EXHIBIT 10
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION FIRST AMENDMENT
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This First Amendment to Credit Agreement ("First Amendment") dated as of May 13,
1998 is between Norwest Bank Minnesota, National Association ("Bank") and
Research, Incorporated ("Borrower").
RECITALS
The Borrower and the Bank entered into a Credit Agreement dated October 13, 1997
("Agreement"), pursuant to which the Bank extended to the Borrower a
$5,000,000.00 revolving line of credit ("Line"). Borrowings under the Line are
evidenced by a promissory note dated October 13, 1997 ("Revolving Note"). The
principal balance outstanding on April 27, 1998 under the 1997 Revolving Note is
$4,365,998; accrued and unpaid interest to that date amounts to $27,597.
The Borrower acknowledges that it is in violation of the financial covenants set
forth in Sections 7.2(a) and 7.2(b) of the Agreement with respect to the second
quarter ending March 31, 1998. The Bank agreed to waive on a one-time only basis
the Borrower's defaults under Sections 7.2(a) and 7.2(b), conditioned upon the
Borrower granting to the Bank a security interest in all assets of the Borrower
(excluding real estate). The Borrower acknowledges that, notwithstanding the
fact that the Bank has waived said default by the Borrower, the Bank shall be
under no obligation to grant a waiver of any covenant in the future.
The Bank and the Borrower have agreed to memorialize their understanding by
means of this First Amendment. Capitalized terms not otherwise defined in this
First Amendment shall have the meaning given them in the Agreement.
AGREEMENT
In consideration of the premises, the Bank and the Borrower agree that the
Agreement is hereby amended as of the date of this First Amendment as follows:
1. ACKNOWLEDGMENT. The Borrower acknowledges and agrees that the Recitals
herein are true and correct and that the indebtedness evidenced by the
Revolving Note is due and owing to the Bank without offset, defense or
counterclaims.
2. AMENDMENTS TO AGREEMENT.
2.1. Section 2 of the Agreement is hereby amended in its entirely
to read as follows:
2. FEES AND EXPENSES. The Borrower agrees, within 10
days of invoice, to pay all expenses, including the
reasonable fees and expenses of legal counsel for
the Bank, incurred in connection with the
preparation, administration, amendment, modification
or enforcement of this Agreement and the collateral
documents and the collection or attempted collection
of the Indebtedness. Despite such reimbursement the
Borrower acknowledges that the Bank's counsel is
engaged solely to represent the Bank and does not
represent the Borrower.
2.2. Section 7.1(b) is hereby amended in its entirety to read as
follows:
7.1(b)Interim Financial Statements and Borrowing Base
Certificate. Provide the Bank within 20 days of each
month end the Borrower's interim financial
statements for the interim period then ending. The
statements must be current through the end of that
period and must be certified as correct by an
officer of the Borrower in a form acceptable to the
Bank.
2.3. A new Section 7.3(n) is hereby added to the Agreement as
follows:
7.3(n) Dividends. Refrain from declaring or paying any
dividends on any shares of stock of the Borrower,
now or hereafter outstanding if: (1) a default has
occurred under any of the Documents that the Bank
has not waived in writing; or (2) payment of the
dividends would result in the occurrence of a
default under any of the Documents.
2.4. A new Section 7.3(o) is hereby added to the Agreement as
follows:
7.3(o) Insurance. Cause its properties to be adequately
insured by a reputable insurance company against
loss or damage and to carry such other insurance
(including business interruption, floor, or
environmental risk insurance) as is required of or
usually carried by persons engaged in the same or
similar business. Such insurance must, with respect
to the Bank's collateral security, include a
lender's loss payable endorsement in favor of the
Bank in a form acceptable to the Bank.
3. GRANT OF SECURITY INTEREST. In consideration of the Bank's waiver of the
defaults described in the Recitals, the Borrower has executed and
delivered to the Bank a security agreement, granting the Bank a first
lien security interest in the Borrower's accounts, inventory, equipment
and general intangibles described in the security agreement, together
with one or more UCC-1 Financing Statements sufficient to perfect the
security interest granted to the Bank under applicable law.
4. WARRANTIES AND REPRESENTATIONS. The Borrower hereby represents and
warrants to the Bank as follows:
4.1 The Agreement as amended by this First Amendment remains in
full force and effect and the Borrower reaffirms each and every
representation and warranty set forth on Exhibit B to the
Agreement as true and correct as of the effective date of this
First Amendment except for the Financial Reports section which is
hereby amended to read in its entirety as follows: "The Borrower
has provided the Bank with the Borrower's annual audited financial
statement dated September 30, 1997 and its interim financial
statement dated March 31, 1998, and these statements fairly
represent the financial condition of the Borrower as of their
respective dates and were prepared in accordance with generally
accepted accounting principals consistently applied."
4.2 The Borrower has no knowledge of any default under the terms
of the Agreement (with the exception of Sections 7.2(a) and 7.2(b)
as disclosed above) or the Revolving Note or of any event that
with notice or the lapse of time or both would constitute a
default under the Agreement or such note.
4.3 The execution, delivery and performance of this First
Amendment is within its corporate powers, have been duly
authorized and are not in contravention of law or the terms of the
Borrower's articles of incorporation or by-laws, or of any
undertaking to which the Borrower is a party or by which it is
bound.
4.4 The resolutions set forth in the Corporate Certificate of
Authority dated March 24, 1997 and delivered by the Borrower to
the Bank have not been amended or rescinded, and remain in full
force and effect.
5. CONDITIONS PRECEDENT. This Amendment shall be of no force or effect until
the Bank has received the following, in form and substance satisfactory
to the Bank and its counsel:
5.1 This First Amendment fully executed by the Borrower; and
5.2 Evidence that the Borrower has obtained all insurance coverage
required by the Agreement, as amended hereby, including a lender's
loss payable endorsement in favor of the Bank in a form acceptable
to the Bank; and
5.3 Reimbursement to the Bank for its expenses, including the
reasonable fees and expenses of legal counsel, incurred in
connection with the preparation, of this Amendment and the
collateral documents.
6. RELEASE. In consideration of the accommodations by the Bank hereunder,
Borrower does hereby, on behalf of itself, its agents, insurers, heirs,
successors and assigns, release, acquit and forever discharge the Bank
and Norwest Corporation, (and any and all of their parent corporations,
subsidiary corporations, affiliated corporations, insurers, indemnitors,
successors and assigns, together with all of their present and former
directors, officers, agents and employees) from any and all claims,
demands or causes of action of any kind, nature or description whether
arising in law or equity or upon contract or tort or under any state or
federal law or otherwise, which the Borrower has had, now has or has made
claim to have against any such party for or by reason of any act,
omission, matter, cause or thing whatsoever from the beginning of time to
and including the date of this First Amendment, whether such claims,
demands and causes of action are matured or unmatured or known or
unknown.
7. MISCELLANEOUS.
7.1 Except as revised or amended or modified herein, all other terms and
conditions of the Agreement, Revolving Note and all other loan documents
attached thereto or incorporated therein remain fully enforceable and in effect
and are incorporated herein and shall remain fully enforceable and in effect and
survive any default herein by the Borrower.
7.2 Except as otherwise specifically provided in this Amendment, the execution
of this First Amendment shall not be deemed to be a waiver of any default or
Event of Default, whether or not existing on the date of this First Amendment,
and the Bank expressly denies any intention to waive any such default or events
of default.
7.3 The Agreement, as amended hereby, shall inure to the benefit of, and shall
be binding upon, the respective successors and permitted assigns of the parties
hereto. The Borrower has no right to assign any of their rights or obligations
hereunder without the prior written consent of the Bank. The Agreement, as
amended hereby, and the documents referred to herein or executed and delivered
pursuant hereto, constitute the entire agreement between the parties, and may be
amended only by a writing signed on behalf of each party. There are no promises,
inducements or terms and conditions other than as specifically set forth herein.
7.4 If any provision contained in this First Amendment or the Agreement is
inconsistent with any of the documents described herein or any other document in
favor of the Bank, the provision contained in this First Amendment or the
Agreement shall supersede such inconsistent provision in the documents described
herein or in any document in favor of the Bank.
8. ADVICE OF COUNSEL. The Borrower acknowledges that it has reviewed this
Amendment in its entirety, having consulted such legal, tax or other
advisors as it deems appropriate and understands and agrees to each of
the provisions of this First Amendment and further acknowledge that it
has entered into this First Amendment voluntarily.
IN WITNESS WHEREOF, the Bank and Borrower have executed this First Amendment as
of the date and year first above written.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION RESEARCH, INCORPORATED
By: /s/ Xxxx Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
Its: Portfolio Manager Its: Treasurer
By: /s/ Xxxxxx X. Xxxxxxx
Its: President and CEO
