Norwest Bank Minnesota South,
National Association First Amendment
This First Amendment (the "First Amendment") dated as of October 21, 1996 is
between Norwest Bank Minnesota South, National Association (the "Bank") and
Xxxxxxx Electronics, Incorporated (the "Borrower").
BACKGROUND
The Borrower and the Bank entered into a credit agreement (the "Agreement")
dated January 31, 1996, pursuant to which the Bank extended to the Borrower a
$2,000,000.00 revolving line of credit (the "Line"). Borrowings under the Line
are evidenced by a revolving note dated the same date as the Agreement (the
"January 1996 Revolving Note").
The Borrower has requested that the Bank increase the Line to $3,500,000.00 and
provide it with a new $500,000.0 term loan to be used to payoff a portion of the
outstanding balance of the Line. The Bank is willing to grant these requests
subject to the terms and conditions of this First Amendment. Capitalized terms
not otherwise defined in this First Amendment shall have the meaning given them
in the Agreement.
In consideration of the premises, the Bank and the Borrower agree that the
Agreement is hereby amended as follows:
1. Section 1.1 of the Agreement is hereby deleted in its entirety and
restated as follows:
1.1 Line of Credit Amount. during the Line Availability Period defined
below, the Bank agrees to provide a conditional revolving line of
credit (the "Line") to the Borrower. Outstanding amounts under the Line
will not, at any one time, exceed the lesser of 1) the Borrowing Base
less the amount of principal and interest outstanding under the Term
Loan or 2) Three Million Five Hundred and 00/100 Dollars
($3,500,000.00). The Borrowing Base is defined in Exhibit A-1 of this
Agreement. This is a conditional revolving line of credit and each
advance under the Line, if made, will be at the sole discretion of the
Bank.
2. Section 1.4 of the Agreement is hereby deleted in its entirety and
restated as follows:
1.4 Mandatory Prepayment. If at any time the principal outstanding
under the Revolving Note exceeds the lesser of 1) the Borrowing Base
less the amount of principal and interest outstanding under the Term
Loan or 2) $3,500,000.00, the Borrower must immediately prepay the
Revolving Note to eliminate the excess.
3. A new Section 1A of the Agreement shall be added as follows:
1A. TERM LOAN
1A.1 Term Loan Amount. The Bank agrees to provide a term loan to the
Borrower in the amount of Five Hundred Thousand and 00/100 Dollars
($500,000.00) (the "Term Loan"), provided that all conditions precedent
described in this Agreement have been met and that the Borrower is not
otherwise in default as of the date of disbursement. The Term Loan is
available in one disbursement on the date of this First Amendment.
1A.2 The Term Note. The Borrower's obligation to repay outstandings
under the Term Loan shall be evidenced by a promissory note (the "Term
Note") dated as of the date of this First Amendment. Reference is made
to the Term Note for terms relating to interest rate, repayment and
other conditions governing the Term Loan.
4. Section 7.2(a) of the Agreement is hereby deleted in its entirety and
restated as follows:
(a) Tangible Net Worth. Maintain a positive Tangible Net Worth as of
December 31, 1996 that is no less than the Borrower's Tangible Net
Worth as of December 31, 1995.
"Tangible Net Worth" means total assets less total liabilities and less
the following types of assets: (1) leasehold improvements; (2)
receivables and other investments in or amounts due from any
shareholder, director, officer, employee or other person or entity
related to or affiliated with the Borrower; (3) goodwill, patents,
copyrights, mailing lists, trade names, trademarks, servicing rights,
organizational and franchise costs, bond underwriting costs and other
like assets properly classified as intangible.
5. Section 7.2(b) of the Agreement is hereby deleted in its entirety and
restated as follows:
(b) Total Liabilities to Tangible Net Worth Ratio. Maintain a ratio of
total liabilities to Tangible Net Worth equal to or less than 3.00 to
1.0 as of December 31, 1996.
6. Simultaneously with the execution of this First Amendment, the Borrower shall
execute and deliver to the Bank a revolving note (the "Revolving Note") in form
and content acceptable to the Bank, which shall replace, but not be deemed to
satisfy, the January 1996 Revolving Note. The initial balance of the Revolving
Note shall be the balance of the January 1996 Revolving Note as of the date of
this First Amendment. Each reference in the Agreement to the Revolving Note
shall be deemed to refer to the Revolving Note dated as of the date of this
First Amendment.
7. The Revolving Note and the Term Note shall collectively be referred to in the
Agreement as the "Notes". Each reference in Section 8 of the Agreement to the
"Revolving Note" shall be amended to refer to the "Notes".
8. Amended Exhibits A-1 and A-2 attached hereto shall replace Exhibits A-1 and
A-2 to the Agreement.
9. The Borrower hereby represents and warrants to the Bank as follows:
A. The Agreement as amended by this First Amendment remains in
full force and effect.
B. The Borrower has no knowledge of any default under the
terms of the Agreement or the Revolving Note, or of any event that with
notice or the lapse of time or both would constitute a default under
the Agreement or any such notes.
C. The execution, delivery and performance of this First
Amendment, the Revolving Note and the Term Note are within its
corporate powers, have been duly authorized and are not in
contravention of law or the terms of the Borrower's articles of
incorporation or by-laws, or of any undertaking to which the Borrower
is a part or by which it is bound.
D. The resolutions set forth in the Corporate Certificate of
Authority dated October 25, 1991 and delivered by the Borrower to the
Bank have not been amended or rescinded, and remain in full force and
effect.
10. Except as modified by this First Amendment, the Agreement remains unchanged
and in full force and effect.
IN WITNESS WHEREOF, the Bank and Borrower have executed this First Amendment as
of the date and year first above written.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION XXXXXXX ELECTRONICS, INCORPORATED
By /s/ Xxxxxxx X. Xxxx By /s/ X. X. Xxxxxxx
Its: Vice President Its: President and CEO
AMENDED EXHIBIT A-1
BORROWING BASE DEFINITION
"Borrowing Base" means the sum of 80% of Eligible Accounts Receivable (as
defined below) plus 60% of Eligible inventory (as defined below).
Eligible Accounts Receivable means all accounts receivable except those which
are:
1) Greater Than 90 days past the invoice date.
2) Due from an account debtor, 10% or more of whose accounts owed to
the Borrower are more than 90 days past the invoice date.
3) Subject to offset or dispute.
4) Due from an account debtor who is subject to any bankruptcy
proceeding.
5) Owed by a shareholder, subsidiary, affiliate, officer or employee of
the Borrower.
6) Not subject to a perfected first lien security interest in favor of
the Bank.
7) Due from an account debtor located outside the United States and not
supported by a standby letter of credit acceptable to the Bank.
8) Due from a unit of government, whether foreign or domestic.
9) Otherwise deemed ineligible by the Bank in its reasonable discretion.
Eligible inventory means all inventory of the Borrower, at the lower of cost or
market as determined by generally accepted accounting principals, except
inventory which is:
1) In transit; or located at any warehouse not approved by the Bank.
2) Covered by a warehouse receipt, xxxx of lading or other document of
title.
3)On consignment to or from any other person or subject to any bailment.
4) Damaged, obsolete or not salable in the Borrower's ordinary course of
business.
5) Subject to a perfected first lien security interest in favor of any
third party.
6) Supplies or parts inventory.
7) Otherwise deemed ineligible by the Bank in its reasonable discretion.
AMENDED EXHIBIT A-2
XXXXXXX ELECTRONICS, INCORPORATED
BORROWING BASE CERTIFICATE
To: Norwest Bank Minnesota South,
National Association
Second and Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000-0000
(the "Bank")
Xxxxxxx Electronics, Incorporated (the "Borrower") certifies that the following
computation of the Borrowing Base was performed as of __________________ in
accordance with the Borrowing Base definitions set forth in Amended Exhibit A-1
to the Credit Agreement between the Bank and the Borrower dated January 31,
1996, as amended by a First Amendment dated October 21, 1996.
Total Accounts Receivable $
Less: 1) Greater than 90 days in age $
2) Other ineligibles $
Eligible Accounts Receivable $
80% of Eligible Accounts Receivable $
Total Inventory $
Less: Ineligible Inventory $
Eligible Inventory $
60% of Eligible Inventory $
Total Borrowing Base $
Less balance of Term Loan $
Less Total Line Outstandings $
Excess (Deficit) $
XXXXXXX ELECTRONICS, INCORPORATED
By:
Its:
