BANKNORTH, N. A. COMMERCIAL LOAN AGREEMENT
BANKNORTH,
N. A.
| BORROWERS’ NAMES AND ADDRESSES: | DESCRIPTION OF LOANS: | |
| BRANDPARTNERS GROUP, INC. | Revolving Line of Credit Loan: | |
| BRANDPARTNERS RETAIL, INC. | $5,000,000.00 | |
| ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ | Term Loan: $2,000,000.00 | |
| ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||
| DATE OF THIS AGREEMENT: May ___, 2005 |
THIS
COMMERCIAL LOAN AGREEMENT (this “Agreement”), is made as of the date set forth
above, between the above-named borrowers, BRANDPARTNERS GROUP, INC., a Delaware
corporation (“BPG”) and BRANDPARTNERS RETAIL, INC. (“BPR”), a New Hampshire
corporation, each with executive offices at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (BPG and BPR being jointly, severally, and collectively, the
“BORROWER”); GRAFICO INCORPORATED, a Delaware corporation, with executive
offices at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the “GUARANTOR”); and
BANKNORTH, N. A., a national banking association with a business address of
▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the “BANK”). The BORROWER and
GUARANTOR have requested for the BANK to extend a revolving line of credit
loan
and a term loan to the BORROWER, all pursuant to the terms and conditions of
this Agreement and each of the other Loan Documents (as hereinafter defined).
Each of the loans to the BORROWER as first described above, as the same may
hereafter be renewed, replaced, amended, extended or increased, is hereinafter
sometimes referred to individually as a “Loan” and collectively as the “Loans”.
All of the Loans are, together with all other joint and several debts,
liabilities and obligations of BORROWER to the BANK, direct or indirect,
absolute or contingent, now existing or hereafter arising, including, but not
limited to, the obligations of the BORROWER to BANK under agreements pertaining
to any interest rate swap, cap, floor or hedging transaction, hereinafter
sometimes collectively referred to as the “Obligations”. Each Loan is or shall
be evidenced by a promissory note (individually a “Note” and collectively the
“Notes”). GUARANTOR is a wholly-owned subsidiary of BPG and, in consideration of
BANK extending the Loans to the BORROWER, shall unconditionally guaranty all
of
the Obligations of the BORROWER to the BANK. Each Loan of BORROWER and all
of
the other Obligations of BORROWER are and shall be secured pursuant to a
Security Agreement of each BORROWER and GUARANTOR in favor of the BANK of near
or even date herewith (collectively, the “Security Agreement”) and certain other
Loan Documents. The BORROWER and GUARANTOR will execute in connection with
this
Agreement and may hereafter execute certain other documents, certificates and
agreements, including documents pertaining to any interest rate swap, cap,
floor, or hedging transaction, all of which are, together with this Agreement,
the Notes, and the Security Agreement, and as all of the same may be hereafter
amended, modified, replaced, revised, renewed, or extended, sometimes
collectively referred to herein as the “Loan Documents”. Each Loan, whether now
existing or hereafter arising, is made upon and subject to the terms and
conditions set forth in the Note evidencing such Loan, the Security Agreement,
the other Loan Documents, and this Agreement. The terms, conditions,
representations, warranties, and covenants set forth in this Agreement are
in
addition to, and not in limitation of, the terms, conditions, representations,
warranties, and covenants set forth in the other Loan Documents. In the event
of
any conflict between the terms, conditions, representations, warranties, and
covenants contained in the Loan Documents, this Agreement shall control. All
of
the terms, conditions, representations, warranties, and covenants set forth
in
this Agreement and in the other Loan Documents, and all of the Obligations,
shall apply to, be binding upon, and be deemed to be made by each BORROWER
and
GUARANTOR, jointly, severally, separately, and individually. For purposes of
this Agreement and the Loan Documents and unless otherwise specifically defined,
the term “material” where used as an adjective shall mean any transaction, loss,
liability, value, consideration, matter, or amount which individually or in
the
aggregate exceeds $100,000.00; provided that any failure to pay the Loans or
any
of the other Obligations in whole or in part as and when due shall always be
deemed “material” regardless of the dollar amount involved.
IN
CONSIDERATION OF the
Loans
made or to be made by BANK to the BORROWER, and of all other Obligations of
the
BORROWER to the BANK, BORROWER,
GUARANTOR, and BANK hereby agree as follows:
I.
REVOLVING LINE OF CREDIT LOAN.
The
Revolving Line of Credit Loan first described above (the “Revolving Line of
Credit Loan”) made available by the BANK to the BORROWER shall be upon and
subject to the terms and conditions set forth in the Revolving Credit Promissory
Note of near or even date herewith, evidencing such Loan (as the same may be
hereafter amended, modified, revised, renewed, or extended, the “Revolving Line
of Credit Note”), the other Loan Documents, and this Agreement.
A.
Maximum
Available Amount.
The
maximum amount available to the BORROWER from time to time under the Revolving
Line of Credit Loan shall be Five Million Dollars ($5,000,000.00).
B.
Advances.
The
Revolving Line of Credit Loan shall be disbursed, advanced, readvanced, and
repaid as provided in the Revolving Line of Credit Note and this Agreement.
Through and until the Revolving Line of Credit Maturity Date, BORROWER may
request advances orally or in writing from time to time in accordance with
such
procedures as the BANK may from time to time specify in an amount such that
the
aggregate amounts outstanding under the Revolving Line of Credit Loan do not
exceed the maximum available amount as set forth in Section I. A. above. The
BANK shall be under no obligation to make any advance (automatic or otherwise)
at any time or times during which an Event of Default has occurred and is
existing under this Agreement or the Loan Documents, or if any condition exists
which, if not cured, would with the passage of time or the giving of notice,
or
both, constitute such an Event of Default. At the time of each advance and
readvance under the Revolving Line of Credit Loan, BORROWER shall immediately
become indebted to the BANK for the amount thereof. Each such advance or
readvance may be credited by the BANK to any deposit account of BORROWER with
the BANK, be paid to BORROWER, or applied to any Obligation, as the BANK may
in
each instance elect. BORROWER authorizes the BANK to charge any account which
BORROWER maintains with the BANK for any payments which BORROWER may or must
make, or customarily makes, to the BANK from time to time.
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C.
Payment
of Principal.
The
BORROWER shall make payments of principal under the Revolving Line of Credit
Loan from time to time in such amounts as is required to maintain the
outstanding principal thereunder at or below the maximum available amount set
forth in Section I. A. above. THE ENTIRE AMOUNT OF OUTSTANDING PRINCIPAL,
ACCRUED INTEREST AND OTHER CHARGES PAYABLE UNDER THE REVOLVING LINE OF CREDIT
LOAN SHALL BE DUE AND PAYABLE IN FULL ON MAY 4, 2008 (the “Revolving Line of
Credit Maturity Date”).
D.
Interest
Rate.
The
principal balance outstanding from time to time under the Revolving Line of
Credit Loan shall bear interest in accordance with the provisions of Section
III
below and the Revolving Line of Credit Note. Interest shall be calculated and
accrue daily on the basis of actual days elapsed over a three hundred sixty
(360) day banking year.
E.
Purposes.
Amounts
advanced and readvanced to BORROWER under the Revolving Line of Credit Loan
shall be used initially to repay outstanding indebtedness of BORROWER to Fleet
Capital Corporation (a Bank of America company) and Longview Fund, LP, and
thereafter solely for BORROWER’s ordinary working capital needs.
F.
Revolving
Line of Credit Loan Management.
Set
forth on Schedule A are additional terms and conditions relating to the
management of the Revolving Line of Credit Loan.
II.
TERM LOAN.
The Term
Loan first described above (the “Term Loan”) in the principal amount of Two
Million Dollars ($2,000,000.00) first described above made to BORROWER shall
be
upon and subject to the terms and conditions set forth in the Term Note of
near
or even date herewith made by BORROWER payable to the order of the BANK
evidencing such Term Loan (“Term Loan Note”), the other Loan Documents and this
Agreement. Proceeds of the Term Loan shall be used to repay outstanding
indebtedness of BORROWER to Fleet Capital Corporation (a Bank of America
company) and Longview Fund, LP. The Term Loan shall be repaid as set forth
in
the Term Loan Note and this Agreement. The principal balance outstanding under
the Term Loan shall bear interest in accordance with the provisions of Section
III below and the Term Loan Note. Interest shall be calculated and accrue daily
on the basis of actual days elapsed over a three hundred sixty (360) day banking
year.
III.
INTEREST RATE PROVISIONS.
Unless
specifically provided otherwise under the applicable Note evidencing a Loan,
the
following provisions shall apply to each Loan with respect to the interest
rate
thereunder.
A.
Interest
Rate Definitions.
In
addition to terms defined elsewhere in this Agreement and the Loan Documents,
for purposes of this Agreement and the Loan Documents, the following terms
shall
have the following meanings:
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“Banking
Day” means a day on which banks are not required or authorized by law to close
in the city in which BANK's principal office is situated. The term “London
Banking Day” means a day on which banks are not required or authorized by law to
close in the city of London, England.
“Business
Day” means any Banking Day and, with respect to determining or selecting the
LIBOR Interest Rate, any London Banking Day. If any day on which a payment
is
due is not a Business Day, then the payment shall be due on the next day
following which is a Business Day, unless, with respect to a LIBOR Advance,
the
effect would be to make the payment due in the next calendar month, in which
event such payment shall be due on the next preceding day which is a Business
Day. Further, if there is no corresponding day for a payment in the given
calendar month (i.e., there is no “February 30th”), the payment shall be due on
the last Business Day of the calendar month.
“LIBOR
Rate” means for each Loan a fixed per annum rate of interest equal to LIBOR
plus
250
basis points (2.50%).
“LIBOR
Advance” means the principal amount of a Loan as to which the BORROWER has
selected the LIBOR Rate.
“LIBOR”
means, as to any LIBOR Advance, the rate per annum as determined on the basis
of
the offered rates for deposits in U.S. Dollars, for a period of time comparable
to such LIBOR Advance which appears on the Telerate page 3750 as of 11:00 a.m.
London time on the day that is two (2) London Banking Days preceding the first
day of such LIBOR Advance; provided, however, if the rate described above does
not appear on the Telerate System on any applicable interest determination
date,
LIBOR shall be the rate (rounded upward, if necessary, to the nearest one
hundred-thousandth of a percentage point), determined on the basis of the
offered rates for deposits in U.S. dollars for a period of time comparable
to
such LIBOR Advance which are offered by four major banks in the London interbank
market at approximately 11:00 a.m. London time, on the day that is two (2)
London Banking Days preceding the first day of such LIBOR Advance as selected
by
BANK. The principal London office of each of the four major London banks will
be
requested to provide a quotation of its U.S. Dollar deposit offered rate. If
at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations. If fewer than two quotations are provided
as
requested, the rate for that date will be determined on the basis of the rates
quoted for loans in U.S. dollars to leading European banks for a period of
time
comparable to such LIBOR Advance offered by major banks in New York City at
approximately 11:00 a.m. New York City time, on the day that is two London
Banking Days preceding the first day of such LIBOR Advance. In the event that
Bank is unable to obtain any such quotation as provided above, it will be deemed
that LIBOR pursuant to a LIBOR Advance cannot be determined. In the event that
the Board of Governors of the Federal Reserve System shall impose a Reserve
Percentage with respect to LIBOR deposits of Bank, then for any period during
which such Reserve Percentage shall apply, LIBOR shall be equal to the amount
determined above divided by an amount equal to 1 minus the Reserve Percentage.
“Reserve Percentage” shall mean the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed on member banks of the Federal Reserve System against “Euro-currency
Liabilities” as defined in Regulation D.
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“Maximum
LIBOR Advances” means three (3) LIBOR Advances for the Revolving Line of Credit
Loan which is the maximum number of LIBOR Advances which BORROWER may have
outstanding under such Loan at any time.
“Minimum
LIBOR Advance” means $300,000.00 for the Revolving Line of Credit Loan, which is
the minimum amount of principal which the BORROWER may elect to be subject
to a
LIBOR Rate under such Loan at any time.
“Minimum
LIBOR Advance Increment” means $100,000 which is the minimum increment of
additional principal above the Minimum LIBOR Advance which the BORROWER may
elect to be subject to a LIBOR Rate under the Revolving Line of Credit
Loan.
“Prime
Rate” means
the
rate published by The
Wall Street Journal
from
time to time under the category “Prime Rate: The Base Rate on Corporate Loans
posted by at least 75% of the Nation's 30 Largest Banks” (the lowest of the
rates so published if more than one rate is published under this category at
any
given time) or such other comparable index rate selected by the BANK in its
sole
discretion if The
Wall Street Journal
ceases
to publish such rate. The BORROWER acknowledges that the Prime Rate is used
for
reference purposes only as an index and is not necessarily the lowest interest
rate charged by the BANK on commercial loans. Each time the Prime Rate changes,
the interest rate under the applicable Loan shall change contemporaneously
with
such change in the Prime Rate. Interest is calculated and accrued daily on
the
basis of a 360-day banking year.
B.
Prime
Rate.
The
principal balance outstanding from time to time, or portion thereof, under
the
Revolving Line of Credit Loan and the Term Loan which is not subject to the
LIBOR Rate, shall bear interest at a variable annual rate equal to the Prime
Rate.
C.
LIBOR
Rate.
The
BORROWER may elect from time to time to have all or a portion of the outstanding
principal under the Revolving Line of Credit Loan bear interest at a fixed
rate
equal to the LIBOR Rate. The BORROWER may elect from time to time to have all,
but not less than all, of the outstanding principal under the Term Loan bear
interest at a fixed rate equal to the LIBOR Rate. BORROWER may select the LIBOR
Rate for a LIBOR Advance under a Loan for a period of one (1) month with respect
to such LIBOR Advance (but in no event beyond the Revolving Line of Credit
Maturity Date). BORROWER may only elect the LIBOR Rate for an outstanding
principal amount under a Loan of not less than the Minimum LIBOR Advance and
for
the Revolving Line of Credit Loan in increments above such amounts of not less
than the Minimum LIBOR Advance Increment. BORROWER may not have more than the
Maximum LIBOR Advances outstanding under the Revolving Line of Credit Loan
at
any time. BORROWER shall notify BANK in writing at least two (2) Business Days
in advance of the date upon which the BORROWER desires a LIBOR Advance to be
effective under a Loan. BORROWER's notice to BANK as aforesaid shall specify
(a)
the Loan which is to be subject to the LIBOR Rate, (b) the outstanding principal
amount under the Loan that BORROWER desires to bear interest at the LIBOR Rate
selected (which for the Term Loan shall be deemed to be the entire outstanding
principal amount of the Term Loan), and (c) the date such election is to be
effective (which must be a Business Day). Notwithstanding the foregoing, if
as a
result of any change in any foreign or United States law or regulation (or
change in the interpretation thereof) it is determined by BANK that it is
unlawful to maintain a LIBOR Advance, or if any central bank or governmental
authority (foreign or domestic) shall assert that it is unlawful to maintain
a
LIBOR Advance, then such LIBOR Advance shall terminate and the BORROWER shall
have no further right hereunder to elect further LIBOR Advances of the type
terminated. If for any reason a LIBOR Advance is terminated or prepaid prior
to
the end of the applicable period for which the LIBOR Advance is to be in effect,
the BORROWER shall, upon demand by BANK, pay to BANK any amounts required to
compensate BANK for any losses, costs, or expenses which it may reasonably
incur
as a result of such termination or prepayment, including, without limitation,
any losses, costs, or expenses incurred by reason of the liquidation or
redeployment of deposits or other funds acquired by the BANK to fund or maintain
such LIBOR Advance.
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D.
Prepayments
of LIBOR Advances.
If, at
any time the BANK in its sole discretion should determine that current market
conditions can accommodate a prepayment request with respect to an outstanding
LIBOR Advance, BORROWER may prepay a LIBOR Advance upon at least three (3)
Business Days prior written notice to BANK (which notice shall be irrevocable).
BORROWER shall pay to BANK, upon request of BANK, such amount or amounts as
shall be sufficient (in the reasonable opinion of BANK) to compensate it for
any
loss, cost, or expense incurred as a result of: (i) any payment of a LIBOR
Advance on a date other than the last day of the term thereof; (ii) any failure
by BORROWER to borrow a LIBOR Advance on the date specified by BORROWER’s
written notice; and (iii) any failure by BORROWER to pay a LIBOR Advance on
the
date for payment specified in BORROWER’s written notice. Without limiting the
foregoing, with respect to any prepayment of a LIBOR Advance BORROWER shall
pay
to BANK a “yield maintenance fee” in an amount computed as follows: The current
rate for United States Treasury securities (bills on a discounted basis shall
be
converted to a bond equivalent) with a maturity date closest to the term of
the
LIBOR Advance as to which the prepayment is made, shall be subtracted from
the
LIBOR Rate in effect at the time of prepayment. If the result is zero or a
negative number, there shall be no yield maintenance fee. If the result is
a
positive number, then the resulting percentage shall be multiplied by the amount
of the principal balance being prepaid. The resulting amount shall be divided
by
360 and multiplied by the number of days remaining in the term of the LIBOR
Advance as to which the prepayment is made. Said amount shall be reduced to
present value calculated by using the above referenced United States Treasury
securities rate and the number of days remaining in the term of the LIBOR
Advance as to which prepayment is made. The resulting amount shall be the yield
maintenance fee due to BANK upon the payment of the LIBOR Advance. If by reason
of an Event of Default, BANK elects to declare a Loan to be immediately due
and
payable, then any yield maintenance fee with respect to each LIBOR Advance
shall
become due and payable in the same manner as though the BORROWER had exercised
such right of prepayment. Any prepayment may also result in payments due from
the BORROWER to BANK in accordance with the terms of that certain ISDA Master
Agreement between BORROWER and BANK of near or even date herewith, and under
any
similar agreement between BORROWER and BANK pertaining to any interest rate
swap, cap, floor or hedging transaction.
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E.
Default
Interest Rate.
During
the continuance of an Event of Default, after maturity, or after judgment has
been rendered on any of the Obligations, BORROWER’s right to select the LIBOR
Rate shall cease and the unpaid principal of each Loan shall, at the option
of
the BANK, bear interest at the Prime Rate plus five percent (5%) per
annum.
F.
Interest
Rate Computation Convention; Payments.
All
computations of interest under each Loan shall be made on the basis of a three
hundred sixty (360) day year and the actual number of days elapsed. Accrued
and
unpaid interest is payable monthly in arrears; provided that accrued and unpaid
interest on each LIBOR Advance shall be paid on the expiration of the term
thereof.. All payments shall be made by BORROWER to BANK at its address first
set forth above or such other place as Bank may from time to time specify in
writing in lawful currency of the United States of America in immediately
available funds, without counterclaim or setoff and free and clear of, and
without any deduction or withholding for, any taxes or other payments. All
payments shall be applied first to the payment of all fees, expenses and other
amounts due to the BANK (excluding principal and interest), then to accrued
interest, and the balance on account of outstanding principal; provided,
however, that after demand or default, payments will be applied to the
obligations of BORROWER to BANK as BANK determines in its sole
discretion.
IV.
FEES. In
addition to such other fees as are provided in this Agreement and in the other
Loan Documents, BORROWER agrees to pay the BANK the fees set forth on
Schedule
B attached
hereto.
V.
PAYMENTS.
All
payments made by the BORROWER of principal and interest on the Loans, and other
sums and charges payable under the Loan Documents, shall be made to the BANK
in
accordance with the terms of the respective Loan Documents in lawful money
of
the United States of America in immediately available funds at its office set
forth above, or by the debiting by the BANK of the demand deposit account(s)
in
the name of the BORROWER at the BANK, or in such other reasonable manner as
may
be designated by the BANK in writing to the BORROWER. The BORROWER authorizes
the BANK automatically to debit the BORROWER’s demand deposit account as
aforesaid.
VI.
SECURITY; GUARANTY. Each
of
the Loans and all other Obligations of the BORROWER to the BANK, whether now
existing or hereafter arising, shall at all times be secured by first priority
perfected security interests in the Collateral (as hereinafter defined), which
security interests shall continue until payment in full of all amounts
outstanding under said Loans and the other Obligations. The term “Collateral” as
used herein shall be deemed to include all property and assets of the BORROWER
and GUARANTOR secured, mortgaged, pledged, assigned, or otherwise encumbered
or
covered by any of the Loan Documents, including, but not limited to, the
Security Agreement. The BORROWER and GUARANTOR covenant and agree to take such
further actions and to execute such additional documents as may be necessary
from time to time to enable the BANK to obtain, maintain and perfect the
security interests and liens arising under the Loan Documents. Each of the
Loans
and all other Obligations of the BORROWER to the BANK, whether now existing
or
hereafter arising, shall at all times be guaranteed by a continuing,
unconditional guaranty of the GUARANTOR to the benefit of the BANK, in form
and
substance satisfactory to the BANK.
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VII.
SUBORDINATION AND
STANDBY OF DEBT. The
BORROWER covenants and agrees that all existing debt of BORROWER to its
officers, directors, and shareholders and all future debt if permitted hereunder
from BORROWER to its officers, directors, and shareholders, shall be and hereby
is, without need for further writing, made subject and subordinate to the prior
payment and performance of all the Loans and other Obligations of BORROWER.
In
furtherance of the foregoing, the BORROWER shall provide such subordinations,
certificates, and other documents, and shall ▇▇▇▇ its corporate books, records,
stock certificates, and ledgers, as the BANK may reasonably request from time
to
time, in form and substance satisfactory to BANK and BANK's counsel, evidencing
the subordination of all debt of BORROWER to its officers, directors, and
shareholders, whether now existing or hereafter arising, in accordance with
the
covenants of BORROWER hereunder. Notwithstanding the foregoing provisions,
existing and future indebtedness of BPR to Corporate Mezzanine II, L.P., a
British Virgin Islands limited partnership (collectively, with its successors
and assigns, “CMII”), shall be subject to the terms and conditions of a separate
Subordination and Intercreditor Agreement of near or even date herewith among
BPR, GUARANTOR, CMII and BANK (the “CMII Subordination Agreement”).
VIII.
CONTINUING REPRESENTATIONS AND WARRANTIES.
BORROWER
and GUARANTOR warrant and represent to the BANK that so long as any of the
Obligations is outstanding:
A.
Good
Standing.
Each of
BORROWER and GUARANTOR is duly organized, validly existing, and in good standing
under the laws of its state of organization and is qualified to do business
in
all other jurisdictions where the nature of the business conducted or property
owned by it require BORROWER or GUARANTOR to be so qualified. Each of BORROWER
and GUARANTOR has the power to own its properties and to carry on its business
as now being conducted.
B.
Authority.
Each of
BORROWER and GUARANTOR has full power and authority to enter into this Agreement
and to borrow under the Loan Documents, to execute and deliver the Loan
Documents and to incur the obligations provided for herein and in the Loan
Documents, all of which have been duly authorized by all proper and necessary
corporate or other action. The persons executing the Loan Documents on behalf
of
the BORROWER and GUARANTOR have been duly authorized to do so.
C.
Binding
Agreement.
This
Agreement and the Loan Documents constitute the valid and legally binding
obligations of the BORROWER and GUARANTOR, enforceable in accordance with their
terms.
D.
Litigation.
There
are no suits, proceedings, or investigations of any kind or nature pending
or,
to the knowledge of the BORROWER or GUARANTOR, threatened against or affecting
the BORROWER or GUARANTOR, which would have, or could be reasonably expected
to
have, a material adverse affect on their business operations or their assets,
which have not been disclosed in writing to the BANK.
-7-
E.
Conflicting
Agreements; Consents.
There
is no charter, bylaw, preference stock, or trust provision of the BORROWER
or
GUARANTOR, and no provision(s) of any existing mortgage, indenture, contract
or
agreement binding on the BORROWER or GUARANTOR, or affecting their property,
which would conflict with, have a material adverse affect upon, or in any way
prevent the execution, delivery, or performance of the terms of this Agreement
or the Loan Documents. Except for the consent of CMII under that certain
Subordinated Note and Warrant Purchase Agreement dated October 22, 2001 (the
“Note Purchase Agreement”), which consent has been obtained, neither the
BORROWER nor GUARANTOR is required to obtain any order, consent, approval,
authorization of any person, entity, or governmental authority in connection
with or as a condition to the execution, delivery, and performance of this
Agreement or the Loan Documents or the granting of the security interests and
liens in the Collateral.
F.
Financial
Condition.
The
financial statements delivered to the BANK by the BORROWER and GUARANTOR have
been and shall be prepared in accordance with generally accepted accounting
principles, consistently applied, are and will be complete and correct, and
fairly present the financial condition and results of the BORROWER and
GUARANTOR. Other than those liabilities disclosed in writing to the BANK, there
are no liabilities, direct or indirect, fixed or contingent, of the BORROWER
or
GUARANTOR which are not reflected in the financial statements or in the notes
thereto which would be required to be disclosed therein and there has been
no
material adverse change in the financial condition or operations of the BORROWER
or GUARANTOR since the date of such financial statements.
G.
Taxes.
Each of
BORROWER and GUARANTOR has filed all federal, state and local tax returns
required to be filed by it, or have filed an appropriate extension with respect
to the same, and have paid all taxes shown by such returns (or estimated taxes
with respect to any such extensions) to be due and payable on or before the
due
dates thereof or, if such taxes are being contested, the BORROWER or GUARANTOR,
as the case may be, have made appropriate reserves therefor.
H.
Solvency.
The
present fair saleable value of the BORROWER's and GUARANTOR’s assets is greater
than the amount required to pay their total liabilities; the amount of the
BORROWER's and GUARANTOR’S capital is adequate in view of the type of business
in which they are engaged; and neither BORROWER nor GUARANTOR would currently
be
deemed insolvent under generally accepted accounting principles.
I.
Full
Disclosure.
None of
the information with respect to the BORROWER or GUARANTOR which has been
furnished to the BANK in connection with the transactions contemplated hereby
is
false or misleading with respect to any material fact, or omits to state any
material fact necessary in order to make the statements therein not
misleading.
J.
Employee
Benefit Plans.
All
Plans (as hereinafter defined) which are pension plans as defined in Section
3(2) of the Employment Retirement Income Security Act of 1974, as amended
(“ERISA”), qualify under Section 401 of the Internal Revenue Code of 1986 (as
amended, the “IRC”), and all Plans are in compliance with the provisions of the
IRC and ERISA, and have been administered in accordance with their terms. The
term “Plan” means any pension plan, as defined in Section 3(2) of ERISA and any
welfare plan, as defined in Section 3(1) of ERISA, which is sponsored,
maintained or contributed to by BORROWER or GUARANTOR, or any commonly
controlled entity, or in respect of which BORROWER or GUARANTOR, or a commonly
controlled entity, is an “employer” as defined in Section 3(5) of ERISA. With
respect to the Plans:
-8-
(i)
Prohibited
Transactions.
None of
the Plans has participated in, engaged in or been a party to any non-exempt
“prohibited transaction” as defined in ERISA or the IRC, and no officer,
director or employee of BORROWER or GUARANTOR has committed a breach of any
of
the responsibilities or obligations imposed upon fiduciaries by Title I or
ERISA.
(ii)
Claims.
There
are no material contested claims, pending or threatened, involving any Plan
which is a pension plan by a current or former employee (or beneficiary thereof)
of BORROWER or GUARANTOR, nor is there any reasonable basis to anticipate any
claims involving any such Plan.
(iii)
Reporting
and Disclosure Requirements.
There
have been no material violations of any reporting or disclosure requirements
with respect to any Plan and no such Plan has violated applicable law, including
but not limited to ERISA and the IRC.
(iv)
“Accumulated
Funding Deficiency”; Reportable Event.
No Plan
which is a defined benefit pension plan has (a) incurred a material “accumulated
funding deficiency” (within the meaning of Section 412(a) of the IRC), whether
or not waived, (b) been a plan with respect to which a Reportable Event (to
the
extent that the reporting of such events to the Pension Benefit Guaranty
Corporation (the “PBGC”) within thirty (30) days of the occurrence has not been
waived) has occurred and is continuing, or (c) been a Plan with respect to
which
there exists conditions or events which have occurred presenting a risk of
termination by PBGC.
(v)
Multiemployer
Plan.
No Plan
which is a multiemployer pension plan (as defined in Section 414(f) of the
IRC)
to which BORROWER or GUARANTOR contributes has been a plan with respect to
which
BORROWER or GUARANTOR has received any notification that such Multiemployer
Plan
is in reorganization or has been terminated within the meaning of Title IV
of
ERISA and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated within the meaning of Title IV of ERISA.
Neither BORROWER nor GUARANTOR has withdrawn from, or incurred any withdrawal
liability to, any multiemployer plan.
(vi)
COBRA.
There
has been no material violation of the applicable requirements of Section 4980B
of the IRC pertaining to COBRA continuation coverage with respect to any
Plan.
(vii)
Employee
Welfare Benefit Plans.
No Plan
which is a medical, dental, health, disability, insurance or other plan or
arrangement, whether oral or written, which constitutes an “employee welfare
benefit plan” as defined in Section 3(1) of ERISA, has any unfunded accrued
liability or provides benefits to former employees or retirees (except as may
be
required by COBRA).
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K.
Location
of Records.
All of
the material books and records or true and complete copies thereof relating
to
the accounts and contracts of the BORROWER and GUARANTOR are and will be kept
at
BORROWER's executive offices at the address first set forth above (the
“Premises”).
L.
Compliance
with Laws.
Each of
BORROWER and GUARANTOR is in compliance in all material respects with all laws
and governmental rules and regulations applicable to BORROWER, GUARANTOR, the
Collateral and to BORROWER’s and GUARANTOR’s business, properties and assets,
including, but not limited to, applicable federal and state securities laws
and
the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, to the extent the failure
to
so comply would have a material adverse affect upon the BORROWER, the
Collateral, or the rights and remedies of the BANK hereunder.
M.
Issuance
of Securities.
Each of
BORROWER and GUARANTOR has complied in all material respects with all federal
and state laws and governmental rules and regulations applicable to the issuance
and sale of securities by BORROWER and GUARANTOR.
N.
Hazardous
Waste.
No
Hazardous Waste (as hereinafter defined) has been generated, stored or treated
on any of the premises occupied by BORROWER or GUARANTOR, except in compliance
with all applicable laws to the extent a failure to so comply would have a
material adverse affect upon the BORROWER, the Collateral, or the rights and
remedies of the BANK hereunder. No Hazardous Waste has ever been, is being,
is
intended to be, or is threatened to be spilled, released, discharged, disposed,
placed or otherwise caused to be found in the soil or water in, under, or upon
any of the premises occupied by the BORROWER or GUARANTOR. Each of BORROWER
and
GUARANTOR agrees to indemnify and hold the BANK harmless from and against any
claims, damages, liabilities (whether joint or several), losses and expenses
(including, without limitation, attorneys' fees) incurred by the BANK as a
result of the presence of Hazardous Waste in, under, or upon any of the premises
occupied by the BORROWER or GUARANTOR. For the purpose of this Agreement, the
term “Hazardous Waste” means “hazardous waste”, “hazardous material”, “hazardous
substance”, and “oil” as presently defined in the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response, Compensation and
Liability Act, the Hazardous Material Transportation Act, the Federal Water
Pollution Control Act, and corresponding state and local statutes, ordinances,
and regulations, as such statutes, ordinances and regulations may be amended,
or
as defined in any federal or state regulation adopted pursuant to such
acts.
O.
Title
to Collateral.
BORROWER and GUARANTOR have and will at all times have good and marketable
title
to the Collateral, free and clear from any liens, security interests, mortgages,
encumbrances, pledges or other right, title or interest of any other person
or
entity, except those arising under the Loan Documents or permitted by the BANK
under this Agreement or the Security Agreement (“Permitted
Encumbrances”).
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P.
Employees.
Each of
BORROWER and GUARANTOR has to the best of its knowledge complied with all laws
relating to the employment of labor, including any provisions thereof relating
to ERISA, wages, hours, collective bargaining, the payment of social security
and similar taxes, equal employment opportunity, employment discrimination
and
occupational safety and health, and is not liable for any arrears of wages
or
any taxes or penalties for failure to comply with any of the foregoing, to
the
extent the failure to so comply with any of the foregoing would have a material
adverse affect upon the BORROWER, the Collateral, or the rights and remedies
of
the BANK hereunder.
Q.
Subsidiaries.
BPG
owns all of the issued and outstanding capital stock of BPR and GUARANTOR and
other than BPR, GUARANTOR, and BRANDPARTNERS EUROPE LTD., a private limited
company formed under the laws of England and Wales (“BPE”), BPG has no direct or
indirect subsidiaries.
IX.
AFFIRMATIVE COVENANTS.
Until
payment in full of all indebtedness under the Loans and the other Obligations,
each of BORROWER and GUARANTOR agrees that, unless the BANK shall otherwise
consent in writing, it will:
A.
Prompt
Payment.
Pay
promptly, subject to any applicable cure or grace period, when due all amounts
due and owing to the BANK.
B.
Use
of
Proceeds.
Use the
proceeds of the Loans only in accordance with the provisions of this Agreement
and will furnish the BANK with such evidence as it may reasonably require with
respect to such use.
C.
Financial
Statements.
Furnish
the BANK with such financial statements of BORROWER and GUARANTOR as are
described on Schedule
B
attached
hereto. All such statements shall be prepared on a consistent basis in a format
reasonably acceptable to the BANK.
D.
Maintenance
of Existence.
Take
all necessary action to maintain BORROWER's and GUARANTOR’s legal
existence.
E.
Maintenance
of Business.
Do or
cause to be done all things commercially reasonable and necessary to maintain
and preserve BORROWER's and GUARANTOR’s business and assets.
F.
Maintenance
of Insurance.
Keep
all of BORROWER's and GUARANTOR’s properties (specifically including, but not
limited to, the Collateral) adequately insured against loss or damage by fire
and such other casualties and hazards as the BANK may specify from time to
time;
maintain adequate ▇▇▇▇▇▇▇'▇ Compensation Insurance under applicable laws and
Comprehensive General Public Liability Insurance; and maintain adequate
insurance covering such other risks as the BANK may reasonably specify from
time
to time hereafter. All insurance required hereunder shall be effected by valid
and enforceable policies issued by insurers of recognized responsibility
authorized to transact business within the State of New Hampshire and shall,
inter
alia,
(1) name
the BANK as a loss payee, and (2) provide that the BANK shall be notified in
writing of any proposed cancellation of such policy at least thirty (30) days
in
advance thereof and will have the opportunity to correct any deficiencies
justifying such proposed cancellation. For the purposes of this Paragraph,
an
insurance policy shall be deemed to be “adequate” if it provides coverage
against such risks and in such amounts as is customarily carried by owners
of
similar businesses and properties. BANK acknowledges receipt of certificates
of
BORROWER’s insurance coverages in effect as of the date hereof and accepts the
same for purposes of compliance with this Section IX. F. as of the date
hereof.
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G.
Inspection
by the BANK.
Each of
BORROWER and GUARANTOR agrees that the BANK may, upon ten (10) days prior
notice, conduct regular field examination audits of the BORROWER's and
GUARANTOR’s books, records, accounts, inventory, and other property at each of
BORROWER’s and GUARANTOR’s locations up to two (2) times during each fiscal year
of BORROWER and that BORROWER shall pay the BANK all reasonable fees, costs,
and
expenses charged or incurred by BANK for such audits. BANK agrees to conduct
such audits at such times as are reasonably convenient to the BORROWER and
GUARANTOR, as the case may be. Each of BORROWER and GUARANTOR also agrees that
upon prior reasonable notice (other than in emergencies when no notice shall
be
required) and during normal business hours, it shall permit any person
designated by the BANK to inspect any of BORROWER's and GUARANTOR’s properties,
including its books, records, and accounts (and including the making of copies
thereof and extracts therefrom) all at BANK's cost and expense. BANK agrees
that
it shall only conduct such inspections of the BORROWER’s and GUARANTOR’s
properties as the BANK reasonably deems necessary and appropriate to monitor
the
condition of the BORROWER, GUARANTOR, and the Collateral and in any event not
so
frequently as to be unnecessarily disruptive to the BORROWER’s or GUARANTOR’s
business operations. After and during the continuance of an Event of Default,
each of BORROWER and GUARANTOR also agrees that the BANK may conduct field
examination audits of the BORROWER's and GUARANTOR’s books, records, accounts,
inventory, and other property as often as the BANK deems necessary and
appropriate in its sole discretion and that BORROWER shall pay the BANK all
reasonable fees, costs, and expenses charged or incurred by BANK for such audits
without limitation as to amount.
H.
Prompt
Payment of Taxes.
Accrue
its tax liability (including withholdings for employee taxes and social
security) in accordance with usual accounting practice and pay or discharge
(or
cause to be paid or discharged) as they become due all taxes, assessments,
and
government charges upon its property, operations, income and products (as well
as all claims for labor, materials or supplies), which, if unpaid might become
a
lien upon any of its property; provided, that the BORROWER and GUARANTOR shall,
prior to payment thereof, have the right to contest such taxes, assessments
and
charges in good faith by appropriate proceedings so long as the BANK's interests
are protected by appropriate financial reserves or bond, letter of credit,
escrowed funds or other appropriate security.
I.
Notification
of Default Under This and Other Loan or Financing Arrangements.
Promptly notify the BANK in writing of the occurrence of any Event of Default
under this Agreement or any default or breach under any other material loan
or
financing arrangements.
-12-
J.
Notification
of Litigation and Judgments.
Promptly notify the BANK in writing of any litigation, proceedings, or
investigation that has been instituted or is pending oris threatened of which
BORROWER or GUARANTOR has knowledge and which might have a material adverse
affect on its continued operations or financial condition and of all judgments
rendered against the BORROWER or GUARANTOR.
K.
Notification
of Governmental Action.
Promptly notify the BANK in writing of any governmental investigation or
proceeding that has been instituted, is pending or, is threatened of which
BORROWER or GUARANTOR has knowledge, including without limitation, matters
relating to the federal or state tax returns of the BORROWER or GUARANTOR;
compliance with the Occupational Safety and Health Act, the Securities Act
of
1933, the Securities Exchange Act of 1934, or the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002;
proceedings by the Securities and Exchange Commission; or proceedings by the
Treasury Department, Labor Department, or Pension Benefit Guaranty Corporation
with respect to matters affecting employee welfare, benefit or retirement
programs.
L.
Preservation
of the Collateral and Financial Condition.
Take
all reasonably necessary steps to preserve, protect and defend the Collateral
free of unpermitted liens and give BANK access to and permit it to inspect
the
Collateral during all business hours and other reasonable times. Take all
reasonably necessary steps to preserve the financial condition of the BORROWER
and GUARANTOR as evidenced by the most recent financial statements of the
BORROWER and GUARANTOR delivered to the BANK prior to the execution of this
Agreement.
M.
Maintenance
of Records.
Keep
adequate records and books of account, in which complete entries will be made
in
a manner reasonably acceptable to the BANK and consistently applied, reflecting
all financial transactions of the BORROWER and GUARANTOR.
N.
Compliance
With Laws.
Comply
in all material respects with all applicable laws, rules, regulations, and
orders to the extent the failure to comply would have a material adverse affect
upon the BORROWER or the Collateral, such compliance to include, without
limitation, paying before the same become delinquent all taxes, assessments,
and
governmental charges imposed upon it or upon its property; provided,
however,
that
BORROWER and GUARANTOR shall be entitled to contest the same in good faith
so
long as such action does not have a material adverse affect upon the BANK's
rights hereunder or the Collateral which results in the BANK deeming itself
insecure within the meaning of the Uniform Commercial Code as in effect in
the
State of New Hampshire.
O.
Accounts
Deposits, and Balances.
BORROWER and GUARANTOR shall maintain their primary operating and deposit
accounts with the BANK. BORROWER and GUARANTOR may maintain accounts with other
financial institutions provided that (1) any such account is maintained solely
for purposes of BORROWER’s or GUARANTOR’s business relationship with such
financial institutions, (2) deposits to all such accounts are limited to
$100,000.00 in the aggregate, and (3) BANK is notified in writing of each such
account within five (5) business days of BORROWER or GUARANTOR establishing
the
same.
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P.
Notification
of Material Adverse Changes.
Promptly notify the BANK in writing of any conditions or circumstances which
reasonably could be expected to have a material adverse affect on BORROWER's
or
GUARANTOR’S continued operations or financial condition which is more likely
than not to adversely affect the BORROWER's or GUARANTOR’s ability to pay the
Obligations.
Q.
Additional
Financial and Other Covenants.
Comply
with the additional financial and other covenants set forth on Schedule
B
attached
hereto.
R.
New
Accountants.
On or
before December 31, 2005, BORROWER shall engage a new certified public
accounting firm to audit the financial statements of the BORROWER for the fiscal
year ending December 31, 2005 and for each fiscal year thereafter. Such
certified public accounting firm shall be subject to the reasonable approval
of
the BANK and BANK hereby approves BORROWER’s proposed engagement of the
accounting firm of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.C., Certified Public Accountants for this
purpose.
X.
NEGATIVE COVENANTS.
Until
payment in full of all indebtedness under the Loans and the other Obligations,
each of BORROWER and GUARANTOR covenants that neither BORROWER nor GUARANTOR
will, without the express prior written consent of the BANK:
A.
Nature
and Scope of Business.
Enter
into any type of business other than that in which it is presently engaged
or
otherwise significantly change the scope or nature of its business.
B.
Indebtedness.
Incur,
create, assume or suffer to exist any indebtedness for borrowed money (or issue
or sell any of its bonds, debentures, notes or similar obligations) except:
(1)
borrowings under the Loans; (2) other Obligations to the BANK; (3) borrowings
used to prepay in full the Obligations, (4) ordinary trade account payables,
(5)
purchase money indebtedness or capitalized leases the aggregate principal amount
of which does not at any time exceed $100,000.00, (6) guaranties permitted
under
Section X.I below; (7) indebtedness of BORROWER to subordinated lenders approved
in writing by the BANK, which indebtedness is subject to subordination
agreements to the benefit of the BANK, in form and substance satisfactory to
the
BANK, (8) indebtedness of BPR to CMII which is subject to the CMII Subordination
Agreement and any refinancing of the indebtedness of BPR to CMII on terms and
conditions which are not more onerous to BPR than the terms and conditions
under
the existing indebtedness to CMII and subject to any such refinancing party
executing a subordination agreement to the benefit of the BANK, in form and
substance satisfactory to the BANK (collectively indebtedness under clauses
(7)
and (8) being “Permitted Subordinated Debt”); and (9) issuance of convertible
subordinated debentures by BPG for purposes of obtaining additional working
capital up to an aggregate amount of $1,000,000 and provided the same does
not
otherwise result in a breach of any of the financial covenants of the BORROWER
under this Agreement.
C.
Liens
and Mortgages.
Incur,
create, assume or suffer to exist any pledge, lien, attachment, charge or other
encumbrance of any nature whatsoever on any of the Collateral, now or hereafter
owned, other than (1) the security interests or liens granted to the BANK
pursuant to the Loan Documents; (2) liens imposed by law, such as carriers,
warehousemen's or mechanic's liens incurred in good faith in the ordinary course
of business, and which do not in the aggregate have a material adverse effect
on
the BORROWER's or GUARANTOR’s financial condition or the Collateral; (3)
prejudgment judicial attachments, provided that any such attachments in an
amount which individually or in the aggregate exceed $100,000.00 are discharged
in full prior to execution thereon, and in any event within forty-five (45)
days
of the date of the issuance of final judgment in the lawsuit from which such
attachment arises, and BORROWER's legal counsel provides the BANK, immediately
upon the issuance of such attachment, with a description of the lawsuit giving
rise to such attachment and the probable outcome thereof; and (4) purchase
money
security interests granted and capitalized leases with respect to indebtedness
permitted under clause (5) of Section X.B above.
-14-
D.
Capital
Structure; Ownership; Management.
Change
the capital structure of BPR or GUARANTOR, or permit or participate in any
changes to the current ownership of 100% of the capital stock of BPR and
GUARANTOR by BPG.
E.
Places
of Business; Location of Collateral.
Maintain or relocate to, open or close, any other place of business or move
any
of the Collateral of BORROWER from the BORROWER’s existing facilities in
Rochester, New Hampshire and New York, New York, except upon thirty (30) days
prior written notice to the BANK and except for inventory sold in the ordinary
course of business and for the disposition of obsolete assets in the ordinary
course.
F.
Mergers,
Acquisitions, Etc. Without the Consent of the Bank.
Except
as specifically permitted herein below, merge, exchange or consolidate with
any
other person, firm, or entity; or sell, assign, lease, or otherwise dispose
of
(whether in one transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired); acquire all or
substantially all of the capital stock, assets or the business of any other
person, firm, or entity; or form or organize any new subsidiary entity or firm;
or acquire any real property for operations, investment or otherwise.
Notwithstanding the foregoing, without further consent of the BANK, in
connection with acquiring the business of any person or entity, any of BORROWER
or GUARANTOR may acquire the assets or capital stock of such person or entity
provided that (A) the aggregate consideration (including the payment of cash,
issuance of securities, and assumption of liabilities and indebtedness) for
all
such transactions does not exceed $2,500,000.00 and (B) the person or entity
which is the subject of any such acquisition is engaged in substantially the
same business as BPR.
G.
Leases. Create,
incur, assume, or suffer to exist any obligation as lessee for the rental or
hire of any real or personal property, except (i) leases existing on the date
of
this Agreement and any extensions or renewals thereof, and (ii) operating leases
incurred in the ordinary course of BORROWER’s or GUARANTOR’s
business.
H.
Sale
of Assets. Sell,
lease, assign, transfer, or otherwise dispose of, any of its now owned or
hereafter acquired assets (including, without limitation, any of the
Collateral), except: (1) for inventory disposed of in the ordinary course of
business; (2) the sale or other disposition of assets no longer used or useful
in the conduct of its business as determined in a commercially reasonable
manner; and (3) the sale or other disposition of assets with a value
individually and in aggregate which does not exceed $100,000.00 in any fiscal
year.
-15-
I.
Guaranties.
Etc. Other
than with respect to indebtedness permitted under Section X.B. above (including
indebtedness of BPR to CMII which is subject to the CMII Subordination
Agreement), assume, guarantee, endorse, or otherwise be or become directly
or
contingently responsible or liable (including, but not limited to, an agreement
to purchase any obligation, stock, assets, goods, or services, or to supply
or
advance any funds, assets, goods, or services, or to maintain or cause such
other person, firm, or entity to maintain a minimum working capital or net
worth, or otherwise to assure the creditors of any other person, firm, or entity
against loss) for obligations of any other person, firm, or entity, except
guaranties by endorsement of negotiable instruments for deposit or collection
or
similar transactions in the ordinary course of business (product warranties
for
purposes of this section shall not be deemed guaranties). Notwithstanding the
foregoing, BANK acknowledges that BORROWER may in the ordinary course of
business be responsible for the performance by certain third parties in
connection with projects undertaken by BORROWER for its customers; provided
BORROWER shall notify the BANK in writing in the event that any such
responsibility or liability is or becomes material.
J.
Transactions
With Affiliates.
Enter
into any material transaction, including, without limitation, the purchase,
sale, or exchange of property or the rendering of any service, with any
affiliate, or the making of advances to any affiliates, except in the ordinary
course of business upon fair and reasonable terms no less favorable to the
BORROWER or GUARANTOR than they would obtain in a comparable arm's length
transaction with a person not an affiliate which have been disclosed in writing
to and approved by the BANK on or before the date of such transaction. As used
herein, an “affiliate” is any person which is a shareholder (but excluding CMII)
or is under common ownership with or a member of the same controlled group
as
BORROWER or GUARANTOR.
K.
Dividends. Except
as
specifically permitted herein below, declare or pay any dividends; or purchase,
redeem, retire, or otherwise acquire for value any capital stock, or warrants
or
options therefor, of any BORROWER or GUARANTOR, now or hereafter outstanding;
or
make any distribution of assets to any stockholders as such of any BORROWER
or
GUARANTOR, whether in cash, assets, or obligations of the BORROWER or GUARANTOR;
or allocate or otherwise set apart any sum for the payment of any dividend
or
distribution on or for the purchase, redemption, or retirement of, any shares
of
capital stock; or warrants or options therefor, of any BORROWER or GUARANTOR,
or
make any other distribution by reduction of capital or otherwise in respect
of
any shares of capital stock, or warrants or options therefor, of any BORROWER
or
GUARANTOR. Notwithstanding the foregoing but subject to the following provision,
BPG may (i) declare and pay ordinary dividends to holders of its common capital
stock, provided that the declaration and payment of any such dividends does
not
and shall not result in or cause a breach of any of the financial covenants
of
the BORROWER under Section IX.Q. of this Agreement and (ii) issue the capital
stock of BPG upon the exercise of any warrants outstanding with respect
thereto.
-16-
L.
Investments. Other
than (i) among the BORROWER and GUARANTOR, (ii) BPG’s investment (whether in the
form of debt or equity) in BPE which at no time shall exceed an aggregate amount
of $_______________, and (iii) the acquisition of warrants by BPG in exchange
for its issuance of capital stock upon the exercise of such warrants; make
any
loan or advance to any person, firm, or entity, or purchase or otherwise acquire
any capital stock, assets, obligations, or other securities of, make any capital
contribution to, or otherwise invest in or acquire any interest in any person,
firm, or entity, except: (1) direct obligations of the United States of any
agency thereof with maturities of one year or less from the date of acquisition;
(2) commercial paper of a domestic issuer rated at least “A-1” by Standard &
Poor's Corporation or “P-1” by Moody's Investor's Service, Inc.; (3)
certificates of deposit with maturities of one year or less from the date of
acquisition issued by any commercial bank having capital and surplus in excess
of One Hundred Million ($100,000,000.00) Dollars; and (4) stock, obligations,
or
securities received in settlement of debts (created in the ordinary course
of
business) owing to the BORROWER.
XI.
CONDITIONS PRECEDENT TO MAKING OF LOANS.
The
obligation of the BANK to make any Loan and make disbursements and advances
of
the proceeds of the same to the BORROWER is subject to the satisfaction by
the
BORROWER, GUARANTOR, or their representatives of the following conditions
precedent with respect to such Loan: (1) the BORROWER and GUARANTOR have
executed and delivered all of the Loan Documents deemed appropriate and
necessary by the BANK in its discretion, in form and substance satisfactory
to
the BANK; (2) the BORROWER’s and GUARANTOR’s warranties and representations as
contained herein and in the Loan Documents shall be accurate and complete in
all
material respects; (3) BANK has received a satisfactory opinion of BORROWER’s
and GUARANTOR’s legal counsel in form and substance satisfactory to the BANK;
and (4) neither BORROWER nor GUARANTOR shall be in default under any of the
covenants, warranties, representations, terms, or conditions contained in this
Agreement or in the Loan Documents as of the date of closing on such Loan and
as
of the date of each disbursement and advance thereunder.
-17-
XII.
EVENTS OF DEFAULT; ACCELERATION.
The
occurrence of any one or more of the following events shall constitute a default
under this Agreement, each of the Loan Documents, and each of the Obligations
(individually, an “Event of Default”, and collectively, “Events of Default”):
(1) if any statement, representation or warranty made by the BORROWER or
GUARANTOR in this Agreement or in any of the Loan Documents, or in connection
with any of the same, or if any financial statement, report, schedule, or
certificate furnished by the BORROWER, GUARANTOR, or any of their officers
or
accountants to the BANK, shall prove to have been false or misleading when
made,
or subsequently becomes false or misleading, in any material respect; (2)
default by the BORROWER in payment on its due date of any principal or interest
called for under any of the Loans or the Loan Documents, or of other amounts
due
under any other of the Obligations, or other default by the BORROWER of its
payment obligations under the Loan Documents or the other Obligations, provided
such default is not cured within any applicable grace period thereunder; (3)
default (other than a payment default described in clause (2) above) by the
BORROWER or GUARANTOR in the compliance, performance or observance of any of
the
provisions, terms, conditions, warranties or covenants of this Agreement, the
Loan Documents, or any other of the Obligations, provided that such default
is
not cured within thirty (30) days of the occurrence thereof, and further
provided, however, that no cure period shall be afforded BORROWER or GUARANTOR
hereunder if such default has or could reasonably be expected to have an
immediate material adverse affect upon the BORROWER’s or GUARANTOR’s financial
condition, upon the BORROWER’s or GUARANTOR’s ability to conduct its business,
upon the Collateral, or upon the rights, remedies, and/or security of BANK
under
this Agreement or the other Loan Documents; (4) the dissolution, termination
of
existence, merger or consolidation of the BORROWER or GUARANTOR, or a sale
of
all or substantially all of the BORROWER’s or GUARANTOR’S business, assets or
properties not in the ordinary course of business; (5) the BORROWER or GUARANTOR
shall (a) apply for or consent to the appointment of a receiver, trustee or
liquidator of any of them or any of their property, (b) make a general
assignment for the benefit of creditors, (c) be subject to an order of relief
from creditors, (d) file a voluntary petition in bankruptcy, or a petition
or an
answer seeking reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation under any law or statute, or an answer admitting
the
material allegations of a petition filed against any of them in any proceeding
under any such law or statute, or (e) offer or enter into any composition,
extension or arrangement seeking relief or extension of their debts; (6)
proceedings shall be commenced or an order, judgment or decree shall be entered,
without the application, approval or consent of the BORROWER or GUARANTOR,
as
the case may be, in or by any court of competent jurisdiction, relating to
the
bankruptcy, dissolution, liquidation, reorganization or the appointment of
a
receiver, trustee or liquidator of the BORROWER or GUARANTOR, or of all or
a
substantial part of their assets, and such proceedings, order, judgment or
decree shall continue undischarged or unstayed for a period of sixty (60) days;
(7) BORROWER’s or GUARANTOR’s inability to pay their debts as they mature or
other act of insolvency, as determined by the BANK in a commercially reasonable
manner; (8) a judgment for the payment of money not covered by insurance shall
be rendered against the BORROWER or GUARANTOR in an amount in excess of
$100,000.00 and the same shall remain undischarged for a period of thirty (30)
days, during which period execution shall not be effectively stayed; (9) any
default or event of default, or failure to pay when due, with respect to any
material indebtedness, liabilities or obligations of BORROWER or GUARANTOR
to
any third party, including, but not limited to, with respect to any Permitted
Subordinated Debt; (10) if at any time during the twelve (12) month period
from
the date of this Agreement, ▇▇▇▇▇ ▇▇▇▇▇▇ is not the Chief Executive Officer
of
the BORROWER; or (11) any material adverse change to the BORROWER or GUARANTOR,
or to their financial condition, or to the Collateral, and BORROWER has failed
to cure the conditions giving rise thereto after written notice thereof from
the
BANK.
Upon
the
occurrence of any Event of Default, the BANK's commitment to make further Loans
under the Loan Documents or any other agreement with the BORROWER, and to make
any advances or disbursements under any Loan, shall immediately cease and
terminate and, at the election of the BANK, all of the Obligations of the
BORROWER to the BANK, either under this Agreement, the Loan Documents, or
otherwise, will immediately become due and payable without further demand,
notice or protest, all of which are hereby expressly waived. Thereafter, the
BANK may proceed to protect and enforce its rights, at law, in equity, or
otherwise, against the BORROWER and GUARANTOR, and any endorser of the
BORROWER’s Obligations, either jointly or severally, and may proceed to
liquidate and realize upon any of its Collateral in accordance with the rights
of a secured party under the Uniform Commercial Code, under any other applicable
law, under any Loan Documents, under any other agreement between the BORROWER
or
GUARANTOR and the BANK, or under any agreement between any endorser of the
BORROWER’s Obligations to the BANK, and to apply the proceeds thereof to payment
of the Obligations of the BORROWER to the BANK in such order and in such manner
as the BANK, in its sole discretion, deems appropriate.
-18-
XIII. JOINT
AND SEVERAL LIABILITY.
A.
Each
BORROWER and GUARANTOR is accepting joint and several liability under this
Agreement in consideration of the financial accommodations to be provided by
BANK under this Agreement, for the mutual benefit, directly and indirectly,
of
each BORROWER and GUARANTOR, and in consideration of the undertakings of each
other BORROWER and GUARANTOR to accept joint and several liability for the
Obligations of each BORROWER to BANK.
B.
Each
BORROWER and GUARANTOR, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with each other BORROWER and GUARANTOR, with respect
to
the payment and performance of all of the Obligations of each BORROWER to BANK
under this Agreement (including, without limitation, any Obligations arising
under this section), it being the intention of the parties hereto that all
the
Obligations of each BORROWER to the BANK under this Agreement shall be the
joint
and several obligation of each of the BORROWER and GUARANTOR without preferences
or distinction among them.
C.
If and
to the extent that any BORROWER or GUARANTOR shall fail to make any payment
with
respect to any of the Obligations of each BORROWER to BANK under this Agreement,
as and when due or to perform any of such Obligations in accordance with the
terms thereof, then in each such event the other BORROWER and GUARANTOR, under
this Agreement will make such payment with respect to, or perform, such
Obligation.
D.
The
Obligations of each BORROWER and GUARANTOR under the provisions of this section
constitute full recourse Obligations of each BORROWER and GUARANTOR enforceable
against each such BORROWER and GUARANTOR to the full extent of its properties
and assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other circumstance whatsoever.
-19-
E.
Each
BORROWER and GUARANTOR hereby waives notice of acceptance of its joint and
several liability, notice of any loans made under this Agreement, notice of
any
action at any time taken or omitted by BANK under or in respect of any of the
Obligations of each BORROWER to BANK under this Agreement, and generally, to
the
extent permitted by applicable law, but excepting only those notices and rights
to cure specifically provided under this Agreement, all demands, notices and
other formalities of every kind in connection with this Agreement. Each BORROWER
and GUARANTOR hereby assents to, and waivers notice of, any extension or
postponement of the time for the payment of any of the Obligations of each
BORROWER to BANK under this Agreement, the acceptance of any payment of any
of
such Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by BANK at any time or times in respect
of any default by any BORROWER and GUARANTOR in the performance or satisfaction
of any term covenant, condition or provision of this Agreement, any and all
other indulgences whatsoever by BANK in respect of any of the Obligations of
each BORROWER to BANK under this Agreement, and the taking, addition,
substitution or release, in whole or in part, at any time or times, of any
security for any of such Obligations of each BORROWER to BANK or the addition,
substitution or release, in whole or in part, of any BORROWER or GUARANTOR.
Without limiting the generality of the foregoing, each BORROWER and GUARANTOR
assents to any other action or delay in acting or failure to act on BANK’s part
with respect to the failure by any BORROWER or GUARANTOR to comply with any
of
its respective Obligations, including, without limitation, any failure strictly
or diligently to assert any right or to pursue any remedy or to comply fully
with applicable laws or regulations thereunder, which might, but for the
provisions of this section, afford grounds for terminating, discharging or
relieving any BORROWER or GUARANTOR, in whole or in part, from any of its
Obligations under this section, it being the intention of each BORROWER and
GUARANTOR that, so long as any of the Obligations under this Agreement remain
unsatisfied, the Obligations of such BORROWER and GUARANTOR under this section
shall not be discharged except by performance and then only to the extent of
such performance. The obligations of each BORROWER and GUARANTOR under this
section shall not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar proceeding
with respect to any other BORROWER or GUARANTOR or BANK. The joint and several
liability of each BORROWER and GUARANTOR under this Agreement shall continue
in
full force and effect notwithstanding any absorption, merger, amalgamation
or
any other change whatsoever in the name, membership, constitution or place
of
formation of any BORROWER or GUARANTOR or BANK.
F.
The
provisions of this section are made for the benefit of BANK and BANK’s
successors and assigns, and may be enforced by BANK in good faith from time
to
time against any or all of the BORROWER and GUARANTOR as often as occasion
therefore may arise and without requirement on BANK’s part first to marshal any
of its claims or to exercise any of its rights against any BORROWER or GUARANTOR
or to exhaust any remedies available to BANK against any other BORROWER or
GUARANTOR or to resort to any other source or means of obtaining payment of
any
of the Obligations under this Agreement or to elect any other remedy. The
provisions of this section shall remain in effect until all of the Obligations
of each BORROWER to BANK under this Agreement shall have been paid in full
or
otherwise fully satisfied. If at any time, any payment, or any part thereof,
made in respect of any of such Obligations of each BORROWER to BANK, is
rescinded or must otherwise be restored or returned by BANK upon the insolvency,
bankruptcy or reorganization of any BORROWER or GUARANTOR, or otherwise, the
provisions of this section will forthwith be reinstated in effect, as though
such payment had not been made.
-20-
G.
Each
BORROWER and GUARANTOR agrees that it shall not have, and hereby expressly
waives: (i) any right to subrogation or indemnification, and any other right
to
payment from or reimbursement by any other BORROWER or GUARANTOR, in connection
with or as a consequence of any payment made by any BORROWER or GUARANTOR to
BANK, (ii) any right to enforce any right or remedy which BANK has or may
hereafter have against any other BORROWER or GUARANTOR, and (iii) any benefit
of, and any right to participate in (A) any collateral now or hereafter held
by
BANK, or (B) any payment to BANK by, or collection by BANK from any other
BORROWER or GUARANTOR. The provisions of this paragraph are made for the express
benefit of each BORROWER and GUARANTOR as well as BANK, and may be enforced
independently by each BORROWER and GUARANTOR or any successor in interest to
each BORROWER and GUARANTOR. The foregoing shall in no manner limit the rights
of BORROWER and GUARANTOR against any third party or the properties or assets
of
any such third party.
XIV.
MISCELLANEOUS PROVISIONS.
A.
Entire
Agreement; Waivers.
This
Agreement, the Schedules hereto, and the Loan Documents together constitute
the
entire agreement among the BORROWER, GUARANTOR, and the BANK with respect to
the
subject matter hereof. No covenant, term, condition or other provision of this
Agreement or any of the Loan Documents, or any default in connection therewith,
may be waived except by an instrument in writing, signed by the BANK and
delivered to the BORROWER and GUARANTOR. The BANK’s failure to exercise or
enforce any of its rights, powers or privileges under this Agreement or the
Loan
Documents shall not operate as a waiver thereof. In the event of any conflict
between the terms, covenants, conditions and restrictions contained in the
Loan
Documents, the term, covenant, condition or restriction which confers the
greatest benefit upon the BANK shall control. The determination as to which
term, covenant, condition or restriction is more beneficial shall be made by
the
BANK in its sole discretion.
B.
Remedies
Cumulative.
All
remedies provided under this Agreement and the Loan Documents or afforded by
law
shall be cumulative and available to the BANK until all of the BORROWER’s
Obligations to the BANK have been paid in full.
C.
Survival
of Covenants.
All
covenants, agreements, representations and warranties made in this Agreement
and
in the Loan Documents shall be deemed to be material and to have been relied
on
by the BANK, notwithstanding any investigation made by the BANK or in its
behalf, and shall survive the execution and delivery of this Agreement and
the
Loan Documents. All such covenants, agreements, representations and warranties
shall bind and inure to the benefit of the BORROWER’s, GUARANTOR’s, and the
BANK’s successors and assigns, whether so expressed or not.
D.
Governing
Law; Jurisdiction.
This
Agreement and the Loan Documents shall be construed and their provisions
interpreted under and in accordance with the laws of the State of New Hampshire.
The BORROWER and GUARANTOR, to the extent they may legally do so, hereby consent
to the jurisdiction of the courts of the State of New Hampshire and the United
States District Court for the State of New Hampshire for the purpose of any
suit, action or other proceeding arising out of any of their obligations
hereunder or with respect to the transactions contemplated hereby, and expressly
waive any and all objections they may have to venue in any such
courts.
-▇▇-
▇.
▇▇▇▇▇▇▇▇▇
of Execution and Delivery of Closing Documents and Additional
Instruments.
The
BORROWER and GUARANTOR agree to execute and deliver, or to cause to be executed
and delivered, to the BANK all of the documents, instruments, and certificates
set forth on the Closing Agenda of even date herewith and all such further
instruments, and to do or cause to be done all such further acts and things,
as
the BANK may reasonably request or as may be necessary or desirable to effect
further the purposes of this Agreement and the Loan Documents. Upon receipt
of
an affidavit of an officer of BANK as to the loss, theft, destruction or
mutilation of any Note or any other of the Loan Documents which is not of public
record, and, in the case of any such loss, theft, destruction or mutilation,
upon surrender and cancellation of such Note or other of the Loan Documents,
BORROWER will issue, in lieu thereof, a replacement Note or other of the Loan
Documents in the same principal amount thereof and otherwise of like
tenor.
F.
Waivers
and Assents.
The
BORROWER, GUARANTOR, and any endorsers of the BORROWER Obligations to the BANK,
hereby waive, to the fullest extent permitted by law, all rights to marshaling
of assets and all rights to demand, notice, protest, notice of acceptance of
this Agreement and the Loan Documents, notice of Loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description with respect both to the Loan
Documents and the Collateral.
G.
No
Duty of the Bank With Respect to the Collateral.
The
BANK shall have no duty as to the collection or protection of Collateral or
any
income thereon, nor as to the preservation of rights against prior parties,
nor
as to the preservation of any rights pertaining thereto, beyond the safe custody
thereof.
H.
Election
of the Bank.
The
BANK may exercise its rights with respect to Collateral without resorting or
regard to other collateral or sources of reimbursement for the Obligations
of
BORROWER to the BANK.
-22-
I.
Assignment
and Pledge.
BANK
shall have the unrestricted right at any time or from time to time, and without
BORROWER’s or GUARANTOR’s consent, to assign all or any portion of its right and
obligations under this Agreement and the Loan Documents to one or more banks
or
other financial institutions (each, an “Assignee”), and BORROWER and GUARANTOR
agree that they shall execute, or cause to be executed, such documents,
including without limitation, amendments to this Agreement and to any Loan
Documents as BANK shall deem necessary to effect the foregoing. In addition,
at
the request of BANK and any such Assignee, BORROWER shall issue one or more
new
promissory notes, as applicable, to any such Assignee and, if BANK has retained
any of its rights and obligations hereunder following such assignment, to BANK,
which new promissory notes shall be issued in replacement of, but not in
discharge of, the liability evidenced by the promissory note held by BANK prior
to such assignment and shall reflect the amount of the respective commitments
and loans held by such Assignee and BANK after giving effect to such assignment.
Upon the execution and delivery of appropriate assignment documentation,
amendments and any other documentation required by BANK in connection with
such
assignment, and the payment by Assignee of the purchase price agreed to by
BANK
and such Assignee, such Assignee shall be a party to this Agreement and shall
have all of the rights and obligations of BANK hereunder (and under any and
all
other guaranties, documents, instruments and agreements executed in connection
herewith) to the extent that such rights and obligations have been assigned
by
BANK pursuant to the assignment documentation between BANK and such Assignee,
and BANK shall be released from its obligations hereunder and thereunder to
a
corresponding extent. This Agreement and the Loan Documents shall be binding
upon and inure to the benefit of the BANK, BORROWER, GUARANTOR, their
successors, assigns, heirs and personal representatives; provided, however,
the
rights and obligations of the BORROWER and GUARANTOR are not assignable,
delegable or transferable without the consent of the BANK. BANK may at any
time
pledge all or any portion of its rights under this Agreement and the Loan
Documents, including, but not limited to, any portion of any Note to any of
the
twelve (12) Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement thereof shall
release BANK from its obligations under any of the Loan Documents.
J.
Participations.
BANK
shall have the unrestricted right at any time and from time to time, and without
the consent of or notice to BORROWER or GUARANTOR, to grant to one or more
banks
or other financial institutions (each, a “Participant”) participating interests
in BANK’s obligations to lend under this Agreement, the Loan Documents, and/or
any or all of the Loans held by BANK hereunder. In the event of any such grant
by BANK of a participating interest to a Participant, whether or not upon notice
to BORROWER or GUARANTOR, BANK shall remain responsible for the performance
of
its obligations hereunder and BORROWER and GUARANTOR shall continue to deal
solely and directly with BANK in connection with BANK’s rights and obligations
hereunder. BANK may furnish any information concerning BORROWER and GUARANTOR
in
its possession from time to time to prospective Assignees and Participants,
provided that BANK shall require any such prospective Assignees or participant
to agree in writing to maintain the confidentiality of such
information.
K.
The
BANK’s Right of Offset.
BORROWER and GUARANTOR each hereby grants to BANK, a continuing lien, security
interest and right of setoff as security for all liabilities and obligations
to
BANK, whether now existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of BANK or any entity under the control of Banknorth
Group, Inc. and its successors and assigns or in transit to any of them. At
any
time, without demand or notice (any such notice being expressly waived by
BORROWER and GUARANTOR), BANK may setoff the same or any part thereof and apply
the same to any liability or obligation of BORROWER or GUARANTOR even though
unmatured and regardless of the adequacy of any other collateral securing the
Loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING
ITS
RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF
BORROWER OR GUARANTOR ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
-23-
L.
Notices.
All
notices, requests, demands and other communications provided for hereunder
shall
be in writing (including telegraphic communication) and shall be either mailed
by certified mall, return receipt requested, or delivered by overnight courier
service, to the applicable party at the addresses set forth in this
Agreement.
M.
Savings
Clause.
Any
provision of this Agreement or any of the Loan Documents which is prohibited
or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating
the
remaining provisions hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
N.
Term
of this Agreement.
This
Agreement shall remain in full force and effect until all of the Obligations
have been paid in full, all of the terms, conditions and covenants under the
Loan Documents have been performed, and all commitments of the BANK advance
funds under any of the Loans have terminated.
O.
Use
of
Proceeds.
No
portion of the proceeds of the Loans shall be used, in whole or in part, for
the
purpose of purchasing or carrying any “margin stock” as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve
System.
P. Fees
and Expenses.
BORROWER shall pay on demand all reasonable expenses of BANK in connection
with
the preparation, administration, default, collection, waiver or amendment of
the
Loans, or in connection with BANK’s exercise, preservation or enforcement of any
of its rights, remedies or options hereunder, including, without limitation,
fees of outside legal counsel or the allocated costs of in-house legal counsel,
accounting, consulting, brokerage or other similar professional fees or
expenses, and any fees or expenses associated with travel or other costs
relating to any appraisals or examinations conducted in connection with the
Loans or any Collateral therefor, and the amount of all such expenses shall,
until paid, bear interest at the rate applicable to principal hereunder
(including any default rate) and be an Obligation secured by any Collateral.
BANK shall provide to BORROWER a statement in reasonable detail of such expenses
upon BANK’s demand for payment thereof by BORROWER.
Q. Final
Agreement.
This
Agreement is intended by the parties as the final, complete and exclusive
statement of the transactions evidenced by this Agreement. All prior or
contemporaneous promises, agreements and understandings, whether oral or
written, are deemed to be superceded by this Agreement, and no party is relying
on any promise, agreement or understanding not set forth herein. This Agreement
may not be amended or modified except by a written instrument describing such
amendment or modification executed by BORROWER, GUARANTOR, and
BANK.
R.
Interest
Rate Provisions.
If, at
any time, the rate of interest, together with all amounts which constitute
interest and which are reserved, charged or taken by BANK as compensation for
fees, services or expenses incidental to the making, negotiating or collection
of the loan evidenced hereby, shall be deemed by any competent court of law,
governmental agency or tribunal to exceed the maximum rate of interest permitted
to be charged by BANK to BORROWER under applicable law, then, during such time
as such rate of interest would be deemed excessive, that portion of each sum
paid attributable to that portion of such interest rate that exceeds the maximum
rate of interest so permitted shall be deemed a voluntary prepayment of
principal. As used herein, the term “applicable law” shall mean the law in
effect as of the date hereof; provided, however, that in the event there is
a
change in the law which results in a higher permissible rate of interest, then
the applicable Loan Document shall be governed by such new law as of its
effective date.
-24-
S.
Waiver
of Jury Trial.
BORROWER, GUARANTOR, AND BANK MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE
OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF BANK RELATING TO THE ADMINISTRATION
OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT NO PARTY WILL
SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, EACH OF BANK,
BORROWER, AND GUARANTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES
OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER AND
GUARANTOR CERTIFY THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF BANK HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR BANK TO ENTER INTO THIS AGREEMENT AND MAKE THE
LOAN.
[SIGNATURE
PAGE FOLLOWS]
-25-
IN
WITNESS WHEREOF,
the
BANK, BORROWER, and GUARANTOR have executed this Agreement all as of the day
and
year first above written.
| BANK: | ||
| WITNESSES: | BANKNORTH, N.A. | |
| |
|
|
| By: | /s/ | |
|
▇▇▇▇ ▇▇▇▇▇▇▇, Senior Vice President |
||
| BORROWER: | ||
| BRANDPARTNERS GROUP, INC. | ||
| |
|
|
| By: | /s/ | |
|
Signature and Title/Duly Authorized |
||
| BRANDPARTNERS RETAIL, INC. | ||
| |
|
|
| By: | /s/ | |
|
Signature and Title/Duly Authorized |
||
| GUARANTOR: | ||
| GRAFICO INCORPORATED | ||
| |
|
|
| By: | /s/ | |
|
Signature and Title/Duly Authorized |
||
| Title | ||
-26-
BANKNORTH,
N.A.
SCHEDULE
A
CASH
MANAGEMENT PROVISIONS
BORROWER
has established and shall maintain with the BANK a single Demand Deposit Account
No. 9241250820 in the name “BrandPartners Group, Inc.” (the “Account”). BORROWER
and BANK desire to establish a link between the Account and the Revolving Line
of Credit Loan in order to provide for, among other things, automatic advances
(“Automated Sweep Advances”) under the Revolving Line of Credit Loan to fund
debits to the Account that are not otherwise covered by available funds
(“Debits”) and automatic repayment of principal and payment of interest on the
Automated Sweep Advances outstanding under the Revolving Line of Credit Loan
from funds in the Account.
BORROWER
has requested that Automated Sweep Advances be automatically authorized under
the Revolving Line of Credit Loan to fund any Debits to the Account, and to
maintain any applicable pre-set Target Balance, subject to the availability
of
credit under the Revolving Line of Credit Loan. BORROWER has further requested
that any available funds in the Account at the end of the day, subject to any
applicable pre-set Target Balance, be used to repay any principal amounts due
to
the BANK under the Revolving Line of Credit Loan outstanding as a result of
Automated Sweep Advances.
For
purposes of implementing the foregoing, the BANK and BORROWER agree as
follows:
A. The
Revolving Line of Credit Loan is linked to the Account. To the extent that
credit is available under the Revolving Line of Credit Loan, and provided that
the BANK has not terminated the linkage to the Account, Advances under the
Revolving Line of Credit Loan shall be made by the BANK on an automatic basis
to
fund Debits to the Account (that, in the absence of the Revolving Line of Credit
Loan, would result in an overdraft), and to maintain any applicable pre-set
Target Balance. Such Automated Sweep Advances shall not require the
authorization of the BORROWER. Any Automated Sweep Advances under the Revolving
Line of Credit Loan affirmatively desired by the BORROWER may be initiated
only
by
accessing the Account directly via check or other method deemed appropriate
by
the BANK.
B. An
Automated Sweep Advance under the Revolving Line of Credit Loan shall not occur
if the credit availability under the Revolving Line of Credit Loan has been
terminated by the BANK, or if the credit availability is insufficient to cover
the full amount of the overdraft or the full amount necessary to maintain any
applicable pre-set Target Balance, as the case may be, or if the credit
availability is suspended in accordance with the terms of the Loan Documents,
or
if the total of Advances outstanding under the Revolving Line of Credit Loan
together with the amount of any Automated Sweep Advance would exceed the maximum
credit limit under the Loan Documents. The BORROWER agrees that the BANK has
the
right to decline, at any time in the exercise of its sole discretion, to make
an
Automated Sweep Advance to the BORROWER under the Revolving Line of Credit
Loan.
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C. The
aggregate amount of Automated Sweep Advances outstanding under the Revolving
Line of Credit Loan shall be automatically debited from the Account and repaid
on a daily basis, provided that there are available funds in the Account and
subject to any applicable Target Balance. Interest due on Automated Sweep
Advances outstanding under the Revolving Line of Credit Loan shall be
automatically debited from the Account and repaid from available funds in the
Account on the day of each month specified for the payment of interest in the
Loan Documents (“Interest Payment Date”), subject to any applicable Target
Balance. Any available funds in the Account on the Interest Payment Date shall
be used to satisfy the monthly interest payment first, with any excess to be
applied to principal as set forth above. Partial payments will continue as
funds
become available until repayment is made in full. If there are insufficient
funds available in the Account to cover the payment of amounts due for interest
on the outstanding principal in accordance with the payment schedule set forth
above, an Automated Sweep Advance under the Revolving Line of Credit Loan shall
automatically occur to fund such payment to the extent that there is
availability under the Revolving Line of Credit Loan.
D.
The
Revolving Line of Credit Loan is considered “delinquent” when the interest and
any other amounts due to the BANK under the terms of the Loan Documents have
not
been paid as required by the terms of the Loan Documents. Notwithstanding
the foregoing, late fee charges will not be imposed on the Automated Sweep
Advances while the link between the Revolving Line of Credit Loan and the
Account is in effect.
E. Subject
to paragraph F below, repayment of Automated Sweep Advances due under the
Revolving Line of Credit Loan may be made only by deposit to the linked Account
and automatic debit by the BANK of available funds in the Account to satisfy
the
amounts due. Items on deposit include wire transfers to the Account, electronic
items, cash and check deposits and any other credit items deemed to be on
deposit by the BANK.
F. Notwithstanding
anything herein to the contrary, the BANK reserves the right to mail an invoice
to the BORROWER, at any time and from time to time, for the entire unpaid
principal balance and accrued interest plus any late fees or other amounts
due
under the Revolving Line of Credit Loan. In addition, the BANK reserves the
right to collect payment from the BORROWER by check or any other payment method
at the time the Revolving Line of Credit Loan terminates, whether such
termination is voluntary or the result of demand by the BANK or an event of
default, or at the time the BORROWER requests payoff information in anticipation
of closing the Revolving Line of Credit Loan, or any other time deemed
appropriate by the BANK.
If
at any
time the Note evidencing the Revolving Line of Credit Loan is payable on a
demand basis, the entire principal balance of any and all Advances under the
Revolving Line of Credit Loan shall be due and payable to the BANK ON DEMAND.
In
no
event
shall
the payment method described herein be construed as a limitation on the BANK’s
right under the Loan Documents to demand full payment of any or all Advances.
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G. The
BORROWER acknowledges and agrees that the BANK may sever the link between the
Revolving Line of Credit Loan and the Account at any time. If the link is
severed, no Automated Sweep Advances will be made under the Revolving Line
of
Credit Loan to fund Debits in the Account. The BANK may continue to
automatically debit the Account for amounts due to it for principal, interest
and late fees in accordance with the terms of the Loan Documents.
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BANKNORTH,
N.A.
SCHEDULE
B
ADDITIONAL
TERMS AND CONDITIONS
I. Fees
Payable by BORROWER:
| Commitment Fee: | $75,000.00 (payable in full on the date hereof) | |
| Unused Revolving Line of Credit | ||
| Commitment Fee: | 0.375% per annum of daily average of unadvanced amounts under Revolving Line of Credit Loan (based upon maximum amount of $5,000,000.00), determined quarterly and payable in arrears | |
| Prepayment Fee: |
In
the event of any termination for any reason of the Revolving Line
of
Credit prior to the Revolving Line of Credit Maturity Date, or prepayment
of the Term Loan prior to the scheduled payments of principal thereunder,
BORROWER shall pay to BANK a prepayment fee equal to the product
of the
Commitment Amount (as hereinafter defined) multiplied by (a) two
percent
(2%) if such termination or prepayment occurs on or before May 4,
2006 or
(b) one percent (1%) if such termination or prepayment occurs after
May 4,
2006 and on or before the Revolving Line of Credit Maturity Date.
“Commitment Amount” means the sum of $5,000,000 plus the then outstanding
principal balance of the Term
Loan. |
II. Description
of Financial Statements to be Delivered:
A.
Annual
consolidated and consolidating financial statements of BORROWER and GUARANTOR
within ninety (90) days after the end of each fiscal year, including balance
sheets and statements of income, retained earnings and surplus, and a statement
of cash flow, together with supporting schedules, setting forth in each case
comparative figures for the preceding fiscal year, all as prepared in accordance
with generally accepted accounting principles consistently applied and in each
case prepared and audited by an independent certified public accountant
reasonably acceptable to BANK.
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B.
Form
10K annual report of Brand Partners Group, Inc. as filed with the Securities
and
Exchange Commission within ninety (90) days after the end of each fiscal
year.
C.
Copies
of all management letters, exception reports or similar letters or reports
received by BORROWER from its independent certified public accountants within
five (5) days after receipt thereof by BORROWER.
D.
Monthly consolidated financial statements of the BORROWER and GUARANTOR within
thirty (30) days after the end of each month, including balance sheets and
statements of income and cash flow, together with supporting schedules, all
as
prepared on a consistent basis by the BORROWER and GUARANTOR.
E.
Form
10Q quarterly report of BrandPartners Group, Inc. as filed with the Securities
and Exchange Commission within ninety (90) days after the end of each fiscal
quarter.
F.
Annual
operating budgets and plans of the BORROWER and GUARANTOR prepared on a month
by
month basis to be delivered to the BANK within thirty (30) days prior to the
beginning of the fiscal year as to which they pertain.
G.
Current project backlog summary of the BORROWER and GUARANTOR within thirty
(30)
days after the end of each month.
H.
Financial covenant compliance certifications by the BORROWER within forty-five
(45) days after the end of each fiscal quarter on such or forms as may from
time
to time be specified by the BANK.
I.
Form
8K’s as filed with the Securities and Exchange Commission within one (1)
business day of filing with the Securities and Exchange Commission.
III. Financial
Covenants
A.
BORROWER, on a consolidated basis with GUARANTOR, shall have a minimum Tangible
Capital Base (as hereinafter defined) of not less than negative Two Million
Five
Hundred Thousand Dollars ($2,500,000.00) as of March 31, 2005, and as of the
end
of each of BORROWER’s fiscal quarters thereafter, which minimum Tangible Capital
Base shall increase on a cumulative basis as of the end of each fiscal quarter
by an amount equal to fifty percent (50%) of the Net Profits (as hereinafter
defined) for such fiscal year. “Tangible Capital Base”
means
the value of BORROWER's and GUARANTOR’s total assets on a consolidated basis
(but excluding goodwill, patents, trademarks, trade names, organization expense,
unamortized debt discount and expense, capitalized or deferred research and
development costs, deferred marketing expenses, and other like intangibles)
less
total liabilities, including but not limited to accrued and deferred income
taxes, but excluding Permitted Subordinated Debt,
all as
determined from the BORROWER's and GUARANTOR’s financial statements delivered to
the BANK in accordance with the covenants of the BORROWER herein above (the
“Financial Statements”). “Net Profits” means net profits of BORROWER and
GUARANTOR on a consolidated basis as determined on a consolidated basis in
accordance with generally accepted accounting principles from the Financial
Statements.
-31-
B.
BORROWER, on a consolidated basis with GUARANTOR, shall maintain a Fixed Charge
Coverage Ratio (as hereinafter defined) of not less than 1.5:1
as of
March 31, 2005, and as of the end of each of BORROWER’s fiscal quarters
thereafter.
“Fixed
Charge Coverage Ratio” means the ratio of (a) EBITDA (as hereinafter defined),
minus the sum of taxes, dividends, and non-financed capital expenditures paid
in
cash, for the twelve (12) month period ending on the date of determination,
to
(b) the sum of interest expense, lease expense, rent expense, required scheduled
principal payments on long term debt and the current portion of capitalized
lease obligations all for the twelve (12) month period ending on the date of
determination. “EBITDA” means BORROWER’s and GUARANTOR’s net income on a
consolidated basis, less income or plus loss from discontinued operations and
extraordinary items, plus income taxes, plus interest expense, plus
depreciation, depletion, amortization and other non-cash charges, all for the
twelve (12) month period ending on the date of determination.
C.
BORROWER, on a consolidated basis with GUARANTOR, shall maintain a ratio of
Funded Debt (as hereinafter defined) to EBITDA not exceeding 2.0:1
as of
March 31, 2005, and as of the end of each of BORROWER’s fiscal quarters
thereafter.
“Funded
Debt” means all of BORROWER’s and GUARANTOR’s outstanding liabilities for
borrowed money and other interest-bearing liabilities on a consolidated basis,
including current and long-term debt (including the Loans and Permitted
Subordinated Debt).
D.
BORROWER shall maintain at all times Permitted Subordinated Debt in the
principal amount of not less than $5,500,000.00.
E.
BORROWER,
on a
consolidated basis with GUARANTOR,
shall
report and certify to BANK its compliance with the financial covenants
hereinabove within forty-five (45) days after the end of each fiscal quarter,
commencing with the fiscal quarter ending March 31, 2005, on such form or forms
as may from time to time be specified by the BANK.
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