AMENDMENT AND WAIVER NO. 5, dated as of March , 2007 (this "Amendment") BY AND AMONG
Exhibit
10.2
AMENDMENT
AND WAIVER NO. 5,
dated
as of March , 2007 (this "Amendment")
BY
AND AMONG
| (1) |
BRANDPARTNERS
GROUP, INC.,
a
Delaware corporation ("BPG");
|
| (2) |
BRANDPARTNERS
RETAIL, INC., a
New Hampshire corporation (formerly known as ▇▇▇▇▇▇ Brothers, Inc.)
("BPR",
and together with BPG, each individually a "Company"
and collectively, the "Companies");
and
|
| (3) |
CORPORATE
MEZZANINE II, L.P.,
a
British Virgin Islands limited partnership ("CMII").
|
WHEREAS,
the
Companies and CMII are parties to a certain Subordinated Note and Warrant
Purchase Agreement dated as of October 22, 2001, as amended by Amendment
No. 1 and Waiver dated as of May 14, 2002, Amendment No. 2 and
Waiver dated as of August 9, 2002, Amendment No. 3 and Waiver dated as of
January 7, 2004 and Amendment No. 4, dated as of May 5, 2005 (the "Original
Purchase Agreement"
and as
amended hereby, the "Purchase
Agreement")
pursuant to which (i) BPR has issued and sold to CMII a subordinated promissory
note (as amended by Amendment No. 1, dated as of January 7, 2004, the
"Note")
in the
original principal amount of $5,000,000 with a final maturity of October 22,
2008, and (ii) BPG has issued and sold to CMII certain warrants for the
purchase of an aggregate of 665,000 shares of common stock of BPG (the
"Warrants");
and
WHEREAS,
the
Companies, Grafico Incorporated, a Delaware corporation and wholly owned
subsidiary of BPG ("Grafico"),
and
Banknorth, N.A., a national banking association (the "Banknorth")
are
parties to a Commercial Loan Agreement, dated as of May 5, 2005 (as the same
has
been or may be amended, restated, supplemented or otherwise modified from time
to time as permitted under the Subordination Agreement, the "Senior
Credit Agreement");
and
WHEREAS,
the
Companies, Grafico, CMII and Banknorth are parties to a Subordination and
Intercreditor Agreement, dated as of May 5, 2005 (as the same may be amended,
restated, supplemented or otherwise modified from time to time as permitted
thereunder, the "Subordination
Agreement");
and
WHEREAS,
(i)
Section 8.3(b) of the Original Purchase Agreement requires that BPR shall
maintain for each period of twelve trailing months ending on the last day of
each fiscal quarter, minimum EBITDA of at least $900,000 (the “Original
Minimum EBITDA Covenant”),
(ii)
Section 8.3(c) of the Original Purchase requires that BPR shall not permit
Interest Coverage Ratio for any
period of four consecutive fiscal quarters ending on the last day of
any
fiscal quarter to be less than 2.1:1 (the “Original
Interest Coverage Covenant”)
and
(iii) Section 8.3(d) of the Original Purchase Agreement requires that on the
last day of each fiscal quarter, BPR shall not permit Fully Loaded Fixed Charge
Coverage Ratio for any such fiscal quarter to be less than 1.15:1 (the
“Original Fixed
Charge Coverage Covenant”);
and
WHEREAS,
BPR has
not complied with (i) the Original Minimum EBITDA Covenant for the periods
of
twelve trailing months ended on March 31, 2006 and December 31, 2006,
respectively, (ii) the Original Fixed Charge Coverage Covenant for the periods
of four consecutive fiscal quarters ended on March 31, 2006 and December 31,
2006, respectively or (iii) the Original Interest Coverage Covenant for the
period of four consecutive fiscal quarters ended on December 31, 2006 (the
“Subject
Events of Default”);
and
WHEREAS,
the
Companies have requested that CMII amend certain provisions of the Original
Purchase Agreement;
WHEREAS,
the
Companies have asked CMII to waive the Subject Events of Default, but only
for
the specific covenants and time period set forth above; and
WHEREAS,
subject
to the satisfaction of the conditions set forth in Section 4, CMII is willing
to
waive the Subject Events of Default, but only for the specific covenants and
time periods set forth above and is willing to amend certain provisions of
the
Original Purchase Agreement, but only on the terms and conditions set forth
in
this Amendment.
NOW,
THEREFORE,
for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
(1) Definitions.
Capitalized terms used in this Amendment shall have the meanings given them
in
the Original Purchase Agreement unless otherwise defined herein.
(2) Affirmation
of Original Purchase Agreement.
Each
Company acknowledges that each of the Original Purchase Agreement, the Note
and
each Warrant is a valid and binding obligation of the Companies, in the case
of
the Original Purchase Agreement, of BPG, in the case of the Warrant, and of
BPR,
in the case of the Note, enforceable against the Companies, BPG or BPR, as
the
case may be, in accordance with their respective terms.
(3) Amendment.
Effective as of the Effective Date (as hereinafter defined) and subject to
the
conditions to effectiveness set forth in Section
4
hereof,
the Original Purchase Agreement is hereby amended as follows:
| (a) |
Section
8.3 of the Original Purchase Agreement is amended and restated in
its
entirety as follows:
|
“8.3
Financial Covenants
Until
the
payment in full by BPR of all principal of and interest on the Notes and of
all
other amounts owing at the time of payment of such principal and interest to
CMII under this Agreement, including, without limitation, all expenses and
amount due at such time in respect of indemnity obligations under ▇▇▇▇▇▇▇ ▇,
▇▇▇
▇▇▇▇▇▇▇▇▇ and agrees that:
| (a) |
Maximum
Total Debt to EBITDA
|
BPR
shall
maintain a ratio of Total Debt to EBITDA of not more than 3.6:1.0 for each
period of four consecutive fiscal quarters ending on the last day of each fiscal
quarter, beginning with the fiscal quarter ending on March 31,
2007.
| (b) |
Minimum
EBITDA
|
BPR
shall
not permit EBITDA for any fiscal quarter ending on or after March 31, 2007
to be
less than $650,000.
| (c) |
Omitted.
|
| (d) |
Minimum
Fully Loaded Fixed Charge Coverage
Ratio
|
BPR
shall
not permit the Fully Loaded Fixed Charge Coverage Ratio (i) for the period
of
four consecutive fiscal quarters ending on March 31, 2007 or for the period
of
four consecutive fiscal quarters on June 30, 2007, to be less than 1.0:1.0
or
(ii) for any period of four consecutive fiscal quarters ending after June 30,
2007, to be less than 1.1:1.0.
For
the
purposes of calculating compliance with the covenants set forth in Section
8.3(a) and Section 8.3(d), for the periods of four consecutive fiscal quarters
ending on March 31, 2007, June 30, 2007 and September 30, 2007, respectively,
EBITDA shall be deemed to be the actual EBITDA for the periods of one, two
and
three fiscal quarters ending on such dates, multiplied by 4, 2 and 4/3,
respectively.
| (4) |
Conditions.
The waivers and amendments contained in Section 3 hereof shall become
effective upon the satisfaction in full of the following conditions
on the
date (the “Effective
Date”),
on or prior to March 31, 2007, on
which:
|
| (a) |
CMII
shall have executed and delivered a counterpart of this Amendment
and CMII
shall have received a counterpart of this Amendment executed and
delivered
by each Company;
|
| (b) |
CMII
shall have received a fully executed counterpart of a letter agreement
executed by the Bank and the Companies, substantially in the form
of
Exhibit
1,
and all conditions to the effectiveness of such letter agreement
shall
have been satisfied; and
|
| (c) |
pursuant
to Section 3.2 of the Subordination Agreement, the Bank shall have
consented in writing to the amendments contained in Section 3 hereof
and
CMII shall have received a counterpart of such
consent.
|
| (5) |
Reimbursement
of Expenses.
BPR will pay all out-of-pocket expenses, costs and charges incurred
by
CMII (including reasonable fees and disbursements of counsel) in
connection with the preparation and implementation of this Amendment,
and
all documents executed in connection
herewith.
|
| (6) |
Original
Purchase Agreement and Note to Remain in Force.
Except as specifically provided herein, the Original Purchase Agreement
and the other Transaction Documents shall remain in full force and
effect
and are in all respects hereby ratified and affirmed. From and after
the
Effective Date, all references in the Purchase Agreement to "this
Agreement", "hereof" or "herein" or the like, and all references
in the
other Transaction Documents to the Purchase Agreement, shall mean
and
refer to the Original Purchase Agreement as amended and waived
hereby.
|
| (8) |
Successors
and Assigns.
The Agreement shall inure to the benefit of and be binding upon the
parties hereto and their successors and
assigns.
|
| (9) |
Counterparts.
This Amendment may be executed in counterparts, each of which shall
constitute an original and all of which, taken together, shall constitute
one and the same agreement.
|
| (10) |
Headings.
The headings in this Amendment are for convenience of reference only
and
shall not limit or otherwise affect the meaning hereof.
|
| (11) |
No
Implied Waivers.
No failure or delay on the part of CMII in exercising any power or
right
hereunder shall operate as a waiver thereof, nor shall any single
or
partial exercise of any such right or power preclude any other or
further
exercise thereof or the exercise of any other right or power hereunder
or
under the Purchase Agreement or the Note. No modification or waiver
of any
provisions of this Amendment shall in any event be effective unless
the
same shall be in writing and signed by CMII, and then such modification,
waiver or consent shall be effective only in the specific instance
and for
the purpose for which given.
|
| (12) |
| (13) |
Jurisdiction;
WAIVER OF RIGHT TO JURY TRIAL.
Each party to this Amendment hereby irrevocably agrees that any legal
action or proceeding arising out of or relating to this Amendment
or any
agreements or transactions contemplated hereby may be brought in
the
courts of the State of New York located in New York City or of the
United States of America for the Southern District of New York and
hereby expressly submits to the personal jurisdiction and venue of
such
courts for the purposes thereof and expressly waives any claim of
improper
venue and any claim that such courts are an inconvenient forum. TO
THE
EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH
PARTY
HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN
ANY
FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF
ACTION
ARISING OUT OF OR BASED UPON THIS AMENDMENT OR THE SUBJECT MATTER
HEREOF.
EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY
RELIED ON THIS WAIVER IN ENTERING INTO THIS TRANSACTION, AND THAT
EACH
WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS.
|
| (14) |
Severability.
In the event that any one or more of the provisions contained herein,
or
the application thereof in any circumstance, is held invalid, illegal
or
unenforceable in any respect for any reason, the validity, legality
and
enforceability of any such provision in every other respect and of
the
remaining provisions hereof shall not be in any way impaired, unless
the
provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions
hereof.
|
| (15) |
Limited
Waivers.
The waiver of the Subject Events of Default is subject to the satisfaction
of the conditions set forth in Section 4, are applicable only to
the
specific violations and provisions described as “Subject Events of
Default” and to no other Events of Default, known or unknown, nor to any
other failure of any Company to comply with any term or provisions
of any
Transaction Document, and the granting by CMII of the waiver of the
Subject Events of Default does not imply any agreement to provide
any
subsequent waiver of any Default or Event of Default.
|
[signature
page follows]
IN
WITNESS WHEREOF, the parties have caused this Amendment to be duly executed
all
as of the day and year first above written.
BRANDPARTNERS
GROUP, INC.
| By: | |||
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Name:
Title:
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BRANDPARTNERS
RETAIL, INC.
| By: | |||
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Name:
Title:
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CORPORATE
MEZZANINE II, L.P.
| By: | |||
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Name:
Title:
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