EXHIBIT 10.16
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT AND
WAIVER OF DEFAULTS
This Amendment, dated as of March 16, 1999, is made by and between ROYAL
GRIP, INC., a Nevada corporation, and ROXXI, INC., a Nevada corporation
(collectively, jointly and severally, the "Borrower"), and NORWEST BUSINESS
CREDIT, INC., a Minnesota corporation (the "Lender").
Recitals
The Borrower and the Lender have entered into an Amended and Restated
Credit and Security Agreement dated as of October 9, 1998 (the "Credit
Agreement"). Capitalized terms used in these recitals have the meanings given to
them in the Credit Agreement unless otherwise specified.
Roxxi, Inc., a Nevada corporation ("Roxxi") has entered into that certain
Asset Purchase Agreement dated March 11, 1999, with Big Play, Inc. The
transaction evidenced by such Agreement is referred to as the "Equipment
Transaction".
Roxxi has entered into that certain Asset Purchase Agreement dated February
26, 1999, with Paramount Headwear, Inc. The transaction evidenced by such
Agreement is referred to as the "Trademark Transaction".
The consummation of the Equipment Transaction and the Trademark Transaction
will violate Section 7.3, 7.6 and 7.15 of the Credit Agreement (the "Transaction
Defaults").
Borrower has requested that Lender waive the Transaction Defaults. Lender,
although under no obligation to do so, has agreed to waive the Transaction
Defaults, subject to the terms of this Amendment.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. DEFINED TERMS. 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.
2. AMENDMENT. The Credit Agreement is hereby amended by deleting the
definition of Borrowing Base contained in Section 1.1 of the Credit Agreement,
and replacing it as follows:
"Borrowing Base" means, at any time the lesser of:
(a) the Maximum Line; or
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(b) subject to change from time to time in the Lender's sole
discretion, the sum of:
(A) the lesser of (x) 80% of Eligible Accounts, or (y)
$1,500,000.00, plus
(B) the lesser of (x) 60% of Eligible Royal Grip Inventory, or
(y) $600,000.00.
3. NO OTHER CHANGES. Except as modified by Section 2 above, all of the
terms and conditions of the Credit Agreement shall remain in full force and
effect and shall apply to any Advance thereunder.
4. WAIVER OF DEFAULTS. Upon the terms and subject to the conditions set
forth in this Amendment, the Lender hereby waives the Transaction Defaults. This
waiver shall be effective only in this specific instance and for the specific
purpose for which it is given, and this waiver shall not entitle the Borrower to
any other or further waiver in any similar or other circumstances.
5. CONDITIONS PRECEDENT. This Amendment, and the waiver set forth in
Paragraph 4 hereof, shall be effective when the Lender is satisfied that, after
giving effect to the collateral release contemplated by Section 6, the
outstanding Revolving Advances to the Borrower will not be in excess of the
Borrowing Base and Lender shall have received an executed original hereof (or
copy in Lender's discretion), of each of the following, each in substance and
form acceptable to the Lender in its sole discretion:
(a) Receipt by the Lender of the $300,000.00 portion of the purchase
price (the "Proceeds") payable by Big Play, Inc. under the Equipment
Transaction;
(b) An assignment of proceeds, executed by the purchaser under the
Trademark Transaction whereby, among other things, the purchaser acknowledges
that all amounts owed to Roxxi have been assigned to Lender;
(c) The Acknowledgment and Agreement of Guarantor set forth at the end
of this Amendment, duly executed by the Guarantor;
(d) Certificates of the Secretaries of the entities constituting the
Borrower certifying as to (i) the resolutions of the boards of directors of the
entities constituting the Borrower approving the execution and delivery of this
Amendment, (ii) the fact that the articles of incorporation and bylaws of the
entities constituting the Borrower, which were certified and delivered to the
Lender pursuant to the Certificates of Authority dated as of October 9, 1998 in
connection with the execution and delivery of the Credit Agreement continue in
full force and effect and have not been amended or otherwise modified except as
set forth in the Certificates to be delivered, and (iii) certifying that the
officers and agents of the Borrower who have been certified to the Lender,
pursuant to the Certificates of Authority dated as of October 9, 1998, as being
authorized to sign and to act on behalf of the Borrower continue to be so
authorized or setting forth the sample signatures of each of the officers and
agents of the entities constituting the Borrower authorized to execute and
deliver this Amendment and all other documents, agreements and certificates on
behalf of the entities constituting the Borrower;
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(e) Final fully executed Agreements, including exhibits, applicable to
the Equipment Transaction and the Trademark Transaction;
(f) Such other matters as the Lender may require.
6. TERMINATIONS. Upon the satisfaction of the conditions precedent to the
effectiveness of this Amendment, Lender shall terminate its security interests
in Roxxi's work-in-process and raw materials Inventory, Roxxi's Equipment and
other personal property used in connection with the embroidering business and
the assets being conveyed pursuant to the Trademark Transaction.
7. FIRST TERM ADVANCE PAYOFF. Borrower hereby directs Lender to apply the
Proceeds to pay down the First Term Advance. Borrower further directs Lender to
make a Revolving Advance in an amount sufficient to fully prepay the First Term
Advance. Borrower acknowledges that prepayment of the First Term Advance will
result in a prepayment fee of $12,360.00. Borrower directs Lender to make a
Revolving Advance in the amount of $12,360.00 to pay such prepayment fee.
8. 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) The execution, delivery and performance by the Borrower of this
Amendment has been duly authorized by all necessary corporate action and do not
(i) require any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation or of any
order, writ, injunction or decree presently in effect, having applicability to
the Borrower, or the articles of incorporation or bylaws of the entities
constituting the Borrower, or (iii) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which the entities constituting the Borrower are a party
or by which it or their properties may be bound or affected;
(c) All of the representations and warranties contained in the Credit
Agreement are 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.
9. REFERENCES. All references in the Credit Agreement to "this Agreement"
shall be deemed to refer to the Credit Agreement 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 amended hereby.
10. NO OTHER WAIVER. Except as set forth in Paragraph 4 hereof, the
execution of this Amendment and acceptance of any documents related hereto shall
not be deemed to be a waiver of any Default or Event of Default or Default
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Period 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.
11. RELEASE. The Borrower and the Guarantor, by signing the Acknowledgment
and Agreement of Guarantor set forth below, each hereby absolutely and
unconditionally releases and forever discharges the Lender, and any and all
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, 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 or such Guarantor 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.
12. COSTS AND EXPENSES. The Borrower hereby reaffirms its agreement under
the Credit Agreement to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Credit Agreement, the
Security Documents and all other documents contemplated thereby, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, the Borrower specifically
agrees to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this
Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, 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, disbursements, costs and expenses.
13. MISCELLANEOUS. This Amendment and the Acknowledgment and Agreement of
Guarantor 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.
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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.
NORWEST BUSINESS CREDIT, INC.
By /s/ Xxxxxxx Xxxxxxxx
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Its Business Banking Officer
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ROYAL GRIP, INC., a Nevada corporation
By /s/ Xxxxxx Xxxxxxxxx
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Its President
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ROXXI, INC., a Nevada corporation
By /s/ Xxxxxx Xxxxxxxxx
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Its /s/ President
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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR
The undersigned, a guarantor of the indebtedness of Royal Grip, Inc., and
Roxxi, Inc., each Nevada corporations (collectively, jointly and severally, the
"Borrowers") to Norwest Business Credit, Inc. (the "Lender") pursuant to a
Guaranty dated as of October 9, 1998 (the "Guaranty"), hereby (i) acknowledges
receipt of the foregoing Amendment; (ii) consents to the terms (including
without limitation the release set forth in paragraph 11 of the Amendment) and
execution thereof; (iii) reaffirms its obligations to the Lender pursuant to the
terms of its Guaranty; and (iv) acknowledges that the Lender may amend, restate,
extend, renew or otherwise modify the Credit Agreement and any indebtedness or
agreement of the Borrower, or enter into any agreement or extend additional or
other credit accommodations, without notifying or obtaining the consent of the
undersigned and without impairing the liability of the undersigned under the
Guaranty for all of the Borrowers' present and future indebtedness to the
Lender.
ROYAL PRECISION, INC.,
a Delaware corporation
By /s/ Xxxxxx Xxxxxxxxx
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Its President
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