Exhibit 10.8
XXXXXX FINANCIAL, INC.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Pivot Rules, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
re: Amendments to Financing Agreements Between
Xxxxxx Financial, Inc. and Pivot Rules, Inc.
Gentlemen:
Reference is made to the various credit arrangements between Pivot
Rules, Inc. (the "Company") and Xxxxxx Financial, Inc. ("Xxxxxx"), i.e., the
Retail Collection Factoring Agreement, effective as of April 28, 1992 (the
"Factoring Agreement"), the Letter of Credit Financing Agreement, dated April
28, 1992 (the "Financing Agreement"), the Collateral Installment Note in the
face amount of $325,000, dated December 1994 (the "Term Loan"), the Stock
Pledge, dated December 1994 (the "Stock Pledge") and the Overformula Advance
Facility Agreement, dated August 21, 1996.
You have requested Xxxxxx to waive certain provisions contained in
such agreements and amend certain others in connection with a subordinated loan
previously provided to the Company by a third party and a contemplated bridge
financing and subsequent initial public offering by the Company. Xxxxxx hereby
(i) waives any objection to the promissory note in the face amount of $240,000,
dated September 30, 1996, executed by the Company in favor of Xxxxxx X. Xxxx
("Xxxx") in the form annexed hereto as Exhibit A and the granting of a
subordinated security interest in certain of the Company's assets referred to
therein and consents to the same as if such consent were given as of September
30, 1996; (ii) consents to the Company's issuance of certain convertible
subordinated secured promissory notes in the aggregate face amount of
$1,500,000 (the "Bridge Notes") in substantially the form annexed to the Term
Sheet, dated December 10, 1996 (the "Term Sheet"), as Exhibit A and the
granting of a subordinated security interest in all of the Company's assets,
other than accounts receivables factored to Xxxxxx, to the holders of the
Bridge Notes, as evidenced by a security agreement in substantially the form of
the security agreement annexed to the Term Sheet as Exhibit B; (iii) amends the
Term Loan and terminates the Stock Pledge to relinquish its security interest
in 18.65 shares of Common Stock, no par value, of the Company, with all other
provisions of the Term Loan remaining in full force and effect; and (iv) amends
section 8(l) of the Factoring Agreement to provide that (a) the change of
ownership threshold of 40% specified therein shall be increased
to 55%, and (b) from and after consummation of an initial public offering by
the Company, no change of ownership of the Company's Capital Stock shall
constitute an event of default thereunder, unless such change of ownership
results from the acquisition, in one or a series of transactions by any
individual or "group" (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934), other than Xxxxxxx Xxxxx and/or his affiliates, of 50%
or more of the outstanding capital stock of the Company, with all other
provisions of the Factoring Agreement remaining in full force and effect.
XXXXXX FINANCIAL, INC.
By:/s/ Xxxx X. Xxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxx
Title: SVP
Accepted And Agreed:
PIVOT RULES, INC.
By:/s/ X. Xxxxxxx Xxxxx
---------------------------------
X. Xxxxxxx Xxxxx
President
Dated: December 18, 1996
New York, New York
