SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
This SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment")
is made and entered into as of the 2nd day of February, 1998, among
NATIONSBANK, N.A. ("Lender"), ILD TELESERVICES, INC. ("ILD") and INTELLICALL
OPERATOR SERVICES, INC. ("IOS") (ILD and IOS are sometimes collectively
referred to herein as the "Borrowers").
W I T N E S S E T H:
WHEREAS, Lender and Borrowers are party to that certain Loan and
Security Agreement dated as of August 29, 1997 (as the same has been amended
from time to time, the "Loan Agreement"); and
WHEREAS, Lender and Borrowers desire to amend the Loan Agreement as set
forth herein;
NOW, THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the receipt and legal sufficiency of which
is hereby acknowledged, the parties hereby agree as follows:
1. All capitalized terms used herein and not otherwise expressly
defined herein shall have the respective meanings given to such terms in the
Loan Agreement.
2. The Loan Agreement is amended as follows:
A. Section 1.01 of the Loan Agreement is hereby amended by adding
the following definition for "INTELLICALL SUBORDINATED INDEBTEDNESS" in the
correct alphabetical order thereto:
"INTELLICALL SUBORDINATED INDEBTEDNESS" shall mean and include
Indebtedness (not to exceed the principal amount of $1,000,000.00) owed by
Borrowers to Intellicall, Inc. pursuant to that certain Promissory Note,
dated as of February 2, 1998, made by ILD in favor of Intellicall, Inc. in
the original principal amount of $1,000,000.00, which Indebtedness shall be
subordinated to the Secured Obligations on terms satisfactory to Lender, in
its sole discretion.
B. Section 1.01 of the Loan Agreement is hereby further amended
by adding to the definition of "SHAREHOLDER SUBORDINATED INDEBTEDNESS,"
following the words "Xxxxxx Telecommunications, LLC" the phrase "; PROVIDED,
HOWEVER, the term "Shareholder Subordinated Indebtedness" shall not include
the Intellicall Subordinated Indebtedness."
C. Section 1.01 of the Loan Agreement is hereby further amended
by renaming the defined term "ELIGIBLE RECEIVABLES" as "ELIGIBLE TELECOM
RECEIVABLES" and moving the renamed definition to the appropriate
alphabetical order.
D. Section 1.01 of the Loan Agreement is hereby further amended
by adding the following definition for "ELIGIBLE PREPAID RECEIVABLES" in the
correct alphabetical order thereto:
"ELIGIBLE PREPAID RECEIVABLES" means the total of all of the unpaid
portions of any Receivables payable in Dollars to a Borrower for the purchase
of a prepaid calling card by a Person whose principal place of business or
residence is in the United States of America, net of any returns, discounts,
claims, credits, charges or other allowances, offsets, deductions,
counterclaims, disputes or other defenses and reduced by the aggregate amount
of all reserves, limits and deductions provided for in this definition and
elsewhere in this Agreement which are deemed by the Lender in the exercise of
its sole and absolute discretion to be eligible for inclusion in the
calculation of the Borrowing Base. Unless otherwise approved in writing by
the Lender, no Receivable of either Borrower shall be deemed an Eligible
Prepaid Receivable unless it also meets all of the following requirements:
(a) such Receivable is owned by a Borrower and represents a complete BONA
FIDE transaction which requires no further act under any circumstances on the
part of such Borrower to make such Receivable payable by the Account Debtor;
(b) such Receivable is not unpaid more than 90 days after the date of the
original invoice or past due more than 60 days after its due date, which
shall not be later than 30 days after the invoice date; (c) such Receivable
does not arise out of any transaction with any Subsidiary, Affiliate,
creditor, lessor or supplier of such Borrower; (d) such Receivable is not
owing by an Account Debtor more than fifty percent (50%) of whose
then-existing accounts owing to any of the Borrowers do not meet the
requirements set forth in CLAUSE (b) above; (e) if the Account Debtor with
respect thereto is located outside of the United States of America, the goods
which gave rise to such Receivable were shipped after receipt by a Borrower
from the Account Debtor of an irrevocable documentary or standby letter of
credit that has been confirmed by a financial institution acceptable to the
Lender and is in form and substance acceptable to the Lender, payable in the
full face amount of the face value of the Receivable in Dollars at a place of
payment located within the United States and has been duly delivered to the
Lender; (f) such Receivable is not subject to the Assignment of Claims Act of
1940, as amended from time to time, or any applicable law now or hereafter
existing similar in effect thereto, as determined in the sole discretion of
the Lender, or to any provision prohibiting its assignment or requiring
notice of or consent to such assignment; (g) such Borrower is not in breach
of any express or implied representation or warranty with respect to the
goods the sale of which gave rise to such Receivable; (h) the Account Debtor
with respect to such Receivable is not insolvent or the subject of any
bankruptcy or insolvency proceedings of any kind or of any other proceeding
or action, threatened or pending, which might, in the Lender's sole judgment,
have a Materially Adverse Effect on such Account Debtor; (i) such Receivable
is evidenced by an invoice or other documentation in form acceptable to the
Lender containing only terms normally offered by such Borrower, and dated no
later than required pursuant to the terms and conditions of the agreement(s)
between such Borrower and its Account Debtor; provided, however, if such
documentation constitutes a consignment, xxxx and hold, conditional sale or
other similar arrangement, no Receivables shall be deemed created until such
time as the Account Debtor has an irrevocable obligation to pay such Borrower
for any goods being sold pursuant to such an arrangement; (j) such Receivable
is a valid, legally enforceable obligation of the Account Debtor with respect
thereto and is not subject to any present, or contingent (and no facts exist
which are
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the basis for any future), offset, deduction or counterclaim, dispute or
other defense on the part of such Account Debtor; (k) such Receivable is not
evidenced by chattel paper or an instrument of any kind, unless such chattel
paper or instrument has been delivered and endorsed and/or assigned to the
Lender; (l) if such Receivable arises from the performance of services, such
services have been fully performed; and (m) such Receivable is subject to the
Security Interest, which is perfected as to such Receivable, and is subject
to no other Lien whatsoever other than a Permitted Lien and the goods giving
rise to such Receivable were not, at the time of the sale thereof, subject to
any Lien other than a Permitted Lien.
E. Section 1.01 of the Loan Agreement is hereby further amended
by adding the following definition of "ELIGIBLE RECEIVABLES" in the correct
alphabetical order thereto:
"ELIGIBLE RECEIVABLES" shall refer collectively to the Eligible
Prepaid Receivables and the Eligible Telecom Receivables.
F. Section 10.06 of the Loan Agreement is hereby amended by
adding thereto, after the phrase "Permitted Distributions," the phrase "and
payments of principal and interest on the Intellicall Subordinated
Indebtedness, as permitted by the Subordination Agreement among ILD, Lender
and Intellicall, Inc. related to the Intellicall Subordinated Indebtedness."
3. Except as expressly set forth herein, the Loan Agreement shall be
and remain in full force and effect as originally written, and shall
constitute the legal, valid, binding and enforceable obligations of Borrowers
to Lender.
4. Each of the Borrowers agrees, jointly and severally, to pay on
demand all reasonable costs and expenses of Lender in connection with the
preparation, execution, delivery and enforcement of this Amendment and all
other Loan Documents and any other transactions contemplated hereby,
including, without limitation, the reasonable fees and out-of -pocket
expenses of legal counsel to Lender.
5. To induce Lender to enter into this Amendment, each of the
Borrowers hereby (i) represents and warrants that, as of the date hereof, and
after giving effect to the terms hereof, there exists no Default or Event of
Default under the Loan Agreement or any of the Loan Documents, and (ii)
acknowledges and agrees that no right of offset, defense, counterclaim, claim
or objection in favor of Borrowers against Lender exists arising out of or
with respect to any of the Loan Documents, the Secured Obligations or the
administration thereof.
6. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same
instrument.
7. This Amendment shall be binding upon and inure to the benefit of
the successors and permitted assigns of the parties hereto.
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8. This Amendment and the other Loan Documents shall be governed by,
and construed in accordance with, the laws and decisions of the State of
Georgia, excluding laws and decisions regarding conflicts of law.
IN WITNESS WHEREOF, Borrowers and Lender have caused this Amendment to
be duly executed, all as of the date first above written.
ILD TELESERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
---------------------------------
Its: President
---------------------------------
INTELLICALL OPERATOR SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
---------------------------------
Its: President
---------------------------------
NATIONSBANK, N.A.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Its: Vice President
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