THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Amendment, dated as of April 5, 1999, is made by and among
Xxxxxxxx, Inc., a Minnesota corporation (the "Borrower"), NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association ("Norwest";
in its separate capacity as administrative agent for the Lenders, the
"Agent"), and each of the financial institutions appearing on the signature
pages hereof.
Recitals
The Borrower, the Agent and the Lenders are parties to a Credit
and Security Agreement dated as of June 19, 1998, as amended by a First
Amendment to Credit and Security Agreement dated as of November 25, 1998 and
as amended by a Second Amendment to Credit and Security Agreement dated as of
March 4, 1999 (the "Credit Agreement"). Capitalized terms used in these
recitals and in the preamble have the meanings given to them in the Credit
Agreement unless otherwise specified.
The Borrower is presently in default of various financial
covenants and has requested that the Lenders waive such defaults and reset the
financial covenants in the Credit Agreement. The Agent is willing to grant the
Borrower's requests pursuant to the terms and conditions set forth herein.
Accordingly, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. Default Fee. Section 2.22 of the Credit Agreement is hereby
amended by adding the following new subsection (g):
"(g) Default Fee. If a default occurs under Section 6.18, 6,19,
6.20, 6.21 or 7.12 during the Borrower's fiscal year-ending on or about August
31, 1999, the Borrower shall pay one default fee of $50,000, due and payable
on the date that the Borrower's financial statement under Section 6.1(a) or
6.1(b), as applicable, is due. Such default fee will not cure such default or
affect the Lenders' ability to impose the Default Rate under Section
2.13(e)."
2. Financial Covenants. Sections 6.18 through 6.21 of the Credit
Agreement are amended to read as follows:
"Section 6.18 Minimum Cash Flow Available for Debt Service. The Borrower
will achieve Cash Flow Available for Debt Service, determined as at the end
of each fiscal quarter, at not less than the amount set forth opposite such
quarter:
Fiscal Quarter Ending on or about Minimum Cash Flow
Available for Debt
Service
5/28/99 $10,300,000
8/27/99 $15,000,000
"Section 6.19 Minimum Debt Service Coverage Ratio. The Borrower will
maintain its Debt Service Coverage Ratio, determined as at the end of each
quarter, at not less than the ratio set forth opposite such quarter:
Fiscal Quarter Ending on or about Minimum Debt Service
Coverage Ratio
8/27/99 0.90 to 1.00
"Section 6.20 Minimum Pre-tax Net Income. The Borrower will achieve Pre-tax
Net Income, determined as of the end of each fiscal quarter described
below, of not less than the amount set forth opposite such fiscal quarter:
Fiscal Quarter Ending on or about Minimum Pre-tax Net
Income
5/28/99 $(9,500,000)
8/27/99 $(9,400,000)
"Section 6.21 Minimum Net Worth. The Borrower will maintain its Net Worth,
determined as at the end of each fiscal quarter described below, of not
less than the amount set forth opposite such fiscal quarter:
Fiscal Quarter Ending on or about Minimum Net Worth
5/28/99 $75,500,000
8/27/99 $76,500,000
3. No Other Changes. Except as explicitly amended by this
Amendment, all of the terms and conditions of the Credit Agreement shall
remain in full force and effect and shall apply to any advance or letter of
credit thereunder.
4. Waiver of Defaults. For the Borrower's second fiscal quarter
ending on or about February 28, 1999, the Borrower is in default of the
following provisions of the Credit Agreement (collectively, the "Defaults"):
Covenant Required Actual
Section 6.18 Cash Flow Available Not less than $4,224,000
for Debt Service $5,500,000
Section 6.19 Minimum Debt Service Not less than 0.53 to 1.00
Coverage Ratio 0.70 to 1.00
Section 6.20 Minimum Pre-tax Net Not less than $(8,030,000)
Income $(5,050,000)
Section 6.21 Minimum Net Worth Not less than $74,962,000
$76,400,000
Upon the terms and subject to the conditions set forth in this Amendment, the
Agent hereby waives the Defaults.
In addition, Section 6.1(a) of the Credit Agreement requires the Borrower to
"within 90 days after the end of each fiscal year of the Borrower" deliver
its audited financial statements to each Lender. The Borrower is in default
of this Section as no audited financial statements have been delivered. So
long as the audited financial statements are delivered to each Lender on or
before April 30, 1999, the Agent waives this default.
These waivers shall be effective only in this specific instance and for the
specific purpose for which they are given, and these waivers shall not entitle
the Borrower to any other or further waiver in any similar or other
circumstances.
5. Amendment Fee. The Borrower shall pay the Lenders as of the
date hereof a fully earned, non-refundable fee in the amount of $20,000 in
consideration of the Lenders' execution of this Amendment.
6. Conditions Precedent. This Amendment, and the waiver set
forth in Paragraph 4 hereof, shall be effective when the Agent shall have
received an executed original hereof, together with each of the following,
each in substance and form acceptable to the Agent in its sole discretion:
(a) Payment of the fee described in Paragraph 5.
(b) Such other matters as the Lender may require.
7. Representations and Warranties. The Borrower hereby represents and
warrants to the Lenders as follows:
(a) The Borrower has all requisite power and authority to
execute this Amendment and to perform all of its obligations hereunder,
and this Amendment has been duly executed and delivered by the Borrower
and constitute the legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms.
(b) The execution, delivery and performance by the Borrower of
this Amendment have been duly authorized by all necessary corporate
action and do not (i) require any authorization, consent or approval by
any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) violate any provision of any
law, rule or regulation or of any order, writ, injunction or decree
presently in effect, having applicability to the Borrower, or the
articles of incorporation or by-laws of the Borrower, or (iii) result in
a breach of or constitute a default under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be bound or
affected.
(c) All of the representations and warranties contained in
Article V of the Credit Agreement are correct on and as of the date
hereof as though made on and as of such date, except to the extent that
such representations and warranties relate solely to an earlier date.
8. References. All references in the Credit Agreement to "this
Agreement" shall be deemed to refer to the Credit Agreement as amended
hereby; and any and all references in the Security Documents to the Credit
Agreement shall be deemed to refer to the Credit Agreement as amended hereby.
9. No Other Waiver. Except as set forth in Paragraph 4 above,
the execution of this Amendment and acceptance of any documents related hereto
shall not be deemed to be a waiver of any Default or Event of Default under
the Credit Agreement or breach, default or event of default under any Security
Document or other document held by the Lenders, whether or not known to the
Lenders and whether or not existing on the date of this Amendment.
10. Release. The Borrower hereby absolutely and unconditionally
releases and forever discharges the Lenders, and any and all participants,
parent corporations, subsidiary corporations, affiliated corporations,
insurers, indemnitors, successors and assigns thereof, together with all of
the present and former directors, officers, agents and employees of any of the
foregoing, 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 person for or by
reason of any act, omission, matter, cause or thing whatsoever arising from
the beginning of time to and including the date of this Amendment, whether
such claims, demands and causes of action are matured or unmatured or known or
unknown.
11. Costs and Expenses. The Borrower hereby reaffirms its
agreement under the Credit Agreement to pay or reimburse the Lenders on demand
for all costs and expenses incurred by the Lenders in connection with the
Credit Agreement, the Security Documents and all other documents contemplated
thereby, including without limitation all reasonable fees and disbursements of
legal counsel. Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the
Lenders for the services performed by such counsel in connection with the
preparation of this Amendment and the documents and instruments incidental
hereto. The Borrower hereby agrees that the Lenders may, at any time or from
time to time in its sole discretion and without further authorization by the
Borrower, make a loan to the Borrower under the Credit Agreement, or apply the
proceeds of any loan, for the purpose of paying any such fees, disbursements,
costs and expenses and the fee required under paragraph 5 hereof.
12. Miscellaneous. This Amendment may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed
an original and all of which counterparts, taken together, shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed as of the date first written above.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Agent
By /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Its Vice President
XXXXXXXX, INC.
By /s/ Xxxx X. XxXxxxx
Xxxx X. XxXxxxx
Its Vice President of Finance
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By /s/ Xxxxx X. Jackson____________
Xxxxx X. Xxxxxxx
Its Vice President
XXXXXX TRUST AND SAVINGS BANK
By /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
Its Vice President
NBD BANK
By /s/ Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
Its First Vice President
THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By /s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx
Its Assistant Vice President
