[EXECUTION COPY]
FIRST AMENDMENT TO MASTER NOTE PURCHASE AGREEMENT
Dated as of June 1, 1998
Between
STATE OF WISCONSIN INVESTMENT BOARD
AND
BANDO McGLOCKLIN SMALL BUSINESS LENDING CORPORATION
AND
BANDO McGLOCKLIN CAPITAL CORPORATION
FIRST AMENDMENT TO MASTER NOTE PURCHASE AGREEMENT
This First Amendment to Master Note Purchase Agreement is dated as of
June 1, 1998, between BANDO McGLOCKLIN SMALL BUSINESS LENDING CORPORATION,
a Wisconsin corporation (the "Company"), whose address is P.O. Box 190
(W239 N 1700 Busse Road & Highway J), Pewaukee, Wisconsin 53072-0190,
BANDO McGLOCKLIN CAPITAL CORPORATION (the "Parent"), whose address is P.O.
Box 190 (W239 N 1700 Busse Road & Highway J), Pewaukee, Wisconsin 53072-
0190, and the STATE OF WISCONSIN INVESTMENT BOARD (the "Board"), whose
address is P.O. Box 7842 (121 East Wilson Street), Madison, Wisconsin
53707-7842.
PRELIMINARY STATEMENT
A. The Company and the Board executed a Master Note Purchase
Agreement dated as of January 1, 1997 (the "Master Note Purchase
Agreement"), pursuant to which the Board agreed to purchase from the
Company a 90% participation in certain loans (the "Loans") originated by
the Company and evidenced by promissory notes (the "Notes") and other loan
documents (the "Loan Documents").
B. The Company and the Board have executed a Third Amended and
Restated Credit Agreement (the "Credit Agreement"), of even date herewith,
pursuant to which the Board has extended a $10,000,000 secured term loan
to the Company.
C. The Company and the Board now wish to amend certain provisions
of the Master Note Purchase Agreement to conform the same to the Credit
Agreement.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Board and the Company
agree as follows:
1. The defined term "Banks" set forth in Section 1.03 of the Master
Note Purchase Agreement is amended and restated in full as follows:
1.03. "Banks" shall mean Firstar Bank Milwaukee, N.A.,
individually (and as agent for) U.S. Bank National Association,
LaSalle National Bank, and Harris Trust and Savings Bank,
Huntington Bank and such other lender who qualifies as a
"Lender" under the terms of the Revolving Credit Agreement (as
hereinafter defined). Any such lender who ceases to be subject
to the Revolving Credit Agreement shall cease being considered
one of the "Banks" under the terms of this Agreement.
2. A new defined term is added to the Master Note Purchase
Agreement as Section 1.11(a) as follows:
1.11(a). "Credit Agreement" shall mean that certain Third
Amended and Restated Credit Agreement dated as of June 1, 1998
by and between the Board, the Company, and the Parent.
3. The defined term "Fiscal Year" set forth in Section 1.16 of the
Master Note Purchase Agreement is amended and restated in its entirety as
follows:
1.16. "Fiscal Year" shall mean a fiscal year of the
Company ending on December 31 of each year.
4. The defined term "Intercreditor Agreement" set forth in Section
1.20 of the Master Note Purchase Agreement is deleted in its entirety.
5. A new defined term is added to the Master Note Purchase
Agreement as Section 1.34(a) as follows:
1.34(a). "Revolving Credit Agreement" shall mean that
certain Credit Agreement dated as of March 11, 1998, by and
between the Company and the Banks, which provides for the making
by the Banks of up to $60,000,000 in Revolving Credit Loans (as
hereinafter defined) to the Company.
6. The defined term "Revolving Credit Loans" set forth in Section
1.35 of the Master Note Purchase Agreement is amended and restated in full
as follows:
1.35. "Revolving Credit Loans" shall mean the revolving
credit loans made or to be made to the Company as borrower, and
each of the Banks, and such loans that may hereafter be made by
lenders who qualify as a "Lender" under the terms of the
Revolving Credit Agreement.
7. Sections 4.09(d) and (e) of the Master Note Purchase Agreement
are amended and restated in full as follows:
(d) No Loan or Loans, when combined with all Loans
constituting Collateral under the Credit Agreement, to a single
Borrower (including Affiliates of a Borrower) are for an
aggregate amount in excess of $4,000,000;
(e) No Loan or Loans, when combined with all Loans
constituting Collateral under the Credit Agreement, consist of
more than $8,000,000 in any one industry as classified by the
Company consistent with its existing industry classification
practices which are set forth on Exhibit F; and
8. Section 5.01(a) of the Master Note Purchase Agreement is amended
and restated in full as follows:
5.01 Reports.
(a) Financial Statements. Maintain a standard and modern
system of accounting in accordance with sound accounting practice,
and furnish to the Board such information respecting the business,
assets and financial condition of the Company and the Parent as the
Board may reasonably request and, without request furnish to the
Board:
(i) as soon as available, and in any event within 45 days
after the end of each quarter, financial statements for the
Company and the Parent, including the balance sheet for the
Company and the consolidated and consolidating balance sheet of
the Parent and its Subsidiaries, as of the end of each such
month, and statements of income of the Company and the
consolidated and consolidating statements of income of the
Parent and its Subsidiaries for each such month and for that
part of the fiscal year ending with such month, setting forth in
each case, in comparative form, figures for the corresponding
periods in the preceding fiscal year, all in reasonable detail
and certified as true, correct and complete, subject to review
and normal year-end adjustments, by the chief executive officer
of the Company;
(ii) as soon as available, and in any event within 105 days
after the close of each fiscal year, a copy of the detailed
annual audit report for such year and accompanying financial
statements for the Parent and its Subsidiaries as of the end of
such year, containing balance sheets and statements of income,
retained earnings and cash flows for such year and for the
previous fiscal year and consolidated and consolidating balance
sheets, statements of income and cash flows for such year, as
audited by independent certified public accountants of
recognized standing selected by the Company and satisfactory to
the Board, which report shall be accompanied by the unqualified
opinion of such accountants to the effect that the statements
present fairly, in all material respects, the financial position
of the Parent and its Subsidiaries as of the end of such year
and the results of its operations and its cash flows for the
year then ended in conformity with GAAP;
(iii) with the financial statements described in
Section 5.01(a)(ii), an Officer's Certificate to the effect
that (i) a review of the activities of the Company during such
period has been made under the supervision of the president of
the Company to determine whether the Company has observed,
performed and fulfilled each and every covenant and condition in
this Agreement, including specifically certifying the Company is
in compliance with the Company's loan policies and underwriting
standards set forth on Exhibit A and the loan characteristics
set forth in Section 4.09 hereof; (ii) no Default has occurred;
and (iii) if a Default has occurred, the certificate shall
specify the nature thereof and the period of existence thereof
and the steps, if any, being undertaken to correct the same;
(iv) with the financial statements described in Section
5.01(a)(ii), at the Company's option, either: (a) an audit by
the Company's independent certified public accountants of the
reconciliation report prepared by the Company for the fiscal
year, as required under Section 5.01(c), that such
reconciliation accurately presents in all material respects the
information therein contained and the year-end balances of the
Third Party Loans constituting Collateral as of the end of the
fiscal year then ending, individually and in the aggregate and
confirms that they have no knowledge of any Third Party Loan
Document constituting Collateral being in payment default as of
the end of the fiscal year then ended; or, (b) an estoppel
letter in substantially the form of Exhibit B attached hereto
executed by the borrower under each Third Party Loan
constituting Collateral, dated as of the end of the fiscal year
then ending, together with a statement of the Company's
independent certified public accountants that they have no
knowledge of any Third Party Loan constituting Collateral being
in payment default as of the end of the fiscal year then ended.
All financial statements referred to herein shall be complete
and correct in all material respects and shall be prepared on a
consolidated and consolidating basis, in reasonable detail, and
in accordance with GAAP, applied consistently throughout all
accounting periods.
9. Section 5.10 of the Master Note Purchase Agreement is amended
and restated in full as follows:
5.10. Net Worth. The Company shall maintain a net
worth at all times at least equal to the sum of Nineteen Million
Five Hundred Thousand Dollars ($19,500,000) plus eighty-five
percent (85%) of any increase in the Company's net worth after
March 3, 1995 which may result from, inter alia, the receipt of
any proceeds (cash or other property) from the issuance by the
Company of any shares of its capital stock, the receipt of any
capital contributions (cash or other property) from existing or
future shareholders of the Company, whether in the form of paid-
in capital or otherwise, or the retention of earnings by the
Company. For purposes of this Section 5.10, the Company's net
worth shall be equal to the aggregate amount of assets less the
aggregate amount of liabilities and preferred stock (if any),
all according to GAAP definitions. (As presented on the
Company's balance sheet, net worth includes common stock, paid-
in surplus, treasury stock, undistributed realized earnings,
unrealized gain or loss on loans and investments, and realized
gain or loss on loans and investments. Any realized or
unrealized gain or loss on interest rate swaps are, and shall
continue to be, accounted for, as the case may be, as realized
or unrealized gain or loss on loans and investments.)
10. Section 6.04(a)(ii) of the Master Note Purchase Agreement is
amended and restated in full as follows:
(ii) Liens created in favor of the Banks, or any of them,
to secure the Revolving Credit Loans and such other indebtedness
permitted by Section 6.05(a) hereof;
11. Section 6.05(a) of the Master Note Purchase Agreement is amended
and restated in full as follows:
(a) Revolving Credit Loans and such other indebtedness to the
Banks to the extent provided for or permitted under the Revolving
Credit Agreement, provided that the creation of any such indebtedness
requiring an amendment to the Revolving Credit Agreement shall
require the prior written consent of the Board;
12. Sections 6.05(b) and (c) of the Master Note Purchase Agreement
are deleted in their entirety.
13. Section 7.04 of the Master Note Purchase Agreement is amended
and restated in full as follows:
7.04. Other Debt. The Company shall: (a) fail to pay
when due or within any applicable grace period any Debt owed by
the Company to the Board pursuant to the $10,000,000 promissory
note dated November 7, 1991, or pursuant to the $10,000,000
promissory note dated June 1, 1998; or (b) fail to pay when due
or within any applicable grace period any Debt in excess of
$50,000 in the aggregate at any one time outstanding for the
Company; or (c) default in the performance of any other term,
provision or condition contained in any agreement, including,
but not limited to, the Credit Agreement or the Revolving Credit
Loans, under which any such Debt described in clause (a) or (b)
was created or is governed, the effect of which is to cause to
come due prior to its stated maturity, or to permit the holder
or holders of the same to call due prior to its stated maturity.
14. Except as expressly provided herein, the Master Note Purchase
Agreement is not modified, amended, or revised, and shall remain in full
force and effect. This First Amendment shall not constitute a novation of
the Master Note Purchase Agreement.
15. This First Amendment may be executed by the parties hereto
individually or in several separate counterparts, each of which shall be
an original and all of which taken together shall constitute one and the
same agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company, the Parent, and the Board have
executed this Agreement as of the date first above written.
BANDO McGLOCKLIN SMALL BUSINESS
LENDING CORPORATION
(the "Company")
By:
George R. Schonath
President
BANDO McGLOCKLIN CAPITAL
CORPORATION
(the "Parent")
By:
George R. Schonath
President
STATE OF WISCONSIN INVESTMENT BOARD
(the "Board")
By:
Monica A. Jaehnig
Investment Officer