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EXHIBIT 10.2
AGREEMENT CONCERNING AMENDMENT TO CREDIT AGREEMENT
This Agreement dated as of December 9, 1999 by and between Preferred Networks,
Inc., formerly a Delaware corporation and presently reincorporated in the State
of Georgia ("PNI") and Glenayre Electronics, Inc. ("Glenayre").
STATEMENT OF PURPOSE
PNI and Glenayre entered into that certain Promissory Note and Credit Agreement
dated as of January 26, 1996 (herein with all amendments, riders and
modifications thereto and any accompanying notes, collectively referred to as
the "Credit Agreement"). It is contemplated that PNI will sell all or
substantially all of its shares of common stock in EPS WIRELESS, INC. ("EPS"), a
Georgia corporation and a wholly-owned subsidiary of PNI to Celestica
Corporation (the "Sale") pursuant to that certain Share Purchase Agreement dated
as of December 10, 1999, as amended ("Share Purchase Agreement"). PNI wishes to
obtain Glenayre's consent to a proposed sale of EPS and to modify the certain
terms of the Credit Agreement. Glenayre is willing to enter into this Agreement
in return for an in reliance on PNI's covenants, reaffirmations and obligations,
contained herein and only on the terms and conditions of this Agreement.
NOW THEREFORE, for and in consideration of the premises, the mutual covenants
contained herein and Glenayre's reliance hereon and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. Capitalized terms not otherwise specifically defined
herein shall have the same meaning as given them in the Credit
Agreement.
2. No Collateral. PNI represents and warrants to Glenayre that PNI
remains and shall remain after the Sale the sole legal and beneficial
owner of all items of the Collateral, with good and marketable title
thereto, free and clear of all encumbrances (except for Collateral
which PNI has sold and for which PNI has paid Glenayre the proceeds as
required by the Credit Agreement).
3. Amendments to the Credit Agreement and Notes Effective only upon
Timely Fulfillment of the "Amendment Conditions". Upon Glenayre's
determination, in its sole discretion, that each and all of the
"Amendment Conditions" (as that term is defined in Section 5 below)
have been fulfilled in accordance with the terms and conditions hereof
by no later than December 15, 1999, the Credit Agreement and the Note
shall, effective upon such fulfillment, be amended as follows:
(a) The Credit Agreement is amended by deleting Section 1.1 in
its entirety and substituting in lieu thereof the following:
1.1. Modified Payment Terms. PNI agrees and promises
to pay to Glenayre the Principal Balance (as that
term is defined in Section 5(b) below) and interest
in accordance with the Amortization Schedule set
forth in Exhibit A attached hereto; to wit, PNI
shall pay interest to Glenayre on the first day of
each month, commencing on January 1, 2000, computed
on the unpaid Principal Balance from the date hereto
and accruing at the rate of 12.57% simple interest
per annum, and continuing until the Principal
Balance is fully repaid to Glenayre, and in addition
to said payment of
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interest to Glenayre, PNI shall pay to Glenayre all
principal payments deferred up to March 31, 2001 on
or before March 31, 2001, and subsequently pay to
Glenayre interest and principal payments on the 1st
day of each month beginning April 1, 2001 until the
Maturity Date, on which date all remaining unpaid
principal and accrued but unpaid interest hereunder
shall be due and payable, if not sooner paid. For
avoidance of doubt, it is the parties' intent that
this section shall not affect Glenayre's rights
and/or remedies if an Event of Default occurs.
(b) The Credit Agreement is amended by deleting Section 6.8 in
its entirety and substituting in lieu thereof the following:
6.8. Inspection and Monitoring. PNI shall allow
Glenayre and its agents and employees to perform, at
PNI's expense, such comprehensive inspection and
monitoring of the Collateral and its and its
Subsidiaries' properties and books and records
(including but not limited to field exams) as
Glenayre deems reasonably necessary or appropriate
and PNI shall cooperate fully with same.
(c) The Credit Agreement is amended by deleting from Section 9.1
thereof the definition of the term "Interest Rate" and
"Maturity Date" in their entirety and substituting in their
respective places the following:
"Interest Rate" means, except as otherwise set forth
in Section 4, a fixed rate of interest of 12.57% per
annum.
"Maturity Date" means December 1, 2001.
The foregoing amendments to the Credit Agreement shall become
effective automatically and without the need for any further
documentation at such time as Glenayre has determined in its sole
discretion that each and all of the Amendment Conditions have been
timely fulfilled in strict accordance with the terms and conditions
hereof.
4. Consent and Release. Upon Glenayre's determination, in its sole
discretion, that each and all of the Amendment Conditions have been
timely performed in strict accordance with the terms and conditions
hereof, Glenayre shall consent to the Sale by executing an
acknowledgement and consent document ("Acknowledgement and Consent")
in the form attached hereto as Exhibit B. To the extent the Amendment
Conditions require a payment to Glenayre of certain of the proceeds
from the Sale, assuming all other Amendment Conditions have been
fulfilled, Glenayre shall execute and deliver the aforesaid
Acknowledgement and Consent simultaneously with delivery to it of such
proceeds in immediately available funds.
5. Amendment Conditions. For purposes of this Agreement the following
shall constitute the "Amendment Conditions":
(a) There shall be no default or Event of Default existing under
the terms of the Credit Agreement;
(b) PNI shall have caused to be made a principal payment against
the Note out of the proceeds of the Sale in the amount of Two
Million Four Hundred Fifty-Four
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Thousand Seven Hundred Fifty U.S. Dollars and Fifty Eight
Cents ($2,454,750.58) in immediately available funds, so that
the unpaid principal balance of the Note, (after giving
effect to such principal payment and the payment for the sale
of the Collateral, as set forth in Section 5(c) below) is One
Million Nine Hundred Seventy Four Thousand One Hundred Ninety
Seven U.S. Dollars and Forty Cents ($1,974,197.40)
("Principal Balance");
(c) In addition to the principal payment pursuant to Section
5(b), PNI shall have paid any past due interest (including,
but not limited to, the December 1999 interest payment of
$46,671.70) and all amounts required to be paid by the Credit
Agreement due to PNI's sale of Collateral (including, but not
limited to, the amount due for the November 1999 sale of
Collateral, which PNI has represented to Glenayre to be
$25,802.60); and
(d) Glenayre shall have received a fully executed copy of this
Agreement.
6. Waiver of Claims. PNI warrants and represents to Glenayre that the
Note is not subject to any credits, charges, claims, or rights of
offset or deduction of any kind or character whatsoever; PNI releases
and discharges Glenayre from any and all claims and causes of action,
whether known or unknown and whether now existing or hereafter
arising, including without limitation, any usury claims, that have at
any time been owned, or that are hereafter owned, in tort or in
contract by PNI and its Affiliates and that arise out of any one or
more circumstances or events that occurred prior to the date of this
Agreement. Moreover, PNI and its Affiliates, jointly and severally,
waive any and all claims now or hereafter arising from or related to
any delay by Glenayre in exercising any rights or remedies under the
Documents.
7. Bankruptcy.
(a) In entering into this Agreement, PNI and Glenayre hereby
stipulate, acknowledge and agree that Glenayre gave up
valuable rights and agreed to forbear from exercising legal
remedies available to it in exchange for the promises,
representations, acknowledgements and warranties of PNI as
contained herein and that Glenayre would not have entered
into this Agreement but for such promises, representations,
acknowledgements, agreements, and warranties, all of which
have been accepted by Glenayre in good faith, the breach of
which by PNI in any way, at any time, now or in the future,
would admittedly and confessedly constitute cause for
dismissal of any such bankruptcy petition pursuant to 11
U.S.C. ss. 1112(b).
(b) As additional consideration for Glenayre agreeing to forbear
from immediately enforcing its rights and remedies under the
Credit Agreement and in the Documents, PNI agree that in the
event a bankruptcy petition under any Chapter of the
Bankruptcy Code (11 X.X.X.xx. 101, et seq.) is filed by or
against PNI at any time after the execution of this Agreement,
Glenayre shall be entitled to the immediate entry of an order
from the appropriate bankruptcy court granting Glenayre
complete relief from the automatic stay imposed by ss.362 of
the Bankruptcy Code (11 U.S.C.ss.362) to exercise its
foreclosure and other rights, including but not limited to
obtaining a foreclosure judgement and foreclosure sale, upon
the filing with the appropriate court of a motion for relief
from the automatic stay with a copy of this Agreement attached
thereto. PNI specifically
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agree (i) that upon filing a motion for relief from the
automatic stay, Glenayre shall be entitled to relief from the
stay without the necessity of an evidentiary hearing and
without the necessity or requirement of Glenayre to establish
or prove the value of the Collateral, the lack of adequate
protection of its interest in the Collateral, or lack of
equity in the Collateral; (ii) that the lifting of the
automatic stay hereunder by the appropriate bankruptcy court
shall be deemed to be "for cause" pursuant to ss.362(d)(1) of
the Bankruptcy Code (11 U.S.C.ss.362(d)(1); and (iii) that
PNI will not directly or indirectly oppose or otherwise
defend against Glenayre's efforts to gain relief from the
automatic stay. This provision is not intended to preclude
PNI from filing for protection under any Chapter of the
Bankruptcy Code. The remedies prescribed in this paragraph
are not exclusive and shall not limit Glenayre's rights under
the Documents, this Agreement or under any law.
(c) All of the above terms and conditions have been freely
bargained for and are all supported by reasonable and
adequate consideration and the provisions herein are material
inducements for Glenayre entering into this Agreement.
8. Miscellaneous.
(a) Reaffirmation. PNI hereby acknowledges and reaffirms its
obligations and liabilities under the Credit Agreement
pursuant to the terms of this Agreement.
(b) Time is of the essence.
(c) Full Force and Effect. Except as expressly herein amended,
the terms and conditions of the Credit Agreement and the
other Documents remain in full force and effect.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, each of which need not contain the signatures
of more than one party and all of which taken together shall
constitute one in the same original same instruments.
Delivery by facsimile by any of the parties hereto of an
executed counterpart of this Agreement shall be as effective
as an original executed counterpart hereof and shall be
deemed a representation that an original executed counterpart
hereof will be delivered.
(e) Enforceability. PNI represent and warrant that it has the
corporate or other necessary power and authority, and the
legal right, to make, deliver and perform the Documents to
which it is a party (including, but not limited to, this
Agreement) and has taken all necessary corporate action to
authorize the terms and conditions of Agreement and to
authorize the execution, delivery and performance of the
Documents to which it is a party. No consent or authorization
of, filing with, notice to or other similar act by or in
respect of, any Person is required to be obtained or made by
or on behalf of PNI in connection with the execution,
delivery, performance, validity or enforceability of the
Documents. This Agreement has been duly executed, authorized
and delivered on behalf of PNI. This Agreement and the
Documents, when executed and delivered, will constitute, a
legal, valid and binding obligation enforceable against such
party in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally
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and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law).
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Agreement to be duly executed and delivered as of the date first above written.
PNI
PREFERRED NETWORKS, INC.
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Title: Senior Vice President &
Chief Financial Officer
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GLENAYRE
GLENAYRE ELECTRONICS, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
---------------------------------------
Title: Treasurer
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EXHIBIT A
AMORTIZATION SCHEDULE
Preferred Networks, Inc.
Compound Period ..........: Monthly
Nominal Annual Rate ......: 12.570 %
Effective Annual Rate ....: 13.320 %
Periodic Rate ............: 1.0475 %
Daily Rate ...............: 0.03444%
Event Start Date Amount Number Period End Date
1 Loan 01-Dec-99 4,454,750.58 1
2 Payment 09-Dec-99 Interest Only 1
3 Payment 09-Dec-99 2,480,553.58 1
Fixed Payment (+ Interest)
4 Payment 01-Jan-00 Interest Only 15 Monthly 03/01/2001
5 Payment 31-Mar-01 1,024,124.17 1
Fixed Payment (+ Interest)
6 Payment 01-Apr-01 Interest Only 1
7 Payment 01-May-01 124,426.17 8 Monthly 12/01/2001
AMORTIZATION SCHEDULE - Normal Amortization
# Date Payment Interest Principal Balance
Loan 01-Dec-99 4,454,750.58
1 09-Dec-99 12,273.14 12,273.14 0.00 4,454,750.58
2 09-Dec-99 2,480,553.58 0.00 2,480,553.58 1,974,197.00
1999 Totals 2,492,826.72 12,273.14 2,480,553.58
3 01-Jan-00 15,637.26 15,637.26 0.00 1,974,197.00
4 01-Feb-00 20,679.71 20,679.71 0.00 1,974,197.00
5 01-Mar-00 20,679.71 20,679.71 0.00 1,974,197.00
6 01-Apr-00 20,679.71 20,679.71 0.00 1,974,197.00
7 01-May-00 20,679.71 20,679.71 0.00 1,974,197.00
8 01-Jun-00 20,679.71 20,679.71 0.00 1,974,197.00
9 01-Jul-00 20,679.71 20,679.71 0.00 1,974,197.00
10 01-Aug-00 20,679.71 20,679.71 0.00 1,974,197.00
11 01-Sep-00 20,679.71 20,679.71 0.00 1,974,197.00
12 01-Oct-00 20,679.71 20,679.71 0.00 1,974,197.00
13 01-Nov-00 20,679.71 20,679.71 0.00 1,974,197.00
14 01-Dec-00 20,679.71 20,679.71 0.00 1,974,197.00
2000 Totals 243,114.07 243,114.07 0.00
15 01-Jan-01 20,679.71 20,679.71 0.00 1,974,197.00
16 01-Feb-01 20,679.71 20,679.71 0.00 1,974,197.00
17 01-Mar-01 20,679.71 20,679.71 0.00 1,974,197.00
18 31-Mar-01 1,044,520.60 20,396.43 1,024,124.17 950,072.83
19 01-Apr-01 327.19 327.19 0.00 950,072.83
20 01-May-01 124,426.17 9,952.01 114,474.16 835,598.67
21 01-Jun-01 124,426.17 8,752.90 115,673.27 719,925.40
22 01-Jul-01 124,426.17 7,541.22 116,884.95 603,040.45
23 01-Aug-01 124,426.17 6,316.85 118,109.32 484,931.13
24 01-Sep-01 124,426.17 5,079.65 119,346.52 365,584.61
25 01-Oct-01 124,426.17 3,829.50 120,596.67 244,987.94
26 01-Nov-01 124,426.17 2,566.25 121,859.92 123,128.02
27 01-Dec-01 124,426.17 1,298.15 123,128.02 0.00
2001 Totals 2,102,296.28 128,099.28 1,974,197.00
Grand Totals 4,838,237.07 383,486.49 4,454,750.58
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EXHIBIT B
FORM OF ACKNOWLEDGEMENT AND CONSENT
Glenayre Electronics, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Reference is hereby made to the Credit Agreement dated as January 26, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") by and between Preferred Networks, Inc. ("PNI"), Glenayre
Electronics, Inc. (the "Glenayre"). All capitalized terms used herein and not
defined herein shall have the meanings given to such terms in the Credit
Agreement.
Pursuant to Section 7.3 of the Credit Agreement, PNI and its Subsidiaries may
not sell any of their assets (other than in the ordinary course of business)
without the consent of Glenayre. It is contemplated that PNI will sell all or
substantially all of its shares of common stock in EPS WIRELESS, INC. ("EPS"),
a Georgia corporation and a wholly-owned subsidiary of PNI to Celestica
Corporation (the "Sale") pursuant to that certain Share Purchase Agreement
dated as of December 10, 1999, as amended ("Share Purchase Agreement"). This
letter constitutes the consent of Glenayre to the Sale pursuant to the Share
Purchase Agreement, provided that the "Amendment Conditions" set forth in that
certain Agreement concerning Amendment to Credit Agreement between Glenayre and
PNI dated December 9, 1999 (the "Agreement") have been satisfied or waived by
December 15, 1999.
This agreement may be executed by one or more of the parties hereto on any
number of separate counterparts (including by facsimile), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. This agreement shall be governed by and construed in accordance
with the laws of the State of North Carolina.
Very truly yours,
Acknowledged, Accepted and Agreed to:
GLENAYRE ELECTRONICS, INC. PREFERRED NETWORKS, INC.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxx Xxxxxx
------------------------------- -------------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxxx Xxxx Xxxxxx
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Title: Treasurer Title: Senior Vice President and
------------------------------ Chief Financial Officer
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