EXHIBIT 10.39.1
AMENDMENT TO LOAN AND SECURITY AGREEMENT
Startec Global Communications Corporation, a Delaware corporation (the
"Borrower"), and NTFC Capital Corporation, a Delaware corporation (the "Lender")
enter into this Amendment to Loan and Security Agreement (this "Amendment") as
of the 30th day of June, 2000.
W I T N E S S E T H :
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Whereas, Startec Global Communications Corporation, a Maryland
corporation ("Startec Maryland"), and Lender entered into that certain Loan and
Security Agreement dated as of December 31, 1998 (the "Loan Agreement"); and
Whereas, Startec Maryland merged with Borrower, with Borrower as the
surviving corporation; and
Whereas, Borrower transferred all, or substantially all, of its assets
to Startec Global Operating Company, a Delaware corporation ("Guarantor"); and
Whereas, as a condition to Lender's consent to the merger of Startec
Maryland into Borrower and the transfer of all, or substantially all, of Startec
Maryland's assets to Guarantor, (a) Borrower subsequently assumed and agreed to
perform all the obligations of Startec Maryland as set forth in the Loan
Agreement pursuant to that certain Assumption Agreement dated March 26, 1999 by
Borrower for the benefit of the Lender and (b) Guarantor guaranteed the
obligations of Borrower under the Loan Agreement pursuant to that certain
Guaranty dated March 26, 1999 by Guarantor in favor of Lender; and
Whereas, the Borrower and the Lender wish to amend the Loan Agreement
to increase the amount of credit available under the Loan Agreement and to make
certain additional modifications to the Loan Agreement.
Now, therefore, in consideration of the foregoing, the mutual covenants
and agreements contained in this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which each party hereby
acknowledges, the parties agree as follows:
ARTICLE 1: AMENDMENTS TO LOAN AGREEMENT
1.01. COMMITMENT. The parties hereby amend Schedule 2.01 to the Loan
Agreement to increase the maximum principal amount of the Loan to $50,000,000
and to extend the date for drawing down until on or before December 31, 2000. In
addition, The parties hereby amend Section 2.01 of the Loan Agreement to read,
in its entirety, as follows:
2.01. COMMITMENT. Subject to the terms and conditions provided
in this Agreement and as long as no Default has occurred and is
continuing under this Agreement, the Lender shall lend to the Borrower
from time to time before the Financing Termination Date, an aggregate
principal amount not to exceed the amount set forth on SCHEDULE 2.01 to
this Agreement as the maximum amount (the
"COMMITMENT"). The Lender and the Borrower acknowledge and agree that
the outstanding principal balance of the Loan as of June 30, 2000 (the
"Tranche 1 Amount),is $27,933,435. The remaining aggregate principal
amount available under the Commitment, therefore, shall equal a maximum
of $22,000,000 (the "Tranche 2 Amount"). The Borrower may use all of
the available funds under the Tranche 2 Amount for general corporate
purposes, including working capital (the "General Corporate Advances"),
as well as for the purchase of Nortel Equipment and/or Vendor
Equipment.
1.02. EXISTING LOAN BALANCE. The Lender and the Borrower acknowledge
and agree that the outstanding principal balance of the Loan as of June 30, 2000
is $27,933,435.
1.03 FINANCING TERMINATION DATE. The parties hereby amend Schedule 2.02
to the Loan Agreement to extend the Financing Termination Date to December 31,
2000.
1.04. INTEREST RATE. The parties hereby amend the definition of
"Interest Rate" as set forth on Schedule 2.02 to the Loan Agreement to read, in
its entirety, as follows:
"INTEREST RATE": For each Advance comprising all or part of
the Tranche 1 Amount, a fixed rate equal to the average yield to
maturity on matching term Treasury Notes as reported in the Federal
Reserve Statistical Release H.15(519) (the "Release") in effect three
Business Days prior to the applicable Borrowing Date(s) plus the Rate
Adjustment (as described in the Note). For each Advance comprising all
or part of the Tranche 2 Amount, a fixed rate equal to the average
yield to maturity on five-year Treasury Notes as reported in the
Release in effect three Business Days prior to the applicable Borrowing
Date(s) plus 4.50 percentage points. Interest shall accrue monthly
based on a 365-day year.
1.05. MATURITY DATE. The parties hereby amend the definition of
"Maturity Date" as set forth on Schedule 2.02 to the Loan Agreement to read, in
its entirety, as follows:
"MATURITY DATE": For each Advance comprising all or part of
the Tranche 1 Amount, the 60th Payment Date (January 2, 2004) upon
which date all then outstanding principal, interest, premium, expenses,
fees, penalties and other amounts relating to the Tranche 1 Amount
shall become due and payable. For each Advance comprising all or part
of the Tranche 2 Amount, the 60th Payment Date after the date of the
initial Advance comprising all or part of the Trance 2 Amount, upon
which date all then outstanding principal, interest, premium, expenses,
fees, penalties and other amounts relating to the Tranche 2 Amount
shall become due and payable.
1.06. MANDATORY PREPAYMENTS. In addition to the Mandatory Prepayments
currently required by the Loan Agreement, all General Corporate Advances in
excess of 40% of the aggregate Advances shall become immediately due and payable
from the proceeds of the sale of any equity securities, excluding the sale of
any equity securities relating to exercise of any existing stock options or
warrants, and/or Subordinated Indebtedness of the Borrower, if the net proceeds
to the Borrower from the sale exceed $50 million.
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1.07. ADDITIONAL COLLATERAL. As additional Collateral for the Loan, the
Borrower shall have its subsidiary, Startec Global Operating Company (the
"Operating Company"), grant a security interest to the Lender in all of the
assets of the Operating Company as additional Collateral securing the Operating
Company's obligations under that certain Guaranty Agreement, dated as of March
26, 1999. In addition, the Borrower shall grant a security interest to the
Lender in all of the capital stock of the Operating Company now held or later
acquired by the Borrower as additional Collateral securing the Obligation of the
Borrower under the Loan Agreement.
1.08. ADDITIONAL GUARANTEES AND COLLATERAL. The Borrower represents and
warrants that the accounts receivable of the Operating Company currently exceed
85% of the consolidated accounts receivable of the Borrower. In addition to the
provisions of Section 3.09 of the Loan Agreement, the Borrower shall provide
additional guarantees and pledges of assets by its other Subsidiaries sufficient
to result in the Lender having a security interest in at least 85% of the
Borrower's consolidated accounts receivable as of the end of each fiscal quarter
of the Borrower.
1.09. REGULATORY AUTHORIZATIONS. The parties hereby amend and replace
Schedule 4.05 to the Loan Agreement with the schedule attached as Exhibit A to
this Amendment.
1.10. RESTRICTIONS ON LOANS. The parties hereby amend and replace
Schedule 4.07 to the Loan Agreement with the schedule attached as Exhibit B to
this Amendment.
1.11. FINANCIAL STATEMENTS. The parties hereby amend and replace
Schedule 4.08 to the Loan Agreement with the schedule attached as Exhibit C to
this Amendment.
1.12. ASSUMED NAMES. The parties hereby amend and replace Schedule 4.27
to the Loan Agreement with the schedule attached as Exhibit D to this Amendment.
1.13 SUBSIDIARIES OF BORROWERS. The Borrower hereby amends and replaces
Schedule 4.30 to the Loan Agreement with the schedule attached hereto as Exhibit
E to this Amendment.
1.14. FINANCIAL COVENANTS. The parties hereby amend and replace
Schedule 7.14 to the Loan Agreement with the form of schedule attached as
Exhibit F to this Amendment.
1.15. EQUIPMENT LOCATED IN FRANCE. With regard to any additional
Equipment financed or refinanced by the Loan which the Borrower intends to
locate in France, the Borrower or its applicable Subsidiary shall pledge the
Equipment in accordance with the regulations of the law no. 51-59 dated 18
January 1951; provided, further, that the Borrower or its applicable Subsidiary
shall serve as the direct purchaser and the real user of the Equipment, the
Borrower or its applicable Subsidiary shall execute the appropriate pledge
documentation within two months after the first delivery of any of the Equipment
in France, and the Borrower or its applicable Subsidiary shall register the
pledge with the relevant Tribunal de Commerce within 15 days after the execution
of the pledge documents.
ARTICLE 2: AFFIRMATIONS
The Borrower hereby represents and warrants that (a) on the date of
this Amendment no Default or Event of Default has occurred and is continuing or
exists or will occur or exist after giving effect to this Amendment; (b) the
execution and terms of this Amendment have been duly authorized by all necessary
and appropriate corporate action; and (c) the representations and warranties
contained
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in Article 4 of the Loan Agreement, as amended by this Amendment, remain true
and correct on and as of the date of this Amendment as though made on and as of
the date of this Amendment, except as follows:
2.01. The first sentence of Section 4.01 should read, "The Borrower is
duly organized, validly existing, and in good standing as a corporation under
the laws of Delaware.
2.02. The word "Borrower" in Sections 4.05, 4.13 and 4.36 should change
to read "the Borrower or one or more Subsidiaries of the Borrower."
2.03. The representation made in Section 4.14 remains true as of the
date of the Certificate of Financial Condition referred to in Section 4.14.
2.04. The Borrower's federal taxpayer identification number set forth
on Schedule 1 should change to ▇▇-▇▇▇▇▇▇▇.
ARTICLE 3: CONDITIONS
3.01. The effectiveness of this Amendment shall depend on the
fulfillment of all of the following conditions precedent:
(a) The Lender shall have received a Certificate of Financial
Condition of the Borrower executed by one of its officers dated as the
date of this Amendment.
(b) The Lender shall have received a fully-executed Amended
and Restated Promissory Note in the amount of $50,000,000 substantially
in the form of Exhibit G to this Amendment. The Lender promptly shall
return the original executed Promissory Note to the Borrower with a
signed notation marked on it as being amended and replaced by the
Amended and Restated Promissory Note.
(c) The Lender shall have received a fully-executed
Supplemental Security Agreement from the Operating Company in the form
of Exhibit H to this Amendment.
(d) The Lender shall have received a fully-executed Pledge
Agreement from the Borrower in the form of Exhibit I to this Amendment.
(e) The Lender shall have received a Consent and Agreement to
Amendment by all of the Borrower's Subsidiaries that have guaranteed
the Loan in the form of Exhibit J to this Amendment.
(f) The Lender shall have received an officer's certificate
evidencing all actions taken by the Borrower and the Operating Company
to authorize the execution, delivery and performance of the Borrower of
this Amendment, the Amended and Restated Promissory Note, and the
Supplemental Security Agreement, and the Pledge Agreement.
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(g) The Lender shall have received a written opinion of
counsel relating to the Borrower and the Operating Company
substantially in the form of Exhibit K to this Amendment.
ARTICLE 4: MISCELLANEOUS
4.01. Except as amended as provided above, the Loan Agreement shall
remain in full force and effect. The Borrower and the Lender hereby ratify the
Loan Agreement, as amended by this Amendment.
4.02. Except to the extent otherwise provided in the Loan Agreement,
the laws of New York shall govern this Amendment and its construction.
4.03. Unless otherwise specifically defined in this Amendment, all
capitalized terms used in this Amendment shall have the meanings assigned to
them in the Loan Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of
the day and year first set forth above.
Startec Global Communications Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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CFO
NTFC Capital Corporation
By: /s/ LI-▇▇▇ ▇▇▇▇
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SCHEDULE 7.14 TO
LOAN AND SECURITY AGREEMENT
FINANCIAL COVENANTS
(a) TOTAL SECURED DEBT TO TOTAL CAPITALIZATION. At the time of each
Advance and at the end of each fiscal quarter, the Borrower shall maintain a
ratio of Total Secured Debt to Total Capitalization of not more than .50 to
1.00. For the purposes of that ratio, the following definitions shall apply:
(i) "TOTAL CAPITALIZATION": All equity as shown on the balance
sheet of the Borrower plus all funded Indebtedness of the Borrower.
(ii) "TOTAL SECURED DEBT": Indebtedness of the Borrower
secured by a Lien on the assets of the Borrower, excluding Indebtedness
secured by accounts receivable.
(b) CASH FLOW COVERAGE RATIO. The Borrower shall maintain a minimum
Cash Flow Coverage Ratio (measured at the end of each fiscal quarter for the
past four fiscal quarters) of at least 1.25, beginning at the end of the second
fiscal quarter of fiscal year 2002. For the purposes of that ratio, the
following definitions shall apply:
(i) "CASH FLOW COVERAGE RATIO": At the end of any fiscal
period, the ratio of the Borrower's Cash Flow (as defined in the
Agreement) plus interest income for the fiscal period to the Borrower's
Debt Service for the fiscal period.
(ii) "DEBT SERVICE": For any fiscal period of Borrower, the
sum of all principal and interest payments that Borrower is required to
make during the period on account of all of its Indebtedness, including
(without limitation) (a) amounts due during the period on account of
capitalized leases; (b) the then current portion of any long-term
Indebtedness, including any Subordinated Indebtedness; (c) amounts due
on short-term Indebtedness; and (d) amounts due under this Agreement
and the Note.
(c) MINIMUM REVENUES. The Borrower shall maintain "Minimum Revenues" in
an amount equal to or greater than the quarterly amounts set forth below.
QUARTER ENDED AMOUNT
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March 31, 2000 $ 59,534,000
June 30, 2000 71,441,000
September 30, 2000 77,394,000
December 31, 2000 89,301,000
March 31, 2001 71,739,000
June 30, 2001 86,087,000
September 30, 2001 93,261,000
December 31, 2001 107,609,000
March 31, 2002 90,133,999
June 30, 2002 108,159,000
September 30, 2002 117,173,000
December 31, 2002 135,199,000
QUARTER ENDED AMOUNT
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March 31, 2003 102,751,000
June 30, 2003 123,302,000
September 30, 2003 133,577,000
December 31, 2003 154,127,000
March 31, 2004 117,137,000
June 30, 2004 140,564,000
September 30, 2004 152,278,000
December 31, 2004 175,705,000
The phrase "Minimum Revenues" shall mean the Borrower's total
consolidated revenues for the fiscal quarter ending on the date of measurement.
(d) MINIMUM EBITDA. The Borrower shall maintain "Minimum EBITDA" in an
amount equal to or greater than the quarterly amounts set forth below.
QUARTER ENDED AMOUNT
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March 31, 2000 $ (5,798,000)
June 30, 2000 (6,394,000)
September 30, 2000 2,000,000
December 31, 2000 3,592,000
March 31, 2001 3,675,000
June 30, 2001 6,045,000
September 30, 2001 8,441,000
December 31, 2001 10,753,000
March 31, 2002 11,046,000
June 30, 2002 13,255,000
September 30, 2002 13,807,000
December 31, 2002 17,121,000
March 31, 2003 15,275,000
June 30, 2003 16,673,000
September 30, 2003 17,438,000
December 31, 2003 19,050,000
March 31, 2004 18,635,000
June 30, 2004 20,340,000
September 30, 2004 21,274,000
December 31, 2004 23,240,000
The term "Minimum EBITDA" shall mean the Borrower's EBITDA for the
fiscal quarter ending on the date of measurement. The term "EBITDA" shall mean,
for any fiscal period, the Borrower's actual operating earnings from ongoing
operations and before interest, taxes, depreciation and amortization for the
fiscal period.