THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
DMI FURNITURE, INC., a Delaware corporation (the "Company"), and BANK ONE,
INDIANAPOLIS, NATIONAL ASSOCIATION, a national banking association (the "Bank"),
parties to an Amended and Restated Credit Agreement dated June 9, 1994, as
amended by a First Amendment to Amended and Restated Credit Agreement dated
October 11, 1994, and as amended by a Second Amendment to Amended and Restated
Credit Agreement dated January 10, 1995 (collectively, as amended, the "Original
Agreement"), agree to amend the Original Agreement by this Third Amendment to
Amended and Restated Credit Agreement (this "Third Amendment") as follows:
1. DEFINITIONS. Sections 2.p, 2.q, 2.vv and 2.kkk of the Original
Agreement are amended in their entireties and a new Section 2.ccccc is added to
the Original Agreement, all to read as follows:
p. BORROWING BASE. "Borrowing Base" means an amount equal to the sum
of (i) eighty percent (80%) of the adjusted book value of the
Company's accounts receivable, plus (ii) fifty percent (50%) of the
book value of the Company's finished goods inventories, plus (iii)
for the period from June 1 through July 31 of each year and from
December 1 of each year through February 28 or February 29 of the
following year, $500,000.00, plus (iv) twenty-five percent (25%) of
the book value of the Company's raw materials inventory, plus (v)
the Borrowing Base Adjustment. For purposes of the preceding
sentence, the phrase "adjusted book value of the Company's accounts
receivable" means the book value of the Company's accounts
receivable less any accounts which are sixty (60) days or more past
due, or which are due from an account debtor known to the Company to
be the subject of a bankruptcy or other insolvency proceeding or
known to the Company to have ceased doing business, and less all
accounts due from any account debtor if ten percent (10%) or more of
the aggregate amount of the accounts receivable from such debtor are
sixty (60) days or more past due, and provided that any account
receivable otherwise includable in the Borrowing Base shall be
reduced, but not below zero, by the amount
of any accounts payable to the account debtor from which such
account is due.
q. BORROWING BASE ADJUSTMENT. "Borrowing Base Adjustment" means the
amounts shown in the following table during the periods indicated:
PERIOD AMOUNT
------ ------
At March 15, 1995, and
until August 15, 1995 $2,000,000
At August 15, 1995, and
until September 15, 1995 $1,000,000
At September 15, 1995, and
until October 15, 1995 $ 500,000
At October 15, 1995, and
at all times thereafter Zero
vv. OVERLINE LOAN MATURITY DATE. "Overline Loan Maturity Date" means
December 31, 1995, and any subsequent date to which the Overline
Loan Commitment may be extended by the Bank pursuant to the terms of
Section 3.c(iv).
kkk. REVOLVING LOAN MATURITY DATE. "Revolving Loan Maturity Date" means
November 30, 1996, and any subsequent date to which the Revolving
Loan Commitment may be extended by the Bank pursuant to the terms of
Section 3.a(iv).
ccccc. THIRD AMENDMENT. "Third Amendment" means that agreement entitled
"Third Amendment to Amended and Restated Credit Agreement" between
the Company and the Bank dated , 1995.
All other terms defined in the Original Agreement and used in this Third
Amendment shall have their respective meanings stated in the Agreement.
2. THE LOANS. The first sentence of Section 3.a(ii), the entire
Section 3.c(i), and the first sentence of Section 3.c(ii) of the
Original Agreement are amended in their entireties to read as
follows:
a. (ii) METHOD OF BORROWING. The obligation of the Company to repay
the Revolving Loan shall be evidenced by a promissory note
(the "Revolving Note") of the Company in the form of EXHIBIT
"A" attached to the Third Amendment.
c. (i) THE OVERLINE LOAN COMMITMENT -- USE OF PROCEEDS. From the
date of the Third Amendment and until the Overline Loan
Maturity Date, the Bank agrees to make Advances
(collectively, the "Overline Loan") under a revolving line of
credit from time to time to the Company of amounts not
exceeding the lesser of Two Million Eight Hundred Thousand
and No/100 Dollars ($2,800,000.00) (the "Overline Loan
Commitment"), or the Overline Loan Availability Amount in the
aggregate at any time outstanding, provided that all of the
conditions of lending stated in Section 9 of this Agreement
have been fulfilled at the time of each Advance. Proceeds of
the Overline Loan may be used by the Company only to fund
working capital requirements resulting from the order the
Company received from Sam's Club a division of Walmart, Inc.
for desk furniture.
c. (ii) METHOD OF BORROWING. The obligation of the Company to repay
the Overline Loan shall be evidenced by a promissory note
(the "Overline Note") of the Company in the form of EXHIBIT
"B" attached to the Third Amendment.
3. REPRESENTATIONS AND WARRANTIES. To induce the Bank to enter into
this Third Amendment, the Company affirms that the representations and
warranties contained in the Original Agreement are correct as of the date of
this Third Amendment, except that (i) they shall be deemed also to refer to this
Third Amendment, as well as all documents named herein, and (ii) Section 5.d
shall be deemed also to refer to the most recent audited and unaudited financial
statements of the Company furnished to the Bank.
4. AFFIRMATIVE COVENANTS. Section 7.g(ii) of the Original Agreement is
amended in its entirety to read as follows:
g. (ii) TANGIBLE NET WORTH. The Company shall maintain its Tangible
Net Worth at levels not less than those shown in the
following table during the periods indicated:
-2-
PERIOD TANGIBLE NET WORTH
------ ------------------
at fiscal year end 1994 and
until fiscal year end 1995 $ 8,800,000
at fiscal year end 1995 and
until fiscal year end 1996 $ 9,500,000
at fiscal year end 1996 and
until fiscal year end 1997 $10,500,000
at fiscal year end 1997 and
all times thereafter $11,500,000
5. EVENTS OF DEFAULT. The Company certifies that no Event of Default
or Unmatured Event of Default under the Original Agreement, as amended by this
Third Amendment, has occurred and is continuing as of the date of this Third
Amendment.
6. CLOSING DOCUMENTS. As conditions precedent to the effectiveness of
this Third Amendment, the Bank shall first receive the following
contemporaneously with the execution and delivery of this Third Amendment, each
duly executed, dated and in form and substance satisfactory to the Bank:
A. The Revolving Note in the form attached as EXHIBIT "A" to this Third
Amendment;
B. The Overline Note in the form attached as EXHIBIT "B" to this Third
Amendment;
C. A certified copy of the resolutions of the Board of Directors of the
Company, authorizing the execution, performance and delivery of this
Third Amendment and the other documents named herein; and
D. Such other documents as are reasonably required by the Bank.
7. EFFECT OF THIRD AMENDMENT. Except as amended in this Third
Amendment, all of the terms and conditions of the Original Agreement shall
continue unchanged and in full force and effect together with this Third
Amendment.
IN WITNESS WHEREOF, the Company and the Bank, by their respective duly
authorized officers, have executed and delivered in Indiana this Third Amendment
to Amended and Restated Credit Agreement on this day of , 1995.
DMI FURNITURE, INC.
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx, Chief Financial
Officer
BANK ONE, INDIANAPOLIS, NA
By:
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Xxxxxx X. Xxxxxxx, Vice President
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