SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), made and
entered into as of March __, 1997, is by and between THE O'BOISIE CORPORATION,
an Illinois corporation (the "Borrower"), and REPUBLIC ACCEPTANCE CORPORATION,
a Minnesota Corporation (the "Lender").
RECITALS
1. The Lender and the Borrower entered into a Credit Agreement dated
as of July 3, 1996, as amended by that First Amendment to Credit Agreement dated
October __, 1996, (the "Credit Agreement"); and
2. The Borrower desires to amend certain provisions of the
Agreement, and the Lender has agreed to make such amendments, subject to the
terms and conditions set forth in this Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby covenant
and agree to be bound as follows:
Section 1. CAPITALIZED TERMS. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the Credit
Agreement, unless the context shall otherwise require.
Section 2. AMENDMENTS. The Credit Agreement is hereby amended as
follows:
2.1 DEFINITIONS. The definition of "COMMITMENTS", "NOTES", "TOTAL
COMMITMENT AMOUNT"and "TOTAL OUTSTANDINGS" contained in Section 1.1 of the
Credit Agreement are amended in their entirety as follows:
"COMMITMENTS": The Revolving Commitment, the Term Loan Commitment,
the Additional Term Loan Commitment and the Special Term Loan Commitment.
"NOTES": The Revolving Note, The Term Note, the Additional Term Note
and the Special Term Note.
"TOTAL COMMITMENT AMOUNT": The sum of the Revolving Commitment
Amount, the Term Loan Commitment Amount, the Additional Term Loan Commitment
Amount and the Special Term Loan Commitment Amount.
"TOTAL OUTSTANDINGS": At the time of any determination, the sum of
the unpaid balance of the Revolving Note and the unpaid balance of the Term
Note.
Section 1.1 of the Credit Agreement is further amended by adding the
definitions of "SPECIAL TERM LOAN", "SPECIAL TERM LOAN COMMITMENT","SPECIAL
TERM LOAN COMMITMENT AMOUNT" and "SPECIAL TERM NOTE" thereto in correct
alphabetical order:
"SPECIAL TERM LOAN": As defined in Section 2.1.
"SPECIAL TERM LOAN COMMITMENT": The obligation of the Lender to make
a term loan to the Borrower in the Special Term Loan Commitment Amount upon the
terms and subject to the conditions and limitations of this Agreement.
"SPECIAL TERM LOAN COMMITMENT AMOUNT": As defined in Section 2.1.
"SPECIAL TERM NOTE": As defined in Section 2.3.
2.2 ADDITIONAL TERM LOAN. Section 2.1(c) of the Credit Agreement is
amended in its entirety as follows:.
Section 2.1(c) ADDITIONAL TERM LOAN. An Additional Term Loan to
mature April 1, 1998 (the "Additional Term Loan") from the Lender to the
Borrower in the amount of $1,000,000 (the "Additional Term Loan Commitment
Amount").
2.3 SPECIAL TERM LOAN. A new section 2.1(d) is added to provide as
follows:.
Section 2.1(d) SPECIAL TERM LOAN. A Special Term Loan to mature April
1, 1998 (the "Special Term Loan") from the Lender to the Borrower in the amount
of $2,000,000 (the "Special Term Loan Commitment Amount").
2.4 THE NOTES. Section 2.3 of the Credit Agreement is amended in its
entirety as follows:
Section 2.3 THE NOTES. The Advances on the Revolving Loan shall be
evidenced by a single promissory note (the "Revolving Note"), substantially in
the form of Exhibit 2.3 (a) hereto, in the amount of the Revolving Commitment
Amount originally in effect. The Term Loan shall be evidenced by a promissory
note (the "Term Note"), substantially in the form of Exhibit 2.3 (b) hereto, in
an amount equal to the Term Loan Commitment Amount. The Additional Term Loan
shall be evidenced by a promissory note (the "Additional Term Note"),
substantially in the form of Exhibit 2.3 (c) hereto, in an amount equal to the
Additional Term Loan Commitment Amount. The Special Term Loan shall be evidenced
by a promissory note (the "Special Term Note"), substantially in the form of
Exhibit 2.3 (d) hereto, in an amount equal to the Special Term Loan Commitment
Amount. The Lender shall enter in its ledgers and records the payments made on
the Term Loan, the Additional Term Loan, the Special Term Loan and Advances made
and the payments made thereon, and the Lender is authorized by the Borrower to
enter on schedules attached to the Notes a record of such Advances and
repayments.
2.5 INTEREST RATES, INTEREST PAYMENTS AND DEFAULT INTEREST. Section 2.4
of the Credit
Agreement is amended in its entirety as follows:
Section 2.4 INTEREST RATES, INTEREST PAYMENTS AND DEFAULT INTEREST.
Effective as of February 1, 1997, interest shall accrue and be payable on the
unpaid balance of the Revolving Note at a floating rate per annum equal to the
sum of the Reference Rate plus 3.75% (the latter being the "Applicable Revolving
Margin"); PROVIDED, HOWEVER, that any amount of principal of the Revolving Note
not paid when due (whether at such date or upon acceleration following an Event
of Default) shall thereafter bear interest at a floating rate equal to the sum
of (a) the Reference Rate, plus (b) the Applicable Revolving Margin, plus (c)
31/2%. Interest shall accrue and be payable on the unpaid balance of the Term
Note at a floating rate per annum equal to the sum of the Reference Rate plus
3.75% (the latter being the "Applicable Term Margin"); PROVIDED, HOWEVER, that
any amount of principal of the Term Note not paid when due after giving effect
to any applicable grace period, if any (whether at the date scheduled therefor
or upon acceleration following an Event of Default) shall thereafter bear
interest at a floating rate equal to the sum of (a) the Reference Rate, plus (b)
the Applicable Term Margin, plus (c) 3 1/2%. Interest shall accrue and be
payable on the unpaid balance of the Additional Term Note at a floating rate per
annum equal to the sum of the Reference Rate plus 5.00% (the latter being the
"Applicable Additional Term Margin"); PROVIDED, HOWEVER, that any amount of
principal of the Additional Term Note not paid when due after giving effect to
any applicable grace period, if any (whether at the date scheduled therefor or
upon acceleration following an Event of Default) shall thereafter bear interest
at a floating rate equal to the sum of (a) the Reference Rate, plus (b) the
Applicable Additional Term Margin, plus (c) 3 1/2%. Interest shall accrue and be
payable on the unpaid balance of the Special Term Note at a floating rate per
annum equal to the sum of the Reference Rate plus 5.00% (the latter being the
"Applicable Special Term Margin"); PROVIDED, HOWEVER, that any amount of
principal of the Special Term Note not paid when due after giving effect to any
applicable grace period, if any (whether at the date scheduled therefor or upon
acceleration following an Event of Default) shall thereafter bear interest at a
floating rate equal to the sum of (a) the Reference Rate, plus (b) the
Applicable Special Term Margin, plus (c) 3 1/2%. PROVIDED, HOWEVER, that upon
irrevocable payment in full of both the Additional Term Loan and the Special
Term Loan, interest shall accrue and be payable on the unpaid balance of the
Revolving Note at a floating rate per annum equal to the sum of the Reference
Rate plus 1.75% (the latter being the "Future Applicable Revolving Margin");
PROVIDED, HOWEVER, that any amount of principal of the Revolving Note not paid
when due (whether at such date or upon acceleration following an Event of
Default) shall thereafter bear interest at a floating rate equal to the sum of
(a) the Reference Rate, plus (b) the Future Applicable Revolving Margin, plus
(c) 2%. PROVIDED, HOWEVER, that upon irrevocable payment in full of both the
Additional Term Loan and the Special Term Loan, interest shall accrue and be
payable on the unpaid balance of the Term Note at a floating rate per annum
equal to the sum of the Reference Rate plus 1.75% (the latter being the "Future
Applicable Term Margin"); PROVIDED, HOWEVER, that any amount of principal of the
Term Note not paid when due after giving effect to any applicable grace period,
if any (whether at the date scheduled therefor or upon acceleration following an
Event of Default) shall thereafter bear interest at a floating rate equal to the
sum of (a) the Reference Rate, plus (b) the Future Applicable Term Margin, plus
(c) 2%. Interest shall be payable monthly in arrears and upon final payment of
the respective Notes.
2.6 REPAYMENT OF THE ADDITIONAL TERM LOAN. Section 2.7(d) of the Credit
Agreement is
amended in its entirety as follows:
Section 2.7(d) REPAYMENT OF THE ADDITIONAL TERM LOAN. Principal of
the Additional Term Note is payable as provided in the Additional Term Note.
The Borrower may prepay the Additional Term Note at any time without premium or
penalty. Any such prepayment must be accompanied by accrued and unpaid interest
on the amount prepaid. Each partial prepayment shall be in an amount of $1,000
or an integral multiple thereof. Amounts so prepaid cannot be reborrowed. In
the event that Borrower raises equity through an Initial Public Offering
("IPO"), or Private Placement through an Investment Banker ("PPO") the
Additional Term Note shall be due and payable immediately upon the funding of
the IPO or PPO.
2.7 REPAYMENT OF THE SPECIAL TERM LOAN. A new section 2.7(e) is added to
provide as follows:
Section 2.7(e) REPAYMENT OF THE SPECIAL TERM LOAN. Principal of the
Special Term Note is payable as provided in the Special Term Note. The Borrower
may prepay the Special Term Note at any time without premium or penalty. Any
such prepayment must be accompanied by accrued and unpaid interest on the amount
prepaid. Each partial prepayment shall be in an amount of $1,000 or an integral
multiple thereof. Amounts so prepaid cannot be reborrowed. In the event that
Borrower raises equity through an Initial Public Offering ("IPO"), or Private
Placement through an Investment Banker ("PPO") the Special Term Note shall be
due and payable immediately upon the funding of the IPO or PPO.
2.8 MAINTENANCE OF ACCOUNTS. A new section 2.15 is added to provide as
follows:
2.15 MAINTENANCE OF ACCOUNTS. On or before May 30, 1997 the Borrower
shall establish and maintain on deposit with First Bank National Association all
of its operating and payroll accounts.
2.9 SALE OF TRUCKS. A new section 5.11 is added to provide as follows:
5.11 SALE OF TRUCKS. On or before July 1, 1997, Borrower agrees to
sell all trucks owned by it. The proceeds of the sale, net of costs incurred in
connection with the sale, shall immediately be paid to Lender for application on
the loan secured by the truck, with any remaining proceeds being applied to the
Special Term Loan. In the event that Borrower has not sold all trucks owned by
it, by July 1, 1997, Borrower shall enter into an agreement with a Lender
approved liquidator, on terms acceptable to Lender, for the sale of all trucks
owned by Borrower, with the proceeds from such sale applied as set forth above.
2.10 SALE OF PRETZEL LINES. A new section 5.12 is added to provide as
follows:
5.12 SALE OF PRETZEL LINES. In the event that (a) Borrower does not
obtain an IPO or PPO or has not received funding on an IPO or PPO and (b) the
Borrower (i) does not have sufficient cash flow to service its obligations under
the Credit Agreement, or (ii) an Event of Default exists under the Credit
Agreement, then no later than September 1, 1997, Borrower will
sell its pretzel lines and the proceeds of the sale, net of costs incurred in
connection with the sale,shall immediately be paid to Lender for application on
any loan securing the pretzel lines, with any remaining proceeds being applied
to the Special Term Loan. In the event that Borrower has not sold its pretzel
lines, by September 1, 1997, Borrower shall enter into an agreement with a
Lender approved liquidator, on terms acceptable to Lender, for the sale of its
pretzel lines, with the proceeds from such sale applied as set forth above.
2.11 SUCCESS FEE. A new section 5.13 is added to provide as follows:
5.13 SUCCESS FEE. Immediately upon funding of the IPO or PPO,
Borrower shall pay Lender the sum of $75,000 as a success fee.
2.12 RESTRUCTURE FEE. A new section 5.14 is added to provide as follows:
5.14 RESTRUCTURE FEE. Borrower shall pay Lender the sum of $25,000 as
a restructure fee, payable in ten equal weekly installments commencing on March
__,1997, and continuing on the same day of each week until paid in full .
2.13 RESTRUCTURE FEE. A new section 5.15 is added to provide as follows:
5.15 CREDIT ANALYSIS FEE. Borrower shall pay Lender the sum of
$50,000 as a credit analysis fee, payable in ten equal weekly installments
commencing on March __,1997, and continuing on the same day of each week until
paid in full.
2.14 FINANCIAL PROJECTIONS. A new section 5.16 is added to provide as
follows:
5.14 FINANCIAL PROJECTIONS. No later than March 31, 1997 Borrower
shall provide Lender financial projections of the Borrower through the period
ending September 15, 1998, consisting of at least projections of statements of
income, cash flow and changes in stockholders' equity, and a balance sheet.
2.15 A new section 7.1(n) is added to provide as follows:
On or before March 21, 1997 Borrower shall have provided Lender with
Common Stock Purchase Warrants in an amount that constitutes five percent of
the outstanding stock of Borrower, on terms and conditions acceptable to Lender.
Section 3. EFFECTIVENESS OF AMENDMENTS. The amendments contained in
this Amendment shall become effective upon delivery by the Borrower of, and
compliance by the Borrower with, the following:
3.1 This Amendment, duly executed by the Borrower.
3.2 A copy of the resolutions of the Board of Directors of the
Borrower authorizing the execution, delivery and performance of this
Amendment certified as true and
accurate by its Secretary or Assistant Secretary, along with a
certification by such Secretary or Assistant Secretary (i) certifying that
there has been no amendment to the Articles of Incorporation or Bylaws of
the Borrower since true and accurate copies of the same were delivered to
the Lender with a certificate of the Secretary of the Borrower dated July
3, 1996, and (ii) identifying each officer of the Borrower authorized to
execute this Amendment and any other instrument or agreement executed by
the Borrower in connection with this Amendment, and certifying as to
specimens of such officer's signature and such officer's incumbency in such
offices as such officer holds.
3.3 Certified copies of all documents evidencing any necessary
corporate action or consent with respect to this Amendment.
3.4 The Additional Term Note substantially in the form of Exhibit
2.3(c) hereto.
3.5 The Special Term Note substantially in the form of Exhibit 2.3(d)
hereto.
3.6 The duly executed Guaranty of Xxxxxx Xxxxxxxxxx XX.
3.7 The sum of $2,500 as the first installment of the restructure
fee.
3.8 The sum of $5,000 as the first installment of the credit analysis
fee.
3.9 The Borrower shall have satisfied such other conditions as
specified by the Lender or counsel to the Lender, including payment of all
unpaid legal fees and expenses incurred by the Lender through the date of
this Amendment in connection with the Credit Agreement.
Section 4. WAIVER OF EXISTING EVENTS OF DEFAULT. The Lender hereby,
effective as of the date hereof, consents to the Borrower's failure to comply
with the provisions of Sections 2.6 and 5.7 of the Credit Agreement prior to the
date hereof and waives the Lender's right in connection therewith to declare a
default or event of default under the Agreement, to exercise any remedies
arising out of such an event of default or default to the extent (but only to
the extent) that the Lender may have had such rights based solely on the failure
to comply with such provisions prior to the date hereof. This waiver is for the
limited purpose set forth herein and shall not be deemed to (i) be a consent to
any waiver or modification of any other term or condition of the Agreement or
any instrument or agreement referred to therein, or (ii) prejudice any right or
remedy that the Lender may now have (except to the extent such right or remedy
is based upon existing defaults that will not exist after giving effect to the
waiver set forth herein) or may have in the future under or in connection with
the Agreement or any instrument or agreement referred to therein.
Section 5. REPRESENTATIONS; ACKNOWLEDGMENTS. The Borrower hereby
represents that on and as of the date hereof and after giving effect to this
Amendment (a) all of the representations and warranties contained in the Credit
Agreement, and in any and all other Loan Documents of the Borrower, are true,
correct and complete in all respects as of the date hereof as
though made on and as of such date, except for changes permitted by the terms of
the Credit Agreement, and (b) the Borrower is in compliance with all covenants
and agreements of the Borrower as set forth in the Credit Agreement and in any
and all other Loan Documents of the Borrower. The Borrower represents and
warrants that the Borrower has the power and legal right and authority to enter
into this Amendment and has duly authorized as appropriate the execution and
delivery of this Amendment and other agreements and documents executed and
delivered by the Borrower in connection herewith or therewith by proper
corporate action. The Borrower acknowledges and agrees that its obligations to
the Lender under the Credit Agreement and exist and are owing without offset,
defense or counterclaim assertable by the Borrower against the Lender. The
Borrower further acknowledges and agrees that its obligations to the Lender
under the Credit Agreement, as amended, constitute "Obligations" within the
meaning of the Security Agreement and are secured by the Security Agreement and
the Collateral Assignment of Trademarks.
Section 6. AFFIRMATION, FURTHER REFERENCES. Except as expressly
modified under this Amendment, all of the terms, conditions, provisions,
agreements, requirements, promises, obligations, duties, covenants and
representations of the Borrower under the Credit Agreement, the Security
Agreement, and any and all other Loan Documents entered into with respect to the
obligations under the Credit Agreement are incorporated herein by reference and
are hereby ratified and affirmed in all respects by the Borrower. All
references in the Credit Agreement to "this Agreement," "herein," "hereof," and
similar references, and all references in the other Loan Documents to the
"Agreement," shall be deemed to refer to the Agreement, as amended by this
Amendment.
Section 7. MERGER AND INTEGRATION, SUPERSEDING EFFECT. This
Amendment, from and after the date hereof, embodies the entire agreement and
understanding between the parties hereto and supersedes and has merged into it
all prior oral and written agreements on the same subjects by and between the
parties hereto with the effect that this Amendment, shall control with respect
to the specific subjects hereof and thereof.
Section 8. SEVERABILITY. Whenever possible, each provision of this
Amendment and any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto shall be interpreted in such manner as
to be effective, valid and enforceable under the applicable law of any
jurisdiction, but, if any provision of this Amendment or any other statement,
instrument or transaction contemplated hereby or thereby or relating hereto or
thereto shall be held to be prohibited, invalid or unenforceable under the
applicable law, such provision shall be ineffective in such jurisdiction only to
the extent of such prohibition, invalidity or unenforceability, without
invalidating or rendering unenforceable the remainder of such provision or the
remaining provisions of this Amendment or any other statement, instrument or
transaction contemplated hereby or thereby or relating hereto or thereto in such
jurisdiction, or affecting the effectiveness, validity or enforceability of such
provision in any other jurisdiction.
Section 9. SUCCESSORS. This Amendment shall be binding upon the
Borrower and the Lender and their respective successors and assigns, and shall
inure to the benefit of the Borrower and the Lender and the successors and
assigns of the Lender.
Section 10. LEGAL EXPENSES. The Borrower agrees to reimburse the
Lender, upon execution of this Amendment, for all reasonable out-of-pocket
expenses (including attorneys' fees and legal expenses of Xxxxxx & Whitney,
counsel for the Lender) incurred in connection with the Credit Agreement,
including in connection with the negotiation, preparation and execution of this
Amendment and all other documents negotiated, prepared and executed in
connection with this Amendment, and in enforcing the obligations of the Borrower
under the Credit Agreement, as amended by this Amendment, which obligations of
the Borrower shall survive any termination of the Credit Agreement.
Section 11. HEADINGS. The headings of various sections of this
Amendment have been inserted for reference only and shall not be deemed to be a
part of this Amendment.
Section 12. COUNTERPARTS. This Amendment may be executed in several
counterparts as deemed necessary or convenient, each of which, when so executed,
shall be deemed an original, provided that all such counterparts shall be
regarded as one and the same document, and either party to this Amendment may
execute any such agreement by executing a counterpart of such agreement.
Section 13. GOVERNING LAW. The Amendment Documents shall be governed
by the internal laws of the State of Minnesota, without giving effect to
conflict of law principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the date and year first above written.
THE O'BOISIE CORPORATION
By:
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Title:
REPUBLIC ACCEPTANCE CORPORATION
By:
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Title:
