AMENDMENT AND SUPPLEMENT
TO
LOAN AGREEMENT
AGREEMENT, made this 30th day of September, 1996,
by and among:
FIVE STAR GROUP, INC., a Delaware corporation (the
"Borrower");
The Banks that have executed the signature pages hereto
(individually a "Bank" and collectively, the "Banks"); and
FLEET BANK, NATIONAL ASSOCIATION, a national banking
association (the successor in interest to NatWest Bank N.A.), as
Agent for the Banks (in such capacity, together with its successors
in such capacity, the "Agent");
W I T N E S S E T H:
WHEREAS:
A. The Borrower, the Banks and National Westminster
Bank N.J., as Agent (a predecessor in interest to the Agent) have
heretofore entered into a Loan Agreement dated April 29, 1993 (as
heretofore amended, the "Original Loan Agreement", and as the
Original Loan Agreement is amended and supplemented hereby and as
it may from time to time hereafter be amended and supplemented, the
"Loan Agreement");
B. The parties hereto wish to amend and supplement the
Original Loan Agreement to provide for an extension of the Commitment
Termination Date, as defined therein, and for certain other matters as
hereinafter set forth; and
C. Capitalized terms used herein which are defined in
the Original Loan Agreement and not otherwise defined herein shall
have the respective meanings ascribed thereto in the Original Loan
Agreement;
NOW, THEREFORE, for good and valuable consideration,
receipt of which is hereby acknowledged, the parties hereto agree
as follows:
Article 1. Amendments to Loan Agreement
The Original Loan Agreement is hereby amended as follows:
Section 1.1 Article 1 of the Original Loan Agreement
is amended as follows:
(a) The definition of "Agent's Main Office" is deleted
in its entirety and the following new definition is substituted
therefor:
"'Agent's Main Office' - the office of the Agent
presently located at 51 Cragwood Road, South
Plainfield, New Jersey 07080."
(b) The definition of "Applicable Margin" is deleted in
its entirety and the following new definition is substituted therefor:
"'Applicable Margin' - as at any date of
determination thereof, the applicable percentage
set forth below opposite the ratio of Indebtedness
of the Borrower as at such date of determination,
to the Tangible Net Worth of the Borrower, as in
effect on such date:
Ratio of Indebtedness Applicable
to Tangible Net Worth Margin
Equal to or greater 2%
than 2.50:1.00
Equal to or greater 1%
than 2.00:1.00 and
less than 2.50:1.00
Equal to or greater 3/4%
than 1.75:1.00 and
less than 2.00:1.00
Equal to or greater 1/2%
than 1.50:1.00 and
less than 1.75:1.00
Equal to or greater 1/4%
than 1.00:1.00 and
less than 1.50:1.00
Less than 1.00:1.00 -0-
The determination of the applicable percentage
pursuant to the table set forth above shall be made
on a quarterly basis based on an examination of the
certified financial statements of the Borrower
delivered pursuant to and in compliance with
Section 5.1 or Section 5.2 hereof, which financial
statements, whether annual or quarterly, shall be
certified by the chief financial officer of the
Borrower and shall indicate that there exists no
Default or Event of Default hereunder. Each
determination of the Applicable Margin shall be
effective as of the first day of the calendar month
following the date on which the financial
statements on which such determination was based
were received by the Agent. In the eventthat
financial statements for the most recently
completed fiscal period prior to such date of
determination either: (i) have not been delivered
to the Agent in compliance with Section 5.1 or 5.2
hereof, or (ii) if delivered, do not comply in form
or substance with Section 5.1 or 5.2 hereof (in the
sole judgment of the Agent), then the Agent may
determine, in its reasonable judgment, the ratio
referred to above which would have been in effect
as at such date, and, consequently, the Applicable
Margin in effect for the period commencing on such
date."
(c) The definition of "Commitment Termination Date" is
amended by deleting the date "September 30, 1996" and by
substituting therefor the date "September 30, 1997".
(d) The definition of "Current Liabilities" is amended
by adding at the conclusion thereof, before the period, the following:
",provided, however, that, notwithstanding the
foregoing, all Indebtedness of the Borrower to NPDC
and any of NPDC's Affiliates shall be deemed to be
Long Term Debt and not Current Liabilities"
(e) The definition of "Principal Office" is deleted in
its entirety, and the following new definition is substituted
therefor:
"'Principal Office' - The office of Fleet Bank,
National Association presently located at 1133
Avenue of the Americas, New York, New York 10036."
(f) The definition of "Tangible Net Worth" is amended by
deleting the proviso at the conclusion thereof and by substituting
therefor the following:
"provided, however, that amounts receivable by the
Borrower from NPDC or any Affiliate of NPDC,
whether pursuant to bonds, notes, open account
indebtedness or otherwise, shall be deemed to be
intangibles for the purposes hereof to the extent
that the aggregate amount of such amounts
receivable exceed, at the time of determination of
Tangible Net Worth, the aggregate amount payable at
such time by the Borrower to NPDC or any Affiliate
of NPDC whether pursuant to bonds, notes, open
account indebtedness or otherwise."
(g) The following new definitions are added, each in the
appropriate alphabetical order:
"'Fleet' - Fleet Bank, National Association, a
national banking association."
"'Summit' - Summit Bank, a national banking
association."
Section 1.2 Section 2.8 of the Original Loan Agreement
is amended as follows:
(a) The heading of Section 2.8 is deleted in its
entirety, and the following new heading is substituted therefor:
"Section 2.8 Voluntary and Mandatory Changes in
Commitments; Mandatory and Optional
Prepayments of Loans."
(b) A new subsection (f) is added to Section 2.8 as
follows:
"(f) In the event that MXL shall prepay the full
outstanding balance of all Loans under the MXL Loan
Agreement, or MXL shall terminate the Commitments
under the MXL Loan Agreement, then, in such event,
not later than such prepayment or such termination,
as the case may be, (i) the Borrower shall prepay
the full outstanding balance of all Loans hereunder
together with all accrued interest and Fees, and
(ii) the Commitments hereunder shall thereupon
terminate."
Section 1.3 Section 5.10 of the Original Loan Agreement
is amended by deleting subsection 5.10(v)(B) and by substituting therefor
the following:
"(B) monthly, as soon as available but in any event
within twenty (20) days after the end of each
calendar month, a schedule of physicals of finished
goods (including any resale items) and"
Section 1.4 Section 6.9 of the Original Loan Agreement
is deleted in its entirety and the following new Section 6.9 is
substituted therefor:
"Section 6.9 Financial Covenants.
(a) Have or maintain, as to the Borrower:
(i) Tangible Net Worth as at the last day of
each fiscal quarter of the Borrower which day
occurs in the years set forth below at not less
than the respective amounts set forth opposite each
such year:
Minimum Tangible Net
Fiscal Quarter-End Worth on Such Fiscal
Date Occurring in: Quarter-End Date
1993 $10,000,000
1994 11,500,000
1995 13,000,000
1996 and thereafter 14,500,000
(ii) The ratio of Indebtedness to Tangible Net
Worth of the Borrower as at (1) the last day of
each fiscal quarter of the Borrower through June
30, 1996 at not more than 3.00 to 1.00; and (2) the
last day of each fiscal quarter of the Borrower
from and after September 30, 1996 at not more than
2.50 to 1.00.
(iii) The excess of Current Assets over
Current Liabilities of the Borrower as at (1) the
last day of each fiscal quarter of the Borrower
through June 30, 1996 at not less than $2,500,000;
and (2) the last day of each fiscal quarter of the
Borrower from and after September 30, 1996 at not
less than $4,300,000.
(iv) Debt Service Coverage of the Borrower for
the four full fiscal quarters ending on (1) the
last day of each fiscal quarter of the Borrower
through June 30, 1996 at not less than 120%; and
(2) the last day of each fiscal quarter of the
Borrower from and after September 30, 1996 at not
less than 150%.
(b) Have or maintain, as to NPDC only, on an
unconsolidated basis, as at the last day of each
fiscal quarter, available, unencumbered and
unrestricted cash, cash equivalents and marketable
securities (as such terms are defined in accordance
with generally accepted accounting principles) of
not less than $5,000,000 in the aggregate, of which
amount, not more than $2,500,000 shall consist of
marketable securities."
Section 1.5 Section 7.13 of the Original Loan
Agreement is deleted in its entirety, and the following new Section
7.13 is substituted therefor:
"Section 7.13 Capital Expenditures
Make or become obligated to make Capital
Expenditures in the aggregate for the Borrower
during each fiscal year of the Borrower in excess
of the respective amounts set forth below
(provided, however, that the Capital Expenditures
set forth on Exhibit M-2 annexed hereto shall not
be included for purposes of determining compliance
with this Section 7.13):
Fiscal Year Ending Maximum Capital
December 31 Expenditures
1993 $750,000
1994 250,000
1995 500,000
1996 450,000
1997 and each 350,000"
year thereafter
Section 1.6 Section 7.14 of the Loan Agreement is
amended by deleting the amount "$2,500,000" and by substituting
therefor the amount "$2,800,000".
Section 1.7 Section 10.9 of the Original Loan
Agreement is amended by deleting subsection 10.9(c) and by
substituting therefor the following:
"(c) If to the Agent:
Fleet Bank, National Association, as Agent
51 Cragwood Road
South Plainfield, NJ 07080
Attention: Murray Markowitz
Telecopier No.: (908)226-6205
with a copy (other than in the case of Borrowing
Notices and reports and other documents delivered
in compliance with Article 5 hereof) to:
Sullivan & Worcester LLP
767 Third Avenue
New York, New York 10017
Attention: Simon B. Posner, Esq.
Telecopier No.: (212)758-2151"
Section 1.8 The parties hereto acknowledge that:
(a) Fleet is the successor to NatWest Bank N.A., which
in turn was a successor to National Westminster Bank USA, and that
all references in the Loan Agreement to "NatWest USA" shall be
deemed to refer to Fleet, in its capacity as a Bank under the Loan
Agreement; and
(b) Summit is the successor to UJB, and that all
references in the Loan Agreement to "UJB" shall be deemed to refer
to Summit in its capacity as a Bank under the Loan Agreement.
Section 1.9 The Original Loan Agreement, the Loan
Documents, and all agreements, instruments and documents executed
and delivered in connection with any of the foregoing, shall each
be deemed to be amended hereby to the extent necessary to give
effect to the provisions of this Amendment and Supplement. Except
as amended hereby, the Loan Agreement and the other Loan Documents
shall remain in full force and effect in accordance with their
respective terms.
Article 2. Extension of Commitment Termination Date;
Amended and Restated Revolving Credit
Note; Mortgage Modification Agreements;
Amendment Facility Fee
Section 2.1 The parties hereto acknowledge that,
pursuant to this Amendment and Supplement, the Commitment
Termination Date in respect of the Revolving Credit Loans is being
extended. The Revolving Credit Loans, as so extended, shall be
evidenced by a single promissory note of the Borrower in form and
substance satisfactory to the Agent and the Banks (the "Amended and
Restated Revolving Credit Note"). The Amended and Restated
Revolving Credit Note shall be dated the date of this Amendment and
Supplement, shall be payable to the Agent for the ratable benefit
of the Banks in a principal amount equal to the sum of the Banks'
Revolving Credit Commitments as originally in effect and shall
otherwise be duly completed. The Amended and Restated Revolving
Credit Note shall be deemed to amend and restate the Revolving
Credit Note executed and delivered in connection with the Original
Loan Agreement, as heretofore amended (as so amended, the "Original
Revolving Credit Note"), and upon the execution and delivery to the
Agent of the Amended and Restated Revolving Credit Note, the Agent
shall mark the Original Revolving Credit Note "Paid by Substitution
of New Note" and return it to the Borrower.
Section 2.2 Concurrently with the execution and
delivery of this Amendment and Supplement, MXL shall execute and
deliver to the Agent Mortgage Modification and Extension Agreements
in form and substance satisfactory to the Agent and the Banks (the
"Mortgage Modification Agreements") pursuant to which MXL agrees
that the Guarantor Mortgages secure, without limitation, MXL's
obligations in respect of its Guaranty of the indebtedness
evidenced by the Amended and Restated Revolving Credit Note (the
Mortgage Modification Agreements, the Amended and Restated
Revolving Credit Note and this Amendment and Supplement, and all
other documents executed and delivered in connection herewith or
therewith, are sometimes hereinafter referred to collectively as
the "Supplemental Loan Documents").
Section 2.3 Concurrently with the execution and
delivery of this Amendment and Supplement, the Borrower shall pay
a non-refundable amendment facility fee to Fleet in the amount of
$10,937.00 and to Summit in the amount of $14,063.00.
Article 3. Acknowledgments and Confirmations
Section 3.1 (a) The Borrower acknowledges and
confirms that any term used in the Security Documents to which the
Borrower is a party to refer to the Borrower's Indebtedness,
liabilities and obligations to the Banks and the Agent, includes,
without limitation, the Indebtedness, liabilities and obligations
of the Borrower to the Banks, whether now existing or hereafter
arising under the Amended and Restated Revolving Credit Note and
the Original Loan Agreement as amended hereby, and that all of the
collateral security provided for in such Security Documents secures
the Borrower's full payment and performance of such Indebtedness,
liabilities and obligations of the Borrower.
(b) The Indebtedness, liabilities and obligations of the
Borrower to the Banks and the Agent, whether now existing or
hereafter arising, under the Amended and Restated Revolving Credit
Note and the Original Loan Agreement as amended and supplemented
hereby, are hereinafter referred to collectively as the
"Supplemental Obligations".
Section 3.2 Each of MXL and NPDC, as Guarantors,
consents in all respects to the execution and delivery by the
Borrower of this Amendment and Supplement and the Amended and
Restated Revolving Credit Note and the transactions contemplated
herein, and acknowledges and confirms that:
(a) its Guaranty continues to be valid and in full force
and effect, and guarantees, without limitation, the full payment
and performance of the Supplemental Obligations as well as the
Obligations; and
(b) any term used in the Security Documents to which
such Guarantor is a party to refer to the Borrower's Indebtedness,
liabilities and obligations to the Banks and the Agent, includes,
without limitation, the Supplemental Obligations, and that all of
the collateral security provided for in such Security Documents
secures, without limitation, the full payment and performance by
each Guarantor of the Indebtedness, liabilities and obligations of
such Guarantor under its Guaranty, as acknowledged and confirmed
hereby.
Section 3.3 Each of the Borrower, the Banks and the
Agent hereby acknowledges and confirms that all references in the
Loan Agreement, the other Loan Documents and any other agreement,
instrument or document executed and delivered in connection
herewith or therewith:
(a) to the "Revolving Credit Loans" shall be deemed to
include the Revolving Credit Loans as amended hereby;
(b) to the "Revolving Credit Note" shall be deemed to
refer to the Amended and Restated Revolving Credit Note;
(c) to the "Loan Agreement" or "this Agreement" (insofar
as such term refers to the Loan Agreement) shall be deemed to refer
to the Original Loan Agreement as amended and supplemented hereby;
(d) to the "Loan Documents" shall be deemed to include,
without limitation, the Supplemental Loan Documents, and all other
documents executed and delivered in connection herewith or
therewith; and
(e) to the "Obligations" (or any other term used to
describe or refer to the Borrower's Indebtedness, liabilities and
Obligations to the Banks and the Agent) shall be deemed to include,
without limitation, the Supplemental Obligations.
Article 4. Representations and Warranties
The Borrower hereby represents and warrants to the Agent
and the Banks that:
Section 4.1 After giving effect to the amendment and
supplement of the Original Loan Agreement pursuant hereto and the
consummation of the transactions contemplated hereby, (a) each of
the representations and warranties set forth in Article 3 of the
Loan Agreement is true and correct in all respects as if made on
the date hereof, and (b) there exists no Default or Event of
Default under the Loan Agreement.
Section 4.2 The Borrower and each Guarantor has
the power to execute, deliver and perform the Supplemental Loan
Documents to be executed by it. The Borrower and each
Guarantor has taken all necessary action, corporate or otherwise, to
authorize the execution, delivery and performance of the
Supplemental Loan Documents to be executed by it. No consent or
approval of any Person (including, without limitation, any
stockholder of the Borrower or any Guarantor), no consent or
approval of any landlord or mortgagee, no waiver of any Lien or
right of distraint or other similar right and no consent, license,
certificate of need, approval, authorization or declaration of any
governmental authority, bureau or agency, is or will be required in
connection with the execution, delivery or performance by the
Borrower or any Guarantor, or the validity, enforcement or
priority, of the Supplemental Loan Documents.
Section 4.3 The execution and delivery by the Borrower
and each Guarantor of each Supplemental Loan Document to which it
is a party and performance by it hereunder and thereunder, will not
conflict with or result in a breach of any order, writ, injunction,
ordinance, resolution, decree, or other similar document or
instrument of any court or governmental authority, bureau or
agency, domestic or foreign, or any certificate of incorporation or
by-laws of the Borrower or any Guarantor, or create (with or
without the giving of notice or lapse of time, or both) a default
under or breach of any agreement, bond, note or indenture to which
the Borrower or any Guarantor, is a party, or by which it is bound
or any of its properties or assets is affected, or result in the
imposition of any Lien of any nature whatsoever upon any of the
properties or assets owned by or used in connection with the business of
the Borrower or any Guarantor, except for the Liens created and granted
pursuant to the Security Documents and acknowledged and confirmed hereby.
Section 4.4 This Amendment and Supplement and each
other Supplemental Loan Document has been duly executed and
delivered by each Loan Party that is a party thereto, and each
constitutes the valid and legally binding obligations of each such
Loan Party that is a party thereto, enforceable in accordance with
its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other
similar laws, now or hereafter in effect, relating to or affecting
the enforcement of creditors' rights generally and except that the
remedy of specific performance and other equitable remedies are
subject to judicial discretion.
Section 4.5 The Liens that have been created and
granted pursuant to the Security Documents and confirmed hereby
constitute valid perfected first Liens on the properties and
assets covered by the Security Documents, subject to no prior or
equal Lien except as permitted by Section 7.2 of the Loan
Agreement. Without limiting the generality of the foregoing, (a) there has
been no change in the location of the chief place of business of
the Borrower or MXL, or offices where their respective records are
kept, or of other locations of Collateral owned by each of them,
from the locations set forth in the respective Security Agreement
executed by each of them, (b) there has been no change in the
respective business and trade names set forth in the respective
Security Agreement executed by each of them, and (c) all of the
representations and warranties of the Borrower and MXL contained in
their respective Security Agreements as to such locations and trade
names are true, correct and complete as of the date hereof.
Article 5. Conditions to Amendment
The effectiveness of this Amendment and Supplement shall
be subject to the fulfillment (to the satisfaction of the Agent and
the Banks) of the following conditions precedent:
Section 5.1 The Borrower, the Banks and the Agent
shall have executed and delivered this Amendment and Supplement.
Section 5.2 The Borrower shall have executed and
delivered to the Agent its Amended and Restated Revolving Credit Note.
Section 5.3 MXL shall have executed and delivered to
the Agent the Mortgage Modification Agreements.
Section 5.4 The Agent shall have received copies of
(i) a certificate of an officer of the Borrower and the Guarantors
to the effect that the Borrower's and Guarantors' respective
certificates of incorporation and by-laws have not been amended,
modified or changed in any respect since the date of delivery to
the Agent of the certificates of incorporation and by-laws of the
Borrower and the Guarantors in connection with the execution and
delivery of the Original Loan Agreement; (ii) all corporate action
taken by the Borrower and the Guarantors to authorize the execution,
delivery and performance of each of this Amendment and Supplement,
the Loan Agreement as amended hereby, the Amended and
Restated Revolving Credit Note, the other agreements, instruments
and documents executed in connection herewith and therewith and the
consummation of the transactions contemplated hereby and thereby,
certified by its secretary; and (iii) an incumbency certificate
(with specimen signatures) with respect to the Borrower and the
Guarantors.
Section 5.5 Counsel to the Borrower shall have
delivered to the Agent an opinion in form and substance
satisfactory to the Agent and its counsel.
Section 5.6 (a) The Borrower shall have complied and
shall then be in compliance with all of the terms, covenants and
conditions of this Amendment and Supplement and the Loan Agreement
as amended hereby;
(b) After giving effect to the transactions contemplated
hereby, there shall exist no Default or Event of Default under the
Loan Agreement; and
(c) The representations and warranties contained in
Article 3 of the Loan Agreement shall be true and correct on the
date hereof and after giving effect to this Amendment and
Supplement, the Loan Agreement as amended hereby and the
transactions contemplated hereunder and thereunder;
and the Agent shall have received a Compliance Certificate dated
the date hereof to the foregoing effect.
Section 5.7 All legal matters incident hereto shall be
satisfactory to counsel to the Agent.
Article 6. The Agent
(a) The Banks and the Agent agree and confirm that
Article 9 of the Loan Agreement applies in all respects to this
Amendment and Supplement, the Loan Agreement as amended hereby and
the transactions contemplated herein. Without limiting the generality
of the foregoing, each Bank agrees that Section 9.6 of the Loan
Agreement applies to this Amendment and Supplement and the
transactions contemplated hereby, and that each Bank has,
independently and without reliance on the Agent or any other Bank,
and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter
this Amendment and Supplement.
(b) Each Bank acknowledges that Fleet Bank, National
Association is the successor in interest to NatWest Bank N.A. in
its capacity as Agent, and that Fleet Bank, National Association,
in such capacity, is vested with all the rights, powers, privileges
and duties with which NatWest Bank N.A. had been vested in its
capacity as Agent, and each Bank consents to the foregoing in all
respects.
Article 7. Miscellaneous
Section 7.1 THIS AMENDMENT AND SUPPLEMENT, THE AMENDED
AND RESTATED REVOLVING CREDIT NOTE, THE LOAN AGREEMENT AS AMENDED
HEREBY AND ALL OTHER AGREEMENTS, DOCUMENTS AND INSTRUMENTS EXECUTED
AND DELIVERED IN CONNECTION HEREWITH AND THEREWITH SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
Section 7.2 The provisions of this Amendment and
Supplement are severable, and if any clause or provision shall be
held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such
jurisdiction and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or
provision in this Amendment and Supplement in any jurisdiction.
Section 7.3 This Amendment and Supplement may be
signed in any number of counterparts with the same effect as if the
signatures thereto and hereto were upon the same instrument.
Section 7.4 This Amendment and Supplement shall be
binding upon and inure to the benefit of the Borrower and the
Guarantors and their respective successors and to the benefit of
each of the Agent and the Banks and its respective successors and
assigns. The rights and obligations of the Borrower and the
Guarantors under this Amendment and Supplement shall not be
assigned or delegated without the prior written consent of the
Banks, and any purported assignment or delegation without such
consent shall be void.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
FIVE STAR GROUP, INC.
By:________________________
Title:
FLEET BANK, NATIONAL
ASSOCIATION
By:________________________
Title:
SUMMIT BANK
By:________________________
Title:
FLEET BANK, NATIONAL
ASSOCIATION, as Agent
By:________________________
Title:
Consented to and
Agreed in All Respects:
NATIONAL PATENT DEVELOPMENT
CORPORATION
By:________________________
Title:
MXL INDUSTRIES, INC.
By:________________________
Title: