Exhibit 10.7
SIXTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
This Sixth Amendment, dated as of September 11, 1996, is made by and between
DAKOTAH, INCORPORATED, a South Dakota corporation (the "Borrower"), and NORWEST
BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender").
Recitals
The Borrower and the Lender have entered into an Amended and Restated Credit and
Security Agreement dated as of August 17, 1995, as amended by a First Amendment
to Amended and Restated Credit and Security Agreement dated as of October 5,
1995, a Second Amendment to Amended and Restated Credit and Security Agreement
dated as of November 15, 1995, a Third Amendment to Amended and Restated Credit
and Security Agreement dated as of March 15, 1996, a Fourth Amendment to Amended
and Restated Credit and Security Agreement dated as of June 14, 1996 and a Fifth
Amendment to Amended and Restated Credit and Security Agreement dated as of July
11, 1996 (as so amended, the "Credit Agreement"). Capitalized terms used in
these recitals have the meanings given to them in the Credit Agreement unless
otherwise specified.
The loan advances under the Credit Agreement are evidenced by
the Borrower's Second Replacement Revolving Note dated as of July 11, 1996, in
the maximum principal amount of $9,000,000 and payable to the order of the
Lender, and the Borrower's demand promissory note dated as of October 5, 1995,
in the maximum principal amount of $1,000,000 and payable to the order of the
Lender.
The Borrower has requested that the Lender, in its sole discretion, cause
letters of credit to be issued for the Borrower's account from time to time in
an amount not to exceed $200,000 at any one time outstanding. The Lender is
willing to grant the Borrower's request subject to the terms of this Sixth
Amendment.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, it is agreed as follows:
1. Defined Terms. Capitalized terms used in this Sixth Amendment which are
defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein. In addition, Section 1.1 of the Credit
Agreement is amended by adding or amending, as the case may be, the following
definitions:
" 'Issuer' means the issuer of any Letter of Credit."
" 'L/C Amount' means the sum of (i) the aggregate face amount of any issued and
outstanding Letters of Credit and (ii) the unpaid amount of the Obligation of
Reimbursement."
" 'L/C Application' means an application and agreement for Letters of Credit in
a form acceptable to the Issuer and the Lender."
" 'Letter of Credit' has the meaning given in Section 2.13."
" 'Obligation of Reimbursement' has the meaning given in Section 2.14(a)."
" 'Obligations' means each and every debt, liability and obligation of every
type and description which the Borrower may now or at any time hereafter owe to
the Lender, whether such debt, liability or obligation now exists or is
hereafter created or incurred, whether it arises in a transaction involving the
Lender alone or in a transaction involving other creditors of the Borrower, and
whether it is direct or indirect, due or to become due, absolute or contingent,
primary or secondary, liquidated or unliquidated, or sole, joint, several or
joint and several, and including specifically, but not limited to, all
indebtedness of the Borrower arising under this Agreement (including but not
limited to the Notes and the Obligation of Reimbursement) or any other loan or
credit agreement or guaranty between the Borrower and the Lender, whether now in
effect or hereafter entered into."
" 'Sixth Amendment' means that certain Sixth Amendment to Amended and Restated
Credit and Security Agreement dated as of September __, 1996."
" 'Special Account' means a specified cash collateral account maintained by a
financial institution acceptable to the Lender in connection with Letters of
Credit, as contemplated by Sections 2.15 and 3.8."
2. Advances. The first paragraph of Section 2.2 of the Credit Agreement is
amended to read as follows:
"Section 2.2 Revolving Advances. The Lender may, in its sole
discretion, make Advances to the Borrower from time to time during the
period from the date all of the conditions set forth in Section 4.1 are
satisfied (the "Funding Date") to the Termination Date, on the terms
and subject to the conditions herein set forth (the "Revolving
Advances"). The Lender shall not consider any request for a Revolving
Advance if, after giving effect to such requested Revolving Advance,
the sum of the outstanding and unpaid Revolving Advances would exceed
the Borrowing Base less the L/C Amount. The Borrower's obligation to
pay the Revolving Advances shall be evidenced by the Revolving Note and
shall be secured by the Collateral as provided in Article III. Within
the limits set forth in this Section 2.2, the Borrower may request
Revolving Advances, prepay pursuant to Section 2.7 and request
additional Revolving Advances. The Borrower agrees to comply with the
following procedures in requesting Revolving Advances under this
Section 2.2."
3. Fees. The following new Sections 2.4(c) and 2.4(d) are added to the Credit
Agreement immediately after Section 2.4(b):
"(c) Letter of Credit Fees. The Borrower agrees to pay the Lender a fee with
respect to each Letter of Credit, if any, accruing on a daily basis and,
effective as of June 1, 1996, computed at the annual rate of two percent (2.0%)
of the aggregate amount (the "L/C Exposure") that may then be drawn on all
issued and outstanding Letters of Credit, assuming compliance with all
conditions for drawing thereunder from and including the date of issuance of
such Letter of Credit until such date as such Letter of Credit shall terminate
by its terms or be returned to the Lender, due and payable monthly in arrears on
the first day of each month and on the Termination Date; provided, however, that
from the first day of any month during which any Default or Event of Default
occurs or exists at any time, in the Lender's discretion and without waiving any
of its other rights and remedies, the Lender may increase the above-described
fee to an amount not to exceed an annual rate of three percent (3.0%) of the L/C
Exposure. The foregoing fee shall be in addition to any and all fees,
commissions and charges of any Issuer of a Letter of Credit with respect to or
in connection with such Letter of Credit.
(d) Letter of Credit Administrative Fees. The Borrower agrees to pay the Lender,
on demand, the administrative fees charged by the Issuer in connection with the
honoring of drafts under any Letter of Credit, amendments thereto, transfers
thereof and all other activity with respect to the Letters of Credit at the
then-current rates published by the Issuer for such services rendered on behalf
of customers of the Issuer generally."
4. Mandatory Prepayment. Section 2.8 of the Credit Agreement is amended to read
as follows:
"Section 2.8 Mandatory Prepayment. The Borrower shall repay the Revolving
Advances immediately upon demand of the Lender. Without notice or demand, if the
sum of the outstanding principal balance of the Revolving Advances plus the L/C
Amount shall at any time exceed the Borrowing Base, the Borrower shall (i)
first, immediately prepay the Revolving Advances to the extent necessary to
eliminate such excess; and (ii) if prepayment in full of the Revolving Advances
is insufficient to eliminate such excess, pay to the Lender in immediately
available funds for deposit in the Special Account an amount equal to the
remaining excess. Any payment received by the Lender under this Section 2.8 or
under Section 2.7 may be applied to the Obligations, in such order and in such
amounts as the Lender, in its discretion, may from time to time determine."
5. Letter of Credit Provisions. The following new Sections are added to the
Credit Agreement at the end of Article II:
"Section 2.13 Issuance of Letters of Credit.
(a) The Lender may, in its sole discretion, cause to be issued by an Issuer one
or more letters of credit for the account of the Borrower (each a "Letter of
Credit") from time to time during the period from the date of the Sixth
Amendment until the earlier of the date the Lender demands payment of the
Revolving Advances or the Termination Date, in an aggregate amount at any time
outstanding not to exceed the lesser of:
(i) $200,000 less the L/C Amount, or
(i) the Borrowing Base less the sum of
(A) all outstanding and unpaid Advances hereunder
and (B) the L/C Amount.
Each Letter of Credit, if any, shall be issued
pursuant to a separate L/C Application entered
into by the Borrower and the Lender as
co-applicants for the benefit of the Issuer,
completed in a manner satisfactory to the Lender
and the Issuer. The terms and conditions set forth
in each such L/C Application shall supplement the
terms and conditions hereof, but in the event of
inconsistency between the terms of any such L/C
Application and the terms hereof, the terms hereof
shall control.
(b) No Letter of Credit shall be issued with an expire date later than the
Maturity Date.
(c) Any request for the issuance of a Letter of Credit under this Section 2.13
shall be deemed to be a representation by the Borrower that the statements set
forth in Section 4.2 hereof are correct as of the time of the request.
Section 2.14 Payment of Amounts Drawn Under Letters of Credit. The Borrower
acknowledges that the Lender, as co-applicant, will be liable to the Issuer of
any Letter of Credit for reimbursement of any and all draws thereunder and all
other amounts required to be paid under the applicable L/C Application.
Accordingly, the Borrower agrees to pay to the Lender any and all amounts
required to be paid under the applicable L/C Application, when and as required
to be paid thereby, and the amounts designated below, when and as designated:
(a) The Borrower hereby agrees to pay the Lender on the day a draft is honored
under any Letter of Credit a sum equal to all amounts drawn under such Letter of
Credit plus any and all reasonable charges and expenses that the Issuer or the
Lender may pay or incur relative to such draw, plus interest on all such
amounts, charges and expenses as set forth below (all such amounts are
hereinafter referred to, collectively, as the "Obligation of Reimbursement").
(b) The Borrower hereby agrees to pay the Lender on demand interest on all
amounts, charges and expenses payable by the Borrower to the Lender under this
Section 2.14, accrued from the date any such draft, charge or expense is paid by
the Issuer until payment in full by the Borrower at the Floating Rate.
If the Borrower fails to pay to the Lender promptly the amount
of its Obligation of Reimbursement in accordance with the
terms hereof and the L/C Application pursuant to which such
Letter of Credit was issued, the Lender is hereby irrevocably
authorized and directed, in its sole discretion, to make a
Revolving Advance in an amount sufficient to discharge the
Obligation of Reimbursement, including all interest accrued
thereon but unpaid at the time of such Revolving Advance, and
such Revolving Advance shall be evidenced by the Revolving
Note and shall bear interest as provided in Section 2.3
hereof.
Section 2.15 Special Account. If the Lender terminates this Credit Facility
pursuant to Section 2.6, or this Credit Facility is otherwise terminated for any
reason whatsoever, while any Letter of Credit is outstanding, the Borrower shall
thereupon pay the Lender in immediately available funds for deposit in the
Special Account an amount equal to the maximum aggregate amount available to be
drawn under all Letters of Credit then outstanding, assuming compliance with all
conditions for drawing thereunder. The Special Account shall be maintained for
the Lender by any financial institution acceptable to the Lender. Any interest
earned on amounts deposited in the Special Account shall be credited to the
Special Account. Amounts on deposit in the Special Account may be applied by the
Lender at any time or from time to time to the Borrower's Obligation of
Reimbursement or any other Obligations, in the Lender's sole discretion, and
shall not be subject to withdrawal by the Borrower so long as the Lender
maintains a security interest therein. The Lender agrees to transfer any balance
in the Special Account to the Borrower at such time as the Lender is required to
release its security interest in the Special Account under applicable law.
Section 2.16 Obligations Absolute. The obligations of the Borrower arising under
Section 2.14 shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, under all circumstances
whatsoever, including (without limitation) the following circumstances:
(a) any lack of validity or enforceability of any Letter of Credit or any other
agreement or instrument relating to any Letter of Credit (collectively the
"Related Documents");
(b) any amendment or waiver of or any consent to departure from all or any of
the Related Documents;
(c) the existence of any claim, setoff, defense or other right which the
Borrower may have at any time, against any beneficiary or any transferee of any
Letter of Credit (or any persons or entities for whom any such beneficiary or
any such transferee may be acting), or other person or entity, whether in
connection with this Agreement, the transactions contemplated herein or in the
Related Documents or any unrelated transactions;
(d) any statement or any other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever;
(e) payment by or on behalf of the Issuer or the Lender under any Letter of
Credit against presentation of a draft or certificate which does not strictly
comply with the terms of such Letter of Credit; or
(f) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing."
6. Pledge of Special Account and Collateral Account. The following new Section
3.8 is added at the end of Article III:
"Section 3.8 Security Interest in Special Account. The Borrower hereby pledges,
and grants to the Lender a security interest in, all funds held in the Special
Account from time to time and all proceeds thereof, as security for the payment
of all Obligations."
7. Conditions Precedent to Each Advance and Each Letter of Credit. Section 4.2
of the Credit Agreement is amended to read as follows:
"Section 4.2 Conditions Precedent to the Lender's Willingness to Consider Making
All Advances and Causing All Letters of Credit to be Issued. The Lender will not
consider a request for any Advance or the issuance of any Letter of Credit
unless on the date thereof:
(a) the representations and warranties contained in Article V hereof are correct
on and as of such date as though made on and as of such date, except to the
extent that such representations and warranties relate solely to an earlier
date; and
(b) no event has occurred and is continuing, or would result from such Advance
or the issuance of such Letter of Credit, as the case may be, which constitutes
a Default or an Event of Default."
8. No Other Changes. Except as explicitly amended by this Sixth 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.
9. Conditions Precedent. This Amendment shall be effective when the Lender shall
have received an executed original hereof, together with each of the following,
each in substance and form acceptable to the Lender in its sole discretion:
(m) Consent of the Participant.
(n) Such other matters as the Lender may require.
10. Representations and Warranties. The Borrower hereby represents and warrants
to the Lender as follows:
(o) The Borrower has all requisite power and authority to execute this Sixth
Amendment and to perform all of its obligations hereunder, and this Sixth
Amendment has been duly executed and delivered by the Borrower and constitutes
the legal, valid and binding obligation of the Borrower, enforceable in
accordance with its terms.
(p) The execution, delivery and performance by the Borrower of this Sixth
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.
(q) 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.
11. 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 any other Loan Document to the Credit Agreement shall be deemed to
refer to the Credit Agreement as amended hereby.
12. No Waiver. The execution of this Sixth 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 Lender,
whether or not known to the Lender and whether or not existing on the date of
this Sixth Amendment.
13. Release. The Borrower hereby absolutely and unconditionally releases and
forever discharges the Lender, and any and all 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
Sixth Amendment, whether such claims, demands and causes of action are matured
or unmatured.
14. Costs and Expenses. The Borrower hereby reaffirms its agreement under the
Credit Agreement to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender 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 Lender for the
services performed by such counsel in connection with the preparation of this
Sixth Amendment and the documents and instruments incidental hereto. The
Borrower hereby agrees that the Lender 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.
15. Miscellaneous. This Sixth 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 Sixth
Amendment to be duly executed as of the date first written above.
DAKOTAH, INCORPORATED
By____________________________________________________
Xxxx Xxxxx, Jr.
Its Chief Executive Officer
NORWEST BUSINESS CREDIT, INC.
By____________________________________________________
Xxxxxx X. Xxxxxxx
Its Assistant Vice President
