Specialty Lending Group TD Banknorth, N.A. 5 Commerce Park North Bedford, NH 03110 TDBanknorth.com
 Specialty
Lending Group
TD
Banknorth, N.A.
0
Xxxxxxxx Xxxx Xxxxx
Xxxxxxx,
XX 00000
XXXxxxxxxxx.xxx
|
March
22,
0000
Xxxxx
Xxxxxx, President & CEO
Brandpartners
Group, Inc.
Brandpartners
Retail, Inc.
00
Xxxx
Xxxxxx
Xxxxxxxxx,
XX 00000
Re:
Credit Facilities to Brandpartners Group, Inc. and Brandpartners Retail,
Inc.
(collectively, the "Borrower") by TD Banknorth, N.A. (the
"Bank")
Dear
Xx.
Xxxxxx:
Reference
is made to that certain Commercial Loan Agreement among the Bank, the Borrower,
and Grafico Incorporated, as "Guarantor", dated May 5, 2005, as amended
or modified from time to time (the "Loan Agreement"). Capitalized terms
not otherwise defined herein shall have the meanings ascribed thereto in
the
Loan Agreement.
The
Borrower is in default in the performance of its obligations under the Loan
Agreement in that it has violated its (i) Tangible Capital Base covenant
under
Section III A. of the Loan Agreement, (ii) Fixed Charge Coverage Ratio covenant
under Section III B. of Schedule B of the Loan Agreement, and (iii) Funded
Debt
to EBITDA ratio covenant under Section III C. of Schedule B of the Loan
Agreement (collectively, the "Relevant Covenants") as of the period
ending December 31, 2006
(collectively,
the "Covenant Defaults"). The Borrower's failure to meet the Relevant
Covenants and the resulting Covenant Defaults constitute an Event of Default
under the Loan Agreement and an event of default under the Permitted
Subordinated Debt, which default under the Permitted Subordinated Debt
constitutes an Event of Default under the Loan Agreement (the "Permitted
Subordinated Debt Default" and, collectively with the Covenant Defaults, the
"Defaults").
Brandpartners
Group, Inc.
March
22,
2007
Page
2 of
4
Subject
to the terms of this letter, the Bank has agreed to waive its right to
declare
the indebtedness of the Borrower to the Bank to be immediately due and
payable
as a result of the Defaults. This waiver shall be effective only with
respect to
the Defaults and shall be conditioned upon (a) execution by the Bank,
Borrower,
and Guarantor of an amendment to the Loan Agreement, in form and substance
satisfactory to the Bank and its counsel (the
"Amendment"),
whereby,
in addition to other terms and conditions, the Relevant Covenants shall
be
modified as more particularly described below, (b) delivery by the current
holders of the Permitted Subordinated Debt of a written waiver of the default
arising under the Permitted Subordinated Debt as a result of the failure
of the
Borrower to meet the Relevant Covenants and as a result of Covenant Default
under the Loan Agreement, and (c) the payment by Borrower to Bank of a
fee in
the amount of$15,000.00. The agreement of the Bank to waive the Defaults
does
not imply an agreement or requirement on the part of the Bank to waive
or
release any other default.
The
Bank
and Borrower have agreed that the Relevant Covenants shall be modified as
follows: (i) for purposes of determining compliance with the Relevant Covenants
as at fiscal quarter ending March 31, 2007, EBITDA shall be determined based
upon annualized results of operations for such fiscal quarter (fixed charges
shall be determined on the basis of actual results of operations for the
four
(4) fiscal quarter period then ending); (ii) for purposes of determining
compliance with the Relevant Covenants as at the fiscal quarter ending June
30,
2007, EBITDA shall be determined based upon annualized results of operations
for
such fiscal quarter and for the fiscal quarter ending March 31, 2007 (fixed
charges shall be determined on the basis of actual results of operations
for the
four (4) fiscal quarter period then ending); (iii) for purposes of determining
compliance with the Relevant Covenants as at the fiscal quarter ending September
30, 2007, EBITDA shall be determined based upon annualized results of operations
for such fiscal quarter and for the fiscal quarters ending March 31, 2007
and
June 30, 2007, (iv) for the fiscal quarter ending December 31, 2007 and for
each
fiscal quarter thereafter, for purposes of determining compliance with the
Relevant Covenants as at each such fiscal quarter-end, EBITDA and fixed charges
shall be determined based upon actual results of operations for the four
(4)
fiscal quarter period then ending; (v) for each of the fiscal quarters of
the
Borrower, beginning with the fiscal quarter ending March, 31, 2007, the ratio
of
Funded Debt to EBITDA for purposes of Section III C. of Schedule B of the
Loan
Agreement shall not exceed 3.0: 1; (vi) for the fiscal quarters ending March
31,
2007 and June 30, 2007, the Fixed Charge Coverage Ratio shall be a Minimum
of
1.10:1 (and shall revert to 1.20:1 as of the fiscal quarter ending September
30,2007); and (vii) the minimum Tangible Capital Base as of March 31,2007
shall
not be less than eighty percent (80%) of the Borrower's tangible net worth
as of
December 31, 2006 and shall increase on a cumulative basis as of the end
of each
fiscal quarter thereafter by an amount equal to fifty percent (50%) of the
Net
Profits for such fiscal quarter.
The
Amendment will also include a revised formula availability mechanism whereby
the
maximum amount available under the Revolving Line of Credit shall be the
lesser
of (i) $5,000,000, or (ii) 70% of Acceptable Accounts (to be defined in the
Amendment), reported monthly plus 50% of cost in excess of xxxxxxxx (capped
at
$1,000,000), reported monthly, less an availability reserve of $250,000.
Also,
the Amendment will include an increase of 25 basis points (0.25%) in the
Revolving Line of Credit Loan and Term Loan pricing.
Brandpartners
Group, Inc.
March
22,
2007
Page
3 of
4
Other
than such rights as Bank has specifically agreed to be waived hereunder,
the
Bank reserves all rights available to it under the Loan Agreement and under
any
and all of the Loan Documents.
Borrower
and Guarantor have indicated their acceptance of the terms of this letter
and
the waivers hereunder by the Borrower's and Guarantor's execution of a duplicate
original hereof where indicated.
Sincerely,
TD
Banknorth, N.A.
| By: /s/ Xxxx Xxxxxxx | |||
|
|
|||
|
Xxxx
Xxxxxxx,
Senior Vice President
|
Brandpartners
Group, Inc.
March
22,
2007
Page
4 of
4
Acknowledged
and agreed this ____ day of March 2007.
Brandpartners
Group, Inc.
| By: | |||
|
|
|||
|
Xxxxx
Xxxxxx,
President & CEO
Duly
Authorized
|
Brandpartners
Retail, Inc.
| By: | |||
|
|
|||
|
Xxxxx
Xxxxxx,
President & CEO
Duly
Authorized
|
Grafico
Incorporated
| By: | |||
|
|
|||
|
Xxxxx
Xxxxxx,
President & CEO
Duly
Authorized
|
