AMENDMENT #4
to
CREDIT AGREEMENT
THIS AMENDMENT #4 TO CREDIT AGREEMENT (this "Amendment") dated
as of February 18, 1999, between V BAND CORPORATION (the "Borrower") and
NATIONAL BANK OF CANADA, NEW YORK BRANCH (the "Bank").
RECITALS
A. The Borrower and the Bank are parties to the Credit
Agreement dated as of May 28, 1997, as amended by Amendment and Waiver dated as
of February 10, 1998, Amendment and Waiver dated as of June 4, 1998, and the
Amendment #3 to Credit Agreement dated as of January 19, 1999 (as the same may
have been, is hereby or may hereafter be further amended, the "Credit
Agreement"), pursuant to which the Bank agreed to extend credit to the Borrower
in the form of revolving loans and letters of credit upon the terms and subject
to the conditions set forth in the Credit Agreement.
B. The Borrower has requested that the Bank permit it to
borrow under the Credit Agreement overadvances of up to $100,000 in the
aggregate and allow such overadvances to remain outstanding until March 1, 1999,
in consideration of, inter alia, the agreement of the Borrower to comply with
the requirements imposed hereby.
C. The Bank is willing to permit such overadvances,
subject to the terms and conditions set forth below.
NOW THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Credit Agreement.
2. Amendment to Credit Agreement.
(a) The definition of the term "Commitment" set forth in
Section 1.1 of the Credit Agreement (Defined Terms) is hereby amended in its
entirety to read as follows:
"Commitment": the commitment of the Bank to make
Loans pursuant to Section 2.1, and to issue Letters
of Credit pursuant to Section 2.10, in the maximum
aggregate principal amount of Two Million Dollars
($2,000,000.00), as the Commitment may be terminated
or reduced from time to time in accordance with the
provisions of this Agreement.
(b) The definition of the term "Permitted Overadvance
Amount" set forth within the definition of "Borrowing Base" in Section 1.1 of
the Credit Agreement (Defined Terms) is hereby amended to read as follows:
"Permitted Overadvance Amount" means (x) during the
period commencing on February 18, 1999 and ending on
March 1, 1999, One Hundred Thousand Dollars
($100,000), and (y) thereafter, $0.00.
(c) The last sentence of Section 2.11(f) of the Credit
Agreement is hereby amended to read as follows:
For purposes of this Section, the term "Applicable
Percentage" means (i) 3% with respect to any optional
reduction, refinancing or termination which becomes
effective before May 28, 1998, (ii) 2% with respect
to any optional reduction, refinancing or termination
which becomes effective on or after May 28, 1998 but
before August 28, 1999, (iii) 2.25% with respect to
any optional reduction, refinancing or termination
which becomes effective on or after August 28, 1999
but before November 28, 1999, (iv) 2.5% with respect
to any optional reduction, refinancing or termination
which becomes effective on or after November 28, 1999
but before February 28, 2000, (v) 2.75% with respect
to any optional reduction, refinancing or termination
which becomes effective on or after February 28, 2000
but before May 28, 2000, and (vi) 3% with respect to
any optional reduction, refinancing or termination
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which becomes effective on or after May 28, 2000.
(b) Section 7.1 (Financial Covenants) of the Credit
Agreement is hereby amended in its entirety to read as follows:
7.1 Financial Covenants. The Borrower hereby
covenants and agrees that so long as the Commitment remains in
effect or any Letter of Credit remains outstanding and until
the payment in full of the Obligations and the complete
performance of all of the Borrower's other obligations
hereunder and under the other Loan Documents, unless the Bank
shall otherwise consent in writing, the Borrower shall not:
(a) Permit its Consolidated EBITDA for any
fiscal quarter specified below to be less than the amount set
forth below for such fiscal quarter:
================================================================================
|Fiscal Year | First | Second | Third | Fourth |
| Ending | Quarter | Quarter | Quarter | Quarter |
|------------|---------------|----------------|----------------|---------------|
|October 31, | ($500,000) | ($200,000) | $100,000 | $250,000 |
| 1999 | | | | |
|------------|---------------|----------------|----------------|---------------|
|October 31, | $50,000 | $50,000 | Not | Not |
| 2000 | | | Applicable | Applicable |
================================================================================
(b) Permit its Leverage Ratio for any fiscal quarter specified
below to exceed the ratio below for such fiscal quarter:
================================================================================
|Fiscal Year | First | Second | Third | Fourth |
| Ending | Quarter | Quarter | Quarter | Quarter |
|------------|---------------|----------------|----------------|---------------|
|October 31, | 5.00:1.00 | 5.00:1.00 | 5.00:1.00 | 5.00:1.00 |
| 1999 | | | | |
|------------|---------------|----------------|----------------|---------------|
|October 31, | 4.00:1.00 | 4.00:1.00 | Not | Not |
| 2000 | | | Applicable | Applicable |
================================================================================
(c) Permit its Consolidated Tangible Net Worth
as at the end of any fiscal quarter specified below to be less
than the amount set forth below for such fiscal quarter:
================================================================================
|Fiscal Year | First | Second | Third | Fourth |
| Ending | Quarter | Quarter | Quarter | Quarter |
|------------|---------------|----------------|----------------|---------------|
|October 31, | $1,300,000 | $1,200,000 | $1,300,000 | $1,500,000 |
| 1999 | | | | |
|------------|---------------|----------------|----------------|---------------|
|October 31, | $1,600,000 | $1,800,000 | Not | Not |
| 2000 | | | Applicable | Applicable |
================================================================================
(d) Permit its Interest Coverage Ratio to be
less than 1.00 to 1.00 for any fiscal quarter beginning with
and including the third fiscal quarter of its fiscal year
ending October 31, 1999 through and including the second
fiscal quarter of its fiscal year ending October 31, 2000, or
for the Calculation Period ending at the end of the second
fiscal quarter of its fiscal year ending October 31, 2000.
(e) Permit its Current Ratio to be less than
1.00 to 1.00 as at the end of any fiscal quarter of its fiscal
year ending October 31, 1999 or as at the end of either of the
first or second fiscal quarter of its fiscal year ending
October 31, 2000.
(d) All references in the Credit Agreement to "this
agreement" or such words as "hereof", "herein", or "hereunder" shall be deemed
to be references to the "Credit Agreement," as defined in this Agreement.
3. Reaffirmation of Obligations. The Borrower hereby
acknowledges and confirms to the Bank (a) that the amendments and modifications
to the Credit Agreement made pursuant to this Amendment shall not affect or
impair in any way the validity, binding effect or enforceability of any Loan
Document to which the Borrower is a party or of any liens or security interests
granted to the Bank thereunder, or the Borrower's obligations or the Bank's
rights and remedies thereunder, and (b) that the Loan Documents to which the
Borrower is a party, any liens and security interests granted to the Bank
thereunder, and the Borrower's obligations and the Bank's rights and remedies
thereunder shall continue in full force and effect, notwithstanding such
amendments and modifications.
4. Effectiveness. The provisions of this Amendment to
the contrary notwithstanding, the foregoing amendment shall be effective only
through the earliest of (a) noncompliance by the Borrower with any of the
limitations or requirements contained herein, or (b) the occurrence of an Event
of Default under the
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Credit Agreement.
5. Amendment Fee. As consideration for the amendment to
the Credit Agreement provided in this Amendment, the Borrower shall pay to the
Bank on or before the Amendment Date a fee in the amount of $15,500.00 (the
"Amendment Fee"), which fee is nonrefundable and is deemed earned by the Bank
when paid.
6. Representations and Warranties. The Borrower hereby
represents and warrants to the Bank that (a) it has full power and authority to
execute and deliver this Amendment, (b) this Amendment, and the Credit Agreement
as amended hereby, constitute the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms, (c) the Borrower's execution and delivery of this Amendment, and its
performance of this Amendment and of the Credit Agreement, have been duly
authorized by all requisite action of the Borrower and do not require the
approval of its shareholders, (d) the execution and delivery by the Borrower of
this Amendment and the performance by the Borrower of the Credit Agreement do
not and will not (i) violate the Borrower's Certificate of Incorporation or
By-Laws or any law or regulation applicable to the Borrower, (ii) violate or
constitute (with due notice or lapse of time or both) a default under any
indenture, agreement, license or other instrument to which the Borrower is a
party or by which the Borrower or any of its properties may be bound or
affected, (iii) violate any order of any court, tribunal or governmental agency
binding upon the Borrower or its properties, (iv) result in the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
the Borrower, or (v) require any license, consent or approval of any
governmental agency or regulatory authority or any other third party, and (e)
the total of the outstanding principal balance of all Loans and the LC Exposure
as of the date hereof is $1,271,186.08.
7. Conditions Precedent. This Amendment shall become
effective on the date (the "Amendment Date") on which each of the following
conditions precedent shall have been satisfied or waived:
(a) the Borrower and the Bank shall have executed and
delivered counterpart originals or facsimiles hereof;
(b) the Borrower shall have executed and delivered to the
Bank UCC financing statements in form, substance and number sufficient for
filing in all offices specified by the Bank;
(c) the Consent attached hereto as Exhibit A shall have
been duly executed by all of the Borrower's Domestic Subsidiaries and delivered
to the Bank;
(d) the Bank shall have received payment in full of the
Amendment Fee; and
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(e) all legal, documentary and other matters in
connection with this Amendment and the transactions contemplated hereby shall be
satisfactory to the Bank and its counsel.
The amendment to the Credit Agreement set forth in Section 2
hereof shall become effective automatically on the Amendment Date, without the
need for any further action by any party hereto.
8. Covenants. The Borrower agrees that it shall use its
best efforts to promptly cause the execution by such parties as the Bank shall
request of all such landlord, warehouseman, processor or similar waivers as the
Bank shall request regarding (a) any locations at which the Borrower or any
Guarantor has an office or place of business or at which any Collateral is
located, or (b) any party that holds, sells, stores, modifies, manufactures or
installs any Inventory. The Borrower shall deliver to the Bank on or before
February 26, 1999 true and correct copies of all leases, including any
amendments, riders and schedules thereto, regarding the premises described in
(a) hereof, and any agreements or contracts between the Borrower or any
Guarantor and any party described in (b) hereof.
9. Default. Any default by the Borrower in the
observance or performance of any term, condition, covenant, representation or
warranty set forth in this Amendment shall constitute an Event of Default under
the Credit Agreement.
10. Waiver and Release. AS A MATERIAL INDUCEMENT FOR, AND
IN CONSIDERATION OF, THE BANK'S AGREEMENTS HEREIN, THE BORROWER (FOR ITSELF AND
ITS SUCCESSORS, ASSIGNS, EXECUTORS AND ADMINISTRATORS) HEREBY WAIVES, RELEASES,
REMISES AND FOREVER DISCHARGES THE BANK, ITS SHAREHOLDERS, DIRECTORS, EMPLOYEES,
AGENTS, SUCCESSORS, ASSIGNS, HEIRS, EXECUTORS AND ADMINISTRATORS OF AND FROM ANY
AND ALL MANNER OF ACTIONS, CAUSES OF ACTION, SUITS, CROSSCLAIMS, COUNTERCLAIMS,
DEBTS, DUES, SUMS OF MONEY, ACCOUNTS, BILLS, COVENANTS, CONTRACTS,
CONTROVERSIES, AGREEMENTS, PROMISES, VARIANCES, DAMAGES, JUDGMENTS, CLAIMS AND
DEMANDS WHATSOEVER, IN LAW OR IN EQUITY, WHICH AGAINST THE BANK, THE BORROWER
EVER HAD, NOW HAS, OR THE BORROWER, OR ITS SUCCESSORS, ASSIGNS, EXECUTORS, OR
ADMINISTRATORS CAN, SHALL OR MAY HAVE FOR, UPON OR BY REASON OF ANY MATTER,
CAUSE OR THING WHATSOEVER FROM THE BEGINNING OF THE WORLD TO THE DAY OF THE DATE
OF THIS AGREEMENT. BORROWER CONFIRMS THAT THE FOREGOING WAIVER AND RELEASE IS AN
INFORMED WAIVER AND RELEASE AND IS FREELY GIVEN.
11. Miscellaneous.
(a) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ITS CONFLICT OF LAWS RULES (OTHER
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THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).
(b) Except as expressly amended hereby, all terms and
conditions of the Credit Agreement and the other Loan Documents, and all rights
of the Bank and obligations of the Borrower thereunder and under all related
documents, shall remain in full force and effect. Without limiting the
generality of the foregoing, nothing herein contained shall be deemed to
increase the Commitment.
(c) The Borrower hereby agrees to pay on demand all costs
and expenses (including without limitation the reasonable fees and expenses of
outside counsel to the Bank) incurred by the Bank in connection with the
negotiation, preparation, execution and delivery of this Amendment and all
related documents, whether or not the transactions contemplated hereby are
consummated.
(d) This Amendment may be executed by one or more of the
parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page to this Amendment by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart hereof.
(e) This Amendment constitutes the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and any prior oral agreements or understandings are merged herein.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their duly authorized officers as of the day
and year first above written.
V BAND CORPORATION
By:
-------------------------------------
Name:
Title:
NATIONAL BANK OF CANADA, NEW YORK BRANCH
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
EXHIBIT A
CONSENT OF GUARANTORS
Each of the undersigned (each, a "Guarantor") consents and agrees to
the execution and delivery by the Borrower of the Amendment #4 to Credit
Agreement dated as of February 18, 1999 (the "Amendment") between V Band
Corporation and National Bank of Canada, New York Branch (the "Bank") and to all
of the transactions contemplated by the Amendment. Each Guarantor acknowledges
and agrees that each of the documents which it has executed in connection with
the Credit Agreement is ratified, confirmed and reaffirmed, including, without
limitation, its Subsidiary Guarantee, and any other Loan Documents to which it
is a party and that such documents are in full force and effect in accordance
with their terms and there are no defenses, counterclaims or rights of set-off
as to any of such Guarantor's obligations thereunder. Each Guarantor further
acknowledges and agrees that the Amendment is supported by good and valuable
consideration by the Bank including, without limitation, the Bank's agreement to
execute the Amendment.
AS A MATERIAL INDUCEMENT FOR, AND IN CONSIDERATION OF, THE BANK'S
AGREEMENTS IN THE AMENDMENT, EACH GUARANTOR (FOR ITSELF AND ITS SUCCESSORS,
ASSIGNS, EXECUTORS AND ADMINISTRATORS) HEREBY WAIVES, RELEASES, REMISES AND
FOREVER DISCHARGES THE BANK, ITS SHAREHOLDERS, DIRECTORS, EMPLOYEES, AGENTS,
SUCCESSORS, ASSIGNS, HEIRS, EXECUTORS AND ADMINISTRATORS OF AND FROM ANY AND ALL
MANNER OF ACTIONS, CAUSES OF ACTION, SUITS, CROSSCLAIMS, COUNTERCLAIMS, DEBTS,
DUES, SUMS OF MONEY, ACCOUNTS, BILLS, COVENANTS, CONTRACTS, CONTROVERSIES,
AGREEMENTS, PROMISES, VARIANCES, DAMAGES, JUDGMENTS, CLAIMS AND DEMANDS
WHATSOEVER, IN LAW OR IN EQUITY, WHICH AGAINST THE BANK, EACH GUARANTOR HAD, NOW
HAS, OR EACH GUARANTOR, OR ITS SUCCESSORS, ASSIGNS, EXECUTORS, OR ADMINISTRATORS
CAN, SHALL OR MAY HAVE FOR, UPON OR BY REASON OF ANY MATTER, CAUSE OR THING
WHATSOEVER FROM THE BEGINNING OF THE WORLD TO THE DAY OF THE DATE OF THIS
AGREEMENT. EACH GUARANTOR CONFIRMS THAT THE FOREGOING WAIVER AND RELEASE IS AN
INFORMED WAIVER AND RELEASE AND IS FREELY GIVEN.
LICOM Incorporated
By:
------------------------
Name:
Title:
V Band NE, Inc.
By:
------------------------
Name:
Title:
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