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AMENDMENT NUMBER ONE TO
LOAN AND SECURITY AGREEMENT
by and between
MIDCOM COMMUNICATIONS INC.,
ADVAL, INC.,
ADVAL DATA CORPORATION,
ADVANCED NETWORK DESIGN,
CEL-TECH INTERNATIONAL CORP.,
and
PACNET INC.
and
FOOTHILL CAPITAL CORPORATION
Dated as of April 1, 1997
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AMENDMENT NUMBER ONE TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NUMBER ONE TO LOAN AND SECURITY AGREEMENT (THIS
"AMENDMENT"), is entered into as of April 1, 1997, by and among FOOTHILL CAPITAL
CORPORATION, a California corporation ("Foothill"), with a place of business
located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, MIDCOM COMMUNICATIONS INC., a Washington corporation ("Midcom"),
with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ADVAL, INC., an Oregon corporation ("AdVal"), with
its chief executive office located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ADVAL DATA CORPORATION, an Oregon corporation ("AdVal Data"),
with its chief executive office located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ADVANCED NETWORK DESIGN, a California corporation
("A.N.D."), with its chief executive office located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, CEL-TECH INTERNATIONAL CORP., a
Washington corporation ("Cel-Tech"), with its chief executive office located at
▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and PACNET INC., a Washington
corporation ("PacNet"), with its chief executive office located at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (collectively, and jointly and
severally, the "Borrowers").
This Amendment is entered into with reference to the following facts:
A. Foothill, as lender, Midcom, AdVal, AdVal Data, A.N.D.,
Cel-Tech, and PacNet, collectively, and jointly and severally
as borrowers, heretofore entered into that certain Loan and
Security Agreement, dated as of February 27, 1997 (herein the
"Agreement");
B. The Borrowers have requested Foothill to amend the Agreement as
set forth in this Amendment, (i) to extend the date on which
the Closing Date shall have occurred under Section 3.1(d), (ii)
to modify the terms of the Amended Net Worth covenant contained
in Section 7.22, and (iii) to amend Schedule 3.1(u) to the
Agreement to eliminate any reference to the Borrowers' La
Mirada location.
C. Foothill is willing to so amend the Agreement in accordance
with the terms and conditions hereof; and
D. All capitalized terms used herein and not defined herein shall
have the meanings ascribed to them in the Agreement, as amended
hereby.
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NOW, THEREFORE, in consideration of the above recitals and the mutual
promises contained herein, Foothill and the Borrowers hereby agree as follows:
1. Amendments to the Agreement.
a. The following specified provisions of the Agreement
hereby are amended and restated in their entirety as follows:
(1) Section 3.1(d) of the Agreement:
the Closing Date shall occur on or before May 15, 1997;
(2) Section 7.22 of the Agreement:
7.22 FINANCIAL COVENANT. Maintain a consolidated Adjusted Net
Worth determined in accordance with GAAP of Midcom and its Subsidiaries of
less than the relevant amount set forth in the following table, measured on
a fiscal quarter-end basis:
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Period Ending Minimum Consolidated Adjusted Net Worth
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6/30/97 <$19,730,000>
9/30/97 <$37,621,000>
12/31/97 <$48,710,000>
03/31/98 <$52,023,000>
6/30/98 <$55,557,000>
9/30/98 <$56,111,000>
12/31/98 <$54,396,000>
03/31/99 <$50,370,000>
06/30/99 <$44,208,000>
09/30/99 <$36,051,000>
12/31/99 <$26,096,000>
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b. Schedule 3.1(u) (Collateral Access Agreements) is
hereby amended and replaced in its entirety with the attached revised Schedule
3.1(u), attached hereto as Exhibit 1 to this Amendment, that eliminates any
reference to the location at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇.
2. Representations and Warranties. Borrower hereby represents and
warrants to Foothill that (a) the execution, delivery, and performance of this
Amendment and of the Agreement, as amended by this Amendment, are within its
corporate powers, have been duly authorized by all necessary corporate action,
and are not in contravention of any law, rule, or regulation, or any order,
judgment, decree, writ, injunction, or award of any arbitrator, court, or
governmental authority, or of the terms of its charter or bylaws, or of any
contract or undertaking to which it is a party or by which any of its
properties may be bound or affected, and (b) this Amendment and the Agreement,
as amended by this Amendment, constitute Borrower's legal, valid, and binding
obligation, enforceable against Borrower in accordance with its terms.
3. Conditions Precedent to Amendment. The satisfaction of each of
the following, on or before the First Amendment Closing Deadline, unless waived
or deferred by Foothill in its sole discretion, shall constitute conditions
precedent to the effectiveness of this Amendment:
a. The representations and warranties in this Amendment,
the Agreement as amended by this Amendment, and the other Loan Documents shall
be true and correct in all respect on and as of the date hereof, as though made
on such date (except to the extent that such representations and warranties
relate solely to an earlier date);
b. No Event of Default or event which with the giving of
notice or passage of time would constitute an Event of Default shall have
occurred and be continuing on the date hereof, nor shall result from the
consummation of the transactions contemplated herein;
c. No injunction, writ, restraining order, or other order
of any nature prohibiting, directly or indirectly, the consummation of the
transactions contemplated herein shall have been issued and remain in force by
any governmental authority against Borrower or Foothill; and
d. All other documents and legal matters in connection
with the transactions contemplated by this Amendment shall have been delivered
or executed or recorded and shall be in form and substance satisfactory to
Foothill and its counsel.
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4. Further Assurances. Borrower shall execute and deliver all
agreements, documents, and instruments, in form and substance satisfactory to
Foothill, and take all actions as Foothill may reasonably request from time to
time fully to consummate the transactions contemplated under this Amendment and
the Agreement, as amended by this Amendment.
5. Miscellaneous.
a. Upon the effectiveness of this Amendment, each
reference in the Agreement to "this Agreement", "hereunder", "herein",
"hereof" or words of like import referring to the Agreement shall mean and
refer to the Agreement as amended by this Amendment.
b. Upon the effectiveness of this Amendment, each
reference in the Loan Documents to the "Loan Agreement", "thereunder",
"therein", "thereof" or words of like import referring to the Agreement shall
mean and refer to the Agreement as amended by this Amendment.
c. As used in this Amendment, "First Amendment Closing
Deadline" means April 25, 1997.
d. This Amendment shall be governed by and construed in
accordance with the laws of the State of California.
e. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Amendment by signing
any such counterpart.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
MIDCOM COMMUNICATIONS INC.,
a Washington corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Title: Executive Vice President-CFO
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ADVAL, INC.,
an Oregon corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Treasurer
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ADVAL DATA CORPORATION,
an Oregon corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Treasurer
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ADVANCED NETWORK DESIGN,
a California corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Treasurer
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CEL-TECH INTERNATIONAL CORP.,
a Washington corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Title: Treasurer
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PACNET INC.,
a Washington corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Title: Treasurer
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FOOTHILL CAPITAL CORPORATION,
a California corporation
By /s/ BEN SILVER
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Title:
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REVISED SCHEDULE 3.1(u)
TO THE
FOOTHILL LOAN AND SECURITY AGREEMENT
COLLATERAL ACCESS AGREEMENTS
1. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3. ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
4. The Westing Building, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
5. ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇
6. Printers' Square, ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
7. Financial Square, ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
8. Allianz Financial Center, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
9. ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇