Exhibit 10.23
SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
This Amendment, dated as of September 3, 1999, is made by and between
RSI SYSTEMS, INC., a Minnesota corporation (the "Borrower"), and XXXXX FARGO
BUSINESS CREDIT, INC. f/k/a NORWEST BUSINESS CREDIT, INC., a Minnesota
corporation (the "Lender").
Recitals
The Borrower and the Lender have entered into an Amended and Restated
Credit and Security Agreement dated as of April 16, 1998 as amended by First
Amendment to Amended and Restated Credit and Security Agreement dated as of
September 22, 1998 (as so amended, the "Credit Agreement"). Capitalized terms
used in these recitals have the meanings given to them in the Credit Agreement
unless otherwise specified.
The Borrower has requested that certain amendments be made to the
Credit Agreement, which the Lender is willing to make pursuant to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. DEFINED TERMS. Capitalized terms used in this Amendment which are
defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein. In addition, Section 1.1 of the Credit
Agreement is amended by adding or amending, as the case may be, the following
definitions:
"`Borrowing Base' means the lesser of:
(a) the Maximum Line less the Norwest Bank Revolving Advances; or
(b) the sum of:
(i) 80% of Eligible Accounts,
(ii) 100% of Eligible Certificates of Deposits, plus
(iii) 100% of Eligible Marketable Securities."
"`Collateral' means the Special Account, all of the Borrower's
Equipment, General Intangibles, Inventory, Receivables, all sums on deposit
in any Collateral
Account, and any items in any Lockbox; together with (i) all substitutions
and replacements for and products of any of the foregoing; (ii) proceeds of
any and all of the foregoing; (iii) in the case of all tangible goods, all
accessions; (iv) all accessories, attachments, parts, equipment and repairs
now or hereafter attached or affixed to or used in connection with any
tangible goods; and (v) all warehouse receipts, bills of lading and other
documents of title now or hereafter covering such goods.
"`Issuer' means the issuer of any Letter of Credit."
"`L/C Amount' means the sum of (i) the aggregate face amount of any
issued and outstanding Letters of Credit and (ii) the unpaid amount of the
Obligation of Reimbursement."
"`L/C Application' means an application and agreement for Letters of
Credit in a form acceptable to the Issuer and the Lender."
"`Letter of Credit' has the meaning given in Section 2.11."
"`Maturity Date' means June 26, 2001."
"`Maximum Line' means $2,500,000."
"`Obligation of Reimbursement' has the meaning given in Section
2.12(a)."
"`Obligations' means each and every debt, liability and obligation of
every type and description which the Borrower may now or at any time
hereafter owe to the Lender, whether such debt, liability or obligation now
exists or is hereafter created or incurred, whether it arises in a
transaction involving the Lender alone or in a transaction involving other
creditors of the Borrower, and whether it is direct or indirect, due or to
become due, absolute or contingent, primary or secondary, liquidated or
unliquidated, or sole, joint, several or joint and several, and including
specifically, but not limited to, all indebtedness of the Borrower arising
under this Agreement (including but not limited to the Notes and the
Obligation of Reimbursement) or any other loan or credit agreement or
guaranty between the Borrower and the Lender, whether now in effect or
hereafter entered into."
"`Revolving Note' means the Borrower's Second Replacement Promissory
Note, payable to the order of the Lender in substantially the form of
Exhibit A to the Second Amendment and any note or notes issued in
substitution therefor, as the same may hereafter be amended, supplemented
or restated from time to time."
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"`Second Amendment' means the Second Amendment to Amended and Restated
Credit and Security Agreement by and between the Borrower and the Lender,
dated as of September 3, 1999."
"`Second Amendment Effective Date' means the date on which the
conditions set forth in paragraph 15 of the Second Amendment are either
satisfied or waived by the Lender."
"`Special Account' means a specified cash collateral account
maintained by a financial institution acceptable to the Lender in
connection with Letters of Credit, as contemplated by Sections 2.13 and
3.6."
2. REVOLVING ADVANCES. Section 2.2 of the Credit Agreement is hereby
amended to read as follows:
"Section 2.2 REVOLVING ADVANCES. The Lender agrees, on the terms and
conditions set forth herein, to make advances to the Borrower from time to
time from the date this Agreement is signed and delivered to the
Termination Date (each a "Revolving Advance"). The Lender shall have no
obligation to make a Revolving Advance if, after giving effect to such
requested Revolving Advance, the sum of the outstanding and unpaid
Revolving Advances plus the L/C Amount would exceed the Borrowing Base. The
Borrower's obligation to pay the Revolving Advances shall be evidenced by
the Revolving Note and shall be secured by the Collateral. Within the
limits set forth in this Section 2.2, the Borrower may request Revolving
Advances, prepay, and request additional Revolving Advances. The Borrower
shall make each request for a Revolving Advance to the Lender before 11:00
a.m. (Minneapolis time) of the day of the requested Revolving Advance.
Requests may be made in writing or by telephone."
3. CAPITAL ADEQUACY, ETC. Section 2.6 of the Credit Agreement is
amended to read as follows:
"Section 2.6 CAPITAL ADEQUACY. If any Related Lender determines at any
time that its Return has been reduced as a result of any Rule Change, such
Related Lender may require the Borrower to pay it the amount necessary to
restore its Return to what it would have been had there been no Rule
Change. For purposes of this Section 2.6:
(a) `Capital Adequacy Rule' means any law, rule, regulation,
guideline, directive, requirement or request regarding capital
adequacy, or the interpretation or administration thereof by any
governmental or regulatory authority, central bank or comparable
agency, whether or not having the force of law, that applies to any
Related Lender. Such rules include rules requiring
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financial institutions to maintain total capital in amounts based upon
percentages of outstanding loans, binding loan commitments and letters
of credit.
(b) `L/C Rule' means any law, rule, regulation, guideline,
directive, requirement or request regarding letters of credit, or the
interpretation or administration thereof by any governmental or
regulatory authority, central bank or comparable agency, whether or
not having the force of law, that applies to any Related Lender. Such
rules include rules imposing taxes, duties or other similar charges,
or mandating reserves, special deposits or similar requirements
against assets of, deposits with or for the account of, or credit
extended by any Related Lender, on letters of credit.
(c) `Related Lender' includes (but is not limited to) the Lender,
any parent corporation of the Lender and any assignee of any interest
of the Lender hereunder and any participant in the loans made
hereunder.
(d) `Return' for any period, means the return as determined by a
Related Lender on the Advances and Letters of Credit based upon its
total capital requirements and a reasonable attribution formula that
takes account of the Capital Adequacy Rules and L/C Rules then in
effect, costs of issuing or maintaining any Letter of Credit and
amounts received or receivable under this Agreement or the Notes with
respect to any Advance or Letter of Credit. Return may be calculated
for each calendar quarter and for the shorter period between the end
of a calendar quarter and the date of termination in whole of this
Agreement.
(e) `Rule Change' means any change in any Capital Adequacy Rule
or L/C Rule occurring after the date of this Agreement, but the term
does not include any changes in applicable requirements that at the
Closing Date are scheduled to take place under the existing Capital
Adequacy Rules or L/C Rules or any increases in the capital that any
Related Lender is required to maintain to the extent that the
increases are required due to a regulatory authority's assessment of
the financial condition of such Related Lender.
The Lender will promptly notify the Borrower of any event of which it has
knowledge, occurring after the date hereof, which will entitle the Lender
to compensation pursuant to this Section 2.6. Certificates of any Related
Lender sent to the Borrower from time to time claiming compensation under
this Section 2.6, stating the reason therefor and setting forth in
reasonable detail the calculation of the additional amount or amounts to be
paid to the Related Lender hereunder to restore its Return shall
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be conclusive absent manifest error. In determining such amounts, the
Related Lender may use any reasonable averaging and attribution methods."
4. MANDATORY PREPAYMENT. Section 2.7 of the Credit Agreement is
amended to read as follows:
"Section 2.7 MANDATORY PREPAYMENT. Without notice or demand, if the
outstanding principal balance of the Revolving Advances shall at any time
exceed the Borrowing Base plus the L/C Amount, the Borrower shall
immediately prepay the Revolving Advances to the extent necessary to
eliminate such excess."
5. Fees. Section 2.10 of the Credit Agreement is amended to read as
follows:
"Section 2.10 Fees.
(a) UNUSED LINE FEE. For the purposes of this Section 2.10(a),
"Unused Amount" means (i) the Maximum Line, minus (ii) the sum of (A)
the outstanding Revolving Advances and (B) the L/C Amount. The
Borrower shall pay to the Lender an unused line fee of one quarter of
one percent (0.25%) of the average daily Unused Amount during each
calendar quarter, due and payable quarterly in arrears on the first
day of each quarter and on the Termination Date.
(b) LETTER OF CREDIT FEES. The Borrower shall pay the Lender a
fee with respect to each Letter of Credit, if any, computed at the
annual rate of two percent (2%) of the amount of each requested Letter
of Credit for the term of the requested Letter of Credit. Such fee
shall be due and payable in full at the time the Borrower submits an
L/C Application for such Letter of Credit. The foregoing fee shall be
in addition to any and all fees, commissions and charges of any Issuer
of a Letter of Credit with respect to or in connection with such
Letter of Credit.
(c) LETTER OF CREDIT ADMINISTRATIVE FEES. The Borrower shall pay
the Lender, on demand, the administrative fees charged by the Issuer
in connection with the honoring of drafts under any Letter of Credit,
amendments thereto, transfers thereof and all other activity with
respect to the Letters of Credit at the then-current rates published
by the Issuer for such services rendered on behalf of customers of the
Issuer generally."
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6. LETTER OF CREDIT PROVISIONS. The following new Sections are added
to the Credit Agreement at the end of Article II:
"Section 2.11 ISSUANCE OF LETTERS OF CREDIT.
(a) The Lender may, in its sole discretion and on the terms and
conditions set forth herein, cause an Issuer to issue, from the Second
Amendment Effective Date to the Termination Date, one or more
documentary letters of credit (each, a "Letter of Credit") for the
Borrower's account.
(i) The Lender shall not consider any request for the
issuance of any Letter of Credit for the benefit of the Borrower
if the face amount of the Letter of Credit to be issued, would
exceed the lesser of:
(A) $500,000 less the L/C Amount, or
(B) the Borrowing Base less the sum of (1) all
outstanding and unpaid Revolving Advances and (2) the L/C
Amount.
Each Letter of Credit, if any, shall be issued pursuant to a separate
L/C Application entered by the Borrower and the Lender for the benefit
of the Issuer, completed in a manner satisfactory to the Lender and
the Issuer. The terms and conditions set forth in each such L/C
Application shall supplement the terms and conditions hereof, but if
the terms of any such L/C Application and the terms of this Agreement
are inconsistent, the terms hereof shall control.
(b) No Letter of Credit shall be issued with an expiry date later
than the Maturity Date.
(c) Any request for the issuance of a Letter of Credit under this
Section 2.11 shall be deemed to be a representation by the Borrower
that the statements set forth in Section 4.2 hereof are correct as of
the time of the request.
"Section 2.12 PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. The
Borrower acknowledges that the Lender, as co-applicant, will be liable to
the Issuer of any Letter of Credit for reimbursement of any and all draws
thereunder and all other amounts required to be paid under
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the applicable L/C Application. Accordingly, the Borrower agrees to pay to
the Lender any and all amounts required to be paid under the applicable L/C
Application, when and as required to be paid thereby, and the amounts
designated below, when and as designated:
(a) The Borrower hereby agrees to pay the Lender on the day a
draft is honored under any Letter of Credit a sum equal to all amounts
drawn under such Letter of Credit plus any and all reasonable charges
and expenses that the Issuer or the Lender may pay or incur relative
to such draw, plus interest on all such amounts, charges and expenses
as set forth below (all such amounts are hereinafter referred to as
the "Obligation of Reimbursement").
(b) The Borrower hereby agrees to pay the Lender on demand
interest on all amounts, charges and expenses payable by the Borrower
to the Lender under this Section 2.12, accrued from the date any such
draft, charge or expense is paid by the Issuer until payment in full
by the Borrower at the Revolving Floating Rate.
If the Borrower fails to pay to the Lender promptly the amount of its
Obligation of Reimbursement in accordance with the terms hereof and the L/C
Application pursuant to which such Letter of Credit was issued, the Lender
is hereby irrevocably authorized and directed, in its sole discretion, to
make a Revolving Advance in an amount sufficient to discharge the
Obligation of Reimbursement, including all interest accrued thereon but
unpaid at the time of such Revolving Advance, and such Revolving Advance
shall be evidenced by the Revolving Note and shall bear interest as
provided in Section 2.3 hereof.
"Section 2.13 SPECIAL ACCOUNT. If this Credit Facility is terminated
for any reason whatsoever, while any Letter of Credit is outstanding, the
Borrower shall thereupon pay the Lender in immediately available funds for
deposit in the Special Account an amount equal to the maximum aggregate
amount available to be drawn under all Letters of Credit then outstanding,
assuming compliance with all conditions for drawing thereunder. The Special
Account shall be maintained for the Lender by any financial institution
acceptable to the Lender. Any interest earned on amounts deposited in the
Special Account shall be credited to the Special Account. Amounts on
deposit in the Special Account may be applied by the Lender at any time or
from time to time to the Borrower's Obligation of Reimbursement or any
other Obligations, in the Lender's sole discretion, and shall not be
subject to withdrawal by the Borrower so long as the Lender maintains a
security interest therein. The Lender agrees to transfer any balance in the
Special Account to the Borrower at such time as the Lender is required to
release its security interest in the Special Account under applicable law.
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"Section 2.14 OBLIGATIONS ABSOLUTE. The obligations of the Borrower
arising under Section 2.12 shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of
this Agreement, under all circumstances whatsoever, including (without
limitation) the following circumstances:
(a) any lack of validity or enforceability of any Letter of
Credit or any other agreement or instrument relating to any Letter of
Credit (collectively the "Related Documents");
(b) any amendment or waiver of or any consent to departure from
all or any of the Related Documents;
(c) the existence of any claim, setoff, defense or other right
which the Borrower may have at any time, against any beneficiary or
any transferee of any Letter of Credit (or any persons or entities for
whom any such beneficiary or any such transferee may be acting), or
other person or entity, whether in connection with this Agreement, the
transactions contemplated herein or in the Related Documents or any
unrelated transactions;
(d) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(e) payment by or on behalf of the Issuer or the Lender under any
Letter of Credit against presentation of a draft or certificate which
does not strictly comply with the terms of such Letter of Credit; or
(f) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing."
7. PLEDGE OF SPECIAL ACCOUNT AND COLLATERAL ACCOUNT. The following new
Section 3.6 is added at the end of Article III:
"Section 3.6 SECURITY INTEREST IN SPECIAL ACCOUNT. The Borrower
hereby pledges, and grants to the Lender a security interest in, all
funds held in the Special Account from time to time and all proceeds
thereof, as security for the payment of all Obligations."
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8. CONDITIONS PRECEDENT TO EACH ADVANCE AND EACH LETTER OF CREDIT.
Section 4.2 of the Credit Agreement is amended to read as follows:
"Section 4.2 CONDITIONS PRECEDENT TO ALL ADVANCES AND CAUSING ALL
LETTERS OF CREDIT TO BE ISSUED. The Lender's obligation to make each
Advance or issue any Letter of Credit shall be subject to the further
conditions precedent that on such date:
(a) the representations and warranties contained in Article V
hereof are correct on and as of such date of such Advance as though
made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date; and
(b) no event has occurred and is continuing, or would result from
such Advance or the issuance of such Letter of Credit, as the case may
be, which constitutes a Default or an Event of Default."
9. MINIMUM BOOK NET WORTH. Section 6.8 of the Credit Agreement is
hereby amended to read as follows:
"Section 6.8 MINIMUM BOOK NET WORTH. The Borrower will maintain its
Book Net Worth determined as at the end of each month, at an amount not
less than the amount set forth opposite such month:
Month Minimum Book Net Worth
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July 31, 1999 $1,000,000
August 31, 1999 $900,000
September 30, 1999 $1,000,000
October 31, 1999 $1,000,000
November 30, 1999 $1,100,000
December 31, 1999 $1,150,000
January 31, 2000 $1,300,000
February 29, 2000 $1,450,000
March 31, 2000 $1,650,000
April 30, 2000 $1,825,000
May 31, 2000 $2,050,000
June 30, 2000 $2,300,000
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10. EVENTS OF DEFAULT. Section 7.1 of the Credit Agreement is amended
to add the following new subsection 7.1(e) immediately after Section 7.1(d):
"(e) Failure to pay when due any amount specified in Section 2.9
hereof relating to the Borrower's Obligation of Reimbursement, or failure
to pay immediately when due or upon termination of the Credit Facility any
amounts required to be paid for deposit in the Special Account under
Section 2.9 or 2.10 hereof."
11. RIGHTS AND REMEDIES. The following new Section 7.2(d) is added to
the Credit Agreement immediately after Section 7.2(c):
"(d) The Lender may make demand upon the Borrower and, forthwith upon
such demand, the Borrower will pay to the Lender in immediately available
funds for deposit in the Special Account pursuant to Sections 2.9 and 2.10
an amount equal to the maximum aggregate amount available to be drawn under
all Letters of Credit then outstanding, assuming compliance with all
conditions for drawing thereunder."
12. NO OTHER CHANGES. Except as explicitly amended by this Amendment,
all of the terms and conditions of the Credit Agreement shall remain in full
force and effect and shall apply to any advance or letter of credit thereunder.
13. WAIVER OF DEFAULTS. The Borrower is in default of Section 6.8 of
the Credit Agreement which requires that the Borrower maintain a minimum Book
Net Worth of at least $2,000,000. As of June 30, 1999, the Borrower had an
actual Book Net Worth of $1,485,000 (the "Default"). Upon the terms and subject
to the conditions set forth in this Second Amendment, the Lender hereby waives
the Default. This waiver shall be effective only in this specific instance and
for the specific purpose for which it is given, and this waiver shall not
entitle the Borrower to any other or further waiver in any similar or other
circumstances.
14. AMENDMENT FEE. The Borrower shall pay the Lender as of the date
hereof a fully earned, non-refundable fee in the amount of $2,500 for the
increase in the Maximum Line and the default waiver in Paragraph 13 of this
Second Amendment.
15. CONDITIONS PRECEDENT. This Amendment shall be effective when the
Lender shall have received an executed original hereof, together with each of
the following, each in substance and form acceptable to the Lender in its sole
discretion:
(a) The Revolving Note substantially in the form of Exhibit A hereto,
duly executed on behalf of the Borrower (the "Revolving Note").
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(b) A Certificate of the Secretary of the Borrower certifying as to
(i) the resolutions of the board of directors of the Borrower approving the
execution and delivery of this Amendment, (ii) the fact that the articles
of incorporation and bylaws of the Borrower, which were certified and
delivered to the Lender pursuant to the Certificate of Authority of the
Borrower's secretary dated as of June 26, 1997 continue in full force and
effect and have not been amended or otherwise modified except as set forth
in the Certificate to be delivered, and (iii) certifying that the officers
and agents of the Borrower who have been certified to the Lender, pursuant
to the Certificate of Authority of the Borrower's secretary dated as of
April 16, 1998, as being authorized to sign and to act on behalf of the
Borrower continue to be so authorized or setting forth the sample
signatures of each of the officers and agents of the Borrower authorized to
execute and deliver this Amendment and all other documents, agreements and
certificates on behalf of the Borrower.
(c) An amendment to the Patent Security Agreement sufficient to grant
the Lender a security interest in the Borrower's newly acquired patent for
the peripheral video conferencing system technology in Mediapro.
(d) Payment of the fee described in Paragraph 14.
(e) Such other matters as the Lender may require.
16. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Lender as follows:
(a) The Borrower has all requisite power and authority to execute this
Amendment and the Revolving Note and to perform all of its obligations
hereunder, and this Amendment and the Revolving Note have been duly
executed and delivered by the Borrower and constitute the legal, valid and
binding obligations of the Borrower, each enforceable in accordance with
its terms.
(b) The execution, delivery and performance by the Borrower of this
Amendment and the Revolving Note have been duly authorized by all necessary
corporate action and do not (i) require any authorization, consent or
approval by any governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign; (ii) violate any provision of any
law, rule or regulation or of any order, writ, injunction or decree
presently in effect, having applicability to the Borrower, or the articles
of incorporation or by-laws of the Borrower; or (iii) result in a breach of
or constitute a default under any indenture or loan or credit agreement or
any other agreement, lease or instrument to which the Borrower is a party
or by which it or its properties may be bound or affected.
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(c) All of the representations and warranties contained in Article V
of the Credit Agreement are correct on and as of the date hereof as though
made on and as of such date, except to the extent that such representations
and warranties relate solely to an earlier date.
17. REFERENCES. All references in the Credit Agreement to "this
Agreement" shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all references in the Security Documents to the Credit Agreement
shall be deemed to refer to the Credit Agreement as amended hereby.
18. NO OTHER WAIVER. Except as set forth in paragraph 13 hereof, the
execution of this Amendment and acceptance of the Revolving Note and any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or breach, default or event of
default under any Security Document or other document held by the Lender,
whether or not known to the Lender and whether or not existing on the date of
this Amendment.
19. RELEASE. The Borrower hereby absolutely and unconditionally
releases and forever discharges the Lender, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers,
indemnitors, successors and assigns thereof, together with all of the present
and former directors, officers, agents and employees of any of the foregoing,
from any and all claims, demands or causes of action of any kind, nature or
description, whether arising in law or equity or upon contract or tort or under
any state or federal law or otherwise, which the Borrower has had, now has or
has made claim to have against any such person for or by reason of any act,
omission, matter, cause or thing whatsoever arising from the beginning of time
to and including the date of this Amendment, whether such claims, demands and
causes of action are matured or unmatured or known or unknown.
20. COSTS AND EXPENSES. The Borrower hereby reaffirms its agreement
under the Credit Agreement to pay or reimburse the Lender on demand for all
costs and expenses incurred by the Lender in connection with the Credit
Agreement, the Security Documents and all other documents contemplated thereby,
including without limitation all reasonable fees and disbursements of legal
counsel. Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses and the fee
required under paragraph 14 hereof.
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21. MISCELLANEOUS. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first written above.
XXXXX FARGO BUSINESS CREDIT, INC. RSI SYSTEMS, INC.
By By
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Its Vice President Its
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Exhibit A to Second Amendment to
Amended and Restated Credit and
Security Agreement
SECOND REPLACEMENT REVOLVING NOTE
$2,500,000 Minneapolis, Minnesota
September 3, 1999
For value received, the undersigned, RSI SYSTEMS, INC., a Minnesota
corporation (the "Borrower"), hereby promises to pay on the Termination Date
under the Credit Agreement (defined below) to the order of XXXXX FARGO BUSINESS
CREDIT, INC., a Minnesota corporation (the "Lender"), at its main office in
Minneapolis, Minnesota, or at any other place designated at any time by the
holder hereof, in lawful money of the United States of America and in
immediately available funds, the principal sum of Two Million, Five Hundred
Thousand Dollars ($2,500,000) or, if less, the aggregate unpaid principal amount
of all Advances made by the Lender to the Borrower under the Amended and
Restated Credit and Security Agreement dated as of April 16, 1998 by and between
the Lender and the Borrower as amended by a First Amendment to Amended and
Restated Credit and Security Agreement dated as of September 22, 1998 and Second
Amendment to Amended and Restated Credit and Security Agreement of even date
herewith (as the same may hereafter be amended, supplemented or restated from
time to time, the "Credit Agreement") together with interest on the principal
amount hereunder remaining unpaid from time to time (computed on the basis of
actual days elapsed in a 360-day year) from the date of the initial Advance
until this Note is fully paid at the rate from time to time in effect under the
Credit Agreement.
This Note is the Revolving Note as defined in the Credit Agreement and
is subject to the Credit Agreement. To the extent this Note evidences the
Borrower's obligation to pay existing Revolving Advances, this Note is issued in
substitution for and replacement of but not in payment of the Borrower's
promissory note dated as of September 22, 1998 payable to the order of the
Lender in the original principal amount of $2,000,000.
RSI SYSTEMS, INC.
By
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Xxxxxx X. Lies
Its President
and Chief Executive Officer
