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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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<S> <C>
Date of Report (Date of earliest event reported): Commission File Number:
JUNE 30, 1999 1-10210
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EGLOBE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3486421
(State or other jurisdiction (IRS Employer
of incorporation) Identification Number)
2000 PENNSYLVANIA AVENUE, N.W., SUITE 4800
WASHINGTON, D.C. 20008
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(303) 691-2115
(Former name or former address, if changed since last report)
NOT APPLICABLE
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EGLOBE, INC.
ITEM 5 OTHER EVENTS
As of June 30, 1999, eGlobe, Inc. (the "Company") completed a
$20 million long term financing with EXTL Investors LLC, which, together with
its affiliates, is our largest stockholder ("EXTL Investors").
Interim April Loan. The recent financing is the second of two
transactions with EXTL Investors under a Loan and Note Purchase Agreement
entered into on April 9, 1999. In the first transaction in April 1999, the
Company and its wholly owned subsidiary, eGlobe Financing Corporation, borrowed
$7 million from EXTL Investors and the Company granted EXTL Investors warrants
to purchase 500,000 shares of the Company's Common Stock at an exercise price of
$.01 per share. This loan was repaid from the proceeds of the recent $20 million
financing. An additional warrant to purchase 1,000,000 shares of the Company's
Common Stock at an exercise price of $.01 per share, granted in connection with
the first loan, expired upon the repayment of the first loan.
Recent $20 million Financing. As of June 30, 1999, the Loan
and Note Purchase Agreement with EXTL Investors was amended to add two
additional borrowers (IDX Financing Corporation and Telekey Financing
Corporation), each of which is an indirect wholly owned subsidiary of the
Company, and EXTL Investors purchased $20 million of 5% secured notes from
eGlobe Financing, IDX Financing and Telekey Financing (collectively, the
"Financing Companies"). As required by the Loan and Note Purchase Agreement,
eGlobe Financing used proceeds of the $20 million financing to repay the $7
million April 1999 loan from EXTL Investors and approximately $8.4 million
(including interest) of senior indebtedness to IDT Corporation. The Company
granted EXTL Investors warrants to purchase 5,000,000 shares of the Company's
Common Stock at an exercise price of $1.00 per share.
The 5% secured notes must be repaid in 36 specified monthly
installments commencing on the first month following issuance, with the
remaining unpaid principal and accrued interest being due in a lump sum with the
last payment. The entire amount becomes due earlier if the Company completes an
offering of debt or equity securities from which the Company receives net
proceeds of at least $100 million (a "Qualified Offering"). The principal and
interest of the 5% secured notes may be paid in cash. However, up to 50% of the
original principal amount of the 5% secured notes may be paid in the Company's
Common Stock at the Company's option if (1) the closing price of the Company's
Common Stock on Nasdaq is $8.00 or more for any 15 consecutive trading days, (2)
the Company closes a public offering of equity securities at a price of at least
$5.00 per share and with gross proceeds to the Company of at least $30 million,
or (3) the Company
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closes a Qualified Offering (at a price of at least $5.00 per share, in the case
of an offering of equity securities).
The 5% secured notes are secured by substantially all of the
equipment and other personal property of the Company and its subsidiaries and
the accounts receivables of the Company and IDX. In order to provide such
security arrangements, the Company and each of its subsidiaries transferred
equipment and other personal property to the Financing Companies and the Company
has agreed that it will and will cause its subsidiaries to transfer equipment
and other personal property acquired after the closing date to the Financing
Companies. The Company and its operating subsidiaries have guaranteed payment of
the secured notes.
The Loan and Note Purchase Agreement with EXTL Investors
contains several covenants which the Company believes are fairly customary for a
note financing, including prohibitions on:
o mergers and sales of substantially all assets;
o sales of material assets other than on an arm's length basis and in the
ordinary course of business;
o encumbering any of the Company's assets (except for certain permitted
liens);
o incurring or having outstanding indebtedness other than certain
permitted debt (which includes certain existing debt and future
equipment and facilities financing), or prepaying any subordinated
indebtedness; or
o paying any dividends or distributions on any class of the Company's
capital stock (other than any dividend on outstanding preferred stock or
additional preferred stock issued in the future) or repurchasing any
shares of the Company's capital stock (subject to certain exceptions).
The Loan and Note Purchase Agreement with EXTL Investors
contains several events of default, including:
o non-payment of any principal or interest on the 5% secured notes, or
non- payment of $250,000 or more on any other indebtedness (other than
specified existing indebtedness;
o failure to perform any obligation under the Loan and Note Purchase
Agreement or related documents;
o breach of any representation or warranty in the Loan and Note Purchase
Agreement;
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o inability to pay debts as they become due, or initiation or consent to
judicial proceedings relating to bankruptcy, insolvency or
reorganization;
o dissolution or winding up, unless approved by EXTL Investors; and
o final judgment ordering payment in excess of $250,000 which remains
undismissed, undischarged or unstayed pending appeal for thirty days.
EXTL Investors also has agreed to make advances to the
Financing Companies from time to time based upon eligible accounts receivables.
These advances may not exceed (1) the lesser of 50% of eligible accounts
receivable or (2) the aggregate amount of principal payments made by the
Financing Companies under the 5% secured notes. The eligible accounts
receivables include the accounts receivables of the Company, the Financing
Companies and IDX. The accounts receivables note is secured by the same security
arrangements as the secured notes.
The terms of the Loan and Note Purchase Agreement with EXTL
Investors, a side letter, Amendment No. 1 to Loan and Note Purchase Agreement,
the $20 million Secured Note, the Security Agreement with the Financing
Companies, the Security Agreement with the Company and IDX, the Guaranty and the
Accounts Receivable Revolving Note are as set forth in Exhibits 10.1, 10.2,
10.3, 10.4, 10.5, 10.6, 10.7 and 10.8, respectively, and the terms of the
warrants are set forth in the form of Warrant to purchase 5,000,000 shares of
the Company's Common Stock attached hereto as Exhibit 4.1 in each case
incorporated herein by reference. A copy of the press release, dated July 7,
1999, issued by the Company regarding the above described transaction is
attached as Exhibit 99.1 hereto.
(c) Exhibits.
4.1 Form of Warrant to purchase 5,000,000 shares of common stock of the
Company issued to EXTL Investors LLC.
10.1 Loan and Note Purchase Agreement, dated April 9, 1999, between EXTL
Investors LLC, eGlobe Financing Corporation and the Company (Incorporated
by reference to Exhibit 10.16 in Annual Report on Form 10-K of the
Company, for the period ended December 31, 1998).
10.2 Side letter, dated June 16, 1999, between EXTL Investors LLC and the
Company.
10.3 Amendment No. 1 to Loan and Note Purchase Agreement, dated June 30, 1999,
between EXTL Investors LLC, eGlobe Financing Corporation, IDX Financing
Corporation, Telekey Financing Corporation and the Company.
10.4 Form of Secured Promissory Note in the original principal amount of
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$20,000,000, dated June 30, 1999, of eGlobe Financing Corporation, IDX
Financing Corporation and Telekey Financing Corporation payable to EXTL
Investors LLC.
10.5 Security Agreement, dated June 30, 1999, among eGlobe Financing
Corporation, IDX Financing Corporation and Telekey Financing Corporation
payable to EXTL Investors LLC.
10.6 Security Agreement, dated June 30, 1999, among eGlobe, Inc., IDX
International, Inc. and EXTL Investors LLC.
10.7 Guaranty, dated June 30, 1999, among eGlobe, Inc., IDX International, Inc.
and EXTL Investors LLC.
10.8 Form of Accounts Receivable Revolving Credit Promissory Note in the
original principal amount of up to $20,000,000, dated June 30, 1999, of
eGlobe Financing Corporation, IDX Financing Corporation and Telekey
Financing Corporation payable to EXTL Investors LLC.
99.1 Press Release, dated July 7, 1999, regarding the completion of the $20
million financing.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
eGLOBE, INC.
Date: July 16, 1999 By: /s/Graeme S.R. Brown
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Graeme S.R. Brown
Associate General Counsel and
Assistant Secretary
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EXHIBIT INDEX
Exhibit Description
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4.1 Form of Warrant to purchase 5,000,000 shares of common stock of the
Company issued to EXTL Investors LLC.
10.1 Loan and Note Purchase Agreement, dated April 9, 1999, between EXTL
Investors LLC, eGlobe Financing Corporation and the Company (Incorporated
by reference to Exhibit 10.16 in Annual Report on Form 10-K of the
Company, for the period ended December 31, 1998).
10.2 Side letter, dated June 16, 1999, between EXTL Investors LLC and the
Company.
10.3 Amendment No. 1 to Loan and Note Purchase Agreement, dated June 30, 1999,
between EXTL Investors LLC, eGlobe Financing Corporation, IDX Financing
Corporation, Telekey Financing Corporation and the Company.
10.4 Form of Secured Promissory Note in the original principal amount of
$20,000,000, dated June 30, 1999, of eGlobe Financing Corporation, IDX
Financing Corporation and Telekey Financing Corporation payable to EXTL
Investors LLC.
10.5 Security Agreement, dated June 30, 1999, among eGlobe Financing
Corporation, IDX Financing Corporation and Telekey Financing Corporation
payable to EXTL Investors LLC.
10.6 Security Agreement, dated June 30, 1999, among eGlobe, Inc., IDX
International, Inc. and EXTL Investors LLC.
10.7 Guaranty, dated June 30, 1999, among eGlobe, Inc., IDX International, Inc.
and EXTL Investors LLC.
10.8 Form of Accounts Receivable Revolving Credit Promissory Note in the
original principal amount of up to $20,000,000, dated June 30, 1999, of
eGlobe Financing Corporation, IDX Financing Corporation and Telekey
Financing Corporation payable to EXTL Investors LLC.
99.1 Press Release, dated July 7, 1999, regarding the completion of the $20
million financing.
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EXHIBIT 4.1
WARRANT
NEITHER THE WARRANTS REPRESENTED HEREBY NOR THE SECURITIES ISSUABLE UPON
EXERCISE THEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). NONE OF SUCH SECURITIES MAY BE OFFERED OR SOLD EXCEPT
PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT, OR (II) AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE ACT RELATING TO THE DISPOSITION OF
SECURITIES AND UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH EXEMPTION FROM REGISTRATION
UNDER THE ACT IS AVAILABLE.
DATE: June 30, 1999
NO.: W-8
WARRANT TO PURCHASE
SHARES OF
COMMON STOCK
OF
EGLOBE, INC.
eGlobe, Inc., a Delaware corporation (the "Company"), hereby issues to
EXTL Investors, LLC (the "Holder") this warrant to purchase from the Company,
for a price per share equal to $1.00, 5,000,000 shares of common stock, $.001
par value per share of the Company (the "Common Stock").
1. Exercise. The rights represented by this warrant may be exercised,
in whole or in part, at any time beginning on (i) the date hereof, with respect
to one-third (1/3) of the number of shares of Common Stock which the Holder is
entitled to purchase under this warrant, (ii) the earlier of (x) the first
anniversary of the date hereof and (y) the Note Maturity Date, as defined in the
Loan and Note Purchase Agreement, dated as of April 9, 1999, among the Holder,
the Company and eGlobe Financing Corporation, a wholly owned subsidiary of the
Company and amended by Amendment No. 1 to Loan and Note Purchase Agreement dated
as of the date hereof (the "Loan and Note Purchase Agreement"), with respect to
an additional one-third (1/3) of the number of shares of Common Stock which the
Holder is entitled to purchase under this warrant, and (iii) the earlier of (x)
the second anniversary of the date hereof and (y) the Note Maturity Date, with
respect to the final one-third (1/3) of the number of shares of Common Stock
which the Holder is entitled to purchase under this warrant, in each case until
(and all rights to purchase Common Stock hereunder shall expire at) 5:00 PM (New
York, New York
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time) on the Note Maturity Date or, in the event that some shares of Common
Stock first can be purchased under this warrant on the Note Maturity Date
because the Note Maturity Date occurs prior to the third anniversary of the date
hereof, on the date that is 30 days after the Note Maturity Date (the "Exercise
Period").
The rights represented by this warrant may be exercised by (a) the
surrender of this warrant, along with the purchase form attached as Exhibit A
(the "Purchase Form"), properly executed, at the address of the Company set
forth in section 7.2 (or such other address as the Company may designate by
notice in writing to the Holder at its address set forth in section 7.2) and (b)
the payment to the Company of the exercise price by check, payable to the order
of the Company, for the number of shares of Common Stock specified in the
Purchase Form, together with any applicable stock transfer taxes. A certificate
representing the shares of Common Stock so purchased and, in the event of an
exercise of fewer than all the rights represented by this warrant, a new warrant
in the form of this warrant issued in the name of the Holder or its designee(s)
and representing a new warrant to purchase a number of shares of Common Stock
equal to the number of shares of Common Stock as to which this warrant was
theretofore exercisable less the number of shares of Common Stock as to which
this warrant shall theretofore have been exercised, shall be delivered to the
Holder or such designee(s) as promptly as practicable, but in no event later
than three business days, after this warrant shall have been so exercised.
2. Antidilution. In case the Company shall (i) pay a dividend in shares
of Common Stock or make a distribution in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock (including, without limitation, by way of
stock splits and the like), (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company
(including any such reclassification in connection with a consolidation or
merger in which the Company is the surviving corporation), the number of shares
of Common Stock purchasable upon exercise of this warrant immediately prior
thereto shall be adjusted so that the Holder shall be entitled to receive the
number of shares of Common Stock or the kind and number of other securities of
the Company which it would have owned or have been entitled to receive after the
happening of any of the events described above had this warrant been exercised
immediately prior to the happening of such event or any record date with respect
thereto, and the exercise price per share shall be adjusted appropriately. An
adjustment made pursuant to this Section 2 shall become effective immediately
after the effective date of each such event retroactive to the record date, if
any, for such event, without amendment or modification required to this
document.
3. Transfer. Subject to applicable law (including the requirements set
forth in the legend at the beginning of this warrant), this warrant may be
transferred at any time, in whole or in part, to any person or persons. Any
transfer shall be
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effected by the surrender of this warrant, along with the form of assignment
attached as Exhibit B, properly executed, at the address of the Company set
forth in section 7.2 (or such other address as the Company may designate by
notice in writing to the Holder at its address set forth in section 7.2).
Thereupon, the Company shall issue in the name or names specified by the Holder
a new warrant or warrants of like tenor and representing a warrant or warrants
to purchase in the aggregate a number of shares equal to the number of shares to
which this warrant was theretofore exercisable less the number of shares as to
which this warrant shall theretofore have been exercised.
4. Payment of Taxes. The Company shall cause all shares of Common Stock
issued upon the exercise of this warrant to be validly issued, fully paid and
nonassessable and not subject to preemptive rights. The Company shall pay all
expenses in connection with, and all taxes and other governmental charges that
may be imposed with respect to the issuance or delivery of the shares of Common
Stock upon exercise of this warrant, unless such tax or charge is imposed by law
upon the Holder.
5. Reservation of Shares. From and after the date of this warrant, the
Company shall at all times reserve and keep available for issuance upon the
exercise of this warrant a number of its authorized but unissued shares of
Common Stock sufficient to permit the exercise in full of this warrant.
6. Substitution of Preferred Stock. Notwithstanding the references in
this Agreement to Common Stock and the purchase of Common Stock upon the
exercise of this warrant, to the extent the Company is not permitted to issue
Common Stock without obtaining Stockholder Approval (as defined below) under the
rules or regulations of the Nasdaq Stock Market, as in effect at the applicable
time, the Company shall substitute, in lieu of Common Stock, a preferred stock
of the Company that (i) shall be equivalent to Common Stock in all economic
respects, including with respect to liquidation, dividends and other economic
terms, (ii) shall be non-voting in the event that the holder (together with all
of its affiliates) is the beneficial owner (as such term is defined under the
federal securities laws and the rules and regulations thereunder) of 19.9% or
more of the Common Stock but otherwise shall vote with the Common Stock as a
single class and be entitled to the same number of votes per share as the number
of shares of Common Stock issuable upon conversion of such preferred stock, and
(iii) shall be convertible into Common Stock, provided that the conversion right
may not be exercised without Stockholder Approval in the event that the holder
(together with all of its affiliates) is, or following such conversion would be,
the beneficial owner of 19.9% or more of the Common Stock. "Stockholder
Approval" means any approval of stockholders of the Company which may be
required, in the reasonable determination of the Company upon advice of its
counsel, under the rules or regulations of the Nasdaq Stock Market, as in effect
at the applicable time.
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7. Miscellaneous.
7.1 Securities Act Restrictions. The Holder acknowledges that this
warrant and Common Stock issuable upon the exercise of this warrant may not be
sold, transferred or otherwise disposed of without registration under the
Securities Act of 1933, as amended (the "Act") or an applicable exemption from
the registration requirements of the Act and, accordingly, this warrant and all
certificates representing the Common Stock issuable upon the exercise of this
warrant shall bear a legend in the form set forth on the top of page one of this
warrant.
7.2 Notices. Any notices and other communications under this warrant
shall be in writing and may be given by any of the following methods: (a)
personal delivery; (b) facsimile transmission; (c) registered or certified mail,
postage prepaid, return receipt requested; or (d) overnight delivery service.
Notices shall be sent to the appropriate party at its address or facsimile
number given below (or at such other address or facsimile number for such party
as shall be specified by notice given hereunder): (a) if to the Company, to it
at: 2000 Pennsylvania Avenue, Washington, DC 20006, Fax No. (202) 822-8984,
Attention: Chief Executive Officer, and if to the Holder, to it at his/her
address appearing on the stock records of the Company at the time that a notice
shall be mailed, or at such other address as the party to be notified shall from
time to time have furnished to the Company. All such notices and communications
shall be deemed received upon (a) actual receipt thereof by the addressee, (b)
actual delivery thereof to the appropriate address or (c) in the case of a
facsimile transmission, upon transmission thereof by the sender and issuance by
the transmitting machine of a confirmation slip confirming that the number of
pages constituting the notice have been transmitted without error. In the case
of notices sent by facsimile transmission, the sender shall contemporaneously
mail a copy of the notice to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice is deemed received.
7.3 Amendment. This warrant may be modified or amended or the
provisions of this warrant may be waived only with the written consent of the
Company and the Holder.
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7.4 Governing Law. This warrant shall be governed by the law of the
State of Delaware, without regard to the provisions thereof relating to
conflicts of laws.
EGLOBE, INC.
By:
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Name: Christopher J. Vizas
Title: Chairman of the Board of
Directors and Chief
Executive Officer
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EXHIBIT A
PURCHASE FORM
EXTL Investors, LLC, the undersigned registered owner of this warrant,
irrevocably exercises this warrant for the purchase of ______________ shares of
common stock, $.001 par value per share (the "Common Stock") of eGlobe, Inc.,
for a price per share equal to $1.00, and herewith makes payment therefor in the
aggregate amount of $___________, all on the terms and conditions specified in
this warrant, and requests that certificates for the shares of Common Stock
hereby purchased be issued in the name of and delivered to the undersigned.
Dated: EXTL Investors, LLC
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By
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Title
--------------------------------
Address
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED. the undersigned registered owner of this warrant
hereby sells, assigns and transfers to the assignee named below all of the
rights of the undersigned under this warrant with respect to the number of
shares of common stock, $.001 par value per share of eGlobe, Inc. set forth
below:
Name and Address of Assignee No. of Shares of Common Stock
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and does hereby irrevocably constitute and appoint ____________________
attorney-in-fact to register such transfer on the books of eGlobe, Inc.
maintained for the purpose, with full power of substitution in the premises.
Dated: Print Name:
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Signature:
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Witness:
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EXHIBIT 10.2
June 16, 1999
EXTL Investors, LLC
Attn: R. Jensen
Re: Loan and Note Purchase Agreement dated April 9, 1999 between EXTL
Investors LLC and eGlobe Financing Corporation and Executive TeleCard,
Ltd. d/b/a eGlobe, Inc. ("eGlobe") (the "Note Purchase Agreement")
Dear Mr. Jensen:
As you know, eGlobe is proposing to amend its certificate of
incorporation to prohibit stockholders from increasing their percentage
ownership above specified limits other than pursuant to a qualifying tender
offer. The amendment provides for exceptions for transactions approved by
eGlobe's Board of Directors. If an investor increases its percentage ownership
above the specified limits without any exception applying and other than by a
qualifying tender offer, eGlobe has certain redemption rights.
This letter is to confirm eGlobe's agreement, in the event the
amendment is adopted, to promptly seek a formal Board approval for all issuances
to EXTL Investors, LLC upon conversion or exercise of all securities presently
held by it or issuable to it under agreements in effect as of the date hereof
(including all securities issuable under the Note Purchase Agreement and
documents and agreements referred to therein). In addition, eGlobe agrees that
if it exercises any redemption right that may exist under the amendment to
redeem any of the stock held by EXTL Investors, LLC as of the date hereof or
issuable to EXTL Investors, LLC, as described in the prior sentence, such
redemption shall be at the greater of the then fair market value or the price
paid by EXTL Investors for such stock.
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This letter shall constitute an amendment to the Note Purchase
Agreement and may be relied upon by EXTL Investors, LLC in proceeding with the
$20 million note purchase and sale thereunder.
Sincerely,
EXECUTIVE TELECARD, LTD.
By: /s/ Christopher J. Vizas
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Christopher J. Vizas
President and CEO
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EXHIBIT 10.3
AMENDMENT NO. 1 TO LOAN AND NOTE PURCHASE AGREEMENT
Amendment No. 1 to Loan and Note Purchase Agreement (the "Amendment")
is entered into as of this 30th day of June, 1999 by and among eGlobe, Inc.,
formerly known as Executive TeleCard, Ltd., ("Parent"), eGlobe Financing
Corporation ("eGlobe Financing"), IDX Financing Corporation, a Delaware
corporation ("IDX Financing"), Telekey Financing Corporation, a Delaware
corporation ("Telekey Financing") and EXTL Investors, LLC ("Investor").
WHEREAS, Parent, eGlobe Financing and Investor entered into a
Loan and Note Purchase Agreement dated April 9, 1999 (the "Purchase Agreement");
and
WHEREAS, the parties desire to make certain amendments to the
Purchase Agreement.
NOW THEREFORE, the parties hereto do hereby agree as follows:
1. IDX Financing and Telekey Financing shall each be added as
co-makers of the 5% Secured Notes (the "Secured Notes") and the revolving note
based on the balance of accounts receivable (the "A/R Note" and collectively
with the Secured Notes, the "Notes"), and together with eGlobe Financing will
have joint and several liability for any obligations under the Notes and the
Security Agreement (as such term is defined under the Purchase Agreement.
2. Section 1.2(f) of the Purchase Agreement shall be amended
by deleting all of said section and replacing the deleted language with a new
Section 1.2(f) that reads as follows:
(f) Security Agreement; Asset Transfer. The Notes
shall be secured by and shall be entitled to the benefits of a
Security Agreement (the "Security Agreement") substantially in
the form attached hereto as Exhibit F to be entered into by
the Companies and the Investor at the Second Closing. At or
prior to the Second Closing, the Parent shall (i) convey or
cause its subsidiaries (except for IDX International, Inc.
("IDX") and Telekey, Inc. ("Telekey") to convey to eGlobe
Financing, on the terms and conditions set forth in the
transfer documents reasonably acceptable to the Investor (the
"eGlobe Financing Transfer Documents"), the assets described
in Exhibit G-1 presently owned by such transferors; (ii) cause
IDX to convey to IDX Financing, on the terms and conditions
set forth in the transfer documents reasonably acceptable to
the Investor (the "IDX Financing Transfer Documents"), the
assets described in Exhibit G-1 presently owned by IDX; and
(iii) cause Telekey to convey to Telekey Financing,
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on the terms and conditions set forth in the transfer
documents reasonably acceptable to the Investor (the "Telekey
Financing Transfer Documents"), the assets described in
Exhibit G-1 presently owned by Telekey. The Parent shall cause
its subsidiaries to convey to the relevant Company, during the
period in which the Notes are outstanding, all assets acquired
after the date hereof which are described in Exhibit G-2. (If
such assets cannot be conveyed without violating the terms of
Material Contracts, the Parent or relevant subsidiary shall
enter into a comparable security agreement granting a security
interest, to the extent permitted by applicable Material
Contracts.) In the event that any of the transferred assets
are already encumbered by an Encumbrance that is not
prohibited hereunder, it is intended that the Investor would
receive a second priority security interest to the extent
permitted by the documents evidencing the first security
interest, and the Company and the Parent agree to use all
reasonable efforts to obtain such consents as may be necessary
from the holders of such first security interests to allow a
second security interest to be placed on such assets for the
benefit of the Investor.
3. Section 2.3(a) of the Purchase Agreement shall be amended
by replacing all references to the "Company" with "eGlobe Financing."
4. The Purchase Agreement shall be amended by adding a new
Section 2.3(c) and (d) which shall read as follows:
(c) The authorized capital stock of IDX
Financing consists of 4,000 shares of common stock of which
100 shares are validly issued and outstanding, fully paid and
non-assessable, all of which are held (directly or indirectly)
by Parent free and clear of all Encumbrances, and 1,000 shares
of preferred stock, none of which are issued or outstanding.
There are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the
issued or unissued capital stock of IDX Financing or
obligating IDX Financing to issue or sell any shares of
capital stock of, or other equity interests in IDX Financing,
including any securities directly or indirectly convertible
into or exercisable or exchangeable for any capital stock or
other equity securities of IDX Financing, expect for options
or rights held by the Parent. All shares of common stock of
IDX Financing are duly and validly issued, fully paid and
nonassessable.
(d) The authorized capital stock of Telekey
Financing consists of 2,000 shares of common stock of which
100 shares are validly issued and outstanding, fully paid and
non-assessable, all of which are held (directly or indirectly)
by Parent free and clear of all
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Encumbrances, and 1,000 shares of preferred stock, none of
which are issued or outstanding. There are no options,
warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or
unissued capital stock of Telekey Financing or obligating
Telekey Financing to issue or sell any shares of capital stock
of, or other equity interests in Telekey Financing, including
any securities directly or indirectly convertible into or
exercisable or exchangeable for any capital stock or other
equity securities of Telekey Financing, expect for options or
rights held by the Parent. All shares of common stock of
Telekey Financing are duly and validly issued, fully paid and
nonassessable.
5. The "Company" shall refer to each of eGlobe Financing, IDX
Financing and Telekey Financing for all other purposes under the Purchase
Agreement, except with respect to Section 2.6 (Financial Statements) and where
the context requires otherwise.
6. Copies of all notices to IDX Financing and Telekey
Financing shall be sent c/o eGlobe, Inc. to its principal place of business,
attention "Chairman."
7. Capitalized terms used herein and not defined herein shall
have the meaning ascribed to them in the Purchase Agreement. All terms and
provisions of the Purchase Agreement and amendments thereto, as amended hereby,
shall continue in full force and effect, and are hereby confirmed in all
respects.
8. This Amendment No. 1 to Loan and Note Purchase Agreement
may be executed in several counterparts, each of which is an original, but all
of which together constitute one and the same agreement.
9. All corporate law matters arising under this Amendment No.
1 to Loan and Note Purchase Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, and all other matters arising
under this Agreement shall be governed by and construed in accordance with the
laws of the State of Texas, in each case regardless of the laws that might
otherwise govern under applicable principles of conflicts of law. Each of the
parties consents to the jurisdiction of the federal courts whose districts
encompass any part of the State of Texas or the state courts of the State of
Texas in connection with any dispute arising under this Amendment No. 1 to Loan
and Note Purchase Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on forum non conveniens, to
the bringing of any such proceeding in such jurisdictions.
[Remainder of Page Intentionally Left Blank]
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
EGLOBE, INC.
By:__________________________________
Name/Title:__________________________
EGLOBE FINANCING CORPORATION
By:__________________________________
Name/Title:__________________________
IDX FINANCING CORPORATION
By:__________________________________
Name/Title:__________________________
TELEKEY FINANCING CORPORATION
By:__________________________________
Name/Title:__________________________
EXTL INVESTORS, LLC
By:__________________________________
Name/Title:__________________________
4
EXHIBIT 10.4
5% SECURED NOTE
$20,000,000 June 30, 1999
FOR VALUE RECEIVED, EGLOBE FINANCING CORPORATION, a Delaware
corporation, IDX FINANCING CORPORATION, a Delaware corporation, and TELEKEY
FINANCING CORPORATION, a Delaware corporation (collectively, the "Maker"),
jointly and severally promise to pay to the order of EXTL INVESTORS, LLC, a
limited liability company organized under the laws of Nevada (the "Holder"), at
850 Cannon, Suite 200, Hurst, TX 76054, or at such other place as the Holder of
this Note may from time to time designate, the principal amount of Twenty
Million United States Dollars ($20,000,000), together with any accrued but
unpaid interest thereon, on the terms and conditions set forth below.
This Note is one of the "Notes" referred to in the Loan and
Note Purchase Agreement dated as of April 9, 1999, by and among the Maker,
eGlobe, Inc., a Delaware corporation (the "Parent"), and the Holder and amended
by Amendment No. 1 to Loan and Note Purchase Agreement dated as of the date
hereof (the "Loan and Note Purchase Agreement"). Capitalized terms used but not
defined herein shall have the meanings set forth in the Loan and Note Purchase
Agreement.
Principal and interest shall be due and payable in 36 equal
monthly installments (based upon a level payment debt service amortization over
a five year period) according to the amortization schedule attached hereto, in
arrears on the first day of each month, commencing on August 1, 1999, with the
entire remaining unpaid principal amount (together with accrued interest
thereon) to be due and payable in a single payment on the Note Maturity Date.
This Note shall bear interest on the unpaid portion of the
principal amount thereof, from the date of issuance until the unpaid portion of
the principal shall have become due and payable (whether on the Note Maturity
Date, by acceleration or otherwise), at the Note Interest Rate. To the extent
not prohibited by applicable law, this Note shall bear interest on overdue
principal, on any overdue amounts arising out of a required or optional
prepayment of principal and on any overdue installment of interest at the Note
Overdue Rate, from after the date on which such amounts were due and payable,
whether by acceleration or otherwise, until paid.
Whenever any payment to be made under or with respect to this
Note shall be stated to be due on any day other than a Business Day, such
payment may be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of interest due on such
date.
1
<PAGE>
This Note may be prepaid without premium or penalty, at the
option of the Maker exercised by written notice to the Holder, at any time in
whole or from time to time in part in integral multiples of $100,000. Any
prepayment will be applied first to accrued interest and then to payment of
principal. If this Note is prepaid only in part, this Note shall be surrendered
at the Company's principal office and the payment shall be recorded directly on
this Note or by an amendment thereto, whereupon the Loan Note will be returned
to the Investor promptly.
Interest on this Note shall be paid in cash. Principal of this
Note shall be paid in cash except as provided in this paragraph. In the event
that (1) the Closing Price of the Parent Common Stock on Nasdaq is $8.00 or more
for any 15 consecutive trading days during any period in which Notes are
outstanding that is not more than five Business Days preceding the date of a
written election made in accordance with this sentence, (2) the Parent closes a
public offering of equity securities of the Parent at a price of at least $5.00
per share and with gross proceeds to the Parent of at least $30 million, or (3)
the Parent closes a Qualified Offering (at a price of at least $5.00 per share,
in the case of an offering of equity securities), to the extent permitted by the
Loan and Note Purchase Agreement, principal of this Note equal to up to 50% of
the original principal amount of this Note may be paid in Parent Common Stock at
the option of the Maker if a written election to make such prepayment in Parent
Common Stock is made by the Maker (and delivered to the Holder) prior to the
date that is five Business Days after the occurrence of the event specified in
clauses (1), (2) or (3) of this sentence. For purposes of payment in Parent
Common Stock, each share of Parent Common Stock shall be valued as follows: A)
if the Market Price of Parent Common Stock is less than $6.00 as of the date of
payment, the value of each share of Parent Common Stock shall equal the Market
Price of Parent Common Stock (if the Market Price of Parent Common Stock is less
than $5.00 as of the date of payment, Parent Common Stock may not be used for
such prepayment unless the issuance of the Parent Common Stock would not require
any Stockholder Approval that has not been obtained); or (B) if the Market Price
of Parent Common Stock is greater than or equal to $6.00 as of the date of
payment, the value of each share of Parent Common Stock shall be $6.00. Payment
in the Parent Stock shall be made within 15 days after the election is made.
Until the Parent Stock is issued, all monthly cash installment payments due
under this Note shall be made in a timely manner without giving effect to any
reduction in principal.
All rights of the Company under this Note to make payments in
Parent Common Stock shall be subject to receipt by the Parent of any required
Stockholder Approval. Notwithstanding the prior sentence, to the extent it would
avoid the need for Stockholder Approval, the Company shall be entitled to
substitute, in lieu of Parent Common Stock, a preferred stock of Parent that (i)
shall be equivalent to Parent Common Stock in all economic respects, including
with respect to liquidation, dividends and other economic terms, (ii) shall be
non-voting in the event that the holder (together with all of its Affiliates) is
the beneficial owner (as
2
<PAGE>
such term is defined under the federal securities laws and the rules and
regulations thereunder) of 19.9% or more of the Parent Common Stock but
otherwise shall vote with the Parent Common Stock as a single class and be
entitled to the same number of votes per share as the number of shares of Parent
Common Stock issuable upon conversion of such preferred stock, and (iii) shall
be convertible into Parent Common Stock, provided that the conversion right may
not be exercised without Stockholder Approval in the event that the holder
(together with all of its Affiliates) is, or following such conversion would be,
the beneficial owner of 19.9% or more of the Parent Common Stock. For purposes
of the provisions relating to use of Parent Common Stock (or, pursuant to this
paragraph, such preferred stock) to prepay the Notes, such preferred stock shall
be deemed to have the same value as the value of the Parent Common Stock into
which the preferred stock is convertible (whether or not the conversion right
may then be exercised).
This Note is secured by and shall be entitled to the benefits
of the Security Agreements. In addition, this Note is guaranteed by and shall be
entitled to the benefits of the Guaranty Agreement, which in turn is secured by
and entitled to the benefits of the Parent Security Agreement.
The occurrence of any Event of Default under and as defined in
the Loan and Note Purchase Agreement shall constitute an "Event of Default"
hereunder.
If an Event of Default exists hereunder, the Holder may
exercise any right, power or remedy which the Holder may have under the Loan and
Note Purchase Agreement if the corresponding Event of Default exists under and
as defined in the Loan and Note Purchase Agreement.
In the event the interest provisions hereof or any exactions
provided for herein or in the Loan and Note Purchase Agreement shall result in
an effective rate of interest which, for any period of time, exceeds the limit
of any usury or other law applicable to the transactions evidenced hereby, all
sums in excess of those lawfully collectible as interest for the period in
question shall, without further agreement or notice between or by any party
hereto, be applied toward repayment of outstanding principal immediately upon
receipt of such moneys by the Holder with the same force and effect as if the
Maker had specifically designated such extra sums to be so applied to principal
and the Holder had agreed to accept such extra payments in repayment of the
principal balance hereof. Notwithstanding the foregoing, however, the Holder may
at any time and from time to time elect, by notice in writing to the Maker, to
reduce or limit the collection of any interest to such sums which shall not
result in any payment of interest in excess of that lawfully collectable. The
Maker agrees that in determining whether or not any interest payable under this
Note exceeds the highest rate permitted by law, any non-principal payment shall
be deemed to the extent permitted by law to be an expense, fee, premium or
penalty, rather than interest.
3
<PAGE>
The Maker expressly waives presentment for payment, demand,
notice of dishonor, protest, notice of protest, diligence of collection, notice
of intention to accelerate, notice of acceleration, and (except as otherwise
expressly provided herein or in the Loan and Note Purchase Agreement to the
contrary) any similar notice of any kind, and hereby consents to any number of
renewals and extensions of time of payment hereof, which renewals and extensions
shall not affect the liability of the Maker.
The Maker promises to pay all costs and expenses (including,
without limitation, attorneys' fees and disbursements) incurred in connection
with the collection thereof.
Without the prior written consent of the Maker, this Note may
not be transferred except to an Affiliate of the Holder, to Mr. Ronald Jensen,
to a member of Mr. Jensen's immediate family or an Affiliate of either.
Neither this Note nor any of the rights, interests or
obligations of the Maker hereunder shall be assigned in any respect without the
prior written consent of the Holder. Whenever used herein, the words "the Maker"
and "the Holder" shall be deemed to include their respective successors and
permitted assigns.
All communications required or permitted by this Note shall be
in accordance with Section 7.1 of the Loan and Note Purchase Agreement.
If any term, condition or other provision of this Note is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms, conditions and provisions of this Note shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Note so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
This Note may not be amended except by an instrument in
writing signed by the Maker and the Holder.
This Note shall be governed by and construed in accordance
with the laws of the State of Texas, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law. The Maker consents to
the jurisdiction of the federal courts whose districts encompass any part of the
State of Texas or the state courts of the State of Texas in connection with any
dispute arising under this Note and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Note to be
duly executed and delivered as of the day and year first written above.
EGLOBE FINANCING CORPORATION
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
IDX FINANCING CORPORATION
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
TELEKEY FINANCING CORPORATION
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
5
<PAGE>
NOTES AMORTIZATION SCHEDULE
<TABLE>
<CAPTION>
PERIOD LOAN BALANCE PAYMENT 5% INTEREST PRINCIPAL LOAN BALANCE
- ------ ------------ ------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
1 $20,000,000.00 $377,424.67 83,333.33 $294,091.34 $19,705,908.66
2 $19,705,908.66 $377,424.67 82,107.95 $295,316.72 $19,410,591.94
3 $19,410,591.94 $377,424.67 80,877.47 $296,547.21 $19,114,044.73
4 $19,114,044.73 $377,424.67 79,641.85 $297,782.82 $18,816,261.91
5 $18,816,261.91 $377,424.67 78,401.09 $299,023.58 $18,517,238.33
6 $18,517,238.33 $377,424.67 77,155.16 $300,269.51 $18,216,968.82
7 $18,216,968.82 $377,424.67 75,904.04 $301,520.64 $17,915,448.18
8 $17,915,448.18 $377,424.67 74,647.70 $302,776.97 $17,612,671.21
9 $17,612,671.21 $377,424.67 73,386.13 $304,038.54 $17,308,632.67
10 $17,308,632.67 $377,424.67 72,119.30 $305,305.37 $17,003,327.30
11 $17,003,327.30 $377,424.67 70,847.20 $306,577.48 $16,696,749.82
12 $16,696,749.82 $377,424.67 69,569.79 $307,854.88 $16,388,894.94
13 $16,388,894.94 $377,424.67 68,287.06 $309,137.61 $16,079,757.33
14 $16,079,757.33 $377,424.67 66,998.99 $310,425.68 $15,769,331.65
15 $15,769,331.65 $377,424.67 65,705.55 $311,719.12 $15,457,612.52
16 $15,457,612.52 $377,424.67 64,406.72 $313,017.95 $15,144,594.57
17 $15,144,594.57 $377,424.67 63,102.48 $314,322.20 $14,830,272.37
18 $14,830,272.37 $377,424.67 61,792.80 $315,631.87 $14,514,640.50
19 $14,514,640.50 $377,424.67 60,477.67 $316,947.00 $14,197,693.50
20 $14,197,693.50 $377,424.67 59,157.06 $318,267.62 $13,879,425.88
21 $13,879,425.88 $377,424.67 57,830.94 $319,593.73 $13,559,832.15
22 $13,559,832.15 $377,424.67 56,499.30 $320,925.37 $13,238,906.78
23 $13,238,906.78 $377,424.67 55,162.11 $322,262.56 $12,916,644.21
24 $12,916,644.21 $377,424.67 53,819.35 $323,605.32 $12,593,038.89
25 $12,593,038.89 $377,424.67 52,471.00 $324,953.68 $12,268,085.21
26 $12,268,085.21 $377,424.67 51,117.02 $326,307.65 $11,941,777.56
27 $11,941,777.56 $377,424.67 49,757.41 $327,667.27 $11,614,110.30
28 $11,614,110.30 $377,424.67 48,392.13 $329,032.55 $11,285,077.75
29 $11,285,077.75 $377,424.67 47,021.16 $330,403.52 $10,954,674.24
30 $10,954,674.24 $377,424.67 45,644.48 $331,780.20 $10,622,894.04
31 $10,622,894.04 $377,424.67 44,262.06 $333,162.61 $10,289,731.42
32 $10,289,731.42 $377,424.67 42,873.88 $334,550.79 $9,955,180.63
33 $9,955,180.63 $377,424.67 41,479.92 $335,944.75 $9,619,235.88
34 $9,619,235.88 $377,424.67 40,080.15 $337,344.52 $9,281,891.35
35 $9,281,891.35 $377,424.67 38,674.55 $338,750.13 $8,943,141.23
36 $8,943,141.23 $377,424.67 37,263.09 $340,161.58 $8,602,979.65
- ------------------------------------------------------------------------------------*
37 $8,602,979.65 $377,424.67 35,845.75 $341,578.92 $8,261,400.72
38 $8,261,400.72 $377,424.67 34,422.50 $343,002.17 $7,918,398.55
39 $7,918,398.55 $377,424.67 32,993.33 $344,431.35 $7,573,967.21
40 $7,573,967.21 $377,424.67 31,558.20 $345,866.48 $7,228,100.73
41 $7,228,100.73 $377,424.67 30,117.09 $347,307.59 $6,880,793.14
42 $6,880,793.14 $377,424.67 28,669.97 $348,754.70 $6,532,038.44
43 $6,532,038.44 $377,424.67 27,216.83 $350,207.85 $6,181,830.59
44 $6,181,830.59 $377,424.67 25,757.63 $351,667.05 $5,830,163.55
45 $5,830,163.55 $377,424.67 24,292.35 $353,132.32 $5,477,031.22
46 $5,477,031.22 $377,424.67 22,820.96 $354,603.71 $5,122,427.52
47 $5,122,427.52 $377,424.67 21,343.45 $356,081.22 $4,766,346.29
48 $4,766,346.29 $377,424.67 19,859.78 $357,564.90 $4,408,781.39
49 $4,408,781.39 $377,424.67 18,369.92 $359,054.75 $4,049,726.64
50 $4,049,726.64 $377,424.67 16,873.86 $360,550.81 $3,689,175.83
51 $3,689,175.83 $377,424.67 15,371.57 $362,053.11 $3,327,122.72
52 $3,327,122.72 $377,424.67 13,863.01 $363,561.66 $2,963,561.06
53 $2,963,561.06 $377,424.67 12,348.17 $365,076.50 $2,598,484.56
54 $2,598,484.56 $377,424.67 10,827.02 $366,597.65 $2,231,886.91
55 $2,231,886.91 $377,424.67 9,299.53 $368,125.14 $1,863,761.76
56 $1,863,761.76 $377,424.67 7,765.67 $369,659.00 $1,494,102.76
57 $1,494,102.76 $377,424.67 6,225.43 $371,199.24 $1,122,903.52
58 $1,122,903.52 $377,424.67 4,678.76 $372,745.91 $ 750,157.61
59 $ 750,157.61 $377,424.67 3,125.66 $374,299.02 $ 375,858.60
60 $ 375,858.60 $377,424.67 1,566.08 $375,858.60 $0.00
</TABLE>
- -----------
*Payments 37-60 will be made in a single lump sum payment with payment 36.
6
EXHIBIT 10.5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of June 30, 1999,
is made and entered into by and among EGLOBE FINANCING CORPORATION, a Delaware
corporation ("eGlobe Financing"), IDX FINANCING CORPORATION, a Delaware
corporation ("IDX Financing"), and TELEKEY FINANCING CORPORATION, a Delaware
corporation ("Telekey Financing" and together with eGlobe Financing and IDX
Financing, the "Financing Companies"), and EXTL INVESTORS, LLC, a limited
liability company organized under the laws of Nevada (the "Investor").
WITNESSETH:
WHEREAS, the Financing Companies are collectively issuing and selling
to the Investor, and the Investor is purchasing from the Financing Companies,
the Financing Companies' 5% Secured Notes (the "Secured Notes") and the
Financing Companies are executing and delivering a revolving note based on the
balance of accounts receivable (the "A/R Note" and collectively with the Secured
Notes, the "Notes"), pursuant to the terms and conditions of the Loan and Note
Purchase Agreement dated April 9, 1999 by and among eGlobe Financing, eGlobe,
Inc., a Delaware corporation and the parent corporation of eGlobe Financing (the
"Parent"), and the Investor, as amended by Amendment No. 1 to Loan and Note
Purchase Agreement dated as of the date hereof (as amended, the "Loan and Note
Purchase Agreement");
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings given such terms in the Loan and Note
Purchase Agreement; and
WHEREAS, in connection with the purchase of the Secured Notes and
issuance of the A/R Note, the Investor desires to obtain from the Financing
Companies and the Financing Companies desire to grant to the Investor a security
interest in the collateral more particularly described below.
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. GRANT OF SECURITY INTEREST. For the purpose of securing the
Obligations (as defined below), each Financing Company hereby grants to the
Investor (subject to Section 4(a) hereof) a security interest in all equipment
and other tangible personal property of such Financing Company which is movable
or which are fixtures and which are used or bought for use primarily in such
Financing Company's business, whether now owned or hereafter acquired and
wherever located, together with all
1
<PAGE>
proceeds and products thereof and accessions therefor, including without
limitation the equipment and other property described on Schedule 1 hereto, in
each case only to the extent that the grant by such Financing Company of a
security interest pursuant to this Agreement would not violate any Material
Contract (as defined in the Loan and Note Purchase Agreement) (collectively, the
"Collateral"); provided, however, that should the prohibition on the grant of a
security interest under a Material Contract be extinquished, such security
interest shall immediately attach to such Collateral.
2. THE OBLIGATIONS. The obligations secured hereby shall include (a)
the due and punctual payment (in cash or in Parent Common Stock, pursuant to the
terms of the Notes and the Loan and Note Purchase Agreement) of the principal,
interest and any other amounts payable in respect of the Notes, and (b) all
attorney's fees, court costs and expenses of whatever kind incident to the
collection of any of said indebtedness or other obligations and the enforcement
and protection of the security interest created hereby and (c) the performance
of all obligations under the Loan and Note Purchase Agreement where the failure
to perform would constitute an Event of Default thereunder (collectively, the
"Obligations").
3. REPRESENTATIONS AND WARRANTIES OF THE FINANCING COMPANIES. Each
Financing Company represents and warrants as follows:
(a) Except as set forth on Schedule 1 hereto, such Financing
Company is the owner of the Collateral and has good and marketable
title to the Collateral free and clear of any liens, security
interests, claims and encumbrances except for those in favor of the
Investor and those previously disclosed in writing to the Investor,
contingent or otherwise.
(b) The addresses set forth on Schedule 1 hereto are all of
the locations of all Collateral.
(c) The execution and delivery of this Agreement and the
financing statements delivered in connection herewith by such Financing
Company do not conflict with or violate any Law (including, without
limitation, any judgment or injunction) applicable to such Financing
Company or its assets or properties or any contract or security
agreement to which such Financing Company is a party or by which its
assets or properties are encumbered.
4. COVENANTS. Each Financing Company covenants and agrees as follows:
(a) Except with the prior written consent of the Investor,
such Financing Company will not grant or permit to exist any liens or
security interests other than (i) those created by this Agreement, (ii)
Permitted Liens pursuant to the Loan and Note Purchase Agreement, and
(iii) Encumbrances not prohibited by Section 4.9 of the Loan and Note
Purchase Agreement, to attach to any of the Collateral, nor permit any
of the Collateral to be levied upon under any legal or private process.
To the extent that an item of Collateral is subject to
2
<PAGE>
a Permitted Lien or an Encumbrance not prohibited by such Section 4.9
of the Loan and Note Purchase Agreement, or is included in Schedule 1
hereto as an exception pursuant to Section 3(a), the lien created by
this Agreement is intended to be junior in lien and effect to such
liens and encumbrances, but only if such junior lien is not prohibited
by the terms of any agreement relating to any such liens or
encumbrances. If any such agreement does prohibit such junior lien,
then such item of Collateral shall not be subject to the security
interest contemplated by this Agreement. Such Financing Company shall
use all reasonable efforts to obtain such consents, waivers or
amendments as may be necessary or appropriate to permit such junior
lien, and upon obtaining the same to reflect that such item of
Collateral shall be subject to the security interest contemplated by
this Agreement. Such Financing Company shall promptly notify the
Investor of any default or alleged default by such Financing Company
under any lien prior to the lien created by this Security Agreement on
the Collateral, or any portion thereof.
(b) Such Financing Company will not permit any of the
Collateral to be removed from the location specified on Schedule 1,
except for temporary periods in the normal and customary use thereof,
without the prior written consent of the Investor, and will permit the
Investor to inspect the Collateral at any reasonable time following
reasonable advance notice from the Investor to such Financing Company.
(c) If any of the Collateral is equipment of a type normally
used in more than one state or country (whether or not actually so
used), such Financing Company will contemporaneously herewith furnish
the Investor a list of the states and countries wherein such equipment
is or will be used, and hereafter will notify the Investor in writing
of any other states and countries in which such equipment is so used.
(d) Except as contemplated by the Loan and Note Purchase
Agreement, such Financing Company will not sell, exchange, lease or
otherwise dispose of any of the Collateral or any interest therein
without the prior written consent of the Investor, except for any items
of Collateral which become obsolete or which, in such Financing
Company's reasonable judgment, is no longer useful in the conduct of
such Financing Company's business, or which is replaced by other
Collateral, unless such sale, exchange, lease or other disposition is
on an arm's length basis for fair value and in the ordinary course of
business.
(e) Such Financing Company will, in all material respects,
maintain, preserve and keep the Collateral (whether owned in fee or a
leasehold interest) in good repair and working order, reasonable wear
and tear excepted, and from time to time will make all necessary
repairs, replacements, renewals and additions so that at all times the
economic efficiency thereof will be maintained and will pay and
discharge all taxes, levies and other impositions levied thereon as
well as the cost of repairs to or maintenance of same. If such
Financing
3
<PAGE>
Company fails to pay such sums, the Investor may do so for such
Financing Company's accounts and add the amount thereof to the other
amounts secured hereby.
(f) Such Financing Company will defend the Collateral against
the claims and demands of all persons.
(g) Such Financing Company will pay to the Investor all
amounts secured hereby as and when the same shall be due and payable,
whether at maturity, by acceleration or otherwise, and such payments
shall be made in cash or in Parent Common Stock in accordance with the
terms of the Notes.
(h) Such Financing Company shall carry and maintain in full
force and effect, at all times with financially sound and reputable
institutions, insurance in such forms and amounts and against such
risks as may be reasonable and prudent in the circumstances for a
company holding the assets it will hold as of the Second Closing Date
and as may be required by applicable Laws. Such Financing Company
assigns to the Investor all right to receive proceeds of insurance not
exceeding the amounts secured hereby, directs any insurer to pay all
such proceeds directly to the Investor, and appoints the Investor such
Financing Company's attorney in fact to endorse any draft or check from
such insurer made payable to such Financing Company in order to collect
the benefits of such insurance. Such Financing Company will, to the
extent permitted by such insurance policies, add the Investor as an
additional insured thereunder. If an Event of Default (as defined in
the Loan and Note Purchase Agreement) has occurred and is continuing,
any money received by the Investor under said policies may be applied
to the payment of any indebtedness secured hereby, whether or not due
and payable, otherwise said money shall be delivered by the Investor to
such Financing Company for the purpose of repairing or restoring the
Collateral. If such Financing Company fails to keep the Collateral
insured as required above, the Investor shall have the right to obtain
such insurance at such Financing Company's expense and add the cost
thereof to the other amounts secured hereby.
(i) Such Financing Company will file, and pay all costs of
filing, such financing, continuation and termination statements with
respect to the security interests created hereby as the Investor may
reasonably request, and the Investor is authorized to do all things
that it deems necessary to perfect and continue perfection of the
security interests created hereby.
(j) Such Financing Company shall deliver to the Investor, on a
monthly basis, reports certified by its chief financial officer or
treasurer indicating whether any additional lien or security interest
has been created with respect to the Collateral, indicating the type of
lien or security interest and describing the obligation secured, or
stating that no additional lien has been created.
4
<PAGE>
(k) Such Financing Company shall take or cause to be taken
such further actions, shall execute, deliver, and file or cause to be
executed, delivered, and filed such further documents and instruments,
and shall obtain such consents as may be necessary or as the Investor
may reasonably request to effectuate the purposes, terms, and
conditions of this Agreement, whether before, at or after the closing
of transactions contemplated hereby or the occurrence of an Event of
Default (as defined in the Loan and Note Purchase Agreement).
5. EVENT OF DEFAULT. The occurrence of an Event of Default under the
Loan and Note Purchase Agreement shall constitute an Event of Default hereunder.
6. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence and during the
continuation of an Event of Default, the Investor may exercise any and all
rights and remedies provided by the Uniform Commercial Code (Texas) or other
applicable law, as well as all other rights and remedies possessed by the
Investor pursuant to the Loan and Note Purchase Agreement, all of which shall
(to the extent permitted by law) be cumulative. Any notice of sale, lease or
other intended disposition of the Collateral by the Investor sent to the
Financing Companies at the address hereinafter set forth, at least ten (10) days
prior to such action, shall constitute reasonable notice to the Financing
Companies.
The Investor may waive any Event of Default before or after the same
has been declared without impairing its right to declare a subsequent Event of
Default hereunder.
7. RELEASE OF SECURITY INTEREST. Upon payment in full of all
Obligations, the Investor shall release the security interest created hereby and
shall execute and deliver to the Financing Companies such termination statements
and other agreements and documents as the Financing Companies may reasonably
request to evidence such payment and release.
8. POWER OF ATTORNEY. The Financing Companies hereby constitute the
Investor as the Financing Companies' attorney-in-fact with power, upon the
occurrence and during the continuance of an Event of Default, to do all acts and
things necessary or desirable to enforce the Investor's rights under this
Agreement. This power of attorney is coupled with an interest and is irrevocable
until all of the Obligations are paid in full.
9. NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered, mailed or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for
5
<PAGE>
a party as shall be specified by like changes of address) or sent by electronic
transmission to the telecopier number specified below:
(a) If to the Financing Companies:
eGlobe Financing Corporation
IDX Financing Corporation
Telekey Financing Corporation
2000 Pennsylvania Avenue, NW
Suite 4800
Washington, DC 20006
Telecopier No.: 202-882-8984
Attention: Chairman
(b) If to the Parent:
eGlobe, Inc.
2000 Pennsylvania Avenue, NW
Suite 4800
Washington, DC 20006
Telecopier No.: 202-882-8984
Attention: Chairman
(c) If to the Investor:
EXTL Investors, LLC
850 Cannon, Suite 200
Hurst, TX 76054
Telecopier No.: 817-428-3899
Attention: Ronald Jensen
10. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
12. ENTIRE AGREEMENT. This Agreement (together with the Schedules
delivered pursuant hereto and the Loan and Note Purchase Agreement, as referred
to or incorporated herein) constitutes the entire agreement of the parties and
supersedes all prior agreements and undertakings, both written and oral, between
the parties,
6
<PAGE>
or any of them, with respect to the subject matter hereof, except as otherwise
expressly provided herein, are not intended to confer upon any other person any
rights or remedies hereunder.
13. SPECIFIC PERFORMANCE. The transactions contemplated by this
Agreement are unique. Accordingly, each of the parties acknowledges and agrees
that, in addition to all other remedies to which it may be entitled, each of the
parties hereto is entitled to a decree of specific performance, provided such
party is not in material default hereunder.
14. ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
15. THIRD PARTY BENEFICIARIES. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
16. FEES AND EXPENSES. Except as otherwise provided for in this
Agreement, each party hereto shall pay its own fees, costs and expenses incurred
in connection with this Agreement and in the preparation for and consummation of
the transactions provided for herein.
17. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
18. CONSENT REQUIRED. Any term, covenant, agreement or condition of
this Agreement may, with the consent of the Financing Companies, be amended or
compliance therewith may be waived (either generally or in particular instance
and either retroactively or prospectively), if the Financing Companies shall
have obtained the consent in writing of the Investor.
19. GOVERNING LAW. All corporate law matters arising under this
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, and all other matters arising under this Agreement shall be
governed by and construed in accordance with the laws of the State of Texas, in
each case regardless of the laws that might otherwise govern under applicable
principles of conflicts of law. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the State of Texas
or the state courts of the State of Texas in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions.
7
<PAGE>
Notwithstanding the foregoing, it is the intention of the parties that,
to the extent local law would govern with respect to Collateral located in a
particular jurisdiction, this Agreement shall create a security interest,
floating charge or similar grant of rights under such local law with respect to
Collateral located in such jurisdiction.
20. COUNTERPARTS. This Agreement may be executed and delivered in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
[Remainder of Page Intentionally Left Blank]
8
<PAGE>
IN WITNESS WHEREOF, the Financing Companies and the Investor have
caused this Agreement to be executed as of the date first above written.
EGLOBE FINANCING CORPORATION
By:
--------------------------------
Title:
--------------------------------
Address: 2000 Pennsylvania Avenue, NW
Suite 4800
Washington, DC 20006
IDX FINANCING CORPORATION
By:
--------------------------------
Title:
--------------------------------
Address: 2000 Pennsylvania Avenue, NW
Suite 4800
Washington, DC 20006
TELEKEY FINANCING CORPORATION
By:
--------------------------------
Title:
--------------------------------
Address: 2000 Pennsylvania Avenue, NW
Suite 4800
Washington, DC 20006
EXTL INVESTORS, LLC
By:
--------------------------------
Title:
--------------------------------
Address: 850 Cannon, Suite 200
Hurst, TX 76054
9
<PAGE>
SCHEDULE 1
Collateral, Location, Title Exceptions
--------------------------------------
COLLATERAL DESCRIPTION:
See Attachment A
COLLATERAL LOCATION:
All collateral owned by eGlobe Financing is located at:
4260 E. Evans Avenue
Denver, Colorado 80222
OR
Banehojvej 19 8600
Silkeborg, Denmark
OR
Rm. 2503-4
CLI Building, 313-317,
Hennessy Road
Wanchai Hong Kong
OR
Suite 1
Millpool House, Mill Lane
Godalming Suri GU7EY England
OR
with respect to the Caviars: See Attachment B
All collateral owned by IDX Financing is located at:
11410 Issac Newton Square North, Suite 101
Reston, Virginia 20190
OR
<PAGE>
Rm. 2503-4
CLI Building, 313-317,
Hennessy Road
Wanchai Hong Kong
OR
9F, No. 142, Nan-Kang Rd., Sec. 2
Taipei, Taiwan
All collateral owned by Telekey Financing is located at:
229 Peachtree Street, Suite 1102
Atlanta, Georgia 30303
TITLE EXCEPTIONS:
None
2
EXHIBIT 10.6
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of June 30, 1999,
is made and entered into by and among eGLOBE, INC., a Delaware corporation
("Parent"), and IDX INTERNATIONAL, INC., a Virginia corporation and a wholly
owned subsidiary of Parent (collectively, the "Companies"), and EXTL INVESTORS,
LLC, a limited liability company organized under the laws of Nevada (the
"Investor").
WITNESSETH:
WHEREAS, eGlobe Financing Corporation, a Delaware corporation and a
wholly owned subsidiary of the Parent ("eGlobe Financing"), IDX Financing
Corporation, a Delaware corporation and a wholly owned subsidiary of IDX ("IDX
Financing"), and Telekey Financing Corporation, a Delaware corporation and a
wholly owned subsidiary of Telekey, Inc., a wholly owned subsidiary of the
Parent ("Telekey Financing" and together with eGlobe Financing and IDX
Financing, the "Financing Companies"), are issuing and selling to the Investor
on the date hereof, and the Investor is purchasing from the Financing Companies,
the Financing Companies' 5% Secured Notes (the "Secured Notes") and the
Financing Companies are executing and delivering a revolving note based on the
balance of accounts receivable (the "A/R Note" and collectively with the Secured
Notes, the "Notes"), pursuant to the terms and conditions of the Loan and Note
Purchase Agreement dated April 9, 1999 by and among eGlobe Financing, the
Parent, and the Investor, as amended by Amendment No. 1 to the Loan and Note
Purchase Agreement dated as of the date hereof (as amended, the "Loan and Note
Purchase Agreement"); and
WHEREAS, the Companies are guaranteeing the payment and performance by
the Financing Companies of obligations under the Loan and Note Purchase
Agreement as more fully set forth in the Guaranty, dated as of June _, 1999 for
the benefit of the Investor (the "Guaranty"); and
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings given such terms in the Loan and Note
Purchase Agreement; and
WHEREAS, in connection with the purchase and guaranty of the Secured
Notes and the issuance of the A/R Note, the Investor desires to obtain from the
Companies and the Companies desire to grant to the Investor a security interest
in the collateral more particularly described below.
1
<PAGE>
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. GRANT OF SECURITY INTEREST. For the purpose of securing the
Obligations (as defined below), each Company hereby grants to the Investor
(subject to Section 4(a) hereof) a security interest in all accounts of any
Company now or hereafter acquired, including without limitation all present or
future accounts receivable, all rights to payment for goods sold or leased or to
be sold or leased or for services rendered or to be rendered, whether or not
earned by performance, all rights in any merchandise or goods which any of the
same may represent, all notes receivables, book debts, notes, bills, drafts,
acceptances, choses in action, contract rights, instruments and documents and
all sums of money due or to become due thereon and all proceeds thereof and all
rights, title, security interests and guarantees with respect to each of the
foregoing, in each case only to the extent that the grant by such Company of a
security interest pursuant to this Agreement would not violate any Material
Contract (as defined in the Loan and Note Purchase Agreement) (collectively, the
"Collateral").
2. THE OBLIGATIONS. The obligations secured hereby shall include (a)
the due and punctual payment of all obligations under the Guaranty, (b) all
attorney's fees, court costs and expenses of whatever kind incident to the
collection of any of said obligations and the enforcement and protection of the
security interest created hereby and (c) the performance of all obligations
under the Guaranty where the failure to perform would constitute an event of
default thereunder (collectively, the "Obligations").
3. REPRESENTATIONS AND WARRANTIES. Each Company represents and warrants
as follows:
(a) Except as set forth on Schedule 1 hereto, such Company is
the owner of the applicable portion of the Collateral and has good and
marketable title to such Collateral free and clear of any liens,
security interests, claims and encumbrances except for those in favor
of the Investor and those previously disclosed in writing to the
Investor, contingent or otherwise.
(b) The addresses set forth on Schedule 2 hereto are all of
the locations of all of the books and records regarding the Collateral.
(c) The execution and delivery of this Agreement and the
financing statements delivered in connection herewith by the Companies
do not conflict with or violate any Law (including, without limitation,
any judgment or injunction) applicable to any Company or its assets or
properties or any
2
<PAGE>
Material Contract or security agreement to which any Company is a party
or by which its assets or properties are encumbered.
4. COVENANTS. Each Company covenants and agrees as follows:
(a) Except with the prior written consent of the Investor,
such Company will not grant or permit to exist any liens or security
interests other than (i) those created by this Agreement, and (ii)
items described in clauses (ii), (iii) or (iv) of the definition of
Permitted Liens in the Loan and Note Purchase Agreement.
(b) No Company will change the location of its chief executive
office unless it shall have given the Investor prior written notice
thereof.
(c) Except as contemplated by the Loan and Note Purchase
Agreement, no Company will sell, exchange or otherwise dispose of any
of the Collateral or any interest therein without the prior written
consent of the Investor, unless such sale, exchange or other
disposition is on an arm's length basis for fair value and in the
ordinary course of business.
(d) Such Company will defend the applicable portion of the
Collateral against the claims and demands of all persons.
(e) Such Company will pay to the Investor all amounts secured
hereby as and when the same shall be due and payable, whether at
maturity, by acceleration or otherwise, and such payments shall be made
in accordance with the terms of the Guaranty.
(f) Such Company will file, and pay all costs of filing, such
financing, continuation and termination statements with respect to the
security interests created hereby as the Investor may reasonably
request, and the Investor is authorized to do all things that it deems
necessary to perfect and continue perfection of the security interests
created hereby.
(g) The Company shall deliver to the Investor, on a monthly
basis, within 20 days after the end of each month, reports certified by
its chief financial officer or treasurer (1) indicating the aggregate
amount of accounts receivable of the Companies and the amount of the
Collateral as of such month, and (2) confirming that there are no liens
or security interests outstanding with respect to the Collateral (or if
there are any, indicating the type of lien or security interest and
describing the obligation secured). Such reports shall be in a form
requested by the Investor and reasonably acceptable to the Companies.
3
<PAGE>
(h) Such Company shall take or cause to be taken such further
actions, shall execute, deliver, and file or cause to be executed,
delivered, and filed such further documents and instruments, and shall
obtain such consents as may be necessary or as the Investor may
reasonably request to effectuate the purposes, terms, and conditions of
this Agreement, whether before, at or after the closing of transactions
contemplated hereby or the occurrence of an Event of Default (as
defined in the Loan and Note Purchase Agreement).
5. EVENT OF DEFAULT. The occurrence of an Event of Default under the
Loan and Note Purchase Agreement shall constitute an Event of Default hereunder.
6. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence and during the
continuation of an Event of Default, the Investor may exercise any and all
rights and remedies provided by the Uniform Commercial Code (Texas) or other
applicable law, as well as all other rights and remedies possessed by the
Investor pursuant to the Guaranty, all of which shall (to the extent permitted
by law) be cumulative. Any notice of sale or other intended disposition of the
Collateral by the Investor sent to the Companies at the address hereinafter set
forth, at least ten (10) days prior to such action, shall constitute reasonable
notice to the Companies.
The Investor may waive any Event of Default before or after the same
has been declared without impairing its right to declare a subsequent Event of
Default hereunder.
7. RELEASE OF SECURITY INTEREST. Upon payment in full of all
Obligations, the Investor shall release the security interest created hereby and
shall execute and deliver to the Companies such termination statements and other
agreements and documents as any Company may reasonably request to evidence such
payment and release.
8. POWER OF ATTORNEY. The Companies hereby constitute the Investor as
the Companies' attorney-in-fact with power, upon the occurrence and during the
continuance of an Event of Default, to do all acts and things necessary or
desirable to enforce the Investor's rights under this Agreement. This power of
attorney is coupled with an interest and is irrevocable until all of the
Obligations are paid in full.
9. NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered, mailed or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier number
specified below:
4
<PAGE>
(a) If to the Companies:
c/o eGlobe, Inc.
2000 Pennsylvania Avenue, NW
Suite 4800
Washington, DC 20006
Telecopier No.: 202-882-8984
Attention: Chairman
(b) If to the Investor:
EXTL Investors, LLC
850 Cannon, Suite 200
Hurst, TX 76054
Telecopier No.: 817-428-3899
Attention: Ronald Jensen
10. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
12. ENTIRE AGREEMENT. This Agreement (together with the Schedules
delivered pursuant hereto, the Guaranty and the Loan and Note Purchase
Agreement, as referred to or incorporated herein) constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof, except as otherwise expressly provided herein, are not
intended to confer upon any other person any rights or remedies hereunder.
13. SPECIFIC PERFORMANCE. The transactions contemplated by this
Agreement are unique. Accordingly, each of the parties acknowledges and agrees
that, in addition to all other remedies to which it may be entitled, each of the
5
<PAGE>
parties hereto is entitled to a decree of specific performance, provided such
party is not in material default hereunder.
14. ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
party. Subject to the preceding sentence, this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
15. THIRD PARTY BENEFICIARIES. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
16. FEES AND EXPENSES. Except as otherwise provided for in this
Agreement, each party hereto shall pay its own fees, costs and expenses incurred
in connection with this Agreement and in the preparation for and consummation of
the transactions provided for herein.
17. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
18. CONSENT REQUIRED. Any term, covenant, agreement or condition of
this Agreement may, with the consent of the Companies, be amended or compliance
therewith may be waived (either generally or in particular instance and either
retroactively or prospectively), if the Companies shall have obtained the
consent in writing of the Investor.
19. GOVERNING LAW. All corporate law matters arising under this
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, and all other matters arising under this Agreement shall be
governed by and construed in accordance with the laws of the State of Texas, in
each case regardless of the laws that might otherwise govern under applicable
principles of conflicts of law. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the State of Texas
or the state courts of the State of Texas in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions.
Notwithstanding the foregoing, it is the intention of the parties that,
to the extent local law would govern with respect to Collateral located in a
particular jurisdiction, this Agreement shall create a security interest,
floating charge or similar grant of rights under such local law with respect to
Collateral located in such jurisdiction.
6
<PAGE>
20. COUNTERPARTS. This Agreement may be executed and delivered in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
[Remainder of Page Intentionally Left Blank]
7
<PAGE>
IN WITNESS WHEREOF, the Companies and the Investor have caused this
Agreement to be executed as of the date first above written.
EGLOBE, INC.
By:
--------------------------------
Title:
--------------------------------
Address: 2000 Pennsylvania Avenue, NW
Suite 4800
Washington, DC 20006
IDX FINANCING CORPORATION
By:
--------------------------------
Title:
--------------------------------
Address: 11410 Issac Newton Square North
Suite 101
Reston, Virginia 20190
EXTL INVESTORS, LLC
By:
--------------------------------
Title:
--------------------------------
Address: 850 Cannon, Suite 200
Hurst, TX 76054
8
<PAGE>
SCHEDULE 1
Title Exceptions
----------------
Parent has granted a security interest in a certain account maintained
at Norwest Bank Colorado in connection with a Letter of Credit relating to IDX
International, Inc.
<PAGE>
SCHEDULE 2
Location of Books and Records
-----------------------------
The books and records of the Parent are located at:
4260 E. Evans Avenue
Denver, Colorado 80222
The books and records of the IDX International, Inc. are located at:
11410 Issac Newton Square North, Suite 101
Reston, Virginia 20190
EXHIBIT 10.7
GUARANTY
This Guaranty (this "Guaranty") is made and executed as of
June 30, 1999 by eGLOBE, INC., a Delaware corporation (the "Parent"), and IDX
INTERNATIONAL, INC., a Virginia corporation and a wholly owned subsidiary of the
Parent ("IDX") (hereinafter collectively called the "Guarantor"), in favor of
EXTL INVESTORS, LLC, a limited liability company organized under the laws of
Nevada (hereinafter called the "Investor").
WHEREAS, eGlobe Financing Corporation, a Delaware corporation
and a wholly owned subsidiary of the Parent ("eGlobe Financing"), IDX Financing
Corporation, a Delaware corporation and a wholly owned subsidiary of IDX ("IDX
Financing"), and Telekey Financing Corporation, a Delaware corporation and a
wholly owned subsidiary of Telekey, Inc., a wholly owned subsidiary of the
Parent ("Telekey Financing" and together with eGlobe Financing and IDX
Financing, the "Borrower"), is issuing and selling to the Investor on the date
hereof, and the Investor is purchasing from the Borrower, the Borrower's 5%
Secured Notes (the "Secured Notes") and the Borrower is executing and delivering
a revolving note based on the balance of accounts receivable (the "A/R Note" and
collectively with the Secured Notes, the "Notes"), pursuant to the terms and
conditions of the Loan and Note Purchase Agreement dated April 9, 1999 by and
among eGlobe Financing, the Parent, and the Investor, as amended by Amendment
No. 1 to the Loan and Note Purchase Agreement dated as of the date hereof (as
amended, the "Loan and Note Purchase Agreement"); and
WHEREAS, in connection with the purchase of the Secured Notes
and issuance of the A/R Note, the Investor desires to obtain from the Guarantor
and the Guarantor desires to provide to the Investor the guaranty more fully set
forth below;
NOW, THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby agrees as follows:
1. The Guarantor hereby unconditionally guarantees to the
Investor the due, timely and full payment and satisfaction by Borrower of all
its obligations that arise under the Loan and Note Purchase Agreement and the
Notes on or after the date hereof, including, without limitation, payment in
full, when due, of the indebtedness evidenced by the Notes and the due, timely
and complete performance by the Borrower of all of its other agreements, terms
and covenants under the Loan and Note Purchase Agreement and the Notes, provided
that a violation of such other agreements, terms and covenants would constitute
an Event of Default under the Loan and Note Purchase Agreement or the applicable
Note
<PAGE>
(collectively, the "Guaranteed Obligations"). The obligations of the Guarantor
hereunder are absolute and unconditional and this Guaranty is a continuing
guaranty of payment and performance by Borrower which will not terminate until
the Guaranteed Obligations shall have been paid and performed in full.
2. The Investor may, at the Investor's option, proceed to
enforce this Guaranty directly against the Guarantor without first proceeding
against Borrower or any other person liable for payment or performance under the
Loan and Note Purchase Agreement, the Secured Notes, the A/R Note or this
Guaranty and without first proceeding against or exhausting any collateral now
or hereafter held by the Investor to secure payment or performance under the
Loan and Note Purchase Agreement, the Secured Notes, the A/R Note or the
Security Agreement securing this Guaranty (the "Security Agreement").
3. The Guarantor waives diligence, presentment, protest,
notice of dishonor, demand for payment, notice of nonpayment or nonperformance,
notice of acceptance of this Guaranty, notice of intention to accelerate, notice
of acceleration, and all other notices of any nature in connection with the
exercise of the Investor's rights under the Loan and Note Purchase Agreement,
the Secured Notes, the A/R Note, the Security Agreement or this Guaranty.
Performance by the Guarantor hereunder will not entitle the Guarantor to any
payment by Borrower under any claim for contribution, indemnification,
subrogation or otherwise, and the Guarantor hereby irrevocably waives and
relinquishes any and all rights to recover from Borrower, whether by way of
subrogation, reimbursement, indemnity, contribution, or otherwise, any amounts
paid by the Guarantor under this Guaranty until such time as the Guaranteed
Obligations have been paid and performed in full.
4. The Guarantor hereby consents and agrees that renewals and
extensions of time of payment, surrender, release, exchange, substitution,
dealing with or taking of additional collateral security, taking or release of
other guarantees, abstaining from taking advantage of or realizing upon any
collateral security or other guarantees and any and all other forbearances or
indulgences granted by the Investor to Borrower or any other party may be made,
granted and effected by the Investor without notice to the Guarantor and without
in any manner affecting the Guarantor's liability hereunder.
5. Nothing herein contained will limit the Investor in
exercising any rights held under the Loan and Note Purchase Agreement, the
Secured Notes, the A/R Note or the Security Agreement. In the event of any
default under the Loan and Note Purchase Agreement, the Secured Notes, the A/R
Note, the Security Agreement or this Guaranty, the Investor will be entitled
selectively and successively to enforce any one or more of the rights held by
the Investor hereunder or thereunder and such action will not be deemed a waiver
of any other right held by the Investor. All of the remedies of the Investor
under this Guaranty, the Loan
<PAGE>
and Note Purchase Agreement, the Secured Notes, the A/R Note and the Security
Agreement are cumulative and not alternative. If the Investor elects to
foreclose any lien created by the Loan and Note Purchase Agreement, the Secured
Notes, the A/R Note or the Security Agreement, the Investor is authorized to
purchase for the Investor's account all or any part of the collateral covered by
such lien at public or private sale.
6. In the event that a petition in bankruptcy for an
arrangement or reorganization of Borrower under any bankruptcy law or for the
appointment of a receiver for Borrower or any of its property is filed by
Borrower, or if Borrower shall make an assignment for the benefit of creditors
or shall become insolvent, all indebtedness of Borrower shall, for the purpose
of this Guaranty, be deemed at the Investor's election to have become
immediately due and payable.
7. The Guarantor further agrees to pay the Investor any and
all costs, expenses and reasonable attorneys' fees paid or incurred by the
Investor in enforcing or endeavoring to enforce this Guaranty.
8. If any provision of this Guaranty is held to be invalid,
illegal or unenforceable in any respect for any reason, such invalidity,
illegality or unenforceability will not affect any other provisions herein
contained and such other provisions will remain in full force and effect. This
Guaranty will be binding on the Guarantor and all successors and assigns of the
Guarantor and will inure to the benefit of the Investor and all successors and
assigns of the Investor. The Guarantor consents to the assignment of all or any
portion of the rights of the Investor hereunder in connection with any
assignment of the rights of the Investor under the Loan and Note Purchase
Agreement, without notice to the Guarantor.
9. If any payment or thing of value should be received and
accepted by the Investor in payment of any indebtedness or obligation of
Borrower under the Loan and Note Purchase Agreement or any Note and it should
subsequently be determined or adjudged that such payment be void or voidable
under any law or statute now or hereafter in effect, the receipt of such payment
by the Investor shall, as to the Guarantor, be deemed a provisional receipt and
if any such payment should be avoided or set aside under any such law or statute
the Guarantor shall be and remain liable to the Investor in respect thereof as
if such payment had not been received by the Investor, notwithstanding any
release or discharge of this Guaranty issued or granted by the Investor in the
belief or assumption that its receipt of such payment was absolute and not
subject to any avoidance or set aside.
10. The terms "the Guarantor" and "Borrower" and any pronouns
referring thereto as used herein shall be construed in the masculine, feminine,
neuter, singular or plural as the context may require.
<PAGE>
11. The obligations of each of the parties hereto which are
included in the defined term "the Guarantor" are joint and several.
12. This Agreement may not be amended except by an instrument
in writing signed by the parties hereto.
13. All corporate law matters arising under this Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware, and all other matters arising under this Agreement shall be governed
by and construed in accordance with the laws of the State of Texas, in each case
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the State of Texas or the
state courts of the State of Texas in connection with any dispute arising under
this Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions.
14. This Agreement may be executed and delivered in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed as of the day and year first above written.
EGLOBE, INC.
By:
--------------------------------
Title:
--------------------------------
Address: 2000 Pennsylvania Avenue, NW
Suite 4800
Washington, DC 20006
IDX FINANCING CORPORATION
By:
--------------------------------
Title:
--------------------------------
Address: 11410 Issac Newton Square North
Suite 10
Reston, Virginia 20190
EXTL INVESTORS, LLC
By:
--------------------------------
Title:
--------------------------------
Address: 850 Cannon, Suite 200
Hurst, TX 76054
EXHIBIT 10.8
ACCOUNTS RECEIVABLE REVOLVING CREDIT NOTE
June 30, 1999 $20,000,000.00
FOR VALUE RECEIVED, EGLOBE FINANCING CORPORATION, a Delaware
corporation ("eGlobe Financing"), IDX FINANCING CORPORATION, a Delaware
corporation, and TELEKEY FINANCING CORPORATION, a Delaware corporation
(collectively, the "Maker"), promises to pay to the order of EXTL INVESTORS,
LLC, a limited liability company organized under the laws of Nevada (the
"Holder"), at 850 Cannon, Suite 200, Hurst, TX 76054, or at such other place as
the Holder of this Note may from time to time designate, Twenty Million and
No/100 Dollars or such amounts as may be advanced from time to time by the
Holder pursuant to Section 1.6 of the Loan and Note Purchase Agreement dated as
of April 9, 1999, by and among the eGlobe Financing, Executive TeleCard, Ltd., a
Delaware corporation (the "Parent"), and the Holder and amended by Amendment No.
1 to Loan and Note Purchase Agreement dated as of the date hereof (the "Loan and
Note Purchase Agreement"), and remain outstanding, together with any accrued but
unpaid interest thereon, on the terms and conditions set forth below.
This Note is the "A/R Note" referred to in the Loan and Note
Purchase Agreement. A borrowing base certificate in the form attached hereto as
Exhibit A executed by Parent's chief financial officer shall be submitted in
connection with each request for an advance hereunder and on the first day of
each month that a principal balance under this Note is outstanding. Capitalized
terms used but not defined herein shall have the meanings set forth in the Loan
and Note Purchase Agreement.
The entire principal amount of this Note shall be repaid to
the Holder, together with any accrued but unpaid interest thereon, on the
earliest to occur of a single payment on the earlier to occur of (i) the third
anniversary of the date hereof or (ii) the date of closing of a Qualified
Offering (the "Note Maturity Date").
This Note shall bear interest on the unpaid portion of the
principal amount outstanding from time to time until the unpaid portion of the
principal shall have become due and payable (whether on the Note Maturity Date,
by acceleration or otherwise), at the Note Interest Rate. Interest shall be due
and payable to the Holder in arrears on the first day of each month, commencing
on the first day of the month following the date hereof (each, an "Interest
Payment Date"), until and including the Note Maturity Date. To the extent not
prohibited by applicable law, this Note shall bear interest on overdue
principal, on any overdue amounts arising out of a required or optional
prepayment of principal and on any overdue installment of interest at the Note
Overdue Rate, from after the date on
<PAGE>
which such amounts were due and payable, whether by acceleration or otherwise,
until paid.
Payments of principal and interest on this Note shall be paid in cash
in lawful money of the United States of America.
Whenever any payment to be made under or with respect to this
Note shall be stated to be due on any day other than a Business Day, such
payment may be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of interest due on such
date.
This Note may be prepaid without premium or penalty, at the
option of the Maker exercised by written notice to the Holder, at any time in
whole or from time to time in part in integral multiples of $100,000. Any
prepayment will be applied first to accrued interest and then to payment of
principal. If this Note is prepaid only in part, this Note shall be surrendered
at the Company's principal office and the payment shall be recorded directly on
this Note or by an amendment thereto.
Either the Holder or the Maker may in its discretion, keep
records of amounts advanced and prepaid hereunder. Upon the reasonable request,
the Holder and the Maker shall reconcile their respective records and agree in
writing on the aggregate amounts advanced and prepaid hereunder.
This Note is secured by and shall be entitled to the benefits
of the Security Agreements. In addition, this Note is guaranteed by and shall be
entitled to the benefits of the Guaranty Agreement, which in turn is secured by
and entitled to the benefits of the Parent Security Agreement.
The occurrence of any Event of Default under and as defined in
the Loan and Note Purchase Agreement shall constitute an "Event of Default"
hereunder.
If an Event of Default exists hereunder, the Holder may
exercise any right, power or remedy which the Holder may have under the Loan and
Note Purchase Agreement if the corresponding Event of Default exists under and
as defined in the Loan and Note Purchase Agreement.
In the event the interest provisions hereof or any exactions
provided for herein or in the Loan and Note Purchase Agreement shall result in
an effective rate of interest which, for any period of time, exceeds the limit
of any usury or other law applicable to the transactions evidenced hereby, all
sums in excess of those lawfully collectible as interest for the period in
question shall, without further agreement or notice between or by any party
hereto, be applied toward repayment of outstanding principal immediately upon
receipt of such moneys by the Holder with the same force and effect as if the
Maker had specifically designated such extra sums to be so applied
<PAGE>
to principal and the Holder had agreed to accept such extra payments in
repayment of the principal balance hereof. Notwithstanding the foregoing,
however, the Holder may at any time and from time to time elect, by notice in
writing to the Maker, to reduce or limit the collection of any interest to such
sums which shall not result in any payment of interest in excess of that
lawfully collectable. The Maker agrees that in determining whether or not any
interest payable under this Note exceeds the highest rate permitted by law, any
non-principal payment shall be deemed to the extent permitted by law to be an
expense, fee, premium or penalty, rather than interest.
The Maker expressly waives presentment for payment, demand,
notice of dishonor, protest, notice of protest, diligence of collection, notice
of intention to accelerate, notice of acceleration, and (except as otherwise
expressly provided herein or in the Loan and Note Purchase Agreement to the
contrary) any similar notice of any kind, and hereby consents to any number of
renewals and extensions of time of payment hereof, which renewals and extensions
shall not affect the liability of the Maker.
The Maker promises to pay all costs and expenses (including,
without limitation, attorneys' fees and disbursements) incurred in connection
with the collection thereof.
Without the prior written consent of the Maker, this Note may
not be transferred except to an Affiliate of the Holder, to Mr. Ronald Jensen,
to a member of Mr. Jensen's immediate family or an Affiliate of either.
Neither this Note nor any of the rights, interests or
obligations of the Maker hereunder shall be assigned in any respect without the
prior written consent of the Holder. Whenever used herein, the words "the Maker"
and "the Holder" shall be deemed to include their respective successors and
permitted assigns.
All communications required or permitted by this Note shall be in
accordance with Section 7.1 of the Loan and Note Purchase Agreement.
If any term, condition or other provision of this Note is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms, conditions and provisions of this Note shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Note so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
This Note may not be amended except by an instrument in
writing signed by the Maker and the Holder.
<PAGE>
This Note shall be governed by and construed in accordance
with the laws of the State of Texas, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law. The Maker consents to
the jurisdiction of the federal courts whose districts encompass any part of the
State of Texas or the state courts of the State of Texas in connection with any
dispute arising under this Note and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions.
IN WITNESS WHEREOF, the undersigned has caused this Note to be
duly executed and delivered as of the day and year first written above.
EGLOBE FINANCING CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
IDX FINANCING CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
EXTL INVESTORS, LLC
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
EXHIBIT 99.1
WEDNESDAY JULY 7, 7:00 AM EASTERN TIME
COMPANY PRESS RELEASE
SOURCE: eGlobe
EGLOBE ANNOUNCES COMPLETION OF $20 MILLION FINANCING
WASHINGTON, July 7 /PRNewswire/ -- eGlobe (Nasdaq: EGLO) today
announced it completed the $20 million long-term financing that was approved by
shareholders at its Annual Meeting held June 16, 1999. The funding arrangement
is with EXTL Investors, LLC, eGlobe's largest shareholder.
The financing will be used to repay an interim one-year loan
of $7 million that served as a bridge to the full facility and to repay the $7.5
million debt outstanding to IDT Corp. The remainder of the facility will be used
to fund capital expenditures relating to the expansion of the Company's network
of Internet Protocol (IP) trunks and Intelligent platforms, as well as for
working capital and general corporate purposes.
As previously reported, the $20 million is in the form of
three-year 5% secured notes and attached warrants. eGlobe is a leading supplier
of global enhanced telecommunications and information services, including
Internet voice and fax, calling card services along with related validation,
billing and payment systems, and other international Intranet and
inter-networking services in partnership with telecommunications operators
around the world. Operating through its World Direct network, eGlobe originates
traffic in 90 territories and countries and terminates anywhere in the world.
eGlobe provides its services principally to telecommunications companies and
financial institutions.
Certain statements in this news release are "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 and involve known and unknown risks, uncertainties and other factors
that may cause the Company's actual results, performance or achievements to be
materially different from the results, performance or achievements expressed or
implied by the forward looking statement. Factors that impact such forward
looking statements include, among others, the ability of the Company to attract
additional business, the ability of the Company to successfully integrate the
IDX acquisition, complete software development and offer new products, changes
in expectations regarding restructuring, including tax liabilities and
reductions in cost, possible changes in collections of accounts receivable,
risks of competition, price and margin trends, changes in worldwide general
economic conditions, changes in interest rates, currency rates and worldwide
competition.
