Exhibit 10.1
FIRST AMENDMENT TO CREDIT
AGREEMENT
This Amendment is entered into as of
March 31, 2009 by and among Arctic Cat Inc., a Minnesota
corporation (the “Borrower”) , Arctic Cat Sales
Inc., a Minnesota corporation, Arctic Cat Production LLC, a
Minnesota limited liability company, Arctic Cat Production Support
LLC, a Minnesota limited liability company, and Arctic Cat Shared
Services LLC, a Minnesota limited liability company (the
“Guarantors” ), and Wells Fargo Bank, National
Association, a national banking association, as the Administrative
Agent, Issuing Lender and sole Lender under the Credit Agreement
described below (in such capacities, the “Bank”
).
The Borrower and the Bank have
entered into a Credit Agreement dated August 29, 2008, setting
forth the terms on which the Bank would make advances to and issue
letters of credit for the account of the Borrower (together with
all amendments, modifications and restatements thereof, the
“Credit Agreement” ).
Pursuant to their Guaranty dated
August 29, 2008 (together with all amendments, modifications
and restatements thereof, the “Guaranty”) , the
Guarantors have guarantied the payment and performance of all
obligations of the Borrower arising under the Credit Agreement and
related documents.
Pursuant to a Security Agreement
dated August 29, 2008 (together with all amendments,
modifications and restatements thereof, the “Security
Agreement” ), the Borrower and the Guarantors have
granted the Bank a security interest in substantially all of their
personal property.
The Borrower has asked the Bank to
extend the revolving line of credit provided under the Credit
Agreement, and the Bank is willing to do so on the terms and
subject to the conditions set forth herein.
ACCORDINGLY, in consideration of the
mutual covenants contained in this Amendment and in the other
documents described herein, the parties hereby agree as
follows:
1.
Definitions.
As used in this Amendment,
capitalized terms defined in the Credit Agreement and not otherwise
defined herein shall have the meanings given them in the Credit
Agreement.
2.
Amendments
(a)
The following definitions in
Section 1.1 of the Credit Agreement are hereby amended in
their entirety to read, respectively, as follows:
“Aggregate Revolving
Commitment Amount” means $30,000,000, being an amount equal to the
sum of the Revolving Commitments, as such amount may be reduced
from time to time pursuant to Section 2.8 or amendment in
accordance with this Agreement.
“Facility Termination
Date” means
May 31, 2009, or the earlier date of the termination of the
Revolving Facility pursuant to Section 2.8 or 7.2.
“Floating
Rate” means, at any
time, an annual rate equal to the sum of (i) 225 basis points
(2.25% per annum), and (ii) the greater of:
(A)
the Base Rate; or
(B)
the Federal Funds Rate, plus 50 basis points (0.50% per
annum).
The Floating Rate shall change when
and as the Base Rate or Federal Funds Rate changes.
“LIBO Rate
Margin” means 500
basis points (5.00% per annum).
(b)
Paragraph (a) of the definition
of “Eligible Receivables Value” in Section 1.1 of
the Credit Agreement is hereby amended in its entirety to read as
follows:
(a)
(i)
That portion of Dealer Floorplan
Finance Receivables unpaid more than 5 calendar days after the
applicable invoice date;
(ii)
that portion of other accounts
receivable unpaid more than 90 days after the applicable invoice
date.
(c)
The following paragraph (h) is
inserted at the end of the definition of “Eligible
Receivables Value” in Section 1.1 of the Credit
Agreement:
(h)
Accounts receivable owed by an account debtor whose chief executive
office or principal place of business is located outside the United
States and Canada.
(d)
The phrase, “the Security
Agreement”, is deleted in the definition of “Material
Adverse Effect” in Section 1.1 of the Credit Agreement,
and the phrase, “any Security Document”, is substituted
therefor.
(e)
The following definitions are hereby
added to Section 1.1 of the Credit Agreement in its
appropriate alphabetical order:
“Borrowing
Base” means, at any
time, the lesser of:
(a)
the Aggregate Revolving Commitment Amount, and
(b)
the sum of
(i)
60% of Eligible Receivables Value,
(ii)
the lesser of (A) $20,000,000, or (B) 50% of Eligible
Finished Goods Value,
(iii)
20% of Eligible Parts Value, and
(iv)
10% of Eligible Raw Materials Value.
“Borrowing Base
Certificate” means
a certificate in substantially the form attached hereto as
Exhibit E, duly completed and certified by the Borrower,
pursuant to which the Borrower sets forth the Borrowing Base as of
a particular date.
“Dealer Floorplan Finance
Receivables” means
amounts owing to any Obligor under any Dealer Finance
Agreement.
“First Amendment
Date” means
March 31, 2009.
“Security
Documents” means
the Security Agreement and each other security agreement, mortgage,
deed of trust, assignment or other instrument or agreement now or
hereafter directly or indirectly securing any Obligations of the
Borrower or any guaranty of any Obligations.
(f)
The definitions of “Adjusted
Asset Value” and “Asset Coverage Ratio” are
hereby deleted.
(g)
The first two sentences of
Section 2.1 of the Credit Agreement are hereby deleted, and
the following is substituted therefor:
2
Each Lender agrees, severally but
not jointly, on the terms and subject to the conditions hereinafter
set forth, to make Advances to the Borrower and to participate in
commercial and standby Letters of Credit for the account of the
Borrower from the date hereof through the Facility Termination
Date; provided, however, that (A) the Revolving Facility
Outstandings shall at no time exceed the Borrowing Base and
(B) no Lender’s Percentage of the Revolving Facility
Outstandings shall at any time exceed that Lender’s Revolving
Commitment. The credit facility established under this
Section 2.1 is revolving; within the limits set forth herein,
the Borrower may request Advances and Letters of Credit through the
Facility Termination Date, repay such Advances or terminate such
Letters of Credit, and reborrow or receive additional Letters of
Credit, so long as no Advance or Letter of Credit causes the limits
set forth below to be exceeded.
(h)
The second sentence of
Section 2.3(e) of the Credit Agreement is hereby deleted, and
the following is substituted therefor:
Unless otherwise agreed by the
Required Lenders in writing, the Borrower shall deposit in the L/C
Cash Collateral Account, not less than 5 Business Days before the
Facility Termination Date, an amount equal to 105% of the L/C
Amount, less the balance (if any) then outstanding in the L/C Cash
Collateral Account.
(i)
The following is hereby inserted at the end of Section 2.4(b)
of the Credit Agreement:
Notwithstanding any other provision
of this Agreement, from and after the First Amendment Date, the
Borrower may not elect any Interest Period longer than one month to
be applicable to any LIBO Rate Funding.
(j)
The following new Section 2.15
is hereby inserted at the end of Article II of the Credit
Agreement:
Section 2.15 Borrowing Base
Deficiencies.
If the Revolving Facility
Outstandings shall on any date exceed the Borrowing Base, the
Borrower, not later than the next Business Day following such date,
shall remit to the Administrative Agent an amount equal to such
excess, without notice or demand by the Administrative Agent or any
Lender. Such remittance shall be applied to the Obligations
(whether or not due) in such order of application as the
Administrative Agent may in its sole discretion choose. To the
extent that the amount of such remittance exceeds the outstanding
non-contingent Obligations, such excess portion of the remittance
shall be deposited in the L/C Cash Collateral Account.
(k)
The following is hereby inserted at the end of Section 3.2 of
the Credit Agreement:
Any request for a Borrowing or a
Letter of Credit, whether written, telephonic, telecopy or
otherwise, shall be deemed to be a representation by the Borrower
that (i) the amount of the requested Borrowing or Letter of
Credit, when added to the Revolving Facility Outstandings would not
cause the sum of the Revolving Facility Outstandings to exceed the
Borrowing Base, and (b) the statements set forth in this
Section 3.2 are correct as of the time of the
request.
(l)
Section 5.1(c)(i) of the Credit Agreement is hereby
amended in its entirety to read as follows:
(i)
Consolidated balance sheets of the
Borrower and its Subsidiaries as at the end of such month and
related consolidated statements of earnings of the Borrower and its
Subsidiaries for such month and for the year to date, in reasonable
detail and stating in comparative form the figures for the
corresponding date and period in
3
the previous year, all prepared in
accordance with GAAP, and certified by the chief financial officer
of the Borrower, subject to year-end audit adjustments.
(m)
The following paragraphs are
inserted after paragraph (m) in Section 5.1 of the Credit
Agreement:
(n)
On the third Business Day of every
calendar month, a Borrowing Base certificate as of the end of the
immediately preceding calendar month.
(o)
On each Wednesday, a cash flow
budget for the 13-week period commencing on the immediately
preceding Sunday, including forecasted financing needs during such
period (including a forecast of borrowings hereunder) and the
income, expense and other information supporting such forecast, all
presented on a week-by-week basis in such detail as the
Administrative Agent may reasonably request.
(n)
Sections 5.9, 5.10 and 5.11 of the
Credit Agreement are hereby deleted.
(o)
Section 6.1(h) of the Credit
Agreement is hereby amended in its entirety to read as
follows:
(h)
Liens granted to the Administrative
Agent pursuant to any Security Documents.
(p)
The following new paragraph
(n) is hereby added to Section 7.1 of the Credit
Agreement:
(n)
The aggregate payments made by the Borrower and its Subsidiaries on
account of repurchase or similar obligations or liabilities under
Dealer Finance Agreements in any single calendar month, after
deducting any payments received during such month on account of
returned
