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EXHIBIT 10.21
SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment, dated as of March 12, 1999, is entered into
by and between YOUNG AMERICA CORPORATION, a Minnesota corporation (the
"Borrower"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national
banking association (the "Bank").
Recitals
The Borrower and the Bank have entered into a credit agreement (the
"Original Credit Agreement") dated as of April 7, 1998. The Original Credit
Agreement was amended as of November 13, 1998 by a First Amendment (the Original
Credit Agreement as amended by the First Amendment, the "Amended Credit
Agreement"). Pursuant to the Amended Credit Agreement, the Bank has agreed to
make certain revolving credit advances to, and issue letters of credit for the
benefit of, the Borrower, which revolving credit advances are to be evidenced by
the Borrower's promissory note dated as of April 7, 1998.
The Borrower has requested that the Bank agree to certain further
amendments to the Amended Credit Agreement, and the Bank has agreed to do so
pursuant to the terms and upon the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. DEFINED TERMS. UNLESS OTHERWISE DEFINED HEREIN OR IN THE PREAMBLE
OR THE RECITALS HERETO, CAPITALIZED TERMS USED IN THIS SECOND AMENDMENT WHICH
ARE DEFINED IN THE AMENDED CREDIT AGREEMENT SHALL HAVE THE MEANINGS GIVEN TO
THEM THEREIN.
2. AMENDMENT OF ARTICLE I.
(a) Section 1.1 of the Amended Credit Agreement is hereby amended by
substituting or adding, as the case may be, the following defined terms:
"'EBITDA' means, for the period of determination, the sum of
(a) Net Income of the Borrower for such period and (b) Interest
Expense, taxes, depreciation, depletion, amortization and other
non-cash items (including the December 1998 write-offs of the IVR
Leases) of the Borrower for such period (to the extent deducted in
determining Net Income), all as determined in accordance with GAAP.
Unless otherwise stated herein, EBITDA as of any month-end means the
Borrower's EBITDA during the twelve (12) calendar months ending on
that month-end period."
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"'Interest Coverage Ratio' means, as of the end of any
calendar quarter, the ratio of the (a) EBITDA of the Borrower during
the period of four (4) successive calendar quarters ending on that
quarter-end, less all Capital Expenditures of the Borrower during
that same period to (b) the Interest Expense of the Borrower during
that same period."
"'IVR Leases' means those certain leases under which the
Borrower, as lessor, leases use of its interactive voice response
system to provide interactive voice response services for the
consumers of the Borrower's clients."
"'Second Amendment' means the Second Amendment to Credit
Agreement dated as of March 12, 1999, by and between the Borrower
and the Bank."
(b) Section 1.1 of the Amended Credit Agreement is hereby amended by
deleting the defined term "Net Quick Accounts" and the definition related
thereto in their entirety.
3. Amendment of Article II. Article II of the Amended Credit
Agreement is hereby amended as follows:
(a) Interest Rate. On the first calendar day of the month following
the Bank's receipt of the Borrower's financial statements indicating, to
the Bank's satisfaction, compliance with all covenants stated in the
Amended Credit Agreement through March 31, 1999, and provided that no
Default exists on such date, the amendment to the Original Credit
Agreement made pursuant to Paragraph 4(b) of the First Amendment shall be
rescinded and the amendment to the definition of "Floating Rate" made
pursuant to Paragraph 3 of the First Amendment shall also be rescinded.
And, from and after such date, (i) the entire unpaid principal balance of
the Note shall bear interest as provided in the Original Credit Agreement
prior to the amendment stated in Paragraph 4(b) of the First Amendment,
(ii) the Borrower's option to elect a Eurodollar Rate under Article II of
the Original Credit Agreement for application to any outstanding principal
of the Note, which was terminated under Paragraph 4(b) of the First
Amendment, shall be reinstated, (iii) each and every reference in the
Original Credit Agreement to the Eurodollar Rate and Eurodollar Rate
Fundings shall also be reinstated, and (iv) the definition of "Floating
Rate" shall be "an annual rate equal to the Base Rate".
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(b) Non-usage Fees. Provided that the Bank has received financial
statements of the Borrower indicating, to the Bank's satisfaction,
compliance with all covenants stated in the Amended Credit Agreement
though December 31, 1999 and that no Default exists on January 1, 2000,
from and after January 1, 2000, the amendment to Section 2.8(b) of the
Original Credit Agreement made by Paragraph 4(c) of the First Amendment
shall be deleted and such section shall read as provided in the Original
Credit Agreement prior to the amendment stated in Paragraph 4(b) of the
First Amendment.
4. Amendment of Article V. Article V of the Amended Credit Agreement
is hereby amended as follows:
(a) Interest Coverage Ratio. Section 5.09 of the Amended Credit
Agreement is hereby amended in its entirety to read as follows:
"Section 5.9 Interest Coverage Ratio. Beginning with the
calendar quarter ending on December 31, 1999 and then each calendar
quarter thereafter, the Borrower will at all times maintain its
Interest Coverage Ratio, determined at the end of each calendar
quarter, at not less than 1.35 to 1."
(b) Current Ratio. Section 5.10 of the Amended Credit Agreement is
hereby amended in its entirety to read as follows:
"Section 5.10 Current Ratio. The Borrower will maintain the
ratio of its Current Assets to Current Liabilities, determined at
the end of each calendar quarter designated below, at not less than
the amount set forth below opposite such calendar quarter:
Calendar Quarter Ratio
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Ending on March 31, 1999 1.00 to 1
Ending on June 30, 1999 1.00 to 1
Ending on September 30, 1999
and each calendar quarter thereafter 1.10 to 1"
(b) Net Quick Accounts. Section 5.12 of the Amended Credit Agreement
is hereby amended in its entirety to read as follows, "Section 5.12
[RESERVED]".
5. Amendment of Section 6.12. Section 6.12 of the Amended Credit
Agreement is hereby amended in its entirety to read as follows:
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"Section 6.12 Capital Expenditures. Beginning with the calendar
quarter ending on March 31, 1999, the Borrower will not make Capital
Expenditures during any calendar quarter in excess of $500,000, regardless
of whether such expenditures are payable currently or in the future,
provided that any unused portion of permitted Capital Expenditures for a
calendar quarter may be expended in the next succeeding calendar quarter;
provided, however, that in no event may Capital Expenditures exceed
$2,000,000 during any calendar year."
6. No Other Changes. Except as expressly amended by this Second
Amendment, all of the terms and conditions of the Amended Credit Agreement shall
remain in full force and effect.
7. Representations and Warranties. The Borrower hereby represents
and warrants to the Bank as follows:
(a) The Borrower has all requisite power and authority to execute
this Second Amendment and to perform all of its obligations hereunder; and
this Second Amendment has been duly executed and delivered by the Borrower
and constitutes the legal, valid, and binding agreement of the Borrower,
enforceable in accordance with its terms except to the extent that
enforcement thereof may be limited by principles of equity and any
applicable bankruptcy, solvency, or similar laws now or hereafter in
effect affecting creditors' rights generally.
(b) The execution, delivery, and performance by the Borrower of this
Second Amendment has been duly authorized by all necessary corporate
action and does not (i) require any authorization, consent, or approval by
any governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, (ii) violate any provision of any
law, rule, or regulation, or of any order, writ, injunction, or decree
presently in effect, having applicability to the Borrower, or of the
articles of incorporation or by-laws of the Borrower, or (iii) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease, or instrument to which the
Borrower is a party or by which it or its properties may be bound or
affected.
(c) All of the representations and warranties contained in Article
IV of the Amended Credit Agreement are true and correct in all material
respects on and as of the date hereof as though made on and as of such
date, except to the extent that such representations and warranties relate
solely to an earlier date.
8. References. All references in the Amended Credit Agreement to
"this Agreement" shall be deemed to refer to the Amended Credit Agreement as
amended hereby; and any and all references to the "Credit Agreement" in the
Security Agreement or any other Loan Document shall be deemed to refer to the
Amended Credit Agreement as amended hereby.
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9. No Waiver. The execution of this Second Amendment shall not be
deemed to be a waiver of any Default or Event of Default under the Amended
Credit Agreement or of any breach, default or event of default under any
Security Agreement or other document held by the Bank, whether or not known to
the Bank and whether or not existing on the date of this Second Amendment.
10. Release. The Borrower hereby absolutely and unconditionally
releases and forever discharges the Bank, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers,
indemnitors, successors, and assigns thereof, together with all of the present
and former directors, officers, agents, and employees of any of the foregoing,
from any and all claims, demands, or causes of action of any kind, nature, or
description, whether arising in law or equity or upon contract or tort or under
any state or federal law or otherwise, which the Borrower has had, now has, or
has made claim to have against any such person for or by reason of any act,
omission, matter, cause, or thing whatsoever arising from the beginning of time
to and including the date of this Second Amendment, whether such claims, demands
and causes of action are matured or unmatured or known or unknown.
11. Costs and Expenses. The Borrower hereby reaffirms its agreement
under the Amended Credit Agreement to pay or reimburse the Bank for all
reasonable costs and expenses incurred by the Bank in connection with the
Amended Credit Agreement, the Security Agreement, the Loan Documents, and all
other documents contemplated thereby, including without limitation all
reasonable fees and disbursements of legal counsel. Without limiting the
generality of the foregoing, the Borrower specifically agrees to pay all
reasonable fees and disbursements of counsel to the Bank for the services
performed by such counsel in connection with the preparation of this Second
Amendment and any documents and instruments incidental hereto. The Borrower
hereby agrees that the Bank may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make an Advance to
the Borrower under the Amended Credit Agreement, or apply the proceeds of an
Advance, for the purpose of paying any such fees, disbursements, costs, and
expenses.
12. Ratification. As amended hereby, the Amended Credit Agreement is
hereby ratified, approved, and confirmed in every respect, and shall remain in
full force and effect.
13. Miscellaneous.
(a) Governing Law. This Second Amendment shall be governed by, and
construed in accordance with, the internal laws (without regard to the conflict
of laws provisions) of the State of Minnesota.
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(b) Counterparts. This Second Amendment may be executed in any
number of counterparts (including facsimile counterparts), each of which when so
executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same instrument.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the date first above written.
YOUNG AMERICA CORPORATION
By /s/ Roger D. Anderson
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Its Vice President Finance and CFO
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ John K. Lukaska
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John K. Lukaska
Its Vice President
(Signature Page 1 of 1 to Second Amendment to Credit Agreement)