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EXHIBIT 7.3
________________________________________________________________________________
CREDIT AGREEMENT
between
AMRE, INC.
as Borrower,
and
HFS INCORPORATED
as Lender
Dated as of October 17, 1995
$4,000,000
________________________________________________________________________________
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . .
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITY . . . . . . . . . . . 10
Section 2.1 Revolving Loans . . . . . . . . . . . . . . . . . . . . . 10
Section 2.2 Notice of Borrowing . . . . . . . . . . . . . . . . . . . 10
Section 2.3 Disbursement of Funds . . . . . . . . . . . . . . . . . . 10
Section 2.4 Note . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.5 Interest . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.6 Voluntary and Mandatory Reductions of Commitments . . . . 12
Section 2.7 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . 12
Section 2.8 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . 12
Section 2.9 Method and Place of Payment . . . . . . . . . . . . . . . 13
Section 2.10 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.11 Increased Costs. . . . . . . . . . . . . . . . . . . . . . 13
Section 2.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.13 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . 15
Section 3.1 Conditions Precedent to Initial Loans . . . . . . . . . . 15
Section 3.2 Conditions Precedent to All Loans . . . . . . . . . . . . 16
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 17
Section 4.1 Corporate Status . . . . . . . . . . . . . . . . . . . . . 17
Section 4.2 Corporate Power and Authority . . . . . . . . . . . . . . 18
Section 4.3 No Violation . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.5 Financial Conditions; Material Adverse Change . . . . . . . 18
Section 4.6 Use of Proceeds; Margin Regulations . . . . . . . . . . . 19
Section 4.7 Governmental Approvals . . . . . . . . . . . . . . . . . . 19
Section 4.8 No Default . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.9 Licenses, etc. . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.10 Compliance With Law . . . . . . . . . . . . . . . . . . . 19
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SECTION 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 20
Section 5.1 Information Covenants . . . . . . . . . . . . . . . . . . 20
Section 5.2 Books, Records and Inspections. . . . . . . . . . . . . . 24
Section 5.3 Maintenance of Insurance . . . . . . . . . . . . . . . . . 24
Section 5.4 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.5 Corporate Franchises . . . . . . . . . . . . . . . . . . . 25
Section 5.6 Compliance with Law. . . . . . . . . . . . . . . . . . . . 25
Section 5.7 Performance of Obligations . . . . . . . . . . . . . . . . 25
Section 5.8 Compliance with Preferred Stock . . . . . . . . . . . . . 25
Section 5.9 Maintenance of Properties . . . . . . . . . . . . . . . . 25
Section 5.10 Additional Guarantors . . . . . . . . . . . . . . . . . . 26
SECTION 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 26
Section 6.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.3 Restriction on Fundamental Changes . . . . . . . . . . . . 27
Section 6.4 Sale of Assets . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.5 Dividends . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.6 Transactions with Affiliates . . . . . . . . . . . . . . . 28
Section 6.7 Changes in Business . . . . . . . . . . . . . . . . . . . 28
Section 6.8 Certain Restrictions . . . . . . . . . . . . . . . . . . . 28
Section 6.9 Investments . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.10 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 29
Section 7.1 Events of Default . . . . . . . . . . . . . . . . . . . . 29
Section 7.2 Rights and Remedies . . . . . . . . . . . . . . . . . . . 32
SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.1 Payment of Expenses, Indemnity, etc. . . . . . . . . . . . 32
Section 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.3 Successors and Assigns; Participation; Assignments . . . . 34
Section 8.4 Amendments and Waivers . . . . . . . . . . . . . . . . . . 34
Section 8.5 Not Waiver; Remedies Cumulative . . . . . . . . . . . . . 34
Section 8.6 Governing Law; Submission to Jurisdiction . . . . . . . . . 35
Section 8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.8 Effectiveness . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.9 Headings Descriptive . . . . . . . . . . . . . . . . . . . 36
Section 8.10 Marshalling; Recapture . . . . . . . . . . . . . . . . . . 36
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Section 8.11 Severability . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.12 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.13 Limitation of Liability . . . . . . . . . . . . . . . . . 36
Section 8.14 Calculations; Computations . . . . . . . . . . . . . . . . 37
Section 8.15 Waiver of Trial by Jury . . . . . . . . . . . . . . . . . 37
Schedule 6.1 -- Existing Indebtedness
Schedule 6.2 -- Existing Liens
Schedule 6.9 -- Existing Investments
Exhibit A -- Form of Note
Exhibit B -- Form of Subsidiary Guaranty
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CREDIT AGREEMENT, dated as of October 17, 1995 between AMRE,
Inc., a Delaware corporation (the "Borrower"), and HFS Incorporated, a Delaware
corporation (the "Lender").
WHEREAS, Borrower and the Lender have entered into a License
Agreement, dated as of the date hereof (as the same may hereafter be amended,
modified or supplemented from time to time, the "License Agreement"), pursuant
to which, among other things, an affiliate of the Lender will license to
Borrower the Trademark (as defined in the License Agreement); and
WHEREAS, in connection with the transactions contemplated by
the License Agreement, the Lender is willing to make loans to the Borrower upon
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and intending to be legally
bound hereby, Borrower and the Lender hereby agree as follows:
SECTION 1. DEFINITIONS.
Section 1.1 Definitions. As used herein, the following terms
shall have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural number the singular.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power to (i)
vote 10% or more of the securities having ordinary voting power for the
election of directors of such corporation or (ii) direct or cause the direction
of the management and policies of such corporation, whether through the
ownership of voting securities, by contract or otherwise. The term "Affiliate"
shall not include the Lender or any of its Subsidiaries.
"Agreement" shall mean this Credit Agreement as the same may
from time to time hereafter be modified, supplemented or amended.
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"Applicable LIBOR Rate" shall mean for each Interest Period
the LIBOR Rate determined by the Lender as of the first day of such Interest
Period.
"Applicable Margin" shall mean one and one-half percent
(1-1/2%).
"Assignee" shall have the meaning provided in Section 8.4(c).
"Bankruptcy Code" shall mean Title 11 of the United States
Code entitled "Bankruptcy", as amended from time to time, and any successor
statute or statutes.
"Borrower" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrowing" shall mean the incurrence of a Loan from the
Lender on a given date.
"Business Day" shall mean any day excluding Saturday, Sunday
and any day which shall be in New York City or in New Jersey a legal holiday or
a day on which banking institutions are authorized or required by law or other
government actions to close.
"Capitalized Lease" shall mean (i) any lease of property, real
or personal, the obligations under which are capitalized on the consolidated
balance sheet of the Borrower and its Subsidiaries, and (ii) any other such
lease to the extent that the then present value of the minimum rental
commitment thereunder should, in accordance with GAAP, be capitalized on a
balance sheet of the lessee.
"Capitalized Lease Obligations" shall mean all obligations of
the Borrower and its Subsidiaries under or in respect of Capitalized Leases.
"Cash Equivalents" shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) having maturities
of not more than 90 days from the date of acquisition, (ii) demand deposits,
time deposits and certificates of deposit of any Bank or any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500,000,000 with maturities of not more than 90 days from the date of
acquisition, (iii) fully secured repurchase
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obligations with a term of not more than 7 days for underlying securities of
the types described in clause (i) entered into with any bank meeting the
qualifications specified in clause (ii) above, and (iv) commercial paper issued
by the parent corporation of any domestic commercial bank of recognized
standing having capital and surplus in excess of $500,000,000 and commercial
paper rated at least A-1 or the equivalent thereof by Standard & Poor's
Corporation or at least P-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investor
Services, Inc. and in each case maturing within 90 days after the date of
acquisition.
"Closing Date" shall mean the date on which the conditions
precedent to the making of the initial Loans pursuant to Section 3.1 hereof are
satisfied.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute.
"Contingent Obligation" as to any Person shall mean any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii)
to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv) otherwise to assure
or hold harmless the owner of such primary obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Contingent Obligation shall be deemed to
be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
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"Default Rate" shall have the meaning provided in Section
2.5(b).
"Dividends" shall have the meaning provided in Section 6.6.
"Environmental Affiliate" shall mean, with respect to any
Person, any other Person whose liability for any Environmental Claim such
Person has or may have retained, assumed or otherwise become liable for
(contingently or otherwise), either contractually or by operation of law.
"Environmental Approvals" shall mean any permit, license,
approval, ruling, variance, exemption or other authorization required under
applicable Environmental Laws.
"Environmental Claim" shall mean, with respect to any Person,
any notice, claim demand or similar communication (written or oral) by any other
Person alleging potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned by such Person or
(ii) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.
"Environmental Laws" shall mean all federal, state, local and
foreign laws and regulations relating to pollution or protection of human
health or the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata), including without
limitation, laws and regulations relating to emissions, discharges, releases or
threatened releases of Materials of Environmental Concern, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, asamended from time to time. Section references to ERISA are to
ERISA, as in effect at the date of this Agreement and any subsequent provisions
of ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Controlled Group" means a group consisting of any ERISA
Person and all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control with
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such Person that, together with such Person, are treated, as a single employer
under regulations of the PBGC.
"ERISA Person" shall have the meaning set forth in Section
3(9) of ERISA for the term "person."
"Event of Default" shall have the meaning provided in
Section 7.
"Federal Reserve Board" shall mean the Board of Governors of
the Federal Reserve System as constituted from time to time.
"Fees" shall mean all amounts payable pursuant to Section 2.10.
"Final Maturity Date" shall mean the earlier of (i) the 3rd
anniversary of the date hereof or (ii) such time as the Loan Commitment is
reduced to zero pursuant to the terms hereof.
"Financial Officer" of any Person shall mean such Person's
chief financial officer, treasurer or assistant treasurer.
"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date hereof and consistent with those utilized
in the preparation of the financial statements referred to in Section 3.1(h).
"Guarantors" shall mean each of the Borrower's Subsidiaries
who on the Closing Date are, or at any time thereafter pursuant to the
provisions of Section 5.10 become, parties to the Subsidiary Guaranty.
"Indebtedness" of any Person shall mean, without duplication,
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than trade payable on terms of 90
days or less incurred in the ordinary course of business of such Person), (ii)
all indebtedness of such Person evidenced by a note, bond, debenture or similar
instrument, (iii) the principal component of all Capitalized Lease Obligations
of such Person, (iv) the face amount of all letters of credit issued for the
account of such Person and, without duplication, all unreimbursed amounts drawn
thereunder, (v) all indebtedness of any other Person secured by any Lien on any
property owned by such Person, whether or not such indebtedness has been
assumed, (vi) all Contingent Obligations of such Person, and (vii) all payment
obligations of such Person under any interest rate protection agreement
(including, without limitation, any
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interest rate swaps, caps, floors, collars and similar agreements) and currency
swaps and similar agreements.
"Interest Period" shall mean the period from the Closing Date
to but excluding the first Payment Date and thereafter each period from and
including a Payment Date to but excluding the next succeeding Payment Date.
"Investment" shall mean all investments in and all loans,
advances and extensions of credit to any Person, all stock, notes, bonds,
leases or other securities or evidences of indebtedness of or any capital
contribution to any corporation, partnership, firm, joint venture or other
business entity.
"Lender's Office" shall mean the office of the Lender located
at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or such other office
as the Lender may hereafter designate in writing as such to the Borrower.
"LIBOR Rate" with respect to each Interest Period shall mean
for any day, as determined by the Lender, the interest rate per annum offered
for deposits in U.S. Dollars for the Interest Period in the London interbank
market which appears on Telerate Page 3750 or such other page as may replace
Page 3750 on that service or such other service or services as may be nominated
by the British Bankers' Association for the purpose of displaying such rate
(collectively, "Telerate Page 3750") as of 11:00 A.M. London time on the second
Business Day prior to any such date (the "LIBOR Determination Date"). If the
Interest Period is of a duration failing between the interest periods for which
such rates appear on Telerate Page 3750, the LIBOR Rate shall be the rate
determined by interpolation between the rates for the next shorter and the next
longer interest periods for which such rate appears on Telerate Page 3750, as
determined by the Lender, whose determination shall be conclusive in the
absence of manifest error. In the event that (i) more than one such LIBOR Rate
is provided, the average of such rates shall apply or (ii) no such LIBOR Rate
is published, then the LIBOR Rate shall be determined from such comparable
financial reporting company as the Lender, in its discretion, shall determine.
"License Agreement" shall have the meaning provided in the
recitals hereto.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement of any kind or nature
whatsoever, including,
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without limitation, any conditional sale or other title retention agreement,
any financing lease having substantially the same effect as any of the
foregoing and the filing of any financing statement or similar instrument under
the Uniform Commercial Code or comparable law of any jurisdiction, domestic or
foreign.
"Loan Commitment" shall mean $4,000,000, as such amount may be
reduced from time to time pursuant to Sections 2.6, 2.8 and 8.3(b).
"Loan Documents" shall mean this Agreement and the Note.
"Loan Party" shall mean and include the Borrower and the
Guarantors.
"Loans" shall have the meaning provided in 2.1(a).
"Margin Stock" shall have the meaning provided such term in
Regulation U and Regulation G of the Federal Reserve Board.
"Material Adverse Effect" shall mean a material adverse effect
upon (i) the business, operations, properties, assets or condition (financial
or otherwise) of the Borrower and its Subsidiaries, taken as a whole, (ii) the
ability of any Loan Party to perform, or of the Lender to enforce, any of the
Obligations or (iii) the ability of the Borrower to perform its obligations
under the License Agreement.
"Materials of Environmental Concern" shall mean and include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products.
"Multiemployer Plan" shall mean a Plan which is a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
"Net Proceeds" shall mean all cash proceeds of (x) each sale
or other disposition (or any subsequent collection of proceeds) of assets by
the Borrower or its Subsidiaries (other than sales of inventory, sales of
obsolete equipment in the ordinary course of business and factoring of
receivables in the ordinary course of business), in each case net of (i)
reasonable expenses incurred or reasonably expected to be incurred directly in
connection with such sale or disposition and (ii) any income, franchise,
transfer or other tax payable by any Loan Party in connection with such sale or
disposition and (y) each issuance by
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Borrower or its Subsidiaries of debt or equity securities excluding equity
securities issued pursuant to outstanding stock options, in each case net of
(i) any underwriting discounts or commissions and (ii) reasonable expenses
incurred or reasonably expected to be incurred directly in connection with such
issuance.
"Note" shall have the meaning provided in Section 2.4.
"Notice of Borrowing" shall have the meaning provided in
Section 2.2.
"Obligations" shall mean all obligations, liabilities and
Indebtedness of every nature of the Borrower and the Guarantors from time to
time owing to the Lender under or in connection with this Agreement or any
other Loan Document.
"Payment Date" shall mean the last day of March, June,
September and December of each year.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established under ERISA, or any successor thereto.
"Person" shall mean and include any individual, partnership,
joint venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or agency, department or instrumentality
thereof.
"Plan" means any employee benefit plan covered by Title IV of
ERISA, the funding requirements of which:
(i) were the responsibility of the
Borrower or a member of its ERISA Controlled Group at any time within
the five years immediately preceding the date hereof,
(ii) are currently the responsibility of
the Borrower or a member of its ERISA Controlled Group, or,
(iii) hereafter become the responsibility
of the Borrower or a member of its ERISA Controlled Group,
including any such plans as may have been, or may hereafter be, terminated for
whatever reason.
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"Preferred Stock" shall mean the 300,000 shares of the
Borrower's Senior Convertible Preferred Stock issued by the Borrower to the
Lender pursuant to the Stock Purchase Agreement.
"Reportable Event" has the meaning set forth in Section
4043(b) of ERISA (other than a Reportable Event as to which the provision of 30
days notice to the PBGC is waived under applicable regulations), or is the
occurrence of any of the events described in section 4068(f) or 4063(a) of
ERISA.
"Stock Purchase Agreement" shall mean that certain Stock
Purchase Agreement dated as of the date hereof pursuant to which the Lender
shall purchase the Preferred Stock, as the same may hereafter be amended,
modified or supplemented from time to time.
"Subsidiary" of any Person shall mean and include (i) any
corporation 50% or more of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person
directly or indirectly through Subsidiaries and (ii) any partnership,
association, joint venture, limited liability company or other entity in which
such Person, directly or indirectly through Subsidiaries, is either a general
partner or has a 50% or more equity interest at the time.
"Subsidiary Guaranty" shall mean the Subsidiary Guaranty dated
the date hereof and substantially in the form of Exhibit B hereto, as the same
may hereafter be amended, modified or supplemented from time to time.
"Termination Event" shall mean (i) a Reportable Event, or (ii)
the initiation of any action by the Borrower, any member of the Borrower's
ERISA Controlled Group or any Plan fiduciary to terminate a Plan or the
treatment of an amendment to a Plan as a termination under ERISA or (iii) the
institution of proceedings by the PBGC under Section 4042 of ERISA to terminate
a Plan or the appointment of a trustee to administer any Plan.
"Transactions" shall mean each of the transactions
contemplated by the Loan Documents and the License Agreement.
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"Unfunded Benefit Liabilities" means with respect to any Plan
at any time, the amount (if any) by which (i) the present value of all benefit
liabilities under such Plan as defined in Section 4001(a)(16) of ERISA, exceeds
(ii) the fair market value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plan (on the
basis of assumptions prescribed by the PBGC for the purpose of Section 4044 of
ERISA).
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITY.
Section 2.1 Revolving Loans. (a) Subject to and upon the terms
and conditions herein set forth, the Lender agrees, at any time and from time
to time on and after the Closing Date and prior to the Final Maturity Date, to
make revolving loans (collectively, "Loans") to the Borrower, which Loans shall
not at any time exceed in aggregate principal amount at any time outstanding
the Loan Commitment at such time.
(b) Loans may be voluntarily prepaid pursuant to
Section 2.7, and, subject to the other provisions of this Agreement, any
amounts so prepaid may be reborrowed. The Loan Commitment shall expire, and the
Loan shall mature on, the Final Maturity Date, without further action on the
part of the Lender.
(c) Each Borrowing of Loans shall be in the
aggregate minimum amount of $250,000 or any integral multiple of $100,000 in
excess thereof.
Section 2.2 Notice of Borrowing. Whenever the Borrower desires
to borrow hereunder, a Financial Officer of the Borrower shall give a Financial
Officer of the Lender, at the Lender's Office prior to 10:00 A.M., New York
City time, at least five Business Days' prior written notice of each Loan;
provided that the Borrower shall not borrow Loans hereunder more than once in
any period of thirty consecutive calendar days. Each such notice (a "Notice of
Borrowing") shall be irrevocable and shall specify (i) the aggregate principal
amount of the requested Loans, and (ii) the date of Borrowing (which shall be a
Business Day).
Section 2.3 Disbursement of Funds. On the date specified in
each Notice of Borrowing, the Lender will make available the Loans requested to
be made on such date, in U.S. dollars by wire transfer in immediately
available funds to an account specified in a written instrument signed by a
Financial
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Officer of Borrower and delivered to a Financial Officer of the Lender together
with any Notice of Borrowing.
Section 2.4 Note. (a) The Borrower's obligation to pay the
principal of, and interest on, the Loans shall be evidenced by a promissory
note (a "Note") duly executed and delivered by the Borrower substantially in
the form of Exhibit A hereto in a principal amount equal to the Loan
Commitment, with blanks appropriately completed in conformity herewith. The
Note issued to the Lender shall (x) be payable to the order of the Lender, (y)
be dated the Closing Date, and (z) mature on the Final Maturity Date.
(b) The Lender is hereby authorized, at its
option, either (i) to endorse on the schedule attached to its Note (or on a
continuation of such schedule attached to such Note and made a part thereof) an
appropriate notation evidencing the date and amount of each Loan evidenced
thereby and the date and amount of each principal and interest payment in
respect thereof, or (ii) to record such Loans and such payments in its books
and records. Such schedule or such books and records, as the case may be, shall
constitute prima facie evidence of the accuracy of the information contained
therein.
Section 2.5 Interest. (a) The Borrower agrees to pay interest
in respect of the unpaid principal amount of each Loan from the date of the
making of such Loan until such Loan shall be paid in full at a rate per annum
which shall be equal to the sum of the Applicable Margin plus the Applicable
LIBOR Rate in effect from time to time, such interest to be computed on the
basis of a 360 day year and the actual number of days elapsed.
(b) In the event that, and for so long as, any
Event of Default shall have occurred and be continuing pursuant to Sections
7.1(a) or 7.1(e), the outstanding principal amount of all Loans and, to the
extent permitted by law, overdue interest in respect of all Loans, shall bear
interest at a rate per annum (the "Default Rate") equal to the sum of two
percent (2%) plus the interest rate otherwise applicable hereunder to such
principal amount in effect from time to time; provided that nothing in any Loan
Document shall permit the Lender to receive interest in excess of the maximum
rate of interest permitted by law.
(c) Interest on each Loan shall accrue from and
including the date of the Borrowing thereof to but excluding the date of any
repayment thereof (provided that any Loan borrowed and repaid on the same day
shall
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accrue one day's interest) and shall be payable on each Payment Date and on the
Final Maturity Date.
Section 2.6 Voluntary and Mandatory Reductions of Commitments.
(a) Upon at least three Business Days' prior irrevocable written notice (or
telephonic notice promptly confirmed in writing) to the Lender the Borrower
shall from time to time, have the right, without premium or penalty, to
permanently reduce the Loan Commitment, provided that any such partial
reduction shall be in the minimum aggregate amount of $250,000 or any integral
multiple of $100,000 in excess thereof.
(b) The Loan Commitment shall be reduced in an
amount, to the extent, and for the duration required by Sections 2.8(b).
Section 2.7 Voluntary Prepayments. The Borrower shall have the
right to prepay the Loans in whole or in part at any time and from time to time
without premium or penalty on the following terms and conditions: (i) the
Borrower shall give the Lender written notice (or telephonic notice promptly
confirmed in writing), which notice shall be irrevocable, of its intent to
prepay the Loans, at least one Business Day prior to a prepayment, which notice
shall specify the date (which shall be a Business Day) and the amount of such
prepayment and (ii) each prepayment shall be in an aggregate principal amount
of $250,000 or any integral multiple of $100,000 in excess thereof.
Section 2.8 Mandatory Prepayments. (a) On each date after the
Closing Date on which the Borrower or any of its Subsidiaries receives any Net
Proceeds, the Borrower shall prepay any outstanding Loans in an amount equal to
the lesser of (i) 100% of the amount of such Net Proceeds or (ii) the amount of
outstanding Loans at that time.
(b) In the event any prepayments are or would be
required pursuant to Section 2.8(a) hereof, whether or not any Loans are then
outstanding, the Loan Commitment shall be permanently reduced in an amount
equal to 100% of such Net Proceeds.
(c) During each 12-month period commencing with
the date which is 18 months after the first date upon which a Loan is made
hereunder, for a period of 30 consecutive days, the Borrower shall prepay any
outstanding Loans or refrain from making any Borrowings so as to reduce the
balance of outstanding Loans during each such consecutive 30-day period to
zero.
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Section 2.9 Method and Place of Payment. (a) Except as
otherwise specifically provided herein, all payments and prepayments under this
Agreement and the Note shall be made to the Lender not later than 2:00 p.m.,
New York City time, on the date when due and shall be made in lawful money of
the United States of America by wire transfer in immediately available funds to
the account specified in a written instrument signed by the Treasurer or an
Assistant Treasurer of the Lender and delivered to the Treasurer of Borrower,
and any funds received by the Lender after such time shall, for all purposes
hereof, be deemed to have been paid on the next succeeding Business Day.
(b) Whenever any payment to be made hereunder or
under the Note shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable at the
applicable rate during such extension.
(c) All payments made by the Borrower hereunder
and under the Note shall be made irrespective of, and without any reduction
for, any setoff or counterclaims, including, without limitation, any setoff or
counterclaims arising due to a breach or alleged breach by the Lender or its
Subsidiaries of any other agreement to which the Lender or its Subsidiaries and
any of the Loan Parties are parties.
Section 2.10 Fees. The Borrower agrees to pay to the Lender a
commitment fee, computed at the per annum rate of 1/2 of 1% on the average
daily unused portion of the Loan Commitment, from and including the Closing
Date to the Final Maturity Date, payable in arrears on each Payment Date and on
the Final Maturity Date or such earlier date, if any, on which the Loan
Commitment shall terminate in accordance with the terms hereof.
Section 2.11 Increased Costs. In the event that the Lender
shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto) at any time, that the
Applicable LIBOR Rate applicable to the Loans shall not represent the effective
cost to the Lender for funding or maintaining Loans, or the Lender shall incur
increased costs or reductions in the amounts received or receivable hereunder
in respect of any Loan, in any such case because of (x) any change since the
date of this Agreement in any applicable law or governmental rule, regulation,
guideline or order or any interpretation thereof and including the introduction
of any new law or governmental rule, regulation, guideline or order, whether or
not having the
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force of law and whether or not failure to comply therewith would be unlawful,
and/or (y) other circumstances affecting the Lender, including, without
limitation, any of the foregoing circumstances affecting the provider of funds
to the Lender or any of its Affiliates to enable Lender to make or maintain the
Loans, then, and in any such event, the Lender shall, promptly after making
such determination, give notice (by telephone promptly confirmed in writing) to
the Borrower of such determination. Thereafter, the Borrower shall pay to the
Lender, upon the Lender's delivery of written demand therefor to the Borrower,
such additional amounts (in the form of an increased rate of interest, or a
different method of calculating interest, or otherwise, as the Lender in its
sole discretion shall determine) as shall be required to compensate the Lender
for such increased costs or reduction in amounts received or receivable
hereunder.
Section 2.12 Taxes. All payments made by the Borrower under
this Agreement shall be made free and clear of, and without reduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
governmental authority excluding, in the case of the Lender, net income and
franchise taxes imposed on the Lender by the jurisdiction under the laws of
which the Lender is organized or any political subdivision or taxing authority
thereof or therein (all such non-excluded taxes, levies, imposts, deductions,
charges or withholdings being hereinafter called "Taxes"). If any Taxes are
required to be withheld from any amounts payable to the Lender hereunder or
under the Note, the amounts so payable to the Lender shall be increased to the
extent necessary to yield to the Lender (after payment of all Taxes) interest
or any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement and the Note. Whenever any Taxes are payable by the
Borrower, as promptly as possible thereafter, the Borrower shall send to the
Lender a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Taxes when
due to the appropriate taxing authority or fails to remit to the Lender the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Lender for any incremental taxes, interest or penalties that may
become payable by the Lender as a result of any such failure. The agreements in
this Section 2.12 shall survive the termination of this Agreement and the
payment of the Note and all other Obligations.
Section 2.13 Use of Proceeds. The proceeds of the Loans shall
be used for the Borrower's general corporate purposes.
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SECTION 3. CONDITIONS PRECEDENT.
Section 3.1 Conditions Precedent to Initial Loans. The
obligation of the Lender to make its initial Loans is subject to the
satisfaction on the Closing Date of the following conditions precedent:
(a) License Agreement. Borrower's subsidiary
American Remodeling, Inc. and an affiliate of the Lender shall have entered
into the License Agreement and the Term (as defined therein) shall have
commenced.
(b) Loan Documents.
(i) Credit Agreement. The Borrower
shall have executed and delivered this Agreement to the Lender.
(ii) Note. The Borrower shall have
executed and delivered to the Lender the appropriate Note in the
amount, maturity and as otherwise provided herein.
(iii) Subsidiary Guaranty. The
Guarantors shall have executed and delivered the Subsidiary Guaranty
to the Lender.
(c) Preferred Stock. The Borrower and Lender
shall have executed and delivered the Stock Purchase Agreement and the
Preferred Stock shall have been duly and validly issued to the Lender (or its
designee) thereunder.
(d) Opinion of Counsel. The Lender shall have
received a legal opinion from Akin, Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇, dated the
Closing Date, from counsel to the Borrower and the Guarantors, in form and
substance reasonably satisfactory to Lender.
(e) Corporate Documents. The Lender shall have
received the Certificate of Incorporation of each Loan Party, certified to be
true, correct and complete by the appropriate Secretary of State.
(f) Certified Resolutions, etc. The Lender shall
have received a certificate of the Secretary or Assistant Secretary of each of
the Loan Parties and dated the Closing Date certifying (i) the names and true
signatures of
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the incumbent officers of such Person authorized to sign the applicable Loan
Documents, (ii) the By-Laws of such Person as in effect on the Closing Date,
(iii) the resolutions of such Person's Board of Directors approving and
authorizing the execution, delivery and performance of the Loan Documents
executed by such Person, and (iv) that there have been no changes in the
Certificate of Incorporation of such Person since the date of the most recent
certification thereof by the appropriate Secretary of State.
(g) Insurance. The Lender shall have received a
certificate of insurance demonstrating insurance coverage in respect of the
Borrower and its Subsidiaries of types, in amounts, with insurers and with
other terms satisfactory to the Lender.
(h) Financial Statements. The Lender shall have
received the Borrower's audited consolidated financial statements for the
fiscal year ended December 31, 1994 and the unaudited consolidated financial
statements of the Borrower for the fiscal period ending on June 30, 1995.
(i) Additional Matters. The Lender shall have
received such other certificates, opinions, documents and instruments relating
to the Transactions as may have been reasonably requested by the Lender, and
all corporate and other proceedings and all other documents (including, without
limitation, all documents referred to herein and not appearing as exhibits
hereto) and all legal matters in connection with the Transactions shall be
satisfactory in form and substance to the Lender.
Section 3.2 Conditions Precedent to All Loans. The obligation
of the Lender to make any Loan (including any initial Loan made on the Closing
Date) is subject to the satisfaction on the date such Loan is made of the
following conditions precedent:
(a) Representations and Warranties. The
representations and warranties contained herein and in the other Loan
Documents, the License Agreement and the Stock Purchase Agreement (other than
representations and warranties which expressly speak only as of a different
date) shall be true and correct in all material respects on such date both
before and after giving effect to the making of such Loans.
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(b) No Default or Event of Default. No Default or
Event of Default shall have occurred and be continuing on such date either
before or after giving effect to the making of such Loans.
(c) No Material Adverse Change. No event, act or
condition shall have occurred which, in the judgment of the Lender, has had or
could have a Material Adverse Effect; provided, however, that no Material
Adverse Effect shall be deemed to have occurred to the extent the Borrower does
not perform as contemplated in that certain pro forma statement delivered to
the Lender dated as of October 17, 1995.
(d) No Injunction. No law or regulation shall
have been adopted, no order, judgment or decree of any governmental authority
shall have been issued, and no litigation shall be pending or threatened, which
in the judgment of the Lender would enjoin, prohibit or restrain, or impose or
result in the imposition of any material adverse condition upon, the making or
repayment of the Loans.
(e) Notice of Borrowing. The Lender shall have
received a fully executed Notice of Borrowing in respect of the Loans to be
made on such date.
The providing of a Notice of Borrowing and the acceptance of
the proceeds of each Loan shall each constitute a representation and warranty
by the Borrower to the Lender that all of the conditions required to be
satisfied under this Section 3 in connection with the making of such Loan have
been satisfied.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender to enter into this Agreement and
to make the Loans, the Borrower makes the following representations and
warranties, which shall survive the execution and delivery of this Agreement
and the Note and the making of the Loans:
Section 4.1 Corporate Status. Each Loan Party and each of its
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its incorporation, (ii) has the
corporate power and authority to own its property and assets and to transact
the business in which it is engaged or presently proposes to engage and (iii)
is duly qualified and is authorized to do business and is in good standing as a
foreign corporation in
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every jurisdiction in which it owns or leases real property or in which the
nature of its business requires it to be so qualified, except where the failure
to so qualify, individually or in the aggregate, could not have a Material
Adverse Effect.
Section 4.2 Corporate Power and Authority. Each Loan Party has
the corporate power and authority to execute, deliver and carry out the terms
and provisions of each of the Loan Documents to which it is a party and has
taken all necessary corporate action to authorize the execution, delivery and
performance by it of such Loan Documents. Each Loan Party has duly executed
and delivered each such Loan Document, and each such Loan Document constitutes
its legal, valid and binding obligation, enforceable in accordance with its
terms.
Section 4.3 No Violation. Neither the execution, delivery or
performance by any Loan Party of the Loan Documents to which it is a party, nor
compliance by it with the terms and provisions thereof nor the consummation of
the Transactions, (i) will contravene any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality or (ii) will conflict or be inconsistent with or
result in any breach of, any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien upon any of the property or
assets of any Loan Party pursuant to the terms of any indenture, mortgage, deed
of trust, agreement or other instrument to which such Loan Party is a party or
by which it or any of its property or assets is bound or to which it may be
subject, or (iii) will violate any provision of the Certificate of
Incorporation or By-Laws of any Loan Party.
Section 4.4 Litigation. There are no actions, suits or
proceedings pending or, to the knowledge of the Borrower, threatened with
respect to any of the Transactions or Loan Documents or that could,
individually or in the aggregate, result in a Material Adverse Effect.
Section 4.5 Financial Conditions; Material Adverse Change. (a)
The financial statements delivered to Lender pursuant to Section 3.1(h) were
prepared in accordance with GAAP and fairly present the financial condition of
the Borrower and its Subsidiaries on the dates and for the periods covered
thereby, subject, in the case of interim financial statements, to normally
recurring year-end adjustments. Neither the Borrower nor any of its
Subsidiaries have any material contingent liabilities not reflected on such
financial statements (or in the
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footnotes thereto), (b) since June 30, 1995, there has occurred no event, act
or condition which has had, or could have, a Material Adverse Effect.
Section 4.6 Use of Proceeds, Margin Regulations. All proceeds
of each Loan will be used by the Borrower only in accordance with the
provisions of Section 2.13. No part of the proceeds of any Loan will be used by
the Borrower to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock. Neither the
making of any Loan nor the use of the proceeds thereof will violate or be
inconsistent with the provisions of Regulations G, T, U or X of the Federal
Reserve Board.
Section 4.7 Governmental Approvals. No order, consent,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is required
in connection with (i) the execution, delivery and performance of any Loan
Document or the consummation of any of the Transactions or (ii) the legality,
validity, binding effect or enforceability of any Loan Document.
Section 4.8 No Default. No Loan Party is in default under or
with respect to any agreement, instrument or undertaking to which it is a party
or by which it or any of its property is bound in any respect which could
result in a Material Adverse Effect. No Default or Event of Default exists.
Section 4.9 Licenses, etc. The Loan Parties have obtained and
hold in full force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditation, easements, rights of way and
other rights, consents and approvals which are necessary for the operation of
their respective businesses as presently conducted, except where the failure to
so obtain the foregoing could not, individually or in the aggregate, have a
Material Adverse Effect.
Section 4.10 Compliance With Law. Each Loan Party is in
compliance with all laws, rules, regulations, orders, judgments, writs and I
decrees, except where the failure to so comply, individually or in the
aggregate, could not have a Material Adverse Effect.
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SECTION 5. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that on and after the
Closing Date and until the Loan Commitment has terminated, and the Obligations
are paid in full:
Section 5.1 Information Covenants. The Borrower will furnish
to the Lender.
(a) Quarterly Financial Statements. Within 45
days after the close of each quarterly accounting period in each fiscal year of
the Borrower (other than the fourth quarter), the consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such quarterly period and
the related consolidated statements of income, cash flow and retained earnings
for such quarterly period and for the elapsed portion of the fiscal year ended
with the last day of such quarterly period, in each case setting forth
comparative figures for the related periods in the prior fiscal year and in
each case certified by the Borrower's chief financial officer (which
certification may be subject to year-end audit adjustments).
(b) Annual Financial Statements. Within 90 days
after the close of each fiscal year of the Borrower, the consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal year
and the related consolidated statements of income, cash flow and retained
earnings for such fiscal year, setting forth comparative figures for the
preceding fiscal year and, with respect to such consolidated financial
statements, certified without qualification by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, L.L.P. or other
independent certified public accountants of recognized national standing
reasonably acceptable to the Lender, in each case together with a report of
such accounting firm stating that in the course of its regular audit of the
consolidated financial statements of the Borrower, which audit was conducted in
accordance with generally accepted auditing standards, such accounting firm has
obtained no knowledge of any Default or Event of Default then continuing, or if
in the opinion of such accounting firm such a Default or Event of Default has
occurred and is continuing, a statement as to the nature thereof.
(c) Officer's Certificates. At the time of the
delivery of the financial statements under clauses (a) and (b) above, a
certificate of the chief financial officer of the Borrower which certifies (x)
that such financial statements fairly present the financial condition and the
results of operations of the Borrower
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and its Subsidiaries on the dates and for the periods indicated, subject, in
the case of interim financial statements, to normally recurring year-end
adjustments and (y) that such officer has reviewed the terms of the Loan
Documents and has made, or caused to be made under his or her supervision, a
review in reasonable detail of the business and condition of the Borrower and
its Subsidiaries during the accounting period covered by such financial
statements, and that as a result of such review such officer has concluded that
no Default or Event of Default has occurred during the period commencing at the
beginning of the accounting period covered by the financial statements
accompanied by such certificate and ending on the date of such certificate or,
if any Default or Event of Default has occurred, specifying the nature and
extent thereof and, if continuing, the action the Borrower proposes to take in
respect thereof.
(d) Notice of Default or Litigation. Promptly and
in any event within three Business Days after any Loan Party obtains knowledge
thereof, notice of (i) the occurrence of any Default or Event of Default, (ii)
any litigation or governmental proceeding pending or threatened against any
Loan Party which could result in a Material Adverse Effect and (iii) any other
event, act or condition which could result in a Material Adverse Effect.
(e) ERISA.
(i) As soon as possible and in any
event within 10 days after the Borrower or any member
of its ERISA Controlled Group knows, or has reason to
know, that:
(A) any Termination Event
with respect to a Plan has occurred or will occur, or
(B) any condition exists with
respect to a Plan which presents a material risk of
termination of the Plan or imposition of an excise
tax or other liability (other than variable premium
payments to the PBGC) on the Borrower or any member
of its ERISA Controlled Group, or
(C) the Borrower or any member of
its ERISA Controlled Group has applied for a waiver
of the minimum funding standard under Section 412 of
the Code or Section 302 of ERISA, or
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(D) the Borrower or any member of
its ERISA Controlled Group has engaged in a
"prohibited transaction," as defined in Section 4975
of the Code or as described in Section 406 of ERISA,
that is not exempt under Section 4975 of the Code and
Section 408 of ERISA, or
(E) the aggregate present value of
the Unfunded Benefit Liabilities under all Plans has
in any year increased by $100,000 or to an amount in
excess of $500,000, or
(F) any condition exists with
respect to a Multi- employer Plan which presents a
material risk of a partial or complete withdrawal (as
described in Section 4203 or 4205 of ERISA) by the
Borrower or any member of its ERISA Controlled Group
from a Multiemployer Plan, or
(G) the Borrower or any member of
its ERISA Controlled Group is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect
to payments to a Multiemployer Plan, or
(H) a Multi-employer Plan is in
"reorganization" (as defined in Section 418 of the
Code or Section 4241 of ERISA) or is "insolvent" (as
defined in Section 4245 of ERISA), or
(I) the potential withdrawal
liability (as determined in accordance with Title IV
of ERISA) of the Borrower and the members of its
ERISA Controlled Group with respect to all
Multiemployer Plans has in any year increased by
$5,000,000 or to an amount in excess of $10,000,000,
or
(J) there is an action brought
against the Borrower or any member of its ERISA
Controlled Group under Section 502 of ERISA with
respect to its failure to comply with Section 515 of
ERISA,
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a certificate of the president or chief financial officer of the Borrower
setting forth the details of each of the events described in clauses (A)
through (J) above as applicable and the action which the Borrower or the
applicable member of its ERISA Controlled Group proposes to take with respect
thereto, together with a copy of any notice or filing from the PBGC or which
may be required by the PBGC or other agency of the United States government
with respect to each of the events described in clauses (A) through (J) above,
as applicable.
(ii) As soon as possible and in any
event within two Business Days after the
receipt by the Borrower or any member of its
ERISA Controlled Group of a demand letter
from the PBGC notifying the Borrower or such
member of its ERISA Controlled Group of its
final decision finding liability and the date
by which such liability must be paid, a copy
of such letter, together with a certificate
of the president or chief financial officer
of the Borrower setting forth the action
which the Borrower or such member of its
ERISA Controlled Group proposes to take with
respect thereto.
(f) Environmental. Promptly and in any event
within 10 Business Days after the existence of any of the following conditions,
a certificate of the chief executive officer or chief financial officer of the
Borrower specifying in detail the nature of such condition and the proposed
response thereto: (i) the receipt by any Loan Party or any of its Subsidiaries
of any communication, whether from a governmental authority, citizens group,
employee or otherwise, that alleges that such Loan Party, Subsidiary or an
Environmental Affiliate is not in compliance with applicable Environmental Laws
and such noncompliance, individually or in the aggregate, could have a Material
Adverse Effect, (ii) any Loan Party, any of its Subsidiaries or any of its
Environmental Affiliates shall obtain actual knowledge that there exists any
Environmental Claim pending or threatened against such Loan Party Subsidiary,
or such Environmental Affiliate, which, individually or in the aggregate, could
have a Material Adverse Effect, or (iii) any release, emission, discharge or
disposal of any Material of Environmental Concern that could form the basis of
any Environmental Claim against any Loan Party, any of its Subsidiaries or any
of their Environmental Affiliates, which Environmental Claim, individually or
in the aggregate could have a Material Adverse Effect.
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(g) SEC Filings. As soon as available, copies of
all regular and periodic reports and registration statements which it or any
Subsidiary files with the Securities and Exchange Commission or with any
securities exchange.
(h) Other Information. From time to time, such
other information or documents (financial or otherwise) as the Lender may
reasonably request.
Section 5.2 Books, Records and Inspections. The Borrower
shall, and shall cause each of its Subsidiaries to, keep proper books
of record and account in which full, true and correct entries in conformity
with GAAP and all requirements of law shall be made of all dealings and
transactions in relation to its business and activities. The Borrower shall,
and shall cause each of its Subsidiaries to, permit officers and designated
representatives of the Lender to visit and inspect any of the properties of the
Borrower or any of its Subsidiaries, and to examine the books of record and
account of the Borrower or any of its Subsidiaries, and discuss the affairs,
finances and accounts of the Borrower or any of its Subsidiaries with, and be
advised as to the same by, its and their officers and independent accountants,
all upon reasonable notice and at such reasonable times as the Lender may
reasonably request.
Section 5.3 Maintenance. The Borrower shall, and shall cause
each of its Subsidiaries to, (a) maintain with financially sound and reputable
insurance companies insurance on itself and its properties in at least such
amounts and against at least such risks as are customarily insured against in
the same general area by companies engaged in the same or a similar business,
which insurance shall in any event not provide for materially less coverage than
the insurance in effect on the Closing Date, and (b) furnish to the Lender from
time to time, upon written request, the policies under which such insurance is
issued, certificates of insurance and such other information relating to such
insurance as the Lender may request.
Section 5.4 Taxes. (a) The Borrower shall pay or cause to be
paid, and shall cause each of its Subsidiaries to pay or cause to be paid, when
due, all taxes, charges and assessments and all other lawful claims required to
be paid by the Borrower or such Subsidiaries, except as contested in good faith
and by appropriate proceedings diligently conducted, if adequate reserves have
been established with respect thereto in accordance with GAAP.
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(b) The Borrower shall not, and shall not permit
any of its Subsidiaries to, file or consent to the filing of any consolidated
tax return with any Person (other than the Borrower and its Subsidiaries).
Section 5.5 Corporate Franchises. The Borrower shall, and
shall cause each of its Subsidiaries to, do or cause to be done, all things
necessary to preserve and keep in full force and effect its existence and its
patents, trademarks, servicemarks, tradenames, copyrights, franchises, licenses
(other than the Sears License Agreement), permits, certificates,
authorizations, qualifications, accreditation, easements, rights of way and
other rights, consents and approvals except where the failure to so preserve
any of the foregoing (other than existence) could not, individually or in the
aggregate, result in a Material Adverse Effect.
Section 5.6 Compliance with Law. The Borrower shall, and shall
cause each of its Subsidiaries to, comply with all applicable laws, rules,
statutes, regulations, decrees and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of their business and the ownership of their property, including,
without limitation, all Environmental Laws, except such non-compliance as could
not, individually or in the aggregate, result in a Material Adverse Effect.
Section 5.7 Performance of Obligations. The Borrower shall,
and shall cause each of its Subsidiaries to, perform all of its obligations
under the terms of (i) each mortgage, indenture, security agreement, debt
instrument, lease, undertaking and contract by which it or any of its
properties is bound or to which it is a party if the failure to so perform,
individually or in the aggregate, could result in a Material Adverse Effect,
(ii) the License Agreement and (iii) the Certificate of Incorporation
(including Certificates of Designation) and By-Laws of the Borrower.
Section 5.8 Compliance with Preferred Stock. The Borrower
shall, and shall cause each of its Subsidiaries to, comply with all financial
and other covenants contained in the Preferred Stock to be issued by the
Borrower to the Lender.
Section 5.9 Maintenance of Properties. The Borrower shall, and
shall cause each of its Subsidiaries to, ensure that its properties used or
useful in its business are kept in good repair, working order and condition,
normal wear and tear excepted.
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Section 5.10 Additional Guarantors. Borrower shall give Lender
prompt written notice of the creation or acquisition of any Subsidiary after
the Closing Date. Upon request of the Lender, the Borrower shall cause such
Subsidiary to become a party to the Subsidiary Guaranty and in connection
therewith to deliver to the Lender such documents or opinions as Lender may
reasonably request.
SECTION 6. NEGATIVE COVENANTS.
The Borrower covenants and agrees that on and after the
Closing Date until the Loan Commitment has terminated, and the Obligations are
paid in full, without the prior written consent of Lender:
Section 6.1 Indebtedness. The Borrower shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume, suffer to exist
or otherwise become or remain directly or indirectly liable with respect to,
any Indebtedness, other than (i) Indebtedness existing on the Closing Date and
described on Schedule 6.1 (but not any refinancing or renewal thereof), (ii)
Indebtedness under the Loan Documents and the License Agreement, (iii)
Indebtedness with respect to purchase-money Indebtedness not in excess of
$1,000,000 in the aggregate outstanding per year and (iv) Indebtedness with
respect to letters of credit issued for the Borrower's account and, without
duplication, all unreimbursed amounts drawn thereunder not in excess of
$1,300,000 in the aggregate at any one time outstanding.
Section 6.2 Liens. The Borrower shall not, and shall not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist,
directly or indirectly, any Lien on any of its property now owned or hereafter
acquired, other than:
(a) Liens existing on the Closing Date and
described on Schedule 6.2 hereto;
(b) Liens for taxes not yet due or which are
being, contested in good faith by appropriate proceedings diligently conducted
and with respect to which adequate reserves are being maintained in accordance
with GAAP;
(c) Statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other Liens imposed by Law
(other
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than any Lien imposed by ERISA or pursuant to any Environmental Law) created in
the ordinary course of business for amounts not yet due or which are being
contested in good faith by appropriate proceedings diligently conducted and
with respect to which adequate bonds have been posted; and
(d) Liens created to secure purchase-money
Indebtedness permitted pursuant to Section 6.1 (iii) provided that such Liens
are only in respect of the property or assets subject to, and secure only, the
respective purchase money Indebtedness.
Section 6.3 Restriction on Fundamental Changes.
(a) The Borrower shall not, and shall not permit
any of its Subsidiaries to, enter into any merger or consolidation, or
liquidate, wind-up or dissolve (or suffer any liquidation or dissolution),
discontinue its business or convey, lease, sell, transfer or otherwise dispose
of, in one transaction or series of transactions, all or any substantial part
of its business or property, whether now or hereafter acquired, except as
otherwise permitted under Section 6.5.
(b) The Borrower shall not and shall not permit
any of its Subsidiaries to, amend its certificate of incorporation or by-laws
or its accounting policies or reporting practices if such amendment could have
a Material Adverse Effect.
Section 6.4 Sale of Assets. The Borrower shall not, and shall
not permit any of its Subsidiaries to, convey, lease, sell, transfer or
otherwise dispose of (or agree to do so at any future time) all or any part of
its property or assets, except (i) sales of inventory, sales of obsolete
equipment and factoring of receivables in the ordinary course of business and
(ii) sales of equipment which in the reasonable judgment of the Borrower is
uneconomic, obsolete or no longer useful in its business.
Section 6.5 Dividends. The Borrower shall not, and shall not
permit any of its Subsidiaries to, declare or pay any dividends (other than
dividends payable solely in common stock), or return any capital to, its common
or preferred stockholders or authorize or make any other distribution, payment
or delivery of property or cash to its common or preferred stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
any shares of any class of its capital stock now or hereafter outstanding (or
any options or warrants issued with respect to its capital stock), or set aside
any funds for any of
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the foregoing purposes (all the foregoing "Dividends") except that (i) any
Subsidiary of the Borrower may declare and pay Dividends to the Borrower or any
other wholly-owned Subsidiary of the Borrower, (ii) the Borrower may pay
dividends on the Preferred Stock and (iii) the Borrower may pay Dividends on
its common stock if (x) no Default or Event of Default shall have occurred and
be continuing, (y) there have been no outstanding Loans for the three
consecutive calendar months preceding the date such Dividends are payable and
(z) the aggregate total amount of such Dividends shall not exceed $400,000 per
quarter.
Section 6.6 Transactions with Affiliates. The Borrower shall
not, and shall not permit any of its Subsidiaries to, enter into any
transaction or series of related transactions, whether or not in the ordinary
course of business, with any Affiliate, other than on terms and conditions
substantially as favorable to the Borrower or such Subsidiary as would be
obtainable at the time in a comparable arm's-length transaction with a Person
other than an Affiliate.
Section 6.7 Changes in Business. The Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into any business which is
substantially different from that conducted by the Borrower or such Subsidiary,
as the case may be, on the Closing Date and which is not being conducted
pursuant to, or contemplated by, the License Agreement.
Section 6.8 Certain Restrictions. The Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into any agreement which
restricts the ability of the Borrower or any of its Subsidiaries to (a) enter
into amendments, modifications or waivers of the Loan Documents, (b) sell,
transfer or otherwise dispose of its assets, (c) create, incur, assume or
suffer to exist any Lien upon any of its property, (d) create, incur, assume,
suffer to exist or otherwise become liable with respect to any Indebtedness, or
(e) pay any Dividend.
Section 6.9 Investments. Other than those Investments existing
as of the Closing Date and described on Schedule 6.9 hereto, the Borrower shall
not, and shall not permit any of its Subsidiaries to make any Investment except
that the Borrower and its Subsidiaries may acquire and hold Cash Equivalents.
Section 6.10 Fiscal Year. The Borrower shall not, and shall
not permit any of its Subsidiaries to, change its fiscal year.
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SECTION 7. EVENTS OF DEFAULT
Section 7.1 Events of Default. Each of the following events,
acts, occurrences or conditions shall constitute an Event of Default under this
Agreement, regardless of whether such event, act, occurrence or condition is
voluntary or involuntary or results from the operation of law or pursuant to or
as a result of compliance by any Person with any judgment, decree, order, rule
or regulation of any court or administrative or governmental body:
(a) Failure to Make Payments. The Borrower shall
(i) default in the payment when due of any principal of the Loans or (ii)
default, and such default shall continue unremedied for 10 or more calendar
days, in the payment when due of any interest on the Loans or in the payment
when due of any Fees or any other amounts owing hereunder.
(b) Breach of Representation or Warranty. Any
representation or warranty made by any Loan Party herein or in any other Loan
Document or in any certificate or statement delivered pursuant hereto or
thereto shall prove to be false or misleading in any material respect on the
date as of which made or deemed made.
(c) Breach of Covenants.
(i) The Borrower shall fail to perform
or observe any agreement, covenant or obligation arising under
Sections 5.1(f) or 6.
(ii) The Borrower shall fail to perform
or observe any agreement, covenant or obligation arising under this
Agreement (except those described in subsections (a), (b) and (c)(i)
above), and such failure shall continue for 15 days.
(d) Default Under Other Agreements. Any Loan
Party shall default in the payment when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) of any amount owing in
respect of any Indebtedness (other than the Obligations) in the aggregate
principal amount of $250,000 or more; or any Loan Party shall default in the
performance or observance of any obligation or condition with respect to any
such Indebtedness or any other event shall occur or condition exist, if the
effect of such default, event or condition is to accelerate the maturity of any
such Indebtedness or to
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permit (without regard to any required notice or lapse of time) the holder or
holders thereof, or any trustee or agent for such holders, to accelerate the
maturity of any such Indebtedness, or any such Indebtedness shall become or be
declared to be due and payable prior to its stated maturity other than as a
result of a regularly scheduled payment.
(e) Bankruptcy, etc. (i) The Borrower or any of
its Subsidiaries shall commence a voluntary case concerning itself under the
Bankruptcy Code; or (ii) an involuntary case is commenced against the Borrower
or any of its Subsidiaries and the petition is not controverted within 10 days,
or is not dismissed within 30 days, after commencement of the case; or (iii) a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of the Borrower or any of its
Subsidiaries or the Borrower or any of its Subsidiaries commences any other
proceedings under any reorganization, arrangement, adjustment of debt, relief
of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
of its Subsidiaries or there is commenced against the Borrower or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 30
days; or (iv) any order of relief or other order approving any such case or
proceeding is entered; or (v) the Borrower or any of its Subsidiaries is
adjudicated insolvent or bankrupt; or (vi) the Borrower or any of its
Subsidiaries suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 30 days; or (vii) the Borrower or any of its Subsidiaries makes a
general assignment for the benefit of creditors; or (viii) the Borrower or any
of its Subsidiaries shall fail to pay, or shall state that it is unable to pay,
or shall be unable to pay, its debts generally as they become due; or (ix) the
Borrower or any of its Subsidiaries shall call a meeting of its creditors with
a view to arranging a composition or adjustment of its debts; or (x) the
Borrower or any of its Subsidiaries shall by any act or failure to act consent
to, approve of or acquiesce in any of the foregoing; or (xi) any corporate
action is taken by the Borrower or any of its Subsidiaries for the purpose of
effecting any of the foregoing.
(f) ERISA. (i) Any Termination Event shall occur,
or (ii) any Plan shall incur an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived or
(iii) the Borrower or a member of its ERISA Controlled Group shall have engaged
in a transaction which is prohibited under Section 4975 of the Code or Section
406 of ERISA which could result in the imposition of liability in excess of
$100,000
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on the Borrower or any member of its ERISA Controlled Group, or (iv) the
Borrower or any member of its ERISA Controlled Group shall fail to pay when due
an amount which it shall have become liable to pay to the PBGC, any Plan or a
trust established under Title IV of ERISA, or (v) a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree adjudicating that
a Plan must be terminated or have a trustee appointed to administer any Plan,
or (vi) the Borrower or a member of its ERISA Controlled Group suffers a
partial or complete withdrawal from a Multiemployer Plan or is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan, or (vii) a proceeding shall be instituted against the
Borrower or any member of its ERISA Controlled Group to enforce Section 515 of
ERISA, or (viii) any other event or condition shall occur or exist with respect
to any Plan which could subject the Borrower or any member of its ERISA
Controlled Group to any tax, penalty or other liability in excess of $250,000.
(g) Change of Control. Any Person or Persons or
affiliated group of Persons (other than the Lender and its Subsidiaries and
Affiliates) shall become the beneficial owner of 25% or more of the issued and
outstanding shares of common stock of the Borrower or during any period of two
consecutive calendar years, individuals who at the beginning of such period
constituted the Borrower's Board of Directors (together with any new directors
whose election by the Borrower's Board of Directors or whose nomination for
election by the Borrower's shareholders was approved by a vote of at least two
thirds of the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors then in office.
(h) Judgments. One or more judgments or decrees
in an aggregate amount of $250,000 or more shall be entered by a court or
courts of competent jurisdiction against the Borrower or any of its
Subsidiaries (other than any judgment as to which, and only to the extent, a
reputable insurance company has acknowledged coverage of such claim in writing)
and (i) any such judgments or decrees shall not be stayed, discharged, paid,
bonded or vacated within 30 days or (ii) enforcement proceedings shall be
commenced by any creditor on any such judgments or decrees.
(i) Subsidiary Guaranty. The Subsidiary Guaranty
or any material provision thereof shall cease to be in full force and effect,
or any
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Guarantor or any Person acting on behalf of a Guarantor shall deny or disaffirm
all or any portion of such Guarantor's obligations under the Subsidiary
Guaranty.
(j) License Agreement. The Borrower shall have
defaulted in the performance of any of its obligations or agreements under the
License Agreement or the License Agreement shall terminate for any reason other
than as a result of the scheduled expiration thereof in accordance with its
terms.
Section 7.2 Rights and Remedies. Upon the occurrence of any
Event of Default described in Section 7.1(e), the Commitments shall
automatically and immediately terminate and the unpaid principal amount of and
any and all accrued interest on the Loans and any and all accrued Fees and
other Obligations shall automatically become immediately due and payable, with
all additional interest from time to time accrued thereon and without
presentation, demand, or protest or other requirements of any kind (including,
without limitation, valuation and appraisement, diligence, presentment, notice
of intent to demand or accelerate and notice of acceleration), all of which are
hereby expressly waived by the Borrower, and the obligation of the Lender to
make any Loan hereunder shall thereupon terminate; and upon the occurrence and
during the continuance of any other Event of Default, the Lender may, by
written notice to the Borrower, (i) declare that the Loan Commitment is
terminated, whereupon the Loan Commitment and the obligation of the Lender to
make any Loan hereunder shall immediately terminate, and (ii) declare the
unpaid principal amount of and any and all accrued and unpaid interest on the
Loans and any and all accrued Fees and other Obligations to be, and the same
shall thereupon be, immediately due and payable with all additional interest
from time to time accrued thereon and without presentation, demand, or protest
or other requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by
Borrower.
SECTION 8. MISCELLANEOUS
Section 8.1 Payment of Expenses. Indemnity, etc. The Borrower
shall:
(a) pay all reasonable out-of-pocket costs and
expenses of the Lender in connection with the negotiation, preparation,
execution and delivery of the Loan Documents and the documents and instruments
referred to therein in an amount not to exceed $20,000, and any amendment,
waiver or
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consent relating to any of the Loan Documents, which costs and expenses shall
accrue as of the Closing Date but shall be payable at such time, if any, as the
first Loan is made.
(b) pay all reasonable out-of-pocket costs and
expenses of the Lender in connection with the preservation of rights under, and
enforcement of, the Loan Documents and the documents and instruments referred
to therein or in connection with any restructuring or rescheduling of the
Obligations (including, without limitation, the reasonable fees and
disbursements of counsel for the Lender);
(c) pay, and hold the Lender harmless from and
against, any and all present and future stamp, excise and other similar taxes
with respect to the foregoing matters and hold the Lender harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to the Lender) to pay such
taxes; and
(d) indemnify the Lender, its officers,
directors, employees, representatives and agents (each an "Indemnitee") from,
and hold each of them harmless against, any and all losses, liabilities,
claims, damages, expenses, obligations, penalties, actions, judgments, suits,
costs or disbursements of any kind or nature whatsoever (including, without
limitation, the fees and disbursements of counsel for such Indemnitee in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may at any time (including, without limitation, at any time
following the payment of the Obligations) be imposed on, asserted against or
incurred by any Indemnitee as a result of, or arising out of, or in any way
related to or by reason of, any of the Transactions or the execution, delivery
or performance of any Loan Document.
Section 8.2 Notices. Except as otherwise expressly provided
herein, all notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and shall
be deemed to have been duly given or made when delivered by hand, or five days
after being sent by certified or registered United States mail, postage
prepaid, or, in the case of telecopy notice, when sent, or, in the case of a
nationally recognized overnight courier service, one Business Day after
delivery to such courier services, addressed, in the case of each party hereto,
at its address specified opposite its signature below, or to such other address
as may be designated by any party in a written notice to the other party
hereto.
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Section 8.3 Successors and Assigns Participation; Assignments.
(a) Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the Borrower, the Lender, all
future holders of the Note and their respective successors and assigns, except
that the Borrower may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of the Lender.
(b) Assignments. The Lender may, in accordance
with applicable law, at any time assign to any of its affiliates (each an
"Assignee") all or any part of its interests in any Loan owing to the Lender,
any Note held by the Lender, any Loan Commitment of the Lender or any other
interest of the Lender hereunder. The Borrower and the Lender agree that to the
extent of any assignment the Assignee shall be deemed to have the same rights
and benefits under the Loan Documents as the Lender hereunder.
Section 8.4 Amendments and Waivers. Neither this Agreement,
any other Loan Document nor any terms hereof or thereof may be amended,
supplemented, modified or waived except in accordance with the provisions of
this Section. The Lender and the Borrower may, from time to time, enter into
written amendments, supplements, modifications or waivers for the purpose of
adding, deleting, changing or waiving any provisions to this Agreement or the
Notes. Any such amendment, supplement, modification or waiver shall be in
writing and shall apply to and shall be binding upon the Borrower, the Lender
and all future holders of the Notes. In the case of any waiver, the Borrower
and the Lender shall be restored to their former position and rights hereunder
and under the outstanding Notes, and any Default or Event of Default waived
shall be deemed to be cured and not continuing, but no such waiver shall extend
to any subsequent or other Default or Event of Default, or impair any right
consequent thereon.
Section 8.5 No Waiver; Remedies Cumulative. No failure or
delay on the part of the Lender or any holder of a Note in exercising any
right, power or privilege hereunder or under any other Loan Document and no
course of dealing between any Loan Party and the Lender or the holder of any
Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Loan
Document preclude any other or further exercise thereof of the exercise of any
other right, power or privilege hereunder or thereunder. The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the
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Lender or the holder of any Note would otherwise have. No notice to or demand
on any Loan Party in any case shall entitle any Loan Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Lender or the holder of any Note to any other or
further action in any circumstances without notice or demand.
Section 8.6 Governing Law; Submission to Jurisdiction. (a)
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).
(b) Any legal action or proceeding with respect
to this Agreement or any other Loan Document and any action for enforcement of
any judgment in respect thereof may be brought in the courts of the State of
New York or of the United States of America for the Southern District of New
York, and, by execution and delivery of this Agreement, the Borrower hereby
accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
appellate courts from any thereof. The Borrower irrevocably consents to the
service of process out of any of the aforementioned courts in any such action
or proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, the Borrower at its address set forth opposite its signature
below. The Borrower hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Loan Document brought in the courts referred to above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of the Lender or any
holder of a Note to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Borrower in any
other jurisdiction,
Section 8.7 Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
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Section 8.8 Effectiveness. This Agreement shall become
effective on the date on which the Lender and the Borrower shall have each
signed a counterpart hereof and the Borrower shall have delivered the same to
the Lender.
Section 8.9 Headings Descriptive. The headings of the several
Sections and subsections of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision of
this Agreement.
Section 8.10 Marshalling; Recapture. The Lender shall be
under no obligation to ▇▇▇▇▇▇▇▇ any assets in favor of any Loan Party or any
other party or against or in payment of any or all of the Obligations. To the
extent the Lender receives any payment by or on behalf of any Loan Party, which
payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to such Loan
Party or its estate, trustee, receiver, custodian or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to
the extent of such payment or repayment, the obligation or part thereof which
has been paid, reduced or satisfied by the amount so repaid shall be reinstated
by the amount so repaid and shall be included within the liabilities of such
Loan Party to the Lender as of the date such initial payment, reduction or
satisfaction occurred.
Section 8.11 Severability. In case any provision in or
obligation under this Agreement or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
Section 8.12 Survival. All indemnities set forth herein
including, without limitation, in Sections 2.11, 2.12 and 8.1 shall survive the
execution and delivery of this Agreement and the Note and the making and
repayment of the Loans hereunder.
Section 8.13 Limitation of Liability. No claim may be made by
any Loan Party or any other Person against the Lender or any of its Affiliates,
directors, officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or any act, omission or event
occurring in connection herewith; and each Loan Party hereby waives, releases
and agrees not
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to ▇▇▇ upon any claim for any such damages, whether or not accrued and whether
or not known or suspected to exist in its favor.
Section 8.14 Calculations; Computations. The financial
statements to be furnished to the Lender pursuant hereto shall be made and
prepared in accordance with GAAP consistently applied throughout the periods
involved and consistent with GAAP as used in the preparation of the financial
statements referred to in Section 3.1(h).
Section 8.15 Waiver of Trial by Jury. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, EACH OF THE BORROWER AND THE LENDER HEREBY IRREVOCABLY
WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
AMRE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Title: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Notice Address:
HFS INCORPORATED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Title: Executive Vice President
Notice Address:
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EXHIBIT A
FORM OF PROMISSORY NOTE
$4,000,000 Dated: October __, 1995
FOR VALUE RECEIVED, AMRE, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of HFS INCORPORATED, a
Delaware corporation (the "Lender"), the principal sum of FOUR MILLION DOLLARS
(or such lesser amount as shall equal the aggregate unpaid principal amount of
the Loans made by the Lender to the Borrower under the Credit Agreement (as
defined below)), in lawful money of the United States of America and in
immediately available funds, on the Final Maturity Date and to pay interest on
the unpaid principal amount of such Loan, in like money and funds, for the
period commencing on the date of such Loan until such Loan shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.
The Lender is hereby authorized by the Borrower, prior to any
transfer hereof, to endorse on the schedule attached to this Note (or any
continuation thereof) the amount of each Loan made by the Lender to the
Borrower under the Credit Agreement, the date such Loan is made, and the amount
of each payment of principal or interest of such Loan received by the Lender.
This Note is the Note referred to in the Credit Agreement (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") dated as of October _, 1995, between the Borrower and the Lender,
and evidences Loans made by the Lender thereunder. Capitalized terms used in
this Note have the respective meanings assigned to them in the Credit
Agreement. This Note is entitled to the benefits of the Subsidiary Guaranty
referred to in the Credit Agreement.
Upon the occurrence of an Event of Default, the principal
hereof and accrued interest hereon shall become, or may be declared to be,
forthwith due and payable in the manner, upon the conditions and with the
effect provided in the Credit Agreement.
44
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK. THE BORROWER HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS NOTE.
AMRE, INC.
By
-----------------------------------
Title:
A-2
45
SCHEDULE TO PROMISSORY NOTE
This Note evidences Loans made by the Lender to the Borrower
under the Credit Agreement referred to above, in the principal amounts set
forth below, which Loans were made on the dates set forth below, subject to the
payment of principal and interest set forth below.
Principal Balance Notation
Date Amount of Principal Interest Out- Made
Made Loan Payment Payment Standing By
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A-3
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EXHIBIT B
SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY, dated as of October _, 1995 (as the same
may be amended, modified or supplemented from time to time, the "Subsidiary
Guaranty"), made by each of the corporations listed on Annex A attached hereto
(individually, a "Guarantor" and collectively, the "Guarantors"), in favor of
HFS Incorporated (the "Lender") and its successors and assigns under the Credit
Agreement hereinafter referred to (such successors and assigns, together with
the Lender, the "Guaranteed Parties"). All capitalized terms used herein and
defined in the Credit Agreement shall be used herein as so defined. The annexes
hereto are incorporated herein by reference and this Agreement together with
all annexes shall constitute the "Subsidiary Guaranty" referred to in the
Credit Agreement.
W I T N E S S E T H:
WHEREAS, AMRE, Inc., a Delaware corporation (the "Borrower"),
and the Lender have entered into the Credit Agreement, dated as of October __,
1995, providing for the making of Loans as contemplated therein (as used
herein, the term "Credit Agreement" means the Credit Agreement described above
in this paragraph, as the same may be amended, modified, extended, renewed,
restated or supplemented from time to time, and including any agreement
extending the maturity of, or restructuring (including, but not limited to, any
increase in the amount borrowed) all or any portion of the Indebtedness under
such agreement or any successor agreements);
WHEREAS, the Borrower and the Guarantors share an identity of
interests as members of a consolidated group of companies engaged in
substantially similar businesses, the Borrower provides centralized financial,
accounting and management services to each of the Guarantors and the making of
the loans under the Credit Agreement will facilitate expansion of, and enhance
the overall financial strength and stability of the Borrower's corporate group;
and
WHEREAS, it is a condition precedent to the above-described
extensions of credit to the Borrower that the Guarantors shall have executed
and delivered this Agreement; and
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WHEREAS, the Guarantors desire to execute and deliver this
Agreement to satisfy the conditions described in the preceding paragraph.
NOW, THEREFORE, in consideration of the premises contained
herein and in order to induce the Lender to make loans under the Credit
Agreement, the Guarantors hereby jointly and severally agree as follows:
SECTION 1. Guaranty. (a) The Guarantors hereby jointly and
severally unconditionally guarantee the punctual payment when due, whether at
stated maturity, by acceleration or otherwise, of (i) all Obligations of the
Borrower and its Subsidiaries now or hereafter existing, whether for principal,
interest (including any interest accruing during a Proceeding (as hereinafter
defined) whether or not the claim for such interest is allowable or discharged
in such Proceeding), fees, expenses or otherwise, and (ii) any and all
reasonable expenses (including counsel fees and expenses) incurred by any
Guaranteed Party in enforcing any rights under this Subsidiary Guaranty (all of
the foregoing, collectively, the "Guaranteed Obligations"). It is the intention
of the parties hereto that in no event shall any Guarantor's obligations under
this Subsidiary Guaranty constitute or result in a violation of any applicable
fraudulent conveyance or similar law of any relevant jurisdiction. Therefore,
in the event that this Subsidiary Guaranty would, but for the preceding
sentence, constitute or result in such violation, then the liability of a
Guarantor under this Subsidiary Guaranty shall be reduced to the maximum amount
permissible under the applicable fraudulent conveyance or similar laws. Any and
all payments by the Guarantors hereunder shall be made free and clear of and
without deduction for any set-off or counterclaim.
(b) Additionally, each Guarantor unconditionally
and irrevocably, jointly and severally, guarantees the payment of any and all
of the Guaranteed Obligations to the Guaranteed Parties whether or not due or
payable by the Borrower upon the occurrence in respect of the Borrower of any
Proceeding, and unconditionally and irrevocably, jointly and severally,
promises to pay such Guaranteed Obligations to the Guaranteed Parties, or
order, on demand, in lawful money of the United States.
SECTION 2. Guaranty Absolute. Each Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms
of the Credit Agreement and the other Loan Documents, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of any Guaranteed Party with respect thereto.
This is a
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guaranty of payment and not of collection, and the liability of the Guarantors
under this Subsidiary Guaranty shall be joint, several, absolute and
unconditional, in accordance with its terms and shall remain in full force and
effect without regard to, and shall not be released, suspended, discharged,
terminated or otherwise affected by, any circumstance or occurrence whatsoever,
including, without limitation: (a) any change in the time, place or manner of
payment of, or in any other term of, all or any of the Guaranteed Obligations,
any waiver, indulgence, renewal, extension, amendment or modification of, or
addition, consent or supplement to, or deletion from, or any other action or
inaction under, or in respect of the Credit Agreement, any other Loan Document
or any documents, instruments or agreements relating to the Guaranteed
Obligations or any other instrument or agreement referred to therein or any
assignment or transfer of any thereof; (b) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document or any other
documents, instruments or agreements referred to therein or any assignment or
transfer of any thereof; (c) any furnishing of any additional security to the
Guaranteed Parties or their assignees or any acceptance thereof or any release
of any security by the Guaranteed Parties, or their assignees; (d) any
limitation on any party's liability or obligations under any such instrument or
agreement (other than as set forth in Section I hereof) or any invalidity or
unenforceability, in whole or in part, of any such instrument or agreement, or
any term thereof; (e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to the
Borrower, or any action taken with respect to this Subsidiary Guaranty by any
trustee or receiver, or by any court, in any such proceeding, whether or not
any Guarantor shall have notice or knowledge of any of the foregoing and each
Guarantor waives any right to the deferral or modification of its obligations
hereunder by reason of any such proceeding; (f) any exchange, release or
nonperfection of any other collateral, or any release, or amendment or waiver
of, or consent to, departure from any guaranty or security, for all or any of
the Guaranteed Obligations; (g) any direction as to application of payment by
the Borrower or by any other party; (h) any dissolution, termination or
increase, decrease or change in personnel by the Borrower; or (i) any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, any Guarantor. This Subsidiary Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Guaranteed Obligations is rescinded or must otherwise be returned by
any Guaranteed Party upon the insolvency, bankruptcy or reorganization of the
Borrower or any Guarantor or otherwise, all as though such payment had not been
made.
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SECTION 3. Waiver. To the extent permitted by applicable law,
the Guarantors hereby waive promptness, diligence, notice of acceptance and any
other notice with respect to the Guaranteed Obligations and this Subsidiary
Guaranty and any requirement that any Guaranteed Party protect, secure, perfect
or insure any security interest or lien or any property subject thereto or
exhaust any right or take any action against the Borrower, or any other Person
or any collateral. The Guarantors waive, to the fullest extent permitted by
law, the benefit of any statute of limitations affecting its liability
hereunder or the enforcement thereof. Any payment by the Borrower or other
circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to each Guarantor.
SECTION 4. Subordination of Subrogation. Each Guarantor hereby
irrevocably agrees to subordinate any Subrogation Rights (as defined below) to
the rights of any Guaranteed Party to recover from the Borrower all Guaranteed
Obligations. "Subrogation Rights" shall mean any and all rights of subrogation,
reimbursement, exoneration, contribution or indemnification, any right to
participate in any claim or remedy of the Guaranteed Parties or any collateral
which any Guaranteed Party now has or hereafter acquires in connection with the
payment, performance or enforcement of such Guarantor's obligations under this
Subsidiary Guaranty or any Loan Document, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including the
right to take or receive, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on account of such claim
or other rights. To effectuate such subordination, each Guarantor hereby agrees
that it shall not be entitled to any payment by the Borrower in respect of any
Subrogation Right until all of the Guaranteed Obligations have been
indefeasibly paid in full. If any amount shall be paid to any Guarantor in
violation of the preceding sentence and the Guaranteed Obligations shall not
have been paid in full or any commitment of any Guaranteed Party under the
Credit Agreement shall not have been irrevocably terminated, such amount shall
be deemed to have been paid to such Guarantor for the benefit of, and held in
trust for, the benefit of the Guaranteed Parties, and shall forthwith be paid
to the Guaranteed Parties to be credited and applied to the Guaranteed
Obligations, whether matured or unmatured. Each Guarantor acknowledges that it
will receive direct and indirect benefits from the financing arrangements
contemplated by the Credit Agreement and that the subordination set forth in
this Section is knowingly made in contemplation of such benefits.
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SECTION 5. Representations and Warranties. Each Guarantor
hereby represents and warrants as follows:
(a) Each representation, warranty and agreement
made by the Borrower in Section 4 of the Credit Agreement is confirmed to be
true and correct.
(b) On the Closing Date, after giving effect to
all the transactions contemplated by the Credit Agreement, including, without
limitation, the execution and delivery of the Credit Agreement, and the
incurrence by such Guarantor of liabilities under this Subsidiary Guaranty, (i)
the assets of such Guarantor, at a fair valuation, will exceed its liabilities,
including contingent liabilities (but excluding any intercompany liabilities,
including contingent intercompany liabilities), (ii) the remaining capital of
such Guarantor will not be unreasonably small to conduct its business and (iii)
such Guarantor has not incurred debts, and does not intend to incur debts,
beyond its ability to pay such debts as they mature. For purposes of this
Section 5(b), "debt" means any liability on a claim, and "claim" means (x)
right to payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured, or (y) right to an equitable remedy
for breach of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.
SECTION 6. Additional Guarantors. In accordance with the
provisions of Section 5.10 of the Credit Agreement, any Person that becomes a
Subsidiary of the Borrower after the Closing Date (an "Additional Guarantor")
shall, upon the request of the Lender, execute and deliver to the Lender a
counterpart (substantially in the form of Annex B hereto) of this Subsidiary
Guaranty. Upon such execution, such Additional Guarantor shall be liable to the
Guaranteed Parties pursuant to Section 1 hereof and Annex A hereto shall be
deemed to be amended to include such Additional Guarantor.
SECTION 7. Notices. All notices and other communications
provided for hereunder shall be given to the Borrower (on behalf of any
relevant Guarantor) and the Lender at the addresses and in the manner specified
in the Credit Agreement.
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SECTION 8. No Waiver; Remedies, Enforcement. No failure on the
part of any Guaranteed Party to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 9. Right of Set-Off. In addition to, and not in
limitation of, all rights of set-off that any Guaranteed Party may have under
applicable law, each Guaranteed Party shall, upon the occurrence of any Event
of Default and whether or not such Guaranteed Party has made any demand or any
Guarantor's obligations hereunder have matured, have the right to appropriate
and apply to the payment of the Guaranteed Obligations, all deposits (general
or special, time or demand, provisional or final) then or thereafter held by,
and other indebtedness or property then or thereafter owing by, such Guaranteed
Party, whether or not related to this Subsidiary Guaranty or any transaction
hereunder.
SECTION 10. Continuing Guaranty; Transfer of Obligations. This
Subsidiary Guaranty is a continuing guaranty and shall (i) remain in full force
and effect until indefeasible payment in full of the Guaranteed Obligations and
all other amounts payable under this Subsidiary Guaranty, (ii) be binding upon
each Guarantor, its successors and assigns, and (iii) inure to the benefit of
and be enforceable by each Guaranteed Party and its permitted successors,
transferees and assigns; provided that each Guarantor may not assign or
transfer any of its interests or obligations hereunder without the prior
written consent of the Lender. Without limiting the generality of the foregoing
clause (iii), the Lender and any other Guaranteed Party may, in accordance with
the terms and provisions of the Credit Agreement, assign to one or more banks
or other entities all or any part of, or may grant participations to one or
more banks or other entities in or to all or any part of, any of the Guaranteed
Obligations, whereupon each such bank or entity shall become vested with all
the rights in respect of all or such portion thereof granted to the Lender or
such Guaranteed Party herein or otherwise in respect hereof.
SECTION 11. Governing Law, Submission to Jurisdiction. (a)
THIS SUBSIDIARY GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
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PRINCIPLES THEREOF). Any legal action or proceeding with respect to this
Subsidiary Guaranty or any other Loan Document may be brought in the courts of
the State of New York or of the United States for the Southern District of New
York, and, by execution and delivery of this Subsidiary Guaranty, each
Guarantor hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each
Guarantor irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Borrower (on
behalf of the Guarantors) at its address set forth in the Credit Agreement.
Nothing herein shall affect the right of the Lender or any other Guaranteed
Party to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Guarantors in any other
jurisdiction.
(b) Each Guarantor hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Subsidiary Guaranty or any other Loan Document brought in the courts referred
to in clause (a) above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum.
SECTION 12. Subordination of Borrower's Obligations To
Guarantors. As an independent covenant, each Guarantor hereby expressly
covenants and agrees for the benefit of each Guaranteed Party that all
obligations and liabilities of the Borrower to such Guarantor of whatsoever
description including, without limitation, all intercompany receivables of such
Guarantor from the Borrower ("Junior Claims") shall be subordinate and junior
in right of payment to all obligations of the Borrower to the Guaranteed
Parties, including, without limitation, interest accrued during any Proceeding
(as hereinafter defined) on the Guaranteed Obligations whether or not the claim
for such interest is allowable or discharged in such Proceeding) ("Senior
Claims").
If an Event of Default shall occur and the Lender so requests,
then no direct or indirect payment (in cash, property, securities by setoff or
otherwise) shall be made by the Borrower to any Guarantor on account of, or in
any manner in respect of, any Junior Claim except such payments and
distributions the proceeds of which shall be applied to the Senior Claims.
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Notwithstanding anything to the contrary, set forth in the
immediately preceding paragraph of this Section 12, in the event of a
Proceeding, all Senior Claims shall first be paid in full before any direct or
indirect payment or distribution (in cash, property, or securities, by setoff
or otherwise) shall be made to any Guarantor on account of or in any manner in
respect of any Junior Claim except such payments and distributions the proceeds
of which shall be applied to the Senior Claims. "Proceeding" means the
occurrence of any of the following: the Borrower shall commence a voluntary
case concerning itself under Title II of the United States Code entitled
"Bankruptcy" as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or any involuntary case is commenced against the Borrower;
or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or any substantial part of the property of the Borrower, or the
Borrower commences any other proceedings under any reorganization arrangement,
adjustment of debt, relief of debtor, dissolution, insolvency or liquidation or
similar law of any jurisdiction whether now or hereafter in effect relating to
the Borrower, or the Borrower is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is
entered; or the Borrower suffers any appointment of any custodian or the like
for it or any substantial part of its property; or the Borrower makes a general
assignment for the benefit of creditors; or the Borrower shall fail to pay, or
shall state that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or the Borrower shall call a meeting of its
creditors with a view to arranging a composition or adjustment of its debts; or
the Borrower shall by any act or failure to act indicate its consent to,
approval of, or acquiescence in, any of the foregoing; or any corporate action
shall be taken by the Borrower for the purpose of effecting any of the
foregoing.
In the event any direct or indirect payment or distribution is
made to a Guarantor in contravention of this Section 12, such payment or
distribution shall be deemed received in trust for the benefit of the
Guaranteed Parties and shall be immediately paid over to the Lender for
application in accordance with the terms of the Credit Agreement.
Prior to the transfer by any Guarantor of any note or
negotiable instrument evidencing any indebtedness of the Borrower to such
Guarantor, such Guarantor shall ▇▇▇▇ such note or negotiable instrument with a
legend that the same is subject to this subordination.
Each Guarantor agrees to execute such additional documents as
the Lender may request to evidence the subordination provided for in this
Section 12.
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By its execution and delivery of this Subsidiary Guaranty, the
Lender hereby acknowledges and agrees to the subordination provided for in this
Section 12.
SECTION 13. Severability. To the extent permitted by
applicable law, any provision of this Subsidiary Guaranty 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 14. Amendments. Etc. No amendment or waiver of any
provision of this Subsidiary Guaranty nor consent to any departure by any
Guarantor therefrom shall in any event be effective unless the same shall be
executed in accordance with the terms of the Credit Agreement.
SECTION 15. Waiver of Trial by Jury. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THE COMPANY AND EACH GUARANTOR HEREBY IRREVOCABLY WAIVE ALL
RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF, OR IN CONNECTION WITH, THIS SUBSIDIARY GUARANTY OR ANY OTHER LOAN DOCUMENT
OR ANY MATTER ARISING IN CONNECTION HEREUNDER OR THEREUNDER.
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IN WITNESS WHEREOF, each of the Guarantors and the Borrower
has caused this Subsidiary Guaranty to be duly executed and delivered by its
officer thereunto duly authorized as of the date first above written.
GUARANTORS:
By
-----------------------------------
______________, in his/her capacity
as ___________ for the corporations
listed on Annex A hereto.
ACKNOWLEDGED AND AGREED TO
AS APPLICABLE TO THE BORROWER:
AMRE, INC.
By
-----------------------------------
Name:
Title:
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ANNEX A
SUBSIDIARY GUARANTY
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ANNEX B
ADDITIONAL GUARANTOR
The undersigned hereby acknowledges that it has read this
Subsidiary Guaranty and agrees to be liable to the Guaranteed Parties pursuant
to Subsidiary Guaranty and to be bound by the terms and provisions thereof.
IN WITNESS WHEREOF, the undersigned has caused this Subsidiary
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the ____ day of_____________, 19__.
Notice Address: [Name of Guarantor], a
[State of Incorporation]
Corporation
By
-----------------------------------
Title:
12