Exhibit 10.4
THIRD AMENDMENT TO
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
This Third Amendment, dated as of March 15, 1996, is made by and between
DAKOTAH, INCORPORATED, a South Dakota corporation (the "Borrower"), and NORWEST
BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender").
Recitals
The Borrower and the Lender have entered into an Amended and Restated Credit and
Security Agreement dated as of August 17, 1995, (as amended by a First Amendment
to Credit and Security Agreement dated as of October 5, 1995, and a Second
Amendment to Credit and Security Agreement dated as of November 15, 1995 (as so
amended, the "Credit Agreement"). Capitalized terms used in these recitals have
the meanings given to them in the Credit Agreement unless otherwise specified.
The Borrower has requested that certain amendments be made to the Credit
Agreement to provide for Revolving Advances against Inventory. The Lender is
willing to grant the Borrower's request subject to the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, it is agreed as follows:
1. Defined Terms. Capitalized terms used in this Third Amendment which are
defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein. In addition, Section 1.1 of the Credit
Agreement is amended by adding or amending, as the case may be, the following
definitions:
" 'Borrowing Base' means, at any time and subject to change from time to time in
the Lender's sole discretion, the lesser of:
(a) the Maximum Line; or
(b) the sum of:
(i) 80% of Eligible Accounts; and
(ii) on or before June 15, 1996, the lesser of ( A)
20% of Eligible Inventory or ( B) $1,500,000."
" 'Eligible Inventory' means all Inventory of the Borrower, at the lower of cost
or market value as determined in accordance with GAAP; provided, however, that
the following shall not in any event be deemed Eligible Inventory:
(1) Inventory that is: in-transit; located
at any warehouse or other premises not approved by
the Lender in writing; located outside of the states,
or localities, as applicable, in which the Lender has
filed financing statements to perfect a first
priority security interest in such Inventory; covered
by any negotiable or non-negotiable warehouse
receipt, ▇▇▇▇ of lading or other document of title;
on consignment from any Person; on consignment to any
Person or subject to any bailment unless such
consignee or bailee has executed an agreement with
the Lender;
(2) Supplies, packaging or parts Inventory;
(3) Work-in-process Inventory;
(4) Inventory that is damaged, obsolete or
not currently saleable in the normal course of the
Borrower's operations;
(5) Inventory that the Borrower has
returned, has attempted to return, is in the process
of returning or intends to return to the vendor
thereof;
(6) Inventory that is subject to a security
interest in favor of any Person other than the
Lender; and
(7) Inventory otherwise deemed ineligible by
the Lender in its sole discretion."
" 'Floating Rate' means, subject to Paragraph 2 of the Third Amendment, ( I)
except for Inventory Advances, an annual rate equal to the sum of the Base Rate
plus one and one-half percent (1.5%), and ( II) for Inventory Advances, an
annual rate equal to the sum of the Base Rate plus two percent (2.0%), which
annual rates in each case shall change when and as the Base Rate changes."
" 'Inventory Advances' means on or before June 15, 1996, the difference of ( I)
the outstanding principal balance of the Revolving Note and ( II) 80% of
Eligible Accounts, if greater than zero ($-0)."
" 'Third Amendment' means that certain Third Amendment to Amended and Restated
Credit and Security Agreement dated as of March __, 1996."
2. Allocation of Revolving Advances. The Lender shall strive to minimize that
portion of Revolving Advances constituting Inventory Advances by allocating
payments on Revolving Advances to Inventory Advances first and by exhausting
borrowing availability under clause (ii) of the definition of "Borrowing Base"
first before making Inventory Advances. If the Lender fails to do so, however,
the Borrower may notify the Lender and the Lender shall promptly remedy the
situation, but the Borrower shall not be entitled to any return of any excess
interest that was charged to the Borrower because of such failure.
3. No Other Changes. Except as explicitly amended by this Third Amendment, all
of the terms and conditions of the Credit Agreement shall remain in full force
and effect and shall apply to any advance or letter of credit thereunder.
4. Conditions Precedent. This Third Amendment shall be effective when the Lender
shall have received an executed original hereof, together with each of the
following, each in substance and form acceptable to the Lender in its sole
discretion:
(a) A Certificate of the Secretary of the Borrower certifying as to (I) the
resolutions of the board of directors of the Borrower approving the execution
and delivery of this Third Amendment, (II) the fact that the Articles of
Incorporation and Bylaws of the Borrower, which were certified and delivered to
the Lender pursuant to the Certificate of the Borrower's Secretary dated as of
August 15, 1995 continue in full force and effect and have not been amended or
otherwise modified except as set forth in the Certificate to be delivered , and
(iii) certifying that the officers and agents of the Borrower who have been
certified to the Lender, pursuant to the Certificate of Authority of the
Borrower's Secretary dated as of November 15, 1995, as being authorized to sign
and to act on behalf of the Borrower continue to be so authorized or setting
forth the sample signatures of each of the officers and agents of the Borrower
authorized to execute and deliver this Third Amendment and all other documents,
agreements and certificates on behalf of the Borrower.
(b) An opinion of the Borrower's counsel as to the matters set forth in
paragraphs 5(A) and 5(B) hereof and as to such other matters as the Lender shall
require.
(c) Such other matters as the Lender may require.
5. Representations and Warranties. The Borrower hereby represents and warrants
to the Lender as follows:
(a) The Borrower has all requisite power and authority to execute this Third
Amendment and to perform all of its obligations hereunder, and this Third
Amendment has been duly executed and delivered by the Borrower and constitutes
the legal, valid and binding obligation of the Borrower, enforceable in
accordance with its terms.
(b) The execution, delivery and performance by the Borrower of this Third
Amendment have been duly authorized by all necessary corporate action and do not
(I) require any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation or of any
order, writ, injunction or decree presently in effect, having applicability to
the Borrower, or the articles of incorporation or by-laws of the Borrower, or (
III) result in a breach of or constitute a default under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which the
Borrower is a party or by which it or its properties may be bound or affected.
(c) All of the representations and warranties contained in Article V of the
Credit Agreement are correct on and as of the date hereof as though made on and
as of such date, except to the extent that such representations and warranties
relate solely to an earlier date.
6. References. All references in the Credit Agreement to "this Agreement" shall
be deemed to refer to the Credit Agreement as amended hereby; and any and all
references in the Security Documents to the Credit Agreement shall be deemed to
refer to the Credit Agreement as amended hereby.
7. No Waiver. The execution of this Third Amendment and acceptance of any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or breach, default or event of
default under any Security Document or other document held by the Lender,
whether or not known to the Lender and whether or not existing on the date of
this Third Amendment.
8. Release. The Borrower hereby absolutely and unconditionally releases and
forever discharges the Lender, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers,
indemnitors, successors and assigns thereof, together with all of the present
and former directors, officers, agents and employees of any of the foregoing,
from any and all claims, demands or causes of action of any kind, nature or
description, whether arising in law or equity or upon contract or tort or under
any state or federal law or otherwise, which the Borrower has had, now has or
has made claim to have against any such person for or by reason of any act,
omission, matter, cause or thing whatsoever arising from the beginning of time
to and including the date of this Third Amendment, whether such claims, demands
and causes of action are matured or unmatured or known or unknown.
9. Costs and Expenses. The Borrower hereby reaffirms its agreement under the
Credit Agreement to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Credit Agreement, the
Security Documents and all other documents contemplated thereby, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, the Borrower specifically
agrees to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this
Third Amendment and the documents and instruments incidental hereto. The
Borrower hereby agrees that the Lender may, at any time or from time to time in
its sole discretion and without further authorization by the Borrower, make a
loan to the Borrower under the Credit Agreement, or apply the proceeds of any
loan, for the purpose of paying any such fees, disbursements, costs and
expenses.
10. Miscellaneous. This Third Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
be duly executed as of the date first written above.
NORWEST BUSINESS CREDIT, INC. DAKOTAH, INCORPORATED
By ______________________________ By ______________________________
Its ___________________________ Its ___________________________