AMENDED AND RESTATED LOAN AGREEMENT
Dated as of January 2, 1997
Intelliphone, Inc., a Minnesota corporation (the "Borrower"), located at
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and National City Bank
of Minneapolis, a national banking association (the "Bank"), located at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement the following terms
shall have the following meanings (such meanings to be equally applicable to
singular and plural forms of the terms defined):
(a) "Affiliates" shall mean any of the following Persons:
(i) any director, officer or employee of the Borrower;
(ii) any person who, individually or with his immediate
family, beneficially owns or holds 5% or more of voting
interest of the Borrower; or
(iii) any company in which any Person described
above owns a 5% or greater equity interest;
(b) "Base Rate" shall mean the rate established by the Bank
from time to time as its base rate.
(c) "Business Day" shall mean any day other than a
Saturday, Sunday or a public holiday or the equivalent under the
laws of the State of Minnesota or the United States of America.
(d) "Debt" shall mean (i) indebtedness for borrowed money
or for the deferred purchase price of property or services, (ii)
obligations as lessee under leases which shall have been or
should be, in accordance with generally accepted accounting
principles, recorded as capital leases, (iii) obligations under
direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in
clause (i) or (ii) above, and (iv) liabilities in respect of
unfunded vested benefits under plans covered by Title IV of
ERISA.
(e) "Debt Service Coverage Ratio" for any time period shall
mean a ratio the numerator of which is the sum of the Borrower's
net income during that period plus interest, depreciation and
income tax expense during that period and the denominator of
which is the sum of interest expense during that period plus that
portion of the principal of the Borrower's Debt coming due during
that period.
(f) "Event of Default" shall mean one of the events
specified in Section 6.1.
(g) "Loan Documents" shall mean this Agreement, the Note,
the Security Agreement, the Guaranty and all other documents to
be executed in connection with this Agreement.
(h) "Loan Party" shall mean any Person obligated under any
Loan Document.
(i) "Note" shall mean the Note described in Section 2.2.
(j) "Person" shall mean an individual, corporation,
partnership, joint venture, trust or unincorporated organization
or governmental agency or political subdivision thereof.
2
(k) "Subordinated Debt" shall mean Debt of the Borrower which is
subordinated both as to principal and as to interest to the extent
required by the Bank in accordance with a written subordination
agreement executed by the holder of that Debt and delivered to the
Bank.
(l) "Subsidiary" shall mean any corporation of which more
than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such
corporation (irrespective of whether or not at the time capital
stock or any other class or classes of stock of such corporation
shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by the
Borrower, by the Borrower and one or more other Subsidiaries, or
by one or more other Subsidiaries.
(m) "Tangible Net Worth" shall mean the aggregate of the
capital stock, paid in surplus, Subordinated Debt and retained
earnings of the Borrower (excluding stock of the Borrower held by
the Borrower), determined and computed in accordance with
generally accepted accounting principles consistently applied
from year to year, less the book value of all assets of the
Borrower that would be treated as intangibles under generally
accepted accounting principles including without limitation, such
items as goodwill, trademarks, tradenames, service marks,
copyrights, patents and licenses and less the book value of all
obligations owed to the Borrower by any of its Affiliates.
(n) "Total Liabilities" shall mean the aggregate of the
liabilities of the Borrower determined and computed in accordance
with generally accepted accounting principles consistently
applied from year to year.
Section 1.2 ACCOUNTING AND OTHER TERMS. All accounting terms not
specifically defined in this Agreement shall be construed in accordance with
generally accepted accounting
3
principles consistently applied as such principles may change from time to time.
Other terms defined herein shall have the meanings ascribed to them herein.
ARTICLE II.
TERM LOAN
Section 2.1 COMMITMENT FOR TERM LOAN. The Bank hereby lends to the
Borrower, and the Borrower hereby borrows from the Bank, the amount of
$3,000,000.00 (the "Term Loan").
Section 2.2 THE NOTE. The Term Loan shall be evidenced by a promissory
note (the "Note") which is in substantially the form of Exhibit A attached
hereto and is delivered to the Bank pursuant to Article III.
Section 2.3 INTEREST AND PAYMENTS. The Borrower shall repay, and shall
pay interest on, the aggregate unpaid principal amount of the Term Loan in
accordance with the Note. All payments of principal, interest and fees under
this Agreement shall be made when due to the Bank in immediately available
funds. All computations of interest shall be made by the Bank on the basis of
the actual number of days elapsed in a year of 360 days. Whenever any such
payment shall be due on a non-Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall be included in
the computation of interest or fees, as the case may be. The Bank is expressly
authorized to charge any principal, interest or fee payment, when due, to
Borrower's demand deposit account maintained at the Bank, or, if that account
shall not contain sufficient funds, to any other account maintained by the
Borrower at the Bank.
Section 2.4 VOLUNTARY PREPAYMENT. The Borrower may prepay the Note in
whole or in part; PROVIDED, HOWEVER, that each partial prepayment shall be in a
principal amount of not less than $10,000.00; and PROVIDED FURTHER, HOWEVER,
that any prepayment of the Notes shall be applied to principal installments of
the Notes in the inverse order of their maturities.
4
Section 2.5. USE OF PROCEEDS. The proceeds of the Term Loan shall be used
to refinance existing Debt at the Bank and to fund the acquisition of certain
assets from Telco West.
Section 2.6. FACILITY FEE. In consideration of the Term Loan, the
Borrower agrees to pay to the Bank a facility fee in the amount of $21,490.00.
This fee shall be paid in two installments of $10,745.00 each payable on the
date of this Agreement and on May 1, 1997.
ARTICLE III.
CONDITIONS OF LENDING
Section 3.1 CONDITIONS PRECEDENT TO TERM LOAN ADVANCE. The Bank shall
have no obligation to make the Term Loan unless the Bank shall have received on
or before the date of disbursement the following documents:
(a) The Note, properly executed and delivered on behalf of
the Borrower.
(b) A security agreement (the "Security Agreement"), in a
form acceptable to the Bank, properly executed and delivered on
behalf of the Borrower, granting to the Bank a security interest
in all of the Borrower's inventory, accounts, equipment, general
intangibles and other property described therein as security for
the performance of the Borrower's obligations under this
Agreement and the Note, together with any UCC-1 Financing
Statement or other document deemed necessary or desirable by the
Bank to perfect the security interest granted by the Security
Agreement. The Bank and the Borrower agree that the Security
Agreement dated September 20, 1995, as amended on the date
hereof, executed by the Borrower in favor of the Bank shall
constitute the Security Agreement under this Agreement.
5
(c) A certified copy of the resolutions of the Board of
Directors of the Borrower, approving the execution and delivery
of the Loan Documents to which it is a party and approving all
other matters contemplated by this Agreement.
(d) A certificate by the Secretary or any Assistant
Secretary of the Borrower certifying the names of the officer or
officers of the Borrower authorized to sign the Loan Documents to
which it is a party, together with a sample of the true signature
of such officer.
(e) A guaranty (the "Guaranty") of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇ (collectively, the "Guarantor"), in a
form satisfactory to the Bank, securing the Borrower's
obligations under this Agreement and the Note.
(f) Payment of the first installment of the fee required to
be paid under Section 2.6.
In addition, the Bank shall have no obligation to make the Term Loan if on
or before the date of disbursement, any event has occurred and is continuing, or
will result from such Term Loan, which constitutes an Event of Default or would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Section 4.1 REPRESENTATIONS AND WARRANTIES OF THE BORROWER. To induce the
Bank to make the Term Loan, the Borrower represents and warrants as follows:
(a) EXISTENCE OF BORROWER. The Borrower is a corporation
duly incorporated, validly existing and in good standing under
the laws of the state indicated at the beginning of this
Agreement.
6
(b) AUTHORITY TO EXECUTE. The execution, delivery and
performance by the Borrower of the Loan Documents to which it is
a party are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, do not and
will not conflict with any provision of law or of the charter or
bylaws of the Borrower or of any agreement or contractual
restriction binding upon or affecting the Borrower or any of its
property, and need no further shareholder or creditor consent.
(c) BINDING OBLIGATION. This Agreement is, and the other
Loan Documents when delivered hereunder will be, legal, valid and
binding obligations of the Loan Parties enforceable against such
Persons in accordance with their respective terms.
(d) GOVERNMENTAL APPROVAL. No consent of, or filing with,
any governmental authority is required on the part of any Loan
Party in connection with the execution, delivery or performance
of any Loan Documents.
(e) FINANCIAL STATEMENTS. The audited financial statements
of the Borrower as of December 31, 1995 and the unaudited
financial statements as of November 30, 1996, copies of which
have been furnished to the Bank, have been prepared in conformity
with generally accepted accounting principles consistently
applied and present fairly the financial condition of the
Borrower as of such dates, and the results of the operations of
the Borrower for the financial periods then ended, and since such
dates, there has been no materially adverse change in such
financial condition.
(f) LITIGATION. No litigation or governmental proceeding
is pending or threatened against the Borrower which may have a
materially adverse effect on the financial condition or
operations of the Borrower.
(g) TITLE TO ASSETS. The Borrower has good and marketable
title to all assets used in connection with its trades or
businesses, and none of such assets is subject to
7
any mortgage, pledge, lien, security interest or encumbrance of any
kind, except for current taxes not delinquent, and except as has been
disclosed in writing to the Bank contemporaneously with this
Agreement.
(h) TAXES. The Borrower has filed all federal and state
income and excess profits tax returns which are required to be
filed, and has paid all taxes shown on such returns to be due
and all other tax assessments received by it to the extent that
such assessments have become due.
(i) ERISA. No plan (as that term is defined in the
Employee Retirement Income Security Act of 1974 ("ERISA")) of the
Borrower (a "Plan") which is subject to Part 3 of Subtitle B of
Title 1 of ERISA had an accumulated funding deficiency (as such
term is defined in ERISA) as of the last day of the most recent
fiscal year of such Plan ended prior to the date hereof, or would
have had such an accumulated funding deficiency on such date if
such year were the first year of such Plan, and no material
liability to the Pension Benefit Guaranty Corporation has been,
or is expected by the Borrower to be, incurred with respect to
any such Plan. No Reportable Event (as defined in ERISA) has
occurred and is continuing in respect to any such Plan.
(j) DEFAULTS. The Borrower is not in default in the
payment of principal or interest on any indebtedness for borrowed
money and is not in default under any instrument or agreement
under or subject to which any indebtedness for borrowed money has
been issued, and no event has occurred and is continuing which,
with or without the lapse of time or the giving of notice, or
both, constitutes or would constitute an event of default under
any such instrument or agreement or an Event of Default
hereunder.
8
(k) SUBSIDIARIES. The Borrower has no Subsidiaries.
(l) PATENTS TRADEMARKS, ETC. The Borrower has good and
marketable title to all patents, trademarks, processes,
copyrights, franchises and licenses title to which is necessary
for the operation of the Borrower's businesses.
(m) USE OF PROCEEDS FOR SECURITIES TRANSACTIONS. No
proceeds of the Term Loan will be used to acquire any security in
any transaction which is subject to Sections 13 and 14 of the
Securities Exchange Act of 1934.
(n) REGULATION U. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued
by the Board of Governors of the Federal Reserve System), and no
proceeds of the Term Loan will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
ARTICLE V.
COVENANTS OF THE BORROWER
Section 5.1 AFFIRMATIVE COVENANTS. So long as the Note shall remain
unpaid, the Borrower will, unless the Bank shall give its prior written consent:
(a) FINANCIAL REPORTING. Furnish to the Bank: (i) as soon
as available and in any event within 30 days after the end of
each month of each fiscal year of the Borrower, balance sheets of
the Borrower as of the end of such month and statements of income
and retained earnings of the Borrower for the period commencing
at the end of the previous fiscal year and ending with the end of
such month, certified by the chief financial officer of the
Borrower; (ii) as soon as available and in any event within 90
days after the end of each fiscal year of the Borrower, (A) a
copy of the annual report for such year for the Borrower,
containing financial statements for such year certified in a
9
manner acceptable to the Bank by independent public accountants
acceptable to the Bank and (B) a budget and projections prepared by
the Borrower in a form acceptable to the Bank for the following fiscal
year; (iii) promptly upon the sending or filing thereof copies of all
public reports issued by the Borrower to any of its security holders,
to the Securities and Exchange Commission or to any national
securities exchange; (iv) promptly upon the filing or receiving
thereof, copies of all reports which the Borrower files under ERISA or
which the Borrower receives from the Pension Benefit Guaranty
Corporation if such report shows any material violation or potential
violation by the Borrower of its obligations under ERISA; (v) such
other information concerning the conditions or operations, financial
or otherwise, of the Borrower as the Bank from time to time may
reasonably request; (vi) by April 15 of each year, a signed personal
financial statement of each Guarantor dated as of a date not earlier
than the immediately preceding December 31; and (vii) within 45 days
after the end of each quarter, a certificate of the Borrower listing
all of the Borrower's customers as of the end of the quarter most
recently ended and listing the cash receipts from the Borrower's 50
largest customers during that quarter.
(b) VISITATION RIGHTS. At any reasonable time and from
time to time, permit the Bank or any agents or representatives
thereof, to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the
Borrower, and to discuss the affairs, finances and accounts of
the Borrower with any of its officers or directors. The Borrower
will reimburse the Bank for its reasonable costs and expenses of
conducting such periodic examinations.
(c) NOTIFICATION OF DEFAULT, ETC. Notify the Bank as
promptly as practicable (but in any event not later than 5
Business Days) after the Borrower obtains knowledge
10
of: (i) the occurrence of any event which constitutes an Event of
Default or which would constitute an Event of Default with the passage
of time or the giving of notice or both; or (ii) the commencement
of any litigation or governmental proceedings of any type which could
materially adversely affect the financial condition or business
operations of the Borrower.
(d) COMPLIANCE CERTIFICATE. At the time any financial
statement is required to be provided to Bank under this
Agreement, the Borrower will provide to Bank a certificate of the
chief financial officer of the Borrower substantially in the form
of Exhibit B attached hereto (appropriately completed). If that
certificate shows that an Event of Default or any event which
would constitute an Event of Default with the passage of time or
the giving of notice or both, has occurred, the certificate shall
state in reasonable detail the circumstances surrounding such
event and action proposed by the Borrower to cure such event.
(e) KEEPING OF FINANCIAL RECORDS AND BOOKS OF ACCOUNT.
Maintain proper financial records in accordance with generally
accepted accounting principles consistently applied which fully
and correctly reflect all financial transactions and all assets
and liabilities of the Borrower.
(f) TANGIBLE NET WORTH. Maintain Tangible Net Worth of not
less than the following amounts during the time periods
indicated:
--------------------------------------------------
PERIOD MINIMUM
TANGIBLE NET
WORTH
--------------------------------------------------
From Completion of Telco West $1,500,000
Acquisition through June 29, 1997
--------------------------------------------------
June 30, 1997 through December 30, $2,000,000
1997
--------------------------------------------------
After December 30, 1997 $2,500,000
--------------------------------------------------
11
Maintain at all times a ratio of Total Liabilities to Tangible
Net Worth of not more than 2.0 to 1.
(g) DEBT SERVICE COVERAGE RATIO. Maintain as of the end of
each 12-month period measured as of the end of each month, a Debt
Service Coverage Ratio of not less than 1.25 to 1.
(h) SUBORDINATED DEBT. Maintain at all times Subordinated
Debt of not less than $1,562,000 and comply with the terms of
each subordination agreement executed in connection with
Subordinated Debt.
(i) MAINTENANCE OF INSURANCE. Maintain such insurance with
reputable insurance carriers as is normally carried by companies
engaged in similar businesses and owning similar property, and
name the Bank as loss payee on all policies insuring personal
property in which the Bank has a security interest and provide
the Bank with certificates of insurance evidencing its status as
a loss payee. The loss payee endorsement shall provide for
payment to the Bank notwithstanding any acts or omissions of the
Borrower and shall require notice to the Bank 30 days prior to
the expiration or cancellation of the insurance.
(j) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve
all of its properties, necessary or useful in the proper conduct
of its business in good working order and condition, ordinary
wear and tear excepted.
(k) PAYMENT OF TAXES. Pay all taxes, assessments and
governmental charges of any kind payable by it as such taxes,
assessments and charges become due and before any penalty shall
be imposed, except as the Borrower shall contest in good faith
and by appropriate proceedings providing such reserves as are
required by generally accepted accounting principles.
12
(l) COMPLIANCE WITH ERISA. Cause each benefits Plan to
comply and be administered in accordance with those provisions of
ERISA which are applicable to such Plan.
(m) MAINTENANCE OF ACCOUNTS. Maintain its corporate bank
accounts at the Bank except for such incidental accounts that
reasonable business judgment requires to be maintained elsewhere,
and either (A) keep collected demand deposit balances in such
accounts in the amount necessary to compensate the Bank for
applicable activity charges in such accounts, as calculated by
the Bank and applied to such balances in a manner consistent with
all similar accounts or (B) pay such applicable activity charges.
(n) PRESERVATION OF CORPORATE EXISTENCE, ETC.
Preserve and maintain its corporate existence, rights, franchises
and privileges in the jurisdiction of its incorporation, and
qualify and remain qualified, as a foreign corporation in each
jurisdiction in which such qualification is necessary or
desirable in view of its business and operations or the ownership
of its properties.
Section 5.2 NEGATIVE COVENANTS. So long as the Note shall remain
unpaid, the Borrower will not, unless the Bank shall give its prior written
consent:
(a) LIENS. Create or suffer to exist any mortgage, pledge,
lien, security interest or other encumbrance with respect to any
assets now owned or hereafter acquired by the Borrower except
those encumbrances made in favor of the Bank and existing or
future subordinated encumbrances held by ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Telco West.
(b) DEBT. Create or suffer to exist any Debt except the
Debt under this Agreement or the Note, Subordinated Debt and
other Debt secured by liens permitted under Section 5.2(a).
13
(c) GUARANTIES, ETC. Assume, guarantee, endorse or
otherwise become liable upon the obligation of any Person except
by endorsement of negotiable instruments for collection in the
ordinary course of business.
(d) MERGER, ETC. Merge or consolidate with any other
Person; sell, transfer, convey, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all
or a substantial portion of its assets (whether now owned or
hereafter acquired) to any other Person.
(e) COMPENSATION. Pay a salary or other compensation to
any of its officers, directors, employees or stockholders in an
amount which is in excess of a reasonable salary or other
compensation paid for similar services by similar businesses.
(f) TRANSACTIONS WITH AFFILIATES. Engage in any
transaction (including, without limitation, loans or financial
accommodations of any kind) with any Affiliate, provided that
such transactions are permitted if they are on terms no less
favorable to the Borrower than would be obtainable if no such
relationship existed.
(g) INVESTMENTS IN OTHER PERSONS. Make any loan or advance
to any Person; or purchase or otherwise acquire the capital
stock, assets, or obligations of, or any interest in, any other
Person other than (i) readily marketable direct obligations of
the United States of America, (ii) certificates of time deposits
issued by commercial banks of recognized standing operating in
the United States of America, (iii) prepayments of lease
obligations for the placement of telephone units in the ordinary
course of business not in excess of $100,000.00 outstanding at
any one time for any one customer and (iv) advances to employees
in the ordinary course of business.
(h) CHANGE IN NATURE OF BUSINESS. Make any material change
in the nature of the business of the Borrower, taken as a whole,
as carried on at the date hereof.
14
(i) DIVIDENDS, ETC. Purchase or redeem any of its capital
stock, declare or pay any dividends (other than stock dividends)
thereon, make any cash or property distribution to shareholders,
or set aside any funds for such purpose, except for cash
dividends and distributions in any fiscal quarter not to exceed 2
cents for each share of common stock outstanding in that fiscal
quarter.
ARTICLE VI.
DEFAULT
Section 6.1 EVENTS OF DEFAULT. "Events of Default" in this Agreement
means any of the following events:
(a) Failure of the Borrower to pay the principal of the
Note when due or, if payable on demand, upon demand;
(b) Failure of the Borrower to pay any interest or fees
required to be paid hereunder or under the Note when due;
(c) Any representation or warranty made by, or on behalf
of, any Loan Party in, or pursuant to, any Loan Document shall
prove to have been incorrect in any material respect when made;
(d) Default in performance of any other covenant or
agreement of any Loan Party in, or pursuant to, any Loan Document
and continuance of such default or breach for a period of 30 days
after written notice thereof to such Person by the Bank;
(e) Any Loan Party shall generally not pay its or his
debts as such debts become due, or shall admit in writing its or
his inability to pay its or his debts generally, or shall make a
general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against any Loan Party
seeking to adjudicate it or him a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment,
15
custodianship, protection, relief, or composition of it or him or its
or his debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order
for relief, or the appointment of a receiver, custodian, trustee, or
other similar official for it or him or for any substantial part of
its or his property; or any Loan Party shall take any corporate action
to authorize any of the actions set forth above in this subsection;
and in the case of a proceeding of the type described in this
paragraph commenced against any Loan Party, that proceeding shall not
be dismissed within 60 days or that Loan Party shall consent to that
proceeding;
(f) The Borrower shall fail to pay any Debt (but excluding Debt
evidenced by the Note) of the Borrower, or any interest or premium
thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or any other default
under any agreement or instrument relating to any such Debt, or any
other event, shall occur and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate, or to permit
the acceleration of, the maturity of such Debt; or any such Debt
shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof;
(g) Any guaranty or any third party security interest
securing any indebtedness of the Borrower to the Bank shall be
repudiated or revoked, or purported to be repudiated or revoked;
16
(h) The entry against any Loan Party of a final judgment,
decree or order for the payment of money in excess of $50,000.00
and the continuance of such judgment, decree or order unsatisfied
for a period of 30 days without a stay of execution;
(i) Any Reportable Event (as defined in ERISA) shall have
occurred with respect to a Plan and continue for 30 days; or any
Plan shall have been terminated by the Borrower not in compliance
with ERISA, or a trustee shall have been appointed by a court to
administer any Plan, or the Pension Benefit Guaranty Corporation
shall have instituted proceedings to terminate any Plan or to
appoint a trustee to administer any Plan;
(j) The Bank shall at any time have reasonable grounds to
believe that the prospect of due and punctual payment of any of
the obligations of the Borrower now or hereafter existing under,
or pursuant to, this Agreement is impaired.
Section 6.2 RIGHTS AND REMEDIES. If any Event of Default shall occur
and be continuing, the Bank may exercise any or all of the following rights and
remedies:
(a) Declare the Note, all interest thereon, and all other
obligations under, or pursuant to, any Loan Document to be
immediately due and payable, and upon such declaration such Note,
interest and other obligations shall immediately be due and
payable, without presentment, demand, protest or any notice of
any kind, all of which are expressly waived;
(b) Exercise any right or remedy under the Security
Agreement, or any other right or remedy of a secured party under
the Uniform Commercial Code as in effect in Minnesota or in any
other State in which any collateral under the Security Agreement
is located;
17
(c) Exercise any other right or remedy available to the
Bank at law or in equity.
ARTICLE VII.
MISCELLANEOUS
Section 7.1 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on
the part of the Bank in exercising any right or remedy under, or pursuant to,
any Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, remedy or power preclude other or further
exercise thereof, or the exercise of any other right, remedy or power. The
remedies in the Loan Documents are cumulative and are not exclusive of any
remedies provided by law.
Section 7.2 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of any Loan Document shall be effective unless such amendment or
waiver is in writing and is signed by the Bank, and such amendment or waiver
shall be effective only in the specific instance and for the specific purpose
for which it was given.
Section 7.3 NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telecopier communication)
and mailed or telecopied or delivered, if to the Borrower, at its address stated
in the preamble hereof, Attention: ▇▇▇▇ ▇▇▇▇▇▇; if to the Bank, at its address
stated in the preamble hereof, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇; or, as to each party, at
such other address as shall be designated by such party in a written notice to
the other party. All such notices and communications shall, when mailed or
telecopied, be effective when deposited in the mails or transmitted by
telecopier, respectively, addressed as aforesaid, except that notices to the
Bank pursuant to the provisions of Article II shall not be effective until
received by the Bank.
18
Section 7.4 COSTS AND EXPENSES. The Borrower agrees to pay on demand
all costs and expenses of the Bank in connection with the preparation of the
Loan Documents, including reasonable attorneys fees and legal expenses, as well
as all costs and expenses of the Bank, including reasonable attorneys fees and
expenses, in connection with the administration and enforcement of the Loan
Documents (whether suit is commenced or not).
Section 7.5 RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank to
or for the credit or the account of the Borrower or any Guarantor against any
and all of the obligations of the Borrower now or hereafter existing under any
Loan Document, irrespective of whether or not the Bank shall have made any
demand under any Loan Document and although such obligations may be unmatured.
The Bank agrees promptly to notify the Borrower after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Bank under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Bank may have.
Section 7.6 GOVERNING LAW. All Loan Documents shall be governed by
the laws of the State of Minnesota. Any term used in this Agreement and not
otherwise defined shall have the definition given that term in the Uniform
Commercial Code as in effect in the State of Minnesota from time to time. If
any term in this Agreement shall be held to be illegal or unenforceable, the
remaining portions of this Agreement shall not be affected, and this Agreement
shall be construed and enforced as if this Agreement did not contain the term
held to be illegal or unenforceable. The Borrower hereby irrevocably submits to
the jurisdiction of
19
the Minnesota District Court, Fourth District, and the Federal District Court,
District of Minnesota, Fourth Division, over any action or proceeding arising
out of or relating to this Agreement and agrees that all claims in respect of
such action or proceeding may be heard and determined in any such court.
Section 7.7 BINDING EFFECT; ASSIGNMENT. All Loan Documents shall be
binding upon and inure to the benefit of the Loan Parties and the Bank and their
respective successors and assigns. No Loan Party shall have the right to assign
its rights or interest under any such agreement without the prior written
consent of the Bank.
Section 7.8 AMENDED AND RESTATED AGREEMENT. This Agreement is a
complete amendment and restatement of a Revolving Credit Agreement (the "Prior
Agreement") dated as of September 20, 1995, as amended, between the Borrower and
the Bank. The Prior Agreement remains in effect as to all transactions which
occurred prior to the date hereof. In the event of a conflict between the terms
of this Agreement and the terms of the Prior Agreement, the terms of this
Agreement shall govern.
20
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
INTELLIPHONE, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Its President
-----------------------------
NATIONAL CITY BANK OF MINNEAPOLIS
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Its AVP
-----------------------------
21
EXHIBIT A
PROMISSORY NOTE
$3,000,000.00 Dated: January 2, 1997
For value received, Intelliphone, Inc., a Minnesota corporation (the
"Borrower") promises to pay to the order of National City Bank of Minneapolis
(the "Bank"), at its offices in Minneapolis, Minnesota, in lawful money of the
United States of America, the principal amount of Three Million and no/100
Dollars ($3,000,000.00); together with interest on any and all principal amounts
remaining unpaid hereon from the date of this Note until said principal amounts
are fully paid at a fluctuating annual rate equal to 2.0% above the rate of
interest established by the Bank from time to time as its base rate (the "Base
Rate"). Principal and interest shall be due and payable on the 15th day of each
calendar month starting on February 15, 1997. The monthly payment shall be
$50,000.00 in February, March, April, June, July, September, October and
December of 1997, $100,000.00 in May and August of 1997 and $150,000.00 in
November of 1997. All unpaid principal and interest shall come due and payable
in full on January 15, 1998. Each change in the fluctuating interest rate shall
take effect simultaneously with the corresponding change in the Base Rate.
This Note is the Note referred to in, and is entitled to the benefits of,
the Amended and Restated Loan Agreement dated as of the date hereof (the "Loan
Agreement") between the Borrower and the Bank, which Loan Agreement, among other
things, contains provisions for the acceleration of the maturity of this Note
upon the happening of certain stated events and also for prepayments of the
principal amount due under this Note upon stated terms and conditions.
This Note is a renewal and replacement of three promissory notes from the
Borrower to the Bank in the principal amount of $300,000.00 dated as of
September 20, 1995, in the
A-1
principal amount of $500,000.00 dated as of September 20, 1995 and in the
principal amount of $200,000.00 dated as of December 18, 1995, respectively,
which prior notes remain partially unpaid but the principal balances of which
have been incorporated into this Note.
Intelliphone, Inc.
By
------------------------------------
Its
--------------------------------
A-2
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
I, the _________________________ of Intelliphone, Inc. (the "Borrower"),
hereby provide this Compliance Certificate in accordance with Section 5.1(d) of
the Amended and Restated Loan Agreement (the "Agreement") dated as of January 2,
1997 between the Borrower and National City Bank of Minneapolis.
I certify that as of the date hereof:
(1) The representations and warranties of the Borrower contained in
Article IV of the Agreement are correct as though made on the date
hereof.
(2) No event has occurred and is continuing which constitutes an Event of
Default under the Agreement or would constitute and Event of Default
but for the requirement that notice be given or time elapse or both.
I further certify that as of _____________________, 19__:
(1) Tangible Net Worth as defined in the Agreement was $_________________.
(2) The ratio of Total Liabilities to Tangible Net Worth as defined in the
Agreement was _______________________.
(3) The Debt Service Coverage Ratio as defined in the Agreement was
________________.
(4) Subordinated Debt as defined in the Agreement was $__________________.
Dated: _______________________________ __________________________________
Title: __________________________
B-1