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EXHIBIT 10D(3)
THIRD AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT is dated
as of April 4, 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
(the "First Amendment") and as amended by a Second Amendment to Amended and
Restated Credit Agreement (the "Second Amendment") dated as of March 30, 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 April 4, 2001, (ii) it has violated certain financial covenants
contained in the Credit Agreement and (iii) it expects to be in violation of
certain financial covenants contained in the Credit Agreement for the month
ended March 31, 2001 and for future reporting periods.
C. The Borrower has requested that the Banks agree to extend the due
dates for the payments due under Term Loan A and Term Loan B under the Credit
Agreement on the terms set forth in this Agreement, to waive the Borrower's
events of default due to the Borrower's failure to meet its financial covenants
and to modify the Borrower's financial covenants on the terms set forth in this
Amendment.
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:
Section 1. 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.
Section 2. Amendments to Credit Agreement. Subject to Section 5 hereof,
the Credit Agreement is hereby amended as follows:
(a) Amended Definitions. 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 Term A Loan shall be payable as
follows (i) one installment of principal in the amount of
$500,000 shall be due and payable on April 16, 2001, (ii) two
installments of principal in the amount of $1,000,000 each
shall be due and payable on May 15, 2001 and
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June 15, 2001 and (iii) an installment equal to the unpaid
balance of Term Loan A, and all accrued and unpaid interest
thereon, shall be due and payable on June 29, 2001;
(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 June 29, 2001;
(b) Mandatory Prepayments. The second sentence of Section
2.6(c) of the Credit Agreement is deleted in its entirety and the
following is substituted in lieu thereof:
Any such prepayments shall be applied, in the following order
by the Agent to the Loans ratably to each Bank according to
its Revolving Commitment Percentage, Term A Loan Percentage,
Term B Loan Percentage or Term C Loan Percentage, as
applicable: (i) first, to unpaid principal balance of the Term
A Loan, in inverse order of the maturities of the installments
thereon (or, in the case of prepayments due to sale or
transfers of the type specified in clause (A) of the forgoing
sentence, in order of the maturities of the installments
thereon), (ii) second, to the unpaid principal balance of the
Term B Loan, (iii) third, to the unpaid principal balance of
the Term C Loan, (iv) fourth, to the unpaid principal balance
of the Revolving Loans (other than the reimbursement
obligations with respect to the Existing Letter of Credit) and
(v) fifth, to the Holding Account in the amount of the
aggregate face amount of the Existing Letter of Credit.
(c) Financial Reporting. Sections 5.1(c) and (d) of the Credit
Agreement are each amended by deleting the clause "45 days" as it
appears in each such Section and substituting in lieu thereof the
clause "30 days". Section 5.1(d) of the Credit Agreement is amended by
deleting the clause "Sections 6.8, 6.16, 6.18 and 6.19" as it appears
therein and substituting in lieu thereof the clause "Sections 6.8, 6.16
and 6.18".
(d) Ericsson Intercreditor Agreements. The following new
Section 5.17 is added immediately following Section 5.16 of the Credit
Agreement:
Section 5.17 ERICSSON INTERCREDITOR AGREEMENTS. By
April 19, 2001, the Borrower shall furnish to the Agent the
Intercreditor Agreements substantially in the form of those
attached as Exhibits C and D to the First Amendment hereto,
duly executed by the NCI, Ericsson, Inc. or Ericsson Webcom,
Inc., as applicable.
(e) Amendments to Financial Covenants. Sections 6.15, 6.16,
6.17, 6.18 and 6.19 of the Credit Agreement are deleted in their
respective entireties and the following is substituted in lieu thereof:
Section 6.15 [RESERVED].
Section 6.16 MINIMUM EBITDA. The Borrower will not
permit EBITDA, as of the last day of the Borrower's fiscal
months ended on or about the
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following dates for such fiscal month, to be less than the
following indicated amounts:
Fiscal Month Ended On or About Minimum EBITDA
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March 31, 2001 ($900,000)
April 30, 2001 $1,400,000
May 31, 2001 $900,000
June 30, 2001 $1,300,000
Section 6.17 [RESERVED].
Section 6.18 ADJUSTED LEVERAGE RATIO. The Borrower
will not permit the Adjusted Leverage Ratio, as of the last
day of the Borrower's fiscal months ended on or about the
following dates for such fiscal month, to be greater than the
following indicated amounts:
Fiscal Month Ended On or About Maximum Adjusted Leverage Ratio
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March 31, 2001 24.0 to 1.0
April 30, 2001 22.0 to 1.0
May 31, 2001 24.9 to 1.0
June 30, 2001 25.0 to 1.0
Section 6.19 [RESERVED].
(f) Schedule to Borrower's Pledge Agreement. The Borrower's
Pledge Agreement is amended by deleting the text following the
subheading "Part II, Foreign Shares" as it appears therein and
substituting in lieu thereof the clause "None".
(g) Amendment to First Amendment. The First Amendment is
amended by deleting the text of Sections 5(c) and (d) and substituting
in lieu of such text the clause "[Reserved]".
(h) Amendment of Second Amendment. Section 3(a) of the Second
Amendment is amended by deleting the clause "($2,179,000), which amount
is" as it appearing therein. Section 3(b) of the Second Amendment is
amended by deleting the clause "16.9 to 1.0, which amount is" as it
appears therein. Section 3(c) of the Second Amendment is amended by
deleting the clause "(3.2) to 1.0, which amount is" as it appears
therein.
Section 3. Waiver 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 (as it existed prior to the
effectiveness of this Amendment) for the period ended February 28,
2001, in that its actual EBITDA for the fiscal month ended on
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that date was 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 (as it existed prior to the
effectiveness of this Amendment) for the fiscal month ended February
28, 2001, in that the Adjusted Leverage Ratio as of that date was
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 (as it existed prior to the
effectiveness of this Amendment) for the fiscal month ended February
28, 2001, in that the Interest Coverage Ratio as of that date was 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 4 below, each Bank waives
the Existing Defaults. The Banks' agreement to waive the Existing Defaults is
limited to the express terms thereof, and nothing herein shall be deemed a
waiver by the Banks of any other term, condition, representation or covenant
applicable to the Borrower under the Loan Documents (including but not limited
to any future occurrence similar to the Existing Defaults). The waiver by the
Banks set forth herein shall not constitute a waiver by the Banks 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.
Section 4. 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:
(a) 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;
(b) 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;
(c) the execution, delivery and performance by the Borrower of
the Amendment (i) have been duly authorized by all requisite corporate
action and, if
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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);
(d) as of the date hereof, no Default or Event of Default has
occurred which either (a) is continuing or (b) has not been waived by
the Agent and the Banks as set forth in Section 3 of this Amendment;
and
(e) 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.
Section 5. 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:
(a) The Agent shall have received executed counterparts of
this Amendment, duly executed by the Borrower and each of the Banks.
(b) 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.
(c) The Agent shall have received a Pledge Agreement executed
by Norstan International, Inc. covering 65% of its capital stock in
Norstan UK, Ltd., together with financing statements and stock powers
in the form prescribed by the Agent, each duly executed by Norstan
International, Inc.
(d) The Agent shall have received such other documents or
instruments reasonably deemed necessary by the Agent.
Section 6. 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
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documents and agreements entered into with respect to the Obligations are
incorporated herein by reference and are hereby ratified and affirmed in all
respects by the Borrower.
Section 7. General Release. The Borrower hereby releases and discharges
the Agent and each Bank, and each of their officers, directors, employees,
agents and attorneys, from any and all claims, actions and liabilities of any
kind or nature that it or any one claiming through or under the Borrower ever
had or may now have, whether now known or hereafter discovered, arising out of
or in any way relating to: (i) any lending relationship or loan commitment
between the Agent, the Banks and the Borrower prior to the date of this
Amendment; (ii) the Loan Documents; or (iii) the negotiations preceding the
execution and delivery of this Agreement.
Section 8. General.
(a) 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.
(b) 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.
(c) 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.
(d) 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.
(e) 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/ Xxxxxxxx Xxxxxx
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Its VP
M&I XXXXXXXX & XXXXXX BANK
By /s/ Xxxxxx X. Xxxxxxx
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Its VP
By /s/ Xxxx X. Xxxxx
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Its SVP
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ Xxxxxxx X. Xxxxxxx
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Its VP
[Signature Page to Third Amendment to Amended and Restated Credit Agreement]
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