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EXHIBIT 10D(2)
SECOND AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT is dated
as of March 30, 2001 ("this Amendment"), by and among NORSTAN, INC., a Minnesota
corporation (the "Borrower"), the banks which are signatories hereto (each
individually, a "Bank," and collectively, the "Banks"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, one of the Banks, as agent for the
Banks (in such capacity, the "Agent").
RECITALS
A. The Borrower, the Banks and the Agent are parties to an Amended and
Restated Credit Agreement dated as of December 20, 2000, as amended by a First
Amendment to Amended and Restated Credit Agreement dated as of March 19, 2001
(as amended, the "Credit Agreement").
B. The Borrower has advised the Banks that (i) it will be unable to
make the principal payments due upon Term Loan A and Term Loan B of the Credit
Agreement due on March 30, 2001 and (ii) it has violated certain financial
covenants contained in the Credit Agreement.
C. The Borrower has requested that the Banks agree to extend the times
for the payments due under Term Loan A and Term Loan B under the Credit
Agreement on the terms set forth in this Agreement and agree to forbear from
exercising their remedies pursuant to the Borrower's events of default due to
the Borrower's failure to meet its financial covenants.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
DEFINITIONS. CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED HEREIN,
BUT WHICH ARE DEFINED IN THE CREDIT AGREEMENT, SHALL HAVE THE MEANINGS
ASCRIBED TO SUCH TERMS IN THE CREDIT AGREEMENT UNLESS THE
CONTEXT OTHERWISE REQUIRES.
AMENDMENTS TO CREDIT AGREEMENT. SUBJECT TO SECTION 5 HEREOF,
THE CREDIT AGREEMENT IS HEREBY AMENDED AS FOLLOWS:
TERM LOAN PAYMENTS. SECTIONS 2.5(B) AND 2.5(C) OF THE CREDIT AGREEMENT ARE
DELETED IN THEIR ENTIRETIES AND THE FOLLOWING IS SUBSTITUTED IN LIEU THEREOF:
(b) Term A Loan. The unpaid balance of the Term A
Loan, and all accrued and unpaid interest thereon, shall be
due and payable on April 4, 2001;
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(c) Term B Loan. The unpaid balance of the Term B
Loan, and all accrued and unpaid interest thereon, shall be
due and payable on April 4, 2001;
FORBEARANCE FROM OF EVENTS OF DEFAULT. THE BORROWER
HAS INFORMED THE BANKS AS FOLLOWS:
(a) that it was not in compliance with its covenant under
Section 6.16 of the Credit Agreement for the period ended February 28,
2001, in that its actual EBITDA for the fiscal month ended on that date
was ($2,179,000), which amount is the less than the minimum EBITDA of
$2,195,000 required by that Section for that period;
(b) that it was not in compliance with its covenant under
Section 6.18 of the Credit Agreement for the fiscal month ended
February 28, 2001, in that the Adjusted Leverage Ratio as of that date
was 16.9 to 1.0, which amount is greater than the maximum Adjusted
Leverage Ratio of 13.7 to 1.0 required by that Section for that period;
and,
(c) that it was not in compliance with its covenant under
Section 6.19 of the Credit Agreement for the fiscal month ended
February 28, 2001, in that the Interest Coverage Ratio as of that date
was (3.2) to 1.0, which amount is less than the minimum Interest
Coverage Ratio of 3.9 to 1.0 required by that Section for that period;
Each such instance of noncompliance constitutes a Default or Event of Default
under the Credit Agreement (collectively, the "Existing Defaults"). Upon the
satisfaction of the conditions set forth in Section 5 below, each Bank and the
Agent shall, until the Forbearance Termination Date (defined below), forbear
from exercising their enforcement remedies under the Loan Documents arising from
the Existing Defaults. For purposes of this letter, the "Forbearance Termination
Date" shall mean the earlier to occur of April 4, 2001 or the date on which any
additional Event of Default occurs. The Banks' and the Agent's agreement to
forbear is limited to the express terms thereof, and nothing herein shall be
deemed a waiver or forbearance by the Banks or the Agent of any other term,
condition, representation or covenant applicable to the Borrower or any
Guarantor under the Loan Documents (including but not limited to any future
occurrence similar to the Existing Defaults). The forbearance by the Banks and
the Agent set forth herein shall not constitute a waiver or forbearance by the
Banks or the Agent of any other Default or Event of Default, if any, under any
Loan Document, and shall not be, and shall not be deemed to be, a course of
action with respect thereto upon which the Borrower may rely in the future, and
the Borrower hereby expressly waives any claim to such effect.
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REPRESENTATIONS AND WARRANTIES OF THE BORROWER. TO INDUCE THE BANKS
AND THE AGENT TO EXECUTE AND DELIVER THIS AMENDMENT (WHICH REPRESENTATIONS AND
WARRANTIES SHALL SURVIVE THE EXECUTION AND DELIVERY OF THIS AMENDMENT), THE
BORROWER REPRESENTS AND WARRANTS TO THE AGENT AND THE BANKS THAT:
THIS AMENDMENT HAS BEEN DULY AUTHORIZED, EXECUTED AND DELIVERED BY IT AND THIS
AMENDMENT CONSTITUTES THE LEGAL, VALID AND BINDING OBLIGATION OF THE BORROWER
ENFORCEABLE AGAINST THE BORROWER IN ACCORDANCE WITH ITS TERMS, SUBJECT TO
LIMITATIONS AS TO ENFORCEABILITY WHICH MIGHT RESULT FROM BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM OR SIMILAR LAWS OR EQUITABLE PRINCIPLES RELATING TO
OR LIMITING CREDITORS' RIGHTS GENERALLY;
THE CREDIT AGREEMENT, AS AMENDED BY THIS AMENDMENT, CONSTITUTES THE LEGAL, VALID
AND BINDING OBLIGATION OF THE BORROWER ENFORCEABLE AGAINST THE BORROWER IN
ACCORDANCE WITH ITS TERMS, SUBJECT TO LIMITATIONS AS TO ENFORCEABILITY WHICH
MIGHT RESULT FROM BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR
LAWS OR EQUITABLE PRINCIPLES RELATING TO OR LIMITING CREDITORS' RIGHTS
GENERALLY;
THE EXECUTION, DELIVERY AND PERFORMANCE BY THE BORROWER OF THE AMENDMENT (I)
HAVE BEEN DULY AUTHORIZED BY ALL REQUISITE CORPORATE ACTION AND, IF REQUIRED,
SHAREHOLDER ACTION, (II) DO NOT REQUIRE THE CONSENT OR APPROVAL OF ANY
GOVERNMENTAL OR REGULATORY BODY OR AGENCY, AND (III) WILL NOT (A) VIOLATE (1)
ANY PROVISION OF LAW, STATUTE, RULE OR REGULATION OR ITS CERTIFICATE OF
INCORPORATION OR BYLAWS, (2) ANY ORDER OF ANY COURT OR ANY RULE, REGULATION OR
ORDER OF ANY OTHER AGENCY OR GOVERNMENT BINDING UPON IT, OR (3) ANY PROVISION OF
ANY MATERIAL INDENTURE, AGREEMENT OR OTHER INSTRUMENT TO WHICH IT IS A PARTY OR
BY WHICH ANY OF ITS PROPERTIES OR ASSETS ARE OR MAY BE BOUND, OR (B) RESULT IN A
BREACH OF OR CONSTITUTE (ALONE OR WITH DUE NOTICE OR LAPSE OF TIME OR BOTH) A
DEFAULT UNDER ANY INDENTURE, AGREEMENT OR OTHER INSTRUMENT REFERRED TO IN CLAUSE
(III)(A)(3) OF THIS SECTION 4(C);
AS OF THE DATE HEREOF, NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED WHICH EITHER
(A) IS CONTINUING OR (B) PURSUANT TO WHICH THE AGENT AND THE BANKS HAVE NOT
AGREED TO FORBEAR FROM EXERCISING THEIR REMEDIES AS SET FORTH IN SECTION 3 OF
THIS AMENDMENT; AND
ALL THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE IV OF THE CREDIT
AGREEMENT ARE TRUE AND CORRECT IN ALL MATERIAL RESPECTS WITH THE SAME FORCE AND
EFFECT AS IF MADE BY THE BORROWER ON AND AS OF THE DATE HEREOF.
CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT. THIS AMENDMENT SHALL
BECOME EFFECTIVE AS OF THE DATE FIRST ABOVE WRITTEN WHEN EACH
AND EVERY ONE OF THE FOLLOWING CONDITIONS SHALL HAVE BEEN SATISFIED:
THE AGENT SHALL HAVE RECEIVED EXECUTED COUNTERPARTS OF THIS AMENDMENT, DULY
EXECUTED BY THE BORROWER AND EACH OF THE BANKS.
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THE AGENT SHALL HAVE RECEIVED FROM THE GUARANTORS A CONSENT AND AGREEMENT OF
GUARANTORS IN THE FORM OF EXHIBIT A HERETO (THE "GUARANTOR AGREEMENTS") DULY
COMPLETED AND EXECUTED BY EACH GUARANTOR.
THE BORROWER SHALL HAVE SATISFIED ALL OF THE CONDITIONS PRECEDENT TO THE
EFFECTIVENESS OF THE FIRST AMENDMENT TO THE CREDIT AGREEMENT.
THE AGENT SHALL HAVE RECEIVED SUCH OTHER DOCUMENTS OR INSTRUMENTS REASONABLY
DEEMED NECESSARY BY THE AGENT.
AFFIRMATION; REAFFIRMATION. THE AGENT, EACH BANK AND THE BORROWER EACH
ACKNOWLEDGE AND AFFIRM THAT THE CREDIT AGREEMENT, AS HEREBY AMENDED,
IS HEREBY RATIFIED AND CONFIRMED IN ALL RESPECTS AND ALL TERMS, CONDITIONS
AND PROVISIONS OF THE CREDIT AGREEMENT, EXCEPT AS AMENDED BY THIS AMENDMENT,
SHALL REMAIN UNMODIFIED AND IN FULL FORCE AND EFFECT. ALL REFERENCES IN
ANY DOCUMENT OR INSTRUMENT TO THE CREDIT AGREEMENT ARE HEREBY
AMENDED AND SHALL REFER TO THE CREDIT AGREEMENT AS AMENDED BY THIS AMENDMENT.
THE BORROWER CONFIRMS TO THE AGENT AND EACH BANK THAT THE OBLIGATIONS ARE AND
CONTINUE TO BE SECURED BY THE SECURITY INTEREST GRANTED BY THE BORROWER IN
FAVOR OF THE AGENT UNDER THE BORROWER'S SECURITY AGREEMENT AND ALL OF THE
TERMS, CONDITIONS, PROVISIONS, AGREEMENTS, REQUIREMENTS, PROMISES, OBLIGATIONS,
DUTIES, COVENANTS AND REPRESENTATIONS OF THE BORROWER UNDER SUCH DOCUMENTS AND
ANY AND ALL OTHER DOCUMENTS AND AGREEMENTS ENTERED INTO WITH RESPECT
TO THE OBLIGATIONS ARE INCORPORATED HEREIN BY REFERENCE AND ARE HEREBY
RATIFIED AND AFFIRMED IN ALLRESPECTS BY THE BORROWER.
GENERAL.
THE BORROWER AGREES TO REIMBURSE THE AGENT UPON DEMAND FOR ALL REASONABLE
EXPENSES (INCLUDING REASONABLE ATTORNEYS FEES AND LEGAL EXPENSES) INCURRED BY
THE AGENT IN THE PREPARATION, NEGOTIATION AND EXECUTION OF THIS AMENDMENT AND
ANY OTHER DOCUMENT REQUIRED TO BE FURNISHED HEREWITH, AND TO PAY AND SAVE THE
AGENT HARMLESS FROM ALL LIABILITY FOR ANY STAMP OR OTHER TAXES WHICH MAY BE
PAYABLE WITH RESPECT TO THE EXECUTION OR DELIVERY OF THIS AMENDMENT, WHICH
OBLIGATIONS OF THE BORROWER SHALL SURVIVE ANY TERMINATION OF THE CREDIT
AGREEMENT.
THIS AMENDMENT MAY BE EXECUTED IN AS MANY COUNTERPARTS AS MAY BE DEEMED
NECESSARY OR CONVENIENT, AND BY THE DIFFERENT PARTIES HERETO ON SEPARATE
COUNTERPARTS, EACH OF WHICH, WHEN SO EXECUTED, SHALL BE DEEMED AN ORIGINAL BUT
ALL SUCH COUNTERPARTS SHALL CONSTITUTE BUT ONE AND THE SAME INSTRUMENT.
ANY PROVISION OF THIS AMENDMENT WHICH IS PROHIBITED OR UNENFORCEABLE IN ANY
JURISDICTION SHALL, AS TO SUCH JURISDICTION, BE INEFFECTIVE TO THE EXTENT OF
SUCH PROHIBITION OR UNENFORCEABILITY WITHOUT INVALIDATING THE REMAINING PORTIONS
HEREOF OR AFFECTING THE VALIDITY OR ENFORCEABILITY OF SUCH PROVISIONS IN ANY
OTHER JURISDICTION.
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THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF MINNESOTA, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
THIS AMENDMENT SHALL BE BINDING UPON THE BORROWER, THE AGENT AND THE BANKS AND
THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, AND SHALL INURE TO THE BENEFIT OF THE
BORROWER, THE AGENT AND THE BANKS AND THE SUCCESSORS AND ASSIGNS OF THE AGENT
AND THE BANKS.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first above written.
NORSTAN, INC.
By /s/ Xxxxxx X. Xxxx
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Its Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as a Bank and as Agent
By /s/ Xxxxx X. Xxxxxx
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Its XX
XXXXXX TRUST AND SAVINGS BANK
By /s/ Xxxxxx X. Xxxxxx
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Its VP
M&I XXXXXXXX & XXXXXX BANK
By /s/ Xxxx X. Xxxxxx
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Its VP
By /s/ Xxxx Xxxxxx
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Its XX
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ Xxxxxxx X. Xxxxxxx
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Its VP
[Signature Page to Second Amendment to Amended and Restated Credit Agreement]
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