EXHIBIT 10.12.4 AMENDMENT NO. 4
AMENDMENT NO. 4 TO CREDIT AGREEMENT
This AMENDMENT NO. 4 TO CREDIT AGREEMENT (this "Amendment") is entered
into as of this ________ day of June, 2003, by NAVARRE CORPORATION, a Minnesota
corporation, ("Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation, as agent (the "Agent") for itself and the Lenders under and as
defined in the Credit Agreement (as hereinafter defined), and the Lenders.
Unless otherwise specified herein, capitalized terms used in this Amendment
shall have the meanings ascribed to them by the Credit Agreement (as hereinafter
defined).
RECITALS
WHEREAS, the Borrower, the Agent and the Lenders have entered into that
certain Credit Agreement, dated as of October 3, 2001 (as amended, supplemented,
restated or otherwise modified from time to time, the "Credit Agreement"); and
WHEREAS, the Borrower, Agent and the Lenders desire to amend certain
provisions of the Credit Agreement as herein set forth.
NOW THEREFORE, in consideration of the foregoing recital, mutual
agreements contained herein and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Borrower, the Agent, and
Lenders hereby agree as follows:
AMENDMENTS.
Subsection (b) of Section 1.9 of the Credit Agreement is hereby amended
and restated to read in its entirety as follows:
"(b) As additional compensation for the Revolving
Lenders, Borrower shall pay to Agent, for the ratable benefit
of such Lenders, in arrears, on the first Business Day of each
month prior to the Commitment Termination Date and on the
Commitment Termination Date, a Fee for Borrower's non-use of
available funds in an amount equal to one half of one percent
(0.5%) per annum (calculated on the basis of a 360 day year
for actual days elapsed) multiplied by the difference between
(x) the Maximum Amount (as it may be reduced from time to
time) and (y) the average for the period of the daily closing
balances of the Revolving Loan and the Swing Line Loan
outstanding during the period for which the such Fee is due."
Section 6.1 of the Credit Agreement is hereby amended and restated to
read in its entirety as follows:
"6.1. Mergers, Subsidiaries, Etc. Without the prior
written consent of the Agent (which consent may be provided or
withheld in the Agent's sole discretion), no Credit Party
shall directly or indirectly, by operation of law or
otherwise, (a) form or acquire any Subsidiary, (b) merge with,
consolidate with, acquire all or substantially all of the
assets or Stock of, or otherwise combine with or acquire, any
Person, or (c) other than purchases of Inventory and licenses
of Intellectual Property, in each case in the ordinary course
of business consistent with practices as in effect on the date
hereof, purchase assets from any Person if (i) such purchase
is not a Capital Expenditure or (ii) the amount paid for such
purchase does not reduce the EBITDA, during the period such
purchase is made and by the amount paid for such purchase, of
the Credit Party which makes such purchase; provided, however
that (A) the Borrower may form Encore Acquisition and (B)
Encore Acquisition may acquire the assets of Encore Software
pursuant to and in accordance with the Encore Purchase
Agreement. Notwithstanding the foregoing, Borrower, may (i)
acquire all or substantially all of the assets or Stock of any
Person (the "Target") (in each case, a "Permitted
Acquisition") and (ii) make Permitted Intellectual Property
Acquisitions from any Person (a "Seller"), in the case of each
of (i) and (ii) subject to the satisfaction of each of the
following conditions:
(i) in the case of a Permitted Acquisition, Agent
shall receive at least 30 Business Days' prior written notice
of such proposed Permitted Acquisition, which notice shall
include a reasonably detailed description of such proposed
Permitted Acquisition;
(ii) in the case of a Permitted Intellectual Property
Acquisition, promptly following the consummation of such
Permitted Intellectual Property Acquisition, Agent shall
receive notice thereof, which notice shall include a
reasonably detailed description thereof;
(iii) in the case of a Permitted Acquisition, such
Permitted Acquisition shall only involve assets located in the
United States or Canada and solely comprising a business of
distributing (exclusive of distributing via internet) of music
software and videos, or the assets of such business, and which
business would not subject Agent or any Lender to regulatory
or third party approvals in connection with the exercise of
its rights and remedies under this Agreement or any other Loan
Documents other than approvals applicable to the exercise of
such rights and remedies with respect to Borrower prior to
such Permitted Acquisition;
(iv) such transaction shall be consensual and shall
have been approved by the Target's or Seller's board of
directors;
(v) no additional Indebtedness, Guaranteed
Indebtedness, Contingent Obligations or other liabilities
shall be incurred, assumed or otherwise be reflected on a
consolidated balance sheet of Borrower and Target (if
applicable) after giving effect to such transaction, except
(A) Loans made hereunder and (B) ordinary course trade
payables, accrued expenses and , to the extent approved by the
Agent in writing in its sole direction and otherwise permitted
hereunder, unsecured Indebtedness of the Target (if
applicable) to the extent no Default or Event of Default has
occurred and is continuing or would result after giving effect
to such transaction;
(vi) the sum of all amounts payable in connection
with any such transaction (including all transaction costs and
all Indebtedness, liabilities and Contingent Obligations
incurred or assumed in connection therewith or otherwise
reflected on a consolidated balance sheet of Borrower, its
Subsidiaries and Target (if applicable)) shall not exceed
$1,000,000; and the sum of all amounts payable in connection
with all Permitted Acquisitions and Permitted Intellectual
Property Acquisitions (including all transaction costs and all
Indebtedness, liabilities and Contingent Obligations incurred
or assumed in connection therewith or otherwise reflected on a
consolidated balance sheet of Borrower, its Subsidiaries and
Target) (if applicable) during any Fiscal Year shall not
exceed $2,500,000 in the aggregate;
(vii) in the case of a Permitted Acquisition, the
Target shall not have incurred an operating loss for the
trailing twelve-month period preceding the date of the
Permitted Acquisition, as determined based upon the Target's
financial statements for its most recently completed fiscal
year and its most recent interim financial period completed
within sixty (60) days prior to the date of consummation of
such Permitted Acquisition;
(viii) the business and assets acquired in such
transaction shall be free and clear of all Liens (other than
Permitted Encumbrances);
(ix) at or prior to the closing of each such
transaction, Agent will be granted a first priority perfected
Lien (subject to Permitted Encumbrances) in all assets
acquired pursuant thereto or in the assets and Stock of the
Target, and Borrower and the Target shall have executed such
documents and taken such actions as may be required by Agent
in connection therewith;
(x) in the case of a Permitted Acquisition,
concurrently with delivery of the notice referred to in clause
(i) above, Borrower shall deliver to Agent, in form and
substance reasonably satisfactory to Agent:
(A) a pro forma consolidated balance sheet, income
statement and cash flow statement of Borrower and its
Subsidiaries (the "Acquisition Pro Forma"), based on recent
financial statements, which shall be complete and shall fairly
present in all material respects the assets, liabilities,
financial condition and results of operations of Borrower and
its Subsidiaries in accordance with GAAP consistently applied,
but taking into account such Permitted Acquisition and the
funding of all Loans in connection therewith, and such
Acquisition Pro Forma shall reflect that (x) average daily
Borrowing Availability for the 90-day period preceding the
consummation of such Permitted Acquisition would have exceeded
$10,000,000 on a pro forma basis (after giving effect to such
Permitted Acquisition and all Loans funded in connection
therewith as if made on the first day of such period) and the
Acquisition Projections (as hereinafter defined) shall reflect
that such Borrowing Availability of $10,000,000 shall continue
for at least 90 days after the consummation of such Permitted
Acquisition, and (y) on a pro forma basis, no Event of Default
has occurred and is continuing or would result after giving
effect to such Permitted Acquisition and Borrower would have
been in compliance with the financial covenants set forth in
Annex G to the Credit Agreement for the four quarter period
reflected in the Compliance Certificate most recently
delivered to Agent pursuant to clause (a) of Annex E to the
Credit Agreement prior to the consummation of such Permitted
Acquisition (after giving effect to such Permitted Acquisition
and all Loans funded in connection therewith as if made on the
first day of such period);
(B) updated versions of the most recently delivered
Projections covering the 3 year period commencing on the date
of such Permitted Acquisition and otherwise prepared in
accordance with the Projections (the "Acquisition
Projections") and based upon historical financial data of a
recent date reasonably satisfactory to Agent, taking into
account such Permitted Acquisition; and
(C) a certificate of the chief financial officer of
Borrower to the effect that: (w) Borrower is Solvent
immediately following the consummation of the Permitted
Acquisition; (x) the Acquisition Pro Forma fairly presents the
financial condition of Borrower and its Subsidiaries (on a
consolidated basis) as of the date thereof after giving effect
to the Permitted Acquisition; (y) the Acquisition Projections
are reasonable estimates of the future financial performance
of Borrower and its Subsidiaries subsequent to the date
thereof based upon the historical performance of Borrower and
its Subsidiaries and the Target and show that Borrower and its
Subsidiaries shall continue to be in compliance with the
financial covenants set forth in Annex G to the Credit
Agreement for the 3-year period thereafter; and (z) Borrower
and its Subsidiaries have completed their due diligence
investigation with respect to the Target and such Permitted
Acquisition, which investigation was conducted in a manner
similar to that which would have been conducted by a prudent
purchaser of a comparable business and the results of which
investigation were delivered to Agent and Lenders;
(xi) in the case of any Permitted Intellectual
Property Acquisition, the average daily Borrowing Availability
for the 90-day period preceding the consummation of such
Permitted Intellectual Property Acquisition would have
exceeded $10,000,000 on a pro forma basis (after giving effect
to such Permitted Intellectual Property Acquisition and all
Loans funded in connection therewith as if made on the first
day of such period);
(xii) in the case of a Permitted Acquisition, on or
prior to the date of such Permitted Acquisition, Agent shall
have received, in form and substance reasonably satisfactory
to Agent, copies of the acquisition agreement and related
agreements and instruments, and all opinions, certificates,
lien search results and other documents reasonably requested
by Agent, including those specified in the last sentence of
Section 5.9; and
(xiii) at the time of such transaction and after
giving effect thereto, no Default or Event of Default has
occurred and is continuing. Notwithstanding the foregoing, the
Accounts and Inventory of a Target shall not be included in
Eligible Accounts and Eligible Inventory without the prior
written consent of Agent and Requisite Lenders."
Section 6.2 of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
"6.2. Investments; Loans and Advances. No Credit
Party shall make or permit to exist any investment in, or
make, accrue or permit to exist loans or advances of money to,
any Person, through the direct or indirect lending of money,
holding of securities or otherwise, except that: (a) Borrower
and Encore Acquisition may hold investments comprised of notes
payable, or stock or other securities issued by Account
Debtors to Borrower or Encore Acquisition, as applicable
pursuant to negotiated agreements with respect to settlement
of such Account Debtor's Accounts in the ordinary course of
business, so long as the aggregate amount of such Accounts so
settled by Borrower and Encore Acquisition does not exceed
$500,000 (in the aggregate for Borrower and Encore Acquisition
combined); (b) each Credit Party may maintain its existing
investments in its Subsidiaries as of June ___, 2003; (c)
Borrower may maintain Eligible Certificate of Deposits; (d) so
long as no Default or Event of Default has occurred and is
continuing and there is no outstanding Revolving Loan balance,
Borrower may make investments, subject to Control Letters in
favor of Agent for the benefit of Lenders or otherwise subject
to a perfected security interest in favor of Agent for the
benefit of Lenders, in (i) marketable direct obligations
issued or unconditionally guaranteed by the United States of
America or any agency thereof maturing within one year from
the date of acquisition thereof, (ii) commercial paper
maturing no more than one year from the date of creation
thereof and currently having the highest rating obtainable
from either Standard & Poor's Ratings Group or Moody's
Investors Service, Inc., (iii) certificates of deposit
maturing no more than one year from the date of creation
thereof issued by (A) the Business Bank, a Minnesota
corporation, or (B) commercial banks incorporated under the
laws of the United States of America, each having combined
capital, surplus and undivided profits of not less than
$300,000,000 and having a senior unsecured rating of "A" or
better by a nationally recognized rating agency (an "A Rated
Bank"), (iv) time deposits maturing no more than 30 days from
the date of creation thereof with A Rated Banks and (v) mutual
funds that invest solely in one or more of the investments
described in clauses (i) through (iv) above; (e) Borrower and
Encore Acquisition may provide advances to Vendors described
in Part A of Disclosure Schedule 6.2; (f) Borrower and Encore
Acquisition may provide advances to Vendors so long as (i) at
the time of each such advance the Borrowing Availability
immediately after giving effect to such advance is at least
$10,000,000, (ii) the aggregate outstanding amount of advances
to Vendors permitted solely pursuant to Section 6.2(e) and
this Section 6.2(f) does not exceed $15,000,000 at any time
and (iii) with respect to each advance to a Vendor to be made
by Encore Acquisition, immediately after giving effect thereto
the Borrower would be permitted to make at least $500,000 of
additional advances to Encore Acquisition pursuant to Section
6.2(j) hereof (provided, however, that the amount set forth in
this Section 6.2(f) shall be reduced from time to time by the
amount of advances to Vendors otherwise permitted by Section
6.2(e) and/or Section 6.2(f) which have been written off as
uncollectible in accordance with Borrower's policies and as
determined in accordance with GAAP to the extent that the
amount of such write off has not caused a reduction in the
EBITDA of Borrower in the fiscal period such write off is
taken; (g) Borrower may provide advances to Vendors described
in Part B of Disclosure Schedule 6.2; (h) Borrower may provide
advances by a Credit Party to its employees expressly
permitted by Section 6.4(b) hereof; (i) on or about July 31,
2002, Borrower may make an investment through a loan in Encore
Acquisition in an aggregate principal amount not to exceed
$6,000,000; (j) Borrower may make loans to Encore Acquisition
in an aggregate outstanding principal amount not to exceed, at
any time, the lesser of (i) $6,000,000 and (ii) an amount
equivalent to the book value of the Accounts (other than
Accounts owed to Encore Acquisition by an Affiliate of Encore
Acquisition) and Inventory of Encore Acquisition at such time;
(k) investments made by Borrower in Encore Acquisition
pursuant to Section 5 of the Amendment No. 1 to Encore
Purchase Agreement in an aggregate principal amount not to
exceed $1,150,000 and (l) other investments not exceeding
$100,000 in the aggregate at any time outstanding."
Subsection (a) of Section 6.3 of the Credit Agreement is hereby amended
and restated to read in its entirety as follows:
"6.3. Indebtedness.
(a) No Credit Party shall create, incur, assume or
permit to exist any Indebtedness, except (without duplication)
(i) Indebtedness secured by purchase money security interests
and Capital Leases permitted in Section 6.7(c), (ii) the Loans
and the other Obligations, (iii) unfunded pension fund and
other employee benefit plan obligations and liabilities to the
extent they are permitted to remain unfunded under applicable
law, (iv) existing Indebtedness described in Disclosure
Schedule (6.3) and refinancings thereof or amendments or
modifications thereof that do not have the effect of
increasing the principal amount thereof or changing the
amortization thereof (other than to extend the same) and that
are otherwise on terms and conditions no less favorable to any
Credit Party, Agent or any Lender, as determined by Agent,
than the terms of the Indebtedness being refinanced, amended
or modified, (v) Indebtedness permitted pursuant to Section
6.2(j) hereof and (vi) Indebtedness of Encore Acquisition to
the Borrower in an aggregate amount not to exceed $7,200,000,
Indebtedness of Borrower to Encore Acquisition pursuant to
Section 5 of the Amendment No. 1 to Encore Purchase Agreement
in an aggregate principal amount not to exceed $1,150,000;
provided that, no Credit Party (other than Encore Acquisition)
shall guarantee, grant liens on its assets (including, without
limitation, the equity interests in Encore Acquisition) to
secure, or otherwise be directly or indirectly liable for any
such Indebtedness or related obligations."
Section 6.7 of the Credit Agreement is hereby amended and restated to
read in its entirety as follows:
"6.7 Liens. No Credit Party shall create, incur,
assume or permit to exist any Lien on or with respect to its
Accounts or any of its other properties or assets (whether now
owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and
summarized on Disclosure Schedule (6.7) securing Indebtedness
described on Disclosure Schedule (6.3) and permitted
refinancings, extensions and renewals thereof, including
extensions or renewals of any such Liens; provided that the
principal amount so secured is not increased and the Lien does
not attach to any other property; and (c) Liens created after
the date hereof by conditional sale or other title retention
agreements (including Capital Leases) or in connection with
purchase money Indebtedness with respect to Equipment and
Fixtures acquired by any Credit Party in the ordinary course
of business, involving the incurrence of an aggregate amount
of purchase money Indebtedness and Capital Lease Obligations
of not more than $250,000 outstanding at any one time for all
such Liens (provided that such Liens attach only to the assets
subject to such purchase money debt and such Indebtedness is
incurred within 20 days following such purchase and does not
exceed 100% of the purchase price of the subject assets). In
addition, no Credit Party shall become a party to any
agreement, note, indenture or instrument, or take any other
action, that would prohibit the creation of a Lien on any of
its properties or other assets in favor of Agent, on behalf of
itself and Lenders, as additional collateral for the
Obligations, except operating leases, Capital Leases or
Licenses which prohibit Liens upon the assets that are subject
thereto."
Section 6.18 of the Credit Agreement is hereby amended and restated to
read in its entirety as follows:
"6.18 Leases; Real Estate Purchases. Except as
otherwise permitted in Section 6.1 in connection with a
Permitted Acquisition, no Credit Party shall enter into any
operating lease for Equipment or Real Estate, if the aggregate
of all such operating lease payments payable in any year for
Borrowers on a consolidated basis would exceed $250,000.
Except as otherwise permitted in Section 6.1 in connection
with a Permitted Acquisition, no Credit Party shall purchase a
fee simple ownership interest in Real Estate."
The following definitions in Annex A to the Credit Agreement are hereby
amended and restated to read in their entirety as follows:
"Borrowing Base" means, as of any date of
determination by Agent, from time to time, an amount equal to
the sum at such time of:
(a) the lesser of (i) 58% of the book value
of Borrower's Eligible Accounts or (ii) (a) during
the month of January of each Fiscal Year,
$25,000,000, (b) during the months of February,
March, April, May, June, July and August of each
Fiscal Year, $20,000,000 and (c) at all other times,
$30,000,000;
(b) the lesser of (i) 58% of the Borrower's
Eligible Inventory valued at the lower of cost (FIFO)
or market or (ii) 85% of the Orderly Liquidation
Value of Borrower's Eligible Inventory; and
(c) 100% of the aggregate face value of each
Eligible Certificate of Deposit issued to the
Borrower;
in each case less any Reserves established by Agent from time
to time. The value of any Eligible Accounts denominated in
Canadian Dollars shall be included in the Borrowing Base using
such Accounts' Dollar Amount.
"Commitment Termination Date" means the earliest of
(a) June ___, 2007 and (b) the date of termination of Lenders'
obligations to make Advances and to incur Letter of Credit
Obligations or permit existing Loans to remain outstanding
pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrower of the Loans and the
cancellation and return (or stand-by guarantee) of all Letters
of Credit or the cash collateralization of all Letter of
Credit Obligations pursuant to Annex B, and the permanent
reduction of the Commitments to zero dollars ($0).
"Encore Acquisition" means Encore Software, Inc.
(f/k/a Encore Acquisition Corporation), a Minnesota
corporation and a Subsidiary of Borrower.
"Revolving Loan Commitment" means (a) as to any
Revolving Lender, the aggregate commitment of such Revolving
Lender to make Revolving Credit Advances or incur Letter of
Credit Obligations as set forth on Annex J to the Agreement or
in the most recent Assignment Agreement executed by such
Revolving Lender and (b) as to all Revolving Lenders, the
aggregate commitment of all Revolving Lenders to make
Revolving Credit Advances or incur Letter of Credit
Obligations, which aggregate commitment shall be Forty Million
Dollars ($40,000,000) on the Closing Date, as such amount may
be adjusted, if at all, from time to time in accordance with
the Agreement."
Annex A to the Credit Agreement is hereby amended by adding the
following new definitions thereto in the applicable alphabetical locations:
"Accounts Payable" shall mean as of any date of
determination the sum of (i) accounts payable of Borrower and
its Subsidiaries on a consolidated basis, as determined in
accordance with GAAP; and (ii) the then outstanding balance of
advances to Vendors to the extent taken into account in the
determination of the amount in clause (i) of this definition.
"Acquisition Pro Forma" has the meaning ascribed to
it in Section 6.1.
"Acquisition Projections" has the meaning ascribed to
it in Section 6.1.
"Contingent Obligation" means, as applied to any
Person, any direct or indirect liability of that Person: (i)
with respect to Guaranteed Indebtedness and with respect to
any Indebtedness, lease, dividend or other obligation of
another Person if the purpose or intent of the Person
incurring such liability, or the effect thereof, is to provide
assurance to the obligee of such liability that such liability
will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss
with respect thereto; (ii) with respect to any letter of
credit issued for the account of that Person or as to which
that Person is otherwise liable for reimbursement of drawings;
(iii) under any foreign exchange contract, currency swap
agreement, interest rate swap agreement or other similar
agreement or arrangement designed to alter the risks of that
Person arising from fluctuations in currency values or
interest rates, (iv) any agreement, contract or transaction
involving commodity options or future contracts, (v) to make
take-or-pay or similar payments if required regardless of
nonperformance by any other party or parties to an agreement,
or (vi) pursuant to any agreement to purchase, repurchase or
otherwise acquire any obligation or any property constituting
security therefor, to provide funds for the payment or
discharge of such obligation or to maintain the solvency,
financial condition or any balance sheet item or level of
income of another. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed
or otherwise supported or, if not a fixed and determined
amount, the maximum amount so guaranteed.
"Inventory Value" shall mean as of any date of
determination the book value of the Inventory of Borrower and
its Subsidiaries on a consolidated basis, as determined in
accordance with GAAP.
"Permitted Acquisition" has the meaning ascribed to
it in Section 6.1.
"Permitted Intellectual Property Acquisition" shall mean the
acquisition by Borrower of the assets of any Person to the extent that such
assets consist primarily of copyright protected works and any registrations or
applications for registration of any such copyright protected works.
"Target" has the meaning ascribed to it in Section
6.1."
Subsections (a), (b), (c) and (d) on Annex G to the Credit Agreement
are hereby amended and restated to read in their entirety as follows:
"(a) Maximum Capital Expenditures. Borrower and its
Subsidiaries on a consolidated basis shall not make Capital
Expenditures during the following periods that exceed in the
aggregate the amounts set forth opposite each of such periods:
Maximum Capital Expenditures
Period per Period
------ ----------------------------
Fiscal Year ending on or about March 31, 2004 $2,500,000
Fiscal Year ending on or about March 31, 2005
and each Fiscal Year ending thereafter $2,000,000
(b) Minimum EBITDA. Borrower and its Subsidiaries on
a consolidated basis shall have, at the end of each Fiscal
Quarter set forth below, EBITDA plus interest income for the
12-month period then ended of not less than the amount set
forth opposite such Fiscal Quarter below:
Fiscal Quarter Amount
-------------- ------
Fiscal Quarter ending on June 30, 2003
and each Fiscal Quarter ending thereafter $2,000,000
(c) Minimum Working Capital Ratio. Borrower and its
Subsidiaries on a consolidated basis shall have, at the end of
each Fiscal Quarter set forth below, a ratio of Accounts
Payable to Inventory Value as of the last day of such Fiscal
Quarter of not less than the ratio set forth opposite such
Fiscal Quarter set forth below:
Period Minimum Working Capital Ratio
------ -----------------------------
Fiscal Quarter ending on June 30, 2003 2.30 to 1.00
Fiscal Quarter ending on September 30, 2003 2.55 to 1.00
Fiscal Quarter ending on December 31, 2003 3.90 to 1.00
Fiscal Quarter ending on March 31, 2004 3.20 to 1.00
Fiscal Quarter ending on June 30, 2004 2.30 to 1.00
Fiscal Quarter ending on September 30, 2004 2.60 to 1.00
Fiscal Quarter ending on December 31, 2004 3.90 to 1.00
Fiscal Quarter ending on March 31, 2005 3.20 to 1.00
Fiscal Quarter ending on June 30, 2005 2.30 to 1.00
Fiscal Quarter ending on September 30, 2005 2.60 to 1.00
Fiscal Quarter ending on December 31, 2005 3.90 to 1.00
Fiscal Quarter ending on March 31, 2006 3.20 to 1.00
Fiscal Quarter ending on June 30, 2006 2.30 to 1.00
Fiscal Quarter ending on September 30, 2006 2.60 to 1.00
Fiscal Quarter ending on December 31, 2006 3.90 to 1.00
Fiscal Quarter ending on March 31, 2007 3.20 to 1.00
(d) Minimum Fixed Charge Coverage Ratio. Borrowers
and their Subsidiaries shall have on a consolidated basis, for
the Fiscal Quarter ending on or before June 30, 2003 and for
each Fiscal Quarter thereafter, at the end of each such Fiscal
Quarter, for the 12-month period then ended, a ratio of (A)
EBITDA plus interest income received during such period to (B)
the sum of (i) the aggregate of all Interest Expense paid or
accrued during such period, plus (ii) scheduled payments of
principal with respect to Indebtedness during such period,
plus (iii) Capital Expenditures during such period, plus (iv)
income taxes paid in cash during such period, plus (v) the
aggregate amount of all consideration paid for Permitted
Intellectual Property Acquisitions during such period, plus
(vi) all Restricted Payments made by a Credit Party during
such period (other than Restricted Payments made to another
Credit Party), of not less than 1.2:1."
Annex J to the Credit Agreement is hereby amended and restated in its
entirety to read as Annex J hereto.
Disclosure Schedule 3.1 to the Credit Agreement is hereby amended and
restated in its entirety to read as Disclosure Schedule 3.1 hereto.
Disclosure Schedule 3.2 to the Credit Agreement is hereby amended and
restated in its entirety to read as Disclosure Schedule 3.2 hereto.
Disclosure Schedule 3.6 to the Credit Agreement is hereby amended and
restated in its entirety to read as Disclosure Schedule 3.6 hereto.
Disclosure Schedule 3.8 to the Credit Agreement is hereby amended and
restated in its entirety to read as Disclosure Schedule 3.8 hereto.
Disclosure Schedule 3.11 to the Credit Agreement is hereby amended and
restated in its entirety to read as Disclosure Schedule 3.11 hereto.
Disclosure Schedule 5.1 to the Credit Agreement is hereby amended and
restated in its entirety to read as Disclosure Schedule 5.1 hereto.
Part A of Disclosure Schedule 6.2 to the Credit Agreement is hereby
amended and restated in its entirety to read as Part A of Disclosure Schedule
6.2 hereto.
EFFECTIVENESS. The effectiveness of this Amendment is subject to the
satisfaction of the following conditions precedent:
Execution. This Amendment shall have been duly executed and delivered
by Borrower, Agent and each Lender;
Fees. The Borrower shall have paid to the Agent, for the ratable
benefit of the Lenders, a commitment increase fee of $100,000 and an extension
fee of $150,000 (each of which fee shall be fully earned and payable on the date
hereof and shall be non-refundable once paid);
Payoff Letter. Agent shall have received, in form and substance
reasonably satisfactory to Agent, copies of a duly executed payoff letter, by
and between all parties to the Comerica Loan Agreement evidencing payment in
full of all obligations under the Comerica Loan Agreement and termination of all
security interests, liens and pledges and termination of all applicable
agreements, together with (a) UCC-3 or other appropriate termination statements,
in form and substance satisfactory to Agent, releasing all liens of Comerica
Bank upon any of the personal property of Encore Acquisition [ANY PTO OR SIMILAR
FILINGS?], and (b) termination of all blocked account agreements, bank agency
agreements or other similar agreements or arrangements or arrangements in favor
of Comerica Bank;
Charter and Good Standing. The Agent shall have received, for each
Credit Party, such Credit Party's (a) certificate of incorporation and all
amendments thereto, (b) good standing certificates (including verification of
tax status for each Credit Party) in its jurisdiction of incorporation, each
dated a recent date prior to the date hereof and certified by the applicable
Secretary of State or other authorized Governmental Authority;
Bylaws and Resolutions. The Agent shall have received, for each Credit
Party, (a) such Credit Party's bylaws, together with all amendments thereto and
(b) resolutions of such Credit Party's Board of Directors and stockholders,
approving and authorizing the execution, delivery and performance of this
Amendment and the transactions to be consummated in connection therewith, each
certified as of the date hereof by such Credit Party's corporate secretary or an
assistant secretary as being in full force and effect without any modification
or amendment;
Incumbency Certificates. The Agent shall have received, for each Credit
Party, signature and incumbency certificates of the officers of each such Credit
Party executing this Amendment, certified as of the date hereof, by such Credit
Party's corporate secretary or an assistant secretary as being true, accurate,
correct and complete;
First Amendment to Mortgage. The Agent shall have received, in form and
substance satisfactory to Agent, original copy the First Amendment to Mortgage
executed by Borrower in favor of Agent with respect to the Real Estate in
Hennepin county, Minnesota; and
Legal Opinion. The Agent shall have received a duly executed original
of the opinion of Winthrop & Weinstine, P.A., in form and substance satisfactory
to Agent and its counsel, with respect to the due authorization, execution,
delivery and performance by each Credit Party signatory hereto of this Amendment
and the enforceability of the Credit Agreement as amended hereby.
REPRESENTATIONS AND WARRANTIES. In order to induce the Agent and each Lender to
enter into this Amendment, the Borrower hereby represents and warrants to the
Agent and each Lender, which representations and warranties shall survive the
execution and delivery of this Amendment, that:
all of the representations and warranties contained in the Credit
Agreement and in each Loan Document are true and correct as of the date hereof
after giving effect to this Amendment, except to the extent that any such
representations and warranties expressly relate to an earlier date;
the execution, delivery and performance by the Borrower of this
Amendment has been duly authorized by all necessary corporate action required on
its part and this Amendment, and the Credit Agreement as amended by this
Amendment, is the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, except as its
enforceability may be affected by the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights or remedies of creditors generally;
Neither the execution, delivery and performance of this Amendment by
Borrower, the performance by Borrower of the Credit Agreement as amended by this
Amendment nor the consummation of the transactions contemplated hereby does or
shall contravene, result in a breach of, or violate (i) any provision of any
Credit Party's certificate or articles of incorporation or bylaws or other
similar documents, or agreements, (ii) any law or regulation, or any order or
decree of any court or government instrumentality, or (iii) any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which any
Credit Party or any of its Subsidiaries is a party or by which any Credit Party
or any of its Subsidiaries or any of their property is bound, except in any such
case to the extent such conflict or breach has been waived herein or by a
written waiver document, a copy of which has been delivered to Agent on or
before the date hereof; and
No Default or Event of Default has occurred and is continuing.
REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.
Except as specifically set forth above, the Credit Agreement and the
other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed; and
The amendments set forth herein are effective solely for the purposes
set forth herein and shall be limited precisely as written, and shall not be
deemed to (i) be a consent to any amendment, waiver or modification of any other
term or condition of the Credit Agreement or any other Loan Document, (ii)
operate as a waiver or otherwise prejudice any right, power or remedy that the
Agent or the Lenders may now have or may have in the future under or in
connection with the Credit Agreement or any other Loan Document or (iii)
constitute a waiver of any provision of the Credit Agreement or any Loan
Document, except as specifically set forth herein. Upon the effectiveness of
this Amendment, each reference in the Credit Agreement to "this Agreement",
"herein", "hereof" and words of like import and each reference in the Credit
Agreement and the Loan Documents to the Credit Agreement shall mean the Credit
Agreement as amended hereby. This Amendment shall be construed in connection
with and as part of the Credit Agreement.
COSTS AND EXPENSES. As provided in Section 11.3 of the Credit Agreement, the
Borrower agrees to reimburse Agent for all fees, costs, and expenses, including
the reasonable fees, costs, and expenses of counsel or other advisors for
advice, assistance, or other representation in connection with this Amendment.
GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
HEADINGS. Section headings in this Amendment are included herein for convenience
of reference only and shall not constitute part of this Amendment for any other
purposes.
COUNTERPARTS. This Amendment may be executed in any number of counterparts, each
of which when so executed shall be deemed an original, but all such counterparts
shall constitute one and the same instrument.
(signature page follows)
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment No. 4 to Credit Agreement as of the date first written above.
BORROWER:
NAVARRE CORPORATION
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
AS AGENT AND LENDER
By:
---------------------------------
Name:
--------------------------------
Title:
-------------------------------
CONSENT
The undersigned hereby (i) acknowledges receipt of and consents to the
Amendment No. 4 to Credit Agreement (the "Amendment"), (ii) ratifies and
confirms each Loan Document, including, without limitation, the guaranty and the
security agreement to which it is a party, and (iii) acknowledges and agrees
that after giving effect to the Amendment, each of the Loan Documents to which
it is a party is and shall remain in full force and effect in accordance with
the terms thereof.
ENCORE SOFTWARE, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ANNEX J (FROM ANNEX A-COMMITMENTS DEFINITION)
TO
CREDIT AGREEMENT
Lender(s)
General Electric Capital Corporation Revolving $40,000,000
Loan Commitment (including a Swing Line Commitment of
$5,000,000
DISCLOSURE SCHEDULE 3.1
TO
CREDIT AGREEMENT
DISCLOSURE SCHEDULE 3.2
TO
CREDIT AGREEMENT
DISCLOSURE SCHEDULE 3.6
TO
CREDIT AGREEMENT
DISCLOSURE SCHEDULE 3.8
TO
CREDIT AGREEMENT
DISCLOSURE SCHEDULE 3.11
TO
CREDIT AGREEMENT
DISCLOSURE SCHEDULE 5.1
TO
CREDIT AGREEMENT
PART A OF DISCLOSURE SCHEDULE 6.2
TO
CREDIT AGREEMENT