Exhibit 10.7
BANK [LOGO] ONE Business Loan Agreement
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Agreement by and between Bank One, Chicago ("Bank One"), located at Arlington
Heights, Illinois and Factory Card Outlet of America. Ltd. and FCOA Acquisition
Corp. collectively ("Borrower"), located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Borrower has requested certain extension(s) of credit provided by Bank One,
evidenced by the following:
Business Purpose
(a) Revolving Promissory Note $15,000,000 November __, 1995
------------------------- ----------- ----------------- ---------------------
Instrument Amount Date (Obligor) (Guarantor)
Borrower
--------------------- -------------------------- ---------------------
Obligor Obligor (Obligor) (Guarantor)
Business Purpose Revolving
(b) Promissory Note $5,000,000 November __, 1995
------------------------- ----------- ----------------- ---------------------
Instrument Amount Date (Obligor) (Guarantor)
Borrower
--------------------- -------------------------- ---------------------
Obligor Obligor (Obligor) (Guarantor)
(c) Promissory Note $1,500,000 May 1, 1995
------------------------- ----------- ----------------- ---------------------
Instrument Amount Date (Obligor) (Guarantor)
Factory Card Outlet
of America Ltd. FCOA Acquisition Corp.
--------------------- -------------------------- ---------------------
Obligor Obligor (Guarantor)
Instrument Amount
and any and all renewals, extensions or substitutions therefor ("Obligations").
In consideration of the mutual promises set forth below and the extension(s) of
credit as described above and subject to Borrower's satisfactory fulfillment of
all conditions incident to the borrowing(s), Bank One and Borrower agree as
follows:
ARTICLE I - DEFINITIONS
The following terms shall have the following meanings in this Agreement or in
any document made or delivered pursuant to or in conjunction with this
Agreement:
1.1 All computations and determinations as to accounting or financial matters
shall be made in accordance with generally accepted accounting principles
consistently applied ("GAAP"), and all accounting or financial terms shall have
the meanings ascribed to such terms by GAAP.
1.2 "Indebtedness" shall mean:
(a) All indebtedness and liabilities of whatsoever kind, nature and
description owed to Bank One by Borrower (including Liabilities of Borrower as
defined in any note now or hereafter executed by Borrower in favor of Bank One),
whether direct or indirect, absolute or contingent, due or to become due or
whether now existing or hereafter arising, and howsoever evidenced or acquired,
and whether joint and several;
(b) All future advances which Bank One at any time may, but shall not be
required to, make for the protection or preservation of Bank One's rights and
interests arising hereunder, including, without limitation, advances for taxes,
levies, assessments, insurance, and reasonable attorneys' fees, if allowable by
law; and
(c) All costs and expenses incurred by Bank One in the protection and
preparation for sale of any of the collateral hereinafter described in Section
3.1 in any other security document including, without limitation, attorneys'
fees, if allowable by law, and court costs.
1.3 "Obligation" shall mean the above referenced extension(s) of credit
including any Promissory Note, Guaranty, Letter of Credit or other instrument of
Borrower evidencing any loan, advance, credit or extension or renewal thereof
made or committed by Bank One to Borrower under this Agreement.
1.4 "Person" shall mean and include an individual, partnership, corporation,
trust, unincorporated association or organization, government or any department
or agency thereof.
1.5 "Related Person" shall include, but shall not be confined to, any Person
related to Borrower by common control or ownership.
1.6 "Subordinated Debt" shall mean indebtedness of Borrower which is
subordinated to all indebtedness of Borrower to Bank One under the terms and
conditions approved in writing by Bank One.
1.7 The aforestated definitions, and all other definitions which may be set
forth herein, shall be applicable to the singular and plurals of said defined
term.
ARTICLE II - REPRESENTATIVES AND WARRANTIES
Borrower represents and warrants that:
2.1 If applicable, it is a duly organized, legally existing corporation in good
standing under the laws of the State of Illinois, is qualified to do business in
and is in good standing under the laws of any other state in which it conducts
its business.
2.2 It has the power and is duly authorized to enter into this Agreement and to
execute and deliver to Bank One, now and from time to time hereafter, additional
instruments, resolutions, agreements and other instruments or documents relating
to the Obligation owed to Bank One. It has, by proper action, authorized and
empowered those persons whose signatures appear in this Agreement, and any
instruments, documents and exhibits that have been delivered in connection
herewith to execute the same for and on its behalf.
2.3 The execution by it of this Agreement or any other agreements, instruments,
or documents which may, from time to time hereafter, be executed in respect
hereto and delivered to Bank One, shall not constitute a breach of any
provisions contained in its articles of incorporation or bylaws, or if
promulgated pursuant thereto, and that the performance by it of its obligations
hereunder or any agreements executed by it and delivered hereunder shall not
constitute an event of default under any other agreement to which it is now a
party.
2.4 All financial statements and information relating to it which have been or
may hereafter be delivered by it, its agents or accountants to Bank One are true
and correct and have been prepared in accordance with GAAP and that there have
been no material adverse changes in its financial or business condition or
operations since the submission of any financial information to Bank One, and no
material adverse changes in its financial or business condition or operations
are imminent or threatened.
2.5 All of its Federal, State and other tax returns and reports, including
reports to any governmental authority, for the proper maintenance and operation
of its properties, assets and business, as may be required by law to be filed or
paid, have been filed, and all Federal, State and other taxes, assessments, fees
and other governmental charges (other than those presently payable, without
penalty) imposed upon it or its properties or assets, which are due and payable,
have been fully paid unless being contested by it in the ordinary course of
business for which it has provided adequate reserves.
2.6 There is no litigation or, legal or administrative proceedings,
investigations or other action of any nature, pending or, to its knowledge,
threatened against or affecting it, which have not been disclosed to Bank One
and involve the possibility of any judgment or liability not covered by
insurance which may materially or adversely affect any of its properties or
assets or its right to carry on its business as now conducted.
2.7 It has good, valid and marketable title to all of its property and assets
free of any adverse lien, security interest or encumbrance, except liens,
security interests, pledges and encumbrances disclosed to Bank One by Borrower
in writing prior to the date hereof.
2.8 All of the funds loaned to it pursuant to this Agreement have been or will
be used exclusively in its normal business operation, will not be diverted to or
used in any other manner, and will not be used for the purchasing or carrying of
any "Margin Stock" as defined in regulations promulgated by the Federal Reserve
Board or the Securities and Exchange Commission.
2.9 It possesses and will continue to possess all permits, licenses, trademarks,
patents and rights thereto to conduct its business and that its business does
not conflict or violate any valid rights of others with respect to the
foregoing.
2.10 If applicable, it is in compliance in all material respects with all
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereof ("ERISA"). Neither a Reportable Event nor a Prohibited Transaction, as
defined per ERISA, has occurred and is continuing with respect to any Plan, nor
has there been a notice of intent to terminate a Plan or appoint a trustee to
administrate a Plan.
2.11 It is in material compliance with all Federal, State and local laws,
ordinances, regulations, rulings and interpretations relating to industrial
hygiene, public health or safety, environmental conditions, the protection of
the environment, the release, discharge, emission or disposal to air, water,
land or ground water, the withdrawal or use of ground water or the use,
handling, disposal, treatment, storage or management of or exposure to Hazardous
Materials ("Hazardous Materials Laws"), the violation of which would have a
material effect on its business, its financial condition or its assets. The term
"Hazardous Materials" means any flammable materials, radioactive materials,
pollutants, toxic substances, hazardous water, hazardous materials, hazardous
substances, polychlorinated biphenyls, asbestos, urea formaldehyde, petroleum
(including its derivatives, by-products or other hydrocarbons) or related
materials or other controlled, prohibited or regulated substances or materials,
including, without limitation, any substances defined or listed as or included
in the definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "pollutants" or "toxic substances" under any Hazardous Materials
Laws. It has not received any written or oral communication or notice from any
judicial or governmental entity nor it is aware of any investigation by any
agency for any violation of any Hazardous Materials Law,
2.12 Details of all litigation, legal or administrative proceedings,
investigation or other action of similar nature, pending or threatened against
it, at any time during the term of this Agreement, which in part or in whole may
or will render any of these Representations and Warranties no longer true,
accurate and correct in each and every respect, will be brought to the attention
of Bank One, in writing, within fifteen (15) days from the date Borrower
acquires knowledge of same.
ARTICLE III - SECURITY
3.1 As security for repayment of the Indebtedness, regardless of whether the
principal sum evidenced by an Obligation is reduced to zero and thereafter
increased/decreased an unlimited number of times, Borrower hereby grants to Bank
One or has previously caused to be granted to Bank One a security interest
and/or lien in or on the following property under separate instrument(s):
|X| Accounts, general intangibles, chattel paper, instruments, and other
forms of obligations and receivables
|X| Inventory, merchandise, raw materials, work in process and supplies
|X| Goods, equipment, machinery, furnishings and other personal property
___ Real estate located at _____________________________________________
___ An assignment of life insurance on the life of ______________________
in an amount no less than $_____________
___ Specific collateral described as follows: ____________________________
___________________________________________
3.2 It is further agreed that the security described above shall secure
repayment of all Indebtedness and that a default in terms of any note, security
agreement, mortgage, or other agreement from Borrower to Bank One shall
constitute a default of all notes, security agreements, mortgages, and other
agreements, and that Bank One may proceed in exercising its rights thereunder in
any order or manner it may choose. The purpose of this section being to
cross-collateralize and cross-default all Indebtedness. Additionally, the
security interest described above, if any, may be modified, added to or deleted
from time to time without modification of this Agreement.
ARTICLE IV - AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as any Indebtedness is outstanding or
so long as this Agreement is in effect, Borrower shall:
4.1 Maintain insurance against fire, business interruption, public liability,
theft and other casualty on its insurable real and personal property to their
full replacement costs with companies acceptable to Bank One and against
liability on account of damage to persons or property and as required under all
applicable Workers' Compensation Laws. Furthermore, Borrower shall maintain any
other insurance as may from time to time be reasonably requested by Bank One,
shall insert a joint loss payee clause naming Bank One in all fire and extended
coverage policies and shall deliver certified copies of all such insurance
policies to Bank One upon demand.
4.2 Maintain, keep, and preserve its buildings and properties and every part
thereof in good repair, working order, and condition and from time to time make
all needful and proper repairs, renewals, replacements, additions, betterments,
and improvements thereto, so that at all times the efficiency thereof shall be
fully preserved and maintained.
4.3 Duly pay and discharge or cause to be paid and discharged all taxes,
assessments, and other governmental charges imposed upon it and its properties
or any part thereof or upon the income or profits therefrom, as well as all
claims for labor, materials, or supplies, which if unpaid might by law become a
lien or charge upon its property, except such items as are being in good faith
appropriately contested and for which it has provided adequate reserves.
4.4 Carry on and conduct its business in substantially the same manner and in
substantially the same fields as such business is now and has heretofore been
carried on, maintain management with the same expertise and experience, and if
management is to be changed, immediately notify Bank One of said change, and
maintain its legal existence, and comply with all valid and applicable statutes,
rules and regulations.
4.5 Maintain, keep, and preserve a system of accounting in accordance with GAAP,
deliver to Bank One financial reports in a form satisfactory to Bank One as Bank
One may request from time to time, permit the duly authorized representative(s)
of Bank One at all reasonable times to examine and inspect the books and records
of it or any related business entity of it, to make abstracts and copies
thereof, and to visit and inspect any of its property wherever the same may be
located.
4.6 Comply with all laws and regulations which it is required to comply with
including Hazardous Materials Laws and regulations, and permit Bank One to make
environmental audits from time to time if requested by Bank One with costs of
same to be paid by Borrower.
ARTICLE V - NEGATIVE COVENANTS
Borrower covenants and agrees that so long as any Indebtedness is outstanding or
so long as this Agreement is in effect, except for that previously disclosed in
writing to and consented to by Bank One, Borrower shall not without prior
written consent of Bank One:
5.1 Create, incur or assume any indebtedness for borrowed money, other than to
Bank One, or act as guarantor for any indebtedness of others in an aggregate
amount greater than $ 00 other than Subordinated Debt at any time. For purpose
hereof, sale of accounts receivable and or entering into capital leases of
personal property shall be deemed the incurring of indebtedness for borrowed
money.
5.2 Mortgage, pledge, assign, hypothecate, encumber, create or grant a security
interest in any of its assets except to Bank One, nor sell, lease, transfer,
assign or otherwise dispose of any of its assets, properties or business outside
of the ordinary course of business, except secured purchase money or lease
indebtedness up to the amount permitted by Section 5.1, if any.
5.3 Invest in, loan or advance money to, organize or participate in the
organization or in the creation of any other business entity.
5.4 Merge, transfer, acquire or consolidate with or into any other entity,
change ownership, dissolve, and/or transfer or sell any assets outside of the
ordinary course of business without the prior written consent of Bank One.
5.5 If Borrower is a corporation, release, redeem, retire, purchase, or
otherwise acquire directly or indirectly any of its capital stock, or make any
changes in its capital structure, or pay, set aside, allocate or declare any
dividends, in cash or other property, upon its capital stock.
ARTICLE VI - ADDITIONAL COVENANTS
Borrower agrees that each additional covenant listed below is fully applicable
if marked by an "X" or a check in the applicable box or boxes, or if the
information necessary to complete same is typed or written in the appropriate
space provided.
|_| 6.1 GUARANTY. Prior to or contemporaneous with the execution of this
Agreement, Borrower shall deliver to Bank One the Guaranty(s) of
_________________________________________ (Guarantor(s) name(s)) in
form and content acceptable to Bank One which Guaranty(s) shall
provide for liability of the Guarantor(s) for payment of the
Indebtedness and performance of the terms, conditions and provisions
of this Agreement and any and all applicable Security documents and
agreements.
|X| 6.2 FINANCIAL REPORTS. Borrower covenants in accordance with Section 4.5
that it will deliver to Bank One:
|X| (a) Within ninety (90) days after the end of each fiscal year of
Borrower, audited, consolidated financial statements of Borrower
prepared in accordance with GAAP which shall include a Balance
Sheet, Statement of Income, Statement of Reconciliation of Net
Worth, Statement of Changes in Financial Position and Notes to
financial statements and within thirty (30) days from the
applicable filing deadline, Borrower's Federal income tax return.
|X| (b) Within thirty (30) days after the end of each fiscal month of
Borrower, internally prepared financial statements of Borrower
prepared in accordance with GAAP which shall include a Balance
Sheet at the end of each such period and an Income Statement for
the period from the beginning of the current fiscal year to the
end of such period. These statements shall be prepared on
substantially the same accounting basis as the statements
required in Section 6.2(a) above, if applicable, and the accuracy
of the statements (subject to audit and year-end adjustments)
shall be certified by the chief financial officer or president of
Borrower.
|X| (c) Simultaneously with the financial statements required above,
a Compliance Certificate, in form attached to this Agreement,
certifying that the financial statements are complete and correct
and that the Borrower has no knowledge of any condition, event or
act which with notice or lapse of time or both, could constitute
an Event or Default or which materially and adversely could
affect the financial condition or operations of Borrower, or if
such condition, event or acts exist, specifying the nature and
status thereof.
|_| (d) Within ___________________ (__) days after the end of each
_______________ year, signed and dated personal financial
statements of all individual Guarantor(s) and Obligor(s), if any,
on Bank One's forms, and by May 1 of each calendar year, the
personal income tax returns filed for the past calendar year of
all individual Guarantor(s) and Obligor(s), if any.
|_| (e) Simultaneously with the financial statements required in
___________ above, __________ financial statement(s) of all
corporate or partnership Guarantor(s) and Obligor(s), if any,
prepared in accordance with GAAP.
|X| 6.3 TANGIBLE NET WORTH. Borrower agrees to maintain a Tangible Net Worth
of not less than either (check one):
|X| (a) Ten million five hundred thousand DOLLARS ($ 10,500,000) or
|_| (b) the amount(s) set forth for the following period(s):
Period(s) Amount(s)
__________________________ _______________________________
__________________________ _______________________________
__________________________ _______________________________
"Tangible Net Worth" shall be determined in accordance with GAAP and
shall be deemed to include the amount of total assets of Borrower
excluding the amount of Intangible Assets of Borrower minus the amount
of total liabilities of Borrower, exclusive of Subordinated Debt, if
any.
"Intangible Assets" shall be determined in accordance with GAAP and be
deemed to include at book value, without limitation, leasehold
improvements, goodwill, patents, copyrights, secret processes,
deferred expenses relating to sales, general administrative, research
and development expense, and all amounts due from any officer,
employee, director, shareholder or Related Person.
|X| 6.4 DEBT TO TANGIBLE NET WORTH. Borrower agrees to maintain ratio of Debt
to Tangible Net Worth of not more than either (check one):
|X| (a) 3.00 to 1. _________ or
|_| (b) the ratio(s) set forth for the following period(s):
Period(s) Ratio(s)
__________________________ _______________________________
__________________________ _______________________________
__________________________ _______________________________
"Debt" shall be determined in accordance with GAAP and shall be deemed
to include all liabilities of Borrower including but not limited to
accruals, deferrals net of deferred rent liability, and capitalized
leases, less Subordinated Debt, if any.
|_| 6.5 WORKING CAPITAL. Borrower agrees to maintain net working capital
(Current Assets less current liabilities) of not less than either
(check one):
|_| (a) DOLLARS ($________________) or
|_| (b) the amount(s) set forth for the following period(s):
Period(s) Amount(s)
__________________________ _______________________________
__________________________ _______________________________
__________________________ _______________________________
"Current Assets" shall be determined in accordance with GAAP and shall
be deemed to include inventory at lower of cost or current market
value less any amounts due from any officer, employee, director,
shareholder or Related Person.
|X| 6.6 CURRENT RATIO. Borrower agrees to maintain a Current Ratio (Current
Assets divided by current liabilities) of not less than either (check
one):
|X| (a) 1.10 to 1. ________ or
|_| (b) the ratio(s) set forth for the following period(s):
Period(s) Ratio(s)
__________________________ _______________________________
__________________________ _______________________________
__________________________ _______________________________
|_| 6.7 CASH FLOW RATIO. Borrower agrees to maintain a Cash Flow Ratio (net
income after taxes plus depreciation plus amortization to current
maturities of long term debt) of not less than either (check one):
|_| (a) _________. _________ to _________ _________
|_| (b) the amount(s) set forth for the following period(s):
Period(s) Ratio(s)
__________________________ _______________________________
__________________________ _______________________________
__________________________ _______________________________
|X| 6.8 DEBT SERVICE COVERAGE RATIO. Borrower agrees to maintain a Debt
Service Coverage Ratio (net income before interest expense,
depreciation expense, amortization expense, less inventory
capitalization income, plus/minus deferred rent expense to current
maturities of long term debt plus interest) of:
|X| (a) 1.50 to 1. ________ or
|_| (b) the ratio(s) set forth for the following period(s):
Period(s) Ratio(s)
__________________________ _______________________________
__________________________ _______________________________
__________________________ _______________________________
|_| 6.9 CAPITAL EXPENDITURES. Borrower agrees not to purchase, lease or
otherwise acquire or enter into any commitment to purchase, lease or
otherwise acquire additional capital assets where the aggregate
liability or expenditure therefore exceeds the following, except with
prior written consent by Bank One (check one):
|_| (a) $_______________ per fiscal year commencing with fiscal
year ___________or
|_| (b) the amount(s) set forth for the following period(s):
Period(s) Amount(s)
__________________________ _______________________________
__________________________ _______________________________
__________________________ _______________________________
|X| 6.10 SUBORDINATION OF DEBT. Borrower shall cause to be subordinate all
Indebtedness including interest thereon ("Junior Indebtedness"), which may at
any time now or hereafter be owed to any officer, employee, director,
shareholder or Related Person by the Borrower in favor of all Indebtedness,
including interest thereon ("Senior Indebtedness") due Bank One. Borrower shall
obtain and deliver to Bank One subordination agreements from said officers,
employees, directors, shareholders or Related Persons for said Junior
Indebtedness in form and content acceptable to Bank One. Upon the occurrence of
an Event of Default under this Agreement, Borrower shall without notice from
Bank One immediately cease payment of any fees or advances to any officer,
employee, director, shareholder or Related Person and shall also cease payment
of the sums, if any, allowed to be paid by the terms of the Subordination
Agreement(s).
|X| 6.11 DEPOSIT ACCOUNTS. Borrower shall establish and maintain its principal
deposit accounts at Bank One as long as any Indebtedness remains outstanding or
so long as this Agreement remains in effect.
|_| 6.12 COMPENSATION. Borrower agrees, except with prior written consent of
Bank One, that salary, withdrawals, bonuses and all other compensation paid, in
cash or otherwise, by Borrower to the following person(s) shall not exceed the
following amount(s).
Person(s) Amount(s)
__________________________ $_______________________________
__________________________ $_______________________________
__________________________ $_______________________________
|X| 6.13 BORROWING BASE. Borrower is subject to certain "Borrowing Base"
conditions as set forth in the "Borrowing Base" Addendum attached hereto and
made a part hereof.
|_| 6.14 OPINION OF COUNSEL. If required by Bank One, Bank One shall receive a
favorable written opinion of Counsel for Borrower acceptable to Bank One in form
and substance satisfactory to Bank One in its sole discretion, relating to the
Representations and Warranties set forth herein and such other matters as Bank
One may reasonably request.
|X| 6.15 ADDITIONAL PROVISIONS. If any, as are set forth in the Rider attached
hereto and made part hereof.
ARTICLE VII - DEFAULT AND REMEDIES
7.1 Borrower shall be in default hereunder upon the happening of any of the
following ("Event of Default"):
(a) The occurrence of an event of default under the terms of any evidence
of Indebtedness or any Obligation, security agreement, mortgage and
other agreement executed in connection therewith or herewith,
including any renewal, extension or modification thereof or hereof or
in any other obligation or agreement with Bank One, whether now or
hereafter existing;
(b) Non-performance of any covenant, warranty or liability contained or
referred to herein; or
(c) If any warranty, representation or statement made or furnished to Bank
One by or on behalf of Borrower, Guarantor or any Obligor, in
connection with this Agreement, or to induce Bank One to make a loan
to Borrower, proves to have been false in any material respect when
made or furnished.
7.2 Upon the occurrence of an Event of Default, Bank One may, at its option,
declare principal and accrued interest of all Indebtedness to be immediately due
and payable, without presentation, demand, protest or notice of any kind, all of
which are hereby expressly waived. Bank One shall have all the rights and
remedies of a Secured Party under the Uniform Commercial Code, as enacted in the
state where Bank One's principal office is located, said rights and remedies
being cumulative in nature. Bank One may set off any of the Borrower's or
Guarantor's deposits or accounts, and any other indebtedness of Bank One to
Borrower against the Indebtedness before or after an Event of Default, without
first looking to any property securing payment thereof.
7.3 Acceptance of payment, in full or part, or waiver of any Event of Default
shall not operate as a waiver of any current or later Event of Default, nor of
any other right of Bank One.
7.4 The provisions of this Agreement concerning any Event of Default are not
intended in any way to affect any rights of Bank One with respect to any
Indebtedness of Borrower to Bank One which may or hereafter be payable on
demand.
7.5 No delay or failure of Bank One in exercising any right, power, remedy or
privilege hereunder shall affect such right, power or privilege or be construed
as a waiver against Bank One.
7.6 Any waiver, permit, consent or approval by Bank One of any breach or Event
of Default hereunder must be in writing and shall be effective only to the
extent set forth in such writing.
ARTICLE VIII - MISCELLANEOUS
8.1 All notices required to be given under any term of this Agreement shall be
sufficient if mailed, via registered or certified mail, return receipt
requested, or sent via overnight or hand courier, to the parties at their
respective addresses as previously set forth.
8.2 All documents referred to in this Agreement shall for all purposes be
considered part of this Agreement, and all terms used in this Agreement shall
have the meaning set forth in said documents, and this Agreement shall include
all of the provisions stated in said documents.
8.3 This Agreement is a continuing agreement and shall continue in effect
notwithstanding that from time to time, no Indebtedness may exist. This
Agreement shall continue as to any Indebtedness and as to any and all renewals,
extensions or modifications thereof.
8.4 This Agreement may be executed in several counter-parts, each of which shall
be an original and all of which shall constitute the same instrument.
8.5 This Agreement, together with all other documents executed concurrently
herewith or attached hereto, constitutes the full and complete Agreement of the
parties and may not be modified except by written instrument signed by all
parties hereto.
8.6 This Agreement shall be binding upon and inure to the benefit of Borrower
and Bank One and their respective successors and assigns.
8.7 Borrower agrees to pay on demand all costs and expenses in connection with
the negotiation, preparation, execution, delivery, filing, recording,
administration, enforcement, litigation, collection, or filing of any legal
action on or for any Obligation, including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for Bank One, with respect thereto.
Time is of the essence of all requirements of Borrower hereunder. The
obligations of Borrower under this paragraph shall survive payment of any
Obligation.
8.8 This Agreement shall be governed and construed in accordance with the laws
of the state where Bank One's principal office is located.
8.9 Any provision contained in this Agreement 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 of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
8.10 Borrower shall fully and promptly pay, perform, discharge, defend,
indemnify and hold harmless Bank One from any and all claims, orders, demands,
causes of action, proceedings, judgments, or suits and all liabilities, losses,
costs or expenses (including, without limitation, technical consultant fees,
count costs, expenses paid to third parties and reasonable legal fees) and
damages arising out of, or as a result of (i) any release, discharge, deposit,
dump, spilt, leak or placement of any Hazardous Material into or on any
Collateral or property owned, leased, rented or used by Borrower (the
"Property") at any time; (ii) any contamination of the soil or ground water of
the Property or damage to the environment and natural resources of the Property
or the result of actions whether arising under any Hazardous Material Law, or
common law; or (iii) any toxic, explosive or otherwise dangerous Material which
have been buried beneath or concealed within the Property. This indemnity shall
survive termination of this Agreement.
8.11 This Agreement contains the entire agreement of the panties and supersedes
all prior agreements and understandings, oral or written, with respect to the
subject matter hereof.
Executed this 10th day of November, 1995.
BORROWER:
Bank One, Chicago, NA Factory Card Outlet of America Ltd.
By: /s/ [ILLEGIBLE] By: /s/ ▇.▇. ▇▇▇▇▇▇▇
--------------------------- ---------------------------------
FCOA Acquisition Corp.
Its Vice President
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
---------------------------------
RIDER TO BUSINESS LOAN AGREEMENT
DATED NOVEMBER 10, 1995
1. As of December 31, 1995 and June 30, 1996, the aggregate outstanding
principal balance of the Note and the $5,000,000 note of Borrower shall not
exceed, and Borrower shall make such payments thereon as are necessary to so
effect, an amount equal to 45% of Eligible Inventory.
2. Borrower shall pay to Bank One a commitment fee equal to 1/4% per year
of the daily average unused amount of the $15,000,000 Note, such payment due on
the last day of each calendar quarter.
3. Borrower shall maintain a Fixed Cost Coverage Ratio within 90% of that
provided in the financial projections provided Bank One prior to the date of
this Agreement. "Fixed Cost Coverage Ratio" means the ratio of (a) the twelve
month rolling average of the sum of (i) earnings before interest, taxes and
non-store depreciation and amortization charges, plus (ii) rental payments, to
(b) the twelve month rolling average of the sum of (i) interest payments due and
payable plus (ii) rental payments.
4. Borrower shall maintain a Leverage Ratio of not greater than 4.00:1.
"Leverage Ratio" means the ratio of (a) the sum of (i) all indebtedness and
other liabilities of Borrower, including Subordinated Debt plus (ii) 3 times the
aggregate of all of Borrower's obligations under operating leases to (b)
Tangible Net Worth.
5. In the event there is a default hereunder occasioned by a breach of a
covenant in paragraph 3 or 4 immediately above, which default continues for two
consecutive months, in addition to all other remedies available to Bank One
hereunder, Borrower is prohibited from executing any leases for the opening of
any new store or other retail outlet without the prior written consent of Bank
One.
6. Borrower shall not open any new store or other retail outlet, or change
the location of any existing store, without prior written notice to Bank One.
7. Without the prior written consent of Bank One, Factory Card Outlet of
America Ltd. shall make no loans, advances or extensions of credit, nor pay any
dividends or other distributions on account of its common stock to FCOA
Acquisition Corp.
REGISTRATION AGREEMENT
THIS AGREEMENT is made as of August 2, 1996, by and among FCOA Acquisition
Corp., a Delaware corporation (the "Company"), and the Persons listed on
Schedule A attached hereto (the "Stockholders"). Certain capitalized terms used
herein are defined in Section 8 below.
WHEREAS, the Company and the initial holders of the Company's Series A
Preferred, are parties to a Series A Preferred Stock Purchase Agreement, dated
as of July 10, 1989, as amended by a First Amendment to the Series A Preferred
Stock Purchase Agreement dated July 15, 1994 and by a Second Amendment to the
Series A Preferred Stock Purchase Agreement of even date herewith (as amended,
the "Series A Purchase Agreement");
WHEREAS, the Company and the initial holders of the Company's Subordinated
Debentures Due 1993 are parties to a Purchase Agreement, dated as of September
11, 1990 (the "Sub Debt Purchase Agreement") whereby holders of shares of Common
Stock issued in payment of interest thereunder are entitled to certain
registration rights (the "Interest Shares");
WHEREAS, the Company and the initial holders of the Company's Series B
Preferred (the "Series B Stockholders") are parties to a Stock Purchase
Agreement, dated as of July 15, 1994, as amended by a First Amendment to the
Series B Preferred Stock Purchase Agreement of even date herewith (the "Series B
Purchase Agreement");
WHEREAS, the Company and the initial holders of the Company's Series C
Preferred (the "Series C Stockholders") are parties to a Stock Purchase
Agreement of even date herewith (the "Series C Purchase Agreement");
WHEREAS, certain other parties hereto hold shares of the Company's Common
Stock, no par value per share (the "Common Stock");
WHEREAS, in order to induce the Series C Stockholders to enter into the
Series C Purchase Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement; and
WHEREAS, the execution and delivery of this Agreement is a condition to the
Series C Stockholders' obligations to acquire the Series C Preferred pursuant to
the Series C Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties to this Agreement hereby agree as follows:
1
1. Demand Registrations.
(a) Requests for Registration. The holders of the Series C Registrable
Securities shall be entitled to request registration under the Securities Act of
all or a portion of their Registrable Securities at any time ("Series C Demand
Registrations"), the holders of the Series B Registrable Securities shall be
entitled to request registration under the Securities Act of all or a portion of
their Registrable Securities at any time ("Series B Demand Registrations"), and
the holders of the Series A Registrable Securities and the Common Stock
Registrable Securities, acting as a single class, shall be entitled to request
registration under the Securities Act of all or a portion of their Registrable
Securities at any time ("Series A Demand Registrations," and, together with
Series B Demand Registrations and Series C Demand Registrations, "Demand
Registrations"), subject to the terms and conditions hereof (including without
limitation Sections l(b), (c) and (d) below).
(b) Long-Form Demand Registrations. Subject to Section 1(a) above and the
other terms and conditions hereof, the holders of a majority of the Series C
Registrable Securities then in existence shall be entitled to request two Series
C Demand Registrations on Form S-1 or any similar long form ("Series C Long-Form
Demand Registrations"), the holders of a majority of the Series B Registrable
Securities then in existence shall be entitled to request two Series B Demand
Registrations on Form S-1 or any similar long form ("Series B Long-Form Demand
Registrations"), and the holders of a majority of the Series A Registrable
Securities and the Common Stock Registrable Securities then in existence, voting
as single class, shall be entitled to request two Series A Demand Registrations
on Form S-1 or any similar long form ("Series A Long-Form Demand Registrations,"
and, together with the Series B Long-Form Demand Registrations and the Series C
Long-Form Demand Registrations, "Long-Form Demand Registrations").
(c) Short-Form Registrations. Subject to Section 1(a) above and the other
terms and conditions hereof, the holders of a majority of the Series C
Registrable Securities then in existence, the holders of a majority of the
Series B Registrable Securities then in existence and the holders of a majority
of the Series A Registrable Securities and the Common Stock Registrable
Securities then in existence, acting as a single class, shall each be entitled
to request an unlimited number of Demand Registrations on Form S-2 or S-3, or
any similar short form (a "Short-Form Demand Registration"). After the Company
has become subject to the reporting requirements of the Securities Exchange Act,
the Company shall use its best efforts to make Short-Form Registrations
available for the sale of Registrable Securities.
(d) Other Conditions. The Company shall not be obligated hereunder to
effect any Demand Registration unless the aggregate offering price of the
Registrable Securities to be offered pursuant to such registration is at least
$7.5 million. The Company shall not be obligated to effect any Demand
Registration requested pursuant to Section 1(1)) or (c) above within 12 months
after the effective date of any prior such Demand Registration. The Company
shall pay all Registration Expenses, as defined in Section 5 below, of the
holders of Registrable Securities requested to be included in any Demand
Registration. A registration shall not count
2
as one of the permitted Series A Long-Form Registrations unless at least 75 % of
the Series A Registrable Securities requested to be included in such
registration are registered and sold thereunder, a registration shall not count
as one of the permitted Series B Long-Form Registrations unless at least 75 % of
the Series B Registrable Securities requested to be included in such
registration are registered and sold thereunder, and a registration shall not
count as one of the permitted Series C Long-Form Registrations unless at least
75 % of the Series C Registrable Securities requested to be included in such
registration are registered and sold thereunder, provided that in any event the
Company shall pay all Registration Expenses in connection with any registration
initiated as a Demand Registration whether or not it has become effective. All
Long-Form Demand Registrations shall be underwritten registrations. All Demand
Registrations shall be Short-Form Registrations whenever the Company is
permitted to use any applicable short form.
(e) Notices and Participation. Each request for a Demand Registration shall
be in writing and shall specify the approximate number of Registrable Securities
requested to be registered and the anticipated per share price range for such
offering. Within ten days after receipt of any such request, the Company shall
give written notice of such requested registration to all other holders of
Registrable Securities and, subject to Section 1(f) and (h) below, shall use its
best efforts to include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within 20 days after the receipt of the Company's notice.
(f) Priority on Demand Registration. The Company shall not include in any
Demand Registration any securities which are not Registrable Securities without
the prior written consent of the holders of a majority of the Registrable
Securities initially requesting such registration. If a Demand Registration is
an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion all or a number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering
exceed the number of Registrable Securities and other securities, if any, which
can be sold in an orderly manner in such offering within a price range
acceptable to the holders of a majority of the Registrable Securities initially
requesting such registration, then the Company shall be required to include in
such Demand Registration only that number of Registrable Securities and other
securities, if any, which the managing underwriter believes may be sold in an
orderly manner in such offering in the following order of priority of
participation:
(i) first, the Series C Registrable Securities, the Series B
Registrable Securities and the Series A Registrable Securities and Common
Stock Registrable Securities requested to be included therein, pro rata
among the holders thereof on the basis of the number of Series C, Series B,
Series A and Common Stock Registrable Securities held by each such holder,
(ii) second, any other Registrable Securities requested to be included
therein, pro rata among the holders thereof on the basis of the number of
such other Registrable Securities held by each such holder, and (iii)
third, any other securities requested and permitted to be included therein,
pro rata on the basis of the number of such other securities held by each
holder thereof; and
3
(g) Selection of Underwriters. The holders of a majority of the Registrable
Securities initially requesting registration hereunder shall have the right to
select the investment banker(s) and manager(s) to administer the offering made
pursuant to such registration, subject to the Company's approval which shall not
be unreasonably withheld.
2. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register any of
its securities under the Securities Act (other than pursuant to a Demand
Registration) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
shall give prompt written notice (in any event within five business days after
its receipt of notice of any exercise of demand registration rights other than
under this Agreement) to all holders of Registrable Securities of its intention
to effect such a registration and, subject to Sections 2(c) and 2(d) below,
shall include in such registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within 20
days after receipt of the Company's notice.
(b) Piggyback Expenses. The Registration Expenses of the holders of
Registrable Securities shall be paid by the Company in all Piggyback
Registrations.
(c) Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion all or a number
of the securities requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such offering within a price
range acceptable to the Company, the Company shall include in such registration
(i) first, the securities the Company proposes to sell, (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
shares owned by each such holder,, and (iii) third, other securities requested
and permitted to be included in such registration.
(d) Priority on Secondary Registrations. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of the Company's
securities other than Registrable Securities, and the managing underwriters
advise the Company in writing that in their opinion all or a number of the
securities requested to be included in such registration exceeds the number
which can be sold in an orderly manner in such offering within a price range
acceptable to the holders initially requesting such registration, the Company
shall include in such registration (i) first, the securities requested to be
included therein by the holders requesting such registration, (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
such Registrable Securities owned by each such holder, and (iii) third, other
securities requested and permitted to be included in such registration.
(e) Other Registrations. If the Company has previously filed a registration
statement with respect to Registrable Securities pursuant to Section 1 or this
Section 2, and if
4
such previous registration has not been withdrawn or abandoned, the Company
shall not file or cause to be effected any other registration of any of its
equity securities or securities convertible or exchangeable into or exercisable
for its equity securities under the Securities Act (except on Forms S-4 or S-8
or any successor forms), whether on its own behalf or on behalf of any holder or
holders of such securities, until a period of at least 90 days has elapsed from
the effective date of such previous registration, without the prior consent of
holders of a majority of the Registrable Securities included in such previous
registration or the underwriters managing such previous registration.
(f) Notwithstanding anything contained in this Agreement to the contrary,
if any holder of Registrable Securities does not elect to include his or its
Registrable Securities in a Piggyback Registration, such holder of Registrable
Securities shall not be entitled to request or participate in any request for
any Demand Registration or to include such holder's Registrable Securities in
any registration hereunder for six months after the effective date of said
Piggyback Registration.
3. Holdback Agreements.
(a) Each holder of Registrable Securities agrees not to effect any public
sale or distribution (including sales pursuant to Rule 144) of equity securities
of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during (i) the seven days prior to and (i) the
90-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration in which Registrable
Securities are included (except as part of such underwritten registration) and
(ii) the seven days prior to and the 120-day period beginning on the IP0 Date
(except as part of such underwritten registration), unless the underwriters
managing the registered public offering otherwise agree.
(b) The Company (i) shall not effect any public sale or distribution
(including sales pursuant to Rule 144) of its equity securities, or any
securities convertible into or exchangeable or exercisable for such securities,
during the seven days prior to and during the 180-day period beginning on the
effective date of any underwritten Demand Registration or any underwritten
Piggyback Registration in which Registrable Securities are included (except as
part of such underwritten registration or pursuant to registrations on Forms S-4
or S-8 or any successor forms), unless the underwriters managing the registered
public offering otherwise agree, and (ii) shall cause each holder of at least 3
% (on a fully-diluted basis) of its Common Stock, or any securities convertible
into or exchangeable or exercisable for Common Stock, purchased from the Company
at any time after the date of this Agreement (other than in a registered public
offering) to agree not to effect any public sale or distribution (including
sales pursuant to Rule 144) of any such securities during such period (except as
part of such underwritten registration, if otherwise permitted), unless the
underwriters managing the registered public offering otherwise agree.
(c) It shall be the responsibility of the Company to notify holders of
Registrable Securities of the periods in which the restrictions contained in
Section 3 are in effect.
5
4. Registration Procedures. Whenever the holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant to this
Agreement, the Company shall use its best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended method
of disposition thereof (including the registration of Series A Preferred, Series
B Preferred, Series C Preferred and Common Stock held by a holder of Registrable
Securities requesting registration as to which the Company has received
reasonable assurances that only Registrable Securities shall be distributed to
the public), and pursuant thereto the Company shall as expeditiously as
possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall furnish to counsel to the holders of
Registrable Securities copies of all such documents proposed to be filed, which
documents shall be subject to the review and comment of such counsel);
(b) notify each holder of Registrable Securities of the effectiveness of
each registration statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than 180 days and comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such
seller;
(d) use its best efforts to register or qualify such Registrable Securities
under such other securities or blue sky laws of such jurisdictions as any seller
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller provided that the Company shall not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subsection, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(e) notify each seller of such Registrable Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein
6
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed and,
if not so listed, to be listed on the NASD automated quotation system and, if
listed on the NASD automated quotation system, use its best efforts to secure
designation of all such Registrable Securities covered by such registration
statement as a NASDAQ "national market system security" within the meaning of
Rule 1 lAa2-1 of the Securities and Exchange Commission or, failing that, to
secure NASDAQ authorization for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register as such with respect to such Registrable Securities with the
NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting agreements
in customary form) and take all such other actions as the holders of a majority
of the Registrable Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities (including effecting a stock split or a combination of shares);
(i) make available for inspection by any seller of Registrable Securities,
any underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable rules and
regulations of the Securities and Exchange Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) permit any holder of Registrable Securities which holder, in its sole
and exclusive judgment, might be deemed to be an underwriter or a controlling
person of the Company, to participate in the preparation of such registration or
comparable statement and to require the insertion therein of material, furnished
to the Company in writing, which in the reasonable judgment of such holder and
its counsel should be included;
7
(1) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order;
(m) use its best efforts to cause such Registrable Securities covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Securities; and
(n) obtain a cold comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by cold comfort letters as the holders of a majority of the Registrable
Securities being sold reasonably request provided that Registrable Securities
constitute at least 10% of the securities covered by such registration
statement).
5. Registration Expenses.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, fees and disbursements of custodians,
and fees and disbursements of counsel for the Company and all independent
certified public accountants, underwriters but excluding discounts and
commissions) and other Persons retained by the Company (all such expenses being
herein called "Registration Expenses"), shall be borne as provided in this
Agreement, except that the Company shall, in any event, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit or quarterly review, the expense of any liability insurance and
the expenses and fees for listing the securities to be registered on each
securities exchange on which similar securities issued by the Company are then
listed or on the NASD automated quotation system.
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Registrable Securities
included in such registration for the reasonable fees and disbursements of one
counsel chosen by the holders of a majority of the Registrable Securities
included in any Piggyback Registration or initially requesting any Demand
Registration, as applicable.
6. Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by law, each
holder of Registrable Securities, its partners, officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact
8
contained in any registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to the Company by or on behalf
of such holder expressly for use therein or by such holder's failure to deliver
a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such holder with a
sufficient number of copies of the same. In connection with an underwritten
offering, the Company shall indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such holder; provided that the obligation to indemnify
shall be individual to each holder and shall be limited to the net amount of
proceeds received by such holder from the sale of Registrable Securities
pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification provided that the failure to give prompt notice shall not
impair any Person's right to indemnification hereunder to the extent such
failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
9
(d) If the indemnification provided for in this Section 6 is unavailable or
insufficient to hold harmless an indemnified party under Section 6(a) or 6(d)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in Section 6(a) or 6(d) above in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and the indemnified party on the other in connection with the
statements or omissions which resulted in such losses, claims, demands or
liabilities as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or parties on the one hand or the indemnified party on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The amount
paid by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this Section 6(d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this Section 6(d). No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(e) The indemnification provided for under this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities.
7. Participation in Underwritten Registrations. No Person may participate
in any registration hereunder which is underwritten unless such Person (i)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided that no
holder of Registrable Securities included in any underwritten registration shall
be required to make any representations or warranties to the Company or the
underwriters other than representations and warranties regarding such holder and
such holder's intended method of distribution.
8. Definitions.
"Common Stock" means the Company's Common Stock, no par value per share.
"Common Stock Registrable Securities" means Registrable Securities relating
to the Common Stock referred to in clause (vii) of the definition of Registrable
Securities.
"Investor Registrable Securities" means, collectively, the Series A
Registrable Securities, the Series B Registrable Securities and the Series C
Registrable Securities.
10
"IPO Date" means the effective date of the first firm underwritten public
offering of Common Stock under the Securities Act.
"Market Price" shall have the meaning set forth in the Company's
Certificate of Incorporation as in effect on the date hereof.
"Person" shall have the meaning set forth in the Series C Purchase
Agreement.
"Registrable Securities" means (i) any Common Stock issued or issuable upon
the conversion of any Series C Preferred issued pursuant to the Series C
Purchase Agreement, (ii) any Common Stock issued or issuable upon the conversion
of any Series B Preferred issued pursuant to the Series B Purchase Agreement,
(iii) any Common Stock issued or issuable upon the conversion of any Series A
Preferred issued pursuant to the Series A Purchase Agreement, (iv) 15,000
Interest Shares issued pursuant to the Sub Debt Purchase Agreement, (v) any
Common Stock issued or issuable upon exercise of any Stock Options, (vi) any
Common Stock issued or issuable directly or indirectly with respect to the
securities referred to in clauses (i) through (v) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization and (vii) Common
Stock issued and outstanding as of the date hereof. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
when they have been distributed to the public pursuant to a offering registered
under the Securities Act or sold to the public through a broker, dealer or
market maker in compliance with Rule 144 under the Securities Act (or any
similar rule then in force). For purposes of this Agreement, a Person shall be
deemed to be a holder of Registrable Securities whenever such Person has the
right to acquire directly or indirectly such Registrable Securities (upon
conversion or exercise in connection with a transfer of securities or otherwise,
but disregarding any restrictions or limitations upon the exercise of such
right), whether or not such acquisition has actually been effected.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred", "Series B Preferred" and "Series C Preferred" means
the Company's Series A Preferred Stock, its Series B Preferred Stock and its
Series C Preferred Stock, respectively, each with a par value $.01 per share.
"Series A Registrable Securities" means Registrable Securities relating to
the Series A Preferred referred to in clauses (iii) and (iv) of the definition
of Registrable Securities.
"Series B Registrable Securities" means Registrable Securities relating to
the Series B Preferred referred to in clause (ii) of the definition of
Registrable Securities.
"Series C Registrable Securities" means Registrable Securities relating to
the Series C Preferred referred to in clause (i) of the definition of
Registrable Securities.
11
"Stock Options" means stock options issued or issuable to directors,
employees, consultants and sponsors of the Company pursuant to the FCOA
Acquisition Corp. 1989 Stock Option Plan, as amended, exercisable for up to
280,000 shares of Common Stock.
"Subsequent Offering Date" means the effective date of any underwritten
public offering of Common Stock under the Securities Act occurring after the IPO
Date.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not hereafter enter into
any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the holders of Registrable Securities in this
Agreement. Except as provided in this Agreement, the Company shall not grant to
any Persons the right to request the Company to register any equity securities
of the Company, or any securities convertible or exchangeable into or
exercisable for such securities, without the prior written consent of the
holders of a majority of the Series C Registrable Securities then in existence,
the holders of a majority of the Series C Registrable Securities then in
existence and the holders of a majority of the Series A Registrable Securities
and Common Stock Registrable Securities then in existence, voting as a single
class; provided that the Company may grant rights to other Persons to (i)
participate in Piggyback Registrations so long as such rights are subordinate to
the rights of the holders of Registrable Securities with respect to such
Piggyback Registrations and (ii) request registrations so long as the holders of
Registrable Securities are entitled to participate in any such registrations on
the basis set forth in Section 2(d) above.
(b) Adjustments Affecting Registrable Securities. The Company shall not
take any action, or permit any change to occur, with respect to its securities
which would adversely affect the ability of the holders of Registrable
Securities to include such Registrable Securities in a registration undertaken
pursuant to this Agreement or which would adversely affect the marketability of
such Registrable Securities in any such registration (including, without
limitation, effecting a stock split or a combination of shares).
(c) Remedies. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(d) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived generally upon, but only
upon, the prior written consent of the Company and holders of a majority of the
Series A Registrable Securities and Common Stock Registrable Securities in
existence at the time such amendment
12
or waiver becomes effective, voting as a single class, holders of a majority of
the Series B Registrable Securities in existence at the time such amendment or
waiver becomes effective, and holders of a majority of the Series C Registrable
Securities in existence at the time such amendment or waiver becomes effective.
(e) Successors and Assigns. All covenants and agreements in this Agreement
by or on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto whether so
expressed or not. In addition, whether or not any express assignment has been
made, the provisions of this Agreement which are for the benefit of purchasers
or holders of any Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of such Registrable Securities.
Furthermore, whether or not any express assumption has been made, the provisions
of this Agreement which are enforceable against a holder of Registrable
Securities in his or its capacity as such are also enforceable against any
subsequent holder of such Registrable Securities.
(f) Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this Agreement.
(g) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together shall constitute one and the
same Agreement.
(h) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
(i) Governing law. The corporate law of the State of Delaware will govern
all issues and questions concerning the relative rights of the Company and its
stockholders. All other issues and questions concerning the construction,
validity, interpretation and enforcement of this Agreement and the schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of Illinois, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of Illinois or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Illinois.
(j) Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid) or mailed to the recipient by certified or registered mall, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each Stockholder at the address indicated on
Schedule A attached hereto and to the Company at the address indicated below:
13
FCOA Acquisition Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Office of the Chairman of the Board
with copies to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Pitney, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
14
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Agreement as of the date first written above.
FCOA ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Its Chairman
ALLSTATE INSURANCE COMPANY
By:
--------------------------------------
Its
--------------------------------------
By:
--------------------------------------
Its
--------------------------------------
CTC ILLINOIS TRUST COMPANY, AS TRUSTEE
FOR THE ALLSTATE RETIREMENT PLAN
By:
--------------------------------------
Its
--------------------------------------
CTC ILLINOIS TRUST COMPANY, AS TRUSTEE
FOR THE AGENTS PENSION PLAN
By:
--------------------------------------
Its
--------------------------------------
BESSEMER VENTURE PARTNERS FCOA
By:
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its Authorized Agent
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Agreement as of the date first written above.
FCOA ACQUISITION CORP.
By:
--------------------------------------
Its
--------------------------------------
ALLSTATE INSURANCE COMPANY
By: /s/ [ILLEGIBLE]
-------------------------------------
Its
--------------------------------------
By: /S/ [ILLEGIBLE]
--------------------------------------
Its
--------------------------------------
CTC ILLINOIS TRUST COMPANY, AS TRUSTEE
FOR THE ALLSTATE RETIREMENT PLAN
By: /S/ [ILLEGIBLE]
--------------------------------------
Its
--------------------------------------
CTC ILLINOIS TRUST COMPANY, AS TRUSTEE
FOR THE AGENTS PENSION PLAN
By: /S/ [ILLEGIBLE]
--------------------------------------
Its
--------------------------------------
BESSEMER VENTURE PARTNERS FCOA
By: _____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its Authorized Agent
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Agreement as of the date first written above.
FCOA ACQUISITION CORP.
By:
--------------------------------------
Its
--------------------------------------
ALLSTATE INSURANCE COMPANY
By:
-------------------------------------
Its
--------------------------------------
By:
--------------------------------------
Its
--------------------------------------
CTC ILLINOIS TRUST COMPANY, AS TRUSTEE
FOR THE ALLSTATE RETIREMENT PLAN
By:
--------------------------------------
Its
--------------------------------------
CTC ILLINOIS TRUST COMPANY, AS TRUSTEE
FOR THE AGENTS PENSION PLAN
By: /S/ [ILLEGIBLE]
--------------------------------------
Its
--------------------------------------
BESSEMER VENTURE PARTNERS FCOA
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its Authorized Agent
▇▇▇▇▇▇ INVESTMENTS LTD.
By:
--------------------------------------
Its
--------------------------------------
JASMINE TRUSTEES LTD. A/C 5615
By:
--------------------------------------
Its
--------------------------------------
JASMINE TRUSTEES LTD. A/C 5616
By:
--------------------------------------
Its
--------------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇▇-▇▇▇▇▇▇▇
-----------------------------------------
Ahmed A. N. Al-Agil
-----------------------------------------
Abdulaziz Al-Fahad
-----------------------------------------
▇▇▇▇▇▇▇▇ ▇▇-▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇-▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇▇ ▇▇-▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇-▇▇▇▇▇▇▇
-----------------------------------------
Othman M. Al-▇▇▇▇▇▇▇
▇▇-▇▇▇▇ INSTALLMENT CO. LIMITED
-----------------------------------------
By: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇-▇▇▇▇▇▇▇
Its
--------------------------------------
JARIR INVESTMENTS
-----------------------------------------
By: ▇▇▇▇▇▇▇▇ ▇▇-▇▇▇▇
Its
-------------------------------------
COMMUNITY INVESTMENT PARTNERS II, L.P.
-----------------------------------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its
-------------------------------------
FINE ARTS DEVELOPMENTS, P.L.C.
-----------------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its
-------------------------------------
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Signature Page to Registration Agreement
▇▇-▇▇▇▇ INSTALLMENT CO. LIMITED
-----------------------------------------
By: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇-▇▇▇▇▇▇▇
Its
--------------------------------------
NHN, LTD.
-----------------------------------------
By:
-------------------------------------
Its
-------------------------------------
COMMUNITY INVESTMENT PARTNERS II, L.P.
-----------------------------------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its
-------------------------------------
FINE ARTS DEVELOPMENTS, P.L.C.
-----------------------------------------
By:
-------------------------------------
Its
-------------------------------------
/s/ ▇▇▇ ▇▇▇ Hung
-----------------------------------------
▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ RUN NOMINEE CORPORATION
-----------------------------------------
By: Ms. ▇▇▇▇ [ILLEGIBLE]
Its
-------------------------------------
REGISTRATION AGREEMENT
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
REGISTRATION AGREEMENT
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
REGISTRATION AGREEMENT
CONSTRUCTION COUNSELLORS, INC.
/s/ [ILLEGIBLE]
-------------------------------------
By: [ILLEGIBLE]
---------------------------------
Its C.E.O.