FOURTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
FOURTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Amendment, dated as of May 18TH, 2005, is made by and among COST-U-LESS, INC., a Washington corporation (“CUL” or a “Borrower”), CULGUAM, INC., a Guam corporation (“GUAM” or a “Borrower”), CULNEV, INC., a Nevada corporation (“NEV” or a “Borrower”), CULUSVI, INC., a U.S. Virgin Islands corporation (“USVI” or a “Borrower”, and together with CUL, GUAM and NEV, the “Borrowers”), and XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the “Lender”).
Recitals
Each Borrower and the Lender are parties to a Credit and Security Agreement dated as of April 9, 2003, as amended by that certain First Amendment to Credit and Security Agreement dated as of October 17, 2003, that certain Second Amendment to Credit and Security Agreement dated as of March 2, 2004 and that certain Third Amendment to Credit and Security Agreement dated as of November 11, 2004 (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.
Each Borrower has requested that certain amendments be made to the Credit Agreement, which the Lender is willing to make pursuant to the terms and conditions set forth herein.
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 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 hereby amended by adding or amending, as the case may be, the following definitions:
“Floating Rate” means, with respect to the Advances, an annual interest rate equal to the Base Rate, which interest rate shall change when and as the Base Rate changes. |
“Maturity Date” means May 18th, 2007. |
“Net Income” means fiscal year-to-date after-tax net income from continuing operations, including extraordinary losses but excluding extraordinary gains, as determined in accordance with GAAP. |
2. Section 2.8 of the Credit Agreement is hereby amended by amending subsection (b) thereof to read in its entirety as follows:
“(b) Minimum Interest Charge. Notwithstanding the interest payable pursuant to Subsection (a), the Borrower shall pay to the Lender interest of not less than |
$25,000 per calendar year (the “Minimum Interest Charge”) during the term of this Agreement, and the Borrower shall pay any deficiency between the Minimum Interest Charge and the amount of interest otherwise calculated under Section 2.8(a) on the last day of each calendar year and on the Termination Date.” |
3. Section 2.8 of the Credit Agreement is hereby further amended by amending subsection (d) thereof to read in its entirety as follows:
“(d) Reserved.” |
4. Section 2.9 of the Credit Agreement is hereby amended by amending subsections (b) and (c) thereof to read in their entirety as follows:
“(b) Unused Line Fee. For the purposes of this Section 2.9, “Unused Amount” means the Maximum Line reduced by outstanding Advances and the L/C Amount. The Borrower agrees to pay to the Lender an unused line fee at the rate of three-eighths of one percent (0.375%) per annum on the average daily Unused Amount from the date of this Agreement to and including the Termination Date, due and payable monthly in arrears on the first day of the month and on the Termination Date. |
(c) Audit Fees. The Borrower shall pay the Lender, on demand, audit fees in connection with any audits or inspections conducted by the Lender of any Collateral or the Borrower’s operations or business at the rates established from time to time by the Lender as its audit fees (which fees are currently $100 per hour per auditor), together with all actual out-of-pocket costs and expenses incurred in conducting any such audit or inspection; provided, however, that as long as no Event of Default has occurred and is continuing and Availability is not less than $1,500,000 for any five consecutive days, the Borrower shall not be required to reimburse the Lender for such fees, costs and expenses for more than two audits in any twelve month period. |
5. Section 6.2 of the Credit Agreement is hereby amended in its entirety to read as follows:
“(a) Minimum Book Net Worth. The Borrower will maintain, during each period described below and for each month thereafter, its consolidated Book Net Worth, determined as at the end of each month, at an amount not less than the amount set forth opposite such period (numbers appearing between “< >” are negative): |
| Period | Minimum Book Net Worth | |
|---|---|---|
| The month ending May 22, 2005 | $20,315,000 | |
| The month ending June 26, 2005 | $20,690,000 | |
| The month ending July 24, 2005 | $20,575,000 | |
| The month ending August 21, 2005 | $20,690,000 | |
| The month ending September 25, 2005 | $21,150,000 |
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| Period | Minimum Book Net Worth | |
|---|---|---|
| The month ending October 23, 2005 | $20,825,000 | |
| The month ending November 20, 2005 | $20,950,000 | |
| The month ending January 1, 2006 and thereafter | $21,750,000 |
(b) Minimum Net Income. The Borrower will achieve during each period described below, consolidated minimum Net Income, of not less than the amount set forth opposite such period (numbers appearing between “< >” are negative): |
| Period | Minimum Net Income | |
|---|---|---|
| Year to date as of June 26, 2005 | $ 600,000 | |
| Year to date as of September 25, 2005 | $1,000,000 | |
| Year to date as of January 1, 2006 | $1,500,000 |
(c) Capital Expenditures. The Borrower will not incur or contract to incur aggregate Capital Expenditures of more than $6,500,000 during the Borrower’s fiscal year ending January 1, 2006 and zero thereafter until the Borrower and the Lender agree on Financial Covenants for periods after January 1, 2006. |
(d) New Financial Covenants. On or before January 1, 2006, the Borrower and the Lender shall agree on the new dollar amount for such covenant levels for Section 6.2(a), Section 6.2(b) and Section 6.2(c) for periods after such date. The new Financial Covenants will be based on the Borrower’s projections for such periods and shall be no less stringent than the present Financial Covenants, but if the Borrower and the Lender do not agree after good faith negotiations, the Lender may designate the required amounts in its sole discretion and the failure by the Borrower to maintain the designated amounts shall constitute an Event of Default.” |
6. 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.
7. Conditions Precedent. This Amendment shall be effective when the Lender shall have received an executed original hereof, together with such other matters as the Lender may require, each in substance and form acceptable to the Lender in its sole discretion.
8. Representations and Warranties. Each Borrower hereby represents and warrants to the Lender as follows:
(a) Each 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
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executed and delivered by each Borrower and constitutes the legal, valid and binding obligation of each Borrower, enforceable in accordance with its terms.
(b) The execution, delivery and performance by each 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 any Borrower, or the articles of incorporation or by-laws of any 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 any 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.
9. 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.
10. No Waiver. 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 Lender, whether or not known to the Lender and whether or not existing on the date of this Amendment.
11. Release. Each Borrower hereby absolutely and unconditionally releases and forever discharges the Lender, 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 such 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.
12. Costs and Expenses. Each 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 Loan Documents, including without limitation all reasonable fees and disbursements of legal counsel. Without limiting the generality of the foregoing, each 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 Amendment and the documents and instruments incidental hereto. Each Borrower hereby agrees that the Lender may, at any time or from time to time in its sole discretion and without further
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authorization by any Borrower, make a loan to any Borrower under the Credit Agreement, or apply the proceeds of any loan, for the purpose of paying any such fees, disbursements, costs and expenses.
13. Joint and Several Liability. All obligations of each Borrower under this Amendment shall be joint and several. All references to the term “Borrower” herein shall refer to each of them separately and to all of them jointly and all such Persons shall be bound both severally and jointly with the other. Each Borrower is responsible for all of the Borrower obligations under this Amendment. Notices from the Lender to any Borrower shall constitute notice to all Borrowers. Directions, instructions, representations, warranties or covenants made by any Borrower to the Lender shall be binding on all Borrowers.
14. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above.
| XXXXX FARGO BUSINESS CREDIT, INC. | COST-U-LESS, INC. | |||
| By: | /s/ Xxxx X. Xxxxxx | By: | /s/ Xxxxxx X. Xxxxx | |
| Name:
Xxxx X. Xxxxxx Its: Commercial Banking Officer |
Name:
Xxxxxx X. Xxxxx Its: Chief Financial Officer |
|||
| CULGUAM, INC. | ||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Name:
Xxxxxx X. Xxxxx Its: Authorized Agent |
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| CULNEV, INC. | ||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Name:
Xxxxxx X. Xxxxx Its: Authorized Agent |
||||
| CULUSVI, INC. | ||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Name:
Xxxxxx X. Xxxxx Its: Authorized Agent |
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