AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT ("Credit Agreement") is made and
entered into as of May 9, 1996, by and between NORTH ATLANTIC TECHNOLOGIES,
INC., a Minnesota corporation (the "Borrower"), whose address is ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and FIRST BANK NATIONAL
ASSOCIATION, a national banking association (the "Lender"), whose address is
First Bank Place, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
RECITALS
FIRST: North Atlantic Technologies, Inc., a Minnesota corporation ("Borrower")
and the Lender are parties to a credit agreement dated as of December 21, 1987
("Original Agreement"). Pursuant to the terms of the Original Agreement the
Lender agreed to extend on a revolving credit basis sums to Borrower. The
Original Agreement was amended by a First Amendment to Credit Agreement dated
April 13, 1990, a Second Amendment to Credit Agreement dated June 18, 1991, a
Third Amendment to Credit Agreement dated September 25, 1991, a Fourth Amendment
to Credit Agreement dated December 30, 1991, a Fifth Amendment to Credit
Agreement dated June 26, 1992, a Sixth Amendment dated as of December 29, 1992,
a Seventh Amendment dated as of August 31, 1993, an Eighth Amendment dated
October 25, 1993, a Ninth Amendment dated August 31, 1994, a Tenth Amendment to
Credit Agreement dated March 28, 1995, an Eleventh Amendment to Credit Agreement
dated May 8, 1995, an Eleventh Amendment dated August 31, 1995, and a Twelfth
Amendment dated October 31, 1995.
SECOND: Borrower's loans are secured by an attached and perfected security
interest in all of Borrower's inventory, accounts, equipment, general
intangibles, proceeds and products thereof. In addition, ▇▇▇▇▇▇ ▇. ▇▇▇▇,
shareholder of the Borrower, has guaranteed all obligations of the Borrower
pursuant to a Guaranty dated December 21, 1987. In addition, the Borrower's
loans are secured pursuant to the terms of a Pledge Agreement dated December 21,
1987 by ▇▇▇▇▇▇ ▇. ▇▇▇▇ pledging certain financial assets including securities to
the Lender.
THIRD: On February 1, 1996 Borrower filed a petition for relief under Chapter 11
of Title 11 of the United States Code, and pursuant to an order confirming the
Borrower's Plan of Reorganization dated April 19, 1996, Borrower was restored to
its property and assets pursuant to 11 U.S.C. 1141. Borrower and Lender agreed
to amend and restate the terms of the Original Agreement as set forth in the
confirmed Plan and to extend new credit to Borrower pursuant to the Plan and
this Credit Agreement.
NOW, THEREFORE, for and in consideration of the loans and advances to be made by
the Lender to the Borrower hereunder, the mutual covenants, promises and
agreements contained herein, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the Borrower and the
Lender agree as follows:
DEFINITIONS
The following terms when used in this Credit Agreement shall, except where the
context otherwise requires, have the following meanings both in the singular and
plural forms thereof:
"Account" means any right of the Borrower to payment for goods sold or services
rendered.
"Advance" means any advance by the Lender made under the Revolving Credit
Commitment. (The face amount of any letter of credit, and the converted face
amount of any letter of credit issued in foreign currency using the conversion
rates applied by the Lender, issued by the Lender for the account of the
Borrower shall be deemed an Advance hereunder).
"Affiliate" means any corporation, association, partnership, joint venture or
other business entity directly or indirectly controlling or controlled by, or
under direct or indirect common control of, the Borrower or any of its
Subsidiaries.
"Borrower" means North Atlantic Technologies, Inc., a Minnesota corporation.
"Borrowing Base" means so many of the shares of the stock owned by ▇▇▇▇▇▇ ▇.
▇▇▇▇ traded on the New York Stock Exchange which have an aggregate value as of
the date hereof equal to $2,357,142.85 (which stock shall be transferred to
▇▇▇▇'▇ account number 10-603730 as of the date hereof).
"Business Day" means any day on which the Lender is open for the transaction of
business of the kind contemplated by this Credit Agreement.
"Collateral" means all of the assets of the Borrower or any other party in which
the Lender holds a security interest pursuant to any of the Loan Documents.
"Credit Agreement" means this Credit Agreement, as originally executed and as
may be amended, modified, supplemented, or restated from time to time by written
agreement between the Borrower and the Lender.
"Current Assets" means, at any date, the aggregate amount of all assets of the
Borrower that are classified as current assets in accordance with GAAP.
"Current Liabilities" means, at any time, the aggregate amount of all
liabilities of the Borrower that are classified as current liabilities in
accordance with GAAP (including taxes and other proper accruals and the matured
portion of any indebtedness).
"Debt" means (i) all items of indebtedness or liability that, in accordance with
GAAP, would be included in determining total liabilities as shown on the
liabilities side of a balance sheet as of the date on which such Debt is to be
determined; (ii) indebtedness secured by any mortgage, pledge, lien or security
interest existing on property owned by the Person whose Debt is being
determined, whether or not the indebtedness secured thereby shall have been
assumed; and (iii) guaranties, endorsements (other than for purposes of
collection in the ordinary course of business) and other contingent obligations
in respect of, or to purchase or otherwise acquire, indebtedness of others.
"Default" means any event which if continued uncured would, with notice or lapse
of time or both, constitute an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
and as may be further amended from time to time, and the rules and regulations
promulgated thereunder by any governmental agency or authority, as from time to
time in effect.
"Event of Default" means any event of default described in Section 8
hereof."GAAP" means the generally accepted accounting principles in the United
States in effect from time to time including, but not limited to, Financial
Accounting Standards Board (FASB) Standards and Interpretations, Accounting
Principles Board (APB) Opinions and Interpretations, Committee on Accounting
Procedure (CAP) Accounting Research Bulletins, and certain other accounting
principles which have substantial authoritative support.
"Guarantor" means ▇▇▇▇▇▇ ▇. ▇▇▇▇.
"Guaranty" means the Restated Guaranty, of even date herewith, executed by the
Guarantor in favor of the Lender, as originally executed and as may be amended,
modified or supplemented from time to time by written agreement between the
Guarantor and the Lender.
"Index Rate" means the variable annual rate that will always be equal to the
rate calculated by the Lender from time to time as its One Month Reserve
Adjusted Certificate of Deposit Rate.
"Lender" means First Bank National Association, a national banking association,
its successors and assigns.
"Lien" means any lien, security interest, pledge, mortgage, statutory or tax
lien, or other encumbrance of any kind whatsoever (including without limitation,
the lien or retained security title of a conditional vendor), whether arising
under a security instrument or as a matter of law, judicial process or otherwise
or by an agreement of the Borrower to grant any lien or security interest or to
pledge, mortgage or otherwise encumber any of its assets.
"Loan Documents" means this Credit Agreement, the Revolving Credit Note, the
Term Note, the Security Agreement, the Pledge Agreement, and the Guaranty, and
such other documents as the Lender may reasonably require as security for, or
otherwise may be executed in connection with, any loan hereunder, all as
originally executed and as may be amended, modified or supplemented from time to
time by written agreement between the parties thereto.
"Material Adverse Occurrence" means any occurrence which materially adversely
affects the present or prospective financial condition or operations of the
Borrower, or which impairs the ability of the Borrower to perform its
obligations under the Loan Documents.
"Maturity" of the Revolving Credit Note means the earlier of (a) the date on
which the Revolving Credit Note becomes due and payable upon the occurrence of
an Event of Default; or (b) the Termination Date.
"Net Worth" means the aggregate of capital and surplus (and subordinated Debt)
of the Borrower, all determined in accordance with GAAP.
"Notes" means the Revolving Credit Note and Term Note.
"Person" means any natural person, corporation, firm, association, government,
governmental agency or any other entity, whether acting in an individual
fiduciary or other capacity.
"Pledge Agreement" means the Restated Pledge Agreement, of even date herewith,
executed by ▇▇▇▇▇▇ ▇. ▇▇▇▇ ("Pledgor") in favor of the Lender, as originally
executed and as may be amended, modified or supplemented by written agreement
between the Pledgor and the Lender.
"Regulatory Change" means any change after the date hereof in any (or the
adoption after the date hereof of any new) (a) Federal or state law or foreign
law applying to the Lender; or (b) regulation, interpretation, directive or
request (whether or not having the force of law) applying or in the reasonable
opinion of the Lender applicable to, the Lender of any court or governmental
authority charged with the interpretation or administration of any law referred
to in clause (a) of this definition or of any fiscal, monetary, or other
authority having jurisdiction over the Lender.
"Revolving Credit Commitment" means the sum of One Million One Hundred Fifty
Thousand and No/100 Dollars ($1,150,000.00), as reduced from time to time
pursuant to the terms of this Credit Agreement, or the Lender's obligation to
extend Advances to the Borrower under Section 2, as the context may
require.
"Revolving Credit Loan" means, at any date, the aggregate amount of all Advances
made by the Lender to the Borrower pursuant to Section 2 hereof.
"Revolving Credit Note" means the Revolving Credit Promissory Note of even date
herewith in the original principal amount of One Million One Hundred Fifty
Thousand and No/100 Dollars ($1,150,000.00) made by the Borrower payable to the
order of the Lender, together with all extensions, renewals, modifications,
substitutions and changes in form thereof effected by written agreement between
the Borrower and the Lender.
"Security Agreement" means the Amended and Restated Security Agreement, of even
date herewith, executed by Borrower in favor of the Lender, as originally
executed and as may be amended, modified or supplemented from time to time by
written agreement between Borrower and the Lender.
"Subsidiary" means any corporation of which more than fifty percent (50%) of the
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether, at the
time, stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned by the Borrower and/or one or more
Subsidiary or Affiliate.
"Termination Date" of the Revolving Credit Note means the earlier of (a) June 1,
1997; or (b) the date upon which the obligation of the Lender to make Advances
is terminated pursuant to Section 2.8.
"Term Loan" means the loan evidenced by the Term Note.
"Term Note" means the Term Promissory Note of even date herewith in the original
principal amount of Five Hundred Thousand and No/100 Dollars ($500,000.00), made
by the Borrower payable to the order of the Lender, together with all
extensions, renewals, modifications, substitutions and changes in form thereof
effected by written agreement between the Borrower and the Lender.
THE REVOLVING CREDIT LOAN
Commitment for Revolving Credit. The Revolving Credit Commitment shall initially
be in the amount of $1,150,000; provided however, that the Revolving Credit
Commitment shall be reduced from time to time as follows: (1) the Revolving
Credit Commitment automatically shall be reduced by $25,000 on the last day of
each calendar month beginning on July 31, 1996; and (2) in the event that the
Revolving Credit Commitment shall exceed on any given date an amount equal to
seventy percent (70%) of the Borrowing Base less the amount of all outstanding
principal and past-due interest owing under the Term Note, then the Revolving
Credit Commitment automatically shall be reduced to such amount. Subject to the
Conditions of Lending set forth in Section 4 hereof and as long as no Event of
Default has occurred hereunder, the Lender agrees to make Advances to the
Borrower from time to time from the date of this Credit Agreement through the
Termination Date, provided, however, that the Lender shall not be obligated to
make any Advance if, after giving effect to such Advance, the aggregate
outstanding principal amount of all Advances would exceed the Revolving Credit
Commitment as reduced from time to time. Within the limits set forth above, the
Borrower may borrow, repay and reborrow amounts under the Revolving Credit Note.
Purpose of Loan/Use of Proceeds. The Borrower will use the proceeds of any
Advance hereunder for general working capital.
The Revolving Credit Note. All Advances shall be evidenced by, and the Borrower
shall repay such Advances to the Lender in accordance with, the terms of the
Revolving Credit Note, including without limitation the provision of the
Revolving Credit Note that the principal amount payable thereunder at any time
shall not exceed the then unpaid principal amount of all Advances made by the
Lender.
Records of Advances and Payments. The Borrower hereby irrevocably authorizes the
Lender to make or cause to be made, at or about the time each Advance is made by
the Lender, an appropriate notation on the Lender's records of the principal
amount of such Advance; and the Lender shall make or cause to be made, on or
about the time a payment of any principal or interest of the Revolving Credit
Note is received, an appropriate notation of such payment on its records. The
aggregate amount of all unpaid Advances set forth on the records of the Lender
shall be rebuttable presumptive evidence of the principal amount owing and
unpaid on the Revolving Credit Note.
Interest on the Revolving Credit Note.
The Borrower agrees to pay interest on the outstanding principal amount of the
Revolving Credit Note at a variable rate from the date thereof until paid in
full at the Index Rate plus One and Three-Quarters percent (1.75%).
Interest accrued on the Revolving Credit Note through Maturity shall be payable
on the first day of each calendar month, commencing June 1, 1996 and at
Maturity. Interest accrued after Maturity shall be payable upon demand.
No provision of this Credit Agreement or the Revolving Credit Note shall require
the payment or permit the collection of interest in excess of the rate permitted
by applicable law.
All computation of interest on the outstanding principal amount of the Revolving
Credit Note shall be computed on the basis of a year comprised of 360 days, but
charged for the actual number of days elapsed. Each change in the interest rate
payable on the Revolving Credit Note due to a change in the Index Rate shall
take place simultaneously with the corresponding change in the Index Rate.
Whenever any payment to be made by or to the Lender or other holder(s) of the
Revolving Credit Note shall otherwise be due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall be included in computing the fees or interest payable on
such next succeeding Business Day.
Manner of Borrowing. The Borrower shall give the Lender written or telephonic
notice of each requested Advance by not later than 1:00 p.m. (Minneapolis time)
on the date such Advance is to be made, provided that the Borrower shall forward
to the Lender within three (3) Business Days of any such telephone notice,
written confirmation thereof. Each Advance shall be deposited to the Borrower's
account no. 116401271246 with the Lender.
Payments. Any other provision of this Credit Agreement to the contrary
notwithstanding, the Borrower shall make all payments of interest on and
principal of the Revolving Credit Note in immediately available funds to the
Lender at its office shown on the first page hereof. The Borrower authorizes the
Lender to charge from time to time against the Borrower's account no.
116401271246 with the Lender any payments when due.
Termination. The obligation of the Lender to make Advances shall terminate:
Upon receipt by the Lender of thirty (30) days' written notice of termination
from the Borrower given at any time when no amount is outstanding under the
Revolving Credit Note; Immediately and without further action upon the
occurrence of an Event of Default of the nature referred to in Subsection
8.1(c); orImmediately when any Event of Default (other than one of the nature
specified in Subsection 8.1(c)) shall have occurred and be continuing and either
(i) the Lender shall have demanded payment of the Revolving Credit Note or (ii)
the Lender shall elect by giving notice to Borrower.
Mandatory Prepayment. In the event that the outstanding balance under the
Revolving Credit Note exceeds the Revolving Credit Commitment as reduced from
time to time, the Lender shall give the Borrower notice of such excess amount
and the Borrower shall immediately reduce the amount of outstanding Advances to
less than or equal to the Revolving Credit Commitment (or execute and deliver to
the Lender such documents necessary to pledge, assign, or grant the Lender a
security interest in, such additional Collateral acceptable to the Lender with a
collateral value equal to or greater than the amount of the excess of the
outstanding Advances over the Revolving Credit Commitment).
Security. The indebtedness, liabilities and other obligations of the Borrower to
the Lender under the Revolving Credit Note and this Credit Agreement are secured
by, inter alia, security interests granted pursuant to the Security Agreement
and Pledge Agreement.
THE TERM LOAN
Term Loan. Subject to the Conditions of Lending set forth in Section 4, the
Lender agrees to loan funds to the Borrower, in a single advance, in the maximum
principal amount of Five Hundred Thousand and No/100 Dollars ($500,000.00).
Purpose of Loan/Use of Funds. The Borrower shall use the Term Loan for general
working capital purposes.
The Term Note. To evidence the loan made by the Lender to the Borrower
hereunder, the Borrower has executed and delivered to the Lender the Term Note.
The Borrower agrees to pay to the Lender amounts outstanding under the Term Note
in installments as set forth in said note, with all outstanding principal and
accrued interest due and payable May 1, 2001.
Interest on the Term Note.
The Borrower agrees to pay interest on the unpaid principal balance of the Term
Note outstanding from time to time at a variable annual rate equal to the Index
Rate plus One and Three-Quarters percent (1.75%).
Payments of principal and interest on amounts outstanding under the Term Note
shall be payable according to the terms of the Term Note.
No provision of this Credit Agreement or the Term Note shall require the payment
or permit the collection of interest in excess of the rate permitted by
applicable law.
All computation of interest on the outstanding principal amount of the Term Note
shall be computed on the basis of a year comprised of 360 days, but charged for
the actual number of days elapsed. Each change in the interest rate payable on
the Term Note due to a change in the Index Rate shall take place simultaneously
with the corresponding change in the Index Rate. Whenever any payment to be made
by or to the Lender or other holder(s) of the Term Note shall otherwise be due
on a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in
computing the fees or interest payable on such next succeeding Business Day.
Voluntary Prepayments. The Borrower may prepay the principal of the Term Note in
whole or in part, at any time, without premium or penalty. Each such prepayment
shall be accompanied by the interest accrued on the amount so prepaid to the
date of the prepayment. Each principal prepayment shall be applied to the
payment of periodic installments on the Term Note in the inverse order of their
maturity.
Payments. Any other provision of this Credit Agreement to the contrary
notwithstanding, the Borrower shall make all payments of interest on and
principal of the Term Note in immediately available funds to the Lender at its
office shown on the first page hereof. The Borrower authorizes the Lender to
charge from time to time against the Borrower's account no. 116401271246 with
the Lender any payments when due.
Security. The indebtedness, liabilities and other obligations of the Borrower to
the Lender under the Term Note and this Credit Agreement are secured by, inter
alia, security interests granted pursuant to the Security Agreement and the
Pledge Agreement.
CONDITIONS OF LENDING
Conditions Precedent. This Credit Agreement and the Lender's obligations
hereunder are subject to receipt by the Lender of the following, each to be in
form and substance satisfactory to the Lender, unless the Lender waives receipt
of any of the following in writing: This Credit Agreement and the Notes each
appropriately completed and duly executed by the Borrower;
The Security Agreement and corresponding financing statement(s) appropriately
completed and duly executed by Borrower;
The Pledge Agreement appropriately completed and duly executed by ▇▇▇▇▇▇ ▇.
▇▇▇▇, together with the original certificates evidencing the pledge stock and a
stock power executed in blank for each such certificate;
The Guaranty appropriately completed and duly executed by the Guarantor;
A current UCC secured transaction search, federal and state tax lien search,
judgment and bankruptcy search, reflecting results satisfactory to the Lender,
on Borrower from the appropriate filing offices as required by the Lender;
A Certificate of Good Standing for the Borrower issued by the Secretary of State
in all states where the Borrower is qualified to do business;
A copy of the Borrower's Bylaws, together with all amendments, certified by the
Secretary of the Borrower to be a true and correct copy thereof;
A copy of the Articles of Incorporation of the Borrower, together with all
amendments, certified by the Secretary of State of the state of the Borrower's
incorporation to be a true and correct copy thereof;
A certified copy of the resolutions of the Board of Directors of the Borrower
authorizing or ratifying the transactions contemplated hereby, and the
execution, delivery and performance of the Loan Documents, and designating the
officers authorized to execute the Loan Documents to which the Borrower is a
party and to perform the obligations of the Borrower thereunder;
A certificate of the Secretary of the Borrower certifying the names of the
officers authorized to execute the Loan Documents, together with a sample of the
true signature
A favorable opinion of counsel for the Borrower, satisfactory to the Lender, as
to the matters set forth in Subsections 5.1, 5.2, and 5.3, and other matters as
requested by the Lender, satisfactory to the Lender and its counsel;
The Borrower shall have paid to the Lender all of the fees and expenses required
by the Lender pursuant to Section 9.3 of this Credit Agreement;
Policies or certificates of insurance evidencing insurance coverage required
under this Credit Agreement and any other of the Loan Documents; and
Such other documents, information and actions as the Lender may reasonably
request.
Conditions Precedent to all Loans and Advances. The obligation of the Lender to
make any loan or Advance hereunder, including the initial loans and Advances, is
subject to the satisfaction of each of the following, unless waived in writing
by the Lender:
The representations and warranties set forth in Section 5 are true and correct
in all material respects on the date hereof and on the date of any loan or
Advance.
No Default or Event of Default shall have occurred and be continuing.
No litigation, arbitration or governmental investigation or proceeding shall be
pending, or, to the knowledge of the Borrower, threatened, against the Borrower
or affecting the business or operations of the Borrower which was not previously
disclosed to the Lender and which, if determined adversely to the Borrower,
would have a material adverse effect on the operation or financial condition of
the Borrower.
No Default or Event of Default shall result from the making of any such loan or
Advance.
No Material Adverse Occurrence shall have occurred and be continuing.
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender as follows:
Organization, etc. The Borrower is a corporation validly organized and existing
and in good standing under the laws of the State of Minnesota, has full power
and authority to own its property and conduct its business substantially as
presently conducted by it and is duly qualified to do business and is in good
standing as a foreign corporation in each other jurisdiction where the nature of
its business makes such qualification necessary. The Borrower has full power and
authority to enter into and perform its obligations under the Loan Documents and
to obtain the loans and Advances hereunder.
Due Authorization. The execution, delivery and performance by the Borrower of
the Loan Documents (1) have been duly authorized by all necessary corporate
action, (2) do not require any approval or consent of, or any registration,
qualification or filing with, any governmental agency or authority or any
approval or consent of any other Person (including, without limitation, any
stockholder), (3) 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, or 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 (4) will not result in the creation or imposition of any Lien on
any of its property pursuant to the provisions of any agreement binding on or
applicable to the Borrower or any of its property except pursuant to the Loan
Documents.
Validity of the Loan Documents. The Loan Documents to which the Borrower is a
party are the legal, valid and binding obligations of the Borrower and are
enforceable in accordance with their terms, subject only to bankruptcy,
insolvency, reorganization, moratorium or similar laws, rulings or decisions at
the time in effect affecting the enforceability of rights of creditors generally
and to general equitable principles which may limit the right to obtain
equitable remedies.
Financial Information. The financial statements of the Borrower furnished to the
Lender have been and will be prepared in accordance with GAAP consistently
applied by the Borrower and present fairly the financial condition of the
Borrower as of the dates thereof and for the periods covered thereby. The
Borrower is not aware of any contingent liabilities or obligations which would,
upon becoming non-contingent liabilities or obligations, be a Material Adverse
Occurrence. Since the date of the most recent such statements, neither the
condition (financial or otherwise), the business nor the properties of the
Borrower have been materially and adversely affected in any way.
Litigation, Other Proceedings. Except as previously disclosed to and approved of
in writing by the Lender, there is no action, suit or proceeding at law or
equity, or before or by any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, pending, or to the knowledge of
the Borrower threatened, against the Borrower or any of its property, which, if
determined adversely would be a Material Adverse Occurrence; and the Borrower is
not in default with respect to any final judgment, writ, injunction, decree,
rule or regulation of any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, where such default would
be a Material Adverse Occurrence.
Title to Assets. Except for Liens permitted by Section 7.2, the Borrower has
good and marketable title to all of its assets, real and personal.
Lien Priority. The Liens created by the Security Agreement are attached and
first, perfected Liens on the Collateral.
Guarantees and Indebtedness. Except as disclosed on financial statements of the
Borrower furnished to the Lender, the Borrower is not a party to any contract of
guaranty or suretyship and none of its assets is subject to any contract of that
nature and the Borrower is not indebted to any other party, except the Lender.
Margin Stock. No part of any loan or Advance hereunder shall be used at any time
by the Borrower to purchase or carry margin stock (within the meaning of
Regulation U promulgated by the Board of Governors of the Federal Reserve
System) or to extend credit to others for the purpose of purchasing or carrying
any margin stock. The Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purposes of
purchasing or carrying any such margin stock. No part of the proceeds of any
loan or Advance hereunder will be used by the Borrower for any purpose which
violates, or which is inconsistent with, any regulations promulgated by the
Board of Governors of the Federal Reserve System. Taxes. The Borrower has filed
all federal, state and other income tax returns which are required to be filed
through the date of this Credit Agreement, and has paid all taxes as shown on
said returns, and all taxes due or payable without returns and all assessments
received to the extent such taxes and assessments have become due. All tax
liabilities of the Borrower are adequately provided for on its books, including
interest and penalties. No income tax liability of a material nature has been
asserted by taxing authorities for taxes in excess of those already paid. The
Borrower has made all required withholding deposits.
Accuracy of Information. All factual information furnished by or on behalf of
the Borrower to the Lender for purposes of or in connection with this Credit
Agreement or any transaction contemplated by this Credit Agreement is, and all
other such factual information furnished by or on behalf of the Borrower to the
Lender in the future, will be true and accurate in every material respect on the
date as of which such information is dated or certified. No such information
contains any material misstatement of fact or omits any material fact or any
fact necessary to prevent such information from being misleading.
Material Agreements. The Borrower is not a party to any agreement or instrument
or subject to any restriction that materially and adversely affects its
business, property or assets, operations or condition (financial or otherwise)
which are not reflected on the Borrower's Form 10-KSB for the period ended
December 31, 1995.
Defaults. Other than defaults preceding or relating to the Borrower's chapter 11
bankruptcy case, Bky No. 3-96-526, which defaults are addressed by the
Borrower's confirmed plan of reorganization, the Borrower is not in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any: (a) agreement to which the Borrower is a party,
which default might have a material adverse effect on the business, properties
or assets, operations, or condition (financial or otherwise) of the Borrower; or
(b) instrument evidencing any indebtedness or under any agreement relating to
such indebtedness.
ERISA. (a) No Reportable Event has occurred and is continuing with respect to
any Plan; (b) the Pension Benefit Guaranty Corporation, or any successor entity,
has not instituted proceedings to terminate any Plan; and (c) each Plan of the
Borrower has been maintained and funded in all material respects in accordance
with its terms and with ERISA. All undefined capitalized terms used in this
Section shall have the meanings ascribed to them in ERISA.
Survival of Representations. All representations and warranties contained in
this Section 5 shall survive the delivery of the Notes and the making of the
loans and Advances evidenced thereby and any investigation at any time made by
or on behalf of Lender shall not diminish its rights to rely thereon.
AFFIRMATIVE COVENANTS
As long as there remains any amount outstanding under the Notes, or the Lender
has any obligation to make Advances under the Revolving Loan Commitment, the
Borrower shall, unless waived in writing by the Lender:
Financial Statements and Reports. Furnish to the Lender, at the times set forth
below, the following financial statements, reports and information:
As soon as available, but in any event within ninety (90) days after each fiscal
year end, audited financial statements of the Borrower including without
limitation a balance sheet, income statement and sources of income certified by
certified public accountants satisfactory to the Lender to have been prepared in
accordance with GAAP consistently applied;
As soon as available, but in any event within forty-five (45) days after the
last day of each quarterly fiscal period unaudited financial statements of the
Borrower consisting of a balance sheet and statement of income and surplus
statement dated as of the last Business Day of such quarterly fiscal period in
form and detail as reasonably required by the Lender certified by the chief
financial officer of the Borrower to have been prepared from the records of the
Borrower on the basis of accounting principles consistently applied by the
Borrower;
Promptly provide the Lender from time to time with personal financial statements
of the Guarantor, in form and substance acceptable to the Lender, at least once
every 12 months and as otherwise requested by the Lender; and provide the
Lender, in form and substance acceptable to the Lender, within 15 days after the
same are filed with the United States Internal Revenue Service, the annual
federal income tax return of the Guarantor, including all schedules,
attachments, and amendments thereto; and provide the Lender from time to time
with such other information respecting the condition (financial and otherwise),
business, and property of the Guarantor as the Lender may request, in form and
substance acceptable to the Lender;
As soon as available, copies of all regular and periodic financial reports and
statements which the Borrower shall file with the Securities and Exchange
Commission (or any governmental authority succeeding to any of its functions),
or provide to its stockholders or any national securities exchange;
Forthwith upon any officer of the Company obtaining knowledge of any condition
or event which constitutes an Event of Default or an unmatured Event of Default,
a certificate specifying the nature and period of existence thereof and what
action the Company has taken or is taking or proposes to take with respect
thereto; and
Such other information concerning the business, operations and condition
(financial or otherwise) of the Borrower and the Guarantor as the Lender may
reasonably request.
Maintenance of Corporate Existence. Maintain and preserve its corporate
existence.
Taxes. Pay and discharge as the same shall become due and payable, all taxes,
assessments and other governmental charges and levies against or on any of its
property, as well as claims of any kind which, if unpaid, might become a Lien
upon any of its properties, unless such tax, levy, charge assessment or Lien is
being contested in good faith by the Borrower and is supported by an adequate
book reserve. The Borrower shall make all required withholding deposits.
Notices. As soon as practicable, give notice to the Lender of:
The commencement of any litigation relating to the Borrower involving claimed
damages in excess of $25,000.00 or relating to the transactions contemplated by
this Credit Agreement;
The commencement of any material arbitration or governmental proceeding or
investigation not previously disclosed to the Lender which has been instituted
or, to the knowledge of the Borrower, is threatened against the Borrower or its
property which, if determined adversely to the Borrower, would have a material
adverse effect on the business, operations or condition (financial or otherwise)
of the Borrower;
Any Reportable Event or "prohibited transaction" or the imposition of a
Withdrawal Liability, all within the meaning of ERISA, in connection with any
Plan and, when known, any action taken by the Internal Revenue Service,
Department of Labor or Pension Benefit Guaranty Corporation with respect
thereto, and any adverse development which occurs in any litigation, arbitration
or governmental investigation or proceeding previously disclosed to the Lender
which if determined adversely to the Borrower would constitute a Material
Adverse Occurrence; and Any Default or Event of Default under this Credit
Agreement.
Compliance with Laws. Carry on its business activities in substantial compliance
with all applicable federal or state laws and all applicable rules, regulations
and orders of all governmental bodies and offices having power to regulate or
supervise its business activities. The Borrower shall maintain all material
rights, liens, franchises, permits, certificates of compliance or grants of
authority required in the conduct of its business.
Books and Records. Keep books and records reflecting all of its business affairs
and transactions in accordance with GAAP consistently applied and permit the
Lender, and its representatives, at reasonable times and intervals, to visit all
of its offices, discuss its financial matters with officers of the Borrower and
its independent public accountants (and by this provision the Borrower
authorizes its independent public accountants to participate in such
discussions) and examine any of its books and other corporate records.
Insurance. Procure and maintain with financially sound and reputable insurers,
insurance with respect to the Collateral and its other property against damage
and loss by theft, fire, collision (in the case of motor vehicles) and such
other risks as are required by the Lender in an amount equal to the fair market
value thereof and, in any event, in an amount sufficient to avoid the
application of any coinsurance provisions, and naming the Lender as loss payee.
The Borrower shall also procure and maintain other such insurance including
workers compensation insurance, liability and business interruption insurance,
and other insurance as the Lender may require and/or that may be required under
any of the Loan Documents, all in such amounts as may be required by the Lender.
Policies of all such insurance shall contain an agreement by the insurer to
provide the Lender thirty (30) days prior written notice of cancellation and an
agreement that the Lender's interest shall not be impaired or invalidated by any
act or neglect of the Borrower nor by the occupation of properties owned or
leased by the Borrower or other properties wherein the Collateral is located for
purposes more hazardous than those permitted by such policies. The Borrower
shall provide evidence of such insurance and the policies of insurance or copies
thereof to the Lender upon request.
Maintain Property. Maintain and keep its assets, property and equipment in good
repair, working order and condition and from time to time make or cause to be
made all needed renewals, replacements and repairs.
Conduct of Business. Continue to engage primarily in the business being
conducted on the date of this Credit Agreement.
Field Audits. Permit the Lender and its agents and representatives, to conduct
an annual business survey of the Borrower and audits of the Collateral from time
to time as the Lender deems necessary, all at the Borrower's expense.
Further Assurances. The Borrower agrees upon reasonable request by the Lender to
execute and deliver such further instruments, deeds and assurances, including
financing statements under the Uniform Commercial Code of Minnesota and/or any
other relevant states, and to do such further acts as may be necessary or proper
to carry out more effectively the purposes of this Credit Agreement and the Loan
Documents and, without limiting the foregoing, to make subject to the liens and
security interests of the Security Agreement and any other of the Loan Documents
any property agreed to be subjected, or intended to be subject, or covered by
the granting clauses of the Security Agreement or such other of the Loan
Documents.
ERISA Compliance. Comply at all times with all applicable provisions of ERISA
and the regulations and published interpretations thereunder.
NEGATIVE COVENANTS
As long as there remains any amount outstanding under the Notes or the Lender
has any obligation to make Advances under the Revolving Loan Commitment, the
Borrower shall not, unless waived in writing by the Lender:
Consolidation; Merger; Sale of Assets; Acquisitions. Consolidate with or merge
into or with any other entity; or sell (other than sales of inventory in the
ordinary course of business), transfer, lease or otherwise dispose of all or a
substantial part of its assets; or acquire a substantial interest in another
Person either through the purchase of all or substantially all of the assets of
that Person or the purchase of a controlling equity interest in that Person.
Liens. Create, incur, assume or suffer to exist any Lien on any of its property,
real or personal, except (a) Liens in favor of the Lender; (b) Liens disclosed
to and approved of in writing by the Lender, including the liens of ▇▇▇▇▇▇ ▇.
▇▇▇▇ which are subordinate to the liens of the Lender pursuant to a
subordination agreement dated as of February 1, 1996, the liens of WDH
Investment Co. in real property and fixtures, and the liens represented by the
financing statements disclosed in part 1 of Exhibit A of the Security Agreement;
(c) Liens for current taxes and assessments which are not yet due and payable;
and (d) purchase money security interests.
Additional Indebtedness. Create, incur, assume or suffer to exist any
indebtedness except: (a) indebtedness in favor of the Lender; (b) current
liabilities incurred in the ordinary course of business; (c) indebtedness
existing on the date of this Credit Agreement and disclosed to and approved of
in writing by the Lender; and (d) purchase money indebtedness incurred in
connection with the acquisition of fixed assets.
Guaranties. Assume, guarantee, endorse or otherwise become liable in connection
with the indebtedness of any other person or entity except endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business.
EVENTS OF DEFAULT AND REMEDIES
Events of Default. The term "Event of Default" shall mean any of the following
events: The Borrower shall default in the payment when due, or if payable on
demand, upon demand, of any principal or interest on the Notes; or
The Borrower shall default (other than a default in payment under subsection (a)
above) in the due performance and observance of any of the covenants contained
in any of the Loan Documents and such default shall continue unremedied for a
period of thirty (30) days after notice from the Lender to the Borrower thereof;
or
The Borrower or any Guarantor shall become insolvent or generally fail to pay or
admit in writing its inability to pay its debts as they become due; or the
Borrower or any Guarantor shall apply for, consent to, or acquiesce in the
appointment of a trustee, receiver or other custodian for itself or any of its
property, or make a general assignment for the benefit of its creditors; or a
trustee, receiver or other custodian shall otherwise be appointed for the
Borrower or any Guarantor or any assets of either; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation proceeding shall
be commenced by or against the Borrower or any Guarantor; or the Borrower or any
Guarantor shall take any corporate action to authorize, or in furtherance of,
any of the foregoing; or
The Borrower shall default in the terms of its confirmed Plan of Reorganization;
or
Any judgments, writs, warrants of attachment, executions or similar process (not
undisputedly covered by insurance) in an aggregate amount in excess of
$100,000.00 shall be issued or levied against the Borrower or any Guarantor or
any assets of either and shall not be released, vacated or fully bonded prior to
any sale and in any event within thirty (30) days after its issue or levy; or
Any garnishment, summons, writ of attachment, or other legal paper referring to
the Borrower or any Guarantor shall be served on the Lender; or
The death of the Guarantor; or
Any representation or warranty set forth in this Credit Agreement or any other
Loan Document shall be untrue in any material respect on the date as of which
the facts set forth are stated or certified; or
The occurrence of any Material Adverse Occurrence; or
A Reportable Event (as defined under ERISA) shall have occurred.
Remedies. If an Event of Default described in Section 8.1(c) shall occur, the
full unpaid balance of the Notes (outstanding balance plus accrued interest) and
all other obligations of the Borrower to the Lender shall automatically be due
and payable without declaration, notice, presentment, protest or demand of any
kind (all of which are hereby expressly waived) and the obligation of the Lender
to make additional Advances shall automatically terminate. If any other Event of
Default shall occur and be continuing, the Lender may terminate its obligation
to make additional Advances and may declare the outstanding balance of the Notes
and all other obligations of the Borrower to the Lender to be due and payable
without further notice, presentment, protest or demand of any kind (all of which
are hereby expressly waived), whereupon the full unpaid amount of the Notes and
all other obligations of the Borrower to the Lender shall become immediately due
and payable. Upon any Event of Default, the Lender shall be entitled to exercise
any and all rights and remedies available under any of the Loan Documents or
otherwise available at law or in equity to collect the Notes and all other
obligations of the Borrower to the Lender and to realize upon or otherwise
pursue any and all Collateral and other security (including without limitation
any and all guarantees) for the loans under this Credit Agreement.
MISCELLANEOUS
Waivers, Amendments. The provisions of the Loan Documents may from time to time
be amended, modified, or waived, if such amendment, modification or waiver is in
writing and signed by the Lender. No failure or delay on the part of the Lender
or the holder(s) of the Notes in exercising any power or right under any of the
Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on the Borrower in any case shall entitle it to any notice or demand in
similar or other circumstances.
Notices. All communications and notices provided under this Credit Agreement
shall be in writing and addressed or delivered to the Borrower or the Lender at
their respective addresses shown on the first page hereof, or to any party at
such other address as may be designated by such party in a written notice to the
other parties. Such notices shall be delivered by any of the following means:
(i) mailing through the United States Postal Service, postage prepaid, by
registered or certified mail, return receipt requested; (ii) delivery by
reputable overnight delivery service including without limitation, and by way of
example only: Federal Express, DHL, Airborne Express and Express Mail; or (iii)
delivery by reputable private personal delivery service. Notices delivered in
accordance with (i) above shall be deemed delivered the second Business Day
after deposit in the mail; notices delivered in accordance with (ii) above shall
be deemed delivered the first Business Day after delivery to the delivery
service; and notices delivered in accordance with (iii) above shall be deemed
delivered the same Business Day as that specified by the notifying party to the
delivery service.
Costs and Expenses. The Borrower agrees to pay all expenses for the preparation
of this Credit Agreement, including exhibits, and any amendments to this Credit
Agreement as may from time to time hereafter be required, and the reasonable
attorneys fees and legal expenses of counsel for the Lender, from time to time
incurred in connection with the preparation and execution of this Credit
Agreement and any document relevant to this Credit Agreement, any amendments
hereto or thereto, and the consideration of legal questions relevant hereto and
thereto. The Borrower agrees to reimburse Lender upon demand for, all reasonable
out-of-pocket expenses (including attorneys fees and legal expenses) in
connection with the Lender's enforcement of the obligations of the Borrower
hereunder or under the Notes or any other of the Loan Documents, whether or not
suit is commenced including, without limitation, attorneys fees, and legal
expenses in connection with any appeal of a lower court's order or judgment. The
obligations of the Borrower under this Section 9.3 shall survive any termination
of this Credit Agreement.
Interest Limitation. All agreements between the Borrower and the Lender are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of acceleration of maturity of the indebtedness evidenced or secured
thereby or otherwise, shall the rate of interest charged or agreed to be charged
to the Lender for the use, forbearance, loaning or detention of such
indebtedness exceed the maximum permissible interest rate under applicable law
("Maximum Rate"). If for any reason or in any circumstance whatsoever
fulfillment of any provision of this Credit Agreement and/or the Notes, any
document securing or executed in connection herewith or therewith, or any other
agreement between the Borrower and the Lender, at any time shall require or
permit the interest rate applied thereunder to exceed the Maximum Rate, then the
interest rate shall automatically be reduced to the Maximum Rate, and if the
Lender should ever receive interest at a rate that would exceed the Maximum
Rate, the amount of interest received which would be in excess of the amount
receivable after applying the Maximum Rate to the balance of the outstanding
obligation shall be applied to the reduction of the principal balance of the
outstanding obligation for which the amount was paid and not to the payment of
interest thereunder. This provision shall control every other provision of any
and all agreements between the Borrower and the Lender and shall also be binding
upon and applicable to any subsequent holder of the Notes.
Severability. Any provision of this Credit Agreement or any other of the Loan
Documents executed pursuant hereto which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such portion or unenforceability without invalidating the remaining provisions
of this Credit Agreement or such Loan Document or affecting the validity or
enforceability of such provisions in any other jurisdiction.
Cross-References. References in this Credit Agreement or in any other of the
Loan Documents executed pursuant hereto to any Section are, unless otherwise
specified, to such Section of this Credit Agreement or such Loan Document, as
the case may be.
Headings. The various headings of this Credit Agreement or of any other of the
Loan Documents executed pursuant hereto are inserted for convenience only and
shall not affect the meaning or interpretation of this Credit Agreement or such
Loan Document or any provisions hereof or thereof.
Governing Law; Venue. Each of the Loan Documents shall be deemed to be a
contract made under and governed by the laws of the State of Minnesota. The
Borrower hereby consents to the personal jurisdiction of the state and federal
courts located in the State of Minnesota in connection with any controversy
related to this Credit Agreement and any other of the Loan Documents, waives any
argument that venue in such forums is not convenient, and agrees that any
litigation instigated by the Borrower against the Lender in connection herewith
or therewith shall be venued in the federal or state court that has jurisdiction
over matters arising in Minneapolis, Minnesota.
Successors and Assigns. This Credit Agreement shall be binding upon and shall
inure to the benefit of the parities hereto and their respective successors and
assigns, except that Borrower may not assign or transfer its rights hereunder
without the prior written consent of Lender.
Recitals Incorporated. The recitals to this Credit Agreement are incorporated
into and constitute an integral part of this Credit Agreement.
Multiple Counterparts. This Credit Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same instrument.
Prior Agreement Superseded. This Credit Agreement amends, restates, and
supersedes in its entirety the Original Agreement, dated December 21, 1987,
between the Borrower and the Lender and all obligations, liabilities and
indebtedness of the Borrower incurred or arising thereunder shall be deemed to
have been incurred and arising hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
NORTH ATLANTIC TECHNOLOGIES, INC., a Minnesota corporation
By:
Its:
FIRST BANK NATIONAL ASSOCIATION,
a national banking association
By:
Its:
ACKNOWLEDGMENTS
STATE OF MINNESOTA )
) ss.
COUNTY OF __________)
The foregoing instrument was acknowledged before me this _____ day of
____________, 1996, by __________________________________, the
________________________ of NORTH ATLANTIC TECHNOLOGIES, INC., a Minnesota
corporation.
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _____ day of
_____________, 1996, by _______________________________, the
______________________ of FIRST BANK NATIONAL ASSOCIATION, a national banking
association.
Notary Public