Exhibit 10.32
AMENDMENT NUMBER THREE TO LOAN AND SECURITY AGREEMENT
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This AMENDMENT NUMBER THREE TO LOAN AND SECURITY AGREEMENT (this
"Amendment"), dated as of May 30, 2001, is entered into by and among WAM!NET
INC., a Minnesota corporation ("Parent"), each of Parent's Subsidiaries
identified on the signature pages hereof (such Subsidiaries, together with
Parent, are referred to hereinafter each individually as a "Borrower", and
individually and collectively, jointly and severally, as the "Borrowers"), each
of the financial institutions named on the signature pages hereto as Lenders
(such financial institutions, together with their respective successors and
assigns, each a "Lender" and collectively, the "Lenders"), and FOOTHILL CAPITAL
CORPORATION, a California corporation, as agent for the Lenders (in such
capacity, the "Agent").
WHEREAS, the Borrowers have requested the Lender Group to amend
certain terms of that certain Loan and Security Agreement, dated as of February
13, 2001, as amended prior to the date hereof (as further amended, restated,
supplemented, or otherwise modified from time to time, the "Loan Agreement"),
and the Lender Group is willing to amend the Loan Agreement subject to the terms
and conditions of this Amendment. All capitalized terms used herein and not
defined herein shall have the meanings ascribed to them in the Loan Agreement,
as amended hereby.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements and conditions hereinafter set forth, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Amendments.
(a) Section 1.1 of the Loan Agreement is hereby amended by adding the
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following definitions in alphabetical order:
"Foreign Interest" means any foreign government or agency or
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representative thereof; any form of business enterprise or legal entity
organized, chartered or incorporated under the laws of a country other than the
United States or its possessions and trust territories; or any person who is not
a citizen or national of the United States.
"Foreign Person" means any Foreign Interest and any U.S. citizen,
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U.S. national or business enterprise organized, chartered or incorporated under
the laws of the U.S., its possessions or trust territories, that is effectively
owned or controlled by a Foreign Interest.
"Initial Term B Loan" has the meaning set forth in Section 2.14.
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"New Term B Loan" has the meaning set forth in Section 2.14.
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"Third Amendment" means Amendment Number Three to Loan and Security
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Agreement, dated as of May 30, 2001, by and among the Borrowers and Lender
Group.
"Third Amendment Closing Date" means the date that all conditions set
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forth in Section 3 of the Third Amendment have been satisfied.
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"Third Amendment Commitment Fee" has the meaning set forth in Section
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2.11(c)(i).
"Third Amendment Use Fee" has the meaning set forth in Section
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2.11(c)(ii).
(b) Section 1.1 of the Loan Agreement is hereby amended by amending and
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restating the following definitions in their respective entirety as follows:
"Conversion Price" means, (i) with respect to Parent Common Stock, a
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price per share equal to (x) $3,500,000 divided by (y) an amount equal to
15.0% of the issued and outstanding shares of Parent Common Stock on a
fully diluted basis and (ii) with respect to WGSI Common Stock, a price per
share equal to (x) $3,500,000 divided by (y) an amount equal to 15.0% of
the issued and outstanding shares of WGSI Common Stock on a fully diluted
basis or such adjusted conversion price in effect at the date of the
exercise of the Conversion Rights as provided in Section 2.16.
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"Second Amendment" means Amendment Number Two to Loan and Security
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Agreement, dated as of May 15, 2001, by and among the Borrowers and Lender
Group.
"Term B Loan" has the meaning set forth in Section 2.14.
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(c) Section 2.11 of the Loan Agreement is amended as follows:
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(i) by deleting clause (iii) of subsection (b) thereof in its
entirety and substituting therefor the following:
(iii) Anniversary Fee. An anniversary fee equal to 3% of the sum
of (A) $7,590,000, plus ( B) the difference between (x) the Term
B Loan Amount on such anniversary date and (y) $7,590,000, due
and payable in cash on each anniversary of the Second Amendment
Closing Date (the "Anniversary Fee").
(ii) by inserting a new subsection (c) at the end of Section 2.11, to
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read as follows:
(c) Third Amendment Fees. Borrowers shall pay to Agent the
following fees and charges, which fees and charges shall be non-
refundable when paid (irrespective of whether this Agreement is
terminated thereafter) and shall be apportioned among the Term B
Lenders in accordance with their Pro Rata Shares:
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(i) Third Amendment Commitment Fee. A commitment fee of
$240,000, due and payable on the Third Amendment Closing
Date (the "Third Amendment Commitment Fee").
(ii) Third Amendment Use Fee. A use fee of $80,000, due
and payable on the Third Amendment Closing Date (the
"Third Amendment Use Fee").
(d) Section 2.14 of the Loan Agreement is amended and restated in its
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entirety to read as follows:
2.14 Term B Loan. On the Second Amendment Closing Date, the
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Term B Lender made a term loan to the Borrowers in the principal amount of
$3,240,000 (the "Initial Term B Loan"). Subject to the terms and conditions
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of this Agreement, on the Third Amendment Closing Date the Term B Lender
agrees to make an addition term loan to the Borrowers in the principal
amount of $4,350,000 (the "New Term B Loan"). The principal amount of the
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New Term B Loan shall be added to the principal amount of the Initial Term
B Loan and such loans shall be deemed a single term loan (hereinafter, the
"Term B Loan"). The outstanding unpaid principal balance and all accrued
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and unpaid interest under the Term B Loan, including the Term B Loan PIK
Amount, shall be due and payable on the date of termination of this
Agreement, whether by its terms, by prepayment, or by acceleration. All
amounts outstanding under the Term B Loan, including all accrued and unpaid
interest and including the Term B Loan PIK Amount, shall constitute
Obligations.
(e) Section 2.16.1 of the Loan Agreement is amended in its entirety to
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read as follows:
Section 2.16.1 Right to Convert
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(a) The Term B Lender may, in its sole and absolute discretion, (i)
convert a portion of the Term B Loan Amount equal to $3,500,000 into the
number of shares of Parent Common Stock representing fifteen percent
(15.0%) of the issued and outstanding shares of Parent Common Stock on a
fully diluted basis (the "Parent Conversion Right") and (ii) convert a
portion of the Term B Loan Amount equal to $3,500,000 into the number of
shares of WGSI Common Stock representing fifteen percent (15.0%) of the
issued and outstanding shares of WGSI Common Stock on a fully diluted basis
(the "WGSI Conversion Right"), at any time and from time to time
(including, without limitation, during the continuance of an Event of
Default) that the Term B Loan Amount is outstanding; provided, however,
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that the Term B Lender shall not have the right to (i) exercise its Parent
Conversion Right in the event that the Term B Lender (or its nominee) has
exercised the Parent Warrant or (ii) exercise the WGSI Conversion Right in
the event that the Term B Lender (or its nominee) has exercised the WGSI
Warrant or (iii) exercise either the Parent Conversion Right or the WGSI
Conversion Right if such exercise would result in ownership or beneficial
ownership, direct or indirect, of five percent (5%) or
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more of WGSI's voting stock or of twenty-five percent (25%) or more of
WGSI's non-voting stock by a Foreign Person.
(b) The option of the Term B Lender to exercise its rights pursuant
to this Section 2.16.1 shall be exercised by the delivery of a written
notice of election by such holder to Parent, which notice shall state the
Term B Loan Amount and the date on which such election is to be effective
(the "Conversion Date") and shall be delivered on a date not less than 10
nor more than 60 Business Days prior to the Conversion Date. A notice of
election, once delivered, may be rescinded at any time prior to the
Conversion Date.
(c) Upon the Conversion Date the Term B Lender (or its nominee) shall
be entitled to receive, (i) in exchange for a portion of the Term B Loan
Amount equal to $3,500,000, the number of shares of Parent Common Stock
equal to fifteen percent (15.0%) of the issued and outstanding shares of
Parent Common Stock on a fully diluted basis, and (ii) in exchange for a
portion of the Term B Loan Amount equal to $3,500,000, the number of shares
of WGSI Common Stock equal to fifteen percent (15.0%) of the issued and
outstanding shares of WGSI Common Stock on a fully diluted basis.
(d) Each of Parent and WGSI shall at all times, when the Term B Loan
Amount shall be outstanding, reserve and keep available out of its
authorized but unissued shares of Common Stock, for the purposes of
effecting the conversion of the Term B Loan Amount, the number of duly
authorized shares of Common Stock as shall from time to time be sufficient
to effect the conversion of the Term B Loan Amount pursuant to the Parent
Conversion Right and the WGSI Conversion Right, on a fully diluted basis.
(e) Each of Parent and WGSI shall comply with all federal and state
securities laws regulating the offer and sale of shares of Common Stock
upon exercise of the conversion rights set forth in this Section 2.16.
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(f) Section 2.16.3 of the Loan Agreement is amended by replacing the words
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"the right to convert up to $3,000,000" with the words "the right to convert up
to $7,000,000".
(g) Section 6.16 of the Loan Agreement is deleted in its entirety and the
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following is substituted therefor:
Section 6.16. [Intentionally Omitted].
(h) Section 7.14 of the Loan Agreement is amended and restated in its
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entirety to read as follows:
Section 7.14 Transactions with Affiliates. Directly or
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indirectly enter into or permit to exist any transaction with any
Affiliate of any Borrower except for (a) Permitted Investments, (b)
transactions that are in the ordinary course of Borrowers' business,
upon fair and reasonable terms, that are fully disclosed to Agent, and
that are no less favorable to Borrowers that would be
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obtained in an arm's length transaction with a non-Affiliate, and (c)
transactions evidenced by the Loan Documents.
(i) Schedule C-1 hereby is amended and restated in its entirety to read as
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set forth in Annex I attached hereto.
2. Acknowledgement of the Obligations. Borrowers acknowledge that, as of May
29, 2001, (i) Borrowers owe the Original Lenders $14,641,809.83 in principal for
Advances plus accrued and unpaid interest, (ii) Borrowers owe the Term A Lender
$2,400,000 in principal for the Term A Loan plus accrued and unpaid interest and
(iii) Borrowers owe the Term B Lender $3,240,000 in principal for the Initial
Term B Loan plus accrued and unpaid interest. The total amount of the
Obligations, including without limitation principal, interest and fees and
reasonable expenses of Lenders' counsel, is by the execution of this Amendment
by Borrowers, ratified, confirmed and approved by Borrowers in all respects.
Borrowers acknowledge and agree that (a) the Obligations are valid and binding
obligations of Borrowers, enforceable against Borrowers in accordance with their
terms, and (b) Borrowers are presently obligated to pay these amounts and all of
their other existing Obligations in accordance with the terms of the Loan
Documents, all without any further demand, notice or claim. In addition,
Borrowers acknowledge and agree with Lenders that (x) Borrowers have no known
claim or cause of action against Lenders (or Lenders' directors, officers,
employees, agents, affiliates or attorneys), (y) Borrowers have no known offset
right, counterclaim or defense of any kind against any Obligations, and (z)
Lenders have heretofore properly performed and satisfied in a timely manner all
of Lenders' obligations to Borrowers.
3. Conditions. This Amendment shall become effective only upon satisfaction
in full of the following conditions precedent:
(a) Agent shall have received on or before the Third Amendment Closing
Date the following, each in form and substance satisfactory to Agent (and, where
indicated, t he applicable Lender) and, unless indicated otherwise, dated as of
the Third Amendment Closing Date:
(i) counterparts of this Amendment, duly executed by the Borrowers
and the Lender Group; and
(ii) such other agreements, instruments, approvals, opinions and
other documents as Agent or any Lender may reasonably request.
(b) The Term B Lender shall have received the Term B Equity Documents (as
hereinafter defined) in form and substance satisfactory to the Term B Lender.
(c) Agent shall have received from the Borrowers, for the benefit of the
Term B Lender, the Third Amendment Commitment Fee and the Third Amendment Use
Fee, which Third Amendment Commitment Fee and the Third Amendment Use Fee shall
be fully earned as of the date of this Amendment; the parties hereto agree that
the Term B Commitment Fee and the Term B Use Fee shall be paid from the proceeds
of the Term B Loan.
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(d) The several counsel to the members of the Lender Group shall have
received payment, in immediately available funds, of all accrued and unpaid
attorneys fees and expenses constituting Lender Group Expenses incurred in
connection with this Amendment and the transactions contemplated hereunder or
reasonably ancillary hereto;
(e) The representations and warranties in this Amendment, 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);
(f) No Default or 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 Borrowers or the Lender Group; 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 Agent
and its counsel.
4. Term B Equity Documents. In consideration of the financial accommodations
being provided to Borrowers by the Term B Lender pursuant to this Amendment and
the Second Amendment, the parties hereto hereby agree as follows:
(a) On the Third Amendment Closing Date, the Parent and WGSI agree to
execute and deliver to the Term B Lender, the following instruments
(collectively, the "Term B Equity Documents"; together with this Amendment and
any other documents delivered pursuant to Section 3(a) above, each an "Amendment
Document" and collectively, the "Amendment Documents"), each in form and
substance satisfactory to the Term B Lender:
(i) a warrant issued to the Term B Lender (or its nominee) to
purchase up to fifteen percent (15.0%), on a fully diluted basis, of
the number of shares of the Parent's common stock on the Third
Amendment Closing Date (the "Parent Warrant"), duly executed by the
Parent;
(ii) a warrant issued to the Term B Lender (or its nominee) to
purchase up to fifteen percent (15.0%), on a fully diluted basis, of
the number of shares of WGSI Common Stock on the Third Amendment
Closing Date (the "WGSI Warrant"; together with the Parent Warrant,
collectively, the "Warrants"), duly executed by WGSI.
(iii) a registration rights agreement between the Parent and the Term
B Lender (or its nominee) in respect of the shares of common stock
issuable under the
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Parent Warrant or pursuant to the Parent Conversion Right under
Section 2.16 of the Loan Agreement (as amended hereby) (the "Parent
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Registration Rights Agreement"), duly executed by the Parent;
(iv) a registration rights agreement between WGSI and the Term B
Lender (or its nominee) in respect of the shares of common stock of
WGSI issuable under the WGSI Warrant or pursuant to the WGSI
Conversion Right under Section 2.16 of the Loan Agreement (as amended
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hereby) (the "WGSI Registration Rights Agreement"; together with the
WGSI Registration Rights Agreement, collectively, the "Registration
Rights Agreements"), duly executed by WGSI; and
(v) such other agreements, instruments, approvals, opinions and
other documents as the Term B Lender may reasonably request in
connection with the Warrants and the Registration Rights Agreement.
(b) The Parent and WGSI agree that (i) each of the Warrants shall have (A)
an expiration date of five (5) years from the Third Amendment Closing Date, (B)
an exercise price per share equal to the Exercise Price (as defined below) and
(C) anti-dilution provisions acceptable to the Term B Lender but in no event
less favorable than those of shareholders existing on or after the date hereof,
and (ii) each of the Registration Rights Agreements shall grant the Term B
Lender (or its nominee) (A) at least two demand registration rights, (B)
unlimited "S-3" registration rights and (C) unlimited "piggy-back" registration
rights.
(c) As used in subsection (b) above, "Exercise Price" means (i) with
respect to Parent Common Stock, a price per share equal to (x) $3,500,000,
divided by (y) an amount equal to fifteen percent (15.0%) of the issued and
outstanding shares of Parent Common Stock on a fully diluted basis and (ii) with
respect to WGSI Common Stock, a price per share equal to (x) $3,500,000, divided
by (y) an amount equal to fifteen percent (15.0%) of the issued and outstanding
shares of WGSI Common Stock on a fully diluted basis or such adjusted exercise
price in effect at the date of the exercise of the Parent Warrant or the WGSI
Warrant, as applicable.
(d) The Term B Lender agrees that (i) if the Term B Lender exercises its
Parent Conversion Right under Section 2.16 of the Loan Agreement (as amended
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hereby), the Parent Warrant shall expire, and (ii) if the Term B Lender
exercises its WGSI Conversion Right under Section 2.16 of the Loan Agreement (as
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amended hereby), the WGSI Warrant shall expire.
(e) The Agent and each of the Lenders hereby consent to the issuance of
the Term B Equity Documents and to the terms thereof and waive any term,
agreement or covenant in the Loan Agreement or in any other Loan Document which
would otherwise restrict or prohibit the execution, delivery and performance of
the Term B Equity Documents. Such consent and waiver shall be effective only in
this specific instance and for this specific purpose and shall not permit any
further departure from the terms of the Loan Documents, all of which shall
remain in full force in effect (except as expressly set forth in this Amendment)
and are hereby ratified and confirmed.
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5. Representations and Warranties. Each Borrower hereby represents and
warrants to the Lender Group that (a) the execution, delivery, and performance
of each Amendment Document to which it is a party, and the performance of the
Loan Agreement, as amended by this Amendment, are within its corporate or other
organizational 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) each Amendment Document to which it is a party
and the Loan Agreement, as amended by this Amendment, constitute such Borrower's
legal, valid, and binding obligation, enforceable against such Borrower in
accordance with its terms.
6. Further Assurances. Borrowers shall execute and deliver all agreements,
documents, and instruments, in form and substance satisfactory to Agent, and
take all actions as Agent or any Lender may reasonably request from time to time
fully to consummate the transactions contemplated under the Amendment Documents
and the Loan Agreement, as amended by this Amendment.
7. 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 shall be governed by and construed in accordance with
the laws of the State of New York.
(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.
(e) This Amendment is a Loan Document.
[Remainder of this 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 above written.
Borrowers:
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WAM!NET INC., a
Minnesota corporation
By: ________________________________
Title: _____________________________
WAM!NET GOVERNMENT SERVICES, INC.,
a Minnesota corporation
By: ________________________________
Title: _____________________________
WAM!NET PROFESSIONAL SERVICES LLC,
a Minnesota limited liability company
By: ________________________________
Title: _____________________________
Agent:
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FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent
By: ________________________________
Title: _____________________________
(Signature Page to the Third Amendment)
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Lenders:
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FOOTHILL CAPITAL CORPORATION,
a California corporation
By: ________________________________
Title: _____________________________
ABLECO FINANCE LLC,
a Delaware limited liability company
(for itself and as agent for certain
of its affiliates)
By: ________________________________
Title: _____________________________
XXXXXXXXX L.L.C.,
a New York limited liability company
(for itself and as agent for certain
of its affiliates)
By: ________________________________
Title: _____________________________
(Signature Page to the Third Amendment)
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ANNEX I
Schedule C-1
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Commitments
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Lender Revolver Term A Loan Term B Loan Total
Commitment Commitment Commitment Commitment
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Foothill Capital $15,000,000 $ 0 $ 0 $15,000,000
Corporation
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Ableco Finance LLC $15,000,000 $2,400,000 $ 0 $17,400,000
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Xxxxxxxxx L.L.C. $ 0 $ 0 $7,590,000 $ 7,590,000
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All Lenders $30,000,000 $2,400,000 $7,590,000 $39,990,000
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