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EXHIBIT 10D(5)
FIFTH AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT is dated
as of June 29, 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, as amended by a First
Amendment to Amended and Restated Credit Agreement dated as of March 19, 2001,
as amended by a Second Amendment to Amended and Restated Credit Agreement dated
as of March 30, 2001, as amended by a Third Amendment to Amended and Restated
Credit Agreement dated as of April 4, 2001 and as amended by a Fourth Amendment
to Amended and Restated Credit Agreement dated as of May 15, 2001 (as amended,
the "Credit Agreement").
B. The Borrower has requested that the Banks agree to amend certain
provisions of the Credit Agreement as set forth in this Amendment.
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 "Applicable Margin",
"Borrowing Base Supplement", "Excess Cash Flow", "Existing Letter of
Credit", "Holding Account", "Loan", "Note", "Obligations", "Revolving
Commitment Amount", "Revolving Outstandings", "Term C Loan", "Term C
Loan Commitment Amount", "Term Loan C Percentage", "Term C Note",
"Total Percentage" and "Warrant Documents" as they appear therein and
by inserting in such Section 1.1 the following definitions in the
appropriate alphabetical order:
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"Additional Letter of Credit": Any irrevocable letter
of credit (other than the Existing Letter of Credit) issued by
the Agent pursuant to this Agreement for the account of the
Borrower.
"Average Monthly Revolver Availability": with respect
to any calendar month, (a) the sum of the amount, if any, by
which the lesser of the Aggregate Revolving Commitment Amounts
or the Borrowing Base, exceeds the Aggregate Revolving
Outstandings, in each case calculated as of the close of
business on each Friday contained in such month, divided by
(b) the number of Fridays contained in such month.
"Applicable Margin": With respect to:
(a) the Revolving Loans - 2.50%;
(b) the Term A Loans - 2.50%; and
(c) the Term B Loans - 4.00%; provided that,
from and after the date on which the Term A Loans
have been paid in full, the Applicable Margin for the
Term B Loans shall be permanently reduced to 2.50%.
"Bonus Payments": For any period of determination,
Employee bonuses under the Borrower's annual incentive plan
paid to management employees by the Borrower or any
Subsidiary.
"Borrowing Base Supplement": $7,500,000, provided
that (a) such amount shall be permanently reduced to an amount
not less than $5,000,000 by the aggregate amount of
prepayments applied to the Revolving Loans in accordance with
Sections 2.6(d), 5.16(b) and 5.18(b) and (b) if such amount
has not been earlier reduced to $5,000,000 pursuant to the
forgoing clause (a), such amount shall be permanently reduced
to $5,000,000 on and after October 15, 2001.
"Excess Cash Flow": As of the end of any fiscal year
of the Borrower, determined for such fiscal year on a
consolidated basis for the Borrower and its Subsidiaries in
accordance with GAAP, the remainder of
(a) the sum, without duplication, of (i)
EBITDA for such period, and (ii) extraordinary cash
income, if any, business interruption insurance
proceeds, if any, and cash gains attributable to
sales of assets outside the ordinary course of
business (but net of taxes, expenses and reserves for
indemnification, and exclusive of any gains realized
in connection with any transaction contemplated by
Section 2.6(c) so long as the Net Proceeds of such
transaction are applied in the manner set forth in
Section 2.6(d)), if any, during such period to the
extent that any such extraordinary cash income, such
insurance proceeds or such cash gain is not included
in EBITDA for such period,
minus
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(b) the sum, without duplication, of (i)
income taxes paid in cash or accrued by the Borrower
or any Subsidiary during such period, (ii) the
aggregate amount of Capital Expenditures, if any (but
only to the extent such Capital Expenditures were
permissible under Section 6.8 during such period)
minus Indebtedness incurred to finance such Capital
Expenditures and secured solely by Liens on the
property acquired, and (iii) Interest Expense and
(iv) any payments made upon the Term A Loans or the
Term B Loans (other than prepayments applied to the
Term A Loans or the Term B Loans pursuant to Section
2.6(d)).
"Existing Letter of Credit": Letter of Credit No.
76528 in the original face amount of $3,500,000 issued by U.S.
Bank for the account of the Borrower in favor of Bank of
Montreal.
"Holding Account": A deposit account belonging to the
Agent for the benefit of the Banks into which the Borrower may
be required to make deposits pursuant to the provisions of
this Agreement, such account to be under the sole dominion and
control of the Agent and not subject to withdrawal by the
Borrower, with any amounts therein to be held for application
toward any drawings made under any Letter of Credit. The
Holding Account shall be a money market savings account or
substantial equivalent (or other appropriate investment medium
as the Borrower may from time to time request and to which the
Agent in its sole discretion shall have consented) and shall
bear interest in accordance with the terms of similar accounts
held by the Agent for its customers.
"Letter of Credit": The Existing Letter of Credit and
any Additional Letter of Credit.
"Loan": A Revolving Loan, a Term A Loan or a Term B
Loan.
"Note": A Term A Note, a Term B Note or a Revolving
Note.
"Obligations": The Borrower's obligations in respect
of the due and punctual payment of principal and interest
(including, without limitation and to the extent permitted by
law, interest accruing after the commencement of a case by or
against the Borrower under the United States Bankruptcy Code)
on the Notes and Unpaid Drawings when and as due, whether by
acceleration or otherwise and all fees (including Unused
Revolving Commitment Fees and Letter of Credit Fees),
expenses, indemnities, reimbursement and other obligations of
the Borrower under this Agreement, any other Borrower Loan
Document, and any letter of credit application and
reimbursement agreement executed and delivered by the Borrower
to U.S. Bank in connection with the issuance of any Letter of
Credit, in all cases whether now existing or hereafter arising
or incurred.
"Ratably": With respect to any unpaid installment
upon the Term A Loan or the Term B Loan, as applicable, the
amount equal to (a) the aggregate amount of any prepayment to
be applied pursuant to this Agreement to the Term A Loan
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or the Term B Loan, as applicable, multiplied by (b) a
fraction, the numerator of which is the unpaid principal
balance of such installment payment and the denominator of
which is the aggregate unpaid principal balance of Term A Loan
or the Term B Loan, as applicable.
"Revolving Commitment Amount": With respect to a
Bank, initially the amount set opposite such Bank's name on
Schedule 1.1B hereto (as such Schedule may from time to time
be amended) as its Revolving Commitment Amount, but as the
same may be from time to time increased or reduced as provided
Section 2.8.
"Revolving Outstandings": As of any date of
determination with respect to any Bank, the sum of (a) the
aggregate unpaid principal balance of Advances outstanding
under such Bank's Revolving Note on such date, (b) an amount
equal to the aggregate stated amount of each Letter of Credit
multiplied by such Bank's Revolving Commitment Percentage, and
(c) an amount equal to the aggregate amount of Unpaid Drawings
on such date (after applying any funds held in the Holding
Account to the payment thereof) multiplied by such Bank's
Revolving Commitment Percentage.
"Stock": All shares, interests, participation or
other equivalents, however designated, of or in a corporation
or a limited liability company, whether or not voting,
including but not limited to common stock, member interests,
warrants, preferred stock, convertible debentures, and all
agreements, instruments and documents convertible, in whole or
in part, into any one or more or all of the foregoing.
"Subsequent Warrants": Warrants for the purchase of
100,000 shares of the Borrower's common stock issued upon the
effectiveness of the Fifth Amendment hereto ratably to the
Banks in accordance with their Revolving Commitment
Percentages.
"Subsequent Warrant Issuance Agreement": Second Round
Warrant Issuance Agreement dated as of the date of the Fifth
Amendment hereto between the Borrower and the Banks, as the
same may be amended, restated or otherwise modified from time
to time.
"Total Percentage": With respect to any Bank, the
percentage equivalent of a fraction, the numerator of which is
the sum of the Revolving Commitment Amount of such Bank (or,
if the Revolving Commitments have been terminated, the
Revolving Outstandings of such Bank), the outstanding Term A
Loans and Term B Loans of such Bank and the denominator of
which is the sum of the Aggregate Revolving Commitment Amounts
(or, if the Revolving Commitments have terminated, the
Aggregate Revolving Outstandings) and the outstanding Term A
Loans and Term B Loans of all the Banks.
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"Warrant Documents": The Warrant Registration
Agreement, the Warrant Issuance Agreement, the Warrants, the
Subsequent Warrant Issuance Agreement and the Subsequent
Warrants.
(b) Term Loans. Sections 2.1(b), (c) and (d) of the Credit
Agreement are deleted in their respective entireties and the following
is substituted in lieu thereof:
(c) Term A Loans. Upon the Fifth Amendment Effective
Date, each Bank shall continue its ratable portion of
$20,000,000 of the Banks' existing term loans to the Borrower
as a term loan in an amount by such Bank equal to its Term A
Loan Commitment Amount (each being a "Term A Loan" and,
collectively, the "Term A Loans").
(d) Term B Loans. Upon the Fifth Amendment Effective
Date, each Bank shall continue its ratable portion of
$15,430,004.50 of the Banks' existing term loans to the
Borrower as a term loan in an amount by such Bank equal to its
Term B Loan Commitment Amount (each being a "Term B Loan" and,
collectively, the "Term B Loans").
(c) Notes. Section 2.3 of the Credit Agreement is deleted in
its entirety and the following is substituted in lieu thereof:
Section 2.3 Notes. The Revolving Loans of each Bank
shall be evidenced by a single Revolving Note payable to the
order of such Bank in a principal amount equal to such Bank's
Revolving Commitment Amount originally in effect. The Term A
Loan of each Bank shall be evidenced by a Term A Note payable
to the order of such Bank in the principal amount equal to
such Bank's Term A Loan Commitment Amount. The Term B Loan of
each Bank shall be evidenced by a Term B Note payable to the
order of such Bank in the principal amount equal to such
Bank's Term B Loan Commitment Amount. Each Bank shall enter in
its ledgers and records the amount of its Term A Loan, its
Term B Loan, and each Revolving Loan, the various Advances
made and the payments made thereon, and each Bank is
authorized by the Borrower to enter on a schedule attached to
its Term A Note, Term B Note, or Revolving Note, as
appropriate, a record of such Term A Loan, Term B Loan,
Revolving Loans, Advances and payments; provided, however that
the failure by any Bank to make any such entry or any error in
making such entry shall not limit or otherwise affect the
obligation of the Borrower hereunder and on the Notes, and, in
all events (a) the principal amounts owing by the Borrower in
respect of the Revolving Notes shall be the aggregate amount
of all Revolving Loans made by the Banks less all payments of
principal thereof made by the Borrower, (b) the principal
amount owing by the Borrower in respect of the Term A Notes
shall be the aggregate amount of all Term A Loans made by the
Banks less all payments of principal thereof made by the
Borrower, and (c) the principal amount owing by the Borrower
in respect of the Term B Notes shall be the aggregate amount
of all Term B Loans made by the Banks less all payments of
principal thereof made by the Borrower.
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(d) Repayments. Section 2.5 of the Credit Agreement is deleted
in its entirety and the following is substituted in lieu thereof:
Section 2.5 Repayment; Payment to Holding Account.
(a) Revolving Loans. The Revolving Loans,
together with all accrued and unpaid interest
thereon, shall be due and payable on the Termination
Date.
(b) Term A Loan. The principal of the Term A
Loan shall be due and payable as follows:
(i) an installment of $2,000,000
due and payable on August 31, 2001;
(ii) two equal installments of
$1,000,000 due and payable on each of
September 28, 2001 and October 31, 2001;
(iii) five equal installments of
$2,000,000 due and payable on each of
November 30, 2001, December 31, 2001,
January 31, 2002, February 28, 2002 and
March 29, 2002;
(iv) an installment of $3,000,000
due and payable on April 30, 2002;
(v) an installment of $1,000,000
due and payable on May 31, 2002; and
(vi) an installment of $2,000,000
due and payable on June 28, 2002;
provided, however, that (y) any installment of
principal due on any date specified in the table
above shall be reduced by any prepayments of
principal applied to such installment pursuant to
this Agreement and (z) if the aggregate principal
amount outstanding under the Term A Loans as of the
date any principal payment is due is less than the
amount specified for such date in the table above,
then the principal amount payable on such date shall
be such amount outstanding.
(c) Term B Loan. The principal of the Term B
Loan shall be due and payable as follows:
(i) an installment of $2,000,000 due
and payable on the earlier of (A) July 31,
2002 and (B) the last Business Day of the
first month following the month in which the
Term A Loans have been paid in full;
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(ii) an installment of $1,000,000
due and payable on the earlier of (A) August
31, 2002 and (B) the last Business Day of
the second month following the month in
which the Term A Loans have been paid in
full;
(iii) an installment of $1,500,000
due and payable on the earlier of (A)
September 30, 2002 and (B) the last Business
Day of the third month following the month
in which the Term A Loans have been paid in
full;
(iv) an installment of $2,000,000
due and payable on the earlier of (A)
October 31, 2002 and (B) the last Business
Day of the fourth month following the month
in which the Term A Loans have been paid in
full;
(v) an installment of $2,000,000 due
and payable on the earlier of (A) November
29, 2002 and (B) the last Business Day of
the fifth month following the month in which
the Term A Loans have been paid in full; and
(vi) an installment of $6,569,995.50
due and payable on the earlier of (A)
December 31, 2002 and (B) the last Business
Day of the sixth month following the month
in which the Term A Loans have been paid in
full;
provided, however, that (x) any installment of
principal due on any date specified in the table
above shall be reduced by any prepayments applied to
such installment pursuant to this Agreement, (y) if
the aggregate principal amount outstanding under the
Term B Loans as of the date any principal payment is
due is less than the amount specified for such date
in the table above, then the principal amount payable
on such date shall be such amount outstanding and (z)
if the Term A Loan is paid in full on or prior to May
30, 2002, the Banks will consider in good faith any
proposal by the Borrower based upon its projections
of cash available for debt service to modify the
installment payments which would come due prior to
July 31, 2002 pursuant to the table above (provided
that no Bank shall be obligated to consider any such
proposal for more than 10 days beyond the Borrower's
initial written proposal and no Bank shall be
obligated to agree to modify such installment
payments, which modification shall be subject to the
prior written approval of each Bank in its sole
discretion).
(d) Payment to Holding Account. The Borrower
shall pay to the Holding Account on the Termination
Date an amount equal to the aggregate face amount of
the Letters of Credit.
(e) Prepayments. Section 2.6 of the Credit Agreement is
deleted in its entirety and the following is substituted in lieu
thereof:
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Section 2.6 Mandatory and Optional Prepayments.
(a) Optional Prepayments. The Borrower may
prepay Loans, in whole or in part, at any time,
without premium or penalty. Amounts paid (unless
following an acceleration or upon termination of the
Revolving Commitments in whole) or prepaid on
Revolving Loans under this Section 2.6 may be
reborrowed upon the terms and subject to the
conditions and limitations of this Agreement. Amounts
paid or prepaid on the Term A Loans or the Term B
Loans may not be reborrowed. Amounts paid or prepaid
on the Loans under this Section 2.6 shall be for the
account of each Bank in proportion to its share of
Loans being prepaid.
(b) Mandatory Prepayment of Revolving Loans.
(i) If at any time the Aggregate
Revolving Outstandings exceed the Aggregate
Revolving Commitment Amounts (including but
not limited to any excess caused by a
reduction in the Revolving Commitment
Amounts pursuant to Section 2.8 hereof), the
Borrower shall repay the Revolving Notes in
an aggregate amount equal to such excess,
which prepayment shall be apportioned among
the Banks' Revolving Notes in accordance
with their respective Revolving Outstandings
Percentages.
(ii) Prepayments on Revolving Loans
shall be made in accordance with the
provisions of Section 2.17(b).
(c) Mandatory Prepayments Due to Certain
Transactions. Immediately upon the receipt thereof by
the Borrower or any Subsidiary, the Borrower shall
prepay the Loans in an aggregate amount of 100% of
the Net Proceeds received in cash by the Borrower or
any Subsidiary as a result of any of the following
events: (i) sales or other transfers of NFS Lease
Accounts and Norstan Canada Lease Accounts (other
than NFS Lease Accounts and Norstan Canada Lease
Accounts that, from and after the date of the Fifth
Amendment hereto, have been, substantially
contemporaneously upon the creation of such Account,
financed in the ordinary course of business by a
financer other than the Borrower or any Subsidiary),
and the related leases and equipment that are
authorized by Sections 6.2(d) and (e); (ii) sales of
any assets of the Borrower or any Subsidiary, other
than sales of inventory in the ordinary course of
business or sales of obsolete or worn-out equipment
(but this subsection 2.6(c) does not authorize any
such sales, which are subject to Section 6.2 hereof)
and other than sales of assets of the type specified
in the forgoing clause (i); or (iii) any public or
private sale or offering by the Borrower of its
capital stock or debt securities (but this subsection
2.6(c) does not authorize any such issuances, which
are subject to Sections 6.11 and 6.24 hereof).
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(d) Application of Prepayments Under Section
2.6(c). Any prepayments made pursuant to Section
2.6(c) shall be applied in the following order by the
Agent to the Loans ratably to each Bank according to
its Revolving Commitment Percentage, Term A Loan
Percentage or Term B Loan Percentage, as applicable:
(i) with respect to Net Proceeds of
transactions of the type specified in the
clauses (i) and (iii) of Section 2.6(c), (a)
an amount equal to the lesser of 25% of such
Net Proceeds and the unpaid balance of the
Revolving Loans, shall be applied to the
Revolving Loans (other than the
reimbursement obligations with respect to
the Letters of Credit), and (b) an amount
equal to the greater of 75% of such Net
Proceeds or the amount remaining of such Net
Proceeds following payment in full of the
Revolving Loans, shall be applied (w) first,
Ratably to the unpaid installments upon Term
A Loan, (x) second, Ratably to the unpaid
installments upon the Term B Loan (y) third,
to the unpaid principal balance of the
Revolving Loans (other than reimbursement
obligations with respect to letters of
credit), and (z) fourth, to the Holding
Account in the amount of the aggregate face
amount of the Letters of Credit.
(ii) with respect to Net Proceeds of
transactions of the type specified in clause
(ii) of Section 2.6(c), (a) an amount equal
to the lesser of 75% of such Net Proceeds
and the unpaid balance of the Term A Loans,
shall be applied Ratably to the unpaid
installments upon the Term A Loans, (b) an
amount equal to the greater of 25% of such
Net Proceeds and the amount remaining of
such Net Proceeds following payment in full
of the Term A Loans, shall be applied (x)
first, Ratably to the unpaid installments
upon the Term B Loan, (y) second, to the
unpaid principal balance of the Revolving
Loans (other than the reimbursement
obligations with respect to the Letters of
Credit), and (z) third, to the Holding
Account in the amount of the aggregate face
amount of the Letters of Credit.
(e) Average Monthly Revolving Availability.
If, for any calendar month (commencing with the
calendar month ending on July 31, 2001), the Average
Monthly Revolving Availability exceeds $10,000,000,
then, on or before the 10th calendar day of the next
following month, the Borrower shall prepay the Term A
Loan and Term B Loan in the amount of such excess.
Any such prepayments shall be applied (a) first,
Ratably to the unpaid installments upon the Term A
Loans and (b) second, Ratably to the unpaid
installments upon the Term B Loans.
(f) Borrowing Base Deficiency. If at any
time a Borrowing Base Deficiency exists, the Borrower
shall immediately pay on the
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principal of the Revolving Loans an amount equal to
such Borrowing Base Deficiency. Amounts paid on the
Revolving Loans under this Section 2.6(f) shall be
for the account of each Bank in proportion to its
share of outstanding Revolving Loans. If, after
paying all outstanding Revolving Loans, a Borrowing
Base Deficiency still exists, the Borrower shall pay
into the Holding Account an amount equal to the
amount of the remaining Borrowing Base Deficiency.
(g) Excess Cash Flow. On or before 30 days
after the end of each fiscal year of the Borrower
(commencing with the fiscal year ending April 30,
2002), the Borrower shall prepay the Term B Loans in
an amount equal to 50% of the Excess Cash Flow for
such fiscal year. Amounts paid on the Term B Loans
under this Section 2.6(g) shall applied to the unpaid
installments upon the Term B Loans in inverse order
of their maturities.
(f) Additional Letters of Credit. Section 2.7(a) of the Credit
Agreement is deleted in its entirety and the following is substituted
in lieu thereof:
(a) The Letters of Credit. The Existing
Letter of Credit shall be deemed to be issued and
outstanding under this Agreement on the Closing Date.
Subject to Section 2.7(f) and the other terms and
conditions of this Agreement, the Agent agrees to
issue Additional Letters of Credit for the account of
the Borrower from time to time prior to the
Termination Date in such amounts as the Borrower
shall request; provided, however, that:
(i) No Additional Letter of Credit
will be issued in any amount which, after
giving effect to such issuance, would cause
either (A) the Aggregate Revolving
Outstandings to exceed the Aggregate
Revolving Commitment Amounts or (ii) the sum
of the Unpaid Drawings under the Letters of
Credit plus the aggregate amount available
to be drawn under the Letters of Credit
(including such Additional Letter of Credit)
to exceed $8,000,000;
(ii) No Additional Letter of Credit
shall have a stated available amount of less
than $50,000; and
(iii) Without the prior written
consent of all of the Banks, no Additional
Letter of Credit shall expire later than the
earlier of (i) 365 days after the date of
issuance thereof and (ii) the Business Day
preceding the Revolving Commitment Ending
Date.
(g) Further Letter of Credit Amendments. Sections 2.7(b) and
(e) of the Credit Agreement are each hereby amended by deleting each
appearance of the term "the Existing Letter of Credit" contained
therein and by substituting in lieu thereof the term "any Letter of
Credit". Section 2.7(c) of the Credit Agreement is amended by deleting
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each appearance of the terms "the Existing Letter of Credit" and "the
Existing Letters of Credit" contained therein and by substituting in
lieu thereof the term "each Letter of Credit". Section 2.7(d) of the
Credit Agreement is amended by deleting each appearance of the term
"the Existing Letter of Credit" contained therein and by substituting
in lieu thereof the term "any Letter of Credit." Section 2.7 of the
Credit Agreement is further amended by adding the following new
subsection (f) thereto:
(f) Procedures for Additional Letters of Credit. Each
request for an Additional Letter of Credit shall be made by
the Borrower in writing, by facsimile transmission or
electronic conveyance received by the Agent by 2:00 P.M.,
Minneapolis time, on a Business Day which is not less than one
Business Day preceding the requested date of issuance (which
shall also be a Business Day). Each request for an Additional
Letter of Credit shall be deemed a representation by the
Borrower that on the date of issuance of such Additional
Letter of Credit and after giving effect thereto the
applicable conditions specified in Article III have been and
will be satisfied. The Agent may require that such request be
made on such letter of credit application and reimbursement
agreement form as the Agent may from time to time specify,
along with satisfactory evidence of the authority and
incumbency of the officers of the Borrower making such
request. The Agent shall promptly notify the other Banks of
the receipt of the request and the matters specified therein.
On the date of each issuance of an Additional Letter of Credit
the Agent shall send notice to the other Banks of such
issuance, accompanied by a copy of the Additional Letter or
Letters of Credit so issued. Additional Letters of Credit
shall be issued in support of obligations of the Borrower and
the Subsidiaries under performance and surety bond incurred in
the ordinary course of business.
Section 2.8 of the Credit Agreement is amended (1) by deleting the
clause "the Existing Letters of Credit is no longer" as it appears
therein and by substituting in lieu thereof the clause "no Letter of
Credit is" and (2) by deleting the clause "the Existing Letter of
Credit" as it appears in the last sentence thereof and by substituting
in lieu thereof the clause "the Letters of Credit". Section 2.16 of the
Credit Agreement is amended by deleting the clause "the Existing Letter
of Credit" as it appears therein and by substituting in lieu thereof
the clause "the Letters of Credit". Section 7.2 of the Credit Agreement
is amended by deleting each reference to the phrase "the Existing
Letters of Credit" appearing therein and by substituting in lieu
thereof the phrase "each Letter of Credit". Section 9.1(g) is amended
by deleting the clause "the Existing Letter of Credit" as it appears
therein and by substituting in lieu thereof the clause "the Letters of
Credit".
(h) Letter of Credit Fees. Section 2.10 of the Credit
Agreement is deleted in its entirety and the following is substituted
in lieu thereof:
Section 2.10 Letter of Credit Fees. For each Letter
of Credit issued, the Borrower shall pay to the Agent for the
ratable account of the Banks, in advance payable on the date
of issuance, a fee (a "Letter of Credit Fee") in an amount
equal to 2.5% of the original face amount of the Letter of
Credit. Each Bank may set off any refund of the Letter of
Credit Fees contemplated by the forgoing
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sentence against any amounts due and payable to such Bank on
the date such refund is payable. The Borrower shall pay to
U.S. Bank for its own account, on demand, all fees customarily
charged by U.S. Bank with respect to the issuance, renewal,
amendment, administration or payment of each Letter of Credit.
(i) Revolving Commitment Ending Date. Section 2.14 is amended
by deleting the clause "June 29, 2001" as it appears therein and by
substituting in lieu thereof the clause "June 28, 2002".
(j) Use of Proceeds. Section 2.15 of the Credit Agreement is
amended by deleting the first sentence thereof and by substituting in
lieu thereof the following:
The Term A Loan and the Term B Loan shall each continue a
portion (equal to the principal amount of such Loan) of the
Borrower's existing term loan obligations to the Bank
outstanding immediately prior to the consummation of the Fifth
Amendment hereto.
(k) Conditions Precedent to all Loans. Section 3.2 of the
Credit Agreement is amended (1) by deleting the clause ", Term B Loans
and Term C Loans" as it appears therein and by substituting in lieu
thereof the clause "and Term B Loans", (2) by deleting each reference
to the phrase "the renewal of the Existing Letter of Credit" and by
substituting in lieu thereof the phrase "the issuance of any Additional
Letter of Credit" and (3) by deleting the phrase "the Existing Letter
of Credit is renewed" and by substituting in lieu thereof the phrase
"any Letter of Credit is issued".
(l) Preamble to Articles 5 and 6. The Preamble to each of
Articles 5 and 6 of the Credit Agreement is deleted in its entirety and
the following is substituted in lieu thereof:
Until any obligation of the Banks hereunder to make
the Loans, and any obligation of U.S. Bank to issue the
Letters of Credit shall have expired or been terminated and
the Notes and all of the other Obligations have been paid in
full, and no amount is available to be drawn under the under
the Letters of Credit, unless the Majority Banks shall
otherwise consent in writing:
(m) Connaissance Note Collateral. Section 5.16(b) of the
Credit Agreement is deleted in its entirety and the following is
substituted in lieu thereof:
(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 as follows:
(i) any such Net Proceeds constituting
payment upon any regularly scheduled installment of
principal upon the Connaissance Note Collateral shall
be applied (a) first, to the unpaid installments upon
the Term A Loans in order of their maturities, (b)
second, the unpaid installments upon the Term B Loans
in order of their maturities, (c) third, to the
unpaid
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principal balance of the Revolving Loans (other than
reimbursement obligations with respect to Letters of
Credit) and (d) fourth, to the Holding Account in the
amount of the aggregate face amount of the Letters of
Credit; and,
(ii) any such Net Proceeds other than as
provided in the forgoing clause (i) (including any
prepayments upon any Connaissance Note Collateral and
any payments upon any Connaissance Note Collateral
following any acceleration of the maturity dates of
such Connassiance Note Collateral) shall be applied
in the manner set forth in subclause (ii) of Section
2.6(d).
Any Net Proceeds of Connaissance Note Collateral 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 assignment).
Notwithstanding anything to the contrary in this Agreement,
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 in accordance
with Section 20 of NCI's Security Agreement or otherwise.
(n) Ericsson Intercreditor Agreements. Section 5.17 of the
Credit Agreement is amended by deleting the clause "May 30, 2001" as it
appears therein and by substituting in lieu thereof the clause "July
15, 2001".
(o) Consulting Sale Collateral. Section 5.18(b) of the Credit
Agreement is deleted in its entirety and the following is substituted
in lieu thereof:
(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 Consulting Sale Collateral, shall be applied, and shall be
forthwith delivered to the Agent to apply, to the Obligations
as follows:
(i) any such Net Proceeds constituting
payment upon any regularly scheduled installment of
principal upon the Consulting Sale Collateral shall
be applied (a) first, to the unpaid installments upon
the Term A Loans in order of their maturities, (b)
second, the unpaid installments upon the Term B Loans
in order of their maturities, (c) third, to the
unpaid principal balance of the Revolving Loans
(other than reimbursement obligations with respect to
Letters of Credit) and (d) fourth, to the Holding
Account in the amount of the aggregate face amount of
the Letters of Credit; and,
(ii) any such Net Proceeds other than as
provided in the forgoing clause (i) (including any
prepayments upon any Consulting Sale Collateral and
any payments upon any Consulting Sale Collateral
following any
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acceleration of the maturity dates of such Consulting
Sale Collateral) shall be applied in the manner set
forth in subclause (ii) of Section 2.6(d).
Any Net Proceeds of Consulting Sale Collateral 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 assignment).
Notwithstanding anything to the contrary in this Agreement,
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 Consulting Sale Collateral in accordance
with Section 20 of NCI's Security Agreement or otherwise.
(p) Sale of Assets. Sections 6.2(d) and (e) are amended be
deleting the clause "applied pursuant to Section 2.6(c)" as such clause
appears in each such Section and by substituting in lieu thereof the
clause "paid to the Agent pursuant to Section 2.6(c) for application
pursuant to Section 2.6(d)".
(q) Capital Expenditures. Section 6.8 of the Credit Agreement
is deleted in its entirety and the following is substituted in lieu
thereof:
Section 6.8 The Borrower will not, and will not
permit any Subsidiary to, make Capital Expenditures in an
amount exceeding, on a consolidated basis in the following
amounts for the following period: (a) during the fiscal year
ending April 30, 2002, $3,000,000, and (b) during the period
from May 1, 2002 through December 31, 2002, $2,000,000.
(r) Amendments to Financial Covenants. Sections 6.16, 6.17,
6.18 and 6.19 of the Credit Agreement are deleted in their respective
entireties and the following is substituted in lieu thereof:
Section 6.16 MINIMUM EBITDA. The Borrower will not
permit EBITDA to be less than (a) $2,301,000 for the fiscal
quarter ending on or about July 31, 2001, (b) $5,585,000 for
the two fiscal quarters ending on or about October 31, 2001
and (c) $9,264,000 for the three fiscal quarters ending on or
about January 31, 2002. Further, the Borrower will not permit
EBITDA, as of the last day of the Borrower's fiscal quarters
ending on or about the following dates for the four fiscal
quarters ended on such date, to be less than the following
indicated amounts:
Fiscal Quarter Ending On or About Minimum EBITDA
--------------------------------- --------------
April 30, 2002 $13,858,000
July 31, 2002 $16,130,000
October 31, 2002 $17,754,000
Section 6.17 [RESERVED].
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Section 6.18 ADJUSTED LEVERAGE RATIO. The Borrower
will not permit the Adjusted Leverage Ratio, as of the last
day of the Borrower's fiscal quarters ending on or about the
following dates for such fiscal quarter, to be greater than
the following indicated amounts:
Fiscal Quarter Ending On or About Maximum Adjusted Leverage Ratio
--------------------------------- -------------------------------
July 31, 2001 69.7 to 1.0
October 31, 2001 69.9 to 1.0
January 31, 2002 44.3 to 1.0
April 30, 2002 24.8 to 1.0
July 31, 2002 15.7 to 1.0
October 31, 2002 10.5 to 1.0
Section 6.19 INTEREST COVERAGE RATIO. The Borrower
will not permit the Interest Coverage Ratio to be less than
(a) 1.6 to 1.0 for the fiscal quarter ending on or about July
31, 2001, (b) 1.9 to 1.0 for the two fiscal quarters ending on
or about October 31, 2001 and (c) 2.2 to 1.0 for the three
fiscal quarters ending on or about January 31, 2002. Further,
the Borrower will not permit the Interest Coverage Ratio, as
of the last day of the Borrower's fiscal quarters ending on or
about the following dates for the four fiscal quarters ending
on such date, to be less than the following indicated amounts:
Fiscal Quarter Ending On or About Minimum Interest Coverage Ratio
--------------------------------- -------------------------------
April 30, 2002 2.6 to 1.0
July 31, 2002 3.4 to 1.0
October 31, 2002 4.3 to 1.0
(s) New Negative Covenant. Article 6 of the Credit Agreement
is amended by adding the following new Sections 6.23 and 6.24 at the
end thereof:
6.23 Employee Bonuses. The Borrower will not, and
will not permit any Subsidiary to, make any payments under the
Bonus Plan which are accrued and required to the paid during
the fiscal year ending April 30, 2002 in an amount exceeding
$2,000,000.
6.24 Issuance and Ownership of Stock. Except for
issuing Stock of the Borrower or any Subsidiary, or options to
purchase the same, issued in the ordinary course of business
to the Borrower's or such Subsidiary's officers or employees
pursuant to the Borrower's of such Subsidiary's officer or
employee stock purchase or option agreements, the Borrower
will not, nor will permit any Subsidiary to, take any action,
or permit any Subsidiary to take any action, which would (a)
result in a decrease in the Borrower's or any Subsidiary's
ownership interest in any Subsidiary including, without
limitation, decrease in the percentage of the shares of any
class of stock owned or (b) result in the issuance by the
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Borrower of Stock other than (i) those issued and outstanding
on the date of the Fifth Amendment hereto and (ii) the
Warrants and the Subsequent Warrants and common stock of the
Borrower necessary to satisfy the exercise of the Warrants or
the Subsequent Warrants. The Borrower acknowledges that no
Bank has any obligation to exercise the Warrants or the
Subsequent Warrants and that any such exercise shall be in the
sole discretion of such Bank.
(t) Payments and Collections. Section 8.10 of the Credit
Agreement is amended by deleting the third sentence thereof in its
entirety. Section 8.10 of the Credit Agreement is further amended by
deleting the clause "the Existing Letter of Credit" and substituting in
lieu thereof the clause "the Letters of Credit".
(u) New Borrowing Base Certificate. Exhibit A to the Credit
Agreement is hereby amended and restated as set forth in Exhibit A to
this Amendment, which Exhibit A is hereby made a part of the Credit
Agreement as Exhibit A thereto.
(v) New Term A Note. Exhibit C to the Credit Agreement is
hereby amended and restated to read as set forth on Exhibit B to this
Amendment, which Exhibit B is made a part of the Credit Agreement as
Exhibit C thereto.
(w) New Term B Note. Exhibit D to the Credit Agreement is
hereby amended and restated to read as set forth on Exhibit C to this
Amendment, which Exhibit C is made a part of the Credit Agreement as
Exhibit D thereto.
(x) Deletion of Term C Note. Exhibit E to the Credit Agreement
is hereby deleted in its entirety.
(y) New Schedule of Commitments. Schedule 1.1B of the Credit
Agreement is hereby amended and restated to read as set forth on
Exhibit D hereto, which Exhibit D is hereby made a part of the Credit
Agreement as Schedule 1.1B thereof.
(z) New Schedule of Subsidiaries. Schedule 4.19 of the Credit
Agreement is hereby amended and restated to read as set forth on
Exhibit E hereto, which Exhibit E is hereby made a part of the Credit
Agreement as Schedule 4.19 thereof.
Section 3. [Reserved]
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 and each Amendment Document (defined below)
to which the Borrower is a party has been duly authorized, executed and
delivered by it and each Amendment Document to which the Borrower is a
party 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
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bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors' rights
generally;
(b) each Amendment Document to which the Borrower is a party
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;
(c) the execution, delivery and performance by the Borrower of
the Amendment Documents to which it is a party (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; 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.
Section 5. Conditions to Effectiveness of this Amendment. This
Amendment shall become effective as of June 29, 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 an executed new Term A Note
and a Term B Note for each Bank, properly completed for such Bank based
upon its Term A Loan Commitment or Term B Loan Commitment, as
applicable, and duly executed by the Borrower.
(c) The Agent shall have received from the Guarantors a
Consent and Agreement of Guarantors in the form of Exhibit F hereto
(the "Guarantor Agreements") duly completed and executed by each
Guarantor.
(d) The Agent shall have received a copy of the resolutions of
the Board of Directors of the Borrower authorizing the execution,
delivery and performance by the Borrower of this Amendment, the new
Term Note A and Term Note B and the other documents to be executed by
the Borrower in connection herewith, together with a
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certificate of an officer of the Borrower certifying as to the
incumbency and the true signatures of the officers authorized to
execute such documents and certifying that the Articles of
Incorporation and Bylaws of the Borrower have not been amended or
otherwise modified since true and accurate copies of such documents
were previously furnished to the Bank.
(e) the Agent shall have received the favorable opinion of
counsel to Borrower, in form and substance acceptable to the Agent and
its counsel;
(f) The Agent shall have received the Subsequent Warrant
Registration Agreement, duly executed by the Borrower and the Banks.
(g) The Agent shall have received Subsequent Warrants,
properly completed for each Bank and duly executed by the Borrower and
issued to the Banks ratably in accordance with their Revolving
Commitment Percentages, containing an exercise price equal to the
closing price per share of the Borrower's common stock on the
recognized exchange on which such stock is traded at the close of
trading on the date of this Amendment.
(h) The Agent shall have received all certificates,
instruments and other agreements representing or evidencing the
Consulting Sale Collateral, together with duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory
to the Agent.
(i) The Agent shall have received for the ratable benefit of
the Banks a non-refundable restructuring fee in the amount of $163,750
(the "Restructuring Fee").
(j) The Borrower shall have satisfied such other conditions as
specified by the Agent, including payment of all unpaid legal fees and
expenses incurred by the Agent and the fees and expenses of Price
Waterhouse Coopers, financial consultants to the Banks, in each case
through the date of this Amendment in connection with the Credit
Agreement, this Amendment and any and all other documents to be
executed and delivered by any party in connection with this Amendment
(the "Amendment Documents").
Upon the effectiveness of this amendment, the Agent shall distribute the
Restructuring Fee to the Banks ratably in accordance with their Revolving
Commitment Percentages.
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
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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) As provided in Section 9.2 of the Credit Agreement, the
Borrower agrees to reimburse the Agent and each Bank, upon execution of
this Amendment, for all reasonable out-of-pocket expenses (including
attorney' fees and legal expenses of Xxxxxx & Xxxxxxx LLP, counsel for
the Agent and the fees and expenses of PriceWaterhouse Coopers,
financial consultants to the Banks) incurred in connection with the
Credit Agreement, including in connection with the negotiation,
preparation and execution of the Amendment Documents and all other
documents negotiated, prepared and executed in connection with the
Amendment Documents, and in enforcing the obligations of the Borrower
under the Amendment Documents, and to pay and save the Agent and the
Banks harmless from all liability for, any stamp or other taxes which
may be payable with respect to the execution or delivery of the
Amendment Documents, 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.
(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.
Section 8. General Release. The Borrower hereby releases and discharges
the Agent and each Bank, and each of their officers, directors, employees,
agents and attorneys, from any and all claims, actions and liabilities of any
kind or nature that it or any one claiming through or under the Borrower ever
had or may now have, whether now known or hereafter discovered, arising out of
or in any way relating to: (i) any lending relationship or loan commitment
between the Agent, the Banks and the Borrower prior to the date of this
Amendment; (ii) the Loan Documents; or (iii) the negotiations preceding the
execution and delivery of this Amendment.
[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
---------------------------------------
Its Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as a Bank and as Agent
By /s/ Xxxxx X. Xxxxxx
---------------------------------------
Its XX
XXXXXX TRUST AND SAVINGS BANK
By /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Its VP
M&I XXXXXXXX & ILSLEY BANK
By /s/ Xxxx X. Xxxxxx
---------------------------------------
Its VP
By /s/ Xxxx Xxxxxx
---------------------------------------
Its XX
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Its VP
[Signature Page to Fifth Amendment to Amended and Restated Credit Agreement]
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