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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of
earliest event reported): December 29, 1999
VIATEL, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 000-21261 13-3787366
(State or Other (Commission (I.R.S. Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
Viatel, Inc.
685 Third Avenue
New York, New York 10017
(Address of Principal Executive Offices, Including Zip Code)
Registrant's telephone number, including area code: 212-350-9200
Exhibit List Appears on Page 4
Page 1 of 4 Pages
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Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements of Businesses Acquired.
Not Applicable
(b) Pro Forma Financial Information.
Not Applicable
(c) Exhibits.
The following exhibits are filed with this Report.
Exhibit No. Description.
3(i)(2) Certificate of Designations of Series A Junior Participating
Preferred Stock of Viatel, Inc.
10.36 Third Amended and Restated Equipment Loan and Security
Agreement, dated as of November 5, 1999, between NTFC
Capital Corporation and Destia Communications, Inc.
2
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SIGNATURES
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.
VIATEL, INC.
Date: December 29, 1999 By: /s/ James P. Prenetta
--------------------------
Name: James P. Prenetta
Title: Vice President and General
Counsel
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EXHIBIT LIST
Exhibit No. Description
3(i)(2) Certificate of Designations of Series A Junior Participating
Preferred Stock of Viatel, Inc.
10.36 Third Amended and Restated Equipment Loan and Security Agreement,
dated as of November 5, 1999, between NTFC Capital Corporation
and Destia Communications, Inc.
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Exhibit 3(i)(2)
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
VIATEL, INC.
The undersigned hereby certifies that he is Senior Vice President,
Business and Legal Affairs of Viatel, Inc. (the "Corporation"), that the
Corporation is a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Law") and that, pursuant to
authority vested in the Board of Directors of the Corporation in accordance with
the provisions of the Amended and Restated Certificate of Incorporation of the
Corporation, as amended, the following resolution was duly adopted by the Board
of Directors of the Corporation as required by Section 151 of the Law at a
meeting duly called and held on December 6, 1999:
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of the Corporation in accordance
with the provisions of the Amended and Restated Certificate of
Incorporation of the Corporation, as amended, the Board of
Directors of the Corporation hereby creates a series of
Preferred Stock, par value $.01 per share (the "Preferred
Stock"), of the Corporation and hereby states the designation
and number of shares, and fixes the voting and other powers,
preferences and relative, participating, optional or other
rights thereof and the qualifications, limitations and
restrictions thereon, as follows:
Section I. DESIGNATION AND AMOUNT. There shall be a series of
Preferred Stock designated as "Series A Junior Participating Preferred Stock"
(the "Series A Preferred Stock") and the number of shares constituting the
Series A Preferred Stock shall be 1,000. Such number of shares may be increased
or decreased by resolution of the Board of Directors; PROVIDED, HOWEVER, that no
decrease shall reduce the number of shares to a number less than the number of
shares then outstanding plus the number of shares then reserved for issuance
upon the exercise of outstanding options, rights or warrants or upon the
conversion or exchange of outstanding securities issued by the Corporation
convertible into or exchangeable for Series A Preferred Stock.
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Section II. DIVIDENDS AND DISTRIBUTIONS.
A. Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock (or any similar stock) ranking prior
and superior to the Series A Preferred Stock with respect to dividends, the
holders of shares of Series A Preferred Stock, in preference to the holders of
Common Stock, par value $.01 per share, of the Corporation (the "Common Stock")
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable in
cash on the 15th day of April, July, October and January in each year (each such
date being called as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $420,000 or (b) the Adjustment
Number (as defined below) times the aggregate per share amount of all cash
dividends, plus the fair value, as determined by the Board of Directors upon the
advice of a nationally recognized investment banking firm selected in good faith
by the Board of Directors, of all non-cash dividends and other distributions
(other than dividends payable in shares of Common Stock) declared on the Common
Stock since the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. The "Adjustment
Number" shall initially be 200,000. In the event the Corporation shall at any
time after December 24, 1999 (the "Rights Declaration Date"): (i) declare and
pay any dividend on Common Stock payable in shares of Common Stock; (ii)
subdivide the outstanding Common Stock; or (iii) combine the outstanding shares
of Common Stock into a smaller number of shares, then in each such case the
Adjustment Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. (References herein to the
Adjustment Amount shall mean the Adjustment Amount as in effect at the relevant
time).
B. The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this Section II
immediately after it declares a dividend or distribution on Common Stock (other
than a dividend payable in shares of Common Stock); PROVIDED, that, in the event
no dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $420,000 per share on the Series
A Preferred Stock shall nevertheless be declared for payment on such subsequent
Quarterly Dividend Payment Date.
C. Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of first issuance of any shares of Series A
Preferred Stock, unless the date of issuance of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on shares of Series A Preferred Stock shall begin to accrue from the
date of issuance thereof, or unless the date of issuance of such shares is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
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either of which cases dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on shares of Series A Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.
Section III. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
A. Subject to the provision for adjustment set forth herein,
each share of Series A Preferred Stock shall entitle the holder thereof to a
number of votes equal to the Adjustment Number (as then adjusted) on all matters
submitted to a vote of the holders of Common Stock.
B. Except as otherwise provided herein or required by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of holders of Common Stock.
C. Except as otherwise set forth herein or required by law,
the holders of Series A Preferred Stock shall have no voting or approval rights
separate or apart from their right to vote with holders of shares of Common
Stock as set forth herein.
Section IV. CERTAIN RESTRICTIONS.
A. Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section II
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on the Series A Preferred Stock shall
have been paid in full, the Corporation shall not:
1. declare or pay dividends, or make any other distributions,
on any shares of Common Stock or other stock ranking junior (either as
to dividends or upon liquidation or dissolution) to the Series A
Preferred Stock;
2. declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation or dissolution) with the Series A Preferred Stock,
except dividends paid ratably on Series A Preferred Stock and shares of
such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares
are then entitled;
3. redeem, purchase or otherwise acquire shares of any Common
Stock or other stock ranking junior (either as to dividends or upon
liquidation or dissolution) to the Series A Preferred Stock, provided
that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any
other stock of the Corporation ranking junior (both as to dividends and
upon dissolution or liquidation) to the Series A Preferred Stock; or
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4. redeem, purchase or otherwise acquire any shares of Series
A Preferred Stock or any shares of stock ranking on a parity with the
Series A Preferred Stock, except in accordance with a purchase offer
made to the holders of all such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates
and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
B. The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section V. REACQUIRED SHARES. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation or any subsidiary
of the Corporation in any manner shall be promptly retired. All such shares
shall upon their retirement become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock created in
accordance with the Amended and Restated Certificate of Incorporation, as
amended, and the Law.
Section VI. LIQUIDATION OR DISSOLUTION.
(A) Upon any liquidation or dissolution of the Corporation (which terms
include a winding up of the Corporation, voluntary or otherwise), no
distribution shall be made on any shares of stock ranking junior (either as to
dividends or upon liquidation or dissolution) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock shall
have received an amount per share (the "Series A Liquidation Preference") equal
to the greater of (i) $42,000,000 plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment or (ii) the Adjustment Number times the per share amount of all
cash and other property to be distributed on the Common Stock upon such
liquidation or dissolution.
(B) If there are not sufficient assets available to permit payment in
full of the Series A Liquidation Preference and the liquidation preferences of
all other classes and series of stock of the Corporation that rank on a parity
with the Series A Preferred Stock in respect thereof, then the assets available
for such distribution shall be distributed ratably to the holders of the Series
A Preferred Stock and the holders of such parity stock in proportion to their
respective liquidation preferences.
(C) Neither the merger or consolidation of the Corporation into or with
another corporation (or other entity) nor the merger or consolidation of another
corporation (or other entity) into or with the Corporation shall be deemed to be
a liquidation or dissolution of the Corporation within the meaning of this
Section VI.
Section VII. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
shares of Common Stock are exchanged for or changed into other stock,
securities, cash and/or other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share equal to the Adjustment Number times the
aggregate
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amount of stock, securities, cash and/or other property, as the case may be,
into which or for which each share of Common Stock is changed or exchanged.
Section VIII. NO REDEMPTION. The shares of Series A Preferred Stock
shall not be redeemable.
Section IX. RANKING. The Series A Preferred Stock shall, with respect
to payments of dividends and rights upon liquidation or dissolution, rank: (a)
senior and prior to (i) the Common Stock and (ii) any series of preferred stock
of the Corporation which is stated to be junior to the Series A Preferred Stock;
(b) PARI PASSU with (i) any series of preferred stock of the Corporation which
is not stated to be senior to or junior to the Series A Preferred Stock; and (c)
junior and subordinate to any series of preferred stock of the Corporation which
is stated to be senior to the Series A Preferred Stock. Determination as to
whether any such statements has shall be made by reference to the Certificate of
Incorporation of the Corporation, as then in effect.
Section X. AMENDMENT. At any time that shares of Series A Preferred
Stock are outstanding, the Certificate of Incorporation of the Corporation as
then in effect shall not be amended in any manner which would materially alter
or change the powers, preferences or rights of the Series A Preferred Stock so
as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
Section XI. FRACTIONAL SHARES. Series A Preferred Stock may be issued
in fractions of a share that shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
Section XII. MISCELLANEOUS. The rights of holders of Series A Preferred
Stock shall, to the extent not inconsistent with this resolution, be the same as
those of holders of Common Stock.
This Certificate of Designations shall become effective at 9:00 a.m. on
December 24, 1999.
IN WITNESS WHEREOF, this Certificate of Designations has been executed
on this 6th day of December, 1999.
By: /s/ SHELDON M. GOLDMAN
-------------------------------
Sheldon M. Goldman
Senior Vice President, Business
And Legal Affairs
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Exhibit 10.36
THIRD AMENDED AND RESTATED
EQUIPMENT LOAN AND SECURITY AGREEMENT
This THIRD AMENDED AND RESTATED EQUIPMENT LOAN AND SECURITY AGREEMENT
("Agreement"), dated as of November 5, 1999, is by and between the following
parties:
LENDER/SECURED PARTY: NTFC CAPITAL CORPORATION, a Delaware
corporation with offices at 501 Corporate
Centre Drive, Suite 600, Franklin, Tennessee
37067 ("Lender")
BORROWER/DEBTOR: DESTIA COMMUNICATIONS, INC., a Delaware
corporation with its principal place of
business at 95 Route 17 South, Paramus, New
Jersey 07652 ("Destia"), the Domestic and/or
Foreign Subsidiaries of Destia which are
signatories hereto, and such additional
Domestic and/or Foreign Subsidiaries of
Destia which hereafter may become a party
hereto pursuant to Section 2.11 hereof and
such successors and assigns as may be
permitted hereunder.
This Agreement amends and restates that certain Second Amended and Restated
Equipment Loan and Security Agreement dated as of January 28, 1998 as amended
and modified to the date hereof, between and among Destia, Destia Network
Services, Ltd. (formerly American Telemedia, Ltd.), an English corporation
("DNS") and a wholly owned subsidiary of Destia, Econophone GmbH, a limited
liability company organized under the laws of the Federal Republic of Germany
("Econophone GmbH"), Destia Communications Services, Inc., a Delaware
Corporation and a wholly owned subsidiary of Destia, 3461386 Canada, Inc., an
Ontario corporation and a wholly owned subsidiary of Destia, Telco Global
Communications, Ltd., VoiceNet Corporation, a New York corporation and a wholly
owned subsidiary of Destia, and Lender, and includes the general terms and
conditions contained herein and all the exhibits and schedules attached hereto,
all of which are incorporated herein. In the event of a conflict between the
general terms and conditions and any schedule, the additional terms and
conditions stated in the schedule shall control.
By executing this Agreement, Lender agrees to make loans to the Borrowers, and
Borrowers agree to borrow from Lender and to provide collateral to secure such
loans, all on the terms and conditions set forth herein.
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IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives:
LENDER: BORROWER:
NTFC CAPITAL CORPORATION DESTIA COMMUNICATIONS, INC.
BY: /s/ Ronald L. Heiken BY: /s/ Alan Levy
------------------------------- ----------------------------------
TITLE: Vice President TITLE: President and Chief
DATE: Operating Officer
----------------------------- DATE: November 5, 1999
DESTIA NETWORK SERVICES, LTD.
BY: /s/ Alfred West
----------------------------------
TITLE: Chief Executive Officer
TELCO GOLBAL COMMUNICATIONS, LTD.
BY: /s/ Alfred West
----------------------------------
TITLE: Chief Executive Officer
ECONOPHONE GmbH
BY: /s/ Alfred West
----------------------------------
TITLE: Chief Executive Officer
DESTIA COMMUNICATIONS SERVICES, INC.
BY: /s/ Alan Levy
----------------------------------
TITLE: President and Chief
Operating Officer
ii
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3461386 CANADA, INC.
BY: /s/ Alan Levy
----------------------------------
TITLE: President and Chief
Operating Officer
VOICENET CORPORATION
BY: /s/ Alan Levy
----------------------------------
TITLE: President and Chief
Operating Officer
iii
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TABLE OF CONTENTS
ARTICLE 1: DEFINITIONS.......................................................9
1.01. Certain Definitions..............................................9
1.02. Accounting Principles; Subsidiaries.............................27
1.03. UCC Terms.......................................................27
1.04. General Construction; Captions..................................27
1.05. References to Documents and Laws................................27
ARTICLE 2: LOANS............................................................27
2.01. Commitment......................................................27
2.02. Note and Payment Terms..........................................28
2.03. Procedures for Borrowing........................................32
2.04. Prepayments.....................................................33
2.05. Computation of Interest.........................................35
2.06. Payments........................................................35
2.07. Indemnity.......................................................35
2.08. Use of Proceeds.................................................35
2.09. Fees............................................................36
2.10. Lender's Expenses...............................................36
ARTICLE 3: COLLATERAL AND SECURITY AGREEMENT................................38
3.01. Grant of Security Interest......................................39
3.02. Priority of Security Interests..................................40
3.03. Further Documentation; Pledge of Instruments....................40
3.04. Further Identification of Collateral............................40
3.05. Remedies........................................................40
3.06. Standard of Care................................................40
3.07. Advances to Protect Collateral..................................41
3.08. License to Use..................................................41
3.09 Priority of Security Interests and/or Liens on Equipment located
outside of the United States....................................41
ARTICLE 4: REPRESENTATIONS AND WARRANTIES...................................42
4.01. Organization and Qualification..................................42
4.02. Authority and Authorization.....................................42
4.03. Execution and Binding Effect....................................42
4.04. Governmental Authorizations.....................................42
4.05. Regulatory Authorizations.......................................43
4.06. Material Agreement; Absence of Conflicts........................43
4.07. No Restrictions.................................................43
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4.08. Financial Statements............................................43
4.09. Financial Accounting Practices..................................44
4.10. Accurate and Complete Disclosure................................44
4.11. No Event of Default; Compliance with Material Agreements........44
4.12. Litigation......................................................44
4.13. Rights to Property; Intellectual Property.......................45
4.14. Financial Condition.............................................45
4.15. Taxes...........................................................45
4.16. No Material Adverse Change......................................45
4.17. No Regulatory Event.............................................45
4.18. Trade Relations.................................................46
4.19. No Brokerage Fees...............................................46
4.20. Margin Stock; Regulation U......................................46
4.21. Investment Company; Public Utility Holding Company..............46
4.22. Personal Holding Company........................................46
4.23. ERISA...........................................................46
4.24. Environmental Warranties........................................47
4.25. Security Interests..............................................47
4.26. Place of Business...............................................47
4.27. Location of Collateral..........................................47
4.28. Clear Title To Collateral.......................................47
4.29. Assumed Names...................................................48
4.30. Subsidiaries of Destia..........................................48
4.31. Year 2000 Compliance............................................48
ARTICLE 5: CONDITIONS OF CLOSING............................................48
5.01 Tranche 1 and Tranche 2 Closings................................48
5.02 Amendment and Restatement.......................................48
ARTICLE 6: CONDITIONS OF LENDING............................................50
6.01. Conditions for Initial Advance..................................50
6.02. Conditions for All Advances.....................................50
6.03. Affirmation of Representations and Warranties...................52
6.04. Deadline for Funding Conditions.................................53
ARTICLE 7: AFFIRMATIVE COVENANTS............................................53
7.01. Reporting and Information Requirements..........................53
7.02 Other Notices...................................................54
7.03. Notice of Pension-Related Events................................55
7.04. Inspection Rights...............................................55
7.05. Preservation of Corporate Existence and Qualification...........56
7.06. Continuation of Business........................................56
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7.07. Insurance.......................................................56
7.08. Payment of Taxes, Charges, Claims and Current Liabilities.......58
7.09. Financial Accounting Practices..................................59
7.10. Compliance with Laws............................................59
7.11. Use of Proceeds.................................................59
7.12. Government Authorizations; Regulatory Authorizations, Etc.......59
7.13. Contracts and Franchises........................................60
7.14. Consents........................................................60
7.15. Financial Covenants.............................................60
7.16. Construction and Storage........................................60
7.17. Upgrade NTI Equipment...........................................60
ARTICLE 8: NEGATIVE COVENANTS...............................................61
8.01. Additional Indebtedness.........................................61
8.02. Restrictions on Liens and Sale of Collateral....................62
8.03. Limitation on Contingent Obligations............................62
8.04. Intentionally Omitted...........................................63
8.05. Prohibition of Mergers, Acquisitions, Name, Office or Business
Changes, Etc....................................................63
8.06. Limitation on Equity Payments...................................64
8.07. Limitation on Investments, Advances and Loans...................64
8.08. Capital Expenditures............................................64
8.09. Limitation on Leases............................................64
8.10. Transactions with Affiliates....................................65
8.11. Termination of NTI Purchase Agreement...........................65
8.12. Removal of Collateral...........................................66
8.13. Assumed Names...................................................66
ARTICLE 9: EVENTS OF DEFAULT................................................67
9.01. Events of Default...............................................67
9.02. Consequences of an Event of Default.............................70
9.03. Exercise of Rights..............................................70
9.04. Rights of Secured Party.........................................70
9.05. Notices, Etc. Waived............................................71
9.06. Additional Remedies.............................................71
9.07. Application of Proceeds.........................................72
9.08. Discontinuance of Proceedings...................................72
9.09. Power of Attorney...............................................72
9.10. Regulatory Matters..............................................74
ARTICLE 10: GENERAL CONDITIONS/MISCELLANEOUS................................74
10.01. Modifications and Waivers .....................................74
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10.02. Advances Not Implied Waivers ..................................75
10.03. Deviation from Covenants ......................................75
10.04. Holidays ......................................................75
10.05. Records .......................................................76
10.06. Notices .......................................................76
10.07. FCC and PUC Approval ..........................................77
10.08. Lender Sole Beneficiary .......................................77
10.09. Lender's Review of Information ................................77
10.10. No Joint Venture ..............................................77
10.11. Severability ..................................................77
10.12. Rights Cumulative .............................................77
10.13. Duration; Survival ............................................78
10.14. Governing Law .................................................78
10.15. Counterparts ..................................................78
10.16. Successors and Assigns ........................................78
10.17. Participation .................................................79
10.18. Time of Essence ...............................................79
10.19. Disclosures and Confidentiality ...............................79
10.20. Jurisdiction and Venue ........................................81
10.21. Jury Waiver ...................................................81
10.22. Limitation on Liability .......................................81
10.23. Borrowers Waivers .............................................82
10.24. Schedules .....................................................82
10.25. Agreement to Govern ...........................................82
10.26. Entire Agreement ..............................................82
10.27. Several Obligations ...........................................82
10.28. Original Loan Agreement .......................................83
vii
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SCHEDULES TO EQUIPMENT LOAN AND SECURITY AGREEMENT
Schedule 1. Borrower Information and Defined Terms
Schedule 2.01 Maximum Loan Amount
Schedule 2.02 Payment Terms and Governing Law
Schedule 2.09 Fees
Schedule 4.04 Required Consents
Schedule 4.05 Regulatory Authorizations
Schedule 4.07 Restrictions on Loans
Schedule 4.08 Financial Statements
Schedule 4.12 Pending Litigation
Schedule 4.25 UCC Filing Offices
Schedule 4.26 Principal Offices and Location of Collateral
Schedule 4.29 Assumed Names
Schedule 4.31 NTI Purchase Agreement
Schedule 6.02 Post-Closing Items
Schedule 7.07 Insurance
Schedule 7.15 Financial Covenants
Schedule 8.01 Permitted Specific Indebtedness
Schedule 8.02 Permitted Specific Encumbrances
Schedule 8.06 Permitted Equity Payments
EXHIBITS TO EQUIPMENT LOAN AND SECURITY AGREEMENT
Exhibit A Form of Note
Exhibit B Form of Borrowing Certificate
Exhibit C Form of Opinion of Counsel for Borrower
Exhibit D [INTENTIONALLY OMITTED]
Exhibit E Form of Landlord's Consent
Exhibit F Certificate of Financial Condition
Exhibit G Form of Guaranty
Exhibit H Form of Senior Indenture
Exhibit I Form of Senior Discount Notes Indenture
vii
<PAGE>
THIRD AMENDED AND RESTATED
EQUIPMENT LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDED AND RESTATED EQUIPMENT LOAN AND SECURITY AGREEMENT
("Agreement") dated as of November 5, 1999, is by and among DESTIA
COMMUNICATIONS, INC., a Delaware corporation ("Destia"), the Domestic and/or
Foreign Subsidiaries of Destia which are signatories hereto, and such additional
Domestic and/or Foreign Subsidiaries of Destia which hereafter may become a
party hereto pursuant to Section 2.11 hereof (Destia, Domestic and/or Foreign
Subsidiaries of Destia which are signatories hereto, and such additional
Domestic and/or Foreign Subsidiaries of Destia which may hereafter become a
party hereto pursuant to Section 2.11 of this Agreement are individually
referred to as a "Borrower" and collectively as the "Borrowers"), and NTFC
CAPITAL CORPORATION, a Delaware corporation ("Lender"), with offices at 501
Corporate Centre Drive, Suite 600, Franklin, Tennessee 37067.
B A C K G R O U N D:
A. Destia and/or its Subsidiaries have entered into one or more purchase
agreements with Northern Telecom Inc., providing for the purchase by it or its
Subsidiaries of certain telecommunications equipment and the license of
associated software, all as described therein, and has requested Lender to
extend credit to the Borrowers to finance such purchase and license, as
described on Schedule 1 hereto.
B. Destia and Lender previously entered into the Original Loan Agreement,
pursuant to which the Lender agreed to loan Destia and certain Subsidiaries of
Destia up to Twenty-Four Million Dollars ($24,000,000) subject to the terms and
conditions stated in the Original Loan Agreement, and
C. Destia and the Borrowers party to the Original Loan Agreement have
requested Lender to amend and restate the Original Loan Agreement and all
amendments and modifications thereto pursuant to this Agreement to extend
additional credit subject to the terms and conditions set forth in this
Agreement, and Lender is willing to extend such credit upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE 1: DEFINITIONS
1.01. Certain Definitions. Certain terms are defined on Schedule 1 hereto.
In addition to other words and terms defined in the preamble hereof or elsewhere
in this
ix
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Agreement, or on the Schedules hereto, the following words and terms shall have
the following meanings unless the context otherwise clearly requires:
"Additional Equipment": any equipment and/or Software purchased by a
Borrower in furtherance of or in connection with the Description of Business set
forth on Schedule 1, other than the purchase of the Equipment or Software with
the Advances.
"Adjusting Fiscal Quarter": the fiscal quarter (x) immediately following a
fiscal quarter in which Destia's Debt Service Coverage Ratio was not greater
than 1.10 to 1.00 and in which Destia failed to have revenues (calculated at the
end of such fiscal quarter as the revenue of the four fiscal quarters then
ending) equal to or greater than 85% of the level projected for such fiscal
quarters in the Original Minimum Revenue Projection Table and (y) in which
Destia's Debt Service Coverage Ratio was not greater than 1.10 to 1.00 and in
which Destia does not have revenues (calculated at the end of such immediately
succeeding fiscal quarter as the revenue of the four fiscal quarters then
ending) equal to or greater than 85% of the level projected for such four fiscal
quarters in the Original Minimum Projected Revenue Table.
"Adjusted Minimum Revenue Projection Table": the table of projections for
Destia's minimum revenues set forth in Table 2, attached to Schedule 6.02.
"Applicable Minimum Revenue Projection Table": (i) Prior to the Adjusting
Fiscal Quarter, the Original Minimum Revenue Projection Table, and (ii) from and
after the Adjusting Fiscal Quarter, the Adjusted Minimum Revenue Projection
Table.
"Advance(s)": any advance or loan of funds made by Lender to a Borrower
pursuant to this Agreement.
"Affiliate": as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with that Person,
or related to such Person by blood, marriage or adoption. For purposes of this
definition and the definition of "Subsidiary", a Person shall be deemed to
control another Person if such first Person possesses, directly or indirectly,
the power to direct, or to cause the direction of, the management and policies
of such other Person, whether through ownership of voting securities, by
contract or otherwise.
"Affiliate Transaction": the merger of a Borrower with an Affiliate of a
Borrower or a Subsidiary thereof, whether the Borrower, such Affiliate of a
Borrower or a Subsidiary thereof, or another entity is the surviving entity, or
other combination involving a Borrower and Affiliate, provided that (i) such
Affiliate Transaction does not cause a Change of Control of Destia; (ii) the
surviving corporation is a Subsidiary of Destia, assumes the obligations of such
Borrower hereunder in writing reasonably satisfactory to Lender and does not
cause a Domestic Borrower to become a Foreign Borrower; (iii) on or before the
consummation of such
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transaction, Lender receives an opinion of counsel to the surviving company with
respect to such matters as Lender deems reasonably necessary (including, but not
limited to, the validity and enforceability of the written assumption by such
successor and the continued priority and perfection of the security interests on
the Collateral in favor of the Lender); and (iv) immediately prior to, and after
giving effect to, such merger or consolidation and any assumption by such
successor of such Borrower's obligations hereunder, there shall not exist a
Default or Event of Default.
"Basic Agreements": a collective reference to this Agreement, each Note,
and the Security Documents.
"Borrowing Certificate": a certificate substantially in the form of
Exhibit B hereto designating the applicable Borrower hereunder, and executed by
Destia and the applicable Borrower, if other than Destia.
"Borrower": Destia, the Domestic and/or Foreign Subsidiaries of Destia
which are signatories hereto, and such additional Domestic and/or Foreign
Subsidiaries of Destia which hereafter may become a party hereto pursuant to
Section 2.11 of this Agreement.
"Borrowing Date": any Business Day on which an Advance is made to a
Borrower hereunder.
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in Nashville, Tennessee are authorized or required by law to
close.
"Calendar Quarter": each three month period starting on each January 1,
April 1, July 1, and October 1, during the term of this Agreement.
"Cash": at any time, the cash, cash equivalents or marketable investment
grade securities held by Destia or its Subsidiaries free of any claims or
encumbrances.
"Cash Flow": during any fiscal period of Destia, the sum (on a
consolidated basis) of (i) net income (or loss) (which may be a positive or
negative number) for such period, plus (ii) all non-cash items deducted in
determining such net income (or loss), minus (iii) all non-cash items added in
determining such net income (or loss) during such period, less (iv) any Equity
Payments pursuant to Section 8.06 hereof or payments on Subordinated
Indebtedness made during such period.
"Certificate of Financial Condition": a certificate in the form of Exhibit
F hereto, executed by Borrower.
"Change in Control": means such time a "person" or "group" (within the
meaning of
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Section 13(d) or 14(d)(2) under the Exchange Act) of more than 35% of the total
voting power of the voting stock of Destia on a fully diluted basis and such
ownership represents a greater percentage of the total voting power of the
voting stock of Destia, on a fully diluted basis, than is held by the Existing
Stockholders and their Affiliates on such date; or (ii) individuals who on the
Tranche 3 Closing Date constitute the board of directors (together with any new
directors whose election by the board of directors or whose nomination for
election by Destia's stockholders was approved by a vote of at least two-thirds
of the members of the board of directors then in office who either were members
of the board of directors on the Tranche 3 Closing Date or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors then in office.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Collateral": as defined in Section 3.01 hereof and any other property
granted as security to Lender for Obligations hereunder.
"Commitment": the Tranche 1 Commitment, the Tranche 2 Commitment, the
Tranche 3 Commitment, and the Tranche 4 Commitment as defined in Section 2.01
hereof.
"Communications Law": any and all of (i) the Communications Act of 1934,
as amended, and any similar or successor federal statute, and the rules and
regulations of the FCC thereunder, (ii) any state law governing the provision of
telecommunications services, and the rules and regulations of the PUC, all as
the same may be in effect from time to time.
"Consent": a consent to a collateral assignment of the NTI Purchase
Agreement and Landlord Consents.
"Contingent Obligation": as to any Person, any obligation of such Person
guaranteeing, directly or indirectly, any Indebtedness, leases, dividends or
other obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (d) otherwise to assure or hold harmless the owner of such primary
obligation against loss in respect thereof.
"Debt Service": for any fiscal period of Destia, the sum of all principal
and interest payments that Destia is required to make during such period on a
consolidated basis on
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account of all of Indebtedness including, without limitation, (a) amounts due
during such period on account of capitalized leases, (b) the then current
portion of any long-term Indebtedness, (c) amounts due on short-term
Indebtedness, and (d) amounts due under this Agreement and each Note.
"Debt Service Coverage Ratio": at the end of any fiscal period, the ratio
of Cash Flow for such fiscal period to Debt Service for such fiscal period.
"Default": any of the conditions or occurrences specified in Section 9.01,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition has been satisfied.
"Default Rate": a rate of interest equal to the lesser of (i) three
percent (3%) over the Interest Rate, or (ii) the maximum permissible rate under
applicable law in effect at any time.
"Domestic Borrower": Destia, and each Subsidiary of Destia, which is
incorporated under the laws of the United States, one of the states of the
United States, the District of Columbia, or any territory, possession or
protectorate of the United States that is a Borrower hereunder.
"Domestic Borrower Obligations": all indebtedness, liabilities and
obligations of a Domestic Borrower to Lender of any class or nature, whether
arising under or in connection with this Agreement and/or the other Loan
Documents or otherwise , whether now existing or hereafter incurred, direct or
indirect, absolute or contingent, secured or unsecured, matured or unmatured,
joint or several, whether for principal, interest, fees, expenses, lease
obligations, indemnities or otherwise, including, without limitation, future
advances of any sort, all future advances made by Lender for taxes, levies,
insurance and/or repairs to or maintenance of the Collateral, the unpaid
principal amount of, and accrued interest on, each Note executed by such
Domestic Borrower, the Guaranty and any expenses of collection or protection of
Lender's rights, including reasonable attorneys' fees.
"Domestic Subsidiary": means a subsidiary of Destia which is incorporated
under the laws of the United States, one of the states of the United States, the
District of Columbia, or any territory, possession or protectorate of the United
States.
"EBITDA": for any fiscal period, on a consolidated basis, Destia's actual
operating earnings from ongoing operations and before interest, taxes,
depreciation and amortization for such fiscal period.
"Environmental Law": any current or future federal, state and local law
(including common law), statute, regulation, ordinance, rulings, codes, judicial
order, administrative
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order or terms of licenses or permits applicable to environmental conditions
(including without limitation conditions relating to ambient air, surface water,
groundwater, land surface or subsurface strata), including without limitation
all such laws governing employment, the generation, use, storage, disposal or
transportation of toxic or hazardous substances or wastes (including, without
limitation, asbestos and petroleum products), the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and Recovery
Act, the Superfund Amendment and Reauthorization Act of 1986, the Toxic
Substances Control Act, the Clean Air Act, the Water Pollution Control Act, the
Hazardous Waste Management Act, the Mineral Lands and Leasing Act, the Surface
Mining Control and Reclamation Act, U.S. Department of Transportation
Regulations, and all similar state and local laws, regulations, all as now or
hereafter amended.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any successor statute.
"Equipment": as defined in Section 3.01 hereof.
"Equity Payment": any distribution of earnings or capital to any Owner
with respect to such Owner's stock or other equity ownership interests, or any
redemption of stock or other equity ownership interests, either directly or
indirectly, whether in cash or property or in obligations of Destia or any of
its Subsidiaries.
"Event of Default": any of the events specified in Section 9.01 hereof,
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, under Section 9.01 or otherwise, has been
satisfied.
"Existing Stockholders" means Alfred West, Steven West and any spouse or
lineal descendant thereof or any estate thereof or any trust of which any of the
foregoing are the exclusive beneficiaries.
"FCC": the Federal Communications Commission of the United States of
America, and any successor, in whole or in part, to its jurisdiction.
"Financing Termination Date": the Tranche 1, Tranche 2, Tranche 3 or
Tranche 4 Financing Termination Date.
"Foreign Borrower": a Subsidiary of Destia which is a party hereto
incorporated under the laws of any jurisdiction other than the laws of the
United States, one of the states of the United States, the District of Columbia,
or any territory, possession or protectorate of the United States or one of the
states of the United States that is a Borrower hereunder.
"Foreign Borrower Obligations": all Indebtedness, liabilities and
obligations of such
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Foreign Borrower to Lender of any class or nature, whether arising under or in
connection with this Agreement and/or the other Loan Documents or otherwise,
whether now existing or hereafter incurred, direct or indirect, absolute or
contingent, secured or unsecured, matured or unmatured, joint or several,
whether for principal, interest, fees, expenses, lease obligations indemnities
or otherwise, including, without limitation, future advances of any sort, all
future advances made by Lender for taxes, levies, insurance and/or repairs to or
maintenance of Collateral, the unpaid principal amount of, and accrued interest
on, each Note executed by such Foreign Borrower, and any expenses of collection
or protection of Lender's rights, including reasonable attorneys' fees.
"Foreign Subsidiary": means a subsidiary of Destia incorporated under the
laws of any jurisdiction other than the laws of the United States, one of the
states of the United States, the District of Columbia, or any territory,
possession or protectorate of the United States or one of the states of the
United States.
"GAAP": subject to Section 1.02 hereof, generally accepted accounting
principles in the United States of America (as such principles may change from
time to time) applied on a consistent basis (except for changes in application
in which Destia's independent certified public accountants concur), applied both
to classification of items and amounts.
"General Intangibles": as defined in Section 3.01 hereof.
"Governmental Actions": actions by any Governmental Authority.
"Governmental Authority": the federal government, any state or political
subdivision thereof, any city or municipal entity, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranty": the guaranty dated the date hereof in favor of Lender executed
by Destia in the form of Exhibit G.
"High Yield Notes": each of the (i) $155,000,000 principal amount (or such
higher amount as may be issued) of Destia's Senior Notes, which are issued
pursuant to the Senior Notes Indenture, and (ii) $300,000,000 principal amount
of Destia's Senior Discount Notes containing such terms and conditions therein
and as may be contained in the documents referred to therein, and in any case
(i) which are unsubordinated and unsecured (except for approximately $55,000,000
(or such proportionately higher amount in the event greater than $155,000,000
principal amount of High Yield Notes are issued) of net proceeds from the
issuance of the High Yield Notes and accompanying warrants that will be pledged
as security for the payment of the first six scheduled interest payments due on
the High Yield Notes) obligations of Destia, with a maturity date not earlier
than 2007, (ii) on which interest, if any, will be payable semi-annually in
arrears, and which will be subject to no put rights or
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redemption rights, except for (w) upon the occurrence of asset sales under
certain circumstances, (x) an optional right of redemption by Destia no earlier
than January 1, 2002, (y) a right of Destia to redeem up to 35% of the aggregate
principal amount of High Yield Notes, exercisable no later than July 15, 2000,
with the proceeds of Public Equity Offerings, as such term is defined in the
respective Indentures as each exists on the date hereof, and (z) an obligation
of Destia to offer to purchase the High Yield Notes at a price equal to 101% of
the aggregate principal amount thereof, plus any accrued interest, upon the
occurrence of a Change in Control, as such term is defined in the respective
Indentures as each exists on the date hereof. The term "High Yield Notes" shall
also include any securities issued to replace, renew, or refinance, in whole or
in part, any High Yield Notes so long as such securities contain maturity,
subordination and interest payment terms no less favorable to Lender than the
terms contained in clauses (i) and (ii) above.
"High Yield Period": the time during which High Yield Notes are issued and
outstanding.
"Indebtedness": as to any Person, at a particular time, (a) indebtedness
for borrowed money or for the deferred purchase price of property or services in
respect of which such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which such Person otherwise assures a
creditor against loss, (b) obligations under leases which shall have been or
should be, in accordance with GAAP, recorded as capital leases in respect of
which obligations such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person assures a
creditor against loss, (c) obligations of such Person to purchase or repurchase
accounts receivable, chattel paper or other payment rights sold or assigned by
such Person, and (d) indebtedness or obligations of such Person under or with
respect to letters of credit, notes, bonds or other debt instruments, but (e)
excluding Indebtedness constituting trade payables incurred by Borrower in the
ordinary course of business.
"Indenture": the Senior Notes Indenture and the Senior Discount Notes
Indenture.
"Initial Payment Date": either a Tranche 1, Tranche 2, Tranche 3 or
Tranche 4 Initial Payment Date.
"Interest Payment Date": either a Tranche 1, Tranche 2, Tranche 3 or
Tranche 4 Interest Payment Date.
"Interest Rate": either a Tranche 1, Tranche 2, Tranche 3 or Tranche 4
Interest Rate, in each case as defined in Schedule 2.02 hereto.
"Landlord Consent": a consent substantially in the form of Exhibit E
hereto or in other form acceptable to Lender, to be executed by the
owner/landlord, sublessor and/or licensor
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(including carriers) of any real property where any of the Collateral is to be
located.
"Law": any law (including common law), constitution, statute, regulation,
rule, ordinance, order, injunction, writ, decree or award of any governmental
body or court of competent jurisdiction or of any arbitrator (including but not
limited to ERISA, the Code, the UCC, any applicable tax law, product safety law,
occupational safety or health law, Communications Law, Environmental Law and/or
securities laws).
"Lender's Expenses": as defined in Section 2.10 hereof.
"Lien": any mortgage, pledge, hypothecation, lien (statutory or other),
judgment lien, security interest, security agreement, charge or other
encumbrance, or other security arrangement of any nature whatsoever, including,
without limitation, any installment contract, conditional sale or other title
retention arrangement, any sale of accounts receivable or chattel paper, and any
assignment, deposit arrangement or lease intended as, or having the effect of,
security and the filing of any financing statement under the UCC or comparable
law of any jurisdiction.
"Loan": Any loan made pursuant to the Tranche 1 Commitment, the Tranche 2
Commitment, the Tranche 3 Commitment, or the Tranche 4 Commitment .
"Loan Documents": a collective reference to this Agreement, each Note, the
Guaranty, the Security Documents, and all other documents, instruments,
agreements and certificates evidencing or securing any advance hereunder or any
obligation for the payment or performance thereof and/or executed and delivered
in connection with any of the foregoing.
"Mandatory Optional Prepayments: as defined in Section 2.04(b) hereof.
"Material Adverse Effect" or "Material Adverse Change": a material adverse
effect on, or material adverse change in, (i) the business, operations or
financial condition of Destia and its Subsidiaries taken as a whole, (ii) the
ability of Destia to perform its obligations under this Loan Agreement, any
Note, or the other Loan Documents, or (iii) the Lender's ability to enforce the
rights and remedies granted under this Agreement or the other Loan Documents, in
all cases whether attributable to a single circumstance or event or an
aggregation of circumstances or events.
"Merger": the proposed merger of Destia with a subsidiary of Viatel, Inc.
pursuant to the Agreement and Plan of Merger, dated August 27, 1999 and related
transactions.
"Note": collectively, the Tranche 1 Note, the Tranche 2 Note, the Tranche
3 Note, the Tranche 4 Note and any other promissory notes issued by a Borrower
to Lender pursuant to this Agreement, and all extensions, renewals,
modifications, replacements, amendments,
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restatements and refinancings thereof.
"NTI": Northern Telecom Inc., a Delaware corporation.
"NTI Equipment": the equipment and licensed or sub-licensed software
manufactured or supplied by NTI to a Borrower with respect to which Advances
hereunder are used directly or indirectly to finance the acquisition cost there
at any time pursuant to the NTI Purchase Agreement or any purchase order issued
by a Borrower to NTI, including installation and construction services provided
by NTI pursuant thereto.
"NTI Purchase Agreement": the NTI Purchase Agreement identified on
Schedule 4.31 hereto, together with any amendments or supplements thereto, and
any other purchase agreement between NTI and a Borrower and all purchase orders
and invoices issued pursuant thereto, all as approved by Lender.
"Obligations": all Domestic Borrower Obligations and Foreign Borrower
Obligations.
"Organizational Documents": with respect to a corporation, the articles of
incorporation and by-laws of such corporation; with respect to a partnership,
the certificate of partnership (or limited partnership, as applicable) and
partnership agreement, together with the analogous documents for any corporate
or partnership general partner; with respect to a limited liability company, the
articles of organization and operating agreement of such limited liability
company; and in any case, any other document governing the formation and conduct
of business by such entity, in each case as may be in effect from time to time.
"Original Loan Agreement": that certain Second Amended and Restated
Equipment Loan and Security Agreement, dated as of January 28, 1998 as amended
and modified to the date hereof, between and among Destia, DNS, ECONOphone GmbH,
and Lender, amending and restating that certain Equipment Loan and Security
Agreement dated as of May 28, 1996 between Destia and Lender, as first amended
by that certain Letter Agreement dated as of November 18, 1996 extending the
funding date, and as subsequently amended and restated and joined in by DNS. as
of March 27, 1997, and further amended by that First Amendment to Amended and
Restated Equipment Loan and Security Agreement dated as of April 24, 1997, by
that Second Amendment to Amended and Restated Equipment Loan and Security
Agreement dated as of June 26, 1997, by that Third Amendment to Amended and
Restated Equipment Loan and Security Agreement, dated as of August 7, 1997 and
by that Fourth Amendment to Amended and Restated Loan and Security Agreement,
dated as of December 31, 1997.
"Original Minimum Revenue Projection Table": the table of projections for
Destia's minimum revenues set forth in Table 1, attached to Schedule 6.02.
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"Owners": all presently existing and future shareholders of Borrower and
all other Persons with ownership interests in Borrower.
"Payment Date": as defined on Schedule 2.02 hereto.
"Payment Schedule": either the Tranche 1, Tranche 2, Tranche 3 or Tranche
4 Payment Schedule.
"PBGC": the Pension Benefit Guaranty Corporation established under Title
IV of ERISA or any other governmental agency, department or instrumentality
succeeding to its functions.
"Permits": all consents, licenses, notices, approvals, authorizations,
filings, orders, registrations, and permits required by any Governmental
Authority for the construction and operation of the Equipment (excluding
Regulatory Authorizations), issued or obtained as and when required in
accordance with all Requirements of Law.
"Permitted Encumbrances": the Liens permitted under Section 8.02 hereof.
"Permitted Investments": (a) direct obligations of, or obligations for the
timely payment of the principal of and interest of which is fully and
unconditionally guaranteed by, the United States of America, (b) certificates of
deposits of national or state banks, certificates of deposit of federal savings
and loan associations and state building and loan associations which deposits
are fully insured by the Federal Deposit Insurance Corporation; (c) bankers
acceptances drawn on and accepted by commercial banks having a combined capital
and surplus of not less than $100,000,000 and rated "Aa" or higher by Moody's
Investor Service, and "AA" or higher by Standard & Poors Corporation; (d)
obligations of any agency or instrumentality of the United States of America
that are backed by the full faith and credit of the United States of America;
(e) notes or commercial paper (of entities other than Borrower or related
entities) rated in either of the two highest rating categories by Moody's
Investors Services and Standard & Poors Corporation; (f) repurchase agreements
with banking or financial institutions having a combined capital and surplus of
not less than $100,000,000, with respect to and fully secured by obligations
described in (a) or (d) above, and rated "Aa" or higher by Moody's Investors
Service and "AA" or higher by Standard & Poors Corporation; (g) money market
mutual funds which invest solely in investments meeting the criteria of
Permitted Investments; and (h) during the High Yield Period, Temporary Cash
Investments, as such term is defined in the respective Indentures as each exists
on the date hereof.
"Person": an individual, corporation, limited liability company,
partnership, business or other trust, unincorporated association, joint venture,
joint-stock company, Governmental Authority or any other entity.
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"Plan": any employee pension benefit plan to which Section 4021 of ERISA
applies and (i) which is maintained for employees of Destia or (ii) to which
Destia made, or was required to make, contributions at any time within the
preceding five (5) years.
"Proceeds": as defined in Section 3.01 hereof.
"Public Equity Offering": an underwritten primary public offering of
common stock of Destia pursuant to an effective registration statement under the
Securities Act of 1933.
"Public Market": (i) a Public Equity Offering has been consummated and
(ii) at least 15% of the total issued and outstanding Common Stock of Destia has
been distributed by means of an effective registration statement under the
Securities Act of 1933 or sales pursuant to Rule 144 under the Securities Act of
1933.
"PUC": the public utilities commission for the state or any other
jurisdiction in which the Borrower operates its telecommunications business or
any portion of the Equipment is located, or any successor agency, and any
successor, in whole or in part, to its functions or jurisdictions, and any other
Persons specified as such on Schedule 1 hereto.
"Regulatory Authorizations": all approvals, authorizations, licenses,
filings, notices, registrations, consents, permits, exemptions, registrations,
qualifications, designations, declarations, or other actions or undertakings now
or hereafter made by, to or in respect of any telecommunications governmental or
other regulatory authority, including, without limitation, any certificates of
public convenience and all grants, approvals, licenses, filings and
registrations from or to the FCC or PUC or under any Communications Law
necessary in order to enable Destia or its Subsidiaries to own, construct,
maintain and operate the Equipment, and any authorizations specified on Schedule
1 hereto.
"Regulatory Event": any of the following events: (i) Lender becomes
subject to regulation as a "carrier," a "telephone company," a "common carrier,"
a "public utility" or otherwise under any applicable law or governmental
regulation, federal, state or local, solely as a result of the consummation of
the transactions contemplated by this Agreement and the other Loan Documents, or
(ii) Destia or any Subsidiary becomes subject to regulation by any Governmental
Authority in any way that is materially different from the regulation existing
at the Tranche 3 Closing Date and that could materially adversely affect
Destia's ability to perform its material obligations under the Loan Documents or
Lender's rights thereunder or the Collateral, or (iii) the FCC or PUC issues an
order revoking, denying or refusing to renew, or recommending the revocation,
denial or non-renewal of, any material Regulatory Authorization.
"Reportable Event": (i) a reportable event described in Section 4043 of
ERISA and
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regulations thereunder, (ii) a withdrawal by a substantial employer from a Plan
to which more than one employer contributes, as referred to in Section 4063(b)
of ERISA, or (iii) a cessation of operations at a facility causing more than
twenty percent (20%) of Plan participants to be separated from employment, as
referred to in Section 4062(f) of ERISA.
"Required Consents": the Governmental Authority approvals or consents of
other Persons required with respect to the Borrower's execution, delivery and
performance of this Agreement and the other Loan Documents, as described in
Section 4.04 hereto.
"Requirement of Law": as to any Person, the Organizational Documents of
such Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its properties or transactions or to
which such Person or any of its property or transactions is subject, including
without limitation, all applicable common law and equitable principles, all
provisions of all applicable state and federal constitutions, statutes, rules,
regulations and orders of governmental bodies, all Permits or Regulatory
Authorizations issued to Destia or its Subsidiaries, all Communications Laws,
and all Environmental Laws.
"Responsible Officer": with respect to a corporation, its President or any
Vice President or Treasurer; with respect to a partnership, its general partner
(or the President, any Vice President or Treasurer of any corporate general
partner, as applicable); with respect to a limited liability company, a member
or manager (or the President, any Vice President or Treasurer of any corporate
member or manager), or the President or any Vice President of any other Person.
"Restricted Subsidiary": means any Subsidiary of Destia other than an
Unrestricted Subsidiary.
"Security Documents": this Agreement, the Consents, all financing
statements, all documents and instruments executed and/or delivered by or on
behalf of any Borrower in favor of Lender granting and perfecting liens and
security interests on NTI Equipment and related Software to be installed in the
United Kingdom, Belgium, France, the Netherlands, Germany, Switzerland and such
other locations outside the United States as Lender may approve and any other
documents granting, evidencing, or perfecting any security interest or Lien with
respect to or securing any of the Obligations.
"Senior Discount Notes Indenture": that certain Indenture, as may be
amended, dated as of February 18, 1998, between the Borrower and The Bank of New
York as trustee, pursuant to which Borrower's Senior Discount Notes are issued.
"Senior Notes Indenture": that certain Indenture, as may be amended, dated
as of July 1, 1997, between the Borrower and The Bank of New York as trustee,
pursuant to which
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Borrower's Senior Notes are issued.
"Site(s)": any of the sites where Equipment is or is to be located.
"Software" and "Software Licenses": any software now or hereafter owned
by, or licensed to, a Borrower or any of its Subsidiaries or with respect to
which Destia or any of its Subsidiaries has or may have license or use rights.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership, limited liability company, or other entity, are at the
time owned, or the management of which is otherwise controlled, directly or
indirectly, through one or more intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of Destia.
"Subordination Agreement": one or more subordination agreements reasonably
acceptable to Lender.
"Subordinated Indebtedness": Indebtedness of any Borrower for money
borrowed for the use of such Borrower, payment of which is fully subordinated to
the payment of all Foreign Borrower Obligations or Domestic Borrower
Obligations, as applicable, upon terms and provisions set forth in a
Subordination Agreement.
"System": Destia's complete telecommunications network or system
constructed and/or operated by Destia and its Subsidiaries, of which the
Equipment forms a part.
"Tranche 1 Closing Date": as defined in Schedule 2.02 hereto.
"Tranche 2 Closing Date": as defined in Schedule 2.02 hereto.
"Tranche 3 Closing Date": as defined in Schedule 2.02 hereto.
"Tranche 4 Closing Date": as defined in Schedule 2.02 hereto.
"Tranche 1 Commitment": as defined in Section 2.01 hereof.
"Tranche 2 Commitment": as defined in Section 2.01 hereof.
"Tranche 3 Commitment": as defined in Section 2.01 hereof.
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"Tranche 4 Commitment": as defined in Section 2.01 hereof.
"Tranche 1 Financing Termination Date": as defined in Schedule 2.02
hereto.
"Tranche 2 Financing Termination Date": as defined in Schedule 2.02
hereto.
"Tranche 3 Financing Termination Date": as defined in Schedule 2.02
hereto.
"Tranche 4 Financing Termination Date": as defined in Schedule 2.02
hereto.
"Tranche 1 First Borrowing Date": the date of the first borrowing by
Borrower hereunder for Advances made prior to the Tranche 2 Closing Date.
"Tranche 2 First Borrowing Date": the date of the first borrowing by
Borrower hereunder for Advances made on or after the Tranche 2 Closing Date, but
before the Tranche 3 Closing Date.
"Tranche 3 First Borrowing Date": With respect to each Borrower, the date
of the first borrowing by such Borrower hereunder for Advances made on or after
the Tranche 3 Closing Date, but before the Tranche 4 Closing Date..
"Tranche 4 First Borrowing Date": With respect to each Borrower, the date
of the first borrowing by such Borrower hereunder for Advances made on or after
the Tranche 4 Closing Date.
"Tranche 1 Initial Payment Date": as defined on Schedule 2.02 hereto.
"Tranche 2 Initial Payment Date": as defined on Schedule 2.02 hereto.
"Tranche 3 Initial Payment Date": as defined on Schedule 2.02 hereto.
"Tranche 4 Initial Payment Date": as defined on Schedule 2.02 hereto.
"Tranche 1 Interest Payment Date": as defined on Schedule 2.02 hereto.
"Tranche 2 Interest Payment Date": as defined on Schedule 2.02 hereto.
"Tranche 3 Interest Payment Date": as defined on Schedule 2.02 hereto.
"Tranche 4 Interest Payment Date": as defined on Schedule 2.02 hereto.
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"Tranche 1 Interest Rate": as defined in Schedule 2.02 hereto.
"Tranche 2 Interest Rate": as defined in Schedule 2.02 hereto.
"Tranche 3 Interest Rate": as defined in Schedule 2.02 hereto.
"Tranche 4 Interest Rate": as defined in Schedule 2.02 hereto.
"Tranche 1 Maturity Date": the date defined on Schedule 2.02 hereto, on
which all principal, interest, premium, expenses, fees, penalties and other
amounts due under the Tranche 1 Note shall be finally due and payable.
"Tranche 2 Maturity Date": the date defined on Schedule 2.02 hereto, on
which all principal, interest, premium, expenses, fees, penalties and other
amounts due under the Tranche 2 Note shall be finally due and payable.
"Tranche 3 Maturity Date": the date defined on Schedule 2.02 hereto, on
which all principal, interest, premium, expenses, fees, penalties and other
amounts due under the Tranche 3 Note shall be finally due and payable.
"Tranche 4 Maturity Date": the date defined on Schedule 2.02 hereto, on
which all principal, interest, premium, expenses, fees, penalties and other
amounts due under the Tranche 4 Note shall be finally due and payable.
"Tranche 1 Note": that certain amended and restated promissory note in the
original principal amount of up to $2,000,000 dated as of November 5, 1999,
executed by the Domestic Borrowers as joint and several obligors, amending and
restating that certain promissory note dated as of May 28, 1996 in the original
principal amount of up to $2,000,000 executed by Destia in favor of Lender, and
any other promissory notes evidencing loans under the Tranche 1 Commitment, and
all extensions, renewals, modifications, replacements, amendments, restatements
and refinancings thereof.
"Tranche 2 Note": that certain amended and restated promissory note in the
original principal amount of $3,000,000 dated as of November 5, 1999, executed
by the Borrowers as joint and several obligors amending and restating that
certain promissory note dated as of March 27, 1997 in the original principal
amount of $3,000,000 executed by Destia and by DNS as joint and several obligors
in favor of Lender, and any other promissory notes evidencing loans under the
Tranche 2 Commitment, and all extensions, renewals, modifications, replacements,
amendments, restatements and refinancings thereof.
"Tranche 3 Domestic Borrowing Note": that certain amended and restated
promissory note in the original principal amount of $19,000,000 dated as of
November 5, 1999, executed
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by the Domestic Borrowers as joint and several obligors amending and restating
that certain promissory note dated as of January 28, 1998 in the original
principal amount of up to $19,000,000 executed by Destia, in favor of Lender,
and any other promissory notes evidencing loans under the Tranche 3 Commitment,
and all extensions, renewals, modifications, replacements, amendments,
restatements and refinancings thereof.
"Tranche 3 Foreign Borrowing Note": that certain amended and restated
promissory note in the original principal amount of up to $19,000,000 dated as
of November 5, 1999, executed by the Borrowers as joint and several obligors
amending and restating that certain promissory note dated as of September 25,
1998 in the original principal amount of $15,718,490.20 executed by DNS, in
favor of Lender, and that certain promissory note dated as of December 31, 1998
in the original principal amount of $15,718,490.20 executed by Econophone GmbH,
in favor of Lender and any other promissory notes evidencing loans under the
Tranche 3 Commitment, and all extensions, renewals, modifications, replacements,
amendments, restatements and refinancings thereof.
"Tranche 3 Note(s)": a Tranche 3 Domestic Borrowing Note and/or a Tranche
3 Foreign Borrowing Note.
"Tranche 4 Domestic Borrowing Note": that certain promissory note in the
original principal amount of up to $25,000,000 dated as of November 5, 1999,
executed by the Domestic Borrowers as joint and several obligors in favor of
Lender, and any other promissory notes evidencing loans under the Tranche 4
Commitment, and all extensions, renewals, modifications, replacements,
amendments, restatements and refinancings thereof.
"Tranche 4 Foreign Borrowing Note": that certain promissory note in the
original principal amount of up to $25,000,000 dated as of November 5, 1999,
executed by the Borrowers as joint and several obligors in favor of Lender, and
any other promissory notes evidencing loans under the Tranche 4 Commitment, and
all extensions, renewals, modifications, replacements, amendments, restatements
and refinancings thereof.
"Tranche 4 Note(s)": a Tranche 4 Domestic Borrowing Note and/or a Tranche
4 Foreign Borrowing Note.
"Tranche 1 Payment Schedule": as defined on Schedule 2.02 hereto.
"Tranche 2 Payment Schedule": as defined on Schedule 2.02 hereto.
"Tranche 3 Payment Schedule": as defined on Schedule 2.02 hereto.
"Tranche 4 Payment Schedule": as defined on Schedule 2.02 hereto.
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"UCC": the Uniform Commercial Code as the same may from time to time be in
effect in the State of New York, or the Uniform Commercial Code of another
jurisdiction, to the extent it may be required to apply to any item or items of
Collateral.
"Unrestricted Subsidiary": (i) any Subsidiary of Destia that at the time
of determination shall be designated an Unrestricted Subsidiary by the board of
directors of Destia in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The board of directors of Destia may designate any
Restricted Subsidiary (including any newly acquired or newly formed Subsidiary
of Destia) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, Destia or any
Restricted Subsidiary; provided that (A) any Guarantee by Destia or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by
Destia or such Restricted Subsidiary (or both, if applicable) at the time of
such designation; (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 4.04 of the respective
Indentures as each exists on the date hereof and (C) if applicable, the
Incurrence of Indebtedness and the Investment referred to in clause (A) of this
proviso would be permitted under Sections 4.03 and 4.04 of the respective
Indentures as each exists on the date hereof. The board of directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that immediately after giving effect to such designation (x) all Liens and
Indebtedness of such Unrestricted Subsidiary outstanding immediately after such
designation would, if Incurred at such time, have been permitted to be incurred
for all purposes of the Indentures and (y) no Default or Event of Default shall
have occurred and be continuing. Any such designation by the Board of Directors
shall be evidenced to the Lender by notifying the Lender promptly after
notifying the Trustee under the Indentures and by providing the Lender a copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions. Capitalized terms used in this definition which are defined in the
Indentures shall have the meanings assigned to them in the respective Indentures
as each exists on the date hereof. In the event of a conflict between the
Indentures, the Senior Indenture shall govern.
"Year 2000 Problem": any significant risk that any Borrower's computer
hardware, software or equipment containing embedded microchips essential to the
business or operations of Destia will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively and reliably
as in the case of times or time periods occurring before January 1, 2000,
including the making of leap year calculations.
"Wholly Owned": with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person. Capitalized terms used in this definition
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which are defined in the Indenture shall have the meanings assigned to them in
the respective Indentures as each exists on the date hereof.
1.02. Accounting Principles; Subsidiaries. Except as otherwise provided in
this Agreement, all computations and determinations as to accounting or
financial matters and all financial statements to be delivered pursuant to this
Agreement shall be made and prepared in accordance with GAAP (including
principles of consolidation where appropriate), consistently applied, and all
accounting or financial terms shall have the meanings ascribed to such terms by
GAAP. If at any time Borrower has any Subsidiaries, all accounting and financial
terms herein shall be deemed to include references to consolidated and
consolidating principles.
1.03. UCC Terms. Except as otherwise provided herein, terms used in this
Agreement that are defined in the UCC shall have the same meanings herein.
1.04. General Construction; Captions. All definitions and other terms used
in this Agreement shall be equally applicable to the singular and plural forms
thereof, and all references to any gender shall include all other genders. The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section, subsection, schedule and
exhibit references are to this Agreement unless otherwise specified. The
captions and table of contents in this Agreement and the other Loan Documents
are for convenience only, and in no way limit or amplify the provisions hereof.
1.05. References to Documents and Laws. All defined terms and references
in this Agreement or the other Loan Documents with respect to any agreements,
notes, instruments, certificates or other documents shall be deemed to refer to
such documents and to any amendments, modifications, renewals, extensions,
replacements, restatements, substitutions and supplements of and to such
documents. All references to statutes and related regulations shall include any
amendments thereof and any successor statutes and regulations.
ARTICLE 2: LOANS
2.01. Commitment. (a) Subject to the terms and conditions herein provided,
and so long as no Event of Default has occurred and is continuing hereunder,
Lender agrees to lend to the Borrowers, from time to time from and after the
Tranche 1 Closing Date and before the Tranche 1 Financing Termination Date, an
aggregate principal amount not to exceed the amount set forth on Schedule 2.01
hereto as the maximum principal amount (the "Tranche 1 Commitment"), solely for
the purpose set forth on Schedule 2.01.
(b) Subject to the terms and conditions herein provided, and so long as no
Event of
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Default has occurred and is continuing hereunder, Lender agrees to lend to the
Borrowers, from time to time from and after the Tranche 2 Closing Date and
before the Tranche 2 Financing Termination Date, an aggregate principal amount
not to exceed the amount set forth on Schedule 2.01 hereto as the maximum
principal amount (the "Tranche 2 Commitment"), solely for the purpose set forth
on Schedule 2.01.
(c) Subject to the terms and conditions herein provided, and so long as no
Event of Default has occurred and is continuing hereunder, Lender agrees to lend
to the Borrowers, from time to time from and after the Tranche 3 Closing Date
and before the Tranche 3 Financing Termination Date, an aggregate principal
amount not to exceed the amount set forth on Schedule 2.01 hereto as the maximum
principal amount (the "Tranche 3 Commitment"), solely for the purpose set forth
on Schedule 2.01.
(d) Subject to the terms and conditions herein provided, and so long as no
Event of Default has occurred and is continuing hereunder, Lender agrees to lend
to the Borrowers, from time to time from and after the Tranche 4 Closing Date
and before the Tranche 4 Financing Termination Date, an aggregate principal
amount not to exceed the amount set forth on Schedule 2.01 hereto as the maximum
principal amount (the "Tranche 4 Commitment"), solely for the purpose set forth
on Schedule 2.01.
2.02. Note and Payment Terms.
(a) Promissory Note. The Loans shall be evidenced by one or more
Notes substantially in the form of Exhibit A hereto, with appropriate
insertions. Each Note shall be executed by the applicable Borrower,
payable to the order of Lender, and shall evidence the obligation of such
Borrower to repay all principal amounts advanced under or pursuant to this
Agreement, together with interest and all other amounts due thereunder.
(i) All Loans made under the Tranche 1 Commitment ("Tranche 1 Loans")
shall be evidenced by the Tranche 1 Note, and all such Tranche 1 Loans
shall have a stated maturity that is the Tranche 1 Maturity Date, and will
bear interest at the Tranche 1 Interest Rate from and including the
borrowing date of such Tranche 1 Loan until such Tranche 1 Loan or any
amount thereof is paid in full (whether on the Tranche 1 Maturity Date, by
acceleration or otherwise). (ii) All Loans made under the Tranche 2
Commitment ("Tranche 2 Loans") shall be evidenced by the Tranche 2 Note,
and all such Tranche 2 Loans shall have a stated maturity that is the
Tranche 2 Maturity Date, and will bear interest at the Tranche 2 Interest
Rate from and including the Tranche 2 First Borrowing Date until Tranche 2
Note or any amount thereof is paid in full (whether on the Tranche 2
Maturity Date, by acceleration or otherwise). (iii) All Loans made
pursuant to the Tranche 3 Commitment ("Tranche 3 Loans") shall be
evidenced by the Tranche 3 Notes which will have a stated maturity that is
the Tranche 3 Maturity Date, and bear interest at the Tranche 3 Interest
Rate from and including the borrowing date of such Tranche 3 Loan until
such Tranche 3
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Loan or any amount thereof is paid in full (whether on the Tranche 3
Maturity Date, by acceleration or otherwise). (iv) All Loans made pursuant
to the Tranche 4 Commitment ("Tranche 4 Loans") shall be evidenced by the
Tranche 4 Notes which will have a stated maturity that is the Tranche 4
Maturity Date, and bear interest at the Tranche 4 Interest Rate from and
including the borrowing date of such Tranche 4 Loan until such Tranche 4
Loan or any amount thereof is paid in full (whether on the Tranche 4
Maturity Date, by acceleration or otherwise). All schedules attached to
any Note shall be deemed a part thereof. Any such schedule may be amended
by Lender from time to time to reflect changes in the amounts includable
thereon, but the failure to attach or amend any schedule shall not
diminish the obligation of the applicable Borrower to repay all amounts
due hereunder or on any Note.
(b) Interest Payments. Interest shall continue to accrue on the
principal amount outstanding on any Note at the applicable Interest Rate
and shall be payable, in arrears, on each applicable Interest Payment
Date. Interest shall not accrue with respect to principal that is repaid
on any date if such principal shall have been repaid prior to 1:00 p.m.,
New York time, on such date. All accrued interest shall be payable, in
arrears, with the principal payments described below.
(c) Principal Payments. (i) All Tranche 1 Loans are term loans and
all principal amounts due with respect to Tranche 1 Loans shall be payable
in installments in accordance with the Tranche 1 Payment Schedule set
forth on Schedule 2.02 hereto, commencing on the Tranche 1 Initial Payment
Date and on each Payment Date thereafter until the Tranche 1 Maturity
Date. The amount of each such principal installment payment shall be
calculated, at the outset, by taking the applicable percentage (as
described on Schedule 2.02 hereto) of the amount of all principal amounts
outstanding on the Tranche 1 First Borrowing Date; provided, however, that
the principal payment amounts shall be recalculated by Lender each time
Advances are made hereunder after the Tranche 1 First Borrowing Date but
prior to the Tranche 2 Closing Date, based on the aggregate amount of all
Advances made under the Tranche 1 Commitment at any time. Borrower and
Lender understand that this payment schedule is intended to amortize fully
the principal amount advanced under the Tranche 1 Commitment in equal
monthly payments from the date of such Advance to the Tranche 1 Maturity
Date and any other principal and interest amounts outstanding representing
amounts owed under Advances made prior to the Tranche 2 Closing Date will
be added to the final payment on the Tranche 1 Maturity Date. In any
event, the entire outstanding principal amount of all Tranche 1 Loans and
all accrued but unpaid interest and all other outstanding amounts due with
respect thereto shall be paid on the Tranche 1 Maturity Date.
(ii) All Tranche 2 Loans are term loans, and all principal amounts due
with respect to the Tranche 2 Loans shall be payable in installments in
accordance with the Tranche
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2 Payment Schedule set forth on Schedule 2.02 hereto, commencing on the
Tranche 2 Initial Payment Date and on each Payment Date thereafter until
the Tranche 2 Maturity Date. The amount of each such principal installment
payment shall be calculated, at the outset, by taking the applicable
percentage (as described on Schedule 2.02 hereto) of the amount of all
principal amounts outstanding on the Tranche 2 First Borrowing Date;
provided, however, that the principal payment amounts shall be
recalculated by Lender each time Advances are made hereunder after the
Tranche 2 Closing Date and before the Tranche 3 Closing Date, based on the
aggregate amount of all Advances made under the Tranche 2 Commitment at
any time. Borrower and Lender understand that this payment schedule is
intended to amortize fully the principal amount advanced under the Tranche
2 Commitment in equal monthly payments from the date of such Advance to
the Tranche 2 Maturity Date and any other principal and interest amounts
outstanding representing amounts owed under Advances after the Tranche 2
Closing Date and before the Tranche 3 Closing Date will be added to the
final payment on the Tranche 2 Maturity Date. In any event, the entire
outstanding principal amount of all Tranche 2 Loans and all accrued but
unpaid interest and all other outstanding amounts due with respect thereto
shall be paid on the Tranche 2 Maturity Date.
(iii) All Tranche 3 Loans are term loans, and all principal amounts due
with respect to the Tranche 3 Loans shall be payable in installments in
accordance with the Tranche 3 Payment Schedule set forth on Schedule 2.02
hereto, commencing on the Tranche 3 Initial Payment Date and on each
Payment Date thereafter until the Tranche 3 Maturity Date. The amount of
each such principal installment payment shall be calculated, at the
outset, by taking the applicable percentage (as described on Schedule 2.02
hereto) of the amount of all principal amounts outstanding on the Tranche
3 First Borrowing Date; provided, however, that the principal payment
amounts shall be recalculated by Lender each time Advances are made
hereunder after the Tranche 3 Closing Date, based on the aggregate amount
of all Advances made under the Tranche 3 Commitment at any time. Borrower
and Lender understand that this payment schedule is intended to amortize
fully the principal amount advanced under the Tranche 3 Commitment in
equal monthly payments from the date of such Advance to the Tranche 3
Maturity Date and any other principal and interest amounts outstanding
representing amounts owed under Advances after the Tranche 3 Closing Date
will be added to the final payment on the Tranche 3 Maturity Date. In any
event, the entire outstanding principal amount of all Tranche 3 loans and
all accrued but unpaid interest and all other outstanding amounts due with
respect thereto shall be paid on the Tranche 3 Maturity Date.
(iv) All Tranche 4 Loans are term loans, and all principal amounts due
with respect to the Tranche 4 Loans shall be payable in installments in
accordance with the Tranche 4 Payment Schedule set forth on Schedule 2.02
hereto, commencing on the Tranche 4
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Initial Payment Date and on each Payment Date thereafter until the Tranche
4 Maturity Date. The amount of each such principal installment payment
shall be calculated, at the outset, by taking the applicable percentage
(as described on Schedule 2.02 hereto) of the amount of all principal
amounts outstanding on the Tranche 4 First Borrowing Date; provided,
however, that the principal payment amounts shall be recalculated by
Lender each time Advances are made hereunder after the Tranche 4 Closing
Date, based on the aggregate amount of all Advances made under the Tranche
4 Commitment at any time. Borrower and Lender understand that this payment
schedule is intended to amortize fully the principal amount advanced under
the Tranche 4 Commitment in equal monthly payments from the date of such
Advance to the Tranche 4 Maturity Date and any other principal and
interest amounts outstanding representing amounts owed under Advances
after the Tranche 4 Closing Date will be added to the final payment on the
Tranche 4 Maturity Date. In any event, the entire outstanding principal
amount of all Tranche 4 Loans and all accrued but unpaid interest and all
other outstanding amounts due with respect thereto shall be paid on the
Tranche 4 Maturity Date.
(d) Late Payments and Default Rate. Notwithstanding the foregoing,
if a Borrower shall fail to pay within ten (10) days after the due date
any principal amount or interest or other amount payable under this
Agreement or under any Note, such Borrower shall pay to Lender, to defray
the administrative costs of handling such late payments, an amount equal
to interest on the amount overdue and unpaid, to the extent permitted
under applicable law, at the Default Rate (instead of the applicable
Interest Rate), from and including the due date until such overdue
principal amount, interest or other unpaid amount is paid in full (both
before and after judgment) whether or not any notice of default in the
payment thereof has been delivered under Section 9.01 hereof. In addition,
but without duplication, upon the occurrence and during the continuance of
an Event of Default, all outstanding amounts hereunder shall bear interest
at the Default Rate (instead of the Interest Rate) until such amounts are
paid in full or such Event of Default is cured by a Borrower or is waived
in writing by Lender.
(e) Excess Interest. Notwithstanding any provision of any Note, this
Agreement or any other Loan Document to the contrary, it is the intent of
Lender and Borrowers that Lender or any subsequent holder of any Note
shall never be entitled to receive, collect, reserve or apply, as
interest, any amount in excess of the maximum rate of interest permitted
to be charged by applicable Law, as amended or enacted from time to time.
In the event Lender, or any subsequent holder of any Note, ever receives,
collects, reserves or applies, as interest, any such excess, such amount
which would be excessive interest shall be deemed a partial prepayment of
principal and treated as such, or, if the principal indebtedness and all
other amounts due are paid in full, any remaining excess funds shall
immediately be applied to any other
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outstanding indebtedness of the applicable Borrower due to Lender, and if
none is outstanding, shall be paid to the applicable Borrower. In
determining whether or not the interest paid or payable, under any
specific contingency, exceeds the highest lawful rate, each Borrower and
Lender shall, to the maximum extent permitted under applicable law, (a)
exclude voluntary prepayments and the effects thereof as it may relate to
any fees charged by Lender, and (b) amortize, prorate, allocate, and
spread, in equal parts, the total amount of interest throughout the entire
term of the indebtedness; provided that if the indebtedness is paid and
performed in full prior to the end of the full contemplated term hereof,
and if the interest received for the actual period of existence hereof
exceeds the maximum lawful rate, Lender or any subsequent holder of any
Note shall refund to the applicable Borrower the amount of such excess or
credit the amount of such excess against the principal portion of the
indebtedness, as of the date it was received, and, in such event, Lender
shall not be subject to any penalties provided by any laws for contracting
for, charging, reserving or receiving interest in excess of the maximum
lawful rate.
2.03. Procedures for Borrowing.
(a) Timing of Advances. Advances shall not be made more than once
per calendar month, and all Advances in any calendar month shall be made
on the same Borrowing Date. Each Advance (other than the last Advance)
shall be in an aggregate principal amount of not less than $25,000. No
amounts may be borrowed under the Tranche 1, Tranche 2, Tranche 3 or
Tranche 4 Commitment on or after the Financing Termination Date for such
tranche. Lender is hereby authorized to retain from each Advance all
amounts of Lender's Expenses that are accrued and unpaid and for which
invoices have been sent to Destia at least five (5) Business Days before
such Advance. In any event, all outstanding Lender's expenses consisting
of legal fees, charges and expenses not paid prior to any Borrowing Date
shall be paid before any Advance is made or concurrently with such
Advance.
(b) Borrowing Certificates. To request an Advance hereunder, a
Borrower shall send to Lender, at least five (5) Business Days prior to
the requested Borrowing Date, a completed Borrowing Certificate, along
with invoices and such other supporting documentation as Lender may
reasonably request. Lender is hereby authorized to add to any Borrowing
Certificate all amounts payable by Borrower to Lender in respect of
Lender's expenses consisting of legal fees, charges and expenses arising
or incurred by Lender, to the extent such fees, charges and expenses have
then been incurred or charged and may be paid from proceeds of the Loan.
(c) Transmission of Advances. Advances shall be made by wire
transfer to the account(s) specified in the applicable Borrowing
Certificate, except that (i) proceeds of the Loans may be transmitted, at
Lender's option, directly to an NTI
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account for payment of any unpaid NTI invoices, and (ii) Advances shall be
transmitted to Borrower only to the extent that Borrower provides Lender
with satisfactory evidence that the amount of such Advance has been paid
to NTI or such other payee for a purpose permitted under Section 2.01. No
further authorization shall be necessary for any such direct
disbursements, and each such Advance shall satisfy pro tanto the
obligations of the Lender under this Agreement.
(d) Borrowing Dates. Advances shall be made by Lender on the
Borrowing Date specified in the applicable Borrowing Certificate if all
conditions for such Advance have been satisfied, or on such later Business
Date as all conditions for such Advance shall have been satisfied, as
reasonably determined by Lender.
(e) Advances After Default. At its option, after the occurrence and
continuance of a Default, Lender may but shall not be obligated to make
advances of portions of the Loan proceeds to any Person (including without
limitation NTI, suppliers, sub-contractors and materialmen) to whom Lender
in good faith determines payment is due with respect to the Equipment, and
any proceeds so disbursed by Lender shall be deemed disbursed as of the
date on which the Person to whom payment is made receives the same. No
further authorization from a Borrower shall be necessary to warrant such
direct advances, and the execution of this Loan Agreement by Destia and
borrowings hereunder by any Borrower shall, and hereby do, constitute an
irrevocable authorization and power of attorney so to advance proceeds
hereunder. All such Advances shall satisfy pro tanto the obligations of
Lender hereunder and shall be secured by the Security Documents as fully
as if made directly to such Borrower.
2.04. Prepayments.
(a) Voluntary Prepayments. Destia may, at its option, at any time,
prepay and cause the other Borrowers to prepay the Loans, in whole but not
in part, upon at least thirty (30) Business Days prior written notice to
Lender specifying the date and amount of prepayment, plus the premium
described below, and all accrued but unpaid interest thereon. Such notice
shall be irrevocable and the principal amount shall be due and payable on
the date specified together with accrued interest on the amount prepaid.
Any such prepayment shall be subject to a prepayment premium equal to the
sum of (i) the amount of additional interest (if any) that would have been
payable by Borrowers under the Tranche 3 and Tranche 4 Loans had the
Tranche 3 and Tranche 4 Rate Adjustment been fixed at three hundred ninety
five basis (395) points during the entire term of the Tranche 3 and
Tranche 4 Loans and not subject to adjustment as provided in Schedule
2.02, plus (ii) a percentage of the amount prepaid as follows: (1) with
respect to prepayments of the Tranche 1, Tranche 2, and Tranche 3 Loans,
three percent (3%) if the prepayment is made not more than one year after
the
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Tranche 3 Closing Date; two percent (2%) if the prepayment is made more
than one (1), but not more than two (2) years after the Tranche 3 Closing
Date, one percent (1%) if the prepayment is made more than two (2), but
not more than three (3) years after the Tranche 3 Closing Date, and zero
percent (0%) if the prepayment is made more than three (3) years after the
Tranche 3 Closing Date; and (2) with respect to prepayments of the Tranche
4 Loans, three percent (3%) if the prepayment is made not more than one
year after the Tranche 4 First Borrowing Date; two percent (2%) if the
prepayment is made more than one (1), but not more than two (2) years
after the Tranche 4 First Borrowing Date, one percent (1%) if the
prepayment is made more than two (2), but not more than three (3) years
after the Tranche 4 First Borrowing Date, and zero percent (0%) if the
prepayment is made more than three (3) years after the Tranche 4 First
Borrowing Date. Amounts prepaid may not be reborrowed and shall be applied
as provided in Section 2.04(c). Excess interest payments under Section
2.02(g) or prepayments made from insurance proceeds pursuant to Section
6.03 or with any condemnation proceeds may be made in accordance with and
subject to the terms, conditions and limitations hereof and shall not be
subject to a prepayment premium.
(b) Mandatory Optional Prepayment. Upon Lender's written demand,
Destia shall, within ten (10) days of receipt thereof, immediately
exercise its option to prepay the Loans in full, including all principal,
premium, to the extent provided for in this Section 2.04(b), accrued
interest and expenses (the "Mandatory Optional Prepayments"), if the
Lender does not grant its consent to the Merger within ninety (90) days of
the consummation of such Merger, provided that no prepayment premium shall
be payable for amounts of Tranche 4 Loans prepaid under Section 2.04(b).
In order to prepay the Loans pursuant to this Section 2.04(b), Destia
shall, within ten (10) days of receipt of Lender's written demand that it
exercise its option to prepay all Loans, prepay all Loans, together with
accrued interest on the amount prepaid, together with a prepayment premium
as follows: any such prepayment shall be subject to a prepayment premium
equal to the sum of (i) the amount of additional interest (if any) that
would have been payable by Borrowers under the Tranche 3 and Tranche 4
Loans had the Tranche 3 and Tranche 4 Rate Adjustment been fixed at three
hundred ninety five basis (395) points during the entire term of the
Tranche 3 and Tranche 4 Loans and not subject to adjustment as provided in
Schedule 2.02, plus (ii) a percentage of the amount prepaid as follows:
(1) with respect to prepayments of the Tranche 1, Tranche 2, and Tranche 3
Loans, three percent (3%) if the prepayment is made not more than one year
after the Tranche 3 Closing Date; two percent (2%) if the prepayment is
made more than one (1), but not more than two (2) years after the Tranche
3 Closing Date, one percent (1%) if the prepayment is made more than two
(2), but not more than three (3) years after the Tranche 3 Closing Date,
and zero percent (0%) if the prepayment is made more than three (3) years
after the Tranche 3 Closing Date. Amounts prepaid may not be reborrowed
and shall be applied as
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provided in Section 2.04(c).
(c) Application of Prepayments. Any prepayments shall be applied
first to interest, then to premium, then to expenses, and then to the
installments of principal in reverse chronological order.
2.05. Computation of Interest. Interest shall be calculated daily on the
basis of a 360-day year for the actual days elapsed in the period during which
it accrues.
2.06. Payments. All payments and prepayments to be made in respect of
principal, interest, prepayment premiums or other amounts due from any Borrower
hereunder or under any Note shall be payable on or before 1:00p.m., Nashville
time, on the day when due, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived, and an action therefor shall
immediately accrue. Such payments shall be made to Lender at Lender's office at
501 Corporate Centre Drive, Suite 600, Franklin, Tennessee 37067, or such other
location specified in writing by Lender, in immediately available funds, without
setoff, recoupment, counterclaims or any other deduction of any nature.
2.07. Indemnity. Each Borrower hereby indemnifies Lender against any
losses, claims, penalties, expenses, actions, suits, obligations, liabilities
and Liens (and all costs and expenses, including reasonable attorneys' fees
incurred in connection therewith), that Lender has sustained or incurred or may
sustain or incur in connection with any of the Collateral, or the enforcement,
performance or administration of the Loan Documents, or as a consequence of any
default by any Borrower in the performance or observance of any covenant or
condition contained in this Agreement or the Loan Documents, including without
limitation, the breach of any representation or warranty, any failure of any
Borrower to pay when due (by acceleration or otherwise) any principal, interest,
fee or any other amount due hereunder or under any Note, and any failure of any
Borrower to comply with all applicable Requirements of Law (collectively,
"Claims") except to the extent of any Claims caused solely by Lender's gross
negligence or willful misconduct. Each Borrower's obligations under this Section
2.07 shall be part of the Obligations and shall be secured by the Collateral.
Each Borrower agrees that upon written notice by Lender of the assertion of any
Claims, the Borrowers shall, at Lender's option, either assume full
responsibility for, or reimburse Lender for the reasonable costs and expenses
of, the defense thereof. Lender shall have no liability for consequential or
incidental damages of any nature. The provisions of this Section 2.07 shall
survive the termination of this Agreement and payment of the Obligations.
2.08. Use of Proceeds. The proceeds of the Advances hereunder shall be
used by the Borrowers only for the purposes and in the amounts described in
Section 2.01 hereof, and no amounts repaid may be reborrowed.
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2.09. Fees. The Borrowers shall pay Lender the fees described on Schedule
2.09 hereto in connection with this Agreement.
2.10. Lender's Expenses. Each Borrower agrees (a) to pay or reimburse
Lender for all its reasonable costs, fees, charges and expenses incurred or
arising in connection with the negotiation, review, preparation and execution of
this Agreement, the Loan Documents, any commitment or proposal letter, or any
amendment, supplement, waiver, modification to, or restructuring of this
Agreement, the Obligations or the other Loan Documents, including, without
limitation, reasonable outside counsel legal fees and disbursements, expenses,
document charges and other charges and expenses of Lender, (b) to pay or
reimburse Lender for all its reasonable costs, fees, charges and expenses
incurred in connection with the administration of the Loans or the enforcement,
protection or preservation of any rights under or in connection with this
Agreement or any other Loan Documents, including, without limitation, reasonable
outside counsel legal fees and disbursements, audit fees and charges, and all
out-of-pocket expenses, (c) to pay, indemnify, and to hold Lender harmless from,
any and all recording and filing fees and taxes and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other taxes
(excluding income and franchise taxes and taxes of similar nature), if any,
which may be payable or determined to be payable in connection with the
execution and delivery or recordation or filing of, or consummation of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement and the
other Loan Documents. All of the amounts described in this Section are referred
to collectively as the "Lender's Expenses," shall be payable upon Lender's
demand, and shall accrue interest at the Interest Rate in effect when such
demand is made from five (5) days after the date of demand until paid in full.
All Lender's Expenses, and interest thereon, shall be part of the Obligations
and shall be secured by the Collateral. The agreements in this Section 2.10
shall survive repayment of the Obligations. All Lender's Expenses that are
outstanding on any Borrowing Date shall be paid before or with such advance. If
a Borrower has not paid to Lender the amount of all Lender's Expenses billed to
Destia at least five (5) Business Days before such Borrowing Date, Lender shall
be authorized to retain from any Advance on such Borrowing Date the amount of
such Lender's Expenses that remain unpaid. Each Borrower's obligation to pay
Lender's Expenses shall not be limited by any limitation on the amount of the
Commitment that may be designated as available for such purposes, and any
amounts so designated shall be used to pay Lender's Expenses accrued at the time
of any Advance before any of the legal fees or similar expenses of the
Borrowers.
2.11 Joint and Several Liability; Additional Subsidiaries. Each Foreign
Borrower shall be jointly and severally liable, to the extent permitted under
the corporate or other laws of such entity's jurisdiction of incorporation, for
all Obligations hereunder arising from Advances to or for the benefit of any
Foreign Borrower. All Domestic Borrowers shall be jointly and severally liable
with all other Borrowers for all other Obligations hereunder. The undersigned
Borrowers acknowledge and agree that: (i) future Domestic Borrowers and
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Foreign Borrowers are required to become additional Borrowers under the
Agreement without the consent of any other Borrower by execution by such
Subsidiary of a form of the Annex A to the Schedule 1.01 of this Agreement; (ii)
Lender is willing to extend certain credit to the undersigned Borrowers, subject
to the terms and conditions set forth in the Agreement, including the condition
that the undersigned Domestic Borrowers will be jointly and severally liable for
the payment of all Indebtedness owed by Destia or any other Borrower to Lender
under the Agreement and the condition that the undersigned Foreign Borrowers, to
the extent permitted under the corporate or other laws of such entity's
jurisdiction of incorporation, will be jointly and severally liable for the
payment of all Indebtedness owed by any Foreign Borrower to Lender under the
Agreement; (iii) without this condition of joint and several liability, Lender
would not be willing to extend credit to any Borrower; and (iv) the undersigned
Borrowers and other Subsidiaries of Destia which may become additional Borrowers
under the Agreement are (or will be) related entities, and the undersigned
Borrowers expect to increase their respective businesses, and to benefit
directly and indirectly, through the use of the equipment to be acquired by it
and the other Borrowers with the proceeds of the loans to be made pursuant to
the Agreement. Destia shall cause each Person that becomes a Domestic Subsidiary
of Destia (other than either (i) non-operating Domestic Subsidiaries of Destia
or (ii) with the consent of Lender, not to be unreasonably withheld or delayed,
Domestic Subsidiaries of Destia which are not Borrowers hereunder or do not own
Collateral if Destia deems the requirement of becoming a Borrower to be unduly
burdensome to, or to interfere in a material respect with such Domestic
Subsidiary's business or operations) or that becomes a Foreign Borrower after
the date of this Agreement to become a Borrower hereunder by executing a form of
Annex which is Annex A to Schedule 1.01 of this Agreement and provide the
information required to be set forth in Schedule 1.01(b) hereto, and if required
by Lender cause the delivery of an opinion of legal counsel to Destia and such
additional Subsidiary dated the date of the execution of the form of the Annex A
to Schedule 1.01 in form and substance satisfactory to Lender and such other
documents as the Lender may request, including but not limited to a certificate
of a responsible officer of such Subsidiary as to the authority of such
Subsidiary to execute, deliver and perform this Agreement and all Notes and as
to the incumbency and signature of the officer or officers signing Borrowing
Certificates and Notes.
2.12 Taxes. (a) Any and all payments by any Borrower hereunder or under
the Notes executed by such Borrower shall be made, in accordance with Section
2.12, free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of Lender Party, taxes that are
imposed on its net income by the United States and taxes that are imposed on its
net income (and franchise taxes imposed in lieu thereof) by the state or foreign
jurisdiction under the laws of which Lender is organized or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities in respect of payments hereunder or under
the Notes being hereinafter referred to as "Taxes"). If any Borrower shall be
required by law to deduct any
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Taxes from or in respect of any sum payable hereunder or under any Note executed
by such Borrower to Lender, (i) the sum payable by such Borrower shall be
increased as may be necessary so that after such Borrower and Lender have made
all required deductions (including deductions applicable to additional sums
payable under this Section 2.12) Lender Party receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such Borrower
shall make all such deductions and (iii) such Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, each Borrower shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or under the Notes executed by such Borrower or
from the execution, delivery or registration of, performance under, or otherwise
with respect to, this Agreement or the Notes executed by such Borrower
(hereinafter referred to as "Other Taxes").
(c) Each Borrower shall jointly and severally indemnify Lender for and
hold it harmless against the full amount of Taxes and Other Taxes, and for the
full amount of taxes of any kind imposed by any jurisdiction on amounts payable
under this Section imposed on or paid by such Lender and any liability
(including penalties, additions to tax, interest and expenses) arising therefrom
or with respect thereto. This indemnification shall be made within 30 days from
the date Lender makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
shall furnish to Lender, at its address referred to above, the original or a
certified copy of a receipt evidencing such payment.
(e) In the event that Lender determines in its reasonable discretion, that
it has actually and finally realized a refund of or credit for taxes withheld or
paid pursuant to this Section, which credit or refund is identifiable by Lender
as being a result of taxes withheld in connection with sums payable hereunder or
under any other Loan Document, Lender shall promptly notify such Borrower and
shall remit to such Borrower, the amount of such refund or credit allocable to
payments made hereunder or under the other Loan Documents; provided, however,
that in the event of any subsequent disallowance of any such refund or credit on
account of which Lender has made a payment pursuant to this paragraph, the
amount so disallowed shall be deemed to be a Tax (notwithstanding any exclusions
in the definition of "Taxes") for which Lender shall be entitled to
indemnification under of this Section, but only to the extent of any payment by
such Lender Party pursuant to this paragraph.
ARTICLE 3: COLLATERAL AND SECURITY AGREEMENT
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3.01. Grant of Security Interest. As security for the Obligations, in the
case of Domestic Borrowers, and for the Foreign Borrower Obligations in the case
of Foreign Borrowers, each Borrower (as debtor) hereby assigns to Lender as
collateral, and grants to Lender (as secured party), a continuing security
interest in and to, all of the Borrower's right, title and interest in and to
the following kinds and types of property, whether now owned or hereafter
acquired or arising, wherever located, together with all substitutions therefor
and all accessions, replacements and renewals thereof, and in all proceeds and
products thereof (collectively, the "Collateral"):
(a) All the NTI Equipment, all third party equipment, including all
replacements and expansions, financed by Lender and any and all additions,
substitutions, and replacements to or of any of the foregoing, together
with all attachments, components, parts, improvements, upgrades, and
accessions installed thereon or affixed thereto (collectively,
"Equipment") and each Borrower's rights under the NTI Purchase Agreement;
(b) All (i) general intangibles and intangible property constituting
part of, or provided by or through NTI in connection with, the Equipment
and (ii) general intangibles and intangible property constituting part of,
or provided by or through NTI in connection with, the System which is
necessary for the proper operation of the Equipment by a Person other than
such Borrower, including in clauses (i) and (ii) without limitation,
insurance policies, licenses, license rights, rights in intellectual
property, software, software licenses, computer programming (including
source codes, object codes and all other embodiments of computer
programming or information), refunds, warranties and indemnification
rights, and all amounts owed at any time to such Borrower by Lender or
NTI, but excluding any general intangibles or intangible property not
financed by Lender that is used by any Borrower in its business for a
purpose exclusive of the operation of the Equipment (collectively,
"General Intangibles"); and
(c) All proceeds and products of any of the foregoing, including
without limitation (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to the Borrower from time to time with
respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to such Borrower from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of governmental authority),
and (iii) any and all cash proceeds and non-cash proceeds in the form of
equipment, inventory, contracts, accounts, general intangibles, chattel
paper, documents, instruments, securities, or other proceeds
(collectively, "Proceeds").
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3.02. Priority of Security Interests. The security interests granted by
the Borrowers to Lender are and shall be continuing and indefeasible security
interests in the Collateral, subject to no Liens except for Liens permitted
under Section 8.02 hereof.
3.03. Further Documentation; Pledge of Instruments. At any time and from
time to time, upon the written request of the Lender, and at the sole expense of
the applicable Borrower, each Borrower shall promptly execute, deliver and
record any documents, instruments, agreements and amendments, and take all such
further action, as the Lender may reasonably deem desirable in obtaining the
full benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing statements or
amendments under the UCC. The Borrowers also hereby authorize the Lender, during
the existence of an Event of Default or Default, to file any such financing
statement or amendment thereto, without the signature of the applicable
Borrower, or with a copy or telecopy of the Borrower's signature, to the extent
permitted by applicable law, or to execute any financing statement or amendment
thereof on behalf of the applicable Borrower as such Borrower's
attorney-in-fact. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note or other
instrument or any certificated securities, such note, instrument or certificate
shall be immediately pledged and delivered to the Lender hereunder, duly
endorsed in a manner satisfactory to the Lender.
3.04. Further Identification of Collateral. Each Borrower shall furnish to
the Lender from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Lender may reasonably request, all in reasonable detail.
3.05. Remedies. Lender shall have all the rights and remedies of a secured
party under the UCC, and shall be entitled to exercise any and all remedies
available under Article 9 hereof or otherwise available at law or in equity upon
the occurrence of an Event of Default.
3.06. Standard of Care. Lender shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral in its
possession if it takes such action for that purpose as any Borrower requests in
writing, but Lender's failure to comply with any such request shall not of
itself be deemed a failure to exercise reasonable care, and no failure of Lender
to preserve or protect any rights with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of such Collateral
not so requested by a Borrower, shall be deemed a failure to exercise reasonable
care in the custody or preservation of such Collateral.
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3.07. Advances to Protect Collateral. All insurance expense and all
reasonable expenses of protecting, storing, warehousing, insuring, handling,
maintaining and shipping the Collateral (including, without limitation, all rent
payable by the Borrowers to any landlord of any premises where any of the
Collateral may be located), and, any and all taxes shall be borne and paid by
the Borrowers. After the occurrence and during the continuance of a Default,
Lender may (but shall not be obligated to) make advances to preserve, protect or
obtain any of the Collateral, including advances to cure defaults under any of
the System agreements or advances to pay taxes, insurance and the like, and all
such advances shall become part of the Obligations owing to Lender hereunder and
shall be payable to Lender on demand, with interest thereon from the date of
such advance until paid at the Default Rate in effect on the date of such
advance.
3.08. License to Use. Lender is hereby granted a license or other right to
use, without charge, but solely following the occurrence of an Event of Default
and in connection with Lender's exercise of remedies hereunder Borrower's
labels, patents, copyrights, rights of use of any name, trade secrets,
tradenames, trademarks and advertising matter, or any tangible or intangible
property or rights of a similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral during the continuance of an
Event of Default and thereafter if Lender is attempting to sell Collateral which
it has acquired from the Borrowers by way of foreclosure or deed in lieu of
foreclosure, and Borrowers' rights under all licenses and franchise agreements
with respect to the Collateral shall inure to Lender's benefit.
3.09 Priority of Security Interests and/or Liens on Equipment located
outside of the United States. Lender and the Borrowers acknowledge that Advances
(i) under the Tranche 2 Commitment may be used by a Borrower to acquire NTI
Equipment and related Software which will be installed in London, England,
Brussels, Belgium and/or Paris, France, (ii) under the Tranche 3 Commitment may
be used by a Borrower to acquire NTI Equipment and related Software which will
be installed in the United States (with respect to a Domestic Borrower only) or
the United Kingdom, Belgium, France, the Netherlands, Germany or such other
location outside the United States as Lender may approve, and (iii) under the
Tranche 4 Commitment may be used by a Borrower to acquire NTI Equipment and
related Software which will be installed in the United States (with respect to a
Domestic Borrower only) or the United Kingdom, Canada, Switzerland, Austria,
Greece, Spain, Italy, Belgium, the Netherlands, Germany, France, or such other
locations outside the United States as Lender may approve. As a condition to any
Advance by Lender to a Borrower to finance the acquisition of NTI Equipment to
be located outside the United States, such Borrower shall (i) deliver a list
identifying all NTI Equipment and specifying where in such country such NTI
Equipment will be located, (ii) at the sole expense of such Borrower, execute,
deliver and record any documents, instruments, agreements and amendments, and
take all such further action as Lender may reasonably deem desirable, to grant
and perfect a security interest and/or lien on the Collateral in favor of Lender
under the laws of such country where such
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NTI Equipment will be located, which security interest and/or lien will be
enforceable against Borrower and third parties in accordance with its terms, and
subject to no other liens or security interest other than Permitted
Encumbrances, and (iii) deliver an opinion of counsel in favor of Lender, in
form and substance to the reasonable satisfaction of the Lender, confirming that
(x) all steps have been taken to grant and perfect the security interest and/or
lien in such Collateral in favor of Lender which is enforceable against Borrower
and third parties in accordance with its terms, subject to no other liens or
security interests, and (y) compliance with all regulatory requirements in such
jurisdiction for the installation and operation of the Collateral in such
jurisdiction and the right of Lender to exercise foreclosure or repossession
remedies without the necessity of regulatory approval or licensing.
ARTICLE 4: REPRESENTATIONS AND WARRANTIES
Destia hereby represents and warrants to Lender as follows:
4.01. Organization and Qualification. Each Borrower and its Subsidiaries
is duly organized, validly existing and in good standing as a corporation or
other business entity under the laws of its jurisdiction of organization. Each
Borrower and its Subsidiaries is duly qualified to do business and in good
standing in each jurisdiction in which the failure to receive or retain such
qualification would have a Material Adverse Effect.
4.02. Authority and Authorization. Each Borrower has all requisite
corporate right, power, authority and legal right to execute and deliver and
perform its obligations under this Agreement, to make the borrowings provided
for herein, and to execute and deliver and to perform its obligations under each
Note. Each Borrower's execution, delivery and performance of the Basic
Agreements to which such Borrower is a party has been duly and validly
authorized by all necessary corporate proceedings on the part of such Borrower.
4.03. Execution and Binding Effect. All Basic Agreements have been or will
be duly and validly executed and delivered by the Borrowers which are required
to be a party thereto, and constitute or, when executed and delivered will
constitute, the legal, valid and binding obligations of the applicable Borrower
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws affecting creditors' rights generally,
and general equitable principles (whether considered in a proceeding at law or
in equity).
4.04. Governmental Authorizations. Except for the consents identified on
Schedule 4.04 hereto (the "Required Consents"), and such consents with respect
to which the failure to obtain will not have a Material Adverse Effect, no
authorization, consent, approval, license, exemption or other action by, and no
registration, qualification, designation, declaration or filing with, any
Governmental Authority (other than the filing of financing statements and
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continuation statements) is or will be necessary in connection with execution
and delivery of this Agreement, each Note or any other Loan Documents by any
Borrower or any Subsidiary thereof, consummation of the transactions herein or
therein contemplated, performance of or compliance by any Borrower or any
Subsidiary thereof with the terms and conditions hereof or thereof or the
legality, validity and enforceability hereof or thereof.
4.05. Regulatory Authorizations. Other than for authorizations, permits
and licenses with respect to which the failure to obtain will not have a
Material Adverse Effect, the Borrowers hold, directly or through Subsidiaries,
all authorizations, permits and licenses required by the FCC or the PUC or any
Communications Law for the construction and operation of the System, and all
such Regulatory Authorizations are in full force and effect, are subject to no
further administrative or judicial review and are therefore final. Lender will
not by reason of the execution, delivery and performance (other than the
enforcement of remedies) of any of the Loan Documents, be subject to the
regulation or control of either the FCC or the PUC.
4.06. Material Agreement; Absence of Conflicts. The execution and delivery
of this Agreement, each Note and the other Loan Documents, the consummation of
the transactions herein or therein contemplated and the performance of or
compliance with the terms and conditions hereof or thereof by any Borrower will
not (a) materially violate any applicable Law; (b) conflict with or result in a
material breach of or a default under the Organizational Documents of any
Borrower or of any Subsidiary thereof or any agreement or instrument to which
any Borrower is a party or by which any Borrower or any Subsidiary or any of
their respective properties is bound; or (c) result in the creation or
imposition of any Lien upon any property (now owned or hereafter acquired) of
any Borrower or any Subsidiary thereof except as otherwise permitted by this
Agreement.
4.07. No Restrictions. Neither the Borrowers nor any Subsidiary thereof is
a party or subject to any contract, agreement, or restriction in its
Organizational Documents that materially and adversely affects its business or
the use or ownership of any of its properties or operation of its business.
Neither the Borrowers nor any Subsidiary thereof is a party or subject to any
contract or agreement which restricts its right or ability to incur Indebtedness
hereunder, other than as set forth on Schedule 4.07, none of which prohibit the
Borrower's execution of or compliance with this Agreement. Neither the Borrowers
nor any Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of the Collateral,
whether now owned or hereafter acquired, to be subject to a Lien that is not a
Permitted Encumbrance.
4.08. Financial Statements. Destia has furnished to Lender the most recent
audited annual or unaudited quarterly financial statements of Destia, certified
by a Responsible Officer of Destia, including balance sheets and related
statements of income, retained earnings and cash flow statements, as described
on Schedule 4.08 hereof. Such financial
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statements (including the notes thereto) present fairly the financial condition
of Destia on a consolidated basis as of the end of such fiscal period and the
results of its operations and the changes in its financial position for the
fiscal period then ended (except that quarterly financial statements may be
subject to normal year end adjustments), all in conformity with GAAP applied on
a basis consistent with that of the preceding fiscal period.
4.09. Financial Accounting Practices. Each Borrower and its Subsidiaries
has made and kept books, records and accounts which, in reasonable detail,
accurately and fairly reflect its respective transactions and dispositions of
its assets, and each Borrower and its Subsidiaries shall maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization, (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with GAAP and (ii) to maintain
accountability for assets, (c) access to assets is permitted only in accordance
with management's general or specific authorization and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
4.10. Accurate and Complete Disclosure. No representation or warranty made
by Borrower under this Agreement and no statement made by Borrower in any
financial statement, certificate, report, exhibit or document furnished by
Borrower to Lender pursuant to or in connection with this Agreement (including
without limitation any filings with the Securities Exchange Commission, the FCC
or the PUC) is or was false or misleading as of the date made in any respect
(including by omission of information necessary to make such representation,
warranty or statement not misleading), other than which are unintentional and do
not have a Material Adverse Effect. There are no facts known to Borrower that
constitute a Material Adverse Effect, or, in Borrower's reasonable estimation,
will constitute a Material Adverse Effect, which has not been set forth in the
financial statements referred to in Section 4.08 hereof or otherwise disclosed
in writing to the Lender prior to the date hereof.
4.11. No Event of Default; Compliance with Material Agreements. No event
has occurred and is continuing and no condition exists which constitutes a
Default or an Event of Default after giving effect to the first Advance to be
made on or after the Tranche 3 Closing Date. As of the date hereof, no Borrower
nor any Subsidiary thereof is in violation of any material term of its material
agreements or instruments to which it is a party or by which it or its
properties is bound.
4.12. Litigation. Except as set forth in Schedule 4.12, there is no
pending action, suit or to Destia's knowledge threatened proceeding by or before
any Governmental Authority against or affecting any Borrower, any Subsidiary
thereof or any of their respective properties, rights or licenses which if
adversely decided would have a Material Adverse
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Effect.
4.13. Rights to Property; Intellectual Property. The Borrower which is the
party granting Lender a first priority security interest or lien under the
Security Document covering such Collateral has good and marketable title,
subject only to the Permitted Encumbrances, (i) to such Collateral acquired with
proceeds of an Advance to such party and (ii) to all personal and real property
purported to be owned by it as reflected in the most recent balance sheet
referred to in Section 4.08 hereof (except as sold or otherwise disposed of in a
manner permitted by this Agreement or as no longer used or useful in the conduct
of the business which sales or other disposals in the aggregate do not have a
Material Adverse Effect on such financial statements). Destia (either directly
or through its Subsidiaries) owns or possesses the right to use all patents,
trademarks, service marks, trade names, copyrights, know-how, franchises,
software and software licenses necessary for the operation of its business, free
from burdensome restrictions, other than where the failure to own or possess
such rights to will not have a Material Adverse Effect.
4.14. Financial Condition. Destia's financial condition is accurately
described in the Certificate of Financial Condition executed by Destia pursuant
hereto.
4.15. Taxes. Destia's federal tax identification number is set forth on
Schedule 1 hereto. With respect to the United States (whether federal, state or
local), (i) all tax returns required to be filed by each Borrower have been
properly prepared, executed and filed other than for such failure to file that
will not have a Material Adverse Effect, and (ii) all taxes, assessments, fees
and other governmental charges upon Borrower or upon any of its respective
properties, incomes, sales or franchises which are shown to be due and payable
thereon have been paid, other than taxes or assessments the validity or amount
of which Borrower is contesting in good faith. The reserves and provisions for
taxes on the books of Borrower are adequate for all open years and for its
current fiscal period. With respect to obligations outside the United States,
all tax returns required to be filed by Destia or by any of its Subsidiaries
have been properly prepared, executed and filed and all taxes, assessments, fees
and other governmental charges upon Borrower or upon a Subsidiary or upon any of
their respective properties, incomes, sales or franchises which would be due and
payable thereon have been paid, other than taxes or assessments the validity or
amount of which Borrower or such Subsidiary is contesting in good faith and
other than taxes, assessments or returns, with respect to which the failure to
pay or prepare, execute and file, as the case may be, do not and will not have,
in the aggregate, a Material Adverse Effect.
4.16. No Material Adverse Change. Since the date of the financial
statements referenced in Section 4.08, there has been no Material Adverse
Change.
4.17. No Regulatory Event. No Regulatory Event has occurred and is
continuing.
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4.18. Trade Relations. There exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship between Destia or any of its Subsidiaries and any carrier, any
labor organization, any customer, any supplier or any group thereof whose
agreements with Destia or any such Subsidiary or use of the Equipment
individually or in the aggregate are material to the business of Destia and its
Subsidiaries on a consolidated basis and which would have a Material Adverse
Effect, and there exists no present condition or state of facts or circumstances
which would have a Material Adverse Effect or prevent Borrower from conducting
its business (either directly or through a Subsidiary) after the consummation of
the transactions contemplated by this Agreement.
4.19. No Brokerage Fees. No brokerage or other fee, commission or
compensation is to be paid by any Borrower to any Person other than Lender in
connection with the loans to be made hereunder. Destia hereby indemnifies Lender
against any claims brought against Lender for brokerage fees or commissions of
any Person based on an agreement with any Borrower and agrees to pay all
expenses incurred by Lender in connection with the defense of any action or
proceeding brought to collect any such brokerage fees or commissions.
4.20. Margin Stock; Regulation U. No Borrower is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock. The making of the Advances and
the use of the proceeds thereof will not violate Regulations G, U or X of the
Board of Governors of the Federal Reserve System.
4.21. Investment Company; Public Utility Holding Company. No Borrower is
an "investment company" or a "company controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended, or a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
4.22. Personal Holding Company. No Borrower is a "personal holding
company" as defined in Section 542 of the Code.
4.23. ERISA. Except as would not have a Material Adverse Effect, (i) With
respect to any Plan, there is no Reportable Event currently under consideration
by the PBGC which may reasonably result in any material liability to the PBGC
with respect to any Plan, (ii) no Plan has been terminated, (iii) no trustee has
been appointed by any United States District Court to administer any Plan, (iv)
the PBGC has not instituted proceedings to terminate any Plan or to appoint a
trustee to administer any such Plan, (v) neither Destia nor any Affiliate has
withdrawn, completely or partially, from any Plan and (vi) neither Destia nor
any Affiliate has incurred secondary liability for withdrawal liability payments
under any Plan.
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4.24. Environmental Warranties. Each Borrower and its Subsidiaries are in
compliance with all Environmental Laws applicable to it or its business or to
the real or personal property owned, leased or operated by it, with respect to
which noncompliance would have a Material Adverse Effect. Neither Borrower nor
any Subsidiary has received notice of, or is aware of, any violations or alleged
violations, or any liability or asserted liability, under any such Environmental
Laws, with respect to it or its business or its properties.
4.25. Security Interests. The provisions of Article 3 hereof are effective
to create in favor of Lender a legal, valid and enforceable Lien on or security
interest in all of the Collateral, and, when the recordings and filings
described on Schedule 4.25 hereto have been effected in the public offices
listed on said Schedule 4.25, this Agreement will create a perfected, first
priority security interest in all right, title, estate and interest of the
Borrowers in the Collateral subject to no Liens except for Permitted
Encumbrances. All action necessary or desirable to protect and perfect such
security interest in each item of the Collateral will have been duly taken prior
to the First Borrowing Date, except to the extent permitted to take place
thereafter by operation of Section 3.09 or Schedule 6.02. The recording and
filings shown on Schedule 4.25 are all the actions (other than the periodic
filing of continuation statements) necessary or advisable in order to establish,
protect and perfect the interest of Lender in the Collateral as of the date
hereof.
4.26. Place of Business. The chief executive offices of each Borrower are
identified on Schedule 4.26 and Schedule 1.01 hereto. Each Borrower's principal
place of business in the state(s) or other jurisdictions where the Equipment is
located is identified on Schedule 4.26 hereto or on a supplemental schedule
delivered pursuant to Section 3.09. The Borrowers' records concerning the
Collateral are kept at one or both of these addresses.
4.27. Location of Collateral. The Collateral is and will be kept at the
locations identified on Schedule 4.26 hereto or such other locations as may be
indicated pursuant to Section 3.09 or permitted under Section 8.12.
Notwithstanding any other provision of this Agreement, Equipment may not be
relocated from any location identified on Schedule 4.26 or on a supplemental
schedule delivered pursuant to Section 3.09 (or such other location as may be
permitted after compliance with Section 8.12) to any other location identified
on Schedule 4.26 or on a supplemental schedule delivered pursuant to Section
3.09 (or such other location to which Collateral has been relocated after
compliance with Section 8.12) without first complying again with the
requirements of Section 8.12 in connection with each relocation.
4.28. Clear Title To Collateral. The applicable Borrower is, or will be,
upon purchase pursuant to the NTI Purchase Agreement or otherwise the sole owner
of each item of the Collateral acquired with proceeds of such Advance borrowed
by such Borrower, having good and insurable title thereto, free and clear of any
and all Liens, claims, or rights of others, except for the security interest
granted to the Lender herein (or in a separate agreement
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between such Borrower and Lender) and the other Permitted Encumbrances.
4.29. Assumed Names. Except as set forth on Schedule 4.29 hereto, none of
the Borrowers conducts business under any assumed names or trade names, and has
not conducted business under any other names, or any assumed names or trade
names, at any time prior to the date hereof.
4.30. Subsidiaries of Destia. Except to the extent not required by Section
2.11 and Section 7.19 hereof, each Domestic Subsidiary of Destia has executed
this Agreement and is a Borrower hereunder.
4.31. Year 2000 Compliance. Each Borrower has reviewed its operations with
a view to assessing whether its operations, will be vulnerable to a Year 2000
Problem and has a reasonable basis to believe that no Year 2000 Problem will
cause a material adverse effect to Destia.
ARTICLE 5: CONDITIONS OF CLOSING
5.01 Tranche 1 and Tranche 2 Closings. On or before the Tranche 1 Closing
Date and the Tranche 2 Closing Date, the conditions set forth in the Original
Loan Agreement for such closings shall have been satisfied. Lender acknowledges
that all such conditions have been satisfied as of the date hereof.
5.02 Amendment and Restatement Except as provided in Schedule 6.02, on or
before the Tranche 3 Closing Date and the date hereof, the following conditions
shall have been satisfied:
(a) One or more certificates of each Borrower signed by a duly authorized
Responsible Officer (which may be satisfied by an omnibus certificate delivered
by a Responsible Officer of Destia with respect to each Borrower) certifying as
to (i) true copies of Organizational Documents of each Borrower in effect on
such date; (ii) true copies of all corporate action taken by each Borrower
relative to this Agreement, each Note and the other Loan Documents; (iii) the
names, true signatures and incumbency of the Responsible Officers of each
Borrower authorized to execute and deliver this Agreement, each Note and the
other Loan Documents to which it is a party on behalf of such Borrowers; (iv) a
Certificate of Good Standing (or equivalent certificate) for each Borrower, duly
issued by the Secretary of State or such other appropriate government office of
(A) the state or other jurisdiction of such Borrower's formation or
organization, (B) each state or jurisdiction in which such Borrower intends to
locate Equipment and (C) each state in which the failure to be qualified as a
foreign corporation or other entity would have a Material Adverse Effect; and
(v) such other matters as Lender shall reasonably request.
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(b) Opinions of Counsel. Lender shall have received the following
opinions, all dated as of the date hereof and all in form and substance
satisfactory to Lender:
(i) A written opinion of counsel to each Domestic Borrower
substantially in the form of Exhibit C-1 hereto; and
(ii) A written opinion of counsel to each Foreign Borrower
substantially in the form of Exhibit C-2 hereto; and
(iii) A written opinion of regulatory counsel for Destia,
substantially in the form of Exhibit D hereto.
(d) Closing Documents. Lender shall have received the following documents,
all in form and substance satisfactory to Lender:
(i) Agreement. This Agreement, duly executed by Destia, DNS,
ECONOphone GmbH, Destia Communications Services, Inc., 3461386 Canada,
Inc., VoiceNet Corporation and Telco Global Communications, Ltd.;
(ii) Guaranty. A Guaranty Agreement duly executed by Destia
unconditionally guaranteeing all amounts advanced hereunder;
(iii) Notes. The Notes duly executed by each Borrower which is
required to be a party thereto;
(iv) Financing Statements. All UCC-1 financing statements necessary
to perfect the Liens granted hereby, each duly executed by the appropriate
Borrower, and duly recorded in all the offices identified on Schedule 4.25
hereto;
(v) Insurance. Policies and certificates of insurance required by
Section 7.07, accompanied by evidence of the payment of the premiums
therefor
(vi) Financial Statements. The financial statements described in
Section 4.08 hereto;
(vii) Balance Sheet. A balance sheet of Destia, dated as of June 30,
1999, certified by a Responsible Officer as fairly presenting the
financial condition of the Borrower.
(viii) Certificate of Financial Condition. A Certificate of
Financial Condition, attached hereto, duly executed by a Responsible
Officer of Destia and each Co-
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Borrower.
(ix) Pre-Closing Lien Searches. Lien searches from all jurisdictions
reasonably determined by Lender to be appropriate, effective as of a date
reasonably close to the Tranche 4 Closing Date, reflecting no other Liens
(other than Permitted Encumbrances) on any of the Collateral.
ARTICLE 6: CONDITIONS OF LENDING
6.01. Conditions for Initial Advance. Except as provided in Schedule 6.02,
on or before the Tranche 4 First Borrowing Date, the following conditions shall
have been met to Lender's satisfaction:
(a) Post-Closing Lien Searches. Lender shall have received
satisfactory results of Lien searches in all jurisdictions reasonably
determined by Lender to be appropriate, reflecting the filing of financing
statements on the Collateral other than security interests in favor of
Lender pursuant hereto and no other Liens other than Permitted
Encumbrances.
(b) Required Consents. Lender shall have received satisfactory
evidence of the Borrowers' obtaining the Required Consents.
(c) Completion of Public Equity Offering. Destia shall have received
net proceeds of at least $25,000,000 from a Public Equity Offering on
terms and conditions reasonably acceptable to Lender.
(d) Maintenance Agreement. [INTENTIONALLY OMITTED]
6.02. Conditions for All Advances. Except as provided in Schedule 6.02,
the obligation of Lender to make any Advance hereunder is subject to the
Borrower's performance of its obligations hereunder on or before the date of
such Advance, and to the satisfaction of the following further conditions on or
before the Borrowing Date for any Advance, including the first Advance:
(a) Filings, Registrations and Recordings. Any financing statements
or other recordings required hereunder shall have been properly filed,
registered or recorded in each office in each jurisdiction required in
order to create in favor of the Lender a perfected first-priority Lien on
the Collateral, subject to no other Lien (other than Permitted
Encumbrances); the Lender shall have received acknowledgment copies of all
such filings, registrations and recordations stamped by the appropriate
filing officer; and Lender shall have received results of searches of such
filing offices,
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and satisfactory evidence that any other Liens (other than Permitted
Encumbrances) on the Collateral have been duly released, that all
necessary filing fees, recording fees, taxes and other expenses related to
such filings, registrations and recordings have been paid in full
(b) Borrowing Certificate and Note. Lender shall have received a
duly executed Borrowing Certificate in the form of Exhibit B, including a
detailed itemization of all costs of goods and services to be paid with
the proceeds of the Advance and accompanied by supporting documentation
reasonably satisfactory to Lender, together with a Note executed by such
Borrower in the principal amount of the Advance requested evidencing the
Loan under the applicable tranche.
(c) Reporting Requirements. The Borrowers shall have provided Lender
with all relevant reports and information required under Article 7 hereof.
(d) No Regulatory Event. No Regulatory Event (in the reasonable
determination of Lender or any Borrower) shall have occurred and be
continuing or would exist upon the consummation of transactions to occur
on such Borrowing Date
(e) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing or would exist upon the consummation
of transactions to occur on such Borrowing Date.
(f) No Material Adverse Change. No Material Adverse Change shall
have occurred, or would occur after giving effect to such Advance, since
the date of the last financial statements delivered to Lender pursuant to
Section 4.08 or 7.01 hereof.
(g) Representations and Warranties. The representations and
warranties contained in Article 4 hereof shall be true on and as of the
date of each such Advance hereunder.
(h) Lender's Expenses. All closing costs, and other Lender's
Expenses shall have been paid in full (or shall be paid first from such
Advance), subject to and as provided in Section 2.03 hereof.
(i) Opinions. Lender shall have received from the applicable
Borrower (if requested) such opinions of counsel for such Borrower as may
be reasonably acceptable to Lender in form and substance with respect to
the perfection and priority of the Liens created by the Security Documents
in each such jurisdictional location and the enforceability of the written
acknowledgement such Borrower's assumption of the terms of this Agreement
insofar as such terms are applicable to such Borrower and the Note
evidencing the amount of the Advance made to such Borrower.
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(j) Details, Proceedings and Documents. All legal details and
proceedings in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory to Lender and Lender shall have
received all such counterpart originals or certified or other copies of
such documents and proceedings in connection with such transactions, in
form and substance reasonably satisfactory to Lender, as Lender may from
time to time request.
(k) Post-Closing Items. The post-closing items described on Schedule
6.02 hereto, if any, shall have been completed in the time permitted, and
Borrower shall have provided Lender with satisfactory evidence thereof.
(l) Advances for NTI Equipment and Related Software to be located
outside the United States. In the event the proceeds of an Advance are to
be used for the purchase of NTI Equipment and related Software to be
located outside the United States, the Borrowers shall have complied with
the requirements of Section 3.09 of this Agreement.
(m) Consents. Lender shall have received Consents duly executed by
all necessary parties and in form satisfactory to Lender.
(n) NTI Purchase Agreement. Lender shall have received a copy of the
executed NTI Purchase Agreement with respect to which proceeds of an
Advance shall be used to acquire NTI Equipment, and Lender's shall have
approved the NTI Equipment to be acquired with proceeds of an Advance.
(o) Minimum Financial Performance. For any Advance that would cause
total Advances under the Tranche 3 Commitment to be in excess of
$5,000,000 and for each Advance occurring after December 31, 1997 under
the Tranche 3 or the Tranche 4 Commitment, Destia must have satisfied the
minimum financial performance requirement set forth in Schedule 6.02
during the time periods set forth therein.
(p) Fees. Lender shall have received the fee(s) described in Section
2.09 hereof.
6.03. Affirmation of Representations and Warranties. Any Borrowing
Certificate or other request for any Advance hereunder shall constitute a
representation and warranty that (a) the representations and warranties
contained in Article 4 hereof are true and correct on and as of the date of such
request with the same effect as though made on and as of the date of such
request, and (b) on the date of such request no Default or Event of Default has
occurred and is continuing or exists or will occur or exist after giving effect
to such Advance (for this purpose such Advance being deemed to have been made on
the date of such request).
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Failure of Lender to receive notice from Borrower to the contrary before such
Advance is made shall constitute a further representation and warranty by
Borrower that (x) the representations and warranties of Borrower contained in
the first sentence of this Section 6.03 are true and correct on and as of the
date of such Advance with the same effect as though made on and as of the date
of such Advance, and (y) on the date of the Advance no Default or Event of
Default has occurred and is continuing or exists or will occur or exist after
giving effect to such Advance.
6.04. Deadline for Funding Conditions. Lender shall have no obligation to
make any Advances hereunder if all of the conditions set forth in Article 5 and
in Sections 6.01 and 6.02 hereof have not been fully satisfied and in any event
after the Financing Termination Date.
ARTICLE 7: AFFIRMATIVE COVENANTS
Destia hereby agrees that as long as the commitment hereunder remains in
effect, any Note remains outstanding or unpaid or any other amount is owing to
Lender hereunder or under any of the Loan Documents, Destia shall keep and
perform fully each and all of the following covenants:
7.01. Reporting and Information Requirements.
(a) Annual Audit Reports. Within three (3) months after the close of
each fiscal year of Destia, Destia shall furnish or cause to be furnished
to Lender audited statements of income, retained earnings and statements
of cash flows for such fiscal year and the Destia's balance sheet as of
the close of such fiscal year, and notes to each, all in reasonable
detail, and beginning with Destia's second full fiscal year setting forth
in comparative form the corresponding figures for the preceding fiscal
year, with such statements and balance sheet to be certified without
qualification by independent certified public accountants of recognized
regional or national standing selected by Destia and reasonably
satisfactory to Lender.
(b) Quarterly Reports. Within forty-five (45) days after the end of
the first three fiscal quarters, Destia shall furnish to Lender (i)
unaudited consolidated statements of income and retained earnings and cash
flow statements for Destia for such quarter and for the period from the
beginning of Destia's then current fiscal year to the end of such quarter,
and an unaudited consolidated balance sheet of Destia as of the end of
such month, all in reasonable detail and certified by a Responsible
Officer of Destia as presenting fairly the financial position of Destia as
of the end of such quarter and the results of its operations and the
changes in its financial position for such quarter, in conformity with
GAAP (except for accompanying notes thereto), subject to year-end audit
adjustments, and (ii) upon Lender's request, an aging of accounts payable
and accounts receivable.
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(c) Compliance Certificates. Within sixty (60) days after the end of
each Calendar Quarter, Destia shall deliver to Lender a certificate dated
as of the end of such period, signed on behalf of Destia by a Responsible
Officer of Destia: (i) stating that as of the date thereof no Event of
Default has occurred and is continuing or exists, or if an Event of
Default has occurred and is continuing or exists, specifying in detail the
nature and period of existence thereof and any action with respect thereto
taken or contemplated to be taken by Destia; (ii) stating that the signer
has personally reviewed this Agreement and that such certificate is based
on an examination made by or under the supervision of the signer
sufficient to assure that such certificate is accurate; (iii) calculating
and certifying Destia's compliance with the financial covenants set forth
in Section 7.15 hereof; and (iv) certifying an attached aging schedule of
Destia's accounts receivables and trade payables for the period then
ended.
(d) [INTENTIONALLY DELETED].
(e) [INTENTIONALLY OMITTED]
(f) Other Reports and Information. Promptly upon their becoming
available to Destia, Destia shall deliver to Lender copies of (i) all
regular or special reports or effective registration statements which
Destia shall file with the Securities and Exchange Commission (or any
successor thereto) or any securities exchange, provided that if any such
report or registration statement is filed via EDGAR (or an equivalent
electronic filing system of the Securities and Exchange Commission) and is
available to the general public, Destia may satisfy this requirement by
giving notice to Lender at the time of such filing, together with a
general description of it, (ii) financial statements, material reports,
and other information distributed by Destia to its creditors or the
financial community in general, (iii) all press releases issued by or
concerning Destia or the System, and (iv) during the High Yield Period,
all material reports and other information distributed to the trustee for
the High Yield Notes pursuant to the respective Indentures (as defined in
the respective Indentures as each exists on the date hereof).
(g) Further Information. Destia will promptly furnish to Lender such
other information (including any report by independent auditors) in such
form as Lender may reasonably request.
7.02 Other Notices. Promptly upon a Responsible Officer of Destia or any
other Borrower becoming aware of any of the following, Destia or such other
Borrower shall give Lender notice thereof, together with a written statement of
a Responsible Officer of Destia or such other Borrower setting forth the details
thereof and any action with respect thereto
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taken or contemplated to be taken by Destia or such other Borrower:
(a) a Default or Event of Default;
(b) any Material Adverse Change;
(c) a material default or breach by Destia or any of its
Subsidiaries under any other contractual obligation to which it is a party
or by which it or its properties is bound, if the consequences of such
breach of default are material to the business, operations or financial
condition of Destia on a consolidated basis;
(d) any event that Destia or such other Borrower reasonably
determines would constitute a Regulatory Event;
(e) the commencement, existence or threat of any proceeding by or
before any Governmental Authority against Destia or any of its
Subsidiaries which, if adversely decided, would have a Material Adverse
Effect;
(f) Destia's or any Subsidiary's receipt of any notice of violation
of, or liability under, any Environmental Laws affecting Destia, a
Subsidiary or any of their respective properties; or
(g) any Change in Control or any material change in the management
of Borrower.
(h) The creation or acquisition of any direct or indirect Subsidiary
of Destia.
7.03. Notice of Pension-Related Events. Destia shall promptly furnish
Lender with written notice upon the receipt by Destia or the administrator of
any Plan of any notice, correspondence or other communication from the PBGC, the
IRS, the Secretary of Treasury, the Department of Labor, or any other Person, as
the case may be, relating to (i) any Reportable Event, (ii) any funding
deficiency in excess of $50,000 (or $250,000 during any High Yield Period) with
respect to any Plan, (iii) any liability, either primary or secondary, with
respect to complete or partial withdrawal from any Plan, (iv) proceedings to
terminate any Plan or (v) the appointment of a trustee for any Plan. Such notice
shall be accompanied by any pertinent documents including, but not limited to,
the relevant notice, correspondence or other communication and a statement of a
Responsible Officer of Destia describing the event or the action taken and the
reasons therefor.
7.04. Inspection Rights. Destia shall upon reasonable notice permit (and
shall cause its Subsidiaries to permit) such persons as Lender may designate to
visit and inspect the
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Collateral or any other properties of Destia and its Subsidiaries, to examine
its books and records and take copies and extracts therefrom and discuss its
respective affairs with its officers, employees and independent engineers at
such times and as often as Lender may reasonably request. Destia hereby
authorizes (and shall cause its Subsidiaries to authorize) such officers,
employees, and independent engineers to discuss with Lender the affairs of
Destia and its Subsidiaries. Lender agrees that it will not use any such
confidential information in a manner prohibited by law or, directly or
indirectly, disclose to any third party confidential information of Destia
obtained by it pursuant to the exercise of such inspection rights, provided,
however, this Section 7.04 shall not restrict the disclosure by Lender of
information if such disclosure is required by law, by order of any court or by
the order, rule or regulation of any administrative agency, including without
limitation any requirements of the FCC, any PUC, or any state or federal
securities commissions. Further, the disclosure of information will not be
restricted hereunder if such information (i) has been or becomes published or is
now, or in the future, in the public domain through (A) no fault of Lender, (B)
disclosure other than unauthorized disclosure by Lender or (C) disclosure to
third parties by Destia without similar restrictions; (ii) subsequent to
disclosure to Lender, is lawfully received from a third party having rights
therein without restriction of the third party's or Lender's rights to
disseminate the information and without notice of any restriction against its
further disclosure; (iii) is disclosed with the written approval of Destia; or
(iv) is or becomes publicly available free of any obligation to keep it
confidential.
7.05. Preservation of Corporate Existence and Qualification. Destia shall
(and shall cause each other Borrower) maintain its existence, good standing and
rights in full force and effect in its jurisdiction of organization and shall
(and shall cause each other Borrower to) qualify to do business and remain
qualified and in good standing and shall obtain all necessary authorizations to
do business in each jurisdiction in which failure to receive or retain such
would have a Material Adverse Effect, provided however, that nothing in this
Section 7.05 shall prohibit any Borrower or any Subsidiary thereof from entering
into an Affiliate Transaction.
7.06. Continuation of Business. Destia shall continue to engage solely in
the business described on Schedule 1.01(a) hereto, and shall acquire and
maintain in full force and effect all material rights, privileges, franchises
and licenses necessary for the operation and maintenance of the System
(including, without limitation any license or authorization required by the FCC
or any PUC).
7.07. Insurance.
(a) Destia shall provide and maintain and cause to be maintained at
all times insurance in such forms and covering such risks and hazards and
in such amounts and with an insurance corporation with a Best Rating of
"A-" or above, licensed to do business in the states where the Equipment
and any Borrower are
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located, as may be reasonably satisfactory to Lender, as shown on Schedule
7.07 hereto, and otherwise as may be required by the Security Documents.
(b) Destia shall cause (i) all liability insurance policies covering
any premises in which Collateral is located and all policies insuring
against liability arising from the Borrowers' operation of the Collateral
to name Lender as an additional insured, (ii) all physical damage
insurance policies to contain a lender's or mortgagee's loss payable
provision acceptable to Lender with respect to the Collateral, (iii) all
liability and physical damage insurance policies described in clauses (i)
and (ii) to provide that no assignment, cancellation, modification,
reduction in amount or adverse change in coverage thereof shall be
effective until at least thirty (30) days after receipt by Lender of
written notice thereof, (iv) all insurance policies to insure the
interests of Lender with respect to the Collateral regardless of any
breach of or violation by Destia of any warranties, declarations or
conditions contained therein and (v) all liability and physical damage
insurance policies described in clauses (i) and (ii) to provide that
Lender shall have no obligation or liability for premiums, commissions,
assessments or calls in connection with such insurance. Lender shall be
under no obligation to verify the adequacy or existence of any insurance
coverage. Except as set forth in Schedule 6.02, Destia shall furnish
Lender copies of, or acceptable certificates with respect to, all such
policies prior to the date hereof, and shall provide to Lender, at least
thirty days prior to each policy expiration date, evidence of the
insurance being maintained by Destia in compliance with this Section
7.07(b). Certificates for insurance required under subsection (i) above
shall be in ACORD Form 27 (attached hereto at Schedule 7.07), and all
certificates shall be satisfactory in form and substance to Lender.
(c) If the Collateral is partially or totally damaged or destroyed,
Destia shall give prompt notice to Lender, and all insurance proceeds,
less the costs of collection thereof, shall be paid to or retained by
Lender. Settlements, adjustments or compromises of any claims for loss,
damage or destruction to the Collateral shall be made by Destia and Lender
as long as no Event of Default has occurred and is continuing, and
otherwise shall be made solely by Lender. Borrower hereby authorizes and
directs any affected insurance company to pay such proceeds directly to
Lender, and to rely on Lender's statement as to whether an Event of
Default has occurred. Borrower shall pay all costs of collection of
insurance proceeds payable on account of such damage or destruction. If no
Default or Event of Default has occurred and is continuing on the date the
Collateral is partially or totally damaged or destroyed, Lender shall make
available to Borrower the proceeds of any physical damage insurance
actually paid to Lender in respect of such damage or destruction of the
Collateral (after deducting therefrom any sums retained by Lender in
reimbursement for costs of collection) to pay the cost of restoration, and
Borrower shall proceed promptly with the work of restoration of the
Collateral and shall pursue the work of
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restoration diligently to completion. If any Default or Event of Default
has occurred and is continuing either on the date of such damage or
destruction or on the date such insurance proceeds are paid, or if any
Default or Event of Default shall occur prior to completion of such work
of restoration, then Lender, at its option, may apply such insurance
proceeds in payment of any of the Obligations, in such order as Lender may
elect in its sole discretion. Any insurance proceeds remaining after
completion of work or restoration shall, at Lender's election, be applied
in accordance with Section 2.04(c) hereof (but without prepayment
premium), or paid over to Borrower. Upon completion of any restoration,
Borrower shall deliver to Lender a certificate stating that the
restoration has been duly completed and accounting for the use of any
insurance proceeds in such restoration.
7.08. Payment of Taxes, Charges, Claims and Current Liabilities. Destia
shall pay or discharge:
(a) on or prior to the date on which penalties thereto accrue, all
taxes, assessments and other government charges or levies imposed upon it
or any of its properties or income (including such as may arise under
Section 4062, Section 4063 or Section 4064 of ERISA, or any similar
provision of law);
(b) on or prior to the date when due, all lawful claims of
materialmen, mechanics, carriers, warehousemen, and other like persons
which could result in creation of a Lien (other than a Permitted
Encumbrance) upon any such property;
(c) on or prior to the date when due, all other lawful claims which,
if unpaid, might result in the creation of a Lien upon any such property
(other than Permitted Encumbrances) or which, if unpaid, might give rise
to a claim entitled to priority over general creditors of a Borrower in a
case under Title 11 (Bankruptcy) of the United States Code, as amended, or
in any insolvency proceeding or dissolution or winding-up involving
Borrower; and
(d) all other current liabilities so that no amount, individually or
in the aggregate greater than $250,000, is overdue more than ninety (90)
days.
Notwithstanding the foregoing, the Borrowers shall be entitled to contest
or appeal the requirements of any Law or Governmental Authority or the payment
of any tax, assessment, charge, levy, claim or other liability, or any judgment
entered against a Borrower (collectively, in this Section 7.08, the
"requirements"), as long as (i) such requirements are being contested in good
faith by appropriate proceedings diligently conducted; (ii) for any such
requirement with which the failure to comply may have a Material Adverse Effect,
Destia has given Lender written notice of such requirements and its intent to
contest them, with supporting reasons for such contest, before the addition of
any
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interest or penalties that may accrue on such requirements; (iii) the applicable
Borrower maintains adequate cash reserves and makes other appropriate provisions
as may be required by GAAP to provide for any liability arising from such
requirements; (iv) the contesting of, or failure to comply with, such
requirements does not in any way jeopardize such Borrower's ability or authority
to operate all or any part of the Collateral or the continuing priority of
Lender's security interests in the Collateral; (v) the contesting of, or failure
to comply with, such requirements does not have a Material Adverse Effect; and
(vi) any foreclosure, attachment, execution, sale or similar proceeding against
a Borrower or any of its properties in connection with any such requirements is
duly stayed by posting of a bond or security deposit or by other action
sufficient under applicable law to stay such foreclosure, attachment, execution,
sale or other proceedings.
7.09. Financial Accounting Practices. Destia shall make and keep books,
records and accounts which, in reasonable detail, accurately and fairly reflect
its transactions and dispositions of its assets and maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization, (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with GAAP and (ii) to maintain
accountability for assets, (c) access to assets is permitted only in accordance
with management's general or specific authorization and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
7.10. Compliance with Laws. The Borrowers shall comply in all respects
with all Laws applicable to the Borrowers, provided that the Borrowers shall not
be deemed to be in violation of this Section 7.10 as a result of any failure to
comply which would not result in any direct liability or exposure to Lender or
any fines, penalties, injunctive relief or other civil or criminal liabilities
which, in the aggregate, would have a Material Adverse Effect.
7.11. Use of Proceeds. The Borrowers shall use the proceeds of Advances
hereunder only as set forth in Section 2.01 hereof.
7.12. Government Authorizations; Regulatory Authorizations, Etc. Other
than for any matter in which the failure to comply with this covenant will not
have a Material Adverse Effect, the Borrowers shall at all times obtain and
maintain in force all Regulatory Authorizations and all other authorizations,
permits, consents, approvals, licenses, exemptions and other actions by, and all
registrations, qualifications, designations, declarations and other filings
with, any Governmental Authority necessary in connection with execution and
delivery of this Agreement or any Note, consummation of the transactions herein
or therein contemplated, performance of or compliance with the terms and
conditions hereof or thereof or to ensure the legality, validity and
enforceability hereof or thereof.
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7.13. Contracts and Franchises. Each of the Borrowers shall comply with
all agreements or instruments to which it is a party or by which it or any of
its properties (now owned or hereafter acquired) may be subject or bound and
shall maintain any and all franchises it may have or hereafter acquire, provided
that the Borrowers shall not be deemed to be in violation of this Section 7.13
as a result of any failure to comply with any agreement if such failure would
not have Material Adverse Effect.
7.14. Consents. The Borrowers shall obtain such Landlord's Consents, and
other third party consents as Lender shall reasonably request to protect its
Liens and its access to the Collateral.
7.15. Financial Covenants. Destia shall comply with the financial
covenants set forth on Schedule 7.15 hereto.
7.16. Construction and Storage. The Collateral shall be installed and
equipped in full compliance with the Requirements of Law affecting the
Collateral except to the extent a failure to so comply would not have a Material
Adverse Effect. All Equipment financed with the proceeds of the Loan shall be
safeguarded and stored until installed in appropriate storage facilities owned
or leased by Destia or any other Borrower. In the event of any cessation of
construction for more than fifteen (15) successive calendar days, Destia or such
other Borrower shall make adequate provision, reasonably acceptable to Lender,
for the protection of all materials stored on site against deterioration, loss
or damage.
7.17. Upgrade NTI Equipment. Destia shall update (or cause to be updated)
the software customarily used in equipment of the same type as the Equipment
within two releases of the most current batch change supplement release. Each
Borrower shall maintain the Equipment owned or used by that Borrower in good
working order in accordance with established maintenance procedures such that
the Equipment performs to published specifications and shall upgrade its
functionality to include batch change supplements releases generally available
to NTI customers and batch change supplements upgrades included in the original
purchase price of the NTI Purchase Agreement in the form in effect on the
Tranche 4 Closing Date.
7.18. Year 2000 Compliance. Each Borrower shall take all actions necessary
and commit adequate resources to assure that computer-based and other systems of
each Borrower are able to process dates effectively, including dates before, on
and after January 1, 2000, without experiencing any Year 2000 Problem that could
cause a Material Adverse Effect to the consolidated financial results of Destia
and its Subsidiaries. At the request of Lender, Destia will provide Lender with
assurances and substantiations (including but not limited to the results of
internal and external audit reports prepared in the ordinary course of business)
reasonably acceptable to Lender that Destia and its Subsidiaries are taking all
reasonable actions to assure the future conduct of its businesses and operations
before, on and after
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January 1, 2000 without experiencing a Year 2000 Problem causing a Material
Adverse Effect.
7.19. Additional Subsidiaries. Destia shall (A) cause each direct or
indirect Domestic Subsidiary of Destia that is formed or acquired after the date
hereof (other than (i) non-operating Domestic Subsidiaries of Destia or (ii)
with the consent of Lender, not to be unreasonably withheld or delayed, Domestic
Subsidiaries of Destia which are not Borrowers hereunder or do not own
Collateral if Destia deems the requirement of becoming a Borrower to be unduly
burdensome to, or to interfere in a material respect with such Domestic
Subsidiary's business or operations) and each Foreign Subsidiary who is or
becomes a Borrower to become a Borrower hereunder in conformity with the terms
and conditions of Section 2.11(b).
ARTICLE 8: NEGATIVE COVENANTS
Each Borrower hereby agrees that so long as the Commitment hereunder
remains in effect or any Note remains outstanding and unpaid or any other amount
is owing to Lender hereunder or under any of the Loan Documents, such Borrower
shall not, and shall not permit any Subsidiary to, directly or indirectly
without prior written consent of Lender, do or permit to exist any of the
following:
8.01. Additional Indebtedness. Create, incur, assume or suffer to exist at
any one time any Indebtedness in excess of $250,000 in the aggregate except for
(a) trade payables incurred in the ordinary course of business, and (b) any
Indebtedness described on Schedule 8.01 hereto.
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8.02. Restrictions on Liens and Sale of Collateral. Create or suffer to
exist any Lien on the Collateral or on any other property of Destia or its
Subsidiaries, or any part thereof, whether superior or subordinate to the Lien
of the Security Documents, or assign, convey, sell or otherwise dispose of or
encumber its interest in the Collateral, or any part thereof (including, without
limitation, execution of any lease), nor permit any such action to be taken,
except for the following permitted dispositions and encumbrances (the "Permitted
Encumbrances"): (i) the Lien created hereby and any purchase money Liens in
favor of NTI created by the NTI Purchase Agreement; (ii) Liens for taxes not yet
due, or which are being contested in good faith and by appropriate proceedings
in accordance with Section 7.08 hereof; (iii) carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business which are overdue for a period not longer than
thirty (30) days or which are being contested in good faith and by appropriate
proceedings in accordance with Section 7.08 hereof; (iv) pledges or liens in
connection with workers' compensation, unemployment insurance and other social
security legislation; (v) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business; (vi) easements, rights-of-way,
restrictions and other similar encumbrances that are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business of Destia
or such Subsidiary; (vii) judgment liens with respect to which execution has
been stayed within ten (10) days by appropriate judicial proceedings and the
posting of adequate security which may not be any of the Collateral; (viii)
specific liens identified on Schedule 8.02 hereto, and (ix) sales or transfers
of Collateral to another Borrower, provided that prior to such sale or transfer,
Destia shall have given under at least thirty (30) days prior written notice of
such intended sale or transfer and such other Borrower shall have executed any
documents or instruments, at Destia's expense, requested by Lender to evidence
the continuation of the lien or security interest of Lender therein and if such
purchaser or transferee is a Foreign Borrower, and documentation requested by
the Lender to evidence the assumption of all Indebtedness hereunder incurred to
finance or refinance such Collateral, and immediately before and after giving
effect to such proposed sale or transfer there is not a Default or Event of
Default under any loan document. Any of the Liens described in the second clause
of subparagraph (ii), the second clause of subparagraph (iii), and subparagraph
(vii) above shall remain "Permitted Encumbrances" as long as they are being
contested by Destia or such Subsidiary in compliance with Section 7.08 hereof.
8.03. Limitation on Contingent Obligations. Agree to, or assume,
guarantee, endorse or otherwise in any way be or become responsible or liable
for, directly or indirectly, any Contingent Obligation except for those created
or contemplated by the Loan Documents, except for (i) Indebtedness permitted
under Section 8.01 and guarantees thereof or (ii) Indebtedness of any Subsidiary
of which Borrower beneficially owns a majority of the outstanding capital stock
engaged principally in the business of Borrower as currently being
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conducted or otherwise in the telecommunications business.
8.04. [INTENTIONALLY OMITTED]
8.05. Prohibition of Mergers, Acquisitions, Name, Office or Business
Changes, Etc. Except in connection with an Affiliate Transaction,
(a) Other than in connection with the Merger, enter into or become
the subject of, any transaction of merger, acquisition or consolidation or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, transfer or otherwise dispose of, in
one transaction or a series of transactions, all or any substantial part
of such Borrower's business or assets, whether now owned or hereafter
acquired.
(b) Other than in connection with the Merger, change its name or
corporate structure without giving Lender at least thirty (30) days
advance written notice of such change, and ensuring that any steps that
Lender may deem necessary to continue the perfection and priority of
Lender's security interests in the Collateral shall have been taken.
(c) Change the fiscal year end of Destia from December 31, except
with the prior written consent of Lender, which consent shall not be
unreasonably withheld.
(d) Other than in connection with the Merger or the issuance of
preferred or common stock that does not result in a Change of Control of
Borrower, amend, restate or otherwise modify, or violate any terms of, its
Organizational Documents in any manner that affects the Lender without the
prior written consent of Lender, which consent will not be unreasonably
withheld.
(e) Become or agree to become a general or limited partner in any
general or limited partnership, or a member in a limited liability company
or a joint venturer in any joint venture not engaged principally in the
business of Destia or its Subsidiaries as currently conducted or related
to the telecommunications industry.
(f) Acquire or purchase substantially all of the stock, partnership,
membership or other ownership interests in, or substantially all of the
business, assets, customers or operations of, any other entity not engaged
principally in the business of Destia or its Subsidiaries as currently
conducted or related to the telecommunications industry.
(g) Enter into any new business other than those related to the
telecommunications industry.
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Destia and the other Borrowers acknowledge that if Lender does not consent to
the Merger within ninety (90) days of the consummation of the Merger, Lender
shall have the right to require Destia to prepay all amounts owed hereunder in
accordance with the terms of Section 2.04(b), and Lender's execution of this
Loan Agreement shall not operate as a consent of Lender to the consummation of
the Merger.
8.06. Limitation on Equity Payments. Make any Equity Payment, except that,
as long as no Default or Event of Default has occurred and is continuing, or
would be caused thereby, and if no other provision contained herein will be
violated by the disbursement of such Equity Payment, Borrower may make Equity
Payments described on Schedule 8.06 hereto. Before making any Equity Payment in
accordance with this Section 8.06, Borrower shall deliver to Lender a
certificate of a Responsible Officer of Borrower, setting forth in detail the
calculation supporting the Borrower's compliance with the financial covenants in
Schedule 7.15, stating that no Material Adverse Change has occurred since the
date of the latest financial statement delivered pursuant to Section 7.01(a),
and stating that no Default or Event of Default has occurred and is continuing
or will be caused by such Equity Payment.
8.07. Limitation on Investments, Advances and Loans. (i) Organize, create,
acquire, capitalize or own any Subsidiaries not engaged principally in the
business of Destia or its Subsidiaries as currently conducted or as otherwise in
the telecommunications business without Lender's prior written consent, or (ii)
make or commit to make any advance, loan, guarantee of any Indebtedness,
extension of credit or capital contribution to, or hold or invest in or purchase
or otherwise acquire any stock, bonds, notes, debentures or other securities of,
or make any other investment in, any Person (x) not engaged principally in the
business of Destia or its Subsidiaries as currently conducted or otherwise in
the telecommunications business (other than Permitted Investments) without
Lender's prior written consent, and (y) other than on terms no more onerous to
Destia or its Subsidiaries than if negotiated on an arms-length basis with an
unrelated person.
8.08. Capital Expenditures. Directly or indirectly make or commit to make
any expenditure in excess of $250,000 in the aggregate in any fiscal year in
respect of the purchase or other acquisition (including installment purchases or
capital leases) of fixed or capital assets, except for capital expenditures in
accordance with the business of Destia and its Subsidiaries as currently
conducted or otherwise in the telecommunications business and normal
replacements and maintenance which are properly charged to current operations;
provided that the limitations of this section shall not apply during the High
Yield Period.
8.09. Limitation on Leases. Enter into any agreement, or be or become
liable under any agreement, not in existence as of the date hereof and reflected
on Destia's financial statements, for the lease, hire or use of any real or
personal property in excess of $250,000 in the aggregate, including, without
limitation, capital or operating leases, except that Destia
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and its Subsidiaries may, in the ordinary course of business and on term
standard in the industry, enter into leases or agreements (i) for the use of
real property for the System or sales offices, (ii) for office space, office
equipment, vehicles or tools, (iii) for the location and storage of the
Collateral, and (iv) for the use of capacity in communication transmission
facilities, such as but not limited to cables and satellites; provided that the
limitations of this section shall not apply during the High Yield Period.
8.10. Transactions with Affiliates. In the case of Destia and Restricted
Subsidiaries directly or indirectly, enter into, renew or extend any transaction
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any holder (or any
Affiliate of such holder) of 5% or more of any class of capital stock of Destia
or with any Affiliate of Destia or any Restricted Subsidiary, except upon fair
and reasonable terms no less favorable to Destia or such Restricted Subsidiary
than could be obtained, at the time of such transaction or, if such transaction
is pursuant to a written agreement, at the time of the execution of the
agreement providing therefor, in a comparable arm's-length transaction with a
Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
board of directors of Destia or (B) for which the Destia or a Restricted
Subsidiary delivers to the Lender a written opinion of a nationally recognized
investment banking firm stating that the transaction is fair to Destia or such
Restricted Subsidiary from a financial point of view, (ii) any transaction
solely between Destia and any of its Wholly Owned Restricted Subsidiaries or
solely between Wholly Owned Restricted Subsidiaries, (iii) the payment of
reasonable and customary regular fees to directors of the Borrower who are not
employees of Destia, (iv) any payments or other transactions pursuant to any
tax-sharing agreement between Destia and any other Person with which Destia
files a consolidated tax return or with which Destia is part of a consolidated
group for tax purpose, (v) any Restricted Payments not prohibited by Section
4.04 or 4.05 of the respective Indentures as each exists on the date hereof,
(vi) employment agreements with, and loans and advances to, officers and
employees of Destia and its Restricted Subsidiaries, in each case in the
ordinary course of business, (vii) customary indemnification arrangements in
favor of directors and officers of Destia and its Restricted Subsidiaries,
(viii) those matters listed on Schedule 8.10 hereto, or (ix) the Merger.
Notwithstanding the foregoing, during the High Yield Period, any transaction
covered by the first paragraph of this Section 8.10 and not covered by clauses
(ii) through (vi) of this paragraph, the aggregate amount of which exceeds
$3,000,000 in value, must be approved or determined to be fair in the manner
provided for in clause (i)(A) or (B) above.
8.11. Termination of NTI Purchase Agreement. Fail to satisfy its purchase
obligations under the NTI Purchase Agreement, or terminate the NTI Purchase
Agreement prior to the earlier of (i) completion of and acceptance of the NTI
Equipment to be acquired thereunder, or (ii) the Financing Termination Date.
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8.12. Removal of Collateral. Remove any material part of the Collateral
(except for sales or leases of Inventory in the ordinary course of business)
from the locations identified on Schedule 4.26, without giving Lender thirty
(30) days prior written notice of such move and ensuring that any steps the
Lender may deem necessary to continue the perfection and priority of Lender's
security interest in the Collateral shall have been taken. Notwithstanding the
terms of any other section of this Agreement, no part of any Collateral may be
removed from locations identified on Schedule 4.26 (or such other location as
may be permitted after compliance with Section 8.12), to any other location
identified on Schedule 4.26 (or such other location to which such Collateral has
been relocated after compliance with Section 8.12) without first complying again
with the requirements of Section 8.12 in connection with each relocation.
8.13. Assumed Names. Without giving Lender at least thirty (30) days
advance written notice of such change and ensuring that any steps that Lender
may deem necessary to continue the perfection and priority of Lender's security
interests in the Collateral shall have been taken, transact or engage in
business under any assumed name, fictitious name, tradestyle or "d/b/a," except
those identified on Schedule 4.29, and provided further that this limitation
does not apply to any Subsidiary of Borrower.
8.14. Employment of, or Competition by, Key Employees. Prior to the
completion of the Merger, (i) cease to employ on a full time basis Alfred West
(other than by reason of his death or disability) or (ii) suffer to exist any
material competition by any of Gary Bondi, Alfred West or Steven West with the
business conducted now or hereafter by Destia directly or through a Subsidiary.
8.15. Restrictions on the upstreaming of revenue by Subsidiaries to
Destia. Create otherwise cause or permit to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends
or make any other distributions on or in respect of its capital stock; (ii) make
loans or advances or to pay any indebtedness or other obligation owed to a
Borrower; or (iii) transfer any of its property or assets to a Borrower, except
for encumbrances or restrictions existing under or by reason of: (1) applicable
law; (2) customary non-assignment provisions of any contract or any lease
governing a leasehold interest of Subsidiary; or (3) existing terms of an
agreement, including without limitation the Indentures, as of, the date of this
Agreement.
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ARTICLE 9: EVENTS OF DEFAULT AND REMEDIES
9.01. Events of Default. An Event of Default shall mean the occurrence or
existence of one or more of the following events or conditions (whatever the
reason for such Event of Default and whether voluntary, involuntary or effected
by operation of Law):
(a) Payment Default. If a Borrower fails to pay any sum, whether of
principal or interest on any Note or any prepayment premiums, or any other
amount due hereunder or under any Note within ten (10) calendar days after
such amount becomes due; or
(b) False Statement. If any statement, representation or warranty
made by any Borrower in any Loan Document or made in any financial
statement, certificate, report, exhibit or document furnished to Lender
pursuant to any Loan Document, proves to have been untrue, incomplete,
false or misleading in any material respect as of the time when made and
shall not have been corrected or remedied to the satisfaction of Lender
within twenty (20) calendar days after the earlier of Borrower's knowledge
thereof or receipt of written notice thereof from Lender; or
(c) Covenant Defaults. (i) If Borrower defaults in the performance
or observance of any covenant or agreement in this Agreement, and such
default continues for a period of twenty (20) calendar days after the
earlier of Borrower's knowledge thereof or receipt of written notice from
Lender thereof, except for violations of Section 7.08(d), which shall
become an Event of Default at the end of the sixty (60) day period stated
therein and except for specific Defaults listed elsewhere in this Section
9.01, as to which no notice or cure period shall apply unless specified;
or
(ii) If Destia defaults in the observance of the covenant set forth
in Schedule 7.15(e) at the end of any fiscal quarter occurring on or after
the Adjusting Fiscal Quarter.
(d) [INTENTIONALLY OMITTED]
(e) Undischarged Judgments. If one or more judgments for the payment
of money has been entered against Destia or any Subsidiary in an amount in
excess of $1,000,000, and such judgment or judgments have remained
undischarged and unstayed for a period of thirty (30) calendar days,
unless the validity thereof is contested in compliance with Section 7.08
hereof; or
(f) Attachments, etc. If one or more writs or warrants of
attachment,
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garnishment, execution, distraint or similar process with respect to
obligations of Destia or any Subsidiary in excess of $250,000 individually
or in the aggregate have been issued against Destia or any Subsidiary or
any of their respective properties which have remained undischarged and
unstayed for a period of thirty (30) consecutive days and are not being
contested in compliance with Section 7.08 hereof; or
(g) Default Under Third Party Agreements. If one or more defaults,
or events or conditions which with notice or lapse of time or both would
become a default, occur that give(s) the creditor the right to accelerate
in respect of any other obligation(s) of Destia or any Subsidiary for
borrowed money (including lease obligations) in the amount of $1,000,000
individually or in the aggregate; or
(h) Dissolution; Discontinuance of Business, Etc. Destia or any
other Borrower discontinues its usual business, dissolves, has its
Organizational Document revoked, winds up or liquidates itself or its
business, except as such acts may occur in connection with an Affiliate
Transaction; or
(i) Involuntary Bankruptcy or Receivership Proceedings. If a
receiver, custodian, liquidator, or trustee of Destia or any Subsidiary or
of any substantial part of its respective property is appointed by the
order or decree of any court or agency or supervisory authority having
jurisdiction; or an order is entered adjudicating Destia or any Subsidiary
as bankrupt or insolvent; or any substantial part of the property of
Destia or any Subsidiary is sequestered by court order; or a petition is
filed against any Borrower under any state or federal bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution, liquidation, or receivership law of any jurisdiction, whether
now or hereafter in effect and such petition is not dismissed within 30
days of filing; or
(j) Voluntary Bankruptcy. If Destia or any Subsidiary takes
affirmative steps to prepare to file, or files, a petition in voluntary
bankruptcy or to seek relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution, or liquidation law of any jurisdiction, whether now or
hereafter in effect, or consents to the filing of any petition against it
under any such law; or
(k) Assignments for Benefit of Creditors, Etc. If Destia or any
Subsidiary makes an assignment for the benefit of creditors, or admits in
writing its inability to pay its debts generally as they become due, or
consents to the appointment of a receiver, trustee, or liquidator of
itself or of all or any part of its properties; or
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(l) Non-compliance with Governmental Requirements. If Destia or any
Subsidiary fails to comply with any requirement of any Governmental
Authority within twenty (20) calendar days after notice in writing of such
requirement shall have been given to Borrower by such Governmental
Authority, or such longer period of time permitted Borrower by such
Governmental Authority, unless the effect of such noncompliance in
Lender's sole judgment would not have a Material Adverse Effect; or
(m) Regulatory Authorizations. If any Regulatory Authorization in
connection with this Agreement or any other Loan Document or any such
Regulatory Authorization now or hereafter necessary or advisable to make
this Agreement or the other Loan Documents legal, valid, enforceable and
admissible in evidence or to permit any Borrower to conduct its business
is not obtained or has ceased to be in full force and effect or has been
modified or amended or has been held to be illegal or invalid or is
revoked or terminated and, after notice from Lender, is not being
contested by Destia in compliance with Section 7.08 hereof and Lender has
reasonably determined in good faith (which determination shall be
conclusive) that such event or occurrence may have a Material Adverse
Effect; or
(n) Damage or Destruction. If the proceeds of any physical damage
insurance actually paid in respect of the partial or total damage or
destruction of the Collateral, together with any other cash or other
readily available funds, are insufficient to cover the cost of the
restoration thereof or such damage or destruction is so extensive that
repair or restoration reasonably cannot be effected within a time period
short enough to prevent a Material Adverse Effect;
(o) Landlord Waivers. If any Borrower fails to provide the Landlord
Waivers required hereunder and Lender determines in its sole discretion
that such failure results in a material impairment of Lender's security
for the Loans; or
(p) Change in Control. If any Change in Control, other than as a
result of the Merger, should occur without Lender's prior written consent,
which may be withheld in Lender's sole and absolute discretion, or if any
Borrower (other than Destia) ceases to be a Subsidiary of Destia; or
(q) ERISA Defaults. Except as does not reject in a Material Adverse
Effect, if, with respect to any Plan, (i) there has occurred a Reportable
Event being considered by the PBGC which may reasonably result in any
material liability to the PBGC with respect to any Plan, (ii) a Plan has
been terminated not in compliance with ERISA, (iii) a trustee has been
appointed by a United States District Court to administer a Plan, (iv) a
PBGC or any other person has instituted proceedings to terminate a Plan or
to appoint a trustee to administer any such Plan, (v) either the Borrower
or any
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Affiliate has withdrawn, completely or partially, from any Plan, (vi)
either the Borrower or any Affiliate has incurred secondary liability for
withdrawal liability payments under any Plan or (vii) a Plan has failed to
meet the minimum funding standards established under the Code or ERISA; or
(r) Defaults Under Other Loan Documents. If any default,
misrepresentation or breach should occur under any Security Document or
other Loan Document and is not cured or waived within the time permitted
therein, or any such Loan Documents should cease to be in full force and
effect, or any party thereto should assert any unenforceability of, or
deny liability on, or admit inability to perform under, any such Loan
Document.
9.02. Consequences of an Event of Default. If any Event of Default shall
occur and be continuing or shall exist, Lender shall be under no further
obligation to make Advances hereunder, any remaining commitment hereunder shall
immediately terminate, with no further notice, and Lender may, by notice to
Destia, as agent for each Borrower, declare the unpaid principal amount of each
Note, interest accrued thereon and all other amounts owing by such Borrower
hereunder or under each Note to be immediately due and payable without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived, and an action therefor shall immediately accrue. Such
consequences shall occur automatically upon the occurrence of an Event of
Default under Section 9.01 (h), (i), (j) or (k), without any notice or demand.
Upon the occurrence of an Event of Default, Lender may, in its sole discretion,
exercise any and all remedies available to it under this Article 9 or under any
of the Loan Documents or under applicable law without further notice or period
of grace or opportunity to cure.
9.03. Exercise of Rights. Subject to any requirements for FCC or other
governmental approval upon the occurrence of any Event of Default, the rights,
powers and privileges provided in this Section and all other remedies available
to Lender under this Agreement or by statute or by rule of law may be exercised
by Lender at any time from time to time whether or not the Obligations shall be
due and payable, and whether or not Lender shall have instituted any foreclosure
or other action for the enforcement of this Agreement or any Note. No failure to
exercise nor any delay in exercising on the part of Lender, any right, remedy,
power or privilege hereunder or under any of the other Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or future
exercise thereof or the exercise of any other right, remedy, power or privilege.
9.04. Rights of Secured Party; Possession or Sale of Collateral. Without
limiting the generality of the foregoing, Lender shall have all the rights and
remedies of a secured party under the UCC, and Lender may, without demand and
without advertisement or notice, except as may be required by Section 9-504(3)
of the UCC, all of which the Borrowers waive,
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except as may be required by Section 9-504(3) of the UCC, at any time or times,
sell and deliver any or all Collateral held by or for it at public or private
sale, for cash, upon credit or otherwise, at such prices and upon such terms as
Lender deems advisable, in its sole discretion, and/or collect, or enforce the
collection of, the Collateral. Lender may be the purchaser at any such sale.
Upon the occurrence of an Event of Default and upon Lender's request, the
Borrowers shall assemble, at its own expense, any or all Collateral owned by
such Borrower at a convenient place acceptable to Lender and shall pay to Lender
or reimburse Lender for, on demand, all costs of collection of all amounts due,
and enforcement of all rights hereunder, including reasonable attorneys' fees
and legal expenses, and expenses of any repairs to any realty or other property
to which any of such Collateral may be affixed. Upon an Event of Default Lender
may, to the fullest extent permitted by applicable law, without notice,
advertisement, hearing or process of law of any kind, enter upon any premises
where any of the Collateral may be located and take possession of and remove
such Collateral.
9.05. Notices, Etc. Waived. Except as expressly provided in this Article
9, the Borrowers hereby expressly waive, to the fullest extent permitted by
applicable law, presentment, demand, protest, any and all notices of any kind,
advertisements, hearing or process of law in connection with the exercise by
Lender of any of its rights and remedies upon the occurrence of an Event of
Default. If any notification of intended disposition of any of the Collateral is
required by law, such notification shall be deemed reasonably and properly given
if given in accordance with Section 10.06 hereto at least ten (10) days before
such disposition.
9.06. Additional Remedies. Lender's remedies upon the occurrence and
during the continuance of an Event of Default shall include, in addition to, and
not in lieu of, such remedies as are available at law or in equity or provided
for in any of the Loan Documents, the following:
(a) Foreclosure; Receivership. Lender shall be entitled to file one
or more suits at law or in equity against the applicable Borrower to
collect such Borrower's Obligations and/or to foreclose on Lender's Liens
on and security interests created by this Agreement or the Security
Documents. Lender may apply or require the Borrowers to apply for any
necessary transfers, assignments, orders, consents or licenses in
connection with the operation or abandonment of the Collateral or any part
thereof, and the Lender shall also be entitled as a matter of right and
without notice and without requiring bond (notice and bond being hereby
waived), without regard to the solvency or insolvency of the Borrowers at
the time of application and without regard to the value of the Collateral
at that time, to have a receiver appointed by a court of competent
jurisdiction in order to manage, protect, and preserve the Collateral and
to continue the operation of the business of the Borrowers, and to collect
all revenues and profits thereof and apply the same to the payment of all
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expenses and other charges of such receivership until the sale or other
final disposition of the Collateral. The Borrowers hereby consent to the
appointment of such receiver.
(b) Right to Cure. Following the occurrence and during the
continuance of an Event of Default, if Borrower fails in any material
respect to perform or comply with any of its agreements contained herein
or in any of the other Loan Documents, Lender may take whatever actions it
may deem appropriate to perform or comply or otherwise cause performance
or compliance with such agreement, all at the risk, cost and expense of
Borrower.
(c) Setoff. If the unpaid principal amount of any Note, interest
accrued thereon or any other amount owing by any Borrower hereunder or
under any Note shall have become due and payable (by acceleration or
otherwise), Lender shall have the right, in addition to all other rights
and remedies available to it, without notice to any Borrower, to setoff
against and to appropriate and apply to such due and payable amounts any
debt owing to, and any other funds held in any manner for the account of,
such Borrower by Lender. Such right shall exist whether or not Lender
shall have given notice or made any demand hereunder or under such Note,
whether or not such debt owing to or funds held for the account of such
Borrower is or are matured or unmatured, and regardless of the existence
or adequacy of any collateral, guaranty or any other security, right or
remedy available to Lender. The Borrowers hereby consent to and confirm
the foregoing arrangements and confirms Lender's rights of setoff.
9.07. Application of Proceeds. Any proceeds of any of the Collateral,
received by Lender through sale or disposition of the Collateral or otherwise,
may be applied by Lender toward the payment of the Obligations, including
expenses in connection with the Collateral (including reasonable fees and legal
expenses) in such order of application as Lender may from time to time elect.
9.08. Discontinuance of Proceedings. If Lender should proceed to enforce
any right or remedy under this Agreement or any other Loan Document, and then
discontinue or abandon such proceeding for any reason, all rights, powers and
remedies of Lender hereunder shall continue as if no such proceeding had been
taken.
9.09. Power of Attorney. For the purpose of carrying out the provisions
and exercising the rights, powers and privileges granted by the Loan Documents,
including, without limitation, this Article 9, the Borrowers hereby irrevocably
constitute and appoint Lender its true and lawful attorney-in-fact to execute,
acknowledge and deliver any instruments and do and perform any acts such as are
referred to in the Loan Documents, including, without limitation, this Article
9, in the name and on behalf of such Borrower,
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from time to time in Lender's reasonable discretion after the occurrence and
during the continuance of an Event of Default, in accordance with the Loan
Documents and any statute or rule of law. This power of attorney is a power
coupled with an interest and cannot be revoked. The Borrowers hereby ratify all
that said attorney-in-fact shall lawfully do or cause to be done by virtue and
in accordance with the terms hereof.
Without limiting the generality of the foregoing, Lender may after the
occurrence and during the continuance of an Event of Default do the following
without notice to or assent by any Borrower to accomplish the purposes of this
Agreement:
(a) upon failure of a Borrower to timely pay or discharge taxes or Liens
levied or placed on or threatened against the Collateral or maintain
insurance on the Collateral, pay and discharge such taxes or Liens, effect
any repairs on the Collateral and/or pay the premiums for any insurance
called for by the terms of this Loan Agreement or any other Loan Document;
(b) (i) direct any party liable for any payment on any Collateral to make
payment of any and all monies due and to become due thereunder directly to
Lender or as Lender shall direct; (ii) in the name of a Borrower or its
own name or otherwise, take possession of and endorse and collect any
checks, drafts, notes, acceptances, or other instruments for the payment
of monies due under, or otherwise receive payment of and receipt for any
and all monies, claims and other amounts due and to become due at any time
in respect of or arising out of any Collateral; (iii) sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications and notices
in connection with the Collateral; (iv) commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect all or any of the Collateral and to enforce any
other right in respect of any Collateral; (v) defend any suit, action or
proceeding brought against a Borrower with respect to any Collateral; (vi)
settle, compromise or adjust any suit, action or proceeding described
above upon commercially reasonable terms under the circumstances and, in
connection therewith, give such discharges or releases as Lender may
reasonably deem appropriate; and (vii) generally sell, use, operate,
transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though Lender were
the absolute owner thereof for all purposes, and, at Lender's option and
the applicable Borrower's expense, at any time or from time to time after
the occurrence and during the continuance of an Event of Default, all
other acts and things that Lender reasonably deems necessary to protect,
preserve or realize upon the Collateral and Lender's security interest
therein, in order to effect the intent of this Agreement and the other
Loan Documents all as fully and effectively as the applicable Borrower
might do.
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9.10. Regulatory Matters. Notwithstanding any provision to the contrary
contained herein, Lender will not exercise any right or remedy under this
Agreement that requires prior FCC or PUC approval without first obtaining such
approval. If counsel to Lender reasonably determines that the consent of the FCC
or PUC is required in connection with any of the actions that may be taken by
Lender in the exercise of its rights hereunder or under any of the other Loan
Documents, then the Borrowers, at its sole cost and expense, agrees to use its
best efforts to secure such consent and to cooperate with Lender in any action
commenced by Lender to secure such consent. Upon the occurrence and during the
continuation of an Event of Default, the Borrowers shall promptly execute and/or
cause the execution of all applications, certificates, instruments and other
documents and papers that may be required in order to obtain any necessary
governmental consent, approval or authorization, and if any Borrower fails or
refuses to execute such documents, the clerk of the court with jurisdiction may
execute such documents on behalf of such Borrower.
9.11. Currency Matters. If, for the purposes of obtaining judgment in
respect of any claim under this Agreement in any court, it is necessary to
convert a sum due hereunder to Lender in any currency (the "Original Currency")
into another currency (the "Other Currency"), the parties hereto agree, to the
fullest extent that they may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures Lender could
purchase the Original Currency with the Other Currency on the Business Day
preceding that on which final judgment is paid or satisfied.
The obligations of a Borrower in respect of any sum due in the Original Currency
from it to the Lender under the Loan Agreement shall, notwithstanding any
judgment in any Other Currency, be discharged only to the extent that on the
business day following receipt by the Lender of any sum adjudged to be so due in
such Other Currency, the Lender may in accordance with normal banking procedures
purchase the Original Currency with such Other Currency. If the amount of the
Original Currency so purchased is less than the sum originally due to the Lender
in the Original Currency, the Borrowers shall, as a separate obligation and
notwithstanding any such judgment, jointly and severally, indemnify the Lender
against such loss, and if the amount of the Original Currency so purchased
exceeds the sum originally due to the Lender in the Original Currency, the
Lender shall remit such excess to the Borrower.
ARTICLE 10: GENERAL CONDITIONS/MISCELLANEOUS
The following conditions shall be applicable throughout the term of this
Agreement:
10.01. Modifications and Waivers. This Agreement, the other Loan
Documents, or any provision thereof may not be changed, waived or terminated
orally, but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver
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or termination is sought. No action or course of dealing on the part of Lender,
its officers, employees, consultants, or agents, nor any failure or delay by
Lender with respect to exercising any right, power, or privilege of Lender under
any Note, this Agreement, or any other Loan Document shall operate as a waiver
thereof, except as otherwise provided in this Agreement. Any waiver shall be
effective only to the extent and for the instance specifically identified in
such writing, and shall not be deemed to imply any future waivers or other
waivers. No amendment to the Loan Documents shall be effective without written
agreement signed by all Borrowers and Lender.
10.02. Advances Not Implied Waivers. No waiver of the requirements
contained in any Loan Document shall be effective unless in writing duly signed
by Lender. No Advance hereunder shall constitute a waiver of any of the
conditions of Lender's obligation to make further Advances nor, in the event any
Borrower is unable to satisfy any such condition, shall any waiver of such
condition have the effect of precluding Lender from thereafter declaring such
inability to be an Event of Default as herein provided. Any Advance made by
Lender and any sums expended by Lender pursuant to the Loan Documents shall be
deemed to have been made pursuant to this Agreement, notwithstanding the
existence of an uncured Default or Event of Default. No Advance at a time when
an Event of Default exists shall constitute a waiver of any right or remedy of
Lender existing by reason of such Event of Default, including, without
limitation, the right to accelerate the maturity of the Indebtedness evidenced
by each Note or to foreclose the Lien on the Collateral or to refuse to make
further advances hereunder.
10.03. Deviation from Covenants. The procedure to be followed by a
Borrower to obtain the consent of Lender to any deviation from the covenants
contained in this Agreement or any other Loan Document shall be as follows:
(a) Such Borrower shall send a written notice to Lender setting
forth (i) the covenant(s) relevant to the matter, (ii) the requested
deviation from the covenant(s) involved, and (iii) the reason for the
requested deviation from the covenant(s); and
(b) Lender, within a reasonable time, will send a written notice to
such Borrower, permitting or refusing the request, but in no event will
any deviation from the covenants of this Agreement or any other Loan
Document be effective without the express prior written consent of Lender.
Lender's failure to provide such written notice shall be deemed a refusal
of such request.
10.04. Holidays. Except as otherwise provided herein, whenever any payment
or action to be made or taken hereunder or under any Note shall be stated to be
due on a day which is not a Business Day, such payment or action shall be made
or taken on the next following Business Day and such extension of time shall be
included in computing interest or fees, if any, in connection with such payment
or action.
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10.05. Records. From time to time Lender may send a Borrower statements of
the unpaid principal amount of a Note, the unpaid interest accrued thereon, the
Interest Rate or rates applicable to such unpaid principal amount, the duration
of such applicability, and the amount remaining available on any Loan, and each
statement shall be deemed correct and conclusively binding on Borrower (absent
manifest error) unless a Borrower notifies Lender of an error in the statement
in writing within thirty (30) days of the date of any such statement is provided
to a Borrower.
10.06. Notices. All notices, requests, demands, directions and other
communications (collectively, "notices") required under the provisions of this
Agreement or any other Loan Document shall be in writing (including
communication by facsimile transmission) unless otherwise expressly permitted
hereunder and shall be sent by hand, by registered or certified mail return
receipt requested, by overnight courier service maintaining records of receipt,
or by facsimile transmission with confirmation in writing mailed first-class, in
all cases with charges prepaid, and any such properly given notice shall be
effective upon the earlier of receipt or (i) when delivered by hand, or (ii) the
third Business Day after being mailed, or (iii) the following Business Day if
sent by overnight courier service, or (iv) when sent by facsimile, answer back
received. All notices shall be addressed as follows:
If to Borrower, to the Notice Address set forth on Schedule 1, with
copies, if any, as set forth on Schedule 1.
If to Lender: NTFC Capital Corporation
501 Corporate Centre Drive, Suite 600
Franklin, Tennessee 37067
Attention: Legal Department
Telecopy: (615) 771-6100
With a copy to: NTFC Capital Corporation
501 Corporate Centre Drive, Suite 600
Franklin, Tennessee 37067
Attention: Manager, Credit
Telecopy: (615) 771-6143
and
TFS Portfolio Management
10 Riverview Drive
Danbury, CT 06810
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All notices shall be sent to the applicable party at the address stated
above or in accordance with the last unrevoked written direction from such party
to the other party hereto, given in accordance with the terms hereof.
10.07. FCC and PUC Approval. The exercise of any rights or remedies
hereunder or under any other Loan Document by Lender that may require FCC or PUC
approval shall be subject to obtaining such approval. Pending the receipt of any
PUC or FCC approval, the Borrowers shall not do anything to delay, hinder,
interfere with or obstruct the exercise of Lender's rights or remedies hereunder
or the obtaining of such approvals.
10.08. Lender Sole Beneficiary. All conditions of the obligation of Lender
to make any Advances hereunder are imposed solely and exclusively for the
benefit of Lender and its assigns and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make any Advances in the absence
of strict compliance with any or all such conditions, and no Person shall under
any circumstances be deemed to be a beneficiary of such conditions, any or all
of which may be freely waived in whole or in part by Lender at any time if in
its sole discretion it deems it advisable to do so. Inspections and approvals of
the System, and the workmanship and materials used therein impose no
responsibility or liability of any nature whatsoever on Lender, and no Person
shall, under any circumstances, be entitled to rely upon such inspections and
approvals by Lender for any reason. Lender's sole obligation hereunder is to
make the Advances if and to the extent required by this Agreement or any Note.
10.09. Lender's Review of Information. The Borrowers acknowledge and agree
that any review or analysis by Lender of financial information, operating
information, marketing data or other information provided to Lender by or on
behalf of a Borrower at any time is and shall be conducted solely for Lender's
benefit and internal use and that Lender is under no duty or obligation to make
the results of such review or analysis available to the Borrowers. The Borrowers
are not relying, and will not rely, on Lender for financial or business advice.
10.10. No Joint Venture. Nothing in any of the Loan Documents or in this
Agreement shall be deemed to constitute any kind of partnership, joint venture
or fiduciary relationship between the Lender and the Borrowers or between the
Lender and any Owners.
10.11. Severability. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement or the other Loan Documents shall
be held invalid or unenforceable in whole or in part in any jurisdiction such
provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof or thereof in any jurisdiction.
10.12. Rights Cumulative. All rights, powers and remedies herein given to
Lender are
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<PAGE>
cumulative and not alternative, and are in addition to all statutes or rules of
law.
10.13. Duration; Survival. All representations and warranties of the
Borrowers contained herein or made in connection herewith shall survive the
making of and shall not be waived by the execution and delivery of this
Agreement and the other Loan Documents, any investigation by Lender, or the
making of any Advances hereunder. All covenants and agreements of the Borrowers
contained herein shall continue in full force and effect from and after the date
hereof so long as it may borrow hereunder and until payment in full of each
Note, interest thereon, all fees and all other Obligations. Without limitation,
it is understood that all obligations of the Borrowers to make payments to or
indemnify Lender shall survive the payment in full of each Note and of all other
Obligations.
10.14. Governing Law. This Agreement and each Note and each of the other
Loan Documents shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, except to the extent that the
laws of jurisdictions where the Collateral is located may be required to apply
to the Collateral.
10.15. Counterparts. This Agreement may be executed in any number of
counterparts (by facsimile transmission or otherwise) and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute but one and
the same instrument.
10.16. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Lender and the Borrowers and their respective successors
and assigns; provided, however, that no Borrower may assign or transfer any of
its rights or obligations hereunder or under the other Loan Documents (in whole
or in part), except to its successor in an Affiliate Transaction, without the
prior written consent of Lender. Lender may assign, transfer or pledge any of
its respective rights or obligations hereunder or under the other Loan Documents
upon notice to, but without the prior written consent of, Borrower. Upon receipt
of written notice from Lender of such assignment, the Borrowers shall promptly
acknowledge receipt thereof in writing. If Borrower is given written notice of
any assignment, it shall perform its obligations with respect to this Agreement
for the ratable benefit of the applicable assignee(s), and, if so directed,
shall pay all amounts due or to become due hereunder directly to the applicable
assignee(s) or to any other party designated by such assignee(s). The Borrowers
shall not assert against any such assignee any set-off, defense or counterclaim
that the Borrowers may have against Lender or any person other than such
assignee. The Borrowers shall also execute and deliver to Lender such
documentation as any such assignee may reasonably require, including but not
limited to amended promissory notes and acknowledgment of or consent to the
assignment which may require the Borrowers to make certain representations or
reaffirmations as to some of the basic terms and covenants contained herein.
Lender shall not be relieved of its obligations hereunder as a result of any
such sale, assignment, transfer, grant or pledge, unless such assignee
specifically assumes all or
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<PAGE>
part of Lender's future obligations hereunder in a writing, a copy of which
shall be delivered to Borrowers, in which event after the date of such
assignment, Borrowers' obligations to any such assignee shall be proportionately
as set forth herein with respect to Lender, and Borrowers shall not look to
Lender to perform any of such assignee's obligations hereunder which arise after
the date thereof. Any assignee shall be entitled to rely on Borrowers'
agreements as stated herein, as applicable, and shall be considered a third
party beneficiary thereof. Except to the extent otherwise required by the
context of this Agreement, the word "Lender" where used in this Agreement shall
mean and include any holder of any Note originally issued to Lender hereunder,
and any such holder of any Note shall be bound by and have the benefits of this
Agreement the same as if such holder had been a signatory hereto.
10.17. Participation. Lender shall have the right to enter into one or
more participation agreements, syndication agreements or similar agreements with
one or more participating lenders or other parties approved by Lender on such
terms and conditions as Lender shall deem advisable, provided that any Person
shall invest a minimum amount of $5,000,000. The Borrowers shall furnish a
sufficient number of copies of reports and certificates to Lender so that Lender
and each participating lender shall receive a copy of each such document.
10.18. Time of Essence. Time is of the essence of this Agreement and each
Note and the other Loan Documents.
10.19. Disclosures and Confidentiality.
(a) Borrower agrees that it will obtain Lender's written consent
before using or generating any press release, advertisement, publicity
materials or other publication in which the name (except as permitted by
Section 10.19(b)) or logo of Lender or any of its Affiliates is used or
may be reasonably inferred, and will not distribute any such materials in
the absence of such prior written approval.
(b) Each of the Borrowers agree that it will not, directly or
indirectly, disclose to any third party the terms of this Agreement or the
other Loan Documents or prior or future correspondence relating thereto,
or the transactions contemplated hereby, or any other information
regarding Lender or its Affiliates learned by Borrower during the course
of negotiation thereof. The term "third party" shall exclude only the
Borrowers, their Affiliates, underwriters, prospective investors, and
prospective lenders, and their respective attorney(s) and certified public
accountant(s). This Section 10.19(b) shall not restrict the disclosure of
information if such disclosure is required by law, by order of any court
or by the order, rule or regulation of any administrative agency,
including without limitation any requirements of the FCC, any PUC, or any
state or federal securities commissions (the "Commissions"); provided,
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Lender's Initials:
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<PAGE>
however, that, except for disclosures required by the FCC, PUC or
Commissions, Borrower shall provide Lender with advance notice of any such
required disclosure of information so that Lender may seek an appropriate
protective order and/or waive compliance with this Section. Borrower shall
not oppose any action taken by Lender to obtain an appropriate protective
order or other reliable assurance that the information will be accorded
confidential treatment. The obligations set forth in this Section 10.19(b)
shall survive the termination of this Agreement.
(c) The disclosure of information by either Lender or the Borrowers
will not be restricted under this Agreement if such information (i) has
been or becomes published or is now, or in the future, in the public
domain through (A) no fault of the parties, (B) disclosure other than
unauthorized disclosure by the party to whom the information is disclosed,
or (C) disclosure to third parties by the disclosing party without similar
restriction; (ii) is property (other than proposal letters, commitment
letters or other correspondence between Lender and the Borrowers) within
the legitimate possession of the receiving party prior to disclosure
hereunder; (iii) subsequent to disclosure hereunder, is lawfully received
from a third party having rights therein without restriction of the third
party's or receiving party's rights to disseminate the information and
without notice of any restriction against its further disclosure; (iv) is
disclosed with the written approval of the other party; or (v) is or
becomes publicly available free of any obligation to keep it confidential.
(d) The Borrowers authorize Lender to discuss with and furnish to
any Affiliate of the Lender, to any government or self-regulatory agency
with jurisdiction over the Lender, to any other Governmental Authority or
to any assignee, successor, participant, successor, or prospective
assignee, successor or participant, all financial statements, audit
reports and other information pertaining to the Borrowers and/or their
Subsidiaries whether such information was provided by Borrower or prepared
or obtained by the Lender or third parties. Neither the Lender nor any of
its employees, officers, directors or agents makes any representation or
warranty to any existing or prospective assignee, successor or participant
regarding any audit reports or other analyses of the Borrowers that the
Lender may distribute, whether such information was provided by the
Borrowers or prepared or obtained by the Lender or third parties, nor
shall the Lender or any of its employees, officers, directors or agents be
liable to any Person receiving a copy of such reports or analyses for any
inaccuracy or omission contained in such reports or analyses or relating
thereto.
(e) Every reference in this Agreement to disclosures of the
Borrowers to Lender (except the financial statements), to the extent that
such references refer or are intended to refer to disclosures at or prior
to the execution of this Agreement, shall be deemed strictly to refer only
to written disclosures delivered to Lender concurrently with the execution
of this Agreement and referred to specifically in the Loan
---------------------------------
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<PAGE>
Documents. The parties intend that such disclosures are to be limited to
those presented in an orderly manner at the time of executing this
Agreement and are not to be deemed to include expressly or impliedly any
disclosures that previously may have been delivered from time to time to
Lender, except to the extent that such previous disclosures are again
presented to Lender in writing concurrently with the execution of this
Agreement.
10.20. Jurisdiction and Venue. THE BORROWERS HEREBY IRREVOCABLY CONSENT TO
THE JURISDICTION OF THE COURTS LOCATED IN DAVIDSON COUNTY, TENNESSEE, INCLUDING
WITHOUT LIMITATION FEDERAL COURTS SITTING IN THE MIDDLE DISTRICT OF TENNESSEE
AND THE CHANCERY COURTS FOR DAVIDSON COUNTY, TENNESSEE, AND WILLIAMSON COUNTY,
TENNESSEE, FOR ANY SUIT BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE OBLIGATIONS, AND AGREES NOT TO
CONTEST VENUE IN ANY SUCH COURTS. In any such litigation, the Borrowers waive
personal service of any summons, complaint or other process, and agrees that the
service thereof may be made by certified or registered mail direct to Borrower
at its address set forth in Section 10.06 hereof. Within thirty (30) days after
such mailing, the Borrowers shall appear and answer to such summons, complaint
or other process. Should Borrower fail to appear or answer within the said
30-day period, then such party shall be deemed in default and judgment may be
entered against the Borrowers for the amount or other relief as demanded in any
summons, complaint or other process so served. In the alternative, in its sole
discretion, Lender may effect service upon the Borrowers in any other form or
manner permitted by law. The choice of forum set forth herein shall not be
deemed to preclude the enforcement of any judgment obtained in such forum or the
taking of any action under this Agreement to enforce the same in any appropriate
jurisdiction.
10.21. Jury Waiver. BORROWER AND LENDER HEREBY KNOWINGLY AND WILLINGLY
WAIVE THEIR RIGHTS TO DEMAND A JURY TRIAL IN ANY ACTION OR PROCEEDING INVOLVING
THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, THE OBLIGATIONS, OR ANY RELATIONSHIP
BETWEEN THE LENDER AND BORROWERS. THE BORROWERS WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
10.22. Limitation on Liability. LENDER SHALL HAVE NO LIABILITY UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS FOR SPECIAL,
EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY SORT
IN ANY SUIT BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS AGREEMENT, THE
OTHER LOAN
---------------------------------
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Lender's Initials:
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<PAGE>
DOCUMENTS, OR THE OBLIGATIONS, AND, EXCEPT TO THE EXTENT PROHIBITED BY LAW, EACH
PARTY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH ACTION ANY
SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF
ANY SORT OTHER THAN ACTUAL DAMAGES.
10.23. Borrowers Waivers. To the fullest extent permitted by law, the
Borrowers hereby waive (i) presentment, demand and protest and notice of
presentment, protest, default, non payment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Lender on which the Borrowers may in any way be liable and hereby
ratifies and confirms whatever Lender may do in this regard; (ii) notice prior
to taking possession or control of the Collateral or any bond or security which
might be required by any court prior to allowing Lender to exercise any of
Lender's remedies, including the issuance of an immediate writ of possession,
except as expressly required in any of the Loan Documents; (iii) any marshalling
of assets, or any right to compel Lender to resort first to any Collateral or
other Persons before pursuing the Borrowers for payment of the Obligations and
any defenses based on suretyship or impairment of Collateral; (iv) the benefit
of all valuation, appraisement and exemption laws; (v) any right to require
Lender to terminate its security interest in the Collateral or in any other
property of the Borrowers until termination of this Agreement and the execution
by the Borrower and by any person whose loans to the Borrowers are used in whole
or in part to satisfy the Obligations, of an agreement indemnifying Lender from
any loss or damage Lender may incur as the result of dishonored or unsatisfied
items of any account debtor applied to the Obligations; and (vi) notice of
acceptance hereof. The Borrowers acknowledge that the foregoing waivers are a
material inducement to Lender's entering into this Agreement and that Lender is
relying upon the foregoing waivers in its future dealings with the Borrowers.
10.24. Schedules. The Schedules and Exhibits attached to this Agreement
are an integral part hereof, and are hereby made a part of this Agreement.
10.25. Agreement to Govern. In case of any conflict between the terms of
this Agreement and any of the other Loan Documents, the terms of this Agreement
shall govern.
10.26. Entire Agreement. This Agreement, the other Loan Documents and
other documents, agreements and certificates executed by the parties
contemporaneously herewith or subsequent hereto constitute the entire agreement
of the parties and supersede all prior understandings and agreements, written or
oral, between the parties hereto relating to the subject matter hereof.
Borrowers are not entering into this Agreement in reliance on statements or
representations made by any Person other than as set forth herein.
10.27. Several Obligations. The obligations of each Borrower hereunder and
under
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the other Loan Documents to which such Borrower is a party shall be several and
not joint obligations; provided, however that notwithstanding the foregoing,
Destia shall be obligated jointly and severally for all obligations of all other
Borrowers hereunder.
10.28. Original Loan Agreement. Borrowers and Lender acknowledge and agree
that the Original Loan Agreement shall be of no further force and effect and
that, effective as of the date hereof, all Notes issued pursuant to the Original
Loan Agreement shall be deemed to be issued hereunder.
[END OF GENERAL TERMS AND CONDITIONS. NEXT PAGE IS SCHEDULE 1.]
[SIGNATURES ARE ON COVER PAGE. ]
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<PAGE>
SCHEDULE 1.01(a) TO
LOAN AND SECURITY AGREEMENT
BORROWER INFORMATION AND DEFINED TERMS
"Destia": Destia Communications, Inc., a Delaware corporation ("Destia")
Destia's federal employer/
tax identification number: 11-3132722
Destia's chief executive offices (including county):
95 Route 17 South
Paramus, Bergen County, New Jersey 07652
Telephone No.: (201) 226-4500
Telecopy No.: (201) 226-4578
Destia's Notice Address:
95 Route 17 South
Paramus, Bergen County, New Jersey 07652
Telephone No.: (201) 226-4500
Telecopy No.: (201) 226-4578
The Equipment of Destia is located at:
United States Locations
-----------------------
60 Hudson Street 600 South Federal Street
New York, New York County, New York 10013 Suite 205
Chicago, Illinois 60605
Univision Center 624 South Grand Avenue
2323 Bryan Street Suite 803
Suite 2650 Los Angeles, California 90017
Dallas, Texas 75201-2628
100 North Biscayne Boulevard 2000 "L" Street, NW
Suite 2110 Suite 620
Miami, Florida 33132 Washington, DC 20036
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<PAGE>
Foreign Locations
-----------------
2 Exchange Tower 16-22, Rue de Comediens
Harbour Exchange Sq. 1000 Bruxelles
London E1496B
Le Clemenceau 11 55 Younge Street
Avenue Georges Clemenceau Suite 1201
92021 Nanterre Cedex Toronto, Ontario, Canada M5E1J4
"PUC": the term "PUC" shall include, without limitation, the New York Public
Service Commission.
"Description of Business of Destia and all other Borrowers": The Borrowers
provide local and long-distance U.S. domestic and international
telecommunications service by means of either the resale of telecommunication
services of other telephone carriers or as a facilities-based network provider
of such services, all as further described in the Schedule 14A of Borrower,
filed on October 18, 1999. In addition, the Borrowers provide other
telecommunications equipment to its domestic and international customers,
including, but not limited to, telephone calling card services. The Borrowers
also own and lease submarine cable circuits between the U.S., U.K. and
Continental Europe. The Borrowers provide international telephone service in
Canada, the U.K., Austria, Belgium, France, Germany, Italy, Greece, Switzerland
and The Netherlands through affiliated companies. The Borrowers intend to expand
their New York-based operations both domestically and internationally. The
Borrowers also intend to expand their U.K. and Continental European operations
and other international points. The Borrowers expect that the foregoing
expansions will require the Borrowers' acquisition of additional equipment and
circuit facilities.
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<PAGE>
SCHEDULE 1.01(b) TO
LOAN AND SECURITY AGREEMENT
ADDITIONAL BORROWER INFORMATION
Borrower's federal employer/
tax identification number:_____________________________________
Borrower's chief executive offices (including county):
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
Borrower's official name:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
Any d/b/a name:
---------------------------------------------------------
Borrower's jurisdiction of formation:
---------------------------------------------------------
Borrower's Notice Address:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
with copies to:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
The Equipment of this Borrower is located at:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
[TO BE COMPLETED FOR EACH BORROWER]
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Borrower's Initials:
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SCHEDULE 1.01(b) TO
LOAN AND SECURITY AGREEMENT
ADDITIONAL BORROWER INFORMATION
Borrower's federal employer/
tax identification number:_____________________________________
Borrower's chief executive offices (including county):
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
Borrower's official name:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
Any d/b/a name:
---------------------------------------------------------
Borrower's jurisdiction of formation:
---------------------------------------------------------
Borrower's Notice Address:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
with copies to:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
The Equipment of this Borrower is located at:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
[TO BE COMPLETED FOR EACH BORROWER]
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<PAGE>
SCHEDULE 2.01 TO
LOAN AND SECURITY AGREEMENT
MAXIMUM LOAN AMOUNT
Maximum principal amount Tranche 1 Commitment: Before the Tranche 1 Financing
Termination Date, Two Million Dollars ($2,000,000), One Million Four Hundred
Thousand Dollars ($1,400,000) of which may be used to acquire NTI Equipment and
related services and Six Hundred Thousand Dollars ($600,000) of which may be
used for the purchase of network related third party equipment, the preparation
of a switch room for such NTI Equipment, and the payment of closing costs and
Lender's fees and expenses, including Lender's attorneys' fees pursuant to
Section 2.10 and the Origination Fee listed on Schedule 2.09.
Maximum principal amount Tranche 2 Commitment: From and after the Tranche 2
Closing Date to and through the Tranche 2 Financing Termination Date, Three
Million Dollars ($3,000,000), which may be used (x) to acquire NTI Equipment and
related Software to be located in London, England, Brussels, Belgium and/or
Paris, France, and (y) to capitalize $102,856.33 of Indebtedness owed hereunder,
representing three days of interest in March 1997 and principal and interest
owed for the month of April 1997 and the Tranche 2 Commitment Fee.
Maximum principal amount Tranche 3 Commitment: From and after the Tranche 3
Closing Date to and through the Tranche 3 Financing Termination Date, Nineteen
Million Dollars ($19,000,000) which may be used to purchase new NTI switches and
upgrades to existing NTI switches, including installation, Software and related
equipment to be located in the United States, the United Kingdom, Belgium, the
Netherlands, Germany, France, or such other locations outside the United States
as Lender may approve.
Maximum principal amount Tranche 4 Commitment: From and after the Tranche 4
Closing Date to and through the Tranche 4 Financing Termination Date,
Twenty-Five Million Dollars ($25,000,000) which may be used to purchase new NTI
switches and upgrades to existing NTI switches, including installation, Software
and related equipment to be located in the United States, the United Kingdom,
Canada, Switzerland, Austria, Spain, Greece, Italy, Belgium, the Netherlands,
Germany, France, or such other locations outside the United States as Lender may
approve. Foreign Borrowers may use Advances only for the purchase of NTI
switches and upgrades of existing NTI switches in locations other than in
Canada, the United States or any territory, possession or protectorate of the
United States.
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SCHEDULE 2.02 TO
LOAN AND SECURITY AGREEMENT
PAYMENT TERMS AND GOVERNING LAW
"Tranche 1 Closing Date": May 28, 1996
"Tranche 2 Closing Date": March 27, 1997
"Tranche 3 Closing Date": December 31, 1997
"Tranche 4 Closing Date": November 5, 1999
"Tranche 1 Financing Termination Date": June 30, 1996.
"Tranche 2 Financing Termination Date": March 31, 1997.
"Tranche 3 Financing Termination Date": December 30, 1998.
"Tranche 4 Financing Termination Date": June 30, 2000.
"First Borrowing Date": either a Tranche 1, Tranche 2, Tranche 3 or
Tranche 4 First -------------------- Borrowing Date.
"Initial Payment Date": either a Tranche 1, Tranche 2, Tranche 3 or
Tranche 4 ---------------------- Initial Payment Date.
"Interest Payment Date": the Initial Payment Date and the first (1st)
Business Day of each calendar month thereafter.
"Tranche 1 and Tranche 2 Interest Rate": the variable interest rate per
annum announced from time to time as the ninety (90) day "Commercial Paper" rate
(being defined as the rate paid on high grade unsecured notes sold through major
dealers by major corporations in multiples of One Thousand Dollars ($1,000) for
repurchase within 90 days) as reported in The Wall Street Journal, plus three
hundred and ninety-five (395) basis points. The Tranche 1 and Tranche 2 Interest
Rate shall be automatically adjusted prospectively on the last Business Day of
each Calendar Quarter based upon the rate quoted in The Wall Street Journal on
the immediately preceding Business Day. If The Wall Street Journal should cease
publication or cease publishing such rate, the Lender shall designate a
comparable reference rate for use in determining the Interest Rate hereunder.
"Tranche 3 and Tranche 4 Interest Rate": the variable interest rate per
annum announced from time to time as the ninety (90) day "Commercial Paper" rate
(being defined
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<PAGE>
as the rate paid on high grade unsecured notes sold through major dealers by
major corporations in multiples of One Thousand Dollars ($1,000) for repurchase
within 90 days) as reported in The Wall Street Journal, plus the Tranche 3 and
Tranche 4 Rate Adjustment, as defined below. The Tranche 3 and Tranche 4
Interest Rate shall be automatically adjusted prospectively on the last Business
Day of each Calendar Quarter based upon the rate quoted in The Wall Street
Journal on the immediately preceding Business Day. If The Wall Street Journal
should cease publication or cease publishing such rate, the Lender shall
designate a comparable reference rate for use in determining the Interest Rate
hereunder. The Tranche 3 and Tranche 4 Rate Adjustment initially shall be three
hundred and ninety-five (395) basis points, provided, that if Destia meets any
of the financial targets set forth below as measured over any two complete
successive Fiscal Quarters, the Tranche 3 and Tranche 4 Rate Adjustment shall
adjust to the indicated rate at the commencement of the Fiscal Quarter next
succeeding such two Fiscal Quarters for so long as such targets are maintained;
provided further, if at any time during any Fiscal Quarter the then applicable
target is not maintained, the Tranche 3 and Tranche 4 Rate Adjustment shall
automatically increase to the appropriate amount determined by the grid set
forth below, effective as of the first day of the first Fiscal Quarter next
succeeding the Fiscal Quarter during which the applicable target was not
sustained. The Borrowers and Lender acknowledge that (i) any increase or
decrease in the Tranche 3 and Tranche 4 Rate Adjustment shall be retroactive to
the first day of the Fiscal Quarter immediately succeeding the Fiscal Quarter
for which targets were not (or were) sustained and (ii) The Borrowers shall
promptly pay Lender (or Lender shall promptly credit Borrower) an amount equal
to any underpayment (or overpayment) of interest by the Borrowers under the
Tranche 3 Note and the Tranche 4 Note for any Fiscal Quarter on the Payment Date
next following an increase or decrease in the Tranche 3 and Tranche 4 Rate
Adjustment following Destia's reporting of results of operation for such Fiscal
Quarter pursuant to Section 7.01 of the Loan Agreement.
Financial Target Tranche 3 and Tranche 4 Rate Adjustment
---------------- ---------------------------------------
================================================================================
EBITDA is greater than -0- 350 basis points
- --------------------------------------------------------------------------------
Debt Service Coverage Ratio Greater 300 basis points
than 1.0 to 1
- --------------------------------------------------------------------------------
Debt Service Coverage Ratio greater 250 basis points
than 1.5 to 1
- --------------------------------------------------------------------------------
Debt Service Coverage Ratio Greater 200 basis points
than 2.0 to 1
================================================================================
"Tranche 1 Initial Payment Date": the first (1st) Business Day of the
first (1st) month to commence after the Tranche 1 First Borrowing Date.
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<PAGE>
"Tranche 2 Initial Payment Date": the first (1st) Business Day of the
second (2nd) month to commence after the Tranche 2 First Borrowing Date.
"Tranche 3 Initial Payment Date": with respect to each Borrower, the first
(1st) Business Day of the second (2nd) month to commence after the Tranche 3
First Borrowing Date by such Borrower.
"Tranche 4 Initial Payment Date": with respect to each Borrower, the first
(1st) Business Day of the second (2nd) month to commence after the Tranche 4
First Borrowing Date by such Borrower.
"Tranche 1 Maturity Date": the earlier of (i) July 1, 2001, and (ii) the
first (1st) Business Day of the sixtieth (60th) month after the Tranche 1 First
Borrowing Date, on which date all then-outstanding principal, interest, premium,
expenses, fees, penalties and other amounts due under the Tranche 1 Note shall
be finally due and payable.
"Tranche 2 Maturity Date": the earlier of (i) April 1, 2002, and (ii) the
first (1st) Business Day of the sixtieth (60th) month after the Tranche 2 First
Borrowing Date, on which date all then-outstanding principal, interest, premium,
expenses, fees, penalties and other amounts due under the Tranche 2 Note shall
be finally due and payable.
"Tranche 3 Maturity Date": the earlier of (i) January 1, 2003, and (ii)
the first (1st) Business Day of the sixtieth (60th) month after the Tranche 3
First Borrowing Date, on which date all then-outstanding principal, interest,
premium, expenses, fees, penalties and other amounts due under the Tranche 3
Note shall be finally due and payable.
"Tranche 4 Maturity Date": the earlier of (i) December 1, 2004, and (ii)
the first (1st) Business Day of the sixtieth (60th) month after the Tranche 4
First Borrowing Date, on which date all then-outstanding principal, interest,
premium, expenses, fees, penalties and other amounts due under the Tranche 4
Note shall be finally due and payable.
"Payment Date": the Initial Payment Date and the first (1st) Business Day
of each month thereafter.
"Tranche 1 Payment Schedule: principal shall be paid in sixty (60) equal
consecutive monthly installments equal initially to 1.667% of the amount of the
Advances made hereunder on the Tranche 1 First Borrowing Date; provided,
however, that the principal payment amounts payable hereunder shall be
recalculated by Lender each time subsequent Advances are made hereunder after
the Tranche 1 First Borrowing Date but prior to the Tranche 2 Closing Date,
based on the aggregate amount of all Advances then outstanding so that the
payment schedule, as recalculated, will fully amortize the aggregate amount of
all Advances then outstanding in equal monthly payments of principal to the
Tranche 1
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-91-
<PAGE>
Maturity Date. Borrower and Lender understand that this payment schedule is
intended to amortize fully the principal amount advanced under the Tranche 1
Note in equal monthly payments from the date of such Advance to the Tranche 1
Maturity Date and any other principal and interest amounts advanced prior to the
Tranche 2 Closing Date still outstanding will be added to the final payment on
the Tranche 1 Maturity Date. In any event, the entire outstanding principal
amount of the Tranche 1 Note and all accrued but unpaid interest and all other
outstanding amounts due thereunder shall be paid on the Tranche 1 Maturity Date.
"Tranche 2 Payment Schedule: principal shall be paid in sixty (60) equal
consecutive monthly installments equal initially to 1.667% of the amount of the
Advances made on the Tranche 2 First Borrowing Date; provided, however, that the
principal payment amounts payable hereunder shall be recalculated by Lender each
time subsequent Advances are made hereunder after the Tranche 3 Closing Date,
based on the aggregate amount of all Advances then outstanding under the Tranche
2 Note so that the payment schedule, as recalculated, will fully amortize the
aggregate amount of all Advances made after the Tranche 2 Closing Date and prior
to the Tranche 3 Closing Date then outstanding in equal monthly payments of
principal to the Tranche 2 Maturity Date. Borrower and Lender understand that
this payment schedule is intended to amortize fully the principal amount
advanced under the Tranche 2 Note in equal monthly payments from the date of
such Advance to the Tranche 2 Maturity Date and any other principal and interest
amounts outstanding will be added to the final payment on the Tranche 2 Maturity
Date. In any event, the entire outstanding principal amount of the Tranche 2
Note and all accrued but unpaid interest and all other outstanding amounts due
thereunder shall be paid on the Tranche 2 Maturity Date.
"Tranche 3 Payment Schedule: principal shall be paid in sixty (60) equal
consecutive monthly installments equal initially to 1.667% of the amount of the
Advances made on the Tranche 3 First Borrowing Date; provided, however, that the
principal payment amounts payable hereunder shall be recalculated by Lender each
time subsequent Advances are made hereunder after the Tranche 3 Closing Date,
based on the aggregate amount of all Advances then outstanding under the Tranche
3 Note so that the payment schedule, as recalculated, will fully amortize the
aggregate amount of all Advances made after the Tranche 3 Closing Date and prior
to the Tranche 3 Financing Termination Date then outstanding in equal monthly
payments of principal to the Tranche 3 Maturity Date. Borrower and Lender
understand that this payment schedule is intended to amortize fully the
principal amount advanced under the Tranche 3 Note in equal monthly payments
from the date of such Advance to the Tranche 3 Maturity Date and any other
principal and interest amounts outstanding will be added to the final payment on
the Tranche 3 Maturity Date. In any event, the entire outstanding principal
amount of the Tranche 3 Note and all accrued but unpaid interest and all other
outstanding amounts due thereunder shall be paid on the Tranche 3 Maturity Date.
"Tranche 4 Payment Schedule: principal shall be paid in sixty (60) equal
consecutive
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-92-
<PAGE>
monthly installments equal initially to 1.667% of the amount of the Advances
made on the Tranche 4 First Borrowing Date; provided, however, that the
principal payment amounts payable hereunder shall be recalculated by Lender each
time subsequent Advances are made hereunder after the Tranche 4 Closing Date,
based on the aggregate amount of all Advances then outstanding under the Tranche
4 Note so that the payment schedule, as recalculated, will fully amortize the
aggregate amount of all Advances made after the Tranche 4 Closing Date and prior
to the Tranche 4 Financing Termination Date then outstanding in equal monthly
payments of principal to the Tranche 4 Maturity Date. Borrower and Lender
understand that this payment schedule is intended to amortize fully the
principal amount advanced under the Tranche 4 Note in equal monthly payments
from the date of such Advance to the Tranche 4 Maturity Date and any other
principal and interest amounts outstanding will be added to the final payment on
the Tranche 4 Maturity Date. In any event, the entire outstanding principal
amount of the Tranche 4 Note and all accrued but unpaid interest and all other
outstanding amounts due thereunder shall be paid on the Tranche 4 Maturity Date.
Pursuant to Section 10.14 of the Loan Agreement, the internal laws of the
State of New York shall govern the parties rights and duties with respect to
interest, loan charges, commitment fees and brokerage commissions.
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-93-
<PAGE>
SCHEDULE 2.09 TO
LOAN AND SECURITY AGREEMENT
FEES
1. Tranche 1 Origination Fee. Destia shall pay to Lender, on or before the
Tranche 1 First Borrowing Date, a non-refundable Origination Fee of Ten
Thousand Dollars ($10,000), in consideration of Lender's structuring,
preparing and offering of the commitment to provide the Tranche 1
Commitment hereunder.
2. Tranche 2 Commitment Fee. Destia shall pay Lender, on or before the
Tranche 2 Closing Date, a nonrefundable commitment fee of Thirty Thousand
Dollars ($30,000).
3. (a) Tranche 3 Commitment Deposit. Destia shall deposit with Lender, on
or before the Tranche 3 Closing Date, a non-refundable commitment fee of
Thirty-Two Thousand Dollars ($32,000), in consideration of Lender's
structuring, preparing and offering of the commitment to provide the
Tranche 3 Commitment hereunder (the "Tranche 3 Origination Deposit").
(b) Tranche 3 Commitment Fee. Destia shall pay Lender, prior to or
at the time of disbursement of any Advance under the Tranche 3 Commitment,
a commitment fee of one percent (1%) of the principal amount of such
Advance in consideration of Lender's structuring, preparing and offering
of the Tranche 3 Commitment; provided however that Destia hereby directs
Lender to apply the Tranche 3 Commitment Deposit to the payment of the
Tranche 3 Commitment Fee until the Tranche 3 Commitment Deposit is
exhausted. In the event less than $3,200,000 in Advances hereunder are
made, Destia acknowledges that the balance of the Tranche 3 Commitment
Deposit shall be retained by Lender in consideration of Lender's
structuring, preparing and offering of the Tranche 3 Commitment.
4. (a) Tranche 4 Commitment Fee. Destia shall pay Lender, prior to or at
the time of disbursement of any Advance under the Tranche 4 Commitment, a
commitment fee of one percent (1%) of the principal amount of such Advance
in consideration of Lender's structuring, preparing and offering of the
Tranche 4 Commitment.
(b) Tranche 4 Non-Utilization Fee. In the event (i) less than 80% of
the Tranche 4 Commitment is funded at the Tranche 4 Financing Termination
Date and (ii) from the Tranche 4 Closing Date to the Tranche 4 Termination
Date Destia and/or any Subsidiary(ies) receive invoices from NTI or its
affiliates for equipment and services which were permitted to be financed
under this Agreement but were not, the Borrowers shall pay on the Tranche
4 Financing Termination Date a non-utilization
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
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<PAGE>
fee equal to one percent (1%) of the lesser of (1) the balance of the
Tranche 4 Commitment which remains unfunded and (2) the aggregate amount
of invoices from NTI or its affiliates for equipment and services which
were permitted to be financed under this Agreement but were not.
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-95-
<PAGE>
SCHEDULE 2.11 TO
LOAN AND SECURITY AGREEMENT
ANNEX A TO EQUIPMENT LOAN AND SECURITY AGREEMENT
By executing this Annex to and forming a part of the Equipment Loan and
Security Agreement dated as of November 5, 1999, (the "Third Amended and
Restated Agreement"), by and among NTFC CAPITAL CORPORATION, DESTIA
COMMUNICATIONS, INC., and each direct or indirect Subsidiary of Destia listed on
Schedule 1.01(b) attached to the Agreement, and each Subsidiary which
subsequently becomes a party thereto pursuant to Section 2.11 of the Agreement
by executing this form of Annex, the undersigned represents and warrants that it
is a [FOREIGN or DOMESTIC] Subsidiary of Destia, joins as a party to the
Agreement, assumes the obligations of a [FOREIGN/DOMESTIC] Borrower under the
Agreement, and confirms that it is bound by the terms and conditions of the
Agreement, including but not limited to the grant by the undersigned to Lender
of a security interest in all its right, title and interest in and to the
Collateral as provided in the Agreement. (The execution of this instrument
constitutes a grant by the undersigned of a security interest in the
Collateral). The undersigned further acknowledges and agrees that (i) one or
more other Subsidiaries of Destia may become additional Borrowers under the
Agreement without the consent of any other Borrower by execution of a form of
this Annex; (ii) the Lender is willing to extend certain credit to the
Borrowers, subject to the terms and conditions set forth in the Agreement,
including the condition that all Domestic Borrowers will be jointly and
severally liable for the payment of all Indebtedness owed by Destia or any
Borrower to Lender under the Agreement and the condition that all Foreign
Borrowers will be jointly and severally liable, to the extent permitted under
the corporate or other laws of such entity's jurisdiction of incorporation, for
the payment of all Indebtedness owed by any Foreign Borrower to Lender under the
Agreement; (iii) without this condition of joint and several liability, Lender
would not be willing to extend credit to any Borrower, and (iv) the undersigned,
the existing Borrowers and Subsidiaries of Destia which may become additional
Borrowers under the Agreement are (or will be) related entities, and the
undersigned expects to increase its business, and to benefit directly and
indirectly, through the use of the equipment to be acquired by it and the other
Co-Borrowers with the proceeds of the loans to be made pursuant to the
Agreement.
The undersigned authorizes the Lender to attach this Annex to the
Agreement, and thereby and form a part of the Agreement. This Annex shall be
construed in accordance with and governed by the laws of the jurisdiction stated
in Schedule 2.02 to the Agreement under the caption "Governing Law" except to
the extent the internal laws of another jurisdiction are required to be applied
in connection with the exercise of rights pertaining to Collateral in that
jurisdiction. Capitalized terms used in this Annex without definition shall have
the meanings set forth in the Agreement to which this Annex is attached and form
a part.
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
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<PAGE>
This Annex may be executed in any number of counterparts (by facsimile
transmission or otherwise) and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same document.
IN WITNESS WHEREOF, the undersigned has executed this Annex to Equipment
Loan and Security Agreement by its duly authorized officer or representative
this ___day of ,____:
Borrower:
BY:
TITLE:
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-97-
<PAGE>
SCHEDULE 4.04 TO
LOAN AND SECURITY AGREEMENT
REQUIRED CONSENTS
None, other than the financing statements to be filed as set forth in Schedule
4.25 hereto.
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-98-
<PAGE>
SCHEDULE 4.07 TO
LOAN AND SECURITY AGREEMENT
RESTRICTIONS ON LOANS
None.
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-99-
<PAGE>
SCHEDULE 4.08 TO
LOAN AND SECURITY AGREEMENT
FINANCIAL STATEMENTS
Financial Statements for the Quarter Ended June 30, 1999
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-100-
<PAGE>
SCHEDULE 4.12 TO
LOAN AND SECURITY AGREEMENT
PENDING MATERIAL LITIGATION
NONE
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-101-
<PAGE>
SCHEDULE 4.25 TO
LOAN AND SECURITY AGREEMENT
UCC FILING OFFICES
(1) New York County:
New York City Register's Office
UCC Section
31 Chambers Street, Room 202
New York, NY 10007
(212) 788-8529
(2) Kings County:
Brooklyn City Register's Office
Municipal Building
210 Joralemon Street
Brooklyn, NY 11201
(718) 802-3589
(3) New York Department of State:
Secretary of State's Office
UCC Section
162 Washington Avenue, Third Floor
Albany, NY 12231
(518) 474-4763
(4) New Jersey Department of Revenue
Central Filing, UCC Section
820 Bear Tavern Road
Trenton, NJ 08618
(609) 530-6426
(5) Secretary of State, UCC Department
Howlett Building, Room 30
2nd and Edwards Street
Springfield, Illinois 62756
(217) 782-7518
(6) Secretary of State, UCC Division
1019 Brazos Street, Suite 505
Austin, Texas 78701
(512) 475-2700
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
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<PAGE>
(7) Secretary of State, UCC Division 1500 - 11th Street, Room 255 Sacramento,
California 95814 (916) 653-3516
(8) Department of State
U.C.C. Filings
Bureau of Commercial Filings
409 East Gaines Street
Tallahassee, Florida 32399
(850) 487-6055
(9) Recorder of Deeds or the District
515 "D" Street, NW
Room 202
Washington, DC 20001
(202) 727-5190
FILING OR RECORDATION OFFICES IN LOCATIONS OUTSIDE THE UNITED STATES
LONDON, ENGLAND: Prescribed particulars in respect of the
relevant English Agreement in favor of
Lender, together with such Security
Agreement must be delivered to the
Registrar of Companies within 21 days of
the date thereof.
Other Locations Outside the U.S.: TO BE DETERMINED AND COMPLETED TO
LENDER'S SATISFACTION PRIOR TO ANY
FUNDING OF EQUIPMENT PURCHASES TO BE
INSTALLED THERE
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-103-
<PAGE>
SCHEDULE 4.26 TO
LOAN AND SECURITY AGREEMENT
PRINCIPAL OFFICES AND LOCATION OF COLLATERAL
Borrower's chief executive offices (including county):
95 Route 17 South
Paramus, Bergen County, New Jersey 07652
Telephone No.: (201) 226-4500
Telecopy No.: (201) 226-4578
Borrower's principal place of business (including county) in states where
Equipment is to be located:
45 Broadway
New York, New York County, New York 10006
Locations of Collateral in the United States:
60 Hudson Street
New York, New York County, New York 10013
600 South Federal Street
Suite 205
Chicago, Illinois 60605
Univision Center
2323 Bryan Street
Suite 2650
Dallas, Texas 75201-2628
624 South Grand Avenue
Suite 803
Los Angeles, California 90017
100 North Biscayne Boulevard
Suite 2110
Miami, Florida 33132
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-104-
<PAGE>
2000 "L" Street, NW
Suite 620
Washington, DC 20036
Locations of Collateral in London, England, Brussels, Belgium, Paris, France and
Toronto, Canada:
2 Exchange Tower
Harbour Exchange Sq.
London E1496B
16-22, Rue de Comediens
1000 Bruxelles
Le Clemenceau 11
Avenue Georges Clemenceau
92021 Nanterre Cedex
55 Younge Street
Suite 1201
Toronto, Ontario, Canada M5E1J4
Such other places in countries approved by Lender as identified by
Borrower in a Borrowing Certificate
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-105-
<PAGE>
SCHEDULE 4.29 TO
LOAN AND SECURITY AGREEMENT
ASSUMED NAMES
(1) Destia
(2) Destia Communications
(3) Destia Communications Services
(4) ECONOphone
(5) VoiceNet Corporation
(6) Telco (U.K. only)
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-106-
<PAGE>
SCHEDULE 4.31 TO
LOAN AND SECURITY AGREEMENT
NTI PURCHASE AGREEMENT
Basic Supply Agreement (LM/11346-2) executed by and between Northern
Telecom Inc. and Destia, as amended to May 28, 1996 and Contract Terms dated
September 1996, Ref. No. CCG/UK/002, copies of which are attached hereto.
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-107-
<PAGE>
SCHEDULE 6.02 TO
LOAN AND SECURITY AGREEMENT
POST-TRANCHE 4 CLOSING ITEMS
(a) Applicable Minimum Revenue Projection Table.
TABLE 1
Destia Communications
Original Minimum Projected Revenue Table
(000s)
YEAR
----------------------------------------------------------------------
1999 2000 2001 2002 2003 2004
----------------------------------------------------------------------
31-Mar $62,400 $96,907 $127,073 $172,682 $207,614 $226,155
----------------------------------------------------------------------
Quarter 30-Jun $68,891 $103,992 $139,289 $182,709 $212,284 $232,487
----------------------------------------------------------------------
Ended 30-Sep $79,555 $112,213 $153,769 $194,182 $217,591 $239,462
----------------------------------------------------------------------
31-Dec $90,444 $118,879 $165,779 $203,344 $220,855 $246,074
----------------------------------------------------------------------
Totals $301,290 $431,991 $585,910 $752,917 $858,344 $944,178
TABLE 2
Destia Communications
Adjusted Minimum Projected Revenue Table
(000s)
YEAR
----------------------------------------------------------------------
1999 2000 2001 2002 2003 2004
----------------------------------------------------------------------
31-Mar $58,000 $90,444 $118,879 $165,779 $203,344 $220,855
----------------------------------------------------------------------
Quarter 30-Jun $62,400 $96,907 $127,073 $172,682 $207,614 $226,155
----------------------------------------------------------------------
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-108-
<PAGE>
----------------------------------------------------------------------
Ended 30-Sep $68,891 $103,992 $139,289 $182,709 $212,284 $232,487
----------------------------------------------------------------------
31-Dec $79,555 $112,213 $153,769 $194,182 $217,591 $239,462
----------------------------------------------------------------------
Totals $268,846 $403,556 $539,010 $715,352 $840,833 $918,959
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-109-
<PAGE>
SCHEDULE 6.02 TO
LOAN AND SECURITY AGREEMENT
POST-TRANCHE 4 CLOSING ITEMS
1. Econophone may satisfy all conditions to Closing set forth in Section
5.02(a), (b), (c) and (d)(iv)-(vi) within fourteen (14) days of the date
hereof.
2. Notwithstanding any other provision of this Agreement, Lender shall not be
obligated to make any further Advances under this Agreement after the
Tranche 4 Closing Date unless and until each condition set forth in
Schedule 6.02(b) has been satisfied within the time permitted.
3. Destia shall have caused the execution and delivery to Lender of all
Security Documents requested by Lender to secure Advances under the
Tranche 4 Commitment to finance Equipment to be located in London made on
the Tranche 4 Closing Date and an opinion of English Counsel in form and
substance satisfactory to Lender within thirty (30) days of the Tranche 4
Closing Date.
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-110-
<PAGE>
SCHEDULE 7.07 TO
LOAN AND SECURITY AGREEMENT
INSURANCE
See attached certificate(s)
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
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<PAGE>
SCHEDULE 7.15 TO
LOAN AND SECURITY AGREEMENT
FINANCIAL COVENANTS
(a) Debt Service Coverage Ratio. Borrower shall maintain a Debt
Service Coverage Ratio for the fiscal quarter ending September 30, 1997,
and each fiscal quarter thereafter through the fiscal quarter ended
December 31, 1999, of not less than 1.10 to 1.00, and for each fiscal
quarter thereafter of not less than 1.25 to 1.00. In calculating Cash Flow
as part of the computation of Debt Service Coverage Ratio for purposes of
determining compliance with Schedule 7.15(a) only, Borrower shall be
entitled to include (i) proceeds received from the sale of any equity
interest not required to be redeemed on or prior to the later of the
Tranche 1, Tranche 2 or Tranche 3 Maturity Date and (ii) unexpended
proceeds of the High Yield Notes with respect to which no event has
occurred requiring principal payments thereof. Borrower shall not be
entitled to include such amounts for purposes of determining the Tranche 3
Rate Adjustment, as set forth in Schedule 2.02.
(b) Minimum Cash Balance. Borrower shall maintain a minimum cash
balance at all times during each fiscal quarter of not less than
seventy-five percent (75%) of the following:
(i) From Tranche 3 Closing Date through and including December 31, 1997:
$43,140,000;
(ii) From January 1, 1998 through and including December 31, 1998:
$20,700,000;
(iii) From January 1, 1999 through and including December 31, 1999:
$12,180,000;
(iv) From January 1, 2000 through and including December 31, 2000:
$18,470,000;
(v) From and After January 1, 2001: $40,000,000.
For calculating minimum cash balances, Borrower may include Permitted
Investments (as defined herein) and cash expenditures for Permitted
Investments under any of clause (i), (vi), (viii) or (ix) (as such term is
defined in the respective Indentures as each exists on the date hereof)
made during such period in compliance with the Indentures or otherwise
with the approval of holders of the High Yield Notes.
(c) EBITDA. Borrower's EBITDA shall not be less than: for the fiscal
year ending December 31, 1999, ($25,000,000); for the fiscal year ending
December 31, 2000, ($5,000,000); for the fiscal year ending December 31,
2001, $19,500,000; for the fiscal year ending December 31, 2002,
$44,000,000; for the fiscal year ending December 31, 2003, $58,500,000;
and for the fiscal year ending December 31, 2004, $74,800,000.
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
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<PAGE>
(d) Debt to Net Worth Ratio. Borrower shall maintain, except during
the High Yield Period, a ratio of Indebtedness to net worth (calculated in
accordance with GAAP but excluding from the calculation of Indebtedness
all Subordinated Indebtedness) of not greater than 3.00 to 1.00 for the
fiscal quarter ending September 30, 1997, and for each fiscal quarter
thereafter. For purposes of this calculation, the Preferred Stock shall be
included as equity, and shall not be included as debt, of Borrower.
(e) Compliance with Projections. For any quarter in which Destia's
Debt Service Coverage Ratio (calculated at the end of such fiscal quarter
and without any of the adjustments provided in Schedule 7.15(a)) is not
greater than 1.10 to 1.00, Destia shall have revenues (calculated at the
end of such fiscal quarter as the revenue of the four fiscal quarters then
ending) equal to or greater than 85% of the level projected for such
fiscal quarters in the Applicable Minimum Revenue Projection Table.
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
-113-
<PAGE>
SCHEDULE 8.01 TO
LOAN AND SECURITY AGREEMENT
PERMITTED SPECIFIC INDEBTEDNESS
(1) Indebtedness under that certain note in the amount of $31,316 for the
purchase of computer equipment that matures in March 1999, and any
amendments, modifications, extensions, refinancings or replacements
thereto not increasing the principal indebtedness or payment terms
thereof;
(2) Indebtedness under that certain promissory note in the amount of $662,747
payable to the order of Sprint Communications Company, L.P., and any
amendments, modifications, extensions, refinancings or replacements
thereto not increasing the principal indebtedness or payment terms
thereof;
(3) Indebtedness under that certain agreement between Destia Inc. and Private
Trans-Atlantic Telecommunications System, Inc. dated December 15, 1994
("PTAT-1 Agreement") in which Destia Inc. will acquire and operate
facilities in the PTAT-1 cable in the amount of $130,000; indebtedness
under that certain amendment to the PTAT-1 Agreement dated January 18,
1995 in which Destia Inc. will acquire and operate additional facilities
in the PTAT-1 cable in the amount of $125,000; and indebtedness under that
certain amendment to the PTAT-1 Agreement dated December 27, 1995 in which
Destia Inc. will acquire and operate additional facilities in the PTAT-1
cable in the amount of $224,000, and in each case any amendments,
modifications, extensions, refinancings or replacements thereto in the
ordinary course of business or otherwise related to the purchase of
additional capacity in connection with the Description of Business set
forth in Schedule I;
(4) Indebtedness under that certain agreement between Destia Inc. and Private
Trans-Atlantic Telecommunications System (N.J.) Inc. dated December 15,
1994 ("Backhaul Agreement") for a back-up system to the PTAT-1 Agreement
in the amount of $40,000; indebtedness under that certain amendment to the
Backhaul Agreement dated January 18, 1995 for additional back-up systems
to the Backhaul Agreement in the amount of $40,000; and indebtedness under
that certain amendment to the Backhaul Agreement dated December 27, 1995
for additional back-up systems to the Backhaul Agreement in the amount of
$80,000, and in each case any amendments, modifications, extensions,
refinancings or replacements thereto in the ordinary course of business or
otherwise related to the purchase of additional capacity in connection
with the Description of Business set forth in Schedule I;
(5) Indebtedness under that certain lease of software equipment in the amount
of $46,920, and any amendments, modifications, extensions, refinancings or
---------------------------------
Borrower's Initials:
Lender's Initials:
---------------------------------
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<PAGE>
replacements thereto not increasing the principal indebtedness or payment
terms thereof;
(6) Indebtedness under that certain lease of computer equipment in the amount
of $65,916, and any amendments, modifications, extensions, refinancings or
replacements thereto not increasing the principal indebtedness or payment
terms thereof;
(7) Indebtedness under that certain lease of office-related equipment in the
amount of $41,386, and any amendments, modifications, extensions,
refinancings or replacements thereto not increasing the principal
indebtedness or payment terms thereof;
(8) Indebtedness under that certain lease of computer equipment in the amount
of $82,484, and any amendments, modifications, extensions, refinancings or
replacements thereto not increasing the principal indebtedness or payment
terms thereof;
(9) Indebtedness under that certain lease of office equipment in the amount of
$92,839, and any amendments, modifications, extensions, refinancings or
replacements thereto not increasing the principal indebtedness or payment
terms thereof;
(10) Indebtedness under that certain lease of office equipment in the amount of
$17,570, and any amendments, modifications, extensions, refinancings or
replacements thereto not increasing the principal indebtedness or payment
terms thereof;
(11) Any Indebtedness referenced under Schedule 4.31 of this Loan Agreement;
(12) Any Indebtedness related to the purchase or installation of Additional
Equipment or to the purchase of additional capacity in furtherance of the
Business Plan of Borrower;
(13) Any Indebtedness related to this Loan Agreement, and any amendments,
modifications, extensions, refinancings or replacements or payment terms
thereto;
(14) High Yield Notes;
(15) During the High Yield Period, Indebtedness permitted by Section 4.03 of
the respective Indentures as each exists on the date hereof, and;
(18) Indebtedness described in items 1, 2 and 3 of Schedule 8.10.
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Lender's Initials:
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<PAGE>
SCHEDULE 8.02 TO
LOAN AND SECURITY AGREEMENT
PERMITTED SPECIFIC ENCUMBRANCES
(1) With respect to property located in the United States:
(a) Any purchase money security interests related to Additional
Equipment;
(b) The lien of Primex Leasing Corporation on the Borrower's Quikcard
Thermal Transfer Printer evidenced by financing statements filed at
the Secretary of State's office and the City Registers' Office of
Kings County on January 26, 1995 and January 18, 1995, respectively;
(c) The lien of Sprint Communication L.P. on all accounts receivable and
proceeds of Borrower evidenced by a financing statement filed at the
Secretary of State's Office on January 12, 1993;
(d) The lien of Master Lease Division of Tokai on Borrower's lease of
computer equipment evidenced by financing statements filed at the
Secretary of State's Office and the City Registers' Office of New
York County on April 1, 1996 and April 9, 1996, respectively;
(e) The lien of FINOVA Capital Corporation on certain office equipment
leased by Borrower evidenced by financing statements filed at the
Secretary of State's Office and the City Registers' Office of Kings
County on January 24, 1996 and January 26, 1996, respectively;
(f) The lien of Canon Financial Services, Inc. on Borrower's lease of
office equipment evidenced by a financing statement filed at the
Secretary of State's Office and the City Registers' Office of Kings
County on March 20, 1996 and March 21, 1996, respectively; and
(g) The lien of Pitney Bowes Credit Corporation on Borrower's lease of
office-related equipment evidenced by a financing statement filed at
the Secretary of State's office on January 16, 1996.
(2) With respect to Collateral wherever located:
NONE
(3) During the High Yield Period, encumbrances permitted by Section 4.09 of
the
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Lender's Initials:
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<PAGE>
respective Indentures as each exists on the date hereof, provided that no such
encumbrances are on Collateral.
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<PAGE>
SCHEDULE 8.06 TO
LOAN AND SECURITY AGREEMENT
PERMITTED EQUITY PAYMENTS
1. Nominal payments in lieu of the issuance of fractional shares upon an
exercise of options, warrants or similar agreements or conversion rights.
2. Any special optional redemption of the Preferred Stock under Section
7(a) of Article Fourth of the Amended Certificate of Incorporation, as in
effect on the date hereof.
3. Any repurchase of warrants issued with the High Yield Notes in
accordance with a Repurchase Offer upon the occurrence of a Repurchase
Event, as such terms are defined in such warrants on the date hereof.
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Lender's Initials:
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<PAGE>
SCHEDULE 8.10 TO
LOAN AND SECURITY AGREEMENT
PERMITTED TRANSACTIONS WITH AFFILIATES
(1) That certain $35,018 note made by Borrower in favor of a related party
that matures on August 1, 1998, and any amendments, modifications,
extensions, refinancings or replacements thereto not increasing the
principal indebtedness or payment terms thereof;
(2) That certain $200,000 note made by Borrower in favor of a related party
that matures on December 8, 1997, and any amendments, modifications,
extensions, refinancings or replacements thereto not increasing the
principal indebtedness or payment terms thereof;
(3) That certain $108,000 note made by Borrower in favor of a related party
that matures on November 15, 1998, and any amendments, modifications,
extensions, refinancings or replacements thereto not increasing the
principal indebtedness or payment terms thereof;
(4) That certain loan to A. West in the amount of $297,824 and any amendments,
modifications, extensions, refinancings or replacements thereto not
increasing the principal indebtedness or payment terms thereof except for
such increases in principal amount equal to the tax liability of A. West
for income attributable to him as a shareholder of Borrower by virtue of
Borrower's status as a Subchapter S Corporation under the Internal Revenue
Code;
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