Exhibit 10.1
FOURTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Fourth Amendment to Credit and Security Agreement (the
"AMENDMENT"), dated as of April 17, 2002, is made by and between CXR TELECOM
CORPORATION, a Delaware corporation ("CXR") and XET CORPORATION, a New Jersey
corporation ("XET") (CXR and XET shall collectively be referred to herein as the
"BORROWER" and WELLS FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the
"LENDER").
RECITALS
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The Borrower and the Lender have entered into a Credit and Security
Agreement dated as of August 16, 2000 as amended by that certain First Amendment
to Credit and Security Agreement dated as of September 29, 2000, 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 as of
September 20, 2001 (the "CREDIT AGREEMENT"). Capitalized terms used in these
recitals have the meanings given to them in the Credit Agreement unless
otherwise specified.
The Lender is willing to amend the Credit Agreement pursuant to the
terms and conditions set forth herein. The Borrower is entering into this
Amendment with the understanding and agreement that, except as specifically
provided herein, none of the Lender's rights or remedies as set fourth in the
Credit Agreement is being waived or modified by the terms of this Amendment.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. DEFINED TERMS. Capitalized terms used in this Amendment which are
defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein.
2. AMENDMENTS TO ARTICLE I - DEFINITIONS.
(a) CXR BORROWING BASE. Subsection (b)(ii) of the definition
of "CXR BORROWING BASE" as set forth in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
"(ii) the lesser of (A) $400,000 from January 1 of each year
through April 30 of each year and $300,000 from May 1 of each
year through December 31 of each year, minus the aggregate
outstanding sum of the Revolving Advances to XET based upon
its Eligible Inventory, or (B) the sum of twenty-five percent
(25%) of the Eligible Inventory of CXR consisting or raw
materials plus forty percent (40%) of the Eligible Inventory
of CXR consisting of finished goods, and minus"
(b) XET BORROWING BASE. Subsection (b)(ii) of the definition
of "XET BORROWING BASE" as set forth in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
"(ii) the lesser of (A) $400,000 from January 1 of each year
through April 30 of each year and $300,000 from May 1 of each
year through December 31 of each year, minus the aggregate
outstanding sum of the Revolving Advances to CXR based upon
its Eligible Inventory, or (B) twenty-five percent (25%) of
the Eligible Inventory of XET consisting or raw materials, and
minus"
3. AMENDMENTS TO ARTICLE VI- Borrower's Affirmative Covenants.
(a) MINIMUM DEBT SERVICE COVERAGE RATIO. Section 6.12 of the
Credit Agreement is hereby amended and restated in its entirety to read
as follows:
"Section 6.12 MINIMUM DEFT SERVICE COVERAGE RATIO. The
Borrower will maintain a Debt Service Coverage Ratio, on a
consolidated basis (based on the Debt Service Coverage Ratio
of XET and CXR only), measured quarterly on a year to date
basis, of not less than the ration set forth opposite each
period below:
Minimum Debt
------------
QUARTER ENDING SERVICE COVERAGE RATIO
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March 31, 2002 1.00:1.0
June 30, 2002 1.00:1.0
September 30, 2002 1.00:1.0
December 31, 2002 and each
quarter-end
thereafter 1.50:1.0"
(b) MINIMUM BOOK NET WORTH. Section 6.13 of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
"Section 6.13 MINIMUM BOOK NET WORTH. The Borrower will cause
MicroTel and its subsidiaries to maintain a Book Net Worth, on
a consolidated basis, (i) of not less than Five Million Eight
Hundred Sixty One Thousand Dollars ($5,861,000) for the fiscal
year ending December 31, 2001 and (ii) of not less than Seven
Million Dollars ($5,860,000) for the fiscal year ending
December 31,2002."
(c) MINIMUM CUMULATIVE NET INCOME. Section 6.14 of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
"Section 6.14 MINIMUM NET INCOME. The Borrower will maintain
its Net Income after corporate allocations, on a consolidated
basis (based on Net Income of XET and CXR only), measured
quarterly on a year to date basis, of not less than the amount
set forth opposite the applicable date:
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Minimum Cumulative
DATE NET INCOME
---- -----------------
March 31, 2002 ($500,000)
June 30, 2002 ($300,000)
September 30, 2002 $50,000
December 31, 2002 $500,000"
4. MATURITY DATE. The definition of "MATURITY DATE" as set forth in
Section 2.8 of the Credit Agreement is herby extended and shall now be August
16, 2005.
5. NO OTHER CHANGES. Except as explicitly amended by this Amendment,
all of the terms and conditions of the Credit Agreement shall remain in full
force and effect and shall apply to any Advance or Letter of Credit thereunder.
6. EFFECTIVENESS OF THIS AMENDMENT. Lender must have the following
items, in form and content acceptable to Lender, before this Amendment is
effective and before Lender is required to extend any credit to Borrower as
provided for by this Amendment.
(a) AMENDMENT. This Amendment fully executed in a sufficient
number of counterparts for distribution to Lender and Borrower.
(b) CONSENT. The Consent attached to this Amendment, fully
executed in a sufficient number of counterparts for distribution to
Lender and Borrower.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth herein and in the Credit Agreement must be true
and correct.
(d) OTHER REQUIRED DOCUMENTATION. All other documents and
legal matters in connection with the transaction contemplated by this
Amendment shall have been delivered or executed or recorded and shall
be in form and substance satisfactory to Lender.
7. REPRESENTATIONS AND WARRANTIES. The Borrower hereby, represents and
warrants to the Lender as follows:
(a) The Borrower has all requisite power and authority to
execute this Amendment and to perform all of the obligations hereunder,
and this Amendment has been duly executed and delivered by the Borrower
and constitutes the legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms.
(b) The execution, delivery and performance by the Borrower of
this Amendment have 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 any provision of any
law, rule or regulation or of any order, writ, injunction or decree
presently in effect, having applicability to the Borrower, or the
articles of incorporation or bylaws of the Borrower, or (ii) result in
a breach of or constitute a default under any indenture or ban or
credit agreement or any other agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be bound
or affected.
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(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 that
such representations and warranties relate solely to an earlier date.
8. 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 Loan Documents to the Credit Agreement shall
be deemed to refer to the Credit Agreement as amended hereby.
9. NO WAIVER. The execution of this Amendment and acceptance of any
documents related hereto 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 Loan Document or other document held by the Lender, whether or
not known to the Lender and whether or not existing on the date of this
Amendment.
10. RELEASE. The Borrower, and Guarantor by signing the Acknowledgment
and Agreement of Guarantor set forth below, each hereby absolutely and
unconditionally releases and forever discharges the Lendor, and any, and all
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing, from any and all claims, demands or causes of action of
any kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which the
Borrower or Guarantor has had, now has or has made claim to have against any
such person for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of this
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown. It is the intention of the parties in executing
this release that the same shall be effective as a bar to each and every claim,
demand and cause of action specified and in furtherance of this intention each
waives and relinquishes all rights and benefits under Section 1542 of the Civil
Code of the State of California, which provides:
"A general release does not extend to claims which
the creditor does not know or suspect exist in his favor at
the tune of executing the release, which if known by him might
have materially affected his settlement with the debtor."
The parties acknowledge that each may hereafter discover facts
different from or in addition to those now known or believed to be true with
respect to such claims, demands, or causes of action and agree that this
instrument shall be and remain effective in all respects notwithstanding any
such differences or additional facts.
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11. COSTS AND EXPENSES. The Borrower hereby reaffirms its agreement
under the Credit Agreement to pay or reimburse the Lender on demand for all
costs and expenses incurred by the Lender in connection with the Credit
Agreement, the Loan 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, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses.
12. MISCELLANEOUS. This Amendment 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.
WELLS FARGO BUSINESS CREDIT, INC., CXR TELECOM CORPORATION
a Minnesota corporation
By: /S/ VINCENT L. MADDELA By: /S/ RANDOLPH D. FOOTE
--------------------------------- ------------------------------------
Name: VINCENT L. MADDELA Name: RANDOLPH D. FOOTE
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Title: ASSISTANT VICE PRESIDENT Title: VICE PRESIDENT/CHIEF FINANCIAL
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OFFICER
---------------------------------
XET CORPORATION
By: /S/ RANDOLPH D. FOOTE
-----------------------------------
Name: RANDOLPH D. FOOTE
----------------------------------
Title: VICE PRESIDENT/CHIEF FINANCIAL
---------------------------------
OFFICER
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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS
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The undersigned guarantor of the indebtedness of CXR Telcom Corporation
and XET Corporation (collectively, the "BORROWERS") to Wells Fargo Business
Credit, Inc. (the "LENDER") pursuant to a Guaranty dated as of August 16, 2000
("GUARANTY"'), hereby (i) acknowledges receipt of the foregoing Amendment (ii)
consents to the terms (including without limitation the release set forth in
paragraph 10 of the Amendment) and execution thereof; (iii) reaffirms its
obligations to the Lender pursuant to the terms of the Guaranty; and (iv)
acknowledges that the Lender may amend, restate, extend, renew or otherwise
modify the Credit Agreement and any indebtedness or agreement of the Borrowers,
or enter into any agreement or extend additional or other credit accommodations,
without notifying or obtaining the consent of the undersigned and without
impairing the liability of the undersigned under the Guaranty for all of the
Borrowers' present and future indebtedness to the Lender.
MICROTEL INTERNATIONAL INC.
By: /S/ RANDOLPH D. FOOTE
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Name: RANDOLPH D. FOOTE
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Title: VICE PRESIDENT/CHIEF FINANCIAL OFFICER
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