Exhibit 10.1
FIFTH AMENDMENT TO CREDIT AND
SECURITY AGREEMENT
This Amendment, dated as of November 8, 2000, 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 (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 "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)
$5,000,000.00, 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
$3,500,000.00 from October 1 of each year through February
28 of each subsequent year, plus
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(C) the lesser of (x) 50% of Eligible Raw Materials
Inventory, or (y) $2,500,000.00 from March 1 through
September 30 of each year and $3,500,000.00 from October 1
of each year through February 28 of each subsequent year,
plus
(D) If but only if Lender, in its sole and absolute
discretion, elects to make Revolving Advances under the
Overadvance Limit, as hereafter defined, in any given year,
commencing on November 1 of each year, an overadvance in the
amount not to exceed $600,000.00 (the "Overadvance Limit),
which Overadvance Limit shall be automatically reduced to
$500,000.00 on March 1 of the immediately following year, to
$400,000.00 on April 1 of the immediately following year, to
$200,000.00 on May 1 of the immediately following year and
to $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.
(b) There is hereby added to Section 1.1 of the Credit Agreement a new
definition for "Capital Expenditures Floating Rate" which provides as follows:
"Capital Expenditures Floating Rate means an annual rate equal to the sum
of the Prime Rate plus one-quarter of one percent (0.25%), which annual
rate shall change when and as the Prime Rate changes.
(c) Section 2.6.2(a) of the Credit Agreement is hereby deleted and
replaced as follows:
Section 2.6.2 CAPITAL EXPENDITURES ADVANCE.
(a) The Lender agrees, on the terms and subject to the conditions
herein set forth (including without limitation Section 4.2 and 4.3
below), to make a non-revolving advance (to be disbursed in not more
than two (2) disbursements) to the Borrower in the amount equal to the
lesser of (i) $400,000.00; or (ii) the Lendable Cost, as hereafter
defined (the "Capital Expenditures Advance").
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(d) Section 2.7.2(a) of the Credit Agreement is hereby deleted and
replaced as follows:
Section 2.7.2 PAYMENT OF CAPITAL EXPENDITURES NOTE. The outstanding
principal balance of the Capital Expenditures Note shall be due and payable
as follows:
(a) Beginning on the earlier of (1) May 31, 2001 or (2) the last
day of the first full month following the final operational
installation of the Cap/Ex Equipment, as hereafter defined, at
Borrower Premises located in Torrington, Conn. and on the last day of
each month thereafter in equal monthly installments in an amount
sufficient to fully amortize the Capital Expenditures Advance over an
assumed term of 60 months;
(b) On the Termination Date, the entire unpaid principal balance
of the Capital Expenditures Note, and all unpaid interest accrued
thereon, shall in any event be due and payable.
(e) Subsection (b) of Section 2.8 of the Credit Agreement is hereby
deleted and replaced as follows:
(b) TERM NOTE. Except as set forth in Sections 2.8(d), 2.8(f) and 2.8(g),
the outstanding principal balance of the Term Note shall bear interest at
the Term Floating Rate.
(f) There is hereby added a new Subsection (h) to Section 2.8 of the
Credit Agreement which provides as follows:
(h) CAPITAL EXPENDITURES NOTE. Except as set forth in Sections 2.8(d),
2.8(f) and 2.8(g), the outstanding principal balance of the Capital
Expenditures Note shall bear interest at the Capital Expenditures Floating
Rate. Said interest shall begin to accrue upon the disbursement of any
portion of the Capital Expenditures Advance.
(g) Subsection (d) of Section 2.9 of the Credit Agreement is hereby
deleted and replaced as follows:
(d) AUDIT FEES. The Borrower hereby agrees to pay the Lender, on demand,
audit fees of $75.00 per hour (or Lender's then applicable rate) per
auditor in connection with any audits or inspections by the Lender of any
collateral or the operations or business of the Borrower, together with all
actual out-of-pocket costs and expenses incurred in conducting any such
audit or inspection (collectively, "Out-of-Pockets"). So long as there is
not any then existing Event of Default or Default Period, such audit fees
shall not exceed $5,000.00 per audit plus all applicable Out-of-Pockets and
audits shall be performed not more frequently than three times per annum.
Lender shall send to Borrower an invoice applicable to such audit fees,
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out-of-pocket costs and expenses, provided, however, any failure of Lender
to send such invoices shall not relieve Borrower of its obligations under
this Section 2.9(d).
(h) There is hereby added new subsections (e) and (f) to Section 2.9
of the Credit Agreement which provides as follows:
(e) OVERADVANCE FEE. The Borrower agrees to pay the Lender an annual
Overadvance Fee in the amount of $3,000.00. Such annual fee shall be due
and payable on the first day of each year that any Revolving Advances are
made under the Overadvance Limit. No such Overadvance Fee shall be due in
any year during which no Revolving Advances are made under the Overadvance
Limit.
(f) CAPITAL EXPENDITURES ADVANCE ORIGINATION FEE. The Borrower agrees to
pay the Lender an origination fee of $750.00 in consideration of the
Lender's agreement to make the Capital Expenditures Advance. Such fee shall
be due and payable upon the disbursement of any portion of the Capital
Expenditures Advance.
(i) Section 4.3 to the Credit Agreement is hereby deleted and replaced
as follows:
Section 4.3 CONDITIONS PRECEDENT TO DISBURSEMENT OF THE CAPITAL
EXPENDITURES ADVANCE. The obligation of the Lender to make either of the
two disbursements of the Capital Expenditures Advance shall be subject to
the further conditions precedent:
(a) Each request for a disbursement of the Capital Expenditure
Advance is made on or before the earlier of May 31, 2001 or the
Termination Date;
(b) Lender's prior review and approval of the documentation
supporting the Borrower's Capital Expenditures (the "Cap/Ex
Equipment"), including but not limited to invoices and shipping
documents, and Lender's determination (i) that such purchase is made
by Borrower in an arms-length transaction with a reputable dealer, and
(ii) that such purchase is for an item approved by the Lender in its
sole discretion;
(c) The amount of the disbursement is less than or equal to 80%
of the invoice cost of Cap/Ex Equipment, exclusive of cost of
installation, set-up costs, taxes, shipping and other non-purchase
price costs (the "Lendable Cost");
(d) Lender shall have a first priority perfected security
interest in all of the Cap/Ex Equipment; and
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(e) The Cap/Ex Equipment shall be finally and operationally
installed at the Borrower's Premises located in Torrington, Conn.
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. CONDITIONS PRECEDENT. This Amendment 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 Acknowledgment and Agreement of Guarantor set forth at the end
of this Amendment, duly executed by the Guarantor.
(b) 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 that the officers and agents
of the Borrower who have been certified to the Lender, pursuant to the
Certificate of Authority of the Borrower's secretary or assistant secretary
dated as of October 9, 1998, as being authorized to sign and to act on behalf of
the Borrower continue to be so authorized or 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.
(c) Such other matters as the Lender may require.
5. 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 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 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.
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(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.
6. 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.
7. NO WAIVER. The execution of this Amendment and acceptance of and any
documents related hereto shall not be deemed to be a waiver of any Default or
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.
8. 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.
9. 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.
10. MISCELLANEOUS. This Amendment and the Acknowledgment and Agreement 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.
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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.
By /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Its Assistant 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., formerly known as Norwest 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 8 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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