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EXHIBIT 10.10
AMENDMENT NUMBER FOUR TO AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT
This AMENDMENT NUMBER FOUR TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
(this "Amendment") is entered into as of March 29, 1997, by and between
Foothill Capital Corporation, a Ca1ifornia corporation ("Foothill"), on the one
hand, and Phoenix Network, Inc., a Delaware corporation ("Phoenix"), Phoenix
Network Acquisition Corp., a Delaware corporation ("PNAC"), and AmeriConnect,
Inc., a Delaware corporation ("AmeriConnect"), on the other hand, with
reference to the following facts:
A. Foothill, as lender, and Phoenix, as borrower heretofore entered into
that certain Amended and Restated Loan and Security Agreement, dated
as of September 26, 1995 (despite the fact that the recitals thereof
erroneously referred to "1993" rather than "1995") (herein the
"Original Agreement");
B. Phoenix and PNAC entered into that certain Amendment Number One to
Amended and Restated Loan and Security Agreement, dated as of a date
in October, 1996 (the "First Amendment"), with Foothill to amend the
Original Agreement to, among other things, add PNAC as a secured
co-borrower, and modify the Borrowing Base, in each case as set forth
in the First Amendment;
C. Phoenix, PNAC, and AmeriConnect (individually and collectively,
jointly and severally, "Borrower") entered into that certain Amendment
Number Two to Amended and Restated Loan and Security Agreement, dated
as of December 23, 1996 (the "Second Amendment"), with Foothill, to
amend the Original Loan Agreement, as previously amended, to, among
other things, add AmeriConnect as a secured co-borrower. and modify
the Borrowing Base, in each case as set forth in the Second Amendment;
D. Borrower entered into that certain Amendment Number Three to Amended
and Restated Loan and Security Agreement, dated as of March 12, 1997
(the "Third Amendment"), with Foothill, to amend the Original Loan
Agreement, as previously amended, to, among other things, provide for
a $2,000,000 bridge loan to Borrower, provide for a reducing
Overadvance to Borrower, change certain pricing with respect to the
credit facilities under the Agreement, provide for the issuance of the
Warrants to Foothill, and modify the Borrowing Base, in each case as
set forth in the Third Amendment (the Original Agreement, as amended
by the First Amendment, by the Second Amendment, and by the Third
Amendment, is referred to herein as the "Agreement");
E. Borrower has requested Foothill to amend the Agreement to, among other
things, provide for the restatement of certain covenants, the
elimination of certain covenants, the addition of certain covenants,
and the waiver of certain described Events of Default in existence as
of March 28, 1997, in each case as set forth in this Amendment;
F. Foothill is willing to so amend the Agreement in accordance with the
terms and conditions hereof; and
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G. All capitalized terms used herein and not defined herein shall have
the meanings ascribed to them in the Agreement, as amended hereby.
NOW, THEREFORE, in consideration of the above recitals and the mutual
promises contained herein Foothill and Borrower hereby agree as follows:
1. Amendments to the Agreement.
a. Section 1.1 of the Agreement hereby is
amended by adding the following new defined terms in alphabetical order:
"Debt Service" means, for any Relevant Measuring
Period, consolidated interest expense of Borrower for such period determined in
accordance with GAAP, plus principal of Indebtedness payable during such
period, plus taxes due from Borrower during such period.
"Debt Service Ratio" means, for any Relevant
Measuring Period, EBITDA for such period divided by Debt Service for such
period.
"EBITDA" means, for any Relevant Measuring Period,
Borrower's consolidated earnings before interest, tax, depreciation, and
amortization, determined in accordance with GAAP.
"Fourth Amendment" means that certain Amendment
Number Four to Amended and Restated Loan and Security Agreement, dated as of
March 28, 1997, between Foothill and Borrower.
"Relevant Measuring Period" means, with
respect to the fiscal quarter of Borrower ending March 31, 1997, such fiscal
quarter of Borrower, with respect to the fiscal quarter of Borrower ending June
30, 1997, such fiscal quarter of Borrower and the immediately preceding fiscal
quarter of Borrower, with respect to the fiscal quarter of Borrower ending
September 30, 1997, such fiscal quarter of Borrower and the two immediately
preceding fiscal quarters of Borrower, and with respect to each fiscal quarter
of Borrower ending on or after December 31, 1997, such fiscal quarter of
Borrower and the three immediately preceding fiscal quarters of Borrower.
b. The following definitions contained in
Section 1.1 of the Amendment are amended and restated in their entirety to read
as follows:
"Loan Documents" means this Agreement, the First
Amendment, the Second Amendment the Third Amendment, the Fourth Amendment, the
Suretyship Agreement, any Lock Box Agreement, any note or notes executed by
Borrower and payable to Foothill, and any other agreement entered into by
Borrower or any Affiliate of Borrower in connection with this Agreement.
c. The following specified provisions of the
Agreement hereby are_amended and restated in their entirety as follows:
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(1) Section 6.14:
6.14 FINANCIAL COVENANTS. Borrower shall maintain:
(a) Current Ratio. A ratio of
Consolidated Current Assets divided by Consolidated Current
Liabilities of at least the amounts set forth below as of the relevant
corresponding dates set forth below:
Date Minimum Ratio
3/31/97 .50
6/30/97 .50
9/30/97 .50
12/31/97 .50
3/31/98 .75
6/30/98 .75
9/30/98 .75
12/31/98 .75
3/31/99 1.00
6/30/99 1.00
9/30/99 1.00
12/31/99 1.00
3/31/2000 1.00
6/30/2000 1.00
9/30/2000 1.00
12/31/2000 and each fiscal quarter 1.00
ending date thereafter
EBITDA. EBITDA of not less than the amounts set forth with respect
to the Relevant Measuring Periods ending on the corresponding dates set forth
below:
Date Minimum Amount
3/31/97 ($150,000)
6/30/97 ($75,000)
9/30/97 $1,000,000
12/31/97 $2,000,000
3/31/98 $2,000,000
6/30/98 $3,200,000
9/30/98 $4,200,000
12/31/98 $4,800,000
3/31/99 $5,000,000
6/30/99 $5,000,000
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9/30/99 $5,000,000
12/31/99 $5,000,000
3/31/2000 $5,000,000
6/30/2000 $5,000,000
9/30/2000 $5,000,000
12/31/2000 and each fiscal quarter $5,000,000
ending date thereafter
(c) Debt Service Ratio A Debt
Service Ratio of not less than the amounts set forth with
respect to the Relevant Measuring Periods ending on the
corresponding dates set forth below:
Date Minimum Ratio
3/31/97 (.25)
6/30/97 (.25)
9/30/97 0.00
12/31/97 0.00
3/31/98 0.25
6/30/98 0.75
9/30/98 1.25
12/31/98 2.00
3/31/99 2.50
6/30/99 2.50
9/30/99 2.50
12/31/99 2.50
3/31/2000 3.00
6/30/2000 3.00
9/30/2000 3.00
12/31/2000 and each fiscal quarter 3.00
ending date thereafter
(2) Section 7.10:
7.10 CAPITAL EXPENDITURES. Make any capital
expenditure, or any commitment therefor, where the aggregate amount of such
capital expenditures, made or committed for in any fiscal year, is in excess of
the amount set forth below with respect to such fiscal year:
Fiscal Year Capital Expenditure Limit
1997 $1,500,000
1998 $1,000,000
1999 $1,000,000
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2000 $1,000,000
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 Fourth Amendment Closing Deadline, unless
waived or deferred by Foothill in its sole discretion, shall constitute
conditions precedent to the effectiveness of this Amendment and each and every
provision hereof;
a. Foothill shall have received a certificate
from the Secretary of Phoenix attesting to the incumbency and signatures of
authorized officers of Phoenix and to the resolutions of Phoenix's Board of
Directors authorizing its execution and delivery of this Amendment and the
other Loan Documents to which it is a party and contemplated in this Amendment
and the performance of this Amendment, the Agreement as amended by this
Amendment, and such other Loan Documents, and authorizing specific officers of
Phoenix to execute and deliver the same;
b. Foothill shall have received a certificate
from the Secretary of PNAC attesting to the incumbency and signatures of
authorized officers of PNAC and to the resolutions of PNAC 'S board of
directors or equivalent governing body authorizing its execution and delivery
of the Loan Documents to which it is a party and contemplated in this Amendment
and the performance of such Loan Documents, and authorizing specific officers
of PNAC to execute and deliver the same;
c. Foothill shall have received a certificate
from the Secretary of AmeriConnect attesting to the incumbency and signatures
of authorized officers of AmeriConnect and to the resolutions of board of
directors or equivalent governing body authorizing its execution and delivery
of the Loan Documents to which it is a party and contemplated in this Amendment
and the performance of such Loan Documents. and authorizing specific officers
of AmeriConnect to execute and deliver the same;
d. Foothill shall have received an opinion of
counsel to Borrower in form and substance satisfactory to Foothill in its
reasonable discretion;
e. 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);
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f. Other than the Events of Default expressly
waived by Foothill herein, 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;
g. 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
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.
4. Express Waiver of Certain Events of Default. Effective as of
March 28, 1997, Foothill expressly hereby forever waives each and every Event
of Default that existed on March 28, 1997, with respect to any breach by
Borrower of Section 6.14 or Section 7.10 of the Agreement, or any subpart of
either such Section, which breach occurred prior to March 28, 1997.
5. Effect on Agreement. The 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. Except as expressly set
forth herein, the execution, delivery, and performance of this Amendment shall
not operate as a waiver of, or as an amendment of, any right, power, or remedy
of Foothill under the Agreement, as in effect prior to the date hereof.
Borrower ratifies and reaffirms the continuing effectiveness of the Suretyship
Agreement with respect to the Agreement as amended by this Amendment and the
other Loan Documents.
6. 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 Agreement, as amended by
this Amendment
7. 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. As used in this Amendment, "Fourth
Amendment Closing Deadline" means March 31, 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, and/or by facsimile (followed promptly by delivery of original
signatures), 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.
(balance of page intentionally omitted)
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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.
FOOTHILL CAPITAL CORPORATION
a California corporation
By: /s/ Xxxx X. Xxxxxxx
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Title: Assistant Vice President
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PHOENIX NETWORK, INC., a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Title: S.V.P.
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PHOENIX NETWORK ACQUISITION CORP., a
Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Title: V.P.
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AMERICONNECT, INC., a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Title: V.P.
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