FIRST BANK NATIONAL ASSOCIATION
FINANCING FOR
TRANSITION NETWORKS, INC.
POST-CLOSING DOCUEMENTS
A. AMENDMENT NO. 1 (5/29/97)
1. Amendment
2. Amended Supplement A
3. Secretary's Certificate
a. Resolutions
b. Articles
c. Bylaws
d. Incumbency and Signature Specimen
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment") is
dated as of May 29, 1997, and is by and between TRANSITION NETWORKS, INC., a
Minnesota corporation (the "Borrower") and FIRST BANK NATIONAL ASSOCIATION, a
national banking association (the "Bank"). Capitalized terms not otherwise
expressly defined herein shall have the meanings set forth in the Loan
Agreement.
RECITALS
WHEREAS, the Borrower and the Bank are parties to a Loan and Security
Agreement, dated as of August 9, 1996 (the "Loan Agreement");
WHEREAS, the Borrower and the Bank desire to amend the terms of the Loan
Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1 - AMENDMENTS TO THE LOAN AGREEMENT
1.1 Amendments to Loan Agreement. The Loan Agreement is hereby amended
as follows:
(a) The definitions of "Americable Spin-off", "Guarantor", "Guaranty
Documents", "Loan Documents", "Obligations" and "Obligor" appearing in
ARTICLE I of the Loan Agreement are respectively amended in their
entireties to read as follows:
"Americable Spin-off": North Star Universal, Inc.'s spin-off of
not less than 90% of its stock ownership in Americable to ENStar
Inc., a Minnesota corporation ("ENStar").
"Guarantor": None.
"Guaranty Documents": None
"Loan Documents": This Agreement, any Note, the Subordination
Agreement and each other instrument, document, guaranty, mortgage, deed of
trust, chattel mortgage, pledge, power of attorney, consent, assignment,
contract, notice, security agreement, lease, financing statement,
subordination agreement, trust account agreement, or other agreement
executed and delivered by the Borrower or any guarantor or party granting
security interests in connection with this Agreement, the Loans or the
Collateral.
"Obligations": All of the liabilities, obligations and
indebtedness of the Borrower to the Bank of any kind of nature,
however created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing or due or to become
due, and including, without limitation, (a) the Borrower's
obligations under the Loan Documents, including obligations of
performance, (b) the Borrower's obligations with respect to any
"Letter of Credit" or any "Application" described in this Agreement,
and (c) interest, charges, expenses, Attorney's Fees and other sums
chargeable to the Borrower by the Bank under the Loan Documents.
"Obligations" shall also include any and all amendments, extensions,
renewals, refundings or refinancings of any of the foregoing.
"Obligor": The "Borrower".
(b) Section 5.1.1.(a) of the Loan Agreement is amendment in its
entirety to read as follows:
(a) ANNUAL AUDIT REPORT. As soon as available and in any event
within 120 days after the end of each fiscal year of ENStar, the
annual audit report of ENStar and its Subsidiaries prepared on a
consolidated basis in conformity with GAAP, consisting of at least
statements of income, cash flow, changes in financial position and
stockholders' equity, and a consolidated balance sheet as at the end
of such year, setting forth in each case in comparative form
corresponding figures from the previous annual audit, certified,
without qualification, by independent certified public accountants
of recognized standing selected by ENStar and acceptable to the Bank,
together with the related supplemental consolidating balance sheets
and income statements and any management letters, management reports
or other supplementary comments or reports to ENStar or its board of
directors furnished by such accountants."
(c) Section 2.15 is amended by changing the reference to subsection
"(iii)" appearing in the parenthetical clause in the second line on page
24 of the Loan Agreement to a reference to subsection "(c)".
(d) Section 3.2(b) is amended by inserting 170225066472 as the
account number of the Collateral Account.
(e) The Borrowing Base Certificate attached to the Loan Agreement as
Exhibit A is hereby amended to conform to Exhibit A (Amended 5/97)
attached to this Amendment.
(f) Supplement A attached to the Loan Agreement is hereby deleted
and Supplement A (Amended 5/97) attached to this Amendment is substituted
therefor. All references in the Loan Agreement to "Supplement A" shall be
references to Supplement A (Amended 5/97).
1.2 Construction. All references in the Loan Agreement to "this
Agreement," "herein" and similar references shall be deemed to refer to
the Loan Agreement as amended by this Amendment.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Amendment and to make and
maintain the Loans under the Loan Agreement as amended herby, the Borrower
herby warrants and represents to the Bank that: (a) The execution, delivery
and performance by the Borrower of this Amendment and any other documents to
which the Borrower is a party have been duly authorized by all necessary
corporate or partnership action, do not require any approval or consent of,
or any registration, qualification or filing with, any government agency or
authority or any approval or consent of any other person (including, without
limitation, any stockholder or partner), do not and will not conflict with,
result in any violation of or constitute any default under, any provision of
the Borrower's articles of incorporation or bylaws, any agreement binding on
or applicable to the Borrower or any of its property, or any law or
governmental regulation or court decree or order, binding upon or applicable,
to the Borrower or of any of its property and will not result in the creation
or imposition of any security interest or other lien or encumbrance in or on
any of its property pursuant to the provisions of any agreement applicable to
the Borrower or any of its property; (b) The Loan Agreement as amended by this
Amendment is the legal, valid and binding obligations of the Borrower and is
enforceable in accordance with its terms, subject only to bankruptcy,
insolvency, reorganization, moratorium or similar laws, rulings or decisions
at the time in effect affecting the enforceability of rights or creditors
generally and to general equitable principles which may limit the right to
obtain equitable remedies.
ARTICLE III - CONDITIONS AND EFFECTIVENESS
This Amendment shall become effective on the date first set forth above,
provided, however, that the effectiveness of this Amendment is subject to the
satisfaction of each of the following conditions:
3.1 Before and after giving effect to this Amendment, the
representations and warranties in ARTICLE IV of the Loan Agreement shall
be true and correct as though made on the date hereof except for changes
that are permitted by the terms of the Loan Agreement. The execution by
the Borrower of this Amendment shall be deemed a representation that the
Borrower has complied with the foregoing condition.
3.2 Before and after giving effect to this Amendment, no Event of
Default or no Default, shall have occurred and be continuing under the
Loan Agreement except for those expressly waived by the terms hereof. The
execution by the Borrower of this Amendment shall be deemed a
representation that the Borrower has complied with the foregoing
condition.
3.3 The Bank shall have received the following documents
appropriately completed and duly executed by the Borrower and the other
Obligors where appropriate:
(a) This Amendment appropriately completed and duly executed by
the Borrower, together with a resolution of the Borrower authorizing the
execution and delivery of this Amendment in form and substance
satisfactory to the Bank; and
(b) Such other approvals, opinions or documents, as the Bank
may reasonably request.
ARTICLE IV - GENERAL
4.1 Expenses. The Borrower agrees to reimburse the Bank upon demand
for all reasonable expenses, including reasonable fees of attorneys (who
may be employees of the Bank) and legal expenses incurred by the Bank in
the preparation, negotiation and execution of this Amendment and any other
document required to be furnished herewith, and in enforcing the
obligations of the Borrower hereunder, and to pay and save the Bank
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 Loan
Agreement.
4.2 Counterparts. 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.
4.3 Severability. 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.
4.4 Law. This Amendment shall be a contract made under the laws of
the State of Minnesota, which laws shall govern all the rights and duties
hereunder.
4.5 Successors: Enforceability. This Amendment shall be binding
upon the Borrower and the Bank and their respective successors and
assigns, and shall inure to the benefit of the Borrower and the Bank and
the successors and assigns of the Bank. Except as hereby amended, the
Loan Agreement shall remain in full force and effect and is hereby
ratified and confirmed in all respects.
4.6 Recitals. The recitals hereto are incorporated herein by
reference and constitute and integral part of this Amendment.
4.7 Acknowledgement and Release. In order to induce the Bank
to enter into this Amendment, the Borrower: (a) represents and warrants
to the Bank that no events have taken place and no circumstances exist
at the date hereof which would give the Borrower the right to assert a
defense, offset or counterclaim to any claim by the Bank for payment of
the Obligations; and (b) hereby releases and forever discharges the Bank
and its successors, assigns, directors, officers, agents, employees and
participants from any and all actions, causes of action, suits,
proceedings, debts, sums of money, covenants, contracts, controversies,
claims and demands, at law or in equity, which the Borrower ever had or
now has against the Bank or its successors, assigns, directors, officers,
agents, employees or participants by virtue of their relationship to the
Borrower in connection with the Loan Documents and the transactions
related thereto.
4.8 Release of Guarantors. On the date hereof, the Bank releases
and discharges each of Americable and Cable from the Guaranty Documents
to which such Person is a party.
4.9 Consent. On the date hereof, the Bank, in accordance with
Section 6.12(e) of the Loan Agreement, the Bank consents to the Borrower's
incurrance of Indebtedness from Americable and/or ENStar so long as the
aggregate outstanding principal amount of such Indebtedness does not
exceed $1,000,000 at any time.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of
the date first written above.
TRANSITION NETWORKS, INC.,
a Minnesota corporation
By:
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Title:
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FIRST BANK NATIONAL ASSOCIATION,
a national banking association
By:
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Title:
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EXHIBIT A
BORROWING BASE CERTIFICATE
(AMENDED 5/97)
First Bank National Association
First Bank Place MPFP0804
000 Xxxxxx Xxxxxx Xxxxx Computed as of
Xxxxxxxxxxx, XX 00000-0000 Date: Report No.
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Attention: Xx. Xxxxxxxx Xxxxxxxx
The undersigned is the Borrower under a Loan and Security Agreement, dated
August 9, 1996 (as the same may be amended, modified or supplemented from time
to time, herein called the "Agreement") between the undersigned and FIRST BANK
NATIONAL ASSOCIATION (the "Lender").
The undersigned hereby reaffirms all representations and warranties to the
Agreement and certifies and warrants that the undersigned holds, subject to the
security interest of the Lender under the Agreement, the following collateral
computed as of .
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I. ACCOUNTS RECEIVABLE
1. Accounts balance (From last BBC No. ,
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Dated ) $
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2. Add: New Sales and other Debits $
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3. Less: Collection of Accounts (Net Cash) $
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4. Less: Misc Credit Memos $
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5. Discounts Allowed and Other Adjustments to Receivables $
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6. Accounts Receivable Balance as of Period ending
above (sum lines 1-5) $
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7. Total Ineligible accounts as of Aging dated $
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8. Total Eligible Accounts Receivable (Line 6 - Line 7) $
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9. Eligible Loan Value @ 75%$ $
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10. Total Foreign Accounts Receivable that are Ineligible
because they are foreign and that are insured $
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11. Eligible Loan Value @75% (or higher % permitted
by Lender) $
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II. INVENTORY dated
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12. Total Inventory $
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13. Less: Ineligible Inventory $
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14. Total Eligible Inventory (Line 12 - Line 13) $
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15. Eligible Loan Value @ 20% (or higher %
permitted by Lender) of Line 14 $
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16. The lesser of $1,000,000 or line 15 $
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17. Unadjusted Eligible Loan Value (Line 9 + Line 11
+ Line 14) $
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18. Less: Letter of Credit Obligation (not
collaterized by cash) $
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19. Adjusted Collateral Value (Line 17 - Line 18) $
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III. LOAN AVAILABILITY
20. Credit Amount $4,000,000 $
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21. Less: Letter of Credit Obligations $
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22. Adjusted Credit Amount $
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23. Loan Availability (Lesser of Line 19 and Line 22) $
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24. Loan Balance report (From last BBC No. ,
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Dated )
------------ $
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25. Add: new Loan Advances requested since last report
(Add monthly interest charge, term loan payment and
other fees if applicable) $
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26. Less: Collections applied to loan since last report $
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27. Less: Loan Balance this report (Line 24 +
Line 25 - Line 26) $
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28. Excess (Deficit) Eligible Loan Value of Collateral
(Line 19 - Line 27) $
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The undersigned further certifies and warrants that no Event of Default is
existing as of the date hereof and, to the best knowledge and belief of the
officer of the undersigned executing this Borrowing Base Certificate, there has
not been (except as may otherwise be indicated below) any change to the
information set forth above since the computation date specified above which
would materially reduce the amounts shown if such amounts were computed as of
the date of this Borrowing Base Certificate.
TRANSITION NETWORKS, INC.
By Title Date
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SUPPLEMENT A
to
LOAN AND SECURITY AGREEMENT
Dated as of AUGUST 9, 1996 Between
FIRST BANK NATIONAL ASSOCIATION (the "Bank") and
TRANSITION NETWORKS, INC.
(the "Borrower")
(AMENDED 5/97)
1. Loan Agreement Reference. This Supplement A, as it may be amended or
modified from time to time, is a part of the Loan and Security Agreement, dated
as of August 9, 1996, between the Borrower and the Bank (together with all
amendments, modifications and supplements thereto, the "Loan Agreement"). Terms
used herein which are defined in the Loan Agreement shall have the meanings
given such terms in the Loan Agreement unless the context otherwise requires.
2. Credit Amount; Borrowing Base.
2.1 Credit Amount. The maximum amount of Loans which the Bank will make
available to the Borrower shall not exceed FOUR MILLION AND N0/100 DOLLARS
($4,000,000) (such amount is herein called the "Credit Amount") (unless such
amount is increased by the Bank in its sole and absolute discretion); provided,
however, that the aggregate outstanding principal balance of the Loans plus the
Letter of Credit Obligations shall not exceed the Credit Amount.
2.2 Borrowing Base. The term "Borrowing Base," as used herein, shall mean:
(a) an amount of up to 75% (or such higher percentage with respect to
the portion of the Borrower's Eligible Accounts Receivable that are
foreign insured Accounts Receivable as permitted by the Lender, in its
sole discretion from time to time) of the net amount (as determined by
the Bank after deduction of such reserves and allowances as the Bank
deems proper and necessary) of the Borrower's Eligible Accounts
Receivable; plus
(b) an amount of up to the lesser of (i) 20% (or such higher percentage
with respect as permitted by the Lender, in its sole discretion, from
time to time) of the net value (the lower of the cost or market value
of such Inventory as determined by the Bank on a first in first out basis
and after deduction of such reserves and allowances as the Bank deems
proper and necessary ) of the Borrower's Eligible Inventory or (ii)
$1,000,000.
2.3 Bank's Rights. The Borrower agrees that nothing contained in this
Supplement A (a) shall be construed as the Bank's agreement to resort or
look to a particular type or item of Collateral as security for any
specific Loan or advance or in any way limit the Bank's right to resort
to any or all of the Collateral as security for any of the obligations,
(b) shall be deemed to limit or reduce any lien on or any security
interest in or upon any portion of the Collateral or other security for
the Obligations or (c) shall supersede Section 2.10 of the Loan Agreement.
3. Interest.
3.1 Revolving Loans. The unpaid balance of the Revolving Loans shall bear
interest to maturity as follows:
(a) Eurodollar Advances. The unpaid principal amount of each Eurodollar
Advance shall bear interest prior to maturity at a rate per annum equal
to the Eurodollar Rate (Reserve Adjusted) in effect for each Interest
Period for such Eurodollar Advance plus 2.50% per annum.
(b) Reference Rate Advances. The unpaid principal amount of each
Reference Rate Advance shall bear interest prior to maturity at a rate
per annum equal to the Reference Rate.
3.2 Default Rate. If any amount of the Loans is not paid when due, whether
by acceleration or otherwise, the entire unpaid principal balance of the Loans
(other than overdraft Loans and Over Advances) shall bear interest until paid at
a rate per annum equal to the greater of (i) the Reference Rate from time to
time in effect plus four percent (4%) or (ii) two percent (2%) above the rate
in effect at the time such amount became due for such past due amount.
3.3 Overdraft Loans; Over Advances. Overdraft Loans and over Advances shall
bear interest at the rate(s) determined pursuant to Section 2.8 or Section 2.9
of the Credit Agreement, as applicable.
4. Eligible Account Receivable Data.
(a) The Account Receivable must not be unpaid on the date that is 90 days
after the date of the invoice evidencing such Account Receivable.
(b) If invoices representing 10% or more of the unpaid net amount of all
Accounts Receivable from any one Account Debtor are unpaid more than 90
days after the dates of the invoices evidencing such Accounts Receivable,
then all Accounts Receivable relating to such Account Debtor shall cease
to be Eligible Accounts Receivable.
5. Additional Covenants. From the date of the Loan Agreement and thereafter
until all of the Borrower's Obligations under the Loan Agreement are paid in
full, the Borrower agrees that, unless the Bank shall otherwise consent in
writing, it will not, and will not permit any Subsidiary to, do any of the
following:
5.1 Tangible Capital Base. During each of the periods set forth below, permit
the Tangible Capital Base to be less than the amount set forth below opposite
such period at any time:
Period Tangible Capital Base
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June 1, 1996 through and
including March 29, 1997 $3,500,000
March 31, 1997 through and
including December 30, 1997 $3,300,000
December 31, 1997 through and
including May 30, 1998 $3,600,000
5.2 Leverage Ratio. During each of the periods set forth below, permit the
ratio of (a) the total of (i) the Borrower's unconsolidated Indebtedness, minus
(ii) the Borrower's unconsolidated Subordinated Debt, minus (iii) the aggregate
unpaid accrued interest on all Subordinated Debt of the Borrower owing to NSU,
to (b) Tangible Capital Base to be greater than: (a)1.75:1 during the Borrower's
fiscal year ending December 31, 1996; (b) 2.50:1 during any of the Borrower's
fiscal years thereafter.
5.3 Interest Coverage Ratio. Permit the ratio, as of any Measurement Date, for
the period commencing on the first day of the Borrower's fiscal year through and
including such Measurement Date, of (a) the Borrower's unconsolidated EBITDA to
(b) the total of (i) the Borrower's unconsolidated interest expense (including,
without limitation, imputed interest expense on Capitalized Leases) minus (ii)
the aggregate unpaid accrued interest on all Subordinated Debt of the Borrower
owing to NSU, to be less than: (r) 2:1 for any Measurement Date occurring prior
to January 1, 1997; (s) 1.5:1 for any Measurement Date occurring during the
Borrower's 1997 fiscal year; or (t) 2:1 for any Measurement Date occurring
thereafter. For purposes of this Supplement A, "Measurement Date" means: (x) at
any time other than during the Borrower's 1997 fiscal year, the last day of any
fiscal quarter; or (y) at any time during the Borrower's 1997 fiscal year, the
last day of such fiscal year.
5.4 Capital Expenditures. Make Capital Expenditures in an amount exceeding:
(a) $1,000,000 during the Borrower's fiscal year ending December 31, 1997; or
(b) $450,000 during any fiscal year thereafter.
Borrower's Initials__________
Bank's Initials__________
Date: May______, 1997
CERTIFICATE
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I, , do hereby certify that I am the duly appointed
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or elected and qualified Secretary and the keeper of the
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records of Transition Networks, Inc., a corporation organized and existing
under the laws of the State of Minnesota (the "Corporation") and that the
following is a true and correct copy of resolutions duly adopted by unanimous
written action of the Borrower's Board of Directors on the day of May,
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1997;
and that such resolutions are now in full force and effect, unamended,
unaltered, and unrepealed:
WHEREAS, there has been presented to the directors a form of First
Amendment (the "First Amendment") to that certain Loan and Security Agreement
dated as of August 9, 1996 (the "Loan Agreement"), between this Corporation and
First Bank National Association (the "Bank").
NOW, THEREFORE, BE IT RESOLVED, that any one of the Secretary, Vice
President or Vice President--Finance of this Corporation is authorized to
execute, in the name and on behalf of this Corporation, and deliver to the Bank
the First Amendment and any promissory note or other instrument, document or
agreement required by the Bank in connection with such First Amendment,
substantially in the form of that reviewed by the directors, except for such
changes, additions or deletions as such officer(s) shall deem proper; execution
by such officer(s) of an amendment and related documents to be conclusive
evidence that such officer(s) deem(s) all of the terms and provisions thereof
to be proper (the executed First Amendment is hereafter called the
"Amendment");
FURTHER RESOLVED, that any one of the Secretary, Vice President or Vice
President--Finance of this Corporation be and hereby is authorized on behalf of
this Corporation to borrow from time to time under the Loan Agreement as
amended by the Amendment, to agree to rates of interest and other terms of
loans, and to repay all amounts so borrowed;
FURTHER RESOLVED, that each officer of this Corporation be and hereby is
authorized to take such action from time to time on behalf of this Corporation
as he/she may deem necessary, advisable or proper in order to carry out and
perform the obligations of this Corporation under the Loan Agreement as amended
by the Amendment and all related instruments, documents and agreements;
FURTHER RESOLVED, that all authority conferred by these resolutions shall
be deemed retroactive and any and all acts authorized hereunder performed prior
to the adoption of this resolution are hereby ratified, affirmed, adopted and
approved;
FURTHER RESOLVED, that the Secretary or any other officer of this
Corporation is authorized to certify to said Bank a copy of these resolutions
and the names and signatures of this Corporation's officers or employees hereby
authorized to act, and the Bank is hereby authorized to rely upon such
certificate until formally advised by a like certificate of any change therein,
and is hereby authorized to rely on any such additional certificates.
I FURTHER CERTIFY THAT the Bylaws and Articles of Incorporation previously
delivered by this Corporation to said Bank have not been amended, modified or
restated after the date of such delivery.
I FURTHER CERTIFY THAT the following persons have been appointed or
elected and are now acting as officers or employees of said Corporation in the
capacity set before their respective names:
TITLE NAME SIGNATURE
Secretary Xxxxx X. Xxxxx --------------------
Vice President Xxxxxxx X. Xxxxxxx --------------------
Vice Pres.-Finance Xxxxxx X. Xxxxxxxx --------------------
IN WITNESS WHEREOF, I have subscribed my name as Secretary this day of
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May, 1997.
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Secretary
