the other Loan Documents
and all Liabilities, shall constitute one loan and all
indebtedness and obligations of the Borrower to the Bank
under this Agreement and all other Documents shall
constitute one general obligation of the Borrower secured
under this Agreement and by all other liens heretofore, now
or at any time hereafter granted by the Borrower to the
Bank. The Borrower agrees that all of the rights of the
Bank set forth in this Agreement shall apply to any
amendment, extension, supplement, modification, restatement
or replacement of or to this Agreement or any other Line of
Credit Document.
(d) Section 2.3 of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
Revolving Credit Interest Rate. The Revolving Credit Loans shall
bear interest on the average daily outstanding balance of principal
at a fluctuating rate per annum (computed on the basis of a year of
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360 days and actual days elapsed), equal to the Wall Street Journal
Prime Rate plus the applicable margin set forth below and calculated
in respect of Borrower's Leverage Ratio, such applicable margin to
be recalculated as of the end of each fiscal quarter upon the
receipt of the financial statements required to be delivered
hereunder and based upon the Borrower's Leverage Ratio.
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Leverage Applicable Margin
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>2.225 to 1.0 2.0%
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>2.0 to 1.0 to 1.75%
2.25 to 1.0
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<2.0 to 1.0 1.5%
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The interest rate shall, in all events, change automatically from
time to time effective as of the date of each change in the Wall
Street Journal Prime Rate.
(e) A new Section 3.1(a)(iii) is hereby added to read in its
entirety as follows:
3.1(a)(iii) Without limiting the foregoing, the Borrower hereby
grants to the Bank a security interest in all assets of
the Borrower, of every kind and nature, now existing and
hereafter acquired and arising and wherever located,
including without limitation, accounts (including
health-care-insurance receivables and credit card
receivables), deposit accounts, commercial tort claims,
letter of credit rights, chattel paper (including
electronic chattel paper), documents, instruments,
investment property, general intangibles (including
payment intangibles), software, goods, inventory,
equipment, furniture and fixtures, all supporting
obligations of the foregoing, and all cash and noncash
proceeds and products (including without limitation
insurance proceeds) of the foregoing, and all additions
and accessions thereto, substitutions therefor and
replacements thereof.
(f) Section 4 of the Credit Agreement is hereby amended by amending
and restating the unnumbered introductory paragraph to read in its entirety as
follows:
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To induce the Bank to enter into this Agreement, and to amend this
Agreement as of the 2001 Amendment Date, and to make the Line of
Credit and Term Loan available to the Borrower the Borrower hereby
represents and warrants (collectively) as follows with respect to
each Borrower individually:
(g) Financial Covenants. Subparagraphs (i), (ii) and (iii) of
paragraph (b) of the Third Amendment, which amended and restated Section 6.2 of
the Original Line of Credit Agreement, are deleted in their entirety and
replaced by the following (which shall be applied to the Borrower in the
aggregate):
(i) Minimum Working Capital (defined as Current Assets minus
Current Liabilities) of (A) $1,200,000 as of December 31, 2001, (B)
$1,600,000 as of March 31, 2002 and (C) $1,800,000 as of June 30,
2002, and to be maintained thereafter. The accruals payable to NeST
shall be excluded from Current Liabilities for the purpose of
testing this covenant, so long as no cash payments are made to NeST.
(ii) Minimum Tangible Funds of (A) $2,750,000 as of December 31,
2001, (B) $3,250,000 as of March 31, 2002 and (C) $3,750,000 as of
June 30, 2002 and to be maintained thereafter.
(iii) Maximum ratio of Total Liabilities to Tangible Net Worth
plus subordinated debt of (A) 2.5 to 1 as of December 31, 2001, (B)
2.25 to 1 as of March 31, 2002 and (C) 2.0 to 1 as of June 30, 2002
and to be maintained thereafter.
3. Security.
(a) The obligation to pay and satisfy the Liabilities is secured
pursuant to Article 3 of the Line of Credit Agreement, as amended.
(b) The Borrowers hereby represent and warrant to the Bank that the
Collateral owned by Original Borrower and Broadband is located at the Borrowers'
principal place of business at 000 Xxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx and
none of the Borrowers does business under any fictitious name or tradename. The
Borrowers agree that if the location of the Collateral changes from such
location, or if any of the Borrower changes its name, its type of organization
or establishes another name under which it may do business, the Borrowers will
immediately notify the Bank in writing of the additions or changes.
(c) Each Borrower authorizes the Bank to execute UCC Financing
Statements, "in lieu" filings, Amendments or Continuation Statements, with or
without such Borrower's signature, in order to perfect the Bank's security
interest in the Collateral or to remain the same.
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(d) The Borrowers shall, at any time and from time to time, take
such steps as the Bank may reasonably request for the Bank (i) to obtain an
acknowledgment, in form and substance reasonably satisfactory to the Bank, of
any bailee having possession of any of the Collateral, stating that the bailees
holds the Collateral for the Bank, (ii) to obtain "control" of any investment
property, deposit accounts, letter-of-credit rights, or electronic chattel paper
(as "control" is defined in the Uniform Commercial Code, as amended and in
effect in the Commonwealth of Pennsylvania (the "UCC")), with any agreements
establishing control to be in form and substance reasonably satisfactory to the
Bank, and (iii) otherwise to insure the continued perfection and priority of the
Bank's security interest in any of the Collateral and of the preservation of its
rights under the Line of Credit Documents. If any Borrower shall at any time
acquire a "commercial tort claim" (as defined in the UCC) in excess of $100,000,
such Borrower shall promptly notify the Bank thereof in writing, therein
providing a reasonable description and summary thereof, and upon delivery
thereof to the Bank, such Borrower shall be deemed to thereby grant to the Bank
(and such Borrower hereby grants to the Bank) a security interest and lien in
and to such commercial tort claim and all proceeds thereof.
(e) For the avoidance of doubt, the Liabilities secured hereunder
include, without limitation, the payment obligations under (or relating to) each
of the Term Note and the Line of Credit Note and the "blanket" security interest
granted hereunder is intended to include all categories of personal property
referred to in Article 9 of the UCC as of the 2001 Amendment Date.
4. Extension. The availability of the Line of Credit will expire on
September 30, 2002 (the "Line of Credit Termination Date"), at which time all
sums then outstanding under the Line of Credit Note, together with all accrued
and unpaid interest thereon shall become due and payable and Borrowers' ability
to receive advances of the Line of Credit shall cease. All references in the
Line of Credit Agreement, the Line of Credit Note and the other Line of Credit
Documents to the "Line of Credit Termination Date" or to the "Maturity Date"
shall be deemed to refer to September 30, 2002. The Term Note shall be repaid in
accordance with its terms and all outstanding principal and accrued but unpaid
interest thereon shall be due on the Term Loan Maturity Date.
5. Continuing Validity of Line of Credit Documents; No Defense or
Offsets; Acknowledgment of Outstanding Amount.
(a) By execution of this Amendment, the parties hereby confirm and
ratify all of the Line of Credit Documents in their entirety, including without
limitation, the confession of judgment provisions therein, and agree that the
Line of Credit Documents shall remain in full force and effect in accordance
with their respective terms, as the same may have amended hereby. All of the
Line of Credit Documents are hereby amended, where necessary, to reflect the
provisions of this Amendment.
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(b) The Borrowers confirm, acknowledge and agree that they have no
defenses, charges, claims, demands, pleas or offsets whatsoever in law or equity
to the indebtedness evidenced by the Line of Credit Note, the Term Note or any
other Line of Credit Document, as amended, or to their obligations thereunder.
(c) The Bank and the Borrowers acknowledge that the principal amount
outstanding under the Line of Credit Note as of the date hereof is $1,250,000.
(d) The Line of Credit Note and the Term Note are and shall be
cross-defaulted and all Liabilities are secured pursuant to the terms hereof.
6. Representations and Warranties of the Borrowers. The Borrowers
represent and warrant to the Bank as follows:
(a) All of the representations and warranties made by the Original
Borrower in the Line of Credit Documents are true and correct on the date hereof
and are true and correct with respect to the Additional Borrowers where
applicable.
(b) Broadband is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and SRS is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Connecticut and each is duly licensed or qualified as a foreign
corporation and in good standing in each jurisdiction in which the nature of the
business transacted by it or the character of the property owned or leased by it
make such licensing or qualification necessary and where the failure to be so
licensed or qualified would have a material adverse effect on the business of
such Additional Borrower. The Original Borrower is the owner of all of the
issued and outstanding shares of the capital stock Broadband and Broadband is
the owner of all of the issued and outstanding shares of the capital stock of
SRS.
(c) Each Borrower has full power, authority and legal right to
execute, deliver and comply with this Amendment and this Amendment constitutes
the valid and legally binding obligations of each Borrower enforceable against
it in accordance with its terms.
(d) No consent, approval or other authorization of or by any court,
administrative agency or other governmental authority is required in connection
with any Borrower's execution and delivery of or compliance with this Amendment.
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(e) No Borrower's execution and delivery of and compliance with this
Amendment will conflict with or result in a breach of any applicable law,
judgment, order, writ, injunction, decree, rule or regulation of any court,
administrative agency or other governmental entity, or of any provision of any
agreement or other document or instrument to which any Borrower is a party or by
which it is bound, and such action by the Borrowers will not result in
the creation or imposition of any lien, charge or encumbrance upon any property
of any Borrower in favor of anyone other that the Bank.
(f) There is no action, suit or proceeding pending or, to the
knowledge of any Borrower, threatened against or affecting any Borrower before
or by any court, administrative agency or other governmental authority, or which
brings into question the validity of the transactions contemplated by the Line
of Credit Documents.
7. Conditions Precedent. The obligations of the Bank to amend the Line
of Credit Documents pursuant to the terms hereof is subject to the satisfaction
of the following conditions precedent:
(a) This Amendment shall have been executed by an authorized officer
of each Borrower and delivered to the Bank and the Additional Borrowers shall
have executed such other documents and instruments as the Bank shall reasonably
require in connection with making the Line of Credit available to the Additional
Borrowers, including without limitation the following:
(i) the Pledge Agreements in respect of 100% of the Capital
Stock of each of SRS and Broadband, together with certificates
evidencing such shares and undated stock powers executed in blank
therefor;
(ii) the amended and restated Revolving Credit Note;
(iii) the Term Note;
(iv) the Subordination Agreement in respect of the Seller Notes;
(v) UCC-1 financing statements (including any "in lieu' filings)
required by the Bank; and
(vi) updated complete schedules to the Line of Credit Agreement.
(b) Borrower shall have provided Bank with current good standing
certificates for each Borrower issued by the State of Delaware and the State of
Connecticut, as appropriate, together with current corporate resolutions
authorizing the execution and performance of this Amendment by the Original
Borrower and the execution and performance of all of the Line of Credit
Documents by the Additional Borrowers. In addition, each Additional
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Borrower shall have delivered to Bank copies of its filed Articles of
Incorporation and By-laws, an all amendments thereto, together with an
incumbency and signature certificate executed by authorized officers.
(c) Bank shall have received UCC searches of the Collateral owned by
each Borrower indicating no liens or encumbrances on the Collateral other than
those granted in favor of the Bank pursuant to the Line of Credit Documents.
(d) Each Borrower shall have provided the Bank with its accountant
prepared year-end financial statements indicating no material adverse change in
either Borrower's financial conditions, as determined by the Bank, from its
financial condition as shown in the management prepared statements previously
furnished to the Bank.
(e) The Bank shall have received evidence satisfactory to it that
the note executed by the Original Borrower in favor of Xxx Xxxxxx in the
principal amount of $500,000 remains subordinated to the Line of Credit and that
the maturity thereof has been extended at least through December 31, 2002.
(f) The Borrowers shall have paid a fee to Bank in two parts equal
to (i) $15,000 plus (ii) $4,593 and shall also have paid or reimbursed Bank for
all costs and expenses incurred in connection with this Amendment, including,
without limitation, the legal fees of Bank's counsel and UCC filing fees.
(g) The Borrowers shall have provided an opinion of the Borrower's
legal counsel addressed to the Bank and in form and substance satisfactory to
the Bank.
(h) No action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, this Amendment, the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby or which, in the
Bank's sole discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement or any of the other Loan Documents. All material
consents required to effectuate the transactions contemplated by the Amendment
and the other Loan Documents shall have been obtained. All legal details and
proceedings in connection with the transactions contemplated by this Amendment
and the other Loan Documents shall be in form and substance satisfactory to the
Bank and counsel for the Bank, and the Bank shall have received all such other
counterpart originals or certified or other copies of such documents and
proceedings in connection with such transactions, in form and substance
satisfactory to the Bank and its counsel, as the Bank or its counsel may
reasonably request.
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8. Miscellaneous.
(a) The parties hereto acknowledge and agree that this Amendment
does not constitute a novation of the Line of Credit nor impair the validity or
lien priority of the security interests in the Collateral granted to the Bank
pursuant to the Line of Credit Documents all of the terms, conditions,
provisions and covenants in the Line of Credit Documents, and all other
documents delivered to the Bank in connection with any of the foregoing
documents and obligations secured thereby shall remain unaltered and in full
force and effect except as modified by this Amendment.
(b) Each Borrower hereby represents and warrants to the Bank (and
the waiver set forth herein are made in express reliance on such representation
and warranty) as of the date of this Amendment that there exists no Event of
Default under any of the Line of Credit Documents and the representations and
warranties set forth in the Line of Credit Agreement are true and correct in all
material respects on and as of the date hereof. The falsity of any
representation may by any of the Borrowers in this Amendment or the breach by
any of the Borrowers of any of its covenants or agreements made herein shall, at
the option of the Bank, constitute an Event of Default under the Line of Credit
Documents.
(c) This Amendment shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns. This
Amendment shall be governed by and construed in accordance with the provisions
of the laws of the Commonwealth of Pennsylvania. This Amendment is a "Line of
Credit Document" under the Credit Agreement.
(d) The powers or attorney granted herein shall not be construed in
accordance with Section 5601 of Chapter 56 of Title 20 of the Pennsylvania
Consolidated Statutes, as amended. Such powers shall be exercised for the
benefit of Bank and not for the benefit of the Borrowers and, in acting under
such powers, Bank shall have no fiduciary duty to the Borrowers.
(e) The obligations and liabilities hereunder of each of the
Borrowers shall be joint and several and the word "Borrower" shall mean one, all
or any of them. For purposes of this Amendment, the singular shall be deemed to
include the plural and the neuter shall be deemed to include the masculine and
feminine, as the context may require.
(f) The Loan Agreement and all related documents necessary for the
consummation of the transactions contemplated by the Loan Agreement, as amended
hereby, shall be, and hereby are, amended to give effect to the provisions of
this Amendment.
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(g) Recognizing and in consideration of the Bank's agreement to the
amendments herein set forth, each Borrower hereby waives and releases the Bank
and each of its officers, attorneys, agents and employees from any liability,
suit, damage, claim, loss or expense of any kind or nature whatsoever and
howsoever arising out of or relating to the Bank's acts or opinions with respect
to the Loans or the Loan Documents except for such caused by the Bank's
negligence or willful misconduct. Each Borrower further hereby agrees to
indemnify and hold the Bank and each of its officers, attorneys, agents and
employees harmless from any loss, damage, judgment, liability or expense
(including counsel fees) suffered by or rendered against the Bank or any of them
on account of anything arising our of the Note, the Credit Agreement, this
Amendment, the Loan Documents or any other document delivered pursuant thereto
upon to and including the date hereof except for such caused by the Bank's gross
negligence or willful misconduct.
(h) The extension of the Line of Credit Termination Date made herein
shall be effective as o July 31, 2001.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment
on the day and year first above written.
AM COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ X. X. Xxxxxx
--------------------------
Title:
AM BROADBAND SERVICES, INC.,
a Delaware corporation
By: /s/ X. X. Xxxxxx
--------------------------
Title:
SRS COMMUNICATIONS CORPORATION,
a Connecticut corporation
By: /s/ X. X. Xxxxxx
--------------------------
Title:
PROGRESS BANK
By: /s/ Xxxx XXXXXXXXX
--------------------------
Title: V.P.
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