Exhibit 10.1
EIGHTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT AND WAIVER OF DEFAULTS
This Amendment, dated as of November 13, 2001, is made by and between FM
PRECISION GOLF MANUFACTURING CORP., a Delaware corporation, and FM PRECISION
GOLF SALES CORP., a Delaware corporation (collectively, jointly and severally,
the "Borrower"), and XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota corporation
(the "Lender").
Recitals
The Borrower and the Lender have entered into a Credit and Security
Agreement dated as of October 9, 1998, as amended by that certain Amendment to
Credit and Security Agreement and Waiver of Defaults dated April 13, 1999, as
amended by that certain Second Amendment to Credit and Security Agreement dated
November 10, 1999, as amended by that certain Third Amendment to Credit and
Security Agreement dated March 24, 2000, as amended by that certain Fourth
Amendment to Credit and Security Agreement dated August 3, 2000, as amended by
that certain Fifth Amendment to Credit and Security Agreement dated November 8,
2000, as amended by that certain Sixth Amendment to Credit and Security
Agreement dated March 9, 2001, and as amended by that certain Seventh Amendment
to Credit and Security Agreement dated May 30, 2001 (collectively, the "Credit
Agreement"). Capitalized terms used in these recitals have the meanings given to
them in the Credit Agreement unless otherwise specified.
The Borrower has requested that certain amendments be made to the Credit
Agreement, which the Lender is willing to make pursuant to the terms and
conditions set forth herein.
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. AMENDMENTS. The Credit Agreement is hereby amended as follows:
(a) The definition of "Collateral" contained in Section 1.1 of the
Credit Agreement is hereby deleted and replaced as follows:
"Collateral" means all of the Borrower's Accounts, chattel paper, deposit
accounts, documents, Equipment, General Intangibles, goods, instruments,
Inventory, Investment Property, letter-of-credit rights, letters of credit,
all sums on deposit in any Collateral Account, and any items in any
Lockbox; together with (i) all substitutions and replacements for and
products of any of the foregoing; (ii) in the case of all goods, all
accessions; (iii) all accessories, attachments, parts, equipment and
repairs now or hereafter attached or affixed to or used in connection with
any goods; (iv) all warehouse receipts, bills of lading and other documents
of title now or hereafter covering such goods; (v) all collateral subject
to the Lien of any Security Document; (vi) any money, or other assets of
the Borrower that now or hereafter come into the possession, custody, or
control of the Lender; (vii) all sums on deposit in the Special Account;
and (viii) proceeds of any and all of the foregoing.
(b) The definition of "Borrowing Base" contained in Section 1.1 of the
Credit Agreement is hereby deleted in its entirety and replaced as follows:
"Borrowing Base" means, at any time the lesser of:
(a) the Maximum Line; or
(b) subject to change from time to time in the Lender's sole
discretion, the sum of:
(A) the lesser of (x) 85% of Eligible Accounts, or (y)
$6,500,000.00, plus
(B) the lesser of (x) 60% of Eligible Inventory (exclusive of
Eligible Raw Materials Inventory), or (y) $2,500,000.00 from
March 1 through September 30 of each year and $3,000,000.00 from
October 1 of each year through February 28 of each subsequent
year, plus
(C) the lesser of (x) 50% of Eligible Raw Materials Inventory, or
(y) $500,000.00, plus
(D) on November 1, 2001 an overadvance (the "2001 Overadvance
Limit") in an amount not to exceed $400,000.00 (which amount
shall be increased to $500,000.00 upon receipt of evidence
satisfactory to Lender that the entire $1,250,000.00 in
Subordinated Indebtedness from the Xxxxxxxx Family Charitable
Foundation has been received by the Borrower). In each year
thereafter, if but only if Lender, in its sole and absolute
discretion, elects to make overadvance Revolving Advances, in any
given fiscal year, commencing on November 1 of each year, an
overadvance in the amount not to exceed $500,000.00 (the
"Overadvance Limit"). The 2001 Overadvance Limit and each
Overadvance Limit thereafter shall be automatically reduced to
$400,000.00 on March 1 of the immediately following year, to
$300,000.00 on April 1 of the immediately following year, to
$200,000.00 on May 1 of the immediately following year and to
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$0.00 on June 1 of the immediately following year. No Overadvance
Limit shall exist at any time from June 1 through October 31 in
any year.
(c) Romanette (xv) of the definition of "Eligible Accounts" contained
in Section 1.1 of the Credit Agreement is hereby deleted and replaced as
follows:
(xv) Accounts owed by Marubeni, regardless of whether otherwise eligible,
in excess of (1) 75% of total Accounts through and until May 30, 2002, and
(2) 50% of total Accounts from and after May 30, 2002.
(d) The definitions of "Capital Expenditures Floating Rate,
"Overadvance Floating Rate", "Revolving Floating Rate" and "Term Floating Rate"
contained in Section 1.1 of the Credit Agreement are hereby deleted and replaced
as follows:
"Capital Expenditures Floating Rate" means an annual rate equal to the sum
of the Prime Rate plus three and one-quarter of one percent (3.25%). The
Capital Expenditures Floating Rate shall automatically be reduced to an
annual rate equal to the sum of the Prime Rate plus two and one-quarter of
one percent (2.25%) on the first day of the first full month following
Lender's receipt of Borrower's 2002 fiscal year audited financial
statements complying with Section 6.1(a) below, if but only if (i) said
financial statements indicate that the Borrower and the Covenant Entities
have achieved a Net Loss (exclusive of goodwill impairment, non-cash
increase in the valuation allowance on deferred income tax assets,
amortization of non-cash expenses associated with the issuance of warrants
to the Xxxxxxxx Family Charitable Foundation on October 26, 2001, non-cash
expenses resulting from the conversion of subordinated debt (owed to the
Xxxxxxxx Family Charitable Foundation arising pursuant to an instrument
dated October 26, 2001), to equity, expenses resulting from modifications
to "in the money" options held by employees who lost their jobs in
connection with the corporate restructuring approved on September 25, 2001
(collectively the "Fiscal Year 2002 Non-Cash Expenses")) for the Borrower's
2002 fiscal year of not more than $600,000.00, (ii) said financial
statements indicate that the Borrower and the Covenant Entities decreased
their aggregate Net Worth (exclusive of Fiscal Year 2002 Non-Cash Expenses)
during Borrower's 2002 fiscal year by not more than $600,000.00, and (iii)
there is not a then existing Event of Default or Default Period, provided
however, notwithstanding the above, the Capital Expenditures Floating Rate
shall automatically be reduced to an annual rate equal to the sum of the
Prime Rate plus one-quarter of one percent (0.25%) on the first day of the
first full month following Lender's receipt of Borrower's 2002 fiscal year
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audited financial statements complying with Section 6.1(a) below, if but
only if (i) said financial statements indicate that the Borrower and the
Covenant Entities have achieved a Net Income for the Borrower's 2002 fiscal
year of not less than $600,000.00, (ii) said financial statements indicate
that the Borrower and the Covenant Entities increased their aggregate Net
Worth during Borrower's 2002 fiscal year by not less than $600,000.00, and
(iii) there is not a then existing Event of Default or Default Period. If
but only if said reduction is not achieved as provided above, the Capital
Expenditures Floating Rate shall automatically be adjusted on the first day
of the first full month following Lender's receipt of Borrower's audited
financial statements complying with Section 6.1(a) below in any year
subsequent to Borrower's 2002 fiscal year, to an annual rate equal to the
sum of the Prime Rate plus one-quarter of one percent (0.25%) in the event
that (i) said financial statements indicate that the Borrower and the
Covenant Entities have achieved a Net Income (exclusive of amortization
(not to exceed $300,000.00) of non-cash expenses associated with the
issuance of warrants to the Xxxxxxxx Family Charitable Foundation on
October 26, 2001 (the "Non-Cash Warrant Expenses")) for any such fiscal
year of not less than $600,000.00, (ii) said financial statements indicate
that the Borrower and the Covenant Entities increased their aggregate Net
Worth (exclusive of the Non-Cash Warrant Expenses) during any such fiscal
year by not less than $600,000.00, and (iii) there is not a then existing
Event of Default or Default Period. The Capital Expenditures Floating Rate
shall change when and as the Prime Rate changes.
"Overadvance Floating Rate" means an annual rate equal to the sum of the
Prime Rate plus five and one-quarter of one percent (5.25%). The
Overadvance Floating Rate shall automatically be reduced to an annual rate
equal to the sum of the Prime Rate plus four and one-quarter of one percent
(4.25%) on the first day of the first full month following Lender's receipt
of Borrower's 2002 fiscal year audited financial statements complying with
Section 6.1(a) below, if but only if (i) said financial statements indicate
that the Borrower and the Covenant Entities have achieved a Net Loss
(exclusive of the Fiscal Year 2002 Non-Cash Expenses) for the Borrower's
2002 fiscal year of not more than $600,000.00, (ii) said financial
statements indicate that the Borrower and the Covenant Entities decreased
their aggregate Net Worth (exclusive of the Fiscal Year 2002 Non-Cash
Expenses) during Borrower's 2002 fiscal year by not more than $600,000.00,
and (iii) there is not a then existing Event of Default or Default Period,
provided however, notwithstanding the above, the Overadvance Floating Rate
shall automatically be reduced to an annual rate equal to the sum of the
Prime Rate plus two and one-quarter of one percent (2.25%) on the first day
of the first full month following Lender's receipt of Borrower's 2002
4
fiscal year audited financial statements complying with Section 6.1(a)
below, if but only if (i) said financial statements indicate that the
Borrower and the Covenant Entities have achieved a Net Income for the
Borrower's 2002 fiscal year of not less than $600,000.00, (ii) said
financial statements indicate that the Borrower and the Covenant Entities
increased their aggregate Net Worth during Borrower's 2002 fiscal year by
not less than $600,000.00, and (iii) there is not a then existing Event of
Default or Default Period. If but only if said reduction is not achieved as
provided above, the Overadvance Floating Rate shall automatically be
adjusted on the first day of the first full month following Lender's
receipt of Borrower's audited financial statements complying with Section
6.1(a) below in any year subsequent to Borrower's 2002 fiscal year, to an
annual rate equal to the sum of the Prime Rate plus two and one-quarter of
one percent (2.25%) in the event that (i) said financial statements
indicate that the Borrower and the Covenant Entities have achieved a Net
Income (exclusive of the Non-Cash Warrant Expenses) for any such fiscal
year of not less than $600,000.00, (ii) said financial statements indicate
that the Borrower and the Covenant Entities increased their aggregate Net
Worth (exclusive of the Non-Cash Warrant Expenses) during any such fiscal
year by not less than $600,000.00, and (iii) there is not a then existing
Event of Default or Default Period. The Overadvance Floating Rate shall
change when and as the Prime Rate changes.
"Revolving Floating Rate" means an annual rate equal to the sum of the
Prime Rate plus three and one-quarter of one percent (3.25%). The Revolving
Floating Rate shall automatically be reduced to an annual rate equal to the
sum of the Prime Rate plus two and one-quarter of one percent (2.25%) on
the first day of the first full month following Lender's receipt of
Borrower's 2002 fiscal year audited financial statements complying with
Section 6.1(a) below, if but only if (i) said financial statements indicate
that the Borrower and the Covenant Entities have achieved a Net Loss
(exclusive of the Fiscal Year 2002 Non-Cash Expenses) for the Borrower's
2002 fiscal year of not more than $600,000.00, (ii) said financial
statements indicate that the Borrower and the Covenant Entities decreased
their aggregate Net Worth (exclusive of the Fiscal Year 2002 Non-Cash
Expenses) during Borrower's 2002 fiscal year by not more than $600,000.00,
and (iii) there is not a then existing Event of Default or Default Period,
provided however, notwithstanding the above, the Revolving Floating Rate
shall automatically be reduced to an annual rate equal to the sum of the
Prime Rate plus one-quarter of one percent (0.25%) on the first day of the
first full month following Lender's receipt of Borrower's 2002 fiscal year
audited financial statements complying with Section 6.1(a) below, if but
only if (i) said financial statements indicate that the Borrower and the
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Covenant Entities have achieved a Net Income for the Borrower's 2002 fiscal
year of not less than $600,000.00, (ii) said financial statements indicate
that the Borrower and the Covenant Entities increased their aggregate Net
Worth during Borrower's 2002 fiscal year by not less than $600,000.00, and
(iii) there is not a then existing Event of Default or Default Period. If
but only if said reduction is not achieved as provided above, the Revolving
Floating Rate shall automatically be adjusted on the first day of the first
full month following Lender's receipt of Borrower's audited financial
statements complying with Section 6.1(a) below in any year subsequent to
Borrower's 2002 fiscal year, to an annual rate equal to the sum of the
Prime Rate plus one-quarter of one percent (0.25%) in the event that (i)
said financial statements indicate that the Borrower and the Covenant
Entities have achieved a Net Income (exclusive of the Non-Cash Warrant
Expenses) for any such fiscal year of not less than $600,000.00, (ii) said
financial statements indicate that the Borrower and the Covenant Entities
increased their aggregate Net Worth (exclusive of the Non-Cash Warrant
Expenses) during any such fiscal year by not less than $600,000.00, and
(iii) there is not a then existing Event of Default or Default Period. The
Revolving Floating Rate shall change when and as the Prime Rate changes.
"Term Floating Rate" means an annual rate equal to the sum of the Prime
Rate plus three and three-quarters of one percent (3.75%). The Term
Floating Rate shall automatically be reduced to an annual rate equal to the
sum of the Prime Rate plus two and three-quarters of one percent (2.75%) on
the first day of the first full month following Lender's receipt of
Borrower's 2002 fiscal year audited financial statements complying with
Section 6.1(a) below, if but only if (i) said financial statements indicate
that the Borrower and the Covenant Entities have achieved a Net Loss
(exclusive of the Fiscal Year 2002 Non-Cash Expenses) for the Borrower's
2002 fiscal year of not more than $600,000.00, (ii) said financial
statements indicate that the Borrower and the Covenant Entities decreased
their aggregate Net Worth (exclusive of the Fiscal Year 2002 Non-Cash
Expenses) during Borrower's 2002 fiscal year by not more than $600,000.00,
and (iii) there is not a then existing Event of Default or Default Period,
provided however, notwithstanding the above, the Term Floating Rate shall
automatically be reduced to an annual rate equal to the sum of the Prime
Rate plus three-quarters of one percent (0.75%) on the first day of the
first full month following Lender's receipt of Borrower's 2002 fiscal year
audited financial statements complying with Section 6.1(a) below, if but
only if (i) said financial statements indicate that the Borrower and the
Covenant Entities have achieved a Net Income for the Borrower's 2002 fiscal
year of not less than $600,000.00, (ii) said financial statements indicate
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that the Borrower and the Covenant Entities increased their aggregate Net
Worth during Borrower's 2002 fiscal year by not less than $600,000.00, and
(iii) there is not a then existing Event of Default or Default Period. If
but only if said reduction is not achieved as provided above, the Term
Floating Rate shall automatically be adjusted on the first day of the first
full month following Lender's receipt of Borrower's audited financial
statements complying with Section 6.1(a) below in any year subsequent to
Borrower's 2002 fiscal year, to an annual rate equal to the sum of the
Prime Rate plus three-quarters of one percent (0.75%) in the event that (i)
said financial statements indicate that the Borrower and the Covenant
Entities have achieved a Net Income (exclusive of the Non-Cash Warrant
Expenses) for any such fiscal year of not less than $600,000.00, (ii) said
financial statements indicate that the Borrower and the Covenant Entities
increased their aggregate Net Worth (exclusive of the Non-Cash Warrant
Expenses) during any such fiscal year by not less than $600,000.00, and
(iii) there is not a then existing Event of Default or Default Period. The
Term Floating Rate shall change when and as the Prime Rate changes.
(e) Section 1.2 of the Credit Agreement is amended to read as follows:
"Section 1.2 OTHER DEFINITIONAL TERMS; RULES OF INTERPRETATION. The words
"hereof", "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with GAAP.
All terms defined in the UCC and not otherwise defined herein have the
meanings assigned to them in the UCC. References to Articles, Sections,
subsections, Exhibits, Schedules and the like, are to Articles, Sections
and subsections of, or Exhibits or Schedules attached to, this Agreement
unless otherwise expressly provided. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation". Unless the context in which used herein otherwise clearly
requires, "or" has the inclusive meaning represented by the phrase
"and/or". Defined terms include in the singular number the plural and in
the plural number the singular. Reference to any agreement (including the
Loan Documents), document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to time in
accordance with the terms thereof (and, if applicable, in accordance with
the terms hereof and the other Loan Documents), except where otherwise
explicitly provided, and reference to any promissory note includes any
promissory note which is an extension or renewal thereof or a substitute or
replacement therefor. Reference to any law, rule, regulation, order,
7
decree, requirement, policy, guideline, directive or interpretation means
as amended, modified, codified, replaced or reenacted, in whole or in part,
and in effect on the determination date, including rules and regulations
promulgated thereunder."
(f) Section 3.6 of the Credit Agreement is amended by adding the
following new sentence before the first sentence of that Section:
The Borrower authorizes the Lender to file from time to time where
permitted by law, such financing statements against collateral described as
"all personal property" as the Lender deems necessary or useful to perfect
the Security Interest.
(g) Section 6.12 of the Credit Agreement is hereby deleted and
replaced as follows:
DEBT SERVICE COVERAGE RATIO. The Borrower covenants that FMM and FMS and
the Covenant Entities shall, as of the last day of each fiscal quarter, on
and after August 31, 2002, maintain a consolidated average minimum debt
service coverage ratio (based upon the period set forth below) as follows:
QUARTER ENDING DEBT SERVICE COVERAGE RATIO
-------------- ---------------------------
August 31, 2002 and each 1.0 to 1 based upon the immediately preceding
August 31 thereafter three month period
November 30, 2002 and
each November 30 .75 to 1 based upon the immediately preceding
thereafter six month period
February 28, 2003 and
each February 28 .75 to 1 based upon the immediately preceding
thereafter nine month period
May 31, 2003 and each 1.05 to 1 based upon the immediately preceding
May 31 thereafter twelve month period
(h) Section 6.13 of the Credit Agreement is hereby deleted and
replaced as follows:
Section 6.13 NET WORTH. The Borrower covenants that as of May 31, 2001, the
aggregate consolidated Net Worth of FMM, FMS and the Covenant Entities was
$13,841,589.69. The Borrower covenants that said aggregate consolidated Net
Worth as of the end of each future fiscal quarter end shall increase by not
less than (or in the event a decrease is allowed, decrease by not more
than) the amounts set forth below as measured from the immediately
preceding fiscal year ending aggregate consolidated Net Worth.
8
NET WORTH
QUARTER ENDING INCREASE (DECREASE)
-------------- -------------------
November 30, 2001 ($2,300,000.00)
February 28, 2002 ($2,100,000.00)
May 31, 2002 ($1,050,000.00)
August 31, 2002 and each August 31 thereafter $0.00
November 30, 2002 and each November 30 thereafter ($300,000.00)
February 28, 2003 and each February 28 thereafter ($100,000.00)
May 31, 2003 and each May 31 thereafter $600,000.00
For purposes of calculating the above covenants for the quarters ending
November 30, 2001, February 28, 2002 and May 31, 2002 only, the calculation
of the Net Worth Decrease shall exclude the Fiscal Year 2002 Non-Cash
Expenses. For purposes of calculating the above covenants for the quarters
in the Borrower's 2003 fiscal year only, the Net Worth Increase and Net
Worth Decrease, as applicable, shall exclude the Non-Cash Warrant Expenses.
(i) Section 6.14 of the Credit Agreement is hereby deleted in its
entirety and replaced as follows:
Section 6.14 NET INCOME. The Borrower covenants that FMM, FMS and the
Covenant Entities shall achieve an aggregate consolidated Net Income of at
least (or, in the event a Net Loss is allowed for such fiscal quarter, a
Net Loss of not more than) the amount set forth below for each fiscal
quarter as measured from the immediately preceding fiscal year end.
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QUARTER ENDING NET INCOME (LOSS)
-------------- -----------------
November 30, 2001 ($2,300,000.00)
February 28, 2002 ($2,100,000.00)
May 31, 2002 ($1,050,000.00)
August 31, 2002 and each August 31 thereafter $0.00
November 30, 2002 and each November 30 thereafter ($300,000.00)
February 28, 2003 and each February 28 thereafter ($100,000.00)
May 31, 2003 and each May 31 thereafter $600,000.00
For purposes of calculating the above covenants for the quarters ending
November 30, 2001, February 28, 2002 and May 31, 2002 only, the calculation
of the Net Loss shall exclude the Fiscal Year 2002 Non-Cash Expenses. For
purposes of calculating the above covenants for the quarters in the
Borrower's 2003 fiscal year only, the Net Income and Net Loss, as
applicable, shall exclude the Non-Cash Warrant Expenses.
(j) Section 6.15 of the Credit Agreement is hereby deleted in its
entirety and replaced as follows:
Section 6.15 MONTHLY NET INCOME/NET LOSS. The Borrower covenants that
beginning with September 1, 2001, and continuing for each month thereafter,
FMM, FMS and the Covenant Entities shall achieve an aggregate consolidated
Net Income of not less than (or in the event a Net Loss is allowed for such
month, a Net Loss of not more than) the amounts set forth below for each
month as measured from the last day of the immediately preceding month.
MONTH NET INCOME/(NET LOSS)
----- ---------------------
September, 2001 ($375,000.00)
October, 2001 ($400,000.00)
November, 2001 ($1,250,000.00)
December, 2001 ($450,000.00)
January, 2002 ($50,000.00)
February, 2002 $50,000.00
Xxxxx, 0000 $200,000.00
April, 2002 $200,000.00
May, 2002 $200,000.00
June of 2002 and each June thereafter $0.00
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MONTH NET INCOME/(NET LOSS)
----- ---------------------
July of 2002 and each July thereafter $0.00
August of 2002 and each August thereafter ($300,000.00)
September of 2002 and each September thereafter ($150,000.00)
October of 2002 and each October thereafter ($200,000.00)
November of 2002 and each November thereafter ($100,000.00)
December of 2002 and each December thereafter ($350,000.00)
January, 2003 and each January thereafter ($50,000.00)
February, 2003 and each February thereafter $0.00
March, 2003 and each March thereafter $0.00
April, 2003 and each April thereafter $0.00
May, 2003 and each May thereafter $0.00
For purposes of calculating the above covenants for the months through and
until May 31, 2002 only, the calculation of the Net Income/Net Loss shall
exclude the Fiscal Year 2002 Non-Cash Expenses. For purposes of calculating
the above covenants for the months of June through October in the
Borrower's 2003 fiscal year only, the calculation of the Net Income/Net
Loss shall exclude the Non-Cash Warrant Expenses.
(k) Section 7.10 of the Credit Agreement is hereby deleted and
replaced as follows:
CAPITAL EXPENDITURES. FMM, FMS and the Covenant Entities will not incur or
contract to incur Capital Expenditures in the aggregate of more than
$750,000.00 during the fiscal year. In addition, FMM, FMS and the Covenant
Entities will not incur or contract to incur Capital Expenditures in excess
of $500,000.00 in any one transaction without the prior approval of Lender
which approval can be granted or withheld in Lender's sole discretion.
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(l) There is hereby added a new Section 8.1(u) to the Credit Agreement
which provides as follows:
"(u) Failure on the part of the Borrower to cause not less than
$1,250,000.00 in Subordinated Indebtedness to be received by the Borrower
from the Xxxxxxxx Family Charitable Foundation on or before December 31,
2001."
3. NO OTHER CHANGES. Except as explicitly amended by this Amendment, all of
the terms and conditions of the Credit Agreement shall remain in full force and
effect and shall apply to any advance or letter of credit thereunder.
4. THE EQUIPMENT APPRAISAL. The Borrower, at its sole cost and expense,
shall cause its Equipment to be appraised by Xxxxx Xxxxxxxx (the "Appraisal").
5. WAIVER OF DEFAULTS. The Borrower is in default of the following
provisions of the Credit Agreement (collectively, the "Existing Defaults"):
(a) The Borrower and the Covenant Entities have failed to achieve the
required Debt Service Coverage Ratio for the quarter ending August 31, 2001 in
violation of Section 6.12 of the Credit Agreement.
(b) The Borrower and the Covenant Entities have exceeded the permitted
Net Worth Decrease for the quarter ending August 31, 2001 in violation of
Section 6.13 of the Credit Agreement.
(c) The Borrower and the Covenant Entities have failed to achieve the
required Net Income for the quarter ending August 31, 2001 in violation of
Section 6.14 of the Credit Agreement.
(d) The Borrower and the Covenant Entities have exceeded the permitted
Net Loss for the month ending August 31, 2001 in violation of Section 6.15 of
the Credit Agreement.
Upon the terms and subject to the conditions set forth in this Amendment, the
Lender hereby waives the Existing 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.
6. AMENDMENT FEE. The Borrower shall pay the Lender as of the date hereof a
fully earned, non-refundable fee in the amount of $25,000.00 in consideration of
the Lender's execution and delivery of this Amendment.
7. CONDITIONS PRECEDENT. This Amendment, and the waiver set forth in
Paragraph 5 hereof, shall be effective when the Lender shall have received an
executed original hereof, together with each of the following, each in substance
and form acceptable to the Lender in its sole discretion:
(a) The Subordination Agreement properly executed on behalf of the
Borrower, the Covenant Entities and the Xxxxxxxx Family Charitable Foundation.
12
(b) The Acknowledgment and Agreement of Guarantor set forth at the end
of this Amendment, duly executed by the Guarantor.
(c) A Certificate of the Secretary of the Borrower certifying as to
(i) the resolutions of the board of directors of the Borrower approving the
execution and delivery of this Amendment, (ii) the fact that the certificate of
incorporation and bylaws of the Borrower, which were certified and delivered to
the Lender pursuant to the Certificate of Authority of the Borrower's secretary
or assistant secretary 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
Certificate to be delivered, and (iii) certifying as to the officers and agents
of the Borrower who have been authorized to sign and to act on behalf of the
Borrower and setting forth the sample signatures of each of the officers and
agents of the Borrower authorized to execute and deliver this Amendment and all
other documents, agreements and certificates on behalf of the Borrower.
(d) An opinion of the Borrower's counsel as to the matters set forth
in Paragraphs 8 (a) and 8(b) hereof and as to such other matters as the Lender
shall require.
(e) Payment of the fee described in Paragraph 6.
(f) Such other matters as the Lender may require.
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 have 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 certificate of incorporation or by-laws of 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
Borrower is a party or by which it or its properties may be bound or affected.
(c) Except with respect to (i) the receipt by Borrower of a Notice of
Violation dated October 24, 2000 from the State of Connecticut Department of
Environmental Protection and (ii) the inclusion of the Torrington, Connecticut
Premises on the Comprehensive Environmental Response, Compensation and Liability
Information System, all of the representations and warranties contained in
Article V of 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.
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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 5 hereof, the
execution of this Amendment and acceptance of any documents related hereto shall
not be deemed to be a waiver of any Default, Event of Default or Default 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 Loan Documents, 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 and the fee
required under Paragraph 6 hereof.
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.
XXXXX FARGO BUSINESS CREDIT, INC.,
a Minnesota corporation
By /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Its Vice President
FM PRECISION GOLF MANUFACTURING CORP.,
a Delaware corporation
By /s/ Xxxxx Xxxxx
-------------------------------------
Its Chief Financial Officer
FM PRECISION GOLF SALES CORP.,
a Delaware corporation
By /s/ Xxxxx Xxxxx
-------------------------------------
Its Chief Financial Officer
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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR
The undersigned, a guarantor of the indebtedness of FM Precision Golf
Manufacturing Corp., and FM Precision Golf Sales Corp., each Delaware
corporations (collectively, jointly and severally, the "Borrowers") to Xxxxx
Fargo 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/ Xxxxx Xxxxx
-------------------------------------
Its Chief Financial Officer
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