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EXHIBIT 4.9
AMENDMENT TO BORROWING AGREEMENT
This Amendment to Borrowing Agreement (the "Amendment") is made as of
April 15, 1999, among: Xxxxxxxx Media Capital L.P., a Washington limited
partnership ("Lender"); Multi-Link Telecommunications, Inc. ("MLTC"), a Colorado
corporation; Multi-Link Communications, Inc. ("MLC"), a Colorado corporation and
a wholly-owned subsidiary of MLTC; and the Guarantors named herein. MLTC and MLC
are oftentimes hereinafter referred to, jointly and severally, as "Borrower."
RECITALS:
A. Lender has made a loan (the "Loan") to Borrower secured by: a lien
and security interest in all of the assets of Borrower; by the joint and several
personal guaranties of Xxxxx X. Xxxxxxxxx ("Alexander") and Xxxxx X. Xxxxxxx
("Xxxxxxx"); by the pledge of 480,000 shares of common stock of MLTC owned
beneficially or of record by Alexander; by the pledge of 480,000 shares of
common stock of MLTC owned beneficially or of record by Xxxxxxx; and by the
pledge of 1,950,000 shares of the capital stock of MLC owned beneficially or of
record by MLTC. As additional consideration for the Loan, MLTC also granted
Lender warrants to purchase shares of common stock of MLTC. The proceeds of the
Loan were used by Borrower to refinance existing indebtedness, to pay
transaction costs incurred in connection with the loan, and as working capital.
B. The Loan is evidenced by a Borrowing Agreement among Lender,
Borrower, Alexander and Xxxxxxx dated September 25, 1998, and by certain other
documents and instruments defined in the Borrowing Agreement as the Loan
Documents, including a promissory note dated September 25, 1998, which note was
superseded and replaced by a new promissory note dated April 14, 1999.
C. MLTC has filed a registration statement on Form SB-2 dated February
24, 1999 (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission") pursuant to Section 5 of the Securities Act of
1933, as amended (the "Securities Act"), in connection with a proposed
underwritten public offering of 1,200,000 units of MLTC (each unit consisting of
one share of common stock of MLTC and one common stock purchase warrant) through
Xxxxxxxxx Securities, Inc.
D. Borrower has advised Lender that it intends to repay certain of the
amounts then due Lender under the Loan Documents promptly following the date the
Registration Statement is declared effective by the Commission and the proceeds
of the public offering contemplated by the Registration Statement have been
received. Further, Borrower has asked Lender to amend the terms of the Loan
(such amendment to become effective only if the Registration Statement is
declared effective and the amounts Borrower intends to pay Lender upon such
effective date are paid) to enable Borrower to borrow and re-borrow, from
time-to-time, up to $2,100,000 in principal amount of the Loan, and to extend
the period during which Borrower would be obligated to pay Lender interest only
on the Loan. In consideration of such amendment, Borrower has agreed to grant
Lender, unconditionally, certain registration rights under the Securities Act
with respect to the shares of common stock of MLTC underlying Lender's warrants.
E. In order to facilitate the public offering pursuant to the
Registration Statement, Borrower has also asked Lender to cancel the amended
pledge agreement given by Alexander and Xxxxxxx in February 1999 (the "Amended
Pledge Agreement"), leaving in place the pledge agreement dated September 25,
1998 given by MLTC (hereinafter referred to as the "MLTC Pledge Agreement")
covering all of the issued and outstanding shares of capital stock of MLC owned
beneficially and of record by MLTC.
F. Lender is willing to amend the terms of the Loan and cancel the
Amended Pledge Agreement on the terms and subject to the conditions set forth in
this Amendment.
AGREEMENT:
In consideration of the mutual covenants contained in this Agreement,
Borrower and Lender agree to amend
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the Borrowing Agreement and the other Loan Documents as follows:
1. DEFINITIONS. Capitalized terms previously defined in the Borrowing
Agreement or other of the Loan Documents shall have the meanings ascribed to
them in such Loan Documents, unless such definitions are amended by this
Amendment. Other capitalized terms used in this Amendment are defined below and
elsewhere in this Amendment.
1.1 Amended Guaranty shall mean the amended guaranty in the
form annexed to this Amendment evidencing the Guarantors' joint and
several personal guaranties of the payment and performance of
Borrower's obligations under the Loan Documents.
1.2 Amended Note shall mean the amended promissory note in the
form annexed to this Amendment evidencing amounts borrowed by Borrower under the
Loan, and establishing the terms by which such borrowing shall be repaid. The
term Amended Note also includes any further amendments to, or renewals or
replacements of, such promissory note.
1.3 Effective Date shall mean the date the Registration
Statement is declared effective by the Commission under the Securities Act.
1.4 Loan Documents shall mean the following: the Borrowing
Agreement, as amended by this Amendment; the Amended Note; the Security
Agreement; the Financing Statements; the MLTC Pledge Agreement; the
Amended Guaranty; the Warrant; the Subordination Agreement; the
Registration Rights Agreement; and any further or additional amendments
or supplements to such documents and instruments.
1.5 Registration Rights Agreement shall mean the registration
rights agreement in the form annexed to this Amendment granting Lender
certain piggyback and demand registration rights with respect to the
shares of common stock of MLTC underlying Lender's warrants.
2. THE LOAN. On the Effective Date and the receipt by MLTC of the
proceeds of the public offering contemplated by the Registration Statement, and
subject to the execution and delivery by Borrower and Lender of this Amendment
and the other Loan Documents contemplated by this Amendment, Borrower shall pay
Lender the sum of $2,090,000, representing all but $10,000 of the principal and
accrued but unpaid interest due Lender under the Note, and Lender shall make
available to Borrower for borrowing the principal amount of $2,100,000. Borrower
shall borrow from and repay such amount to Lender, with interest, as is more
fully set forth in the Amended Note. The Amended Note shall supersede and
replace the Note dated September 25, 1998 given by Borrower, which earlier note
shall be tendered to Borrower for cancellation as of the Effective Date.
3. LOAN DOCUMENTS. The Loan will be evidenced, guaranteed and secured
by the Loan Documents, and any other documents which Lender may require. Apart
from the Borrowing Agreement, which is amended by this Amendment, the Note,
which is superseded and replaced by the Amended Note, the Guaranty, which is
superseded and replaced by the Amended Guaranty, and the Amended Pledge
Agreement, which shall be canceled, leaving the MLTC Pledge Agreement as the
only extant pledge agreement, all of the representations, warranties, covenants,
conditions and obligations of Borrower and Guarantors evidenced by the Loan
Documents, specifically including the obligations evidenced by the Security
Agreement and the MLTC Pledge Agreement, shall continue in full force and
effect. None of such other Loan Documents shall be construed or interpreted as
having been amended, modified, superseded or replaced in any way, except as
provided in this Amendment.
4. REPRESENTATIONS AND WARRANTIES. MLTC, MLC, each Guarantor and each
Pledgor jointly and severally represent and warrant to and for the benefit of
Lender as follows:
4.1 Organization and Standing. MLTC and MLC are each
corporations duly organized,
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validly existing and in good standing in the State of Colorado, and each are
duly qualified to transact business as foreign corporations in such other
jurisdictions, if any, where such qualification is necessary.
4.2 Certificates and Articles of Incorporation and Bylaws.
MLTC and MLC have made available to Lender or its counsel true, correct and
complete copies of their respective certificates and articles of incorporation,
their bylaws and any other constating documents or agreements affecting the
rights of their respective shareholders, each as amended or restated to date.
4.3 Power and Authorization. MLTC and MLC have all requisite
power to execute and deliver this Borrowing Agreement and the other Loan
Documents to which each is a party, and to carry out and perform their
respective obligations under this Borrowing Agreement and the Loan Documents.
All action on the part of MLTC and MLC, their respective directors, and, if
necessary, their respective shareholders, for the authorization, execution,
delivery and performance of this Borrowing Agreement and the Loan Documents has
been taken or will be taken prior to closing, and will not be in conflict with,
result in a breach of or constitute a default under any agreement to which
either corporation or any Guarantor is subject. This Borrowing Agreement and the
other Loan Documents, when executed and delivered by Borrower and Guarantors,
will constitute valid and legally binding obligations of the parties thereto in
accordance with their terms, except to the extent their enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally or by general
principles of equity. Alexander and Xxxxxxx are executive officers of MLTC and
MLC, and have the full right and authority to execute this Borrowing Agreement
and the other Loan Documents on behalf of such entities. Each Guarantor and
Pledgor named in this Borrowing Agreement and the other Loan Documents has the
full right and authority to execute this Borrowing Agreement and the other Loan
Documents to which each is a party, and to perform his or her obligations as a
guarantor and pledgor thereunder.
4.4 Capitalization. The authorized capital of MLTC consists of
20,000,000 shares of common stock, no par value, and 5,000,000 shares of
preferred stock, $.01 par value, of which 1,691,542 shares of common stock are
issued and outstanding; of these, 960,000 shares of common stock, constituting
approximately 57% of MLTC's issued and outstanding shares of common stock, are
owned beneficially or of record by Alexander and Xxxxxxx. There are no options,
warrants, conversion privileges or other rights presently outstanding to
purchase or otherwise acquire any authorized but unissued shares of capital
stock of MLTC other than the following: the warrants issued to Lender evidenced
by the Warrant Certificate; the warrant issued to CS Capital on November 17,
1998; the warrants designated as the Series A Warrants, 82,500 of which are
issued and outstanding; the warrants designated as the Series B Warrants, 15,000
of which are issued and outstanding; and options granted pursuant to the
Multi-Link Telecommunications, Inc. Stock Option Plan, which authorizes the
issuance of up to 300,000 shares of common stock of MLTC, The authorized capital
of MLC consists of 1,000,000 shares of capital stock, of which 2,000 shares are
issued and outstanding; of these, 1,950 shares, constituting 97.5% of MLC's
issued and outstanding shares, are owned beneficially or of record by MLTC.
There are no options, warrants, conversion privileges or other rights presently
outstanding to purchase or otherwise acquire any authorized but unissued shares
of capital stock of MLC.
4.5 All Approvals and Consents Obtained. The execution,
delivery and performance of the Loan Documents by Borrower and each Guarantor
and Pledgor has been approved or consented to by all persons or entities whose
approval or consent is required. Lender's exercise of any remedies available to
it under the Loan Documents does not require the approval or consent of any
person.
4.6 No Untrue Statements of Material Fact. All information in
the Loan Documents or in connection with such documents given to Lender by
Borrower and each Guarantor and Pledgor, specifically including financial
information concerning Borrower, was true, complete and correct when given and
will be true, complete and correct at closing. No such information contains any
untrue statement of a material fact or omits a material fact necessary to make
such information not misleading.
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4.7 Business Operated in Conformance with Laws. Borrower's
business has been operated in material conformance with all applicable laws and
regulations. Borrower has obtained all permits, licenses and authorizations
needed to operate its business. Borrower has not received any opinion or
memorandum or legal advice from any legal counsel to the effect that there is
any liability or disadvantage relating to its business that may be material to
Borrower.
4.8 Environmental Compliance. To the best knowledge of
Borrower, no part of the real property owned or leased by Borrower (all of which
is hereinafter referred to as the "Property") is (i) targeted for clean-up or
remediation of Hazardous Substances (which are hereinafter defined) or (ii)
otherwise not in compliance with applicable Environmental Laws (which are also
hereinafter defined). To the best knowledge of Borrower, there are no Hazardous
Substances on, in or under the Property or any part thereof which are in
violation of applicable Environmental Laws, and there are no underground storage
tanks on or under the Property. To the best knowledge of Borrower, each prior
owner or lessor of the Property has owned and operated the Property in
compliance with all applicable Environmental Laws. The term "Hazardous
Substance" means any substance or material defined or designated as hazardous or
toxic (or by any similar term) under any Environmental Law, including petroleum
products and friable asbestos. The term "Environmental Law" means federal, state
or local law, ordinance, rule or regulation relating to pollution or protection
of the environment or actual or threatened releases, discharges or emissions
into the environment.
4.9 Title to Assets. Borrower has good and clear record and
marketable title to its properties and title or valid and subsisting interests
in its other assets. Except as otherwise previously disclosed to Lender in
writing on Schedule 6.9 to the Borrowing Agreement, such assets are free and
clear of liens, encumbrances and adverse claims. The personal property of
Borrower comprise all of the property that has been used by Borrower for the
operation of its business, and is in good operating condition and repair,
subject only to ordinary normal wear and tear.
5. PRE-CLOSING REQUIREMENTS. Prior to and as a condition precedent to
the closing of the Loan pursuant to this Amendment, each of the conditions set
forth below must be met to Lender's satisfaction. In addition, Borrower must
meet to Lender's satisfaction all other conditions to the closing of the Loan as
may have been specified in writing by Lender to Borrower pursuant to a loan
commitment, term sheet, exhibit letter or other written instrument. The term
"closing" used in this Amendment shall mean the date this Amendment, the Amended
Note, the Amended Guaranty and the Registration Rights Agreement have been
executed and delivered by the parties thereto, and all other conditions to the
disbursement of the additional proceeds evidenced by the Amended Note are
satisfied.
5.1 Loan Documents. All of the Loan Documents shall have been executed
and delivered to Lender by Borrower, Guarantors and such other persons or
entities as Lender may require; any other Loan Documents to be recorded or filed
shall have been duly recorded and filed in the appropriate offices.
5.2 Registration Statement Declared Effective and Public Offering
Completed. The Registration Statement shall have been declared effective by the
Commission, the securities included in such Registration Statement shall have
been sold, and the proceeds thereof, net of underwriting discounts and
commissions, shall have been remitted to MLTC.
5.3 Reduction of Indebtedness. Borrower shall pay Lender $2,090,000,
representing all but $10,000 of the principal and accrued but unpaid interest
due Lender under the Note.
5.4 UCC Searches. Lender shall have conducted such additional uniform
commercial code searches of Borrower and Guarantors as Lender may require, and
such searches shall show no filings related to or which could relate
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to the collateral for the Loan, other than filings made pursuant to the Loan
Documents or otherwise approved by Lender.
5.5 Financial Condition. Lender shall be satisfied that the financial
condition and credit of Borrower, and all information relating to Borrower's
business, is as represented to Lender, without any material change.
5.6 Permits and Licenses. Borrower shall continue to hold all permits
and licenses necessary to the operation of its business.
5.7 Litigation. There shall be no litigation pending against Borrower
or any Guarantor which, in Lender's opinion, could or does affect Borrower's
ability to operate its business, or Borrower's or any Guarantor's ability to
otherwise perform all of the terms and provisions of this Amendment and the
other Loan Documents.
5.8 Delivery of Amended Pledge Agreement and Stock Certificates.
Alexander and Xxxxxxx shall have delivered to Lender a fully executed copy of
the Amended Pledge Agreement and certificates for the shares of common stock of
MLTC, duly endorsed in blank or accompanied by stock powers endorsed in blank.
5.9 Other Conditions. All other provisions of this Amendment or any
other Loan Document to be complied with prior to the closing and disbursement of
the additional proceeds evidenced by the Amended Note shall have been complied
with, and all of the representations and warranties of Borrower and each
Guarantor in this Amendment and the other Loan Documents shall be true and
correct in all material respects.If Lender disburses Loan funds without
requiring Borrower or any Guarantor to satisfy each of the foregoing conditions,
Borrower's obligation to meet the unsatisfied conditions shall not be deemed
waived (unless specifically waived in writing by Lender) and Lender may require
compliance with each of such conditions before further Loan disbursements are
made.
6. CLOSING. The closing of the Loan shall occur as of, and be evidence
by, the completion of the following events:
6.1 Execution of Loan Documents. The respective parties thereto shall
have signed (and, where appropriate, acknowledged) and delivered to Lender this
Amendment to Borrowing Agreement and the other Loan Documents each is required
to sign.
6.2. Insurance. If not previously delivered, Borrower shall deliver to
Lender a certificate or certificates evidencing the insurance coverage specified
in Section 8.3 of the Borrowing Agreement.
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ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY, EXTEND
CREDIT OR FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the parties have executed this Borrowing Agreement
the day and year first above written.
LENDER:
Xxxxxxxx Media Capital L.P., a Washington limited partnership, acting by and
through its general partner, Xxxxxxxx Media Capital, Inc.
/s/
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Its duly authorized officer
BORROWER:
Multi-Link Telecommunications, Inc., a Colorado corporation
/s/
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its duly authorized officer
Multi-Link Communications, Inc., a Colorado corporation
/s/
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its duly authorized officer
GUARANTORS:
/s/ Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
AMENDMENT TO BORROWING AGREEMENT - 6
