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AMENDMENT NUMBER FOUR TO
LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
COMMUNICATION TELESYSTEMS INTERNATIONAL dba
WORLDxCHANGE COMMUNICATIONS
WXL COMMUNICATIONS, LTD.
CTS TELCOM, INC.
AND
FOOTHILL CAPITAL CORPORATION
DATED AS OF AUGUST 25, 1998
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AMENDMENT NUMBER FOUR TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NUMBER FOUR TO LOAN AND SECURITY AGREEMENT (this
"Amendment"), is entered into as of August 25, 1998, among FOOTHILL CAPITAL
CORPORATION, a California corporation ("Foothill"), with a place of business
located at 11111 Santa Monica Boulevard, Suite 1500, Los Angeles, California
90025-3333, and COMMUNICATION TELESYSTEMS INTERNATIONAL, dba WORLDxCHANGE
Communications, a California corporation ("WXCC"), with its chief executive
office located at 9999 Willow Creek Road, San Diego, California 92131, WXL
COMMUNICATIONS, LTD., a Canadian corporation ("WXLC"), with its chief executive
office located at 9999 Willow Creek Road, San Diego, California 92131, and CTS
TELCOM, INC., a Florida corporation ("CTST"), with its chief executive office
located at 9999 Willow Creek Road, San Diego, California 92131 (WXCC, WXLC, and
CTST, and each of them, and any one or more of them, jointly and severally,
individually and collectively, "Borrower").
This Amendment is entered into with reference to the following facts:
A. WHEREAS, Foothill 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, by that certain Amendment No. Two to the Loan
and Security Agreement, dated as of February 20, 1998, and by that
certain Amendment Number Three of the Loan and Security Agreement,
dated as of April 27, 1998, and as otherwise from time to time
amended, modified, supplemented, renewed, extended or restated prior
to the date hereof, the "Loan Agreement");
B. WHEREAS, Borrower has previously obtained unsecured indebtedness in
the amount of $40,000,000 (the "Initial Tel-Save Junior Indebtedness")
from Tel-Save Holdings, Inc., a Delaware corporation ("Tel-Save");
C. WHEREAS, Borrower has requested that Foothill consent to additional
debt financing in the amount of $16,200,000 from Tel-Save (the
"Additional Tel-Save Junior Indebtedness," and together with the
Initial Tel-Save Junior Indebtedness, the "Tel-Save Junior
Indebtedness");
D. WHEREAS, Borrower has requested that Foothill consent to the grant of
a junior security interest in all of Borrower's tangible and
intangible personal property to Tel-Save to secure the Tel-Save Junior
Indebtedness (the "Tel-Save Junior Lien");
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E. WHEREAS, Borrower has requested that Foothill (i) consent to the
Additional Tel-Save Junior Indebtedness and the Tel-Save Junior Lien,
and (ii) amend the Loan Agreement to the extent necessary to permit
the Tel-Save Junior Indebtedness and the Tel-Save Junior Lien in
accordance with the terms and conditions hereof as set forth herein.
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 is hereby amended by adding the
following definitions in alphabetical order:
"FOURTH AMENDMENT" means, that certain Amendment Number Four to Loan
and Security Agreement, dated as of August 25, 1998, between Foothill and
Borrower.
"TEL-SAVE" means Tel-Save Holdings, Inc., a Delaware corporation, with
its principal place of business at 6805 Route 202, New Hope, Pennsylvania
18938.
"TEL-SAVE JUNIOR INDEBTEDNESS" means indebtedness of Borrower to
Tel-Save in the aggregate principal amount not to exceed $56,200,000 that
is subject to the Tel-Save Intercreditor Agreement.
"TEL-SAVE INTERCREDITOR AGREEMENT" means, that certain Intercreditor
Agreement between Foothill on the one hand, and Tel-Save and Gerard Klauer
Mattison & Co., Inc. on the other hand, and acknowledged by WXCC, WXLC and
CTST dated August 25, 1998.
"TEL-SAVE PERMITTED LIENS" means those certain liens and security
interests granted by Borrower in favor of Tel-Save in respect of the
Tel-Save Junior Indebtedness, that are in each case subject to the Tel-Save
Intercreditor Agreement.
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b. Section 1.1 of the Loan Agreement is hereby amended by deleting
the following definitions in their entirety and replacing them with the
definitions set forth below in alphabetical order:
"LOAN DOCUMENTS" means, this Agreement, the First Amendment, the
Second Amendment, the Third Amendment, the Fourth Amendment, the Canadian
Security Agreements, the Pledge Agreements, the Disbursement Letter, the
Guarantees, the Guaranty Reaffirmation and Consents, the Tel-Save
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.
"PERMITTED LIENS" means, (a) liens and security interest held by
Foothill, (b) liens for unpaid taxes with respect to which Borrower is not
in breach of its covenants set forth in SECTION 6.9 of the Loan Agreement,
(c) liens and security interests set forth in SCHEDULE P-1 attached to the
Loan Agreement, (d) purchase money security interest and liens of lessors
under capital leases to the extent that the acquisition or lease of the
underlying asset was permitted under SECTION 7.10 of the Loan Agreement,
and so long as the security interest or lien only secures the obligations
of Borrower under the purchase agreement or lease with respect to the
purchase price of or rental payments with respect to the asset, interest or
finance charges with respect thereto, or related fees, costs, or expenses,
and does not secure unrelated obligation of Borrower to the holder of such
purchase agreement or lease, (e) easements, rights of way, reservations,
covenants, conditions, restrictions, zoning variances, and other similar
encumbrances that do not materially interfere with the use or value of the
property subject thereto, (f) obligations and duties as lessee under any
lease existing on the date of this Agreement, (g) mechanics',
materialmen's, warehousemen's, or similar liens that arise by operation of
law, (h) exceptions listed in any title insurance or commitment therefor
delivered by Borrower hereunder in respect of any Real Property and as are
approved in the sole discretion of Foothill, (i) liens with respect to
which Borrower is engaging in a Permitted Protest permitted by an express
provision of the Loan Documents, to the extent that Borrower is in
compliance with such provision, (j) Tel-Save Permitted Liens, and (k) liens
to the extent that Borrower is giving a grace period pursuant to an express
provision of the Loan Documents within which to remove or eliminate such
liens, and to the extent that Borrower is proceeding in compliance with
such provision to remove or eliminate such lien within such grace period.
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3. Subject to the terms and conditions hereof, including without
limitation the execution and delivery of the Tel-Save Intercreditor Agreement in
form and substance satisfactory to Foothill by each of the parties thereto,
Foothill hereby consents to (i) the incurrence of the Tel-Save Junior
Indebtedness by Borrower, (ii) the execution by Borrower of those certain notes,
not to exceed $56,200,000 in aggregate amount, in favor of Tel-Save or its
nominees attached hereto as EXHIBIT A (the "Subordinated Notes," and together
with any other agreements, instruments or other documents entered into in
connection with the Subordinated Notes, the "Tel-Save Transactional Documents"),
and (iii) to the grant of the Tel-Save Junior Lien pursuant to the Tel-Save
Transactional Documents. In connection with Borrower's incurrence of the
Tel-Save Junior Indebtedness, Borrower promptly shall provide Foothill with
copies of all Tel-Save Transactional Documents entered into by Borrower in
connection with Borrower's incurrence of the Tel-Save Junior Indebtedness.
4. LIMITATION OF WAIVERS AND CONSENTS. The waiver and 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
waiver and consent 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
operate 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.
5. 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.
6. CONDITIONS PRECEDENT TO AMENDMENT. The satisfaction of each of
the following, on or before the Third Amendment Closing Deadline, unless waived
or deferred by Foothill in its sole discretion, shall constitute conditions
precedent to the effectiveness of this Amendment:
a. Each of the Guarantors shall have executed and delivered a
Guaranty Reaffirmation and Consent in form and substance satisfactory to
Foothill;
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b. Each of the parties to the Tel-Save Intercreditor Agreement
shall have executed and delivered a counterpart of the Tel-Save Intercreditor
Agreement in form and substance satisfactory to Foothill;
c. 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 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);
d. 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 (except for and excluding those Events of
Default specifically waived hereby), nor shall result from the consummation of
the transactions contemplated herein;
e. 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
f. 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. 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.
8. 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.
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c. This Amendment shall be governed by and construed in
accordance with the laws of the State of California.
d. This Amendment may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Amendment. Delivery of an
executed counterpart of this Amendment by telefacsimile shall be equally as
effective as delivery of a manually executed counterpart of this Amendment. Any
party delivering an executed counterpart of this Amendment by telefacsimile also
shall deliver a manually executed counterpart of this Amendment but the failure
to deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Amendment.
[Remainder of page left intentionally 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.
COMMUNICATION TELESYSTEMS
INTERNATIONAL dba WORLDxCHANGE
COMMUNICATIONS,
a California corporation
By /s/ Edward S. Soren
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Title: President
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WXL COMMUNICATIONS, LTD.,
a Canadian corporation
By /s/ Edward S. Soren
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Title: President
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CTS TELCOM, INC.,
a Florida corporation
By /s/ Edward S. Soren
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Title: President
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FOOTHILL CAPITAL CORPORATION,
a California corporation
By /s/ Kurt R. Marsden
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Title: Vice President
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OMITTED SCHEDULE
The following Schedule to the Amendment Number Four to the Loan and
Security Agreement has been omitted from this Exhibit and shall be furnished
supplementally to the Commission upon request:
Exhibit A - Subordinated Notes