Exhibit 10.16
FOURTH AMENDMENT TO TERM CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO TERM CREDIT AGREEMENT ("FourthAmendment") is made and entered into as of March 30, 2005 by and among ENTRADANETWORKS, INC., a Delaware corporation ("Borrower"), HONG KONG LEAGUECENTRAL CREDIT UNION, in its capacity as a lender under the Credit Agreement (ashereinafter defined) ("Hong Kong League"), HIT CREDIT UNION, in its capacity as a lenderunder the Credit Agreement ("HIT"), BRIGHTLINE BRIDGE PARTNERS I, LLC, in itscapacity as a lender under the Credit Agreement ("Brightline"), MATTHEW MCGOVERN("McGovern"), in his capacity as a lender under the Credit Agreement, (Hong Kong League,HIT, Brightline and McGovern shall herein be collectively referred to as the "Lenders" and, individually, as a "Lender") and SBI ADVISORS, LLC, a California limited liability company,in its capacity as agent for Lenders ("Agent"), and is made with reference to the following:
A. Agent, Hong Kong League, HIT, Shelly Singhal ("Singhal"), and Borrower haveentered into that certain Term Credit Agreement, dated as of January 30, 2004, as amended bythe First Amendment to Term Credit Agreement, dated May 14, 2004, as further amended by theSecond Amendment to Term Credit Agreement, dated October 1, 2004, and as further amended by the Third Amendment to Term Credit Agreement, dated January 29, 2005 (as the same mayhereafter be amended, modified, extended and/or restated from time to time, the "CreditAgreement"). Pursuant to the Credit Agreement, Hong Kong League, HIT, Brightline, Buttles,McGovern and Singhal have made certain Term Loans to Borrower, the repayment of whichTerm Loans is secured by certain assets of Borrower pledged to Agent for the ratable benefit ofLenders pursuant to the Security Agreement (as hereinafter defined).
B. Borrower has requested that the Maturity Date (as defined inSection 2(b)of theCredit Agreement) be extended toJuly 31, 2005.
C. Lenders have agreed to amend the Credit Agreement to extend the Maturity DatetoJuly 31, 2005.
D. Borrower has requested that the interest rate be reduced to 10% per annum andthe balance of 14% to be Paid In Kind ("PIK"). The PIK shall be computed and compounded monthly. The Lenders have agreed to amend the Credit Agreement as such.
E. As a condition to the execution of this Fourth Amendment by Borrower,Trilogy Capital Partners has offered to cancel its letter of engagement datedNovember 10, 2004, return all fees paid to it by the Borrower for the months of January 2005and February 2005, and the 10,000,000 warrants issued to it on November 10, 2004. TheBorrower shall hereby and separately notify Trilogy Capital Partners ("Trilogy") that it accepts its offer fully. Lenders agree to provide reasonable efforts to Borrower to facilitate the return ofthe Trilogy warrants and fees; however, Borrower acknowledges and understands that Lendersand Agent have no authority to bind or enter into any agreements on behalf of Trilogy, and thatneither Lender or Agent have any ability to cause Trilogy to return said warrants or fees, and that Lender has any interest or ownership in Trilogy.
F. Upon repayment of all amounts payable under the terms of the Term Notes, a portion of any unexercised Warrants issued to SBI Advisors, LLC or its designees will be returned to the Borrower on terms more particularly described herein.
NOW, THEREFORE, in consideration of the premises and the agreements, conditions and covenants contained herein and other good and valuable consideration, the receipt andsufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Terms Defined in Credit Agreement.All capitalized terms used in this Fourth Amendment and not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement.
2. For purposes hereof, "Fourth Effective Date" means the date on which each of the conditions set forth inSection 6hereof is fully satisfied to the satisfaction of Agent in its sole and absolute discretion.
3. Effective as of the Fourth Effective Date, the following terms are added to Section 1of the Credit Agreement in their proper alphabetical sequence:
"Fourth Amendment" means that certain Fourth Amendment to TermCredit Agreement dated as ofMarch 30, 2005, by and among the Borrower, the Lenders named therein, and the Agent.
"Fourth Effective Date" means the date on which each of the conditionsset forth inSection 5of the Fourth Amendment is fully satisfied to thesatisfaction of Agent in its sole and absolute discretion.
4. Effective as of the Fourth Effective Date,Section 2(b)of the Credit Agreement is hereby deleted in it entirety and the following is inserted in lieu thereof:
"Term. All unpaid principal and accrued but unpaid interest of the TermLoan shall, subject to subsection (c) below, be payable in full onJuly 31, 2005 (the "Maturity Date")."
5. Conditions Precedent.The satisfaction of the following shall be conditions precedent to the effectiveness of this Fourth Amendment:
5.1Amendment.Agent shall have received this Fourth Amendment, duly executed by Borrower.
5.2 Representations and Warranties.Each representation and warranty madeby Borrower inSection 3of the Credit Agreement shall be true and correct on and as of the Fourth Effective Date as though made as of the Fourth Effective Date, except to the extent such representations and warranties relate solely to an earlier date.
6. General Amendment.Effective as of the Fourth Effective Date, the CreditAgreement, the Security Agreement, and each document delivered to Lenders in connection
therewith (collectively, the "Loan Documents") are hereby further amended and modified to theextent necessary to give effect to the terms and conditions of the amendments to the CreditAgreement effected by the Fourth Amendment.
7. Upon repayment of all amounts payable under the terms of the Term Notes, Lenders will retain5,000,000 Warrants issued to SBI Advisors, LLC or its designees, and the balance of unexercised Warrants held by such parties at the time of repayment of the Term Notes will be returned to Borrower.These parties and their warrants holdings are as follows: (1) 3,500,000 with McGovern Living Trust; (2) 3,650,000 with Jon Buttles; (3) 3,250,000 with David F. Evans; and (4) 3,500,000 with Crestwood Children’s Trust.The warrants retained by SBI or its designees shall be the then lowest priced warrants owned by SBI Advisors, LLC or its designees.
8. Full Force and Effect. Effective as of the Fourth Effective Date, each of the Loan Documents is hereby amended such that all references to the Credit Agreement contained in anysuch documents shall be deemed to be references to the Credit Agreement, as further amendedby this Fourth Amendment.Except as amended hereby, the Credit Agreement and the other Loan Documents shall remain unaltered and in full force and effect, and each party to this Fourth Amendment agrees that this Fourth Amendment represents the entire agreement of the partieswith regard to the subject matter hereof, and Borrower waives any and all claims or defenses relating to the repayment of the Term Loans. Further, except for the repayment of debt owing by Borrower as set forth herein, the parties (including those persons or entities set forth in paragraph 7 hereof), for themselves andanypersons which they control within the meaning of the Securities Act of 1933, as amended, and their respective officer, directors, employees, attorneys, agents, successors and representatives hereby fully, completely and forever discharge and release each other from any and all claims, demands, obligations, liabilities, indebtedness, breaches of duty, acts, omissions, misfeasance, malfeasance, causes of action, and expenses of every type, kind, nature, description orcharacter, and irrespective of how, why or by reason of what facts, whether known or unknown, suspected or unsuspected, liquidated or unliquidated, each as though fully set forth herein at length, arising priorto the date hereof.
With regard to the releases set forth immediately above, the parties specifically waive the provisions ofCalifornia Civil Code §1542, which provides:
"A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor."
Each of the parties acknowledges that they may hereafter discover facts different from or in addition to those which it now knows or believes to be true with respect to the released claims, and each of the parties hereby assumes the risk that this agreement will constitute a waiver of causes of action arising out of the released claims, regardless of their nature or value, which subsequently may become known to that party. Each of the parties hereby agrees that this agreement and the releases provided for herein shall remain in effect in all respects and shall not be subject to termination or rescission, notwithstanding the existence or discovery of such different or additional facts, provided, however, that the promises, warranties, covenants, and obligations contained herein shall survive the releases set forth herein. Each of the parties acknowledges that in entering into the releases set forth in this paragraph 8, they have not relied on any representations of any other party except as specifically set forth in this Fourth Amendment.
9. Counterparts. This Fourth Amendment may be executed in multiple counterparts,each of which shall constitute an original and all of which, taken together, shall constitute butone and the same instrument.
10. Governing Law. This Fourth Amendment shall be governed by, and construed inaccordance with, the laws of the State of California.
(Signature Page to Follow)
IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment by their respective duly authorized officers as of the date first above written.
"BORROWER" |
ENTRADA NETWORKS, INC., a Delaware corporation |
By: /s/ Kanwar J. S. Chadha |
Name: Kanwar J. S. Chadha |
Its: President & CEO |
"AGENT" |
SBI ADVISORS, LLC, solely in its capacity as Agenthereunder |
By:/s/Shelly Singhal |
Name:Shelly Singhal |
Its: Manager |
"HONG KONG LEAGUE" |
HONG KONG LEAGUE CENTRAL CREDIT UNION |
By:/s/ Shelly Singhal |
Name:Shelly Singhal |
Its: Agent |
"HIT” |
HIT CREDIT UNION |
By:/s/ Shelly Singhal |
Name:Shelly Singhal |
Its: Agent |
"BRIGHTLINE" |
BRIGHTLINE BRIDGE PARTNERS I, LLC |
By: /s/ Jon Buttles |
Name: Jon Buttles |
Its:Manager |
”MCGOVERN" |
/s/ Matthew McGovern |
MATTHEW MCGOVERN |
Acknowledged and Agreed: |
/s/ Jon Buttles |
JON BUTTLES |
/s/ David F. Evans |
DAVID F. EVANS |