EXHIBIT 7.10
LOAN AGREEMENT
THIS LOAN AGREEMENT is entered into and effective as of the 24th day
of February, 1999, by and among: (i) IMAGINE INVESTMENTS, INC., a Delaware
corporation with principal place of business in Dallas, Texas (the "Lender"),
(ii) XXXXXX FINANCIAL CORPORATION, a Florida corporation with principal place of
business in Jacksonville, Florida (the "Borrower"), and (iii) J. XXXXXX XXXXXX,
an individual of Jacksonville, Florida (the "Guarantor").
RECITALS:
A. Borrower desires to obtain from Lender a term loan in the amount of
Six Million Dollars ($6,000,000.00), which will be used by Borrower to pay
various obligations as and when the same are due and payable ("Term Loan").
B. In order to induce Lender to enter into this Loan Agreement and to
extend the Term Loan hereunder, without which inducement Lender would be
unwilling to take such actions, and in consideration of the benefits he will
receive therefrom, Guarantor is willing and desires to guaranty the obligations
of Borrower under this Loan Agreement and to make the agreements as set forth
herein.
AGREEMENT:
NOW, THEREFORE, the parties hereby agree as follows:
1. TERM LOAN. Subject to the terms and conditions contained herein,
Lender hereby agrees to make the Term Loan to Borrower, in accordance with the
following provisions:
1.1 Amount, Purpose and Term. The amount of the Term Loan shall be Six
Million Dollars ($6,000,000.00). The Tenor Loan is evidenced by and shall be
payable and otherwise be made on the terms set forth in the "Term Note" made by
Borrower to Lender of even date herewith and on the terms established in this
Loan Agreement. All payments on the Term Note shall be made in immediately
available funds at the principal office of Lender on each date as specified in
the Term Note and/or this Loan Agreement. The Term Note shall bear interest at
the rate of ten percent (10%) per annum. The proceeds of the Term Loan shall be
used by Borrower to pay principal and interest payments on Borrower's
obligations to Bank Boston, N.A. (the "Bank Boston") and Compass Bank as set
forth on Exhibit A attached hereto and made a part hereof and to pay the other
outstanding obligations as set forth on Exhibit B attached hereto and made a
part hereof.
1.2 Disbursements. Contemporaneously with the execution of this Loan
Agreement and the fulfillment of all conditions precedent to the disbursement of
the proceeds of the Term Loan, Lender has disbursed funds by wire transfer to
Borrower or for Borrower's benefit in the amounts shown on Exhibit C attached
hereto and made a part hereof and, as hereby instructed by Borrower, has paid
Borrower's obligations to Lender and to Xxxxxx X. Xxxx as listed on Exhibit B
hereto and has paid Lender's legal fees in connection with the Term Loan.
Lender shall make additional disbursements of principal on the Term
Loan to Borrower as hereinafter requested by Borrower upon ten (10) business
days prior written notice from time to time to Lender in accordance with the
schedules respectively set forth on Exhibit A and
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Exhibit B hereto. The Term Loan is not a revolving loan, and amounts disbursed
thereunder may not be paid down and subsequently reborrowed by Borrower.
1.3 No Prepayment. No portion of the principal balance of the Term Note,
nor any accrued interest thereon, may be prepaid at any time, in whole or in
part, without the written consent of Lender.
1.4 Maturity Date. The maturity date of the Term Note, at which time all
outstanding principal and accrued interest on the Term Note shall be due and
payable in full, is December 31, 2001.
1.5 Fee. Borrower agrees to pay a fee to Lender in the amount of $10,000
for agreeing to make the Term Loan and hereby instructs Lender to immediately
pay such fee out of the proceeds of the Term Loan.
2. SECURITY FOR THE INDEBTEDNESS. The Term Note, and any and all other
obligations and liabilities owed by Borrower or Guarantor to Lender
(collectively, the "Indebtedness"), is and shall be secured by and entitled to
the benefits of all the following (all of the following are sometimes
hereinafter collectively referred to as the "Security Instruments"; the Security
Instruments and this Loan Agreement are sometimes hereinafter collectively
referred to as the "Loan Documents"):
2.1 Stock Pledge Agreement Pertaining to Riverside. That certain Stock
Pledge Agreement between Borrower, Guarantor and Lender of even date herewith
pursuant to which 2,617,243 shares of stock (the "Stock") of Riverside Group,
Inc., a Florida corporation (the "Corporation") have been pledged by Borrower
and Guarantor to Lender, together with the appropriate blank stock powers and
the delivery of the original stock certificates for 392,282 shares of such Stock
to Lender (the remainder of such Shares are being held by Bank Boston as agent
for Lender to perfect Lender's security interest therein).
2.2 Stock Pledge Agreement Pertaining to Borrower. That certain Stock
Pledge Agreement between Guarantor and Lender of even date herewith, pursuant to
which certain of the outstanding shares of stock of Borrower have been pledged
by Guarantor to Lender, together with appropriate blank stock powers and the
delivery of the original stock certificates to Lender.
2.3 Guaranty. The unconditional personal guaranty agreement of Guarantor
pursuant to Section 10 hereunder, and pursuant to the Guaranty Agreement
attached to the Term Note.
2.4 Other Security. Other security and instruments, if any, granted by
Borrower and/or Guarantor to Lender, whether of even date herewith or hereafter
or heretofore granted, to secure the Term Note and/or any other Indebtedness.
3. CONDITIONS PRECEDENT. Lender's obligations under this Loan Agreement,
including each disbursement of any proceeds of the Term Loan, shall be subject
to the fulfillment to Lender's satisfaction of each of the following conditions
precedent, unless such condition or conditions shall be waived by Lender in
writing, in the sole discretion of Lender:
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3.1 Resolutions and Approvals. Borrower shall furnish certified copies of
all consents, resolutions and approvals as may be required by Lender, evidencing
approval of the execution of the Loan Documents, all in form and substance
acceptable to Lender.
3.2 Legal Opinion. Lender shall have received a favorable written opinion
of counsel for Borrower and Guarantor (i.e. Holland & Knight), dated and
effective as of the date on which the Loan Documents are executed and delivered,
addressed to Lender and satisfactory in form and substance to Lender, with only
such modifications, exceptions, assumptions and qualifications as shall be
acceptable to Lender and its counsel.
3.3 Loan Documents. All the Loan Documents, and such other documents or
instruments as Lender may reasonably require, all in form and substance
acceptable to Lender, shall have been duly executed and delivered to Lender,
and, where appropriate, duly recorded in the proper public offices.
3.4 Representations, Warranties and Covenants. All representations and
warranties of Borrower and Guarantor contained herein shall be true and correct,
and Borrower and Guarantor shall be in compliance with all covenants contained
in this Loan Agreement and in the Security Instruments.
3.5 Consents of Third Parties. Such third party consents, estoppels or
agreements as Lender may require, including, but not limited to, the consent and
agreement of Bank Boston to the Stock Pledge Agreement described in Section 2.1
hereof, all of which shall be in form and content satisfactory to Lender in its
sole discretion.
3.6 Corporate Matters. Lender shall have been provided with true and
correct copies of all articles of incorporation, by-laws and corporate minutes
of Borrower and shall have been provided such further information as shall have
been requested by Lender with regard to the business, properties and finances
and operations of Borrower and Guarantor.
3.7 Stock Option. Borrower and Guarantor shall have executed and delivered
a Stock Option Agreement in favor of Lender, of even date herewith (the "Option
Agreement"), pursuant to which Borrower and Guarantor shall have granted Lender
the exclusive right and option to purchase 785,173 shares of the common stock of
the Corporation for a purchase price of $1.75 per share, for a term through
December 31, 2001 (subject to extension as therein provided) (the "Option").
3.8 No Event of Default. No "Event of Default" and no event which would
constitute an Event of Default with the giving of notice, passage of time, or
both (a "Possible Default") shall have occurred.
4. AFFIRMATIVE COVENANTS. Borrower and Guarantor jointly and severally agree
that until the principal of and all interest on the Term Note and all the other
Indebtedness shall have been paid in full and this Loan Agreement terminated,
Borrower and Guarantor, as applicable, shall perform and observe all of the
following terms and provisions:
4.1 Money Obligations. Each of Borrower and Guarantor shall pay in full:
(a) Prior in each case to the date when penalties would attach, all
taxes, assessments and governmental charges and levies hereafter due by Borrower
and/or Guarantor (except only those so long as and to the extent that the same
shall be contested in good faith by
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appropriate and timely legal proceedings and for which a bond staying execution
or enforcement thereof shall have been posted to the satisfaction of the
Lender); and
(b) All its and his respective debts, obligations and liabilities
incurred after the date hereof, on or prior to their respective due dates, for
which it or he may be or become liable or to which any or all of its or his
properties may be or become subject.
4.2 Financial Statements.
(a) Borrower shall furnish to Lender, within thirty (30) days after
the end of each calendar quarter, an income statement of Borrower for that
quarter and for the period from the beginning of the applicable fiscal year of
the Borrower to the end of such quarter and a balance sheet of Borrower as of
the end of each such quarter, certified by the president or Chief Financial
Officer of Borrower to be true, correct and accurate.
(b) Borrower shall furnish to the Lender, within ninety (90) days
after the end of each fiscal year of Borrower, (i) a complete financial report,
consisting of balance sheet, statement of profit and loss, application of funds,
change in financial position and the like, prepared or reviewed by a firm of
independent public accountants of recognized standing acceptable to Lender, and
(ii) the annual audit report of the Corporation, together with the opinion of
the accounting firm that prepared such audit report, that said report presents
fairly the financial position of the Corporation as of the date of the audit and
the results of the Corporation's operations and its cash flows for the year,
without qualification.
(c) Borrower shall furnish to Lender, immediately upon Lender's
written request, such other information about the financial condition,
properties and operations of Borrower and the Corporation as Lender may from
time to time reasonably request.
(d) Guarantor shall furnish to Lender, (i) on or before January 31 of
each year, financial statements of Guarantor, in a form approved by Lender, as
of the preceding December 31, certified as true and correct by Guarantor, (ii) a
copy of Guarantor's signed federal tax return within five (5) business days of
the filing of such return with the Internal Revenue Service, and (iii) promptly
on demand of Lender, such other financial information concerning Guarantor as
Lender may request from time to time;
(e) All financial statements specified in Section 4.2(a), (b), and
(c) above shall be furnished to Lender with comparative figures for the
corresponding period in the preceding fiscal year; and all financial statements
referred to in Section 4.2(a), (b), and (c) above shall be prepared on the
accrual basis of accounting, in accordance with GAAP applied on a basis
consistent with prior years of Borrower and the Corporation, on a consolidated
(and consolidating) basis and shall be accompanied by a certificate of the
President of Borrower:
(1) stating that there exists no Event of Default or Possible
Default hereunder; or
(2) describing with particularity any Event of Default or
Possible Default, stating the nature thereof, the period of existence
thereof and what action Borrower, its subsidiaries and/or Guarantor
have taken or propose to take with respect thereto.
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(f) Borrower shall furnish to Lender, prompt written notice of any
condition or event which has resulted in or might result in:
(1) a material adverse change in the consolidated condition
(financial or otherwise) or operations of Borrower, the Corporation or
Guarantor; or
(2) a breach of or noncompliance with any term, condition or
covenant contained herein or in any document delivered pursuant hereto; or
(3) a material breach of, or noncompliance with, any term,
condition or covenant of any material contract to which Borrower and/or any
of its subsidiaries or the Corporation and/or any of its subsidiaries or
the Guarantor are a party or by which they or their property may be bound.
(g) Borrower and Guarantor shall furnish to Lender prompt written
notice of any claims, proceedings or disputes (whether or not purportedly on
behalf of Borrower or Guarantor) against, or to the knowledge of Borrower or
Guarantor, threatened or affecting Borrower or Guarantor which, if adversely
determined, would have a material adverse effect on the business, properties or
condition (financial or otherwise) of Borrower or any subsidiaries or Guarantor
or any labor controversy resulting in or threatening to result in a strike
against Borrower or Guarantor, or of any proposal by any public authority to
acquire any of the material assets or business of Borrower.
4.3 Financial Records. Borrower and Guarantor, as applicable, shall:
(a) At all times keep true and complete financial records in
accordance with GAAP consistently applied (as to Guarantor, on the cash method);
(b) At all reasonable times, permit Lender to examine any or all of
its or his financial and other records and to make excerpts therefrom and
transcripts thereof;
(c) Maintain its books and records at its and his current principal
office at 0000 Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxx 00000; and
(d) Maintain its and his current fiscal year.
4.4 Existence and Licenses. Borrower shall preserve its corporate
existence in good standing and will be and remain qualified to do business in
good standing in all states in which it is required to be so qualified, and will
maintain all permits, licenses and other similar matters necessary or
appropriate for its business.
4.5 Notice. Guarantor and Borrower (acting by and through the President or
another duly authorized officer of the Borrower) shall notify Lender in writing,
within no more than twenty-four (24) hours (and without the benefit of any grace
period afforded in any provision of thus Loan Agreement or any Security
Instrument) after Guarantor or Borrower or any of Borrower's officers or
directors learns of any of the following:
(a) the existence or occurrence of any Event of Default or Possible
Default under this Loan Agreement, or any default under the Term Note or any of
the Security Instruments; or
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(b) any representation or warranty made herein, or in any related
writing, not being or ceasing to be, for any reason, in any material respect,
true and complete and not misleading; or
(c) the institution of, or adverse determination in, any litigation,
arbitration or governmental proceeding (including but not limited to an audit or
examination by the Internal Revenue Service) which could have a material and
adverse effect upon Borrower, the Corporation or Guarantor, which notification
shall describe the nature thereof, what happened with respect thereto and what
steps are being taken by Borrower, the Corporation or Guarantor, as the case may
be, with respect thereto.
4.6 Agreements. Borrower and Guarantor shall and shall cause the
Corporation to comply timely with all their respective agreements and valid
obligations to and with all parties, and shall not commit or permit to be
committed any default thereunder.
4.7 Stock. Borrower shall instruct its Secretary and stock transfer agent
not to issue any additional capital stock, warrants, options or rights with
respect thereto or instruments convertible into Borrower's capital stock, and
Borrower shall not issue any additional capital stock, warrants, options or
rights with respect thereto, or instruments convertible into Borrower's capital
stock, unless the same is directly pledged and delivered to Lender as security
for the Term Note pursuant to the Stock Pledge Agreement referred to in Section
2.2 hereof.
4.8 Compliance with Laws and Agreements. Each of Borrower and Guarantor
shall, and shall cause the Corporation at all times to, comply with the
applicable statutes, regulations, ordinances and other laws applicable to its
and his operations and activities.
4.9 Subordination. Borrower and Guarantor hereby agree that all current
and future debts of Borrower and/or any of its subsidiaries to Guarantor or any
other stockholder or director of Borrower or any of their spouses, in laws, or
blood relatives shall, and are hereby declared to be, fully subordinated to the
prior repayment of all the Indebtedness, including the Term Note, and, no
payments of principal or interest on such other debts shall be made, without the
prior written consent of Lender, until the Indebtedness, including the Term
Note, has been paid in full.
4.10 Payment of Term Note and Other Indebtedness. Borrower shall timely pay
the Term Note and all the other Indebtedness in accordance with their respective
terms. All payments on the Term Note and the other Indebtedness shall be made to
Lender in immediately available funds at Lender's principal office on the date
due by no later than 2:00 p.m. Lender's local time. Funds received by Lender
after that time shall be deemed to be received by Lender on the following
business day.
5. NEGATIVE COVENANTS. Borrower and Guarantor jointly and severally agree
that, until the principal of and all interest on the Term Note and all the other
Indebtedness shall have been paid in full and this Loan Agreement terminated,
Borrower and Guarantor, as applicable, shall observe and comply with each of the
following provisions:
5.1 Material Adverse Changes. Borrower shall not permit a "material
adverse change" (as hereinafter defined) to occur. A "material adverse change"
shall be deemed to have occurred upon any of the following:
(a) The operating income of Wickes, Inc. for each fiscal four quarter
period in fiscal year 1999 and each fiscal year thereafter is less than 89% of
the amount thereof for the
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corresponding period in fiscal year 1998. This calculation will be made on a
cumulative basis (operating income in 1998 was approximately $30,000,000, and
operating income is expected to range between $38,000,000 and $42,000,000 in
1999).
(b) Any real estate of the Corporation is sold for less than 90% of
the amount shown on the Corporation's Collateral Analysis Schedule, a copy of
which will be provided to Lender within 30 days of the loan closing and updated
quarterly (the "Collateral Analysis Schedule"); or in the event there are no
sales, future values (as reflected on any future Collateral Analysis Schedule
or, if lower, appraisals secured as provided in Section 5.2(b) below) of such
real estate diminish more than 15% in the aggregate from their present value
reflected on the initial Collateral Analysis Schedule.
(c) The operating revenues and cash flows from Cybermax, Inc., an
affiliate of the Corporation, at the end of any fiscal quarter in 1999 (on a
cumulative basis) is less than 90% of those recorded for the same period in 1998
or if the negative cash flow from Cybermax, Inc. is more than $1,000,000 at any
time during 1999.
(d) During fiscal year 2000 and 2001 of Cybermax, Inc., following
approval of the Executive Committee (consisting of Xxxxx Xxxxxxx, Xxxxxx Xxxx
and Guarantor) of Cybermax, Inc.'s business plan, if on a cumulative basis, the
gross profits of Cybermax, Inc. are less than 75% of amounts projected in such
business plan, or expenses are more than 10% above amounts projected in such
business plan.
(e) The Corporation's investment in Xxxxxxxxx, Inc. results in a
material negative cash effect on the Corporation. Examples of a negative effect
associated with this investment would be if the Corporation incurs any
substantial negative cash flow or is involved in material litigation in
connection with Xxxxxxxxx, Inc.
(f) Following approval of the Executive Committee (consisting of Xxxxx
Xxxxxxx, Xxxxxx Xxxx and Guarantor) of BuildScape, Inc.'s business plan, and
provided significant outside capital is not invested in BuildScape, Inc., if on
a cumulative basis, the gross profits of BuildScape, Inc. are less than 75% of
amounts projected in such business plan, expenses are more than 10% above
amounts projected in such business plan, or the stages of completion of the
basic infrastructure of BuildScape, Inc. are more than six (6) weeks delinquent.
If significant outside capital is invested in BuildScape, Inc., the foregoing
business plan shall be modified to reflect such investment and submitted to the
Executive Committee (and whose members must be as stated above), for approval
and if such modified business plan is not approved by the Executive Committee
within 20 days after such capital infusion, that shall be deemed a material
adverse change; if such modified business plan is approved by such Executive
Committee; and if gross profits and expenses of BuildScape, Inc. are within 25%
of those projected in such modified business plan that has been approved by such
Executive Committee, no material adverse change will be deemed to have occurred
under this clause, but otherwise a material adverse change under this clause
will be deemed to have occurred.
Each of the foregoing items will be considered not individually but rather
in the aggregate, such that if an individual item has occurred but there is a
positive offset with respect to another item, Lender will consider the net
effect when making its determination as to whether a "material adverse change"
has occurred, but the Lender shall be entitled to make such determination in its
sole and unfettered discretion. As an example, in the event the Corporation's
investment in Xxxxxxxxx, Inc. ultimately results in the realization of clear
value (i.e.
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cash), then this will be taken into consideration in evaluating the progress or
results of any of the other items.
5.2 Minimum Tangible Net Worth. Borrower and Guarantor shall not permit
either Borrower or the Corporation to fail to meet the following tests:
(a) Borrower shall maintain a minimum. GAAP net worth of $250,000, and
at no tine will the calculated net realizable value of Borrower's assets be less
than $2,000,000 in excess of Borrower's liabilities. The calculated net
realizable value will be computed at the end of each calendar quarter. The
calculated net realizable value of Borrower's assets will be based upon the
agreed upon calculations for Borrower's interest in the Corporation plus the net
current assets and less all liabilities of the Borrower calculated on a GAAP
basis. If within 15 days following the end of any calendar quarter, Borrower and
Lender cannot agree as to the value of Borrower's interest in the Corporation,
then Borrower and Lender shall promptly and, in all events, within 15 days
select an appraiser to establish that value. If they have not agreed on an
appraiser within the 15 days, then Lender, acting alone, may select as the
appraiser any nationally recognized public certified accounting firm, except for
any firms then employed by the Lender.
(b) The Corporation shall maintain a minimum GAAP net worth of
$1,000,000, and at no time will the calculated net realizable value of the
assets of the Corporation be less than $10,000,000 in excess of the
Corporation's liabilities. The calculated net realizable value of the assets
will be computed at the end of each calendar quarter. The calculated net
realizable value of the assets will be based upon the market price of the
Wickes, Inc. shares owned by the Corporation (which shall be the average closing
price of the Wickes, Inc. stock over the last 20 trading days of the calendar
quarter), the net realizable value of any real estate (determined as set forth
below), the estimated value of BuildScape (as determined by Lender in its sole
discretion), plus the net current assets and less all liabilities (adjusted for
any amounts included in the calculations above) of the Corporation. For purposes
of this Section 5.2, the net realizable value of the real estate shall be as
reflected on the Collateral Analysis Schedule prepared by the Corporation's Real
Estate Manager using comparable sales figures and updated for past sales. The
Lender reserves the right, at its sole discretion, to request a third party
appraisal no more than once in a twelve month period. If the Lender exercises
this right, then the minimum net realizable value of any given piece of real
estate for the twelve months following receipt of the appraisal shall not be
greater than the amount shown on the appraisal.
As used herein, the term GAAP refers to generally accepted accounting
principals in effect in the United States of America from tune to time and
applied in a manner consistent with past practices.
5.3 Executive Compensation of Guarantor. Unless approved by Riverside's
Compensation Committee, one of whose members must be Xxxxx Xxxxxxx or Xxxxxx X.
Xxxx, the aggregate amount of compensation and fees (including bonuses) payable
to Guarantor by Borrower, the Corporation, and their subsidiaries and affiliates
(other than Wickes, Inc.) shall not be increased by more than 5% per annum over
the annual rate in effect during fiscal year 1998.
5.4 Advances, Repayment of Debts and Dividends. Without the prior written
consent of Lender, Borrower shall not make any advances or make any payment of
principal or interest on any debt owed to Guarantor, and shall not pay any
actual or constructive dividends
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in cash, stock or other property, and shall not make any other distributions
whatsoever with respect to any of its capital stock, or set aside any funds for
any of such purposes.
5.5 Repurchase of Stock. Without the prior written consent of Lender,
neither Borrower nor any of its subsidiaries nor Guarantor shall purchase,
acquire, redeem or retire any of Borrower's capital stock or rights with respect
thereto, nor shall Borrower liquidate or dissolve or take any action with a view
towards same.
5.6 Mergers, Sales and Transfers. Without the prior written consent of
Lender, neither the Borrower nor any of its subsidiaries (for the purposes of
Sections 5.6, 5.7, 5.9, 5.11 and 5.12, Wickes, Inc. shall not be deemed a
subsidiary of the Corporation or the Borrower) (whether in one transaction or in
a series of transactions) shall:
(a) Be or become a party to any consolidation, reorganization or
merger;
(b) Sell all or substantially all of its assets;
(c) Purchase all or a substantial part of the assets of any other
corporation, partner-ship, limited liability company or other business
enterprise; or
(d) Effect any change in its capital structure, or amend its Articles
of Incorporation.
5.7 Subsidiaries. Without the prior written consent of Lender, neither
Borrower nor any of its subsidiaries shall create any new subsidiaries or
acquire any capital stock or other securities or interests in another
corporation, limited liability company, entity, partnership, joint venture or
business. Borrower shall not transfer, assign or lend any money or other
property to any subsidiary or affiliate.
5.8 New Business. Borrower shall not change materially the nature of its
business in any manner.
5.9 Capital Contributions. Without the prior written consent of Lender,
neither Borrower nor any of its subsidiaries shall make any capital contribution
to, or investment in, any subsidiary or purchase or commit to purchase any
additional stock or securities of any kind from any subsidiary.
5.10 Prepayment of Other Debts. Neither Borrower nor the Guarantor shall
not prepay prior to their respective presently existing maturities any debts or
liabilities.
5.11 Indebtedness. Without the prior written consent of Lender, neither
Borrower nor any of its subsidiaries nor Guarantor shall incur any indebtedness
for borrowed money whatsoever or guaranty or become directly or contingently
liable on any note or other evidence of indebtedness, letter of credit or
contract of any kind, or enter any contract or agreement requiring it or him to
make payments regardless of the performance by the other party or that has the
effect of constituting a guaranty (and Borrower and Guarantor shall not make any
guaranty for any affiliate), except only for trade payables incurred by Borrower
in the ordinary course of business, and capital leases and equipment purchases
of $100,000 or less in the aggregate per annum.
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5.12 Loans. Neither Borrower nor any of its subsidiaries nor Guarantor
shall make any loans other than the creation of accounts receivable in the
ordinary course of business, or advance any funds whatsoever, without the prior
written consent of Lender.
6. ADDITIONAL AGREEMENTS REGARDING STOCK. As additional security for the Term
Loan, and also in connection with the Option, Borrower and Guarantor hereby
assign to Lender all of the respective rights, titles and interests of Borrower
and Guarantor under any and all registration rights and similar agreements with
respect to the stock of the Corporation, to the extent Lender has from time to
time foreclosed upon or otherwise acquired or thereafter does foreclose or
otherwise acquire any of the stock of the Corporation, including any stock
purchased pursuant to the exercise of the Option, as defined in Section 3.7
hereof, or as to which Lender has exercised such Option.
In addition, in the event Lender has from time to time foreclosed upon or
otherwise purchased or acquired any of the stock of the Corporation (or of
Borrower) pursuant to the Option or otherwise, and if Borrower and/or Guarantor
shall, at any time and from time to time through December 31, 2009, agree to
sell any of the stock of the Corporation (or of Borrower) owned by either of
them, or to otherwise transfer any of such stock, either directly or indirectly,
Borrower and Guarantor, and or either or both of them that are selling or
transferring such stock, shall:
(i) Give written notice to Lender by certified or registered
mail (return receipt requested) or by hand delivery (with a return receipt) as
promptly as practicable (but in no event less than fifteen (15) days prior to
such sale or transfer) of all the details, price and terms of such sale or
transfer and the identity of the party (the "Buyer") to whom such stock is to be
sold or transferred; and
(ii) Require as a condition of such sale or transfer that the
Buyer include in such sale or transfer the number of shares of the stock owned
by Lender that have been acquired by Lender through foreclosure or in lieu of
foreclosure that is specified by Lender in a written notice to be given by
Lender to Borrower or Guarantor, as applicable, within ten (10) days after
Lender's receipt of the notice provided for in subparagraph (i) above, all on
the same terms and conditions and at the same price per share as Borrower and/or
Guarantor are selling such stock; and
(iii) Lender shall bear its own legal expenses in connection
with participating in such sale or transfer, but Borrower and Guarantor shall
pay all other expenses of Lender in connection with such sale or transfer.
All of the foregoing provisions of this Section 6 shall survive payment in
full of the Term Loan and termination of this Loan Agreement, and Lender (and
its assigns) shall be entitled to the benefits of this Section 6 both under this
Loan Agreement and in connection with the Option and any Stock acquired by
Lender pursuant to the Option.
7. EVENTS OF DEFAULT. The occurrence of any or all of the following events
constitute an "Event of Default" under this Loan Agreement:
7.1 Payments. If any installment of principal or interest on any of the
Indebtedness, including, but not limited to the Term Note, shall not be paid in
full punctually when due and payable, except if it is "impractical" for Borrower
and Guarantor to pay such interest as such term is used in the Term Note.
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7.2 Defaults Under Loan Documents. If any default or Event of Default
occurs under any Loan Document.
7.3 Covenants and Agreements. If Borrower or Guarantor shall violate or
fail to perform or observe any covenant, agreement, condition, representation,
warranty, or other provision (other than as governed by Section 7.1 or 7.2
hereof contained or referred to in any of the Loan Documents (or the Option
Agreement) and such failure or omission shall not have been fully corrected to
the complete satisfaction of Lender within 15 days (or such xxxxxxx xxxxx period
as may be provided in the particular Loan Document (or the Option Agreement) for
the particular default) after Lender has given written notice thereof to
Borrower and Guarantor.
7.4 Failure to Pay Other Indebtedness. If Borrower or any of its
subsidiaries shall fail to pay or perform any other obligation it may have or be
subject to with respect to any party within any applicable grace period.
7.5 Accuracy of Statements. If any representation or warranty or other
statement of fact contained herein or in any of the Security Instruments or in
any writing, certificate, report or statement at any time furnished by or for
Borrower and/or Guarantor to Lender pursuant to or in connection with this Loan
Agreement or otherwise in connection with the transactions contemplated hereby
shall be false or misleading in any material respect or shall omit to state a
material fact required to be stated therein in order to make the statements
contained therein, in light of the circumstances under which made, not
misleading, on the date as of which made, whether or not made with knowledge of
same.
7.6 Solvency and Other Matters. If Borrower or any of its subsidiaries
or Guarantor shall:
(a) discontinue business; or
(b) make a general assignment for the benefit of creditors; or
(c) apply for or consent to the appointment of a custodian,
receiver, trustee or liquidator of all or a substantial part of its, his or
their assets; or
(d) be adjudicated a bankrupt or insolvent; or
(e) file a voluntary petition in bankruptcy or file a petition or
an answer seeking a composition, reorganization or an arrangement with creditors
or seeking to take advantage of any other law (whether federal or state)
relating to relief for debtors, or admit (by answer, default or otherwise) the
material allegations of any petition filed against them in any bankruptcy,
reorganization, composition, insolvency or other proceeding (whether federal or
state) relating to relief for debtors; or
(f) suffer or permit to continue unstayed and in effect for thirty
(30) consecutive days any judgment, decree or order entered by a court or
governmental agency of competent jurisdiction, which assumes control of Borrower
(or Guarantor) or approves a petition seeking a reorganization, composition or
arrangement of Borrower (or Guarantor) or any other judicial modification of the
rights of any of its (or Guarantor's) respective creditors, or appoints a
custodian, receiver, trustee or liquidator for Borrower or Guarantor or for all
or a substantial part of any of their business or assets; or
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(g) not be paying its or his debts as they become due; or
(h) be enjoined or restrained from conducting all or a material
pan of any of its or his businesses as now conducted and the same is not
dismissed and dissolved within thirty (30) days after the entry thereof.
7.7 Other Defaults. If any of the following shall occur:
(a) Any lien, garnishment, levy, attachment or encumbrance of any
kind is placed against any property which serves as collateral for the Term
Note;
(b) The issuance of any tax lien or levy against Borrower or
Guarantor or any of its or his property or Borrower's or Guarantor's failure to
pay, withhold, collect or remit any tax when assessed or due;
(c) There shall hereafter occur any material and adverse change in
the business operations and condition, financial or otherwise, of Borrower or
Guarantor or in the value of the collateral securing payment of the Term Note;
and
(d) If a final judgment or judgments for the payment of money in
the aggregate in excess of $10,000.00 shall be rendered against Borrower or
Guarantor and such judgment(s) shall remain unsatisfied or unstayed for a period
of thirty (30) days.
8. REMEDIES UPON DEFAULT. Notwithstanding any contrary provision or inference
herein or elsewhere Lender shall have the following rights and remedies:
8.1 Optional Acceleration. It any Event of Default referred to in
Sections 7.1 through 7.5 hereof shall occur, Lender, in its absolute discretion,
without further notice to the Borrower or Guarantor, may declare all or any of
the Indebtedness, including, but not limited to, the Term Note, to be, whereupon
the same shall be, accelerated and immediately due and payable in full, all
without any presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived by Borrower and Guarantor.
8.2 Automatic Acceleration. If any Event of Default referred to in
Section 7.6 hereof shall occur, all of the Indebtedness, including the Term
Note, shall thereupon become accelerated and immediately due and payable in
full, all without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by Borrower and Guarantor.
8.3 Offsets. If any Event of Default or Possible Default shall occur or
begin to exist, Lender shall have the right then, or at any time thereafter, to
set off against, and to appropriate and apply toward the payment of the
Indebtedness (in such order as Lender may select in its sole discretion),
including but not limited to the indebtedness evidenced by the Term Note,
whether or not such indebtedness shall then have matured or be due and payable
and whether or not Lender has declared the Term Note and/or other Indebtedness
to be in default and immediately due, any and all deposit balances and other
sums and indebtedness and other property then held or owed by the Lender to or
for the credit or account of Borrower and/or Guarantor, and in and on all of
which Borrower and Guarantor hereby grant Lender a first security interest and
lien to secure all the Indebtedness, all without notice to or demand upon
Borrower or Guarantor all such notices and demands being hereby expressly
waived.
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8.4 Termination of Disbursements. Upon the occurrence of any Possible
Default, Lender may immediately cease making disbursements under this Loan
Agreement, while any Possible Default exists. Upon the occurrence of any Event
of Default, Lender shall thereafter have no obligation under any circumstances
to make any further disbursements under, this Loan Agreement, even if the Event
of Default is subsequently cured, and, in such event, Lender may pursue all
other remedies available to Lender hereunder or in connection herewith.
8.5 Rights Under Security Instruments. If any Event of Default shall
occur, Lender shall also have all rights and remedies granted it under any and
all of the Security Instruments or other Loan Documents securing or intended to
secure the Indebtedness.
8.6 Rights Cumulative. All of the rights and remedies of Lender upon
occurrence of an Event of Default or Possible Default hereunder shall be
cumulative to the greatest extent permitted by law and shall be in addition to
all those rights and remedies afforded Lender at law or equity.
9. NOTICES.
9.1 Giving of Notices. All notices, requests, consents, approvals,
waivers, demands and other communications hereunder (collectively, "Notices")
shall be deemed to have been given if in writing and (1) personally delivered
against a written receipt, or (2) sent by confirmed telephonic facsimile, or (3)
delivered to a reputable express messenger service (such as Federal Express, DHL
Courier and United Parcel Service) for overnight delivery, addressed as follows
(or to such other address as a party shall have given Notice to the other):
If to Lender:
Imagine Investments, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxx, General Counsel
Telephone: (000) 000-0000
Fax: (000) 000-0000
cc: Xxxxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxxx Xxxx & XxXxxxxx PLLC
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Borrower:
Xxxxxx Financial Corporation
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attn: J. Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
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cc: Xxxxxxx Xxxxxx, Esq.
Xxxxxxx & Xxxxxx
Xxx Xxxxxxxxxxx Xxxxx, Xxxxx 0000
Post Office Box 1559
Jacksonville, Florida 32201-1559 (32202 street address)
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Guarantor:
J. Xxxxxx Xxxxxx
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
cc: Xxxxxxx Xxxxxx, Esq.
Holland & Knight
One Independent Drive, Suite 2000
Post Office Box 1559
Jacksonville, Florida 32201-1559 (32202 street address)
Telephone: (000) 000-0000
Fax: (000) 000-0000
9.2 Time Notices Deemed Given. All Notices shall be effective upon being
properly personally delivered, or upon confirmation of a telephonic facsimile,
or upon the delivery to a reputable express messenger service. The period in
which a response to any such notice must be given shall commence to run from the
date on the receipt of a personally delivered notice, or the date of
confirmation of a telephonic facsimile or two days following the proper delivery
of the Notice to a reputable express messenger service, as the case may be.
10. GUARANTY OF GUARANTOR. Guarantor unconditionally guarantees each and every
covenant, agreement, warranty, representation and obligation of Borrower under
this Loan Agreement and consents to all the terms hereof and thereof, and hereby
waives all suretyship and guarantors' defenses generally. All obligations of
Borrower and Guarantor under this Loan Agreement shall be joint and several.
11. FEES AND EXPENSES. Borrower and Guarantor agree that they shall be
responsible for and shall pay Lender's expenses incurred in negotiating and
effecting the Term Loan and the Loan Documents, including Lender's attorneys'
fees which, at Lender's option, may be deducted from the proceeds of the Term
Loan and paid to Lender's counsel, but shall nevertheless be deemed disbursed
directly to Borrower, and evidenced by the Term Note.
Further, in the event of any default under this Loan Agreement, the Term
Note or any of the Security Instruments or any related instruments, Borrower and
Guarantor will pay to Lender, to the extent allowable by applicable law, such
further amounts as shall be sufficient to reimburse fully the Lender for all of
its costs and expenses of enforcing its rights and remedies under this Loan
Agreement, the Term Note and the Security Instruments, and in protecting or
preserving any security for the Indebtedness including without limitation,
Lender's reasonable attorneys', appraisers' and accountants' fees, court costs,
security costs and maintenance costs, and the same shall be deemed evidenced by
the Term Note and secured by all the
14
Security Instruments. All obligations provided for in this Section shall survive
termination or cancellation of this Loan Agreement for any reason whatsoever.
12. IN-KIND NOTE. Pursuant to Section 3 of the Terms Note, Borrower may elect
to pay the first year's interest by the execution of an in-kind note in the form
shown on Exhibit D attached hereto and made a part hereof (the "In-Kind Note").
The In-Kind Note, if executed, shall constitute Indebtedness as that term is
defined in this Loan Agreement and shall be secured by and entitled to the
benefits of all of the Security Instruments.
13. MISCELLANEOUS PROVISIONS. This Loan Agreement shall be subject to the
following miscellaneous provisions:
13.1 Construction. The parties have participated jointly in the
negotiation and drafting of this Loan Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Loan Agreement shall be
construed as if drafted jointly by the parties and no presumption of burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Loan Agreement. Unless the context clearly
states otherwise, the use of the singular or plural in this Loan Agreement shall
include the other and the use of any gender shall include all others. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Loan Agreement. Unless otherwise expressly provided, the word
"including" does not limit the preceding words or terms.
13.2 Counterparts. This Loan Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original copy of this Loan
Agreement and all of which, when taken together, shall be deemed to constitute
one and the same agreement.
13.3 Entire Agreement. This Loan Agreement embodies the entire agreement
and understanding of the parties hereto with respect to the subject matter
herein contained, and supersedes all prior agreements, correspondence,
arrangements and understandings relating to the subject matter hereof.
13.4 Further Assurances. Borrower and Guarantor agree (a) to furnish upon
Lender's request such further information, (b) to execute and deliver such other
documents, and (c) to do such other acts and things, all as Lender may
reasonably request for the purpose of carrying out the intent of this Loan
Agreement and the documents referred to in this Loan Agreement.
13.5 Governing Law. This Loan Agreement and all other Loan Documents are
executed and delivered in, and shall be governed by the laws of, the
Commonwealth of Kentucky, without giving effect to any conflict of law rule or
principle that might require the application of the laws of another
jurisdiction.
13.6 Headings. The headings in this Loan Agreement are included for
purposes of convenience only and shall not be considered a part of this Loan
Agreement in construing or interpreting any provision hereof.
13.7 Invalidity of Provisions; Severability. If any provision of this
Loan Agreement or the application thereof to any person or circumstance shall to
any extent be held in any proceeding to be invalid, illegal or unenforceable,
the remainder of this Loan Agreement, or the application of such provision to
persons or circumstances other than those to which it was held to be invalid,
illegal or unenforceable, shall not be affected thereby, and shall be valid,
legal and
15
enforceable to the fullest extent permitted by law, but only if and to the
extent such enforcement would not materially and adversely frustrate the
parties' essential objectives as expressed herein. Notwithstanding the
foregoing, each party hereto agrees that it has reviewed the provisions of this
Loan Agreement, and that the same, taken as a whole, are fair and reasonable.
13.8 Limitation on Interest. It is the intention of the parties hereto to
conform strictly to applicable usury laws. Accordingly, all agreements between
Borrower and Lender with respect to the Term Note and the Loan Documents are
hereby expressly limited so that in no event, whether by reason of acceleration
of maturity or otherwise, shall the amount paid or agreed to be paid to Lender
or charged by Lender for the use, forbearance or detention of the money to be
lent hereunder or otherwise, exceed the maximum amount allowed by law. If the
Term Loan would be usurious under applicable law, then, notwithstanding anything
to the contrary in the Term Note or in the Loan Documents: (a) the aggregate of
all consideration which constitutes interest under applicable law that is
contracted for, taken, reserved, charged or received under the Term Note or the
Loan Documents shall under no circumstances exceed the maximum amount of
interest allowed by applicable law, and any excess shall be credited on the Term
Note by the holder thereof or, at Lender's option, refunded to Borrower, and (b)
of maturity is accelerated by reason of an election by Lender, or in the event
of a prepayment, then any consideration which constitutes interest may never
include more than the maximum amount allowed by applicable law. In such case,
excess interest, if any provided for in the Term Note, the Loan Documents or
otherwise, to the extent permitted by applicable law, shall be amortized,
prorated, allocated and spread from the date of advance until payment in full so
that the actual rate of interest is uniform through the term hereof. If such
amortization, proration, allocation and spreading is not permitted under
applicable law, then such excess interest shall be canceled automatically as of
the date of such acceleration or prepayment and, if theretofore paid, shall be
credited on the Term Note or, at Lender's option, refunded to Borrower. The
terms and provisions of this Section shall control and supersede every other
provision of the Term Note and Loan Documents. The Term Note is a contract made
under and shall be construed in accordance with and governed by the laws of
Kentucky, except that if at any time the laws of the United States America
permit Lender to contract for, take, reserve, charge or receive a higher rate of
interest than is allowed by the laws of Kentucky (whether such federal laws
directly so provide or refer to the law of any state), then such federal laws
shall to such extent govern as to the rate of interest which Lender may contract
for, take, reserve, charge or receive under the Term Note.
13.9 Binding Effect. The provisions of this Loan Agreement shall bind and
benefit Borrower, Guarantor and Lender and their respective successors, heirs,
personal representatives and assigns, including each subsequent holder, if any,
of the Term Note or any other Indebtedness.
13.10 Modifications. This Loan Agreement may be modified only in writing
executed by Lender and Borrower, and Guarantor shall automatically be bound by
all such modifications even though he does not join therein or consent thereto,
Guarantor hereby agreeing that Borrower's execution thereof shall be irrevocably
and conclusively deemed Guarantor's consent thereto as Guarantor's irrevocable
attorney-in-fact, even though it does not so state.
13.11 Time of Essence. Time is of the essence in the performance by
Borrower and Guarantor of all the obligations set forth in this Loan Agreement
and in all of the other Loan Documents.
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13.12 Waiver. The rights and remedies of Lender hereunder are cumulative
and not alternative. Neither the failure nor any delay by Lender in exercising
any right, power, or privilege under this Loan Agreement or the documents
referred to in this Loan Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. Each such
right, power, remedy or privilege may be exercised by Lender, either
independently or concurrently with others, and as often and in such order as
Lender may deem expedient. To the maximum extent permitted by applicable law, no
waiver that may be given by a party will be applicable except in the specific
instance for which it is given. No waiver or consent granted by Lender with
respect to this Loan Agreement, the Indebtedness or any Security Instrument or
related writing shall be binding upon Lender, unless specifically granted in
writing by a duly authorized officer of Lender, which writing shall be strictly
construed.
13.13 Interpretation. The parties hereto hereby agree that this Loan
Agreement shall be so interpreted to give effect and validity to all the
provisions hereof to the fullest extent permitted by law.
13.14 Assignment. Neither the Borrower nor Guarantor may assign any of
their rights under the Loan Agreement or any of the Loan Documents to any other
party. Lender may assign its rights and obligations under this Loan Agreement
and the other Loan Documents, in whole or in part, without the need for consent
from Borrower or Guarantor, and such assignee shall be entitled to the benefits
of Lender's rights hereunder.
13.15 Survival of Covenants, Agreements, Warranties and Representations.
All covenants, agreements, warranties and representations made by Borrower and
Guarantor herein shall survive the making of the Term Loan and delivery of the
Term Note, this Loan Agreement and any and all Security Instruments for the Term
Note and other Indebtedness, and shall be deemed to be continuing covenants,
agreements, representations and warranties at all times while any portion of the
Indebtedness, including the Term Note, remains unpaid.
13.16 Bank Boston's Interest in Stock. Notwithstanding any terms or
provisions herein, the rights and interests of Lender in any of the Stock
pledged by Borrower to Bank Boston shall be subject to Bank Boston's rights and
interests in the Stock, as set forth in agreements executed in connection with
Borrower's indebtedness to Bank Boston and in the Letter Agreement between Bank
Boston, Borrower and Lender, the form of which is attached hereto and made a
part hereof as Exhibit E.
14. JURY TRIAL WAIVER. BORROWER AND GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION OR ANY OTHER PROCEEDING BASED ON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
OUT OF ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER WRITTEN OR
ORAL) OR ACTIONS OF THE BORROWER, GUARANTOR OR LENDER.
17
IN WITNESS WHEREOF, the parties have entered into this Loan Agreement as of
the date first written above.
IMAGINE INVESTMENTS, INC.
/s/ Xxxxxxx X. Xxxxxxx
By:_______________________________
Vice President
Title:____________________________
("Lender")
XXXXXX FINANCIAL CORPORATION
/s/ J. Xxxxxx Xxxxxx
By:_______________________________
President
Title:____________________________
"Borrower")
/s/ J. Xxxxxx Xxxxxx
__________________________________
J. XXXXXX XXXXXX
("Guarantor")
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LIST OF EXHIBITS
Exhibit A Schedule of Borrower's Obligations to Bank Boston N.A. and Compass
Bank
Exhibit B Other Outstanding Obligations of Borrower
Exhibit C Schedules of Disbursements of Term Loan Proceeds
Exhibit D In-Kind Note
