REVOLVING LOAN AGREEMENT
THIS REVOLVING LOAN AGREEMENT is made and entered into as of
the 18th day of December, 1996, by and between ▇▇
▇▇▇▇▇▇▇ FINANCIAL SERVICES, INC., a Florida corporation, whose
address is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter referred to as "Borrower"), and SUNTRUST BANK, SOUTH
FLORIDA, N.A., a national banking association, whose address is
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
(hereinafter referred to as "Lender").
W I T N E S S E T H:
WHEREAS, Borrower is a Florida corporation and desires to
obtain extensions of credit of up to Two Million Five Hundred
Thousand and No/100 Dollars ($2,500,000.00) from Lender in order
to provide working capital for Borrower's operations; and
WHEREAS, Lender is willing to extend such credit to Borrower
of up to such amount upon the terms and conditions set forth
herein (the "Loan"); and
NOW, THEREFORE, for and in consideration of the sum of Ten
and No/100 Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, and in consideration of the loans or extensions of
credit heretofore now or hereafter made or to be made for the
benefit of Borrower by Lender, the parties do hereby agree as
follows:
ARTICLE I
RECITALS AND DEFINITIONS
1.1 Recitals. The foregoing recitals are acknowledged by
the parties to be true and correct, and are incorporated herein
by reference.
1. 2 Definitions. As used in this Agreement, the terms
listed below shall have the following meanings:
(a) "Advance": A disbursement by Lender of a portion
of the Loan proceeds to provide working capital for the
operations of Borrower in accordance with the terms and
provisions of this Agreement.
(b) "Agreement" or "Loan Agreement": This Revolving
Loan Agreement.
(c) "Authorized Person": A person authorized to
request Advances on behalf of Borrower. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Chairman, Chief Executive Officer and President; ▇▇▇▇ ▇. ▇▇▇▇▇,
Vice Chairman and Chief Financial Officer; and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Treasurer and Executive Vice President, shall be Authorized
Persons until Lender receives from Borrower written notice of
revocation of their authority and/or decision of the appointment
of other Authorized Persons.
(d) "Borrower": ▇▇ ▇▇▇▇▇▇▇ FINANCIAL SERVICES, INC., a
Florida corporation, whose address is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(e) "Borrower's Counsel Opinion Letter": A letter from
Borrower's Counsel, in form and substance reasonably satisfactory
to Lender and Lender's Counsel, opining as to certain matters
concerning the Loan.
(f) "Broker/Dealer Subsidiary": Any Subsidiary (as
hereinafter defined) of Borrower that is registered as a
broker/dealer under the Securities Exchange Act of 1934, as
amended.
(g) "Business Days": Days upon which Lender is open
for normal business.
(h) "Closing": The time of the execution and delivery
of this Agreement and all other Loan Documents by Borrower and
Lender.
(i) "Code": The Internal Revenue Code of 1986, as
amended from time to time, and applicable Department of Treasury
regulations thereunder.
(j) "Event of Default": The occurrence of any one or
more of the Events of Default described in Article 7 hereof.
(k) "Governmental Authority": Any federal, state,
county, municipal or other governmental department, commission,
board, bureau, court, agency, or any instrumentality of any other
governmental entity.
(1) "Governmental Requirements": Any law, statute,
code, ordinance, order, rule, regulation, judgment, decree writ,
injunction, franchise, permit, certificate, license,
authorization, or other direction or requirement of any
Governmental Authority now existing or hereafter enacted,
adopted, promulgated, entered or issued applicable to the Loan or
to Borrower or Guarantors.
(m) "Generally Accepted Accounting Principles" or
"GAAP": Those principles of accounting set forth in opinions of
the Financial Accounting Standards Board of the American
Institute of Public Accountants or which have other substantial
authoritative support and are applicable in the circumstances as
of the date of any report required herein or as of the date of an
application of such principles as required herein.
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(n) "Guaranty": An unconditional written guarantee of
the payment and performance of the Loan to be executed and
delivered by the Guarantors (hereinafter defined) to Lender in
accordance with this Agreement.
(o) "Guarantor": (i) ▇▇ ▇▇▇▇▇▇▇ Capital Corp. ; (ii)
▇▇ ▇▇▇▇▇▇▇ Insurance Services, Inc.; (iii) except as herein
limited, any Subsidiary, parent or affiliate of Borrower
hereafter formed, which shall, upon formation, or thereafter have
a net worth, calculated in accordance with GAAP, except as
hereinafter specifically set forth, of Fifty Thousand Dollars
($50,000.00) or more; and (iv) except as herein limited, all
other subsidiaries, parents or affiliates of Borrower hereinafter
formed which shall, at any time have an aggregate net worth,
calculated in accordance with GAAP, except as hereinafter
specifically set forth, of Two Hundred Fifty Thousand and No/100
Dollars ($250,000.00) or more. As an exception to GAAP, sums
payable to a subsidiary, parent or affiliate of an entity shall
be treated as equity instead of debt in determining the net worth
of an entity for the purposes of this paragraph. As a guarantee
of the Loan would reduce the regulatory capital of the
Broker/Dealer Subsidiaries, Broker/Dealer Subsidiaries shall not
be required to guarantee repayment of the Loan. Each of ▇▇
▇▇▇▇▇▇▇ Capital Corp. and ▇▇ ▇▇▇▇▇▇▇ Insurance Services, Inc.
("Existing Guarantors") shall guarantee payment and performance
of the Loan by the execution and delivery to Lender of a Guaranty
contemporaneously with the execution and delivery of this
Agreement. Each of the other Guarantors shall guarantee the
payment and performance of the Loan by the execution and delivery
to Lender of a Guaranty at the time such subsidiary, parent or
affiliate meets the definition of "Guarantor".
(p) "Indebtedness": Collectively, all of Borrower's
presently existing or hereafter created or assumed obligations
for borrowed money, notes payable and drafts accepted
representing extensions of credit (whether or not representing
obligations for borrowed money), letters of credit and contingent
obligations, arising out of or in connection with the Loan.
(q) "Initial Advance": The first Advance of the Loan
proceeds.
(r) "Maturity Date": The Loan shall be due and
payable, in full, on April 30, 1999. Any renewal of the Loan or
extension of the Maturity Date shall be within the sole
discretion of Lender.
(s) "Note": A Revolving Credit Promissory Note in
the amount of Two Million Five Hundred Thousand and No/100
Dollars ($2,500,000.00) from Borrower to Lender of even date
herewith evidencing the Loan.
(t) "Person": As the case may be, any corporation,
natural person, firm, joint venture, partnership, trust,
unincorporated organization and government, or any department or
agency of any government.
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(u) "Prime Rate": The interest rate announced by
SUNTRUST BANKS OF FLORIDA, INC. from time to time as its prime
rate, which rate is purely discretionary and is not necessarily
the best or lowest rate charged borrowing customers of Lender.
(v) "Subsidiary": A corporation or entity shall be
considered a "Subsidiary of Borrower" if Borrower owns shares of
stock or other ownership interest having the voting power (other
than the stock or other ownership interest having such power only
by reason of the happening of a contingency) to elect a majority
of the directors of such corporation, or other Persons performing
similar functions for such entity are owned, directly or
indirectly, by Borrower.
1.3 Other Definitional Provisions. (a) The terms
"material" and "materially" shall have the meanings ascribed to
such terms under Generally Accepted Accounting Principles as such
would be applied to the business of Borrower, except as the
context shall clearly otherwise set forth; (b) all of the terms
defined in this Agreement shall have such defined meanings when
used in other documents issued under, or delivered pursuant to,
this Agreement, unless the context shall otherwise require; (c)
all terms defined in this Agreement in the singular shall have
comparable meanings when used in the plural, and vice versa; (d)
accounting terms to the extent not otherwise defined shall have
the respective meanings given them under, and shall be construed
in accordance with Generally Accepted Accounting Principles; (e)
the words "hereby", "hereto", "hereof", "herein", "hereunder"
and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular
provision of this Agreement; (f) the masculine and neuter genders
are used herein and whenever used shall include the masculine,
feminine and neuter as well; and (g) whenever in this Agreement
any of the parties hereto is referred to, such reference shall be
deemed to include their heirs, personal representatives,
successors and assigns of such parties unless the context shall
expressly provide otherwise.
ARTICLE 2
THE LOAN
2.1 Provided there does not exist an Event of Default and
subject to the terms and provisions of this Agreement, Lender
will lend or advance for the account of Borrower from time to
time, and Borrower may borrow and re-borrow under the Note such
amounts as may be required to provide working capital for
Borrower's operations in accordance with the terms of the
Agreement. The aggregate amounts advanced under the Note at any
one time for working capital shall not, however, exceed Two
Million Five Hundred Thousand and No/100 Dollars ($2,500,000.00)
as reduced in accordance with Schedule "A" attached hereto and
made a part hereof.
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2.2 Borrower's obligation to repay the Loan is evidenced by
the Note of even date herewith.
2.3 Borrower shall also deliver, or cause to be delivered
to Lender simultaneously with the delivery of the Note, the
following documents:
(a) The duly executed Guaranties of the Existing
Guarantors.
(b) The duly executed Assignment of Key Man Life
Insurance (hereinafter described).
(c) Borrower's Counsel Opinion Letter, in form and
substance satisfactory to Lender and Lender's Counsel, opining as
to certain matters concerning the Loan.
(d) Satisfactory evidence of such policies of
liability insurance, worker's compensation insurance and errors
and omissions insurance as Lender may reasonably request.
(e) Incumbency Certificates and Corporate Borrowing
Resolutions of the directors of Borrower and Existing Guarantors
authorizing the Loan and the Guaranties, as applicable.
(f) Certificates of Good Standing evidencing that
Borrower and Existing Guarantors are in good standing under the
laws of the states of their incorporation and duly authorized to
do business in the State of Florida.
(g) Certified copies of Articles of Incorporation and
By-Laws of Borrower and Existing Guarantors.
(h) Such other documentation as may be reasonably
required by Lender or Lender's Counsel.
2.4 The Note, the Guaranties, the Assignment of Key Man
Life Insurance (hereinafter described) above, this Agreement and
all other documents relating hereto, shall collectively be
referred to as the "Loan Documents".
ARTICLE 3
MANNER OF MAKING LOAN ADVANCES
3.1 Each Advance to Borrower for working capital shall be
made by Lender not later than the second Business Day following
delivery to Lender of proper written request of Borrower executed
by an Authorized Person stating the principal amount of the
Advance requested and all supporting documentation reasonably
requested by Lender. Any notice delivered under this section
shall be irrevocable and bind Borrower to consummate the Advance.
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3.2 The proceeds of any Advance to Borrower shall, on the
date of such Advance, be deposited in immediately available funds
in Borrower's demand deposit account with Lender or in such other
account with Lender as Borrower may, from time to time, designate
in writing to Lender.
ARTICLE 4
CONDITIONS PRECEDENT TO ADVANCE
4.1 The obligations of Lender to make the Initial Advance
and all additional Advances under the Loan are subject to the
following conditions precedent:
(a) Representations and Warranties. The representa-
tions, covenants and warranties made by Borrower in this
Agreement shall be true and correct in all material respects on
and as of the date of such Advance.
(b) No Default. There shall be no material default,
and no event which with notice or lapse of time or both would
become such an Event of Default, under this Agreement, the Note
or any of the Guarantees, or the Assignment of Key Man Life
Insurance.
(c) Delivery of Loan Documents. All of the Loan
Documents shall have been duly executed and delivered to Lender.
(d) Additional Corporate Documents. Borrower shall
have delivered, or caused to be delivered, to Lender (i) an
Incumbency Certificate and Corporate Borrowing Resolutions of the
directors of each Guarantor authorizing the Guaranty of such
Guarantor; (ii) a Certificate of Good Standing for each Guarantor
evidencing that such Guarantor is in good standing under the laws
of the state and its incorporation and duly authorized to do
business in the State of Florida; and (iii) Certified copy of
Articles of Incorporation and By Laws of each Guarantor.
(e) Information Requests. Lender shall have received,
reviewed and found satisfactory, "information requests" from the
National Association of Securities Dealers and the State of
Florida, Division of Securities.
(f) Compliance Review. Lender shall have received,
reviewed and found satisfactory the current New York Stock
Exchange Compliance Review for Borrower and its Subsidiaries.
(g) Key Man Life Insurance. Borrower shall have
delivered to Lender a true and correct copy of the Key Man Life
Insurance Policy on the life of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ hereinafter
described.
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(h) Delivery of Other Documents. Borrower shall have
delivered, or caused to be delivered to Lender all other
certification or documentation to be executed by Borrower as may
be required hereunder or under the Loan Documents or reasonably
required by Lender or Lender's counsel pursuant to Lender's
rights hereunder or under the other Loan Documents.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Borrower represents and warrants to Lender that, so
long as credit remains available to Borrower or there is any
outstanding balance due under the Note as secured by the Loan
Documents:
(a) Borrower has the corporate power to engage in all
the transactions contemplated by this Agreement and has full
corporate power, authority and legal right to execute and
deliver, and to comply with its obligations under the Loan
Documents, which documents executed by or on behalf of Borrower
constitute the legally binding obligations of Borrower
enforceable against Borrower in accordance with its terms.
(b) To the best of Borrower's knowledge and belief,
there are no suits, actions, or proceedings pending or threatened
against or affecting Borrower or any of its Subsidiaries before
or by any court, administrative agency or other Governmental
Authority which seek to restrain or prohibit the consummation or
performance of the transactions contemplated hereby or could
reasonably be expected to interfere with the ability of Borrower
to comply with the terms hereof.
(c) Borrower and its Subsidiaries are in good standing
within the state in which they are incorporated and are fully
qualified and authorized to do business in the state of Florida
and such other states as they do business where the absence of
such qualification could reasonably be expected to have a
material adverse effect on the business of Borrower.
(d) Neither the execution nor delivery of any of the
Loan Documents will conflict with or result in a material breach
of any of the material provisions of the Articles of
Incorporation or By-Laws of Borrower or, to Borrower's knowledge,
any of its Subsidiaries, or conflict with or result in a material
breach of any applicable law, judgment, order, writ injunction,
decree rule or regulation of any court, administrative agency or
other Governmental Authority which could reasonably be expected
to have a material adverse effect on the business of Borrower,
or, to Borrower's knowledge, conflict with or result in a
material breach of any agreement or other instrument to which
Borrower or any of its subsidiaries is a party or by which
Borrower or any of its Subsidiaries is bound or constitute a
default under any thereof which could reasonably be expected to
have a material adverse effect on the business of Borrower.
7
(e) To Borrower's knowledge, no consent, approval or
other authorization of or by any Governmental Authority is
required in connection with the execution or delivery by Borrower
of the Loan Documents, or compliance with the material provisions
hereof or thereof.
(f) Subject to any limitation stated thereon, all
balance sheets, earnings statements and other financial data
which have been or shall hereafter be furnished to Lender to
induce it to enter into this Agreement or otherwise in connection
herewith, do or will fairly represent, in all material respects,
the financial condition of Borrower and its Subsidiaries as of
the dates thereof, and the results of their operations for the
period for which the same are furnished to Lender, and have been
or will be prepared in accordance with GAAP consistently applied.
To Borrower's knowledge, there are no material liabilities of any
kind of Borrower or its Subsidiaries as of the date of the most
recent financial statements which are not reflected therein. To
Borrower's knowledge, there have been no changes in the financial
condition or operation of Borrower or its subsidiaries since the
date of such financial statements which could reasonably be
expected to have a material adverse effect on the business of
Borrower.
(g) There exists no Event of Default on the part of
Borrower or its Subsidiaries under this Agreement, the Note, any
of the Guarantees or the Assignment of Key Man Life Insurance.
(h) Borrower has not dealt with any broker or finder,
other than SUNTRUST CAPITAL MARKETS, INC., in connection with the
Loan, and Borrower hereby agrees to indemnify Lender and to hold
Lender harmless of and from any and all claims for broker's or
finder's fees or commissions in connection with this Loan, and
agree to pay all expenses (including but not limited to
reasonable attorney's fees and expenses) incurred by Lender in
connection with the defense of any action or proceeding brought
to collect any such fees and commissions, or otherwise relating
to any such broker's claims resulting from or arising out of any
claim that Borrower consulted, dealt or negotiated with the
person or entity making such brokerage claim.
(i) Borrower and its Subsidiaries have filed or caused
to be filed all tax returns, which to the knowledge of Borrower
such entities are required to file, and have fully paid all taxes
shown to be due and payable on said returns or any assessments
made against it or their property, and all other taxes, fees, or
other charges imposed on their or any of their property by any
Governmental Authority except for (i) those taxes, fees or other
charges, the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been
provided on the books of Borrower and its Subsidiaries; and (ii)
such failures to file or pay such tax liens or claims as could
not, in the aggregate, reasonably be expected to have a material
adverse effect on the business operations, property or financial
or other condition of Borrower and its Subsidiaries, and cannot
reasonably be expected to have an adverse effect on the ability
of Borrower and its Subsidiaries to perform any of its respective
8
obligations in any material respect under this Agreement, the
other Loan Documents, or otherwise with respect to the Loan. No
tax liens have been filed and, to the knowledge of Borrower no
claims have been made or may hereafter be asserted with respect
to any such taxes, fees or other charges except for (i) those,
the amount or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books
of Borrower and its Subsidiaries; and (ii) such failures to file
or pay such tax liens or claims as could not, in the aggregate,
reasonably be expected to have a material adverse effect on the
business operations, property or financial or other condition of
Borrower and its Subsidiaries, and cannot reasonably be expected
to have an adverse effect on the ability of Borrower and its
Subsidiaries to perform any of its respective obligations in any
material respect under this Agreement, the other Loan Documents,
or otherwise with respect to the Loan.
(j) To Borrower's knowledge, all copies of all
documents, reports, and statements heretofore furnished by or on
behalf of Borrower in connection with this Agreement to Lender,
are, and those delivered subsequent to the date hereof will be,
true and correct copies of the originals of such documents,
reports and statements. To Borrower's knowledge, all matters
stated or certified in any written statement, certificate, report
or other writing heretofore furnished pursuant to this Agreement
by or on behalf of Borrower to Lender are, and all matters stated
or certified subsequent to the date hereof will be, true and
correct as of the date stated or certified. All such documents,
reports, statements, writings and certifications shall be in form
and detail reasonably satisfactory to Lender.
ARTICLE 6
COVENANTS OF BORROWER
6.1 Borrower shall do all of the things necessary to
preserve, renew and keep in full force and effect, its corporate
existence and rights, licenses and permits, and shall comply in
all material respects with all laws applicable to it, and at all
times shall maintain all franchises and trade names and preserve
all property used in the conduct of its business, where the
failure to comply with such laws or the absence of such rights,
licenses, permits, franchises, trade names and property could
reasonably be expected to have a material adverse effect on
Borrower's business.
6.2 Borrower shall cause to be done all of the things
necessary to preserve, review and keep in force the corporate
existence, rights, licenses and permits of its Subsidiaries and
shall cause its Subsidiaries to comply in all material respects
with all laws applicable to them, and at all times maintain all
franchises and trade names and preserve all property used in the
conduct of its Subsidiaries' business, where the failure to
9
comply with such laws or the absence of such rights, licensees,
permits, franchises, trade names and property could reasonably be
expected to have a material adverse effect on Borrower's
business.
6.3 Borrower shall, at its expense, comply with or cause to
be complied with all of the material insurance requirements set
forth in this Agreement throughout the term of the Loan.
6.4 Borrower shall indemnify and hold harmless Lender from
any and all loss or damage of whatsoever kind and from any suits,
claims, or demands, including, without limitation, Lender's
reasonable legal fees and expenses, at all trial and appellate
levels, on account of any matter or thing arising out of this
Agreement or in connection herewith, or on account of any act or
omission to act by Borrower in connection with this Agreement or
the Loan, but excluding any suits, claims or demands arising from
negligent or willful acts of Lender. Borrower agrees to pay any
and all taxes (other than taxes on or measured by net income of
Lender) incurred or payable by Lender or Borrower in connection
with the execution and delivery of this Agreement and the Loan,
as well as all costs and expenses (including attorneys' fees in
such amount as the court deems reasonable and just) incurred by
Lender in enforcing this Agreement. Such obligation shall
survive repayment of the Loan.
6.5 Borrower shall duly comply with or cause to be complied
with all material terms and covenants contained in each of the
Loan Documents.
6.6 Borrower shall promptly notify Lender upon the
commencement of any action, suit or claim or counter-claim or
proceeding against, or investigation of, Borrower or any
subsidiary which could reasonably be expected to have a material
adverse effect on the business of Borrower.
6.7 Borrower shall promptly notify Lender in writing of (i)
any material assessments by any taxing authorities for unpaid
taxes as soon as Borrower has written notice thereof; and, (ii)
any alleged material default by Borrower or any Subsidiary in the
performance of any agreement, mortgage or indenture or instrument
to which Borrower or any Subsidiary is a party, or which is
binding upon Borrower or any Subsidiary and upon any material
default by Borrower or any Subsidiary in the payment of any of
its indebtedness where any such default could reasonably be
expected to have a material adverse effect on the business of
Borrower.
6.8 Borrower shall keep its books, and the books of its
Subsidiaries, in accordance with GAAP and shall furnish to
Lender, within One Hundred Twenty (120) days after the close of
its fiscal year a balance sheet as of the close of such year, and
statements of income and retained earnings and statements of cash
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flows for such year. Such statements shall be consolidated
statements of Borrower and its Subsidiaries and shall be audited
and certified by nationally recognized independent certified
public accountants. Statements meeting these requirements and
included in Borrower's Form 10-K may be submitted by Borrower in
fulfillment of this obligation. Within sixty (60) days after
each fiscal quarter, Borrower shall furnish lender an internally
prepared balance sheet and income statement for such quarter.
Such statements shall be consolidated statements of Borrower and
its Subsidiaries and shall be certified as true, correct and
complete by Borrower's Chief Financial Officer. Statements
meeting these requirements and included in Borrower's Form 10-Q
may be submitted in fulfillment of this obligation.
6.9 Borrower shall furnish to Lender within one hundred
twenty (120) days after the close of its fiscal year, a true,
correct and complete copy of its Form 10-K filed for that fiscal
year. Borrower shall furnish to Lender within sixty (60) days
after the close of each fiscal quarter, a true, correct and
complete copy of its Form 10-Q filed for such fiscal quarter.
Borrower shall furnish Lender within forty five (45) days after
the close of each fiscal year true, correct and complete copies
of all Focus Reports for Borrower and its Subsidiaries. In
addition, Borrower shall timely furnish Lender a copy of all
other reports, and of all proxy statements and annual or
quarterly reports to shareholders that Borrower files with (or is
required to deliver to) the Securities and Exchange Commission
pursuant to applicable provisions of the Securities Exchange Act
of 1934, as amended, or regulations promulgated thereunder.
6.10 Borrower and its Subsidiaries shall at all times comply
with the aggregate indebtedness standards established by SEC Rule
15C3-1. Borrower and its subsidiaries shall comply with all
other Governmental Requirements where noncompliance could
reasonably be expected to have a material adverse affect on the
business of Borrower.
6.11 For Borrower and its Subsidiaries, on a consolidated
basis, the sum of asset accounts, being cash and equivalents
(including segregated cash and special reserve deposits),
commissions and other receivables from clearing brokers,
receivables from customers net of allowance for doubtful
accounts, securities owned (at market value), income tax
receivables, and any other account or note receivable which is
deemed fully collectable within one year from the date of
statement divided by the sum of liability accounts, being short
term borrowings from bank, accounts payable, accrued expenses,
payables to customers, payables to brokers and dealers,
securities sold but not yet purchased (at market value), income
taxes payable, and other liability accounts payable within one
year from the date of statement, all calculated in accordance
with GAAP, shall not fall below 1.05 to 1.00.
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6.12 For Borrower and its Subsidiaries, on a consolidated
basis, the sum of asset accounts, being cash and equivalents
(including segregated cash and special reserve deposits),
commissions and other receivables from clearing brokers,
receivables from customers net of allowance for doubtful
accounts, securities owned (at market value), income tax
receivables, and any other account or note receivable which is
deemed fully collectable within one year from the date of
statement less the sum of liability accounts, being short term
borrowings from bank, accounts payable, accrued expenses,
payables to customers, payables to brokers and dealers,
securities sold but not yet purchased (at market value) income
taxes payable, and other liability accounts payable within one
year from the date of statement, all calculated in accordance
with GAAP, shall not fall below Ten Million and No/100 Dollars
($10,000,000.00).
6.13 Debt Service Coverage for Borrower and its
Subsidiaries, on a consolidated basis, shall not fall below 1.20
to 1.00. Debt Service Coverage shall be defined as the total of
net income plus interest expense plus depreciation expense plus
amortization expense, divided by the total of interest expense
plus all principal payments made to ▇▇▇▇▇▇▇ CMG, Inc., (exclusive
of the "Stock Loan" as defined in Borrower's 10-Q Report for the
quarter ended March 31, 1996) plus principal payments on other
term debt, all calculated in accordance with GAAP. Debt Service
Coverage for Borrower and its Subsidiaries, on a consolidated
basis, calculated as above set forth but including principal
payments made under the Stock Loan shall not fall below 1.00 to
1.00.
6.14 For Borrower and its Subsidiaries, on a consolidated
basis, reported net income plus amortized expenses reported for
the amortization of intangible expenses associated with the
acquisition of assets or equity, during any four of the preceding
six quarters calculated in accordance with GAAP shall, in the
aggregate, exceed One Million Five Hundred Thousand and No/100
Dollars ($1,500,000.00).
6.15 Stockholder equity for Borrower and its Subsidiaries,
on a consolidated basis, excluding redeemable common stock and
redeemable preferred stock, calculated in accordance with GAAP,
shall not be less than Nine Million and No/100 Dollars
($9,000,000.00), and shall increase each year by seventy five
percent (75%) of annual net income plus seventy five percent
(75%) of net proceeds from common stock equity issues, all
calculated in accordance with GAAP.
6.16 Borrower shall furnish to Lender, within sixty (60)
days after the close of its fiscal year, a statement of the net
worth of all Subsidiaries, in the aggregate and by each
Subsidiary, calculated in accordance with GAAP and certified as
true, correct and complete by Borrower's Chief Financial Officer.
12
6.17 Borrower shall provide or cause to be provided to
Lender such proforma financial statements and other financial
information reasonably requested by Lender from time to time
during the term of the Loan.
6.18 Borrower shall allow Lender, or Lender's designated
agent, to enter upon Borrower's premises and inspect Borrower's
property at all reasonable times during normal business hours.
Lender shall provide Borrower with twenty-four (24) hours written
notice, except where Borrower is in default under the Loan.
6.19 Borrower shall maintain a policy of "key man" life
insurance on ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ in the amount of One Million and
No/100 Dollars ($1,000,000.00) (the "Key Man Policy") with a
company rated "A" or better by Best's. The Key Man Policy shall
be assigned to Lender contemporaneously herewith as security for
the payment and performance of the Loan, to the extent of the
lesser of the face amount of the Key Man Policy or the
outstanding amount (principal, interest, fees and charges) of the
Loan, by an Assignment of Key Man Life Insurance in form and
substance reasonably acceptable to Lender, duly executed by the
owner and beneficiaries of the Policy and filed with the issuing
insurer. The Key Man Policy shall only be cancelable upon thirty
(30) days written notice to Lender.
6.20 Borrower shall maintain demand deposit operating
account(s) with Lender during the term of the Loan, into which
funds advanced under the Loan will be deposited.
6.21 Borrower shall transfer its primary depository/treasury
management relationship to Lender within sixty (60) days after
the date of this Agreement and shall maintain such relationship
with Lender during the term of the Loan. For the purposes of
this Agreement, Borrower's primary depository/treasury management
relationship shall mean not less than ninety percent (90%) of the
balances (as reflected in bank statements and records) of all
operating, payroll and zero balance accounts of Borrower and its
Subsidiaries located outside of the State of New York exclusive
of Local Accounts. "Local Accounts", as used herein, shall mean
depository accounts used for Broker/Dealer correspondents and to
facilitate local deposits where a SunTrust Bank is not
convenient.
6.22 The Borrower and its Subsidiaries shall not incur
additional funded debt other than "Permitted Funded Debt" (as
hereinafter defined) in excess of One Hundred Thousand and No/100
Dollars ($100,000.00) in the aggregate per annum or outstanding
at any one time without the prior written consent of Lender. As
used herein, "Permitted Funded Debt" shall mean (a) other
unsecured lines of credit extended to Borrower and/or its
Subsidiaries which do not exceed Five Million and No/100 Dollars
($5,000,000.00) in the aggregate or to which Lender has given its
prior written consent and to which the Loan is at least pari
passu; (b) Borrower's existing Bank of New York Securities
Warehousing line of credit; (c) unsecured current liability
incurred with trade creditors in the ordinary course of business
other than those which are for money borrowed or are evidenced by
13
bonds, debentures, notes or similar instruments; (d) money
borrowed from banks or other financial institutions in the
ordinary course of business and solely for the purpose of
purchasing securities for the accounts of a Broker/Dealer
Subsidiary or customer margin accounts of a Broker/Dealer
Subsidiary; and (e) notes or similar written instructions
excluded in the ordinary course of business and solely for the
purpose of providing fidelity bond insurance and insurance of
customers accounts in excess of the coverage provided by the
Securities Investor Protection Corporation ("SIPC").
6.23 Borrower and/or its Subsidiaries shall not enter into
equipment leases in excess of Five Hundred Thousand and
No/Dollars ($500,000.00) per annum on an aggregate carry-over
basis.
6.24 Borrower and/or its Subsidiaries, excluding
Broker/Dealer subsidiaries, shall not guarantee any other
indebtedness in excess of Five Hundred Thousand and No/100
Dollars ($500,000.00) in the aggregate during the term of the
Loan. Broker/Dealer Subsidiaries shall not guarantee any
indebtedness in excess of Three Hundred Thousand and No/100
Dollars ($300,000.00) in the aggregate during the term of the
Loan.
6.25 Except as permitted in accordance with Section 6.26
hereof, Broker/Dealer Subsidiaries shall not assume liabilities
or acquire assets except in the normal and ordinary course of a
Broker/Dealer Subsidiary's business.
6.26 Borrower and/or its subsidiaries shall not make
acquisitions where the aggregate cash portion of the purchase
price exceeds One Million and No/100 Dollars ($1,000,000.00) per
annum without the prior written consent of Lender. Such written
consent shall not be unreasonably withheld.
6.27 Except as permitted in accordance with Section 6.23,
Borrower and its Subsidiaries shall not permit any of their
assets to be encumbered with liens or other security interests in
favor of third parties without the prior written consent of
Lender. Lender hereby consents to liens created pursuant to
Borrower's existing Bank of New York Securities Warehousing line
of credit.
6.28 Borrower shall not sell or convey any of its assets.,
except in the normal and ordinary course of business, including
any merger, consolidation or reorganization, unless consented to
in writing by Lender, where such sale or conveyance would
reasonably be expected to have a material adverse effect on the
business of Borrower.
6.29 Borrower will, within ten (10) days after written
request from Lender, furnish a written statement in form
satisfactory to Lender, duly acknowledged: (i) setting forth the
unpaid principal balance of, and the interest and other sums due
on, the indebtedness evidenced by the Note and/or secured by any
of the other Loan Documents; (ii) stating whether or not any
offsets or defenses exist against the payments due under the Note
14
or any of the other Loan Documents; and (iii) setting forth such
other information as Lender may request from time to time.
6.30 Borrower will notify Lender immediately of any change
in (a) the name of Borrower or any of its Subsidiaries, (b) the
principal place of business of Borrower or any of its
Subsidiaries, (c) the office where the books and records of
Borrower or any of its Subsidiaries are kept, or (d) any change
in the registered agent of Borrower or any of its Subsidiaries
for the purpose of service of process.
6.31 Borrower shall use or cause to be used the funds
borrowed by Borrower under this Agreement solely for the purpose
of providing working capital for Borrower's business operations.
ARTICLE 7
EVENTS OF DEFAULT
Each of the following is an Event of Default:
(a) Failure by Borrower to pay any installment of
interest or principal under the Note or any other obligation, or
liability of Borrower to Lender as and when the same shall become
due, where such failure extends beyond any applicable grace or
cure period;
(b) If any representation or warranty of Borrower
hereunder shall prove to be incorrect in any material respect and
Borrower knew or reasonably should have known that such
representation or warranty was incorrect at the time it was made;
(c) The commencement of levy, execution or attachment
proceedings against Borrower or any of the Guarantors or
Broker/Dealer Subsidiaries where such proceedings would
reasonably be expected to have a material adverse effect on the
business of Borrower, or the application for or appointment of a
liquidator, receiver, custodian, sequester, conservator, trustee,
or other similar judicial officer where such proceedings would
reasonably be expected to have a material adverse effect on the
business of Borrower (and such appointment continued for a period
of fifteen (15) days), or the insolvency, in the bankruptcy or
equity sense, of Borrower or any of the Guarantors or
Broker/Dealer Subsidiaries where such insolvency would reasonably
be expected to have a material adverse effect on the business of
Borrower;
(d) The assignment for the benefit of creditors, or
the admission in writing of any inability to pay any debts
generally as they become due, or ordering the winding up or
liquidation of its affairs, by Borrower or Broker/Dealer
subsidiaries, or the commencement of a case by Borrower or
Broker/Dealer Subsidiaries, under any insolvency, bankruptcy,
creditor adjustment, debtor rehabilitation or similar law, state
or federal;
15
(e) The determination by Borrower or Broker/Dealer
subsidiaries to request relief under any insolvency, bankruptcy,
creditor adjustment, debtor rehabilitation or similar proceeding,
state or federal, including without limitation the consent by any
of them to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or similar
official for it or for any of its respective property or assets;
(f) The commencement of a case against Borrower or
Broker/Dealer Subsidiaries under any insolvency, bankruptcy,
creditor adjustment, debtor rehabilitation or similar law, state
or federal, and the failure to have such proceedings dismissed or
stayed within a period of Forty-Five (45) days.
(g) The occurrence of any adverse change in the
financial condition of Borrower or any of its Subsidiaries which
could reasonably be expected to have a material adverse effect on
the business of Borrower;
(h) The entry against Borrower and/or its subsidiaries
of one or more final judgments or decrees which, in Lender's
reasonable judgment, materially impair the ability of Borrower to
perform its obligations under the Loan;
(i) The occurrence of a default by Borrower or any of
its subsidiaries in the performance of its obligations under any
other loan with Lender and/or any other lender where such default
continues beyond any applicable cure or grace period set forth in
the instruments evidencing or securing such loan or loans and
could reasonably be expected to have a material adverse effect on
the business of Borrower;
(j) The occurrence of any change or event which, in
Lender's reasonable judgment, materially increases Lender's risk
in connection with the Loan or indicates that Borrower or any
Guarantor may be unable to perform its obligations under any Loan
Document;
(k) The voluntary or involuntary dissolution,
termination or liquidation of Borrower which, if involuntary, has
not been dismissed or stayed within thirty (30) days after the
commencement thereof, or the merger or consolidation of Borrower
or any Broker Dealer Subsidiary into any other entity without the
prior written consent of Lender;
(1) The (i) assignment for benefit of creditors, or
the admission in writing of any inability to pay debts generally
as they become due, or ordering the winding up or liquidation of
its affairs by any of the Guarantors; or (ii) commencement of a
case by any Guarantor under any insolvency, bankruptcy, creditor
adjustment, debtor rehabilitation or similar law, state or
federal, or (iii) determination by any of the Guarantors to
request relief under any insolvency, bankruptcy, creditor
adjustment, debtor rehabilitation or similar proceeding, state or
federal, including, without limitation, the consent to the
appointment or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestration or similar official
16
for it or for any of its Property or assets; or (iv) commencement
of a case against any of the Guarantors under any insolvency,
bankruptcy, creditor adjustment, debtor rehabilitation or similar
law, state or federal, and the failure to have such proceedings
dismissed or stayed within a period of forty-five (45) days; or
(v) voluntary or involuntary dissolution, termination or
liquidation of any of the Guarantors, or the merger or
consolidation of any of the Guarantors into any other entity
without the prior written consent of Lender where the aggregate
result of such actions over the term of the Loan, inclusive of
the subject action has been a reduction of the aggregate net
worth, calculated in accordance with GAAP, of all Guarantors of
Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) or
more;
(m) The occurrence of any default under any other term
of this Agreement where such default continues for ten (10) days
after written notice thereof by Lender, or the occurrence of any
other default under the Note or any of the Guaranties where any
such default continues beyond any applicable cure or grace period
set forth in such instruments.
ARTICLE 8
SET-OFFS
In addition to any other rights Lender may have at law or in
equity, if Borrower becomes insolvent, howsoever evidenced, or
any Event of Default occurs and is continuing, any indebtedness
from Lender to Borrower and any sums held in any account (other
than accounts of Broker/Dealer Subsidiaries and other than
fiduciary or trust funds, which have been so identified by
Borrower to Lender) or property of Borrower held by Lender, may
be set-off and applied towards the payment of the Indebtedness of
Borrower under this Agreement (including, but not limited to all
Indebtedness evidenced by the Note) to Lender, including, without
limitation, any note payable to Lender, whether or not such
Indebtedness of Borrower to Lender or any part thereof shall then
be due.
ARTICLE 9
LENDER'S REMEDIES IN EVENT OF DEFAULT
9.1 Upon any Event of Default, subject only to any notice
requirement and grace period expressly provided in the Note or
other Loan Documents, Lender shall be entitled to all of its
rights or remedies hereunder, at law or in equity and under the
Note, any other Loan Documents, including, without limitation,
the right to declare the outstanding principal balance of the
Note, the accrued interest thereon, and all other obligations of
Borrower to Lender under this Agreement or otherwise to be
immediately due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby expressly
waived, anything in this Agreement or in the Note to the contrary
notwithstanding, and Lender's obligation to make any additional
Advances hereunder shall be permanently terminated.
17
9.2 All of the remedies herein given to Lender or otherwise
available to it shall be cumulative and may be exercised
concurrently. Failure to exercise any of the remedies herein
provided shall not constitute a waiver thereof by Lender, nor
shall use of any such remedies prevent the subsequent or
concurrent resort to any other remedy or remedies which shall be
vested in Lender by this Agreement or at law or in equity. To be
effective, any waiver by Lender must be in writing and such
waiver shall be limited in its effect to the condition or default
specified therein; but no such waiver shall extend to any
subsequent condition or default or impair any right consequent
thereon.
ARTICLE 10
MISCELLANEOUS
10.1 Any condition of this Agreement which requires the
submission of evidence of the existence or non-existence of a
specified fact or facts implies as a condition the existence or
non-existence, as the case may be, of such fact or facts, and
Lender shall, at all times, be free independently to establish to
its satisfaction and in its absolute discretion such existence or
non-existence.
10.2 No part of the Loan will be, at any time, subject or
liable to attachment or levy at the suit of any creditor of
Borrower or of any other interested party, or at the suit of any
contractor, subcontractor, sub-subcontractors or materialman, or
any of their creditors.
10.3 If performance of any provision hereof or any
transaction related hereto is limited by law, then the obligation
to be performed shall be reduced accordingly, and if any clause
or provision herein contained operates or would operate to
invalidate this Agreement in part, then the invalid part of said
clause or provisions only shall be held for naught as though not
contained herein, and the remainder of this Agreement shall
remain operative and in full force and effect.
10.4 If Lender shall waive any provisions of the Loan
Documents, or shall fail to enforce any of the conditions or
provisions of this Agreement, such waiver shall not be deemed to
be a continuing waiver, and shall never be construed as such, and
Lender shall thereafter have the right to insist upon the
enforcement of such conditions or provisions. Furthermore, no
provision of this Agreement shall be amended, waived, modified,
discharged or terminated except by instrument in writing, signed
by the parties hereto.
18
10.5 This Agreement and the documents expressly referred to
herein embody the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings relating to
the subject matter. This Agreement may be changed, waived,
discharged, or terminated only by an instrument in writing duly
executed by the party against which enforcement of such change,
waiver, discharge, or termination is sought.
10.6 All notices given hereunder shall be in writing and
addressed as follows:
(a) Lender:
SUNTRUST BANK, SOUTH FLORIDA, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
with copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇,, P.A.
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) Borrower:
▇▇ ▇▇▇▇▇▇▇ FINANCIAL SERVICES, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive
Vice President
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇, Vice Chairman
▇▇ ▇▇▇▇▇▇▇ FINANCIAL SERVICES, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and with copy to:
W. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
19
Any notice shall be given by hand delivery, nationally recognized
overnight courier service or by mailing the same by certified
mail, return receipt requested, postage prepaid.
10.7 This Agreement, the Loan Documents and all other
documents relating hereto or thereto may be reproduced by Lender,
and, Lender may destroy any original documents so reproduced.
Borrower agrees and stipulates that any such reproduction shall
be admissible in evidence as the original itself in any
jurisdiction or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was
made by Lender in the regular course of business) and that any
enlargement, facsimile, or further reproduction of said document
shall likewise be admissible in evidence.
10.8 In no event, shall Lender's rights hereunder or under
any of the Loan Documents, grant Lender the right to or be deemed
to indicate that Lender is in control of the business, management
or properties of Borrower, or has power over the daily management
functions and operating decisions made by Borrower. Lender is
the lender only and shall not be considered a shareholder, joint
venturer or partner of Borrower.
10.9 The headings preceding the text of the sections of this
Agreement are used solely for convenience of reference and shall
not affect the meaning, construction, or effect of this
Agreement.
10.10 Lender shall have the right at any time to convey
or assign the Loan or any portion thereof, and, additionally,
shall have the right to sell a participation in the Loan to
another lending institution at any time that the Loan is
outstanding, in any amount as solely determined by Lender.
10.11 Borrower shall not assign this Agreement without
the prior written consent of Lender, and any assignment in
violation hereof shall be of no force and effect and shall
constitute an Event of Default herein. Any assignment of this
Agreement shall be in Lender's sole discretion. Subject to the
previous sentence, this Agreement shall extend to and bind the
parties hereto, and their respective successors and assigns.
10.12 This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida.
LENDER AND BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN
RESPECT TO ANY LITIGATION BASED HEREON OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY
AGREEMENT CONTEMPLATED OR TO BE EXECUTED IN CONJUNCTION
HEREWITH, UNDER ANY OF THE LOAN DOCUMENTS, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER
PARTY.
20
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
Signed, sealed and delivered in
the presence of: BORROWER:
▇▇ ▇▇▇▇▇▇▇ FINANCIAL SERVICES,
INC., a Florida corporation
/s/ ▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇
Title: Chief Financial Officer
[CORPORATE SEAL]
LENDER:
SUNTRUST BANK, SOUTH FLORIDA,
N.A., a national banking association
/s/ W. ▇▇▇▇▇ ▇▇▇▇▇ By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
/s/ [unreadable] Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Assistant Vice President
[CORPORATE SEAL]
21
SCHEDULE "A"
Commencing May 31, 1998, and continuing on the last day of each
month thereafter the maximum aggregate principal sum of the Note
shall decrease by Two Hundred Ten Thousand and No/100 Dollars
($210,000.00) as hereafter detailed:
Date Availability
---- ------------
May 31, 1998 $2,290,000.00
June 30, 1998 $2,080,000.00
July 31, 1998 $1,870,000.00
August 31, 1998 $1,660,000.00
September 30, 1998 $1,450,000.00
October 31, 1998 $1,240,000.00
November 30, 1998 $1,030,000.00
December 31, 1998 $820,000.00
January 31, 1999 $610,000.00
February 28, 1999 $400,000.00
March 31, 1999 $190,000.00
April 30, 1999 $ 0.00
Outstanding principal sums in excess of the resulting maximum
aggregate principal sum shall be due and payable, without demand
upon the date reduction is effective.
22