Exhibit 10.1
AMENDED AND RESTATED THIRD MODIFICATION AGREEMENT
-------------------------------------------------
THIS AMENDED AND RESTATED THIRD MODIFICATION AGREEMENT (hereinafter, this
"Agreement") is made this 14th day of May, 2001 by and among:
SOVEREIGN BANK as successor-in-interest to Fleet National Bank
(hereinafter, the "Bank"), a federal savings bank having an office located at
000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx;
SIGHT RESOURCE CORPORATION (hereinafter, "Sight Resource"), a Delaware
corporation with a principal place of business at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx;
CAMBRIDGE EYE ASSOCIATES, INC. (hereinafter, "Cambridge Eye"), a Delaware
corporation with a principal place of business at Xxx Xxxxxxxx Xxxxxx, Xxxx 0X,
Xxxxxx, Xxxxxxxxxxxxx;
XXXXXXX VISION WORLD, INC. (hereinafter, "Xxxxxxx Vision"), a Delaware
corporation with a principal place of business at Xxx Xxxxxxxx Xxxxxx, Xxxx 0X,
Xxxxxx, Xxxxxxxxxxxxx;
X.X. XXXXX OPTICIANS, INC. (hereinafter, "X.X. Xxxxx"), a Delaware
corporation with a principal place of business at 0000 X. 00xx Xxxxxx,
Xxxxxxxxx, Xxxx;
EYEGLASS EMPORIUM, INC. (hereinafter, "Eyeglass Emporium"), a Delaware
corporation with a principal place of business at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx;
KENT OPTICAL COMPANY, f/k/a KENT ACQUISITION CORP. (hereinafter, "Kent
Optical"), a Delaware corporation with a principal place of business at 000
Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx;
SHAWNEE OPTICAL, INC. (hereinafter, "Shawnee Optical"), a Delaware
corporation with a principal place of business at 0000 X. 00xx Xxxxxx, Xxxx,
Xxxxxxxxxxxx; and
VISION PLAZA, CORP. (hereinafter, "Vision Plaza"), a Delaware corporation
with a principal place of business at 0000 Xxxxxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx
00X, Xxxxxxx, Xxxxxxxxx.
Hereinafter, the Sight Resource, Cambridge Eye, Xxxxxxx Vision, X.X.
Xxxxx, Eyeglass Emporium, Kent Optical, Shawnee Optical, and Vision Plaza shall
be referred to collectively, jointly, and severally, as the "Obligors."
WITNESSETH
----------
WHEREAS, reference is hereby made to certain loan arrangements
(hereinafter, the "Loan Arrangements") entered into by and between the Bank and
the Obligors, evidenced by, among other things, the following documents,
instruments, and agreements (hereinafter collectively, together with this
Agreement and all documents, instruments, and agreements executed incidental
hereto, and contemplated hereby, the "Loan Documents"):
(a) Loan Agreement (hereinafter, as amended, the "Loan Agreement")
dated April 15, 1999, entered into by and between the Bank and the
Obligors;
(b) Secured Revolving Line Note (hereinafter, the "Revolving Note")
dated April 15, 1999 in the maximum principal amount of $3,000,000.00 made
by the Obligors payable to the Bank;
(c) Secured Term Note (hereinafter, the "Term Note") dated April 15,
1999 in the original principal amount of $7,000,000.00 made by the
Obligors payable to the Bank;
(d) Eight (8) Security Agreements (All Assets) (hereinafter,
collectively, the "Security Agreements") dated April 15, 1999
respectively, pursuant to which each of the Obligors granted the Bank a
security interest in the Collateral (as defined in the Security
Agreements);
(e) Security Agreement (Pledged Collateral) dated April 15, 1999,
pursuant to which Sight Resource assigned, transferred, and delivered to
the Bank all of the Collateral (as defined therein);
(f) Modification Agreement (hereinafter, the "Modification
Agreement") dated March 31, 2000 entered into by the Bank and the
Obligors; and
(g) Second Modification Agreement (hereinafter, the "Second
Modification Agreement") dated November 30, 2000 entered into by the Bank
and the Obligors.
Capitalized terms used herein and not otherwise defined shall have the meanings
as set forth in the Loan Agreement, as amended by (i) the Modification Agreement
and (ii) the Second Modification Agreement.
WHEREAS, the Obligors have requested that the Bank amend certain terms and
conditions of the Loan Documents as provided for herein; and
WHEREAS, the Bank has indicated its willingness to do so, BUT ONLY on the
terms and conditions contained in this Agreement; and
WHEREAS, the Obligors have determined that this Agreement is in the
Obligors' best interest.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Obligors and the Bank agree as
follows:
Acknowledgment of Indebtedness
------------------------------
1. The Obligors each hereby acknowledge and agree that, in accordance with
the terms and conditions of (i) the Loan Documents, (ii) this Agreement, and
(iii) all documents, instruments, and agreements executed incidental to, and
contemplated by this Agreement, the Obligors are jointly and severally liable to
the Bank as of May 10, 2001, as follows:
(a) Revolving Note:
(i) Principal: $2,500,000.00
(ii) Interest: $3,750.00
(iii) Late Fees: $33.33
(iv) Legal Fees & Expenses
(From 03/16/01 - 05/08/01): $6,247.39
(b) Term Note:
(i) Principal: $5,850,002.01
(ii) Interest: $8,775.00
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(iii) Late Fees: $78.00
TOTAL $8,368,885.73
(c) All interest accruing from and after May 10, 2001 under the
Revolving Note, and the Term Note, respectively, and all late fees,
reasonable costs, expenses, and costs of collection (including reasonable
attorneys' fees and the allocated costs of the Bank's in-house counsel)
incurred by the Bank from and after May 8, 2001 in connection the Loan
Documents, including, without limitation, all reasonable attorney's fees
and expenses incurred in connection with the negotiation and preparation
of this Agreement and all documents, instruments, and agreements
incidental hereto.
(d) Hereinafter all amounts due as set forth in this Paragraph 1,
and elsewhere payable under this Agreement, shall be referred to
collectively as the "Obligations."
Waiver of Claims
----------------
2. The Obligors each hereby acknowledge and agree that they have no
offsets, defenses, claims, or counterclaims against the Bank or the Bank's
officers, directors, employees, attorneys, representatives, predecessors,
successors, and assigns with respect to the Obligations, or otherwise, and that
if any of the Obligors now have, or ever did have, any offsets, defenses,
claims, or counterclaims against the Bank or the Bank's officers, directors,
employees, attorneys, representatives, predecessors, successors, and assigns,
whether known or unknown, at law or in equity, from the beginning of the world
through this date and through the time of execution of this Agreement, all of
them are hereby expressly WAIVED, and the Obligors each hereby RELEASE the Bank
and the Bank's officers, directors, employees, attorneys, representatives,
predecessors, successors, and assigns from any liability therefor.
Ratification of Loan Documents; Further Assurances
--------------------------------------------------
3. The Obligors:
(a) Hereby ratify, confirm, and reaffirm all and singular the terms
and conditions of the Loan Documents. The Obligors further acknowledge and
agree that except as specifically modified in this Agreement, all terms
and conditions of those documents, instruments, and agreements shall
remain in full force and effect; and
(b) Shall, from and after the execution of this Agreement, execute
and deliver to the Bank whatever additional documents, instruments, and
agreements that the Bank reasonably may require in order to vest or
perfect the Loan Documents and the Collateral granted therein more
securely in the Bank and to otherwise give effect to the terms and
conditions of this Agreement, including, without limitation, such UCC
Financing Statements and related documentation as may be necessary in
order to perfect the security interest granted to the Bank by the Obligors
in the Collateral.
Waiver of Certain Existing Defaults
-----------------------------------
4. In consideration of the Obligors' compliance with the terms and
conditions of this Agreement, the Bank hereby agrees to waive the following
existing Defaults which have occurred under the Loan Documents: (i) Section 7.01
- Minimum Net Worth of not less than $21,000,000 for the quarter ended
12/30/2000; (ii) Section 7.03 - Minimum Debt Service Coverage Ratio of not less
than 1.1x for the quarter ended 12/30/2000; (iii) Section 7.04 - Maximum Funded
Debt Coverage Ration of not more than 3.5x for the trailing twelve (12) month
period ended 12/30/2000; and (iv)
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Section 7.05 - Minimum Net Profit of not greater than a loss of $620,000 for the
quarter ended 12/30/2000 and not greater than a loss of $1,950,000 for the
twelve (12) month period ended 12/30/2000 (collectively, the "Existing
Defaults"). In connection with the waiver of the Existing Defaults, the Obligors
hereby expressly acknowledge and agree as follows:
(a) The waiver of the Existing Defaults (i) shall apply only to the
defaults specified herein, (ii) constitutes a one-time waiver, and (iii)
shall not constitute a waiver of any Default or Events of Default whether
now existing or arising after the execution of this Agreement, other than
of the Existing Defaults; and
(b) The waiver of the Existing Defaults shall not prejudice any
rights or remedies the Bank may have after the date hereof to declare an
Event of Default, or to exercise its rights and remedies with respect to
such Default, with respect to any failure of the Obligors to be in
compliance with any term or condition of the any of the Loan Documents.
Licensing Agreements
--------------------
5. The Obligors each hereby represent and warrant to the Bank that:
(a) The Obligors maintain licensing agreements with only those
parties specifically identified on Exhibit "A" attached hereto;
(b) The Collateral granted to the Bank under the Security Agreements
is subject to the rights of only those licensors specifically listed on
Exhibit "A"; and
(c) Complete and accurate copies of all licensing agreements
(together with any amendments or addendums thereto) maintained among the
Obligors and any other parties are attached hereto as Exhibit "B".
Additional Financings
---------------------
6. The Obligors have advised the Bank that they are negotiating to receive
additional financings in the form of equity and/or debt subordinate to the
Obligations, in the aggregate amount of not less than $2,300,000 (the
"Additional Financings") from third parties (the "Investors"). In that regard,
the Obligors:
(a) Shall provide to the Bank, by no later than the first business
day of each calendar month during the term of this Agreement, written
updates as to the status of the Obligors' efforts to obtain Additional
Financings from the Investors or any other parties (hereinafter, the
"Financing Report"). Each Financing Report shall include, at a minimum, a
statement as to the persons or entities with which the Obligors are
actively seeking any Additional Financings, as well as an accounting of
any amounts received by the Obligor in connection with the Additional
Financings;
(b) Hereby acknowledge and agree that the Additional Financings
shall be on such terms and conditions as are reasonably acceptable to the
Bank;
(c) Shall provide to the Bank, by no later than May 31, 2001, a
formal written agreement or agreements that memorialize all material terms
of the Additional Financings, which have been executed by all necessary
parties and constitute a binding obligation to consummate the Additional
Financings;
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(d) Hereby acknowledge and agree that any Additional Financings
which are in the form of debt shall be subordinate to the Obligations, and
that the Borrower shall, and the Borrower shall cause each subordinated
creditor to, prior to the completion of any Additional Financings which
constitute subordinated debt, execute and deliver to the Bank a
subordination agreement, which subordination agreement shall be in
substantially the form of the Subordination Agreement attached hereto as
Exhibit "C"; and
(e) Hereby acknowledge and agree that the failure to complete the
Additional Financings by no later than July 16, 2001 shall constitute an
Event of Default under the Loan Agreement.
Interest Rate; Repayment of the Obligations
-------------------------------------------
7. From and after the execution of this Agreement, interest shall accrue
upon, and the Obligors shall repay, the Obligations as follows:
(a) Commencing upon the execution of this Agreement interest shall
accrue on the unpaid principal balance of each of (i) the Revolving Note
and (ii) the Term Note, at the following rates during the corresponding
time periods as indicated in the table below:
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Time Period Applicable Interest Rate
----------- ------------------------
--------------------------------------------------------------------------------
February 1, 2001 through and Six (6%) percent
including September 30, 2001:
--------------------------------------------------------------------------------
October 1, 2001 through and Seven (7%) percent
including December 31, 2001:
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January 1, 2002 through the Prime Rate (as defined in the Loan
Maturity Date (as defined herein): Agreement), provided, however, that the
rate of interest charged shall be no less
than eight (8%) percent per annum, and no
greater than eleven (11%) per annum
--------------------------------------------------------------------------------
(b) On the first Banking Day of each calendar month the Obligors
shall make consecutive monthly payments in an amount equal to all accrued
interest under each of (i) the Revolving Note and (ii) the Term Note;
(c) In addition to all other payments required hereunder, the
Obligors shall make regular scheduled payments to be applied in reduction
of the principal balance of the Term Note, during the following time
periods in the corresponding amounts:
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Time Period Amount of Principal Payment
----------- ---------------------------
--------------------------------------------------------------------------------
Commencing the first Banking Day
of July, 2001 and continuing on
the first Banking Day of each
calendar month thereafter through
and including December, 2001: $30,000.00
--------------------------------------------------------------------------------
Commencing on the first Banking
Day of January, 2002 and
continuing on the first Banking
Day of each calendar month
thereafter until the Maturity
Date: $100,000.00
--------------------------------------------------------------------------------
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(d) The Obligors shall pay all Obligations under the Loan Documents
in full by federal funds wire transfer on or before the earlier of (i) the
occurrence of an Event of Default (as defined below) or (ii) December 31,
2002 (hereinafter, the "Maturity Date").
Modification of Negative Covenants
----------------------------------
8. From and after the execution of this Agreement, the following Negative
covenants contained in Article VII of the Loan Agreement shall be modified as
follows:
(a) Section 7.01 is hereby deleted in its entirety and replaced with
the following:
7.01 (Minimum Net Worth). Borrower (on a consolidated basis)
will not permit its Net Worth to be less than $12,500,000 as
at the end of any fiscal quarter commencing with the fiscal
quarter ending March 31, 2001.
(b) Section 7.03 (Minimum Debt Service Coverage Ratio) and Section
7.04 (Maximum Funded Debt Coverage Ratio) are hereby deleted in their
entirety.
(c) Section 7.05 is hereby deleted in its entirety and replaced with
the following:
7.05 (Maximum Net Loss). Borrower will not permit its
consolidated net loss after taxes to be greater than the
following amounts for the following quarters (and annually
where appropriate):
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Quarter Ending Applicable Amount
-------------- -----------------
--------------------------------------------------------------------------------
March 31, 2001 ($1,700,000)
--------------------------------------------------------------------------------
June 30, 2001 ($2,000,000)
--------------------------------------------------------------------------------
September 30, 2001 ($1,000,000)
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December 31, 2001 ($2,300,000)
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Annual Fiscal Year 2001 ($7,000,000)
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March 31, 2002 ($800,000)
--------------------------------------------------------------------------------
June 30, 2002 ($925,000)
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September 30, 2002 ($475,000)
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December 31, 2002 ($1,325,000)
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Annual Fiscal Year 2002 ($3,525,000)
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Each of the first three quarters of each fiscal year and the annual
calculation shall be separate and distinct tests.
Costs of Collection
-------------------
9. The Obligors shall:
(a) On or before the execution of this Agreement, the Obligors shall
pay the Bank the sum of $6,247.39 in reimbursement for reasonable costs,
expenses, and costs of collection (including reasonable attorneys' fees
and expenses) incurred by the Bank from
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March 16, 2001 through May 8, 2001, in connection with the protection,
preservation, and enforcement by the Bank of its rights and remedies under
the Loan Documents, including, without limitation, the negotiation and
preparation of this Agreement.
(b) On demand, reimburse the Bank for any and all reasonable costs,
expenses, and costs of collection (including reasonable attorneys' fees
and expenses) incurred by the Bank from and after March 16, 2001, in
connection with the protection, preservation, and enforcement by the Bank
of its rights and remedies under the Loan Documents.
Notices
-------
10. Any communication between the Bank and the Obligors shall be forwarded
via certified mail, return receipt requested, or via recognized overnight
courier, addressed as follows:
If to the Bank: Sovereign Bank
Managed Assets Division
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn.: Xx. Xxxxx X. Xxxx
With a copy via telecopier to: Xxxxxx X. Xxxxxx, Esquire
Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier No. (000) 000-0000
If to the Obligors: Sight Resource Corporation
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
President and CEO
With a copy via telecopier to: Xxxxx Xxxxxx, Esquire
Xxxx-Xxxxx Xxxxxx, Esquire
Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier No. (000) 000-0000
Waivers
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11. Non-Interference. From and after the occurrence of any Event of
Default, the Obligors agree not to interfere with the exercise by the Bank of
any of its rights and remedies. The Obligors further agree that they shall not
seek to distrain or otherwise hinder, delay, or impair the Bank's efforts to
realize upon any of the collateral granted to the Bank under the Loan Documents,
or otherwise to enforce the Bank's rights and remedies pursuant to the Loan
Documents. This provision shall be specifically enforceable by the Bank.
12. Automatic Stay. The Obligors hereby expressly assent to any motion
filed by the Bank seeking relief from the automatic stay in connection with any
Petition for Relief filed by or against any one or more of the Obligors under
the United States Bankruptcy Code.
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13. Jury Trial. The Obligors hereby make the following waiver knowingly,
voluntarily, and intentionally, and understand that the Bank, in entering into
this Agreement, or in making any financial accommodations to the Obligors, is
relying on such a waiver: THE OBLIGORS HEREBY IRREVOCABLY WAIVE ANY PRESENT OR
FUTURE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH THE BANK
BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST THE
BANK OR IN WHICH THE BANK IS JOINED AS A PARTY LITIGANT), WHICH CASE OR
CONTROVERSY ARISES OUT OF, OR IS IN RESPECT OF, ANY RELATIONSHIP BETWEEN THE
OBLIGORS, OR ANY OTHER PERSON OR ENTITY, AND THE BANK.
Entire Agreement
----------------
14. This Agreement shall be binding upon the Obligors and the Obligors'
respective employees, representatives, successors, and assigns, and shall inure
to the benefit of the Bank and the Bank's successors and assigns. This Agreement
and all documents, instruments, and agreements executed in connection herewith
incorporate all of the discussions and negotiations between the Obligors and the
Bank, either expressed or implied, concerning the matters included herein and in
such other documents, instruments and agreements, any statute, custom, or usage
to the contrary notwithstanding. No such discussions or negotiations shall
limit, modify, or otherwise affect the provisions hereof. No modification,
amendment, or waiver of any provision of this Agreement, or any provision of any
other document, instrument, or agreement between the Obligors and the Bank shall
be effective unless executed in writing by the party to be charged with such
modification, amendment, or waiver, and if such party be the Bank, then by a
duly authorized officer thereof.
Construction of Agreement
-------------------------
15. In connection with the interpretation of this Agreement and all other
documents, instruments, and agreements incidental hereto:
(a) All rights and obligations hereunder and thereunder, including
matters of construction, validity, and performance, shall be governed by
and construed in accordance with the law of the Commonwealth of
Massachusetts and are intended to take effect as sealed instruments.
(b) The captions of this Agreement are for convenience purposes
only, and shall not be used in construing the intent of the Bank and the
Obligors under this Agreement.
(c) In the event of any inconsistency between the provisions of this
Agreement and any other document, instrument, or agreement entered into by
and between the Bank and the Obligors, the provisions of this Agreement
shall govern and control.
(d) The Bank and the Obligors have prepared this Agreement and all
documents, instruments, and agreements incidental hereto with the aid and
assistance of their respective counsel. Accordingly, all of them shall be
deemed to have been drafted by the Bank and the Obligors and shall not be
construed against either the Bank or the Obligors.
Illegality or Unenforceability
------------------------------
16. Any determination that any provision or application of this Agreement
is invalid, illegal, or unenforceable in any respect, or in any instance, shall
not affect the validity, legality, or enforceability of any such provision in
any other instance, or the validity, legality, or enforceability of any other
provision of this Agreement.
-8-
Informed Execution
------------------
17. The Obligors warrant and represent to the Bank that the Obligors:
(a) Have read and understand all of the terms and conditions of this
Agreement;
(b) Intend to be bound by the terms and conditions of this
Agreement;
(c) Are executing this Agreement freely and voluntarily, without
duress, after consultation with independent counsel of their own
selection; and
(d) Acknowledge and agree that the modifications provided to the
Obligors by the Bank pursuant to this Agreement constitute a fair and
reasonable time frame within which all Obligations are to be paid in full.
[remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement has been executed on this 14th day of
May, 2001.
SOVEREIGN BANK SIGHT RESOURCE CORPORATION
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------- -----------------------------
Title: Vice President Title: President
CAMBRIDGE EYE ASSOCIATES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: President
XXXXXXX VISION WORLD, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: President
X.X. XXXXX OPTICIANS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: President
EYEGLASS EMPORIUM, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: President
KENT OPTICAL COMPANY, f/k/a KENT
ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: President
SHAWNEE OPTICAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: President
VISION PLAZA, CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: President
EXHIBIT "A" TO A CERTAIN AMENDED AND RESTATED
THIRD MODIFICATION AGREEMENT DATED MAY 14, 2001 AMONG
SIGHT RESOURCE CORPORATION, ET AL. AND SOVEREIGN BANK
Licensors
1. Marchon Delta Systems, Inc.; and
2. Microsoft Corporation
EXHIBIT "B" TO A CERTAIN AMENDED AND RESTATED
THIRD MODIFICATION AGREEMENT DATED MAY 14, 2001 AMONG
SIGHT RESOURCE CORPORATION, ET AL. AND SOVEREIGN BANK
License Agreements
(Attached)
EXHIBIT "C" TO A CERTAIN AMENDED AND RESTATED
THIRD MODIFICATION AGREEMENT DATED MAY 14, 2001 AMONG
SIGHT RESOURCE CORPORATION, ET AL. AND SOVEREIGN BANK
Form of Subordination Agreement
(Attached)
Subordination Agreement Sovereign Bank
--------------------------------------------------------------------------------
Date: _____________, 2001
This Subordination Agreement (hereinafter, this "Agreement") is made among
________________________________________________________________________________
________________ [insert name and address of appropriate Sight Resource Corp.
entity indebted to the Creditor] (hereinafter, the "Borrower"),
________________________________________________________________________________
________________ [insert name and address of subordinated creditor]
(hereinafter, the "Creditor"), and
Sovereign Bank, successor in interest to Fleet National Bank, a federal savings
bank having offices located at 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx
(hereinafter, the "Bank"),
for good and valuable consideration and in consideration of the mutual covenants
contained herein and benefits to be derived herefrom.
WITNESSETH
----------
WHEREAS, the Bank and the Borrower entered into a certain Loan Agreement
dated April 15, 1999, as amended by (i) a certain Modification Agreement dated
Xxxxx 00, 0000, (xx) a certain Second Modification Agreement dated November 30,
2000, and (iii) a certain Amended and Restated Third Modification Agreement
dated May 14, 2001 (hereinafter, collectively, as amended from time to time, the
Loan Agreement"), pursuant to which the Bank has made loans extensions of credit
to the Borrower; and
WHEREAS, the Creditor has made loans, and may in the future make
additional loans, to the Borrower;
WHEREAS, it is a requirement of the Loan Agreement that the Creditor and
the Borrower enter into this Agreement with the Bank; and
WHEREAS, the Bank's extension of financial accommodations to the Borrower
as more particularly set forth in the Loan Agreement is beneficial to the
Creditor;
NOW THEREFORE, it is hereby agreed among the Bank, the Borrower and the
Creditor as follows:
1. Unless and until this Agreement is terminated by written notice from
the Bank, the Creditor and the Borrower hereby agree with the Bank
that all Junior Debt (defined below) and that all Junior Collateral
(defined below), and all rights, remedies, powers, privileges, and
discretions of the Creditor in and to any Junior Collateral are and
shall be subject and subordinate to the Obligations (defined below)
of the Borrower to the Bank and to the rights, remedies, powers,
privileges, and discretions of the Bank in and to the Junior
Collateral.
2. Unless and until this Agreement is terminated by written notice from
the Bank, the Creditor shall not:
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(a) Demand, accept, or receive from the Borrower any payment or
other value on account of the Junior Debt; or
(b) Set off, contra, or otherwise apply, all or any part of the
Junior Debt towards satisfaction of any obligation of the
Creditor to the Borrower; or
(c) Exercise any of the Creditor's rights, remedies, powers,
privileges, and discretions with respect to the Junior Debt
and/or the Junior Collateral, including, without limitation,
the acceleration of the time for payment of the Junior Debt or
foreclosure of the Junior Collateral; or
(d) Demand, accept, or receive any evidence of, or collateral for,
the Junior Debt.
3. Unless and until this Agreement is terminated by written notice from
the Bank, the Borrower shall not:
(a) Make any payment or give any value to the Creditor on account
of the Junior Debt; or
(b) Set off, contra, or otherwise apply, all or any part of any
obligation of the Creditor to the Borrower towards
satisfaction of the Junior Debt; or
(c) Execute, give, or deliver any evidence of, or collateral for
the Junior Debt.
4. The Creditor will cause all notes, bonds, debentures or other
instruments evidencing the Junior Debt and/or the Junior Collateral
or any part thereof to contain a specific statement thereon to the
effect that the indebtedness evidenced thereby is subject to the
provisions of this Agreement, and the Creditor will xxxx its books
conspicuously to evidence the subordination effected hereby. The
Creditor hereby represents that it is the lawful holder of the
note(s) which evidence the Borrower's indebtedness to the Creditor,
and has not transferred any interest therein to any other person.
Without the prior written consent of the Bank, the Creditor will not
assign, transfer or pledge to any other person any of the Junior
Debt or agree to a discharge or forgiveness of the same so long as
there remains outstanding any of the Obligations.
5. The Creditor and the Borrower shall each execute all such further
instruments and do such other and further acts as the Bank may
request in furtherance of the Bank's rights hereunder and/or the
purposes of this Agreement, including, without limitation, the
endorsement to the Bank of all promissory notes evidencing the
Junior Debt. The respective obligations of the Creditor and the
Borrower hereunder being unique, are specifically enforceable by the
Bank.
6. a. The Creditor hereby designates the Bank as and for the
attorney-in-fact of the Creditor to:
i endorse in favor of, or assign to, the Bank any writing
evidencing the Junior Debt and/or the Junior Collateral; and
ii. exercise any and all rights, remedies, powers, privileges, and
discretions of the Creditor with respect to the Junior Debt
and/or the Junior Collateral.
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Without limiting the generality of the foregoing, the Bank
shall have the right and power to:
(1) prosecute, defend, compromise, settle, or release any
action relating to the Junior Debt or the Junior
Collateral,
(2) file a proof of claim or similar pleading in,
participate in the place and stead of the Creditor in,
and receive any dividend or distribution on account of,
any bankruptcy or insolvency proceeding of the Borrower,
(3) take such other action with respect to the Junior Debt
and the Junior Collateral as the Bank may reasonably
determine to be necessary to protect and preserve the
Bank's interests therein.
b. All of the powers of attorney set forth in this Agreement shall not
be affected by any disability or incapacity suffered by the Creditor
and shall survive same. All powers conferred on the Bank by this
Agreement, being coupled with an interest, shall be irrevocable
until this Agreement is terminated as provided herein.
c. The Bank shall not be obligated to do any of the acts or to exercise
any of the powers authorized herein, but if the Bank elects to do
any such act or to exercise any of such powers, it shall not be
accountable for more than it receives as a result of such exercise
of power. The Bank shall not be liable for any act or omission to
act pursuant to this Agreement except for the Bank's actual willful
misconduct and actual bad faith.
7. The Bank shall have no duty as to the collection or protection of
the Junior Debt and/or Junior Collateral or any income or
distribution thereon, beyond the safe custody of such of the Junior
Debt and/or Junior Collateral as may come into the possession of the
Bank and shall have no duty as to the preservation of any rights
pertaining thereto, including, without limitation, any rights
against prior parties.
8. In the event that the Creditor receives any payments on account of
the Junior Debt, or any collateral in addition to any collateral
heretofore granted, the Creditor shall hold such payments or
collateral in trust for the Bank and shall not commingle such
payments with any other funds of the Creditor. The Creditor shall
deliver all such payments or collateral to the Bank immediately upon
the receipt thereof by the Creditor in the identical form received,
duly endorsed to the Bank.
9. The proceeds (if any) received by the Bank on account of the Junior
Debt or Junior Collateral shall be applied towards the Obligations
in such order and manner as the Bank determines in its sole
discretion. Any such proceeds received by the Bank in excess of the
amounts necessary to satisfy the Obligations shall be paid to the
Creditor.
10. The Creditor:
(a) Waives notice of non-payment, presentment, demand, notice, and
protest with respect to the Obligations and/or the Junior
Debt;
(b) Waives notice of the acceptance of this agreement by the Bank;
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(c) Assents to any extension, renewal, indulgence or waiver,
permitted the Borrower and/or any other person liable or
obligated to the Bank for or on the Obligations or on the
Junior Debt;
(d) Authorizes the Bank to alter, amend, cancel, waive, or modify
any term or condition of the Obligations or the Junior Debt
and of the obligations of any other person liable or obligated
to the Bank for or on the Obligations and/or the Junior Debt,
without notice to, or consent from, the Creditor;
(e) Agrees that no compromise, settlement, or release by the Bank
of the Obligations or the Junior Debt or of the obligations of
any such other person and no release of any collateral
securing the Obligations, the Junior Debt, and/or securing the
obligations of any such other person shall affect the
obligations of the Creditor hereunder; and
(f) If otherwise entitled thereto, waives the right to notice
and/or hearing prior to the Bank's exercising of the Bank's
rights and remedies hereunder. No action by the Bank which has
been assented to herein shall affect the obligations of the
Creditor to the Bank hereunder.
11. The subordination effected hereby shall not be affected by any
fraudulent, illegal, or improper act by the Borrower, the Creditor,
or any person liable or obligated to the Bank for or on the
Obligations, nor by any release, discharge or invalidation, by
operation of law or otherwise, of the Obligations or by the legal
incapacity of the Borrower, the Creditor, or any other person liable
or obligated to the Bank for or on the Obligations. All interest and
costs of collection with respect to the Obligations for which the
Borrower has agreed to be liable shall continue to accrue and shall
continue to be Obligations for purposes of the subordination
effected hereby notwithstanding any stay to the enforcement thereof
against the Borrower or disallowance thereof against the Borrower.
12. The books and records of the Bank showing the account between the
Bank and the Borrower shall be admissible in any action or
proceeding to enforce this Agreement and shall constitute prima
facie evidence and proof of the items contained therein.
13. In the event (a) the Bank determines that any representation made by
the Borrower or the Creditor to the Bank herein was not true or
accurate when given and/or (b) the Borrower or the Creditor (or
both) fails to promptly, punctually, and faithfully perform or
discharge any obligation hereunder or an Event of Default occurs
under the Loan Agreement or any other instrument, document, or
agreement between the Borrower and the Bank, all Obligations, and
any and all liabilities, obligations, and indebtedness of the
Creditor to the Bank, whether arising hereunder or under any other
document, instrument, or agreement to the Bank (whether now existing
or hereafter arising), shall become immediately due and payable, at
the Bank's option and without notice or demand.
14. The Creditor will pay on demand all attorneys' fees and
out-of-pocket expenses incurred by the Bank's attorneys and all
costs incurred by the Bank, including, without limitation, costs
associated with travel on behalf of the Bank, which costs and
expenses are directly or indirectly related to the Bank's efforts to
preserve, protect, collect, or enforce any of the obligations of the
Creditor and/or any of the
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Bank's Rights and Remedies hereunder (whether or not suit is
instituted by or against the Bank).
15. The Borrower will pay on demand all attorneys' fees and
out-of-pocket expenses incurred by the Bank's attorneys and all
costs incurred by the Bank, including, without limitation, costs
associated with travel on behalf of the Bank, which costs and
expenses are directly or indirectly related to the Bank's efforts to
preserve, protect, collect, or enforce any of the obligations of the
Borrower and/or any of the Bank's Rights and Remedies hereunder
(whether or not suit is instituted by or against the Bank).
16. This Agreement incorporates all discussions and negotiations among
and between the Borrower, the Creditor, and the Bank concerning the
subordination effected hereby. No such discussions or negotiations
shall limit, modify, or otherwise affect the provisions hereof. No
provisions hereof may be altered, amended, waived, canceled, or
modified, except by a written instrument executed, sealed, and
acknowledged by a duly authorized officer of the Bank.
17. The Bank may continue to rely upon this Agreement and the
subordination effected hereby with respect to all Obligations which
may arise hereafter. The repayment and satisfaction of all of such
Obligations shall not terminate this Agreement and the subordination
effected hereby as to Obligations which arise thereafter.
18. The rights, remedies, powers, privileges, and discretions of the
Bank hereunder (hereinafter, the "Bank's Rights and Remedies") shall
be cumulative and not exclusive of any rights or remedies which it
would otherwise have. No delay or omission by the Bank in exercising
or enforcing any of the Bank's Rights and Remedies shall operate as,
or constitute, a waiver thereof. No waiver by the Bank of any of the
Bank's Rights and Remedies or of any default or remedy under any
other agreement with the Borrower or the Creditor shall operate as a
waiver of any other default hereunder or thereunder. No exercise of
the Bank's Rights and Remedies and no other agreement or
transaction, of whatever nature, entered into between the Bank and
the Creditor and/or between the Bank and the Borrower at any time
shall preclude any other or further exercise of the Bank's Rights
and Remedies. No waiver by the Bank of any of the Banks' Rights and
Remedies on any one occasion shall be deemed a continuing waiver.
All of the Bank's Rights and Remedies and all of the Bank's rights,
remedies, powers, privileges, and discretions under any other
agreement with the Creditor and/or the Borrower shall be cumulative,
and not alternative or exclusive, and may be exercised by the Bank
at such time or times and in such order of preference as the Bank in
its sole discretion may determine. The Bank may proceed with respect
to the Junior Debt and the Junior Collateral without resort or
regard to other collateral or sources of satisfaction of the
Obligations.
19. As used herein, the following terms have the following meanings:
"Obligation" and "Obligations" include, without limitation, all and each
of the following, whether now existing or hereafter arising:
(a) Any and all liabilities, debts, and obligations of the
Borrower to the Bank, each of every kind, nature, and
description, now existing or hereafter arising, whether under
this Agreement, the Loan Agreement, or any other instrument or
document furnished to the Bank or any other agreement with the
Bank,
-5-
including without limitation, all Obligations as defined in
the Loan Agreement.
(b) Each obligation to repay all loans, advances, indebtedness,
notes, obligations, overdrafts, and amounts now or hereafter
at any time owing by the Borrower to the Bank (including all
future advances or the like, whether or not given pursuant to
a commitment by the Bank), whether or not any of such are
liquidated, unliquidated, primary, secondary, secured,
unsecured, direct, indirect, absolute, contingent, or of any
other type, nature, or description, or by reason of any cause
of action which the Bank may hold against the Borrower.
(c) All interest, fees, and other amounts which may be charged to
the Borrower and/or which may be due from the Borrower to the
Bank from time to time; all fees and charges in connection
with any account maintained by the Borrower with the Bank or
any service rendered by the Bank; and all costs and expenses
incurred or paid by the Bank in respect of this Agreement, the
Loan Agreement, and any other agreement (whether now existing
or hereafter arising) between the Borrower and the Bank or
instrument or document heretofore or hereafter furnished by
the Borrower to the Bank (including, without limitation, all
notes and other obligations of the Borrower now or hereafter
assigned to or held by the Bank, each of every kind, nature,
and description, and all costs of collection, attorneys' fees,
and all court and litigation costs and expenses).
(d) Any and all covenants of the Borrower to or with the Bank and
any and all obligations of the Borrower to act or to refrain
from acting in accordance with the terms, provisions, and
covenants of this Agreement and of any other agreement between
the Borrower and the Bank (whether now existing or hereafter
arising) or instrument or document heretofore or hereafter
furnished by the Borrower to the Bank.
As used herein, the term "indirect" includes, without limitation, all
obligations and liabilities which the Bank may incur or become liable for on
account of, or as a result of any transactions between the Bank and the Borrower
including, without limitation, any which may arise out of any Letter of Credit
or banker's acceptance, or similar instrument issued or obligation incurred by
the Bank for the account of the Borrower; any which may arise out of any action
brought or threatened against the Bank by the Borrower, any guarantor or
endorser of the Obligations of the Borrower, or by any other person in
connection with the Obligations; and any obligation of the Borrower which may
arise as endorser or guarantor of any third party, or as obligor to any third
party which obligation has been endorsed, participated, or assigned to the Bank.
The term "indirect" also refers to any direct or contingent liability of the
Borrower to make payment towards any obligation held by the Bank (including,
without limitation, on account of any industrial revenue bond) to the extent so
held by the Bank.
The Bank's books and records shall be prima facie evidence of the
Borrower's Obligations.
"Junior Debt" includes all liabilities, obligations, and indebtedness,
whether direct or indirect, absolute or contingent, secured or unsecured,
due or to become, now existing or hereafter arising, owed by the Borrower
to the Creditor.
"Junior Collateral" includes all collateral security now or hereafter
granted by the Borrower or any guarantor to secure all or any portion of
the Junior Debt.
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20. This Agreement shall be binding upon the Creditor, the Borrower, and
their respective heirs, executors, administrators, representatives,
successors, and assigns, and shall inure to the benefit of the Bank,
and the Bank's successors and assigns.
21. It is intended that this Agreement take effect as a sealed
instrument and be governed by the laws of The Commonwealth of
Massachusetts. The Creditor and the Borrower each submit to the
jurisdiction of the courts of said Commonwealth for all purposes in
connection with this Agreement and their respective relationships
with the Bank.
22. The Borrower and the Creditor each make the following waiver
knowingly, voluntarily, and intentionally and understand that the
Bank, in the establishment and maintenance of the Bank's
relationship with the Borrower, is relying thereon. THE BORROWER AND
THE CREDITOR RESPECTIVELY TO THE EXTENT ENTITLED THERETO, WAIVE ANY
PRESENT OR FUTURE RIGHT TO A TRIAL BY JURY IN ANY CASE OR
CONTROVERSY IN WHICH THE BANK IS OR BECOMES A PARTY (WHETHER SUCH
CASE OR CONTROVERSY IS INITIATED BY OR AGAINST THE BANK OR IN WHICH
THE BANK IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY
ARISES OUT OF, OR IS IN RESPECT TO, ANY RELATIONSHIP AMONG OR
BETWEEN THE BORROWER, THE CREDITOR, ANY SUCH PERSON, AND THE BANK.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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The undersigned certify that the undersigned read this Agreement prior to
its execution.
________________________________________
("Creditor")
Witness
______________________________ By:_____________________________________
Print Name:_____________________________
Title:__________________________________
Witness
________________________________________
("Borrower")
______________________________ By:_____________________________________
Print Name:_____________________________
Title:__________________________________
Witness SOVEREIGN BANK
("Bank")
______________________________ By:_____________________________________
Print Name:_____________________________
Title:__________________________________
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