Exhibit 10.3
SECOND ADDENDUM TO AMENDED AND RESTATED LOAN AGREEMENT
This Second Addendum to Amended and Restated Loan Agreement (the "Second
Addendum") is entered into as of the 5 day of September 2001, between Xxxx Deere
Construction and Forestry Equipment Company (f/k/a Xxxx Deere Construction
Equipment Company), Deere Credit, Inc., and Xxxx Deere Company, A Division of
Deere & Company (collectively referred to as the "Lender") and RDO Agriculture
Equipment Co. ("RDO Agriculture"), and RDO Equipment Co., RDO Financial Services
Co., RDO Material Handling Co., RDO Truck Center Co., RDO Construction Equipment
Co. ("RDO Construction") (such entities are referred to herein collectively as
the "Borrower").
RECITALS
A. On July 31, 2000, Lender and Borrower entered into an Amended
and Restated Loan Agreement, which was amended pursuant to the
terms of an Addendum to Amended and Restated Loan Agreement
dated October 31, 2000 (as amended, the "Loan Agreement")
pursuant to which Lender extended a Line of Credit in the
maximum amount of One Hundred Five Million and 00/100 Dollars
($105,000,000.00) to Borrower;
B. Lender and Borrower wish to amend the Loan Agreement to extend
the term of the Line of Credit and make certain other changes
in the Loan Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Second Addendum, and other good and valuable consideration, the receipt and
sufficiency of which is expressly acknowledged, the parties hereto agree as
follows:
1. Capitalized terms not defined in this Second Addendum shall
have the meaning provided to them in the Loan Agreement.
2. The definitions of Borrowing Base Amount and Borrowing Base
Certificate are amended to read in their entirety as follows:
"Borrowing Base Amount" means, at the time in question an amount equal
to the sum of all Eligible Value for the Eligible Inventory and the
Eligible Receivables, less 20% of all merchant authorized accounts as
defined in the Power Plan by Deere Terms and Conditions."
"Borrowing Base Certificate" means a Certificate in the form attached
to the Second Addendum to Amended and Restated Loan Agreement as
Exhibit A."
3. The definition of Net Book Value is amended adding the
following language: "Material changes in valuation methods for
determining Net Book Value are subject to approval by Lender
with review of such methods to occur at a minimum annually.
4. The definition of Eligible Value is amended to read in its
entirety as follows:
"Eligible Value" means, with respect to an item of Inventory, the
following, as determined by Lender in its sole discretion:
(a) The Eligible Value for each item of New Equipment Inventory
shall be 95% of the Net Book Value of each item of New
Equipment Inventory.
(b) The Eligible Value for each item of Used Equipment Inventory
shall be 95% of the Net Book Value of each item of Used
Equipment Inventory.
(c) The Eligible Value for Eligible Trade Accounts Receivable
shall be 80% of the total amount of Eligible Trade Accounts
Receivable.
(d) The Eligible Value for Eligible Government Receivables shall
mean the lesser of (i) 70% of the total amount of Eligible
Government Receivables or (ii) Five Million and 00/100 Dollars
($5,000,000.00).
(e) The Eligible Value for Eligible Contracts in Transit shall be
90% of the total amount of Eligible Contracts in Transit.
(f) The Eligible Value for Affiliate Receivables shall mean the
lesser of (i) 70% of the total amount of Eligible Affiliate
Receivables or (ii)Two Million and 00/100 Dollars
($2,000,000.00).
(g) the Eligible Value of Material Handling Inventory shall mean
the lesser of (i) 95% of Eligible Material Handling Inventory
or (ii) $2,000,000.
5. The definitions of Guarantor and Guaranty are hereby deleted.
6. The definition of Line of Credit Rate is amended to read in
its entirety as follows:
"Line of Credit Rate" means a rate equal to the lesser of (i) "Citibank
base rate" (the interest announced publicly from time to time by
Citibank, N.A. in New York, New York as the base (or "prime") rate it
uses in determining the rate of interest it charges on loans) which was
in effect at the close of business on the 15th day of the preceding
month minus 0.50%. or (ii) the maximum rate of interest allowed by
applicable law. The Line of Credit Rate may be adjusted based upon
Borrower's compliance with the terms of the memorandum from Lender to
Borrower dated July 23, 2001, a copy of which is attached hereto as
Exhibit B."
7. The following definitions are added to Section 1 of the Loan
Agreement in appropriate alphabetical order:
"Eligible Affiliate Receivables" shall mean receivables arising from
bona fide sale or lease of Eligible Inventory to companies affiliated
by common ownership with Xxxxxx X. Xxxxxx.
"Eligible Contracts in Transit" shall mean completed, pre-approved
retail installment sale or lease contracts arising from the bona fide
sale or lease of Eligible Inventory that meet all credit underwriting
guidelines and are in the process of being assigned or sold under
existing discount/purchase programs to finance companies or other
lending sources. Contracts in transit will no longer be eligible if
they are more than thirty days old."
"Eligible Government Receivables" shall mean receivables arising from
the bona fide sale or lease of Eligible Inventory with acceptable
account debtors who are either municipal, county or state government
entities with accounts that are less than ninety days old."
"Eligible Material Handling Inventory" means machinery and equipment
held for sale by the RDO Material Handling under valid manufacturer's
dealer licenses.
"Eligible Trade Accounts Receivable" shall mean receivables arising
from the bona fide sale or lease of Eligible Inventory with acceptable
account debtors, provided however such Eligible Trade Accounts
Receivable shall not include:
(a) accounts with an account debtor who has any account which is
over 90 days from the date of invoice;
(b) accounts with concentration in excess of 10% of the total of
Accounts Receivables;
(c) accounts with account debtors who are affiliates of Borrower;
(d) accounts with account debtors who are headquartered outside of
the United States;
(e) accounts which are contra accounts;
(f) accounts on which Lender may not have a first priority
perfected security interest;
(g) accounts with account debtors who have a pending bankruptcy
case.
8. The second sentence of Section 2 of the Loan Agreement is
amended to read as follows:
"Each Advance made under this Line of Credit shall be for an amount
that shall not be less than One Million and 00/100 dollars
($1,000,000.00)."
9. Section 3 of the Loan Agreement is amended to read in its
entirety as follows:
"This Line of Credit shall mature on October 31, 2002, at which time
all outstanding principal balance, plus accrued but unpaid interest
shall be due and payable."
10. Section 11(ii) of the Loan Agreement is amended to read in its
entirety as follows:
"(ii) the ratio of the Consolidated EBIT on a rolling four-quarter
basis to Consolidated Interest Expense at the end each of the following
fiscal quarters end to be greater than or equal to
31 July 2001 -.75 to 1.00
31 October, 2001 -.25 to 1.00
31 January 2002 1.00 to 1.00
At all times thereafter 1.50 to 1.00
11. Section 11(i) of the Loan Agreement is amended to read in its
entirety as follows:
"The Tangible Net Worth plus Subordinated Indebtedness at any time must
be greater than $63 million plus 75% the positive Consolidated Net
Income for measurement periods beginning August 1, 2001, and for each
subsequent fiscal year, to be greater than the minimum Tangible Net
Worth plus Subordinated Indebtedness required for the previous fiscal
year-end plus 75% of the positive Consolidated Net Income for the most
recent fiscal year then ended.
12. Except as expressly amended by this Second Addendum, the terms and
conditions of the Loan Agreement remain in full force and effect. This
Second Addendum may only be amended or modified by the terms of a
written instrument signed by all parties hereto. This Second Addendum
reflects the entire understanding of the parties with respect to the
matters discussed herein.
IN WITNESS WHEREOF, the parties hereto have executed this Second
Addendum effective as of the date first above written.
LENDER: BORROWER:
Xxxx Deere Construction and Forestry RDO Equipment Co.
Equipment Company
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxx
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Its: Division Manager Its: Treasurer
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Xxxx Deere Company, a Division of Deere & RDO Financial Services Co.
Company
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxx
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Its: Division Manager Its: Treasurer
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Deere Credit, Inc. RDO Material Handling Co.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxx
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Its: Division Manager Its: Treasurer
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RDO Truck Center Co.
By: /s/ Xxxxxx X. Xxxxx
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Its: Treasurer
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RDO Agriculture Equipment Co.
By: /s/ Xxxxxx X. Xxxxx
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Its: Treasurer
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RDO Construction Equipment Co.
By: /s/ Xxxxxx X. Xxxxx
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Its: Treasurer
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