EXHIBIT 3.1
[XXXXX FARGO BANK LOGO] XXXXX FARGO BANK,
NATIONAL ASSOCIATION FOURTH AMENDMENT
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This Fourth Amendment (the "Fourth Amendment") dated as of March 1, 2002 is
between Xxxxx Fargo Bank, National Association as successor in interest to Xxxxx
Fargo Bank Wisconsin, National Association formerly known as Norwest Bank
Wisconsin, National Association (the "Bank") and Renaissance Learning, Inc.
formerly known as Advantage Learning Systems, Inc. (the "Borrower").
BACKGROUND
The Borrower and the Bank entered into a Credit Agreement dated December 31,
1997, as amended by a First Amendment dated December 18, 1998, a Second
Amendment dated February 9, 2000, and a Third Amendment dated August 15, 2000
(as amended the "Agreement") pursuant to which the Bank extended to the Borrower
a $10,000,000.00 revolving line of credit (the "Line"). The advances under the
Line are evidenced by a revolving note dated the same date as the Third
Amendment (the "Third Amendment Revolving Note").
The Borrower has requested that the Bank increase the amount of the Line to
$15,000,000.00 and extend the maturity date of the Line to March 31, 2004. The
Bank is willing to grant these requests subject to the terms and conditions of
this Fourth Amendment. Capitalized terms not otherwise defined in this Fourth
Amendment shall have the meaning given them in the Agreement.
In consideration of the premises, the Bank and the Borrower agree that the
Agreement is hereby amended as follows:
1. Section 1.1 of the Agreement is amended by deleting the
amount of "Ten Million and No/100 Dollars ($10,000,000.00)" and substituting the
amount of "Fifteen Million and No/100 Dollars ($15,000,000.00)".
2. Section 1.2 of the Agreement is hereby amended by deleting
the date of "March 31, 2002" and substituting the date of "March 31, 2004".
3. Each reference in Section 3.2 of the Agreement to the "Base
Rate Option" shall be amended to "Prime Rate Option".
4. Section 6.2(a) of the Agreement is amended in its entirety as
follows:
(a) Total Liabilities to Tangible Net Worth Ratio. Maintain a
ratio of total liabilities to Tangible Net Worth of less than
.30 to 1.0 as of the end of each fiscal quarter commencing
March 31, 2002.
5. Simultaneously with the execution of this Fourth Amendment, the
Borrower shall execute and deliver to the Bank a revolving note (the "Revolving
Note") in form and content acceptable to the Bank, which shall replace, but not
be deemed to satisfy, the Third Amendment Revolving Note. The initial balance of
the Revolving Note shall be the balance of the Third Amendment Revolving Note as
of the date of this Fourth Amendment. Each reference in the Agreement to the
Revolving Note shall be deemed to refer to the Revolving Note dated as of the
date of this Fourth Amendment.
6. The Borrower hereby represents and warrants to the Bank as follows:
A. The Agreement as amended by this Fourth Amendment remains in full
force and effect.
B. The Borrower has no knowledge of any default under the terms of
the Agreement or any note evidencing any of the obligations of the
Borrower that are documented in the Agreement, or of any event that
with notice or the lapse of time or both would constitute a default
under the Agreement or any such notes.
C. The execution, delivery and performance of this Fourth
Amendment and the Revolving Note are within its corporate powers, have
been duly authorized and are not in contravention of law or the terms
of the Borrower's articles of incorporation or by-laws, or of any
undertaking to which the Borrower is a party or by which it is bound.
D. The resolutions set forth in the Corporate Certificate of
Authority dated February 9, 2000 and delivered by the Borrower to the
Bank have not been amended or rescinded, and remain in full force and
effect.
7. Except as modified by this Fourth Amendment, the Agreement remains
unchanged and in full force and effect.
IN WITNESS WHEREOF, the Bank and Borrower have executed this Fourth Amendment as
of the date and year first above written.
XXXXX FARGO BANK,
NATIONAL ASSOCIATION RENAISSANCE LEARNING, INC.
BY: /S/ XXXXXX X. XXXXXXX BY: /S/ XXXXXX X. XXXXXXX
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ITS: VICE PRESIDENT ITS: CHIEF FINANCIAL OFFICER
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[XXXXX FARGO BANK LOGO] XXXXX FARGO BANK,
NATIONAL]ASSOCIATION REVOLVING NOTE
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$15,000,000.00 March 1, 2002
FOR VALUE RECEIVED, Renaissance Learning, Inc. (the "Borrower") promises to pay
to the order of Xxxxx Fargo Bank, National Association (the "Bank"), at its
principal office or such other address as the Bank or holder may designate from
time to time, the principal sum of Fifteen Million and No/100 Dollars
($15,000,000.00), or the amount shown on the Bank's records to be outstanding,
plus interest (calculated on the basis of actual days elapsed in a 360-day year)
accruing each day on the unpaid principal balance at the annual interest rates
defined below. Absent manifest error, the Bank's records shall be conclusive
evidence of the principal and accrued interest owing hereunder.
INTEREST RATES.
PRIME RATE OPTION. Unless the Borrower chooses the LIBOR Interest Rate Option as
defined below, the principal balance outstanding under this Revolving Note shall
bear interest at an annual rate equal to the Prime Rate, less 1.0% floating (the
"Prime Rate Option"). "Prime Rate" is a base rate that the Bank from time to
time establishes and which serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto.
LIBOR INTEREST RATE OPTION. Subject to the terms and conditions of the Agreement
the Borrower may elect that all or portions of the principal balance of this
Revolving Note bear interest at the LIBOR Interest Rate plus 1.25% (the "LIBOR
Interest Rate Option"). Specific reference is made to the Interest Rate Options
section of the Agreement for terms governing the designation of interest periods
and rate portions.
The LIBOR Interest Rate shall be computed in accordance with the following
formula.
LIBOR Interest Rate = London Interbank Offered Rate
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1.00 - Reserve Requirement
Where,
(i) "London Interbank Offered Rate" means the Bank's cost of funds as
determined by the Bank's Treasury Division, based upon the average rate
at which U.S. Dollar deposits with a term equal to the applicable LIBOR
Interest Rate Period and in an amount equal to the LIBOR Interest Rate
Portion are available to the Bank at the time or determination on the
London Interbank Market.
(ii) "Reserve Requirement" means the Federal Reserve System requirement
(expressed as a percentage) applicable to the dollar deposits used in
calculating the LIBOR Interest Rate above.
REPAYMENT TERMS
INTEREST. Interest accruing under the Prime Rate Option shall be payable on the
last day of each month beginning March 31,2002. Interest accruing under the
LIBOR Interest Rate Option shall be payable, as applicable, at the end of each
LIBOR Interest Rate Period.
PRINCIPAL. Principal, and all accrued but unpaid interest, shall be payable in
a single payment due on March 31, 2004.
PREPAYMENT FEE. The Borrower may prepay advances of principal accruing interest
under the Prime Rate Option at any time without penalty. Each prepayment of an
advance of principal accruing interest at the LIBOR interest rate option,
whether voluntary or by reason of acceleration, shall be accompanied by a
prepayment fee equal to the amount, if any, by which:
(i) the additional interest that would have been payable on the amount
prepaid, if it had not been paid until the last day of the applicable
interest period, exceeds
(ii) the interest that would have been recoverable by the Bank by
reinvesting the amount of principal prepaid from the prepayment date to
the last day of the applicable interest period in U.S. Government
Securities having a maturity date on or about that date.
ADDITIONAL TERMS AND CONDITIONS. This Revolving Note is issued pursuant to a
Credit Agreement dated December 31, 1997 as previously amended including a
Fourth Amendment of even date hereof (as amended the "Agreement"). The
Agreement, and any future amendments or substitutions, contains additional terms
and conditions, including default and acceleration provisions, which are
incorporated into this Revolving Note by reference. Capitalized terms not
expressly defined herein shall have the meanings given them in the Agreement.
The Borrower agrees to pay all costs of collection, including reasonable
attorneys' fees and legal expenses incurred by the Bank if this Revolving Note
is not paid as provided above. This Revolving Note shall be governed by the
substantive laws of the State of Wisconsin.
WAIVER OF PRESENTMENT AND NOTICE OF DISHONOR. Borrower and any other person who
signs, guarantees or endorses this Revolving Note, to the extent allowed by law,
hereby waives presentment, demand for payment, notice of dishonor, protest, and
any notice relating to the acceleration of the maturity of this Revolving Note.
RENAISSANCE LEARNING, INC.
BY: /S/ XXXXXX X. XXXXXXX
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ITS: CHIEF FINANCIAL OFFICER
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