EXHIBIT 10.4
THIRD AMENDMENT, EXTENSION
AND REAFFIRMATION AGREEMENT
This Agreement, is effective as of the 31st day of May, 1998, by and among
Lundgren Bros. Construction, Inc., a Minnesota corporation ("Borrower"), Peter
Pflaum, Edmund M. Lundgren, Allan D. Lundgren, and Gerald T. Lundgren
(collectively, the "Guarantors") and Norwest Bank Minnesota, National
Association, a national banking association ("Lender").
RECITALS
WHEREAS, Borrower and Lender entered into that certain Amended and Restated
Demand Discretionary Revolving Credit Agreement dated as of March 18, 1994 (the
"Original Credit Agreement"), concerning the extension by the Lender to the
Borrower of a $2,200,000 Revolving Line of Credit (the "Revolving Credit
Facility"); and
WHEREAS, Borrower and Lender subsequently entered into that certain Amendment,
Extension and Reaffirmation Agreement dated as of March 14, 1995 (the "First
Amendment"), pursuant to which the Lender increased the maximum amount available
at any one time under the Revolving Credit Facility from $2,200,000 to
$3,500,000.
WHEREAS, Borrower and Lender subsequently entered into that certain Second
Amendment, Extension and Reaffirmation Agreement dated as of February 24, 1997
(the "Second Amendment"), pursuant to which the Lender increased the maximum
amount available at any one time under the Revolving Credit Facility from
$3,500,000 to $4,250,000. The Original Credit Agreement, the First Amendment and
the Second Amendment shall hereinafter collectively be referred to as the
"Credit Agreement".
WHEREAS, the obligation of the Borrower to repay advances under the Credit
Agreement is evidenced by a certain Fifth Amended and Restated Revolving Note
dated February 24, 1997, executed by the Borrower in the original principal
amount of $4,250,000 and payable to the order of the Lender (the "Fifth Amended
Note"); and
WHEREAS, in consideration of the increase in the Revolving Credit Facility
pursuant to the First Amendment, the Borrower granted the Lender additional
collateral pursuant to a Third Life Insurance Assignment and the Guarantor Life
Insurance Assignments (as those terms are defined in the First Amendment).
WHEREAS, the obligations of the Borrower under and pursuant to the Fifth Amended
Note and the Credit Agreement are secured by, among other things, the First Life
Insurance Assignment, the Second Life Insurance Assignment; the Third Life
Insurance Assignment and the Guarantor Life Insurance Assignments (all as
defined in the First Amendment).
WHEREAS, payment and performance of the obligations of the Borrower under and
pursuant to the Fifth Amended Note and the Credit Agreement have, among other
things, been jointly and
severally guaranteed by the Guarantors and Patrick C. Wells pursuant to that
certain Guaranty dated as of November 5, 1990, executed by the Guarantors and
delivered to the Lender (the "Guaranty"); and
WHEREAS, the Borrower has requested that the Lender increase the maximum amount
available at any one time under the Revolving Credit Facility from $4,250,000.00
to $4,750,000.00.
WHEREAS, the Lender is willing to do so on the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are hereby
made a part hereof, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:
1. Revolving Credit Facility. Section 1 of the Credit Agreement is hereby
deleted in its entirety and the following should be substituted therefor:
Subject to and upon the terms, covenants and conditions hereinafter set
forth, the Lender hereby agrees to make loans to the Borrower under
this Section 1 from time to time until and including May 31, 1999 (and
thereafter until and including May 31 of each succeeding calendar year
if the line of credit is extended in writing by the Lender and the
Borrower for an additional one (1) year period(s) pursuant to Section
13.J. herein) (such date hereinafter referred to as the "Expiration
Date"), at such time and in such amount as to each loan as the Borrower
shall request, up to but not exceeding in aggregate principal amount at
any one time outstanding the lesser of (i) the sum of Four Million
Seven Hundred Fifty Thousand and 00/100 Dollars ($4,750,000.00) or (ii)
the sum of $500,000 plus the "Aggregate Net Cash Surrender Value"
("Maximum Loan Amount"). For purposes hereof, the term "Aggregate Net
Cash Surrender Value" shall mean the aggregate net cash surrender value
of the "Assigned Policies" (as defined in Section 6.A. of this Credit
Agreement) after payment of all policy loans, as confirmed in writing
by the respective issuers of the Assigned Policies in form acceptable
to the Lender in its discretion. Such advances shall be used for
working capital needs, including but not limited to work in progress,
payroll, general and administrative expenses and expenses incurred in
connection with land purchases. So long as no demand for payment has
been made, and so long as the Borrower has otherwise complied with the
terms and conditions hereof, the Borrower may borrow, repay and
reborrow within such limit under this Section 1 from the date hereof to
and including the Expiration Date. The line of credit described above
is hereinafter referred to as the "Revolving Credit Facility."
2. New Revolving Note. The Borrower has executed and delivered to the Lender
that certain Sixth Amended and Restated Revolving Note of even date herewith in
the original principal
amount of $4,750,000 made payable to the order of the Lender (the "New Revolving
Note"). The Borrower and Guarantors acknowledge and agree that the New Revolving
Note is a complete restatement and amendment of the Fifth Amended Note and
supersedes the Fifth Amended Note in its entirety. Borrower acknowledges and
agrees that any and all references contained in the Credit Agreement, the First
Life Insurance Assignment, the Second Life Insurance Assignment, the Third Life
Insurance Assignment, the Guarantor Life Insurance Assignments or any other
document or agreement executed in connection therewith to the term "Note" or
"Revolving Note" shall henceforth mean and refer to the New Revolving Note.
Borrower fully acknowledges and agrees that any indebtedness of the Borrower to
the Lender pursuant to the New Revolving Note shall be secured by, among other
things, the First Life Insurance Assignment, the Second Life Insurance
Assignment, the Third Life Insurance Assignment and the Guarantor Life Insurance
Assignments. Upon execution of this Agreement and the New Revolving Note, the
Lender shall return the Fifth Amended Note to the Borrower.
3. Outstanding Balance. Borrower acknowledges that the unpaid principal balance
of the New Revolving Note as of the effective date hereof is $_________________.
4. Representations. The Borrower and the Guarantors each hereby warrant and
represent to the Lender that each and all of the representations and warranties
set forth and contained in the Credit Agreement, the Guaranty, the First Life
Insurance Assignment, the Second Life Insurance Assignment, the Third Life
Insurance Assignment, the Guarantor Life Insurance Assignments, and the
documents and agreements related hereto or thereto are true, correct and
complete in all respects as of the date hereof. The Borrower hereby supplements
the representations set forth in Section 8.D. of the Credit Agreement as
described on EXHIBIT A attached hereto and incorporated herein.
5. No Waiver. The Borrower and the Guarantors each hereby acknowledge and agree
that by executing and delivering this Agreement the Lender is not waiving any
existing default, whether known or unknown, nor is the Lender waiving any of its
rights or remedies under the Credit Agreement, the New Revolving Note, the First
Life Insurance Assignment, the Second Life Insurance Assignment, the Third Life
Insurance Assignment, the Guarantor Life Insurance Assignments and the Guaranty,
or any of the documents related to or executed in connection with the Revolving
Credit Facility.
6. Costs and Expenses. In accordance with Section 13.B. of the Credit Agreement,
the Borrower shall pay all reasonable costs and expenses, including reasonable
attorneys' fees, incurred by the Lender in connection with the preparation of
this Agreement and the New Revolving Note and any documents relating thereto.
7. No Set-Off. The Borrower hereby acknowledges to and agrees with the Lender
that 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 Lender for payments of amounts owing under the
Fifth Amended Note, the New Revolving Note, the Credit Agreement, the First Life
Insurance Assignment, the Second Life Insurance Assignment, the Third Life
Insurance Assignment, the Guarantor Life Insurance Assignments or any of the
documents related thereto. Any defense, right of set off or counterclaim which
might otherwise be available to Borrower is hereby fully and finally waived and
released in all respects in consideration of the Lender's agreement to increase
the amount available to the Borrower pursuant to the Revolving Credit Facility
as set forth herein; provided, however, that the release shall not apply to any
possible errors by the Lender involving strict mathematical calculation of
principal and/or interest due from time to time under the Fifth Amended Note or
the New Revolving Note.
8. Consent of Guarantors. The Guarantors hereby consent to each and all of the
provisions of this Agreement. Guarantors further acknowledge and agree that the
Guaranty shall be and is hereby amended to provide that all references contained
in the Guaranty to the term "Note" shall henceforth refer to the New Revolving
Note.
9. Acknowledgment of Guarantors. Each of the Guarantors hereby acknowledges and
agrees that the Guaranty and the Guarantor Life Insurance Assignment executed by
him and delivered to the Lender remain fully enforceable and in full force and
effect in accordance with their original terms, except as expressly amended
hereby, and are not subject to any defense, counterclaim or right of set-off.
10. Demand Feature. The Borrower and the Guarantors each hereby acknowledge that
the New Revolving Note continues to be due and payable in full ON DEMAND, and
this Agreement shall not in any way constitute or be deemed to constitute an
amendment, modification or limitation of such provision.
11. No Other Amendments. Except as expressly amended hereby, the Credit
Agreement, the First Life Insurance Assignment, the Second Life Insurance
Assignment, the Third Life Insurance Assignment, the Guarantor Life Insurance
Assignments, the Guaranty and all documents and agreements executed in
connection therewith or otherwise related thereto shall remain in full force and
effect in accordance with their original terms, and no course of dealing or
other action or statement of the Lender or any of its officers, directors,
agents, employees, legal counsel or other representatives shall amend, or be
deemed an amendment of, this Agreement, the Credit Agreement, the Fifth Amended
Note, the New Revolving Note, the First Life Insurance Assignment, the Second
Life Insurance Assignment, the Third Life Insurance Assignment, the Guaranty,
the Guarantor Life Insurance Assignments or any of the documents or agreements
related thereto or hereto (collectively, the "Loan Documents").
12. Merger. All prior oral and written communications, commitments, alleged
commitments, promises, alleged promises, agreements and alleged agreements by or
among the Lender, the Borrower and/or the Guarantors are hereby merged into the
Loan Documents. All commitments, promises and agreements of the parties hereto
are set forth in the Loan Documents and no other commitments, promises or
agreements, oral or written, of any of the parties hereto shall be enforceable
against any such party.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
14. Successors. This Agreement shall be binding upon and inure to the benefit of
the respective heirs, successors or assigns of the parties hereto; provided,
however, that any right the Borrower may have, as set forth in the Credit
Agreement, to obtain advances under the Revolving Credit Facility is not
assignable.
15. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which, taken together, shall constitute
one and the same instrument.
16. Value of Assigned Policies. Borrower agrees that it shall give notice to the
Lender in writing at least ten (10) days prior to any decrease in the Aggregate
Net Cash Surrender Value of the Assigned Policies (as those terms are defined in
the Loan Agreement).
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
LENDER:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By
-----------------------------------
Its Vice President
BORROWER:
LUNDGREN BROS. CONSTRUCTION,
INC.
By
-----------------------------------
Its
GUARANTORS:
-------------------------------------
Peter Pflaum
-------------------------------------
Edmund M. Lundgren
-------------------------------------
Allan D. Lundgren
-------------------------------------
Gerald T. Lundgren
STATE OF MINNESOTA )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this ______ day of
___________, 1998, by ________________________________, the Vice President of
Norwest Bank Minnesota, National Association, a national banking association,
for and on behalf of said association.
--------------------------------------
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this ______ day of
___________, 1998, by Peter Pflaum, the President of Lundgren Bros.
Construction, Inc., a Minnesota corporation, for and on behalf of said
corporation.
--------------------------------------
Notary Public
STATE OF )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this ______ day of
____________, 1998, by Peter Pflaum.
--------------------------------------
Notary Public
STATE OF )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this ______ day of
____________, 1998, by Edmund M. Lundgren.
--------------------------------------
Notary Public
STATE OF )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this ______ day of
____________, 1998, by Allan D. Lundgren.
--------------------------------------
Notary Public
STATE OF )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this ______ day of
____________, 1998, by Gerald T. Lundgren.
--------------------------------------
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
Winthrop & Weinstine, P.A.
ATTN: Thomas M. Hart (Atty #41816)
3200 Minnesota World Trade Center
30 East Seventh Street
St. Paul, Minnesota 55101
EXHIBIT A
(Supplemental Disclosure of Pending Litigation)