EXHIBIT 10.43
SIXTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT AND
FIRST AMENDMENT TO COLLATERAL ACCOUNT AGREEMENT
This Sixth Amendment, dated as of March 12, 1998, is made by and among
LaCANASTA OF MINNESOTA, INC., a Minnesota corporation (the "Borrower"), SPARTA
FOODS, INC., a Minnesota corporation ("Sparta") and NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association (the "Lender").
Recitals
The Borrower, Sparta and the Lender are parties to the Credit and
Security Agreement dated as of December 9, 1994, as supplemented by the First
Supplement to Credit Agreement dated as of December 13, 1994, as amended by a
First Amendment to Credit Agreement dated as of April 14, 1995, a Second
Amendment to Credit Agreement dated as of September 21, 1995, a Third Amendment
to Credit Agreement dated as of April 23, 1996, a Fourth Amendment to Credit and
Security Agreement dated as of December 20, 1996, a Fifth Amendment to Credit
and Security Agreement dated as of July 1, 1997, a letter amendment to Credit
and Security Agreement dated as of October 22, 1997, a letter amendment to
Credit and Security Agreement dated as of December 30, 1997, and a letter
amendment dated as of February 17, 1998 (as amended, the "Credit Agreement").
All capitalized terms used in these Recitals shall have the meanings given to
them in the Credit Agreement.
Pursuant to the Credit Agreement, the Lender has made Advances, a Term
Loan A, a Term Loan B and a Capital Expenditure Loan to the Borrower. The
Borrower's obligations to pay the Advances is presently evidenced by the
Revolving Note of the Borrower dated July 7, 1997, payable to the order of the
Lender in the original principal amount of $2,000,000. The Borrower's
obligations to pay the Term Loan A is presently evidenced by the Term Loan A
Note of the Borrower dated December 9, 1994, payable to the order of the Lender
in the original principal amount of $1,784,800. The Borrower's obligations to
pay the Term Loan B is presently evidenced by the Term Loan B Note of the
Borrower dated July 1, 1997, payable to the order of the Lender in the original
principal amount of $750,000. The Borrower's obligations to pay the Capital
Expenditure Loan is presently evidenced by the Capital Expenditure Loan Note of
the Borrower dated December 20, 1996, payable to the order of the Lender in the
original principal amount of $473,333. As of March 11, 1998, outstanding
principal balance of the Revolving Note was $0. As of March 11, 1998,
outstanding principal balance of the Term Loan A Note, the Term Loan B Note and
the Capital Expenditure Loan Note was $1,289,639.58. The Advances, the Term Loan
A, the Term Loan B and the Capital Expenditure Loan and all other obligations of
the Borrower owing to the Lender are secured, among other things, pursuant to
the Credit and Security Agreement of the Borrower dated as of December 9, 1994.
The Borrower has requested, that the Term Loan A, the Term Loan B and
the Capital Expenditure Loan be consolidated into one term loan facility, and
that the definition of Borrowing Base be amended, among other things. The Lender
is willing to grant the Borrower's request subject to the terms of this Sixth
Amendment.
Accordingly, the Borrower and the Lender hereby agree as follows:
1. Defined Terms. 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, the definitions of Term Loan A, Term Loan
A Note, Term Loan B, Term Loan B Note, Term Loan Notes, Capital Expenditure
Loan, and Capital Expenditure Loan Note are deleted. In addition, Section 1.01
of the Credit Agreement is amended by adding or amending, as the case may be,
the following new definitions:
"`Borrowing Base' means, at any time and subject to change from time to
time in the Lender's sole discretion, the lessor of:
(a) The Revolving Credit Facility Maximum Amount, or
(b) the sum of (1) up to eighty-two percent (82%) of Eligible
Accounts, plus (2) up to fifty percent (50%) of Eligible Inventory,
less (3) the amount of any deductible with respect to any insurance
coverage insuring the Accounts in effect from time to time (which
deductible is $15,000 as of the date of the Sixth Amendment)."
"`Revolving Credit Facility Maximum Amount' shall mean $1,200,000."
"`Revolving Loan Spread' means the percentage set forth below opposite
the range of Leverage Ratio in which the Borrower's Leverage Ratio falls.
Reductions and increases in the percentage will be determined quarterly upon
receipt of the Borrower's financial statements as required under Section 6.1(b)
of the Credit Agreement, but such reductions and increases will be applied
retroactively to the beginning of the quarter immediately following the quarter
for which the determination was made. From the beginning of each fiscal quarter
until such determination is made with respect to that quarter, the Borrower
shall pay interest as if the percentage were unchanged from the percentage
applicable at the end of the preceding fiscal quarter. If the percentage is
determined to have increased and the Borrower has thus underpaid interest since
the beginning of that fiscal quarter, the Borrower shall pay such deficiency on
demand. If the percentage is determined to have decreased and the Borrower has
thus overpaid interest since the beginning of that fiscal quarter, the Lender
shall credit such overpayment, first, as a prepayment of accrued but unpaid
interest on the Revolving Note, and, second, as a prepayment of interest
thereafter accruing on the Revolving Note. Notwithstanding the foregoing, no
reduction in the percentage will be made if a Default or an Event of Default has
occurred and is continuing at the time that such reduction would otherwise be
made.
Leverage Ratio Percentage
1.01 to 1.00 or more 0.25%
1.00 to 1.00 or below 0.00%
As of the December 31, 1997, the Borrower's Leverage Ratio was 4.45 to 1.00;
however, due to the Borrower's $2,500,000 preferred stock placement in February,
1998, the Lender will hold the Revolving Loan Spread at 0.25% for the period
from January 1, 1998 through March 31, 1998. From April 1, 1998 and thereafter,
the Revolving Loan Spread shall mean the percentage set forth above opposite the
range of Leverage Ratio in which the Borrower's Leverage Ratio falls."
"`Revolving Note' means the $1,200,000 promissory note of the Borrower
to the Lender in substantially the form of Exhibit A to the Sixth Amendment."
"`Sixth Amendment' means the Sixth Amendment to Credit and Security
Agreement and First Amendment to Collateral Account Agreement dated as of March
12, 1998, among the Borrower, Sparta and the Lender."
"`Sixth Amendment Effective Date' means the date that all of the
conditions in Section 11 of Sixth Amendment have been satisfied."
"`Term Loan' has the meaning specified in Section 2.2 hereof."
"`Term Loan Note' means the $2,317,640 promissory note of the Borrower
to the Lender in substantially the form of Exhibit B to the Sixth Amendment."
"`Term Loan Spread' means the percentage set forth below opposite the
range of Leverage Ratio in which the Borrower's Leverage Ratio falls. Reductions
and increases in the percentage will be determined quarterly upon receipt of the
Borrower's financial statements as required under Section 6.1(b) of the Credit
Agreement, but such reductions and increases will be applied retroactively to
the beginning of the quarter immediately following the quarter for which the
determination was made. From the beginning of each fiscal quarter until such
determination is made with respect to that quarter, the Borrower shall pay
interest as if the percentage were unchanged from the percentage applicable at
the end of the preceding fiscal quarter. If the percentage is determined to have
increased and the Borrower has thus underpaid interest since the beginning of
that fiscal quarter, the Borrower shall pay such deficiency on demand. If the
percentage is determined to have decreased and the Borrower has thus overpaid
interest since the beginning of that fiscal quarter, the Lender shall credit
such overpayment, first, as a prepayment of accrued but unpaid interest on the
Term Loan Note, and, second, as a prepayment of interest thereafter accruing on
the Term Loan Note. Notwithstanding the foregoing, no reduction in the
percentage will be made if a Default or an Event of Default has occurred and is
continuing at the time that such reduction would otherwise be made.
Leverage Ratio Percentage
1.01 to 1.00 or more 0.50%
1.00 to 1.00 or below 0.25%
As of the December 31, 1997, the Borrower's Leverage Ratio was 4.45 to 1.00;
however, due to the Borrower's $2,500,000 preferred stock placement in February,
1998, the Lender will hold the Term Loan Spread at 0.50% for the period from
January 1, 1998 through March 31, 1998. From April 1, 1998 and thereafter, the
Term Loan Spread shall mean the percentage set forth above opposite the range of
Leverage Ratio in which the Borrower's Leverage Ratio falls."
2. Term Loan. The entire Section 2.2 of the Credit Agreement is deleted
in its entirety and replaced with the following new Section 2.2:
"Section 2.2 Term Loan. The Lender has made a term loan to the Borrower
before the date of the Sixth Amendment, the Borrower's obligations to pay which
are evidenced by the promissory note of the Borrower dated December 9, 1994,
payable to the order of the Lender in the original principal amount of
$1,784,800 (the "Prior Term Loan A Note"). The Lender has made a second term
loan to the Borrower before the date of the Sixth Amendment, the Borrower's
obligations to pay which are evidenced by the promissory note of the Borrower
dated July 1, 1997, payable to the order of the Lender in the original principal
amount of $750,000 (the "Prior Term Loan B Note"). The Lender has made a capital
expenditure loan to the Borrower before the date of the Sixth Amendment, the
Borrower's obligations to pay which are evidenced by the promissory note of the
Borrower dated December 20, 1996, payable to the order of the Lender in the
original principal amount of $473,333 (the "Prior Capital Expenditure Loan
Note"). As of March 11, 1998, the outstanding principal balances of the Prior
Term Loan A Note, the Prior Term Loan B Note and the Prior Capital Expenditure
Loan Note was $1,289,639.58. The Lender has committed to consolidate the Prior
Term Loan A Note, the Prior Term Loan B Note and the Prior Capital Expenditure
Loan Note and make a new term loan to the Borrower as of the date of the Sixth
Amendment (the "Term Loan"), the Borrower's obligations to pay which are
evidenced by a promissory note of the Borrower dated March 12, 1998, payable to
the order of the Lender in the original principal amount of $2,317,640 (the
"Term Loan Note"), substantially in the form of Exhibit B to the Sixth Amendment
and shall be secured pursuant to the Credit Agreement and the Security Documents
as therein defined. The principal amount of the Term Loan shall be payable in
sixty (60) consecutive monthly installments of Thirty-Eight Thousand Five
Hundred Dollars ($38,500), commencing on April 1, 1998, with a payment of all
unpaid principal and other obligations on the earliest of termination of the
Revolving Credit Facility, demand by the Lender or the Termination Date."
3. Interest. Section 2.4(a) of the Credit Agreement is hereby amended
in its entirety to read as follows:
"Section 2.4 Interest. (a) The principal of the Advances outstanding
during any month under the Revolving Credit Facility shall bear interest at the
Revolving Note Rate, and all other Obligations shall bear interest at the Term
Note Rate; 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
principal of the Advances outstanding and the unpaid principal balance of the
Term Loan and any other Obligations outstanding from time to time shall bear
interest at the applicable Default Rate; and provided, further, that in any
event no rate change shall be put into effect which would result in a rate
greater than the highest rate permitted by law. Interest accruing on the
principal balance of the Advances under the Revolving Credit Facility, the Term
Loan, and any other Obligations outstanding from time to time shall be payable
on the first day of the next succeeding month and on the Termination Date or
earlier demand or prepayment in full. All interest (including interest at the
Default Rate) shall be computed on the basis of actual days elapsed in a three
hundred sixty (360) day year."
4. Prepayment Penalty. Section 2.6 of the Credit Agreement is amended
in its entirety to read as follows:
"Section 2.6 Voluntary Prepayment; Termination of Agreement by the
Borrower. Except as otherwise provided herein and subject to payment of the
prepayment fees set forth below, the Borrower may, in its discretion, prepay the
Advances in whole at any time or from time to time in part. If the Borrower
desires or decides to terminate this Agreement as of any date prior to December
31, 1999, or to prepay any Obligations with funds not generated solely from
Borrower's operations in the ordinary course of business, the Borrower shall (a)
provide the Lender with thirty (30) days' prior written notice of the Borrower's
intention to do so, and (b) unless the Borrower pays the Obligations (i) in full
with funds from the Lender or an affiliate of Lender, (ii) upon Lender's written
consent thereto with cash received from a stock offering of Sparta's common
stock or (iii) upon the Lender's written consent thereto with cash received from
the sale of the Owned Premises, pay the Lender a prepayment fee of one percent
(1%) of the Revolving Credit Facility Maximum Amount plus the average
outstanding principal balance of the Term Loan over the previous three (3) month
period. Failure to provide the aforesaid notice or to prepay the Obligations in
full, will not relieve the Borrower of its obligation to pay the prepayment fee.
Upon compliance with the foregoing requirements and subject to payment and
performance of all the Borrower's Obligations to the Lender, the Borrower may
obtain any release or termination of the Security Interest to which the Borrower
is otherwise entitled by law."
5. Financial Covenants. Sections 6.12 and 6.13 of the Credit Agreement
are amended in their entirety to read as follows:
"Section 6.12 Minimum Tangible Net Worth. The Borrower, on a
consolidated basis with Sparta, shall maintain at all times during each fiscal
month in each period set forth below (calculated at the end of each fiscal month
during each period set forth below) its Tangible Net Worth at or above the level
set forth below opposite each such period:
------------------------------------- ---------------------------
Minimum Tangible
Period Net Worth
------------------------------------- ---------------------------
December 1, 1997 through
January 31, 1998 $500,000
------------------------------------- ---------------------------
February 1, 1998 through
June 30, 1998 $2,700,000
------------------------------------- ---------------------------
July 1, 1998 through
August 31, 1999 $2,900,000
------------------------------------- ---------------------------
September 1, 1999 through
December 31, 1999 $3,700,000
------------------------------------- ---------------------------
Section 6.13 Maximum Leverage Ratio. The Borrower, on a consolidated
basis with Sparta, shall maintain at all times during each fiscal month in each
period set forth below (calculated at the end of each fiscal month during each
period set forth below) its Leverage Ratio at or below the level set forth below
opposite each such period:
------------------------------------- ----------------------
Period Maximum
Leverage Ratio
------------------------------------- ----------------------
December 1, 1997 through
January 31, 1998 5.00 to 1.00
------------------------------------- ----------------------
February 1, 1998 through
December 31, 1999 1.60 to 1.00
------------------------------------- ----------------------
6. Expenditures for Fixed Assets. Section 7.10 of the Credit Agreement
is amended in its entirety to read as follows:
"Section 7.10 Capital Expenditures. Sparta will not make any Capital
Expenditures. During each period set forth below, the Borrower will not expend
or contract to expend for Capital Expenditures more than the amount set forth
below opposite each such period:
----------------------------------- -----------------------------
Maximum
Period Capital Expenditures
----------------------------------- -----------------------------
Fiscal year ended
September 30, 1998 $2,500,000
----------------------------------- -----------------------------
Fiscal year ended
September 30, 1999 $500,000
----------------------------------- -----------------------------
October 1, 1999 through
Termination Date $500,000
----------------------------------- -----------------------------
7. Consent to Payment of Subordinated Creditor. The Borrower has
requested that the Lender consent to the Borrower's payment of certain debts
owed to IFP Trust, a subordinated creditor. Such payments are prohibited by a
Subordination Agreement executed by the IFP Trust for the benefit of the Lender,
and acknowledged by the Borrower. The Lender hereby consents to the payment of
subordinated debt by the Borrower to IFP Trust.
8. New Compliance Certificate. Exhibit D to the Credit Agreement is
hereby amended in its entirety and replaced with Exhibit C to the Sixth
Amendment.
9. Amendment to Collateral Account Agreement. Paragraph 4 of the
Collateral Account Agreement, dated as of December 9, 1994, by and between the
Borrower and the Lender (the "Collateral Account Agreement") is amended by
deleting the reference "two (2) days" as it appears therein and replacing it
with "one (1) day".
10. No Other Changes. Except as explicitly amended by this Sixth
Amendment, all of the terms and conditions of the Credit Agreement and Revolving
Note shall remain in full force and effect and shall apply to any Advance
thereunder.
11. Amendment Fee. The Borrower agrees to pay the Lender a fully
earned, non-refundable fee in the amount of $2,500 in consideration of the
execution by the Lender of this Sixth Amendment, payable upon the execution of
this Sixth Amendment.
12. Conditions Precedent. This Sixth Amendment shall be effective upon
receipt by the Lender of an executed original hereof, together with each of the
following, each in substance and form acceptable to the Lender in its sole
discretion:
(a) The new Revolving Note duly executed by the Borrower.
(b) The new Term Loan Note duly executed by the Borrower.
(c) A Certificate of the Secretary of the Borrower certifying as to (i)
the resolutions of the board of directors of the Borrower approving the
execution and delivery of this Sixth Amendment, the Revolving Note and the Term
Loan Note, (ii) the fact that the Articles of Incorporation and Bylaws of the
Borrower, which were previously delivered to the Lender continue in full force
and effect and have not been amended or otherwise modified except as set forth
in the Certificate to be delivered, and (iii) the incumbency of the officers and
agents of the Borrower authorized to sign and to act on behalf of the Borrower
and setting forth the sample signatures of each of the officers and agents of
the Borrower authorized to execute and deliver this Sixth Amendment, the
Revolving Note and the Term Loan Note and all other documents, agreements and
certificates on behalf of the Borrower.
(d) Payment of the amendment fee of $2,500.
(e) Such other matters as the Lender may require.
13. Representations and Warranties. The Borrower hereby represents and
warrants to the Lender as follows:
( a) The Borrower has all requisite power and authority to
execute this Sixth Amendment, the Revolving Note and the Term Loan Note
and to perform all of its obligations thereunder, 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.
( b) The execution, delivery and performance by the Borrower
of this Sixth Amendment, the Revolving Note and the Term Loan Note 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 IV 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.
( d) The recitals set forth on the first page hereof are true
and correct.
14. 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 Mortgage or any Guaranty to the Credit
Agreement shall be deemed to refer to the Credit Agreement as amended hereby.
Upon the satisfaction of each of the conditions set forth in paragraph 11
hereof, the definition of "Revolving Note" and all references thereto in the
Credit Agreement shall be deemed amended to describe the new Revolving Note,
which new Revolving Note shall be issued by the Borrower to the Lender in
replacement, renewal and amendment, but not in repayment, of the Revolving Note.
Further, upon the satisfaction of each of the conditions set forth in paragraph
11 hereof, the definition of "Term Note" and all references thereto in the
Credit Agreement shall be deemed amended to describe the new Term Note, which
new Term Note shall be issued by the Borrower to the Lender in replacement,
renewal and amendment, but not in repayment, of the Prior Term A Note, the Prior
Term B Note and the Prior Capital Expenditure Note.
15. No Waiver. The execution of this Sixth Amendment and acceptance of
the Revolving Note, the Term Note and 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.
16. Release. The 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 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 or known or unknown.
17. 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 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 and the fee
required under paragraph 12 hereof.
18. 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 day and year first above written.
LaCANASTA OF MINNESOTA, INC. NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By:____________________________________
By:___________________________ Xxxxxx X. Xxxxxxxxx
A. Xxxxxxx Xxxxx Its: Vice President
Its: Chief Financial Officer
SPARTA FOODS, INC.
By:__________________________________
A. Xxxxxxx Xxxxx
Its: Chief Financial Officer
Exhibit A to Sixth Amendment to
Credit and Security Agreement
REVOLVING NOTE
$1,200,000 Minneapolis, Minnesota
March 12, 1998
For value received, the undersigned, LaCANASTA OF MINNESOTA, INC., a
Minnesota corporation (the "Borrower"), hereby promises to pay on the
Termination Date, or on such earlier date as provided in the Credit and Security
Agreement (defined below) to the order of NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association (the "Lender"), at its main office
in Minneapolis, Minnesota, or at any other place designated at any time by the
holder hereof, in lawful money of the United States of America and in
immediately available funds, the principal sum of ONE MILLION TWO HUNDRED
THOUSAND DOLLARS ($1,200,000.00) or, if less, the aggregate unpaid principal
amount of all advances made by the Lender to the Borrower hereunder or under the
Revolving Credit Facility, as defined in that certain Credit and Security
Agreement dated as of December 9, 1994, by and among the Lender, the Borrower
and Sparta Foods, Inc. (as amended, the "Credit Agreement") together with
interest on the principal amount hereunder remaining unpaid from time to time,
computed on the basis of the actual number of days elapsed and a three hundred
sixty (360) day year, from the date hereof until this Note is fully paid at the
Revolving Note Rate or Default Rate (if applicable) from time to time in effect.
The principal hereof and interest accruing thereon shall be due and payable as
provided in the Credit Agreement. This Note may be prepaid only in accordance
with the Credit Agreement. All capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Credit Agreement.
This Note is issued pursuant, and is subject, to the Credit Agreement,
which provides, among other things, for acceleration hereof. This Note is the
Revolving Note referred to in the Credit Agreement.
This Note is secured, among other things, pursuant to the Credit
Agreement and the Security Documents as therein defined, and may now or
hereafter be secured by one or more other security agreements, mortgages, deed
of trust, assignments or other instruments or agreements.
The Borrower hereby agrees to pay all costs of collection, including
attorneys' fees and legal expenses in the event this Note is not paid when due,
whether or not legal proceedings are commenced.
Presentment or other demand for payment, notice of dishonor and protest
are expressly waived.
This Note is issued in substitution for and replacement of, but not in
satisfaction of, the Revolving Note of the Borrower dated July 1, 1997, payable
to the order of the Lender in the original principal amount of $2,000,000.
LaCANASTA OF MINNESOTA, INC.
By: ___________________________
A. Xxxxxxx Xxxxx
Its Chief Financial Officer
Exhibit B to Sixth Amendment to
Credit and Security Agreement
TERM LOAN NOTE
$2,317,640 Minneapolis, Minnesota
March 12, 1998
For value received, the undersigned, LaCANASTA OF MINNESOTA, INC., a
Minnesota corporation (the "Borrower"), hereby promises to pay in accordance
with the terms of the Credit Agreement (defined below), to the order of Norwest
Bank Minnesota, National Association, a national banking association (the
"Lender"), at its main office in Minneapolis, Minnesota, or at any other place
designated at any time by the holder hereof, in lawful money of the United
States of America and in immediately available funds, the principal sum of TWO
MILLION THREE HUNDRED SEVENTEEN THOUSAND SIX HUNDRED FORTY DOLLARS ($2,317,640)
or, if less, the aggregate unpaid principal balance of the Term Loan made by the
Lender to the Borrower under that certain Credit and Security Agreement dated as
of December 9, 1994, by and among the Lender, the Borrower and Sparta Foods,
Inc. (as amended, the "Credit Agreement"), together with interest on the
principal amount hereunder remaining unpaid from time to time, computed on the
basis of the actual number of days elapsed and a 360-day year, from the date
hereof until this Note is fully paid, at the Term Note Rate or, if applicable,
the Default Rate, as such terms are defined in the Credit Agreement. The
principal hereof and the interest accruing thereon shall be due and payable as
provided in the Credit Agreement. This Note may be prepaid only in accordance
with the Credit Agreement. All capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Credit Agreement.
Interest accruing each month shall be due and payable on the first day
of the next succeeding month and otherwise as provided in the Credit Agreement.
Principal hereof shall be paid in monthly installments and otherwise as provided
in Article I and II of the Credit Agreement, and in one final installment on the
Termination Date, when the entire unpaid principal balance hereof shall be due
and payable in full.
This Note is issued pursuant, and is subject, to the Credit Agreement,
which provides, among other things, for acceleration hereof. This Note is the
Term Loan Note referred to in the Credit Agreement.
This Note is secured, among other things, pursuant to the Credit
Agreement and the Security Documents, except for the Mortgage, as therein
defined, and may now or hereafter be secured by one or more other security
agreements, mortgages, deeds of trust, assignments or other instruments or
agreements.
The Borrower hereby agrees to pay all costs of collection, including
attorneys' fees and legal expenses, in the event this Note is not paid when due,
whether or not legal proceedings are commenced.
Presentment or other demand for payment, notice of dishonor and protest
are expressly waived.
This Note is issued in substitution for and replacement of, but not in
satisfaction of, (i) the Term Loan A Note of the Borrower dated December 9,
1994, payable to the order of the Lender in the original principal amount of
$1,784,800, (ii) the Term Loan B Note of the Borrower dated July 1, 1997,
payable to the order of the Lender in the original principal amount of $750,000,
and (iii) the Capital Expenditure Loan Note of the Borrower dated December 20,
1996, payable to the order of the Lender in the original principal amount of
$473,333.
LaCANASTA OF MINNESOTA, INC.
By: ____________________________
A. Xxxxxxx Xxxxx
Its: Chief Financial Officer
Exhibit C to Sixth Amendment to
Credit and Security Agreement
Compliance Certificate
To: Xxxx Xxxx
Norwest Bank Minnesota, National Association
Date: __________________, 199___
Subject: LaCanasta of Minnesota, Inc.
Financial Statements
In accordance with our Credit and Security Agreement dated as of
December 9, 1994, as supplemented by the First Supplement to Credit Agreement
dated as of December 13, 1994, as amended by a First Amendment to Credit
Agreement dated as of April 14, 1995, a Second Amendment to Credit Agreement
dated as of September 21, 1995, a Third Amendment to Credit Agreement dated as
of April 23, 1996, a Fourth Amendment to Credit and Security Agreement dated as
of December 20, 1996, a Fifth Amendment to Credit and Security Agreement dated
as of July 1, 1997, a letter amendment to Credit and Security Agreement dated as
of October 22, 1997, and a Sixth Amendment to Credit and Security Agreement and
First Amendment to Collateral Account Agreement dated as of March __, 1998 (as
amended, the "Credit Agreement"), attached are the financial statements of
LaCanasta of Minnesota, Inc. (the "Borrower") as of and for ________________,
19___ (the "Reporting Date") and the year-to-date period then ended (the
"Current Financials"). All terms used in this certificate have the meanings
given in the Credit Agreement.
I certify that the Current Financials have been prepared in accordance
with GAAP, subject to year-end audit adjustments, and fairly present the
Borrower's financial condition and the results of its operations as of the date
thereof.
Events of Default. (Check one):
___ The undersigned does not have knowledge of the occurrence
of a Default or Event of Default under the Credit Agreement.
___ The undersigned has knowledge of the occurrence of a
Default or Event of Default under the Credit Agreement and
attached hereto is a statement of the facts with respect to
thereto.
I hereby certify to the Lender as follows:
___ The Reporting Date does not xxxx the end of one of the
Borrower's Fiscal Years, hence I am completing only paragraph
__ below.
___ The Reporting Date marks the end of the Borrower's Fiscal
Year, hence I am completing all paragraphs below.
Financial Covenants. I further hereby certify as follows:
1. Minimum Tangible Net Worth. Pursuant to Section 6.12 of the
Credit Agreement, the Borrower's Tangible Net Worth for the
year-to-date period ending on the Reporting Date, was $____________,
which ___ satisfies ___ does not satisfy the requirement that such
amount be not less than $_____________ during such period as set forth
in table below:
------------------------------------- ---------------------------
Minimum Tangible
Period Net Worth
------------------------------------- ---------------------------
December 1, 1997 through
January 31, 1998 $500,000
------------------------------------- ---------------------------
February 1, 1998 through
June 30, 1998 $2,700,000
------------------------------------- ---------------------------
July 1, 1998 through
August 31, 1999 $2,900,000
------------------------------------- ---------------------------
September 1, 1999 through
December 31, 1999 $3,700,000
------------------------------------- ---------------------------
2. Minimum Leverage Ratio. Pursuant to Section 6.13 of the
Credit Agreement, as of the Reporting Date, the Borrower's Leverage
Ratio was _____ to 1.00 which _____ satisfies _____ does not satisfy
the requirement that such ratio be no less than less than _____ to 1.00
during such period as set forth in the table below:
------------------------------------- ----------------------
Period Maximum
Leverage Ratio
------------------------------------- ----------------------
December 1, 1997 through
January 31, 1998 5.00 to 1.00
------------------------------------- ----------------------
February 1, 1998 through
December 31, 1999 1.60 to 1.00
------------------------------------- ----------------------
3. Capital Expenditures. Pursuant to Section 7.10 of the Credit
Agreement, for the year-to-date period ending on the Reporting Date,
the Borrower has expended or contracted to expend during the Fiscal
Year ended September 30, 199___, for Capital Expenditures,
$___________ in the aggregate which ____ satisfies ____ does not
satisfy the requirement that such expenditures not exceed
$____________ in the aggregate.
Attached hereto are all relevant facts in reasonable detail to
evidence, and the computations of the financial covenants referred to above.
These computations were made in accordance with GAAP.
LaCANASTA OF MINNESOTA, INC.
By: __________________________
A. Xxxxxxx Xxxxx
Its: Chief Financial Officer
ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR
The undersigned, a guarantor of the indebtedness of LaCANASTA OF
MINNESOTA, INC. (the "Borrower") to NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(the "Lender") pursuant to a Guaranty dated as of December 9, 1994 (the
"Guaranty"), hereby (i) acknowledges receipt of the foregoing Sixth Amendment to
Credit and Security Agreement and First Amendment to Collateral Account
Agreement, the Revolving Note and the Term Loan Note each dated March 12, 1998;
(ii) consents to the terms and execution thereof; (iii) reaffirms its
obligations to the Lender pursuant to the terms of its Guaranty; and (iv)
acknowledges that the Lender may amend, restate, extend, renew or otherwise
modify the Credit Agreement and any indebtedness or agreement of the Borrower,
or enter into any agreement or extend additional or other credit accommodations,
without notifying or obtaining the consent of the undersigned and without
impairing the liability of the undersigned under its Guaranty for all of the
present and future indebtedness of the Borrower to the Lender.
SPARTA FOODS, INC.
By: ______________________
A. Xxxxxxx Xxxxx
Its Chief Financial Officer
ACKNOWLEDGMENT AND AGREEMENT
OF A. XXXXXXX XXXXX AND XXXX XXXXXX
The undersigned, A. Xxxxxxx Xxxxx executed and delivered a certain
Performance Agreement dated as of December 9, 1994, and the undersigned Xxxx
Xxxxxx executed and delivered a certain Performance Agreement dated as of April
14, 1995 (such Performance Agreements collectively called the "Agreement"), in
favor of Norwest Bank Minnesota, N.A. (the "Lender") with respect to LaCanasta
of Minnesota, Inc. (the "Borrower"), and each of the undersigned hereby (i)
acknowledges receipt of the foregoing Sixth Amendment to Credit and Security
Agreement and First Amendment to Collateral Account Agreement, the Revolving
Note and the Term Loan Note each dated March 12, 1998; (ii) consents to the
terms and execution thereof; (iii) reaffirms his obligations to the Lender
pursuant to the terms of his Agreement; and (iv) acknowledges that the Lender
may amend, restate, extend, renew or otherwise modify the Credit Agreement and
any indebtedness or agreement of the Borrower, or enter into any agreement or
extend additional or other credit accommodations, without notifying or obtaining
the consent of the undersigned and without impairing the liability of the
undersigned under his Agreement.
______________________________
A. Xxxxxxx Xxxxx
______________________________
Xxxx Xxxxxx
