EXHIBIT 10-12
AMENDED TERM PROMISSORY NOTE
$2,733,337.00 Rochester, New York
March 28, 1996
This Term Promissory Note (the "Note") amends, restates and replaces the
Term Loan Agreement and Term Promissory Note dated March 31, 1995. All sums
outstanding thereunder shall be deemed outstanding hereunder. No new
indebtedness is created hereby.
For value received, the undersigned (referred to herein as the "undersigned"
or the "Borrower") unconditionally promises to pay to the order of THE CHASE
MANHATTAN BANK (National Association) ("Chase"), at its office located at Xxx
Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 14643, or to such other address as Chase may
notify the undersigned, the principal amount of Two Million Seven Hundred
Thirty-three Thousand Three Hundred Thirty-seven and No/100 Dollars
($2,733,337.00) (the "loan").
This Note includes any Schedule or Rider attached hereto.
TERMS OF REPAYMENT. The entire amount of principal, and remaining
accrued interest on, this Note shall be due on January 1, 1999 (the "Maturity
Date"). Installments shall be payable in 34 consecutive principal installments
of $80,392.26 each due on the first day of each month commencing on April 1,
1996.
INTEREST. The undersigned promises to pay interest on the unpaid balance
of the principal amount of the loan from and including the date of the loan
to but excluding the date the loan shall be paid in full at a rate of interest
per year which shall automatically increase or decrease from time to time so
that at all times such rate shall remain equal to that rate of interest from
time to time announced by Chase at its head office as its prime commercial
lending rate (the "Prime Rate") plus 1.5%. Changes in the rate of interest
hereunder shall be effective as of and for the entire day on which such change
in the Prime Rate becomes effective.
Interest shall be payable on the first day of each month (commencing on the
first such date occurring after the date of the loan), unless otherwise
specified on a Rider attached hereto, on the Maturity Date, and on any
prepayment of principal. Interest shall be calculated on the basis of a year
of 360 days and payable for the actual number of days elapsed.
After the occurrence of an Event of Default set forth below, Chase, at its
option, by written notice to the undersigned may increase the interest rate on
this Note by an additional two percent (2%) per year effective on the date of
such notice.
PAYMENTS. All payments under this Note shall be made in lawful money of the
United States of America at Xxxxx'x office specified above. Chase may (but
shall not be obligated to) debit the amount of any payment (principal or
interest) under this Note when due to any deposit account of (any of) the
undersigned with Chase. Chase may apply any money received or collected for
payment of this Note to the principal of, interest on or any other amount
payable under, this Note in any order that Chase may elect.
Whenever any payment to be made hereunder (including principal and interest)
shall be stated to be due on a day on which Xxxxx'x head office is not open for
business, that payment will be due on the next following banking day, and any
extension of time shall in each case be included in the computation of interest
payable on this Note.
If any payment (principal or interest) shall not be paid within 15 days of
the date it is due, other than a payment of the entire principal balance of the
Note due upon demand, the undersigned shall pay a late payment charge equal to
five percent (5%) of the amount of such delinquent payment, provided that the
amount of such late payment charge shall be not less than $25 nor more than
$500.
AUTHORIZATIONS. The undersigned hereby authorizes Chase to make the loan
and disburse the proceeds and to make repayments of the loan by debiting such
account upon oral, telephonic instructions made by any person purporting to be
an officer or agent of the undersigned who is empowered to make such requests
and give such instructions. The undersigned may amend these instructions, from
time to time, effective upon actual receipt of the amendment by Chase. Chase
shall not be responsible for the authority, or lack of authority, of any person
giving such telephonic instructions to Chase pursuant to these provisions. By
executing this Note, the undersigned agrees to be bound to repay the loan
obtained hereunder as reflected on Xxxxx'x books and records.
RECORDS. The date and amount of the loan and each payment of principal, and
the outstanding principal balance of the loan, shall be recorded by Chase on
its books and any such record shall be conclusive absent manifest error.
REPRESENTATIONS AND WARRANTIES. The undersigned represents and warrants
upon the execution and delivery of this Note, that: (a) it is duly organized
and validly existing under the laws of the jurisdiction of its organization or
incorporation and, if relevant under such laws, in good standing; (b) it has
the power to execute and deliver this Note and to perform its obligations
hereunder and has taken all necessary action to authorize such execution,
delivery and performance; (c) such execution, delivery and performance do not
violate or conflict with any law applicable to it, any provision of its
organizational documents, any order or judgment of any court or other agency of
government applicable to it or any of its assets or any material contractual
restriction binding on or materially affecting it or any of its assets, except
for such violations or conflicts, other than violations or conflicts of any
provision of the Borrower's organizational documents, which would not
materially adversely affect the financial condition, operations, property or
business of the Borrower or the ability of the Borrower to perform its
obligations under this Note (a "Material Adverse Effect"); (d) to the best of
undersigned's knowledge, all governmental and other consents that are required
to have been obtained by it with respect to this Note have been obtained and
are in full force and effect and all conditions of any such consents have been
complied with; (e) its obligations under this Note constitute its legal, valid
and binding obligations, enforceable in accordance with its terms except to the
extent that such enforcement may be limited by applicable bankruptcy,
insolvency or other similar laws affecting creditors' rights generally and
general principles of equity; (f) all financial statements and related
information furnished and to be furnished to Chase from time to time by the
undersigned are true and complete and fairly present the financial or other
information stated therein as at such dates or for the periods covered thereby;
(g) there are no actions, suits, proceedings or investigations pending or, to
the knowledge of the undersigned, threatened against or affecting the
undersigned before any court, governmental agency or arbitrator, which would
have a Material Adverse Effect; and (h) there has been no material adverse
change in the financial condition of the undersigned since the financial
statements for the month ending February 29, 1996.
SECURITY. As collateral security for the payment of this Note and of any
and all other obligations and liabilities of the undersigned to Chase, now
existing or hereafter arising, the undersigned grants to Chase a security
interest in and a lien upon and right of offset against all moneys, deposit
balances, securities or other property or interest therein of the undersigned
now or at any time hereafter held or received by or for or left in the
possession or control of Chase or any of its affiliates, including
subsidiaries, whether for safekeeping, custody, transmission, collection,
pledge or for any other or different purpose.
As further collateral security, the undersigned has granted to Chase a
security interest in all equipment of the undersigned, whether now owned or
hereafter acquired, and all proceeds thereof (which security interest in the
equipment listed on Schedule A hereto shall be subordinate to the interest of
the creditor listed opposite such equipment on Schedule A).
DEFAULT. IF ANY OF THE FOLLOWING EVENTS OF DEFAULT SHALL OCCUR with respect
to any of the undersigned (each an "Event of Default"):
(a) the undersigned shall fail to pay the principal of, or interest on,
this Note, or any other amount payable under this Note, as and when due and
payable;
(b) any representation or warranty made or deemed made by the undersigned
in this Note or in any document granting security or support for (or otherwise
executed in connection with) this Note or by any third party supporting or
liable with respect to this Note (whether by guaranty, subordination, grant of
security or any other credit support, a "Third Party") in any document
evidencing the obligations of a Third Party (this Note and all of the foregoing
documents and all agreements, instruments or other documents executed by the
undersigned or a Third Party being the "Facility Documents") or which is
contained in any certificate, document, opinion, financial or other statement
furnished at any time under or in connection with any Facility Document, shall
prove to have been incorrect in any material respect on or as of the date made
or deemed made;
(c) the undersigned or any Third Party shall fail to perform or observe
any term, covenant or agreement contained in any Facility Document on its part
to be performed or observed, and such failure shall continue for 30 consecutive
days;
(d) the undersigned or any Third Party shall fail to pay when due any
indebtedness in excess of $50,000.00 (including but not limited to indebtedness
for borrowed money) or if any such indebtedness shall become due and payable,
or shall be capable of becoming due and payable at the option of any holder
thereof, by acceleration of its maturity, or if there shall be any default by
the undersigned or any Third Party under any agreement relating to such
indebtedness unless such default shall be cured within an applicable cure
period or waived by the holder of such indebtedness;
(e) the undersigned or any Third Party: (i) shall generally not, or be
unable to, or shall admit in writing its inability to, pay its debts as such
debts become due; (ii) shall make an assignment for the benefit of creditors;
(iii) shall file a petition in bankruptcy or for any relief under any law of
any jurisdiction relating to reorganization, arrangement, readjustment of debt,
dissolution or liquidation; (iv) shall have any such petition filed against it
and the same shall remain undismissed for a period of 30 days or shall consent
or acquiesce thereto; or (v) shall have had a receiver, custodian or trustee
appointed for all or a substantial part of its property;
(f) any Third Party Facility Document shall at any time and for any reason
cease to be in full force and effect or shall be declared null and void, or its
validity or enforceability shall be contested by the relevant Third Party or
such Third Party shall deny it has any further liability or obligation under
any Facility Document or shall fail to perform its obligations under any
Facility Document;
(g) any security agreement or other agreement (whether by the undersigned
or any Third Party) granting a security interest, lien, mortgage or other
encumbrance securing obligations under any Facility Document shall at any time
and for any reason cease to create a valid and perfected first priority
security interest (except with respect to security interests in equipment
referenced on Schedule A), lien, mortgage or other encumbrance in or on the
property purported to be subject to such agreement or shall cease to be in full
force and effect or shall be declared null and void, or the validity or
enforceability of any such agreement shall be contested by any party to such
agreement, or such party shall deny it has any further liability or obligation
under such agreement or any such party shall fail to perform any of its
obligations under such agreement;
(h) there be such a change in the condition or affairs (financial or
otherwise) of the Borrower or any guarantor of this Note, as in the reasonable
opinion of Chase or any holder hereof, which will substantially increase the
credit risk of Chase or any holder hereof; or
(i) one or more judgments, decrees or orders for the payment of money in
excess of $50,000 in the aggregate shall be rendered against the undersigned
and shall continue unsatisfied and in effect for a period of 30 consecutive
days without being vacated, discharged, satisfied or stayed or bonded pending
appeal.
THEN, IN ANY SUCH CASE, if Chase shall elect by notice to the undersigned, the
unpaid principal amount of this Note, together with accrued interest, shall
become forthwith due and payable; provided that in the case of an event of
default under (e) above, the unpaid principal amount of this Note, together
with accrued interest, shall immediately become due and payable without any
notice or other action by Chase.
CERTAIN WAIVERS. The undersigned waives presentment, notice of dishonor,
protest and any other notice or formality with respect to this Note.
COSTS. The undersigned agrees to reimburse Chase on demand for all
costs, expenses and charges (including, without limitation, fees and charges of
external legal counsel for Chase and costs allocated by its internal legal
department) in connection with the preparation, interpretation, performance or
enforcement of this Note and the Facility Documents.
NOTICES. All notices, requests, demands or other communications to or
upon the undersigned or Chase shall be in writing and shall be deemed to be
delivered upon receipt if delivered by hand or overnight courier or five days
after mailing to the address (a) of the undersigned as set forth next to the
undersigned's execution of this Note, (b) of Chase as first set forth above, or
(c) of the undersigned or Chase at such other address as the undersigned or
Chase shall specify to the other in writing.
ASSIGNMENT. This Note shall be binding upon the undersigned and its or
their successors and shall inure to the benefit of Chase and its successors and
assigns.
ENTIRE AGREEMENT, AMENDMENT AND WAIVER. This Note and the Facility
Documents constitute the entire agreement between the undersigned and Chase and
may be amended only by a writing signed on behalf of each party and shall be
effective only to the extent set forth in that writing. In the event of any
inconsistency between this Note (and any Rider(s) attached hereto) and the
Facility Documents, this Note and such Riders shall prevail. No delay by Chase
in exercising any power or right hereunder shall operate as a waiver thereof or
of any other power or right; nor shall any single or partial exercise of any
power or right preclude other or future exercise thereof, or the exercise of
any other power or right hereunder.
GOVERNING LAW; JURISDICTION. This Note shall be governed by and
construed in accordance with the laws of the State of New York. The undersigned
consents to the nonexclusive jurisdiction and venue of the state or federal
courts located in such state. In the event of a dispute hereunder, suit may be
brought against the undersigned in such courts or in any jurisdiction where the
undersigned or any of its assets may be located. Service of process by Chase
in connection with any dispute shall be binding on the undersigned if sent to
the undersigned by registered mail at the address(es) specified below or to
such further address as the undersigned may specify to Chase in writing.
MAXIMUM INTEREST. Notwithstanding any other provision of this Note, the
undersigned shall not be required to pay any amount pursuant to this Note which
is in excess of the maximum amount permitted to be charged by national banks
under applicable law and any such excess interest paid shall be refunded to the
undersigned or applied to principal owing hereunder.
BUSINESS COVENANTS. The undersigned agrees that until payment in full of
the loan, all interest thereon and all other amounts payable under this Note,
the undersigned shall perform and comply with the covenants set forth on the
Business Covenants Rider annexed hereto.
BORROWER WAIVERS. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE(S) (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY
RIGHT TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS NOTE
OR ANY FACILITY DOCUMENT, AND AGREES THAT ANY SUCH DISPUTE SHALL, AT CHASE'S
OPTION, BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
IN ADDITION, THE UNDERSIGNED WAIVES THE RIGHT TO INTERPOSE ANY DEFENSE
BASED UPON ANY STATUTE OF LIMITATIONS OR ANY CLAIM OF DELAY BY CHASE AND ANY
SET-OFF OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION.
Chase Account No. to be charged for Disbursements and Payments:
______________________________
Address for notices: ARTISTIC GREETINGS INCORPORATED
One Xxxxx Center By: /s/ Xxxxxx X. Xxxxxxx
P.O. Box 1999
Elmira, New York 14901 Print Name _________________________________
Title: Senior VP and General Counsel
Business Covenants Rider
SCHEDULE OF BUSINESS COVENANTS
This Rider is referred to in and is attached to the NOTE made by ARTISTIC
GREETINGS INCORPORATED (the "undersigned" or the "Borrower") to the order of
THE CHASE MANHATTAN BANK (National Association) ("Chase") dated March 28, 1996
(the "Note") Any capitalized term not otherwise defined herein shall have the
meaning ascribed.
1. AFFIRMATIVE COVENANTS. The undersigned agrees that it shall:
1.1 Furnish to Chase:
(a) As soon as available and in any event within 90 days after and
as at the close of each Fiscal Year, a consolidated (and consolidating) balance
sheet of undersigned and its consolidated Subsidiaries, and consolidated (and
consolidating) statements of income, cash flows and changes in shareholders'
equity of undersigned and its consolidated Subsidiaries prepared in accordance
with GAAP consistently applied, on an audit basis, prepared by Xxxxxx Xxxxxxxx,
LLP or other independent public accounting firm satisfactory to Chase, and as
to audited statements, accompanied by a satisfactory report and opinion of such
accountants.
(b) As soon as available and in any event within 45 days after the
end of each of the first three Fiscal Quarters, a consolidated (and
consolidating) balance sheet of undersigned and its consolidated Subsidiaries
as at the end of each such quarter and related consolidated (and consolidating)
statements of income, cash flow and changes in shareholders' equity of the
undersigned and its consolidated Subsidiaries for the Fiscal Quarter and from
the beginning of such Fiscal Year to the end of such Fiscal Quarter, together
with comparisons to the previous year, if appropriate, and to budget
projections, prepared in conformity with GAAP consistently applied (subject to
year-end adjustments), and certified by an appropriate financial officer of
undersigned.
(c) As soon as available and in any event within 30 days after the
end of each month which is not also the end of a Fiscal Quarter, a consolidated
(and consolidating) balance sheet of undersigned and its consolidated
Subsidiaries as at the end of each such month and related consolidated (and
consolidating) statements of income, cash flow and changes in shareholders'
equity of the undersigned and its consolidated Subsidiaries for the month and
from the beginning of such Fiscal Year to the end of such month, together with
comparisons to the previous year, if appropriate, and to budget projections,
prepared in conformity with GAAP consistently applied(subject to year-end
adjustments), and certified by an appropriate financial officer of undersigned.
(d) Such other books, records and reports as Chase may from time to
time reasonably request, including an equipment listing; inventory listing,
aging and locations; and accounts receivable aging; which information, together
with the above financial reports, shall all be prepared in form and detail
satisfactory to Chase.
1.2 Cause to be done all things necessary to preserve and keep in
full force and effect undersigned's and its Subsidiaries' existence, rights,
licenses and franchises necessary and material to undersigned's operations
taken as a whole; and comply with all laws applicable to undersigned, except
for such non-compliance which would not have a Material Adverse Effect.
1.3 Permit representatives of Chase to visit and inspect any of the
properties of undersigned and its Subsidiaries, examine its corporate books and
records, and to make extracts or copies of such books and records, and discuss
its affairs, finances and accounts with its officers, provided that the
foregoing shall only be done at reasonable times upon prior written notice and
during normal business hours and with not more than reasonable frequency, and
provided further that the reasonable cost of such inspections and examinations
shall be paid by undersigned.
1.4 Cause to be paid and discharged all obligations when due and all
lawful taxes, assessments and governmental charges or levies imposed upon
undersigned or any Subsidiary, or upon any property, real, personal or mixed,
belonging to undersigned or its Subsidiaries, or upon any part thereof, before
the same shall become in default, as well as lawful claims for labor, materials
and supplies which, if unpaid, might become a lien or charge upon such property
or any part thereof; provided, however, that neither the undersigned nor any
Subsidiary shall be required to cause to be paid and discharged any such
obligation, tax, assessment, charge, levy or claim so long as the validity
thereof shall be contested in the normal course of business and in good faith.
1.5 Maintain with financially sound, reputable and duly licensed
insurers, insurance of the kinds, covering the risks and in the relative
proportionate amounts usually carried by similar companies in similar
localities.
1.6 Promptly notify Chase in writing with full details if any event
occurs or any condition exists which constitutes, or which but for a
requirement of lapse of time or giving of notice or both would constitute an
Event of Default under the Note or which might materially and adversely affect
the financial condition or operations of undersigned or any Subsidiary.
2. NEGATIVE COVENANTS. Undersigned agrees that it shall not, and shall
not permit any Subsidiary to:
2.1 Pledge or encumber any of its assets, except:
(a) mortgages, liens, security interests or encumbrances
granted to Chase,
(b) in the case of real properties, easements, restrictions,
exceptions, reservations or defects which, in the aggregate, do not interfere
materially with the continued use of such properties for the purposes for which
they are used and do not affect materially the value thereof;
(c) liens, pledges or deposits to secure obligations under
workers' compensation laws or similar legislation or to secure performance in
connection with bids, tenders and contracts (other than contracts for the
payment of borrowed money) to which the undersigned or any Subsidiary is a
party;
(d) deposits to secure public or statutory obligations of the
undersigned and any Subsidiaries;
(e) liens, deposits or pledges to secure the performance of
surety, stay, appeal, indemnity, performance or similar bonds;
(f) materialmen's, mechanics', carriers', workers' or other
like liens arising in the ordinary course of business, or deposits of cash or
United States obligations to obtain the release of such liens;
(g) purchase money liens created by undersigned or any
Subsidiary in the course of purchasing property, or existing on property at the
time of such purchase (whether or not assumed), provided that such lien shall
be restricted to the property being purchased, that the indebtedness secured
thereby shall not exceed 80% of the lesser of cost or fair market value at the
time of purchase, and the related expenditure is permitted by Section 2.10
hereof; and
(h) liens and encumbrances existing as of the date hereof and
disclosed to Chase in writing, including without limitation, liens in favor of
Marine Midland Bank; and
(i) judgment and other similar liens or encumbrances arising
in connection with court proceedings, provided the execution or other
enforcement of such liens or encumbrances is effectively stayed and the claims
secured thereby are being actively contested in good faith by appropriate
proceedings.
2.2 Make or permit to be made any material change in the character,
management or direction of undersigned's business or operations (including, but
not limited to, a change in its executive management or in the ownership of its
capital stock which effects a change in the control of any such business or
operations), without reasonable prior written notice to Chase.
2.3 Be in violation of any law or regulation, order, writ,
injunction or decree of any court or governmental instrumentality or in breach
of any agreement or instrument to which undersigned or any Subsidiary is
subject or in default thereunder, except for such violations, breaches or
defaults which would not have a Material Adverse Effect.
2.4 Enter into or be a party to any merger, consolidation,
reorganization, exchange of stock or all or substantially all of its assets,
unless undersigned is the surviving corporation and as such satisfies all of
the covenants contained in this Schedule; provided further, however, the
undersigned will not permit any corporation to merge into undersigned or
acquire all or substantially all of its assets in exchange for securities of
its own issue if immediately after such merger or asset acquisition, assuming
full conversion of any convertible securities issued in connection therewith,
the shareholders of the corporation merged into undersigned or any Subsidiary
would hold 50% or more of the voting power of undersigned or any Subsidiary.
2.5 Organize or cause to exist any new Subsidiaries, without Xxxxx'x
prior written consent, which consent shall not be unreasonably withheld and may
be conditioned, without limitation, upon the execution by such Subsidiary of a
guarantee of payment of the Note and all other indebtedness of undersigned to
Chase and of a security agreement covering such Subsidiary's assets and
securing such debt.
2.6 Sell, lease, assign, transfer or otherwise dispose of any of the
assets of undersigned that are collateral for the undersigned's obligations to
Chase.
2.7 Make or hold any investment in any securities of any kind other
than ownership of stock of Subsidiaries and other than securities owned as of
the date hereof and securities purchased with the proceeds of such securities,
be or become a party to any joint venture or partnership, or make or keep
outstanding any advance or loan except as permitted pursuant to and under
Part 2.8. The foregoing provision shall not apply to any investment in direct
obligations of the United States of America, certificates of deposit issued by
a member bank of the Federal Reserve System, or any investment in commercial
paper which at the time of such investment is assigned the highest quality
rating in accordance with the rating systems employed by either Xxxxx'x
Investors Service, Inc. or Standard & Poor's Corporation.
2.8 Loan or make advances to, or guarantee, indorse or otherwise be
or become liable or contingently liable in connection with the obligations or
indebtedness of any other person, firm or corporation, directly or indirectly
except:
(a) as an indorser of negotiable instruments for the payment
of money in the ordinary course of business;
(b) trade credit extended in the ordinary course of business;
(c) advances, not in excess of $10,000.00 in each instance,
made in the usual course of business to officers and employees and guaranties
of the obligations of employees incurred in connection with their employment;
(d) loans to wholly-owned Subsidiaries which have guaranteed
all indebtedness of undersigned to Chase;
(e) guarantees by Subsidiaries of undersigned's indebtedness
to Chase;
(f) miscellaneous guarantees not to exceed in each case
$50,000.00 or in the aggregate $100,000.00.
2.9 Make expenditures for fixed or capital assets exceeding an
aggregate amount of $3,000,000.00 in any single Fiscal Year, plus the amount
permitted to be and not as of yet expended for fixed or capital assets in the
prior Fiscal Year.
2.10 Declare or pay any dividends, purchase, redeem, retire or
otherwise acquire for value any of its capital stock, or make any distribution
of its assets to its stockholders or permit any of its Subsidiaries to purchase
or otherwise acquire for value any stock of the undersigned or another such
Subsidiary, except that: (a) the undersigned may declare and deliver dividends
and make distributions payable solely in common stock of the undersigned; and
(b) the undersigned may declare dividends in its current Fiscal Year which do
not exceed the amount of tax liability of the shareholders of the undersigned
attributable to the undersigned's undistributed taxable income during any
applicable Fiscal Year.
3. FINANCIAL COVENANTS. The undersigned shall maintain the following
financial covenants and ratios:
3.1 MINIMUM CONSOLIDATED WORKING CAPITAL. The Borrower will
maintain at all times an excess of Consolidated Current Liabilities over
Consolidated Current Assets of not more than $350,000 through June 30, 1996 and
will maintain an excess of Consolidated Current Assets over Consolidated
Current Liabilities of not less than $1.00 at all times thereafter. For the
purpose of this section, all amounts outstanding under the Revolving Credit
Note executed and delivered by Borrower to Marine Midland Bank shall be treated
as long term debt.
3.2 MINIMUM TANGIBLE NET WORTH. The Borrower will maintain at all
times a Consolidated Tangible Net Worth of not less than $8,000,000.
3.3 MONTHLY INCOME/LOSS. During each month ending after the date
hereof, the Borrower will not incur a net, pre-tax loss (exclusive of non-cash
write-downs not to exceed $500,000 in the aggregate) in excess of $500,000.
3.4 CURRENT RATIO. The Borrower will maintain at all times a ratio
of Consolidated Current Assets to Consolidated Current Liabilities of not less
than .9 to 1.0 through June 30, 1996 and 1.0 to 1.0 at all times thereafter.
For the purpose of this section, all amounts outstanding under the Revolving
Credit Note executed and delivered by Borrower to Marine Midland Bank shall be
treated as long term debt.
3.5 QUARTERLY LOSS. The Borrower will not suffer or
incur a quarterly net loss (exclusive of non-cash write-downs not to exceed
$500,000 in the aggregate) before taxes in excess of the
following amounts:
QUARTER ENDED Maximum Quarterly Loss
3/31/96 $900,000
6/30/96 500,000
9/30/96 -0-
12/31/96, and each -0-
fiscal quarter thereafter
3.6 LEVERAGE RATIO. The Borrower will maintain at all times a ratio
of Consolidated Liabilities to Consolidated Tangible Net Worth of not greater
than 4.0 to 1.0.
4. DEFINITIONS AND RULES OF CONSTRUCTION.
4.1 In addition to the terms defined elsewhere in the Note, the
following terms shall have the following meanings for purposes of this
Schedule:
"CONSOLIDATED CURRENT ASSETS" means, in respect of a Person, all assets of
such Person and its Subsidiaries (if any) on a consolidated basis which should
in accordance with GAAP be classified as current assets after eliminating
inter-company items, but in any event excluding any assets which are pledged or
deposited as security for, or for the purpose of paying, any Indebtedness.
"CONSOLIDATED CURRENT LIABILITIES" means, in respect of a Person, all
Indebtedness of such Person and its Subsidiaries (if any) on a consolidated
basis which should, in accordance with GAAP, be classified as current
liabilities after eliminating inter-company items (including loans payable to
officers and employees of the undersigned) and excluding Subordinated Debt.
"CONSOLIDATED LIABILITIES" means, in respect of a Person, all Indebtedness
of such Person and its Subsidiaries (if any) on a consolidated basis which
should, in accordance with GAAP, be classified as liabilities after eliminating
inter-company items and excluding Subordinated Debt.
"CONSOLIDATED TANGIBLE NET WORTH" means, in respect of a Person, the
consolidated stockholders' equity in such Person and its Subsidiaries
determined in accordance with GAAP, except that there shall be deducted
therefrom all intangible assets (other than leasehold improvements) of such
Person and its Subsidiaries, such as organization costs, unamortized debt
discount and expense, goodwill, patents, trademarks, copyrights, contractual
franchises, and research and development expenses.
"CONSOLIDATED WORKING CAPITAL" means the difference of Consolidated Current
Assets minus Consolidated Current Liabilities in respect of a Person.
"FISCAL YEAr" means the undersigned's fiscal year consisting of a twelve
month period ending on each December 31.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect on the date hereof and from time to time hereafter,
consistently applied.
"INDEBTEDNESS" means, in respect of any Person, all items (other than
capital stock, additional paid-in capital, retained earnings and deferred
credits) which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet as at the date on
which Indebtedness is to be determined. "Indebtedness" shall also include,
whether or not so reflected, (i) indebtedness, obligations, and liabilities
secured by any mortgage, pledge or lien existing on property owned subject to
such mortgage, pledge or lien whether or not the indebtedness, obligations or
liabilities secured thereby shall have been assumed, (ii) all guaranties made
by such Person, and (iii) the amount of any reimbursement obligation in respect
of any letter of credit.
"PERSON" means an individual, a corporation, a company, a voluntary
association, a partnership, a trust, an unincorporated organization or a
government or any agency, instrumentality or political subdivision thereof.
"SUBORDINATED DEBT" means indebtedness of the undersigned which shall be
subordinated to the loan in a form satisfactory to Chase in its sole discretion
reasonably exercised and to which Chase shall have given its express written
consent.
"SUBSIDIARY" means any corporation or other entity of which at least a
majority of the securities or other ownership interests having ordinary voting
power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by the undersigned.
4.2 All accounting terms not specifically defined herein shall be
construed in accordance with GAAP, and all financial data required to be
delivered hereunder shall be prepared in accordance with GAAP.
4.3 All references to Subsidiaries or Consolidated Subsidiaries
shall be deemed to mean if any shall exist. For so long as undersigned has no
Subsidiary, all definitions and covenants referring to undersigned and its
Subsidiaries or Consolidated Subsidiaries on a consolidated basis and all
references to consolidated and consolidating financial statements shall be
deemed to refer to undersigned alone and to undersigned's financial statements
alone, respectively, but shall remain applicable in all other respects.
Dated: March 28, 1996 ARTISTIC GREETINGS INCORPORATED
By:/s/ Xxxxxx X. Xxxxxxx
Print Name:__________________________
Title: Senior VP and General Counsel
AMENDMENT AND WAIVER AGREEMENT
AMENDMENT AND WAIVER AGREEMENT (THE "Agreement") dated March 28, 1996 by
and between ARTISTIC GREETINGS INCORPORATED, a Delaware corporation (the
"Borrower"), and THE CHASE MANHATTAN BANK, N.A., a national banking
association (the "Bank").
R E C I T A L S
1. The Borrower and the Bank have entered into a Term Loan Agreement
dated as of March 31, 1995 (the "Term Loan Agreement) and a Security
Agreement dated as of March 31, 1995 (the "Security Agreement"), and, in
connection with the transactions contemplated by the Term Loan Agreement,
the borrower executed a Term Promissory Note in favor of the Bank dated
March 31, 1995 (the "Note"; the Term Loan Agreement, the Security Agreement
and the Note are hereinafter referred to collectively as the "Loan
Documents").
2. The Borrower is in default under the Loan Documents by reason of
the violation of certain covenants in the Term Loan Agreement and the
Security Agreement.
3. The Borrower and Marine Midland Bank ("Marine Midland") have
entered into a Revolving Credit Agreement dated as of March 8, 1996 (the
"Marine Credit Agreement"), and a Security Agreement dated as of March 8,
1996 (the "Marine Security Agreement") an Amendment, Modification and
Waiver Agreement dated as of March 8, 1996 (the "Marine Amendment and
Waiver Agreement"; the Marine Credit Agreement, Marine Security Agreement
and Marine Amendment and Waiver Agreement are hereinafter collectively
referred to as the "Marine Loan Documents") for the purpose of waiving
certain defaults of the Borrower under a pre-existing line of credit and
certain other loan documents between the Borrower and Marine Midland and
for the purpose of terminating such pre-existing line of credit and
refinancing the amounts outstanding thereunder.
4. The Borrower, the bank and Marine Midland have entered into a
letter agreement (the "Letter Agreement") dated March 8, 1996 relating to
certain equipment securing an equipment loan from Marine Midland to
Borrower.
5. The Borrower and the Bank have agreed to amend, restate and replace
the Term Loan Agreement and the Note with an Amended Term Promissory Note
(the "Amended Note") in substantially the form attached hereto as EXHIBIT
A.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the Borrower and the Bank hereby agree as follows:
1. WAIVER OF DEFAULTS. The Bank hereby waives the following:
(a) Through the date of this Agreement, any defaults arising under
paragraph 1, paragraph 2 and paragraph 3 of Term Loan Agreement.
(b) Through the date of this Agreement, any events of default
under paragraphs 3(b), 3(c), 3(d) and 3(f) of the Note.
(c) Through the date of this Agreement, events of default, if any,
arising under the Security Agreement.
(d) Any default under the Loan Documents resulting from the
execution, delivery and performance of the Marine Loan documents and the
transactions contemplated thereby.
2. PRE-PAYMENT. The Borrower shall on the date hereof make a pre-
payment to the Bank of $125,000 (the "Pre-Payment"). Such Pre-Payment
shall be applied against the principal amount outstanding under the Note.
3. TERM LOAN AGREEMENT AND NOTE. The Bank and the Borrower hereby
agree to terminate the Term Loan Agreement and the Note and replace them
with the Amended Note. The remaining principal balance outstanding under
the Note of $2,733,337.00 shall be deemed outstanding under the Amended
Note.
4. RESTRUCTURING FEE. Borrower shall pay to Bank on the date hereof a
restructuring fee equal to $6,833.34.
5. AMENDMENT TO SECURITY AGREEMENT.
(a) The Bank and the Borrower hereby amend paragraphs (a), (c) and
(f) of the "FURTHER WARRANTIES AND COVENANTS OF DEBTOR" section of the
Security Agreement by including therein exceptions for (i) certain liens,
security interests and filings granted to Marine Midland in the items of
equipment identified on Schedule A to the Amended Note ("Schedule A"), (ii)
liens, security interests and filings granted to Southern Tier Economic
Growth in the items of equipment identified on Schedule A and (iii) liens,
security interest and filings granted or to be granted to secure purchase
money indebtedness permitted under the Amended Note.
(b) The Bank and the Borrower hereby amend the "EVENTS OF DEFAULT"
section of the security agreement by deleting Paragraphs (a) through (f) of
such section in their entirety. The Bank and the Borrower hereby agree
that an occurrence of an event of default under the Amended Note shall
constitute and event of default under the Security Agreement.
(c) The Bank and the Borrower hereby agree that to the extent a
term of the Security Agreement is inconsistent with the terms of the
Amended Note, the terms of the Amended Note shall govern.
6. MARINE MIDLAND LIENS. The Bank and the Borrower hereby affirm the
Letter Agreement relating to the liens of Marine Midland on the Marine
Equipment (as defined therein) and the liens of the Bank on the Chase
Collateral (as defined therein).
7. EXCHANGE OF TERM LOAN AGREEMENT AND NOTE. The Bank shall on the
date hereof deliver the original Term Loan Agreement and the Note in
exchange for execution and delivery of the Amended Promissory Note.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date written above.
ARTISTIC GREETINGS INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxx
Title: Senior VP and General Counsel
THE CHASE MANHATTAN BANK, N.A.
By: Xxxxx Xxxxxxx
Title:
