PARTICIPATION AGREEMENT
This Participation Agreement, dated October 3, 2001 (this "AGREEMENT"), is
among the lenders party to the Financing Agreement referred to below
(collectively, the "LENDERS" and each, a "LENDER"), The CIT Group/Business
Credit, Inc., a New York corporation, as agent for the Lenders (in such
capacity, the "AGENT"), and each of the persons listed on the attached SCHEDULE
1 (collectively, the "PARTICIPANTS" and each, a "PARTICIPANT").
PRELIMINARY STATEMENTS:
A. The Lenders and the Agent are party to the Financing Agreement dated as
of June 28, 2001 (as amended, modified or supplemented from time to time, the
"FINANCING AGREEMENT"), with Xxxxxxxxx Xxxxx Corporation, an Illinois
corporation ("XXXXXXXXX"), and Sweet Factory, Inc., a Delaware corporation
("SWEET FACTORY" and, together with Xxxxxxxxx, the "COMPANIES" and each, a
"COMPANY").
B. Simultaneously with the execution and delivery of this Agreement, the
Lenders, the Agent and the Companies are amending the Financing Agreement to,
among other things, permit the Companies to borrow revolving loans under the
Financing Agreement in excess of the borrowing base established by the Financing
Agreement (such excess, the "OVERADVANCE"), which Overadvance may not exceed
$5,000,000. It is a condition precedent to the amendment to the Financing
Agreement that the Participants agree to, subject to the terms of this
Agreement, purchase a participation in the Financing Agreement for up to
$2,500,000, as set forth in this Agreement.
AGREEMENT:
In consideration of the foregoing and the mutual agreements contained in
this Agreement, the receipt and sufficiency of which are acknowledged, the
Lenders, the Agent and the Participants agree as follows:
1. DEFINITIONS. Capitalized terms used in this Agreement and not otherwise
defined have the meanings set forth for such terms in the Financing Agreement.
When used in this Agreement, the following terms have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"COLLATERAL" means all property and interest in property now owed or
hereafter acquired by any Company or any other Person in or upon which a
Lien has been granted under any of the Loan Documents.
"LENDER PARTIES" means the Lenders and, if a Lender has sold, assigned
or participated any of its interest in the Revolving Loans, the Letters of
Credit or its commitment with respect thereto, such Lender and any such
assignees or participants.
"OUTSTANDING CREDIT EXPOSURE" means, at any time, the sum of (i) the
aggregate principal amount of all Revolving Loans outstanding at such time,
plus (ii) the aggregate amount available for drawing under all Letters of
Credit outstanding at such time, plus
(iii) the aggregate unpaid amount of all reimbursement obligations of
the Companies with respect to Letters of Credit at such time.
"PARTICIPATION EFFECTIVE DATE" means the date upon which (i) the
Participation Purchase Date has occurred and (ii) the Participants have
paid to the Agent the Purchase Price in immediately available funds.
"PARTICIPATION PERCENTAGE" means, with respect to any Participant, the
percentage set forth for such Participant on the attached SCHEDULE 1.
"PARTICIPATION PURCHASE DATE" means, at any time prior to the
Participation Termination Date, the earlier of (i) December 28, 2001, and
(ii) the date occurring five Business Days after the Agent has notified the
Participants to pay the Purchase Price to the Agent after the date on which
the obligation of the Agent and the Lenders to make Revolving Loans and
assist the Companies in opening Letters of Credit have ceased and the
Obligations have become due and payable (either automatically or through
declaration) under Section 10.2 of the Financing Agreement.
"PARTICIPATION TERMINATION DATE" means the date occurring prior to the
Participation Purchase Date on which the Overadvance has been permanently
reduced in full and the Agent and the Lenders have no further obligation to
make the Overadvance (or any part thereof) available to the Companies.
"PURCHASE PRICE" means an amount equal to the lesser of (i) $2,500,000
and (ii) 50% of the amount of the Overadvance on the Participation Purchase
Date.
2. PURCHASE OF PARTICIPATION; REPURCHASE BY LENDERS.
(A) On the Participation Purchase Date, the Participants agree, severally
but not jointly, that they will purchase from the Lenders, and the Lenders will
sell and transfer to the Participants, a last-out participation interest (the
"PARTICIPATION") in the Outstanding Credit Exposure under the Financing
Agreement on the Participation Purchase Date. On the Participation Purchase
Date, each Participant agrees, severally but not jointly, to unconditionally and
irrevocably pay to the Agent in immediately available funds an amount equal to
the product of (i) the Purchase Price and (ii) such Participant's Participation
Percentage. The Participation is a last-out interest in all amounts which are
received by the Agent or the Lenders on account of the Outstanding Credit
Exposure (collectively, the "PAYMENTS"), whether from (a) the Companies, (b) the
Collateral or (c) any other source. The obligation of the Participants to
purchase the Participation and to pay the Purchase Price to the Agent terminates
on the Participation Termination Date. If there is no portion of the Overadvance
outstanding on the Participation Purchase Date, the Participants shall have no
obligation to purchase any Participation under this Agreement.
(B) The transaction between the Participants and the Lenders is that of a
purchase by the Participants and the sale by the Lenders of a property interest
in the Outstanding Credit Exposure under the Financing Agreement. Such
transaction creates only a relationship of purchaser and seller between the
Participants and the Lenders and does not create a creditor-debtor relationship
between the Participants and the Lenders or any relationship between the
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Participants and the Companies. Accordingly, the Financing Agreement and all of
the Participants' rights with respect to the Outstanding Credit Exposure shall
be held and exercised by the Agent and the Lenders subject to the terms of this
Agreement. The Agent and the Lenders shall owe the Participants no duty except
as specifically set forth in this Agreement.
(C) On January 5, 2002 (or as soon thereafter as the following conditions
all have been satisfied), the Lenders agree that they will repurchase from the
Participants, and the Participants will resell to the Lenders, the Participation
so long as (i) the Participation Purchase Date has occurred and the Participants
have purchased the Participation as set forth in SECTION 2(A), (ii) no Default
or Event of Default has occurred and is continuing, (iii) the Overadvance has
been permanently reduced in full and the Agent and the Lenders have no further
obligation to make the Overadvance (or any part thereof) available to the
Companies and (iv) the Companies have made the interest payment due with respect
to the Notes on or about January 1, 2002. On January 5, 2002 (if the above
conditions have been satisfied) (or as soon thereafter as the foregoing
conditions all have been satisfied), the Lenders agree to unconditionally and
irrevocably pay the Purchase Price to the Participants in immediately available
funds.
(D) The Agent shall remit to the Participants immediately upon receipt, the
participation fee paid by the Companies to the Agent for the benefit of the
Participants under Section 2(a) of the Overadvance Agreement and First Amendment
to Financing Agreement dated as of the date hereof, among the Agent, the Lenders
and the Companies. Payments to be made to the Participants under this SECTION
2(D) shall be made in accordance with SECTION 26
(E) Except as expressly set forth in this Agreement, no Participant shall
have any further obligation whatsoever with respect to the Financing Agreement,
the Loan Documents or the Outstanding Credit Exposure.
3. INTEREST ON THE PARTICIPATION. On and after the Participation Effective
Date, interest will accrue on that portion of the Participation that is
allocable to the unpaid principal amount of the Revolving Loans at the rates set
forth in the Financing Agreement and be payable in accordance with the
provisions of SECTION 5. All computations of interest shall be made by the Agent
on the basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable. Each determination by the Agent of the interest
amount shall be conclusive and binding for all purposes, absent manifest error
or bad faith. The Agent and the Lenders shall only be obligated to pay interest
to the Participants out of that portion of any Payments received by the Agent or
the Lenders that is available for allocation to the payment of interest on the
Revolving Loans in accordance with the provisions of SECTION 5. Each Participant
agrees that such Participant does not own and shall not have any claim to (i)
any interest that accrues prior to the Participation Effective Date or (ii) any
closing fees, administration fees, non-use fees, letter of credit fees,
prepayment fees, early termination charges, liquidated damage claims or other
fees, charges or expenses at any time owing under the Financing Agreement
4. REPAYMENT OF PRINCIPAL TO PARTICIPANTS. No Participant shall be entitled
to any Payments, or any portion thereof, received by the Agent or any Lender
Party which are allocable to the payment of principal of the Outstanding Credit
Exposure until the Lender Parties' interests in the Outstanding Credit Exposure
have been repaid in full in cash. The Agent and the Lenders
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shall only be obligated to pay such principal payments to the Participants out
of that portion of any Payments received by the Agent or any Lender Party which
is available for allocation to the payment of principal on the Outstanding
Credit Exposure in accordance with the provisions of SECTION 5. Each Participant
agrees that such Participant does not own and shall not have any claim to any
principal payment made prior to the Participation Effective Date.
5. APPLICATION OF PROCEEDS. Distributions of principal and interest to the
Participants with respect to the Participation shall be payable only out of
Payments received after the Participation Effective Date. Solely as among the
Participants, the Agent and the Lender Parties, and without conferring any
benefit or rights to any Company or any other Person, the Payments shall be
applied by the Agent to the Obligations promptly after its receipt thereof in
the following order:
(i) FIRST, to the Agent, for its own account solely in its capacity as
Agent, in an amount equal to the amounts owing to the Agent under
the Financing Agreement and the other Loan Documents for
outstanding fees, costs and expenses, until reduced to zero;
(ii) SECOND, to the Issuing Bank, for its own account solely in its
capacity as the Issuing Bank, in an amount equal to the amounts
owing to the Issuing Bank under the Financing Agreement and the
other Loan Documents, until reduced to zero;
(iii) THIRD, to each Lender Party, for its own account, in an amount
equal to any indemnity obligation owing to such Lender Party by a
Company in connection with the Financing Agreement or any other
Loan Document, until reduced to zero;
(iv) FOURTH, to each Lender Party, for its own account, in an amount
equal to any fees, charges, expenses or other Obligations owing to
such Lender Party under the Financing Agreement or any other Loan
Document (and not constituting principal, Line of Credit Fees,
Letter of Credit Fees or accrued interest payable under the
interest provisions of the Financing Agreement), until reduced to
zero;
(v) FIFTH, to each Lender Party, for its own account, in an amount
equal to any Line of Credit Fees, Letter of Credit Fees or accrued
interest payable under the interest provisions of the Financing
Agreement and owing to such Lender Party, until reduced to zero;
(vi) SIXTH, to each Lender Party, for its own account, in an amount
equal to the Outstanding Credit Exposure owing to such Lender
Party, until reduced to zero;
(vii) SEVENTH, to the Participants, for their own account, in an amount
equal to any fees and accrued interest payable under the interest
provisions of the Financing Agreement and owing to the
Participants under this Agreement, until reduced to zero; and
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(viii) EIGHTH, to the Participants, for their own account, in an amount
equal to the Participation owing to the Participants, until
reduced to zero.
Each determination by the Agent or any Lender Party of the amounts payable under
this SECTION 5 shall be conclusive and binding for all purposes, absent manifest
error or bad faith. Payments to be made to the Participants under this SECTION 5
shall be made in accordance with SECTION 26.
6. STANDARDS OF CARE; DISCLAIMER OF RIGHTS.
(A) None of the Agent, the Lenders, the other Lender Parties or their
respective officers, directors, employees, consultants, accountants, attorneys,
agents or other representatives (the Agent, the Lenders, the other Lender
Parties, such officers, directors, employees, consultants, accountants,
attorneys, agents and other representatives referred to collectively as the
"LENDER GROUP") shall be liable to a Participant for any action taken or omitted
by any of them under the Financing Agreement or any other Loan Document, and
each Participant accepts full risk of non-payment of its Participation
Percentage of the Participation. Subject to SECTION 6(E), each member of the
Lender Group will be entitled to manage, supervise, monitor and service the
Revolving Loans, the Letters of Credit, the Collateral and other loans and
extensions of credit to the Companies in accordance with applicable law and
their usual practices, modified from time to time as they deem appropriate and
without regard to the interest of the Participants in the Participation. The
Lender Group shall have no liability to any Participant for acts or omissions
which allow, or result in, the occurrence or continuance of a Default or an
Event of Default under the Financing Agreement or any other Loan Document. Each
Participant exonerates and releases each member of the Lender Group now and
hereafter from any existing or future obligation or liability to such
Participant, express or implied, for any (i) loss of, release of, subordination
of, modification of, depreciation of, or failure to realize upon, the
Collateral, (ii) failure to collect or receive payment of the Revolving Loans,
the Letters of Credit or other Obligations or (iii) mistake, omission or error
of judgment in (a) passing upon, making or accepting the Revolving Loans, the
Letters of Credit, the Financing Agreement, any other Loan Document or the
Collateral (including, without limitation, the value, genuineness,
enforceability or existence of any of the Collateral), (b) making any advances
of monies or extensions of credit to or for the benefit of the Companies under
the Financing Agreement or any other Loan Document (whether or not the
conditions precedent to making any such advances of monies or extensions of
credit have been satisfied), (c) making or failing to make any examinations,
appraisals, audits or check-ups of the Companies' affairs or the Collateral or
(d) granting extensions, renewals or indulgences to the Companies or any
guarantor of the Obligations, at any time or times hereafter. Notwithstanding
the foregoing, the provisions of this SECTION 6(A) shall not apply to any acts
of gross negligence or willful misconduct by the Agent, any Lender or any Lender
Party.
(B) No member of the Lender Group shall be responsible to any Participant
for any representation, warranty, recital or statement made by any Company in
the Financing Agreement or any other Loan Document, for the execution,
effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of the Financing Agreement or any other Loan Document or for the
financial condition of any Company or any other obligor on the Obligations.
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(C) No member of the Lender Group shall be required to make any inquiry
concerning the performance or observance of any of the terms, provisions or
conditions of the Financing Agreement or any of the other Loan Documents or the
financial condition of any Company or any other obligor on the Obligations or
the existence or possible existence of any Default or Event of Default.
(D) Notwithstanding any provision of the Financing Agreement, any other
Loan Document or this Agreement: (i) the sole duties of the Agent and the
Lenders to the Participants, under all circumstances, and both before and after
the commencement of an Insolvency Proceeding (as defined in SECTION 9(A)), shall
be to (a) repurchase the Participation in accordance with SECTION 2(C) and (b)
pay over to the Participants those payments required to be made to them in
accordance with SECTION 5, if and as received by the Agent or the Lenders; (ii)
in holding or administering any and all Collateral and any and all Obligations,
Agent and the Lenders shall have no fiduciary duty, duty of loyalty, duty of
care, duty of disclosure or (except as set forth in SECTION 6(E)) other
obligation to the Participants, and all matters, acts and omissions relating in
any manner to the Collateral or to any of the Obligations (including, without
limitation, the omission, creation, perfection, priority, abandonment or release
of any security interest or Lien), may be taken or omitted by the Agent or the
Lenders acting exclusively in their respective interests as creditors of the
Companies and any other obligor on the Obligations, without reference to the
interests of, notice to, or approval of, the Participants (including, without
limitation, without regard to whether any Obligations in respect of the
Revolving Loans or the Letters of Credit remain outstanding, are affected or put
in jeopardy); and (iii) no Participant shall have a right to be notified of, or
to direct, require or be heard with respect to any action taken or omitted in
respect of the Collateral or under or with respect to the Financing Agreement or
the other Loan Documents.
(E) No Participant shall have voting rights or any right of approval with
respect to any matter relating to the Financing Agreement, the other Loan
Documents, the Obligations or the Collateral, including, without limitation,
acceleration of the Obligations, rescission thereof or enforcement of any
remedy; PROVIDED that notwithstanding anything in this Agreement to the
contrary, the Lender Group agrees that it will not take any of the following
actions without the written consent of Participants holding a majority of the
Participation Percentages (which consent shall not be unreasonably withheld):
(i) release any Lien or security interest in all or substantially all of the
Collateral in one transaction or series of related transactions, other than in
the ordinary course of business, as permitted under the Financing Agreement or a
transaction or series of related transactions which results in a repayment of
the Obligations; or (ii) consensually subordinate any Lien in favor of the Agent
on all or substantially all of the Collateral (other than a subordination to
Liens permitted under the Financing Agreement as in effect on the date of this
Agreement).
7. PARTICULAR MATTERS RELATING TO COLLATERAL.
(A) No member of the Lender Group shall have any obligation whatsoever to
the Participants to assure that the Collateral exists, is owned by a Company or
any other obligor or grantor, is cared for, protected, insured, or has been
encumbered by Liens to secure any of the Obligations, or that any such Liens
have been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise in any
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particular manner, or at all, any duty of care, disclosure or fidelity, or to
preserve rights against prior parties, or to exercise or to continue to exercise
any right, power or authority granted or available to any of them, it being
understood and agreed that in respect of the Collateral and every act, omission,
and event related thereto, each member of the Lender Group may act in any manner
deemed appropriate in its sole discretion, given its interest, if any, in the
Collateral, and have no duty or liability whatsoever to the Participants
(subject only to the Participants' rights under SECTION 6(E)).
(B) Each Participant agrees that, except as provided in this Agreement, it
shall not be entitled to the benefit of any guaranty, security, Lien or other
arrangement to protect it from loss in respect of the Obligations or in respect
of any other obligation of the Companies owing to the Agent or the Lenders
unless such guaranty, security, Lien or other arrangement has been consented to
and approved in writing by the Agent and the Lenders.
8. INFORMATION.
(A) Each Participant acknowledges and agrees that it has full access to,
and knowledge of, the financial condition and books and records of the Companies
and all other obligors on the Obligations and has received or has knowledge of
all information which it deems appropriate to make its own credit analysis and
decision to enter into this Agreement. Each Participant acknowledges and agrees
that it shall have no recourse against the Lender Group, or any member thereof,
with respect to any matter relating to the creditworthiness of the Companies
with respect to the Financing Agreement or any other Loan Document and that it
has and will continue, independently and without reliance upon the Lender Group,
or any member thereof, to make its own credit judgments and decisions.
(B) Each Participant assumes responsibility for keeping itself informed of
the financial condition of the Companies and all other obligors on the
Obligations and all other circumstances bearing upon the risk of nonpayment of
the Obligations held by it, including the Revolving Loans and the Letters of
Credit. Each Participant agrees that no member of the Lender Group shall have
any duty to advise it of information known to such member regarding such
condition or any such circumstance. In the event that any member of the Lender
Group, in its sole discretion, undertakes at any time, or from time to time, to
provide any such information to a Participant, it shall be under no obligation
to correct, update or provide any such or further information to the
Participants or any other party on any subsequent occasion, to undertake any
investigation or to disclose any information which it wishes to maintain
confidential. Each Participant shall hold in strict confidence any and all
information (other than information that has been publicly disclosed) received
from any member of the Lender Group. Without limiting the generality of the
foregoing, no member of the Lender Group shall have any duty or obligation of
disclosure of any information which it may possess (including, without
limitation, results of investigations, appraisals, valuations, financial
statements, business plans, projections, work-product, or attorney-client
communications), whether or not it shares such information with any other member
of the Lender Group and regardless of by whom prepared.
(C) Each Participant acknowledges that it has received and reviewed a copy
of each Loan Document it has deemed necessary or appropriate to review in
connection with its purchase of the Participation.
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9. INSOLVENCY PROCEEDING.
(A) For purposes of this Agreement, the term "Insolvency Proceeding" means
any and all of the following: (i) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding, relative to a Company or any other obligor on the
Obligations, or to the creditors of a Company or any such obligor as such, or to
the assets of a Company or any such obligor; (ii) any liquidation, dissolution,
reorganization or winding up of a Company or such obligor, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy; and (iii) any
assignment for the benefit of creditors or any other marshalling of assets and
liabilities of a Company or any such obligor.
(B) Each Participant agrees that if in any Insolvency Proceeding, the Agent
and the Lenders, or any of them, shall desire to permit the usage of cash
collateral or to provide financing to the debtor in such Insolvency Proceeding
under section 363 or section 364 of the United States Bankruptcy Code, 11 U.S.C.
ss. 101 ET SEQ. (the "BANKRUPTCY CODE"), or otherwise, then: (i) notice (given
in accordance with the provisions of SECTION 17) received two Business Days
prior to the filing of a motion seeking such cash collateral usage or financing
shall be adequate notice; and (ii) no Participant shall raise any objection to
such cash collateral usage or financing. No Participant shall have the right to
vote in any Insolvency Proceeding by reason of the Participation (subject to the
consent requirements for the matters specified in SECTION 6(E)). No Participant
shall have any rights in respect of actions taken by the Agent, the Lenders or
any Lender Party relating to or arising out of any Insolvency Proceeding, except
as expressly set forth in SECTION 6(E).
10. NO SETOFF; TURNOVER OBLIGATIONS. Each Participant agrees that it shall
not setoff against the amount of its Participation or other claims against the
Companies, any of the Companies' accounts or funds now or hereafter held by such
Participant. Each Participant agrees not to assert and waives, to the fullest
extent permitted by law, any and all rights to reimbursement, setoff, recoupment
or similar rights against the Agent and the Lenders, whether granted by
contract, law or otherwise. In the event that, notwithstanding the provisions of
the Financing Agreement and this Agreement, a Participant shall have received
any payment from, or a distribution of assets of, a Company or any other obligor
on the Obligations, of any kind or character (whether in cash, property or
securities), which payment or distribution pursuant to the terms of this
Agreement or the Financing Agreement should have been applied to the
Obligations, then and in such event such payment or distribution, to the extent
necessary to comply with the terms of this Agreement and the Financing
Agreement, shall be received and held in trust for the Agent, the Lenders and
the other Lender Parties. If made in cash, such payment or distribution shall be
paid over to the Agent for application to the Obligations and if made other than
in cash, shall be turned over to the Agent (with all necessary endorsements and
assignments) to be held as collateral security for the Obligations.
11. AVOIDED PAYMENTS. To the extent any payment with respect to any
Obligation (whether by or on behalf of a Company, as proceeds of Collateral,
enforcement of any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to a trustee, receiver or similar
Person, then such payment or part thereof, originally intended to be satisfied,
shall be deemed to be reinstated and outstanding as if such payment had not
occurred. If any Payment received by the Agent or a Lender and distributed to a
Participant is deemed to
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be reinstated and outstanding pursuant to the foregoing sentence, such
Participant shall, upon demand by the Agent or such Lender, immediately pay to
the Agent or such Lender all such Payments so reinstated and outstanding. The
covenants contained in this SECTION 11 survive the termination of this
Agreement.
12. NO WAIVER OF PROVISIONS. No right of the Agent, the Lenders or any
other Lender Party, or any of them, to receive the benefit of and enforce the
terms of this Agreement shall at any time in any way be prejudiced or impaired
by any act or failure to act on the part of the Companies or any other obligor
on the Obligations or by any act or failure to act by the Agent, the Lenders or
any other Lender Party or by any noncompliance by the Companies or any such
other obligor with the terms, provisions and covenants of the Financing
Agreement or any other Loan Document, regardless of any knowledge thereof which
the Agent, the Lenders and the other Lender Parties, or any of them, may have or
be otherwise charged with.
13. SPECIFIC AUTHORIZATIONS. Without in any way limiting the generality of
SECTION 12, the Lender Parties, and any of them, may, at any time and from time
to time, without the consent of, or notice to, the Participants, and without
incurring any liabilities to any Participant and without impairing or releasing
the terms and benefits provided in this Agreement (even if any right of
subrogation or other right or remedy of the Participants is affected, impaired
or extinguished thereby), do any one or more of the following (subject in each
instance to the limitations set forth in SECTION 6(E)):
(i) change the manner, place, or time of payment of, or make any
advance of monies or extension of credit under the Financing
Agreement or any of the other Loan Documents (whether or not the
conditions precedent to making any such advances of monies or
extensions of credit have been satisfied) or renew, exchange,
amend, increase or alter the terms of any of the Obligations or
any Lien in any of the Collateral securing any of the Obligations
or any guaranty of any of the Obligations or any liability of any
Company or any guarantor, or any liability incurred directly or
indirectly in respect thereof (including, without limitation, any
increase in amount or extension of the Obligations held by the
Lender Parties, without any restriction as to the amount, tenor
or terms of any such increase or extension), or otherwise amend,
renew, exchange, extend, modify, supplement in any manner any of
the Obligations and any Loan Document;
(ii) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any part of
the Collateral or other property securing the Obligations or any
liability of any Company or any other obligor on the Obligations
or any liability incurred directly or indirectly in respect
thereof;
(iii) settle or compromise any of the Obligations or any other
liability of any Company or any other obligor on the Obligations
or any security therefor or any liability incurred directly or
indirectly in respect thereof and apply
9
any sums by whomsoever paid and however realized to any
liability, but consistent with the terms of the Financing
Agreement; and
(iv) fail to take, record or otherwise perfect for any reason, or for
no reason, a Lien securing the Obligations, exercise, delay in or
refrain from exercising any right or remedy against any Company,
any security, any guarantor or any other Person, elect any remedy
and otherwise deal freely with any Company, any obligor on the
Obligations and the Collateral and any liability incurred
directly or indirectly in respect thereof.
14. UNCONDITIONAL OBLIGATIONS. Each Participant's obligation to pay its
Participation Percentage of the Purchase Price to the Lender on the
Participation Purchase Date is unconditional, irrespective of any of the
following (whether occurring prior to or after the Participation Purchase Date):
(i) the validity, enforceability, avoidance, assignment or
subordination of any of the Obligations or any Loan Document;
(ii) the absence of any attempt by or on behalf of the Agent or the
Lenders to collect, or to take any other action to enforce, all
or any part of the Obligations whether from or against the
Companies or any other Person;
(iii) the election of any remedy by or on behalf of the Agent or the
Lenders with respect to all or any part of the Obligations;
(iv) any change in the time, manner or place of payment of, or in any
other term of, or any increase in the amount of, all or any of
the Obligations, or the waiver, consent, extension, forbearance
or granting of any indulgence by or on behalf of the Agent or
the Lenders with respect to any provision in the Financing
Agreement or any of the other Loan Documents;
(v) the failure of the Agent or the Lenders to take any steps to
perfect and maintain its security interest in, or to preserve
its rights to, any security or collateral for all or any part of
the Obligations;
(vi) the disallowance, under section 502 of the Bankruptcy Code of
all or any portion of the claims of the Lenders for repayment of
all or any part of the Obligations;
(vii) any other circumstance, other than payment, which might
otherwise constitute a legal or equitable discharge or defense
of such Participant; or
(viii) any restructuring or refinancing of all or any portion of the
Obligations.
15. EFFECTIVENESS; CONTINUING NATURE; SEVERABILITY. This Agreement shall
become effective when the Agent, the Lenders and the Participants have executed
and delivered counterparts to this Agreement. The terms of this Agreement shall
be effective both before and after the commencement of an Insolvency Proceeding,
and all references in this Agreement to a
10
Company or any other obligor on the Obligations shall apply to and include any
debtor-in-possession and any trustee of such Company's or such obligor's estate.
This Agreement shall continue to be effective until the earliest of the
following has occurred: (i) the date on which the Lenders have repurchased the
Participation from the Participants in accordance with SECTION 2(C), (ii) the
Participation Purchase Date if no portion of the Overadvance exists at such
time; and (iii) the date on which (a) all Obligations (including the
Participation) have been paid in full in cash and (b) the Financing Agreement
has terminated pursuant to its express terms. Each Participant waives any right
it may have under applicable law to revoke this Agreement or any of the
provisions of this Agreement. This Agreement embodies the entire agreement and
understanding among the Lenders, the Agent and the Participants and supersedes
all prior agreements and understandings among the Lenders, the Agent and the
Participants relating to the subject matter thereof. Any provision in this
Agreement that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of this Agreement are declared to
be severable.
16. AMENDMENTS; WAIVERS. No amendment, modification or waiver of any of the
provisions of this Agreement by the Agent, the Lenders or the Participants shall
be deemed to be made unless the same shall be in writing signed on behalf of the
party making the same (or, in the case of the Participants, by Participants
holding a majority of the Participation Percentages) and each waiver, if any,
shall be a waiver only with respect to the specific instance involved and shall
in no way impair the rights of the party making such waiver or the obligations
of the other party to such party in any other respect or at any other time.
17. NOTICES. All notices to the Agent, the Lenders or the Participants
permitted or required under this Agreement to be given shall be in writing and
may be personally served, facsimiled or sent by recognized commercial overnight
courier service or United States mail and shall be deemed to have been given
when delivered in person, upon receipt of a facsimile confirmation or five days
after deposit in the United States mail (registered or certified, with postage
prepaid and properly addressed) and one Business Day after delivery to such
courier service with charges prepaid and properly addressed. For the purposes of
this Agreement, the facsimile numbers and addresses of the parties to this
Agreement (until notice of a change thereof is delivered as provided in this
SECTION 17) shall be as set forth below for such party or, as to each party, at
such other number or address as may be designated by such party in a written
notice to the other parties:
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IF TO THE AGENT OR A LENDER:
c/o The CIT Group/Business Credit, Inc.
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Regional Credit Manager
Telephone: 000-000-0000
Facsimile: 000-000-0000
IF TO A PARTICIPANT:
c/o The Jordan Company
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx X. Max
Telephone: 000-000-0000
Facsimile: 000-000-0000
18. FURTHER ASSURANCES. Each Participant shall take such further action and
shall execute and deliver to the Agent such additional documents and instruments
(in recordable form, if requested) as the Agent or a Lender may reasonably
request to effectuate the terms of this Agreement.
19. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR
PROVISIONS (WHETHER OF THE STATE OF ILLINOIS OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF ILLINOIS. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF
ILLINOIS SHALL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT,
EVEN THOUGH UNDER THAT JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS,
THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
20. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their permitted successors and assigns. Each
Participant agrees not to sell, pledge, encumber, assign or subparticipate its
Participation, or any part thereof, to any Person without the Agent and each
Lender's prior written consent. The Agent, the Lenders and the Participants
agree that any such transfer of an interest in the Participation shall be void
if attempted without the Agent's or the Lenders' written consent. The Lender
Parties may sell, pledge, encumber, assign or participate their respective
interest, or any part thereof, in the Revolving Loans, the Letters of Credit,
its commitments with respect thereto or the Collateral to any Person without any
Participant's consent.
21. LIMITATION OF LIABILITY. No claim may be made by any Participant
against any member of the Lender Group for any special, indirect, consequential
or punitive damages in
12
respect of any claim for breach of contract or any other theory of liability
(whether arising at law or in equity) arising out of or related to the
transactions contemplated by this Agreement or any act, omission or event
occurring in connection therewith and each Participant waives, releases and
agrees not to xxx upon any claim for any such damages, whether or not accrued
and whether or not known or suspected to exist in its favor. The Participants'
sole and exclusive remedy in the event of any asserted breach by the Agent or
any Lender of any of its obligations under this Agreement shall be to bring an
independent action at law for money damages against the Agent or such Lender or
to assert any mandatory counterclaims which a Participant may have in any action
brought by the Agent or any Lender. Each Participant agrees that it will not
assert any permissive counterclaims, setoffs or cross-claims in any proceedings
brought by the Agent or any Lender and arising out of or relating to this
Agreement.
22. SPECIFIC PERFORMANCE. Without limiting in any way any of the Agent's or
any Lender's other rights and remedies under this Agreement, the Agent or any
Lender may demand specific performance of this Agreement. Each Participant
irrevocably waives any defense based on the adequacy of a remedy at law and any
other defense which might be asserted to bar the remedy of specific performance
in any action which may be brought by the Agent or a Lender under this
Agreement.
23. SECTION TITLES. The section titles contained in this Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of the Agreement between the parties hereto.
24. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall together
constitute one and the same document. The parties to this Agreement agree to
accept facsimile counterparts.
25. CONFLICTS. In the event of any conflict between the provisions of this
Agreement and the provisions of the Financing Agreement or any other Loan
Document, the provisions of this Agreement shall govern.
26. PAYMENTS. All payments required to be made by a Lender Party to the
Participants under this Agreement shall be made in the aggregate to JZ Equity
Partners PLC and JZ Equity Partners PLC shall have the obligation to disburse
such payments among the Participants. The Participants agree that any amounts
remitted to the Agent for the benefit of the Participants under SECTION 2(D)
shall be paid to JZ Equity Partners PLC to be distributed by JZ Equity Partners
as follows: (i) first, to JZ Equity Partners PLC in an amount equal to $25,000;
(ii) second, to JZ Equity Partners PLC in an amount equal to the product of (a)
$100,000 multiplied by (b) a fraction, the numerator of which is the amount of
the Purchase Price paid by JZ Equity Partners PLC and the denominator of which
is $439,675; and (iii) third, the right to any remaining amount is waived by
each Participant and (a) the Agent is directed by each Participant to waive, on
their behalf, the Companies' obligation to pay such remaining amount or (b) if
such remaining amount has been paid by the Companies to the Agent or by the
Agent to JZ Equity Partners PLC on behalf of the Participants, then the Agent or
JZ Equity Partners PLC, as applicable, are directed by each Participant to
return such amount to the Companies.
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Executed and delivered as of the date first written above.
AGENT AND LENDERS:
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Agent and a Lender
By /s/ Xxxxxx X. Xxxxx
---------------------------------------
Title: Vice President
Agreed and accepted:
PARTICIPANTS:
JORDAN INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxx XX
-------------------------------------
Title:
JZ EQUITY PARTNERS PLC
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------------
Title: Investment Advisor
LEUCADIA INVESTORS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx (?)
-------------------------------------
Title: Vice President
/s/ Xxxx X. Xxxxxx XX
-----------------------------------------
Xxxx X. Xxxxxx XX
/s/ Xxxxxx X. Xxxxx
-----------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxx X. Max
-----------------------------------------
Xxxx X. Max
/s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxxxxx Xxxxxxx
-----------------------------------------
Xxxxxxxx Xxxxxxx
/s/ Xxxx Xxxxxx
-----------------------------------------
Xxxx Xxxxxx
/s/ Xxxx Xxxx
-----------------------------------------
Xxxx Xxxx
/s/ Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
-----------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxx Xxxxxxxx
-----------------------------------------
Xxxx Xxxxxxxx
-----------------------------------------
Xxx X. Xxxxxxxx
THE JW/JENN TRUST
By: /s/ Xxxx X. Xxxxxx XX
-------------------------------------
Title:
