Exhibit 10.19
[EXECUTION COPY]
MODIFICATION AGREEMENT NO. 1
TO
SECOND AMENDED AND RESTATED
LOAN AND
SECURITY AGREEMENT
THIS MODIFICATION AGREEMENT NO. 1 dated as of March 31, 1999 (the
"Modification Agreement No. 1"), to the Second Amended and Restated Loan and
Security Agreement dated as of January 28, 1998 (as may be further amended,
supplemented, amended and restated or otherwise modified from time to time, the
"Loan Agreement"), among Destia Communications, Inc, a Delaware corporation
formerly known as Econophone, Inc. ("Destia"), American Telemedia Limited, an
English corporation ("ATL") 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") and an indirect wholly owned subsidiary
of Destia (Destia, ATL, ECONOphone GmbH and additional Subsidiaries of Destia as
may become a Borrower under the Loan Agreement pursuant to Section 2.11 thereof
are individually referred to as a "Borrower" and collectively as the
"Borrowers"), and NTFC Capital Corporation, a Delaware corporation (the
"Lender");
W I T N E S S E T H:
WHEREAS, the Borrowers have requested that certain provisions of the Loan
Agreement be amended in certain respects as set forth herein; and
WHEREAS, the Lender is willing to amend such provisions of the Loan
Agreement and to take or permit the taking of certain actions as set forth
herein, but only on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Definitions. Unless otherwise defined herein or
the context otherwise requires, capitalized terms used in this
Modification Agreement No. 1, including its preamble and recitals, have
the meanings provided in the Loan Agreement.
ARTICLE II
AMENDMENT OF LOAN AGREEMENT
AS OF THE MODIFICATION EFFECTIVE DATE
Effective on (and subject to the occurrence of) the Modification Effective
Date, the provisions of the Loan Agreement referred to below are hereby amended
in accordance with this Article II. Except as expressly so amended, the Loan
Agreement shall continue in full force and effect in accordance with its terms.
SECTION 2.1. Modification of Article I (Definitions). Article I of the
Loan Agreement is hereby modified as follows:
SECTION 2.1.1. The following definitions are inserted in Article I of the
Loan Agreement:
"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 Projected
Revenue 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 following 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 Projected
Revenue Table.
"Adjusted Minimum Revenue Projection Table": the table of
projections for Destia's minimum revenues set forth in the attached Table
2.
"Applicable Minimum Revenue Projection Table": (i) Prior to the
Adjusting Fiscal Quarter, the Original Minimum Projected Revenue Table,
and (ii) from and after the Adjusting Fiscal Quarter, the Adjusted Minimum
Projected Revenue Table.
"Original Minimum Revenue Projection Table": the table of
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projections for Destia's minimum revenues set forth in the attached Table
1.
SECTION 2.2. Modification of Article VII (Covenants). Article VII of the
Loan Agreement is hereby modified as follows:
SECTION 2.2.1. Schedule 7.15 of the Loan Agreement is hereby amended by
deleting Schedule 7.15(c) in its entirety and substituting the following in its
place:
(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, $10,000,000; and for the fiscal year ending December 31, 2002,
$10,000,000.
SECTION 2.2.2. Schedule 7.15 of the Loan Agreement is hereby amended by
adding to Schedule 7.15 a paragraph (e) Compliance with Projections as follows:
(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.
SECTION 2.3. Modification of Article IX (Defaults). Article IX of the Loan
Agreement is hereby modified as follows:
SECTION 2.3.1. Section 9.01 of the Loan Agreement is hereby amended by
deleting Schedule 9.01(c) in its entirety and substituting the following in its
place:
(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
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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.
ARTICLE III
CONDITIONS TO EFFECTIVENESS
SECTION 3.1. Modification Effective Date. This Modification Agreement No.
1 shall become effective as of the date first above written (the "Modification
Effective Date"), when all of the conditions set forth in Sections 3.1.1 through
3.1.3 shall have been satisfied:
SECTION 3.1.1. Resolutions, etc. The Lender shall have received from the
Borrower, a certificate of the Secretary of Destia, dated the Modification
Effective Date, of their respective Secretaries or any Assistant Secretaries as
to:
(a) resolutions of the Board of Directors of each Borrower then
being in full force and effect authorizing the execution, delivery,
and performance of this Modification Agreement No. 1 and each other
Loan Document to be executed by it; and
(b) the incumbency and signatures of the officers of such Borrower
authorized to act with respect to this Modification Agreement No. 1
and each other Loan Document to be executed by it (upon which
certificate the Lender may conclusively rely until the Lender shall
have received a further certificate of the Secretary of such
Borrower canceling or amending such prior certificate, which further
certificate shall be reasonably satisfactory to the Lender).
SECTION 3.1.2. Execution of Counterparts. The Lender shall have received
counterparts of this Modification Agreement No. 1 duly executed by each Borrower
and the Lender.
SECTION 3.1.3. Compliance with Warranties; No Default etc. The Lender
shall have received from a Responsible Officer of Destia a certificate, dated
the date first above written, stating that
(a) the representations and warranties of the Borrowers set forth in
the Loan Agreement and the representations and warranties of the
Borrowers set forth in each of the other Loan Documents, in each
case as modified in accordance herewith, are true and correct
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in all material respects with the same effect as if then made
(unless stated to relate solely to an earlier date, in which case
such representations and warranties were true and correct as of such
earlier date); and
(b) no Default has occurred and is continuing.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Cross References. References in this Modification Agreement
No. 1 to any article or section are, unless otherwise specified, to such article
or section of this Modification Agreement No. 1.
SECTION 4.2. Instrument Pursuant to Loan Agreement. This Modification
Agreement No. 1 is a Loan Document executed pursuant to the Loan Agreement and
shall (unless otherwise expressly indicated therein) be construed, administered,
and applied in accordance with all of the terms and provisions of the Loan
Agreement (including that it shall be governed by the laws of the State of New
York). Any term or provision of and any modification effected by this
Modification Agreement No. 1 may be modified in any manner by an instrument in
writing executed by the Borrowers and the Lender. Except as expressly amended
hereby, all of the representations, warranties, terms, covenants and conditions
of the Loan Agreement shall remain unmodified and unwaived. The modifications
set forth herein shall be limited precisely as provided for herein to the
provisions expressly modified herein and shall not be deemed to be a waiver of,
amendment of, consent to or modification of any other term or provision of any
other Loan Document or of any transaction or further or future action on the
part of any Borrower which could require the consent of the Lender under the
Loan Agreement.
SECTION 4.3. Successors and Assigns. This Modification Agreement No. 1
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SECTION 4.4. Counterparts. This Modification Agreement No. 1 may be
executed by the parties hereto in several counterparts which shall be executed
by the Borrowers and the Lender, as the case may be, all of which shall be
deemed to be an original and which shall constitute together but one and the
same agreement.
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SECTION 4.5. Event of Default. It is understood and agreed that any breach
of any representation or warranty or covenant contained herein shall constitute
an Event of Default.
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IN WITNESS WHEREOF, the parties hereto have caused this Modification
Agreement No. 1 to be executed by the respective officers hereunder duly
authorized as of the day and year first above written.
DESTIA:
DESTIA COMMUNICATIONS, INC.
BY:
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TITLE:
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ATL:
AMERICAN TELEMEDIA LIMITED
BY:
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TITLE:
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ECONOPHONE GmbH:
ECONOPHONE GmbH
BY:
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TITLE:
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LENDER:
NTFC CAPITAL CORPORATION
BY:
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TITLE:
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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
--------------------------------------------------------------------------------
30-Jun $ 68,891 $103,992 $139,289 $182,709 $212,284 $232,487
--------------------------------------------------------------------------------
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
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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
--------------------------------------------------------------------------------
30-Jun $ 62,400 $ 96,907 $127,073 $172,682 $207,614 $226,155
--------------------------------------------------------------------------------
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
