JOINDER AND AMENDMENT TO COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS
Exhibit
10.1
JOINDER
AND AMENDMENT TO COMMERCIAL LOAN AGREEMENT
AND
LOAN DOCUMENTS
THIS
JOINDER AND AMENDMENT (this “Joinder and Amendment”), made effective as of the
___ day of __________________ 2007 (the “Effective Date”), is by and among TD
BANKNORTH, N. A. (f/k/a Banknorth, N.A.), a national banking association with
a
business address of 0 Xxxxxxxx Xxxx Xxxxx, Xxxxxxx, Xxx Xxxxxxxxx 00000 (the
“Bank”); BRANDPARTNERS GROUP, INC., a Delaware corporation (“BPG”) and
BRANDPARTNERS RETAIL, INC. (“BPR”), a New Hampshire corporation, each with
executive offices at 00 Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxxxxx 00000 (BPG and
BPR
being jointly, severally, and collectively, the “Borrower”); and GRAFICO
INCORPORATED (“GI”) and BUILDING PARTNERS, INC. (“BPI”), each a Delaware
corporation, with executive offices at 00 Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxxxxx
00000.
RECITALS:
WHEREAS,
the Bank has extended to Borrower certain credit facilities, including a
revolving line of credit loan in the maximum principal amount of up to Five
Million Dollars ($5,000,000.00) (the “Revolving Line of Credit”) and a term loan
in the original principal amount of Two Million Dollars ($2,000,000.00) (the
“Term Loan” and collectively with the Revolving Line of Credit, the “Loans”),
pursuant to a certain Commercial Loan Agreement dated May 5, 2005, as amended
to
date (as amended, the “Loan Agreement”), and certain other related documents,
instruments, agreements, assignments, and certificates executed and/or delivered
in connection with the Loans, as amended to date (collectively as amended
referred to as the “Loan Documents”);
WHEREAS,
the Loans and all other Obligations of the Borrower to the Bank are guaranteed
by GI pursuant to a certain Guaranty Agreement of GI, dated May 5, 2005, as
amended to date (as amended, the “Guaranty”);
WHEREAS,
BPG formed its wholly-owned subsidiary BPI in 2006;
WHEREAS,
the Borrower has requested, and the Bank has agreed, that BPI become a party
to
the Loan Agreement as a guarantor; and
WHEREAS,
the Borrower would be in default in the performance of certain of its
obligations under the Loan Agreement in that it has violated its financial
covenants under Section III of Schedule B of the Loan Agreement for the fiscal
year ending December 31, 2006 (collectively, the “Covenant Defaults”);
and
WHEREAS,
the Borrower, GI, and the Bank have agreed to waive the Covenant Defaults,
to
amend the provisions regarding availability under the Revolving Line of Credit
in certain respects, and to amend the financial covenants under the Loan
Agreement in certain respects, and, in consideration thereof, to increase the
interest rates applicable to the Revolving Line of Credit and the Term Loan,
all
upon and subject to the terms and conditions of this Amendment, as amended
hereby. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Loan Agreement.
NOW,
THEREFORE, in consideration of the foregoing premises and the mutual covenants,
agreements and promises contained herein, the parties agree as
follows:
1. Waiver
of Covenant Defaults.
The
Bank hereby acknowledges the Borrower’s Covenant Defaults under the Loan
Agreement as of the fiscal year ending December 31, 2006. The Bank hereby waives
the Covenant Defaults by the Borrower solely as of the fiscal year ending
December 31, 2006. The foregoing waiver applies only to Borrower’s compliance
with the financial covenants under Section III of Schedule B of the Loan
Agreement as of the fiscal year ending December 31, 2006. The Bank does not
waive compliance by the Borrower with any of its other covenants under the
Loan
Agreement or Loan Documents or for any other dates or for any other
periods.
2. Amendment
of Revolving Line of Credit Maximum Available Amount.
The
Loan Agreement shall be and hereby is amended by deleting Section I. A. of
Loan
Agreement in its entirety and replacing it with the following new Section I.
A.:
“A.
Maximum
Available Amount.
The maximum amount available to the BORROWER from time to time under the
Revolving Line of Credit Loan shall be the lesser
of (1) Five Million Dollars ($5,000,000.00) or (2) an amount equal to (a)
Seventy Percent (70%) of Acceptable Accounts (as hereinafter defined)
plus
(b) the lesser
of (i) One Million Dollars ($1,000,000.00), or (ii) Fifty Percent (50%) of
Costs
in Excess of Xxxxxxxx (as hereafter defined) less
(c) Two Hundred Fifty Thousand Dollars ($250,000.00). For purposes of this
Agreement, “Acceptable Accounts” shall mean those of BPG’s and its wholly owned
subsidiaries’ accounts and accounts receivable as the BANK determines to be
satisfactory, in the BANK's reasonable discretion and “Costs in Excess of
Xxxxxxxx” shall mean the expected revenue to be generated pursuant to contracts
for services performed or goods sold which have not yet been billed but would
otherwise be deemed Acceptable Accounts once billed (“Revenue in Progress” or
“RIP”) as the BANK determines to be satisfactory, in the BANK’s reasonable
discretion. Subject to the foregoing, “Acceptable Accounts” and “Costs in Excess
of Xxxxxxxx” shall not include any amounts subject to retainage or service
charges or sales or other taxes and shall be limited to accounts and/or RIP:
(i) which arise in the ordinary course of BPG’s and its wholly owned
subsidiaries’ business from BPG’s and its wholly owned subsidiaries’ performance
of services or sale of goods which have been performed or sold; (ii) which
are less than one hundred twenty (120) days old from date of invoice (or date
of
performance of services or goods delivered with respect to RIP and Costs in
Excess of Xxxxxxxx) (in the event that fifty percent (50%) of the accounts
receivable from a particular account debtor are sixty (60) days or more old
from
invoice date, all of the accounts receivable from that particular account debtor
shall be excluded from Acceptable Accounts and all of RIP with respect to that
particular account debtor shall be excluded from Costs in Excess of Xxxxxxxx);
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(iii) which
are not evidenced by a promissory note or other instrument; (iv) which are
payable in U.S. Dollars; (v) which are owed by any customer whose principal
place of business is within the United States; (vi) which are owed by any
corporation or other entity other than one which is related to BORROWER, or
is
of common ownership with BORROWER, or could be treated as a member of the same
controlled group of corporations of which BORROWER is a member; (vii) which
constitute valid, binding, and enforceable obligations of customers which are
not subject to any claim, counterclaim, set off, credit, allowance, or
chargeback; (viii) as to which BPG and its wholly owned subsidiaries has
received no notice and has no knowledge as to whether the customer (or any
guarantor or endorser thereof) is bankrupt or insolvent, or any other facts
which make the collection of the account or RIP doubtful; (ix) which are
not owed by any person employed by, or salesman of, BPG and its wholly owned
subsidiaries; (x) which do not arise out of the sale by BPG and its wholly
owned subsidiaries of goods consigned or delivered to BPG and its wholly owned
subsidiaries on “sell or return” terms (whether or not compliance has been made
with Section 2-326 of the UCC); and (xi) which do not arise out of any sale
made on a “xxxx and hold”, dating, or delayed shipping basis. Notwithstanding
the foregoing, Acceptable Accounts shall also include the accounts listed on
Schedule
A
annexed hereto notwithstanding that said accounts may have billing that exceeds
one hundred twenty (120) days from the date of invoice or have in excess of
fifty (50%) percent of the accounts receivable from a particular account sixty
(60) days or more old from invoice date provided that any such account shall
still be excluded if it has xxxxxxxx that exceed one hundred eighty (180) days
from the date of invoice. Accounts payable by BPG and its wholly owned
subsidiaries to any customer shall be netted against accounts and RIP due from
such customer. The BORROWER agrees that the BANK may, at any time or times,
lower the stated percentage of Acceptable Accounts or Costs in Excess of
Xxxxxxxx for purposes of determining the maximum available amount under the
Revolving Line of Credit Loan as the BANK may determine in a commercially
reasonable manner to be appropriate based upon any material deterioration of
the
BORROWER's condition, financial or otherwise, and/or of the condition or quality
of the Collateral. The acceptance of or characterization by the BANK of any
account as an Acceptable Account of any RIP includable in Costs in Excess of
Xxxxxxxx shall not be deemed a determination by the Bank as to their respective
actual values nor in any way obligate BANK to accept any account or RIP arising
subsequently from such customer to be, or to continue to deem such account
to
be, an Acceptable Account, or such RIP includable in Costs in Excess of
Xxxxxxxx. All accounts and RIP of BPG and its wholly owned subsidiaries, whether
or not Acceptable Accounts or Costs in Excess of Xxxxxxxx, as the case may
be,
shall constitute Collateral under the Security Agreement. On a monthly basis,
within fifteen (15) days of each month end, BORROWER shall deliver a certificate
to BANK which sets forth a calculation of the maximum amount available under
clause (2) of this Section I. A and which shall be accompanied by a
reconciliation of accounts receivable and RIP and aging reports therefor, all
in
a form and detail reasonably acceptable to the BANK and prepared on a consistent
basis by the BORROWER.”
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3. Amendment
of Interest Rates.
The
Loan Agreement shall be and hereby is further amended as follows:
(a) The
definition of LIBOR Rate in Section III. A. of the Loan Agreement shall be
and
hereby is deleted in its entirety and replaced with the following:
“LIBOR
Rate” means for the Revolving Line of Credit Loan a fixed per annum rate of
interest equal to LIBOR plus
300 basis points (3.0%) and for the Term Loan a fixed per annum rate of interest
equal to LIBOR plus
275 basis points (2.75%).”
(b) Section
III. B. of the Loan Agreement shall be and hereby is deleted in its entirety
and
replaced with the following:
“B.
Prime
Rate.
The principal balance outstanding from time to time, or portion thereof, under
the Revolving Line of Credit Loan which is not subject to the LIBOR Rate shall
bear interest at a variable annual rate equal to the Prime Rate
plus
50 basis points (0.50%). The principal balance outstanding from time to time
under the Term Loan which is not subject to the LIBOR Rate shall bear interest
at a variable annual rate equal to the Prime Rate plus
25 basis points (0.25%).”
(c) Section
III. E. of the Loan Agreement shall be and hereby is deleted in its entirety
and
replaced with the following:
“E.
Default
Interest Rate.
During the continuance of an Event of Default, after maturity, or after judgment
has been rendered on any of the Obligations, BORROWER’s right to select the
LIBOR Rate shall cease and the unpaid principal of each Loan shall, at the
option of the BANK, bear interest at the Prime Rate plus five and one-quarter
percent (5.25%) per annum.”
4. Amendment
of Financial Covenants.
The
Loan Agreement shall be and hereby is further amended as follows:
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(a)
Paragraph
A. of Section III of Schedule B of the Loan Agreement shall be and hereby is
deleted in its entirety and replaced with the following:
“A.
BPG and its wholly owned subsidiaries, including GUARANTOR, on a consolidated
basis, shall have a minimum Tangible Capital Base (as hereinafter defined)
of
not less than One Million Ninety-Three Thousand Two Hundred Ninety-One Dollars
($1,093,291) as of December31, 2006, and as of the end of each of BORROWER’s
fiscal quarters thereafter, which minimum Tangible Capital Base shall increase
on a cumulative basis as of the end of each fiscal quarter by an amount equal
to
fifty percent (50%) of the Net Profits (as hereinafter defined) for such fiscal
quarter. “Tangible Capital Base”
means the value of BPG’s
and its wholly owned subsidiaries’,
including GUARANTOR’s, total assets on a consolidated basis (but excluding
goodwill, patents, trademarks, trade names, organization expense, unamortized
debt discount and expense, capitalized or deferred research and development
costs, deferred marketing expenses, and other like intangibles) less total
liabilities, including but not limited to accrued and deferred income taxes,
but
excluding Permitted Subordinated Debt,
all as determined from the BORROWER's and GUARANTOR’s financial statements
delivered to the BANK in accordance with the covenants of the BORROWER herein
above (the “Financial Statements”). “Net Profits” means net profits of BPG and
its wholly owned subsidiaries, including GUARANTOR, on a consolidated basis
as
determined on a consolidated basis in accordance with generally accepted
accounting principles from the Financial Statements.”
(b) Paragraph
B. of Section III of Schedule B of the Loan Agreement shall be and hereby is
deleted in its entirety and replaced with the following:
“B.
BPG
and its wholly owned subsidiaries, including
GUARANTOR, on a consolidated basis, shall maintain a Fixed Charge Coverage
Ratio
(as hereinafter defined) of not less than 1.1:1
as of the end of each of the fiscal quarters ending March 31, 2007 and June
30,
2007 and not less than 1.2:1 as of the end of each of BORROWER’s fiscal quarter
thereafter.
“Fixed Charge Coverage Ratio” means the ratio of (a) EBITDA (as hereinafter
defined), minus the sum of taxes, dividends, and non-financed capital
expenditures paid in cash, for the applicable period (as determined in
accordance with the provisions set forth below) ending on the date of
determination, to (b) the sum of interest expense, lease expense, rent expense,
required scheduled principal payments on long term debt and the current portion
of capitalized lease obligations all for the twelve (12) month period ending
on
the date of determination. “EBITDA” means BPG’s
and its wholly owned subsidiaries’,
including GUARANTOR’s, net income (not inclusive of non-recurring expenses) on a
consolidated basis, less income or plus loss from discontinued operations and
extraordinary items, plus income taxes, plus interest expense, plus
depreciation, depletion, amortization and other non-cash charges, for the period
determined in accordance with the following: (i) for the
fiscal quarter ending March 31, 2007, EBITDA shall be determined by annualizing
the results of operations for such fiscal quarter; (ii) for the fiscal quarter
ending June 30, 2007, EBITDA shall be determined by annualizing the results
of
operations for such fiscal quarter and for the fiscal quarter ending March
31,
2007; (iii) for the fiscal quarter ending September 30, 2007, EBITDA shall
be
determined by annualizing the results of operations for such fiscal quarter
and
for the fiscal quarters ending March 31, 2007 and June 30, 2007, and (iv) for
the fiscal quarter ending December 31, 2007 and for each fiscal quarter
thereafter, EBITDA shall be determined based upon actual results of operations
for the four (4) fiscal quarter period then ending.”
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(c) Paragraph
C. of Section III of Schedule B of the Loan Agreement shall be and hereby is
deleted in its entirety and replaced with the following:
“C.
BPG
and its wholly owned subsidiaries,
including GUARANTOR, on a consolidated basis, shall maintain a ratio of Funded
Debt (as hereinafter defined) to EBITDA (as defined and determined under
Paragraph B of this Section III above) not exceeding 3.0:1 as
of March 31, 2007, and as of the end of each of BORROWER’s fiscal quarters
thereafter.
“Funded Debt” means all of BPG’s
and its wholly owned subsidiaries’, including
GUARANTOR’s, outstanding liabilities for borrowed money and other
interest-bearing liabilities on a consolidated basis, including current and
long-term debt (including the Loans and Permitted Subordinated
Debt).”
5. Permitted
Subordinated Debt Defaults.
Borrower represents and warrants to the Bank that, as of the Effective Date,
the
holder[s] of the Permitted Subordinated Debt has waived any and all defaults
existing under the Permitted Subordinated Debt arising as a result of the
Covenant Defaults under the Loan Agreement. Borrower shall provide written
evidence of the same to Bank.
6. Reaffirmation
of Representations and Warranties.
Borrower and GI hereby confirm, reassert, and restate all of their respective
representations and warranties under the Loan Agreement and the Loan Documents
as of the date hereof.
7. Reaffirmation
of Affirmative Covenants.
Borrower and GI hereby confirm, reassert, and restate all of their respective
affirmative covenants as set forth in the Loan Agreement and the Loan Documents
as of the date hereof.
8. Reaffirmation
of Negative Covenants.
Borrower and GI hereby confirm, reassert, and restate all of their respective
negative covenants as set forth in the Loan Agreement and the Loan Documents
as
of the date hereof.
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9. Joinder
to Loan Agreement.
(a) The
Loan
Agreement is hereby amended to join and include BPI, jointly and severally,
as a
guarantor thereunder, such that each reference to “GUARANTOR” in the Loan
Agreement shall hereafter mean and include each of the current guarantors and
BPI, jointly and severally. Borrowers shall take such actions as reasonably
necessary to enable BPI to become a guarantor under the Loan Agreement. BPI
hereby joins and states all the representations and warranties and affirmative
and negative covenants of the GUARANTOR under the Loan Agreement as of the
date
hereof.
(b) Upon
the
execution of this Joinder and Amendment, BPI shall execute and deliver to bank
(i) a certain Guaranty Agreement, (ii) a certain Security Agreement, (iii)
a
certain Stock Pledge and Security Agreement, and (iv) such other related loan
documents reasonably requested by the Bank, all in a form acceptable to the
Bank.
10.
No
Other Modifications.
Except
as specifically modified or amended herein or hereby, all of the terms and
conditions of each of the Loans, the Loan Agreement, and the Loan Documents,
remain otherwise unchanged, and in full force and effect, all of which are
hereby confirmed and ratified by the parties hereto.
11. Bank
Fee.
For and
in consideration of the Bank entering into this Amendment, the Borrower shall
pay to the Bank a fee in the amount of Fifteen Thousand Dollars ($15,000.00),
due and payable in full on the Effective Date. Borrower consents to Bank
charging Borrower's Revolving Line of Credit loan account for any such
fee.
12.
Costs
and Expenses of Bank.
The
Borrower agrees to reimburse the Bank for all reasonable costs, expenses, and
fees, including attorneys' fees, associated with the documentation of this
Amendment. Borrower consents to Bank charging Borrower's Revolving Line of
Credit loan account for any such costs, expenses and fees.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties have executed and delivered this Amendment
effective as of the date first set forth above.
| WITNESSES: | BANK: | |
| BANKNORTH, N.A. | ||
|
______________________________________
|
|
By: ____________________________________ |
| Xxxx Xxxxxxx, Senior Vice President | ||
|
BORROWER:
|
||
| BRANDPARTNERS GROUP, INC | ||
| ______________________________________ | By: ____________________________________ | |
| Signature and Title/Duly Authorized | ||
| BRANDPARTNERS RETAIL, INC. | ||
| ______________________________________ | By: ____________________________________ | |
| Signature and Title/Duly Authorized | ||
| GUARANTOR: | ||
| GRAFICO INCORPORATED | ||
| ______________________________________ | By: ____________________________________ | |
| Signature and Title/Duly Authorized | ||
| BUILDING PARTNERS, INC. | ||
| ______________________________________ | By: ____________________________________ | |
| Signature and Title/Duly Authorized | ||
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SCHEDULE
A
| 1. |
Bank
of America
|
| 2. |
Sun
Trust Bank
|
| 3. |
National
City
|
| 4. |
Comerica
|
| 5. |
Sovereign
|
| 6. |
Am
South
|
| 7. |
Regions
Bank
|
| 8. |
M&T
Bank
|
As
well
as any other account that is deemed credit worthy by Bank
