FOURTH AMENDMENT OF LOAN DOCUMENTS
THIS AMENDMENT, made as of the 30th day of June, 1995, by and between ULTRA PAC,
INC., a Minnesota corporation (the "Borrower"), WEST ONE BANK, IDAHO, an Idaho
banking corporation ("West One") and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association ("Norwest") (West One and Norwest,
respectively and collectively, together with any lender who subsequently becomes
a party hereto, the "Lenders").
W I T N E S S E T H:
WHEREAS, the Borrower and the Lenders entered into that certain Credit and
Security Agreement dated June 13, 1994, by and between the Borrower and the
Lenders, as amended by that certain First Amendment of Loan Documents, dated
July 1, 1994 (the "First Amendment") and that certain Second Amendment of Loan
Documents, dated March 7, 1995 (the "Second Amendment") and that certain Third
Amendment of Loan Documents, dated June 1, 1995 (the "Third Amendment") (such
agreement, as so amended, the "Credit Agreement"), pursuant to which the Lenders
agreed to extend an $8,000,000 line of credit (the "Revolving Loan") and a
additional term loans in the aggregate amount of $6,000,000 (the "Term Loans")
to the Borrower; and
WHEREAS, the Revolving Loan is evidenced by that certain $4,400,000 revolving
note dated June 13, 1994, executed by the Borrower and payable to the order of
Norwest, as heretofore and hereinafter amended, (the "$4,400,000 Revolving
Note") and that certain $3,600,000 revolving note dated June 13, 1994, executed
by the Borrower and payable to the order of West One, as heretofore and
hereinafter amended, (the "$3,600,000 Revolving Note") (the $4,400,000 Revolving
Note and the $3,600,000 Revolving Note are hereinafter collectively referred to
as the "Revolving Notes"); and
WHEREAS, the Term Loan is evidenced by that certain $3,300,000 Term Note dated
June 13, 1994, executed by the Borrower and payable to the order of Norwest, as
heretofore and hereinafter amended, (the "$3,300,000 Note") and that certain
$2,700,000 Term Note dated June 13, 1994, executed by the Borrower and payable
to the order of West One (the "$2,700,000 Note") (the $3,300,000 Note and the
$2,700,000 Note are hereinafter collectively referred to as the "Term Notes");
and
WHEREAS, the Borrower has requested the Lenders to (i) increase the amount of
the Revolving Loan from $8,000,000 to $9,500,000; (ii) extend the "Termination
Date" of the "Credit Facility" (as that term is defined in the Credit Agreement)
from May 31, 1996 to May 31, 1997; (iii) amend certain financial covenants as
contained herein (iv) increase the capital expenditure limitation to $9,500,000,
all as herein contained and (v) extend the maturity date of the Term Notes; and
WHEREAS, the Lenders are willing to agree to the foregoing subject to the terms
and conditions contained herein.
NOW, THEREFORE, in consideration of the foregoing recitals and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Amendment of Term Notes
A. $3,300,000 Term Note. The $3,300,000 Term Note is hereby amended by
(i) deleting the date "May 31, 1996" and substituting "May 31, 1997"
therefor and (ii) deleting the date "June 1, 1996" and substituting
"June 1, 1997" therefor.
B. $2,700,000 Term Note. The $2,700,000 Term Note is hereby amended by
(i) deleting the date "May 31, 1996" and substituting "May 31, 1997"
therefor and (ii) deleting the date "June 1, 1996" and substituting
"June 1, 1997" therefor.
2. Amendment of Revolving Notes.
A. $4,400,000 Revolving Note. The $4,400,000 Revolving Note is hereby
amended by deleting the date "May 31, 1996" and substituting "May 31,
1997" therefor and to increase the amount payable thereunder from
$4,400,000 to $5,225,000. Accordingly, the Revolving Notes, the Credit
Agreement and all other Loan Documents are amended to reflect such
increase.
B. $3,600,000 Revolving Note. The $3,600,000 Revolving Note is hereby
amended by deleting the date "May 31, 1996" and substituting "May 31,
1997" therefor and to increase the amount payable thereunder from
$3,600,000 to $4,275,000. Accordingly, the Revolving Notes, the Credit
Agreement and all other Loan Documents are amended to reflect such
increase.
3. Amendments to Credit Agreement.
A. The Credit Facility is hereby increased from $8,000,000 to $9,500,000.
Accordingly, all references in the Credit Agreement and the Loan
Documents of "$8,000,000" and/or the amount of the Credit Facility
shall hereafter be "$9,500,000."
B. Section 1.1 of the Credit Agreement entitled "Amount of
Commitment" shall be deleted in its entirety and the following
substituted therefor:
"Amount of Commitment" shall be $9,500,000 in the aggregate and,
for each Lender, shall initially be as set forth below:
Revolving Note Term Note
Norwest $5,225,000 (55%) $3,300,000 (55%)
West One $4,275,000 (45%) $2,700,000 (45%)
C. Section 1.1 of the Credit Agreement entitled "Borrowing Base"
shall be deleted in its entirety and the following substituted
therefor:
"Borrowing Base" means, at any time and subject to change from
time to time in the Lenders' sole discretion, the lesser of
(a) $9,500,000 or
(b) the sum of
(i) 80% of Eligible Accounts, plus
(ii) 40% of Eligible Inventory consisting of raw materials
and work in process, plus
(iii) 40% of Eligible Inventory consisting of finishing
goods (provided, that during the period June 1, 1995 to
September 30, 1995, the percentage for finished goods
Eligible Inventory shall be 50%).
D. Section 2.5 of the Credit Agreement entitled "Nature of this
Facility; Termination by the Lenders" is hereby amended by
deleting the date "May 31, 1996" therefrom and substituting the
date "May 31, 1997" therefor.
E. Section 2.15(a) of the Credit Agreement is hereby amended by
deleting the amount of "$8,000,000" and substituting the amount
of "$9,500,000" therefor.
F. Section 6.12(a) of the Credit Agreement is hereby amended by
deleting the date "January 31, 1995" and substituting the date
"January 31, 1996" therefor.
G. Section 6.12(b) of the Credit Agreement is deleted in its
entirety and the following shall be substituted therefor:
(b) a minimum net income after taxes of $750,000 year to date as
of the fiscal quarter ended July 31, 1995; and $1,150,000 as
of the fiscal year ended January 31, 1996;
H. Section 6.12(c) of the Credit Agreement is hereby amended by
deleting "1.6:1.0 as of the fiscal year ended January 31, 1995"
therefrom and substituting "1.25:1.0 as of the fiscal year ended
January 31, 1996" therefor.
I. Section 6.12(d) of the Credit Agreement is hereby deleted in its
entirety and the following shall be substituted therefor:
(d) a ratio of Indebtedness to Tangible Net Worth of not more
than 3.15:1.0 at any time from February 1, 1995 until
September 30, 1995; not more than 3.0:1.0 from October 1,
1995 to January 30, 1996 and not more than 2.80:1.0 on
January 31, 1996 and at all times thereafter;
J. Section 6.12(e) of the Credit Agreement is hereby deleted in its
entirety and the following substituted therefor:
(e) for the periods ending July 31, 1995, October 31, 1995 and
January 31, 1996, an Interest Coverage Ratio of 2.5:1.0
based upon the previous four quarters' results.
K. The paragraphs between Section 6.12(e) and Article VII of the
Credit Agreement are hereby deleted in their entirety and the
following substituted therefor:
The Borrower understands that new mutually agreeable financial
covenants for the fiscal year ending January 31, 1997 will have
to be set prior to January 31, 1996. If such covenants are not
established by such date, the following shall apply:
(a) working capital (current assets less current liabilities,
calculated in accordance with generally accepted accounting
principles, consistently applied) in an amount not less than
$2,000,000 at all times from January 31, 1997;
(b) a minimum net income after taxes of $750,000 year to date as
of the fiscal quarter ended July 31, 1996; and $1,150,000 as
of the fiscal year ended January 31, 1997;
(c) a ratio of traditional cash flow (net income plus non-cash
expense items) to the current portion (those payments due
within the following 12 month period) of the Borrower's
long-term debt (not including deferred income taxes) of at
least 1.25:1.0 as the fiscal year ended January 31, 1997;
(d) a ratio of Indebtedness to Tangible Net Worth of not more
than 3.15: 1.0 at any time from February 1, 1996 until
September 30, 1996; not more than 3.0:1.0 from October 1,
1996 to January 30, 1997 and not more than 2.80:1.0 on
January 31, 1997 and at all times thereafter;
(e) on a quarterly basis, maintain an Interest Coverage Ratio of
2.5:1.0 based upon the previous four quarters' results.
L. Section 7.10, Capital Expenditures, of the Credit Agreement is
hereby deleted in its entirety and the following shall be
substituted therefor:
7.10 Capital Expenditures. The Borrower's capital expenditures
during its fiscal year ending January 31, 1996 together with
any capital lease obligations, shall not exceed $9,500,000
in the aggregate, without the prior written approval of the
Agent; provided, however, that during any fiscal year of the
Borrower, capital expenditures out of the ordinary course of
the Borrower's business shall not exceed $1,000,000 in the
aggregate; further provided, that the Borrower shall
promptly notify the Agent of any and all capital
expenditures in excess of $1,000,000 for the purchase of any
single item. Capital expenditure limitations for the fiscal
year ending January 31, 1997 shall be established by the
Agent and agreed to by the Borrower on or before May 31,
1996.
4. Amendment of Loan Documents. The Credit Agreement, the Revolving Notes, the
Term Notes, and the "Loan Documents" (as defined in the Credit Agreement)
are each hereby amended to incorporate the foregoing amendments.
5. Representations. The Borrower hereby warrants and represents to the Lenders
that (a) each and all of the representations and warranties set forth and
contained in the Credit Agreement, the Loan Documents and the documents
related thereto are true, correct and complete in all respects as of the
date hereof, and (b) no Event of Default (as that term is defined in the
Credit Agreement), and no event, circumstance or condition which with the
giving of notice or the passage of time or both would constitute an Event
of Default, has occurred or is continuing as of the date hereof, unless
specifically waived in writing by the Lender.
6. No Set-Off. The Borrower hereby acknowledges and agrees with the Lenders
that (i) the Note, the Credit Agreement, and any and all other documents
related thereto, executed by it and delivered to the Lenders remain in full
force and effect in accordance with its original terms, except as
previously amended in writing or as amended herein, and (ii) no events,
conditions or circumstances have arisen or exist as of the date hereof
which would give the Borrower the right to assert a defense, counterclaim
and/or setoff to any claim by the Lenders for payment of amount owing under
the Revolving Notes, the Credit Agreement, the Loan Documents or any of the
documents related thereto.
7. Release. The Borrower hereby releases the Lenders and each of its officers,
directors, agents, employees, legal counsel and other representatives from
any and all claims, demands, causes of action, liability, damage, loss,
cost and expense which it has paid, incurred or sustained or believe it has
paid, incurred or sustained, known or unknown, absolute or contingent,
liquidated or unliquidated, as a result of or related to their past or
present relationship with the Lenders, including, but not limited to (a)
the transactions evidenced by or related to the Credit Agreement, the
Revolving Notes, the Loan Documents and any and all other documents,
agreements or instruments related thereto, or (b) any acts or omissions of
the Lenders or any of its officers, directors, agents, employees, legal
counsel or other representatives in connection therewith or related
thereto, or (c) the extension or denial of credit.
8. No Other Amendments. Except as expressly amended hereby, the Credit
Agreement, the Revolving Notes, the Loan Documents, and the documents
related thereto shall remain in full force and effect in accordance with
the original terms, and no course of dealing or other action or statement
of the Lenders or any of its officers, directors, agents, employees, legal
counsel or other representative shall amend, or be deemed an amendment of,
the Loan Documents, the Revolving Notes, the Credit Agreement or any of the
documents related thereto.
9. Costs and Expenses. In accordance with the Credit Agreement, the Borrower
shall pay on demand all costs and expenses, including attorneys' fees,
incurred by the Lenders in connection with the preparation of this
Agreement and the documents related hereto.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
BORROWER:
ULTRA PAC, INC.
By: /s/ Brad Yopp
Its CFO
And:
Its
LENDERS:
WEST ONE BANK, IDAHO
By: /s/ James Hawken
Its Vice President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By: /s/ Laura Schmadt Oberst
Its Vice President