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EXHIBIT 10D(1)
FIRST AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT is dated
as of March 19, 2001 ("this Amendment"), by and among NORSTAN, INC., a Minnesota
corporation (the "Borrower"), the banks which are signatories hereto (each
individually, a "Bank," and collectively, the "Banks"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, one of the Banks, as agent for the
Banks (in such capacity, the "Agent").
RECITALS
A. The Borrower, the Banks and the Agent are parties to an Amended and
Restated Credit Agreement dated as of December 20, 2000 (the "Credit
Agreement").
B. The Borrower, NCI and Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx") have entered
into, and consummated the transactions contemplated by, that certain Purchase
Agreement dated as of January 1, 2001 among them (the "Connaissance Sale
Agreement") whereunder, among other things, NCI has sold to Lusenhop all of its
member interests in Connaissance Consulting, LLC, a Minnesota limited liability
company ("Connaissance").
C. Prior to the date of this Amendment, (i) the Agent has received the
sum of $3,000,000 from the proceeds of the transactions consummated pursuant to
the Connaissance Sale Agreement, which amount the Agent has applied in the
manner set forth in Section 2.6(c) of the Credit Agreement and (ii) the Agent
has executed and delivered to the Borrower UCC-3 financing statements (A)
terminating the UCC-1 financing statements filed by the Agent with respect to
Connaissance and (B) amending the UCC-1 financing statement filed by the Agent
with respect to NCI's Pledge Agreement to release the Agent's security interest
in the member interests in Connaissance pledged by NCI thereunder.
D. NCI and Ericsson, Inc. ("Ericsson") have entered into, and
consummated the transactions contemplated by, the following documents among
them, each dated as of December 29, 2000 (the "Ericsson Purchase Documents"):
(i) Amended and Restated Asset Purchase Agreement, (ii) Administrative and Back
Office Service Agreement, (iii) MD110 Contracts Back-to-Back Agreement and (iv)
Shared Office Rental Agreement. Further, NCI has executed and delivered to
Ericsson its Promissory Note in the amount of $1,981,384 dated as of December
29, 2000 (the "Ericsson Note") and an Amended and Restated Security Agreement
dated as of January 16, 2001 (collectively with the Ericsson Note and the
Ericsson Purchase Documents, the "Ericsson Documents"). Under the Ericsson
Documents, NCI purchased certain assets from Ericsson and agreed to grant to
Ericsson a security interest in certain of such assets to secure a loan by
Ericsson to NCI to finance a portion of the purchase price thereof.
E. The Borrower has requested that the Banks (i) consent to the
Connaissance Sale Agreement and the transactions consummated thereby, (ii)
consent to the Ericsson Documents and the transactions consummated thereby and
(iii) agree to amend certain provisions of, and waive certain Events of Default
under, the Credit Agreement as set forth in this Amendment.
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NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Definitions. Capitalized terms used herein and not otherwise
defined herein, but which are defined in the Credit Agreement, shall have the
meanings ascribed to such terms in the Credit Agreement unless the context
otherwise requires.
Section 2. Amendments to Credit Agreement. Subject to Section 5 hereof,
the Credit Agreement is hereby amended as follows:
(a) Amended Definitions. Section 1.1 of the Credit Agreement
is amended by deleting the definitions of "Guarantors" and "Security
Documents" as they appear therein and substituting in lieu thereof the
following definitions in the appropriate alphabetical order:
"Connaissance Notes": Collectively, (a) that certain
Promissory Note dated January 31, 2001 made by Xxxxxxx X.
Xxxxxxxx in favor of NCI in the amount of $1,000,000, and (b)
that certain Promissory Note dated January 31, 2001 made by
Xxxxxxx X. Xxxxxxxx in favor of NCI in the amount of
$12,000,000.
"Connaissance Note Collateral": Collectively, (a) the
Connaissance Notes and the instruments and other agreements
evidencing the Connaissance Notes, and all interest, cash,
instruments, agreements and other property from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Connaissance Notes, (b) any
and all collateral security (including the Subordinated
Connaissance Note) now or hereafter securing all or any items
of the Connaissance Notes, and all agreements granting such
security, and all rights, remedies, powers and privileges of
NCI under all of the foregoing, and (c) all proceeds of any
and all of the foregoing (including proceeds that constitute
property of types described above in this definition).
"Connaissance": Connaissance Consulting, LLC, a
Minnesota limited liability company.
"Guarantors": Norstan Financial Services, Inc., a
Minnesota corporation; Norstan Communications, Inc., a
Minnesota corporation; Norstan Network Services, Inc., a
Minnesota corporation; Norstan International, Inc., a
Minnesota corporation; Norstan-UK Limited, a corporation
incorporated in London, England; Norstan Consulting Holding
Company, a Minnesota corporation; Norstan Consulting, Inc., a
Minnesota corporation; Norstan Canada, Ltd., a Canadian
corporation; Vibes Technologies, Inc., a Minnesota
corporation; Norstan Canada, Inc. a Minnesota corporation;
Norstan Information Systems, Inc., a Minnesota corporation;
and Norstan Network Services of New Hampshire, Inc., a New
Hampshire corporation.
"Pledge Agreements": Collectively, the separate
Pledge Agreements of the Borrower, Norstan Canada, NCI,
Norstan Network Services, Inc. and Norstan
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Consulting Holding Company pursuant to which the Agent has
been granted, for the benefit of the Banks, a security
interest in the capital stock (or the equivalent) of certain
direct and indirect Subsidiaries of the Borrower, as any of
the same may be amended, supplemented, extended, restated or
otherwise modified from time to time.
"Security Documents": The Guaranties, the Security
Agreements, the Pledge Agreements, any collateral assignment
documents executed and delivered by the Borrower or any
Subsidiary under Section 3.1(a)(xv) and any other documents or
instruments executed and delivered in connection with any of
the forgoing.
"Subordinated Connaissance Note": Senior Subordinated
Promissory Note made by Connaissance in favor of NCI in the
amount of $9,953,931.00.
(b) Connaissance Note Collateral. The following new Section
5.16 of the Credit Agreement is added immediately following Section
5.15 of the Credit Agreement:
Section 5.16 Connaissance Note Collateral.
(a) The Borrower acknowledges and confirms,
and shall cause NCI to acknowledge and confirm, that
the Connaissance Note Collateral constitutes
"Collateral" under and within the meaning of NCI's
Security Agreement. Except as the Agent may otherwise
agree, the Borrower shall cause all certificates,
instruments and other agreements representing or
evidencing Connaissance Note Collateral received by
the Borrower or any Subsidiary to be delivered to the
Agent promptly upon receipt thereof. All such
certificates, instruments and agreements shall be in
suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer
or assignment in blank, all in form and substance
satisfactory to the Agent. Neither the Borrower nor
any Subsidiary shall forgive, cancel, compromise,
modify, amend or extend the time for payment of, or
waive any default under, any of the Connaissance Note
Collateral, or modify or amend, or waive any default
under any agreement with respect to the Connaissance
Note Collateral, or consent to or acquiesce in any of
the foregoing, without in each case the prior written
consent of the Banks.
(b) Notwithstanding whether an Event of
Default has occurred, any and all cash paid, payable
or otherwise distributed in respect of principal of,
or in exchange for, any Connaissance Note Collateral,
shall be applied, and shall be forthwith delivered to
the Agent to apply, to the Obligations in the manner
set forth in Section 2.6(c) hereof and shall, if
received by the Borrower or any Subsidiary, be
received in trust for the benefit of the Agent, be
segregated from the other property or funds of the
Borrower or such Subsidiary, and be forthwith
delivered to the Agent in the same form as so
received (with any necessary endorsement or
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assignment). Notwithstanding the forgoing, upon the
occurrence of an Event of Default and at any time
during the continuance thereof, the Agent may take
any action with respect to the Connaissance Note
Collateral specified in Section 20 of NCI's Security
Agreement or otherwise.
(c) The provisions of this Section 5.16
shall supplement, and be cumulative of, NCI's
Security Agreement.
(c) Sales of Assets. Sections 6.2(d) and 6.2(e) of the Credit
Agreement are each amended by (i) deleting the references to the clause
"Section 6.13(d)" as they appear therein and replacing each such
reference with the clause "Section 6.13(b)" and (2) inserting the
clause ", and the residual interest of the equipment leased under,"
immediately following the clause "total present value of the rental
streams under" as such clause appears in each such section.
(d) Investments. The following new Section 6.10(r) of the
Credit Agreement is added immediately following Section 6.10(q) of the
Credit Agreement:
(r) The Connaissance Notes.
(e) Liens. Section 6.12(l) of the Credit Agreement is deleted
in its entirety and the following is substituted in lieu thereof:
(l) Purchase money Liens granted by NCI to Ericsson,
Inc. against inventory sold by Ericsson, Inc. to NCI pursuant
to the Ericsson Acquisition Documents, provided that that
certain Intercreditor Agreement dated as of the date of the
First Amendment hereto between Ericsson, Inc. and the Agent
remains unmodified and in full force and effect and has not
been repudiated by NCI or Ericsson, Inc.
(m) Purchase money Liens granted by NCI to Ericsson
Webcom, Inc. against inventory sold by Ericsson Webcom, Inc.
to NCI, provided that that certain Intercreditor Agreement
dated as of the date of the First Amendment hereto between
Ericsson Webcom, Inc. and the Agent remains unmodified and in
full force and effect and has not been repudiated by NCI or
Ericsson Webcom, Inc.
(f) Events of Default. Section 7.1(c) of the Credit Agreement
is amended by deleting the clause "or 5.15" as it appears therein and
substituting in lieu thereof the clause ", 5.15 or 5.16".
Section 3. Consent; Waiver of Events of Default and Termination of
Connaissance Security Documents. Upon the satisfaction of the conditions set
forth in Section 5 below:
(a) Each Bank and the Agent (i) hereby consents to the
execution and delivery by the Borrower and NCI of the Connaissance Sale
Agreement and the consummation of the transactions contemplated thereby
and (ii) hereby waives any default or Event of
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Default arising under Sections 4.10, 4.19, 6.1, 6.2, 6.10, 6.14,
7.1(k), 7.1(m) or 7.1(o) of the Credit Agreement (the "Existing
Connaissance Defaults") due to the matters specified in the forgoing
clause (i). Further, each Bank and the Agent (x) hereby consents to the
execution and delivery by NCI of the Ericsson Documents and the
consummation of the transactions contemplated thereby, (y) hereby
waives any default or Event of Default arising under Sections 6.10(q),
6.11(l) or 6.12(l) of the Credit Agreement (collectively with the
Existing Connaissance Defaults, the "Existing Defaults") due to the
matters specified in the foregoing clause (x) and (z) agrees that the
purchase price paid by NCI in connection with the Ericsson Documents
shall not constitute a "Capital Expenditure" for purposes of Section
6.8 of the Credit Agreement. The Banks' and the Agent's consents and
waivers set forth in the forgoing two sentences are limited to the
specific terms thereof, and nothing herein shall be deemed a waiver by
the Banks or the Agent of any other term, condition, representation or
covenant applicable to the Borrower or any Guarantor under the Loan
Documents (including but not limited to any future occurrence similar
to the Existing Defaults). The waivers by the Banks and the Agent set
forth this subparagraph shall not constitute a waiver by the Banks or
the Agent of any other Default or Event of Default, if any, under any
Loan Document, and shall not be, and shall not be deemed to be, a
course of action with respect thereto upon which the Borrower may rely
in the future, and the Borrower hereby expressly waives any claim to
such effect.
(b) The Guaranty of Connaissance and the Security Agreement of
Connaissance are each hereby terminated for all purposes.
(c) Schedule I attached to NCI's Pledge Agreement is hereby
amended to read as set forth on Exhibit A to this Amendment. Except as
amended by this Amendment, NCI's Pledge Agreement shall remain
unmodified and in full force and effect.
(d) The Borrower acknowledges that the Ericsson Documents
constitute the "Ericsson Acquisition Documents" under and within the
meaning of that term set forth in the Credit Agreement.
Section 4. Representations and Warranties of the Borrower. To induce
the Banks and the Agent to execute and deliver this Amendment (which
representations and warranties shall survive the execution and delivery of this
Amendment), the Borrower represents and warrants to the Agent and the Banks
that:
(a) this Amendment has been duly authorized, executed and
delivered by it and this Amendment constitutes the legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, subject to limitations as to enforceability
which might result from bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating to or
limiting creditors' rights generally;
(b) the Credit Agreement, as amended by this Amendment,
constitutes the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, subject
to limitations as to enforceability which might result
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from bankruptcy, insolvency, reorganization, moratorium or similar laws
or equitable principles relating to or limiting creditors' rights
generally;
(c) the execution, delivery and performance by the Borrower of
the Amendment (i) have been duly authorized by all requisite corporate
action and, if required, shareholder action, (ii) do not require the
consent or approval of any governmental or regulatory body or agency,
and (iii) will not (A) violate (1) any provision of law, statute, rule
or regulation or its certificate of incorporation or bylaws, (2) any
order of any court or any rule, regulation or order of any other agency
or government binding upon it, or (3) any provision of any material
indenture, agreement or other instrument to which it is a party or by
which any of its properties or assets are or may be bound, or (B)
result in a breach of or constitute (alone or with due notice or lapse
of time or both) a default under any indenture, agreement or other
instrument referred to in clause (iii)(A)(3) of this Section 4(c);
(d) as of the date hereof, no Default or Event of Default has
occurred which either (a) is continuing or (b) has not been waived by
the Agent and the Banks as set forth in Section 3 of this Amendment;
and
(e) all the representations and warranties contained in
Article IV of the Credit Agreement are true and correct in all material
respects with the same force and effect as if made by the Borrower on
and as of the date hereof.
(f) (i) the Borrower has furnished to the Agent true, complete
and accurate copies of the Connaissance Sale Agreement, the
Connaissance Note Collateral, and all exhibits, schedules and ancillary
documents related thereto, (ii) the documents specified in the forgoing
clause (i), (A) constitute the entire agreement between the Borrower,
NCI and the other parties thereto with respect to the subject matter
thereof and (B) have not been amended, terminated or otherwise modified
and remain in full force and effect and (iii) the transactions
contemplated by the Connaissance Sale Agreement have been consummated.
Section 5. Conditions to Effectiveness of this Amendment. This
Amendment shall become effective as of January 31, 2001 when each and every one
of the following conditions shall have been satisfied:
(a) The Agent shall have received executed counterparts of
this Amendment, duly executed by the Borrower and each of the Banks.
(b) The Agent shall have received from the Guarantors a
Consent and Agreement of Guarantors in the form of Exhibit B hereto
(the "Guarantor Agreements") duly completed and executed by each
Guarantor.
(c) The Agent shall have received the Intercreditor Agreement
in the form of Exhibit C hereto, duly completed and executed by
Ericsson and NCI.
(d) The Agent shall have received the Intercreditor Agreement
in the form of Exhibit D hereto, duly completed and executed by
Ericsson Webcom, Inc.
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(e) The Agent shall have received all certificates,
instruments and other agreements representing or evidencing the
Connaissance Note Collateral, together with duly executed instruments
of transfer or assignment in blank, all in form and substance
satisfactory to the Agent.
(f) The Agent shall have received a Guaranty and a Security
Agreement for Norstan Information Systems, Inc. ("NIS") in the form
prescribed by the Agent, each duly executed by NIS.
(g) The Agent shall have received a complete copy of the
Bylaws of each of Norstan Communications, Inc., Norstan Consulting
Holding Company and Norstan Canada, Inc.
(h) The Agent shall have received such other documents or
instruments reasonably deemed necessary by the Agent.
Section 6. Affirmation; Reaffirmation. The Agent, each Bank and the
Borrower each acknowledge and affirm that the Credit Agreement, as hereby
amended, is hereby ratified and confirmed in all respects and all terms,
conditions and provisions of the Credit Agreement, except as amended by this
Amendment, shall remain unmodified and in full force and effect. All references
in any document or instrument to the Credit Agreement are hereby amended and
shall refer to the Credit Agreement as amended by this Amendment. The Borrower
confirms to the Agent and each Bank that the Obligations are and continue to be
secured by the security interest granted by the Borrower in favor of the Agent
under the Borrower's Security Agreement and all of the terms, conditions,
provisions, agreements, requirements, promises, obligations, duties, covenants
and representations of the Borrower under such documents and any and all other
documents and agreements entered into with respect to the Obligations are
incorporated herein by reference and are hereby ratified and affirmed in all
respects by the Borrower.
Section 7. General.
(a) The Borrower agrees to reimburse the Agent upon demand for
all reasonable expenses (including reasonable attorneys fees and legal
expenses) incurred by the Agent in the preparation, negotiation and
execution of this Amendment and any other document required to be
furnished herewith, and to pay and save the Agent harmless from all
liability for any stamp or other taxes which may be payable with
respect to the execution or delivery of this Amendment, which
obligations of the Borrower shall survive any termination of the Credit
Agreement.
(b) This Amendment may be executed in as many counterparts as
may be deemed necessary or convenient, and by the different parties
hereto on separate counterparts, each of which, when so executed, shall
be deemed an original but all such counterparts shall constitute but
one and the same instrument.
(c) Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining portions hereof or affecting the
validity or enforceability of such provisions in any other
jurisdiction.
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(d) This Amendment shall be governed by, and construed in
accordance with, the internal law, and not the law of conflicts, of the
State of Minnesota, but giving effect to federal laws applicable to
national banks.
(e) This Amendment shall be binding upon the Borrower, the
Agent and the Banks and their respective successors and assigns, and
shall inure to the benefit of the Borrower, the Agent and the Banks and
the successors and assigns of the Agent and the Banks.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first above written.
NORSTAN, INC.
By /s/ Xxxxxx X. Xxxx
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Its Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as a Bank and as Agent
By /s/ Xxxxx X. Xxxxxx
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Its XX
XXXXXX TRUST AND SAVINGS BANK
By /s/ Xxxxxx X. Xxxxxx
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Its Officer
M&I XXXXXXXX & XXXXXX BANK
By /s/ Xxxx X. Xxxxxx
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Its VP
By /s/ Xxxxxxx X. Xxxxxx
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Its XX
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ Xxxxxxx X. Xxxxxxx
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Its VP
[Signature Page to First Amendment to Amended and Restated Credit Agreement]
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