Exhibit 10.16
MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT ("MODIFICATION") is made as of the 7th day
of May, 1997 by and between THE ANTIGUA GROUP, INC., a Nevada corporation
("BORROWER") and LASALLE BUSINESS CREDIT, INC., a Delaware corporation
("LASALLE").
R E C I T A L S
Pursuant to the terms and provisions of a Loan And Security Agreement
dated as of January 23, 1997 ("LOAN AGREEMENT") LASALLE is providing the
BORROWER with a revolving line of credit in the maximum principal amount of
Twelve Million Dollars ($12,000,000.00) ("REVOLVER") and a term loan in the
principal amount of Seven Hundred Seventy-Five Thousand Dollars ($775,000.00)
("TERM LOAN A").
In addition, pursuant to the terms of the LOAN AGREEMENT, LASALLE has
agreed to provide the BORROWER with an additional term loan in the principal
amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) ("TERM LOAN
B") subject to various terms and conditions set forth in the LOAN AGREEMENT. The
LOAN AGREEMENT provides that the proceeds of TERM LOAN B are to be used in
connection with the acquisition by Southhampton Enterprises Corp., a British
Columbia corporation ("SOUTHHAMPTON CORP.") of all of the stock of the BORROWER.
In addition, the LOAN AGREEMENT provides that prior to the acquisition of the
BORROWER'S stock by SOUTHHAMPTON CORP. the following things, among others, must
occur:
(a) The BORROWER and LASALLE must enter into a Modification Agreement
in order to amend certain provisions of the LOAN AGREEMENT in a manner
satisfactory to LASALLE;
(b) LASALLE must approve all of the terms and provisions of the
acquisition of the BORROWER'S stock; and
(c) SOUTHHAMPTON CORP. must execute and deliver to LASALLE a Guaranty
Agreement, in form and substance acceptable to LASALLE, pursuant to which
SOUTHHAMPTON CORP. shall guarantee all of the obligations of the BORROWER to
LASALLE.
The BORROWER has informed LASALLE that it is now the intent that
Southhampton Enterprises, Inc., a Texas corporation and a subsidiary of
SOUTHHAMPTON CORP. ("SEI"), shall acquire all of the stock in the BORROWER. The
BORROWER has requested that LASALLE: (a) consent to SEI acquiring the stock of
the BORROWER; (b) agree to the modification of certain other terms of the LOAN
AGREEMENT; and (c) provide the BORROWER with a term loan in the principal amount
of Three Million Five Hundred Thousand Dollars ($3,500,000.00) ("NEW LOAN")
instead of TERM LOAN X.
XXXXXXX is willing to consent to the request of the BORROWER pursuant
to the terms and provisions of this MODIFICATION and the various documents to be
executed in connection with the NEW LOAN.
NOW, THEREFORE, in consideration of the above premises, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
Section 1. Recitals. The parties hereto hereby acknowledge the accuracy
of the above recitals and hereby incorporate the recitals into this
modification.
Section 2. Amendment To Loan Agreement. The LOAN AGREEMENT is hereby
amended as follows:
A. Section 1(a) of the LOAN AGREEMENT is hereby amended as
follows:
i. The definition of "Acquisition" is hereby amended
by deleting the words "the Guarantor" and substituting in lieu thereof the words
"Southhampton Enterprises, Inc., a Texas corporation ("SEI")".
ii. The following definitions are inserted
immediately preceding the definition of "Guarantor":
"Imperial" means Imperial Bank Arizona.
"Imperial Loan" shall mean the term loan
from Imperial to the Borrower in the principal amount of Two Million
Five Hundred Thousand Dollars ($2,500,000.00), together with any
refinance of such term loan provided any such refinance: (a) does not
increase the amount of the debt, increase the interest rate on the
debt, or accelerate the dates principal is due on the debt and is not
otherwise less favorable to the Borrower; and (b) is subject to the
terms of an Intercreditor Agreement and Subordination Agreement with
LaSalle in the same respective forms as the Intercreditor Agreement of
which LaSalle and Imperial are parties and the Subordination Agreement
between LaSalle and Imperial.
iii. The definition of "Merger Agreement" shall mean
the Stock Purchase Agreement dated April 21, 1997, by and between the Guarantor,
SEI, and the Seller, pursuant to which SEI has agreed to acquire all of the
issued and outstanding stock of the Borrower.
iv. The definitions of "Quadrant" and "Quadrant Loan"
are hereby deleted in their entirety.
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v. The definition of "Seller" is hereby amended by
deleting the name "Xxxxxx X. Xxxxxx, Xx." and substituting in lieu thereof
"collectively (a) Xxxxxx X. Xxxxxx, Xx. and Xxxx X. Xxxxxx, Trustees under the
Xxxxxx X. Xxxxxx and Xxxx Xxxxxx Revocable Trust of 1988, dated 10/4/88; (b)
Xxxxxx X. Xxxxxx as Custodian Under the Uniform Gifts to Minors Act fbo Xxx X.
Xxxxxx; (c) Xxxxxx X. Xxxxxx as Custodian Under the Uniform Gifts to Minors Act
fbo Xxxxx X. Xxxxxx; (d) Xxxxxx X. Xxxxxx, Xx. and Xxxx X. Xxxxxx, Trustees
under the Xxxxxx X. Xxxxxx and Xxxx Xxxxxx Revocable Trust of 1988, dated
10/4/88; (e) E. Xxxxx Xxxxxx, Xx., Trustee, E. Xxxxx Xxxxxx, Xx., Revocable
Intervivos Trust dated December 31, 1982; and (f) Xxxxx X. Xxxxxx, Trustee under
the 1989 Trust Agreement established separate irrevocable Gift Trusts f/b/o the
children of Xxxxxx and Xxxx Xxxxxx dated March 7, 1989."
vi. The definition of "Seller Debt" is hereby amended
by deleting the words and numbers "Seven Million One Hundred Seventy Thousand
Dollars ($7,170,000.00)" and substituting in lieu thereof the words and number
"Six Million Three Hundred Seventy-Eight Thousand Dollars ($6,378,000.00)".
B. Section 4 of the LOAN AGREEMENT is hereby amended by
deleting the words and number "the aggregate undrawn amount of all such Letters
of Credit shall at no time exceed Four Million Dollars ($4,000,000.00)" and
substituting in lieu thereof the words and number "the aggregate undrawn amount
of all such Letters of Credit shall at no time exceed Five Million Dollars
($5,000,000.00)."
C. Section 13(e) of the LOAN AGREEMENT is hereby amended by
deleting its present language in its entirety and substituting in lieu thereof
the following:
(e) No security agreement, financing
statement or analogous instrument exists or shall exist with
respect to any of the Collateral other than: (i) any security
agreement, financing statement or analogous instrument
evidencing Permitted Liens; and (ii) any security agreement,
financing statement or analogous instrument evidencing the
liens securing the Cruttenden Loan, the Imperial Loan, or the
Seller Debt which are permitted pursuant to paragraph 14(i) of
this Agreement;
D. Section 13(g) of the LOAN AGREEMENT is hereby amended by
deleting the words "the PERMITTED LIENS" and substituting in lieu thereof the
words "the liens permitted pursuant to paragraph 14(i) below."
E. Section 13(q) of the LOAN AGREEMENT is hereby amended by
deleting its present language in its entirety and substituting in lieu thereof
the following:
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(q) Borrower is not now obligated, whether
directly or indirectly, for any loans or other indebtedness
for borrowed money other than those loans and indebtedness
permitted pursuant to paragraph 14(h) below.
F. Section 13(s) of the LOAN AGREEMENT is hereby amended by
deleting its present language in its entirety and substituting in lieu thereof
the following:
(s) Except as otherwise disclosed on
Schedule 13(s) attached hereto, Borrower has no Parents,
Subsidiaries or divisions, nor is Borrower engaged in any
joint venture or partnership with any other Person; provided,
however, that following the Acquisition, SEI shall be the
Parent of the Borrower and the Guarantor is the Parent of SEI;
G. Section 14(h) of the LOAN AGREEMENT is hereby amended by
deleting its present language in its entirety and substituting in lieu thereof
the following:
(h) Borrower shall not (i) incur, create,
assume or suffer to exist any indebtedness other than (A)
indebtedness under this Agreement, (B) unsecured indebtedness
owing in the ordinary course of business to trade suppliers,
(C) the Cruttenden Loan, provided Cruttenden has executed a
subordination agreement in form acceptable to LaSalle, (D) the
Imperial Loan, provided Imperial has executed a subordination
agreement in form acceptable to LaSalle, and (E) indebtedness
described on Schedule 13(q) attached hereto; or (ii) except in
connection with the Seller Debt, assume, guaranty or endorse,
or otherwise become liable in connection with, the obligations
of any Person, except by endorsement of instruments for
deposit or collection or similar transactions in the ordinary
course of business;
H. Section 14(i) of the LOAN AGREEMENT is hereby amended by
inserting at the end thereof, immediately preceding the period, the following ";
and (D) liens securing the Imperial Loan provided Imperial executes and delivers
to LaSalle an Intercreditor Agreement in a form acceptable to LaSalle."
I. Section 14(k) of the LOAN AGREEMENT is hereby amended by
deleting the term "Quadrant Loan" and substituting in lieu thereof the term
"Imperial Loan."
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J. Section 14(m) of the LOAN AGREEMENT is hereby amended by
deleting its present language in its entirety and substituting in lieu thereof
the following:
m. Borrower shall maintain and keep in full
force and effect each of the financial covenants set forth
below. The calculation and determination of each such
financial covenant, and all accounting terms contained
therein, shall be calculated and construed in accordance with
GAAP, applied on a basis consistent with the financial
statements of Borrower delivered on or before the Closing
Date:
i. Tangible Net Worth.
Borrower shall maintain at all times a
Tangible Net Worth of not less than the sum
of (A) Three Million Seven Hundred Fifty
Thousand Dollars ($3,750,000.00), plus (B) a
sum equal to the aggregate of fifty percent
(50%) of the annual net income of the
Borrower for each fiscal year of the Borrower
(without reduction for any annual net losses)
commencing with fiscal year 1997 through the
date of determination, all as determined in
accordance with GAAP.
ii. Interest Coverage Ratio.
Borrower shall have as of each date of
calculation, a ratio of (A) EBITDA for such
fiscal quarter to (B) interest expense for
such fiscal quarter, of not less than 1.50 to
1.00, calculated quarterly on a cumulative
basis for the fiscal quarters of Borrower
ending March 31, 1997, June 30, 1997,
September 30, and December 31, 1997, and
thereafter calculated monthly on a rolling
twelve month basis commencing with the month
ending January 31, 1998;
iii. Debt Service Coverage
Ratio. Borrower shall have as of each date of
calculation, a Debt Service Coverage Ratio,
of not less than 1.25 to 1.00, calculated
quarterly on a cumulative basis for the
fiscal quarters of Borrower ending March 31,
1997, June 30, 1997, September 30, and
December 31, 1997, and thereafter calculated
monthly on a rolling twelve month basis
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commencing with the month ending January 31,
1998;
iv. Liabilities to Tangible
Net Worth Ratio. Borrower shall have at all
time a ratio of Liabilities (excluding the
Seller Debt) to Tangible New Worth of not
more than 3.0 to 1.0.
v. Capital Expenditures.
Borrower shall not make: (A) Capital
Expenditures of an aggregate amount of more
than Five Hundred Thousand Dollars
($500,000.00) during any fiscal year
(pro-rated for the fiscal year ending
December 31, 1997); or (B) Capital
Expenditures in the form of expenditures for
capital lease obligations of an aggregate
amount of more than Five Hundred Thousand
Dollars ($500,000.00) during any fiscal year
(pro-rated for the fiscal year ending
December 31, 1997).
K. Section 14(p) of the LOAN AGREEMENT is hereby amended by
deleting its existing language in its entirety and substituting in lieu thereof
the following:
(p) After obtaining the Cruttenden Loan and the
Imperial Loan, Borrower will not modify any of the terms of the
Cruttenden Loan or the Imperial Loan or any of the documents
evidencing, securing or otherwise documenting the Cruttenden Loan or
the Imperial Loan without the prior written consent of LaSalle.
L. Section 14(r) of the LOAN AGREEMENT is hereby amended by
deleting the second sentence of such Section in its entirety and substituting in
lieu thereof the following:
(r) Following the Acquisition, and subject to the
terms of the last sentence of this paragraph, the only dividends which
may be made by the Borrower are dividends in an amount equal to the
regularly scheduled payments due under the Seller Debt, provided such
payments are permitted to be made pursuant to the terms of the
Subordination Agreement between the Seller, LaSalle, Cruttenden and
Imperial and such dividends are used to make such payments.
M. Section 16(i) of the LOAN AGREEMENT is hereby amended by
deleting the term "Quadrant Loan" and substituting in lieu thereof the term
"Imperial Loan".
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Section 3. Term Loan B. The BORROWER acknowledges and agrees that
LASALLE shall have no obligation to provide the BORROWER with TERM LOAN B and
that LASALLE will not provide the BORROWER with TERM LOAN B.
Section 4. Other Terms. Except as specifically modified herein, all
other terms and provisions of the LOAN AGREEMENT remain in full force and effect
are hereby ratified and confirmed.
Section 5. Miscellaneous.
(a) Incorporation; Limited Modification. The terms and
conditions of the documents evidencing, securing or otherwise documenting the
BORROWER'S obligations to the LASALLE under the REVOLVER and TERM LOAN A
(together with the LOAN AGREEMENT, collectively, "LOAN DOCUMENTS") are
incorporated herein by reference and made a part hereof as if fully set forth
herein. Except as specifically modified by or pursuant to this MODIFICATION, all
terms and conditions of the LOAN DOCUMENTS remain unchanged, in full force and
effect, and are hereby ratified and confirmed in all respects. In the event of
any inconsistencies between the terms and conditions of this MODIFICATION and
any of the terms and conditions of the other LOAN DOCUMENTS, LASALLE shall
determine, in its sole discretion, which of the terms and conditions shall
control.
(b) Integration. This MODIFICATION and the other LOAN
DOCUMENTS constitute the entire agreement between LASALLE and the BORROWER with
respect to the subject matter hereof, and any term or condition not expressed in
this MODIFICATION or the other LOAN DOCUMENTS does not constitute a part of the
agreement of LASALLE and the BORROWER with respect to such subject matter.
(c) No Novation. This MODIFICATION shall not cause a novation
of any of the obligations of the BORROWER under the LOAN DOCUMENTS, nor shall it
extinguish, terminate or impair the BORROWER'S obligations under the LOAN
DOCUMENTS. In addition, this MODIFICATION shall not release, affect or impair
the priority of any security interests and liens held by LASALLE against any
assets of the BORROWER.
(d) Severability. If any provision or part of any provision of
this MODIFICATION shall for any reason be held invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this MODIFICATION and this MODIFICATION shall be
construed as if such invalid, illegal or unenforceable provision or part thereof
had never been contained herein, but only to the extent of its invalidity,
illegality, or unenforceability.
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(e) Number, Gender, And Captions. As used herein, the singular
shall include the plural and the plural may refer to only the singular. The use
of any gender shall be applicable to all genders. The captions contained herein
are for purposes of convenience only and are not a part of this MODIFICATION.
(f) Further Assurances. As part of this MODIFICATION, and in
consideration for the agreements of LASALLE as set forth therein, the BORROWER
agrees to execute and deliver to LASALLE such other and further documents as
may, from time to time, in the sole opinion of LASALLE and LASALLE's counsel, be
necessary or appropriate to carry out the terms and conditions of this
MODIFICATION and the LOAN DOCUMENTS.
(g) Choice Of Law. The laws of the State of Maryland shall
govern and be applied to determine all issues relating to this MODIFICATION and
the rights and obligations of the parties hereto, including the validity,
construction, interpretation, and enforceability of this MODIFICATION and its
various provisions and the consequences and legal effect of all transactions and
events which resulted in the execution of this MODIFICATION or which occurred or
were to occur as a direct or indirect result of this MODIFICATION having been
executed.
(h) Binding Effect; No Oral Modification. This MODIFICATION
shall be binding upon and shall inure to the benefit of the parties and their
respective personal representatives, successors and assigns. This MODIFICATION
may not be altered, modified or amended unless such alteration, modification or
amendment is in writing and executed by LASALLE.
Section 6. Release. The BORROWER releases and forever discharges
LASALLE and LASALLE'S officers, directors, employees, agents and representatives
("RELEASED PARTIES") from any and all claims, causes of action and liabilities
of any kind or character whatsoever, which the BORROWER ever had or now has
against any of the RELEASED PARTIES, which in any way relate or pertain to or
arise from, directly or indirectly, the LOAN DOCUMENTS or any of the BORROWER'S
obligations to LASALLE.
Section 7. Waiver Of Jury Trial. The parties hereto agree that any
suit, action, or proceeding, whether claim or counterclaim, brought or
instituted by any party to this MODIFICATION, or any of their successors or
assigns, on or with respect to this MODIFICATION or any other LOAN DOCUMENT or
which in any way relates, directly or indirectly, to the obligations of any of
the BORROWER to LASALLE under the LOAN DOCUMENTS, or the dealings of the parties
with respect thereto, shall be tried only by a court and not by a jury. THE
PARTIES EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH ACTION OR
PROCEEDINGS. The parties acknowledge and agree that this provision is a specific
and material aspect of the agreement between the parties and that the
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parties would not enter into this MODIFICATION if this provision, or any other
provision of this MODIFICATION, were not contained herein.
IN WITNESS WHEREOF, the parties have executed this MODIFICATION as of
the date first above written with the specific intention of creating a document
under seal.
WITNESS: THE ANTIGUA GROUP, INC.
/s/ Xxxxxx X.X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
(SEAL)
Name: Xxxxxx X. Xxxxxxx
Title: Vice President Finance
LASALLE BUSINESS CREDIT, INC.
/s/ Xxxxxx X.X. Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxxx
(SEAL)
Xxxxxxx X. Xxxxxxxxxxx,
Vice President
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ACKNOWLEDGMENTS
STATE OF ARIZONA, CITY/COUNTY OF Maricopa, TO WIT:
I HEREBY CERTIFY that on this 7th day of May, 1997, before me, the
undersigned Notary Public of the State aforesaid, personally appeared Xxxxxx X.
Xxxxxxx, and acknowledged himself to be the Vice President Finance of THE
ANTIGUA GROUP, INC., a Nevada corporation, and that he, as such Vice President
Finance, being authorized so to do, executed the foregoing instrument for the
purposes therein contained by signing the name of THE ANTIGUA GROUP, INC., by
himself as Vice President Finance.
IN WITNESS MY Hand and Notarial Seal.
/s/ Xxxxxx X. Xxxxxx (SEAL)
NOTARY PUBLIC
My Commission Expires:
September 23, 0000
XXXXX XX XXXXXXX, XXXX/XXXXXX XX Xxxxxxxx, TO WIT:
I HEREBY CERTIFY that on this 7th day of May, 1997, before me, the
undersigned Notary Public of the State aforesaid, in personally appeared Xxxxxxx
X. Xxxxxxxxxxx, and acknowledged himself to be a Vice President of LASALLE
BUSINESS CREDIT, INC., a Delaware corporation, and that he, as such Vice
President, being authorized so to do, executed the foregoing instrument for the
purposes therein contained by signing the name of LASALLE BUSINESS CREDIT, INC.,
by himself as Vice President.
IN WITNESS MY Hand and Notarial Seal.
/s/ Xxxxxxx X. Xxxxxxx (SEAL)
NOTARY PUBLIC
My Commission Expires:
My Commission Expires July 31, 1997
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