COMERICA
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
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OBLIGOR# NOTE # AGREEMENT DATE
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342341064 42 December 1, 2004
CREDIT LIMIT INTEREST RATE OFFICER NO./INITIALS
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$7,800,000 In accordance with the table in Section TMH/48497
2.2
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THIS AGREEMENT is entered into on December 1, 2004, between Comerica Bank, a
Michigan banking corporation ("Bank") as secured party, whose Western Division
headquarters office is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ Beverage Company ("Borrower"), whose sole place of business (if it has
only one), chief executive office (if it has more than one place of business) or
residence (if an individual) is located at the address set forth below its name
on the signature page to this Agreement. The parties agree as follows:
Bank and Borrower are parties that that Revolving Credit Loan and Security
Agreement (Accounts And Inventory), dated May 15, 2007 as previously amended (as
so amended the "1997 Agreement");
The Bank and the Borrower wish to amend and restate in full the 1997 on the
terms and conditions contained here.
NOW THEREFORE, the parties hereto agree that the 1997 Agreement is hereby
amended, restated and superseded in full to read as follows:
1. DEFINITIONS.
1.1 "Accounts" shall mean and includes all presently existing and hereafter
arising accounts, including without limitation all accounts receivable, contract
rights and other forms of right to payment for monetary obligations or
receivables for property sold or to be sold, leased, licensed, assigned or
otherwise disposed of, or for services rendered or to be rendered (including
without limitation all health-care-insurance receivables) owing to Borrower, and
any supporting obligations, credit insurance, guaranties or security therefor,
irrespective of whether earned by performance.
1.2 "Agreement" shall mean and includes this Amended and Restated Loan and
Security Agreement, any concurrent or subsequent rider to this Loan and Security
Agreement and any extensions, supplements, amendments or modifications to this
Loan and Security Agreement and/or to any such rider.
1.3 "Bank Expenses" shall mean and includes: all costs or expenses required
to be paid by Borrower under this Agreement which are paid or advanced by Bank;
taxes and insurance premiums of every nature and kind of Borrower paid by Bank;
filing, recording, publication and search fees, appraiser fees, auditor fees and
costs, and title insurance premiums paid or incurred by Bank in connection with
Bank's transactions with Borrower; costs and expenses incurred by Bank in
collecting the Accounts (with or without suit) to correct any default or enforce
any provision of this Agreement, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, disposing of, preparing for
sale and/or advertising to sell the Collateral, whether or not a sale is
consummated; costs and expenses of suit incurred by Bank in enforcing or
defending this Agreement or any portion hereof, including, but not limited to,
expenses incurred by Bank in attempting to obtain relief from any stay,
restraining order, injunction or similar process which prohibits Bank from
exercising any of its rights or remedies; and reasonable attorneys' fees and
expenses incurred by Bank in advising, structuring, drafting, reviewing,
amending, terminating, enforcing, defending or concerning this Agreement, or any
portion hereof or any agreement related hereto, whether or not suit is brought.
Bank Expenses shall include Bank's in-house legal charges at reasonable rates.
1.4 "Base Rate" shall mean that variable rate of interest so announced by
Bank at its headquarters office in San Jose, California as its "Base Rate" from
time to time and which serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto.
1.5 "Borrower's Books" shall mean and includes all of Borrower's books and
records including but not limited to minute books; ledgers; records indicating,
summarizing or evidencing Borrower's assets (including, without limitation, the
Accounts), liabilities, business operations or financial condition, and all
information relating thereto, computer programs; computer disk or tape files;
computer printouts; computer runs; and other computer prepared information and
equipment of any kind.
1.6 "Book Net Worth" shall mean as of the date of determination, Borrower's
consolidated Net Worth which includes the net value of Borrower's, Blue Sky
Natural Beverage Co.'s and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Juice Company's trademarks.
1.7 "Collateral" shall mean and includes all personal property of Borrower,
including without limitation each and all of the following: the Accounts; the
Inventory; the General Intangibles; the Negotiable Collateral; Borrower's Books;
all Borrower's deposit accounts; all Borrower's investment property (including
without limitation securities and securities entitlements); all goods,
instruments, documents, policies and certificates of insurance, deposits, money
or other personal property of Borrower in which Bank receives a security
interest and which now or later come into the possession, custody or control of
Bank; all Borrower's equipment and fixtures; all additions, accessions,
attachments, parts, replacements, substitutions, renewals, interest, dividends,
distributions or rights of any kind for or with respect to any of the foregoing
(including without limitation any stock splits, stock rights, voting rights and
preferential rights); any supporting obligations for any of the foregoing; and
the products and proceeds of any of the foregoing, including, but not limited
to, proceeds of insurance covering the Collateral, and any and all Accounts,
General Intangibles, Negotiable Collateral, Inventory, equipment, money, deposit
accounts, investment property, equipment, fixtures or other tangible and
intangible property of Borrower resulting from the sale or other disposition of
the Collateral and the proceeds thereof and any supporting obligations or
security therefor and any right to payment thereunder, and including, without
limitation, cash or other property which were proceeds and are recovered by a
bankruptcy trustee or otherwise as a preferential transfer by Borrower.
Notwithstanding anything to the contrary contained herein, Collateral shall not
include any waste or other materials, which have been or may be designated as
toxic or hazardous by Bank.
1.8 "Credit" shall mean all Indebtedness, except that Indebtedness arising
pursuant to any other separate contract, instrument, note, or other separate
agreement which, by its terms, provides for a specified interest rate and term.
1.9 "Credit Limit" shall mean Seven Million Eight Hundred Thousand Dollars
($7,800,000).
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1.10 "Current Assets" shall mean, in respect of a Person and as of any
applicable date of determination, all current assets of such Person determined
in accordance with GAAP.
1.11 "Current Liabilities" shall mean, in respect of a Person and as of any
applicable date of determination, all liabilities of such Person that should be
classified as current in accordance with GAAP.
1.12 "Current Maturities of Long Term Indebtedness" shall mean, in respect
of a Person and as of any applicable date of determination thereof, that portion
of Long Term Indebtedness that should be classified as current in accordance
with GAAP.
1.13 "Current Ratio" shall mean, in respect of a Person and as of any
applicable date of determination, Current Assets plus the amount outstanding
under the Credit Limit, divided by Current Liabilities including the amount
outstanding under the Credit Limit.
1.14 "Daily Balance" shall mean the amount determined by taking the amount
of the Credit owed at the beginning of a given day, adding any new Credit
advanced or incurred on such date, and subtracting any payments or collections
which are deemed to be paid and are applied by Bank in reduction of the Credit
on that date under the provisions of this Agreement.
1.15 "Debt" shall mean, as of any applicable date of determination, all
items of indebtedness, obligation or liability of a Person, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, that should be classified as liabilities in
accordance with GAAP. In the case of Borrower, the term "Debt" shall include,
without limitation, the Indebtedness.
1.16 "EBITDA" shall mean, as of any applicable period, Borrower's
consolidated pre-tax Net Income; plus (a) the aggregate of all interest paid or
accrued by Borrower and its Subsidiaries including, without limitation, all
interest, fees and costs payable with respect to Indebtedness and the interest
portion of capitalized lease payments; paid or accrued during such period; plus
(b) amortization and depreciation deducted in determining Net Income for such
period; plus (c) any non-cash charge in determining Net Income for such period.
1.17 "Event of Default" shall mean one or more of those events described in
Section 7 contained herein below.
1.18 "GAAP" shall mean, as of any applicable period, generally accepted
accounting principles in effect during such period.
1.19 "General Intangibles" shall mean and includes all of Borrower's
present and future general intangibles and other personal property (including
without limitation all payment intangibles, electronic chattel paper, contract
rights, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trademarks, servicemarks,
copyrights, blueprints, drawings, plans, diagrams, schematics, purchase orders,
customer lists, monies due or recoverable from pension funds, route lists,
rights to payment (including without limitation, rights to payment evidenced by
chattel paper, documents or instruments) and other rights under any royalty or
licensing agreements, infringement claims, software (including without
limitation any computer program that is embedded in goods that consist solely of
the medium in which the program is embedded), information contained on computer
disks or tapes, literature, reports, catalogs, insurance premium rebates, tax
refunds, and tax refund claims), other than goods, Accounts, Inventory,
Negotiable Collateral, and Borrowers Books.
1.20 "▇▇▇▇▇▇ Natural" means ▇▇▇▇▇▇ Natural Corporation, a Delaware
Corporation.
1.21 "Indebtedness" shall mean and includes any and all loans, advances,
Letter of Credit Obligations, overdrafts, debts, liabilities (including, without
limitation, any and all amounts charged to Borrower's loan account pursuant to
any agreement authorizing Bank to charge Borrower's loan account), obligations,
lease payments, guaranties, covenants and duties owing by Borrower to Bank of
any kind and description whether advanced pursuant to or evidenced by this
Agreement; by any note or other Instrument; or by any other agreement between
Bank and Borrower and whether or not for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due now existing or hereafter
arising, including, without limitation, any interest, fees, expenses, costs and
other amounts owed to Bank that but for the provisions of the United States
Bankruptcy Code would have accrued after the commencement of any Insolvency
Proceeding, and including, without limitation, any debt, liability, or
obligations owing from Borrower to others which Bank may have obtained by
assignment, participation, purchase or otherwise, and further including, without
limitation, all interest not paid when due and all Bank Expenses which Borrower
is required to pay or reimburse by this Agreement, by law, or otherwise.
1.22 "Insolvency Proceeding" shall mean and includes any proceeding or case
commenced by or against Borrower, or any guarantor of Borrower's Indebtedness,
or any of Borrower's account debtors, under any provisions of the Bankruptcy
Code, as amended, or any other bankruptcy or insolvency law, including, but not
limited to assignments for the benefit of creditors, formal or informal
moratoriums, composition or extensions with some or all creditors, any
proceeding seeking a reorganization, arrangement or any other relief under the
Bankruptcy Code, as amended, or any other bankruptcy or insolvency law.
1.23 "Inventory" shall mean and includes all present and future inventory
in which Borrower has any interest, including, but not limited to, goods held by
Borrower for sale or lease or to be furnished under a contract of service and
all of Borrower's present and future raw materials, work in process, finished
goods (including without limitation any computer program embedded in any of the
foregoing goods and any supporting information provided in connection therewith
that (i) is associated with the goods in such a manner that the program
customarily is considered part of the goods or that (ii) by becoming the owner
of the goods, a person acquires a right to use the program in connection with
the goods), together with any advertising materials and packing and shipping
materials, wherever located and any documents of title representing any of the
above, and any equipment, fixtures or other property used in the storing,
moving, preserving, identifying, accounting for and shipping or preparing for
the shipping of inventory, and any and all other items hereafter acquired by
Borrower by way of substitution, replacement, return, repossession or otherwise,
and all additions and accessions thereto, and the resulting product or mass, and
any documents of title respecting any of the above.
1.24 "Judicial Officer or Assignee" shall mean and includes any trustee,
receiver, controller, custodian, assignee for the benefit of creditors or any
other person or entity having powers or duties like or similar to the powers and
duties of trustee, receiver, controller, custodian or assignee for the benefit
of creditors.
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1.25 "Letter of Credit Obligations" shall mean, as of any applicable date
of determination, the sum of the undrawn amount of any letter(s) of credit
issued by Bank upon the application of and/or for the account of Borrower, plus
any unpaid reimbursement obligations owing by Borrower to Bank in respect of any
such letter(s) of credit.
1.26 "Long Term Indebtedness" shall mean, in respect of a Person and as of
any applicable date of determination thereof, all Debt which should be
classified as "funded indebtedness" or "long term indebtedness" on a balance
sheet of such Person as of such date in accordance with GAAP.
1.27 "Net Income" shall mean the net income (or loss) of a person for any
period of determination, determined in accordance with GAAP but excluding in any
event:
a. any gains or losses on the sale or other disposition, not in the
ordinary course of business, of investments or fixed or capital
assets, and any taxes on the excluded gains and any tax deductions or
credits on account on any excluded losses; and
b. in the case of Borrower, net earnings of any Person in which Borrower
has an ownership interest, unless such net earnings shall have
actually been received by Borrower in the form of cash distributions.
1.28 "Negotiable Collateral" shall mean and include all of Borrower's
present and future letters of credit, advises of credit, letter-of-credit
rights, certificates of deposit, notes, drafts, money, documents (including
without limitation all negotiable documents), instruments (including without
limitation all promissory notes), tangible chattel paper or any other similar
property.
1.29 "Person" or "person" shall mean and includes any individual,
corporation, partnership, joint venture, firm, association, trust,
unincorporated association, joint stock company, government, municipality,
political subdivision or agency or other entity.
1.30 "Senior Funded Debt" shall mean, as of an applicable date of
determination total funded Debt under this Agreement plus all standby Letter of
Credit Obligations outstanding.
1.31 "Subordinated Debt" shall mean indebtedness of Borrower to third
parties which has been subordinated to the Indebtedness pursuant to a
subordination agreement in form and content satisfactory to Bank.
1.32 "Subsidiary" shall me, with respect to any Person, any corporation,
association or other business enttity of which more than fifty percent (50%) of
the total voting power of shares of stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers,
or trustees thereof, is at the time owned or controlled, directly or indirectly,
by that Person or one or more of the other Subsidiaries of that Person or a
combination thereof.
1.33 "Tangible Effective Net Worth" shall mean, with respect to any Person
and as of any applicable date of determination, Tangible Net Worth plus
Subordinated Debt.
1.34 "Tangible Net Worth" shall mean, with respect to any Person and as of
any applicable date of determination, the excess of:
a. the net book value of all assets of such Person (excluding affiliate
receivables, patents, patent rights, trademarks, trade names,
franchises, copyrights, licenses, goodwill, and all other intangible
assets of such Person) after all appropriate deductions in accordance
with GAAP (including, without limitation, reserves for doubtful
receivables, obsolescence, depreciation and amortization), over
b. all Debt of such Person at such time.
1.35 "Trademark Rights" shall mean all Borrower's rights under license
agreements and revenue sharing agreements for trademarks and all trademarks
which the Borrower now owns or acquires in the future.
1.36 "Working Capital" shall mean, as of any applicable date of
determination, Current Assets less Current Liabilities.
1.37 Compliance with financial covenants contained in this Agreement shall
be determined based upon the financial condition of ▇▇▇▇▇▇ Natural corporation,
on a consolidated basis, and all references to financial statements and
financial information shall be deemed to refer to the financial statements and
financial information of ▇▇▇▇▇▇ Natural Corporation and its consolidated
subsidiaries.
Any and all terms used in the foregoing definitions and elsewhere in this
Agreement shall be construed and defined in accordance with the meaning and
definition of such terms under and pursuant to the California Uniform Commercial
Code (hereinafter referred to as the "Uniform Commercial Code") as amended,
revised or replaced from time to time. Notwithstanding the foregoing, the
parties intend that the terms used herein which are defined in the Uniform
Commercial Code have, at all times, the broadest and most inclusive meanings
possible. Accordingly, if the Uniform Commercial Code shall in the future be
amended or held by a court to define any term used herein more broadly or
inclusively than the Uniform Commercial Code in effect on the date of this
Agreement, then such term, as used herein, shall be given such broadened
meaning. If the Uniform Commercial Code shall in the future be amended or held
by a court to define any term used herein more narrowly, or less inclusively,
than the Uniform Commercial Code in effect on the date of this Agreement, such
amendment or holding shall be disregarded in defining terms used in this
Agreement.
2. LOAN AND TERMS OF PAYMENT.
For value received, Borrower promises to pay to the order of Bank such amount,
as provided for below, together with interest, as provided for below.
2.1 Upon the request of Borrower, made at any time and from time to time
during the term hereof, and so long as no Event of Default has occurred, Bank
shall lend to Borrower an amount equal to the Credit Limit minus all Letter of
Credit Obligations. If at any time for any reason, the amount of Indebtedness
owed by Borrower to Bank pursuant to this Section 2.1 and Section 2.3 of this
Agreement is greater than the aggregate amount available to be drawn under this
Section 2.1, Borrower shall immediately pay to Bank, in cash, the amount of such
excess.
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2.2 Except as hereinafter provided, the Credit shall bear interest, on the
Daily Balance owing, at a fluctuating rate of interest, depending on the ▇▇▇▇▇▇
Natural's consolidated Senior EBITDA in accordance with the table below, equal
to the Base Rate plus the Applicable Base Margin or at the LIBOR Option Rate (as
defined and determined in accordance with the LIBOR Addendum attached hereto)
plus the Applicable LIBOR Margin.
Applicable Applicable Applicable Letter
Senior Debt To EBITDA LIBOR Margin Base Rate Margin of Credit Fee
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Less than 1.5:1.00 1.25% Minus 1.50% 1.25 %
Equal to or greater
than 1.5:1.00 but
Less than 2.51.00 1.50% Minus 1.25% 1.50%
Equal to or greater
than 2.5:1.00 1.75 Minus 1.00% 1.75%
Each semi annual period of the Borrower, the Applicable Base Rate Margin, the
Applicable LIBOR Rate Margin and the applicable Letter of Credit Fee will be
determined by the Bank after review of the Senior Debt to EBITDA of ▇▇▇▇▇▇
Natural on a consolidated basis according to the June 30 10Q's and December 31
10-K's of ▇▇▇▇▇▇ Natural. The Bank will determine the Applicable Base Rate
Margin and the Applicable LIBOR Rate Margin for each semi-annual period on the
60th day following the last day of each such period. The Senior Debt to EBITDA
at June 30 and December 31, must meet the above referenced thresholds for any
decrease in the Applicable LIBOR Rate Margin and the Applicable Base Rate Margin
to occur and the Applicable Letter of Credit Fee to decrease. The initial
Applicable LIBOR Margin is 1.25% the initial Applicable Base Rate margin is
minus 1.50 % and the initial Letter of Credit Fee is 1.25%.
All interest chargeable under this Agreement that is based upon a per annum
calculation shall be computed on the basis of a three hundred sixty (360) day
year for actual days elapsed. The Base Rate as of the date of this Agreement is
five percent (5.00%) per annum. In the event that the Base Rate announced is,
from time to time hereafter, changed, adjustment in the Base Rate shall be made
and based on the Base Rate in effect on the date of such change. The Base Rate,
as adjusted, shall apply to the Credit until the Base Rate is adjusted again.
All interest payable by Borrower under the Credit shall be due and payable on
the first day of each calendar month during the term of this Agreement. A late
payment charge equal to five percent (5%) of each late payment may be charged on
any payment not received by Bank within ten (10) calendar days after the payment
due date, but acceptance of payment of this charge shall not waive any Event of
Default under this Agreement. Upon the occurrence of an Event of Default
hereunder, and without constituting a waiver of any such Event of Default, then
during the continuation thereof, at Bank's option, the Credit shall bear
interest, on the Daily Balance owing, at a rate equal to three percent (3%) per
year in excess of the rate applicable immediately prior to the occurrence of the
Event of Default, and such rate of interest shall fluctuate thereafter from time
to time at the same time and in the same amount as any fluctuation in the rate
of interest applicable immediately prior to any such occurrence.
2.3 Subject to the terms and conditions of this Agreement, Bank agrees to
issue or cause to be issued letters of credit for the account of Borrower during
the term of this Agreement in the aggregate outstanding face amount not to
exceed the Credit Limit minus the then outstanding Daily Balance, provided that
the Letter of Credit Obligations shall not in any case exceed One Million Two
Hundred Thousand Dollars ($1,200,000). All letters of credit shall be, in form
and substance, acceptable to Bank in its sole discretion and shall be subject to
the terms and conditions of Bank's form of standard Letter of Credit Application
and Agreement.
The obligation of Borrower to immediately reimburse Bank for drawings made under
letters of credit shall be absolute, unconditional and irrevocable in accordance
with the terms of this Agreement and the Letter of Credit Application and
Agreement with respect to each such letter of credit. Borrower shall indemnify,
defend, protect and hold Bank harmless from any loss, cost, expense, or
liability, including, without limitation, reasonable attorney's fees incurred by
Bank, whether in-house or outside counsel is used, arising out of or in
connection with any letters of credit.
3. TERM.
3.1 This Agreement shall remain in full force and effect until June 1,
2006, unless earlier terminated by notice by Borrower. Notice of such
termination by Borrower shall be effectuated by mailing of a registered or
certified letter not less than thirty (30) days prior to the effective date of
such termination, addressed to Bank at the address set forth herein and the
termination shall be effective as of the date so fixed in such notice.
3.2 Notwithstanding the foregoing, should Borrower be in default of one or
more of the provisions of this Agreement, Bank may terminate this Agreement at
any time without notice. Notwithstanding the foregoing, should either Bank or
Borrower become insolvent or unable to meet its debts as they mature, or fail,
suspend, or go out of business, the other party shall have the right to
terminate this Agreement at any time without notice. On the date of termination
all Indebtedness shall become immediately due and payable without notice or
demand; provided, however, that no such notice of termination by Borrower shall
be effective until the payment in full in cash of all Indebtedness to Bank
(including without limitation the expiration or cash collateralization of all
Letter of Credit Obligations in accordance with the terms and conditions of this
Agreement). Any notice of termination given by Borrower shall be irrevocable
unless Bank otherwise agrees in writing, and Bank shall have no obligation to
make any loans or issue any letters of credit on or after the termination date
stated in such notice. Borrower may elect to terminate this Agreement in its
entirety only. No section of this Agreement or type of loan available hereunder
may be terminated singly.
3.3 All undertakings, agreements, covenants, warranties, and
representations of Borrower contained in this Agreement or any other document,
instrument or agreement entered into with or in favor of Bank in connection
herewith shall survive any such termination, and Bank shall retain its security
interest in and to all existing Collateral and Collateral arising thereafter,
any and all liens thereon, and all of its rights and remedies under this
Agreement or any other document, instrument or agreement entered into with or in
favor of Bank in connection herewith notwithstanding such termination until the
payment in full in cash of all Indebtedness to Bank (including, without
limitation, the expiration or cash collateralization of all of all Letter of
Credit Obligations in accordance with the terms and conditions of this Agreement
and the payment in full of all applicable termination charges, if any).
Notwithstanding the satisfaction in full of the Indebtedness, Bank shall not be
required to terminate its security interests in the Collateral unless, with
respect to any loss or damage Bank may incur as a result of dishonored checks or
other items of payment received by Bank and applied to the Indebtedness, Bank
shall, at its option, (a) have received a written agreement, executed by
Borrower and by any Person whose loans or other advances to Borrower are used in
whole or in part to satisfy the Indebtedness, indemnifying Bank from any such
loss or damage, or (b) have retained such monetary reserves and liens on the
Collateral for such period of time as Bank, in its reasonable discretion, may
deem necessary to protect Bank from any such loss or damage.
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3.4 After termination and when Bank has received payment in full of
Borrower's Indebtedness to Bank, Bank shall reassign to Borrower all Collateral
held by Bank, and shall execute a termination of all security agreements and
security interests given by Borrower to Bank.
4. CREATION OF SECURITY INTEREST.
4.1 Borrower hereby grants to Bank a continuing security interest in all
presently existing and hereafter arising Collateral in order to secure prompt
repayment of any and all Indebtedness owed by Borrower to Bank and in order to
secure prompt performance by Borrower of each and all of its covenants and
obligations under this Agreement and otherwise created. Bank's security interest
in the Collateral shall attach to all Collateral without further act on the part
of Bank or Borrower. In the event that any Collateral, including proceeds, is
evidenced by or consists of Negotiable Collateral, Borrower, immediately upon
the request of Bank, shall (a) endorse or assign such Negotiable Collateral to
Bank, (b) deliver actual physical possession of such Negotiable Collateral to
Bank, and (c) ▇▇▇▇ conspicuously all of its records pertaining to such
Negotiable Collateral with a legend, in form and substance satisfactory to Bank
(and in the case of Negotiable Collateral consisting of tangible chattel paper,
immediately ▇▇▇▇ all such tangible chattel paper with a conspicuous legend in
form and substance satisfactory to Bank), indicating that the Negotiable
Collateral is subject to the security interest granted to Bank hereunder.
4.2 Bank's security interest in the Accounts shall attach to all Accounts
without further act on the part of Bank or Borrower. Upon request from Bank,
Borrower shall provide Bank with schedules describing all Accounts created or
acquired by Borrower (including without limitation agings listing the names and
addresses of, and amounts owing by date by account debtors), and shall execute
and deliver written assignments of all Accounts to Bank all in a form acceptable
to Bank; provided, however, Borrower's failure to execute and deliver such
schedules and/or assignments shall not affect or limit Bank's security interest
and other rights in and to the Accounts. Together with each schedule, Borrower
shall furnish Bank with copies of Borrower's customers' invoices or the
equivalent, and original shipping or delivery receipts for all merchandise sold,
and Borrower warrants the genuineness thereof. Upon the occurrence of an Event
of Default, Bank or Bank's designee may notify customers or account debtors of
Bank's security interest in the Collateral and direct such customers or account
debtors to make payments directly to Bank, but unless and until Bank does so or
gives Borrower other written instructions, Borrower shall collect all Accounts
for Bank, receive in trust all payments thereon as Bank's trustee, and, if so
requested to do so from Bank, Borrower shall immediately deliver said payments
to Bank in their original form as received from the account debtor and all
letters of credit, advices of credit, instruments, documents, chattel paper or
any similar property evidencing or constituting Collateral. Notwithstanding
anything to the contrary contained herein, if sales of Inventory are made for
cash, Borrower shall immediately deliver to Bank, in identical form, all such
cash, checks, or other forms of payment which Borrower receives. The receipt of
any check or other item of payment by Bank shall not be considered a payment on
account until such check or other item of payment is honored when presented for
payment, in which event, said check or other item of payment shall be deemed to
have been paid to Bank two (2) calendar days after the date Bank actually
receives such check or other item of payment.
4.3 Bank's security interest in Inventory shall attach to all Inventory
without further act on the part of Bank or Borrower. Borrower will at Borrower's
expense pledge, assemble and deliver such Inventory to Bank or to a third party
as Bank's bailee; or hold the same in trust for Bank's account or store the same
in a warehouse in Bank's name; or deliver to Bank documents of title
representing said Inventory; or evidence of Bank's security interest in some
other manner acceptable to Bank. Until a default by Borrower under this
Agreement or any other Agreement between Borrower and Bank, Borrower may,
subject to the provisions hereof and consistent herewith, sell the Inventory,
but only in the ordinary course of Borrower's business. A sale of Inventory in
Borrower's ordinary course of business does not include an exchange or a
transfer in partial or total satisfaction of a debt owing by Borrower.
4.4 Concurrently with Borrower's execution of this Agreement, and at any
time or times hereafter at the request of Bank, Borrower shall (a) execute and
deliver to Bank security agreements, mortgages, assignments, certificates of
title, affidavits, reports, notices, schedules of accounts, letters of authority
and all other documents that Bank may reasonably request, in form satisfactory
to Bank, to perfect and maintain perfected Bank's security interest in the
Collateral and in order to fully consummate all of the transactions contemplated
under this Agreement, (b) cooperate with Bank in obtaining a control agreement
in form and substance satisfactory to Bank with respect to all deposit accounts,
electronic chattel paper, investment property, and letter-of-credit rights, and
(c) in the event that any Collateral is in the possession of a third party,
Borrower shall join with Bank in notifying such third party of Bank's security
interest and obtaining an acknowledgment from such third party that it is
holding such Collateral for the benefit of Bank. By authenticating or becoming
bound by this Agreement, Borrower authorizes the filing of initial financing
statement(s), and any amendment(s) covering the Collateral to perfect and
maintain perfected Bank's security interest in the Collateral. Upon the
occurrence of an Event of Default, Borrower hereby irrevocably makes,
constitutes and appoints Bank (and any of Bank's officers, employees or agents
designated by Bank) as Borrower's true and lawful attorney-in-fact with power to
sign the name of Borrower on any security agreement, mortgage, assignment,
certificate of title, affidavit, letter of authority, notice of other similar
documents which must be executed and/or filed in order to perfect or continue
perfected Bank's security interest in the Collateral, and to take such actions
in its own name or in Borrower's name as Bank, in its sole discretion, deems
necessary or appropriate to establish exclusive possession or control (as
defined in the Uniform Commercial Code) over any Collateral of such nature that
perfection of Bank's security interest may be accomplished by possession or
control.
4.5 Borrower shall make appropriate entries in Borrower's Books disclosing
Bank's security interest in the Accounts. Bank (through any of its officers,
employees or agents) shall have the right at any time or times hereafter,
provided that reasonable notice is provided, during Borrower's usual business
hours, or during the usual business hours of any third party having control over
the records of Borrower, to inspect and verify Borrower's Books in order to
verify the amount or condition of, or any other matter, relating to, said
Collateral and Borrower's financial condition.
4.6 Effective only upon the occurrence of an Event of Default, Borrower
appoints Bank or any other person whom Bank may designate as Borrower's
attorney-in-fact, with power: to endorse Borrower's name on any checks, notes,
acceptances, money order, drafts or other forms of payment or security that may
come into Bank's possession; to sign Borrower's name on any invoice or ▇▇▇▇ of
lading relating to any Accounts, on drafts against account debtors, on schedules
and assignments of Accounts, on verifications of Accounts and on notices to
account debtors; to establish a lock box arrangement and/or to notify the post
office authorities to change the address for delivery of Borrower's mail
addressed to Borrower to an address designated by Bank, to receive and open all
mail addressed to Borrower, and to retain all mail relating to the Collateral
and forward all other mail to Borrower; to send, whether in writing or by
telephone, requests for verification of Accounts; and to do all things necessary
to carry out this Agreement. Borrower ratifies and approves all acts of the
attorney-in-fact. Neither Bank nor its attorney-in-fact will be liable for any
acts or omissions or for any error of judgement or mistake of fact or law. This
power being coupled with an interest, is irrevocable so long as any Accounts in
which Bank has a security interest remain unpaid and until the Indebtedness has
been fully satisfied.
5
4.7 In order to protect or perfect any security interest which Bank is
granted hereunder, Bank may, in its sole discretion, discharge any lien or
encumbrance or bond the same, pay any insurance, maintain guards, warehousemen,
or any personnel to protect the Collateral, pay any service bureau, or, obtain
any records, and all costs for the same shall be added to the Indebtedness and
shall be payable on demand.
4.8 Borrower agrees that Bank may provide information relating to this
Agreement or relating to Borrower to Bank's parent, affiliates, subsidiaries and
service providers.
5. CONDITIONS PRECEDENT.
5.1 Conditions precedent to the making of the loans and the extension of
the financial accommodations hereunder, Borrower shall execute, or cause to be
executed, and deliver to Bank, in form and substance satisfactory to Bank and
its counsel, the following:
a. This Agreement executed by the Borrower and other documents,
instruments and agreements required by Bank;
b. Security Agreements, Pledge Agreements or reaffirmations thereof
executed by the Borrower, ▇▇▇▇▇▇ Natural Corporation, Blue Sky Natural
Beverage Co., ▇▇▇▇▇▇ ▇▇▇▇▇▇ Juice Company, and Hard e Beverage Company
as required by Bank to continue its security interest in the assets of
these entities as previously granted and the stock of ▇▇▇▇▇▇ ▇▇▇▇▇▇
Juice.
c. Guarantees executed by ▇▇▇▇▇▇ Natural Corporation, Blue Sky Natural
Beverage Co., ▇▇▇▇▇▇ ▇▇▇▇▇▇ Juice Company, and Hard e Beverage
Company.
d. If Borrower is a corporation, limited liability company, limited
partnership or other such entity, certified copies of all actions
taken by Borrower, any grantor of a security interest to Bank to
secure the Indebtedness, and any guarantor of the Indebtedness,
authorizing the execution, delivery and performance of this Agreement
and any other documents, instruments or agreements entered into in
connection herewith, and authorizing specific officers to execute and
deliver any such documents, instruments and agreements;
e. If Borrower is a corporation, limited liability company, limited
partnership or other such entity, then a certificate of good standing
showing that Borrower is in good standing under the laws of the state
of its incorporation or formation and certificates indicating that
Borrower is qualified to transact business and is in good standing in
any other state in which it conducts business;
f. If Borrower is a partnership, then a copy of Borrower's partnership
agreement certified by each general partner of Borrower;
g. UCC searches and financing statements, tax lien and litigation
searches, fictitious business statement filings, insurance
certificates, notices or other similar documents which Bank may
require and in such form as Bank may require, in order to reflect,
perfect or protect Bank's first priority security interest in the
Collateral and in order to fully consummate all of the transactions
contemplated under this Agreement;
h. Evidence that Borrower has obtained insurance and acceptable
endorsements;
i. Such depository control agreements from each Person as Bank may
require;
j. Such collateral access agreements from each lessor, warehouseman,
bailee, and other Person as Bank may require, duly executed by each
such Person; and
6. .WARRANTIES. REPRESENTATIONS AND COVENANTS.
6.1 If so requested by Bank, Borrower shall, at such intervals designated
by Bank, during the term hereof execute and deliver a Report of Accounts
Receivable or similar report, in form customarily used by Bank.
6.2 Returns and allowances, if any, as between Borrower and its customers,
will be on the same basis and in accordance with the usual customary practices
of Borrower, as they exist at this time. Any merchandise which is returned by an
account debtor or otherwise recovered shall be set aside, marked with Bank's
name, and Bank shall retain a security interest therein. Borrower shall promptly
notify Bank of all disputes and claims and settle or adjust them on terms
approved by Bank. After default by Borrower hereunder, no discount, credit or
allowance shall be granted to any account debtor by Borrower and no return of
merchandise shall be accepted by Borrower without Bank's consent. Bank may,
after default by Borrower, settle or adjust disputes and claims directly with
account debtors for amounts and upon terms which Bank considers advisable, and
in such cases Bank will credit Borrower's loan account with only the net amounts
received by Bank in payment of the Accounts, after deducting all Bank Expenses
in connection therewith.
6.3 Borrower warrants, represents, covenants and agrees that:
a. Borrower has good and marketable title to the Collateral. Bank has and
shall continue to have a first priority perfected security interest in
and to the Collateral. The Collateral shall at all times remain free
and clear of all liens, encumbrances and security interests (except
those in favor of Bank);
b. All Accounts are and will, at all times pertinent hereto, be bona fide
existing obligations created by the sale and delivery of merchandise
or the rendition of services to account debtors in the ordinary course
of business, free of liens, claims, encumbrances and security
interests (except as held by Bank and except as may be consented to,
in writing, by Bank) and are unconditionally owed to Borrower without
defenses, disputes, offsets counterclaims, rights of return or
cancellation, and Borrower shall have received no notice of actual or
imminent bankruptcy or insolvency of any account debtor at the time an
Account due from such account debtor is assigned to Bank; and
6
c. At the time each Account is assigned to Bank, all property giving rise
to such Account shall have been delivered to the account debtor or to
the agent for the account debtor for immediate shipment to, and
unconditional acceptance by, the account debtor. Borrower shall
deliver to Bank, as Bank may from time to time require, delivery
receipts, customer's purchase orders, shipping instructions, bills of
lading and any other evidence of shipping arrangements. Absent such a
request by Bank, copies of all such documentation shall be held by
Borrower as custodian for Bank.
6.4 Unless Borrower has given Bank thirty (30) days advanced notice of its
intent to change the Location of Inventory to a location other than the
locations listed in Schedule 6.4 attached hereto, and unless Bank has approved
such change of location, Borrower shall keep the Inventory (other than Inventory
with an aggregate value of $20,000 or less) only at the locations shown on
Schedule 6.4 attached hereto.
a. Borrower, immediately upon demand by Bank therefor, shall now and from
time to time hereafter, at such intervals as are reasonably requested
by Bank, deliver to Bank, designations of Inventory specifying
Borrower's cost of Inventory, the wholesale market value thereof and
such other matters and information relating to the Inventory as Bank
may request;
b. All of the Inventory is and shall remain free from all purchase money
or other security interests, liens or encumbrances, except as held by
Bank and except for warehouse liens, packer's liens and copacker's
liens arising in the ordinary course of business;
c. Borrower does now keep and hereafter at all times shall keep correct
and accurate records itemizing and describing the kind, type, quality
and quantity of the Inventory, its cost therefor and selling price
thereof, and the daily withdrawals therefrom and additions thereto,
all of which records shall be available upon demand to any of Bank's
officers, agents and employees for inspection and copying;
d. All Inventory, now and hereafter at all times, shall be new Inventory
of good and merchantable quality free from material defects;
e. Inventory is not now and shall not at any time or times hereafter be
located or stored with a bailee, warehouseman or other third party
without Bank's prior written consent, and, in such event, Borrower
will concurrently therewith cause any such bailee, warehouseman or
other third party to issue and deliver to Bank, warehouse receipts in
Bank's name evidencing the storage of Inventory and/or an
acknowledgment by such bailee of Bank's prior rights in the Inventory,
in each case in form and substance acceptable to Bank,. In any event,
Borrower shall instruct any third party to hold all such Inventory for
Bank's account subject to Bank's security interests and its
instructions; and
f. Bank shall have the right upon demand now and/or at all times
hereafter, during Borrower's usual business hours, after reasonable
notice, to inspect and examine the Inventory and to check and test the
same as to quality, quantity, value and condition and Borrower agrees
to reimburse Bank for Bank's reasonable costs and expenses in so
doing; and
g. Borrower hall deliver to Bank duly executed certificates of title with
respect to that portion of the Collateral that is subject to
certificates of title.
6.5 Borrower represents, warrants and covenants with Bank that Borrower
will not, without Bank's prior written consent:
▇. ▇▇▇▇▇ a security interest in or permit a lien, claim or encumbrance
upon any of the Collateral to any person, association, firm,
corporation, entity or governmental agency or instrumentality, except
for warehouse liens, packer's liens and copacker's liens arising in
the ordinary course of business;
b. Permit any levy, attachment or restraint to be made affecting any of
Borrower's assets;
c. Permit any Judicial Officer or Assignee to be appointed or to take
possession of any or all of Borrower's assets;
d. Other than sales of Inventory in the ordinary course of Borrower's
business, to sell, lease, or otherwise dispose of, move, or transfer,
whether by sale or otherwise, any of Borrower's assets;
e. Change its name, the location of its sole place of business, chief
executive office or residence, business structure, corporate identity
or structure, form of organization or the state in which it has been
formed or organized; add any new fictitious names, liquidate, merge or
consolidate with or into any other business organization;
f. Move or relocate any Collateral;
g. Acquire any other business organization;
h. Enter into any transaction, or series of transactions aggregating
$100,000 or more, which are not in the usual course of Borrower's
business;
i. Make any change in Borrower's financial structure or in any of its
business objectives, purposes or operations which would materially
adversely affect the ability of Borrower to repay Borrower's
Indebtedness;
j. Incur any debts outside the ordinary course of Borrower's business
except renewals or extensions of existing debts and interest thereon;
k. Make loans, advances or extensions of credit to any Person in excess
of $50,000 (was $5,000), except in the ordinary course of business;
l. Guarantee or otherwise, directly or indirectly, in any way be or
become responsible for obligations of any other Person, whether by
agreement to purchase the indebtedness of any other Person, agreement
for the furnishing of funds to any other Person through the furnishing
of goods, supplies or services, by way of stock purchase, capital
contribution, advance or loan, for the purpose of paying or
discharging (or causing the payment or discharge of) the indebtedness
of any other Person, or otherwise, except for the endorsement of
negotiable instruments by Borrower in the ordinary course of business
for deposit or collection;
7
m. Make any payment on account of any Subordinated Debt except for
regularly scheduled payments of interest and principal in accordance
with the provisions of any Subordination Agreement executed by Bank
and the subordinated debt holder, or amend any provision contained in
any documentation relating to any such Subordinated Debt without
Bank's prior written consent;
n. (a) Sell, lease, transfer or otherwise dispose of properties and
assets having an aggregate book value of more than One Hundred
Thousand Dollars ($100,000 ) (whether in one transaction or in a
series of transactions) except as to the sale of Inventory in the
ordinary course of business; (b) change its name, consolidate with or
merge into any other corporation, permit another corporation to merge
into it, acquire all or substantially all the properties or assets of
any other Person, enter into any reorganization or recapitalization or
reclassify its capital stock, or (c) enter into any sale-leaseback
transaction;
o. Purchase or hold beneficially any stock or other securities of, or
make any investment or acquire any securities or other interest
whatsoever in, any other Person, except for the common stock of the
Subsidiaries owned by Borrower on the date of this Agreement and
except for certificates of deposit with maturities of one year or less
of United States commercial banks with capital, surplus and undivided
profits in excess of One Hundred Million Dollars ($100,000,000) and
the securities or other direct obligations of the United States
Government maturing within one year from the date of acquisition
thereof;
p. Allow any fact, condition or event to occur or exist with respect to
any employee pension or profit sharing plans established or maintained
by it which might constitute grounds for termination of any such plan
or for the court appointment of a trustee to administer any such plan;
q. Use any loan or other extension of credit under this Agreement or any
other document, instrument or agreement entered into by Borrower with
or in favor of Bank in connection with this Agreement for any purpose
other than to refinance existing revolving debt, to provide working
capital for its operations and for other general business purposes. In
no event shall the funds from any such loan or other extension of
credit be used directly or indirectly by any Person for personal,
family, household or agricultural purposes or for the purpose, whether
immediate, incidental or ultimate, of purchasing, acquiring or
carrying any "margin stock" or any "margin securities" (as such terms
are defined respectively in Regulation U and Regulation G promulgated
by the Board of Governors of the Federal Reserve System) or to extend
credit to others directly or indirectly for the purpose of purchasing
or carrying any such margin stock or margin securities. Borrower
hereby represents and warrants that Borrower is not engaged
principally, or as one of Borrower's important activities, in the
business of extending credit to others for the purpose of purchasing
or carrying such margin stock or margin securities; and
r. Borrower shall not downstream any of the funds from the loan or any
extension of credit under this Agreement to Hard e Beverage Company,
▇▇▇▇▇▇ ▇▇▇▇▇▇ Juice Company or Blue Sky Natural Beverage Co.
s. Borrower shall not Sublicense Trademark Rights other than contracts
for the sale or distribution of finished products utilizing Specified
Trademarks entered into in the ordinary course of its business;
provided, however, Borrower may sublicense Specified Trademarks in the
ordinary course of business so long as ten (10) days after entering
into each such sublicense, Borrower shall give notice to Bank of such
sublicense and the name and address of the sublicense and a copy of
the sublicense.
6.6 Borrower represents, warrants, covenants and agrees that:
a. Borrower's true and correct legal name is that set forth on the
signature page to this Agreement. Except as disclosed in writing to
Bank on or before the date of this Agreement, Borrower has not done
business under any name other than that set forth on the signature
page to this Agreement;
b. If Borrower is a registered organization that is organized under the
laws of any one of the states comprising the United States (e.g.
corporation, limited partnership, registered limited liability
partnership or limited liability company), and is located (as
determined pursuant to the Uniform Commercial Code) in the state under
the laws of which it was organized, Borrower's form of organization
and the state in which it has been organized are those set forth
immediately following Borrower's name on the signature page to this
Agreement;
c. If Borrower is a registered organization organized under the laws of
the United States, and Borrower is located in the state that United
States law designates as its location or, if United States law
authorizes Borrower to designate the state for its location, the state
designated by Borrower, or if neither of the foregoing are applicable,
at the District of Columbia (in each case as determined in accordance
with the Uniform Commercial Code), Borrower's form of organization and
the state or district in which it is located are those set forth
immediately following Borrower's name on the signature page to this
Agreement;
6.7 If Borrower is a corporation, Borrower represents, warrants and
covenants as follows:
a. Borrower will not make any distribution or declare or pay any dividend
(in stock or in cash) to any shareholder or on any of its capital
stock, of any class, whether now or hereafter outstanding, or
purchase, acquire, repurchase, or redeem or retire any such capital
stock, provided however, that Borrower may decalre and pay a cash
dividend in cash or in stock in an amount not in excess of current
retained earnings.
b. Borrower is and shall at all times hereafter be a corporation duly
organized and existing in good standing under the laws of the state of
its incorporation and qualified and licensed to do business in
California or any other state in which it conducts its business;
c. Borrower has the right and power and is duly authorized to enter into
this Agreement; and
d. The execution by Borrower of this Agreement shall not constitute a
breach of any provision contained in Borrower's articles of
incorporation or by-laws.
8
6.8 The execution of and performance by Borrower of all of the terms and
provisions contained in this Agreement shall not result in a breach of or
constitute an event of default under any agreement to which Borrower is now or
hereafter becomes a party.
6.9 Borrower shall promptly notify Bank in writing of its acquisition by
purchase, lease or otherwise of any after acquired property of the type included
in the Collateral having an aggregate value in excess of $100,000, with the
exception of purchases of Inventory in the ordinary course of business.
6.10 All assessments and taxes, whether real, personal or otherwise, due or
payable by, or imposed, levied or assessed against, Borrower or any of its
property have been paid, and shall hereafter be paid in full, before
delinquency. Borrower shall make due and timely payment or deposit of all
federal, state and local taxes, assessments or contributions required of it by
law, and will execute and deliver to Bank, on demand, appropriate certificates
attesting to the payment or deposit thereof. Borrower will make timely payment
or deposit of all F.I.C.A. payments and withholding taxes required of it by
applicable laws, and will upon request furnish Bank with proof satisfactory to
it that Borrower has made such payments or deposit. If Borrower fails to pay any
such assessment, tax, contribution, or make such deposit, or furnish the
required proof, Bank may, in its sole and absolute discretion and without notice
to Borrower, (I) make payment of the same or any part thereof, or (ii) set up
such reserves in Borrower's loan account as Bank deems necessary to satisfy the
liability therefor, or both. Bank may conclusively rely on the usual statements
of the amount owing or other official statements issued by the appropriate
governmental agency. Each amount so paid or deposited by Bank shall constitute a
Bank Expense and an additional advance to Borrower.
6.11 There are no actions or proceedings pending by or against Borrower or
any guarantor of Borrower before any court or administrative agency and Borrower
has no knowledge of any pending, threatened or imminent litigation, governmental
investigations or claims, complaints, actions or prosecutions involving Borrower
or any guarantor of Borrower, except as heretofore specifically disclosed in
writing to Bank. If any of the foregoing arise during the term of the Agreement,
Borrower shall immediately notify Bank in writing.
6.12 Insurance.
a. Borrower, at its expense, shall keep and maintain its assets insured
against loss or damage by fire, theft, explosion, sprinklers and all
other hazards and risks ordinarily insured against by other owners who
use such properties in similar businesses for the full insurable value
thereof. Borrower shall also keep and maintain business interruption
insurance and public liability and property damage insurance relating
to Borrower's ownership and use of the Collateral and its other
assets. All such policies of insurance shall be in such form, with
such companies, and in such amounts as may be satisfactory to Bank.
Borrower shall deliver to Bank certified copies of such policies of
insurance and evidence of the payments of all premiums therefor. All
such policies of insurance (except those of public liability and
property damage) shall contain an endorsement in a form satisfactory
to Bank showing Bank as a loss payee thereof, with a waiver of
warranties satisfactory to Bank, and all proceeds payable thereunder
shall be payable to Bank and, upon receipt by Bank, shall be applied
on account of the Indebtedness owing to Bank. To secure the payment of
the Indebtedness, Borrower grants Bank a security interest in and to
all such policies of insurance (except those of public liability and
property damage) and the proceeds thereof, and Borrower shall direct
all insurers under such policies of insurance to pay all proceeds
thereof directly to Bank.
b. Borrower hereby irrevocably appoints Bank (and any of Bank's officers,
employees or agents designated by Bank) as Borrower's attorney for the
purpose of making, selling and adjusting claims under such policies of
insurance, endorsing the name of Borrower on any check, draft,
instrument or other item of payment for the proceeds of such policies
of insurance and for making all determinations and decisions with
respect to such policies of insurance. Borrower will not cancel any of
such policies without Bank's prior written consent. Each such insurer
shall agree by endorsement upon the policy or policies of insurance
issued by it to Borrower as required above, or by independent
instruments furnished to Bank, that it will give Bank at least ten
(10) days written notice before any such policy or policies of
insurance shall be altered or canceled, and that no act or default of
Borrower, or any other person, shall affect the right of Bank to
recover under such policy or policies of insurance required above or
to pay any premium in whole or in part relating thereto. Bank, without
waiving or releasing any Indebtedness or any Event of Default, may,
but shall have no obligation to do so, obtain and maintain such
policies of insurance and pay such premiums and take any other action
with respect to such policies which Bank deems advisable. All sums so
disbursed by Bank, as well as reasonable attorneys' fees incurred by
Bank, whether in-house or outside counsel is used, court costs,
expenses and other charges relating thereto, shall constitute Bank
Expenses and are payable on demand.
6.13 All financial statements and information relating to Borrower which
have been or may hereafter be delivered by Borrower to Bank are true and correct
and have been prepared in accordance with GAAP consistently applied and there
has been no material adverse change in the financial condition of Borrower since
the submission of such financial information to Bank.
6.14 Financial Reporting.
a. Borrower at all times hereafter shall maintain a standard and modern
system of accounting in accordance with GAAP consistently applied with
ledger and account cards and/or computer tapes and computer disks,
computer printouts and computer records pertaining to the Collateral
which contain information as may from time to time be requested by
Bank, not modify or change its method of accounting or enter into,
modify or terminate any agreement presently existing, or at any time
hereafter entered into with any third party accounting firm and/or
service bureau for the preparation and/or storage of Borrower's
accounting records without the written consent of Bank first obtained
and without said accounting firm and/or service bureau agreeing to
provide information regarding the Accounts and Inventory and
Borrower's financial condition to Bank; permit Bank and any of its
employees, officers or agents, upon demand, during Borrower's usual
business hours, or the usual business hour of third persons having
control thereof, to have access to and examine all of Borrower's Books
relating to the Collateral, Borrower's Indebtedness to Bank,
Borrower's financial condition and the results of Borrower's
operations and in connection therewith, permit Bank or any of its
agents, employees or officers to copy and make extracts therefrom.
b. Borrower shall deliver to Bank within sixty (60) days after the end of
each quarter a company prepared balance sheet and profit and loss
statement (Form 10-Q as filed with the US Securities and Exchange
Commission) covering Borrower's operations and deliver to Bank within
ninety five (95) days after the end of each of Borrower's fiscal years
an unqualified audited financial statement (Form 10-K as filed with
the US Securities and Exchange Commission) of the financial condition
of Borrower for each such fiscal year, including but not limited to, a
balance sheet and profit and loss statement and any other report
requested by Bank relating to the Collateral and the financial
condition of Borrower, and a certificate signed by an authorized
employee of Borrower to the effect that all reports, statements,
computer disk or tape files, computer printouts, computer runs, or
other computer prepared information of any kind or nature relating to
the foregoing or documents delivered or caused to be delivered to Bank
under this subparagraph are complete, correct and thoroughly present
the financial condition of Borrower and that there exists on the date
of delivery to Bank no condition or event which constitutes a breach
or Event of Default under this Agreement.
9
c. In addition to the financial statements requested above, Borrower
agrees to provide Bank with the following schedules:
(1) Accounts Receivable Agings and Accounts Payable Agings within 30
days of the end of each quarter;
(2) Compliance Certification within 30 days of the end of each
quarter, and
(3) Inventory report within 30 days of the end of each quarter.
6.15 ▇▇▇▇▇▇ Natural shall maintain the following financial ratios and
covenants on a consolidated basis, which shall be monitored on a quarterly
basis, except as noted below:
a. A Book Net Worth of not less than $35,000,000.
b. a Current Ratio of not less than 1.25:1.00
c. a ratio of Senior Funded Debt to EBITDA of not more than
1.75:1.00. Bank shall (i) in determining EBITDA, use the current
quarter of EBITDA and previous three (3) quarters of EBITDA; and
(ii) in determining Senior Funded debt, use Senior Funded Debt as
of the date of calculating this ratio.
All financial covenants shall be computed in accordance with GAAP
consistently applied except as otherwise specifically set forth in this
Agreement. All monies due from affiliates (including officers, directors and
shareholders) shall be excluded from Borrower's assets for all purposes
hereunder.
In the event that Borrower reasonably expects that it may be in
noncompliance with one or more of the financial covenants set forth in Section
6.15 in the following period of determination by virtue of the operation of SFAS
123 or any other accounting changes hereinafter adopted as GAAP, Borrower shall
so notify the Bank and thereafter, to the extent permitted by law, such
compliance shall be determined without regard to SFAS 123 or such changes to
GAAP.
6.16 Borrower shall promptly supply Bank (and cause any guarantor to supply
Bank) with such other information (including tax returns) concerning its
financial affairs (or that of any guarantor) as Bank may request from time to
time hereafter, and shall promptly notify Bank of any material adverse change in
Borrower's financial condition and of any condition or event which constitutes a
breach of or an event which constitutes an Event of Default under this
Agreement.
6.17 Borrower is now and shall be at all times hereafter solvent and able
to pay its debts (including trade debts) as they mature.
6.18 Borrower shall immediately and without demand reimburse Bank for all
sums expended by Bank in connection with any action brought by Bank to correct
any default or enforce any provision of this Agreement, including all Bank
Expenses; Borrower authorizes and approves all advances and payments by Bank for
items described in this Agreement as Bank Expenses.
6.19 Each warranty, representation and agreement contained in this
Agreement shall be automatically deemed repeated with each advance and shall be
conclusively presumed to have been relied on by Bank regardless of any
investigation made or information possessed by Bank. The warranties,
representations and agreements set forth herein shall be cumulative and in
addition to any and all other warranties, representations and agreements which
Borrower shall give, or cause to be given, to Bank, either now or hereafter.
6.20 Borrower shall keep all of its principal bank accounts with Bank and
shall notify Bank immediately in writing of the existence of any other bank
account, deposit account, or any other account into which money can be
deposited.
6.21 Borrower shall furnish to Bank: (a) as soon as possible, but in no
event later than thirty (30) days after Borrower knows or has reason to know
that any reportable event with respect to any deferred compensation plan has
occurred, a statement of the chief financial officer of Borrower setting forth
the details concerning such reportable event and the action which Borrower
proposes to take with respect thereto, together with a copy of the notice of
such reportable event given to the Pension Benefit Guaranty Corporation, if a
copy of such notice is available to Borrower; (b) promptly after the filing
thereof with the United States Secretary of Labor or the Pension Benefit
Guaranty Corporation, copies of each annual report with respect to each deferred
compensation plan; (c) promptly after receipt thereof, a copy of any notice
Borrower may receive from the Pension Benefit Guaranty Corporation or the
Internal Revenue Service with respect to any deferred compensation plan;
provided, however, this subparagraph shall not apply to notice of general
application issued by the Pension Benefit Guaranty Corporation or the Internal
Revenue Service; and (d) when the same is made available to participants in the
deferred compensation plan, all notices and other forms of information from time
to time disseminated to the participants by the administrator of the deferred
compensation plan.
6.22 Borrower is now and shall at all times hereafter remain in compliance
with all federal, state and municipal laws, regulations and ordinances relating
to the handling, treatment and disposal of toxic substances, wastes and
hazardous material and shall maintain all necessary authorizations and permits.
6.23 Absent the occurrence of an Event of Default under the loan documents
which is continuing, Bank shall not require that Bank be permitted to conduct
audits of the Accounts or Inventory of Borrower. In the Event of Default, by
Borrower under the loan documents, Bank shall be entitled to conduct such audits
of Borrower's Accounts and Inventory as Bank reasonably may require, at
Borrower's expense.
6.24 Borrower shall not loan, advance, make capital contributions to or
otherwise transfer cash or assets in any manner to any Subsidiary, or permit any
Subsidiary to do so with respect to any other Subsidiary, except for (I)
transfers of working capital by Borrower to any Subsidiary when and as necessary
to meet the working capital needs of such Subsidiary in the ordinary course of
business and so long as such transfer would not impair Borrower's operations or
its ability to perform the Obligations; or (ii) transfers of raw material and
work-in-process Inventory for purposes of completion of production of such
Inventory
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7. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an Event of Default by
Borrower under this Agreement:
a. If Borrower fails or neglects to perform, keep or observe any term,
provision, condition, covenant, agreement, warranty or representation
contained in this Agreement, or any other present or future document,
instrument or agreement between Borrower and Bank;
b. If any representation, statement, report or certificate made or
delivered by Borrower, or any of its officers, employees or agents to
Bank is not true and correct;
c. If Borrower fails to pay when due and payable or declared due and
payable, all or any portion of Borrower's Indebtedness (whether of
principal, interest, taxes, reimbursement of Bank Expenses, or
otherwise) and such failure continues for three (3) business days
after notice of such failure is delivered by the Bank to the Borrower
in accordance with Section 12 of this Agreement;
d. If there is a material impairment of the prospect of repayment of all
or any portion of Borrower's Indebtedness or a material impairment of
the value or priority of Bank's security interest in the Collateral,
including, without limitation, any action by any subcontractor or
warehouseman holding or asserting a lien in Collateral or asserting a
setoff right;
e. If all or any of Borrower's assets are attached, seized, subject to a
writ or distress warrant, or are levied upon, or come into the
possession of any Judicial Officer or Assignee and the same are not
released, discharged or bonded against within ten (10) days
thereafter;
f. If any Insolvency Proceeding is filed or commenced by or against
Borrower without being dismissed within ten (10) days thereafter;
g. If any proceeding is filed or commenced by or against Borrower for its
dissolution or liquidation;
h. If Borrower is enjoined, restrained or in any way prevented by court
order from continuing to conduct all or any material part of its
business affairs;
i. If a notice of lien, levy or assessment is filed of record with
respect to any or all of Borrower's assets by the United States
Government, or any department, agency or instrumentality thereof, or
by any state, county, municipal or other government agency, or if any
taxes or debts owing at any time hereafter to any one or more of such
entities becomes a lien, whether inchoate or otherwise, upon any or
all of Borrower's assets and the same is not paid on the payment date
thereof;
j. If a judgment or other claim becomes a lien or encumbrance upon any or
all of Borrower's assets and the same is not satisfied, dismissed or
bonded against within ten (10) days thereafter;
k. If Borrower's records are prepared and kept by an outside computer
service bureau at the time this Agreement is entered into or during
the term of this Agreement such an agreement with an outside service
bureau is entered into, and at any time thereafter, without first
obtaining the written consent of Bank, Borrower terminates, modifies,
amends or changes its contractual relationship with said computer
service bureau or said computer service bureau fails to provide Bank
with any requested information or financial data pertaining to Bank's
Collateral, Borrower's financial condition or the results of
Borrower's operations;
l. If Borrower permits a default in any material agreement to which
Borrower is a party with third parties so as to result in an
acceleration of the maturity of Borrower's indebtedness to others,
whether under any indenture, agreement or otherwise;
m. If Borrower makes any payment on account of indebtedness which has
been subordinated to Borrower's Indebtedness to Bank except as
otherwise permitted under the terms of this Agreement;
n. If any misrepresentation exists now or thereafter in any warranty or
representation made to Bank by any officer or director of Borrower, or
if any such warranty or representation is withdrawn by any officer or
director;
o. If any party subordinating its claims to that of Bank's or any
guarantor of Borrower's Indebtedness dies, terminates its
subordination or guaranty, violates the terms of the subordination or
guaranty, becomes insolvent, or an Insolvency Proceeding is commenced
by or against any such subordinating party or guarantor;
p. If there is a change of ownership or control of Twenty Five percent (
25 %) or more of the issued and outstanding stock of Borrower; or
q. If any reportable event, which Bank determines constitutes grounds for
the termination of any deferred compensation plan by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate
United States District Court of a trustee to administer any such plan,
shall have occurred and be continuing thirty (30) days after written
notice of such determination shall have been given to Borrower by
Bank, or any such Plan shall be terminated within the meaning of Title
IV of the Employment Retirement Income Security Act ("ERISA"), or a
trustee shall be appointed by the appropriate United States District
Court to administer any such plan, or the Pension Benefit Guaranty
Corporation shall institute proceedings to terminate any plan and in
case of any event described in this Section 7, the aggregate amount of
Borrower's liability to the Pension Benefit Guaranty Corporation under
Sections 4062, 4063 or 4064 of ERISA shall exceed five percent (5%) of
Borrower's Tangible Effective Net Worth.
r. If Borrower shall default under, or permit any other party to default
under, any of the Trademark Rights.
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Notwithstanding anything contained in Section 7 to the contrary, Bank shall
refrain from exercising its rights and remedies and Event of Default shall
thereafter not be deemed to have occurred by reason of the occurrence of any of
the events set forth in Sections 7.e, 7.f or 7.j of this Agreement if, within
ten (10) days from the date thereof, the same is released, discharged,
dismissed, bonded against or satisfied; provided, however, if the event is the
institution of Insolvency Proceedings against Borrower, Bank shall not be
obligated to make advances to Borrower during such cure period.
8. BANK'S RIGHTS AND REMEDIES.
8.1 Upon the occurrence of an Event of Default by Borrower under this
Agreement, Bank may, at its election, without notice of its election and without
demand, do any one or more of the following, all of which are authorized by
Borrower:
a. Declare Borrower's Indebtedness, whether evidenced by this Agreement,
installment notes, demand notes or otherwise, immediately due and
payable to Bank;
b. Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, or any other agreement between Borrower
and Bank;
c. Terminate this Agreement as to any future liability or obligation of
Bank, but without affecting Bank's rights and security interests in
the Collateral, and the Indebtedness of Borrower to Bank;
d. Without notice to or demand upon Borrower or any guarantor, make such
payments and do such acts as Bank considers necessary or reasonable to
protect its security interest in the Collateral. Borrower agrees to
assemble the Collateral if Bank so requires and to make the Collateral
available to Bank as Bank may designate. Borrower authorizes Bank to
enter the premises where the Collateral is located, take and maintain
possession of the Collateral and the premises (at no charge to Bank),
or any part thereof, and to pay, purchase, contest or compromise any
encumbrance, charge or lien which in the opinion of Bank appears to be
prior or superior to its security interest and to pay all expenses
incurred in connection therewith;
e. Without limiting Bank's rights under any security interest, Bank is
hereby granted a license or other right to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks and advertising matter, or any
property or a similar nature as it pertains to the Collateral, in
completing production of, advertising for sale and selling any
Collateral and Borrower's rights under all licenses and all franchise
agreement shall inure to Bank's benefit, and Bank shall have the right
and power to enter into sublicense agreements with respect to all such
rights with third parties on terms acceptable to Bank;
f. Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sales and sell (in the manner provided for herein)
the Inventory;
g. Sell or dispose the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's
premises) as is commercially reasonable in the opinion of Bank. It is
not necessary that the Collateral be present at any such sale. At any
sale or other disposition of the Collateral pursuant to this Section,
Bank disclaims all warranties which would otherwise be given under the
Uniform Commercial Code, including without limitation a disclaimer of
any warranty relating to title, possession, quiet enjoyment or the
like, and Bank may communicate these disclaimers to a purchaser at
such disposition. This disclaimer of warranties will not render the
sale commercially unreasonable;
h. Bank shall give notice of the disposition of the Collateral as
follows:
(1) Bank shall give Borrower and each holder of a security interest
in the Collateral who has filed with Bank a written request for
notice, a notice in writing of the time and place of public sale,
or, if the sale is a private sale or some disposition other than
a public sale is to be made of the Collateral, the time on or
after which the private sale or other disposition is to be made;
(2) The notice shall be personally delivered or mailed, postage
prepaid, to Borrower's address appearing in this Agreement, at
least ten (10) calendar days before the date fixed for the sale,
or at least ten (10) calendar days before the date on or after
which the private sale or other disposition is to be made, unless
the Collateral is perishable or threatens to decline speedily in
value. Notice to persons other than Borrower claiming an interest
in the Collateral shall be sent to such addresses as have been
furnished to Bank or as otherwise determined in accordance with
Section 9611 of the Uniform Commercial Code; and
(3) If the sale is to be a public sale, Bank shall also give notice
of the time and place by publishing a notice one time at least
ten (10) calendar days before the date of the sale in a newspaper
of general circulation in the county in which the sale is to be
held; and
(4) Bank may credit bid and purchase at any public sale.
i. Borrower shall pay all Bank Expenses incurred in connection with
Bank's enforcement and exercise of any of its rights and remedies as
herein provided, whether or not suit is commenced by Bank;
j. Any deficiency which exists after disposition of the Collateral as
provided above will be paid immediately by Borrower. Any excess will
be returned, without interest and subject to the rights of third
parties, to Borrower by Bank, or, in Bank's discretion, to any party
who Bank believes, in good faith, is entitled to the excess;
k. Without constituting a retention of Collateral in satisfaction of an
obligation within the meaning of 9620 of the Uniform Commercial Code
or an action under California Code of Civil Procedure 726, apply any
and all amounts maintained by Borrower as deposit accounts (as that
term is defined under 9102 of the Uniform Commercial Code) or other
accounts that Borrower maintains with Bank against the Indebtedness;
12
l. The proceeds of any sale or other disposition of Collateral authorized
by this Agreement shall be applied by Bank first upon all expenses
authorized by the Uniform Commercial Code and all reasonable attorney
fees and legal expenses incurred by Bank, whether in-house or outside
counsel is used, the balance of the proceeds of the sale or other
disposition shall be applied in the payment of the Indebtedness, first
to interest, then to principal, then to remaining Indebtedness and the
surplus, if any, shall be paid over to Borrower or to such other
person(s) as may be entitled to it under applicable law. Borrower
shall remain liable for any deficiency, which it shall pay to Bank
immediately upon demand. Borrower agrees that Bank shall be under no
obligation to accept any noncash proceeds in connection with any sale
or disposition of Collateral unless failure to do so would be
commercially unreasonable. If Bank agrees in its sole discretion to
accept noncash proceeds (unless the failure to do so would be
commercially unreasonable), Bank may ascribe any commercially
reasonable value to such proceeds. Without limiting the foregoing,
Bank may apply any discount factor in determining the present value of
proceeds to be received in the future or may elect to apply proceeds
to be received in the future only as and when such proceeds are
actually received in cash by Bank; and
m. The following shall be the basis for any finder of fact's
determination of the value of any Collateral which is the subject
matter of a disposition giving rise to a calculation of any surplus or
deficiency under Section 9615(f) of the Uniform Commercial Code: (i)
The Collateral which is the subject matter of the disposition shall be
valued in an "as is" condition as of the date of the disposition,
without any assumption or expectation that such Collateral will be
repaired or improved in any manner; (ii) the valuation shall be based
upon an assumption that the transferee of such Collateral desires a
resale of the Collateral for cash promptly (but no later than 30 days)
following the disposition; (iii) all reasonable closing costs
customarily borne by the seller in commercial sales transactions
relating to property similar to such Collateral shall be deducted
including, without limitation, brokerage commissions, tax prorations,
attorney's fees, whether in-house or outside counsel is used, and
marketing costs; (iv) the value of the Collateral which is the subject
matter of the disposition shall be further discounted to account for
any estimated holding costs associated with maintaining such
Collateral pending sale (to the extent not accounted for in (iii)
above), and other maintenance, operational and ownership expenses; and
(v) any expert opinion testimony given or considered in connection
with a determination of the value of such Collateral must be given by
persons having at least 5 years experience in appraising property
similar to the Collateral and who have conducted and prepared a
complete written appraisal of such Collateral taking into
consideration the factors set forth above. The "value" of any such
Collateral shall be a factor in determining the amount of proceeds
which would have been realized in a disposition to a transferee other
than a secured party, a person related to a secured party or a
secondary obligor under Section 9615(f) of the Uniform Commercial
Code.
8.2 In addition to any and all other rights and remedies available to Bank
under or pursuant to this Agreement or any other documents, instrument or
agreement contemplated hereby, Borrower acknowledges and agrees that (i) at any
time following the occurrence and during the continuance of any Event of
Default, and/or (ii) termination of Bank's commitment or obligation to make
loans or advances or otherwise extent credit to or in favor of Borrower
hereunder, in the event that and to the extent that there are any Letter of
Credit Obligations outstanding at such time, upon demand of Bank, Borrower shall
deliver to Bank, or cause to be delivered to Bank, cash collateral in an amount
not less than such Letter of Credit Obligations, which cash collateral shall be
held and retained by Bank as cash collateral for the repayment of such Letter of
Credit Obligations, together with any and all other Indebtedness of Borrower to
Bank remaining unpaid, and Borrower pledges to Bank and grants to Bank a
continuing first priority security interest in such cash collateral so delivered
to Bank. Alternatively, Borrower shall cause to be delivered to Bank an
irrevocable standby letter of credit issued in favor of Bank by a bank
acceptable to Bank, in its sole discretion, in an amount not less than such
Letter of Credit Obligations, and upon terms acceptable to Bank, in its sole
discretion.
8.3 Bank's rights and remedies under this Agreement and all other
agreements shall be cumulative. Bank shall have all other rights and remedies
not inconsistent herewith as provided by law or in equity. No exercise by Bank
of one right or remedy shall be deemed an election, and no waiver by Bank of any
default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election or acquiescence by Bank.
9. TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY. If Borrower fails to
pay promptly when due to another person or entity, monies which Borrower is
required to pay by reason of any provision in this Agreement, Bank may, but need
not, pay the same and charge Borrower's loan account therefor, and Borrower
shall promptly reimburse Bank. All such sums shall become additional
Indebtedness owing to Bank, shall bear interest at the rate hereinabove
provided, and shall be secured by all Collateral. Any payments made by Bank
shall not constitute (i) an agreement by it to make similar payments in the
future or (ii) a waiver by Bank of any default under this Agreement. Bank need
not inquire as to, or contest the validity of, any such expense, tax, security
interest, encumbrance or lien and the receipt of the usual official notice of
the payment thereof shall be conclusive evidence that the same was validly due
and owing. Such payments shall constitute Bank Expenses and additional advances
to Borrower.
10. WAIVERS.
10.1 Borrower agrees that checks and other instruments received by Bank in
payment or on account of Borrower's Indebtedness constitute only conditional
payment until such items are actually paid to Bank and Borrower waives the right
to direct the application of any and all payments at any time or times hereafter
received by Bank on account of Borrower's Indebtedness and Borrower agrees that
Bank shall have the continuing exclusive right to apply and reapply such
payments in any manner as Bank may deem advisable, notwithstanding any entry by
Bank upon its books.
10.2 Borrower waives demand, protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, documents, instruments, chattel paper, and
guarantees at any time held by Bank on which Borrower may in any way be liable.
10.3 Bank shall not in any way or manner be liable or responsible for (a)
the safekeeping of the Inventory; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any diminution in the value
thereof; or (d) any act or default of any carrier, warehouseman, bailee,
forwarding agency or other person whomsoever. All risk of loss, damage or
destruction of Inventory shall be borne by Borrower.
10.4 Borrower waives the right and the right to assert a confidential
relationship, if any, it may have with any accountant, accounting firm and/or
service bureau or consultant in connection with any information requested by
Bank pursuant to or in accordance with this Agreement, and agrees that a Bank
may contact directly any such accountants, accounting firm and/or service bureau
or consultant in order to obtain such information.
10.5 JURY WAIVER AND REFERENCE PROVISIONS.
10.5.1 JURY WAIVER
13
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.
10.5.2
REFERENCE PROVISIONS
a. The parties prefer that any dispute between them be resolved in
litigation subject to a Jury Trial Waiver as set forth in the Loan
Documents (defined below), but the availability of that process is in
doubt because of the opinion of the California Court of Appeal in
Grafton Partners LP v. Superior Court, 9 Cal.Rptr.3d 511. This
Reference Provision will be applicable until the California Supreme
Court completes its review of that case, and will continue to be
applicable if either that court or a California Court of Appeal
publishes a decision holding that a pre-dispute Jury Trial Waiver
provision similar to that contained in the Loan Documents is invalid
or unenforceable. Delay in requesting appointment of a referee pending
review of any such decision, or participation in litigation pending
review, will not be deemed a waiver of this Reference Provision.
b. Other than (i) nonjudicial foreclosure of security interests in real
or personal property, (ii) the appointment of a receiver or (iii) the
exercise of other provisional remedies (any of which may be initiated
pursuant to applicable law), any controversy, dispute or claim (each,
a "Claim") between the parties arising out of or relating to this
Agreement or any other document, instrument or agreement between the
Bank and the undersigned (collectively in this Section, the "Loan
Documents"), will be resolved by a reference proceeding in California
in accordance with the provisions of Section 638 et seq. of the
California Code of Civil Procedure ("CCP"), or their successor
sections, which shall constitute the exclusive remedy for the
resolution of any Claim, including whether the Claim is subject to the
reference proceeding. Except as otherwise provided in the Loan
Documents, venue for the reference proceeding will be in the Superior
Court or Federal District Court in the County or District where the
real property, if any, is located or in a County or District where
venue is otherwise appropriate under applicable law (the "Court").
c. The referee shall be a retired Judge or Justice selected by mutual
written agreement of the parties. If the parties do not agree, the
referee shall be selected by the Presiding Judge of the Court (or his
or her representative). A request for appointment of a referee may be
heard on an ex parte or expedited basis, and the parties agree that
irreparable harm would result if ex parte relief is not granted. The
referee shall be appointed to sit with all the powers provided by law.
Each party shall have one peremptory challenge pursuant to CCP Section
170.6. Pending appointment of the referee, the Court has power to
issue temporary or provisional remedies.
d. The parties agree that time is of the essence in conducting the
reference proceedings. Accordingly, the referee shall be requested to
(a) set the matter for a status and trial- setting conference within
fifteen (15) days after the date of selection of the referee, (b) if
practicable, try all issues of law or fact within ninety (90) days
after the date of the conference and (c) report a statement of
decision within twenty (20) days after the matter has been submitted
for decision. Any decision rendered by the referee will be final,
binding and conclusive, and judgment shall be entered pursuant to CCP
Section 644.
e. The referee will have power to expand or limit the amount and duration
of discovery. The referee may set or extend discovery deadlines or
cutoffs for good cause, including a party's failure to provide
requested discovery for any reason whatsoever. Unless otherwise
ordered, no party shall be entitled to "priority" in conducting
discovery, depositions may be taken by either party upon seven (7)
days written notice, and all other discovery shall be responded to
within fifteen (15) days after service. All disputes relating to
discovery which cannot be resolved by the parties shall be submitted
to the referee whose decision shall be final and binding.
f. Except as expressly set forth in this Agreement, the referee shall
determine the manner in which the reference proceeding is conducted
including the time and place of hearings, the order of presentation of
evidence, and all other questions that arise with respect to the
course of the reference proceeding. All proceedings and hearings
conducted before the referee, except for trial, shall be conducted
without a court reporter, except that when any party so requests, a
court reporter will be used at any hearing conducted before the
referee, and the referee will be provided a courtesy copy of the
transcript. The party making such a request shall have the obligation
to arrange for and pay the court reporter. Subject to the referee's
power to award costs to the prevailing party, the parties will equally
share the cost of the referee and the court reporter at trial.
g. The referee shall be required to determine all issues in accordance
with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in
the State of California will be applicable to the reference
proceeding. The referee shall be empowered to enter equitable as well
as legal relief, provide all temporary or provisional remedies, enter
equitable orders that will be binding on the parties and rule on any
motion which would be authorized in a trial, including without
limitation motions for summary judgment or summary adjudication. The
referee shall issue a decision at the close of the reference
proceeding which disposes of all claims of the parties that are the
subject of the reference. The referee's decision shall be entered by
the Court as a judgment or an order in the same manner as if the
action had been tried by the Court. The parties reserve the right to
appeal from the final judgment or order or from any appealable
decision or order entered by the referee. The parties reserve the
right to findings of fact, conclusions of laws, a written statement of
decision, and the right to move for a new trial or a different
judgment, which new trial, if granted, is also to be a reference
proceeding under this provision.
h. If the enabling legislation which provides for appointment of a
referee is repealed (and no successor statute is enacted), any dispute
between the parties that would otherwise be determined by reference
procedure will be resolved and determined by arbitration. The
arbitration will be conducted by a retired judge or Justice, in
accordance with the California Arbitration Act Section 1280 through
Section 1294.2 of the CCP as amended from time to time. The
limitations with respect to discovery set forth above shall apply to
any such arbitration proceeding.
i. THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS
REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY,
AND THAT THEY ARE IN EFFECT WAIVING THEIR RIGHT TO TRIAL BY JURY IN
AGREEING TO THIS REFERENCE PROVISION. AFTER CONSULTING (OR HAVING HAD
THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH
PARTY KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT AGREES
THAT THIS REFERENCE PROVISION WILL APPLY TO ANY DISPUTE BETWEEN THEM
WHICH ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR THE LOAN
DOCUMENTS
14
10.6 In the event that Bank elects to waive any rights or remedies
hereunder, or compliance with any of the terms hereof, or delays or fails to
pursue or enforce any term, such waiver, delay or failure to pursue or enforce
shall only be effective with respect to that single act and shall not be
construed to affect any subsequent transactions or Bank's right to later pursue
such rights and remedies.
11. ONE CONTINUING LOAN TRANSACTION. All loans and advances heretofore, now
or at any time or times hereafter made by Bank to Borrower under this Agreement
or any other agreement between Bank and Borrower, shall constitute one loan
secured by Bank's security interests in the Collateral and by all other security
interests, liens, encumbrances heretofore, now or from time to time hereafter
granted by Borrower to Bank.
Notwithstanding the above, (i) to the extent that any portion of the
Indebtedness is a consumer loan, that portion shall not be secured by any deed
of trust or mortgage on or other security interest in Borrower's principal
dwelling which is not a purchase money security interest as to that portion,
unless expressly provided to the contrary in another place, or (ii) if Borrower
(or any of them) has (have) given or give(s) Bank a deed of trust or mortgage
covering real property, that deed of trust or mortgage shall not secure the loan
and any other Indebtedness of Borrower (or any of them), unless expressly
provided to the contrary in another place.
12. NOTICES. Unless otherwise provided in this Agreement, all notices or
demands by either party on the other relating to this Agreement shall be in
writing and sent by regular United States mail, postage prepaid, properly
addressed to Borrower or to Bank at the addresses stated in this Agreement, or
to such other addresses as Borrower or Bank may from time to time specify to the
other in writing. Requests for information made to Borrower by Bank from time to
time hereunder may be made orally or in writing, at Bank's discretion.
13. AUTHORIZATION TO DISBURSE. Bank is hereby authorized to make loans and
advances hereunder upon telephonic or other instructions received from anyone
purporting to be an officer, employee, or representative of Borrower, or at the
discretion of Bank if said loans and advances are necessary to meet any
Indebtedness of Borrower to Bank. Bank shall have no duty to make inquiry or
verify the authority of any such party, and Borrower shall hold Bank harmless
from any damage, claims or liability by reason of Bank's honor of, or failure to
honor, any such instructions.
14. PAYMENTS. Borrower hereby authorizes Bank to deduct the full amount of
any interest, fees, costs, or Bank Expenses due under this Agreement and not
paid or collected when due in accordance with the terms and conditions hereof
from any account maintained by Borrower with Bank. Should there be insufficient
funds in any such account to pay all such sums when due, the full amount of such
deficiency shall be immediately due and payable by Borrower; provided, however,
that Bank shall not be obligated to advance funds to cover any such payment.
15. DESTRUCTION OF BORROWER'S DOCUMENTS. Any documents, schedules, invoices
or other papers delivered to Bank, may be destroyed or otherwise disposed of by
Bank six (6) months after they are delivered to or received by Bank, unless
Borrower requests, in writing, the return of the said documents, schedules,
invoices or other papers and makes arrangements, at Borrower's expense, for
their return.
16. CHOICE OF LAW. The validity of this Agreement, its construction,
interpretation and enforcement, and the rights of the parties hereunder and
concerning the Collateral, shall be determined according to the laws of the
State of California. The parties agree that all actions or proceedings arising
in connection with this Agreement shall be tried and litigated only in the state
and federal courts in the Northern District of California or the County of Santa
▇▇▇▇▇.
17. GENERAL PROVISIONS.
17.1 This Agreement shall be binding and deemed effective when
executed by Borrower and accepted and executed by Bank at its
headquarters office.
17.2 This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties;
provided, however, that Borrower may not assign this Agreement or
any rights hereunder without Bank's prior written consent and any
prohibited assignment shall be absolutely void. No consent to an
assignment by Bank shall release Borrower or any guarantor from
their obligations to Bank. Bank may assign this Agreement and its
rights and duties hereunder. Bank reserves the right to sell,
assign, transfer, negotiate or grant participations in all or any
part of, or any interest in Bank's rights and benefits hereunder.
In connection therewith, Bank may disclose all documents and
information that Bank now or hereafter may have relating to
Borrower or Borrower's business.
17.3 Paragraph headings and paragraph numbers have been set forth
herein for convenience only; unless the contrary is compelled by
the context, everything contained in each paragraph applies
equally to this entire Agreement. Unless the context of this
Agreement clearly requires otherwise, references to the plural
include the singular, references to the singular include the
plural, and the term "including" is not limiting. The words
"hereof," "herein," "hereby," "hereunder," and similar terms in
this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement.
17.4 Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed or resolved against Bank or Borrower, whether
under any rule of construction or otherwise; on the contrary,
this Agreement has been reviewed by all parties and shall be
construed and interpreted according to the ordinary meaning of
the words used so as to fairly accomplish the purposes and
intentions of all parties hereto.
17.5 Each provision of this Agreement shall be severable from every
other provision of this Agreement for the purpose of determining
the legal enforceability of any specific provision.
17.6 This Agreement cannot be changed or terminated orally. This
Agreement contains the entire agreement of the parties hereto and
supersedes all prior agreements, understandings, representations,
warranties and negotiations, if any, related to the subject
matter hereof, and none of the parties shall be bound by anything
not expressed in writing.
17.7 The parties intend and agree that their respective rights,
duties, powers, liabilities, obligations and discretions shall be
performed, carried out, discharged and exercised reasonably and
in good faith.
17.8 In addition, if this Agreement is secured by a deed of trust or
mortgage covering real property, then the trustor or mortgagor
shall not mortgage or pledge the mortgaged premises as security
for any other indebtedness or obligations. This Agreement,
together with all other indebtedness secured by said deed of
trust or mortgage, shall become due and payable immediately,
without notice, at the option of Bank, (a) if said trustor or
mortgagor shall mortgage or pledge the mortgaged premises for any
other indebtedness or obligations or shall convey, assign or
transfer the mortgaged premises by deed, installment sale
contract or other instrument; (b) if the title to the mortgaged
premises shall become vested in any other person or party in any
manner whatsoever, or (c) if there is any disposition (through
one or more transactions) of legal or beneficial title to a
controlling interest of said trustor or mortgagor.
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17.9 Each undersigned Borrower hereby agrees that it is jointly and
severally, directly, and primarily liable to Bank for payment and
performance in full of all duties, obligations and liabilities
under this Agreement and each other document, instrument and
agreement entered into by Borrower with or in favor of Bank in
connection herewith, and that such liability is independent of
the duties, obligations and liabilities of any other Borrower or
any other guarantor of the Indebtedness, as applicable. Each
reference herein to Borrower shall mean each and every Borrower
party hereto, individually and collectively, jointly and
severally.
IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Loan and Security Agreement to be executed as of the date first hereinabove
written.
▇▇▇▇▇▇ BEVERAGE COMPANY
Accepted and effective as of: -----------------------
at Bank's Headquarters Office a Delaware Corporation
COMERICA BANK,
a Michigan banking corporation
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
Name:▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------- By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name:
Title: Vice President-Western Division Title:
Address for Notices:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Credit Manager
Fax number: (▇▇▇) ▇▇▇-▇▇▇▇
Address for Notices:
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LIBOR Addendum
To
Amended and Restated Loan and Security Agreement
This Addendum to Loan and Security Agreement (this "Addendum") is entered
into as of this 1st Day of December 2004, by and between Comerica Bank ("Bank")
and ▇▇▇▇▇▇ Beverage Company ("Borrower"). This Addendum supplements the terms of
the Amended and Restated Loan and Security Agreement of even date herewith.
1. Definitions.
a. Agreement. As used herein, "Agreement" means the Amended and
Restated Loan and Security Agreement of even date herewith.
b. Advance. As used herein, "Advance" means a borrowing requested by
Borrower and made by Bank under the Agreement, including a LIBOR
Option Advance and/or a Base Rate Option Advance.
c. Applicable Base Rate Margin. As used herein means the Applicable
Base Rate Margin determined in accordance with the Agreement.
d. Business Day. As used herein, "Business Day" means any day except
a Saturday, Sunday or any other day designated as a holiday under
Federal or California statute or regulation.
e. LIBOR. As used herein, "LIBOR" means the rate per annum (rounded
upward if necessary, to the nearest whole 1/8 of 1%) and
determined pursuant to the following formula:
LIBOR = Base LIBOR
--------------------------------
100% - LIBOR Reserve Percentage
(1) "Base LIBOR" means the rate per annum determined by Bank at which
deposits for the relevant LIBOR Period would be offered to Bank in the
approximate amount of the relevant LIBOR Option Advance in the
inter-bank LIBOR market selected by Bank, upon request of Bank at
10:00 a.m. California time, on the day that is the first day of such
LIBOR Period.
(2) "LIBOR Reserve Percentage" means the reserve percentage prescribed by
the Board of Governors of the Federal Reserve System (or any
successor) for "Eurocurrency Liabilities" (as defined in Regulation D
of the Federal Reserve Board, as amended), adjusted by Bank for
expected changes in such reserve percentage during the applicable
LIBOR Period.
f. LIBOR Business Day. As used herein, "LIBOR Business Day" means a
Business day on which dealings in Dollar deposits may be carried
out in the interbank LIBOR market.
g. LIBOR Period. As used herein, "LIBOR Period" means, with respect
to a LIBOR Option Advance:
(1) initially, the period commencing on, as the case may be, the date the
Advance is made or the date on which the Advance is converted to a
LIBOR Option Advance, and continuing for, in every case, a 30, 60, 90
or 180 day period thereafter so long as the LIBOR Option is quoted for
such period in the applicable interbank LIBOR market, as such period
is selected by Borrower in the notice of Advance as provided in the
Agreement or in the notice of conversion as provided in this Addendum;
and
(2) thereafter, each period commencing on the last day of the next
preceding LIBOR Period applicable to such LIBOR Option Advance and
continuing for, in every case, a 30, 60, 90 or 180 day period
thereafter so long as the LIBOR Option is quoted for such period in
the applicable interbank LIBOR market, as such period is selected by
Borrower in the notice of continuation as provided in this Addendum.
h. Note. As used herein, "Note" means the Amended and Restated Loan
and Security Agreement of even date herewith.
i. Regulation D. As used herein, "Regulation D" means Regulation D
of the Board of Governors of the Federal Reserve System as
amended or supplemented from time to time.
j. Regulatory Development. As used herein, "Regulatory Development"
means any or all of the following: (i) any change in any law,
regulation or interpretation thereof by any public authority
(whether or not having the force of law); (ii) the application of
any existing law, regulation or the interpretation thereof by any
public authority (whether or not having the force of law); and
(iii) compliance by Bank with any request or directive (whether
or not having the force of law) of any public authority.
2. Interest Rate Options. Borrower shall have the following options
regarding the interest rate to be paid by Borrower on Advances under the
Agreement:
a. A rate equal to the Applicable LIBOR Margin above Bank's LIBOR, (the
"LIBOR Option"), which LIBOR Option shall be in effect during the
relevant LIBOR Period; or
b. A rate equal to the Base Rate plus or minus the Applicable Base Rate
Margin. The "Base Rate" is defined in the Agreement and quoted from
time to time by Bank as such rate may change from time to time (the
"Base Rate Option").
3. LIBOR Option Advance. The minimum LIBOR Option Advance will not be less
than Five Hundred Thousand and 00/100 Dollars ($500,000) for any LIBOR Option
Advance.
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4. Payment of Interest on LIBOR Option Advances. Interest on each LIBOR
Option Advance shall be payable pursuant to the terms of the Agreement. Interest
on such LIBOR Option Advance shall be computed on the basis of a 360-day year
and shall be assessed for the actual number of days elapsed from the first day
of the LIBOR Period applicable thereto but not including the last day thereof.
5. Bank's Records Re: LIBOR Option Advances. With respect to each LIBOR
Option Advance, Bank is hereby authorized to note the date, principal amount,
interest rate and LIBOR Period applicable thereto and any payments made thereon
on Bank's books and records (either manually or by electronic entry) and/or on
any schedule attached to the Agreement, which notations shall be prima facie
evidence of the accuracy of the information noted.
6. Selection/Conversion of Interest Rate Options. At the time any Advance
is requested under the Agreement and/or Borrower wishes to select the LIBOR
Option for all or a portion of the outstanding principal balance of the
Agreement, and at the end of each LIBOR Period, Borrower shall give Bank notice
specifying (a) the interest rate option selected by Borrower; (b) the principal
amount subject thereto; and (c) if the LIBOR Option is selected, the length of
the applicable LIBOR Period. Any such notice may be given by telephone so long
as, with respect to each LIBOR Option selected by Borrower, (i) Bank receives
written confirmation from Borrower not later than three (3) LIBOR Business Days
after such telephone notice is given; and (ii) such notice is given to Bank
prior to 10:00 a.m., California time, on the first day of the LIBOR Period. For
each LIBOR Option requested hereunder, Bank will quote the applicable fixed
LIBOR Rate to Borrower at approximately 10:00 a.m., California time, on the
first day of the LIBOR Period. If Borrower does not immediately accept the rate
quoted by Bank, any subsequent acceptance by Borrower shall be subject to a
redetermination of the rate by Bank; provided, however, that if Borrower fails
to accept any such quotation given, then the quoted rate shall expire and Bank
shall have no obligation to permit a LIBOR Option to be selected on such day. If
no specific designation of interest is made at the time any Advance is requested
under the Agreement or at the end of any LIBOR Period, Borrower shall be deemed
to have selected the Base Rate Option for such Advance or the principal amount
to which such LIBOR Period applied. At any time the LIBOR Option is in effect,
Borrower may, at the end of the applicable LIBOR Period, convert to the Base
Rate Option. At any time the Base Rate Option is in effect, Borrower may convert
to the LIBOR OPTION, and shall designate a LIBOR Period.
7. Default Interest Rate. From and after the maturity date of the
Agreement, or such earlier date as all principal owing hereunder becomes due and
payable by acceleration or otherwise, the outstanding principal balance of the
Agreement shall bear interest until paid in full at an increased rate per annum
(computed on the basis of a 360-day year, actual days elapsed) equal to three
percent (3.00%) above the rate of interest from time to time applicable to the
Agreement.
8. Prepayment. In the event that the LIBOR Option is the applicable
interest rate for all or any part of the outstanding principal balance of the
Agreement, and any payment or prepayment of any such outstanding principal
balance of the Agreement shall occur on any day other than the last day of the
applicable LIBOR Period (whether voluntarily, by acceleration, required payment,
or otherwise), or if Borrower elects the LIBOR Option as the applicable interest
rate for all or any part of the outstanding principal balance of the Agreement
in accordance with the terms and conditions hereof, and, subsequent to such
election, but prior to the commencement of the applicable LIBOR Period, Borrower
revokes such election for any reason whatsoever, or if the applicable interest
rate in respect of any outstanding principal balance of the Agreement hereunder
shall be changed, for any reason whatsoever, from the LIBOR Option to the Base
Rate Option prior to the last day of the applicable LIBOR Period, or if Borrower
shall fail to make any payment of principal or interest hereunder at any time
that the LIBOR Option is the applicable interest rate hereunder in respect of
such outstanding principal balance of the Agreement, Borrower shall reimburse
Bank, on demand, for any resulting loss, cost or expense incurred by Bank as a
result thereof, including, without limitation, any such loss, cost or expense
incurred in obtaining, liquidating, employing or redeploying deposits from third
parties. Such amount payable by Borrower to Bank may include, without
limitation, an amount equal to the excess, if any, of (a) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed, refunded
or converted, for the period from the date of such prepayment or of such failure
to borrow, refund or convert, through the last day of the relevant LIBOR Period,
at the applicable rate of interest for such outstanding principal balance of the
Agreement, as provided under this Agreement, over (b) the amount of interest (as
reasonably determined by Bank) which would have accrued to Bank on such amount
by placing such amount on deposit for a comparable period with leading banks in
the interbank LIBOR market. Calculation of any amounts payable to Bank under
this paragraph shall be made as though Bank shall have actually funded or
committed to fund the relevant outstanding principal balance of the Agreement
hereunder through the purchase of an underlying deposit in an amount equal to
the amount of such outstanding principal balance of the Agreement and having a
maturity comparable to the relevant LIBOR Period; provided, however, that Bank
may fund the outstanding principal balance of the Agreement hereunder in any
manner it deems fit and the foregoing assumptions shall be utilized only for the
purpose of the calculation of amounts payable under this paragraph. Upon the
written request of Borrower, Bank shall deliver to Borrower a certificate
setting forth the basis for determining such losses, costs and expenses, which
certificate shall be conclusively presumed correct, absent manifest error. Any
prepayment hereunder shall also be accompanied by the payment of all accrued and
unpaid interest on the amount so prepaid. Any outstanding principal balance of
the Agreement which is bearing interest at such time at the Base Rate Option may
be prepaid without penalty or premium. Partial prepayments hereunder shall be
applied to the installments hereunder in the inverse order of their maturities.
BY INITIALING BELOW, BORROWER ACKNOWLEDGE(S) AND AGREE(S) THAT: (A) THERE IS NO
RIGHT TO PREPAY ANY LIBOR OPTION ADVANCE, IN WHOLE OR IN PART, WITHOUT PAYING
THE PREPAYMENT AMOUNT SET FORTH HEREIN ("PREPAYMENT AMOUNT"), EXCEPT AS
OTHERWISE REQUIRED UNDER APPLICABLE LAW; (B) BORROWER SHALL BE LIABLE FOR
PAYMENT OF THE PREPAYMENT AMOUNT IF BANK EXERCISES ITS RIGHT TO ACCELERATE
PAYMENT OF ANY LIBOR OPTION ADVANCE AS PART OR ALL OF THE OBLIGATIONS OWING
UNDER THE AGREEMENT, INCLUDING WITHOUT LIMITATION, ACCELERATION UNDER A
DUE-ON-SALE PROVISION; (C) BORROWER WAIVES ANY RIGHTS UNDER SECTION 2954.10 OF
THE CALIFORNIA CIVIL CODE OR ANY SUCCESSOR STATUTE; AND (D) BANK HAS MADE EACH
LIBOR OPTION ADVANCE PURSUANT TO THE AGREEMENT IN RELIANCE ON THESE AGREEMENTS.
--------------------
BORROWER'S INITIALS
9. Hold Harmless and Indemnification. Borrower agrees to indemnify Bank and
to hold Bank harmless from, and to reimburse Bank on demand for, all losses and
expenses which Bank sustains or incurs as a result of (i) any payment of a LIBOR
Option Advance prior to the last day of the applicable LIBOR Period for any
reason, including, without limitation, termination of the Agreement, whether
pursuant to this Addendum or the occurrence of an Event of Default; (ii) any
termination of a LIBOR Period prior to the date it would otherwise end in
accordance with this Addendum; or (iii) any failure by Borrower, for any reason,
to borrow any portion of a LIBOR Option Advance.
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10. Funding Losses. The indemnification and hold harmless provisions set
forth in this Addendum shall include, without limitation, all losses and
expenses arising from interest and fees that Bank pays to lenders of funds it
obtains in order to fund the loans to Borrower on the basis of the LIBOR
Option(s) and all losses incurred in liquidating or re-deploying deposits from
which such funds were obtained and loss of profit for the period after
termination. A written statement by Bank to Borrower of such losses and expenses
shall be conclusive and binding, absent manifest error, for all purposes. This
obligation shall survive the termination of this Addendum and the payment of the
Agreement.
11. Regulatory Developments Or Other Circumstances Relating To Illegality
or Impracticality of LIBOR. If any Regulatory Development or other circumstances
relating to the interbank Euro-dollar markets shall, at any time, in Bank's
reasonable determination , make it unlawful or impractical for Bank to fund or
maintain, during any LIBOR Period, to determine or charge interest rates based
upon LIBOR, Bank shall give notice of such circumstances to Borrower and:
(i) In the case of a LIBOR Period in progress, Borrower shall, if
requested by Bank, promptly pay any interest which had accrued prior to
such request and the date of such request shall be deemed to be the last
day of the term of the LIBOR Period; and
(ii) No LIBOR Period may be designated thereafter until Bank
determines that such would be practical.
12. Additional Costs. Borrower shall pay to Bank from time to time, upon
Bank's request, such amounts as Bank determines are needed to compensate Bank
for any costs it incurred which are attributable to Bank having made or
maintained a LIBOR Option Advance or to Bank's obligation to make a LIBOR Option
Advance, or any reduction in any amount receivable by Bank hereunder with
respect to any LIBOR Option or such obligation (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Developments, which (i) change the basis of
taxation of any amounts payable to Bank hereunder with respect to taxation of
any amounts payable to Bank hereunder with respect to any LIBOR Option Advance
(other than taxes imposed on the overall net income of Bank for any LIBOR Option
Advance by the jurisdiction where Bank is headquartered or the jurisdiction
where Bank extends the LIBOR Option Advance; (ii) impose or modify any reserve,
special deposit, or similar requirements relating to any extensions of credit or
other assets of, or any deposits with or other liabilities of, Bank (including
any LIBOR Option Advance or any deposits referred to in the definition of
LIBOR); or (iii) impose any other condition affecting this Addendum (or any of
such extension of credit or liabilities). Bank shall notify Borrower of any
event occurring after the date hereof which entitles Bank to compensation
pursuant to this paragraph as promptly as practicable after it obtains knowledge
thereof and determines to request such compensation. Determinations by Bank for
purposes of this paragraph, shall be conclusive, provided that such
determinations are made on a reasonable basis.
13. Legal Effect. Except as specifically modified hereby, all of the terms
and conditions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties have agreed to the foregoing as of the date
first set forth above.
▇▇▇▇▇▇ BEVERAGE COMPANY COMERICA BANK
Borrower
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By:/s/▇▇▇▇▇▇ ▇▇▇▇▇
---------------------- ---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Title:Chairman Vice President - Western Division
By:
Title:
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