THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Third Amendment to Credit and Security Agreement, dated
as of April 5, 2004 (this "AMENDMENT"), is made by and between AG-BAG
INTERNATIONAL LIMITED, a Delaware corporation (the "BORROWER"), and XXXXX FARGO
CREDIT, INC., a Minnesota corporation (the "LENDER").
RECITALS
A. The Borrower and the Lender are parties to that certain
Credit and Security Agreement dated as of May 14, 2003, as it has previously
been amended (the "CREDIT AGREEMENT").
B. Certain Events of Default have occurred under the Credit
Agreement by reason of the Borrower's failure to maintain the minimum Book Net
Worth as of December 31, 2003 required by Section 6.2(e) of the Credit Agreement
and the minimum Earnings Before Taxes for the period ending December 31, 2003
required by Section 6.2(h) of the Credit Agreement (the "EVENTS OF DEFAULT").
The Borrower has requested that the Lender waive the Events of Default and reset
the Book Net Worth and Earnings Before Taxes covenants.
C. The Borrower and the Lender wish to make certain additional
amendments to the Credit Agreement pursuant to the terms and conditions set
forth herein.
D. Capitalized terms used in this Amendment which are defined
in the Credit Agreement shall have the same meanings as defined therein, unless
otherwise defined herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, it is agreed as follows:
1. Waiver. Subject to the Borrower's execution and return of
this Amendment to the Lender, the Lender waives the Events of Default
specifically described in Recital B above. This waiver is effective only in this
specific instance and does not entitle the Borrower to any other or further
waiver in any similar or other circumstances. The Lender does not waive any
other Events of Default.
2. Minimum Book Net Worth. Section 6.2(e) of the Credit
Agreement is amended in its entirety to read as follows:
"(e) Minimum Book Net Worth. The Borrower will maintain,
during each period set forth below, its Book Net Worth,
determined as of the last day of each month, at an amount not
less than the amount set forth opposite such period below:
Period Minimum Book Net Worth
---------- ----------------------
March 2004 $5,575,000
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April 2004 $5,550,000
May 2004 $5,725,000
June 2004 $5,850,000
July 2004 $5,925,000
August 2004 $6,000,000
September 2004 $6,175,000
October 2004 $6,050,000
November 2004 $6,015,000
December 2004 and each calendar $6,050,000"
month thereafter
3. Minimum Earnings Before Taxes. Section 6.2(h) of the Credit
Agreement is amended in its entirety to read as follows:
"(h) Minimum Earnings Before Taxes. The Borrower will achieve
as of the end of each fiscal year-to-date period described
below, fiscal year-to-date Earnings Before Taxes of not less
than the amount set forth opposite such period below:
Fiscal Year-to-Date Period Minimum Earnings Before Taxes
-------------------------- -----------------------------
Three Months Ending March 31, ($575,000)
2004
Six Months Ending ($300,000)
June 30, 2004
Nine Months Ending September 30, $75,000
2004
Twelve Months Ending ($100,000)"
December 31, 2004
4. Capital Expenditures. Section 6.2(i) of the Credit
Agreement is amended in its entirety to read as follows:
"(i) Capital Expenditures. The Borrower will not incur or
contract to incur Capital Expenditures of more than $200,000
in the aggregate during the fiscal year ending December 31,
2004."
5. Fees and Expenses. The Borrower shall pay all fees, costs
and expenses, including attorney fees, incurred by the Lender in connection with
this Amendment. The Borrower hereby agrees that the Lender may make a loan to
the Borrower under the Credit Agreement, or apply the proceeds of any loan, for
the purpose of paying any such fees, costs and expenses.
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6. Representations and Warranties. The Borrower hereby
represents and warrants to the Lender as follows:
(a) The Borrower has all requisite power and authority to
execute this Amendment and to perform all of its obligations hereunder, and this
Amendment has been duly executed and delivered by the Borrower and constitutes
the legal, valid and binding obligation of the Borrower, enforceable in
accordance with its terms.
(b) All of the Borrower's representations and warranties
contained in the Credit Agreement are true and correct 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.
7. References. All references in the Credit Agreement to "this
Agreement" shall be deemed to refer to the Credit Agreement as previously
amended and as amended hereby, and any and all references in the Security
Documents to the Credit Agreement shall be deemed to refer to the Credit
Agreement as so amended.
8. No Waiver. Except as set forth in paragraph 1 of this
Amendment, the execution of this Amendment and acceptance of any documents
related hereto shall not be deemed to be a waiver by the Lender of any breach or
default under the Credit Agreement or breach, default or event of default under
any Security Document or other document held by the Lender, whether or not known
to the Lender and whether or not existing on the date of this Amendment.
9. Release. The Borrower hereby absolutely and unconditionally
releases and forever discharges the Lender and any affiliated corporations,
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 Amendment, whether
such claims, demands and causes of action are matured or unmatured or known or
unknown.
10. Counterparts; Facsimile Signatures. This Amendment may be
executed in any number of 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. This Amendment may be
delivered by facsimile, and when so delivered will have the same force and
effect as delivery of an original signature.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first written above.
AG-BAG INTERNATIONAL LIMITED
By: /s/ XXXX XXXXXX
---------------------------------------------
Title: Chief Financial Officer
XXXXX FARGO CREDIT, INC.
By: /s/ XXXX XXXX
--------------------------------------------
Title: Vice President
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