WAIVER AND AMENDMENT
Dated as of December 31, 1997
Principal Mutual Life Insurance Company
Northern Life Insurance Company
Modern Woodmen of America
Royal Neighbors of America
ReliaStar Life Insurance Company of New York
ReliaStar United Services Life Insurance Company
Ladies and Gentlemen:
Reference is made to (i) the Note Agreement dated as of December 2, 1994
(as amended by that certain Letter Amendment dated as of February 15, 1996,
and that certain Letter Amendment dated as of December 30, 1996, and that
certain Waiver and Amendment dated as of March 31, 1997, the "1994
Agreement") among Principal Mutual Life Insurance Company ("Principal"),
Northern Life Insurance Company ("Northern"), Modern Woodmen of America
("MWA") and Royal Neighbors of America ("RNA", and together with Principal,
Northern and MWA, collectively the "1994 Purchasers") and The Rottlund
Company, Inc., a Minnesota corporation (the "Company"), pursuant to which the
1994 Purchasers purchased promissory notes of the Company in the aggregate
original principal amount of $25,000,000 (collectively, the "1994 Notes") and
(ii) the Note Agreement dated as of February 15, 1996 (as amended by that
certain Letter Amendment dated as of December 30, 1996 and that certain
Waiver and Amendment dated as of March 31, 1997, the "1996 Agreement", and
together with the 1994 Agreement, collectively the "Agreements" and each
individually an "Agreement") among Principal, Bankers Security Life Insurance
Society, n/k/a ReliaStar Life Insurance Company of New York ("Bankers") and
United Services Life Insurance Company, n/k/a ReliaStar United Services Life
Insurance Company ("United", and together with Principal and Bankers,
collectively the "1996 Purchasers", and, together with the 1994 Purchasers,
collectively the "Purchasers"), pursuant to which the 1996 Purchasers
purchased promissory notes of the Company in the aggregate original principal
amount of $10,000,000 (collectively, the "1996 Notes"). Capitalized terms
used and not otherwise defined herein shall have the meanings ascribed
thereto in each Agreement.
The Company has advised the Purchasers that the Company is at present in
default under Section 5.16 of each of the Agreements, which defaults the
Company hereby acknowledges. The Company has further advised the Purchasers
that the Company is likely to continue to be so in default under Section 5.16
of each of the Agreements in the near future. The Company has accordingly
requested certain waivers and amendments relating to Section 5.16 of each of
the Agreements.
In consideration of the premises herein set forth and the satisfaction
of the Condition hereinafter described, the Company and the Purchasers hereby
agree, effective upon the satisfaction of the Condition, as follows:
1. The Purchasers hereby waive the defaults existing as of the date
hereof under Section 5.16 of each of the Agreements, and each Event of
Default arising directly therefrom.
1
1 Section 5.7 (g)(v) of each of the Agreements is hereby amended
and restated in its entirety as follows:
(v) at no time shall the aggregate amount then remaining unpaid
on Debt secured by such Liens and Liens permitted by Section
5.7(e) exceed the lesser of (i) $8,000,000 or (ii) an amount
equal to 11.5% of Consolidated Net Tangible Assets.
3. Section 5.16 of each of the Agreements is hereby amended and restated
in its entirety as follows:
The Company shall maintain, as of the close of each month,
Net Income Available for Fixed Charges for the immediately
preceding twelve-month period of at least the following
percentages of Fixed Charges for such twelve-month period:
100% as of the close of each month on and prior to
March 31, 1998;
115% as of the close of each month on and prior to June
30, 1998;
140% as of the close of each month on or prior to
September 30, 1998;
190% as of the close of each month on and prior to
December 31, 1998;
200% as of the close of each month thereafter.
4. Section 5 of each of the Agreements is hereby amended by adding the
following new sections 5.19 and 5.20 thereto:
-2-
A. EXISTING BANK INDEBTEDNESS. If the Company shall
modify any term or condition of the Existing Bank
Indebtedness Documents, the Company agrees to give
written notice of such modification to all Holders
promptly, but in any event within five days of the
date on which such modification is effected.
A. GUARANTY FROM FUTURE SUBSIDIARIES. In addition to
causing the existing Subsidiaries to execute and
deliver the Guaranty, the Company will promptly
secure the execution and delivery of a guaranty
substantially in the form of the Guaranty from
each Subsidiary as may hereafter be formed and
organized.
1 Section 6.1 of each of the Agreements is hereby amended (a)
by changing the reference to "5.18" in the third line of
subsection 6.1(c) to "5.19", and (b) by changing the
parenthetical statement "(individually or in the aggregate")
in the sixth and seventh lines of subsection 6.1(e) to
"(individually or in the aggregate, and including without
limitation the Existing Bank Indebtedness)".
1 Section 8.1 of each of the Agreements is hereby amended by
adding thereto the following new definitions:
"Existing Bank Indebtedness" shall mean the portion of the Debt
of the Company incurred under or pursuant to the Existing Credit
Agreement.
"Existing Bank Indebtedness Documents" shall mean the Existing
Credit Agreement, together with all instruments and documents
related thereto, given to secure or evidence the Existing Bank
Indebtedness, or otherwise executed in connection therewith.
"Existing Credit Agreement" shall mean that certain Credit
Agreement dated as of October 23, 1996 among the Company, The
First National Bank of Boston, as Agent, and the other parties
thereto, as the same may from time to time be amended or
otherwise modified. Reference herein to the amendment or other
modification of the Existing Credit Agreement is not intended to
waive or modify in any respect the covenant of the Company
contained in Section 5.19 regarding the modification of the
Existing Bank Indebtedness Documents.
"Guaranty" shall mean the Guaranty of the Subsidiaries, the form
of which is appended as Exhibit A to that certain Waiver and
Amendment dated as of December 31, 1997, by and among the
Company and the Purchasers.
3
This Waiver and Amendment shall become effective only upon the execution and
delivery by each of the Subsidiaries of a Guaranty (the "Guaranty"),
substantially in the form of Exhibit A hereto (the "Condition").
Except as specifically amended hereby, all terms and conditions of each
of the Agreements shall remain in full force and effect. This Waiver and
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be an original, but all of which constitute but one agreement.
This Waiver and Amendment shall be governed by, and enforced in accordance
with Minnesota law.
The Company represents and warrants to the Purchasers that (i) except as
disclosed herein, no Default or Event of Default has occurred and is
continuing, (ii) this Waiver and Amendment has been duly authorized, executed
and delivered by the Company and each Agreement, as amended by this Waiver
and Amendment, constitutes a legal, valid and binding obligation of the
Company, and the Guaranty has been duly authorized, executed and delivered by
each Subsidiary and constitutes a legal, valid and binding obligation of each
Subsidiary, and (iii) there is no provision in the Articles of Incorporation
of the Company or in its bylaws or in any indenture, contract or agreement to
which the Company is a party or by which it is bound nor any provision of law
or any order of any court or governmental authority which prohibits the
execution and delivery by the Company of this Waiver and Amendment, the
performance or observance by the Company of the terms and conditions of this
Waiver and Amendment, or the performance or observance by the Company of the
terms and conditions of the Agreements, as modified by the amendments set
forth in this Waiver and Amendment, and there is no provision in the Articles
of Incorporation or bylaws or partnership agreement, as the case may be, of
any Subsidiary or in any indenture, contract, or agreement to which any
Subsidiary is a party or by which any Subsidiary is bound nor any provision
of law or any order of any court or governmental authority which prohibits
the execution and delivery by any Subsidiary of the Guaranty or the
performance or observance by any Subsidiary of the terms and conditions of
the Guaranty. All representations and warranties contained herein or made in
writing by the Company in connection herewith shall survive the execution and
delivery hereof. It shall be deemed to be an Event of Default under each
Agreement if any of such representations or warranties proves to be false in
any material respect as of the date hereof.
If you are in agreement with the foregoing, please so indicate by
executing the form of acknowledgment set forth below. In accordance with
Section 7.1 of each of the Agreements, this Waiver and Amendment shall become
a binding agreement between you and the Company with respect to each
Agreement, and the amendments set forth herein shall take effect as of the
date hereof with respect to such Agreement, upon the execution of the form of
acknowledgement set forth below by the holders of at least 66 2/3% in the
aggregate principal amount of the outstanding Notes (as defined in such
Agreement) issued pursuant to such Agreement (the percentage of the aggregate
principal amount of the outstanding Notes held by each of you being set forth
on Schedule I hereof).
Very truly yours
THE ROTTLUND COMPANY, INC.
By
---------------------------------
Its
--------------------------------
Agreed to as of the date first above written.
AS TO THE 1994 AGREEMENT AND THE 1996 AGREEMENT:
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By
-----------------------------------
Its
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And
----------------------------------
Its
----------------------------------
AS TO THE 1994 AGREEMENT:
NORTHERN LIFE INSURANCE COMPANY
By
-----------------------------------
Its
----------------------------------
MODERN WOODMEN OF AMERICA
By
-----------------------------------
Its
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And
----------------------------------
Its
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ROYAL NEIGHBORS OF AMERICA
By
-----------------------------------
Its
----------------------------------
And
----------------------------------
Its
----------------------------------
AS TO THE 1996 AGREEMENT:
RELIASTAR LIFE INSURANCE COMPANY
OF NEW YORK, successor by merger to
Relia Star Bankers Life Insurance Company,
f/k/a Bankers Security Life Insurance Society
By
-----------------------------------
Its
----------------------------------
RELIASTAR UNITED SERVICES
LIFE INSURANCE COMPANY
By
-----------------------------------
Its
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SCHEDULE I
1994 AGREEMENT
Percentage of Principal Amount
Holder Of Outstanding Notes
------ --------------------
Principal Mutual Life Insurance 64%
Company
Northern Life Insurance Company 20%
Modern Woodmen of America 12%
Royal Neighbors of America 4%
----
100%
1996 AGREEMENT
Percentagee of Principal Amount
Holder Of Outstanding Notes
------ --------------------
Principal Mutual Life Insurance 70%
Company
Xxxxxx & Co., as nominee for 10%
Bankers Security Life
Insurance Society (n/k/a
ReliaStar Life Insurance
Company of New York)
Xxxxxx & Co., as nominee for 20%
---
United Services Life Insurance
Company (n/k/a ReliaStar
United Services Life Insurance
Company)
100%
EXHIBIT A
FORM OF GUARANTY
[TO COME]
