EXHIBIT 10.20.3
LOAN AND SECURITY AGREEMENT
Dated as of March 15, 2004
Between
CENTENNIAL SPECIALTY FOODS CORPORATION
▇▇▇▇▇▇ CANNING COMPANY
(collectively, the Borrower)
and
HEARTLAND BANK
(the Lender)
Table of Contents
ARTICLE 1 - DEFINITIONS
Section 1.1Definitions
Section 1.2Other Referential Provisions
Section 1.3Exhibits and Schedules
ARTICLE 2 - REVOLVING CREDIT FACILITY
Section 2.1Revolving Credit Loans
Section 2.2Manner of Borrowing Revolving Credit Loans
Section 2.3Repayment of Revolving Credit Loans
Section 2.4Revolving Credit Note
Section 2.5Voluntary Termination of Revolving Credit Facility
ARTICLE 3 - GENERAL LOAN PROVISIONS
Section 3.1Interest
Section 3.2Fees
Sections 3.3 - 3.6: Not Used
Section 3.7Increased Costs and Reduced Returns
Section 3.8Manner of Payment
Section 3.9Statements of Account
Section 3.10 Termination of Agreement
ARTICLE 4 - CONDITIONS PRECEDENT
Section 4.1Conditions Precedent to Initial Loans
Section 4.2Conditions Precedent to All Loans
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 5.1Representations and Warranties
Section 5.2Survival of Representations and Warranties, Etc.
ARTICLE 6 - SECURITY INTEREST
Section 6.1Security Interest
Section 6.2Continued Priority of Security Interest
ARTICLE 7 - COLLATERAL COVENANTS
Section 7.1Verification; Notification and Defense of Title
Section 7.2Disputes, Returns and Adjustments
Section 7.3Invoices
Section 7.4Delivery of Instruments
Section 7.5Sales of Inventory
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Section 7.6Returned Goods
Section 7.7[Reserved]
Section 7.8Insurance
Section 7.9Location of Offices and Collateral
Section 7.10 Records Relating to Collateral
Section 7.11 Inspection
Section 7.12 Maintenance of Property
Section 7.13 Information and Reports
ARTICLE 8 - AFFIRMATIVE COVENANTS
Section 8.1Preservation of Existence and Similar Matters
Section 8.2Compliance with Applicable Law
Section 8.3Payment of Taxes and Claims
Section 8.4Accounting Methods and Financial Records
Section 8.5Use of Proceeds
Section 8.6Hazardous Waste and Substances; Environmental Requirements
Section 8.7Accuracy of Information
Section 8.8Revisions or Updates to Schedules
Section 8.9Operating Account
Section 8.10 Notice of SEC Reporting
Section 8.11 Reporting Compliance
ARTICLE 9 - INFORMATION
Section 9.1Financial Statements
Section 9.2Authorization
Section 9.3Copies of Other Reports
Section 9.4Notice of Litigation and Other Matters
Section 9.5ERISA
Section 9.6Officer's Certificate
ARTICLE 10 - NEGATIVE COVENANTS
Section 10.1 Financial Covenants
Section 10.2 Termination of Material Agreement
Section 10.3 Indebtedness
Section 10.4 Guarantees
Section 10.5 Investments
Section 10.6 Restricted Distributions and Payments
Section 10.7 Merger, Consolidation and Sale of Assets
Section 10.8 Transactions with Affiliates
Section 10.9 Liens
Section 10.10 Benefit Plans
Section 10.11 Sales and Leasebacks
Section 10.12 Amendments of Other Agreements
Section 10.13 Subsidiaries
ARTICLE 11 - DEFAULT
Section 11.1 Events of Default
Section 11.2 Remedies
Section 11.3 Application of Proceeds
Section 11.4 Power of Attorney
Section 11.5 Miscellaneous Provisions Concerning Remedies
Section 11.6 Trademark Licens
ARTICLE 12 - MISCELLANEOUS
Section 12.1 Notices
Section 12.2 Expenses
Section 12.3 Stamp and Other Taxes
Section 12.4 Setoff
Section 12.5 Litigation
Section 12.6 Arbitration
Section 12.7 Special Rules
Section 12.8 Reservation Of Rights
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Section 12.9 Reversal of Payments
Section 12.10 Injunctive Relief
Section 12.11 Accounting Matters
Section 12.12 Assignment; Participation
Section 12.13 Amendments
Section 12.14 Performance of Borrower's Duties
Section 12.15 Indemnification
Section 12.16 All Powers Coupled with Interest
Section 12.17 Survival
Section 12.18 Severability of Provisions
Section 12.19 Governing Law
Section 12.20 Counterparts
Section 12.21 Not Used
Section 12.22 Final Agreement
Section 12.23 Purchase of Insurance
Section 12.24 Oral Agreements
EXHIBIT A - REVOLVING CREDIT NOTE
EXHIBIT B1 - INITIAL ADVANCE REQUEST CERTIFICATE
EXHIBIT B2 - PERIODIC REQUEST FOR ADVANCE
EXHIBIT C - COMPLIANCE CERTIFICATE FOR CLOSING
EXHIBIT D - FORM OF BORROWING BASE CERTIFICATE
SCHEDULE 1 - PRO FORMA CALCULATION OF FINANCIAL COVENANTS
SCHEDULE 5.1(i) - LIST OF LITIGATION
SCHEDULE 5.1(p) - LIST OF BUSINESS LOCATIONS
SCHEDULE 5.1(r) - LIST OF CORPORATE AND FICTITIOUS NAMES; TRADE NAMES
SCHEDULE 5.1(u) - LIST OF INTELLECTUAL PROPERTY
SCHEDULE 5.1(v) - LIST OF BENEFIT PLANS
SCHEDULE 5.1(w) - LIST OF COLLECTIVE BARGAINING AGREEMENTS
SCHEDULE 5.1(x) - LIST OF LOCATIONS OF INVENTORY
SCHEDULE 5.1(z) - LIST OF COMMERCIAL TORT CLAIMS
SCHEDULE 8.5 - LIST OF WORKING CAPITAL LOANS
SCHEDULE 8.9 - LIST OF OPERATING ACCOUNTS
LOAN AND SECURITY AGREEMENT
Dated as of March 15, 2004
CENTENNIAL SPECIALTY FOODS CORPORATION, a Delaware corporation, ▇▇▇▇▇▇
CANNING COMPANY, a Colorado corporation (each, a "Borrower" and collectively the
"Borrower"), and HEARTLAND BANK, a federal savings bank (the "Lender"), agree as
follows:
ARTICLE 1 - DEFINITIONS
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Section 1.1Definitions. For the purposes of this Agreement:
"Account Debtor" means a Person who is obligated on a Receivable.
"Accounts" means all "accounts" as defined in the UCC.
"Affiliate" means, with respect to a Person, (a) any officer, director,
employee or managing agent of such Person, (b) any spouse, parents, brothers,
sisters, children and grandchildren of such Person, (c) any association,
partnership, trust, entity or enterprise in which such Person is a director,
officer or general partner, (d) any other Person that, (i) directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such given Person, (ii) directly or indirectly
beneficially owns or holds 10% or more of any class of voting stock or
partnership or other interest of such Person or any Subsidiary of such Person,
or (iii) 10% or more of the voting stock or partnership or other interest of
which is directly or indirectly beneficially owned or held by such Person or a
Subsidiary of such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities or
partnership or other interests, by contract or otherwise.
"Agreement" means this Agreement, including the Exhibits and Schedules
hereto, and all amendments, modifications and supplements hereto and thereto and
restatements hereof and thereof.
"Agreement Date" means the date as of which this Agreement is dated.
"Appraised Value" means the fair market value as determined by a complete,
self-contained narrative appraisal report addressed to Borrower and to Lender,
prepared by an appraiser satisfactory to Lender, pursuant to Section 4.1(a)(16)
hereof.
"Availability" means, as of the date of determination, the amount of
Revolving Credit Loans available to be borrowed by Borrower hereunder in
accordance with Section 2 less the sum of the outstanding principal balance of
all Revolving Credit Loans hereunder as of such date.
"Base Rate" or "BR" means, for any day, a rate per annum equal to the base
rate of Lender in effect on such day. Borrower acknowledges that the base rate
of Lender is not necessarily the best corporate borrowing rate available to
corporate borrowers of Lender.
"Benefit Plan" means an employee benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan) in respect of which a Person or any
Related Company is, or within the immediately preceding 6 years was, an
"employer" as defined in Section 3(5) of ERISA, including such plans as may be
established after the Agreement Date.
"Borrower" has the meaning set forth in the first paragraph above.
"Borrowing Base" means at any time an amount equal to the sum of: (a) 75%
of the face value of Eligible Receivables due and owing at such time, plus (b)
50% of the lesser of cost (computed on a first-in-first-out basis) and fair
market value of Eligible Inventory at such time, plus (c) the lesser of (i)
$4,000,000 and (ii) 70% of the most current Appraised Value of the Real Estate.
Lender may reduce Availability under the Revolving Credit Facility by such
reserves as the Lender may determine from time to time in the exercise of its
reasonable credit judgment including, without limitation, reserves for inventory
shrinkage, dilution, warehousemen's or bailees' charges, and the amount of
estimated maximum exposure, as determined by Lender from time to time, under any
interest rate contracts which Borrower enters into (including interest rate
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swaps, caps, floors, options thereon, combinations thereof, or similar
contracts).
"Borrowing Base Certificate" means a certificate in the form of Exhibit D
attached hereto.
"Business Day" means any day other than a Saturday, Sunday or other day on
which banks in St. Louis are authorized to close.
"Capital Expenditures" means, with respect to any Person, all expenditures
made and liabilities incurred for the acquisition of assets which are not, in
accordance with GAAP, treated as expense items for such Person in the year made
or incurred or as a prepaid expense applicable to a future year or years.
"Capitalized Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the capitalized amount of such obligations determined in accordance with
GAAP.
"Chattel Paper" means all "chattel paper" as defined in the UCC.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means and includes all of the Borrower's right, title and
interest in and to the following assets, wherever located and whether now or
hereafter existing or now owned or hereafter acquired or arising:
(a) all Accounts,
(b) all Chattel Paper,
(c) all Commercial Tort Claims,
(d) all Contract Rights,
(e) all Deposit Accounts,
(f) all Documents,
(g) all General Intangibles,
(h) all Goods,
(i) all Instruments,
(j) all Intellectual Property,
(k) all Inventory,
(l) all Investment Related Property,
(m) all Letters of Credit Rights,
(n) all Money,
(o) all Receivables and Receivables Records,
(p) the Real Property,
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(q) to the extent not otherwise included above, all Collateral Records,
Collateral Support and Supporting Obligations relating to any of the
foregoing, and any and all products and cash and non-cash proceeds
of the foregoing (including, but not limited to, any claims to any
items referred to in this definition and any claims against third
parties for loss of, damage to or destruction of any or all of the
Collateral or for proceeds payable under or unearned premiums with
respect to policies of insurance) in whatever form, including, but
not limited to, cash, negotiable instruments and other instruments
for the payment of money, chattel paper, security agreements and
other documents.
(r) For avoidance of doubt it is expressly understood and agreed that,
to the extent the UCC is revised subsequent to the date hereof such
that the definition of any of the foregoing terms included in the
description of Collateral is changed, the parties hereto desire that
any property which is included in such changed definitions which
would not otherwise be included in the foregoing grant on the date
hereof be included in such grant immediately upon the effective date
of such revision. Notwithstanding the immediately preceding
sentence, the foregoing grant is intended to apply immediately on
the date hereof to all Collateral to the fullest extent permitted by
applicable law regardless of whether any particular items of
Collateral is currently subject to the UCC.
"Collateral Records" means books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications, manuals,
computer software, computer printouts, tapes, disks and related data processing
software and similar items that at any time evidence or contain information
relating to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon.
"Collateral Support" means all property (real or personal) assigned,
hypothecated or otherwise securing any Collateral and shall include any security
agreement or other agreement granting a lien or security interest in such real
or personal property.
"Commercial Tort Claims" means all "commercial tort claims" as defined in
Revised Article 9, as listed on Schedule 5.1(z) from time to time.
"Consolidated Net Worth" shall mean, as of the date of any determination
thereof, the sum of (a) the capital stock accounts (net of treasury stock, at
cost) of Borrower and its Subsidiaries as of such date plus (or minus in the
case of a deficit), and (b) the surplus and retained earnings of Borrower and
its Subsidiaries as of such date, all determined on a consolidated basis and in
accordance with GAAP.
"Contract Rights" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising rights under
contracts not yet earned by performance and not evidenced by an instrument or
chattel paper, to the extent that the same may lawfully be assigned.
"Debt Service Coverage Ratio" shall mean as of the date of any
determination thereof, the ratio of (a) consolidated EBITDA of Borrower to (b)
Interest Expenses plus scheduled payments of principal amounts of Funded
Indebtedness plus any cash dividends paid.
"Default" means any of the events specified in Section 11.1 that, with the
passage of time or giving of notice or both, would constitute an Event of
Default.
"Default Rate" means the annual rate equal to four percent (4%) in excess
of the Effective Interest Rate.
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"Deposit Accounts" means any demand, time, savings, passbook or like
account maintained with a bank, savings and loan association, credit union or
like organization, including the Disbursement Account, other than an account
evidenced by a certificate of deposit that is an instrument under the UCC.
"Disbursement Account" means the account maintained by and in the name of
Borrower with the Lender for the purpose of disbursing Revolving Credit Loan
proceeds and amounts credited thereto pursuant to Section 2.
"Documents" means all "documents" as defined in the UCC.
"Dollar" and "$" means freely transferable United States dollars.
"EBITDA" means for any period, the sum of (i) Net Income for such period,
plus (ii) an amount which, in the determination of Net Income for such period,
has been deducted for (A) Interest Expense, (B) total federal, state, local and
foreign income, value added and similar taxes and (C) depreciation and
amortization expense and any impairment charges, plus (D) any extraordinary
losses during such period, plus (E) any losses from the sale or other
disposition of assets other than in the ordinary course of business during such
period, minus (iii) an amount which, in the determination of Net Income for such
period, has been included for (A) any extraordinary gains during such period and
(B) any gains from the sale or other dispositions of assets other than in the
ordinary course of business during such period, in each case, determined on a
consolidated basis in accordance with GAAP.
"Effective Date" means the later of (a) the Agreement date, and (b) the
first date on which all of the conditions set forth in Section 4.1 shall have
been fulfilled or waived by Lender.
"Effective Interest Rate" means the rate of interest per annum on the
Loans in effect from time to time pursuant to the provisions of Section 3.1(a),
(b) and (c).
"Eligible Inventory" means items of Inventory of the Borrower held for
sale in the ordinary course of the business of the Borrower (but not including
Inventory which is raw materials, work-in-process or display items, samples,
packaging or shipping materials or maintenance supplies) which are insured
against loss and unless otherwise approved in writing by the Lender, meets all
of the following requirements: (a) such Inventory is owned by the Borrower, is
subject to the Security Interest, which is perfected as to such Inventory, and
is subject to no other Lien whatsoever other than a Permitted Lien; (b) such
Inventory consists of finished goods and does not consist of supplies or
consigned goods or raw materials or work-in-process; (c) such Inventory is in
good condition and meets all standards applicable to such goods, their use or
sale imposed by any governmental agency, or department or division thereof,
having regulatory authority over such matters; (d) such Inventory is currently
either usable or saleable, at prices approximating at least the cost thereof, in
the normal course of the Borrower's business; (e) such Inventory is not
obsolete, slow moving (being defined as older than 18 months from the date of
production), or discontinued or returned or repossessed or used goods taken in
trade; (f) such Inventory does not represent private-labeled inventory; (g) such
Inventory is located at the Real Property or a third party warehouse facility
listed under Section 4.1(a)(15); and (h) such Inventory is in the possession and
control of the Borrower and not any third party and, if located in a warehouse
or other facility leased by the Borrower or under the operating control of a
third party, the lessor or such third party has delivered to the Lender a waiver
and consent in form and substance satisfactory to the Lender.
"Eligible Receivable" means the unpaid portion of a Receivable payable in
Dollars to Borrower net of any returns, discounts, claims, credits, charges, or
other allowances, offsets, deductions, counterclaims, disputes or other defenses
and reduced by the aggregate amount of all reserves, limits and deductions
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provided for in this definition and elsewhere in this Agreement which unless
otherwise approved in writing by the Lender, meets all of the following
requirements: (a) such Receivable is owned by Borrower and represents a complete
bona fide transaction which requires no further act under any circumstances on
the part of Borrower to make such Receivable payable by the Account Debtor; (b)
such Receivable is not unpaid more than 60 days after its due date or 90 days
after the date of the original invoice; (c) such Receivable does not arise out
of any transaction with any Subsidiary, Affiliate or employee of Borrower, or
out of any transaction with any creditor, lessor or supplier of Borrower, unless
such creditor, lessor or supplier expressly waives in writing any right of
offset against such Receivable; (d) such Receivable is not owing by an Account
Debtor more than 20% of whose then-existing accounts owing to Borrower do not
meet the requirements set forth in Clause (b) above; (e) if the Account Debtor
with respect thereto is located outside of the United States of America, the
goods which gave rise to such Receivable were shipped after receipt by Borrower
from the Account Debtor of an irrevocable letter of credit that has been
confirmed by a financial institution acceptable to the Lender and is in form and
substance acceptable to the Lender, payable in the full face amount of the face
value of the Receivable in Dollars at a place of payment located within the
United States and has been duly delivered to the Lender; (f) such Receivable is
not subject to the Assignment of Claims Act of 1940, as amended from time to
time, or any applicable law now or hereafter existing similar in effect thereto,
as determined in the sole discretion of the Lender, or to any provision
prohibiting its assignment or requiring notice of or consent to such assignment;
(g) Borrower is not in breach of any express or implied representation or
warranty with respect to the goods the sale of which gave rise to such
Receivable; (h) the Account Debtor with respect to such Receivable is not
insolvent or the subject of any bankruptcy or insolvency proceedings of any kind
or of any other proceeding or action, threatened or pending, which might, in the
Lender's sole judgment, have a Materially Adverse Effect on such Account Debtor;
(i) to Borrower's knowledge, the goods the sale of which gave rise to such
Receivable were shipped or delivered to the Account Debtor on an absolute sale
basis and not on a ▇▇▇▇ and hold sale basis, a consignment sale basis, a
guaranteed sale basis, a sale or return basis or on the basis of any other
similar understanding, and such goods have not been returned or rejected; (j)
such Receivable is not owing by an Account Debtor who or along with a group of
affiliated Account Debtors has then-existing accounts owing to the Borrower
which exceed in face amount 50% of the Borrower's total Eligible Receivables;
(k) such Receivable is evidenced by an invoice or other documentation in form
acceptable to the Lender containing only terms normally offered by the Borrower,
and dated no later than the date of shipment; (l) such Receivable is a valid,
legally enforceable obligation of the Account Debtor with respect thereto and is
not subject to any present, or contingent (and no facts exist which are the
basis for any future), offset, deduction or counterclaim, dispute or other
defense on the part of such Account Debtor; (m) such Receivable is not evidenced
by chattel paper or an instrument of any kind; (n) if such Receivable arises
from the performance of services, such services shall have been performed in
full; (o) such Receivable is not generated from COD accounts, cash or
miscellaneous accounts, accounts on credit hold, and for finance charges or
service charges, (p) such Receivable does not consist of debit memos or
chargebacks, and (q) such Receivable is subject to the Security Interest, which
is perfected as to such Receivable, and is subject to no other Lien whatsoever
other than a Permitted Lien and the goods giving rise to such Receivable were
not, at the time of the sale thereof, subject to any Lien other than a Permitted
Lien.
"Environmental Laws " means all federal, state, local and foreign laws now
or hereafter in effect relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water or land) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
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disposal, removal, transport or handling of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes, and any and all
regulations, notices or demand letters issued, entered, promulgated or approved
thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in
effect from time to time, and any successor statute.
"Event of Default" means any of the events specified in Section 11.1.
"Financing Statements" means the Uniform Commercial Code financing
statements executed and delivered by Borrower to the Lender, naming the Lender
as secured party and Borrower as debtor, in connection with this Agreement.
"Funded Indebtedness" means Indebtedness for Money Borrowed.
"GAAP" means generally accepted accounting principles in the United States
consistently applied and maintained throughout the period indicated and
consistent with the prior financial practice of the Person referred to.
"General Intangibles" means, all "general intangibles" as defined in the
UCC, including, without limitation, all corporate and other business records,
inventions, designs, blueprints, plans, specifications, trade secrets, goodwill,
computer software, customer lists, all interest rate or currency protection or
hedging arrangements, all tax refunds and tax refund claims, all licenses,
franchises, permits, registrations, concessions and authorizations, all
Intellectual Property and all Payment Intangibles in each case regardless of
whether characterized as general intangibles under the UCC).
"Goods" means all "goods" defined in the UCC and includes, without
limitation, all Inventory and any computer program embedded in the goods and any
supporting information provided in connection with such program if (x) the
program is associated with the goods in such a manner that is customarily
considered part of the goods or (y) by becoming the owner of the goods, a Person
acquires a right to use the program in connection with the goods (in each case,
regardless of whether characterized as goods under the UCC).
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
governmental bodies, whether federal, state, local, foreign national or
provincial, and all agencies thereof.
"Governmental Authority" means any government or political subdivision or
any agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Guarantees" means the unconditional and unlimited guarantees of payment
of the Secured Obligations executed by each Subsidiary of Borrower.
"Indebtedness" of any Person means, without duplication (a) all
obligations for money borrowed or for the deferred purchase price of property or
services or in respect of reimbursement obligations under letters of credit, (b)
all obligations represented by bonds, debentures, notes and accepted drafts that
represent extensions of credit, (c) Capitalized Lease Obligations, (d) all
obligations (including, during the noncancellable term of any lease in the
nature of a title retention agreement, all future payment obligations under such
lease discounted to their present value in accordance with GAAP) secured by any
Lien to which any property or asset owned or held by such Person is subject,
whether or not the obligation secured thereby shall have been assumed by such
Person, (e) all obligations of other Persons which such Person has Guaranteed,
including, but not limited to, all obligations of such Person consisting of
recourse liability with respect to accounts receivable sold or otherwise
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disposed of by such Person, (f) the sum of all undrawn amounts and all drawings
under any letters of credit for which the Person has reimbursement obligations,
and (g) in the case of Borrower (without duplication) the Loans.
"Initial Loan" means the Revolving Credit Loan made to Borrower on the
Effective Date.
"Installment Payment Date" means the first day of each calendar month
commencing on February 1, 2004.
"Instruments" means all "instruments" as defined in Article 9 of the UCC.
"Intellectual Property" means, as to any Person, all of such Person's then
owned existing and future acquired or arising patents, patent rights,
copyrights, works which are the subject of copyrights, trademarks, service
marks, trade names, trade styles, patent, trademark and service ▇▇▇▇
applications (except for "intent to use" applications for trademark or service
▇▇▇▇ applications filed pursuant to Section 1(b) of the ▇▇▇▇▇▇ Act, unless and
until an Amendment to Allege Use or a Statement of Use under Section 1(c) or
1(d) of said Act has been filed), and all licenses and rights related to any of
the foregoing and all other rights under any of the foregoing, all extensions,
renewals, reissues, divisions, continuations and continuations-in-part of any of
the foregoing and all rights to ▇▇▇ for past, present and future infringements
of any of the foregoing.
"Interest Expense" means interest on Indebtedness during the period for
which computation is being made, excluding (a) the amortization of fees and
costs incurred with respect to the closing of loans which have been capitalized
as transaction costs, and (b) interest paid in kind.
"Inventory" means and includes, as to any Person, (i) all "inventory" as
defined in the UCC, and (ii) all of such Person's then owned or existing and
future acquired or arising (a) goods intended for sale or lease or for display
or demonstration, (b) work in process, (c) raw materials and other materials and
supplies of every nature and description used or which might be used in
connection with the manufacture, packing, shipping, advertising, selling,
leasing or furnishing of goods or otherwise used or consumed in the conduct of
business, and (d) documents evidencing and general intangibles relating to any
of the foregoing.
"Investment" means, with respect to any Person: (a) the direct or indirect
purchase or acquisition of any beneficial interest in, any share of capital
stock of, evidence of Indebtedness of or other security issued by any other
Person, (b) any loan, advance or extension of credit to, or contribution to the
capital of, any other Person, excluding advances to employees and prepaid
expenses and deposits in the ordinary course of business for business expenses,
(c) any Guaranty of the obligations of any other Person, or (d) any commitment
or option to take any of the actions described in clauses (a), (b) or (c) above.
"Investment Related Property" means all "investment property" as defined
in the UCC, and including, without limitation, any Deposit Accounts (regardless
of whether characterized as investment property under the UCC).
"Lender" means Heartland Bank, a federal savings bank, and its successors
and assigns.
"Lender's Office" means the office of the Lender specified in or
determined in accordance with the provisions of Section 12.1(c).
"Liabilities" means all liabilities of a Person determined in accordance
with GAAP and includable on a balance sheet of such Person prepared in
accordance with GAAP.
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"Lien" as applied to the property of any Person means: (a) any mortgage,
deed to secure debt, deed of trust, lien, pledge, charge, lease constituting a
Capitalized Lease Obligation, conditional sale or other title retention
agreement, or other security interest, security title or encumbrance of any kind
in respect of any property of such Person or upon the income or profits
therefrom, (b) any arrangement, express or implied, under which any property of
such Person is transferred, sequestered or otherwise identified for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to the payment of the general, unsecured creditors
of such Person, (c) any Indebtedness which is unpaid more than 30 days after the
same shall have become due and payable and which if unpaid might by law
(including, but not limited to, bankruptcy and insolvency laws) or otherwise be
given any priority whatsoever over general unsecured creditors of such Person,
and (d) the filing of, or any agreement to give, any financing statement under
the UCC or its equivalent in any jurisdiction.
"Loan" means any Revolving Credit Loan, and all extensions, renewals and
modifications thereto, as well as all such Loans collectively
"Loan Documents" means, collectively, this Agreement, the Note, the
Security Documents, the Guarantees, and each other instrument, agreement and
document executed and delivered by Borrower in connection with this Agreement
and each other instrument, agreement or document referred to herein or
contemplated hereby.
"Materially Adverse Effect" means any act, omission, event or undertaking
which would, singly or in the aggregate, have a materially adverse effect upon
(a) the business, assets, properties, liabilities, condition (financial or
otherwise), results of operations or business prospects of the Borrower or an
Obligor, (b) upon the respective ability of Borrower or an Obligor to perform
any obligations under this Agreement or any other Loan Document to which it is a
party, or (c) the legality, validity, binding effect, enforceability or
admissibility into evidence of any Loan Document or the ability of Lender to
enforce any rights or remedies under or in connection with any Loan Document; in
any case, whether resulting from any single act, omission, situation, status,
event, or undertaking, together with other such acts, omissions, situations,
statuses, events, or undertakings .
"Money" means "money" as defined in the UCC.
"Money Borrowed" means, as applied to Indebtedness, (a) Indebtedness for
money borrowed, (b) Indebtedness, whether or not in any such case the same was
for money borrowed, (i) represented by notes payable and drafts accepted, that
represent extensions of credit, (ii) constituting obligations evidenced by
bonds, debentures, notes or similar instruments, or (iii) upon which interest
charges are customarily paid (other than trade Indebtedness) or that was issued
or assumed as full or partial payment for property, (c) Indebtedness that
constitutes a Capitalized Lease Obligation, (d) Indebtedness that is such by
virtue of clause (f) of the definition thereof, but only to the extent that the
obligations Guaranteed are obligations that would constitute Indebtedness for
Money Borrowed, and (e) the sum of all undrawn amounts and all drawings under
any letters of credit for which the Person has reimbursement obligations.
"Mortgage" shall mean a first lien mortgage in favor of the Lender upon
the Real Property.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which Borrower or a Related Company is required to
contribute or has contributed within the immediately preceding 6 years.
"Net Income" or "Net Loss" means, as applied to any Person, the net income
(or net loss) of such Person for the period in question after giving effect to
deduction of or provision for all operating expenses, all taxes and reserves
Page 11
(including reserves for deferred taxes and all other proper deductions), all
determined in accordance with GAAP.
"Note" means the Revolving Credit Note.
"Notice of Borrowing" has the meaning set forth in Section 2.
"Obligor" means Borrower, each party to the Security Documents (other than
the Lender), and each other party at any time primarily or secondarily, directly
or indirectly, liable on any of the Secured Obligations.
"Organic Document" means, relative to Borrower or a Subsidiary, its
certificate and articles of incorporation or organization, its by-laws or
operating agreements, and all equity holder agreements, voting agreements and
similar arrangements applicable to any of its authorized shares of capital
stock, its partnership interests or its membership interests, and any other
arrangements relating to the control or management of any such equity (whether
existing as a corporation, a partnership, a limited liability company or
otherwise).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Payment Intangibles" has the meaning specified in the UCC.
"Permitted Capitalized Lease Obligations" means Capitalized Lease
Obligations, incurred by Borrower after the Agreement Date, up to an aggregate
amount outstanding at any time of $150,000.00.
"Permitted Indebtedness" means
(i) Indebtedness owing to Lender;
(ii) accounts payable to trade creditors (including Hoopeston Foods
Denver Corp.) and current operating expenses (other than for Money
Borrowed) which are not aged more than 120 days from billing date or
more than 60 days from the due date, in each case incurred in the
ordinary course of business and paid within such time period, unless
the same are being actively contested in good faith and by
appropriate and lawful proceedings; and Borrower shall have set
aside such reserves, if any, with respect thereto as are required by
GAAP and deemed adequate by Borrower and its independent
accountants;
(iii) the existing Capitalized Lease Obligations listed on Schedule 1
hereto;
(iv) Permitted Capitalized Lease Obligations, provided that the aggregate
total thereof does not exceed the limitation set forth in the
definition of Permitted Capitalized Lease Obligations;
(v) contingent liabilities arising out of endorsements of checks and
other negotiable instruments for deposit or collection in the
ordinary course of business;
(vi) Indebtedness in respect of interest rate swap, cap, or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts or similar
agreements designed to hedge against fluctuations in interest rates
incurred in the ordinary course of business and consistent with
prudent business practice;
(vii) to the extent not mentioned above, accruals in the ordinary course
of business not for Money Borrowed.
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"Permitted Investments" means Investments of Borrower in: (a) negotiable
certificates of deposit, time deposits and banker's acceptances issued by the
Lender or by any United States bank or trust company having capital, surplus and
undivided profits in excess of $30,000,000, (b) any direct obligation of the
United States of America or any agency or instrumentality thereof which has a
remaining maturity at the time of purchase of not more than one year and
repurchase agreements relating to the same, (c) sales on credit in the ordinary
course of business on terms customary in the industry, (d) notes, accepted in
the ordinary course of business, evidencing overdue accounts receivable arising
in the ordinary course of business, and (e) prime commercial paper rated A-1 or
higher by Standard and Poor's Corporation or Prime P1 or higher by ▇▇▇▇▇'▇
Investor Service, Inc.
"Permitted Liens" means: (a) Liens securing taxes, assessments and other
governmental charges or levies (excluding any Lien imposed pursuant to any of
the provisions of ERISA) or the claims of materialmen, mechanics, carriers,
warehousemen or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, but (i) in all cases, only if payment shall not
at the time be required to be made in accordance with Section 8.3, and (ii) in
the case of warehousemen or landlords controlling locations where Inventory is
located, only if such liens have been waived or subordinated to the Security
Interest in a manner satisfactory to the Lender; (b) Liens consisting of
deposits or pledges made in the ordinary course of business in connection with,
or to secure payment of, obligations under workers' compensation, social
security, unemployment insurance or similar legislation or under surety or
performance bonds, in each case arising in the ordinary course of business; (c)
Liens constituting encumbrances in the nature of zoning restrictions, easements
and rights or restrictions of record on the use of Borrower's real estate, which
in the sole judgment of the Lender do not materially detract from the value of
such real estate or impair the use thereof in the business of Borrower; (d)
Liens of the Lender arising under this Agreement and the other Loan Documents;
(e) Liens arising out of or resulting from any judgment or award which does not
constitute an Event of Default; (f) Liens arising in the ordinary course of
Borrower's business by operation of law or regulation, but only if payment in
respect of any such Lien is not at the time required and such Liens do not in
the aggregate materially detract from the value of the property of Borrower or
materially impair the use thereof in the operation of Borrower's businesses; (g)
Liens incurred in connection with sales contracts, leases, statutory
obligations, work in progress advances and other similar obligations not
incurred in connection with the borrowing of money or the payment of the
deferred purchase price of property; (h) Liens arising in connection with
Capitalized Lease Obligations permitted hereunder; provided, that no such Lien
shall extend to or cover any assets other than the assets subject to such
Capitalized Lease Obligations; (i) Liens arising from leases or subleases
granted to others which do not interfere in any material respects with the
business of the Borrower; and (j) such other Liens as Lender may hereafter
approve in writing.
"Person" means an individual, corporation, partnership, association, trust
or unincorporated organization or a government or any agency or political
subdivision thereof.
"Real Property" means the real property owned by ▇▇▇▇▇▇ Canning Company,
and located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Receivables" means and includes, as to any Person, all of such Person's
then owned or existing and future acquired or arising (a) rights to the payment
of Money or other forms of consideration of any kind (whether as Accounts,
Contract Rights, Chattel Paper, General Intangibles, Instruments, Investment
Related Property or otherwise) including, but not limited to, Receivables,
Letters of Credit Rights, tax refunds, insurance proceeds, notes, drafts,
Instruments, Documents, acceptances and all other debts, obligations and
Page 13
liabilities in whatever form from any Person and guaranties, security and Liens
securing payment thereof, (b) goods, whether now owned or hereafter acquired,
and whether sold, delivered, undelivered, in transit or returned, which may be
represented by, or the sale or lease of which may have given rise to, any such
right to payment or other debt, obligation or liability, and (c) cash and
non-cash proceeds of any of the foregoing.
"Receivables Records" means (i) all original copies of all documents,
instruments or other writings or electronic records or other Records evidencing
the Receivables, (ii) all books, correspondence, credit or other files, Records,
ledger sheets or cards, invoices, and other papers relating to Receivables,
including, without limitation, all tapes, cards, computer tapes, computer discs,
computer runs, record keeping systems and other papers and documents relating to
the Receivables, whether in the possession or under the control of Borrower or
any computer bureau or agent from time to time acting for Borrower or otherwise,
(iii) all evidences of the filing of financing statements and the registration
of other instruments in connection therewith, and amendments, supplements or
other modifications thereto, notices to other creditors or secured parties, and
certificates, acknowledgments, or other writings, including, without limitation,
lien search reports, from filing or other registration officers, (iv) all credit
information, reports and memoranda relating thereto and (v) all other written or
non-written forms of information related in any way to the foregoing or any
Receivable.
"Related Company" means, as to any Person, any (a) corporation which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as such Person, (b) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with such Person, or (c) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
such Person or any corporation described in clause (a) above or any partnership,
trade or business described in clause (b) above.
"Restricted Distribution" by any Person means (a) its retirement,
redemption, purchase, or other acquisition for value of any capital stock or
other equity securities or partnership interests issued by such Person, (b) the
declaration or payment of any dividend or distribution on or with respect to any
such securities or other equity interests or partnership interests, (c) any loan
or advance by such Person to, or other investment by such Person in, the holder
of any of such securities or partnership interests, and (d) any other payment by
such Person in respect of such securities or partnership interests.
"Restricted Payment" means (a) any redemption, repurchase or prepayment or
other retirement, prior to the stated maturity thereof or prior to the due date
of any regularly scheduled installment or amortization payment with respect
thereto, of any Indebtedness of a Person (other than the Secured Obligations and
trade debt), and (b) the payment by any Person of the principal amount of or
interest on any Indebtedness (other than trade debt) owing to an Affiliate of
such Person.
"Revolving Credit Facility" means the facility for the Revolving Credit
Loans in the principal sum of up to $5,000,000.
"Revolving Credit Loans" means loans made to Borrower pursuant to Section
2.
"Revolving Credit Note" means the Revolving Credit Note made by Borrower
payable to the order of the Lender evidencing the obligation of Borrower to pay
the aggregate unpaid principal amount of all Revolving Credit Loans made to it
by the Lender (and any promissory note or notes that may be issued from time to
time in substitution, renewal, extension, replacement or exchange therefor),
substantially in the form of Exhibit A hereto.
Page 14
"SEC" means the Securities and Exchange Commission of the United States.
"Secured Obligations" means, in each case whether now in existence or
hereafter arising, (a) the principal of and interest and premium, if any, on the
Loans, (b) payment or performance obligations of Borrower or a Subsidiary to
Lender or any Affiliate of Lender under any and all rate swap transactions,
basis swaps, forward rate transactions, commodity swaps, commodity options,
forward commodity contracts, equity or equity index swaps or options, bond or
bond price or bond index swaps or options or forward bond or forward bond price
or forward bond index transactions, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, or any other similar transactions or any combination of any of
the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to any master
agreement, or any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Association, Inc., or any other master agreement, entered into
between Lender or an Affiliate of Lender and Borrower (any such master
agreement, together with any related schedules, as amended, supplemented,
superseded or replaced from time to time, a "Master Agreement"), including but
not limited to any such obligations or liabilities under any Master Agreement or
foreign currency exchange agreements or instruments, and (c) all indebtedness,
liabilities, obligations, overdrafts, covenants and duties of Borrower and each
Subsidiary to the Lender of every kind, nature and description, direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by any note and whether
or not for the payment of money under or in respect of this Agreement, any Note,
the Guarantees or any of the other Loan Documents.
"Security Agreements" means the security agreement executed by each
Subsidiary in favor of Lender, granting a first priority Lien upon all of the
Collateral owned by each Subsidiary, to secure the Secured Obligations.
"Security Documents" means each of (a) the Financing Statements, (b) the
Mortgage, (c) the Security Agreements, (d) this Agreement, and (e) each other
writing executed and delivered by any Person securing the Secured Obligations or
evidencing such security.
Security Interest" means the Liens of the Lender on and in the Collateral
effected hereby or by any of the Security Documents or pursuant to the terms
hereof or thereof.
"Subsidiary" means a Person of which an aggregate of 50% or more of the
stock of any class or classes or 50% or more of other ownership interests is
owned of record or beneficially by such other Person (including Borrower) or by
one or more Subsidiaries of such other Person (including Borrower) or by such
other Person and one or more Subsidiaries of such Person (including Borrower),
(i) if the holders of such stock or other ownership interests (A) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or other individuals performing similar
functions) of such Person, even though the right so to vote has been suspended
by the happening of such a contingency, or (B) are entitled, as such holders, to
vote for the election of a majority of the directors (or individuals performing
similar functions) of such Person, whether or not the right so to vote exists by
reason of the happening of a contingency, or (ii) in the case of such other
ownership interests, if such ownership interests constitute a majority voting
interest.
"Supporting Obligations" means all "supporting obligations" as defined in
Revised Article 9.
Page 15
"Taxes" means, for any period, the aggregate of all taxes of Borrower for
such period, as determined in accordance with GAAP, to the extent the same are
paid in cash during the period.
"Termination Date" means the date three (3) years after the Agreement
Date.
"Termination Event" means (a) a "Reportable Event" as defined in Section
4043(b) of ERISA, but excluding any such event as to which the provision for 30
days' notice to the PBGC is waived under applicable regulations, (b) the filing
of a notice of intent to terminate a Benefit Plan or the treatment of a Benefit
Plan amendment as a termination under Section 4041 of ERISA, or (c) the
institution of proceedings to terminate a Benefit Plan by the PBGC under Section
4042 of ERISA or the appointment of a trustee to administer any Benefit Plan.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of Missouri.
"Unfunded Vested Accrued Benefits" means, with respect to any Benefit Plan
at any time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Benefit Plan exceeds (b) the fair market
value of all Benefit Plan assets allocable to such benefits, as determined using
such reasonable actuarial assumptions and methods as are specified in Schedule B
(Actuarial Information), Part 1, Line C to the most recent Annual Report (Form
5500) filed with respect to such Benefit Plan.
Section 1.2Other Referential Provisions.
(a) All terms in this Agreement, the Exhibits and Schedules hereto shall
have the same defined meanings when used in any other Loan
Documents, unless the context shall require otherwise.
(b) Except as otherwise expressly provided herein, all accounting terms
not specifically defined or specified herein shall have the meanings
generally attributed to such terms under GAAP including, without
limitation, applicable statements and interpretations issued by the
Financial Accounting Standards Board and bulletins, opinions,
interpretations and statements issued by the American Institute of
Certified Public Accountants or its committees.
(c) All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and the plural shall
include the singular.
(d) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provisions of this Agreement.
(e) Titles of Articles and Sections in this Agreement are for
convenience only, do not constitute part of this Agreement and
neither limit nor amplify the provisions of this Agreement, and all
references in this Agreement to Articles, Sections, Subsections,
paragraphs, clauses, subclauses, Schedules or Exhibits shall refer
to the corresponding Article, Section, Subsection, paragraph, clause
or subclause of, or Schedule or Exhibit attached to, this Agreement,
unless specific reference is made to the articles, sections or other
subdivisions or divisions of, or to schedules or exhibits to,
another document or instrument.
(f) Each definition of a document in this Agreement shall include such
document as amended, modified, supplemented or restated from time to
time in accordance with the terms of this Agreement.
Page 16
(g) Except where specifically restricted, reference to a party to a Loan
Document includes that party and its successors and assigns
permitted hereunder or under such Loan Document.
(h) Unless otherwise specifically stated, whenever a time is referred to
in this Agreement or in any other Loan Document, such time shall be
the local time in St. Louis, Missouri.
(i) Whenever the phrase "to the knowledge of Borrower" or words of
similar import relating to the knowledge of Borrower are used
herein, such phrase shall mean and refer to (i) the actual knowledge
of the President or chief financial officer or (ii) the knowledge
that such officers would have obtained if they had engaged in good
faith in the diligent performance of their duties, including the
making of such reasonable specific inquiries as may be necessary of
the appropriate persons in a good faith attempt to ascertain the
accuracy of the matter to which such phrase relates.
(j) The terms accounts, chattel paper, documents, goods, equipment,
instruments, general intangibles and inventory, as and when used
(without being capitalized) in this Agreement or the Security
Documents, shall have the meanings given those terms in the UCC.
Section 1.3Exhibits and Schedules. All Exhibits and Schedules attached
hereto are by reference made a part hereof.
ARTICLE 2 - REVOLVING CREDIT FACILITY
Section 2.1Revolving Credit Loans. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under this Agreement, the Lender shall make Revolving Credit Loans to Borrower
from time to time from the Effective Date hereof to the Termination Date, as
requested by Borrower in accordance with the terms of Section 2.2, in an
aggregate principal amount outstanding not to exceed at any time the lesser of
(a) the Revolving Credit Facility or (b) the Borrowing Base. It is expressly
understood and agreed that the Lender may and at present intends to use the
lesser of the amounts referred to in the foregoing Subclauses (a) and (b) as a
maximum ceiling on Revolving Credit Loans; provided, however; that it is agreed
that should Revolving Credit Loans exceed the ceiling so determined or any other
limitation set forth in this Agreement, such Revolving Credit Loans shall
nevertheless constitute Secured Obligations and, as such, shall be entitled to
all benefits thereof and security therefor. The principal amount of any
Revolving Credit Loan which is repaid may be reborrowed by Borrower in
accordance with the terms of this Section 2. The Lender is hereby authorized to
record each repayment of principal of the Revolving Credit Loans in its books
and records, such books and records constituting prima facie evidence of the
accuracy of the information contained therein.
Section 2.2Manner of Borrowing Revolving Credit Loans. Borrowings of the
Revolving Credit Loans shall be made as follows:
(a) Requests for Borrowing.
(i) Revolving Credit Loans. A request for the borrowing of a
Revolving Credit Loan shall be made, or shall be deemed to be
made, in the following manner:
(A) Borrower may request a Revolving Credit Loan by giving
the Lender notice, before 11:00 a.m. (Central time) on
the proposed borrowing date of its intention to borrow,
specifying the amount of the proposed borrowing and the
proposed borrowing date; provided, however, that if any
notice referred to in this Clause (a) (i) is received
after
Page 17
11:00 a.m. (Central time), the proposed borrowing will
be postponed automatically to the next Business Day;
(B) whenever a check is presented to the Lender for payment
against the Disbursement Account in an amount greater
than the then available balance in such account, such
presentation shall be deemed to be a request for a
Revolving Credit Loan on the date of such notice in an
amount equal to the excess of such check over such
available balance, and such request shall be
irrevocable; and
(C) unless payment is otherwise made by the Borrower, the
maturity of any Secured Obligation required to be paid
shall be deemed to be a request for a Revolving Credit
Loan on the due date in the amount required to pay such
Secured Obligation.
(ii) Notice of Borrowing. Any request for a Revolving Credit Loan
under Section 2.2(a)(i)(A) (a "Notice of Borrowing") shall be
made in writing, using the Initial Request for Advance Form or
Periodic Request for Advance Form, attached respectively as
Exhibit B-1 and B-2 as applicable.
(b) Disbursement of Loans. The Borrower hereby irrevocably authorizes
the Lender to disburse the proceeds of each borrowing requested, or
deemed to be requested, pursuant to this Section 2.2 as follows: (i)
the proceeds of each borrowing requested under Section 2.2(a)(i)(A)
or (B) shall be disbursed by the Lender in lawful money of the
United States of America in immediately available funds, (A) in the
case of the initial borrowing, in accordance with the Notice of
Borrowing referred to in Section 4.1(a)(9), and (B) in the case of
each subsequent borrowing, by credit to the Disbursement Account or
to such other account as may be agreed upon by the Borrower and the
Lender from time to time; and (ii) the proceeds of each borrowing
requested under Section 2.2(a)(i)(C) or (D) shall be disbursed, by
the Lender by way of direct payment of the relevant principal,
interest or other Secured Obligation, as the case may be.
Section 2.3Repayment of Revolving Credit Loans. The interest on each
Revolving Credit Loan shall be due and payable by Borrower on the Installment
Payment Date for that Loan, and the entire outstanding principal balance of all
Revolving Credit Loans shall be due and payable in full, whether or not any
Default or Event of Default has occurred on the Termination Date, and shall be
repaid by the Borrower in full together with accrued and unpaid interest on the
amount repaid to the date of repayment. If at any time the aggregate unpaid
principal amount of the Revolving Credit Loans then outstanding exceeds the
lesser of the amounts referred to in Clauses (a) and (b) of Section 2.1, the
Borrower shall repay the Revolving Credit Loans in an amount sufficient to
reduce the aggregate unpaid principal amount of such Loans by an amount equal to
such excess, together with accrued and unpaid interest on the amount repaid to
the date of repayment.
Section 2.4Revolving Credit Note. The Revolving Credit Loans and the
obligation of the Borrower to repay such Loans shall also be evidenced by a
single Revolving Credit Note payable to the order of the Lender. Such Note shall
be dated the Effective Date and be duly and validly executed and delivered by
the Borrower.
Section 2.5Voluntary Termination of Revolving Credit Facility. The
Borrower may from time to time permanently reduce or terminate the amount of the
Revolving Credit Facility in whole or in part (in minimum amounts of $500,000 or
in integral multiples thereof, or if less, the full remaining amount of the then
applicable Revolving Credit Facility) upon five (5) Business Days prior written
Page 18
notice to Lender; provided, however, that no such termination or reduction shall
be made which would cause the aggregate principal amount of the outstanding
Revolving Credit Loans to exceed the lesser of (i) the Revolving Credit Facility
and (ii) the Borrowing Base unless, concurrently with such termination or
reduction, the Revolving Credit Loans are repaid to the extent necessary to
eliminate such excess.
ARTICLE 3 - GENERAL LOAN PROVISIONS
Section 3.1 Interest. (a) The Borrower shall pay interest on the unpaid
principal amount of each Revolving Credit Loan for each day from the day such
Loan was made until such Loan is paid (whether at maturity, by reason of
acceleration or otherwise) at a rate per annum equal to the Base Rate plus one
and one-half percent (1.5%), provided, however, that the interest rate shall in
no event be less than five and one-half percent (5.5%) per annum, payable
monthly in arrears on each Installment Payment Date and on the Termination Date.
(b) From and after the occurrence of an Event of Default, the unpaid
principal amount of each Secured Obligation shall bear interest
until paid in full (or, if earlier, until such Event of Default is
cured or waived in writing by the Lender) at a rate per annum equal
to the Default Rate, payable on demand. The interest rate provided
for in this Section 3.1(b) shall to the extent permitted by
applicable law apply to and accrue on the amount of any judgment
entered with respect to any Secured Obligation and shall continue to
accrue at such rate during any proceeding described in Section
11.1(g) or (h).
(c) The interest rates provided for in Sections 3.1(a) and (b) shall be
computed on the basis of a year of 365 days and the actual number of
days elapsed.
(d) It is not intended by the Lender, and nothing contained in this
Agreement or any Note shall be deemed, to establish or require the
payment of a rate of interest in excess of the maximum rate
permitted by applicable law (the "Maximum Rate"). If, in any month,
the Effective Interest Rate, absent such limitation, would have
exceeded the Maximum Rate, then the Effective Interest Rate for that
month shall be the Maximum Rate, and if, in future months, the
Effective Interest Rate would otherwise be less than the Maximum
Rate, then the Effective Interest Rate shall remain at the Maximum
Rate until such time as the amount of interest paid hereunder equals
the amount of interest which would have been paid if the same had
not been limited by the Maximum Rate. In this connection, in the
event that, upon payment in full of the Secured Obligations, the
total amount of interest paid or accrued under the terms of this
Agreement is less than the total amount of interest which would have
been paid or accrued if the Effective Interest Rate had at all times
been in effect, then the Borrower shall, to the extent permitted by
applicable law, pay to the Lender an amount equal to the difference
between (i) the lesser of (A) the amount of interest which would
have been charged if the Maximum Rate had, at all times, been in
effect and (B) the amount of interest which would have accrued had
the Effective Interest Rate, at all times, been in effect, and (ii)
the amount of interest actually paid or accrued under this
Agreement. In the event the Lender receives, collects or applies as
interest any sum in excess of the Maximum Rate, such excess amount
shall be applied to the reduction of the principal balance of the
applicable Secured Obligation, and, if no such principal is then
outstanding, such excess or part thereof remaining shall be paid to
the Borrower.
(e) Borrower will pay a late charge of five percent (5%) of the payment
amount due under the Note but not paid within ten (10) days of due
date.
Page 19
Section 3.2 Fees.
(a) Commitment Fee. In connection with and as consideration for the
Lender's commitment hereunder, subject to the terms hereof, to lend
to the Borrower under the Revolving Credit Facility, the Borrower
shall pay a fee to the Lender, from the Effective Date until the
Termination Date, in an amount equal to the average daily unused
portion of the Revolving Credit Facility times one-half of one
percent (.5%), payable quarterly in arrears on the last Business Day
of each calendar quarter and on the date of any permanent reduction
in the Revolving Credit Facility.
(b) Facility Fee. The Borrower has paid a loan commitment fee to the
Lender in the amount of $50,000 in connection with the establishment
of the Revolving Credit Facility and in consideration of the making
of Loans under this Agreement and in order to compensate the Lender
for the costs associated with structuring, processing, approving and
closing the Revolving Credit Facility and the Loans, but excluding
expenses for which the Borrower has agreed elsewhere in this
Agreement to reimburse the Lender.
(c) Examination Fee. For services performed by the Lender in performing
field examinations hereunder, Borrower shall pay to the Lender a fee
of $5,000 plus the reasonable out-of-pocket expenses of the Lender,
payable in arrears upon demand, for up to (i) one field examination
per calendar year if the total outstanding principal balance of all
Loans at the time the examination is initiated is less than
$4,000,000 and (ii) two field examinations per calendar year if the
total outstanding principal balance of all Loans at the time the
examination is initiated is $4,000,000 or more; provided, that the
foregoing limitations shall not apply after the occurrence and
during the continuance of an Event of Default.
Sections 3.3 - 3.6: Not Used.
Section 3.7 Increased Costs and Reduced Returns. Borrower agrees that if
any law now or hereafter in effect and whether or not presently applicable to
Lender or any request, guideline or directive of any Governmental Authority
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) or the interpretation or administration thereof by
any Governmental Authority , shall either (a)(i) impose, affect, modify or deem
applicable any reserve, special deposit, capital maintenance or similar
requirement against any Loan, (ii) impose on Lender any other condition
regarding any Loan, this Agreement, the Note or the facilities provided
hereunder, or (iii) result in any requirement regarding capital adequacy
(including any risk-based capital guidelines) affecting Lender being imposed or
modified or deemed applicable to Lender, or (b) subject Lender to any taxes on
the recording, registration, notarization or other formalization of the Loans or
the Note, and the result of any event referred to in clause (a) or (b) above
shall be to increase the cost to Lender of making, funding or maintaining any
Loan or to reduce the amount of any sum receivable by Lender or Lender's rate of
return on capital with respect to any Loan to a level below that which the
Lender could have achieved but for such imposition, modification or deemed
applicability (taking into consideration such Lender's policies with respect to
capital adequacy) by an amount deemed by Lender in its reasonable discretion to
be material, then, upon demand by Lender, Borrower shall immediately pay to the
Lender additional amounts which shall be sufficient to compensate Lender for
such increased cost, tax or reduced rate of return, and which amount shall be
reimbursed to Borrower if such Lender receives a refund or credit therefor. A
certificate of Lender provided to Borrower claiming compensation under this
Section 3.7 shall be final, conclusive and binding on all parties for all
purposes in the absence of manifest error. Such certificate shall set forth the
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nature of the occurrence giving rise to such compensation, the additional amount
or amounts to be paid to it hereunder, and the method by which such amounts were
determined. In determining such amount, the affected Lender may use any
reasonable averaging and attribution methods.
Section 3.8 Manner of Payment. (a) Each payment (including prepayments) by
the Borrower on account of the principal of or interest on the Loans or of any
fee or other amounts payable to the Lender under this Agreement or the Note
shall be made not later than 2:00 p.m. on the date specified for payment under
this Agreement (or if such day is not a Business Day, the next succeeding
Business Day) to the Lender at the Lender's Office, in Dollars, in immediately
available funds and shall be made without any setoff, counterclaim or deduction
whatsoever.
(b) The Borrower hereby irrevocably authorizes the Lender and each
Affiliate of the Lender to charge any account of the Borrower or any
Subsidiary, maintained with the Lender or such Affiliate with such
amounts as may be necessary from time to time to pay any Secured
Obligations which are not paid when due.
Section 3.9 Statements of Account. The Lender will account to the Borrower
within 30 days after the end of each calendar month with a statement of Loans,
charges and payments made pursuant to this Agreement during such calendar month,
and such account rendered by the Lender shall be deemed an account stated as
between the Borrower and the Lender and shall be deemed final, binding and
conclusive unless the Lender is notified by the Borrower in writing to the
contrary within 90 days after the date such account is delivered to the
Borrower, save for manifest error. Any such notice shall be deemed an objection
only to those items specifically objected to therein. Failure of the Lender to
render such account shall in no way affect its rights hereunder.
Section 3.10 Termination of Agreement. On the Termination Date, the
Borrower shall pay to the Lender, in same day funds, an amount equal to the
aggregate amount of all Loans outstanding on such date, together with accrued
interest thereon, all fees payable pursuant to the provisions of this Agreement
accrued from the date last paid through the effective date of termination, any
amounts payable to the Lender pursuant to the other provisions of this
Agreement, any and all other Secured Obligations then outstanding, and provide
the Lender with an indemnification agreement in form and substance satisfactory
to the Lender with respect to returned and dishonored items and such other
matters as the Lender shall require.
ARTICLE 4 - CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Initial Loans. Notwithstanding any
other provision of this Agreement, the Lender's obligation to make the initial
advance under the Revolving Credit Loan is subject to the fulfillment of each of
the following conditions prior to or contemporaneously with the making of such
Loan:
(a) Closing Documents. The Lender shall have received each of the
following documents, all of which shall be satisfactory in form and
substance to the Lender and its counsel:
(1) this Agreement, duly executed and delivered by Borrower;
(2) all Loan Documents and any other documents and
instruments necessary or advisable in connection with
the Loans each dated the Effective Date and duly
executed and delivered by the Borrower; and, to the
extent a party thereto, each Obligor;
(3) certified copies of the articles of incorporation and
Page 21
by-laws, of the Borrower and each Subsidiary as in
effect on the Effective Date;
(4) certified copies of all corporate action, including
stockholder approval, if necessary, taken by Borrower
and each Subsidiary to authorize the execution, delivery
and performance of this Agreement and the other Loan
Documents and the borrowings under this Agreement;
(5) certificates of incumbency and specimen signatures with
respect to the officers of the Borrower and each Obligor
who are authorized to execute and deliver this Agreement
or any other Loan Document on behalf of the Borrower and
each Obligor or any document, certificate or instrument
to be delivered in connection with this Agreement or the
other Loan Documents and to request borrowings under
this Agreement;
(6) a certificate evidencing the good standing of the
Borrower and each Subsidiary in the jurisdiction of its
organization and in each other jurisdiction in which it
is qualified as a foreign corporation to transact
business;
(7) certificates or binders of insurance relating to each of
the policies of insurance covering any of the Collateral
together with loss payable clauses which comply with the
terms of Section 7.8(b);
(8) a letter from Borrower to the Lender requesting the
Initial Loans and specifying the method of disbursement,
substantially in the form of Exhibit B-1, attached
hereto;
(9) copies of all the financial statements referred to in
Section 5.1(l) and meeting the requirements thereof;
(10) a certificate of the President or Chief Executive
Officer of Borrower stating that, to the best of his
knowledge and based on an examination sufficient to
enable him to make an informed statement, (a) all of the
representations and warranties made or deemed to be made
under this Agreement are true and correct as of the
Effective Date, both with and without giving effect to
the Loans to be made at such time and the application of
the proceeds thereof, (b) no Default or Event of Default
exists and (c) setting forth a pro forma calculation of
the financial covenants set forth in Section 10.1,
substantially in the form of Exhibit D, attached hereto;
(11) a signed opinion of counsel for Borrower, opining as to
such matters in connection with this Agreement as the
Lender or its counsel may reasonably request;
(12) evidence that Borrower has obtained at its cost and with
respect to the Real Property owned by ▇▇▇▇▇▇ Canning
Company an ALTA lender's policy of title insurance in
favor of the Lender, containing no title exceptions
other than those approved by the Lender in writing and
containing such endorsements as Lender may require;
(13) a Phase I environmental survey and an environmental
operating survey, each addressed to the Lender, a real
estate appraisal, and a flood plain letter, all with
respect to the Real Property and each to be in form and
content
Page 22
satisfactory to the Lender in its discretion;
(14) an as-built survey of the Real Property conforming to
American Land Title Association Minimum Standards;
(15) a consent and subordination agreement and estoppel
certificate from any facility or warehouse in which
Inventory of a Borrower or an Obligor is located, and
which is leased to or under the operating control of a
third party including but not limited to the Real
Property;
(16) a complete, self-contained narrative appraisal report
for the Real Property addressed to Borrower and to
Lender, and prepared by an appraiser satisfactory to
Lender;
(17) copies of the Co-Pack and Warehousing Agreement between
▇▇▇▇▇▇ Canning Company and Hoopeston Foods Denver Corp.,
and any related agreement between those parties or their
Affiliates; and
(18) copies of each of the other Loan Documents duly executed
by the parties thereto with evidence satisfactory to the
Lender and its counsel of the due authorization, binding
effect and enforceability of each such Loan Document on
each such party and such other documents and instruments
as the Lender may reasonably request.
(b) No Injunctions, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any court, governmental agency or legislative body
to enjoin, restrain or prohibit or to obtain substantial damages in
respect of or which is related to or arises out of this Agreement or
the consummation of the transactions contemplated hereby or which,
in the Lender's sole discretion, would make it inadvisable to
consummate the transactions contemplated by this Agreement.
(c) Material Adverse Change. As of the Effective Date, there shall not
have occurred any change which, in the Lender's sole discretion, has
had or may have a Materially Adverse Effect as compared to the
condition of Borrower presented by the most recent unaudited
financial statements of Borrower or Subsidiaries described in
Section 5.1(l).
(d) Solvency. The Lender shall have received evidence satisfactory to it
that, after giving effect to the Initial Loans (i) Borrower has
assets having value, both at fair value and at present fair saleable
value, greater than the amount of its liabilities, and (ii)
Borrower's assets are sufficient in value to provide Borrower with
sufficient working capital to enable it profitably to operate its
business and to meet its obligations as they become due, and (iii)
Borrower has adequate capital to conduct the business in which it is
and proposes to be engaged.
(e) Release of Security Interests. The Lender shall have received
written evidence satisfactory to Lender that each holder of a Lien,
other than holders of Permitted Liens, agrees to release and
terminate such Lien upon said holder's receipt of an identified
amount of proceeds of the Loans.
(f) Initial Public Offering. Borrower shall have completed its initial
public offering pursuant to its Form SB-2 filed with the Securities
and Exchange Commission on August 12, 2003, which offering shall
have resulted in the receipt by Borrower of at least $5,794,180.98
in net offering proceeds ( defined as gross proceeds from the
offering less
Page 23
underwriting discounts, commissions, and related costs ).
(g) Agreement and Plan of Merger. The transaction contemplated by the
Agreement and Plan of Merger dated as of October 20, 2003, among
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ Foods, Inc., ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇ shall have been consummated in accordance with the terms
thereof.
(h) Fees and Expenses. Borrower shall have paid all fees and expenses
required to be paid by Borrower on or before the Effective Date as
required hereunder and under the loan commitment of Lender to
Borrower dated July 30, 2003.
Section 4.2 Conditions Precedent to All Loans. At the time of making of
each Loan, including the Initial Loan:
(a) all of the representations and warranties made or deemed to be made
under this Agreement shall be true and correct at such time both
with and without giving effect to the Loans to be made at such time
and the application of the proceeds thereof, except that
representations and warranties which, by their terms, are applicable
only to the Agreement Date shall be true and correct only as of that
date, and except for such modifications to the representations and
warranties as are necessary due to the passage of time or change in
circumstances and as are disclosed to and approved by Lender,
(b) the actions of Borrower referred to in Section 4.1(a)(4) shall
remain in full force and effect and the incumbency of officers shall
be as stated in the certificates of incumbency delivered pursuant to
Section 4.1(a)(5) or as subsequently modified and reflected in a
certificate of incumbency delivered to the Lender, and
(c) the Lender may, without waiving either condition, consider the
conditions specified in this Section 4.2 fulfilled and a
representation by Borrower to such effect made if no written notice
to the contrary is received by the Lender from Borrower prior to the
making of the Loans then to be made.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 5.1 Representations and Warranties. Borrower represents and
warrants to the Lender as follows:
(a) Organization; Power; Qualification. Borrower and each Subsidiary is
an entity duly organized, validly existing and in good standing
under the laws of each's jurisdiction of organization, has the power
and authority to own properties and to carry on business as now
being and hereafter proposed to be conducted and is duly qualified
and authorized to do business in each jurisdiction in which failure
to be so qualified and authorized would have a Materially Adverse
Effect.
(b) Subsidiaries and Ownership of Borrower. The Subsidiaries of Borrower
and each Obligor are listed on Schedule 5.1(r) attached. The
outstanding stock of Borrower and each Subsidiary has been duly and
validly issued and is fully paid and nonassessable.
(c) Authorization of Agreement, Note, Loan Documents and Borrowing.
Borrower and each Obligor has the right and power and has taken all
necessary action to authorize it to execute, deliver and perform
this Agreement and each of the other Loan Documents to which it is a
party in accordance with their respective terms and to borrow
hereunder. This Agreement and each of the other Loan Documents to
which it is a party have been duly executed and delivered by the
duly authorized officers of Borrower and each Obligor, and is, or
when executed and
Page 24
delivered in accordance with this Agreement will be, a legal, valid
and binding obligation of Borrower and each Obligor, enforceable in
accordance with their respective terms.
(d) Compliance of Agreement, Note, Loan Documents and Borrowing with
Laws, Etc. The execution, delivery and performance of this Agreement
and each of the other Loan Documents to which Borrower or an Obligor
is a party in accordance with their respective terms and the
borrowings hereunder do not and will not, by the passage of time,
the giving of notice or otherwise,
(i) require any Governmental Approval or violate any applicable
law relating to Borrower or any of its Affiliates,
(ii) conflict with, result in a breach of or constitute a default
under (A) the Organic Documents of Borrower or an Obligor, (B)
any indenture, agreement or other instrument to which Borrower
or an Obligor, is a party or by which any of its property may
be bound (C) any Governmental Approval relating to Borrower or
an Obligor, or,
(iii) result in or require the creation or imposition of any Lien
(other than Permitted Liens) upon or with respect to any
property now owned or hereafter acquired by Borrower or an
Obligor other than the Security Interest.
(e) Compliance with Law; Governmental Approvals. Borrower and each
Obligor (i) has all Governmental Approvals, including permits
relating to federal, state and local Environmental Laws, ordinances
and regulations required by any applicable law for it to conduct its
business, each of which is in full force and effect, is final and
not subject to review on appeal and is not the subject of any
pending or, to the knowledge of Borrower, threatened attack by
direct or collateral proceeding, and (ii) is in compliance with each
Governmental Approval applicable to it and in compliance with all
other applicable laws relating to it, including, without being
limited to, all Environmental Laws and all occupational health and
safety laws applicable to Borrower and each Obligor or their
properties, except in the case of both (i) and (ii) above for
instances of noncompliance which would not, singly or in the
aggregate, cause a Default or Event of Default or have a Materially
Adverse Effect and in respect of which adequate reserves have been
established on the books of Borrower and each Obligor.
(f) Title to Properties. Borrower and each Obligor has good and
marketable title to or a valid leasehold interest in all their
respective real estate and valid and legal title to or a valid
leasehold interest in their respective personal property and assets
used in or necessary to the conduct of each's business, including,
but not limited to, those reflected on the balance sheet of Borrower
delivered pursuant to Section 5.1(l).
(g) Liens. None of the properties and assets of Borrower or an Obligor
is subject to any Lien, except Permitted Liens. Other than the
Financing Statements and such existing security interests, no
financing statement under the Uniform Commercial Code of any state
which names Borrower or an Obligor as debtor and which has not been
terminated has been filed in any state or other jurisdiction, and
Borrower has not signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such
financing statement, except to perfect Permitted Liens.
(h) Indebtedness and Guaranties. Neither Borrower nor an Obligor is in
Page 25
default of any material provision of any agreement evidencing or
relating to any Indebtedness.
(i) Litigation. Except as set forth in Schedule 5.1(i), there are no
actions, suits or proceedings pending (nor, to the knowledge of
Borrower, are there any actions, suits or proceedings threatened,
nor is there any basis therefor) against or in any other way
relating adversely to or affecting Borrower or an Obligor or any of
their respective property in any court or before any arbitrator of
any kind or before or by any governmental body.
(j) Tax Returns and Payments. All United States federal, state and local
and foreign national, provincial and local and all other tax returns
of Borrower and Obligors required by applicable law to be filed have
been duly filed, and all United States federal, state and local and
foreign national, provincial and local and all other taxes,
assessments and other governmental charges or levies upon Borrower
or an Obligor and their respective properties, income, profits and
assets which are due and payable have been paid, except any such
nonpayment which is at the time permitted under Section 8.3 and
except for payments which are in a bona fide dispute and involve an
amount of less than $50,000. The charges, accruals and reserves on
the books of Borrower and each Obligor in respect of United States
federal, state and local taxes and foreign national, provincial and
local taxes for all fiscal years and portions thereof since the
organization of such entities are in the judgment of Borrower
adequate, and Borrower knows of no reason to anticipate any
additional assessments for any of such years which, singly or in the
aggregate, might have a Materially Adverse Effect.
(k) Burdensome Provisions. Neither Borrower nor an Obligor is a party to
any indenture, agreement, lease or other instrument, or subject to
any charter or corporate restriction, Governmental Approval or
applicable law, compliance with the terms of which would have a
Materially Adverse Effect.
(l) Financial Statements. Borrower has furnished to the Lender a copy of
the consolidated balance sheet of Borrower and its Subsidiaries as
at September 30, 2003, and the related statements of income, cash
flow and retained earnings for the portion of the calendar year then
ended. Such financial statements are complete and correct in all
material respects and present fairly and in all material respects in
accordance with GAAP, the financial position of Borrower as at the
dates thereof and the results of operations of Borrower for the
periods then ended, subject to normal year-end audit adjustments.
Except as disclosed or reflected in such financial statements or the
notes thereto, Borrower has no material liabilities, contingent or
otherwise, and there were no material unrealized or anticipated
losses of Borrower.
(m) Adverse Change. Since September 30, 2003, no change in the business,
assets, liabilities, condition (financial or otherwise), results of
operations or business prospects of Borrower or an Obligor has
occurred that has had, or reasonably may have, a Materially Adverse
Effect, and (ii) no event has occurred or failed to occur which has
had, or may have, a Materially Adverse Effect.
(n) Absence of Defaults. Neither Borrower nor an Obligor is in default
under its Organic Documents, and no event has occurred which has not
been remedied, cured or waived (i) that constitutes a Default or an
Event of Default or (ii) that constitutes or that, with the passage
of time or giving of notice, or both, would constitute a default or
event of default under any material agreement (other than this
Agreement) or judgment, decree or order to which Borrower or an
Obligor is a party
Page 26
or by which Borrower or any of its properties may be bound or which
would require Borrower or an Obligor to make any payment thereunder
prior to the scheduled maturity date therefor.
(o) Accuracy and Completeness of Information. All written information,
reports and other papers and data produced by or on behalf of
Borrower or an Obligor and furnished to the Lender were, at the time
the same were so furnished, complete and correct in all material
respects to the extent necessary to give the recipient a true and
accurate knowledge of the subject matter, no fact is known to
Borrower which has had, or may in the future have (so far as
Borrower can foresee), a Materially Adverse Effect which has not
been set forth in the financial statements or disclosure delivered
prior to the Effective Date, in each case referred to in Section
5.1(l), or in such written information, reports or other papers or
data or otherwise disclosed in writing to the Lender prior to the
Effective Date. The documents furnished or written statements, taken
as a whole, made to the Lender by Borrower or an Obligor in
connection with the negotiation, preparation or execution of this
Agreement or any of the Loan Documents do not contain any untrue
statement of a fact material to the creditworthiness of Borrower or
an Obligor and do not omit to state a material fact necessary in
order to make the statements contained therein not misleading.
(p) Place of Business. The business locations of the Borrower and each
Obligor are set forth in Schedule 5.1(p).
(q) Equipment. All Equipment is in good order and repair in all material
respects, reasonable wear and tear excepted.
(r) Corporate and Fictitious Names; Trade Names. Except as otherwise
disclosed on Schedule 5.1(r), during the one-year period preceding
the Agreement Date, neither Borrower nor an Obligor has been known
as, nor has it used, any corporate or fictitious name other than the
corporate name of Borrower or each Obligor on the Effective Date.
All trade names or styles under which Borrower or an Obligor sells
Inventory or Equipment or creates Receivables, or to which
instruments in payment of Receivables are made payable, are listed
on Schedule 5.1(r).
(s) Federal Regulations. Borrower is not engaged, principally or as one
of its important activities, in the business of extending credit for
the purpose of "purchasing" or "carrying" any "margin stock" (as
each of the quoted terms is defined or used in Regulations U and X
of the Board of Governors of the Federal Reserve System).
(t) Investment Company Act; SEC Reporting. Borrower is not an
"investment company" or a company "controlled" by an "investment
company" (as each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended). Borrower (i) is
required to file reports under Section 15(d) of the Securities
Exchange Act of 1934 and (ii) has registered securities under
Section 12 of the Securities Exchange Act of 1934.
(u) Intellectual Property. Borrower and each Obligor owns or possesses
all Intellectual Property required to conduct its businesses as now
and presently planned to be conducted without, to its knowledge,
conflict in any material respect with the rights of others and
Schedule 5.1(u) lists all Intellectual Property owned by Borrower
and each Obligor.
(v) ERISA. Neither Borrower nor any Related Company maintains or
contributes to any Benefit Plan other than those listed on Schedule
5.1(v). Each Benefit Plan is in substantial compliance with ERISA,
and neither Borrower nor any Related Company has received any notice
Page 27
asserting that a Benefit Plan is not in compliance with ERISA. No
material liability to the PBGC or to a Multiemployer Plan has been,
or is expected by Borrower to be, incurred by Borrower or any
Related Company.
(w) Employee Relations. Neither Borrower nor an Obligor is, except as
set forth on Schedule 5.1(w), party to any collective bargaining
agreement nor has any labor union been recognized as the
representative of Borrower's or an Obligor's employees; Borrower
knows of no pending, threatened or contemplated strikes, work
stoppage or other labor disputes involving its employees or those of
its Subsidiaries.
(x) Status of Inventory. All Inventory included in any Borrowing Base
Certificate delivered to Lender pursuant to Section 7.13(d) meets
the criteria enumerated in the definition of Eligible Inventory
except as disclosed in such Borrowing Base Certificate or in a
subsequent Borrowing Base Certificate or as otherwise specifically
disclosed in writing to Lender. Set forth on Schedule 5.1(x) is the
(i) address (including street, city, county and state) of each
facility at which Inventory is located, (ii) the approximate
quantity in Dollars of the Inventory customarily located at each
such facility, and (iii) if the facility is leased or is a third
party warehouse or processor location, the name of the landlord or
such third party warehouseman or processor. All Inventory is located
on the premises set forth on Schedule 5.1(x), except as otherwise
disclosed in writing to the Lender; Borrower has not located
Inventory at premises other than those set forth on Schedule 5.1(x)
at any time during the four months immediately preceding the
Agreement Date.
(y) Status of Receivables. Each Receivable reflected in the computations
included in any Borrowing Base Certificate meets the criteria
enumerated in the definition of Eligible Receivables, except as
disclosed in such Borrowing Base Certificate or as disclosed in a
timely manner in a subsequent Borrowing Base Certificate or
otherwise in writing to Lender.
(z) Commercial Tort Claims. Except as set forth in Schedule 5.1(z),
Borrower has not filed, taken action to file, or otherwise have any
interest in any Commercial Tort Claim with a claim value in excess
of $50,000 individually or $300,000 in the aggregate.
(aa) Loans to Directors or Officers. None of the proceeds of the Loans
will be used directly or indirectly to fund a personal loan to or
for the benefit of a director or executive officer of Borrower.
Section 5.2Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article 5 and in other Loan
Documents (including, but not limited to, any such representation, warranty or
statement made in or in connection with any amendment thereto) shall constitute
representations and warranties made under this Agreement. All representations
and warranties made under this Agreement shall be made or deemed to be made at
and as of the Agreement Date, at and as of the Effective Date and at and as of
the date of each Loan, except that representations and warranties which, by
their terms are applicable only to one such date shall be deemed to be made only
at and as of such date, except for such modifications to the representations and
warranties as are necessary due to the passage of time or change in
circumstances and as are disclosed to and approved by Lender. All
representations and warranties made or deemed to be made under this Agreement
shall survive and not be waived by the execution and delivery of this Agreement,
any investigation made by or on behalf of the Lender or any borrowing hereunder.
ARTICLE 6 - SECURITY INTEREST
Page 28
Section 6.1 Security Interest. To secure the payment, observance and
performance of the Secured Obligations, Borrower hereby pledges and assigns all
of the Collateral to the Lender and grants to Lender a continuing security
interest in, and a continuing Lien upon, all of the Collateral.
Section 6.2 Continued Priority of Security Interest. (a) The Security
Interest granted by Borrower shall at all times be valid, perfected and
enforceable against Borrower and all third parties in accordance with the terms
of this Agreement, as security for the Secured Obligations, and the Collateral
shall not at any time be subject to any Liens that are prior to, on a parity
with or junior to the Security Interest, other than Permitted Liens.
(b) Borrower shall, at their sole cost and expense, take all action that
may be necessary or desirable, or that the Lender may request, so as
at all times to maintain the validity, perfection, enforceability
and rank of the Security Interest in the Collateral in conformity
with the requirements of Section 6.2(a) or to enable the Lender to
exercise or enforce its rights hereunder, including, but not limited
to: (i) paying all taxes, assessments and other claims lawfully
levied or assessed on any of the Collateral, except to the extent
that such taxes, assessments and other claims constitute Permitted
Liens, (ii) diligently seeking to obtain, after the Agreement Date,
mechanics' releases, subordinations or waivers, (iii) delivering to
the Lender, endorsed or accompanied by such instruments of
assignment as the Lender may specify, and stamping or marking in
such manner as the Lender may specify, any and all chattel paper,
instruments, letters and advices of guaranty and documents
evidencing or forming a part of the Collateral, and (iv) executing
and delivering financing statements, pledges, designations,
hypothecations, notices and assignments, in each case in form and
substance satisfactory to the Lender, relating to the creation,
validity, perfection, maintenance or continuation of the Security
Interest under the UCC or other applicable law.
(c) The Lender is hereby (i) irrevocably designated, made, constituted
and appointed (as well as all Persons designated by the Lender from
time to time) as Borrower's true and lawful attorney and agent in
fact, for the purpose of executing Financing Statements and any
continuation statements or amendments thereto, on behalf of Borrower
for the purpose of perfecting the security interests granted herein;
and (ii) authorized to file one or more financing or continuation
statements or amendments thereto without the signature of or in the
name of Borrower for any purpose described in Section 6.2(b). A
carbon, photographic or other reproduction of this Agreement or of
any of the Security Documents or of any financing statement filed in
connection with this Agreement is sufficient as a financing
statement, to the extent permitted by applicable law.
(d) Borrower shall ▇▇▇▇ its books and records as may be necessary or
appropriate to evidence, protect and perfect the Security Interest
and shall cause its financial statements to reflect the Security
Interest.
ARTICLE 7 - COLLATERAL COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full:
Section 7.1 Verification; Notification and Defense of Title. (a) Except
for Permitted Liens, Borrower shall at all times be the sole owner of each and
every item of Collateral and shall not create any Lien on, or sell, lease,
exchange, assign, transfer, pledge, hypothecate, grant a security interest or
security title in or otherwise dispose of, any of the Collateral or any interest
therein, except for sales of Inventory in the ordinary course of business, for
cash or on
Page 29
open account or on terms of payment ordinarily extended to its customers.
Nothing contained in this subsection shall be interpreted to prohibit any sales
of assets permitted under other provisions hereof. The inclusion of "proceeds"
of the Collateral under the Security Interest shall not be deemed a consent by
the Lender to any other sale or other disposition of any part or all of the
Collateral.
(b) Borrower shall defend its title in and to the Collateral and shall
defend the Security Interest in the Collateral against the claims
and demands of all Persons, except for Permitted Liens.
(c) In addition to, and not in derogation of, the foregoing and the
requirements of any of the Security Documents, Borrower shall (i)
protect and preserve all properties material to its business,
including Intellectual Property and maintain all tangible property
in good and workable condition in all material respects, with
reasonable allowance for wear and tear, and (ii) from time to time
make or cause to be made all needed and appropriate repairs,
renewals, replacements and additions to such properties necessary
for the conduct of its business, so that the business carried on in
connection therewith may be properly and advantageously conducted at
all times.
Section 7.2 Disputes, Returns and Adjustments. (a) In the event amounts
due and owing under any Receivable in excess of $25,000 are in dispute between
the Account Debtor and Borrower, Borrower shall provide Lender with prompt
written notice thereof.
(b) Borrower shall notify Lender promptly of all material returns and
credits in excess of $25,000 in respect of any Receivable from an
Account Debtor (or any series of returns or credits accepted or
given at substantially the same time in respect of any Receivables
of an Account Debtor), which notice shall specify the Receivables
affected.
(c) Borrower may, in the ordinary course of business and prior to a
Default or an Event of Default, grant any extension of time for
payment of any Receivable or compromise, compound or settle the same
for less than the full amount thereof or release wholly or partly
any Person liable for the payment thereof or allow any credit or
discount whatsoever thereon; provided that (i) no such action
results in the reduction of more than $25,000 in the amount payable
with respect to Receivable or of more than $25,000 with respect to
all Receivables in any fiscal year of Borrower, and (ii) Lender is
promptly notified of the amount of such adjustments and the
Receivable(s) affected thereby.
Section 7.3 Invoices. (a) Borrower will not use any invoices except
invoices calling for standard payment terms as currently in effect with
Borrower.
(b) Upon the request of Lender, Borrower shall deliver to the Lender, at
Borrower's expense, copies of customers' invoices or the equivalent,
original shipping and delivery receipts or other proof of delivery,
customers' statements, the original copy of all documents,
including, without limitation, repayment histories and present
status reports, relating to Receivables and such other documents and
information relating to the Receivables as Lender shall specify.
Section 7.4Delivery of Instruments. In the event any Receivable in an
amount in excess of $25,000 is, or Receivables in excess of $25,000 in the
aggregate are, at any time evidenced by a promissory note or notes, trade
acceptance or any other instrument for the payment of money, Borrower will
immediately thereafter deliver such instruments to Lender, appropriately
endorsed to Lender.
Page 30
Section 7.5Sales of Inventory. All sales of Inventory will be made in
compliance with all material requirements of applicable law.
Section 7.6Returned Goods. The Security Interest in the Inventory shall,
without further act, attach to the cash and non-cash proceeds resulting from the
sale or other disposition thereof and to all Inventory which is returned to
Borrower by customers or is otherwise recovered.
Section 7.7[Reserved].
Section 7.8 Insurance. (a) Borrower shall at all times maintain insurance
on the Inventory against loss or damage by fire, theft, burglary, pilferage,
loss in transit and such other hazards as Lender shall reasonably specify, in
amounts and under policies issued by insurers acceptable to Lender. All premiums
on such insurance shall be paid by Borrower and copies of the policies delivered
to Lender. Borrower will not use or permit the Inventory or Equipment to be used
in violation of any applicable law or in any manner which might render
inapplicable any insurance coverage.
(b) All insurance policies required under Section 7.8(a) shall name
Lender as an additional named insured and shall contain "New York
standard" loss payable clauses in the form submitted to Borrower by
Lender, or otherwise in form and substance satisfactory to Lender,
naming Lender as loss payee as its interests may appear, and
providing that (i) all proceeds thereunder shall be payable to
Lender, (ii) no such insurance shall be affected by any act or
neglect of the insured or owner of the property described in such
policy, and (iii) such policy and loss payable clauses may not be
cancelled, amended or terminated unless at least 30 days' prior
written notice is given to Lender.
(c) Any proceeds of insurance referred to in this Section 7.8 which are
paid to Lender shall be promptly released to Borrower upon receipt
by Lender of adequate assurance that such proceeds will be used only
to rebuild, restore or replace the damaged or destroyed property.
(d) Borrower shall at all times maintain, in addition to the insurance
required by Section 7.8(a) or any of the Security Documents,
insurance with responsible insurance companies against such risks
and in such amounts as is customarily maintained by similar
businesses or as may be required by applicable law, including such
public liability, products liability, third party property damage
and business interruption insurance as is consistent with reasonable
business practices, and from time to time deliver to Lender upon its
request a detailed list of the insurance then in effect, stating the
names of the insurance companies, the amounts and rates of the
insurance, the dates of the expiration thereof and the properties
and risks covered thereby.
Section 7.9 Location of Offices and Collateral. (a) Borrower will not
change the location of its chief executive office or the place where it keeps
its books and records relating to the Collateral or change its name, identity,
jurisdiction of organization or corporate structure without giving Lender 30
days' prior written notice thereof.
(b) All Inventory, other than Inventory in transit to any such location,
will at all times be kept by Borrower at one of the locations set
forth in Schedule 5.1(x), and shall not, without the prior written
consent of Lender, be removed therefrom except, so long as no Event
of Default shall have occurred and be continuing, for sales of
Inventory in the ordinary course of business.
(c) If any Inventory is in the possession or control of any of
Borrower's agents or processors, Borrower shall notify such agents
or processors
Page 31
of the Security Interest and, upon the occurrence of an Event of
Default, shall instruct them (and cause them to acknowledge such
instruction) to hold all such Inventory for the account of Lender,
subject to the instructions of Lender.
Section 7.10......Records Relating to Collateral. (a) Borrower will at all
times (i) keep complete and accurate records of Inventory on a basis consistent
with past practices of Borrower, itemizing and describing the kind, type and
quantity of Inventory and Borrower's cost therefor and a current price list for
such Inventory, and (ii) keep complete and accurate records of all other
Collateral.
(b) Borrower will take a physical listing of all Inventory, wherever
located, at least annually.
Section 7.11......Inspection. Lender (by any of its officers, employees or
agents) shall have the right, to the extent that the exercise of such right
shall be within the reasonable control of Borrower, at any time or times to (a)
visit the properties of Borrower, inspect the Collateral and the other assets of
Borrower and inspect and make extracts from the books and records of Borrower,
including, but not limited to, management letters prepared by independent
accountants, all during customary business hours at such premises, (b) discuss
Borrower's business, assets, liabilities, financial condition, results of
operations and business prospects, insofar as the same are reasonably related to
the rights of the Lenders hereunder or under any of the Loan Documents, with
Borrower's (i) principal officers, (ii) independent accountants and other
professionals providing services to Borrower, and (iii) any other Person (except
that any such discussion with any third parties shall be conducted only in
accordance with Lender's standard operating procedures relating to the
maintenance of confidentiality of confidential information of Borrower), and (c)
verify the amount, quantity, value and condition of, or any other matter
relating to, any of the Collateral and in this connection to review, audit and
make extracts from all records and files related to any of the Collateral.
Borrower will deliver to Lender any instrument necessary to authorize an
independent accountant or other professional to have discussions of the type
outlined above with Lender or for Lender to obtain records from any service
bureau maintaining records on behalf of Borrower.
Section 7.12......Maintenance of Property. Borrower shall maintain all
physical property that constitutes equipment or fixtures or real estate in good
and workable condition in all material respects, with reasonable allowance for
wear and tear, and shall exercise proper custody over all such property.
Section 7.13......Information and Reports.
(a) Schedule of Receivables. Borrower shall deliver to Lender (i) on or
before the Effective Date, a Schedule of Receivables as of a date
not more than three Business Days prior to the Effective Date
setting forth a detailed aged trial balance of all of its then
existing Receivables, specifying the name of and the balance due
from (and any rebate due to) each Account Debtor obligated on a
Receivable so listed, and (ii) no later than 21 days after the end
of each month, a Schedule of Receivables as of the last Business Day
of Borrower's immediately preceding month setting forth (A) a
detailed aged trial balance of all Borrower's then existing
Receivables, specifying the name of and the balance due from (and
any rebate due to) each Account Debtor obligated on a Receivable so
listed and (B) a reconciliation to the Schedule of Receivables
delivered in respect of the next preceding month.
(b) Schedule of Inventory. Borrower shall deliver to Lender on or before
the Effective Date, and no later than 21 days after the end of each
month thereafter, a Schedule of Inventory as of the last Business
Day
Page 32
of the immediately preceding month, itemizing and describing the
kind, type, quantity and location of Inventory and the cost thereof.
(c) Borrowing Base Certificate. Borrower shall deliver to Lender within
21 days after the last day of each month, and at other times as
Lender may request, a Borrowing Base Certificate prepared on a
consolidated basis as of the close of business on the last Business
Day of such month.
(d) Other Information. Borrower shall also furnish to Lender such other
information with respect to the Collateral as Lender may from time
to time reasonably request.
(e) Suspension of Duty to Provide Reports. Lender agrees that Borrower
shall not be required to provide the reports and certificates under
(a) through (c) above for any period of time that the total
outstanding principal balance of all Loans (including the principal
amount of any pending request for advance under the Note) is less
than $4,000,000. In the event the said principal balance becomes
less than $4,000,000 after being equal to or greater than
$4,000,000, the reports and certificates under (a)-(c) above shall
remain required for a period of three (3) full calendar months after
the date the principal balance becomes less than $4,000,000.
ARTICLE 8 - AFFIRMATIVE COVENANTS
Until the Loans have been paid and all the Secured Obligations have been
indefeasibly paid in full, unless the Lender shall otherwise consent in the
manner provided for in Section 12.11, Borrower will:
Section 8.1 Preservation of Existence and Similar Matters. Preserve and
maintain its existence and the existence of each Subsidiary as a corporation as
well as all rights, franchises, licenses and privileges in the jurisdiction of
its incorporation and qualify and remain qualified as a foreign corporation or
organization and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification or authorization, except to the extent the failure to do so would
not have a Materially Adverse Effect.
Section 8.2 Compliance with Applicable Law. Comply with all applicable
laws relating to Borrower, except to the extent the failure to do so would not
have a Materially Adverse Effect.
Section 8.3 Payment of Taxes and Claims. Pay or discharge when due (a) all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or upon any properties belonging to it, and (b) all lawful
claims of materialmen, mechanics, carriers, warehousemen and landlords for
labor, materials, supplies and rentals which, if unpaid, might become a Lien on
any properties of Borrower, except that this Section 8.3 shall not require the
payment or discharge of any such tax, assessment, charge, levy or claim which
(i) is being contested in good faith by appropriate proceedings and for which
adequate reserves have been established on the appropriate books, or (ii) which
is in an amount of less than $50,000.
Section 8.4 Accounting Methods and Financial Records. Maintain a system of
accounting, and keep such books, records and accounts (which shall be true and
complete), as may be required or as may be necessary to permit the preparation
of financial statements in accordance with GAAP consistently applied.
Section 8.5 Use of Proceeds. (a) Use the proceeds of the Loans to (i)
provide working capital to Borrower and its Subsidiaries, and (ii) repay all
amounts owing under the working capital loans described on Schedule 8.5 hereto,
and
Page 33
(b) not use any part of such proceeds to purchase or carry, or to reduce
or retire or refinance any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulation T, U or X of the
Board of Governors of the Federal Reserve System) or for any other
purpose which would involve a violation of such Regulation T, U or X
of such Board of Governors or for any other purpose prohibited by
law or by the terms and conditions of this Agreement.
Section 8.6 Hazardous Waste and Substances; Environmental Requirements.
(a) In addition to, and not in derogation of, the requirements of
Section 8.2 and of the Security Documents, except to the extent the
failure to do so would not have a Materially Adverse Effect, comply
and cause each Subsidiary to comply with all laws, governmental
standards and regulations applicable to Borrower or to any of its
assets in respect of occupational health and safety laws, rules and
regulations and Environmental Laws, promptly notify the Lender of
its receipt of any notice of a violation of any such law, rule,
standard or regulation and indemnify and hold the Lender harmless
from all loss, cost, damage, liability, claim and expense incurred
by or imposed upon the Lender on account of Borrower's failure to
perform its obligations under this Section 8.6.
(b) Whenever Borrower gives notice to the Lender pursuant to this
Section 8.6 with respect to a matter that reasonably could be
expected to result in liability to Borrower in excess of $50,000 in
the aggregate, Borrower shall, at the Lender's request and
Borrower's expense, (i) cause an independent environmental engineer
acceptable to the Lender to conduct such tests of the site where the
noncompliance or alleged noncompliance with Environmental Laws has
occurred and prepare and deliver to the Lender a report setting
forth the results of such tests, a proposed plan to bring Borrower
into compliance with such Environmental Laws and an estimate of the
costs thereof, and (ii) provide to the Lender a supplemental report
of such engineer whenever the scope of the noncompliance or the
response thereto or the estimated costs thereof shall materially
change.
Section 8.7 Accuracy of Information. All written information, reports,
statements and other papers and data furnished to the Lender, whether pursuant
to Article 9 or any other provision of this Agreement or any of the other Loan
Documents, shall be, at the time the same is so furnished, complete and correct
in all material respects to the extent necessary to give the Lender true and
accurate knowledge of the subject matter.
Section 8.8 Revisions or Updates to Schedules. Should any of the
information or disclosures provided on any of the Schedules originally attached
hereto become outdated or incorrect in any material respect, Borrower shall
provide promptly to the Lender such revisions or updates to such Schedule(s) as
may be necessary or appropriate to update or correct such Schedule(s); provided
that no such revisions or updates to any Schedule(s) shall be deemed to have
cured any breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such Schedule(s) unless and until the Lender, in its sole
discretion, shall have accepted in writing such revisions or updates to such
Schedule(s).
Section 8.9 Operating Account. Throughout the duration of this Agreement
from and after sixty (60) days after the date of this Agreement, maintain its
operating deposit accounts with the Lender. The deposit accounts of Borrower and
Subsidiaries are listed on Schedule 8.9.
Section 8.10 Notice of SEC Reporting. Borrower will notify Lender promptly
upon it (i) being required to file reports under Section 15(d) of the Securities
Page 34
Exchange Act of 1934 ("Exchange Act"), or (ii) registering securities under
Section 12 of the Exchange Act.
Section 8.11 Reporting Compliance. Borrower will timely file with the SEC,
and provide to the Lender concurrently therewith, all SEC Documents as are
specified in the Exchange Act as being required to be filed by U.S. corporations
that are subject to reporting requirements of the Exchange Act. In addition, the
Borrower shall timely file with NASDAQ or other applicable stock exchange and
provide to the Lender concurrently therewith, all SEC Documents required to be
filed therewith. Each SEC Document to be filed by the Borrower, when filed with
the SEC or NASDAQ or other applicable stock exchange, as the case may be, will
comply with all applicable requirements of the Securities Act, the Exchange Act,
the NASDAQ or other applicable stock exchange rules, as applicable, and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Borrower and its Subsidiaries to be
included in each SEC document to be filed by the Borrower will comply as to
form, as of the date of its filing with the SEC, with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, will be prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by the SEC) and will fairly present in all
material respects the consolidated financial position of the Borrower and its
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to the omission of footnotes and normal year-end audit
adjustments consistent with past practices and consistently applied).
Notwithstanding anything to the contrary contained in this Section 8.11, the
Borrower shall not be deemed to be in default of this Section 8.11 if the
Borrower is late in filing any SEC document, provided that (a) such SEC document
is filed with the SEC within ten (10) Business Days after the filing was due,
shall notify the Lender in writing of the late filing and (b) the Borrower shall
not rely on the grace period in this sentence on more than two (2) occasions
during the term of this Agreement.
ARTICLE 9 - INFORMATION
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full, unless the Lender shall
otherwise consent in the manner set forth in Section 12.11, Borrower will
furnish to the Lender at the Lender's Office:
Section 9.1 Financial Statements.
(a) Audited Year-End Statements. As soon as available, but in any event
within 90 days after the end of each fiscal year of Borrower, copies
of the consolidated and consolidating balance sheet of Borrower as
at the end of such fiscal year and the related consolidated and
consolidating statements of income, shareholder's equity, partner
equity or members' equity (as applicable) and cash flow for such
fiscal year, in each case setting forth in comparative form the
figures for the previous year-end and reported on, without
qualification, by independent certified public accountants selected
by Borrower and acceptable to the Lender.
(b) Periodic Financial Statements. As soon as available, but in any
event within 45 days after the end of each accounting quarter of
Borrower, copies of the consolidated and consolidating unaudited
balance sheet of Borrower as at the end of such quarter, and the
related unaudited consolidated and consolidating income statement
for such period and for the portion of the fiscal year of Borrower
through such period.
(c) Projected Financial Statements. As soon as available, but in any
event
Page 35
within 30 days after the end of each fiscal year of Borrower, a forecasted
income statement prepared by Borrower, setting forth the assumptions on which
such forecasted income statement was prepared, covering the one-year period
until the next fiscal year-end.
All such financial statements referred to in clauses (a) and (b) shall be
complete and correct in all material respects and shall be prepared in
accordance with GAAP (except, with respect to interim financial statements, for
the omission of footnotes and normal year-end audit adjustments consistent with
past practices and consistently applied) applied consistently throughout the
periods reflected therein.
Section 9.2Authorization. Borrower authorizes the Lender to discuss the
financial condition of Borrower with its independent certified public
accountants and agrees that such discussion or communication shall be without
liability to either the Lender or Borrower's independent certified public
accountants.
Section 9.3 Copies of Other Reports. (a) Promptly upon receipt thereof,
copies of all reports, if any, submitted to Borrower or its Board of Directors
by its independent public accountants, including, without limitation, all
management reports.
(b) From time to time and promptly upon each request, such forecasts,
data, certificates, reports, statements, documents or further
information regarding the business, assets, liabilities, financial
condition, results of operations or business prospects of Borrower
as the Lender may reasonably request. The rights of the Lender under
this Section 9.3(b) are in addition to and not in derogation of its
rights under any other provision of this Agreement or any Loan
Document.
Section 9.4 Notice of Litigation and Other Matters.
Notice of:
(a) the commencement, to the extent Borrower is aware of the same, of
all proceedings and investigations by or before any governmental or
nongovernmental body and all actions and proceedings in any court or
before any arbitrator against or in any other way relating adversely
to, or adversely affecting, Borrower, any Subsidiary or any
Affiliate of Borrower or any of their respective property, assets or
businesses which might, singly or in the aggregate, cause a Default
or an Event of Default or have a Materially Adverse Effect,
(b) any amendment of the Organic Documents of Borrower or a Subsidiary,
(c) any change in the business, assets, liabilities, financial
condition, results of operations or business prospects of Borrower,
any Subsidiary or any Affiliate of Borrower which has had or may
have any Materially Adverse Effect, and any change in the executive
officers of Borrower, and
(d) any (i) Default or Event of Default, or (ii) event that constitutes
or that, with the passage of time or giving of notice or both, would
constitute a default or event of default by Borrower under (A) any
agreement with Hoopeston Foods Denver Corp., or (B) any other
material agreement (other than this Agreement) to which Borrower is
a party or by which Borrower or of its property may be bound, if the
exercise of remedies thereunder by the other party to such agreement
would have, either individually or in the aggregate, a Materially
Adverse Effect.
Section 9.5ERISA. As soon as possible and in any event within 30 days
after Borrower knows, or has reason to know, that:
Page 36
(a) any Termination Event with respect to a Benefit Plan has occurred or
will occur,
(b) the aggregate present value of the Unfunded Vested Accrued Benefits
under all Plans has increased to an amount in excess of $0, or
(c) Borrower is in "default" (as defined in Section 4219(c)(5) of ERISA)
with respect to payments to a Multiemployer Plan required by reason
of its complete or partial withdrawal (as described in Section 4203
or 4205 of ERISA) from such Multiemployer Plan,
certificate of the President or the chief financial officer of Borrower setting
forth the details of such of the events described in clauses (a) through (c) as
applicable and the action which is proposed to be taken with respect thereto
and, simultaneously with the filing thereof, copies of any notice or filing
which may be required by the PBGC or other agency of the United States
government with respect to such of the events described in clauses (a) through
(c) as applicable.
Section 9.6 Officer's Certificate. Within 30 days after the end of each
fiscal quarter of the Borrower, a certificate of the Borrower's Chief Executive
Officer, President or chief financial officer (a) stating that, based on an
examination sufficient to enable such officer to make an informed statement, no
Default or Event of Default exists or, if such is not the case, specifying such
Default or Event of Default and its nature, when it occurred, whether it is
continuing and the steps being taken by the Borrower with respect to such
Default or Event of Default; (b) stating that, to the best of his knowledge, the
financial statements of the Borrower delivered to the Lender pursuant to Section
9.1(b) for each fiscal quarter then ended present fairly the financial condition
and results of operations of the Borrower as of the date hereof and for the
periods then ended, subject to normal year end adjustments; and (c) setting
forth the calculations necessary to establish whether or not the Borrower were
in compliance with the covenants contained in Section 10.1 as of the date of
such statements.
ARTICLE 10 - NEGATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full, Borrower will not
directly or indirectly or permit a Subsidiary directly or indirectly:
Section 10.1......Financial Covenants.
(a) Minimum Consolidated Net Worth. As of the last day of each fiscal
quarter of Borrower commencing with the fiscal quarter of Borrower
ending March 31, 2004, permit the sum of Borrowers' Consolidated Net
Worth to be less than $7,500,000.
(b) Minimum Debt Service Coverage Ratio. As of the last day of each
fiscal quarter of Borrower commencing with the fiscal quarter of
Borrower ending September 30, 2004, permit the consolidated Debt
Service Coverage Ratio, measured for each fiscal quarter, to be less
than 1.5:1.0. The measurement of such Ratio for the fiscal quarter
ending December 31, 2004 will be for the immediately preceding two
fiscal quarters (i.e., the third and fourth fiscal quarters of
2004), for the fiscal quarter ending March 31, 2005 will be for the
immediately preceding three fiscal quarters (i.e., the third and
fourth fiscal quarters of 2004 and the first fiscal quarter of
2005), and for the fiscal quarter ending June 30, 2005 and each
fiscal quarter thereafter will be for the immediately preceding four
fiscal quarters; provided, however, that the foregoing financial
covenant will be applicable only upon and after the end of the first
fiscal quarter the total
Page 37
outstanding principal balance of all Loans is greater than
$3,000,000.
Section 10.2......Termination of Material Agreement. Voluntarily terminate
any material agreement to which Borrower or a Subsidiary is a party or by which
Borrower or any of its property may be bound if the termination of such
agreement would have, either individually or in the aggregate, a Materially
Adverse Effect.
Section 10.3......Indebtedness. Create, assume, or otherwise become or
remain obligated in respect of, or permit or suffer to exist or to be created,
assumed or incurred or to be outstanding any Indebtedness for Money Borrowed,
except for Permitted Indebtedness for Money Borrowed.
Section 10.4......Guarantees. Become or remain liable with respect to any
Guaranty of any obligation of any other Person, except for Guarantees of
Permitted Indebtedness.
Section 10.5......Investments. Acquire, after the Agreement Date, any
business unit or Investment or, after such date, permit any Investment to be
outstanding, other than Permitted Investments.
Section 10.6......Restricted Distributions and Payments. Declare or make
any Restricted Distribution or Restricted Payment, unless at the time of each
such Restricted Distribution or Restricted Payment and after giving effect
thereto, no Default or Event of Default exists or would result therefrom
(including, without limitation, a Default in compliance with the financial
covenants in Section 10.1 computed as of the date of such transaction.
Section 10.7......Merger, Consolidation and Sale of Assets. Without the
prior written consent of Lender, merge or consolidate with any other Person,
unless the Borrower is the surviving entity and the combined net worth of
Borrower is increased as a result of the transaction, or sell, lease or transfer
or otherwise dispose of all or a substantial portion of its assets to any
Person.
Section 10.8......Transactions with Affiliates. Effect any transaction
with any Affiliate on a basis less favorable to Borrower than would be the case
if such transaction had been effected with a Person not an Affiliate.
Section 10.9......Liens. Create, assume or permit or suffer to exist or to
be created or assumed any Lien on any of the property or assets of Borrower,
real, personal or mixed, tangible or intangible, except for Permitted Liens.
Section 10.10.....Benefit Plans. Permit, or take any action which would
result in, the aggregate present value of the Unfunded Vested Accrued Benefits
under all Benefit Plans of Borrower to exceed $0.
Section 10.11.....Sales and Leasebacks. Enter into any arrangement with
any Person providing for the leasing from such Person of real or personal
property which has been or is to be sold or transferred, directly or indirectly,
by Borrower to such Person.
Section 10.12.....Amendments of Other Agreements. Amend in any way the
interest rate or principal amount or schedule of payments of principal and
interest with respect to any Indebtedness for Money Borrowed (other than the
Secured Obligations) other than to reduce the interest rate or extend the
schedule of payments with respect thereto.
Section 10.13.....Subsidiaries. Organize or acquire any Subsidiary or
activate any currently inactive Subsidiary, except in connection with a merger,
acquisition or consolidation in which the Borrower is the surviving entity and
the combined net worth of Borrower is increased as a result of the transaction.
Page 38
ARTICLE 11 - DEFAULT
Section 11.1......Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any governmental or nongovernmental body:
(a) Default in Payment of Loans. Borrower shall default in any payment
of principal of, or interest on, any Loan or Note within ten (10)
days of when the same shall become due and payable (whether at
maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. Borrower shall default in the payment, as and
when due, of principal of or interest on, any other Secured
Obligation, and such default shall continue for twenty (20) days
after the due date.
(c) Misrepresentation. Any representation or warranty made or deemed to
be made by Borrower under this Agreement or any other Loan Document
or any amendment hereto or thereto shall at any time prove to have
been incorrect or misleading in any material respect when made, and,
if capable of being cured, Borrower fails to cure such incorrect or
misleading representation or warranty within 30 days after notice
from Lender.
(d) Default in Performance. (i) Borrower shall default in the
performance or observance of a term, covenant, condition or
agreement contained in Section 6.2, 8.5, 9.1 or 10.1; and, in the
instance of Section 6.2, 8.5 and 9.1, fails to cure such default
within ten (10) days after the sooner to occur of Borrower's receipt
of notice of such default from Lender or the date on which such
default first became known to any officer of Borrower; or (ii)
Borrower shall default in the performance or observance of any other
term, covenant, condition or agreement contained in this Agreement,
any Letter of Credit, or any other Loan Document and the default is
not cured to the satisfaction of Lender within thirty (30) days
after the sooner to occur of Borrower's receipt of notice of such
default from Lender or the date on which such default first became
known to any officer of Borrower.
(e) Indebtedness Cross-Default. (i) Borrower shall fail to pay when due
and payable the principal of or interest on any Indebtedness for
Money Borrowed (other than the Loans or Note) where the principal
amount of such Indebtedness for Money Borrowed is in excess of
$50,000 and such Indebtedness shall have been accelerated, or (ii)
the maturity of any Indebtedness for Money Borrowed shall have been
accelerated as a result of such default or event of default in
accordance with the provisions of any indenture, contract or
instrument providing for the creation of or concerning such
Indebtedness, or (iii) any event shall have occurred and be
continuing which, with or without the passage of time or the giving
of notice, or both, would permit any holder or holders of such
Indebtedness, any trustee or agent acting on behalf of such holder
or holders or any other Person to be accelerate such maturity and
such Indebtedness shall have been accelerated.
(f) Other Cross-Defaults. Borrower shall default in the payment when due
or in the performance or observance of any material obligation or
condition of any agreement, contract or lease (other than the
Security Documents or any such agreement, contract or lease relating
to Indebtedness), including without limitation the agreements
between Borrower or a Subsidiary and Hoopeston Foods Denver Corp.,
if the exercise of remedies thereunder by the other party to such
agreement could have a Materially Adverse Effect, unless Borrower
and the other
Page 39
party are in good faith discussions or negotiations concerning the
resolution of such a default). For the purposes only of this
sub-Section (f), if the amount involved with a payment or
performance or observance obligation is less than $50,000, it shall
be deemed not to have a Materially Adverse Effect.
(g) Voluntary Bankruptcy Proceeding. Any Obligor shall (i) commence a
voluntary case under the federal bankruptcy laws (as now or
hereafter in effect), (ii) commence a proceeding seeking to take
advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or composition
for adjustment of debts, (iii) consent to or fail to contest in a
timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws, (iv)
apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession
by, a receiver, custodian, trustee or liquidator of itself or of a
substantial part of its property, domestic or foreign, (v) admit in
writing its inability to pay its debts as they become due, (vi) make
a general assignment for the benefit of creditors, or (vii) take any
corporate action for the purpose of authorizing any of the
foregoing.
(h) Involuntary Bankruptcy Proceeding. A case or other proceeding shall
be commenced against any Obligor in any court of competent
jurisdiction seeking (i) relief under the federal bankruptcy laws
(as now or hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding
up or adjustment of debts, or (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of any Obligor or of all
or any substantial part of the assets, domestic or foreign, of any
Obligor, and such case or proceeding shall continue undismissed or
unstayed for a period of 90 consecutive calendar days, or an order
granting the relief requested in such case or proceeding against any
Obligor (including, but not limited to, an order for relief under
such federal bankruptcy laws) shall be entered.
(i) Loan Documents. After the expiration of any applicable cure periods,
any event of default or Event of Default under any other Loan
Document shall occur or any Obligor shall default in the performance
or observance of any material term, covenant, condition or agreement
contained in, or the payment of any other sum covenanted to be paid
by any Obligor under, any such Loan Document; or any provision of
this Agreement, or of any other Loan Document after delivery thereof
hereunder, shall for any reason cease to be valid and binding, other
than a nonmaterial provision rendered unenforceable by operation of
law, or any Obligor or other party thereto (other than the Lender)
shall so state in writing; or this Agreement or any other Loan
Document, after delivery thereof hereunder, shall for any reason
(other than any action taken independently by the Lender and except
to the extent permitted by the terms thereof) cease to create a
valid, perfected and, except as otherwise expressly permitted
herein, first priority Lien on, or security interest in, any of the
Collateral purported to be covered thereby.
(j) Judgment. A judgment or order for the payment of money in an amount
in excess of $50,000 shall be entered against any Obligor by any
court and such judgment or order shall continue unbonded,
undischarged or unstayed for 90 days.
(k) Attachment. A warrant or writ of attachment or execution or similar
process shall be issued against any property of any Obligor and such
warrant or process shall continue undischarged or unstayed for 90
days.
Page 40
(l) Material Adverse Change. There occurs any act, omission, event,
undertaking or circumstance or series of acts, omissions, events,
undertakings or circumstances which have, or in the reasonable
judgment of the Lender would have, either individually or in the
aggregate, a Materially Adverse Effect.
(m) ERISA. (i) Any Termination Event with respect to a Benefit Plan
shall occur that, after taking into account the excess, if any, of
(A) the fair market value of the assets of any other Benefit Plan
with respect to which a Termination Event occurs on the same day
(but only to the extent that such excess is the property of
Borrower) over (B) the present value on such day of all vested
nonforfeitable benefits under such other Benefit Plan, results in an
Unfunded Vested Accrued Benefit in excess of $0, (ii) any Benefit
Plan shall incur an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA) for which a waiver
has not been obtained in accordance with the applicable provisions
of the Code and ERISA, or (iii) Borrower is in "default" (as defined
in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from Borrower's complete or partial
withdrawal (as described in Section 4203 or 4205 of ERISA) from such
Multiemployer Plan.
Section 11.2......Remedies.
(a) Automatic Acceleration and Termination of Facilities. Upon the
occurrence of an Event of Default specified in Section 11.1(g) or
(h), (i) the principal of and the interest on the Loans and the
Notes at the time outstanding, and all other amounts owed to the
Lender under this Agreement or any of the Loan Documents and all
other Secured Obligations, shall thereupon become due and payable
without presentment, demand, protest or other notice of any kind,
all of which are expressly waived, anything in this Agreement or any
of the Loan Documents to the contrary notwithstanding, and (ii) the
Revolving Credit Facility and the commitment of the Lender to make
advances thereunder or under this Agreement shall immediately
terminate.
(b) Other Remedies. If any Event of Default (other than as specified in
Section 11.1(g) or (h)) shall have occurred and be continuing, the
Lender, in its sole and absolute discretion, may do either or both
of the following:
(i) declare the principal of and interest on the Loans and the
Notes at the time outstanding, and all other amounts owed to
the Lender under this Agreement or any of the Loan Documents
and all other Secured Obligations, to be forthwith due and
payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice
of any kind, all of which are expressly waived, anything in
this Agreement or the Loan Documents to the contrary
notwithstanding, together with interest on such amounts at the
Default Rate;
(ii) terminate the Revolving Credit Facility and any commitment of
the Lender to make advances hereunder.
(c) Further Remedies. If any Event of Default shall have occurred and be
continuing, the Lender, in its sole and absolute discretion, may do
any of the following:
(i) notify, or request the Borrower to notify, in writing or
otherwise, any Account Debtor or obligor with respect to any
one or more of the Receivables to make payment to the Lender
or any agent or designee of the Lender, at such address as may
be
Page 41
specified by the Lender, and, if, notwithstanding the giving
of any notice, any Account Debtor or other such obligor shall
make payments to the Borrower, the Borrower shall hold all
such payments in trust for the Lender, without commingling the
same with other funds or property of, or held by, the Borrower
and shall deliver the same to the Lender or any such agent or
designee immediately upon receipt by the Borrower in the
identical form received, together with any necessary
endorsements;
(ii) settle or adjust disputes and claims directly with Account
Debtors and other obligors on Receivables for amounts and on
terms which the Lender considers advisable and in all such
cases only the net amounts received by the Lender in payment
of such amounts, after deductions of costs and attorneys'
fees, shall constitute Collateral, and the Borrower shall have
no further right to make any such settlements or adjustments
or to accept any returns of merchandise;
(iii) enter upon any premises on which Inventory may be located and,
without resistance or interference by Borrower, take physical
possession of any or all thereof and maintain such possession
on such premises or move the same or any part thereof to such
other place or places as the Lender shall choose, without
being liable to Borrower on account of any loss, damage or
depreciation that may occur as a result thereof, so long as
the Lender shall act reasonably and in good faith;
(iv) at the expense of Borrower, cause any of the Inventory to be
placed in a public or field warehouse, and the Lender shall
not be liable to Borrower on account of any loss, damage or
depreciation that may occur as a result thereof, so long as
the Lender shall act reasonably and in good faith;
(v) without notice, demand or other process, and without payment
of any rent or any other charge, enter any of Borrower's
premises and, without breach of the peace, until the Lender
completes the enforcement of its rights in the Collateral,
take possession of such premises or place custodians in
exclusive control thereof, remain on such premises and use the
same and any of Borrower's equipment, for the purpose of (A)
completing any work in process, preparing any Inventory for
disposition and disposing thereof, and (B) collecting any
Receivable, and the Lender is hereby granted a license or
sublicense and all other rights as may be necessary,
appropriate or desirable to use the Intellectual Property in
connection with the foregoing, and the rights of Borrower
under all licenses and franchise agreements shall inure to the
Lender's benefit (provided, however, that any use of any
federally registered trademarks as to any goods shall be
subject to the control as to the quality of such goods of the
owner of such trademarks and the goodwill of the business
symbolized thereby);
(vi) exercise any and all of its rights under any and all of the
Security Documents; or
(vii) exercise all of the rights and remedies of a secured party
under the UCC (whether or not the UCC is applicable) and under
any other applicable law, including, without limitation, the
right, without notice except as specified below and with or
without taking the possession thereof, to sell the Collateral
or any part thereof in one or more parcels at public or
private sale, at any location chosen by the Lender, for cash,
on credit or for future
Page 42
delivery and at such price or prices and upon such other terms
as the Lender may deem commercially reasonable. Borrower
agrees that, to the extent notice of sale shall be required by
law, at least 10 days' notice to Borrower of the time and
place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notice, but
notice given in any other reasonable manner or at any other
reasonable time shall also constitute reasonable notification.
The Lender shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The
Lender may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and
place to which it was so adjourned. Section 11.3 Application
of Proceeds. All proceeds from each sale of, or other
realization upon, all or any part of the Collateral following
an Event of Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses incurred in
connection with such sale or other realization, including attorneys'
fees,
(b) Second: to the payment of the Secured Obligations (with Borrower
remaining liable for any deficiency) in any order which the Lender
may elect, and
(c) Third: the balance (if any) of such proceeds shall be paid to
Borrower or, subject to any duty imposed by law or otherwise, to
whomsoever is entitled thereto.
The Borrower shall remain liable and will pay, on demand, any deficiency
remaining in respect of the Secured Obligations, together with interest thereon
at a rate per annum equal to the highest rate then payable hereunder on such
Secured Obligations, which interest shall constitute part of the Secured
Obligations.
Section 11.4......Power of Attorney. In addition to the authorizations
granted to the Lender under any other provision of this Agreement or any of the
Loan Documents, upon and during the continuance of an Event of Default, Borrower
hereby irrevocably designates, makes, constitutes and appoints the Lender (and
all Persons designated by the Lender from time to time) as Borrower's true and
lawful attorney and agent in fact, and the Lender or any agent of the Lender
may, without notice or authorization, and at such time or times as the Lender or
any such agent in its sole discretion may determine, in the name of Borrower or
the Lender,
(a) demand payment of the Receivables, enforce payment thereof by legal
proceedings or otherwise, settle, adjust, compromise, extend or
renew any or all of the Receivables or any legal proceedings brought
to collect the Receivables, discharge and release the Receivables or
any of them and exercise all of Borrower's rights and remedies with
respect to the collection of Receivables,
(b) prepare, file and sign the name of Borrower on any proof of claim in
bankruptcy or any similar document against any Account Debtor or any
notice of Lien, assignment or satisfaction of Lien or similar
document in connection with any of the Collateral,
(c) endorse the name of Borrower upon any chattel paper, document,
instrument, notice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar document
or agreement relating to the Receivables, the Inventory or any other
Collateral,
(d) use the information recorded on or contained in any data processing
Page 43
equipment and computer hardware and software relating to the
Receivables, Inventory or other Collateral to which Borrower has
access.
Section 11.5......Miscellaneous Provisions Concerning Remedies.
(a) Rights Cumulative. The rights and remedies of the Lender under this
Agreement, the Notes and each of the Loan Documents shall be
cumulative and not exclusive of any rights or remedies which it or
they would otherwise have. In exercising such rights and remedies,
the Lender may be selective and no failure or delay by the Lender in
exercising any right shall operate as a waiver of such right nor
shall any single or partial exercise of any power or right preclude
its other or further exercise or the exercise of any other power or
right.
(b) Limitation of Liability. Nothing contained in this Article 11 or
elsewhere in this Agreement or in any of the Loan Documents shall be
construed as requiring or obligating the Lender or any agent or
designee of the Lender to make any demand or to make any inquiry as
to the nature or sufficiency of any payment received by it or to
present or file any claim or notice or take any action with respect
to any Receivable or any other Collateral or the moneys due or to
become due thereunder or in connection therewith or to take any
steps necessary to preserve any rights against prior parties, and
neither the Lender nor any of its agents or designees shall have any
liability to Borrower for actions taken pursuant to this Article 11,
any other provision of this Agreement or any of the Loan Documents,
so long as the Lender or such agent or designee shall act reasonably
and in good faith.
(c) Appointment of Receiver. In any action under this Article 11, the
Lender shall be entitled to the appointment of a receiver, without
notice of any kind whatsoever, to take possession of all or any
portion of the Collateral and to exercise such power as the court
shall confer upon such receiver.
Section 11.6......Trademark License. Borrower hereby grants to the Lender
the nonexclusive right and license to use any trademark used by Borrower, for
the purposes set forth in Section 11.2(c)(vi) and for the purpose of enabling
the Lender to realize on the Collateral and to permit any purchaser of any
portion of the Collateral through a foreclosure sale or any other exercise of
the Lender's rights and remedies under the Loan Documents to use, sell or
otherwise dispose of the Collateral bearing any such trademark. Such right and
license is granted free of charge, without the requirement that any monetary
payment whatsoever be made to Borrower or any other Person by the Lender.
ARTICLE 12 - MISCELLANEOUS
Section 12.1......Notices.
(a) Method of Communication. Except as specifically provided in this
Agreement or in any of the Loan Documents, all notices and the
communications hereunder and thereunder shall be in writing or by
telephone subsequently confirmed in writing. Notices in writing
shall be delivered personally or sent by overnight courier service,
by certified or registered mail, or postage pre-paid, and shall be
deemed received, in the case of personal delivery, when delivered,
in the case of overnight courier service, on the next Business Day
after delivery to such service, and in the case of mailing, on the
third day after mailing (or, if such day is a day on which
deliveries of mail are not made, on the next succeeding day on which
deliveries of mail are made). A telephonic notice to the Lender as
understood by the Lender will be deemed to be the controlling and
proper notice in the
Page 44
event of a discrepancy with or failure to receive a confirming
written notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at
the following addresses, or any other address of which all the other
parties are notified in writing.
If to Borrower:... Centennial Specialty Foods Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Lender:. Heartland Bank
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) Lender's Office. The Lender hereby designates its office designated
above or any subsequent office which shall have been specified for
such purpose by written notice to Borrower, as the office to which
payments due are to be made and at which Loans will be disbursed.
Section 12.2......Expenses. Borrower agrees to pay or reimburse on demand
all costs and expenses incurred by the Lender, including, without limitation,
the reasonable fees and disbursements of counsel (provided, however, that
Borrower shall not be obligated to reimburse Lender for fees of its counsel
incurred in the documentation and closing of the Loan in excess of $15,000 in
total), in connection with the preparation, due diligence, administration,
enforcement and termination of this Agreement and each of the other Loan
Documents including, without limitation, the costs and expenses of appraisals of
the Collateral and of lien searches and costs of inspections and verifications
of the Collateral, including, without limitation, standard per diem fees charged
by the Lender for travel, lodging, and meals for inspections of the Collateral
and Borrower's operations and books and records by Lender or the Lender's
agents. The foregoing shall not be construed to limit any other provisions of
the Loan Documents regarding costs and expenses to be paid by Borrower.
Section 12.3......Stamp and Other Taxes. Borrower will pay any and all
stamp, registration, recordation and similar taxes, fees or charges and shall
indemnify the Lender against any and all liabilities with respect to or
resulting from any delay in the payment or omission to pay any such taxes, fees
or charges, which may be payable or determined to be payable in connection with
the execution, delivery, performance or enforcement of this Agreement and any of
the Loan Documents or the perfection of any rights or security interest
thereunder.
Section 12.4......Setoff. In addition to any rights now or hereafter
granted under applicable law, and not by way of limitation of any such rights,
upon and after the occurrence of any Default or Event of Default, the Lender is
hereby authorized by Borrower at any time or from time to time, without notice
to Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, time or demand, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness at any time held or owing by the Lender to or for the credit
or the account of Borrower against and on account of the Secured Obligations
irrespective of whether or not (a) the Lender shall have made any demand under
this Agreement or any of the Loan Documents, or (b) the Lender shall have
declared any or all of the Secured Obligations to be due and payable as
permitted by Section 11.2 and although such Secured Obligations shall be
contingent or unmatured.
Page 45
Section 12.5......Litigation. EACH OF THE LENDER AND BORROWER HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN ACTION MAY BE
COMMENCED BY OR AGAINST BORROWER OR THE LENDER ARISING OUT OF THIS AGREEMENT,
THE COLLATERAL OR ANY ASSIGNMENT THEREOF OR BY REASON OF ANY OTHER CAUSE OR
DISPUTE WHATSOEVER BETWEEN BORROWER AND THE LENDER OF ANY KIND OR NATURE.
BORROWER AND THE LENDER HEREBY AGREE THAT, TO THE EXTENT ARBITRATION IS NOT
APPLICABLE, THE FEDERAL COURT OF THE EASTERN DISTRICT OF MISSOURI, THE CIRCUIT
COURT FOR THE COUNTY OF ST. LOUIS, MISSOURI, OR, AT THE OPTION OF THE LENDER,
ANY COURT IN WHICH THE LENDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND
WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY AND WHICH
SITS IN A JURISDICTION IN WHICH BORROWER TRANSACTS BUSINESS SHALL HAVE
NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
BORROWER AND THE LENDER, PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR
THE LOAN DOCUMENTS OR TO ANY MATTER ARISING THEREFROM. BORROWER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING
COMMENCED IN SUCH COURTS, HEREBY WAIVING PERSONAL SERVICE OF THE SUMMONS AND
COMPLAINT OR OTHER PROCESS OR PAPERS ISSUED THEREIN AND AGREEING THAT SERVICE OF
SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN SECTION
12.1(b), WHICH SERVICE SHALL BE DEEMED MADE UPON RECEIPT THEREOF. THE
NON-EXCLUSIVE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO
PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF
ANY ACTION UNDER THIS AGREEMENT TO ENFORCE THE SAME IN ANY APPROPRIATE
JURISDICTION.
Section 12.6......Arbitration. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG
THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING
TO THIS AGREEMENT, THE NOTES, AND ANY OTHER LOAN DOCUMENT AND RELATED
INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING
FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE
WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE
LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL
DISPUTES OF J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE
"SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL
RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION. ANY PARTY TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT
MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL
ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY
COURT HAVING JURISDICTION OVER SUCH ACTION.
Section 12.7 .....Special Rules. THE ARBITRATION SHALL BE CONDUCTED IN ST.
LOUIS, MISSOURI AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN
THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL
BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE
ARBITRATOR SHALL ONLY UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
Section 12.8......Reservation Of Rights. NOTHING IN THIS ARBITRATION SHALL
BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) LIMIT THE RIGHT OF LENDER HERETO (A) TO EXERCISE SELF HELP
REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST REAL
ESTATE OF PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT
PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE
RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. LENDER MAY EXERCISE
SUCH SELF HELP RIGHTS, FORECLOSURE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT OR
DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES
Page 46
SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN
ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
RESORT TO SUCH REMEDIES.
Section 12.9......Reversal of Payments. To the extent Borrower makes a
payment or payments to the Lender or the Lender receives any payment or proceeds
of the Collateral for Borrower's benefit, which payment(s) or proceeds or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then, the Lender shall have the continuing and exclusive right
to apply, reverse and re apply any and all payments to any portion of the
Secured Obligations, and, to the extent of such payment or proceeds received,
the Secured Obligations or part thereof intended to be satisfied shall be
revived and continued in full force and effect, as if such payment or proceeds
had not been received by the Lender.
Section 12.10.....Injunctive Relief. Borrower recognizes that, in the
event Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy of law may prove to be inadequate
relief to the Lender; therefore, Borrower agrees that the Lender, at the
Lender's option, shall be entitled to temporary and permanent injunctive relief
in any such case without the necessity of proving actual damages.
Section 12.11 ....Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by
Borrower to determine whether it is in compliance with any covenant contained
herein, shall, unless there is an express written direction or consent by the
Lender to the contrary, be performed in accordance with GAAP and on a
consolidating basis.
Section 12.12.....Assignment; Participation. All the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that Borrower may not assign
or transfer any of its rights under this Agreement. The Lender may assign to one
or more Persons (other than a competitor of Borrower), all or a portion of its
rights and obligations hereunder and under the Note and, in connection with any
such assignment, may assign its rights and obligations under the Security
Documents. The Lender may, in connection with any assignment or proposed
assignment, disclose to the assignee or proposed assignee any information
relating to Borrower furnished to the Lender by or on behalf of Borrower;
provided, however, that such assignee first signs a confidentiality agreement in
a form reasonably acceptable to Borrower to the extent necessary to protect
Borrower's non-public and proprietary information.
Section 12.13.....Amendments. Any term, covenant, agreement or condition of
this Agreement or any of the other Loan Documents may be amended or waived and
any departure therefrom may be consented to if, but only if, such amendment,
waiver or consent is in writing signed by the Lender and, in the case of an
amendment, by Borrower. Unless otherwise specified in such waiver or consent, a
waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.
Section 12.14.....Performance of Borrower's Duties. Borrower's obligations
under this Agreement and each of the Loan Documents shall be performed by
Borrower at its sole cost and expense. If Borrower shall fail to do any act or
thing which it has covenanted to do under this Agreement or any of the Loan
Documents, the Lender may (but shall not be obligated to) do the same or cause
it to be done either in the name of the Lender or in the name and on behalf of
Borrower, and Borrower hereby irrevocably authorizes the Lender so to act.
Section 12.15.....Indemnification. Borrower agrees to reimburse the Lender
Page 47
for all reasonable costs and expenses, including counsel fees and disbursements,
incurred and to indemnify and hold the Lender harmless from and against all
losses suffered by the Lender, other than losses resulting from the Lender's
gross negligence or willful misconduct, in connection with (a) the exercise by
the Lender of any right or remedy granted to it under this Agreement or any of
the Loan Documents, (b) any claim, and the prosecution or defense thereof,
arising out of or in any way connected with this Agreement or any of the Loan
Documents, except in the case of a dispute between Borrower and the Lender in
which Borrower prevails in a final unappealed or unappealable judgment, and (c)
the collection or enforcement of the Secured Obligations or any of them.
Section 12.16.....All Powers Coupled with Interest. All powers of attorney
and other authorizations granted to the Lender and any Persons designated by the
Lender pursuant to any provisions of this Agreement or any of the Loan Documents
shall be deemed coupled with an interest and shall be irrevocable so long as any
of the Secured Obligations remain unpaid or unsatisfied or the Revolving Credit
Facility has not been terminated.
Section 12.17.....Survival. Notwithstanding any termination of this
Agreement, (a) until all Secured Obligations have been paid in full and the
Loans have been indefeasibly been paid in full, the Lender shall retain its
Security Interest and shall retain all rights under this Agreement and each of
the Security Documents with respect to the Collateral as fully as though this
Agreement had not been terminated, and (b) the indemnities to which the Lender
is entitled under the provisions of this Article 12 and any other provision of
this Agreement and the Loan Documents shall continue in full force and effect
and shall protect the Lender against events arising after such termination as
well as before.
Section 12.18.....Severability of Provisions. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 12.19.....Governing Law. This Agreement and the Note and the other
Loan Documents shall be construed in accordance with and governed by the
substantive law of the State of Missouri.
Section 12.20.....Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
Section 12.21.....Not Used.
Section 12.22.....Final Agreement. This Agreement and the other Loan
Documents are intended by the parties hereto as the final, complete and
exclusive expression of the agreement among them with respect to the subject
matter hereof and thereof. This Agreement and the other Loan Documents supersede
any and all prior oral or written agreements between the parties hereto relating
to the subject matter hereof and thereof.
Section 12.23.....Purchase of Insurance. Unless you, Borrower, provide
evidence of the insurance coverage required by your agreement with us, the
Lender, we may purchase insurance at your expense to protect our interest in the
Collateral. This insurance may, but need not, protect your interests. The
coverage that we purchase may not pay any claim that you make or any claim that
is made against you in connection with the Collateral. You may later cancel any
insurance purchased by us, but only after providing evidence that you have
obtained insurance as required by this Agreement. If we purchase insurance for
Page 48
the Collateral, you will be responsible for the costs of that insurance,
including the insurance premium, interest and any other charges we may impose in
connection with the placement of the insurance, until the effective date of the
cancellation of expiration of the insurance. The costs of the insurance may be
added to your total outstanding balance or obligation. The costs of the
insurance may be more than the cost of insurance you may be able to obtain on
your own.
Section 12.24 ...Oral Agreements. ORAL AGREEMENTS OR COMMITMENTS TO LOAN
MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING
PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU
(BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY
AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH
IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS
WE MAY LATER AGREE IN WRITING TO MODIFY IT. THE LOAN DOCUMENTS, AS AMENDED,
MODIFIED AND SUPPLEMENTED HEREBY, ARE INCORPORATED HEREIN BY THIS REFERENCE AND
SHALL BE DEEMED TO CONSTITUTE A PART OF THIS WRITING.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in St. Louis, Missouri by their duly authorized officers in several
counterparts all as of the day and year first written above.
THIS AGREEMENT CONTAINS A BINDING
ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
BORROWER: CENTENNIAL SPECIALTY FOODS CORPORATION
By: ......
------------------
Name: ......
------------------
Title: ......
------------
▇▇▇▇▇▇ CANNING COMPANY
By: ......
------------------
Name: ......
------------------
Title: ......
------------
LENDER: HEARTLAND BANK
By: ......
------------------
Name: ......
------------------
Title: ......
------------
EXHIBIT "A"
REVOLVING CREDIT NOTE
Page 49
$5,000,000 ...... Date: March __, 2004
FOR VALUE RECEIVED, on __________, 2007, the undersigned Makers jointly
and severally promise to pay to the order of Heartland Bank, (hereinafter,
together with any holder hereof, called "Holder"), at St. Louis, Missouri (or at
such other place as the Holder may designate in writing to the undersigned) the
principal amount of $5,000,000 or so much thereof as has been advanced
hereunder.
The undersigned Makers shall pay interest as provided in that certain Loan
and Security Agreement between the undersigned and Holder dated of even date
herewith (the "Loan Agreement").
It is contemplated that the principal sum evidenced by this Note may be
reduced from time to time and that additional advances may be made from time to
time, as provided in the Loan Agreement; provided, however, that the outstanding
principal amount evidenced by this Note shall not exceed the maximum amount
provided in the Loan Agreement.
This Note is subject to the terms and conditions of, and entitled to the
benefit of the Collateral described in, the Loan Agreement. Capitalized terms
not defined herein shall have the meanings given in the Loan Agreement.
No delay or failure on the part of the Holder in the exercise of any right
or remedy hereunder, under the Loan Agreement, the Security Documents or at law
or in equity, shall operate as a waiver thereof, and no single or partial
exercise by the Holder of any right or remedy hereunder, under the Loan
Agreement, the Security Documents, or at law or in equity shall preclude or
estop another or further exercise thereof or the exercise of any other right or
remedy.
Principal and interest on this Note shall be payable and paid in lawful
money of the United States of America.
The undersigned and all endorsers waive presentment, notice of dishonor
and protest.
Time is of the essence of this Note and, in case this Note is collected by
law or through an attorney at law, or under advice therefrom, the undersigned
agrees to pay all costs of collection, including reasonable attorneys' fees if
collected by or through an attorney.
The provisions of this Note shall be construed and interpreted and all
rights and obligations of the parties hereunder determined in accordance with
the laws of the State of Missouri.
IN WITNESS WHEREOF, the undersigned Makers have caused this Revolving
Credit Note to be executed, sealed and delivered in St. Louis, Missouri, in its
corporate name, by and through their respective duly authorized officer, as of
the day and year first above written.
CENTENNIAL SPECIALTY FOODS CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
------------------------------
Page 50
▇▇▇▇▇▇ CANNING COMPANY
By:
------------------------------------
Name:
----------------------------------
Title:
------------------------------
EXHIBIT B1
INITIAL ADVANCE REQUEST CERTIFICATE
_______________, 2004
Heartland Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: _______________________
Re: Request for Advance under Loan and Security Agreement dated as of
March ___, 2004 (as amended from time to time, the "Loan Agreement") by and
among CENTENNIAL SPECIALTY FOODS CORPORATION and ▇▇▇▇▇▇ CANNING COMPANY (the
"Borrower"), and HEARTLAND BANK ("Lender"). Capitalized terms used herein and
not otherwise defined herein have the meanings set forth in the Loan Agreement.
-------------------:
The Borrower hereby delivers this Certificate to the Lender and also
hereby requests the Lender to arrange for and advance the requested funds to
Borrower in accordance with and in reliance upon the following instructions and
certifications:
1.. Initial Revolving Credit Loan Advance $___________
2. Requested Advance Date
In connection with this Initial Advance Request, Borrower hereby
represents and certifies to the Lender as follows, which representations and
certifications are true and correct as of the date of this Certificate and will
be true and correct as of the Advance Date (unless Borrower otherwise notifies
the Lender in writing prior to the Advance Date):
a. The proceeds of the requested initial Revolving Credit Loan Advance
(together, the "Advance") will be used for purposes that are
authorized under Section 8.5 of the Loan Agreement and in a manner
in compliance with the terms of the Loan Agreement.
Page 51
b. The representations and warranties set forth in the Loan Agreement
are and will be true and correct in all material respects on and as
of the date hereof and as of the Advance Date, and the
representations and warranties in each other Loan Document delivered
to the Lender pursuant to the Loan Agreement on or prior to this
Initial Advance Request and the Advance Date herefor are and will be
true and correct in all material respects on and as of the date
hereof and as of the Advance Date, except as set forth in the
Schedules to the Loan Agreement or in a schedule hereto (which
disclosure will not constitute Lender's waiver or acceptance
thereof).
c. No Default or Event of Default under the Loan Agreement and no
default under any other Loan Document has occurred and is continuing
as of the date hereof or as of the Advance Date or will occur as a
result of making the Advance requested hereby, except as set forth
in a schedule hereto (which disclosure will not constitute Lender's
waiver or acceptance thereof).
d. All conditions precedent for the type of advance requested hereby
under the Loan Agreement, as set forth in Article 4 thereof, have
been satisfied and will continue to be satisfied as of the Advance
Date.
The Lender is hereby irrevocably authorized and instructed to arrange for
and to disburse the proceeds of the requested initial Revolving Credit Loan in
accordance with the instructions set forth on Exhibit A annexed hereto.
IN WITNESS WHEREOF, this Initial Advance Request is hereby executed,
delivered and effective as of the date first written above.
Very truly yours,
CENTENNIAL SPECIALTY FOODS CORPORATION
By:
--------------------------------------
Name:
------------------------------
Title:
------------------------------
▇▇▇▇▇▇ CANNING COMPANY
By:
--------------------------------------
Name:
------------------------------
Title:
------------------------------
Exhibit A
To
Initial Advance Request
Page 52
Please wire the amounts set forth below to the indicated payees:
PAYEE AMOUNT WIRE INSTRUCTIONS
$------------ -----------------------------
-----------------------------
-----------------------------
-----------------------------
$------------ -----------------------------
-----------------------------
-----------------------------
-----------------------------
$------------ -----------------------------
------------------------------
------------------------------
------------------------------
[Attach Additional Pages, if necessary, to Identify All Wiring
Instructions]
EXHIBIT B2
PERIODIC REQUEST FOR ADVANCE
The undersigned Borrower, pursuant to the provisions of that certain Loan
and Security Agreement dated effective as of March ___, 2004, (as amended,
modified, or supplemented from time to time, the "Loan Agreement") between
Borrower and HEARTLAND BANK ("Bank"), hereby certifies that:
1. Borrower hereby requests a loan under the Revolving Credit Facility
in the aggregate principal amount of $______________ to be made on
______________, 200__.
2. All representations and warranties of the Borrower made in the Loan
Agreement are true and correct in all material respects as of the
date hereof as if made on the date hereof, with and after giving
effect to the application of the proceeds of the Loan in connection
with which this Request for advance is given.
3. There does not exist and will not exist on the date of the requested
Loan both before and after giving effect to the requested Loan a
Default or an Event of Default.
Page 53
4. All conditions precedent in the Loan Agreement to the funding of the
requested Loan have been met.
5. The proceeds of the requested Loan will be used for the purposes set
forth in the Loan Agreement.
6. Terms used in this Request for Advance, not otherwise defined or
limited herein, are used as defined in the Loan Agreement.
Done and executed on the ______ day of ______________________, 200__.
CENTENNIAL SPECIALTY FOODS CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
▇▇▇▇▇▇ CANNING COMPANY
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
EXHIBIT C
CENTENNIAL SPECIALTY FOODS CORPORATION
Credit Facility with HEARTLAND BANK
COMPLIANCE CERTIFICATE FOR CLOSING
This compliance certificate ("Certificate") has been prepared and is being
delivered pursuant to the Loan and Security Agreement dated as of March ____,
2004 (as amended from time to time, "Loan Agreement") between CENTENNIAL
SPECIALTY FOODS CORPORATION and ▇▇▇▇▇▇ CANNING COMPANY (the "Borrower") and
HEARTLAND BANK ("Lender"). Capitalized terms and references used herein and not
otherwise defined herein have the meanings ascribed to them in the Loan
Agreement.
This Certificate is given, accurate and effective as of _______________,
2004.
Having reviewed the terms and conditions of the Loan Agreement and having
made a review of the transactions and conditions of Borrower as of the effective
date of this Certificate, the undersigned duly elected, qualified and acting
President or Chief Executive Officer of Borrower HEREBY CERTIFIES to Lender as
follows:
1. Fees and Expenses. Borrower has paid (or made acceptable
arrangements
Page 54
with Lender to pay) all fees, costs, expenses and taxes due and
payable under the Loan Agreement.
2. Representations. To the best of my knowledge (after due inquiry),
each representation and warranty contained in the Loan Agreement and
the other Loan Documents (including the schedules thereto) is true,
correct and complete on and as of the date hereof.
3. No Default. To the best of my knowledge (after due inquiry), there
is no Default or Event of Default existing on the date hereof
(assuming the Loan Agreement is already effective), and no such
default will occur as a result of the execution of the Credit
Agreement or the funding of the initial Term Loan and advance under
the Revolving Credit Facility (collectively, the "Advance")
thereunder.
4. No Violations. To the best of my knowledge (after due inquiry), the
execution of the Loan Agreement and the funding of the Advance
thereunder will not contravene any material law, rule or regulation
applicable to Borrower.
5. No Material Change. Between September 30, 2003 (i.e., the "as of"
date for the most recent version of Borrower's financial statements
delivered to Lender) and the effective date hereof, there has not
been any Materially Adverse Change with respect to Borrower.
6. Financial Covenants and Ratios. Without limiting the generality of
the foregoing, as of the effective date hereof, Borrower is in
compliance with each of the financial and operating covenants and
ratios under Article 10 of the Credit Agreement.
Attached hereto as Schedule 1 is a set of detailed calculations supporting
this certification regarding each of the financial and operating covenants
and ratios under Section 10.1 of the Loan Agreement.
7. Federal Tax Identification. The Federal Tax Identification number of
the Borrower is ▇▇-▇▇▇▇▇▇▇ (Centennial Specialty Foods Corporation)
and ▇▇-▇▇▇▇▇▇▇ (▇▇▇▇▇▇ Canning Company).
8. Satisfaction of Conditions Precedent. Each condition precedent
required under Sections 4.1 and 4.2 of the Loan Agreement has been
satisfied (or expressly waived by Lender).
I understand that the Lender are relying on the truth and accuracy of the
foregoing in connection with its entering into the Loan Agreement and other Loan
Documents and consummating the transactions contemplated thereby.
CENTENNIAL SPECIALTY FOODS CORPORATION
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------
▇▇▇▇▇▇ CANNING COMPANY
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------
Page 55
EXHIBIT D
BORROWING BASE CERTIFICATE
This Borrowing Base Certificate is delivered pursuant to Section 7.13(c) of that
certain Loan and Security Agreement dated as of March ____, 2004, by and among
Centennial Specialty Foods Corporation, a Delaware corporation and ▇▇▇▇▇▇
Canning Company, a Colorado corporation (the "Borrowers") and Heartland Bank
("Lender"), as the same may from time to time be amended, modified, extended,
renewed or restated (the "Credit Agreement"). All capitalized terms used and not
otherwise defined herein shall have the respective meanings ascribed to them in
the Credit Agreement.
Borrowers hereby represent and warrant to the Lender that the following
information is true, correct and complete in all material respects as of
____________________________, 20___:
1. Eligible Accounts of Borrowers..............................$
-----------
2. 75% of Item 1...............................................$
-----------
3. Eligible Inventory of Borrowers.............................$
-----------
4. 50% of Item 3...............................................$
-----------
5. Lesser of (i) $4,000,000 and (ii) 70% of the current Appraised Value
of the Real Estate $
-----------
6. Borrowing Base
[Sum of Item 2 plus Item 4 plus item 5].....................$
-----------
7. Total Revolving Credit Facility $ 5,000,000
-----------
8. Borrowers' Maximum Revolving Credit Availability
(Lesser of Item 6 or Item 7)................................$
-----------
9. Aggregate principal amount of outstanding Revolving
Credit Loans................................................$
-----------
10. Unused Revolving Credit Availability [Item 8 minus Item 9]
[Negative amount requires immediate mandatory repayment] $
-----------
If Item 10 above is negative, this Certificate is accompanied by the
mandatory repayment required by Section 2.3 of the Credit Agreement.
Page 56
This Borrowing Base Certificate is dated the _________ day of
__________________, 20_____.
CENTENNIAL SPECIALTY FOODS CORPORATION
By:
--------------------------------------
Title:
-----------------------------------
▇▇▇▇▇▇ CANNING COMPANY
By:
--------------------------------------
Title:
-----------------------------------
Schedule to Borrowing Base Certificate
Ineligible Accounts:
a. Accounts which remain unpaid for more than 90 days $ ________________
after invoice date or more than 60 days after due date
b. 20% Cross Aging $ ________________
c. Affiliate Accounts $ ________________
d. Conditional Sale, ▇▇▇▇ and Hold Accounts $ ________________
e. Foreign Accounts $ ________________
f. Government Accounts $ ________________
g. Offsets or liabilities to Account Debtor $ ________________
h. Pre-Billing $ ________________
i. Accounts not timely invoiced $ ________________
j. ▇▇▇▇ and Hold $ ________________
k. Cash on Delivery Accounts $ ________________
l. Consignment Sales $ ________________
m. Other as Agent determines ineligible $ ________________
n. Accounts in excess of credit limit $ ________________
Page 57
o. Disputed Accounts $ ________________
p. Accounts not subject to perfected security interest $ ________________
q. Bankrupt Accounts $ ________________
r. Unapplied Cash $ ________________
s. TOTAL $ ________________
Page 58