Exhibit 10(a)
AMENDMENT NO. 10 TO
CREDIT AGREEMENT
THIS AMENDMENT NO. 10 TO CREDIT AGREEMENT (this "Amendment No. 10"),
dated as of October 31, 1995, is by and among NatWest Bank N.A. (as successor to
National Westminster Bank USA, the "Bank"), Square Industries, Inc., a New York
corporation (the "Borrower"), and 808 Square Corp., a New York corporation ("808
Corp.").
RECITALS:
WHEREAS, the Bank, the Borrower and 808 Corp. have previously entered
into that certain Credit Agreement dated July 5, 1988, as amended by Amendment
No. 1 thereof dated July 26, 1988, Amendment No. 2 thereof dated as of February
28, 1990, Amendment No. 3 thereof dated April 18, 1990, Amendment No. 4 thereof
dated as of April 30, 1990, Amendment No. 5 thereof dated as of February 28,
1991, Amendment No. 6 thereof dated June 4, 1992, Amendment No. 7 thereof dated
as of February 28, 1993, Amendment No. 8 thereof dated as of February 28, 1994
and Amendment No. 9 thereof dated as of October 11, 1994 (as amended, the
"Credit Agreement"), pursuant to which the Bank agreed to make loans to and
issue letters of credit for the account of the Borrower and 808 Corp.;
WHEREAS, the obligations of the Borrower and 808 Corp. under the
Credit Agreement are guaranteed by certain subsidiaries of the Borrower (the
"Subsidiary Guarantors");
WHEREAS, the Borrower and 808 Corp. desire that the Credit Agreement
be amended in certain respects;
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WHEREAS, the Bank is willing to amend the Credit Agreement upon the
terms and subject to the conditions of this Amendment No. 10; and
WHEREAS, capitalized terms not defined herein shall have the meanings
ascribed to such terms in the Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1 AMENDMENTS
Subject to the satisfaction of the conditions contained in Article 5
hereof, effective as of the Tenth Amendment Effective Date (as defined below),
the Credit Agreement is hereby amended as follows:
1.01. Article 1 of the Credit Agreement is hereby amended by:
(a) Deleting the definition of "Credit Loan Termination Date" in its
entirety and replacing it with the following:
""Credit Loan Termination Date" - December 31, 1998"
(b) Deleting the definition of "Excess Cash Flow" in its entirety and
replacing it with the following:
""Excess Cash Flow" - for any fiscal year or calendar quarter
of the Borrower, the Cash Flow in excess of the Projected Cash Flow for
such fiscal year or quarter set forth or reflected in the Borrower's
financial projections attached as Exhibit 2.5(e) hereto ("Projected
Cash Flow"). For each calendar quarter during 1997 and during 1998 the
Projected Cash Flow shall be set forth on a schedule to be prepared by
the Borrower and delivered to the Bank at least 30 days prior to the
relevant calendar quarter, provided however, that the Projected Cash
Flows for the four calendar quarters of each of 1997 and 1998 do not
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exceed the Projected Cash Flow for that year as set forth in Exhibit
2.5(e)."
(c) Adding thereto the following definitions in the appropriate
alphabetical order:
""Amendment No. 10" - Amendment No. 10 To Credit Agreement
dated as of the Tenth Amendment Closing Date by and among the
Borrower, 808 Corp. and the Bank."
""Cash Flow" - for any quarter or fiscal quarter or any fiscal
year of the Borrower and its subsidiaries, the net cash flow as
determined in accordance with generally accepatable accounting
principles including paid interest on Indebtedness less the sum of (i)
principal payment on Indebtedness, (ii) capital expenditures, (iii)
lease renewal and replacement costs, and (iv) real estate and income
tax payments."
""Projected Cash Flow" - for any fiscal quarter, as defined
under "Excess Cash Flow.""
""Tenth Amendment Closing Date" - October 31, 1995."
1.02. Subsection 2.1(a) of the Credit Agreement is hereby amended by
deleting such Subsection in its entirety and replacing it with the following:
"(a) The Borrower and the Bank acknowledge and agree that as
of the Tenth Amendment Closing Date the Borrower has outstanding loans
(individually, a "Credit Loan" and collectively the "Credit Loans") in
the aggregate principal amount of $11,758,452.70 and outstanding
Letters of Credit in the aggregate face amount of $1,025,000.00, owing
to the Bank and which shall continue to be outstanding pursuant to the
terms and conditions of this Agreement and the other Loan Documents.
The Borrower and the Bank further acknowledge and agree that the
Commitment of the Bank has terminated as of the Tenth Amendment Closing
Date and the Bank is no longer obligated to made or advance any
additional Credit Loans or Letters of Credit, provided that any Letter
of Credit existing on the Tenth Amendment Closing Date may, at the
option of the Borrower so long as no Default or Event of Default has
occurred and is continuing, be extended to a date prior to the Credit
Loan Termination Date."
1.03. Subsection 2.1(b) of the Credit Agreement is hereby amended by
deleting such Subsection in its entirety and replacing it with the following:
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"(b) The Borrower and the Bank acknowledge and agree that as
of the Tenth Amendment Closing Date the Borrower has outstanding a term
loan (the "Square Term Loan") in the aggregate principal amount of
$1,688,100.00 owing to the Bank which shall continue to be outstanding
pursuant to the terms and conditions of this Agreement and the other
Loan Documents."
1.04. Subsection 2.1(d) of the Credit Agreement is hereby amended by
deleting such Subsection in its entirety and replacing it with the following:
"(d) Subject to the terms of this Agreement, the Credit Loans
may be repaid at any time and from time to time, in whole or in part,
without premium or penalty, and any amount so repaid may not be
reborrowed."
1.05. Subsection 2.1(e) of the Credit Agreement is hereby amended by
deleting such Subsection in its entirety and replacing it with the following:
"(e) [intentionally omitted]"
1.06. Subsection 2.5(e) of the Credit Agreement is hereby amended by
deleting such Subsection in its entirety and replacing it with the following:
"(e) Not later than twenty one (21) days after each fiscal
quarter of the Borrower, the Borrower shall repay the Credit Loans in
an amount equal to fifty percent (50%) of any Excess Cash Flow, if any,
for such fiscal quarter. Any such repayments shall be applied to the
remaining scheduled principal installments of the Credit Loans in the
inverse order of maturity. In the event the Borrower's Cash Flow in any
fiscal quarter is less than the Projected Cash Flow for such fiscal
quarter (any such difference being referred to as a "Cash Flow
Deficit"), the Borrower may carry forward the Cash Flow Deficit to any
succeeding fiscal quarters and apply such Cash Flow Deficit to reduce
the Excess Cash Flow for any such succeeding fiscal quarter."
1.07. Subsection 2.8(a) of the Credit Agreement is hereby amended by
deleting such Subsection in its entirety and replacing it with the following:
"(a) The Borrower shall pay to the Bank the principal amount
of the Credit Loans on the dates and in the amounts as follows:
Payment Date Amount
------------ ------
June 30, 1998 $61,900.00
September 30, 1998 $150,000.00
December 31, 1998 $11,546,552.70 or the then outstanding
principal amount of the
Credit Loans"
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1.08. Subsection 2.8(b) of the Credit Agreement is hereby amended by
deleting such Subsection in its entirety and replacing it with the following:
"(b) The Borrower shall pay to the Bank the principal amount
of the Square Term Loan on the dates and in the amounts as follows:
Payment Date Amount
------------ ------
June 30, 1996 $250,000.00
September 30, 1996 $250,000.00
December 31, 1996 $250,000.00
March 31, 1997 $250,000.00
June 30, 1997 $150,000.00
September 30, 1997 $150,000.00
December 31, 1997 $150,000.00
March 31, 1998 $150,000.00
June 30, 1998 $ 88,100.00"
1.09. Subsection 2.9(a) of the Credit Agreement is hereby amended by
deleting such Subsection in its entirety and replacing it with the following:
"(a) The Borrower and the Bank acknowledge and agree that as
of the Tenth Amendment Closing Date the aggregate amount of accrued and
unpaid interest on the Credit Loans is $514,006.79 (the "Credit Loan
Prior Interest"), that $191,900.79 of the Credit Loan Prior Interest
has been paid by the Borrower to the Bank on the Tenth Amendment
Closing Date and that the Borrower will pay to the Bank the unpaid
portion the Credit Loan Prior Interest on the dates and in the amounts
as follows:
Payment Date Amount
January 31, 1996 $107,369.00
February 28, 1996 $107,369.00
March 31, 1996 $107,368.00
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Commencing on November 1, 1995, the unpaid principal amount of the
Credit Loans shall accrue interest for the period commencing on
November 1, 1995 until the Credit Loans shall be paid in full, unless
adjusted as provided below, at a rate per annum equal to the Prime Rate
plus two percent (2.0%) (the "Existing Rate").
Borrower shall engage an independent consultant who is
acceptable to the Bank (the "Consultant") (the firm of Xxxxxxxxx,
Xxxxxxx and Associates LLP is acceptable to the Bank) to determine
whether reductions in the operating and general and administrative
costs of the Borrower and its subsidiaries (collectively for purposes
of this Section 2.9(a) and Section 2.9(b), the "Borrower") of $500,000
(the "Threshold Amount") or more have been effected from those
incurred in 1994. The determination shall be in the form of a
comparison of the annualized (i) costs of operations for the quarter
ended December 31, 1994 for the parking locations operated by the
Borrower during that quarter (the "1994 Locations") and (ii) general
and administrative expenses of the Borrower for the quarter ended
December 31, 1994 as compared (a) with respect to calendar 1995, the
annualized costs of operations of the 1994 Locations and general and
administrative costs of the Borrower during the quarter ended December
31, 1995; (b) with respect to 1996, the annualized costs of operations
of the 1994 Locations and general and administrative costs of the
Borrower during the quarter ended December 31, 1996 and (c) with
respect to 1997, the annualized costs of operations of the 1994
Locations and general and administrative costs of the Borrower during
the quarter ended December 31, 1997. The comparison shall take into
consideration inter alia, payroll costs, including overtime, and the
discontinuation or termination of unprofitable 1994 Locations, but
shall not include with respect to general and administrative expenses,
extraordinary items and the costs incurred with respect to the
negotiation and execution of Amendment No. 10 and the costs incurred,
including the commitment fee, in seeking and negotiating a proposed
secured loan from Greyrock Capital Group Co., Inc.
On the last day of each month, commencing on November 30,
1995, the Borrower shall pay the Bank accrued interest on the unpaid
principal amount of the Credit Loans at a rate per annum equal to four
(4.0%) (the "Current Pay Rate"), with the unpaid portion of the
accrued interest for each month to be deferred (such portion of
deferred and unpaid interest, the "Deferred Interest") until paid or
forgiven as provided below. In the event that the reduction in the
operating costs and general and administrative expenses for calendar
1995 as determined above is at least the Threshold Amount, then (i)
the amount of Deferred Interest for the period from November 1, 1995
to December 31, 1995 shall be forgiven and shall no longer be payable
by the Borrower and (ii) the unpaid principal amount of the Credit
Loans shall accrue interest for the period commencing as of January 1,
1996 until the Credit Loans shall be paid in full, unless adjusted as
provided below, at a rate per annum equal to the Prime Rate (the
"Reduction Rate"), with accrued interest payable by the Borrower to
the Bank on the last day of each month at the Current Pay Rate and
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with the unpaid portion of the accrued interest for each month being
deferred as Deferred Interest until paid or forgiven as provided
below; provided, however, that if the cost reduction was less than the
Threshold Amount, then (A) no adjustment to the Existing Rate shall
occur and (B) all Deferred Interest for the period from November 1,
1995 to December 31, 1995 shall be due and payable in full on the last
day of the month in which the determination by the Consultant is
delivered to the Bank. During 1996 the Borrower shall continue to pay
accrued interest on the last day of each month at the Current Pay
Rate, with any Deferred Interest from and after January 1, 1996 being
paid or forgiven as provided below. In the event that the reduction in
the operating costs and general and administrative expenses for 1996
as determined above is at least the Threshold Amount plus $100,000,
then (i) the amount of Deferred Interest for the period from January
1, 1996 to December 31, 1996 shall be forgiven and shall no longer be
payable by the Borrower and (ii) the unpaid principal amount of the
Credit Loans shall accrue interest for the period commencing as of
January 1, 1997 until the Credit Loans shall be paid in full, unless
adjusted as provided below, at the Reduction Rate, with accrued
interest payable by the Borrower to the Bank on the last day of each
month at the Current Pay Rate and with the unpaid portion of the
accrued interest for each month being deferred as Deferred Interest
until paid or forgiven as provided below; provided, however, that if
the cost reduction is less than the Threshold Amount plus $100,000,
then (A) the unpaid principal amount of the Credit Loans shall accrue
interest for the period commencing as of January 1, 1997 until the
Credit Loans shall be paid in full, unless adjusted as provided below,
at the Existing Rate and (B) all Deferred Interest for the period from
January 1, 1996 to December 31, 1996 shall be due and payable in full
on the last day of the month in which determination by the Consultant
was delivered to the Bank. During 1997 and 1998, the Borrower shall
continue to pay accrued interest on the last day of each month at the
Current Pay Rate, with any Deferred Interest from and after January 1,
1997 being paid or forgiven as provided below. In the event that the
reduction in the operating costs and general and administrative
expenses for 1997 as determined above is a least the Threshold Amount
plus $200,000, then the amount of Deferred Interest for the period
from January 1, 1997 until the Credit Loans shall be paid in full
shall be forgiven and shall no longer be payable by the Borrower;
provided, however, that if the cost reduction is less than the
Threshold Amount plus $200,000, then (A) the unpaid principal amount
of the Credit Loans shall accrue interest for the period commencing as
of January 1, 1998 until the Credit Loans shall be paid in full at the
Existing Rate, (B) all Deferred Interest from the period from January
1, 1997 to December 31, 1997 shall be due and payable in full on the
last day of the month in which the determination by the Consultant was
delivered to the Bank and (C) during 1998 the Borrower shall continue
to pay accrued interest on the last day of each month at the Current
Pay Rate, with any Deferred Interest from and after January 1, 1998
being payable in full on December 31, 1998."
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1.10. Subsection 2.9(b) of the Credit Agreement is hereby amended by
deleting such Subsection in its entirety and replacing it with the following:
"(b) The Borrower and the Bank acknowledge and agree that as of the
Tenth Amendment Closing Date the aggregate amount of accrued and unpaid interest
on the Square Term Loan is $49,490.19 (the "Square Term Loan Prior Interest"),
that $17,500.19 of the Square Term Loan Prior Interest has been paid by the
Borrower to the Bank on the Tenth Amendment Closing Date and that the Borrower
will pay to the Bank the unpaid portion the Square Term Loan Prior Interest on
the dates and in the amounts as follows:
Payment Date Amount
------------ ------
January 31, 1996 $10,663.00
February 28, 1996 $10,663.00
March 31, 1996 $10,664.00
Commencing on November 1, 1995, the unpaid principal amount of the
Square Term Loan shall accrue interest for the period commencing on
November 1, 1995 until the Square Term Loan shall be paid in full,
unless adjusted as provided below, at a rate per annum equal to the
Prime Rate plus two percent (2.0%) (the "Existing Rate"). On the last
day of each month, commencing on November 30, 1995, the Borrower shall
pay the Bank accrued interest on the unpaid principal amount of the
Square Term Loan at a rate per annum equal to four (4.0%) (the "Current
Pay Rate"), with the unpaid portion of the accrued interest for each
month to be deferred (such portion of deferred and unpaid interest, the
"Deferred Interest") until paid or forgiven as provided below.
In the event that the reduction in the cost of operations and
general and administrative expenses of the Borrower for calendar 1995
from those for calendar 1994 as determined in Section 2.9(a) is at
least the Threshold Amount, then (i) the amount of Deferred Interest
for the period from November 1, 1995 to December 31, 1995 shall be
forgiven and shall no longer be payable by the Borrower and (ii) the
unpaid principal amount of the Square Term Loan shall accrue interest
for the period commencing as of January 1, 1996 until the Square Term
Loan shall be paid in full, unless adjusted as provided below, at a
rate per annum equal to the Prime Rate (the "Reduction Rate"), with
accrued interest payable by the Borrower to the Bank on the last day of
each month at the Current Pay Rate and with the unpaid portion of the
accrued interest for each month being deferred as Deferred Interest
until paid or forgiven as provided below; provided, however, that if
the amount of the cost reduction is less than the Threshold Amount,
then (A) no adjustment to the Existing Rate shall occur and (B) all
Deferred Interest for the period from November 1, 1995 to December 31,
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1995 shall be due and payable in full on the last day of the month in
which the determination by the Consultant is delivered to the Bank.
During 1996 the Borrower shall continue to pay accrued interest on the
last day of each month at the Current Pay Rate, with any Deferred
Interest from and after January 1, 1996 being paid or forgiven as
provided below. In the event the reduction in the cost of operations
and general and administrative expenses of the Borrower for calendar
1996 from those for calendar 1994 as determined in Section 2.9(a) is at
least the Threshold Amount plus $100,000, then (i) the amount of
Deferred Interest for the period from January 1, 1996 to December 31,
1996 shall be forgiven and shall no longer be payable by the Borrower
and (ii) the unpaid principal amount of the Square Term Loan shall
accrue interest for the period commencing as of January 1, 1997 until
the Square Term Loan shall be paid in full, unless adjusted as provided
below, at the Reduction Rate, with accrued interest payable by the
Borrower to the Bank on the last day of each month at the Current Pay
Rate and with the unpaid portion of the accrued interest for each month
being deferred as Deferred Interest until paid or forgiven as provided
below; provided, however, that if the amount of the cost reduction is
less than the Threshold Amount plus $100,000, then (A) the unpaid
principal amount of the Square Term Loan shall accrue interest for the
period commencing as of January 1, 1997 until the Square Term Loan
shall be paid in full, unless adjusted as provided below, at the
Existing Rate and (B) all Deferred Interest for the period from January
1, 1996 to December 31, 1996 shall be due and payable in full on the
last day of the month in which the determination by the Consultant is
delivered to the Bank. During 1997 and 1998, the Borrower shall
continue to pay accrued interest on the last day of each month at the
Current Pay Rate, with any Deferred Interest from and after January 1,
1997 being paid or forgiven as provided below. In the event the
reduction in the cost of operations and general and administrative
expenses of the Borrower for calendar 1997 from those for calendar 1994
as determined in Section 2.9(a) is at least the Threshold Amount plus
$200,000, then the amount of Deferred Interest for the period from
January 1, 1997 to December 31, 1998 shall be forgiven and shall no
longer be payable by the Borrower; provided, however, that if the
amount of the cost reduction is less than the Threshold Amount plus
$200,000, then (A) the unpaid principal amount of the Square Term Loan
shall accrue interest for the period commencing as of January 1, 1998
until the Square Term Loan shall be paid in full at the Existing Rate,
(B) all Deferred Interest for the period from January 1, 1997 to
December 31, 1997 shall be due and payable in full on the last day of
the month in which the determination by the Consultant is delivered to
the Bank and (C) the Borrower shall continue to pay accrued interest on
the last day of each month at the Current Pay Rate, with any Deferred
Interest from and after January 1, 1998 being payable in full on
December 31, 1998."
1.11. Subsection 2.9(c) of the Credit Agreement is hereby amended by
deleting such Subsection in its entirety and replacing it with the following:
"(c) [Intentionally omitted]"
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1.12. Subsection 2.9(e) of the Credit Agreement is hereby amended by
deleting such Subsection in its entirety and replacing it with the following:
"(e) Except as provided in the next sentence, accrued interest
on each Loan shall be payable (i) as provided in Subsections 2.9(a) and
(b) hereof and (ii) upon the payment of each Loan (but only on the
principal paid). Interest which is payable at the Post-Default Rate
shall be payable on demand of the Bank."
1.13. Subsection 2.10(a) of the Credit Agreement is hereby amended by
deleting such Subsection in its entirety and replacing it with the following:
"(a) The Credit Loans and the reimbursement obligations of the
Borrower with respect to the Letters of Credit outstanding on the
Tenth Amendment Closing Date shall be evidenced by a single promissory
note of the Borrower (as amended, amended and restated, and
supplemented from time to time, the "Credit Note") in substantially
the form of Exhibit A to Amendment No. 10, payable to the order of the
Bank in the principal amount of $12,783,452.70 and otherwise duly
completed."
1.14. Subsection 2.10(c) of the Credit Agreement is hereby amended by
deleting such Subsection in its entirety and replacing it as follows:
"(c) The Square Term Loan shall be evidenced by a single
promissory note of the Borrower (as amended, amended and restated, and
supplemented from time to time, the "Square Term Note") in
substantially the form of Exhibit B to Amendment No. 10, payable to the
order of the Bank in a principal amount of $1,688,100.00 and otherwise
duly completed."
1.15. Section 6.9 of the Credit Agreement is hereby amended by deleting
such Section in its entirety and replacing it with the following:
"Section 6.9 Financial Covenants.
Have or maintain with respect to the Borrower and its
consolidated Subsidiaries (determined on a consolidated basis):
(a) Net Worth at all times during the periods set forth below
in the amounts not less than the amount set forth below opposite each
such period:
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Period Minimum Net Worth
------ -----------------
10/1/95-12/31/95 $4,200,000
1/1/96-3/31/96 $4,000,000
4/1/96-6/30/96 $4,200,000
7/1/96-9/30/96 $4,100,000
10/1/96-12/31/96 $4,300,000
1/1/97-3/31/97 $4,100,000
4/1/97-6/30/97 $4,400,000
7/1/97-9/30/97 $4,200,000
10/1/97-12/31/97 $4,200,000
1/1/98-3/31/98 $4,500,000
4/1/98-12/31/98 $4,500,000
(b) A ratio of Total Liabilities to Net Worth at all times
during the periods set forth below at not more than the ratio set forth
below opposite each such period:
Period Minimum Ratio
------ -------------
10/1/95-12/31/95 6.75 to 1
1/1/96-3/31/96 7.00 to 1
4/1/96-6/30/96 6.75 to 1
7/1/96-9/30/96 7.00 to 1
10/1/96-12/31/96 6.50 to 1
1/1/97-3/31/97 6.75 to 1
4/1/97-6/30/97 6.50 to 1
7/1/97-9/30/97 6.75 to 1
10/1/97-12/31/97 6.40 to 1
1/1/98-3/31/98 6.60 to 1
4/1/98-12/31/98 6.30 to 1
(c) At the end of each fiscal quarter ending during the
periods set forth below, the Operating Cash Flow Ratio for the
immediately preceding four fiscal quarters at not less than the
following:
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Minimum Operating Cash Flow Ratio:
Period Ratio
------ -----
10/1/95-12/31/95 1.00 to 1
1/1/96-3/31/96 1.00 to 1
4/1/96-6/30/96 1.00 to 1
7/1/96-9/30/96 1.00 to 1
10/1/96-12/31/96 1.00 to 1
1/1/97-3/31/97 1.00 to 1
4/1/97-6/30/97 1.00 to 1
7/1/97-9/30/97 1.00 to 1
10/1/97-12/31/97 1.00 to 1
1/1/98-3/31/98 1.00 to 1
4/1/98-12/31/98 1.00 to 1
1.16. Article 6 of the Credit Agreement is hereby amended by adding a
new Section 6.14 at the end thereof as follows:
"Section 6.14 New York Mortgage.
Pay to the Bank on or before June 30, 1996 all mortgage
recording taxes which are payable upon the recording of the mortgage
covering the property owned by 00xx Xxxxxx Parking Associates located
at 000-000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx (the "47th Street
Mortgage"), and provide the Bank with a mortgagee's title insurance
policy or policies, which shall be issued to the Bank in form and by a
company or companies satisfactory to the Bank insuring that the 00xx
Xxxxxx Mortgage constitutes a valid, direct first mortgage lien, in an
aggregate principal amount of not less than $3,000,000 of the Loans
upon the fee simple title of 00xx Xxxxxx Parking Associates, and
execute and deliver, or cause to be executed and delivered, such other
agreements, instruments and documents as the Bank may reasonably
require to effect the purposes of the 00xx Xxxxxx Mortgage; provided,
however, that if an Event of Default occurs on or prior to June 30,
1996, the Bank may record the 00xx Xxxxxx Mortgage and all of the
foregoing costs and expenses (including, without limitation, mortgage
recording tax and title insurance costs) shall be immediately due and
payable by the Borrower."
1.17. Section 7.1 of the Credit Agreement is hereby amended by adding
a new subsection (f) at the end thereof as follows:
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"(f) Indebtedness of the Borrower in an aggregate principal
amount not to exceed $500,000 owing to Xxxxxx Xxxxxxx and Xxxxxxx
Xxxxxxx; provided that (i) such Indebtedness be evidenced by the
promissory notes (the "Shareholder Notes") dated the Tenth Amendment
Closing Date, copies of which have been delivered, and are in form and
substance satisfactory, to the Bank pursuant to Amendment No. 10, (ii)
such Indebtedness is subordinated to the Obligations pursuant to the
subordination agreement (the "Subordination Agreement") dated as of the
Tenth Amendment Closing Date and executed pursuant to Amendment No.
10."
1.18. Section 7.11 of the Credit Agreement is hereby amended by adding
at the end thereof the following:
"or modify, amend, supplement or terminate, or agree to
modify, amend, supplement or terminate the Shareholder Notes or the
Subordination Agreement"
1.19. The Credit Agreement is hereby amended by attaching Exhibit
2.5(e) thereto in the form of Exhibit 2.5(e) to this Amendment No. 10.
ARTICLE 2 AMENDED AND RESTATED NOTES
2.01. Simultaneously with the execution and delivery of this Amendment
No. 10, the Borrower shall execute and deliver to the Bank a Fifth Amended and
Restated Credit Note in the form of Exhibit A attached hereto in substitution
for, and in fifth restatement of, the indebtedness evidenced by the Credit Note.
Upon the execution of the Fifth Amended and Restated Credit Note and delivery
thereof by the Borrower to the Bank, the Bank shall xxxx the existing Credit
Note "Amended and Restated by Substitution of Amended and Restated Credit Note"
and shall return it to the Borrower. All interest accrued and unpaid on the
existing Credit Note through the date of execution and delivery of the Fifth
Amended and Restated Credit Note shall be evidenced by and payable under the
Fifth Amended and Restated Credit Note.
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2.02. Simultaneously with the execution and delivery of this Amendment
No. 10, the Borrower shall execute and deliver to the Bank a First Amended and
Restated Square Term Note in the form of Exhibit B attached hereto in
restatement of, the indebtedness evidenced by the Square Term Note. Upon the
execution of the First Amended and Restated Square Term Note and delivery
thereof by the Borrower to the Bank, the Bank shall xxxx the existing Square
Term Note "Amended and Restated by Substitution of Amended and Restated Square
Term Note" and shall return it to the Borrower. All interest accrued and unpaid
on the existing Square Term Note through the date of execution and delivery of
the First Amended and Restated Square Term Note shall be evidenced by and
payable under the First Amended and Restated Square Term Note.
ARTICLE 3 ACKNOWLEDGMENTS AND CONFIRMATIONS
3.01. Each of the Borrower and 808 Corp. acknowledges and confirms
that:
(a) the Liens granted pursuant to the Security Documents secure,
without limitation, the Indebtedness, liabilities and obligations of the
Borrower to the Bank under this Amendment No. 10 and the Fifth Amended and
Restated Credit Note and the First Amended and Restated Square Term Note
(collectively, the "Restated Notes"), whether or not so stated in the Security
Documents, and that the term "Obligations" or "Liabilities" as used in the
Security Documents (or any other term used therein to refer to the Indebtedness,
liabilities and obligations of the Borrower to the Bank) includes, without
limitation, Indebtedness, liabilities and obligations to the Bank under the
Credit Agreement, as amended by this Amendment No. 10, and the Restated Notes;
(b) all references in the Credit Agreement, the Security Documents, the
other Loan Documents and in any other agreements, instruments and documents
executed and delivered pursuant to any of the foregoing to the "Credit
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Agreement" and, in the case of the Credit Agreement to "this Agreement", shall
be deemed to refer to the Credit Agreement, as amended hereby; and
(c) all references in the Credit Agreement, the Security Documents, the
other Loan Documents and in any other agreement, instrument or document executed
and delivered pursuant to any of the foregoing to the "Notes" shall be deemed to
refer to the Restated Notes.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
4.01. The Borrower and 808 Corp. each represents and warrants to the
Bank that:
(a) each of the representations and warranties set forth in Article 3
of the Credit Agreement is true in all respects as of the date hereof and with
the same effect as though made on the date hereof, and is hereby incorporated
herein in full by reference as if fully restated herein in
its entirety, except for changes in the ordinary course of business, which are
not, either singly or in the aggregate, materially adverse to the business or
financial condition of the Borrower and its Subsidiaries taken as a whole;
(b) it has the power and authority to execute, deliver and perform
this Amendment No. 10, the Restated Notes and the other documents and
instruments executed pursuant hereto (collectively, the "Amendment Documents");
(c) it has taken all necessary action, corporate or otherwise, to
authorize the execution, delivery and performance of the Amendment Documents;
and
(d) the Amendment Documents constitute the valid and legally binding
obligations of the Borrower and 808 Corp. to the extent a party thereto, each
enforceable in accordance with their respective terms.
-15-
ARTICLE 5 CONDITIONS
5.01. The effectiveness of the amendments contained in Article 1 of
this Amendment No. 10 shall be subject to the satisfaction of the following
conditions:
(a) The Bank shall have received: (i) the duly executed and delivered
Restated Notes, (ii) a legal opinion from counsel to the Borrower, 808 Corp. and
the Subsidiary Guaranters in form and substance satisfactory to the Bank, (iii)
a Subordination Agreement in the form of Exhibit C attached hereto duly executed
and delivered by all parties thereto, (iv) copies of promissory notes executed
by and delivered by the Borrower in favor of Xxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx
in form and substance satisfactory to the Bank, (v) mortgage modifications duly
executed and delivered by the Borrower and the Subsidiaries of the Borrower with
respect to each existing mortgage which secures the Obligations and title
insurance endorsements with respect thereto as requested by the Bank, all in
form and substance satisfactory to the Bank, and (vi) a duly executed mortgage
in form and substance satisfactory to the Bank with respect to the property
owned by 00xx Xxxxxx Parking Associates and located at 000-000 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx;
(b) The Borrower shall have paid to the Bank past due interest in the
amount of $209,400.98; and
(c) The Borrower shall have paid to the Bank all legal fees and
disbursements incurred by the Bank in connection with the preparation,
negotiation and execution of this Amendment No. 10 and any documents,
instruments and agreements required hereby.
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ARTICLE 6 MISCELLANEOUS; NO WAIVER
6.01. The provisions of Article 10 of the Credit Agreement shall
govern this Amendment No. 10 with respect to the subject matter set forth
therein. THIS AMENDMENT NO. 10, THE RESTATED NOTES, THE SECURITY DOCUMENTS, THE
CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS ACKNOWLEDGED, AMENDED AND
CONFIRMED HEREBY, AND ALL OTHER DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED
IN CONNECTION HEREWITH AND THEREWITH, SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
6.02. Whether or not the transactions contemplated by this Amendment
No. 10 are consummated, the Borrower will pay all fees and out-of-pocket
expenses of the Bank incurred in connection with such transactions, including
all reasonable fees and disbursements of legal counsel to the Bank.
6.03. Except as specifically amended herein, the Credit Agreement and
each of the other Loan Documents shall remain in full force and effect in
accordance with their respective terms.
6.04. This Amendment No. 10 may be signed in any number of
counterparts which, when taken together, shall constitute one and the same
document.
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IN WITNESS WHEREOF, the undersigned has executed this Amendment No. 10
on the date first above written.
NATWEST BANK N.A.
By:___________________________
Title:________________________
SQUARE INDUSTRIES, INC.
By:___________________________
Title:________________________
808 SQUARE CORP.
By:___________________________
Title:________________________
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The undersigned Subsidiary Guarantors of all or a portion of the
obligation under, arising out of, or relating to the Credit Agreement and the
other Loan Documents, including without limitation, the Notes, hereby consent to
the execution and delivery of this Amendment No. 10 and confirm and agree that
our respective Guarantees shall remain in full force and effect and shall not be
released or otherwise modified.
Dated: October 31, 1995
306 West 44 Corp.
Park/Fly, Inc.
00xx Xxxxxx Parking, Inc.
Square Philadelphia Corp.
Square Juniper Corp.
810 Square Corp.
6&30 Garage Corp.
Square Brighton Corp., Inc.
Second Avenue Commercial, Inc.
Square 43rd Corp.
Public Square Parking Corp.
Xxxxxx Xxxxx Corp.
000 Xxxxx Xxxxxx Corp.
808 Square Corp.
Gailgal Holding Corp.
Reboy Development Corp.
Marbern Industries, Inc.
S.P. Parking, Inc.
Square Plus Operating of New Jersey, Inc.
Elzab Development Corp.
Square Plus Operating Corp.
Square 30th St. Corp.
400 Square Garage Corp.
000 Xx. Xxxxxxx Corp.
000 X. 00xx Xx. Xxxxxx Corp.
12th & Xxxxxx Parking Corp.
[signatures continue on following page]
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[signatures continued from previous page]
Square Xxxxxx Corp.
Square Liberty Corp.
714 Smithfield Corp.
Pennsylvania Square Corp.
Square Alpha Corp.
Square Xxxxxx Corp.
Broad Newark Corporation
125 Xxxxxx Corp.
Broad Newark Urban Renewal Corporation
By:___________________________
Title:_________________________
00xx Xxxxxx Parking Associates
By: 00xx Xxxxxx Xxxxxxx, Xxx.,
General Partner
By:___________________________
Title:_________________________
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The undersigned hereby consent to the execution and delivery of this
Amendment No. 10 and confirm and agree that our respective Pledge Agreements
shall remain in full force and effect as modified hereby.
Dated: October 31, 1995
SQUARE INDUSTRIES, INC.
By:___________________________
Title:_________________________
SQUARE PLUS OPERATING CORP.
By:___________________________
Title:_________________________
SQUARE PLUS OPERATING OF
NEW JERSEY, INC.
By:___________________________
Title:_________________________
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EXHIBIT 2.5(e)
Financial Projections
22
Exhibit A to
Amendment No. 10
FIFTH AMENDED
AND
RESTATED CREDIT NOTE
$12,783,452.70 As of October 31, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, SQUARE INDUSTRIES, INC., a New York corporation
(the "Borrower"), hereby promises to pay to the order of NATWEST BANK N.A. (the
"Bank") on such dates as provided in the Credit Agreement referred to below at
the Applicable Lending Office of the Bank, the principal sum of Twelve Million
Seven Hundred Eighty-Three Thousand Four Hundred Fifty-Two Dollars and Seventy
Cents ($12,783,452.70) (or such lesser amount as shall equal the aggregate
principal amount of the Credit Loans and reimbursement obligations with respect
to Letters of Credit outstanding from time to time made by the Bank under the
Credit Agreement referred to below), in lawful money of the United States of
America and in immediately available funds, and to pay interest thereon in like
money and funds, for the period commencing on the date of such Credit Loan or
reimbursement obligations until such Credit Loan or reimbursement obligations is
paid in full, at the rates per annum and on the dates hereinafter provided.
This Note is the Credit Note referred to in the Credit Agreement,
dated July 5, 1988 (as amended from time to time the "Credit Agreement"),
between the Borrower, 808 Square Corp. and the Bank and evidences Credit Loans
made by the Bank thereunder. This Note is entitled to certain security as
further described in the Credit Agreement. Capitalized terms used in this Note
have the respective meanings assigned to them in the Credit Agreement.
This Note shall bear interest from the date of each Credit Loan made
by the Bank until such Credit Loan shall be paid in full, at a rate per annum
(computed on the basis of a year of 360 days and actual days elapsed, including
the first day but excluding the last in the period for which payable) as
provided in the Credit Agreement. Notwithstanding the foregoing, the Borrower
shall pay interest on the unpaid principal balance of any Credit Loan and any
unpaid reimbursement obligation with respect to any Letter of Credit, and on any
interest payable hereunder (to the extent permitted by law) which shall not be
paid in full when due (whether at stated maturity, by acceleration or
otherwise), for the period commencing on the due date thereof until the payment
in full at the applicable Post-Default Rate. Except as provided in the next
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sentence, accrued interest on the principal amount of this Note shall be payable
as provided in the Credit Agreement. Interest payable at the Post-Default Rate
shall be payable on demand of the Bank.
Anything in this Note or the Credit Agreement to the contrary
notwithstanding, the obligation of the Borrower to make payments of interest
shall be subject to the limitation that payments of interest shall not be
required to be made to the Bank to the extent that the Bank's receipt thereof
would not be permissible under the law or laws applicable to the Bank limiting
the rates of interest which may be changed or collected by the Bank. Any such
payments of interest which are not made as a result of the limitations referred
to in the preceding sentence shall be made by the Borrower on the earliest
Payment Date or Dates on which the receipt thereof would be permissible under
the laws applicable to the Bank limiting the rates of interest which may be
charged or collected by the Bank. Such deferred interest shall not bear
interest.
The Borrower hereby expressly authorizes the Bank, at the option of
the Bank, to record on the schedule annexed to this Note (or on a supplemental
schedule thereto) the principal amount and date of each Credit Loan made by the
Bank under the Credit Agreement and the amount of each payment and prepayment of
principal of each such Credit Loan received by the Bank, provided however, that
failure to make any such notation shall not affect the rights of the Bank or the
obligations of the Borrower hereunder or under the Credit Agreement in respect
of such Credit Loans. The amount of each Credit Loan made by the Bank under the
Credit Agreement and the amount of each payment and prepayment of principal of
each such Credit Loan received by the Bank shall be determined by the notations
on the schedule annexed to this Note or by the ledgers and records maintained by
the Bank.
Upon the occurrence and continuance of an Event of Default, the entire
unpaid balance of the principal hereof an accrued interest hereon shall
immediately become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
This Note has been executed and delivered in New York, New York and
shall be governed by, and construed and interpreted in accordance with, the laws
of the State of New York.
SQUARE INDUSTRIES, INC.
By:__________________________
Title:_________________________
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SCHEDULE TO FIFTH AMENDED AND RESTATED
CREDIT NOTE MADE BY SQUARE INDUSTRIES, INC.
AND PAYABLE TO THE ORDER OF
NATWEST BANK N.A.
Date
of Principal Date of Principal
Notation Amount Principal Amount Paid Balance
Loan of Loan Payment or Prepaid Outstanding Made By
---- ------- ------- ---------- ----------- -------
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Exhibit B to
Amendment No. 10
FIRST AMENDED
AND
RESTATED SQUARE TERM NOTE
$1,688,100.00 As of October 31, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, SQUARE INDUSTRIES, INC., a New York corporation
(the "Borrower"), hereby promises to pay to the order of NATWEST BANK N.A. (the
"Bank") on such dates as provided in the Credit Agreement referred to below at
the Applicable Lending Office of the Bank, the principal sum of One Million Six
Hundred Eighty- Eight Thousand One Hundred Dollars ($1,688,100.00), in lawful
money of the United States of America and in immediately available funds, and to
pay interest thereon in like money and funds, for the period commencing on the
date of such Square Term Loan until such Square Term Loan is paid in full, at
the rates per annum and on the dates hereinafter provided.
This Note is the Square Term Note referred to in the Credit Agreement,
dated July 5, 1988 (as amended from time to time the "Credit Agreement"),
between the Borrower, 808 Square Corp. and the Bank and evidences Square Term
Loans made by the Bank thereunder. This Note is entitled to certain security as
further described in the Credit Agreement. Capitalized terms used in this Note
have the respective meanings assigned to them in the Credit Agreement.
This Note shall bear interest from the date hereof until such Square
Term Loan shall be paid in full, at a rate per annum (computed on the basis of a
year of 360 days and actual days elapsed, including the first day but excluding
the last in the period for which payable) as provided in the Credit Agreement.
Notwithstanding the foregoing, the Borrower shall pay interest on the unpaid
principal balance of the Square Term Loan and on any interest payable hereunder
(to the extent permitted by law) which shall not be paid in full when due
(whether at stated maturity, by acceleration or otherwise) for the period
commencing on the due date thereof until the payment in full at the applicable
Post-Default Rate. Except as provided in the next sentence, accrued interest on
the principal amount of this Note shall be payable as provided in the Credit
Agreement. Interest payable at the Post-Default Rate shall be payable on demand
of the Bank.
-26-
Anything in this Note or the Credit Agreement to the contrary
notwithstanding, the obligation of the Borrower to make payments of interest
shall be subject to the limitation that payments of interest shall not be
required to be made to the Bank to the extent that the Bank's receipt thereof
would not be permissible under the law or laws applicable to the Bank limiting
the rates of interest which may be changed or collected by the Bank. Any such
payments of interest which are not made as a result of the limitations referred
to in the preceding sentence shall be made by the Borrower on the earliest
Payment Date or Dates on which the receipt thereof would be permissible under
the laws applicable to the Bank limiting the rates of interest which may be
charged or collected by the Bank. Such deferred interest shall not bear
interest.
The Borrower hereby expressly authorizes the Bank, at the option of
the Bank, to record on the schedule annexed to this Note (or on a supplemental
schedule thereto) the amount of each payment and prepayment of principal of the
Square Term Loan received by the Bank, provided however, that failure to make
any such notation shall not affect the rights of the Bank or the obligations of
the Borrower hereunder or under the Credit Agreement in respect of the Square
Term Loan. The amount of the Square Term Loan made by the Bank under the Credit
Agreement and the amount of each payment of principal of the Square Term Loan
received by the Bank shall be determined by the notations on the schedule
annexed to this Note or by the ledgers and records maintained by the Bank.
Upon the occurrence and continuance of an Event of Default, the entire
unpaid balance of the principal hereof an accrued interest hereon shall
immediately become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
This Note has been executed and delivered in New York, New York and
shall be governed by, and construed and interpreted in accordance with, the laws
of the State of New York.
SQUARE INDUSTRIES, INC.
By:__________________________
Title:_________________________
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SCHEDULE TO FIRST AMENDED AND RESTATED
SQUARE TERM NOTE MADE BY SQUARE INDUSTRIES, INC.
AND PAYABLE TO THE ORDER OF
NATWEST BANK N.A.
Date
of Principal Date of Principal
Notation Amount Principal Amount Paid Balance
Loan of Loan Payment or Prepaid Outstanding Made By
---- ------- ------- ---------- ----------- -------
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Exhibit C to
Amendment No. 10
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is made as of October
31, 1995 by and among Square Industries, Inc., a New York corporation (the
"Borrower"), 808 Square Corp., a New York corporation ("808 Corp."), NatWest
Bank N.A. (the "Bank") and Xxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx (collectively, the
"Creditors").
RECITALS:
WHEREAS, the Borrower, 808 Corp. and the Bank are parties to that
certain Credit Agreement dated as of July 5, 1998, as amended (the "Credit
Agreement") pursuant to which the Bank has made certain financial accommodations
to the Borrower and 808 Corp. on the terms and conditions set forth therein;
WHEREAS, as a condition to entering into Amendment No. 10 to Credit
Agreement dated as of the date hereof, the Bank has required that the Creditors
enter into this Agreement; and
WHEREAS, the Creditors are entering into this Agreement to induce the
Bank to enter into Amendment No. 10 to Credit Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. Each capitalized term used herein and not otherwise
defined herein shall have the meaning ascribed to it by the Senior Credit
Agreement. When used herein, the following terms shall have the meanings
indicated:
"Post-Petition Interest" shall mean interest accruing in
respect of Senior Indebtedness after the commencement of any
bankruptcy, insolvency, receivership or similar proceedings by or
against the Borrower at the rate applicable to such Senior Indebtedness
pursuant to the Senior Credit Agreement, whether or not such interest
is allowed as a claim enforceable against the Borrower in any such
proceeding and any other interest that would have accrued but for the
commencement of such proceedings.
"Senior Credit Agreement" means the Credit Agreement, as from
time to time amended, supplemented restated, modified, refunded,
refinanced or replaced.
"Senior Indebtedness" shall mean the Obligations and all
indebtedness, obligations and liabilities of every kind and nature now
existing or hereafter arising, of the Borrower and/or 808 Corp. under,
in connection with, or evidenced by, the Senior Credit Agreement
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and the other Loan Documents, including, without limitation, all
principal, premium (if any), interest (including Post-Petition
Interest), fees, costs, expenses, indemnities and liabilities provided
for therein, and any renewals, extensions, modifications and refundings
of any of the foregoing; provided, however, that the aggregate amount
of Senior Indebtedness for purposes of this Agreement shall not exceed
$16,000,000.
"Subordinated Indebtedness" means all principal, interest,
fees and all other amounts from time to time owing by the Borrower to
one or more of the Creditors pursuant to the promissory notes dated as
of the date hereof and executed by the Borrower in favor of the
Creditors, and any renewals, extensions, modifications and refundings
of any of the foregoing (the "Subordinated Notes"). Subordinated
Indebtedness shall also include any and all principal, interest, fees
and all other amounts owing with respect to any loans advanced by one
or more of the Creditors to the Borrower or any of its subsidiaries
after the date hereof without the prior written consent of the Bank and
for which a separate subordination agreement in the form of this
Agreement has not been executed and delivered by the Creditors and the
Borrower.
References to a "holder of Subordinated Indebtedness" shall be deemed references
to the Creditors and any assignee or successor of any of them with respect to
Subordinated Indebtedness.
2. Subordination Provisions.
(a) Subordination. The Borrower, for itself and its
successors, covenants and agrees, and each holder of the Subordinated
Indebtedness by such holder's execution hereof or acceptance of any
Subordinated Indebtedness, likewise covenants and agrees, that the
payment of the Subordinated Indebtedness is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, in
right of payment to the prior payment in full in cash of all Senior
Indebtedness. For all purposes hereof, a payment or distribution on
account of the Subordinated Indebtedness may consist of cash, property
or securities, by set-off or otherwise, and a payment or distribution
on account of the Subordinated Indebtedness shall include, without
limitation, any redemption, purchase or other acquisition of the
Subordinated Indebtedness.
(b) Distribution on Dissolution, Liquidation and
Reorganization. Upon any distribution of assets of the Borrower, upon
any foreclosure, dissolution, winding up or liquidation of the
Borrower, whether voluntary or involuntary, or upon any reorganization,
readjustment, arrangement or similar proceeding relating to the
Borrower, or any of its property, and whether in bankruptcy, insolvency
or receivership proceedings or otherwise:
(i) the holders of all Senior Indebtedness
shall be entitled to receive payment in full in cash
of the Senior Indebtedness before the holder or
holders of the Subordinated Indebtedness are entitled
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to receive any payment with respect to the
Subordinated Indebtedness; and
(ii) any payment or distribution of assets
of the Borrower of any kind or character, whether in
cash, property or securities, to which the holder or
holders of the Subordinated Indebtedness would be
entitled except for the provisions hereof shall be
paid by the liquidating trustee or agent or other
person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating
trustee or otherwise, directly to the holders of
Senior Indebtedness (or to the agent for such
holders) to the extent necessary to make payment in
full of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or
distribution to the holders of such Senior
Indebtedness.
If any holder of Subordinated Indebtedness does not
file a proper claim or proof of debt in the form required in any
proceeding referred to above prior to thirty (30) days before the
expiration of the time to file such claim in such proceeding, then the
holder of any such Senior Indebtedness is hereby irrevocably appointed
the agent and attorney-in-fact (in its own name or in the name of any
holder of any Subordinated Indebtedness or otherwise), but shall have
no obligation, to execute, verify, deliver and file any such proofs of
claim, consents, assignments or other instruments for or on behalf of
such holder. Each holder of the Subordinated Indebtedness agrees that
while it shall retain the right to vote its claim and otherwise act in
any bankruptcy, insolvency or similar proceedings related to the
Borrower (including, without limitation, the right to vote to accept or
reject any plan of partial or complete liquidation, reorganization,
arrangement, composition or extension), such holder will not take any
acts or vote in any way so as to contest the enforceability of the
subordination provisions set forth herein.
(c) Default Under Senior Indebtedness. No payment or
distribution of any kind or character shall be made by the Borrower on
account of the Subordinated Indebtedness if, at the time of such
payment or distribution, there shall exist a default in the payment of
the principal of, premium, if any, or interest on, or any other amount
owing with respect to Senior Indebtedness or a Default or Event of
Default has occurred and is continuing. The Borrower may resume
payments in respect of the Subordinated Indebtedness (including any
missed payments) when such Default or Event of Default shall have been
cured or waived in writing by the applicable entity in accordance with
the terms of the Senior Credit Agreement, or all of the Senior
Indebtedness shall have been paid in full in cash.
(d) Payment Remittance. In the event that,
notwithstanding the foregoing, any payment or distribution of assets of
the Borrower, or any payment by or on behalf of, of any kind or
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character, whether in cash, property or securities, prohibited by any
of the foregoing paragraphs 2(b) or 2(c) shall be paid to or received
by any holder of Subordinated Indebtedness, then and in such event such
payment or distribution shall be held in trust for the benefit of the
holders of Senior Indebtedness and paid over and delivered forthwith to
the holders of Senior Indebtedness (or to the agent for such holders),
for application to the payment of all Senior Indebtedness remaining
unpaid until all such Senior Indebtedness shall have been paid in full
in cash.
(e) Subrogation. If any amount payable in respect of
the Subordinated Indebtedness is paid over to the holders of Senior
Indebtedness, then subject to the payment in full in cash of all Senior
Indebtedness, the holder or holders of the Subordinated Indebtedness
shall be subrogated to the rights of the holders of Senior Indebtedness
to receive payments or distributions of cash, property or securities of
the Borrower applicable to Senior Indebtedness until the principal of
and interest on the Subordinated Indebtedness shall be paid in full in
cash and, for the purposes of such subrogation, no such payments or
distributions to the holders of Senior Indebtedness of cash, property
or securities otherwise distributable to the holder or holders of the
Subordinated Indebtedness shall, as between the Borrower, its creditors
other than the holders of Senior Indebtedness, and the holder or
holders of the Subordinated Indebtedness, be deemed to be a payment by
the Borrower to or on account of Senior Indebtedness.
(f) Standstill. During any period in which a payment
or distribution of assets of the Borrower is prohibited by paragraph
2(b) or 2(c) above, no holder of any Subordinated Indebtedness shall
take any action to accelerate, collect or otherwise exercise any right
or remedy in respect of such Subordinated Indebtedness other than the
filing of such documents as may be necessary to preserve the rights of
such holder relative to such Subordinated Indebtedness in any
proceeding referenced in paragraph 2(b) above.
(g) Payments Permitted. Nothing contained herein
shall affect the obligation of the Borrower to make, or prevent the
Borrower from making, at any time except as provided in paragraph 2(b)
or 2(c) above, payments of principal of or interest on the Subordinated
Indebtedness, in each case as required by the terms of the Subordinated
Notes as in effect on the date hereof and subject also to such
limitations as to the amount, timing or source of any such payments
imposed by the Senior Credit Agreement.
(h) Reliance re Identification of Persons. Upon any
distribution of assets of the Borrower or payments by or on behalf of
the Borrower referred to herein, the holders of the Subordinated
Indebtedness shall be entitled to rely upon any order or decree of a
court of competent jurisdiction in which any proceedings of the nature
referred to in paragraph 2(a) hereof are pending and upon a certificate
of the debtor in possession, bankruptcy trustee, liquidating trustee or
agent or other Person making any distribution to the holders of the
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Subordinated Indebtedness for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Borrower, the amount thereof
or payable thereon, and all other facts pertinent thereto.
(i) Waiver and Consent. Each holder of the
Subordinated Indebtedness waives any and all notice of the acceptance
of these provisions or of the creation, renewal, extension or accrual,
now or at any time in the future, of any Senior Indebtedness or of the
reliance of the holders of the Senior Indebtedness on these provisions.
Each holder of the Subordinated Indebtedness acknowledges and agrees
that (i) the subordination provisions set forth herein shall be
specifically enforceable against such Persons by the holders of the
Senior Indebtedness, and (ii) without notice to or further assent by
it, the Senior Indebtedness may from time to time, in whole or in part,
be renewed, extended, increased, refunded or released by the holders
thereof, as they may deem advisable, the credit agreements and any
other instruments or documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated.
(j) Subordination Unaffected by Certain Events. The
rights set forth herein of the holders of the Senior Indebtedness as
against each holder of the Subordinated Indebtedness shall remain in
full force and effect without regard to, and shall not be impaired or
affected by:
(i) any act or failure to act on the part of the
Borrower or 808 Corp.;
(ii) any extension or indulgence in respect of any
payment or prepayment of the Senior Indebtedness or any part thereof or
in respect of any other amount payable to any holder of the Senior
Indebtedness; or
(iii) any amendment, modification or waiver of, or
addition or supplement to, or deletion for, or compromise, release,
consent or other action in respect of, any of the terms of any Senior
Indebtedness or any other agreement which may be made relating to any
Senior Indebtedness; or
(iv) any exercise or nonexercise by any holder of
Senior Indebtedness of any right, power, privilege or remedy under or
in respect of such Senior Indebtedness or the Subordinated Indebtedness
or any waiver of any such right, power, privilege or remedy or any
default in respect of such Senior Indebtedness or the Subordinated
Indebtedness, or any receipt by any holder of Senior Indebtedness of
any security, or any failure by such holder to perfect a security
interest in, or any exchange, sale, release or surrender by such holder
of, any security for the payment of such Senior Indebtedness; or
(v) any merger or consolidation of the Borrower or
any of its Subsidiaries into or with any of its Subsidiaries or into or
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with any other Person, or any sale, lease or transfer of any or all of
the assets of the Borrower or any of its Subsidiaries to any other
Person; or
(vi) the absence of any notice to, or knowledge by,
any holder of the Subordinated Indebtedness of the existence
or occurrence of any of the matters or events set forth in the
foregoing clauses (i) through (v).
(k) Reinstatement of Subordination. The obligations
of each holder of the Subordinated Indebtedness under the subordination
provisions set forth herein shall continue to be effective, or be
reinstated, as the case may be, as to any payment in respect of any
Senior Indebtedness that is rescinded or must otherwise be returned by
the holder of such Senior Indebtedness upon the occurrence or as a
result of any proceeding, all as though such payment had not been made.
(l) Legend. The Creditors shall cause each document
or instrument creating or evidencing Subordinated Indebtedness to bear
the following legend:
"The obligations of the Borrower hereunder are
subordinated to certain Senior Indebtedness to the extent and
on the terms set forth in that certain Subordination Agreement
dated as of October 31, 1995 by and among Square Industries,
Inc., 808 Square Corp., NatWest Bank N.A., Xxxxxx Xxxxxxx and
Xxxxxxx Xxxxxxx, as such agreement is from time to time
amended."
3. Amendment of Documents. Prior to the payment in full in cash of the
Senior Indebtedness and notwithstanding anything to the contrary in the
Subordinated Notes, the Borrower and the Creditors shall not amend, modify or
supplement the Subordinated Notes in violation of Section 7.11 of the Credit
Agreement or of any successor provision in any Senior Credit Agreement.
4. Sale or Transfer. In the event of any proposed sale, assignment,
disposition or other transfer of all or any portion of the Subordinated
Indebtedness, the holder thereof, prior to the consummation of any such action,
shall cause the transferee thereof to execute and deliver to the holders of
Senior Indebtedness (or the agent for such holders) an agreement substantially
identical to this Agreement, providing for the continued subordination, to the
extent set forth herein, of the portion of the Subordinated Indebtedness so
transferred to the Senior Indebtedness, as provided herein and for the continued
effectiveness of all of the rights of the holders of the Senior Indebtedness
with respect to such transferred Subordinated Indebtedness. Notwithstanding the
failure to execute and/or deliver any such agreement, the subordination of the
Subordinated Indebtedness to the Senior Indebtedness effected hereby shall
survive any sale, assignment, disposition or other transfer of all or any
portion of the Subordinated Indebtedness.
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5. Miscellaneous. (a) Subject to paragraph 2(h) above, the provisions
of this Agreement are solely for the purpose of defining the relative rights of
the holders of Subordinated Indebtedness and Creditors on the one hand and the
holders of Senior Indebtedness on the other, and shall not be deemed to create
any rights or priorities in any other Person, including without limitation, the
Borrower.
(b) This Agreement may be amended only by a written instrument
signed by the Bank and the Creditors. No waiver of any term or provision of this
Agreement shall be effective unless it is in writing and signed by the party
against whom such waiver is sought to be enforced. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. This Agreement may be signed in one or more counterparts
which, when taken together, shall constitute one and the same document.
(c) Any notices provided for hereunder shall be given in accordance
with Section 9.9 of the Credit Agreement, and, in the case of the Creditors,
shall be addressed to such Creditors in care of the Borrower in accordance with
Section 9.9 of the Credit Agreement.
(d) If any provision of this Agreement shall be prohibited by or be
invalid under applicable law, such provision shall be deemed ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
(e) The paragraph headings used in this Agreement are for
convenience only and shall not effect the interpretation of any of the
provisions hereof.
(f) THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICT OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW
YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
SQUARE INDUSTRIES, INC.
By: ________________________
Title: _____________________
808 SQUARE CORP.
By: ________________________
Title: _____________________
NATWEST BANK N.A.
By: ________________________
Title: _____________________
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XXXXXX XXXXXXX
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XXXXXXX XXXXXXX
