EXHIBIT 10.55
LIMITED WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT
This LIMITED WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT (this "Waiver and Amendment") is entered into as of this _25th day of
August, 2004, by NAVARRE CORPORATION, a Minnesota corporation ("Borrower"), the
Credit Parties signatory hereto, GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, as agent (the "Agent") for itself and the Lenders under
and as defined in the Credit Agreement (as hereinafter defined), and the
Lenders. Unless otherwise specified herein, capitalized terms used in this
Waiver and Amendment shall have the meanings ascribed to them by the Credit
Agreement.
RECITALS
WHEREAS, the Borrower, the Credit Parties, the Agent and the Lenders have
entered into that certain Amended and Restated Credit Agreement, dated as of
June 18, 2004 (as amended, supplemented, restated or otherwise modified from
time to time, the "Credit Agreement"); and
WHEREAS, the Borrower, the Credit Parties, the Agent and the Lenders have
agreed to waive and amend certain provisions of the Credit Agreement as herein
set forth.
NOW THEREFORE, in consideration of the foregoing recital, mutual
agreements contained herein and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Borrower, the Credit
Parties, the Agent, and Lenders hereby agree as follows:
SECTION 1. LIMITED WAIVER. The Agent and the Lenders hereby waive any breach or
violation of the Credit Agreement (and any resulting Event of Default) which has
occurred solely as a result of the failure of the Borrower to comply with the
provisions of clause (k) of Section 6.2 of the Credit Agreement to the extent,
and solely to the extent, of the portion of Mix & Burn Loans extended by the
Borrower to Mix & Burn in the principal amount that is in excess of the
aggregate principal amount of $500,000 permitted under clause (k) of Section 6.2
of the Credit Agreement prior to the date hereof.
SECTION 2. AMENDMENTS.
(a) Section 6.2 of the Credit Agreement is hereby amended and restated to
read in its entirety as follows:
"6.2. Investments; Loans and Advances. No Credit Party shall make or
permit to exist any investment in, or make, accrue or permit to exist
loans or advances of money to, any Person, through the direct or indirect
lending of money, holding of securities or otherwise, except that: (a)
Borrower, Encore Software and BCI Eclipse may hold investments comprised
of notes payable, or stock or other securities issued by Account Debtors
to Borrower, Encore Software or BCI Eclipse, as applicable pursuant to
negotiated agreements with respect to settlement of such Account Debtor's
Accounts in the ordinary course of business, so long as the aggregate
amount of such Accounts so settled by Borrower, Encore Software and BCI
Eclipse does not exceed $500,000 (in the aggregate for Borrower, Encore
Software and BCI Eclipse combined); (b) each Credit Party may maintain its
existing investments in its Subsidiaries as of the Closing Date; (c)
Borrower may maintain Eligible Certificate of Deposits; (d) so long as no
Default or Event of Default has occurred and is continuing and there is no
outstanding Revolving Loan or Acquisition Loan balance, Borrower may make
investments, subject to Control Letters in favor of Agent for the benefit
of Lenders or otherwise subject to a perfected security interest in favor
of Agent for the benefit of Lenders, in (i) marketable direct obligations
issued or unconditionally guaranteed by the United States of America or
any agency thereof maturing within one year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one year from the
date of creation thereof and currently having the highest rating
obtainable from either Standard & Poor's Ratings Group or Xxxxx'x
Investors Service, Inc., (iii) certificates of deposit maturing no more
than one year from the date of creation thereof issued by (A) the Business
Bank, a Minnesota corporation, or (B) commercial banks incorporated under
the laws of the United States of America, each having combined capital,
surplus and undivided profits of not less than $300,000,000 and having a
senior unsecured rating of "A" or better by a nationally recognized rating
agency (an "A Rated Bank"), (iv) time deposits maturing no more than 30
days from the date of creation thereof with A Rated Banks and (v) mutual
funds that invest solely in one or more of the investments described in
clauses (i) through (iv) above; (e) Borrower, Encore Software and BCI
Eclipse may provide advances to Vendors described in Part A of Disclosure
Schedule 6.2; (f) Borrower, Encore Software and BCI Eclipse may provide
advances to Vendors so long as (i) at the time of each such advance the
Borrowing Availability immediately after giving effect to such advance is
at least $20,000,000, (ii) the aggregate outstanding amount of advances to
Vendors permitted solely pursuant to Section 6.2(e) and this Section
6.2(f) does not exceed $15,000,000 at any time and (iii) with respect to
each advance to a Vendor to be made by Encore Software or BCI Eclipse,
immediately after giving effect thereto the Borrower would be permitted to
make at least $500,000 of additional advances to Encore Software or BCI
Eclipse, as applicable pursuant to Section 6.2(i) hereof (provided,
however, that the amount set forth in this Section 6.2(f) shall be reduced
from time to time by the amount of advances to Vendors otherwise permitted
by Section 6.2(e) and/or Section 6.2(f) which have been written off as
uncollectible in accordance with Borrower's policies and as determined in
accordance with GAAP to the extent that the amount of such write off has
not caused a reduction in the EBITDA of Borrower in the fiscal period such
write off is taken; (g) Borrower may provide advances to Vendors described
in Part B of Disclosure Schedule 6.2; (h) Borrower may provide advances by
a Credit Party to its employees expressly permitted by Section 6.4(b)
hereof; (i) Borrower may make loans to Encore Software in an aggregate
outstanding principal amount not to exceed, at any time, $10,000,000; (j)
the Borrower may make loans to BCI Eclipse in an aggregate outstanding
principal amount not to exceed, at any time, $5,000,000; (k) the Borrower
may (i) make one or more loans (each a "Mix & Burn Loan") to Mix & Burn,
Inc., a Minnesota corporation ("Mix & Burn") pursuant to that certain
Amended and Restated Discretionary Revolving Loan Agreement and that
certain Second Discretionary
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Revolving Loan Agreement, each dated as of June 29, 2004 between the
Borrower and Mix & Burn and those certain Amended and Restated Promissory
Note and Promissory Note, each dated as of June 29, 2004 by Mix & Burn in
favor of Borrower (each a "Mix & Burn Promissory Note"), as long as (a)
the aggregate principal amount of all such Mix & Burn Loans does not
exceed $1,500,000, (b) the Mix & Burn Loans are fully secured by fully
perfected first priority Liens in and to all or substantially all of the
assets of Mix & Burn pursuant to that certain Amended and Restated
Security Agreement dated as of June 29, 2004 between the Borrower and Mix
& Burn (the "Mix & Burn Security Agreement"), and (c) Borrower has granted
to Agent, for itself and the benefit of Lenders, fully perfected first
priority Liens, pursuant to documentation in form and substance
satisfactory to Agent, in and to the Mix & Burn Promissory Notes, the
Liens granted to Borrower under the Mix & Burn Security Agreement, all of
the Stock owned by Borrower from time to time in Mix & Burn whether (1)
Borrower has acquired such Stock as a result of the conversion of the Mix
& Burn Promissory Notes into equity, (2) consisting of warrants issued by
Mix & Burn in favor of the Borrower in connection with the Mix & Burn
Loans or (3) Borrower has acquired such Stock in any other manner, (ii)
own Stock in Mix & Burn issued to Borrower for no additional consideration
in connection with the Mix & Burn Loans, (iii) convert the obligations
relating to the Mix & Burn Loans into Stock of Mix & Burn and own such
Stock on terms and subject to conditions satisfactory to Agent; and (l)
other investments not exceeding $100,000 in the aggregate at any time
outstanding."
(b) Section 6.6 of the Credit Agreement is hereby amended and restated to
read in its entirety as follows:
"6.6 Guaranteed Indebtedness. No Credit Party shall create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a) by
endorsement of instruments or items of payment for deposit to the general
account of any Credit Party, (b) for Guaranteed Indebtedness incurred for
the benefit of any other Credit Party if the primary obligation is
expressly permitted by this Agreement, (c) for Guaranteed Indebtedness
incurred by Borrower pursuant to that certain Limited Guaranty, dated as
of July 22, 2004, by Borrower in favor of BMG Music, a New York general
partnership guaranteeing certain Indebtedness of Mix & Burn as set forth
is such Limited Guaranty as in effect as of the date thereof."
SECTION 3. EFFECTIVENESS. The effectiveness of this Waiver and Amendment is
subject to the satisfaction of each the following conditions precedent:
(a) this Waiver and Amendment shall have been duly executed and delivered
by the Borrower, the Credit Parties, the Agent and each Lender;
(b) the Agent shall have received a certified copy of each of (i) that
certain Amended and Restated Discretionary Revolving Loan Agreement and Second
Discretionary Revolving Loan Agreement, each dated as of June 29, 2004 between
the Borrower and Mix & Burn; (ii) those certain Amended and Restated Promissory
Note and Promissory Note, each dated as of June 29, 2004 by Mix & Burn in favor
of Borrower; (iii) that certain Amended and Restated Security Agreement dated as
of June 29, 2004 between the Borrower and Mix & Burn; (iv) that
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certain Amended and Restated Warrant dated as of June 29, 2004 issued by Mix &
Burn in favor of Borrower (the "Mix & Burn Warrant"); (v) all related
agreements, documents, UCC Financing Statements and other instruments executed
and/or delivered in connection therewith (collectively, the "Mix & Burn
Agreements") and the Mix & Burn Agreements shall be in form and substance
satisfactory to Agent; and (vi) that certain Limited Guaranty, dated as of June
29, 2004, by Borrower in favor of BMG Music, a New York general partnership;
(c) The Agent shall have received a Pledge Amendment, in form and
substance satisfactory to Agent, executed by Borrower in favor of Agent,
pledging each Mix & Burn Promissory Note and the Mix & Burn Warrant, together
with (i) an original copy of the Mix & Burn Promissory Notes endorsed to Agent,
and (ii) an original copy of the Mix & Burn Warrant and related undated, blank
executed warrant power; and
(d) The representations and warranties contained herein shall be true and
correct in all respects.
SECTION 4. REPRESENTATIONS AND WARRANTIES. In order to induce the Agent and each
Lender to enter into this Waiver and Amendment, each Credit Party hereby
represents and warrants to the Agent and each Lender, which representations and
warranties shall survive the execution and delivery of this Waiver and
Amendment, that:
(a) all of the representations and warranties contained in the Credit
Agreement and in each Loan Document are true and correct as of the date hereof
after giving effect to this Waiver and Amendment (determined as if all
references to "Closing Date" were references to August ___, 2004), except to the
extent that any such representations and warranties expressly relate to an
earlier date;
(b) the execution, delivery and performance by such Credit Party of this
Waiver and Amendment has been duly authorized by all necessary corporate action
required on its part and this Waiver and Amendment, and the Credit Agreement is
the legal, valid and binding obligation of such Credit Party enforceable against
such Credit Party in accordance with its terms, except as its enforceability may
be affected by the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or affecting the
rights or remedies of creditors generally;
(c) Neither the execution, delivery and performance of this Waiver and
Amendment by such Credit Party, the performance by such Credit Party of the
Credit Agreement nor the consummation of the transactions contemplated hereby
does or shall contravene, result in a breach of, or violate (i) any provision of
any Credit Party's certificate or articles of incorporation or bylaws or other
similar documents, or agreements, (iii) any law or regulation, or any order or
decree of any court or government instrumentality, or (iii) any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which any
Credit Party or any of its Subsidiaries is a party or by which any Credit Party
or any of its Subsidiaries or any of their property is bound, except in any such
case to the extent such conflict or breach has been waived herein or by a
written waiver document, a copy of which has been delivered to Agent on or
before the date hereof; and
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(d) No Default or Event of Default has occurred and is continuing.
SECTION 5. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.
(a) Except as specifically set forth above, the Credit Agreement and the
other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed; and
(b) The waiver and amendments set forth herein is effective solely for the
purposes set forth herein and shall be limited precisely as written, and shall
not be deemed to (i) be a consent to any amendment, waiver or modification of
any other term or condition of the Credit Agreement or any other Loan Document,
(ii) operate as a waiver or otherwise prejudice any right, power or remedy that
the Agent or the Lenders may now have or may have in the future under or in
connection with the Credit Agreement or any other Loan Document or (iii)
constitute a waiver of any provision of the Credit Agreement or any Loan
Document, except as specifically set forth herein. Upon the effectiveness of
this Waiver and Amendment, each reference in the Credit Agreement to "this
Agreement", "herein", "hereof" and words of like import and each reference in
the Credit Agreement and the Loan Documents to the Credit Agreement shall mean
the Credit Agreement as amended hereby. This Waiver and Amendment shall be
construed in connection with and as part of the Credit Agreement.
SECTION 6. COSTS AND EXPENSES. As provided in Section 11.3 of the Credit
Agreement, the Borrower agrees to reimburse Agent for all fees, costs, and
expenses, including the reasonable fees, costs, and expenses of counsel or other
advisors for advice, assistance, or other representation in connection with this
Waiver and Amendment.
SECTION 7. GOVERNING LAW. THIS WAIVER AND AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
SECTION 8. HEADINGS. Section headings in this Waiver and Amendment are included
herein for convenience of reference only and shall not constitute part of this
Waiver and Amendment for any other purposes.
SECTION 9. COUNTERPARTS. This Waiver and Amendment may be executed in any number
of counterparts, each of which when so executed shall be deemed an original, but
all such counterparts shall constitute one and the same instrument.
(signature page follows)
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Waiver and Amendment as of the date first written above.
BORROWER:
NAVARRE CORPORATION
By:_____________________________
Name:___________________________
Title:__________________________
GENERAL ELECTRIC CAPITAL
CORPORATION, AS AGENT AND LENDER
By:_____________________________
Name:___________________________
Title:__________________________
S-1
[Signature Page to Limited Waiver and First Amendment To Credit Agreement]
IN WITNESS WHEREOF, this Waiver and Amendment has been duly executed as of
the date first written above by below Persons in their capacity as Credit
Parties not as Borrower.
ENCORE SOFTWARE, INC., as Credit Party
By:______________________________________
Name:____________________________________
Title:___________________________________
BCI ECLIPSE COMPANY, LLC, as Credit Party
By:______________________________________
Name:____________________________________
Title:___________________________________
S-2
[Signature Page to Limited Waiver and First Amendment To Credit Agreement]
