EXHIBIT 10.15
FIRST AMENDMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment"), made and entered into as of November 30, 2001, is by and
between MagStar Technologies Inc. f/k/a Xxxxxx Manufacturing, Inc., a Minnesota
corporation (the "Borrower"), and U.S. Bank National Association, a national
banking association (the "Lender").
RECITALS
1. The Lender and the Borrower entered into a Amended
and Restated Credit Agreement dated as of October l0, 2000 (the "Credit
Agreement"); and
2. The Borrower desires to amend certain provisions of
the Credit Agreement, and the Lender has agreed to make such amendments, subject
to the terms and conditions set forth in this Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
covenant and agree to be bound as follows:
SECTION 1. CAPITALIZED TERMS. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement, unless the context shall otherwise require.
SECTION 2. AMENDMENTS. The Credit Agreement is hereby amended
as follows:
2.1 DEFINITIONS. The definition of "Reference Rate"
contained in Section 1.1 of the Credit Agreement is amended to read in
its entirety as follows:
"REFERENCE RATE": The rate of interest from time to time
publicly announced by the Lender as its "prime rate." The Lender may
lend to its customers at rates that are at, above or below the Reference
Rate. For purposes of determining any interest rate hereunder or under
the Notes which is based on the Reference Rate, such interest rate shall
change as and when the Reference Rate changes.
Section 1.1 of the Credit Agreement is further amended by
adding the definitions of "Eligible Inventory" and "Inventory" thereto
in correct alphabetical order:
"ELIGIBLE INVENTORY": means Inventory of the Borrower which
meets the following requirements: (a) it is owned by the Borrower, is
subject to a first priority perfected security interest in favor of the
Lender, and is not subject to any assignment, claim or Lien other than
(i) a Lien in favor of the Lender and (ii) Liens consented to by the
Lender in writing; (b) the consists of raw materials or finished
produce (not including
work in process and supplies; (c) if held for sale or lease or
furnishing under contracts of service, it is (except as the Lender may
otherwise consent in writing) new and unused; (d) except as the Lender
may otherwise consent, it is not stored with a bailee, warehouseman or
similar party; if so stored with the Lender's consent, such bailee,
warehouseman or similar party has issued and delivered to the Lender,
in form and substance acceptable to the Lender, such documents and
agreements as the Lender may require, including, without limitation,
warehouse receipts therefor in the Lender's name; (e) the Lender has
determined, in its sole and absolute discretion, that it is not
unacceptable due to age, type, category, quality and/or quantity; (f)
it is not held by the Borrower on consignment and is not subject to any
other repurchase or return agreement; (g) it is not held by a customer
of the Borrower or any other Person on consignment; (h) it complies
with all standards imposed by any governmental agency having regulatory
authority over such goods and/or their use, manufacture or sale; and
(i) the warranties, representations and covenants contained in any
security agreement or other agreement of the Borrower with or given to
the Lender relating directly or indirectly to the Borrower's Inventory
are applicable to it without exception.
"INVENTORY" means any and all of the Borrower's goods,
including, without limitation, goods in transit, wherever located which
are or may at any time be leased by the Borrower to a lessee, held for
sale or lease, furnished under any contract of service or held as raw
materials, work in process, or supplies or materials used or consumed
in the Borrower's business, or which are held for use in connection
with the manufacture, packing, shipping, advertising, selling or
finishing of such goods, and all goods, the sale or other disposition
of which has given rise to account, which are returned to and/or
repossessed and/or stopped in transit by the Borrower or the Lender, or
at any time hereafter in the possession or under the control of the
Borrower or the Lender, or any agent or bailee of either thereof, and
all documents of title or other documents representing the same.
2.2 THE COMMITMENTS. Section 2.1(a) and (b) of the Credit
Agreement are amended to read in their entireties as follows:
Section 2.1 THE COMMITMENTS On the terms and subject to the
conditions hereof, the Lender agrees to make the following lending
facilities available to the Borrower:
2.1 (a) REVOLVING CREDIT. A revolving loan (the "Revolving
Loan") to the Borrower available as advances ("Advances") at any time
and from time to time from the Closing Date to October 1 ,2002 (the
"Revolving Maturity Date"), during which period the Borrower may
borrow, repay and reborrow in accordance with the provisions hereof,
PROVIDED, that the unpaid principal amount of revolving Advances shall
not at any time exceed $1,750,000 (the "Revolving Commitment Amount");
and PROVIDED, FURTHER, that no revolving Advance will be made if, after
giving effect thereto, the unpaid principal amount of the Advances
would exceed the Borrowing Base.
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2.1 (b) TERM LOAN. A term loan ("Term Loan A") from the
Lender to the Borrower in the amount of $2,847,217.68 (the "Term Loan A
Commitment Amount").
2.3 BORROWING BASE AND MANDATORY PAYMENT. Section 2.5 of
the Credit Agreement is amended to read in its entirety as follows:
Section 2.5 BORROWING BASE AND MANDATORY PREPAYMENT The
Borrowing Base shall be equal to the sum of (1) the lesser of(x) 40%
of the lower of cost or market value of raw material Eligible
Inventory plus 30% of the lower of cost (determined on a first in,
first out basis) or market value of finished good Eligible Inventory
or (y) $500,000, PLUS (2) 80% of the face value of Eligible Accounts.
The Borrower shall deliver borrowing base certificates in
substantially the form attached hereto (a "Borrowing Base
Certificate") to the Lender not less than weekly. Each such
certificate shall state the amount of Eligible Accounts and the
Borrowing Base as of the end of the previous month or the date of the
Lender's request, as appropriate. Any limitations on advances or
required prepayments relating to the Borrowing Base shall be based on
the latest borrowing base certificate the Borrower shall have
delivered to the Lender. If the principal balance of the Advances at
any time exceeds the Borrowing Base, the Borrower shall immediately
prepay the Advances by the amount of that excess.
2.4 USE OF PROCEEDS. Section 2.9 of the Credit Agreement
is amended to read in its entirety as follows
Section 2.9 USE OF PROCEEDS. The proceeds of the initial
Revolving Advance shall be used to satisfy obligations to the Lender
under the Existing Agreement. Any remaining balance of the initial
Revolving Advance and the proceeds of any subsequent Revolving Advance
shall be used for the Borrower's general business purposes in a manner
not in conflict with any of the Borrower's covenants in this Agreement.
The proceeds of the Term Loans shall be used to satisfy obligations to
the Lender under the Existing Agreement, PROVIDED, HOWEVER, that
$398,477.68 of the proceeds of Term Loan A shall be used to pay the
Borrower's real estate taxes due on the real property that is subject
to the Mortgage (the "Real Estate Taxes"). The Borrower acknowledges
that the Lender may directly pay the Real Estate Taxes to the taxing
authority or may issue a check made payable to the taxing authority and
deliver to such check to the Borrower. The Borrower acknowledges that
payment of the Real Estate Taxes is the sole obligation of the Borrower
and that the Borrower has requested the Lender advance funds for the
purpose of paying the Real Estate Taxes.
2.5 BORROWING BASE CERTIFICATE. The Borrowing Base
certificate attached to the Credit Agreement is hereby amended to read
as set forth on Exhibit C attached to this Amendment.
SECTION 3. EFFECTIVENESS OF AMENDMENTS. The amendments
contained in this Amendment shall become effective upon delivery by the Borrower
of, and compliance by the Borrower with, the following:
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3.1 This Amendment duly executed by the Borrower.
3.2 A copy of the resolutions of the Board of Directors
of the Borrower authorizing the execution, delivery and performance of
this Amendment and the Notes certified as true and accurate by its
Secretary or Assistant Secretary, along with a certification by such
Secretary or Assistant Secretary (i) certifying that there has been no
amendment to the Articles of Incorporation or Bylaws of the Borrower
since true and accurate copies of the same were delivered to the Lender
with a certificate of the Secretary of the Borrower dated October
10 ,2000, and (ii) identifying each officer of the Borrower authorized
to execute this Amendment and any other instrument or agreement
executed by the Borrower in connection with this Amendment
(collectively, the "Amendment Documents"), and certifying as to
specimens of such officer's signature and such officer's incumbency in
such offices as such officer holds.
3.3 Certified copies of all documents evidencing any
necessary corporate action, consent or governmental or regulatory
approval (if any) with respect to this Amendment.
3.4 A good standing certificate for the Borrower and from
the State of Minnesota issued not more than 30 days prior to the date
of this Amendment.
3.5 The Borrower shall have satisfied such other
conditions as specified by the Lender, including payment of all unpaid
legal fees and expenses incurred by the Lender through the date of this
Amendment in connection with the Credit Agreement and the Amendment
Documents.
SECTION 4. REPRESENTATIONS, WARRANTIES, AUTHORITY, NO ADVERSE
CLAIM.
4.1 REASSERTION OF REPRESENTATIONS AND WARRANTIES, NO
DEFAULT. THE Borrower hereby represents that on and as of the date
hereof and after giving effect to this Amendment (a) all of the
representations and warranties contained in the Credit Agreement are
true, correct and complete in all respects as of the date hereof as
though made on and as of such date, except for changes permitted by the
terms of the Credit Agreement, and (b) there will exist no Default or
Event of Default under the Credit Agreement as amended by this
Amendment on such date which has not been waived by the Lender.
4.2 AUTHORITY, NO CONFLICT, NO CONSENT REQUIRED. The
Borrower represents and warrants that the Borrower has the power and
legal right and authority to enter into the Amendment Documents and has
duly authorized as appropriate the execution and delivery of the
Amendment Documents and other agreements and documents executed and
delivered by the Borrower in connection herewith or therewith by proper
corporate action, and none of the Amendment Documents nor the
agreements contained herein or therein contravenes or constitutes a
default under any agreement, instrument or indenture to which the
Borrower is a party or a signatory or a provision of the Borrower's
Articles of Incorporation, Bylaws or any other agreement or requirement
of law, or result in the
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imposition of any Lien on any of its property under any agreement
binding on or applicable to the Borrower or any of its property
except, if any, in favor of the Lender. The Borrower represents and
warrants that no consent, approval or authorization of or registration
or declaration with any Person, including but not limited to any
governmental authority, is required in connection with the execution
and delivery by the Borrower of the Amendment Documents or other
agreements and documents executed and delivered by the Borrower in
connection therewith or the performance of obligations of the Borrower
therein described, except for those which the Borrower has obtained or
provided and as to which the Borrower has delivered certified copies
of documents evidencing each such action to the Lender.
4.3 NO ADVERSE CLAIM. The Borrower warrants, acknowledges
and agrees that no events have been taken place and no circumstances
exist at the date hereof which would give the Borrower a basis to
assert a defense, offset or counterclaim to any claim of the Lender
with respect to the Obligations.
SECTION 5. AFFIRMATION OF CREDIT AGREEMENT, FURTHER
REFERENCES, AFFIRMATION OF SECURITY INTEREST. The Lender 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 Lender that the Obligations are and continue to be secured by
the security interest granted by the Borrower in favor of the Lender under
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 under the Credit
Agreement are incorporated herein by reference and are hereby ratified and
affirmed in all respects by the Borrower.
SECTION 6. MERGER AND INTEGRATION, SUPERSEDING EFFECT. This
Amendment, from and after the date hereof, embodies the entire agreement and
understanding between the parties hereto and supersedes and has merged into this
Amendment all prior oral and written agreements on the same subjects by and
between the parties hereto with the effect that this Amendment, shall control
with respect to the specific subjects hereof and thereof.
SECTION 7. SEVERABILITY. Whenever possible, each provision of
this Amendment and the other Amendment Documents and any other statement,
instrument or transaction contemplated hereby or thereby or relating hereto or
thereto shall be interpreted in such manner as to be effective, valid and
enforceable under the applicable law of any jurisdiction, but, if any provision
of this Amendment, the other Amendment Documents or any other statement,
instrument or transaction contemplated hereby or thereby or relating hereto or
thereto shall be held to be prohibited, invalid or unenforceable under the
applicable law, such provision shall be ineffective in such jurisdiction only to
the extent of such prohibition, invalidity or unenforceability, without
invalidating or rendering unenforceable the remainder of such
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provision or the remaining provisions of this Amendment, the other Amendment
Documents or any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto in such jurisdiction, or affecting the
effectiveness, validity or enforceability of such provision in any other
jurisdiction.
SECTION 8. SUCCESSORS. The Amendment Documents shall be
binding upon the Borrower and the Lender and their respective successors and
assigns, and shall inure to the benefit of the Borrower and the Lender and the
successors and assigns of the Lender.
SECTION 9. LEGAL EXPENSES. As provided in Section 8.2 of the
Credit Agreement, the Borrower agrees to reimburse the Lender, upon execution of
this Amendment, for all reasonable out-of-pocket expenses (including attorney
fees and legal expenses of Xxxxxx & Whitney LLP, counsel for the Lender)
incurred in connection with the Credit Agreement, including in connection with
the negotiation, preparation and execution of the Amendment Documents and all
other documents negotiated, prepared and executed in connection with the
Amendment Documents, and in enforcing the obligations of the Borrower under the
Amendment Documents, and to pay and save the Lender harmless from all liability
for, any stamp or other taxes which may be payable with respect to the execution
or delivery of the Amendment Documents, which obligations of the Borrower shall
survive any termination of the Credit Agreement.
SECTION 10. HEADINGS. The headings of various sections of this
Amendment have been inserted for reference only and shall not be deemed to be a
part of this Amendment.
SECTION 11. COUNTERPARTS. The Amendment Documents may be
executed in several counterparts as deemed necessary or convenient, each of
which, when so executed, shall be deemed an original, provided that all such
counterparts shall be regarded as one and the same document, and either party
to the Amendment Documents may execute any such agreement by executing a
counterpart of such agreement.
SECTION 12. GOVERNING LAW. THE AMENDMENT DOCUMENTS SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAW PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS, THEIR HOLDING COMPANIES AND THEIR AFFILIATES.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the date and year first above written.
BORROWER:
MAGSTAR TECHNOLOGIES INC. F/K/A
XXXXXX MANUFACTURING, INC.
By: /s/ X. X. Xxxxxxxx
-------------------------------
Title: CEO
----------------------------
LENDER:
U.S. BANK NATIONAL ASSOCIATION
By: [ILLEGIBLE]
-------------------------------
Title: Vice President
----------------------------
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EXHIBIT C
BORROWING BASE CERTIFICATE
MAGSTAR TECHNOLOGIES INC.
Borrowing Base Certificate for the period ended ____________, 20____
This Borrowing Base Certificate is delivered in accordance with the
Credit Agreement dated as of October 10 ,200O between U.S. Bank National
Association (the "Lender") and Magstar Technologies Inc. ("the Borrower").
Capitalized terms used herein which are defined in the Credit Agreement shall
have the meanings set forth for such terms therein. All amounts are as of the
date shown above except as otherwise stated herein.
I certify that the following amounts were correctly determined
according to the Credit Agreement:
Total Receivables $_____________(A)
Receivables 90+ days $_____________
Other Ineligible $_____________
Total Ineligible $_____________(B)
Eligible Receivables (A) - (B) $_____________(C)
Eligible Receivables $_____________(D)
Borrowing Base (80% of(C))
Total Raw Material Inventory $_____________(E)
Ineligible Raw Material $_____________(F)
Inventory
Eligible Raw Material $_____________(G)
Inventory (E) - (F)
Raw Material Inventory $_____________(H)
Borrowing Base 40% of (G)
Total Finished Goods $_____________(I)
Inventory
Ineligible Finished Goods $_____________(J)
Inventory
Eligible Finished Goods $_____________(K)
Inventory (I) - (J)
Finished Goods Inventory $_____________(L)
Borrowing Base 30% of(K)
Total Borrowing Base (D) + $_____________(M)
(H) + (L)
Outstanding Advances $_____________(N)
Availability (M) - (N) $_____________(O)
I hereby certify that all payroll and unemployment taxes are current as
of this date.
For the purpose of inducing the Lender to extend credit to the Borrower
pursuant to the Credit Agreement, the Borrower hereby certifies that the
foregoing information is true and correct in all respects. The Borrower further
certifies that all amounts outstanding under the Note were properly authorized
for the benefit of the Borrower and constitute obligations of the Borrower in
accordance with the terms of the Credit Agreement. The Borrower further
certifies that no circumstances or conditions exist at the date of the Borrowing
Base Certificate which constitute an Event of Default.
MAGSTAR TECHNOLOGIES INC.
BY________________________
Title___________________
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