AMENDED AND RESTATED EXHIBIT 10.13
SECURED PROMISSORY NOTE
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$1,355,000 May 4, 1997
This Amended and Restated Secured Promissory Note ("Note"), entered into
this 4th day of May, 1997 by Coyote Sports, Inc., a Nevada corporation
("Borrower"), in favor of Deere Park Capital Management, Inc., an Illinois
corporation ("Lender"), amends and restates in its entirety that certain Secured
Promissory Note of Borrower in favor of Lender dated as of April 4, 1997.
RECITALS
A. A certain Secured Promissory Note was entered into on April 4, 1997, by
Xxxxxxxx and Xxxxxx (the "Original Note").
X. Xxxxxxxx has requested certain modifications to the Original Note as
provided herein, including the extension of the Original Note.
X. Xxxxxx is willing to modify the Original Note as provided herein,
subject to the terms and conditions as set forth herein.
1. OBLIGATION. FOR VALUE RECEIVED, Xxxxxxxx hereby promises to pay to
the order of Lender, subject to the terms and conditions of this Note, the
principal amount of One Million Three Hundred Fifty-Five Thousand Dollars
($1,355,000) on June 16, 1997, or, as determined pursuant to Section 10 hereof.
2. INTEREST. The unpaid principal balance hereof shall bear interest at
a rate of eight percent (8 %) per annum. Interest shall be calculated on the
basis of a 360-day year for the actual number of days elapsed. All principal,
interest and other amounts unpaid after default shall bear interest, payable on
demand, computed at a rate equal to five percent (5%) per annum plus the rate
otherwise payable hereunder. Principal of and interest on this Note shall be
payable in lawful money of the United States of America. This Note may be
prepaid in full or part at any time without premium or penalty. Payments shall
be applied first to accrued interest, if any, and then to principal.
3. SECURITY. To secure payment of Xxxxxxxx's obligations under this
Note, Borrower grants to Lender the security interests established pursuant to
the following security agreements:
(i) Stock Pledge Agreement (the "AGI Pledge"), dated April 4, 1997,
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pledging entire interest of Borrower in Apollo Golf, Inc., a New
Jersey corporation ("AGI").
(ii) Stock Pledge Agreement (the "ASHL Pledge"), dated April 4, 1997,
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pledging entire interest of Borrower in Apollo Sports Holdings
Limited, a limited company organized in England and Wales
("ASHL").
(iii) Personal Guaranty, dated April 4, 1997, by Xxx Xxxxxxxxxxx.
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(iv) Personal Guaranty, dated April 4, 1997, by Xxxxx Xxxxxx.
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(v) Guaranty, dated May 5, 1997, by ASHL, which guaranty is further
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secured by a pledge providing Lender with a lien in all of ASHL's
right, title and interest in, to and all of the assets of ASHL,
real or personal, tangible or intangible, now existing or
hereafter arising or acquired, including, without limitation, all
accounts, inventory, equipment, machinery, fixtures, contract
rights, chattel paper, instruments, general intangibles,
documents and other obligations of any kind, all bank accounts,
monies, revenues, credits, claims,
demands, goodwill and any claims or causes of action arising from
or relating to any of the foregoing, all proceeds, additions of
or to any and all of the assets described herein, and all
personal property and physical assets owned by ASHL (the "ASHL
Asset Pledge"), which lien shall be subsequent only to those
liens in favor of Midlands Bank plc dated September 18, 1996 (the
"Midlands Lien").
(vi) Collateral Assignment of Economic Benefits of Membership
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Interests (the "LLC Pledge") dated May 4, 1997, by Borrower,
pledging the entire interest of Borrower in Cape Composites LLC
("Cape Composites"), a Colorado limited liability company.
In addition, Borrower hereby grants to Lender a security interest in all of
Xxxxxxxx's right, title and interest in, to and all of the assets of the
Borrower, now existing or hereafter arising or acquired, including, without
limitation, all accounts, contract rights, chattel paper, instruments, general
intangibles, documents and other obligations of any kind, all bank accounts,
monies, revenues, credits, claims, demands, goodwill and any claims or causes of
action arising from or relating to any of the foregoing, all proceeds, additions
of or to any and all of the assets described herein, and all personal property
and physical assets owned by the Borrower.
4. ADDITIONAL CONSIDERATION. As an inducement to Lender to enter into
this Note and to consummate the transactions contemplated herein, Borrower shall
provide Lender with the following additional consideration.
(A) INITIAL PUBLIC OFFERING ON OR BEFORE AUGUST 31, 1997. If Borrower
shall first offer shares of its capital stock to the public pursuant
to a registered public offering on or before August 31, 1997, Borrower
shall, within five (5) days of such offering, deliver to Lender forty-
five thousand one hundred sixty-seven (45,167) shares of such offered
stock and warrants representing the right of Lender to purchase one
hundred eighty thousand six hundred sixty-seven (180,667) shares of
such offered stock at a strike price of equal to the strike price of
the warrants issued pursuant to such offering.
(B) INITIAL PUBLIC OFFERING BETWEEN SEPTEMBER 1, 1997 AND DECEMBER 31,
1997. If Borrower shall first offer shares of its capital stock to the
public pursuant to a registered public offering between September 1,
1997 and December 31, 1997, Borrower shall, within five (5) days of
such offering, deliver to Lender sixty-seven thousand seven hundred
fifty (67,750) shares of such offered stock and warrants representing
the right of Lender to purchase up two hundred twenty-five thousand
eight hundred thirty-three (225,833) shares of such offered stock at a
strike price equal to the strike price of the warrants issued pursuant
to such offering.
(C) INITIAL PUBLIC OFFERING AFTER DECEMBER 31, 1997. If Borrower
shall fail to offer shares of its capital stock to the public pursuant
to a registered public offering on or before December 31, 1997,
Borrower shall deliver to Lender: (i) within five (5) days of
December 31, 1997, shares of equal to an amount representing two and
twenty-six one hundredths percent (2.26%) of the then outstanding
shares of common stock of Borrower; and (ii) within five (5) days of
the first day on which Borrower's common stock is offered to the
public pursuant to a registered public offering, either, at Borrower's
option: (A) warrants representing the right of Lender to purchase two
hundred twenty-five thousand eight hundred thirty-three (225,833)
shares of such offered stock at a strike price equal to the strike
price of the warrants issued pursuant to such shares issued pursuant
to such offering, or (B) four hundred fifty one thousand six hundred
sixty-seven dollars ($451,667). Lender shall have an option to
require Borrower to purchase such shares issued pursuant to this
Section 4(c) at an aggregate price of three hundred thirty-eight
thousand seven hundred fifty dollars ($338,750).
5. REPRESENTATIONS AND WARRANTIES. As an inducement to Lender to
enter into this Note and to consummate the transactions contemplated
herein, Borrower here represents and warrants to Lender and
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agrees as follows on the date hereof and (except as specifically provided
otherwise below) as long as any amount is payable by Borrower under this Note:
(A) ORGANIZATION OF BORROWER. Borrower is a corporation organized,
validly existing and in good standing under the laws of the State of
Nevada. Borrower has full power and authority to own or lease and
operate its properties and to carry on its business as now conducted
or as proposed to be conducted. The name appearing above is the
correct name of Xxxxxxxx, and Borrower does not do business under any
other names. Borrower shall immediately advise Lender of a change of
name, identity, or corporate structure.
(B) AUTHORIZATION; VALIDITY; NO CONFLICT. Xxxxxxxx has full power and
authority to enter into this Note. The execution, delivery and
performance of this Note by Borrower have been duly authorized by
Xxxxxxxx and, upon execution and delivery, this Note will be the
legal, valid and binding agreement of Borrower enforceable against
Borrower in accordance with its terms, except to the extent limited by
bankruptcy, insolvency or other similar laws of general application
relating to or affecting the enforcement of creditor's rights. Neither
the execution and delivery of Note nor the consummation of the
transactions contemplated thereunder, nor compliance with or
fulfillment of the terms, conditions and provisions herein will (i)
conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default, or an
event creating rights of acceleration, termination or cancellation
under the Articles of Incorporation (as amended) or Bylaws (as
amended) of Borrower, or any instrument, agreement, mortgage,
judgment, order, award, decree or other restriction to which Xxxxxxxx
is a party, or (ii) require the approval, consent or authorization of,
or the making of any declaration, filing or registration with any
third party.
(C) FINANCIAL INFORMATION. To the best knowledge of Xxxxxxxx, the
financial information delivered to Lender is correct and complete in
all material respects and fairly presents the financial position of
Borrower as of the indicated dates.
(D) NO ADVERSE CHANGE. There has been no change in the business or
operations of Borrower that might be reasonably expected to materially
and adversely affect the ability of the Borrower to carry on business
substantially as now being conducted or to materially adversely affect
the financial condition of the Borrower.
(E) OWNERSHIP OF INTERESTS PLEDGED. Xxxxxxxx has good, indefeasible
and sole title to the interests pledged by it pursuant to the AGI
Pledge, ASHL Pledge and the LLC Pledge, free and clear of all liens,
claims, security interests, and other encumbrances.
(F) LITIGATION; COMPLIANCE WITH LAWS. There are no lawsuits,
proceedings, claims or governmental investigations pending or, to the
best knowledge of Borrower and except as disclosed to Lender,
threatened, by or against Borrower or its properties or business or
relating to the ownership, use or operation of Borrower's assets or
the conduct of the business related thereto. Borrower has complied in
all material respects with federal, state, local and other laws,
ordinances, regulations or orders applicable to it or its business or
assets.
(G) BUSINESS PURPOSE. Xxxxxxxx will use the proceeds of the loan
evidenced by this Note for business purposes only.
(H) OTHER INFORMATION; NO OMISSIONS. None of the representations and
warranties made by Borrower in this Agreement is false or misleading
in any material respect or omits to state a material fact necessary in
order to make any of the statements therein not misleading. To the
best of the Borrower's knowledge, there is no fact which adversely
affects or in the future is likely to
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affect adversely the business, property or assets of Borrower taken as
a whole in any material respect which has not been disclosed to
Lender.
6. NEGATIVE COVENANTS. From and after the date hereof and so long as any
amount is outstanding under this Note, except to the extent compliance in any
case or cases is waived in writing by Lender, Borrower shall not, and shall not
cause or permit AGI, ASHL or any other subsidiary of Borrower to, directly or
indirectly:
(A) INDEBTEDNESS. Create, assume, incur or have outstanding any
indebtedness (including purchase money indebtedness), or become
liable, whether as endorser, guarantor or surety or otherwise, for any
debt or obligation of any other person, firm or corporation, except
(i) the indebtedness of Borrower hereunder and other indebtedness and
liabilities of Borrower to Lender; (ii) endorsement for collection or
deposit of any commercial paper secured in the ordinary course of
business; (iii) obligations of Borrower for taxes, assessments,
municipal or other governmental charges; (iv) obligations of Borrower
for accounts payable, other than for money borrowed, incurred in the
ordinary course of business; and (v) obligations existing on the date
hereof which are disclosed on the financial statements referred to in
Section 8(a) hereof.
(B) TRANSFER; MERGER. Merge, consolidate, sell, transfer, lease,
encumber or otherwise dispose of all or any part of its property,
assets or business, or sell or discount any of its notes or accounts
receivable, except in the ordinary course of business.
(C) DISTRIBUTIONS. Pay or make any dividends or other distributions to
its shareholders or redeem, purchase or set aside any sums for the
purchase or payment of its capital stock.
(D) VALUE OF COLLATERAL. Take any actions resulting in the diminution
of the value of Borrower, AGI or ASHL or any other subsidiary of
Borrower, or to create, assume, incur, suffer or permit to exist any
mortgage, pledge, encumbrance, security interest, assignment, lien or
charge of any kind or character upon the assets of Borrower, AGI or
ASHL (other than the Midlands Lien).
(E) ACTIONS REGARDING AGI AND ASHL. Take any actions which would
result in: (i) the merger, consolidation, sale, transfer, lease,
encumbrance or any other disposition of all or any part of the
property, assets or business of AGI or ASHL; or (ii) the sale or
discount of any of the notes or accounts receivable of AGI or ASHL,
except in the ordinary course of their businesses.
7. AFFIRMATIVE COVENANTS. From and after the date hereof and so long as
any amount is outstanding under this Note, except to the extent compliance is in
any case or cases waived in writing by Xxxxxx, Borrower shall:
(A) CONTINUED OWNERSHIP OF AGI AND ASHL. Continue to own, without lien
or encumbrance (other than any liens and encumbrances in favor of
Secured Parties as defined in AGI Pledge and the ASHL Pledge), all of
the outstanding shares of capital stock of AGI and ASHL.
(B) USE OF PROCEEDS. Use the proceeds of the Loan only for purposes of
ordinary working capital requirements of Borrower.
(C) FINANCIAL STATEMENTS. Establish and maintain a standard and modern
system of accounting, on the accrual basis of accounting and in all
respects in accordance with GAAP, and shall furnish to Lender or its
authorized representatives such information respecting the business
affairs, operations and financial condition of Borrower, as reasonably
may be requested.
(D) ACCESS TO RECORDS. Allow Lender access to its books and records,
as Lender may reasonably request.
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(E) INSURANCE. Insure and keep insured in good and responsible
insurance companies, and cause AGI and ASHL to insure and keep insured
in good and responsible insurance companies, all insurable property
owned by it (or them) which is of a character usually insured by
companies similarly situated and operating like properties, against
loss or damage from fire and such other hazards or risks as are
customarily insured against by companies similarly situated and
operating like properties; and shall similarly insure employers' and
public liability risks in good and responsible insurance companies;
and shall upon request of Lender furnish a certificate setting forth
in summary form the nature and extent of the insurance maintained by
Borrower, AGI and ASHL identifying Lender as Loss Payee.
(F) NOTICE OF PROCEEDINGS. Immediately after the commencement
thereof, give notice to Lender in writing of all actions, suits and
proceedings before any court or governmental department, commission,
board or other administrative agency which may have a material effect
on the operations of Borrower, AGI or ASHL.
(G) NOTICE OF DEFAULT. Immediately after the commencement thereof,
give notice to Lender in writing of the occurrence of a Default, as
defined below, or an event which with notice or lapse of time or both
would constitute a Default.
8. ADDITIONAL AFFIRMATIVE COVENANTS. Except to the extent compliance is
in any case or cases waived in writing by Xxxxxx:
(A) FINANCIAL STATEMENTS. No later than May 20, 1997, Borrower shall
provide Lender financial statements of Borrower, reasonably acceptable
to Lender, audited by independent certified public accountants,
including the balance sheet and statements of income, retained
earnings and cash flows, including notes and the opinion of such
independent certified public accountants.
(B) CONSENTS TO LLC PLEDGE. No later than May 20, 1997, Borrower
shall provide Lender consents duly executed by the other members of
Cape Composites consenting to the LLC Pledge in such form as is
acceptable to Lender.
(C) REGISTRATION STATEMENT.
(I) DELIVERY OF DRAFT REGISTRATION STATEMENT. No later than June
2, 1997, Borrower shall provide Lender a substantially completed
draft of the appropriate registration statement which Borrower
may offer shares of its capital stock to the public pursuant to a
registered public offering ("Registration Statement").
(II) DELIVERY AND REGISTRATION OF FINAL REGISTRATION STATEMENT.
No later than June 12, 1997, Borrower shall file a formal
Registration Statement with the Securities and Exchange
Commission and provide Lender a copy thereof promptly after such
filing.
(D) PERFECTION OF SECURITY INTEREST IN ENGLAND. Borrower shall
undertake any such actions as reasonably required, or cause such
actions to be undertaken, in order that Lender may perfect its
security interest pursuant to the ASHL Asset Pledge.
(E) FORECASTS. No later than May 20, 1997, Borrower shall provide
Lender with complete forecasts of Xxxxxxxx's expected operating
results and projected financial statements for the years 1998 and
1999.
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9. DEFAULT.
(A) EVENTS OF DEFAULT. If any one or more of the following conditions
or events ("Events of Default") shall occur:
(I) DEFAULT IN PAYMENT OF NOTE. If the Borrower shall default in
the timely payment of any principal or interest due under the
terms of this Note; provided, however, that, if this Note is not
extended pursuant to Section 10 hereof, Borrower shall have thirty
(30) days after June 16, 1997 to pay all amounts outstanding under
this Note; or
(II) DEFAULT IN COMPLIANCE WITH NOTE TERMS. If Borrower shall
default in the performance of or compliance with any term (other
than payment of any principal or interest hereon and other than as
otherwise provided herein) contained in this Note and such default
shall not have been remedied within thirty (30) business days
after written notice thereof to the Borrower; or
(III) BREACH OF SECTION 8 COVENANTS. If Borrower shall default in
the performance of or compliance with any covenant in Section 8
hereof; provided, however, that, upon such a default, Borrower
shall have thirty (30) days thereafter to pay all amounts
outstanding under this Note; or
(IV) BREACH OF REPRESENTATION OR WARRANTY. If any representation
or warranty made by Borrower in this Note proves to be incorrect
in any material respect or is breached in any material respect;
provided, however, that, upon such a default, Borrower shall have
thirty (30) days thereafter to pay all amounts outstanding under
this Note; or
(V) CROSS DEFAULT. If the Borrower defaults in the payment of the
principal or interest of any indebtedness for borrowed money or
dividend payments when due, unless such indebtedness is extended
or renewed; provided, however, that, upon such a default (other
than a default under that certain Amended and Restated Secured
Promissory Note dated May 4, 1997 in favor of Xxxxx Xxxx),
Borrower shall have thirty (30) days thereafter to pay all amounts
outstanding under this Note; or
(VI) BANKRUPTCY; INSOLVENCY; INVOLUNTARY OR VOLUNTARY LIQUIDATION
OR DISSOLUTION. If the Borrower shall make an assignment for the
benefit of creditors, or shall admit in writing its inability to
pay a major part of its debts as they become due, or shall become
the subject of any insolvency, bankruptcy, receivership, or
dissolution proceeding, or the holders of a majority of the
outstanding capital stock of the Borrower shall take any action
looking to the dissolution or liquidation of the Borrower;
then the Lender may at any time, at the option of the Lender, by
written notice given to the Borrower, declare this Note to be, and
this Note shall thereupon become, due and payable, without any
presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, and the Borrower forthwith will pay to
the Lender the entire principal of and interest accrued on this Note;
provided, however, that no such notice shall be required concerning a
default under clause (vi) above.
(B) REMEDIES ON DEFAULT, ETC. In case any one or more Events of
Default shall occur, the Lender may proceed to protect and enforce its
rights, by an action at law, suit in equity or other appropriate
proceedings, whether for the specific performance of any agreement
contained herein, or for an injunction against a violation of any of
the terms hereof, or in aid of the exercise of any
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power granted hereby, or by law. In such event, Lender shall have all
rights and remedies for default provided by the Uniform Commercial
Code, as well as any other applicable law and the Obligations. With
respect to such rights and remedies, written notice, when required by
law, sent to any address of Borrower in this Note at least ten (10)
calendar days (including the day of sending) before the date of a
proposed disposition of the Collateral is reasonable notice.
No right, power or remedy conferred by this Note upon any Holder
hereof shall be exclusive of any other right, power or remedy referred
to herein or now or hereafter available at law, in equity, by statue
or otherwise. The Borrower waives presentment, demand, notice of
dishonor and protest, and agrees to pay all costs of collection,
before and after judgment, including reasonable attorneys' fees and
legal expenses and all expenses of taking possession, holding,
preparing for disposition and disposing of the Collateral. After
deduction of such expenses, Lender may apply the proceeds of
disposition to Borrower's obligations in such order and amounts as it
elects.
10. EXTENSION OF TERM. If Borrower shall comply with all of the
provisions and covenants of Section 8 hereof, as provided thereby, Lender shall
extend the date upon which payment under this Note is due to the earlier to
occur of: (i) December 31, 1997; or (ii) five (5) days after the first day the
shares of Borrower are made available to the public pursuant to a registered
public offering.
11. PAYMENT OF LENDER'S FEES AND EXPENSES. Borrower shall reimburse
Lender for all fees and expenses incurred in the negotiation, preparation,
execution and delivery of this Note and the consummation of the transactions
herein contemplated, including, without limitation, all out-of-pocket expenses
incurred by Xxxxxx and any attorneys' fees related hereto.
12. NATURE OF NOTE. This Note constitutes a replacement and substitute
for the Original Note. The indebtedness evidenced by the Original Note is
continuing indebtedness, and nothing herein shall be deemed to constitute a
payment, settlement or novation of the Original Note, or to release or otherwise
adversely affect any lien or security interest securing such indebtedness or any
rights of Lender against any party primarily or secondarily liable for such
indebtedness.
13. MISCELLANEOUS.
(A) AMENDMENTS AND WAIVERS. Any term of this Note may be amended and
the observance of any term hereof may be waived (either generally or
in a particular instance and either retroactively or prospectively)
only with the written consent of the Borrower and the Lender. No such
amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent thereon.
The Lender may, from time to time and without notice, renew or extend
the time for payment, accept partial payments, release or impair any
Collateral security for payment of this Note, or agree not to sue any
party liable upon it.
(B) NOTICES. All notices or communications hereunder shall be in
writing and shall be mailed by first-class mail, postage prepaid,
addressed to the address of each party as shall have furnished to the
other party in writing. Any notice so addressed and mailed by
registered or certified mail shall be deemed to be given when so
mailed.
(C) GOVERNING LAW. This Note is made pursuant to and shall be
construed in accordance with the internal laws of the State of
Illinois.
(D) SEVERABILITY. If any provision of this Note is held by a court of
competent jurisdiction to be invalid, illegal or unenforceable, such
provision shall be severed, enforced to the extent possible,
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or modified in such a way as to make it enforceable, and the
invalidity, illegality or unenforceability thereof shall not affect
the remainder of this Note.
(E) CAPTIONS; GENDERS. The captions and headings used in this Note are
for convenience and ease of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Note.
Unless otherwise provided herein, or unless the context requires
otherwise, the use of the singular shall include the plural and the
use of any gender shall include all genders.
(F) BINDING NATURE. This Note and all of its terms shall be binding
upon the parties, their heirs, successors, administrators and assigns.
(G) CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE EXCLUSIVE
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JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN COOK COUNTY,
ILLINOIS, AND WAIVES ANY OBJECTION BASED ON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS, WITH REGARD TO
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ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS
AGREEMENT, OR ANY DOCUMENT DELIVERED HEREUNDER OR IN CONNECTION
HEREWITH, OR ANY TRANSACTION ARISING FROM OR CONNECTED TO ANY OF THE
FOREGOING. BORROWER WAIVES ITS RIGHT TO A JURY AND PERSONAL SERVICE OF
ANY AND ALL PROCESS, AND CONSENTS TO ALL SUCH SERVICE OF PROCESS MADE
BY REGISTERED OR CERTIFIED MAIL OR BY MESSENGER DIRECTED TO THE
ADDRESS SPECIFIED BELOW. NOTHING HEREIN SHALL AFFECT SECURED PARTIES'
RIGHTS TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW, OR LIMIT
SECURED PARTIES' RIGHT TO BRING PROCEEDINGS AGAINST BORROWER OR ITS
PROPERTY OR ASSETS IN THE COMPETENT COURTS OF ANY OTHER JURISDICTION
OR JURISDICTIONS.
IN WITNESS WHEREOF, Xxxxxxxx have caused this Note to be signed and
attested by its duly authorized officer on or as of the date first written
above.
COYOTE SPORTS, INC.
By: /s/ Xxx Xxxxxxxxxxx
_________________________
Xxx Xxxxxxxxxxx, President
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