EXHIBIT 10(i)
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is entered into as of July 21, 2004 among NORSTAN COMMUNICATIONS
INC., a Minnesota corporation ("Communications (US)"), VIBES TECHNOLOGIES, INC.,
a Minnesota corporation ("Vibes"; Communications (US) and Vibes are referred to
hereinafter each individually as "Borrower", and collectively, as "Borrowers"),
NORSTAN, INC., a Minnesota corporation ("Parent"), NORSTAN FINANCIAL SERVICES
INC., a Minnesota corporation ("Norstan Financial"), NORSTAN CANADA INC., a
Minnesota corporation ("Canada Holdings"), NORSTAN INTERNATIONAL, INC., a
Minnesota corporation ("UK Holdings") and NORSTAN CANADA LTD., an Ontario
corporation ("Communications (Canada)"; Parent, Norstan Financial, Canada
Holdings, Norstan International, UK Holdings and Communications (Canada) are
referred to hereinafter each individually as a " Credit Party", and individually
and collectively, jointly and severally, as the "Credit Parties") and XXXXX
FARGO FOOTHILL, INC., a California corporation, as agent for lenders ("Agent").
WHEREAS, Borrowers, Credit Parties (Borrowers and Credit Parties are
referred to hereinafter each individually as "Company", and collectively, as
"Companies"), Agent and Lenders are parties to a Loan and Security Agreement
dated as of December 10, 2003 (as amended, restated, supplemented or otherwise
modified from time to time, and as amended hereby, the "Loan Agreement");
WHEREAS, the Companies have requested that Agent amend the Loan
Agreement, and Agent has agreed to do so subject to the terms and conditions
contained herein.
NOW THEREFORE, in consideration of the promises and mutual
agreements herein contained, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms
used herein shall have the meanings ascribed to such terms in the Loan
Agreement.
2. Amendments to Loan Agreement. Subject to the satisfaction of the
conditions set forth in Section 3 hereof, the Loan Agreement is hereby amended
as follows:
(a) The definition of the term "Xxxxxx'x Agreement" contained in
Section 1.1 of the Loan Agreement is hereby amended and restated as follows:
"Xxxxxx'x Agreement" means the Agreement for Siemens Authorized
Distributors dated as of January 26, 1999, as the same has been amended,
supplemented, extended or otherwise modified through the date hereof.
(b) A new defined term, "Norstan Resale Business Projections", is
hereby added to Section 1.1 of the Loan Agreement in appropriate alphabetical
order as follows:
"Norstan Resale Business Projections" means, with respect to the
fiscal year ending April 30, 2005, the projections of Communications
(US)'s resale revenue of refurbished products, excluding revenue under the
Siemens Agreement and resale revenue of refurbished products sold by
Vibes, delivered to Agent prior to the termination of the Rolm/Norstan
Equipment Service Agreement dated as of October 1, 1993 and, with respect
to each fiscal year thereafter, Communications (US)'s forecasted resale
revenue of refurbished products, excluding revenue under the Siemens
Agreement and resale revenue of refurbished products sold by Vibes, all
prepared on a consistent basis with the projections delivered to Agent for
the fiscal year ending April 30, 2005, together with appropriate
supporting details and a statement of underlying assumptions.
(c) A new clause (i) is hereby added at the end of Section 6.3 of
the Loan Agreement as follows:
(i) as soon as available, but in any event within 30 days prior to
the start of each of Borrowers' fiscal years commencing with the fiscal
year ending April 30, 2005, copies of Norstan Resale Business Projections,
in form and substance (including as to scope and underlying assumptions)
satisfactory to Agent, in its sole discretion, for the forthcoming fiscal
year, quarter by quarter, certified by the chief financial officer of each
Borrower as being such officer's good faith best estimate of the resale
revenue of refurbished products, excluding revenue under the Siemens
Agreement and resale revenue of refurbished products sold by Vibes, during
the period covered thereby; provided, however, that Norstan Resale
Business Projections for the fiscal year ending April 30, 2005 shall be
delivered to Agent prior to the termination of the Rolm/Norstan Under
Equipment Services Agreement dated as of October 1, 1999.
(d) A new clause (iii) of Section 7.18(a) of the Loan Agreement is
hereby added to the Loan Agreement in appropriate numerical order as follows:
(i) NORSTAN RESALE BUSINESS REVENUE COVENANT. Resale revenue of
refurbished products, excluding revenue under the Siemens Agreement and
resale revenue of refurbished products sold by Vibes, measured on a fiscal
quarter-end basis, of at least 75% of the revenue projected for such
fiscal quarter as reflected on the Norstan Resale Business Projections
delivered to Agent pursuant to Section 6.3(i).
3. Conditions Precedent to Amendment. The satisfaction of each of
the following, unless waived by Agent in its sole discretion, shall constitute
conditions precedent to the effectiveness of this Amendment:
(a) Agent shall have received this Amendment, duly executed by each
Company; and
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(b) No Event of Default or event which with the giving of notice or
passage of time would constitute an Event of Default shall have occurred and be
continuing on the date hereof, nor shall result from the consummation of the
transaction contemplated herein.
4. Amendment Fee. In addition to any other fee payable under the
Loan Agreement, the Companies shall pay to Agent an amendment fee in the amount
of $15,000 which shall be fully earned and payable on the date hereof.
5. Miscellaneous.
(a) Warranties and Absence of Defaults. In order to induce Agent to
enter into this Amendment, each Company hereby warrants to Agent, as of the date
hereof, that:
(i) The representations and warranties of each Company contained in
the Loan Agreement are true and correct as of the date hereof as if made
on the date hereof; and
(ii) No Event of Default or event which, with giving of notice or
the passage of time or both, would become an Event of Default, exists as
of the date hereof.
(b) Expenses. Each Company agrees, on a joint and several basis, to
pay on demand all costs and expenses of Agent (including the fees and expenses
of outside counsel for Agent) in connection with the preparation, negotiation,
execution, delivery and administration of this Amendment and all other
instruments or documents provided for herein or delivered or to be delivered
hereunder or in connection herewith. In addition, each Company agrees, on a
joint and several basis, to pay, and save Agent harmless from all liability for,
any stamp or other taxes which may be payable in connection with the execution
or delivery of this Amendment or the Loan Agreement and the execution and
delivery of any instruments or documents provided for herein or delivered or to
be delivered hereunder or in connection herewith. All obligations provided in
this Section 5(b) shall survive any termination of this Amendment and the Loan
Agreement.
(c) Governing Law. This Amendment shall be a contract made under and
governed by the internal laws of the State of Illinois.
(d) Counterparts. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Amendment.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized and delivered
as of the date first above written.
NORSTAN COMMUNICATIONS INC.,
an Minnesota corporation
By /s/ Xxxxx X. Xxxxxxx
Title VP Treasurer
VIBES TECHNOLOGIES, INC.,
an Minnesota corporation
By /s/ Xxxxx X. Xxxxxxx
Title VP Treasurer
NORSTAN, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxx
Title VP Treasurer
NORSTAN FINANCIAL SERVICES INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxx
Title VP Treasurer
NORSTAN CANADA INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxx
Title VP Treasurer
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NORSTAN INTERNATIONAL, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxx
Title VP Treasurer
NORSTAN CANADA LTD.,
an Ontario corporation
By /s/ Xxxxx X. Xxxxxxx
Title VP Treasurer
XXXXX FARGO FOOTHILL, INC.,
a California corporation, as Agent
By Xxxx X. Xxxxxxx
Title Vice President
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