SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Amendment, dated as of September 26, 2000, is made by
and between OPEN SEA CORPORATION, d/b/a NEBO PRODUCTS, a Utah corporation (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 June 1, 2000, as previously amended (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. In addition, Section 1.1 of
the Credit Agreement is amended by adding or amending, as the case may be, the
following definitions:
"Accounts Advance Rate" initially means 85%, which rate shall
be reduced by 1% on December 8; 2000 and on each Friday thereafter
until such rate is equal to 80%.
"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:
(i) the Accounts Advance Rate multiplied by
Eligible Accounts, plus
(ii) the lesser of (A) the sum of (I) 50% of
the Eligible Tools Inventory and (II) the Sleeping
Bag Advance Rate multiplied by Eligible Sleeping Bag
Inventory, or (B) $500,000, plus
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(iii) the Overadvance Component.
"Consignment Payment" means any payment to the Borrower by
Sam's Club for Inventory consigned by the Borrower to Sam's Club.
"Eligible Sleeping Bag Inventory" means all Eligible Inventory
consisting of sleeping bags, tents, and other outdoor recreational
products.
"Overadvance Component" initially means $100,000, which amount
shall be reduced by 30% of each Consignment Payment at the time such
Consignment Payment is received by the Borrower; provided, however,
that on January 1, 2001 and all times thereafter, "Overadvance
Component" shall mean zero.
"Sam's Club" means [__________________, a __________________
corporation]
"Sleeping Bag Advance Rate" initially means 60%, which amount
shall be reduced by 5% on December 8, 2000 and on each Friday
thereafter until such rate is equal to 35%.
2. Section 1.1 of the Credit Agreement is further amended by
deleting the definition of "Eligible Tent Inventory."
3. Section 9.3 of the Credit Agreement is hereby emended by
replacing the name "Xxxxxx Xxxxxxx" with the name "Xxxxx Xxxxxx."
4. Weekly Reporting During Overadvance Term. So long as the
Overadvance Component is greater than zero, the Borrower agrees that it will
deliver to the Lender weekly, or more frequently if the Lender so requires, an
inventory certification report, a calculation of the Borrower's Inventory and
Eligible Inventory, and reporting of the Borrower's sales and collections
related to the Borrower's Inventory consigned to Sam's Club, together with a
report of all movements of such Inventory, as of the end of such week or shorter
period.
5. 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.
6. Amendment Fee. The Borrower agrees to pay to the Lender, as
of the date hereof, a fully earned, non-refundable fee in the amount of $10,000
in consideration for the Lender's execution of this Amendment.
7. Conditions Precedent. This Amendment shall be effective
when the Lender shall have received an executed original hereof, together with
the following, each in substance and form acceptable to the Lender in its sole
discretion:
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(a) Acknowledgments and Agreements of Guarantors set
forth at the end of this Amendment, duly executed by the Guarantors.
(b) An Acknowledgment of Ownership and Waiver of Liens
from Sam's Club.
(c) A Deed of Trust, with the Borrower as Grantor and the
Lender as Beneficiary, covering real property owned by the Borrower
having the legal description set forth in Exhibit A hereto. The Lender
hereby agrees that at such time as (i) the Overadvance Component is
equal to zero and (ii) Availability is greater than zero, the Lender
shall release such Deed of Trust and all other interests it may hold in
the real property subject thereto.
(d) Such other matters as the Lender may require.
8. Representations and Warranties. The Borrower hereby
represents end 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 does 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 (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) 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.
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 Waiver. The execution of this Amendment and any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement, or breach, default or event of
default under any Security Document or other document held by the Lender,
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whether or not known to the Lender and whether or not existing on the date
of this Amendment.
11. Release. The Borrower, and each Guarantor by signing the
Acknowledgments and Agreements of Guarantors set forth below, each hereby
absolutely and unconditionally release and forever discharge the Lender, and any
and all participants, parent corporations, subsidiary corporations, affiliated
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 have had, now have or have claimed 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 Acknowledgments
and Agreements of Guarantors 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.
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. OPEN SEA CORPORATION, d/b/a NEBO PRODUCTS
By: /s/ Tor X. Xxxxxx By: /s/ Xxxxx Xxxxxx
--------------------------------- ---------------------------------
Tor X. Xxxxxx Xxxxx Xxxxxx
Its Commercial Banking Officer Its Chief Executive Officer
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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS
Each of the undersigned, each a guarantor of the indebtedness
of Open Sea Corporation, d/b/a NEBO Products (the "Borrower") to Xxxxx Fargo
Business Credit, Inc. (the "Lender") pursuant to a separate Guaranty each dated
as of June 1, 2000 (each, a "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 his obligations to the Lender pursuant to the terms of his
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 his
Guaranty for all of the Borrower's present and future indebtedness to the
Lender.
/s/ X.X. Xxxxxx
--------------------------------
X.X. Xxxxxx
/s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
Exhibit A to Second Amendment
Legal Description of Property
The North 1/4 of the Southwest 1/4 of the Northwest 1/4 and the
Xxxxxxxxx 0/0, Xxxxxxx 00, Xxxxxxxx 00 Xxxxx, Xxxxx 2 West, Salt Lake
Base and Meridian. Also known as Xxx 00, XXXXXXX XXXXXXX, an unrecorded
subdivision.
