EXHIBIT 10(h)
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is entered into as of June 11, 2004, but effective as of April 30,
2004, among NORSTAN COMMUNICATIONS INC., a Minnesota corporation
("Communications (US)"), VIBES TECHNOLOGIES, INC., a Minnesota corporation
("Vibes"; Communications (US) and Vibes are referred to hereinafter each
individually as "Borrower", and collectively, as "Borrowers"), NORSTAN, INC., a
Minnesota corporation ("Parent"), NORSTAN FINANCIAL SERVICES INC., a Minnesota
corporation ("Norstan Financial"), NORSTAN CANADA INC., a Minnesota corporation
("Canada Holdings"), NORSTAN INTERNATIONAL, INC., a Minnesota corporation ("UK
Holdings") and NORSTAN CANADA LTD., an Ontario corporation ("Communications
(Canada)"; Parent, Norstan Financial, Canada Holdings, Norstan International, UK
Holdings and Communications (Canada) are referred to hereinafter each
individually as a " Credit Party", and individually and collectively, jointly
and severally, as the "Credit Parties") and XXXXX FARGO FOOTHILL, INC., a
California corporation, as agent for lenders ("Agent").
WHEREAS, Borrowers, Credit Parties (Borrowers and Credit Parties are
referred to hereinafter each individually as "Company", and collectively, as
"Companies"), Agent and Lenders are parties to a Loan and Security Agreement
dated as of December 10, 2003 (as amended, restated, supplemented or otherwise
modified from time to time, and as amended hereby, the "Loan Agreement");
WHEREAS, the Companies have requested that Agent amend the Loan
Agreement, and Agent has agreed to do so subject to the terms and conditions
contained herein.
NOW THEREFORE, in consideration of the promises and mutual
agreements herein contained, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms
used herein shall have the meanings ascribed to such terms in the Loan Agreement
2. Amendments to Loan Agreement. Subject to the satisfaction of the
conditions set forth in Section 3 hereof, the Loan Agreement is hereby amended
as follows:
(a) Clause (i) of Section 7.18(a) of the Loan Agreement is amended
and restated in its entirety as follows:
(i) MINIMUM EBITDA. EBITDA, measured on a month-end basis, of at
least the required amount set forth in the following table for the
applicable period set forth opposite thereto:
Period Amount
---------------------------------------- ------------
3 month period ending on January 31, 2004 $2,200,000
6 month period ending on April 30, 2004 ($1,800,000)
9 month period ending on July 31, 2004 $1,800,000
12 month period ending on October 31, 2004 $5,000,000
12 month period ending January 31, 2005 $5,250,000
12 month period ending April 30, 2005 $13,500,000
12 month period ending each fiscal quarter thereafter 80% of EBITDA
for such 12-month
period, as
reflected on the
most recent
Projections
delivered to
Agent pursuant to
Section 6.3(c), but
not less than
$13,500,000
Notwithstanding the foregoing, if Agent and the Companies cannot agree on
appropriate EBITDA covenant levels based upon the Projections for any
fiscal year, or if the Projections delivered to Agent for any fiscal year
are not reasonably satisfactory to Agent in form and substance in terms of
projected amounts and assumptions, quarterly EBITDA covenant levels
contained in this clause (i) of Section 7 .18( a) for each 12-month period
beginning with the 12-month period ending on July 31, 2005 shall be
determined by Agent in its reasonable discretion, provided, however, that
such 12-month EBITDA covenant levels shall not be less than $13,500,000.
3. Conditions Precedent to Amendment. The satisfaction of each of
the following, unless waived by Agent in its sole discretion, shall constitute
conditions precedent to the effectiveness of this Amendment, and upon the
satisfaction and/or waiver of such conditions, this Amendment shall be effective
as of April 30, 2004:
(a) Agent shall have received this Amendment, duly executed by each
Company;
(b) Agent shall have received the amendment fee described in Section
4 hereof; and
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(c) No Event of Default or event which with the giving of notice or
passage of time would constitute an Event of Default shall have occurred and be
continuing on the date hereof, nor shall result from the consummation of the
transaction contemplated herein.
4. Amendment Fee. In addition to any other fee payable under the
Loan Agreement, the Companies shall pay to Agent an amendment fee in the amount
of $25,000 which shall be fully earned and payable on the date hereof.
5. Miscellaneous.
(a) Warranties and Absence of Defaults. In order to induce Agent to
enter into this Amendment, each Company hereby warrants to Agent, as of the date
hereof, that:
(i) The representations and warranties of each Company contained in
the Loan Agreement are true and correct as of the date hereof as if made
on the date hereof; and
(ii) No Event of Default or event which, with giving of notice or
the passage of time or both, would become an Event of Default, exists as
of the date hereof.
(b) Expenses. Each Company agrees, on a joint and several basis, to
pay on demand all costs and expenses of Agent (including the fees and expenses
of outside counsel for Agent) in connection with the preparation, negotiation,
execution, delivery and administration of this Amendment and all other
instruments or documents provided for herein or delivered or to be delivered
hereunder or in connection herewith. In addition, each Company agrees, on a
joint and several basis, to pay, and save Agent harmless from all liability for,
any stamp or other taxes which may be payable in connection with the execution
or delivery of this Amendment or the Loan Agreement and the execution and
delivery of any instruments or documents provided for herein or delivered or to
be delivered hereunder or in connection herewith. All obligations provided in
this Section 5(b) shall survive any termination of this Amendment and the Loan
Agreement.
(c) Governing Law. This Amendment shall be a contract made under and
governed by the internal laws of the State of Illinois.
(d) Counterparts. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Amendment.
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IN WITNESS WHEREOF. the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized and delivered
as of the date first above written.
NORSTAN COMMUNICATIONS INC.
an Minnesota corporation
By /s/ Xxxxx X. Xxxxxxx
--------------------------------
Title VP Treasurer
VIBES TECHNOLOGIES, INC.,
an Minnesota corporation
By /s/ Xxxxx X. Xxxxxxx
--------------------------------
Title VP Treasurer
NORSTAN, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxx
--------------------------------
Title VP Treasurer
NORSTAN FINANCIAL SERVICES INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxx
--------------------------------
Title VP Treasurer
NORSTAN CANADA INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxx
--------------------------------
Title VP Treasurer
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NORSTAN INTERNATIONAL, INC.,
a Minnesota corporation
By /s/ Xxxxx X. Xxxxxxx
--------------------------------
Title VP Treasurer
NORSTAN CANADA LTD.,
an Ontario corporation
By /s/ Xxxxx X. Xxxxxxx
--------------------------------
Title VP Treasurer
XXXXX FARGO FOOTHILL, INC.
a California corporation, as Agent
By /s/ Xxxx X. Xxxxxxx
--------------------------------
Title Vice President
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