FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
EXHIBIT
10.1
FIRST
AMENDMENT TO
This
FIRST
AMENDMENT TO LOAN AND SECURITY AGREEMENT
(this “Amendment”)
is
entered into effective April 30, 2008, by and between SILICON
VALLEY BANK
(“Bank”)
and
GPS
INDUSTRIES, INC.,
a
Nevada corporation, (“Borrower”).
Recitals
A. Bank
and
Borrower have entered into that certain Loan and Security Agreement dated as
of
February 28, 2008 (as may from time to time be amended, modified, supplemented
or restated, collectively the “Loan
Agreement”).
Bank
has extended credit to Borrower for the purposes permitted in the Loan
Agreement.
B. Borrower
is currently in default under the Loan Agreement following the death of
Guarantor Xxxxxxx X. Xxxx (the “Existing
Default”).
C. Borrower
is also in default for its failure to deliver its financial statements required
by Section 6.2 of the Loan Agreement for month ending February 29, 2008 (the
“Delivery
Default”).
D. Borrower
has requested that Bank: (i) increase the amount of the Revolving Line to
$6,500,000, (ii) forbear from exercising its rights and remedies against
Borrower from the date hereof for the Existing Default through July 31, 2008
(the “Forbearance
Period”),
and
(iii) waive the Delivery Default.
E. Although
Bank is under no obligation to do so, Bank is willing to make the changes set
forth herein, on all on the terms and conditions set forth in this Amendment
and
so long as Borrower complies with the terms, covenants and conditions set forth
in this Amendment in a timely manner.
Agreements
Now,
Therefore,
in
consideration of the foregoing recitals and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:
1. Definitions.
Capitalized terms used but not defined in this Amendment shall have the meanings
given to them in the Loan Agreement.
2. Forbearance.
2.1. Forbearance
Period.
So long
as no Event of Default, other than the Existing Default, occurs, subject to
the
terms and conditions set forth herein, Bank shall forbear from filing any legal
action or instituting or enforcing any rights and remedies it may have against
Borrower through the Forbearance Period. Except as expressly provided herein,
this Amendment does not constitute a waiver or release by Bank of any
Obligations or of any existing Event of Default, or any Event of Default which
may arise in the future after the date of execution of this Amendment. Borrower
understands that Bank has made no commitment and is under no obligation
whatsoever to grant any additional extensions of time at the end of the
Forbearance Period.
2.2. Forbearance
Terms.
Repayment and performance of all obligations of Borrower to Bank under the
Loan
Agreement and this Amendment shall be secured by the Collateral.
3. Limitation
of Forbearance.
3.1. This
Amendment is effective for the purposes set forth herein and shall be limited
precisely as written and shall not be deemed to, other than as specifically
set
forth herein, (a) be a consent to any amendment, waiver or modification of
any other term or condition of any Loan Document, or (b) otherwise
prejudice any right or remedy which Bank may now have or may have in the future
under or in connection with any Loan Document.
3.2. This
Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants
and
agreements set forth in the Loan Documents are hereby ratified and confirmed
and
shall remain in full force and effect.
4. Waiver.
Subject
to the terms of Section 10 below, Bank hereby waives (i) the Delivery Default.
Except as provided in the above described default and except as otherwise set
forth herein, Bank's agreement to waive the Delivery Default and the foregoing
covenants (1) in no way shall be deemed an agreement by Bank to waive Borrower's
compliance with the above-described covenants as of all subsequent dates, and
(2) shall not limit or impair the Bank's right to demand strict performance
of
these covenants as of all other subsequent dates, and (3) shall not limit or
impair Bank's right to demand strict performance of all other covenants as
of
any date.
5. Amendments.
5.1. Definitions.
The
following definitions are either amended and restated in their entirety or
inserted, as applicable:
“Borrowing
Base”
is
the
lesser of (a) the maximum principal amount guaranteed by Guarantor pursuant
to
the Guaranty, plus the sum of, without duplication, (i) the Value of the Pledged
CD, (ii) the Value of any certificates of deposit pledged to Bank by Xxxxxx
to
secure the Obligations, and (iii) the Value of any certificates of deposit
pledged to Bank by Great White to secure the Obligations, or (b)
$6,500,000.
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“Great
White”
is
Great White Shark Enterprises, LLC, a Florida limited liability
company.
“Revolving
Line”
is
an
Advance or Advances in an amount equal to Six Million Five Hundred Thousand
Dollars ($6,500,000).
“Value”
shall
mean with respect to any certificates of deposit pledged to Bank to secure
the
Obligations, including, but not limited to, any Pledged CD, on any date, a
dollar value at the face amount thereof.
6. Representations
and Warranties.
To
induce Bank to enter into this Amendment, Borrower hereby represents and
warrants to Bank as follows:
6.1. Immediately
after giving effect to this Amendment (a) the representations and warranties
contained in the Loan Documents are true, accurate and complete in all material
respects as of the date hereof (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and correct
as
of such date), and (b) no Event of Default other than the Existing Default
has occurred and is continuing;
6.2. Borrower
has the power and authority to execute and deliver this Amendment and to perform
its obligations under the Loan Agreement;
6.3. The
organizational documents of Borrower delivered to Bank on the Effective Date
remain true, accurate and complete and have not been amended, supplemented
or
restated and are and continue to be in full force and effect;
6.4. The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement have been duly authorized
by all necessary action on the part of Borrower;
6.5. The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement do not and will not
contravene (a) any law or regulation binding on or affecting Borrower,
(b) any contractual restriction with a Person binding on Borrower,
(c) any order, judgment or decree of any court or other governmental or
public body or authority, or subdivision thereof, binding on Borrower, or
(d) the organizational documents of Borrower;
6.6. The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement do not require any order,
consent, approval, license, authorization or validation of, or filing, recording
or registration with, or exemption by any governmental or public body or
authority, or subdivision thereof, binding on either Borrower, except as already
has been obtained or made; and
6.7. This
Amendment has been duly executed and delivered by Borrower and is the binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of general
application and equitable principles relating to or affecting creditors’
rights.
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7. Prior
Agreement.
The
Loan Documents are hereby ratified and reaffirmed and shall remain in full
force
and effect. This Amendment is not a novation and the terms and conditions of
this Amendment shall be in addition to and supplemental to all terms and
conditions set forth in the Loan Documents. In the event of any conflict or
inconsistency between this Amendment and the terms of such documents, the terms
of this Amendment shall be controlling, but such document shall not otherwise
be
affected or the rights therein impaired.
8. Release
by Borrower.
8.1. FOR
GOOD AND VALUABLE CONSIDERATION,
Borrower hereby forever relieves, releases, and discharges Bank and its present
or former employees, officers, directors, agents, representatives, attorneys,
and each of them, from any and all claims, debts, liabilities, demands,
obligations, promises, acts, agreements, costs and expenses, actions and causes
of action, of every type, kind, nature, description or character whatsoever,
whether known or unknown, suspected or unsuspected, absolute or contingent,
arising out of or in any manner whatsoever connected with or related to facts,
circumstances, issues, controversies or claims existing or arising from the
beginning of time through and including the date of execution of this Amendment
(collectively “Released
Claims”).
Without limiting the foregoing, the Released Claims shall include any and all
liabilities or claims arising out of or in any manner whatsoever connected
with
or related to the Loan Documents, the Recitals hereto, any instruments,
agreements or documents executed in connection with any of the foregoing or
the
origination, negotiation, administration, servicing and/or enforcement of any
of
the foregoing.
8.2. By
entering into this release, Borrower recognizes that no facts or representations
are ever absolutely certain and it may hereafter discover facts in addition
to
or different from those which it presently knows or believes to be true, but
that it is the intention of Borrower hereby to fully, finally and forever settle
and release all matters, disputes and differences, known or unknown, suspected
or unsuspected; accordingly, if Borrower should subsequently discover that
any
fact that it relied upon in entering into this release was untrue, or that
any
understanding of the facts was incorrect, Borrower shall not be entitled to
set
aside this release by reason thereof, regardless of any claim of mistake of
fact
or law or any other circumstances whatsoever. Borrower acknowledges that it
is
not relying upon and has not relied upon any representation or statement made
by
Bank with respect to the facts underlying this release or with regard to any
of
such party’s rights or asserted rights.
8.3. This
release may be pleaded as a full and complete defense and/or as a
cross-complaint or counterclaim against any action, suit, or other proceeding
that may be instituted, prosecuted or attempted in breach of this release.
Borrower acknowledges that the release contained herein constitutes a material
inducement to Bank to enter into this Amendment, and that Bank would not have
done so but for Bank’s expectation that such release is valid and enforceable in
all events.
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8.4. Borrower
hereby represents and warrants to Bank, and Bank is relying thereon, as
follows:
(a) Except
as
expressly stated in this Amendment, neither Bank nor any agent, employee or
representative of Bank has made any statement or representation to Borrower
regarding any fact relied upon by Borrower in entering into this
Amendment.
(b) Borrower
has made such investigation of the facts pertaining to this Amendment and all
of
the matters appertaining thereto, as it deems necessary.
(c) The
terms
of this Amendment are contractual and not a mere recital.
(d) This
Amendment has been carefully read by Borrower, the contents hereof are known
and
understood by Borrower, and this Amendment is signed freely, and without duress,
by Borrower.
(e) Borrower
represents and warrants that it is the sole and lawful owner of all right,
title
and interest in and to every claim and every other matter which it releases
herein, and that it has not heretofore assigned or transferred, or purported
to
assign or transfer, to any person, firm or entity any claims or other matters
herein released. Borrower shall indemnify Bank, defend and hold it harmless
from
and against all claims based upon or arising in connection with prior
assignments or purported assignments or transfers of any claims or matters
released herein.
9. Counterparts.
This
Amendment may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
10. Effectiveness.
This
Amendment shall be deemed effective upon (a) the due execution and delivery
to
Bank of this Amendment by each party hereto, (b) Borrower’s payment of a
fully earned, non-refundable commitment fee in an amount equal to $8,750 for
the
Revolving Line, and (c) Borrower’s delivery to Bank of a Security Agreement in
form an content acceptable to Bank executed by Great White to and for the
benefit of Bank granting a security interest in all certificates of deposit
pledged to Bank by Great White to secure the Obligations.
11. Governing
Law; Venue.
This
Amendment and the rights and obligations of the parties hereto shall be governed
by and construed in accordance with the laws of the State of Texas. Borrower
and
Bank each submit to the exclusive jurisdiction of the State and Federal courts
in Xxxxxx County, Texas.
12. Future
Amendments.
This
Amendment and the other Loan Documents may be amended, revised, waived,
discharged, released or terminated only by a written instrument or instruments,
executed by the party against which enforcement of the amendment, revision,
waiver, discharge, release or termination is asserted. Any alleged amendment,
revision, waiver, discharge, release or termination which is not so documented
shall not be effective as to any party.
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13. Further
Assurances.
The
parties hereto shall execute such other documents as may be necessary or as
may
be required, in the opinion of counsel to Bank, to effect the transactions
contemplated hereby and the liens and/or security interests of all other
collateral instruments, as modified by this Amendment. Borrower also agrees
to
provide to Bank such other documents and instruments as Bank reasonably may
request in connection with the modification effected hereby.
14. Enforceability.
In the
event the enforceability or validity of any portion of this Amendment, the
Loan
Agreement or any of the other Loan Documents is challenged or questioned, such
provision shall be construed in accordance with, and shall be governed by,
whichever applicable federal law or law of the State of Texas would uphold
or
would enforce such challenged or questioned provision.
THIS
AMENDMENT AND THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
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In
Witness Whereof, the
parties hereto have caused this Amendment to be duly executed and delivered
as
of the date first written above.
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