SECOND AMENDMENT TO AMENDED AND RESTATED
CREDIT AND SECURITY AGREEMENT
This Second Amendment to the Amended and Restated Credit and Security
Agreement ("Second Amendment") is dated effective July 31, 1997, and is by and
between the following identified parties:
Featherlite Mfg., Inc., a corporation duly organized and validly
existing under the laws of the State of Minnesota, with its principal
place of business at Xxx. 00 & 0, Xxxxxx, Xxxx 00000 ("Borrower");
Xxxxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxxx, residents of Iowa,
and Xxxxx Xxxxxxx and Xxxxx Xxxxxxx, residents of Minnesota (the
"Xxxxxxxx"); and
Firstar Bank Iowa, N.A., a national banking institution ("Bank").
RECITALS
A. Borrower, Xxxxxxxx and Bank entered into an Amended and Restated Credit
and Security Agreement dated as of December 30, 1996 ("Restated Agreement"),
which was amended by a First Amendment dated June 18, 1997.
B. Borrower has requested that the Bank review and extend the revolving
line of credit to amend certain terms and conditions in the Restated Agreement,
and waive certain financial covenants.
C. Bank is willing to grant the request subject to the terms of this Second
Amendment.
The parties agree:
1. Amend Definitions and Accounting. Section 1, Definitions and Accounting,
is amended to modify the following definitions:
"Borrowing Base" means an amount equal to the sum of 80
percent of Eligible Receivables of Borrower outstanding from time to
time applicable thereto plus 65 percent of Eligible Finished Inventory
of Borrower and 65 percent of Eligible Raw Material Inventory of
Borrower as Bank shall deem acceptable. Such Borrowing Base shall be
determined by submission of a monthly Accounts Receivable and Loan
Reconciliation Certificate by the end of each month, accurate to the
first of such month.
and to add the following new definitions:
"Eligible Raw Material Inventory" means raw materials
purchased by Borrower which has not been processed by Borrower valued
at the lower of cost or market value on a "first in-first out" basis
which is acceptable to Bank, in its sole discretion.
"Eligible Finished Inventory" means finished trailers, ready
for sale, which are owned by Borrower and located at Borrower's
facilities, valued at the lower of cost or market value on a "first
in-first out" basis which is acceptable to Bank, in its sole discretion
and excludes inventory that is slow moving or obsolete (as determined
by the Bank in its sole discretion).
2. Amendment to Revolver. Section 5(a) of Revolving Line of Credit and
Payment Provisions, is amended to read as follows:
a) Borrowing. Subject to the terms and conditions of this Restated
Agreement, the Bank shall, in its sole discretion, make loans (each a
"Revolving Loan") to the Borrower in such amounts as the Borrower may
from time to time request in increments of at least $50,000 and at
such intervals as the Bank may from time to time determine, provided
that the aggregate principal amount of Revolving Loans outstanding
hereunder, together with the principal amount of such Revolving Loan
requested, shall not exceed the Borrowing Limit, less the aggregate
face amount of any outstanding letters of credit issued by Bank on
behalf of Borrower.
3. Letters of Credit. A new Section 5A dealing with Letters of Credit is
added after Section 5 as follows:
5A. (a) Letters of Credit. Bank agrees to issue letters of
credit for the account of Borrower from time to time until the
Termination Date in such amounts as Borrower shall request, provided no
letter of credit will be issued in any amount which, after giving
effect to such issuance, would cause the aggregate principal amount of
Revolving Loans plus the face amount of any outstanding letter of
credit to exceed the Borrowing Limit. Each request for a letter of
credit shall be made by the Borrower in writing on the Bank's letter of
credit application and reimbursement agreement form. The Bank shall
charge its reasonable and customary fees for such letters of credit
(which shall be shared prorate with any bank participating in this
credit facility).
(b) Agreement to Repay Letter of Credit Drawings. If the Bank
has received documents that it determines are satisfactory to draw
under a Letter of Credit, Borrower shall reimburse the Bank immediately
in an amount equal to the amount of such drawing. If Borrower fails to
reimburse Bank immediately, Bank is authorized by Borrower to draw on
the Revolving Line of Credit in an amount sufficient to cover the
deficiency, which draw shall be treated as a loan under the Revolving
Line of Credit.
4. Amended Negative Covenant. Section 9, Negative Covenants subpart (b)(iv)
is amended to allow $5,000,000 in floor plan financing for the Vantare division.
5. Amended Financial Covenant. Section 11, Financial Covenants of Borrower,
as follows:
a) Minimum Working Capital. Maintain at all times an excess of current
assets over current liabilities of not less than $8,000,000.
b) Minimum Tangible Net Worth. Maintain at all times as Tangible Net
Worth of not less than $17,500,000.
c) Capital Expenditures. Refrain from making expenditures for fixed or
capital assets which would cause the aggregate of all such expenditures
made by Borrower to exceed $4,000,000 for fiscal year ending 1997 and
$2,000,000 for fiscal year ending 1998.
d) Current Ratio. Maintain at all times a ratio of current assets to
current liabilities of not less than 1.5 to 1.
e) Leverage Ratio. Maintain at all times a ratio of total liabilities
to Tangible Net Worth of not greater than 2.5 to 1.
f) Cash Flow/Debt Service. Maintain a ratio of 1.5 to 1 measured on a
year to date actual basis of Operating Cash Flow to Total Debt Service and
as of September 30, 1997 and quarterly thereafter, maintain a ratio of 1.5
to 1 measured on a trailing four-quarter average basis.
6. Representations and Warranties. All the representations and warranties
of Borrower as set forth in the Restated Agreement are true and correct in all
material respects as of the date of this Second Amendment.
7. Acknowledgment of Receipt. By their execution of this Second Amendment,
the parties acknowledge receipt of a copy of this document.
8. Savings. All other terms and conditions of the Restated Agreement, not
specifically modified by this Second Amendment, shall remain in full force and
effect.
9. Representation. The Borrower represents that no Event of Default has
occurred and is continuing under the Restated Agreement, as amended, and no
event or circumstance has occurred and is continuing that, with the giving of
notice, the passage of time, or both, would constitute an Event of Default under
the Restated Agreement, as amended. Further, the Borrower represents that the
representations and warranties as contained in the Restated Agreement, as
amended, continue to be true.
10. Counterparts. This Second Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AMENDMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR
ORAL PROMISES NOT CONTAINED IN THIS WRITTEN AGREEMENT (EXCEPT THE RESTATED
AGREEMENT AS PREVIOUSLY AMENDED AND DOCUMENTS REFERRED TO IN THE RESTATED
AGREEMENT AS PREVIOUSLY AMENDED) MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE
TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
FEATHERLITE MFG., INC.
BY:
Xxxxxx Xxxxxxx, President
BY:
Xxxxx X. Xxxxxxx, Executive Vice President
FIRSTAR BANK IOWA, N.A.
BY:
Xxxxx XxXxxxx, Vice President
