EXHIBIT 10.39
WAIVER OF DEFAULT AGREEMENT
This Waiver of Default Agreement dated as of March 28, 2003 is
made by and between XET CORPORATION, a New Jersey corporation ("XET"), CXR
TELCOM CORPORATION, a Delaware corporation ("CXR") (CXR and XET shall
collectively be referred to herein as the "BORROWER"), and XXXXX FARGO BUSINESS
CREDIT, INC., a Minnesota corporation ("LENDER").
RECITALS
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Borrower and Lender have entered into that certain Credit and
Security Agreement dated as of August 16, 2000 and amended by that certain First
Amendment to Credit and Security Agreement dated September 29, 2000 and that
certain Second Amendment to Credit and Security Agreement dated as of November
29, 2000 and that certain Third Amendment to Credit and Security Agreement dated
September 20, 2001 and that certain Fourth Amendment to Credit and Security
Agreement dated April 17, 2002 (the "CREDIT AGREEMENT"). Capitalized terms used
in these recitals have the meanings given to them in the Credit Agreement unless
otherwise specified.
Borrower is currently in violation of the Minimum Net Income
Covenant as set forth in Sections 6.14 of the Credit Agreement, which states
that Borrower will maintain a YTD Net Income after corporate allocations of not
less than Five Hundred Thousand Dollars ($500,000) for the fiscal year ending
December 31, 2002. However, Borrower's actual YTD Net Income based on Borrower's
internally prepared financial statement as of December 31, 2002 was noted as
Four Hundred Six Thousand Seven Hundred Fifty-Eight Dollars ($406,758).
Moreover, Borrower is also in violation of the Minimum Book Net Worth covenant
as set forth in Sections 6.13 of the Credit Agreement, which states that
Borrower will cause Microtel and its subsidiaries ("MICROTEL") to maintain a
Book Net Worth, on a consolidated basis, of not less than Five Million Six
Hundred Eighty Thousand Dollars ($5,860,000) for the fiscal year ending December
31, 2002. However, Microtel's actual consolidated Book Net Worth based on the
Microtel's internally prepared financial statement as of December 31, 2002 was
noted as Five Million Seven Hundred Thirty-Three Thousand Dollars ($5,733,000).
Borrower has requested a waiver of Default for violating
Section 6.13 and Section 6.14 of the Credit Agreement.
1. WAIVER OF DEFAULTS. Lender hereby waives enforcement of its
rights against Borrower arising from Defaults or Events of Default resulting
from Borrower's failure to maintain Book Net Worth and Minimum Net Income as set
forth in Section 6.13 and 6.14 of the Credit Agreement prior to the date hereof.
This waiver shall be effective only for the specific Default or Events of
Default specified above, and in no event shall this waiver be deemed to be a
waiver of enforcement of Lender's rights with respect to any other Default(s) or
Event(s) of Default now existing or hereafter arising. Nothing contained in this
agreement nor any communications between Borrower and Lender shall be a waiver
of any rights or remedies Lender has or may have against Borrower, except as
specifically provided herein. Lender hereby reserves and preserves all of its
rights and remedies against Borrower under the Credit Agreement and the other
Loan Documents.
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2. NO OTHER CHANGES. Except as explicitly amended by this
agreement, all of the terms and conditions of the Credit Agreement shall remain
in full force and effect.
3. WAIVER FEE. Borrower shall pay Lender on the date hereof a
fully earned, non-refundable fee in the amount of Two Thousand Five Hundred
Dollars ($2,500) in consideration of Lender's execution of this agreement.
4. CONDITIONS PRECEDENT. This agreement, and the waiver set
forth in Paragraph 1, hereof, shall be effective when Lender shall have received
an executed original hereof, together with each of the following, each in
substance and form acceptable to Lender in its sole discretion: (a) Payment of
the fee described in Paragraph 3, (b) Such other matters as Lender may require.
5. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents
and warrants to Lender as follows:
(a) 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 Borrower and constitute the
legal, valid and binding obligation of Borrower, enforceable in accordance with
its terms.
(b) The execution, delivery and performance by
Borrower of this Amendment has 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 and provision of any law, rule or regulation
or of any order, writ, injunction or decree presently in effect, having
applicability to Borrower, or the articles of incorporation or by-laws of
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 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 of such
representations and warranties relate solely to an earlier date.
6. 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 Security Documents to the Credit Agreement
shall be deemed to refer to the Credit Agreement as amended hereby.
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7. NO OTHER WAIVER. Except as set forth in Paragraph 1 hereof,
the execution of this Agreement 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 Security Document or other document held by Lender,
whether or not known to Lender and whether or not existing on the date of this
Amendment.
8. COSTS AND EXPENSES. Borrower hereby reaffirms its agreement
under the Credit Agreement to pay or reimburse Lender on demand for all costs
and expenses incurred by Lender in connection with the Credit Agreement, the
Security 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, Borrower specifically agrees
to pay all fees and disbursements of counsel to Lender for the services
performed by such counsel in connection with the preparation of this Amendment
and the documents and instruments incidental hereto. Borrower hereby agrees that
Lender may, at any time or from time to time in its sole discretion and without
further authorization by Borrower, make a loan to Borrower under the Credit
Agreement, or apply the proceeds of any loan, for the purpose of paying any such
fees, disbursements, costs and expenses and the fees required under Paragraph 5
hereof.
9. MISCELLANEOUS. This Agreement 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 TELCOM CORPORATION
By: /S/ XXXXXXX X. XXXXXX By: /S/ XXXXXXXX X. XXXXX
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Name: XXXXXXX X. XXXXXX 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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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR
The undersigned, a guarantor of the indebtedness of XET Corporation
("XET") and CXR Telcom Corporation (XET and CXR collectively the "BORROWER") to
Xxxxx Fargo Business Credit, Inc. ("LENDER") pursuant to that certain Guarantee
dated as of August 16, 2000 (the "GUARANTEE"), hereby (i) acknowledge receipt of
the foregoing Agreement; (ii) consent to the terms and execution thereof; (iii)
reaffirm their obligations to Lender pursuant to the terms of the Guarantee; and
(iv) acknowledge that Lender may amend, restate, extend, renew or otherwise
modify the Credit Agreement and any indebtedness or agreement of Borrower, or
enter into any agreement or extent additional or other credit accommodations,
without notifying or obtaining the consent of the undersigned and without
impairing the liability of the undersigned under the Guarantee for all of
Borrower's present and future indebtedness to Lender.
MICROTEL INTERNATIONAL, INC.
By: /S/ XXXXXXXX X. XXXXX
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Name: XXXXXXXX X. XXXXX
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Title: VP & CFO
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