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EXHIBIT 10.8
LOAN AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of April,
1996, by and between the INTRUST BANK, N.A. (herein referred to as "Bank"), and
T-NETIX, INC. (herein referred to as "Borrower").
WITNESSETH:
WHEREAS, Borrower has requested a line of credit from Bank; and
WHEREAS, Bank has agreed to supply such line of credit under
certain terms and conditions.
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, the parties agree as follows:
ARTICLE I - NOTES AND SECURITY
Section 1.1. REVOLVING CREDIT FACILITY. Bank agrees to
establish a revolving credit facility of $10,000,000 (the "Facility") in favor
of Borrower evidenced by a promissory note (the "Note"), a copy of which is
attached hereto, which shall mature on April 1, 1997.
Section 1.2. TERMS OF PAYMENT ON CREDIT FACILITIES. Interest
on the Note, or any advance thereunder, shall be adjusted daily to the prime
rate as published in the Money Rates section of the Southwest Edition of the
Wall Street Journal. Accrued interest shall be due on the first day of each
month.
Section 1.3. LIMITATIONS ON CREDIT FACILITIES. Borrower may
borrow, partially or wholly repay its borrowings, and reborrow, by requesting
advances from the Facility; so long as:
(a) The Facility balance, including all principal and accrued
interest, does not exceed the amount of the Facility at any one time;
(b) None of the terms and conditions of this Agreement are in
default and Bank has not determined that there has been a material adverse
change in the financial condition of Borrower;
(c) Borrower is not in default under any loan or any other
financial obligation, or any other agreement.
Section 1.4. USE OF PROCEEDS. The proceeds from the Facility
shall be used to pay in full an existing line of credit at Bank IV Kansas, N.A.
and for working capital.
Section 1.5. SECURITY. As security for the entire indebtedness
to Bank, Borrower hereby pledges, assigns, and grants a first security interest
in favor of Bank in all accounts, contract rights, inventory (including all
"construction in progress" as set forth in Borrower's financial statements),
fixtures, machinery, equipment and general intangibles of Borrower now owned or
hereinafter acquired including all proceeds from
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the disposition or collection thereof (the "Collateral"). "Accounts" include
all receivables, third-party claims, instruments, documents, chattel paper and
executory contract rights.
Section 1.6. RENEWALS AND EXTENSIONS. Any renewal or extension
of the Facility Note, or any advance made pursuant to the terms of such note,
or any other indebtedness which Borrower may have with Bank in the future,
shall be subject to the terms of this Agreement. Bank is under no obligation to
renew any indebtedness when it matures.
Section 1.7. INDEBTEDNESS. Where the term "indebtedness" is
used in this Agreement, it shall include all debt of Borrower to Bank of every
kind and description, direct or indirect, primary or secondary, secured or
unsecured (including overdrafts), joint and several, absolute or contingent,
due or to become due, now existing or hereafter arising, regardless of how it
may be evidenced.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants, and so long as any
indebtedness from Borrower to the Bank remains outstanding, continuously
represents and warrants as follows:
Section 2.1. LEGAL STATUS. Borrower is a corporation duly
organized and existing under the laws of the State of Colorado, and is
qualified to do business, and is in good standing, in all jurisdictions in
which it conducts its business.
Section 2.2. NO VIOLATION. The making and performance by
Borrower of this Agreement does not violate any provision of law, or result in
a breach of, or constitute a default under, Borrower's articles of
incorporation and bylaws, or any Loan Documents, agreement, indenture or other
instrument to which Borrower may be a party or by which it may be bound.
Section 2.3. LITIGATION. There are no pending or threatened
actions or proceedings before any court or administrative agency against
Borrower which may adversely affect the financial condition or operation of
Borrower other than those heretofore disclosed to Bank in writing.
Section 2.4. CORRECTNESS OF FINANCIAL STATEMENTS. The
financial statements heretofore and hereafter delivered by Borrower to Bank
present fairly the financial condition of Borrower, and have been prepared in
accordance with generally accepted accounting principles consistently applied.
As of the date of each such financial statement, and since such date, there has
been no material adverse change in the condition or operation of Borrower, nor
has Borrower mortgaged, pledged or granted a security interest in, or
encumbered, any assets or properties since such date.
Section 2.5. AUTHORIZATION. The Loan Documents have been duly
authorized, executed and delivered by Borrower and are the legal, valid and
binding obligations of Borrower, enforceable in accordance with their
respective terms. As used in this Loan Agreement, "Loan Documents" shall mean
and refer to this Loan Agreement, all Notes, all Security Agreements and
Assignments, all Guaranty Agreements, and all other documents and agreements
required to be executed herein, and as any of them may be extended, renewed,
amended or supplemented from time to time.
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Section 2.6. NO SUBORDINATION. The obligations of Borrower
under this Agreement, are not subordinated in right of payment or in lien
priority to any obligation of Borrower.
Section 2.7. PERMITS, FRANCHISES. The Borrower now possesses,
and will hereafter possess, all permits, memberships, franchises, contracts,
and licenses required and all trademark rights, trade names, trade name rights,
patents, patent rights, and fictitious name rights necessary to enable it to
conduct its business without conflict with the rights of others.
ARTICLE III - CONDITIONS PRECEDENT
The obligation of Bank to make any advance under the Facility
Note, is subject to the fulfillment of the following conditions:
Section 3.1. APPROVAL OF BANK COUNSEL. All legal matters
incidental to all such advances hereunder shall be satisfactory to legal
counsel of Bank.
Section 3.2. COMPLIANCE. The representations and warranties
contained herein shall be true as of the date of the signing of this Agreement
and on the date of any advance, no Event of Default, as defined in Article VI
herein, and no condition, event or act which, with the giving of notice or the
lapse of time or both, would constitute an Event of Default, shall have
occurred.
Section 3.3. DOCUMENTATION. Borrower shall have delivered to
Bank in form and substance satisfactory to Bank the following described
documents:
(a) This Agreement and Facility Note duly executed.
(b) All Security Agreements and other loan documents duly
executed by Borrower granting to Bank a first and prior perfected security
interest in the assets described in Section 1.5 of this Agreement.
(c) Certified copy of Corporate Resolution of Borrower
ratifying this Agreement and authorizing the execution of the Loan Documents.
(d) Such other documentation as the Bank may reasonably
require.
ARTICLE IV - AFFIRMATIVE COVENANTS
Borrower covenants that so long as Borrower is indebted to
Bank under this Agreement, Borrower will:
Section 4.1. PUNCTUAL PAYMENT. Punctually pay to Bank all
payments required to be made under this Loan Agreement, the Facility Note and
any other indebtedness.
Section 4.2. ACCOUNTING RECORDS. Maintain adequate books and
accounts in accordance with generally accepted accounting principles
consistently applied, so that anytime and from time to time the
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true and complete financial condition of Borrower is fairly presented and can
be readily determined, and permit any representative of Bank at any reasonable
time, to inspect, audit and examine such books and accounts of Borrower and
permit Bank to make and obtain copies of any such books and accounts, and to
permit any representative of Bank to inspect the properties of Borrower.
Section 4.3. FINANCIAL STATEMENTS: Furnish Bank:
(a) Not later than 90 days after, and as of the end of each
fiscal year, an audited financial statement of Borrower to include balance
sheet and income statement.
(b) Not later than 60 days after the end of each quarter, a
balance sheet and statement of income of Borrower in a form satisfactory to
Bank, certified correct by an officer of Borrower and copies of Form 10-Q;
(c) Not later than 30 days after the end of each month, an
aged listing of all accounts payable and receivable of Borrower certified
correct by an officer of Borrower;
(d) Not later than 30 days after the end of each month, a
lending base certificate from an officer of Borrower in the form of the
attached Exhibit certifying that Borrower is in compliance with all the terms
of this Agreement.
(e) Semi-annually, commencing July 31, 1996, a one year cash
flow estimate from telecommunication contracts by state.
(f) From time to time such other information as Bank may
reasonably request.
Section 4.4. NOTICE TO ACCOUNTANTS. Notify Borrower's
accountants in writing that Bank intends to rely upon financial information
prepared by such accountants in behalf of Borrower in determining whether to
make any extension of credit covered by this Loan Agreement, including any
advance, renewal or extension thereto.
Section 4.5. EXISTENCE. Preserve and maintain the existence
and all of the rights, privileges and franchises of Borrower; conduct all
business in an orderly, efficient, and regular manner; and comply with the
requirements of all applicable laws, rules, regulations and orders of a
governmental authority.
Section 4.6. INSURANCE. Maintain and keep in force insurance
of the types and in amounts customarily carried in the line of business similar
to that of Borrower, including, but not limited to, fire, public liability,
property damage, workers' compensation, and carried with companies and in
amounts satisfactory to Bank; and Borrower shall deliver to Bank from time to
time, at Bank's request, schedules setting forth all insurance then in effect.
Borrower shall maintain and keep in force product liability insurance in such
amounts deemed adequate and economically feasible by the parties.
Section 4.7. FACILITIES. Keep all Borrower's properties in
good repair and condition, and from time to time make necessary repairs,
renewals and replacements thereto so that such properties shall be
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fully and efficiently preserved and maintained. Borrower shall promptly satisfy
any and all mechanic's or materialmen's liens filed on any of its facilities.
Section 4.8. TAXES AND OTHER LIABILITIES. Pay and discharge
when due any and all indebtedness, obligations, assessments, and taxes of
Borrower, except such as it may in good faith contest or as to which a bona
fide dispute may arise.
Section 4.9. LITIGATION. Promptly give notice in writing to
Bank of any litigation pending or threatened against Borrower.
Section 4.10. NOTICE TO BANK. Promptly give notice in writing
to Bank of (a) the occurrence of any Event of Default, as defined in Article
VI; (b) any change in the name, identity or corporate structure of Borrower; or
(c) any uninsured or partially uninsured loss in any fiscal year through fire,
theft, liability or property damage in excess of an aggregate of $500,000 to
Borrower.
Section 4.11. SECURITY DOCUMENTATION AND POWER OF ATTORNEY.
Upon request of Bank, assist Bank in obtaining and filing all security
agreements, financing statements, and other documentation required to retain
Bank's perfected security interest in the assets of Borrower. Borrower
irrevocably appoints Bank as its attorney in fact to execute all financing
statements and amendments thereto in behalf of Borrower.
Section 4.12. FINANCIAL CONDITIONS. Maintain Borrower's
financial condition as follows:
(a) Borrower shall maintain a minimum tangible net worth of
$18,000,000. Tangible net worth shall be defined as the equity of the Borrower
as determined by generally accepted accounting principles.
(b) Borrower shall maintain a current assets to current
liabilities ratio of not less than .75:1. Current assets include only cash and
cash equivalents, trade accounts receivable (net of allowance), other
receivables and prepaid expenses. Current liabilities include only accounts
payable, accrued liabilities, loans from customers, and debt, excluding
revolving credit facility with Bank.
(c) Borrower shall maintain a total liabilities to net worth
ratio of not greater than 1:1.
(d) Borrower shall maintain a Collateral base where the total
balance due Bank at any time from Borrower does not exceed:
(i) 75% of Eligible Receivables which are transaction
fees and line information data base receivables from AT&T, Xxxx Atlantic,
Southwestern Xxxx, U.S. West, Nynex, Nevada Xxxx, Cincinnati Xxxx, and GTE
less than 90 days past due; plus
(ii) 50% of Eligible Direct Receivables, net of
allowance, less than 60 days past due; plus
(iii) 35% of book value of Telecommunications Equipment
in use under telecommunication contracts, at least 90% of which must be under
contract with AT&T, Xxxx Atlantic,
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Southwestern Xxxx, U.S. West, Nynex, Nevada Xxxx, Cincinnati Xxxx and GTE
(limited to $5,000,000 of the Facility).
Excluded from Eligible Receivables and Eligible Direct Receivables are amounts
due from affiliated companies or foreign companies, amounts in dispute, amounts
subject to setoff, and amount subject to a prior claim.
Section 4.13. PAYMENT OF COSTS AND EXPENSES. Borrower agrees
to pay to Bank, on demand, all reasonable and necessary costs and expenses as
provided in this Agreement and the other Loan Documents, and all costs and
expenses reasonably and necessarily incurred by Bank from time to time in
connection with this Agreement and the other Loan Documents, including, without
limitation, those reasonably and necessarily incurred in: (i) preparing,
negotiating, amending, waiving or granting consent with respect to the terms of
any or all of the Loan Documents; (ii) enforcing the Loan Documents; (iii)
performing any of Borrower's duties under the Loan Documents upon Borrower's
failure to perform them; (iv) filing financing statements, assignments or other
documents relating to the Collateral (e.g., filing fees, registration taxes);
(v) compromising, pursuing, or defending any controversy, action or proceeding
resulting, directly or indirectly, from Bank's relationship with Borrower,
regardless of whether Borrower is a party to such controversy, action or
proceeding and of whether the controversy, action or proceeding occurs before
or after the all indebtedness owing to Bank by Borrower has been paid in full;
provided, however, that Borrower shall not be liable to Bank for costs and
expenses resulting from the gross negligence or the willful misconduct of Bank
in connection therewith; (vi) enforcing or collecting any part of the
indebtedness owing to Bank by Borrower or any guaranty contemplated under the
Loan Documents; (vii) actual out of pocket expenses of Bank incurred to employ
collection agencies or other agents to collect any or all of the accounts and
accounts receivables; and (viii) obtaining independent appraisals of the
Collateral from time to time as deemed reasonably necessary by Bank. Any amount
due to Bank pursuant to this Section shall, if not paid upon demand, accrue
interest at the Facility Note rate.
ARTICLE V - NEGATIVE COVENANTS
Borrower covenants that so long as Borrower is indebted to
Bank, Borrower will not, without prior written consent of Bank:
Section 5.1. OTHER INDEBTEDNESS. Except as to indebtedness
owed Bank, create, incur, or permit to exist any liabilities resulting from
borrowings, leases, loans or advances, whether secured or unsecured, or any
liens, mortgages or other encumbrances, other than indebtedness outstanding as
of the date of this Agreement. Bank will not unreasonably withhold approval for
capital leases for equipment which is subsequently leased to AT&T or to
Regional Xxxx Operating Companies. Nothing in this Section shall prevent
Borrower from incurring obligations in the ordinary course of business.
Section 5.2. MERGER, CONSOLIDATION, SALE OF ASSETS. Merge into
or consolidate with any corporation or other entity or acquire all or
substantially all of the assets of any other corporation or entity; or sell,
lease, assign, transfer or otherwise dispose of all or substantially all of its
assets.
Section 5.3. GUARANTIES. Guarantee or become liable in any way
as surety, endorser (other than as endorser of negotiable instruments in the
ordinary course of business) or accommodation for the debt or obligations of
any person or entity.
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ARTICLE VI - EVENTS OF DEFAULT
Section 6.1. EVENTS OF DEFAULT. Any of the following shall
constitute an Event of Default.
(a) Default by Borrower in any payment of principal or
interest under the Facility Note or any sum due in this Agreement.
(b) Any representation or warranty made by Borrower hereunder
which shall prove to be at any time incorrect in any material respect.
(c) Default by Borrower in the performance of any other term,
covenant or agreement contained herein, which default is not cured within 20
days from its occurrence.
(d) Default by Borrower under the terms of any agreement, note
or other instrument and such default having not been cured within 30 days;
provided, however, that if Borrower defaults in its performance under any other
agreement, note, or instrument and such default causes Borrower's obligations
to be immediately due and payable, then Bank, in its sole discretion, may
immediately exercise its rights under Section 6.2 herein.
(e) The failure of Borrower to promptly pay and discharge any
judgment, levy of attachment, execution or other process against the assets of
Borrower and such judgment be not satisfied, or such levy or other process be
not removed, within 10 days after the entry of levy thereof.
(f) Borrower shall be adjudicated a bankrupt or insolvent, or
shall consent to or apply for the appointment of a receiver, trustee or
liquidator of itself or any of its property, or shall admit in writing its
inability to pay its debts generally as they become due, or shall make a
general assignment for the benefit of creditors, or shall file a voluntary
petition in bankruptcy or voluntary petition or an answer seeking
reorganization or arrangement in a proceeding under any bankruptcy law.
(g) There shall have occurred a material adverse change, as
reasonably determined by Bank, in the financial condition or results in
operations of the Borrower since the date of this Agreement.
(h) An Event of Default (as defined in the other Loan
Documents) occurs in any of the other Loan Documents.
Section 6.2. ACCELERATION. If an Event of Default shall occur,
any indebtedness of Borrower under this Agreement or the Facility Note, any
term of such Note to the contrary notwithstanding, shall, at Bank's option and
without notice become immediately due and payable without presentment, notice
or demand, all of which are hereby expressly waived by Borrower; and the
obligation, if any, of the Bank to permit further borrowings hereunder shall
immediately cease and terminate.
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ARTICLE VII - MISCELLANEOUS
Section 7.1. WAIVER. No delay or failure of Bank, or any
holder of the Facility Note, in exercising any right, power or privilege
hereunder, shall affect such right, power or privilege; nor shall any single or
partial exercise thereof or any abandonment or discontinuance of steps to
enforce such a right, power or privilege hereunder, shall affect such right,
power or privilege. The rights and remedies of Bank hereunder are cumulative
and not exclusive. Any waiver, permit, consent or approval of any kind to
Bank, or any holder of the Facility Note, of any breach or default hereunder,
or any such waiver of any provisions or conditions hereof, must be in writing
and shall be effective only to the extent set forth in such writing.
Section 7.2. JURY WAIVER. BORROWER EXPRESSLY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDINGS TO ENFORCE OR DEFEND ANY RIGHTS
HEREUNDER OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED,
OR WHICH MAY HEREAFTER BE DELIVERED, TO BORROWER.
Section 7.3. NOTICES. All notices, requests and demands given
to or made upon the respective parties shall be deemed to have been given or
made when deposited in the mail, postage prepaid, and addressed as follows:
Borrower: T-NETIX, INC.
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Bank: INTRUST Bank, N.A.
X.X. Xxx Xxx
Xxxxxxx, XX 00000
Attn: Commercial Loan Department
Section 7.4. WRITTEN AGREEMENTS. THIS LOAN AGREEMENT, TOGETHER
WITH OTHER WRITTEN AGREEMENTS OF THE PARTIES, IS THE FINAL EXPRESSION OF THE
AGREEMENT BETWEEN THE BANK AND THE BORROWER, AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF ANY PRIOR OR CONTEMPORANEOUS ORAL AGREEMENT BETWEEN THE PARTIES.
ANY NON-STANDARD TERM MUST BE WRITTEN BELOW TO BE ENFORCEABLE.
BY SIGNING BELOW THE PARTIES AFFIRM THERE ARE NO UNWRITTEN
AGREEMENTS BETWEEN THEM.
"BANK" "BORROWER"
INTRUST Bank, N.A. T-NETIX, INC.
By /s/ [ILLEGIBLE] By /s/ XXXX XXXXXXXXX
---------------------------- -----------------------------
Vice President Xxxx Xxxxxxxxx
Vice President
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Section 7.5. KANSAS LAW APPLICABLE. This Agreement shall be
construed in accordance with the laws of the State of Kansas, without regard to
principles of conflicts of laws, and applicable federal law. Borrower
expressly agrees that jurisdiction and venue for all legal proceedings filed in
connection herewith shall lie exclusively in Sedgwick County, Kansas.
Section 7.6. PREVIOUS SECURITY AGREEMENTS. Any security
interest previously granted to Bank by Borrower shall survive and continue to
exist in priority.
Section 7.7. OTHER LOAN DOCUMENTS. Borrower understands and
agrees that it is additionally bound by the terms and conditions of the other
Loan Documents, which such terms and conditions are incorporated herein and
made a part of this Agreement. To the extent that any term or provision
contained in other Loan Documents conflicts with a term or provision of this
Agreement, the term or provision providing the Bank the most security or the
greatest right shall control.
Section 7.8. BINDING EFFECT. The rights and obligations of the
parties under this Agreement shall inure to the benefit of, and shall be
binding upon their heirs, personal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement
the day first above written.
"BANK" "BORROWER"
INTRUST Bank, N.A. T-NETIX, INC.
By [ILLEGIBLE] By /s/ XXXX GIANAULA
-------------------------------- --------------------------------
Vice President Xxxx Xxxxxxxxx
Vice President
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