FOURTH AMENDMENT TO
CREDIT AGREEMENT
This Fourth Amendment is made this 12th day of June, 1998, by and between
ULTIMATE ELECTRONICS, INC., a Delaware corporation (the "Borrower"), NORWEST
BANK COLORADO, NATIONAL ASSOCIATION (the "Lender") and NORWEST BUSINESS
CREDIT, INC, a Minnesota corporation, as administrative agent for the Lender
(the "Administrative Agent").
RECITALS
The Borrower, the Lender and the Administrative Agent entered into a Credit
Agreement dated as of November 21, 1996, as amended (the "Credit Agreement").
The Borrower has requested that the Lender change certain covenants in, and
waive certain defaults under, the Credit Agreement. The Lender is willing to
do so on the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual promises
herein contained, the parties hereto agree as follows:
1. Section 1.1 of the Credit Agreement is hereby amended by amending the
definition of the term "Borrowing Base" contained therein to read in its
entirety as follows:
"Borrowing Base" shall mean, and at any time and subject to change from
time to time in the Administrative Agent's sole discretion, 70% of the
value of the Acceptable Inventory, determined in accordance with GAAP on a
basis consistent with accounting practices used in the financial statements
of the Borrower referred to in Section 5.8 hereof, subject to audit, review
and adjustment based thereon by the Administrative Agent, which percentage
shall decrease to 69.5% on August 1, 1998, and shall be decreased by an
additional 0.5% every other Monday thereafter; provided, however, that
unless an Event of Default or event that with notice or the passage of time
would constitute an Event of Default then exists, the Administrative Agent
will give Borrower (20) days' notice of any change in the method of
calculation of the Borrowing Base, and will base any other reduction in the
percentage of Acceptable Inventory used in determining the Borrowing Base
on the Administrative Agent's good faith judgment as to the liquidation
value of such Acceptable Inventory."
2. Section 6.13 of the Credit Agreement is hereby amended by amending
subsections (b) and (c) thereto to read in their entirety as follows:
"(b) Maintain during each of the periods set forth below, a minimum Net
Worth calculated as at the end of each month in such period in an amount
which is greater than or equal to the amount set forth opposite such
period; PROVIDED THAT the minimum Net Worth that the Borrower is required
to maintain shall be increased by the sum of 100% of the net proceeds
received by the Borrower for the sale of any equity securities after the
date of this Agreement:
Period Minimum Net Worth
------ -----------------
May 1, 1998 to and including $41,950,000
May 31, 1998
June 1, 1998 to and including $41,400,000
June 30, 1998
July 1, 1998 to and including $41,250,000
July 31, 1998
(c) Maintain on each of the dates set forth below a maximum ratio of
Funded Indebtedness to EBITDA determined for the four fiscal quarters of
the Borrower ending on such date that is less than or equal to the ratio
set forth opposite such date:
Date Ratio
---- -----
July 31, 1998 6.70 to 1.00"
3. Section 7.1 of the Credit Agreement is hereby amended to read in its
entirety as follows:
"Section 7.1 FIXED ASSETS EXPENDITURES. Make any capital expenditures
(as such term is defined in accordance with GAAP) or expenditures for fixed
assets in an aggregate amount in excess of $400,000 per quarter during its
1999 fiscal year."
4. WAIVER OF DEFAULTS. The Borrower is in default of Section 6.13(b) and
(c) of the Credit Agreement (collectively, the "Defaults"). Upon the terms
and subject to the conditions set forth in this Amendment, the Lender hereby
waives the Defaults as of April 30, 1998. This waiver shall be effective only
in this specific instance and for the specific purpose for which it is given,
and this waiver shall not entitle the Borrower to any other or further waiver
in any similar or other circumstances.
5. 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 Amendment, whether such claims,
demands and causes of action are matured or unmatured or known or unknown.
6. Except as specifically amended hereby, the Credit Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to be
duly executed as of the day and year first above written.
ULTIMATE ELECTRONICS, INC.
By: /s/ Xx. Xxxx Xxxxxxx
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Its: Vice President of Finance
NORWEST BANK COLORADO, NATIONAL ASSOCIATION
By: /s/ Ms. Xxxxx Xxxxx
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Its: Vice President
NORWEST BUSINESS CREDIT, INC.
By: /s/ Xx. Xxxxxx Xxxxxxx
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Its: Assistant Vice President
