EXHIBIT 10.14[4]
Execution Copy
FOURTH AMENDMENT TO CREDIT AGREEMENT AND LIMITED WAIVER OF
DEFAULT
This FOURTH AMENDMENT TO CREDIT AGREEMENT AND LIMITED WAIVER OF DEFAULT
(this "Amendment"), made and entered into as of March 22, 2002, is by and
between RTW, Inc., a Minnesota corporation (the "Borrower"), and U.S. Bank
National Association, a national banking association (the "Bank").
RECITALS
1. The Bank and the Borrower entered into a Credit Agreement dated as
of March 31, 2000 as amended by a First Amendment dated as of May 4, 2000, a
Second Amendment dated as of March 28, 2001 and Third Amendment dated as of
September 29, 2001 (as amended, the "Credit Agreement"); and
2. The Borrower desires to amend certain provisions of the Credit
Agreement, and the Bank 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.
(a) The definition of "Applicable Margin" contained in Section
1.1 of the Credit Agreement is hereby amended in its entirety to read
as follows:
"Applicable Margin": The Applicable Margin for Prime Rate
Advances in effect at all times shall be twenty-five
hundredths of one percent (0.25%). On or before March 31,
2002, the Applicable Margin for Eurodollar Rate Advances in
effect at all times shall be two and seventy-five hundredths
percent (2.75%). From and after April 1, 2002, the Applicable
Margin for Eurodollar Rate Advances in effect at all times
shall be three percent (3.00%).
(b) Section 1.1 of the Credit Agreement is hereby amended by
adding the definitions of "Administrative Service Revenues" and "EBIT"
in the correct alphabetical order to read as follows:
"Administrative Service Revenues": For any period of
determination, gross revenues derived by the Borrower from providing
administrative or other revenue-generating services to non-related
third party customers.
"EBIT": For any period of determination, the net income of the
Borrower before deductions for income taxes and Interest Expense, in
each case determined for said period in accordance with GAAP.
2.2 Cash Flow Sweep. Section 2.7 of the Credit Agreement is amended to
add a new Section 2.7(c) to read as follows:
2.7(c) Administrative Service Revenue Sweep. The Borrower
shall pay to the Bank, within thirty (30) days after the end of each
fiscal quarter, an amount equal to ten percent (10%) of Administrative
Service Revenues for such fiscal quarter. Any prepayment under this
Section 2.7(c) shall be applied against the next principal payment
required under the terms of the Term Note.
2.3 Consolidated Net Worth. Section 6.15 of the Credit Agreement is
amended in its entirety to read as follows:
Section 6.15 Consolidated Net Worth. The Borrower will not
permit its Consolidated Net Worth at any time to be less than the sum
of $14,500,000 plus 25% of its cumulative positive Consolidated Net
Income arising after March 31, 2002.
2.4 Statutory Surplus of ACIC. Section 6.16 of the Credit Agreement is
amended in its entirety to read as follows:
Section 6.16 Statutory Surplus of ACIC. The Borrower shall not
permit ACIC's Capital and Surplus at any time to be less than the sum
of $18,000,000 plus 25% of ACIC's cumulative positive Statutory Net
Income arising after March 31, 2002.
2.5 Minimum Earnings. Section 6.17 of the Credit Agreement is amended
in its entirety to read as follows:
Section 6.17 Minimum EBIT. The Borrower will not permit its
EBIT to be less than $4,000,000 as of the last day of any fiscal
quarter calculated as follows:
(a) on each March 31, the product of (i) EBIT for the period
from and after January 1 to and including March 31 times (ii)
four (4);
(b) on each June 30, the product of (i) EBIT for the period
from and after January 1 to and including June 30 times (ii)
two (2);
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(c) on each September 30, the product of (i) EBIT for
the period from and after January 1 to and including
September 30 times (ii) four-thirds (4/3); and
(d) on each December 31, EBIT for the four previous
fiscal quarters ending on such date.
2.6 Risk-Based Capital Ratio of ACIC. Section 6.18 of the
Credit Agreement is amended in its entirety to read as follows:
Section 6.18 Risk-Based Capital Ratio of ACIC. The
Borrower will not permit the ratio (expressed as a percentage)
of the Adjusted Capital to the Risk-Based Capital of ACIC at
any time to be less than 235%.
2.7 A.M. Best Rating of ACIC. Section 6.19 of the Credit
Agreement is amended in its entirety to read as follows:
Section 6.19 A.M. Best Rating of ACIC. On or after
January 1, 2003, the Borrower will not permit the rating of
ACIC by A.M. Best & Company at any time to be less than B+.
2.8 Compliance Certificate. Exhibit 5.1(b) to the Credit
Agreement is hereby amended in its entirety to read as set forth in
Exhibit B to this Amendment, which is made a part of the Credit
Agreement as Exhibit 5.1(b) thereto.
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:
3.1 This Amendment and the Third Amended and Restated Term
Note in the form of Exhibit A hereto (the "Note"), each 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 Note 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 Bank with a
certificate of the Secretary of the Borrower dated March 31, 2000, and
(ii) identifying each officer of the Borrower authorized to execute
this Amendment, the Note 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 The Borrower shall have paid an amendment fee of $3,000 to
the Bank.
3.4 The Borrower shall have satisfied such other conditions as
specified by the Bank, including payment of all unpaid legal fees and
expenses incurred by the Bank
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through the date of this Amendment in connection with the Credit
Agreement and the Amendment Documents.
Section 4. Defaults and Waivers.
4.1 Events of Default and Unmatured Events of Default.
(a) Consolidated Net Worth. Under Section 6.15 of the Credit
Agreement, the Borrower agreed not to permit its Consolidated Net Worth
at any time to be less than the sum of $35,000,000 plus 25% of its
cumulative positive Consolidated Net Income arising after September 30,
2001. As of December 31, 2001, the Borrower's Consolidated Net Worth
was less than the sum of $35,000,000 plus 25% of its cumulative
positive Consolidated Net Income arising after September 30, 2001. As a
result, an Event of Default has occurred under Section 7.1(c) of the
Credit Agreement.
(b) Statutory Surplus of ACIC. Under Section 6.16 of the Credit
Agreement, the Borrower agreed not to permit ACIC's Capital and Surplus
at any time to be less than the sum of $25,000,000 plus 25% of ACIC's
cumulative positive Statutory Net Income arising after September 30,
2001. As of December 31, 2001, ACIC's Capital and Surplus was less than
the sum of $25,000,000 plus 25% of ACIC's cumulative positive Statutory
Net Income arising after September 30, 2001. As a result, an Event of
Default has occurred under Section 7.1(c) of the Credit Agreement.
(c) Consolidated Net Income. Under Section 6.17 of the Credit
Agreement, the Borrower agreed not to permit its Consolidated Net
Income for any period of four consecutive fiscal quarters to be less
than $3,000,000. For the four fiscal quarters ending December 31, 2001,
the Borrower's Consolidated Net Income was less than $3,000,000. As a
result, an Event of Default has occurred under Section 7.1(c) of the
Credit Agreement.
(d) Risk-Based Capital Ratio of ACIC. Under Section 6.18 of the
Credit Agreement, the Borrower agreed not to permit the ratio
(expressed as a percentage) of the Adjusted Capital to the Risk-Based
Capital of ACIC at any time to be less than 400%. As of December 31,
2001, the ratio (expressed as a percentage) of the Adjusted Capital to
the Risk-Based Capital of ACIC was less than 400%. As a result, an
Event of Default has occurred under Section 7.1(c) of the Credit
Agreement.
4.2 Waiver. Upon the date on which this Amendment becomes
effective, the Bank hereby waives the Borrower's Defaults and Events of
Default described in the preceding Sections 4.1(a) through 4.1(d) (the
"Existing Defaults"). The waiver of the Existing Defaults set forth
above is limited to the express terms thereof, and nothing herein shall
be deemed a waiver by the Bank of any other term, condition,
representation or covenant applicable to the Borrower under the Credit
Agreement (including but not limited to any future occurrence similar
to the Existing Defaults) or any of the other agreements, documents or
instruments executed and delivered in connection therewith, or of the
covenants described therein. The waivers set forth herein shall not
constitute a waiver by the Bank of any other Default or Event of
Default, if any, under the Credit
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Agreement, 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.
Section 5. Representations, Warranties, Authority, No Adverse Claim.
5.1 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 Bank.
5.2 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 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 Bank. 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 Bank.
5.3 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 Bank with respect
to the Obligations.
Section 6. Affirmation of Credit Agreement, Further References,
Affirmation of Security Interest. The 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 Bank that the
Obligations are and continue
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to be secured by the security interest granted by the Borrower in favor of the
Bank under the Security Documents, 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 7. 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 8. 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 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 9. Successors. The Amendment Documents shall be binding upon
the Borrower and the Bank and their respective successors and assigns, and shall
inure to the benefit of the Borrower and the Bank and the successors and assigns
of the Bank.
Section 10. Legal Expenses. As provided in Section 8.2 of the Credit
Agreement, the Borrower agrees to reimburse the Bank, upon execution of this
Amendment, for all reasonable out-of-pocket expenses (including attorney' fees
and legal expenses of Xxxxxx & Xxxxxxx LLP, counsel for the Bank) 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 Bank 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 11. 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 12. Counterparts. The Amendment Documents may be executed in
several counterparts as deemed necessary or convenient, each of which, when so
executed, shall be
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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 13. 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.
[The remainder of this page is intentionally left blank.]
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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: RTW, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Title: Chief Financial Officer
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BANK: U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxxxx
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Title: Corporate Banking Officer
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[Signature Page to Fourth Amendment to Credit Agreement]
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