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AMENDMENT TO LOAN AND SECURITY AGREEMENT AND TERM NOTE
THIS AMENDMENT TO LOAN AND SECURITY AGREEMENT AND TERM NOTE made as of
September 15, 1999 by and among ▇▇▇▇▇▇▇ PARTNERS, LLC, a New York limited
liability company, having a mailing address c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President,
Tisch Family Interests, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the
"Secured Party") and ▇▇▇▇▇▇▇ INTERNATIONAL, LTD., a Delaware corporation having
its principal office at One Winnendon Road, Norwich, Connecticut 06360 (the
"Debtor").
W I T N E S S E T H:
WHEREAS, the Secured Party and the Debtor are parties to a certain Loan
and Security Agreement dated October 2, 1998 (the "Agreement"); and
WHEREAS, as evidence of the Debtor's obligation to repay the Secured Party
the $4,000,000 borrowed by the Debtor from the Secured Party pursuant to the
terms of the Agreement (the "Loan"), the Debtor executed and delivered to the
Secured Party the Debtor's $4,000,000 Term Note dated October 2, 1998 (the
"Original Note"); and
WHEREAS, as of September 14, 1999 the Debtor had repaid $800,000 of
principal to the Secured Party leaving a then outstanding principal balance of
the Loan of $3,200,000; and
WHEREAS, the Secured Party has on the date hereof advanced an additional
$800,000 to the Debtor and agreed to modify the repayment terms of the Loan as
herein set forth; and
WHEREAS, the Secured Party and the Debtor desire to document (i) the
aforesaid additional $800,000 advance to the Debtor and (ii) the modification of
the repayment terms of the Loan by amending the Agreement as herein provided and
having the Debtor execute and deliver a Substitute Term Note in the form of
Exhibit A attached hereto which would take the place of the Original Note.
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NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Secured Party and the Debtor
agree as follows:
1. Definitions. All capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to them in the Agreement.
2. Amendment to the Agreement.
A. Interest. Section 1(a) of the Agreement is modified by adding the
following at the end thereof:
(iii) Notwithstanding anything contained herein to the
contrary, the Secured Party and the Debtor confirm that as of September
14, 1999, the accrued and outstanding interest on the Loan was $53,304.11
which shall be paid to the Secured Party on October 1, 1999. Interest on
the outstanding principal balance of the Loan ($4,000,000 as of September
15, 1999) shall be payable as provided in the Agreement with all interest
which shall accrue thereon from September 15, 1999 through September 30,
1999 being due and payable on October 1, 1999 together with the aforesaid
outstanding interest which accrued on the Loan prior to September 15,
1999.
B. Term Note; Installment Payments. From and after September 15,
1999 the provisions of Section 1(b) of the Agreement shall be replaced by the
following:
(b) Term Note; Installment Payments.
(i) From and after September 15, 1999, the Debtor's
obligations to repay the Loan shall be evidenced by that certain
$4,000,000 Substituted Term Note dated as of September 15, 1999 made by
the Debtor to the order of the Secured Party which shall be delivered to
the Secured Party in substitution for the original $4,000,000 Term Note
made by the Debtor to the order of the Secured Party on October 2, 1998.
The defined term "Term Note" as used in the Agreement shall mean the
aforesaid $4,000,000 Substituted Term Note.
(ii) The principal of the Loan will be repaid in nine
(9) payments as follows: (a) Two Hundred Thousand Dollars ($200,000) shall
be paid on the first (1st) day of each month commencing on October 1, 2001
and
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continuing to and including April 1, 2002; (b) One Hundred Thousand
Dollars ($100,000) shall be paid on May 1, 2002; and (c) the balance,
together with all unpaid amounts due hereunder or under the Financing
Statements, as herein defined, shall be paid on October 1, 2003 or on such
earlier date that the Loan becomes due and payable as a result of
acceleration as provided herein (the "Maturity Date"). Notwithstanding the
foregoing, if at any time prior to October 1, 2001, the Retained Earnings
of the Debtor, calculated in accordance with generally accepted accounting
principals, increase to One Million Dollars ($1,000,000) or more above the
Debtor's Retained Earnings as of June 30, 1999 (such event herein called
the "Triggering Event") then the principal payments set forth above as
being due on October 1, 2001 through May 1, 2002 shall be accelerated and
become due in consecutive monthly installments as set forth above payable
on the 1st day of each month commencing on the 1st day of the second (2nd)
month following the month in which the Triggering Event shall occur.
3. Substitute Term Note. Simultaneously with the execution of this
Amendment to Loan and Security Agreement and Term Note, the Debtor has executed
and delivered to the Secured Party the Debtor's $4,000,000 Substitute Term Note
(the "Substitute Term Note") which shall be substituted for the Original Note.
Notwithstanding the aforesaid substitution of the Substitute Term Note for the
Original Note, the Debtor agrees to pay to the Secured Party on October 1, 1999
the $53,304.11 of interest which accrued and remains unpaid on the outstanding
principal balance of the Original Note through September 14, 1999.
4. Cross Reference in Financing Agreements. All references in the
Financing Agreements to the "Agreement: and the "Term Note" shall be deemed to
mean and refer to the Agreement, and the Substitute Term Note, as amended hereby
and as may be further amended from time to time.
5. Ratification of Obligations; No Defaults. As modified hereby, the
Agreement and the Note and all of the Financing Agreements are hereby ratified
and confirmed by the Borrower and the Lender and every provision, covenant,
warranty, representation, condition, obligation, right and power contained in
and under the Agreement, the Note and the other Financing Agreements, as amended
hereby, shall continue in full force and
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effect. Without limiting the generality of the foregoing, Borrower hereby
represents and warrants that as of the date hereof, after giving effect to this
Amendment (i) there exists no Default or Event of Default and (ii) there exists
no right of offset, defense, counterclaim, claim or objection in its favor as
against the Lender with respect to the Agreement, the Note or any of the other
Financing Agreements.
6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7. Manner of Execution. Telefacsimile transmissions of any executed
original document and/or retransmission of any executed telefacsimile
transmission shall be deemed to be the same as the delivery of an executed
original. At the request of any party hereto, the other parties shall confirm
telefacsimile transmissions by executing duplicate original documents and
delivering the same to the requesting party or parties.
IN WITNESS WHEREOF, the Lender and the Borrower have caused this Amendment
to Loan and Security Agreement and Note to be duly executed by their respective
duly authorized officers as of the date first above written.
▇▇▇▇▇▇▇ PARTNERS, LLC ▇▇▇▇▇▇▇ INTERNATIONAL, LTD.
By: By:
--------------------------- -------------------------------
Name: Name:
Title: Title:
Hereunto Duly Authorized Hereunto Duly Authorized
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EXHIBIT A
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SUBSTITUTE TERM NOTE
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$4,000,000 September 15, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
For value received, the undersigned, ▇▇▇▇▇▇▇ International, Ltd. (the
"Borrower") promises to pay to the order of ▇▇▇▇▇▇▇ PARTNERS, LLC ("Lender") at
the office of its agent, c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Tisch Family Interests, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ or at such other place as Lender may
designate, the principal sum of FOUR MILLION DOLLARS ($4,000,000), together with
interest on the unpaid balance of this Note at the rate of eight percent (8%)
per annum, beginning on the date hereof, before or after maturity or judgment,
which interest shall be computed on the basis of a 360-day year and actual days
elapsed, together with all taxes levied or assessed on this Note or the debt
evidenced hereby against Lender, and together with all costs, expenses and
reasonable attorneys' fees incurred in the collection of this Note, or to
enforce or foreclose any security agreement or other document including, without
limitation, the Agreement (as hereinafter defined), securing or relating to this
Note, or in protecting or defending the lien of said security agreement or other
document, or in any
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litigation or matter arising from or connected with said
security agreement, other document, or this Note. This Note is the Term Note
referred to in, and is entitled to the benefits of, that certain Loan and
Security Agreement dated October 2, 1998 between Borrower and Lender as amended
by that certain Amendment to Loan Agreement and Term Note dated the date hereof
(such Loan and Security Agreement as so modified and as the same may be further
amended from time to time, the "Agreement"). Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the
Agreement. The Agreement, among other things, contains provisions for (i)
acceleration of the maturity of this Note upon the happening of certain stated
events, (ii) for prepayments on account of principal hereof prior to the
maturity of this Note upon the terms and conditions specified in the Agreement
and (iii) the payment of interest at the Default Rate under certain
circumstances. The Agreement and all other instruments either relating to or
securing the indebtedness evidenced hereby are made a part of this Note and
deemed incorporated in full.
Interest shall be paid on the first day of each calendar quarter beginning
October 1, 1999, and continuing on the first day of each April, July, October
and January thereafter, until the principal balance with accrued interest
thereon is paid in
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full. Principal shall be paid in nine payments as follows:
(a) Two Hundred Thousand Dollars ($200,000) shall be paid on the first day of
each month commencing on October 1, 2001 and continuing to and including April
1, 2002; (b) One Hundred Thousand Dollars ($100,000) shall be paid on May 1,
2002 and (c) the balance together with all accrued and unpaid interest and all
other unpaid amounts due hereunder or under the Financing Agreements, shall be
due and payable on October 1, 2003 or on such earlier date that this Note
becomes due and payable as a result of acceleration as provided in the Agreement
(the "Maturity Date"). Notwithstanding the foregoing, if at any time prior to
October 1, 2001, the Retained Earnings of the Borrower, calculated in accordance
with generally accepted accounting principals, increase to One Million Dollars
($1,000,000) or more above the Borrower's Retained Earnings as of June 30, 1999
(such event herein called the "Triggering Event") then the principal payments
set forth above as being due on October 1, 2001 through May 1, 2002 shall be
accelerated and become due in consecutive monthly installments as set forth
above payable on the 1st day of each month commencing on the 1st day of the
second (2nd) month following the month in which the Triggering Event shall
occur.
Upon the occurrence of an Event of Default under and as defined in the
Agreement, the entire indebtedness, with accrued
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interest thereon, due under this Note, shall, at the option of Lender, become
immediately due and payable without demand or notice of any kind.
If any amount due hereunder is not paid within ten (10) days after the
date it is due, without in any way affecting Lender's right to accelerate this
Note, a late charge equal to five percent (5%) of said amount shall be assessed
against Borrower for each month that said amount is late, and shall be
immediately due and payable without demand or further notice of any kind.
Borrower hereby grants to Lender a lien and right of setoff for all of
Borrower's liabilities to Lender under this Note and the Agreement upon and
against all the deposits, credits, collateral and property of Borrower, now or
hereinafter in the possession or control of Lender or in transit to it. Lender
may, at any time after the occurrence, and during the continuance, of an Event
of Default, apply or set off the same, or any part thereof, to any liability of
Borrower, whether or not matured or demanded.
Notwithstanding any provisions of this Note to the contrary, the rate of
interest to be paid by Borrower to Lender under this Note shall not exceed the
highest or the maximum rate of interest permitted to be charged by Lender under
applicable
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laws. Any amounts paid by Borrower to Lender in excess of such rate shall be
deemed to be partial prepayments of principal hereunder.
No delay or omission by Lender in exercising any right hereunder, nor
failure by Lender to insist upon the strict performance of any terms herein,
shall operate as a waiver of such right, any other right hereunder, or any terms
herein. No waiver of any right shall be effective unless in writing and signed
by Lender, nor shall a waiver on one occasion be constituted as a bar to, or
waiver of, any such right on any future occasion.
BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY SUIT, ACTON
OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO
THE FINANCING TRANSACTIONS OF WHICH THIS NOTE IS A PART AND/OR THE ENFORCEMENT
OF ANY OF LENDER'S RIGHTS AND REMEDIES. BORROWER ACKNOWLEDGES THAT IT MAKES THIS
WAIVER KNOWINGLY, VOLUNTARILY AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE
RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS. NO PARTY TO THIS NOTE HAS
AGREED WITH OR REPRESENTED TO ANY OTHER PARTY HERETO THAT THE PROVISIONS OF THIS
SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
BORROWER ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS NOTE IS A COMMERCIAL
TRANSACTION AND WAIVES ITS RIGHTS TO NOTICE AND
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HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE
ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH
BANK MAY DESIRE TO USE, and further waives diligence, demand, presentment for
payment, notice of nonpayment, protest, and notice of protest, and notice of any
renewals or extensions of this Note, and all rights under any statute of
limitations.
This Note shall be governed by and construed in accordance with the laws
of the State of Connecticut.
This Note is delivered in substitution for that certain $4,000,000 Term
Note dated October 2, 1998 made by the Borrower to the order of the Lender.
▇▇▇▇▇▇▇ INTERNATIONAL, LTD.
By:
------------------------
Name:
Title:
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