AMENDMENT NUMBER EIGHT TO
LOAN AND SECURITY AGREEMENT
This AMENDMENT NUMBER EIGHT TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is entered into as of August 24th, 1999, by and between FOOTHILL
CAPITAL CORPORATION, a California corporation ("Foothill"), with a place of
business located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, on the one hand, and, on the other hand,
COMMUNICATION TELESYSTEMS INTERNATIONAL, DBA WORLDxCHANGE Communications, a
California corporation ("WXCC"), with its chief executive office located at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, WORLDxCHANGE
COMMUNICATIONS, INC., a Canadian corporation ("WXC"), with its chief
executive office located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, CTS TELCOM HOLDINGS, INC., a Delaware corporation ("Holdings"), with
its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and CTS TELCOM, INC., a Florida corporation ("CTST"), with
its chief executive office located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (WXCC, WXC, Holdings, and CTST, and each of them, and any
one or more of them, jointly and severally, individually and collectively,
"Borrower"), with reference to the following facts:
A. WHEREAS, Foothill, as lender, and Borrower are parties to that
certain Loan and Security Agreement, dated as of March 11, 1997,
as amended by that certain Amendment Number One to Loan and
Security Agreement, dated as of December 31, 1997, as amended by
that certain Amendment No. Two to the Loan and Security
Agreement, dated as of February 20, 1998, as amended by that
certain Amendment Number Three to Loan and Security Agreement,
dated as of April 27, 1998, as amended by that certain Amendment
Number Four to Loan and Security Agreement, dated as of August
25, 1998, as amended by that certain Amendment Number Five to
Loan and Security Agreement, dated as of December 29, 1998, and
as amended by that certain Amendment Number Six to Loan and
Security Agreement, dated as of March 15, 1999, as amended by
that certain Amendment Number Seven to Loan and Security
Agreement, dated as of June 16, 1999, (as so amended, and as
otherwise amended, modified, supplemented, renewed, extended, or
restated from time to time, including, without limitation, by
this Amendment Number Eight, the "Loan Agreement");
B. WHEREAS, Borrower has requested Foothill to (i) amend the Loan
Agreement to extend the Termination Date, (ii) consent to the
issuance of 30,000 shares of 4%, cumulative convertible Series A
Preferred Stock (the "Series A Preferred Stock") pursuant to that
certain Certificate of Determination of Preferences of Series A
Preferred Stock of Communication Telesystems International, dated
on or about the date hereof, and (iii) consent to the payment of
dividends payable with respect to the Series A Preferred Stock to
Gold & ▇▇▇▇▇ Transfer S.A., a British Virgin Islands corporation
("Purchaser"), as the purchaser of the Series A Preferred Stock
pursuant to that certain Stock Purchase Agreement, dated on or
about the date hereof, entered into between Purchaser and WXCC;
C. WHEREAS, Foothill is willing to so amend the Loan Agreement in
accordance with the terms and conditions hereof and to consent to
the issuance of the Series A Preferred Stock;
NOW, THEREFORE, in consideration of the above recitals and the
mutual promises contained herein, Foothill and Borrower hereby agree as
follows:
1. INITIALLY CAPITALIZED TERMS.
All capitalized terms used herein and not defined herein shall
have the meanings ascribed to them in the Loan Agreement, as amended hereby.
2. AMENDMENTS TO THE LOAN AGREEMENT.
a. SECTION 1.1 of the Loan Agreement hereby is amended by
adding the following defined terms in alphabetical order:
"EIGHTH AMENDMENT means, that certain Amendment Number
Eight to Loan and Security Agreement, dated as of August 24, 1999,
between Foothill and Borrower."
"SERIES A CERTIFICATE OF DETERMINATION means that certain
Certificate of Determination of Preferences of Series A Convertible
Preferred Stock of Communication Telesystems International, dated on or
about the date of the Eighth Amendment."
"SERIES A PREFERRED STOCK means up to 30,000 shares of 4%,
cumulative Series A Convertible Preferred Stock of WXCC, issued pursuant
to the Series A Certificate of Determination.
"STOCK PURCHASE AGREEMENT means that certain Stock
Purchase Agreement, relating to the Series A Preferred Stock dated on or
about the date of the Eighth Amendment, entered into between Purchaser
and WXCC"
"PURCHASER" means Gold & ▇▇▇▇▇ Transfer S.A., a British Virgin
Islands corporation."
b. SECTION 1.1 of the Loan Agreement hereby is amended by
deleting the following defined terms in their entirety and replacing them in
their entirety with the defined terms set forth below in alphabetical order:
"APPLICABLE PERCENTAGE" means (a) from and after the Closing
Date and through and including the first anniversary of the Closing
Date, four percent (4.00%), (b) from and after the first anniversary of
the Closing Date and through and including March 15, 2000 (i) if and
only if the termination of this Agreement and repayment of the
Obligations is occurring contemporaneously with, or within 180 days
after, the consummation of a public or private equity offering in excess
of $20,000,000 by Borrower, or a sale of substantially all of the assets
of Borrower (including a sale effected by one or more mergers or any
pooling merger), and as direct result of either
thereof, under circumstances where the thirty-day prior notice requirement
of Section 3.6 has been complied with, one percent (1.00%), or
(ii) otherwise, two percent (2.00%), and (c) thereafter, $100,000.
"LOAN DOCUMENTS means, this Agreement, the First Amendment, the
Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment, the Seventh Amendment, and the Eighth
Amendment, the Canadian Security Agreements, the Pledge Agreements, the
Disbursement Letter, the Guarantees, the Guaranty Reaffirmation and Consents,
the TelSave Intercreditor Agreement, the Lockbox Agreements, any Mortgages
hereafter delivered by Borrower to Foothill, the Suretyship Agreement, any
note or notes executed by Borrower and payable to Foothill, and any other
agreement entered into, now or in the future, in connection with this
Agreement."
"TERMINATION DATE" means October 1, 2000.
c. SECTION 3.4 of the Loan Agreement is hereby amended and restated
in its entirety as follows:
3.4 TERM AND TERMINATION. This Agreement shall become effective
upon the execution and delivery hereof by Borrower and Foothill and shall
continue in full force and effect for a term ending on the Termination Date.
The foregoing notwithstanding, Foothill shall have the right to terminate
its obligations under this Agreement immediately and without notice upon
the occurrence and during the continuation of an Event of Default.
d. The word "and" at the end of existing clause (g) of SECTION 7.1 of
the Loan Agreement is deleted in its entirety, the period at the end of
existing clause (h) thereof is deleted and replaced in its entirety with
"; and," and the following new clause (i) is inserted immediately following
existing clause (h) thereof in its entirety as follows:
"(i) Indebtedness of WXCC incurred in connection with the
issuance of the Series A Preferred Stock pursuant to the terms and conditions
of the Stock Purchase Agreement."
c. SECTION 7.3 of the Loan Agreement is hereby amended by adding the
following new sentence at the end thereof in its entirety as follows:
"Anything contained in the foregoing to the contrary notwithstanding,
Borrower shall not amend, modify, revise, or otherwise alter the Series A
Certificate of Determination without the prior written consent of Foothill.
f. SECTION 7.12 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows;
"7.12 DISTRIBUTIONS. Make any distribution or declare or pay any
dividends (in cash or other property, other than capital stock) on, or
purchase, acquire, redeem, or retire any of Borrower's capital stock, of any
class, whether now or hereafter
outstanding, except that, so long as no Event of Default has occurred and
is continuing, (a) WXCC may declare and pay dividends with respect to its
Series A Preferred Stock in accordance with the rights, preferences, and
terms of the Series A Certificate of Determination as in effect on date
of the Eighth Amendment, and (b) WXCC may repurchase shares of its stock
in connection with immediately exercisable options granted pursuant to
WXCC's stock option plan, for total consideration not to exceed $100,000
during any fiscal year of WXCC, or $250,000 in the aggregate from and
after the Closing Date until the Obligations are finally paid in cash.
3. ANNIVERSARY FACILITY FEE. Borrower and Foothill hereby agree that
the "Anniversary Facility Fee" set forth in SECTION 2.8 (a) of the Loan
Agreement shall not be payable on March 14, 2000. It being understood that
such fee shall remain due and payable on each anniversary of the Closing Date
other than March 14, 2000, in accordance with the terms of the Loan Agreement.
4. CONSENT TO INCURRENCE OF INDEBTEDNESS IN CONNECTION WITH THE
ISSUANCE OF SERIES A PREFERRED STOCK. Subject to the terms and conditions
hereof, and not withstanding any contrary provision of the Loan Agreement as
amended, Foothill hereby consents to (i) the issuance of the Series A
Preferred Stock pursuant to the Series A Certificate of Determination, and
(ii) to the payment of dividends in connection therewith in accordance with
Section 7.12 of the Loan Agreement as amended by the Eighth Amendment. In
connection with issuance of the Series A Preferred Stock and the purchase
thereof by Purchaser, Borrower promptly shall provide Foothill with copies of
the Series A Certificate of Determination, the Stock Purchase Agreement, and
all other documents, instruments, and agreements entered into by Borrower in
connection therewith.
5. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Foothill that (a) the execution, delivery, and performance of
this Amendment and of the Loan 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 Loan Agreement, as amended by this Amendment, constitute Borrower's
legal, valid, and binding obligation, enforceable against Borrower in
accordance with its terms.
6. CONDITIONS PRECEDENT TO AMENDMENT. The satisfaction of each of the
following on or before August 16, 1999, shall constitute conditions precedent
to the effectiveness of this Amendment:
a. Foothill shall have received an amendment fee in the
amount of $67,500 in connection herewith, such amendment fee being fully
earned and non-refundable when paid;
b. Borrower shall have executed and delivered an officer's
certificate with respect to this Eighth Amendment in form and substance
satisfactory to Foothill;
c. Foothill shall have received the acknowledgment and
agreement of each of its Participants in the secured credit facilities
extended to Borrower under the Agreement to this Amendment;
d. The representations and warranties in this Admendment,
the Loan Agreement as amended by this Amendment, and the other Loan Documents
shall be true and correct in all respects 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);
e. 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;
f. 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, Foothill, or any of their
Affiliates;
g. The Collateral shall not have declined materially in
value from the values set forth in the most recent appraisals or field
examinations previously done by Foothill; and
h. 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.
7. EFFECT ON LOAN AGREEMENT. The Loan Agreement, as amended hereby,
shall be and remain in full force and effect in accordance with its
respective terms and hereby is ratified and confirmed in all respects. The
execution, delivery, and performance of this Amendment shall not operate as a
waiver of or, except as expressly set forth herein, as an amendment, of any
right, power, or remedy of Foothill under the Loan Agreement, as in effect
prior to the date hereof. The consents contained herein are limited to the
specifics hereof, shall not apply with respect to any facts or occurrences
other than those on which each such consents are based, shall not excuse
future non-compliance with the Loan Agreement or any other Loan Document, (as
they may from time to time be amended), except and only to the extent
expressly set forth herein, shall not opeate as a waiver or an amendment of
any right, power or remedy of Foothill, nor as a consent to any further or
other matter, under any of the Loan Documents.
8. 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, to perfect and maintain the perfection and priority of Foothill's
security interests in the Collateral, and to fully consummate the
transactions contemplated under this Amendment and the Loan Agreement, as
amended by this Amendment.
9. MISCELLANEOUS.
a. Upon the effectiveness of this Amendment, each reference
in the Loan Agreement to "this Agreement", "hereunder", "herein", "hereof" or
words of like import referring to the Loan Agreement shall mean and refer to
the Loan 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 Loan Agreement shall mean and refer to the Loan Agreement as
amended by this Amendment.
c. 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. Delivery of an executed counterpart of this
Amendment by fax shall be equally as effective as a manually executed
counterpart. Any party delivering an executed counterpart of this Amdendment
by fax shall also deliver a manually executed counterpart, but the failure to
so deliver a manually executed counterpart shall not affect the
effectiveness or validity hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first written above.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/ [Illegible]
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Title: Assistant Vice President
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COMMUNICATION TELESYSTEMS
INTERNATIONAL dba WORLDxCHANGE
COMMUNICATIONS,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Executive Vice President
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WORLDxCHANGE COMMUNICATIONS, INC.,
a Canadian corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: President
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CTS TELCOM HOLDINGS, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: President
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CTS TELCOM, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: President
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