INTERCOMPANY NOTE
$3,585,000 June 27, 1997
FOR VALUE RECEIVED, Let's Talk Cellular & Wireless, Inc., a Florida corporation ("Maker" or "LTC"), promises to pay to Texas Cellular Partners, L.P., a Delaware limited partnership ("Payee" or "TCP"), the principal sum of up to THREE MILLION FIVE HUNDRED EIGHTY-FIVE THOUSAND DOLLARS ($3,585,000), together with interest thereon at the rates hereinafter provided.
Section 1. Interest. Interest shall accrue on the principal amount of this Note from time to time outstanding at the rate of eight percent (8%) per annum, provided, however, that if at the end of any calendar year, LTC has not completed an initial public offering of its common stock, which yields proceeds (net of all expenses, including underwriting fees and commissions, of at least $20.0 million (a "Qualified IPO") and LTC's and TCP's combined Indebtedness exceeds 3.5 times their combined EBITDA (as defined below), interest shall accrue on the principal amount of this Note from time to time outstanding at the rate of twelve percent (12%) per annum until LTC's Indebtedness is reduced below such threshold (the "Interest Rate"). Interest shall be payable in quarterly installments on the last day of each fiscal quarter following the date of this Note commencing July 31, 1997, based on a three hundred sixty-five (365) day year for actual number of days elapsed.
Section 2. Payment. The principal amount of this Note shall be due and payable as follows: (i) $750,000 shall be payable on March 15, 1999 in the event the Adjusted EBIT (as defined below) for the year ended December 31, 1998 for Telephone Warehouse, Inc., a Delaware corporation ("TWI"), and National Cellular, Incorporated, a Texas corporation ("NCI" and collectively with TWI, the "Companies"), equals or exceeds $5,000,000, (ii) $835,000 shall also be payable on March 15, 1999 in the event the Adjusted EBIT for the year ended December 31, 1998 for the Companies equals or exceeds $7,000,000, and (iii) $2,000,000 shall be payable on the earlier of (i) the second anniversary of the closing of a Qualified IPO, or (ii) March 15, 2002.
Section 3. Method of Payment. Payments of principal, interest and other amounts due hereunder shall be made in lawful money of the United States of America by (a) in the case of payments of principal, wire transfer of immediately available funds to the account of Payee in the United States designated in the records maintained by Maker, and (b) in the case of interest and any and all other payments, company check to Payee at the address set forth in Maker's records unless and until Payee provides written notice to Maker to the contrary.
Section 4. Default Interest. If any installment of interest, or the principal amount hereof, is not paid within fifteen (15) days after the due date thereof, interest shall accrue on such unpaid amount at a default rate equal to the lesser of (a) twelve percent (12%) per annum or
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(b) the highest rate permitted under applicable law, until such amount is paid in full, (the "Default Rate").
Section 5. Prepayment. Subject to the provisions of the Credit Agreement (as defined below), this Note may be prepaid in whole or in part at any time without prepayment premium or penalty.
Section 6. Defaults and Remedies.
6.1 Events of Default. Any one or more of the following shall constitute an Event of Default hereunder: (a) default shall be made in the payment of the principal of this Note when and as the same shall become due and payable, whether at stated maturity, by acceleration, or otherwise after five (5) days notice of such failure from Payee; (b) Maker shall fail to pay within ten (10) days following the due date any installment of interest of the principal amount hereof; (c) Maker shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or be generally unable to pay its debts as such debts become due; (d) an involuntary case or other proceeding shall be commenced against Maker seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property or an order for relief shall be entered against Maker under the federal bankruptcy laws or the laws of the jurisdiction of organization of Maker as now or hereafter in effect, and such involuntary case or other proceeding or order shall remain undismissed or unstayed for a period of sixty (60) days, and if stayed, such involuntary case or other proceeding or order shall be dismissed upon termination of such stay; (e) default shall be made in the performance or observance of any other covenant, agreement or condition contained herein and such default shall have continued for a period of thirty (30) days after such default shall first have become known to Maker; (f) any representation or warranty made by Maker in this Note or pursuant hereto or in connection with any provision hereof shall be false or incorrect in any material respect on the date as of which made and shall not have been cured within thirty (30) days of notice thereof; or (g) a Change in Control of Maker shall occur.
6.2 Acceleration. If (a) an Event of Default shall occur pursuant to Sections 6.1(c) or (d), the principal of, and accrued interest on, and all other amounts due under this Note shall become immediately due and payable, and (b) any other Event of Default shall occur, the principal of, and accrued interest on, and all other amounts due under, this Note shall become due and payable upon notice by Payee to Maker; provided that if the Credit Agreement is in effect at such time, such notice shall not become effective until at least ten (10) days' prior notice by Payee to the Agent under the Credit Agreement.
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