EXHIBIT #10.12.5
LIMITED CONSENT AND AMENDMENT NO. 5 TO CREDIT AGREEMENT
This LIMITED CONSENT AND AMENDMENT NO. 5 TO CREDIT AGREEMENT (this "Consent and
Amendment") is entered into as of this 23 day of October, 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 Consent and 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, and Agent and Lenders desire to
provide the limited consent 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:
1 LIMITED CONSENT. Pursuant to Section 11.2 of the Credit Agreement, and subject
to the conditions set forth in Section 3 below, the Agent and the Lenders hereby
consent and agree to the release by Agent of the Mortgage granted to Agent by
Borrower with respect to the Minnesota Real Estate and agree that Agent shall
deliver to Borrower a duly executed mortgage release and related UCC-3
termination statement for filing by Borrower promptly upon satisfaction of the
conditions set forth in Section 3 below.
2 AMENDMENTS TO CREDIT AGREEMENT.
2.1 Subsection 1.3(b)(ii) of the Credit Agreement is hereby amended by
adding the following sentence at the end thereof:
"Notwithstanding anything herein to the contrary,
proceeds from the sale-leaseback of the Minnesota Facility
shall be applied to repay the Indebtedness incurred by
Borrower under the Construction Loan Agreement and to the
extent such Indebtedness have been repaid in full, such
proceeds shall be applied in accordance with Section 1.3(c)
hereof."
2.2 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, (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, and (vii) Indebtedness
incurred by Borrower under the Construction Loan Agreement in
an aggregate principal amount not to exceed $4,550,000."
2.3 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; (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), and
(d) Liens in favor of The Business Bank on the Minnesota Real
Estate and related assets pursuant to the Construction
Mortgage solely to secure Indebtedness permitted pursuant to
Section 6.3(a)(vii) hereof. 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
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for the Obligations, except operating leases, Capital Leases
or Licenses which prohibit Liens upon the assets that are
subject thereto."
2.4 Section 6.12 of the Credit Agreement is hereby amended and restated
to read in its entirety as follows:
"6.12 Sale-Leasebacks. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any
of its assets; provided that Borrower may engage in a sale-leaseback
transaction with respect to the Minnesota Facility pursuant to the
Minnesota Sale-Leaseback Documents, as long as Agent shall have
received certified copies of all documents governing or evidencing
such transaction, including, without limitation, a landlord waiver, in
form and substance reasonably satisfactory to Agent, prior to
consummation of such transaction."
2.5 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 and except for the lease of the
Minnesota Facility pursuant to the Minnesota Sale-Leaseback Documents, 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."
2.6 Section 6 of the Credit Agreement is hereby amended by adding the
following new Subsection 6.19 at the end thereof:
"Section 6.19 Amendments. The Borrower shall not enter into
any amendment, supplement, restatement, other modification or
waiver with respect to any of the Construction Loan Documents
or the Minnesota Sale-Leaseback Documents without the prior
written consent of Agent."
2.7 Annex A to the Credit Agreement is hereby amended by adding the
following new definitions thereto in the applicable alphabetical locations:
""Construction Loan Agreement" means that certain Construction Loan
Agreement, dated as of October _____, 2003, between The Business Bank
and Borrower (as amended, restated or otherwise modified from time to
time).
"Construction Loan Documents" means the Construction Loan Agreement,
the Construction Mortgage and all other agreements, instruments,
documents and certificates executed and delivered in connection with
the Construction Loan Agreement or the transactions contemplated
thereby. Any reference in this Agreement or any other Loan Document to
a Construction Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or
other modifications thereto, and shall refer to such Construction Loan
Document as the same may be in effect at any and all times such
reference becomes operative.
"Construction Mortgage" means the Construction Mortgage as in effect on
October __, 2003 and as amended or otherwise modified in a manner
permitted hereunder.
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"Minnesota Facility" means the office/warehouse facility to be
constructed on the Minnesota Real Estate.
"Minnesota Real Estate" means the Real Estate owned by Borrower
located in the County of Hennepin and the State of Minnesota and as
further described on (1)Exhibit A hereto.
"Minnesota Sale-Leaseback Documents" means that certain Sale, Purchase
and Build to Suit Agreement, dated as of _______, 2003 between
Borrower, as seller and NL Ventures IV, L.P., as buyer, and all other
agreements, instruments, documents and certificates executed and
delivered in connection therewith, as in effect as of the date hereof
and as amended or otherwise modified in a manner permitted hereunder."
3 EFFECTIVENESS. The effectiveness of this Consent and Amendment is subject to
the satisfaction of the following conditions precedent:
3.1 this Consent and Amendment shall have been duly executed and
delivered by Borrower, Agent and each Lender;
3.2 the Agent shall have received a certified copy of the Construction
Loan Documents and the Minnesota Sale-Leaseback Documents, and the Construction
Loan Documents and the Minnesota Sale-Leaseback Documents shall be in form and
substance satisfactory to Agent; and
3.3 The representations and warranties contained herein shall be true
and correct in all respects.
4 REPRESENTATIONS AND WARRANTIES. In order to induce the Agent and each Lender
to enter into this Consent and 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 Consent and Amendment, that:
4.1 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 Consent and Amendment, except to the extent that any
such representations and warranties expressly relate to an earlier date;
4.2 the execution, delivery and performance by the Borrower of this
Consent and Amendment has been duly authorized by all necessary corporate action
required on its part and this Consent and Amendment, and the Credit Agreement as
amended by this Consent and 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;
4.3 Neither the execution, delivery and performance of this Consent and
Amendment by Borrower, the performance by Borrower of the Credit Agreement as
amended by this Consent and Amendment nor the consummation of the transactions
contemplated hereby does or shall
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1 LEGAL DESCRIPTION OF MINNESOTA REAL ESTATE TO BE PROVIDED BY BORROWER
AND ATTACHED AS EXHIBIT A HERETO.
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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, (iii) 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
4.4 No Default or Event of Default has occurred and is continuing.
5 REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.
5.1 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
5.2 The consent and 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 Consent and 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 Consent and Amendment shall be
construed in connection with and as part of the Credit Agreement.
6 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 Consent and
Amendment.
7 GOVERNING LAW. THIS CONSENT AND AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
8 HEADINGS. Section headings in this Consent and Amendment are included herein
for convenience of reference only and shall not constitute part of this Consent
and Amendment for any other purposes.
9 COUNTERPARTS. This Consent and 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)
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Limited
Consent and Amendment No. 5 to Credit Agreement as of the date first written
above.
BORROWER:
NAVARRE CORPORATION
By:
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Name:
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Title:
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GENERAL ELECTRIC CAPITAL
CORPORATION, AS AGENT AND LENDER
By:
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Name:
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Title:
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[Signature Page to Limited Consent and Amendment No. 5 to Credit Agreement]
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CONSENT
The undersigned hereby (i) acknowledges receipt of and consents to the Limited
Consent and Amendment No. 5 to Credit Agreement (the "Consent and 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 Consent and 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:
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Name:
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Title:
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[Signature Page to Limited Consent and Amendment No. 5 to Credit Agreement]
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EXHIBIT A
LEGAL DESCRIPTION
OF
MINNESOTA REAL ESTATE
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