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EXHIBIT 4.10
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 20th day of March, 1998,
by and among FLEET CAPITAL CORPORATION (together with its successors and
assigns, "Lender"), a Rhode Island corporation with an office at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇; ATLANTIC PREMIUM BRANDS, LTD.
(individually and in its capacity as the representative of the other Borrowers
pursuant to Section 3.3 hereof, "APB"), a Delaware corporation with its chief
executive office and principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; CARLTON FOODS CORP. ("Carlton"), a Delaware
corporation with its chief executive office and principal place of business at
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; PREFCO CORP. ("Prefco"),
a Delaware corporation with its chief executive office, and principal place of
business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇'▇
FARM, INC. ("▇▇▇▇▇▇'▇"), a Delaware corporation with its chief executive office
and principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇▇▇ CAJUN FOODS CORP. ("▇▇▇▇▇▇▇▇"), a Delaware corporation
with its chief executive office and principal place of business at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; AND POTTER'S ACQUISITION CORP.
("Potter's"), a Delaware corporation with its chief executive office and
principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ (APB, Carlton, Prefco, ▇▇▇▇▇▇'▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇'▇ are referred to
collectively as "Borrowers" and individually as a "Borrower"). Capitalized terms
used in this Agreement have the meanings assigned to them in Appendix A, General
Definitions.
R E C I T A L S:
Each Borrower has requested that Lender make available a revolving
credit and term loan facility to Borrowers, which facility shall be used by
Borrowers to finance their mutual and collective enterprise of manufacturing and
distributing pork, beef and other meat products and distributing beverage
products. In order to utilize the financial powers of each Borrower in the most
efficient and economical manner, and in order to facilitate the financing of
each Borrower's needs, Lender will, at the request of any Borrower, make loans
to all Borrowers under the revolving credit facility on a combined basis and in
accordance with the provisions hereinafter set forth. Borrowers' business is a
mutual and collective enterprise, and Borrowers believe that the consolidation
of all revolving credit loans under this Agreement will enhance the aggregate
borrowing powers of each Borrower and ease the administration of their revolving
credit loan relationship with Lender, all to the mutual advantage of Borrowers.
Lender's willingness to extend credit to Borrowers and to administer each
Borrower's collateral security therefor, on a combined basis as more fully set
forth in this Agreement, is done solely as an accommodation to Borrowers and at
Borrowers' request in furtherance of Borrowers' mutual and collective
enterprise.
Each Borrower has agreed to guarantee the obligations of each of the
other Borrowers under this Agreement and each of the other Loan Documents.
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TABLE OF CONTENTS
Page
SECTION 1 CREDIT FACILITY..................................................................... -2-
1.2. Term Loan Facility.......................................................... -2-
1.4. Letters of Credit........................................................... -3-
1.5. Indemnification............................................................. -5-
SECTION 2 INTEREST, FEES AND CHARGES........................................................ -5-
2.1. Interest.................................................................... -5-
2.2. Fees........................................................................ -8-
2.4. Reimbursement of Expenses................................................... -9-
2.5. Bank Charges................................................................ -9-
2.6. Maximum Interest............................................................ -9-
2.7. Illegality.................................................................. -10-
2.8. Increased Costs............................................................. -10-
2.9. Capital Adequacy............................................................ -11-
2.10. Funding Losses.............................................................. -12-
SECTION 3 LOAN ADMINISTRATION................................................................. -13-
3.1. Manner of Borrowing Revolver Loans.......................................... -13-
3.2. Special Provisions Governing LIBOR Loans.................................... -14-
3.3. Borrowers' Representative................................................... -14-
3.4. All Loans to Constitute One Obligation...................................... -15-
SECTION 4 PAYMENTS; NATURE OF EACH BORROWER'S LIABILITY........................................ -15-
4.1. General Payment Provisions.................................................. -15-
4.2. Repayment of Revolver Loans................................................. -15-
4.3. Repayment of Term and Equipment Loans....................................... -16-
4.4. Payment of Other Obligations................................................ -17-
4.5. Marshalling; Payments Set Aside............................................. -18-
4.6. Application of Payments and Collections..................................... -18-
4.7. Loan Account................................................................ -18-
4.8. Statements of Account....................................................... -18-
4.9. Nature and Extent of Each Borrower's Liability.............................. -18-
SECTION 5 TERM AND TERMINATION............................................................... -20-
5.1. Term of Agreement........................................................... -20-
5.2. Termination................................................................. -20-
SECTION 6 COLLATERAL SECURITY.................................................................. -21-
6.1. Grant of Security Interest.................................................. -21-
6.2. Lien on Deposit Accounts.................................................... -22-
6.3. Lien on Real Estate......................................................... -22-
6.4. Other Collateral............................................................ -23-
6.5. Lien Perfection; Further Assurances......................................... -▇▇-
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▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ADMINISTRATION........................................................... -23-
7.1. General.................................................................... -23-
7.2. Administration of Accounts................................................. -24-
7.3. Administration of Inventory................................................ -25-
7.4. Administration of Equipment................................................ -26-
7.5. Payment of Charges......................................................... -26-
SECTION 8 REPRESENTATIONS AND WARRANTIES...................................................... -26-
8.1. General Representations and Warranties..................................... -27-
8.2. Reaffirmation of Representations and Warranties............................ -31-
8.3. Survival of Representations and Warranties................................. -32-
SECTION 9 COVENANTS AND CONTINUING AGREEMENTS................................................. -32-
9.1. Affirmative Covenants...................................................... -32-
9.2. Negative Covenants......................................................... -35-
9.3. Specific Financial Covenants............................................... -37-
SECTION 10 CONDITIONS PRECEDENT.............................................................. -40-
10.1. Conditions Precedent to Initial Loans...................................... -40-
10.2. Conditions Precedent to Procurement of Letters of Credit................... -42-
10.3. Conditions Precedent to all Loans.......................................... -42-
10.4. Limited Waiver of Conditions Precedent..................................... -43-
SECTION 11 EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT................................. -43-
11.1. Events of Default.......................................................... -43-
11.2. Acceleration of the Obligations............................................ -45-
11.3. Other Remedies............................................................. -45-
11.4. Setoff..................................................................... -48-
11.5. Remedies Cumulative; No Waiver............................................. -48-
SECTION 12 MISCELLANEOUS..................................................................... -48-
12.1. Power of Attorney.......................................................... -48-
12.2. Indemnity.................................................................. -49-
12.3. Modification of Agreement; Sale of Interest................................ -49-
12.4. Severability............................................................... -50-
12.5. Successors and Assigns..................................................... -50-
12.6. Cumulative Effect; Conflict of Terms....................................... -50-
12.7. Execution in Counterparts.................................................. -50-
12.8. Notice..................................................................... -50-
12.9. Lender's Consent........................................................... -51-
12.10. Credit Inquiries........................................................... -51-
12.11. Time of Essence............................................................ -51-
12.12. Entire Agreement; Appendix A and Exhibits.................................. -51-
12.14. Governing Law; Consent To Forum............................................ -52-
12.15. Waivers by Borrower........................................................ -52-
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LIST OF EXHIBITS
Exhibits
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Exhibit A Form of Term Note
Exhibit B Form of Equipment Note
Exhibit C Notice of Conversion/Continuation
Exhibit D Notice of Borrowing
Exhibit E Compliance Certificate
Exhibit F Opinion Letter Requirements
Exhibit G Form of LC Request
Schedules
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7.1.1 Borrowers' and their Subsidiaries' Business Locations
8.1.1 Jurisdictions in which Borrowers and their Subsidiaries are
Authorized to do Business
8.1.4 Capital Structure of Borrowers
8.1.5 Corporate Names
8.1.8 Restrictions
8.1.13 Tax Identification Numbers of Subsidiaries
8.1.15 Patents, Trademarks, Copyrights and Licenses
8.1.18 Contracts Restricting Borrowers' Rights to Incur Debts
8.1.19 Litigation
8.1.21 Capitalized and Operating Leases
8.1.22 Pension Plans
8.1.24 Labor Contracts
9.2.5 Permitted Liens
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NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable
consideration, the parties hereto hereby agree as follows:
SECTION 1 CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a total credit facility of up to $26,000,000
available to Borrowers as follows:
1.1. REVOLVER FACILITY
1.1.1. Revolver Loans. Lender agrees, upon the terms and
subject to the conditions set forth herein, to make Revolver Loans to Borrowers
from time to time on any Business Day, up to a maximum principal amount at any
time outstanding equal to the Borrowing Base at such time. The Revolver Loans
shall be repaid and may be reborrowed in accordance with the provisions of this
Agreement and shall bear interest as set forth in Section 2.1 hereof. Each
Revolver Loan shall, at the option of Borrowers, be made or continued as, or
converted into, a Base Rate Loan or a LIBOR Loan. The initial Revolver Loan
hereunder shall be a Base Rate Loan and shall be in a principal amount in excess
of $250,000. If the unpaid balance of Revolver Loans outstanding at any time
should exceed the Borrowing Base at such time (an "Out-of-Formula Condition"),
such Revolver Loans shall nevertheless constitute Obligations that are secured
by the Collateral and entitled to all of the benefits of the Loan Documents. If
Lender is willing in its sole and absolute discretion to make Out-of-Formula
Loans, such Out-of-Formula Loans shall be payable ON DEMAND and shall bear
interest as provided in this Agreement for Revolver Loans generally or at such
higher rate of interest as Lender may require as a condition to making any such
Out-of-Formula Loans. Borrowers and Lender agree that, if any event shall occur
or any condition shall exist that Lender determines is likely to have a Material
Adverse Effect, or if a Default or Event of Default exists, Lender shall have
the right (exercisable at such time or times as Lender deems appropriate) to
require that separate Borrowing Base calculations be made for each Borrower, as
well as the right to limit the use of proceeds of the Loans by each Borrower to
an amount that does not exceed at any time such Borrower's Borrowing Base at
such time.
1.1.2. Use of Proceeds. The proceeds of the Revolver Loans
shall be used by Borrowers solely for one or more of the following purposes: (i)
to finance Borrowers' payment of the purchase price in the Acquisition; (ii) to
pay the fees and transaction expenses associated with the Acquisition and the
closing of the transactions described herein; (iii) to pay any of the
Obligations; and (iv) to make expenditures for other lawful corporate purposes
of Borrowers to the extent such expenditures are not prohibited by this
Agreement or Applicable Law. In no event may any Revolver Loan proceeds be used
by any Borrower to make a contribution to the equity of any Subsidiary, or to
purchase or to carry, or to reduce, retire or refinance any Debt incurred to
purchase or carry, any Margin Stock or for any related purpose that violates the
provisions of Regulations G, T, U or X of the Board of Governors.
1.2. TERM LOAN FACILITY.
1.2.1. Term Loan. Subject to and upon the terms and conditions
herein set forth, Lender agrees to make a term loan to Borrowers on the Closing
Date in the principal amount of $11,000,000, which loan shall bear interest as
provided in Section 2.1.1 hereof, shall be repayable in accordance with the
terms of the Term Note and shall be secured by all of the Collateral. The
proceeds of the Term Loan shall be used by Borrowers solely for purposes
permitted by Section 1.1.2 hereof.
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Borrowers may not reborrow any amount repaid with respect to the Term Loan. The
Term Loan shall initially be a Base Rate Loan.
1.2.2. Term Note. Borrowers shall execute and deliver to
Lender on the Closing Date the Term Note to evidence the Term Loan, which shall
incorporate by reference the repayment terms set forth in Section 4.3 hereof,
shall be secured by the Collateral and shall bear interest at the variable rate
per annum as provided in Section 2.1.1 hereof.
1.3. EQUIPMENT LOAN FACILITY.
1.3.1. Equipment Loans. Lender agrees, during the term of this
Agreement, to make Equipment Loans to Borrowers, in an aggregate amount not to
exceed $2,500,000, to finance Borrowers' purchase of Eligible Equipment. In no
event shall Lender have any obligation (i) to honor a request of any Borrower
for an Equipment Loan unless at the time of such request each of the Equipment
Loan Conditions is satisfied or (ii) to make more than 2 Equipment Loans during
any Fiscal Quarter. The proceeds of each Equipment Loan shall be used solely to
purchase Eligible Equipment and the amount of each Equipment Loan shall not
exceed 100% of the Equipment Purchase Price of the Eligible Equipment so
purchased. Each Equipment Loan shall be in an amount of not less than $250,000.
All Equipment Loans shall be secured by the Collateral and shall be evidenced by
the Equipment Note. Borrowers shall not be permitted to reborrow any amount
repaid with respect to any of the Equipment Loans. Each Equipment Loan shall, at
the option of Borrowers, be made or continued as, or converted into, part of one
or more Borrowings that, unless otherwise specifically provided herein, shall
consist entirely of Base Rate Loans or LIBOR Loans.
1.3.2. Equipment Note. Each Equipment Loan and Borrowers'
obligation to repay the same shall be evidenced by the Equipment Note, which
shall incorporate by reference the repayment terms set forth in Section 4.3
hereof, shall be secured by the Collateral and shall bear interest at the
variable rate per annum as provided in Section 2.1.1 hereof.
1.4. LETTERS OF CREDIT. During the period from the date hereof to (but
excluding) the 30th day prior to the last day of the Original Term or any
applicable Renewal Term, and provided no Default or Event of Default exists,
Fleet agrees to procure from Bank one or more Letters of Credit on any
Borrower's request therefor from time to time, subject to the following terms
and conditions:
(i) Each Borrower acknowledges that Bank's
willingness to issue any Letter of Credit is conditioned upon Bank's receipt of
(A) the LC Guaranty duly executed and delivered to Bank by Lender, (B) an LC
Application with respect to the requested Letter of Credit and (C) such other
instruments and agreements as Bank may customarily require for the issuance of a
letter of credit of equivalent type and amount as the requested Letter of
Credit. Lender shall have no obligation to execute any LC Guaranty or to join
with any Borrower in executing an LC Application unless (x) Lender receives from
such Borrower, at least 3 Business Days prior to the date on which such Borrower
desires to submit such LC Application to Bank, an LC Request, and (y) each of
the LC Conditions is satisfied on the date of Lender's receipt of the LC Request
and at the time of the requested execution of the LC Application. In no event
shall Lender have any liability or obligation to any Borrower for any failure or
refusal by Bank to issue, for Bank's delay in issuing, or for any error of Bank
in issuing any Letter of Credit.
(ii) Letters of Credit may be requested hereunder
by any Borrower only if they are to be used (i) to support obligations of such
Borrower incurred in the ordinary course of its
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business, as presently conducted, on a standby basis, or (ii) for such other
purposes as Lender may approve from time to time.
(iii) Borrowers shall comply with all of the terms
and conditions imposed on Borrowers by Bank, whether such terms and conditions
are contained in an LC Application or in any agreement with respect thereto, and
subject to the rights of Bank, Lender shall have the same rights and remedies
that Bank has under any agreements that any or all Borrowers may have with Bank
in addition to any rights and remedies contained in any of the Loan Documents.
Borrowers jointly and severally agree to reimburse Bank for any draw under any
Letter of Credit immediately upon demand, and to pay Bank the amount of all
other liabilities and obligations payable to Bank under or in connection with
any Letter of Credit immediately when due, irrespective of any claim, setoff,
defense or other right that any or all Borrowers may have at any time against
Bank or any other Person. If Lender shall pay any amount under the LC Guaranty
with respect to any Letter of Credit, then Borrowers shall be jointly and
severally obligated to pay to Lender, in Dollars on the first Business Day
following the date on which payment was made by Lender under such LC Guaranty,
an amount equal to the amount paid by Lender under such LC Guaranty together
with interest from and after the date of Lender's payment under such LC Guaranty
until payment in full is made by Borrowers at a variable rate per annum in
effect from time to time hereunder for Revolver Loans constituting Base Rate
Loans. Borrowers agree that any claim made upon Lender by Bank under an LC
Guaranty shall be conclusive on Lender and Borrowers shall forthwith satisfy and
discharge any such claim, ON DEMAND, failing which Borrowers shall be jointly
and severally obligated to reimburse Lender for any payment made by Lender under
an LC Guaranty in connection with such claim as hereinabove provided.
(iv) Borrowers assume all risks of the acts,
omissions or misuses of any Letter of Credit by the beneficiary thereof.
The obligation of Borrowers to reimburse Lender for any payment made
by Lender under an LC Guaranty shall be absolute, unconditional, irrevocable
and joint and several, and shall be paid without regard to any lack of validity
or enforceability of any Letter of Credit, the existence of any claim, setoff,
defense or other right which any or all Borrowers may have at any time against
a beneficiary of any Letter of Credit, or untimely or improper honor by Bank of
any draw request under a Letter of Credit. Without limiting the generality of
the foregoing, if presentation of a demand, draft or certificate or other
document does not comply with the terms of a Letter of Credit and a Borrower
contends that, as a consequence of such noncompliance it has no obligation to
reimburse Bank for any payment made with respect thereto, Borrowers shall
nevertheless be jointly and severally obligated to reimburse Lender for any
payment made under the LC Guaranty with respect to such Letter of Credit, but
without waiving any claim a Borrower may have against Bank in connection
therewith.
(v) If any LC Obligations (other than LC Obligations
fully secured by Cash Collateral at the time in question), whether or not
then due or payable, shall for any reason be outstanding (i) at any time
that an Event of Default exists, (ii) on any date that Availability is less
than zero, or (iii) on the effective date of termination of this Agreement
pursuant to Section 5 hereof, then Borrowers shall, upon demand, forthwith
deposit with Lender, in cash, an amount equal to the maximum aggregate amount
of all LC Obligations then outstanding. If Borrowers fail to make such deposit
on Lender's demand therefor, Lender may advance such amount as a Revolver Loan
(whether or not an Out-of-Formula Condition is created thereby). Such cash
(together with any interest accrued thereon) shall be held by Lender in the
Cash Collateral Account and may be invested, in Lender's discretion, in Cash
Equivalents. Each Borrower hereby pledges, and grants to Lender a security
interest in, all of such Borrower's right, title and interest in the Cash
Collateral Account and all Cash Collateral held in the Cash Collateral Account
from time to time and all proceeds thereof, as security for the payment of the
LC
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Obligations, whether or not then due or payable. From time to time after cash is
deposited in the Cash Collateral Account, Lender may apply any Cash Collateral
then held in the Cash Collateral Account to the payment of any amounts, in such
order as Lender may elect, as shall be or shall become due and payable by
Borrowers to Lender with respect to the Obligations which may then be
outstanding. Neither any Borrower nor any other Person claiming by, through or
under or on behalf of any Borrower shall have any right to withdraw any of the
funds held in the Cash Collateral Account, including any accrued interest,
provided that upon termination of all Letters of Credit and the payment and
satisfaction in full of the LC Obligations, any Cash Collateral remaining in the
Cash Collateral Account shall be returned to Borrowers unless an Event of
Default then exists (in which event Lender may apply such funds to the payment
of any other Obligations outstanding).
(vi) No Letter of Credit shall be extended or amended
in any respect that is not solely ministerial, unless all of the LC Conditions
are met as though a new Letter of Credit were being requested and issued.
(vii) In addition to and without limiting any other
right or remedy of Lender contained in this Agreement or in any of the other
Loan Documents, Lender shall be fully subrogated to the rights and remedies
of Bank under any agreement made between any or all Borrowers and Bank,
including each LC Application, relating to the issuance of any Letter of
Credit, each such agreement being incorporated herein by reference, and
Lender shall be entitled to exercise all such rights and remedies thereunder
and under Applicable Law in such regard as fully as if it were Bank. If any
Letter of Credit is drawn upon to discharge any obligation of any Borrower
to the beneficiary of such Letter of Credit, in whole or in part, Lender
shall be fully subrogated to the rights of such beneficiary with
respect to the obligation of such Borrower to such beneficiary discharged with
the proceeds of such Letter of Credit.
1.5. INDEMNIFICATION. In addition to any other indemnity which
Borrowers may have to Lender under this Agreement or any of the other Loan
Documents, and without limiting such other indemnification provisions, each
Borrower hereby agrees to indemnify Lender from and to defend and hold Lender
harmless against any and all Claims that Lender may (other than as the result of
its own gross negligence or willful misconduct) incur or be subject to as a
consequence, directly or indirectly, of (i) the issuance of, payment or failure
to pay or any performance or failure to perform under any Letter of Credit or LC
Guaranty or (ii) any suit, investigation or proceeding as to which Lender is or
may become a party to as a consequence, directly or indirectly, of the issuance
of any Letter of Credit, any LC Guaranty or the payment or failure to pay
thereunder. This indemnity shall survive payment in full of the Obligations and
termination of this Agreement.
SECTION 2 INTEREST, FEES AND CHARGES
2.1. INTEREST.
2.1.1. Rates of Interest.
(i) Borrowers jointly and severally agree to pay
interest in respect of all unpaid principal amounts of the Loans from the
respective dates such principal amounts are advanced until paid (whether at
stated maturity, on acceleration or otherwise) at a rate per annum equal to
the following applicable rate: (a) for Loans outstanding as Base Rate Loans,
the Applicable Margins plus the Base Rate in effect from time to time; or
(b) for Loans outstanding as LIBOR Loans, the Applicable
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Margin plus the relevant Adjusted LIBOR Rate for the applicable Interest Period
selected by a Borrower in conformity with this Agreement.
(ii) Upon determining the Adjusted LIBOR Rate for
any Interest Period requested by Borrowers, Lender shall promptly notify
Borrowers thereof by telephone and, if so requested by Borrowers, confirm the
same in writing. Such determination shall, absent manifest error, be final,
conclusive and binding on all parties and for all purposes. The applicable
rate of interest for all Loans (or portions thereof) bearing interest based
upon the Base Rate shall be increased or decreased, as the case may be, by
an amount equal to any increase or decrease in the Base Rate, with such
adjustments to be effective as of the opening of business on the day that
any such change in the Base Rate becomes effective. Interest on each Loan
shall accrue from and including the date on which such Loan is made,
converted to a Loan of another Type or continued as a LIBOR Loan to (but
excluding) the date of any repayment thereof; provided, however, that, if a
Loan is repaid on the same day made, one day's interest shall be paid on
such Loan. The Base Rate on the date hereof is 8.5% per annum and, therefore,
the rate of interest in effect hereunder on the date hereof, expressed in
simple interest terms, is 9.5% per annum with respect to any portion of the
Loans bearing interest as a Base Rate Loan.
2.1.2. Conversions and Continuations.
(i) Borrowers may on any Business Day, subject
to the giving of a proper Notice of Conversion/Continuation as hereinafter
described, elect (A) to continue all or any part of a LIBOR Loan by selecting
a new Interest Period therefor, to commence on the last day of the
immediately preceding Interest Period, or (B) to convert all or any part of a
Loan of one Type into a Loan of another Type; provided, however, that no
outstanding Loans may be converted into or continued as LIBOR Loans when any
Default or Event of Default exists. Any conversion of a LIBOR Loan into a Base
Rate Loan shall be made on the last day of the Interest Period for such LIBOR
Loan.
(ii) Whenever Borrowers desire to convert or continue
Loans under Section 2.1.2(i), a Borrower shall give Lender written notice
(or telephonic notice promptly confirmed in writing) substantially in the form
of EXHIBIT D, signed by an authorized officer of such Borrower, on the requested
conversion date by 11:00 a.m., in the case of a conversion into Base Rate Loans,
and by 11:00 a.m. at least 3 Business Days before the requested conversion or
continuation date, in the case of a conversion into or continuation of LIBOR
Loans. Each such Notice of Conversion/Continuation shall be irrevocable and
shall specify the aggregate principal amount of the Loans to be converted or
continued, the date of such conversion or continuation (which shall be a
Business Day) and whether the Loans are being converted into or continued as
LIBOR Loans (and, if so, the duration of the Interest Period to be applicable
thereto) or Base Rate Loans. If, upon the expiration of any Interest Period in
respect of any LIBOR Loans, Borrowers shall have failed to deliver the Notice of
Conversion/Continuation, Borrowers shall be deemed to have elected to convert
such LIBOR Loans to Base Rate Loans.
2.1.3. Interest Periods. In connection with the making or
continuation of, or conversion into, each Borrowing of LIBOR Loans, Borrowers
shall select an interest period (each an "Interest Period") to be applicable to
such LIBOR Loan, which interest period shall commence on the date such LIBOR
Loan is made and shall end on a numerically corresponding day in the first,
second or third month thereafter; provided, however, that:
(i) the initial Interest Period for a LIBOR Loan
shall commence on the date such Loan is made (including the date of any
conversion from a Loan of another Type) and each Interest
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Period occurring thereafter in respect of such Loan shall commence on the date
on which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise
expire on a day that is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day, provided that if any Interest Period
in respect of LIBOR Loans would otherwise expire on a day that is not a Business
Day but is a day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business Day;
(iii) any Interest Period that begins on a day for
which there is no numerically corresponding day in the calendar month at the
end of such Interest Period shall expire on the last Business Day of such
calendar month;
(iv) no Interest Period with respect to any portion
of principal of a Loan shall extend beyond a date on which a Borrower is
required to make a scheduled payment of such portion of principal;
(v) no Interest Period shall extend beyond the
last day of the Original Term; and
(vi) there shall be no more than 5 Interest Periods
in effect at any one time.
2.1.4. Interest Rate Not Ascertainable. If Lender shall
determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) that on any date for determining the
Adjusted LIBOR for any Interest Period, by reason of any changes arising after
the date of this Agreement affecting the London interbank market or Lender's or
Bank's position in such market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of Adjusted LIBOR Rate, then, and in any such event, Lender shall
forthwith give notice (by telephone confirmed in writing) to APB of such
determination. Until Lender notifies Borrowers that the circumstances giving
rise to the suspension described herein no longer exist, the obligation of
Lender to make LIBOR Loans shall be suspended, and such affected Loans then
outstanding shall, at the end of the then applicable Interest Period or at such
earlier time as may be required by Applicable Law, bear the same interest as
Base Rate Loans.
2.1.5. Default Rate of Interest. Interest shall accrue at the
Default Rate (i) with respect to the principal amount of any portion of the
Obligations (and, to the extent permitted by Applicable Law, all past due
interest) that is not paid on the due date thereof (whether due at stated
maturity, on demand, upon acceleration or otherwise) until paid in full, and
(ii) with respect to the principal amount of all of the Obligations (and, to the
extent permitted by Applicable Law, all past due interest) upon the earlier to
occur of (x) a Borrower's receipt of notice of Lender's election to charge the
Default Rate based upon the existence of any Event of Default or (y) the
commencement by or against any Borrower of an Insolvency Proceeding, whether or
not under the circumstances described in either clause (i) or (ii) hereof Lender
elects to accelerate the maturity or demand payment of any of the Obligations.
To the fullest extent permitted by Applicable Law, the Default Rate shall apply
and accrue on any judgment entered with respect to any of the Obligations and to
the unpaid principal amount of the Obligations during any Insolvency Proceeding
of a Borrower. Each Borrower acknowledges that the cost and expense to Lender
attendant upon the occurrence of an Event of Default are difficult to ascertain
or estimate and that the Default Rate is a fair and reasonable estimate to
compensate Lender for such added cost and expense.
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2.2. FEES.
2.2.1. Origination Fee. Borrowers shall be jointly and
severally obligated to pay to Lender an origination fee of $130,000, which fee
shall be paid concurrently with the funding of the initial Loan hereunder.
2.2.2. Unused Revolver Line Fee. Borrowers shall be jointly
and severally obligated to pay to Lender a monthly fee equal to .5% per annum of
the amount by which the sum of the Average Revolver Loan Balance for any month
(or portion thereof that this Agreement is in effect) plus the Average LC
Obligations for such month (or portion thereof that this Agreement is in effect)
is less than $15,000,000, such fee to be paid on the first day of the following
month; but if the Agreement is terminated on a day other than the first day of a
month, then such fee payable for the month in which termination shall occur
shall be paid on the effective date of such termination.
2.2.3. Minimum Loan Charges. Each Borrower acknowledges that
the administrative costs associated with the Loans and other financing provided
to Borrowers under this Agreement are such that Lender cannot finance Borrowers
profitably at the interest rates provided for herein in the event that the
Average Monthly Loan Balance is less than $5,000,000 (the "Minimum Loan
Amount"). Accordingly, Borrowers shall be jointly and severally obligated to pay
to Lender each month interest on the greater of the Minimum Loan Amount or the
Average Monthly Loan Balance for such month (or portion thereof that this
Agreement is in effect). In no event, however, shall Borrowers be obligated to
pay interest on the Minimum Loan Amount if the Average Monthly Loan Balance is
less than the Minimum Loan Amount solely by reason of Lender's refusal to make
available to Borrowers on such date, at Borrowers' request, Loans that would
cause the Average Monthly Loan Balance to equal the Minimum Loan Amount or if
the assessment or collection of such interest, together with all other amounts
deemed interest under this Agreement and the other Loan Documents, would exceed
the Maximum Rate.
2.2.4. Audit and Appraisal Fees. Borrowers shall be jointly
and severally obligated to reimburse Lender for all reasonable costs and
expenses incurred in connection with audits and appraisals of Borrowers' books
and records and such other matters as Lender shall reasonably deem appropriate.
2.2.5. LC Guaranty Fees. In addition to each Borrower's
obligation to pay to Bank all fees and normal and customary charges associated
with the issuance and administration of each Letter of Credit, Borrowers shall
be jointly and severally obligated to pay to Lender, for Lender's LC Guaranty of
each standby Letter of Credit, a fee equal to 2.5% per annum of the face amount
of each such Letter of Credit outstanding from time to time during the term of
this Agreement which shall be due and payable on the first Business Day of each
month, and an additional fee equal to 2.5% per annum of the face amount of such
Letter of Credit payable upon each renewal and each extension thereof, all of
which fees and charges shall be deemed fully earned upon issuance, renewal or
extension (as the case may be) of each such Letter of Credit.
2.2.6. General Provisions. All fees shall be fully earned by
Lender when due and payable and, except as otherwise set forth herein or
required by Applicable Law, shall not be subject to refund, rebate or proration.
All fees provided for in this Section 2.2 are and shall be deemed to be for
compensation for services and are not, and shall not be deemed to be, interest
or any other charge for the use, forbearance or detention of money.
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2.3. COMPUTATION OF INTEREST AND FEES. All fees and other charges
provided for in this Agreement that are calculated as a per annum percentage of
any amount and all interest shall be calculated daily and shall be computed on
the actual number of days elapsed over a year of 360 days. For the purpose of
computing interest and other charges hereunder, all Payment Items received by
Lender shall be deemed applied by Lender on account of the Obligations (subject
to final payment of such items) on the first Business Day after Lender receives
such items in immediately available funds in the Payment Account, and Lender
shall be deemed to have received such Payment Item on the date specified in
Section 4.6 hereof.
2.4. REIMBURSEMENT OF EXPENSES. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender incurs legal or
accounting expenses or any other costs or out-of-pocket expenses in connection
with (i) the negotiation and preparation of this Agreement or any of the other
Loan Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents, (ii) the administration of this Agreement or any of the
other Loan Documents and the transactions contemplated hereby and thereby; (iii)
any litigation, contest, dispute, suit, proceeding or action (whether instituted
by Lender, any Borrower or any other Person) in any way relating to the
Collateral, this Agreement or any of the other Loan Documents or any Borrower's
affairs; (iv) any attempt to enforce any rights of Lender against any Borrower
or any other Person which may be obligated to Lender by virtue of this Agreement
or any of the other Loan Documents, including the Account Debtors; or (v) any
attempt to inspect, verify, protect, preserve, perfect or continue the
perfection of Lender's Liens upon, restore, collect, sell, liquidate or
otherwise dispose of or realize upon the Collateral; then all such legal and
accounting expenses, other costs and out of pocket expenses of Lender shall be
charged jointly and severally to Borrowers. All amounts chargeable to Borrowers
under this Section 2.4 shall be Obligations secured by all of the Collateral,
shall be payable on demand to Lender. Borrowers shall also be jointly and
severally obligated to reimburse Lender for expenses incurred by Lender in its
administration of the Collateral to the extent and in the manner provided in
Section 7 hereof.
2.5. BANK CHARGES. Borrowers shall be jointly and severally obligated
to pay to Lender, ON DEMAND, any and all fees, costs or expenses which Lender
pays to a bank or other similar institution (including any fees paid by Lender
to any Participant) arising out of or in connection with (i) the forwarding to
any Borrower or any other Person on behalf of any Borrower, by Lender or any
Participant, of proceeds of Loans made by Lender to Borrowers pursuant to this
Agreement and (ii) the depositing for collection, by Lender or any Participant,
of any Payment Item received or delivered to Lender or any Participant on
account of the Obligations. Each Borrower acknowledges and agrees that Lender
may charge such costs, fees and expenses as they are incurred by Lender, subject
to later adjustment for the amount actually incurred.
2.6. MAXIMUM INTEREST. Regardless of any provision contained in any of
the Loan Documents, in no contingency or event whatsoever shall the aggregate of
all amounts that are contracted for, charged or received by Lender pursuant to
the terms of any of the Loan Documents and that are deemed interest under
Applicable Law exceed the highest rate permissible under any Applicable Law. No
agreements, conditions, provisions or stipulations contained in any of the Loan
Documents or the exercise by Lender of the right to accelerate the payment or
the maturity of all or any portion of the Obligations, or the exercise of any
option whatsoever contained in any of the Loan Documents, or the prepayment by
Borrower of any of the Obligations, or the occurrence of any contingency
whatsoever, shall entitle Lender to charge or receive in any event, interest or
any charges, amounts, premiums or fees deemed interest by Applicable Law (such
interest, charges, amounts, premiums and fees referred to herein collectively as
"Interest") in excess of the Maximum Rate and in no event shall Borrowers be
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obligated to pay Interest exceeding such Maximum Rate, and all agreements,
conditions or stipulations, if any, which may in any event or contingency
whatsoever operate to bind, obligate or compel Borrowers to pay Interest
exceeding the Maximum Rate shall be without binding force or effect, at law or
in equity, to the extent only of the excess of Interest over such Maximum Rate.
If any Interest is charged or received in excess of the Maximum Rate ("Excess"),
each Borrower acknowledges and stipulates that any such charge or receipt shall
be the result of an accident and bona fide error, and such Excess, to the extent
received, shall be applied first to reduce the principal Obligations and the
balance, if any, returned to Borrowers, it being the intent of the parties
hereto not to enter into a usurious or otherwise illegal relationship. The right
to accelerate the maturity of any of the Obligations does not include the right
to accelerate any Interest that has not otherwise accrued on the date of such
acceleration, and Lender does not intend to collect any unearned Interest in the
event of any such acceleration. Each Borrower recognizes that, with fluctuations
in the rates of interest set forth in Section 2.1.1 of this Agreement or in the
Notes and the Maximum Rate, such an unintentional result could inadvertently
occur. All monies paid to Lender hereunder or under any of the other Loan
Documents, whether at maturity or by prepayment, shall be subject to any rebate
of unearned Interest as and to the extent required by Applicable Law. By the
execution of this Agreement, each Borrower covenants that (i) the credit or
return of any Excess shall constitute the acceptance by Borrowers of such
Excess, and (ii) no Borrower shall seek or pursue any other remedy, legal or
equitable, against Lender, based in whole or in part upon contracting for,
charging or receiving any Interest in excess of the Maximum Rate. For the
purpose of determining whether or not any Excess has been contracted for,
charged or received by Lender, all Interest at any time contracted for, charged
or received from Borrowers in connection with any of the Loan Documents shall,
to the extent permitted by Applicable Law, be amortized, prorated, allocated and
spread in equal parts throughout the full term of the Obligations. Borrowers and
Lender shall, to the maximum extent permitted under Applicable Law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as Interest and (ii) exclude voluntary prepayments and the effects thereof. The
provisions of this Section shall be deemed to be incorporated into every Loan
Document (whether or not any provision of this Section is referred to therein).
All such Loan Documents and communications relating to any Interest owed by
Borrowers and all figures set forth therein shall, for the sole purpose of
computing the extent of Obligations, be automatically recomputed by Borrowers,
and by any court considering the same, to give effect to the adjustments or
credits required by this Section 2.6.
2.7. ILLEGALITY. Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (i) any change in any law or regulation or in
the interpretation thereof by any governmental authority charged with the
administration thereof shall make it unlawful for Lender to make or maintain a
LIBOR Loan or to give effect to its obligations as contemplated hereby with
respect to a LIBOR Loan or (ii) at any time Lender determines that the making or
continuance of any LIBOR Loan has become impracticable as a result of a
contingency occurring after the date hereof which adversely affects the London
interbank market or the position of Lender or Bank in such market, then, by
written notice to any Borrower, Lender may (1) declare that LIBOR Loans will not
thereafter be made by Lender, whereupon any request by a Borrower for a LIBOR
Loan shall be deemed a request for a Base Rate Loan unless Lender's declaration
shall be subsequently withdrawn; and (2) require that all outstanding LIBOR
Loans made by Lender be converted to Base Rate Loans, under the circumstances of
clause (i) or (ii) of this Section 2.7 insofar as Lender determines the
continuance of LIBOR Loans to be impracticable, in which event all such LIBOR
Loans shall be converted automatically to Base Rate Loans as of the date of any
Borrower's receipt of the aforesaid notice from Lender.
2.8. INCREASED COSTS. If, by reason of (a) the introduction of or any
change (including any change by way of imposition or increase of Statutory
Reserves or other reserve requirements) in or in
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the interpretation of any law or regulation, or (b) the compliance with any
guideline or request from any central bank or other governmental authority or
quasi-governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law):
(i) Lender shall be subject after the date hereof to any
Taxes, duty or other charge with respect to any LIBOR Loan or its
obligation to make LIBOR Loans, or a change shall result in the basis
of taxation of payment to Lender of the principal of or interest on its
LIBOR Loans or its obligation to make LIBOR Loans (except for changes
in the rate of tax on the overall net income of Lender imposed by the
jurisdiction in which Lender's principal executive office is located);
or
(ii) any reserve (including any imposed by the Board
of Governors), special deposits or similar requirement against assets
of, deposits with or for the account of, or credit extended by, Lender
shall be imposed or deemed applicable or any other condition affecting
its LIBOR Loans or its obligation to make LIBOR Loans shall be imposed
on Lender or the London interbank market;
and as a result thereof there shall be any increase in the cost to Lender of
agreeing to make or making, funding or maintaining LIBOR Loans (except to the
extent already included in the determination of the applicable Adjusted LIBOR
Rate for LIBOR Loans), or there shall be a reduction in the amount received or
receivable by Lender, then Borrowers shall from time to time, upon written
notice from and demand by Lender (with a copy of such notice and demand to
Lender), pay to Lender, within 5 Business Days after the date specified in such
notice and demand, an additional amount sufficient to indemnify Lender against
such increased cost. A certificate as to the amount of such increased cost,
submitted to Borrowers by Lender, shall be final, conclusive and binding for all
purposes.
If Lender shall advise APB at any time that, because of the
circumstances described hereinabove in this Section 2.8 or any other
circumstances arising after the date of this Agreement affecting Lender or the
London interbank market or Lender's or Bank's position in such market, the
Adjusted LIBOR Rate, as determined by Lender, will not adequately and fairly
reflect the cost to Lender of funding LIBOR Loans, then, and in any such event:
(i) Lender shall forthwith give notice (by
telephone confirmed in writing) to APB of such event;
(ii) Borrowers' right to request and Lender's
obligation to make LIBOR Loans shall be immediately suspended and
Borrowers' right to continue a LIBOR Loan as such beyond the then
applicable Interest Period shall also be suspended; and
(iii) Lender shall make a Base Rate Loan as part of
the requested Borrowing of LIBOR Loans, which Base Rate Loan shall, for
all purposes, be considered part of such Borrowing.
For purposes of this Section 2.8, all references to Lender shall be
deemed to include any bank holding company or bank parent of Lender.
2.9. CAPITAL ADEQUACY. If after the date hereof Lender determines that
(a) the adoption of any Applicable Law regarding capital requirements for banks
or bank holding companies or the
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subsidiaries thereof, (b) any change in the interpretation or administration of
any such Applicable Law, any governmental authority, central bank, or comparable
agency charged with the interpretation or administration thereof, or (c)
compliance by Lender or its holding company with any request or directive of any
such governmental authority, central bank or comparable agency regarding capital
adequacy (whether or not having the force of law), has the effect of reducing
the return on Lender's capital to a level below that which Lender could have
achieved (taking into consideration Lender's and its holding company's policies
with respect to capital adequacy immediately before such adoption, change or
compliance and assuming that Lender's capital was fully utilized prior to such
adoption, change or compliance) but for such adoption, change or compliance as a
consequence of Lender's commitment to make the Loans pursuant hereto by any
amount deemed by Lender to be material, Borrowers shall pay to Lender, as an
additional fee from time to time, on demand, such amount as Lender certifies to
be the amount that will compensate Lender for such reduction. A certificate of
Lender claiming entitlement to compensation as set forth above will be
conclusive in the absence of manifest error. Such certificate will set forth the
nature of the occurrence giving rise to such compensation, the additional amount
or amounts to be paid to Lender (including the basis for Lender's determination
of such amount), and the method by which such amounts were determined. In
determining such amount, Lender may use any reasonable averaging and attribution
method. For purposes of this Section 2.9, all references to Lender shall be
deemed to include any bank holding company or bank parent of Lender.
2.10. FUNDING LOSSES. If for any reason (other than due to a default by
Lender or as a result of Lender's refusal to honor a LIBOR Loan request due to
circumstances described in Section 2.6 or 2.7 hereof) a Borrowing of, or
conversion to or continuation of, LIBOR Loans does not occur on the date
specified therefor in a Notice of Borrowing or Notice of Conversion/
Continuation (whether or not withdrawn), or if any repayment (including any
conversions pursuant to Section 2.1.2 hereof) of any of its LIBOR Loans occurs
on a date that is not the last day of an Interest Period applicable thereto, or
if for any reason Borrower defaults in its obligation to repay LIBOR Loans when
required by the terms of this Agreement, then Borrowers shall pay to Lender, in
addition to any amounts that may be due hereunder, an amount (if a positive
number) computed pursuant to the following formula:
L = (R- T) x P x D
--------------
360
where
L = amount payable
R = interest rate applicable to the LIBOR Loan
unborrowed or prepaid
T = effective interest rate per annum at which any
readily marketable bond or other obligations of
the United States, selected at Lender's sole
discretion, maturing on or near the last day of
the then applicable or requested Interest Period
for such LIBOR Loan and in approximately the
same amount as such LIBOR Loan, can be
purchased by Lender on the day of such
payment of principal or failure to borrow
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P = the amount of principal
paid or the amount of the
LIBOR Loan requested or to
have been converted or continued
D = the number of days
remaining in the Interest
Period as of the date of
such prepayment or the
number of days in the
requested Interest Period
Borrowers shall pay such amount upon presentation by Lender of a statement
setting forth the amount and Lender's calculation thereof pursuant hereto, which
statement shall be deemed true and correct absent manifest error. For purposes
of this Section 2.10, all references to Lender shall be deemed to include any
bank holding company or bank parent of such Lender. The calculations of all
amounts payable to Lender under this Section 2.10 shall be made as though Lender
had actually funded or committed to fund its LIBOR Loan through the purchase for
an underlying deposit in an amount equal to the amount of such LIBOR Loan and
having a maturity comparable to the relevant Interest Period for such LIBOR
Loan; provided, however, Lender may fund its LIBOR Loans in any manner it deems
fit and the foregoing assumption shall be utilized only for the calculation of
amounts payable under this Section 2.10.
SECTION 3 LOAN ADMINISTRATION
3.1. MANNER OF BORROWING REVOLVER LOANS. Revolver Loans available to
Borrowers pursuant to Section 1.1 hereof shall be made and funded as follows:
3.1.1. Notice of Borrowing.
(i) Whenever Borrowers desire to obtain a
Revolver Loan under Section 1.1 of this Agreement (other than a Borrowing
resulting from a conversion or continuation pursuant to Section 2.1.2),
Borrowers shall give Lender prior written notice (or telephonic notice promptly
confirmed in writing) of such Borrowing request (a "Notice of Borrowing"), which
shall be in the form of EXHIBIT C annexed hereto and signed by an authorized
officer of APB. Such Notice of Borrowing shall be given by Borrowers to Lender
no later than 11:00 a.m. (a) on the Business Day of the requested funding date
of such Borrowing, in the case of a Base Rate Loan, and (b) at least 2 Business
Days prior to the requested funding date of such Borrowing, in the case of a
LIBOR Loan. Notices received after 11:00 a.m. shall be deemed received on the
next Business Day. Revolver Loans made by Lender on the Closing Date shall be in
the principal amount of not less than $250,000 and shall be made as Base Rate
Loans and thereafter may be made or continued as, or converted into, Base Rate
Loans or LIBOR Loans. Each Notice of Borrowing (or telephonic notice thereof)
shall be irrevocable and shall specify (a) the principal amount of the
Borrowing, (b) the date of Borrowing (which shall be a Business Day), (c)
whether the Borrowing is to consist of Base Rate Loans or LIBOR Loans, and (d)
in the case of LIBOR Loans, the duration of the Interest Period to be applicable
thereto. Borrowers may not request any LIBOR Loans if a Default or Event of
Default exists.
(ii) Unless payment is otherwise timely made by
Borrowers, the becoming due of any amount required to be paid under this
Agreement or any of the other Loan Documents as principal, accrued interest,
fees or other charges shall be deemed irrevocably to be a request for Revolver
Loans on the due date of, and in an aggregate amount required to pay, such
principal, accrued interest, fees or other charges, and the proceeds of such
Revolver Loans may be disbursed by way of direct payment of the relevant
Obligation and shall bear interest as Base Rate Loans. Lender shall have no
obligation to Borrowers to honor any deemed request for a Revolver Loan, but may
do so in its discretion
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without regard to the existence or creation of, and without being deemed to have
waived, any Default, Event of Default or Out-of-Formula Condition.
(iii) As an accommodation to Borrowers, Lender may
permit telephonic requests for Borrowings and electronic transmittal of
instructions, authorizations, agreements or reports to Lender by Borrowers;
provided, however, that Borrowers shall confirm each such telephonic request for
a Borrowing of LIBOR Loans by delivery of the required Notice of Borrowing to
Lender by facsimile transmission promptly, but in no event later than 5:00 p.m.
on the same day. Unless Borrowers specifically direct Lender in writing not to
accept or act upon telephonic or electronic communications from Borrowers,
Lender shall not have any liability to Borrowers for any loss or damage suffered
by Borrowers as a result of Lender's honoring of any requests, execution of any
instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have been
sent to Lender by a Borrower and Lender shall not have any duty to verify the
origin of any such communication or the identity or authority of the Person
sending it.
3.1.2. Disbursement Authorization. Each Borrower hereby
irrevocably authorizes Lender to disburse the proceeds of each Revolver Loan
requested by any Borrower, or deemed to be requested pursuant to Section 3.1.1,
as follows: (i) the proceeds of each Revolver Loan requested under Section
3.1.1(i) shall be disbursed by Lender in accordance with the terms of the
written disbursement letter from Borrowers in the case of the initial Borrowing,
and, in the case of each subsequent Borrowing, by wire transfer to the Funding
Account; and (ii) the proceeds of each Revolver Loan requested under Section
3.1.1(ii) shall be disbursed by Lender by way of direct payment of the relevant
interest or other Obligation. APB shall have the authority and responsibility to
transfer Loan proceeds deposited in the Funding Account to the other Borrowers
according to their borrowing needs. Any Loan proceeds received by any Borrower
or in payment of any of the Obligations shall be deemed to have been received by
all Borrowers.
3.2. SPECIAL PROVISIONS GOVERNING LIBOR LOANS.
3.2.1. Number of LIBOR Loans. In no event may the number of
LIBOR Loans outstanding at any time to Lender exceed 5.
3.2.2. Minimum Amounts. Each election of LIBOR Loans pursuant
to Section 3.1.1(i), and each continuation of or conversion to LIBOR Loans
pursuant to Section 2.1.2 hereof, shall be in a minimum amount of $500,000 with
respect to any portion of the Loans that bear interest as a LIBOR Loan and
integral multiples of $100,000 in excess of that amount.
3.2.3. LIBOR Lending Office. Lender's initial LIBOR Lending
Office is set forth opposite its name on the signature pages hereof. Lender
shall have the right at any time and from time to time to designate a different
office of itself or of any Affiliate as Lender's LIBOR Lending Office, and to
transfer any outstanding LIBOR Loans to such LIBOR Lending Office. No such
designation or transfer shall result in any liability on the part of a Borrower
for increased costs or expenses resulting solely from such designation or
transfer; provided, that increased costs for expenses resulting from a change in
Applicable Law occurring subsequent to any such designation or transfer shall
not be deemed to result solely from such designation or transfer.
3.3. BORROWERS' REPRESENTATIVE. Each Borrower hereby irrevocably
appoints APB as, and APB shall act under this Agreement as, the agent and
representative of itself and each other Borrower
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for all purposes under this Agreement, including requesting Borrowings,
selecting whether any Loan or portion thereof is to bear interest as a Base Rate
Loan or a LIBOR Loan, and receiving account statements and other notices and
communications to Borrowers (or any of them) from Lender. Lender may rely, and
shall be fully protected in relying, on any Notice of Borrowing, Notice of
Conversion/Continuation, disbursement instructions, reports, information or any
other notice or communication made or given by APB, whether in its own name, on
behalf of any Borrower or on behalf of "the Borrowers," and Lender shall have no
obligation to make any inquiry or request any confirmation from or on behalf of
any other Borrower as to the binding effect on such Borrower of any such
request, instruction, report, information, notice or communication, nor shall
the joint and several character of Borrowers' liability for the Revolver Loans
be affected, provided that the provisions of this Section 3.3 shall not be
construed so as to preclude any Borrower from directly requesting Borrowings or
taking other actions permitted to be taken by "a Borrower" hereunder. Lender may
to maintain a single Loan Account in the name of "APB" hereunder, and each
Borrower expressly agrees to such arrangement and confirms that such arrangement
shall have no effect on the joint and several character of such Borrower's
liability for the Revolver Loans.
3.4. ALL LOANS TO CONSTITUTE ONE OBLIGATION. The Loans shall constitute
one general Obligation of Borrowers and (unless otherwise expressly provided in
the Security Documents) shall be secured by Lender's Lien upon all of the
Collateral.
SECTION 4 PAYMENTS; NATURE OF EACH BORROWER'S LIABILITY
4.1. GENERAL PAYMENT PROVISIONS. All payments (including all
prepayments) of principal of and interest on the Loans, LC Obligations and other
Obligations shall be made to Lender in Dollars without any offset or
counterclaim and free and clear of (and without deduction for) any present or
future Taxes, and, with respect to payments made other than by application of
balances in the Payment Account, in immediately available funds not later than
12:00 noon on the due date (and payment made after such time on the due date to
be deemed to have been made on the next succeeding Business Day).
4.2. REPAYMENT OF REVOLVER LOANS.
4.2.1. Payment of Principal. The outstanding principal amounts
with respect to the Revolver Loans shall be repaid as follows:
(i) Any portion of the Revolver Loans consisting
of the principal amount of Base Rate Loans shall be paid by Borrowers to
Lender, unless timely converted to a LIBOR Loan in accordance with this
Agreement, immediately upon (a) each receipt by a Borrower or Lender of any
proceeds of any of the Accounts or Inventory, to the extent of such proceeds,
and (b) the Termination Date.
(ii) Any portion of the Revolver Loans consisting
of the principal amount of LIBOR Loans shall be paid by Borrowers to
Lender, unless converted to a Base Rate Loan or continued as a LIBOR Loan in
accordance with the terms of this Agreement, upon (a) the last day of the
Interest Period applicable thereto and (b) the Termination Date. In no event
shall Borrowers be authorized to pay any LIBOR Loan prior to the last day of the
Interest Period applicable thereto unless (x) otherwise agreed in writing by
Lender or Borrowers are otherwise expressly authorized or required by any other
provision of this Agreement to pay any LIBOR Loan outstanding on a date other
than the last day of the Interest
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Period applicable thereto, and (y) Borrowers pay to Lender concurrently with any
prepayment of a LIBOR Loan any amount due Lender under Section 2.10 hereof as a
result of such prepayment.
(iii) Notwithstanding anything to the contrary
contained elsewhere in this Agreement, if an Out-of-Formula Condition shall
exist, Borrowers shall, on the sooner to occur of Lender's demand or the first
Business Day after a Borrower has obtained knowledge of such Out-of- Formula
Condition, repay the outstanding Revolver Loans that are Base Rate Loans in an
amount sufficient to reduce the aggregate unpaid principal amount of all
Revolver Loans by an amount equal to such excess; and, if such payment of Base
Rate Loans is not sufficient to eliminate the Out-of-Formula Condition, then
Borrowers shall immediately either (a) deposit with Lender, for application to
any outstanding Revolver Loans bearing interest as LIBOR Loans as the same
become due and payable (whether at the end of the applicable Interest Periods or
on the Termination Date), cash in an amount sufficient to eliminate such
Out-of-Formula Condition, subject to Lender's Lien thereon and rights of offset
with respect thereto, pending Lender's application of same to LIBOR Loans, or
(b) pay the Revolver Loans outstanding as LIBOR Loans to the extent necessary to
eliminate such Out-of-Formula Condition and also pay to Lender any and all
amounts required by Section 2.10 hereof to be paid by reason of the prepayment
of a LIBOR Loan prior to the last day of the Interest Period applicable thereto.
4.2.2. Payment of Interest. Interest accrued on the Revolver
Loans shall be due and payable on (i) the first calendar day of each month (for
the immediately preceding month), computed through the last calendar day of the
preceding month, with respect to any Revolver Loan (whether a Base Rate Loan or
LIBOR Loan) and (ii) the last day of the applicable Interest Period in the case
of a LIBOR Loan. Accrued and unpaid interest shall also be paid by Borrowers on
the Termination Date. With respect to any Base Rate Loan converted into a LIBOR
Loan pursuant to Section 2.1.2 on a day when interest would not otherwise have
been payable with respect to such Base Rate Loan, accrued interest to the date
of such conversion on the amount of such Base Rate Loan so converted shall be
paid on the conversion date.
4.3. REPAYMENT OF TERM AND EQUIPMENT LOANS.
4.3.1. Payment of Principal of Term Loan. The principal amount
of the Term Loan shall be repaid in accordance with the terms of the Term Note.
4.3.2. Payment of Principal of Equipment Loans. The unpaid
principal amount of the Equipment Loans outstanding from time to time shall be
paid in consecutive monthly installments on the first day of each month
hereafter, commencing on the first day of the month following the month in which
the first such Equipment Loan is made, with the entire unpaid principal balance
and all accrued and unpaid interest thereon to be paid in full on the last day
of the Original Term; provided, however, that the aggregate unpaid principal
amount of and all accrued but unpaid interest with respect to the Equipment
Loans shall be forthwith due and payable upon any termination of this Agreement
in accordance with Section 5.2 hereof. The amount of each monthly installment of
principal to be paid with respect to the Equipment Loans outstanding on the due
date for such installment shall be equal to 1/60th of the aggregate principal
amount of all Equipment Loans made by Lender to Borrowers prior to the date on
which such installment is due.
4.3.3. Payment of Interest. Interest accrued on the Term Loan
and the Equipment Loans shall be due and payable on (i) the first calendar day
of each month for the immediately preceding month, computed through the last
calendar day of the preceding month, whether all or any portion of the Term Loan
or any Equipment Loans bears interest as a Base Rate Loan or a LIBOR Loan, (ii)
the last day of
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the applicable Interest Period in the case of any portion of the Term Loan or
any Equipment Loans that is a LIBOR Loan and (iii) the Termination Date.
4.3.4. Mandatory Prepayment of Term and Equipment Loans.
Borrowers shall prepay the entire unpaid principal balance of the Term Loan and
all Equipment Loans, and all accrued but unpaid interest thereon, upon the
Termination Date. Borrowers shall also be required to prepay the Term Loan and
all Equipment Loans as follows:
(i) Borrowers shall prepay the Term Loan and
Equipment Loans in connection with dispositions of Equipment by any
Borrower, as and when required by Section 7.4.2 hereof; and
(ii) Borrowers shall prepay the Term Loan and
Equipment Loans from the Net Proceeds of insurance or condemnation awards
paid in respect of any Equipment or Real Estate, unless to the extent Borrowers
are authorized to use such Net Proceeds in accordance with the provisions of
Section 7.1.2(ii) hereof.
Each mandatory prepayment pursuant to this Section 4.3.4 shall be applied first
to Base Rate Loans to the full extent thereof before application to any LIBOR
Loans; provided, however, that, so long as no Default or Event of Default
exists, in lieu of application of such prepayment to LIBOR Loans prior to the
expiration of the respective Interest Periods applicable thereto and any
resulting requirement to pay the charges provided for in Section 2.10 hereof,
Borrowers, at their option, may deposit with Lender cash funds equal to such
prepayments to be held by Lender in the Cash Collateral Account for application
to the Term Loan or Equipment Loans on the sooner to occur of the expiration of
the Interest Period applicable thereto or the Termination Date. No prepayment
premium shall be payable by Borrowers with respect to prepayments required by
this Section 4.3.4.
4.3.5. Optional Prepayments of Term Loans. Borrowers may, at
their option, prepay any portion of the Term Loans or Equipment Loans bearing
interest as a Base Rate Loan in whole at any time or in part from time to time,
in amounts aggregating $250,000 or any greater integral multiple of $100,000, by
paying the principal amount to be prepaid together with interest accrued and
unpaid thereon to the date of prepayment and a prepayment premium as set forth
in the Term Note or the Equipment Note, as applicable. Any portion of the Term
Loan or Equipment Loans bearing interest as a LIBOR Loan may be prepaid, at
Borrowers' option, as applicable, at any time in whole or from time to time in
part, in amounts aggregating $250,000 or any greater integral multiple thereof,
by paying the principal amount to be prepaid, interest accrued and unpaid
thereon to the date of prepayment and a prepayment premium as set forth in the
Term Note or the Equipment Note, as applicable, and any applicable charges
pursuant to Section 2.10 hereof if such prepayment is made on a date other than
the last day of an applicable Interest Period. Each such optional prepayment may
be applied against scheduled amortization payments in the inverse order of the
occurrence thereof. Borrowers shall give written notice (or telephonic notice
confirmed in writing) to Lender of any intended prepayment not less than 1
Business Day prior to any prepayment of Term Loan or any Equipment Loans bearing
interest as Base Rate Loans and not less than 2 Business Days prior to any
prepayment of Term Loans or any Equipment Loans bearing interest as LIBOR Loans.
4.4. PAYMENT OF OTHER OBLIGATIONS. The balance of the Obligations
requiring the payment of money shall be repaid by Borrowers to Lender as and
when provided in the Loan Documents, or, if no date of payment is otherwise
specified in the Loan Documents, ON DEMAND.
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4.5. MARSHALLING; PAYMENTS SET ASIDE. Lender shall be under no
obligation to ▇▇▇▇▇▇▇▇ any assets in favor of any Borrower or any other Obligor
or against or in payment of any or all of the Obligations. To the extent that
any Borrower makes a payment to Lender or Lender receives payment from the
proceeds of any Collateral or exercises its right of setoff, and such payment or
the proceeds of such enforcement or setoff (or any part thereof) are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other Person, then to the
extent of any such recovery, the obligation or part thereof originally intended
to be satisfied, and all Liens, rights and remedies therefor, shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred. The provisions of the immediately
preceding sentence of this Section 4.5 shall survive any termination of this
Agreement and payment in full of the Obligations.
4.6. APPLICATION OF PAYMENTS AND COLLECTIONS. Payment Items received by
Lender by 12:00 noon, Chicago, Illinois time on any Business Day shall be deemed
received on that Business Day. All Payment Items received by Lender after 12:00
noon, Chicago, Illinois time on any Business Day shall be deemed received on the
following Business Day. Each prepayment of the Term Loan or any Equipment Loan
shall be applied first to accrued but unpaid interest and then to installments
of principal in the inverse order of their maturities. Except to the extent that
the manner of application to the Obligations of payments or proceeds of
Collateral is expressly governed by other provisions of this Agreement, each
Borrower irrevocably waives the right to direct the application of any and all
payments and collections at any time or times hereafter received by Lender from
or on behalf of such Borrower, and each Borrower does hereby irrevocably agree
that Lender shall have the continuing exclusive right to apply and reapply any
and all such payments and collections received at any time or times hereafter by
Lender or its agent against the Obligations, in such manner as Lender may deem
advisable, notwithstanding any entry by Lender upon any of its books and
records.
4.7. LOAN ACCOUNT. Lender shall establish an account on its books (the
"Loan Account") and shall enter all Loans as debits to the Loan Account and
shall also record in the Loan Account all payments made by Borrowers on any
Obligations and all proceeds of Collateral which are finally paid to Lender, and
may record therein, in accordance with customary accounting practice, other
debits and credits, including interest and all charges and expenses properly
chargeable to Borrowers.
4.8. STATEMENTS OF ACCOUNT. Lender will account to Borrowers monthly
with a statement of Loans, charges and payments made pursuant to this Agreement,
and such accounting rendered by Lender shall be deemed final, binding and
conclusive upon Borrowers unless Lender is notified by Borrowers in writing to
the contrary within 30 days after the date each accounting is deemed to have
been sent pursuant to Section 12.8. Such notice shall only be deemed an
objection to those items specifically objected to therein.
4.9. NATURE AND EXTENT OF EACH BORROWER'S LIABILITY.
(i) Joint and Several Liability. Each
Borrower shall be liable for, on a joint and several basis, and hereby
guarantees the timely payment by all other Borrowers of, all of the Loans, and
other Obligations, regardless of which Borrower actually may have received the
proceeds of any Loans or other extensions of credit hereunder or the amount of
such Loans received or the manner in which Lender accounts for such Loans or
other extensions of credit on its books and records, it being acknowledged and
agreed that Loans to any Borrower inure to the mutual benefit of all Borrowers
and that Lenders is relying on the joint and several liability of Borrowers in
extending the Loans and other financial accommodations hereunder. Each Borrower
hereby unconditionally and irrevocably agrees that upon default in the payment
when due (whether at stated maturity, by acceleration or otherwise) of any
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principal of, or interest owed on, any of the Loans or other Obligations, such
Borrower shall forthwith pay the same, without notice or demand.
(ii) Unconditional Nature of Liability.
Each Borrower's joint and several liability hereunder with respect to, and
guaranty of, the Loans and other Obligations shall, to the fullest extent
permitted by Applicable Law, be unconditional irrespective of (i) the validity,
enforceability, avoidance or subordination of any of the Obligations or of any
promissory note or other document evidencing all or any part of the Obligations,
(ii) the absence of any attempt to collect any of the Obligations from any other
Obligor or any Collateral or other security therefor, or the absence of any
other action to enforce the same, (iii) the waiver, consent, extension,
forbearance or granting of any indulgence by Lender with respect to any
provision of any Instrument evidencing or securing the payment of any of the
Obligations, or any other agreement now or hereafter executed by any other
Borrower and delivered to Lender, (iv) the failure by Lender to take any steps
to perfect or maintain the perfected status of its security interest in or Lien
upon, or to preserve its rights to, any of the Collateral or other security for
the payment or performance of any of the Obligations, or Lender's release of any
Collateral or release or subordination of its Liens upon any Collateral, (v)
Lenders' election, in any proceeding instituted under the Bankruptcy Code, for
the application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing
or grant of a security interest by any other Borrower, as debtor-in-possession
under Section 364 of the Bankruptcy Code, (vii) the release or compromise, in
whole or in part, of the liability of any Obligor for the payment of any of the
Obligations, (ix) any amendment or modification of any of the Loan Documents or
waiver of any Default or Event of Default thereunder, (x) any increase in the
amount of the Obligations beyond any limits imposed herein or in the amount of
any interest, fees or other charges payable in connection therewith, or any
decrease in the same, (xi) the disallowance of all or any portion of Lender's
claims for the repayment of any of the Obligations under Section 502 of the
Bankruptcy Code, (xii) Lender's release of any Obligor, (xiii) any delay,
extension of time, renewal, compromise or other indulgence granted by Lender
with respect to any Obligations, and (xiv) any other circumstance that might
constitute a legal or equitable discharge or defense of any Borrower. Each
Borrower expressly waives any requirement that Lender exhausts any right or take
any action against any Obligor or any Collateral, including any rights any
Borrower might otherwise have under O.C.G.A. Section 10- 7-24 or any similar
statute. At any time an Event of Default exists, Lender may proceed directly
and at once, without notice to any Obligor, against any or all of Obligors to
collect and recover all or any part of the Obligations, without first
proceeding against any other Obligor or against any Collateral or other
security for the payment or performance of any of the Obligations, and each
Borrower waives any provision that might otherwise require Lender under
Applicable Law to pursue or exhaust its remedies against any Collateral or
Obligor before pursuing such Borrower or another Obligor. Each Borrower
consents and agrees that Lender shall be under no obligation to ▇▇▇▇▇▇▇▇ any
assets in favor of any Obligor or against or in payment of any or all of the
Obligations.
(iii) No Reduction in Liability for
Obligations. No payment or payments made by an Obligor or received or
collected by Lender from any Collateral or any other Person by virtue of any
action or proceeding or any setoff or appropriation or application at any time
or from time to time in reduction of or in payment of the Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of any
Borrower under this Agreement, each of which shall remain jointly and severally
liable for the payment and performance of all Loans and other Obligations until
the Obligations are paid in full and this Agreement is terminated.
(iv) Contribution and Indemnity Among
Borrowers. Each Borrower is obligated to repay the Obligations as a joint
and several obligor under this Agreement. To the extent that any Borrower shall,
under this Agreement, as a joint and several obligor, repay any of the
Obligations constituting Loans made to another Borrower hereunder or other
Obligations incurred directly
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and primarily by any other Borrower (an "Accommodation Payment"), then the
Borrower making such Accommodation Payment shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Borrowers in an
amount, for each of such other Borrower, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Borrower's
"Allocable Amount" (as defined below) and the denominator of which is the sum of
the Allocable Amounts of all of the Borrowers. As of any date of determination,
the Allocable Amount of each Borrower shall be equal to the maximum amount of
liability for Accommodation Payments which could be asserted against such
Borrower hereunder without (a) rendering such Borrower "insolvent" within the
meaning of Section 101(31) of the Bankruptcy Code, Section 2 of the Uniform
Fraudulent Transfer Act (the "UFTA") or Section 2 of the Uniform Fraudulent
Conveyance Act (the "UFCA"), (b) leaving such Borrower with unreasonably small
capital or assets within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA or Section 5 of the UFCA, or (c) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code, Section 4 of the UFTA or Section 5 of the UFCA. The
provisions of this section shall, to the extent expressly inconsistent with any
provision in any of the Loan Documents, supersede such inconsistent provision.
(v) Subordination. Each Borrower hereby
subordinates any claims, including any right of payment, subrogation,
contribution and indemnity, that it may have from or against any other Obligor,
and any successor or assign of any other Obligor, including any trustee,
receiver or debtor-in-possession, howsoever arising, due or owing or whether
heretofore, now or hereafter existing, to the payment in full of all of the
Obligations.
SECTION 5 TERM AND TERMINATION
5.1. TERM OF AGREEMENT. Subject to Lender's right to cease making Loans
to Borrowers when any Default or Event of Default exists, this Agreement shall
be in effect for a period of 5 years from the date hereof, through March ___,
2003 (the "Original Term"), and this Agreement shall automatically renew itself
for one-year periods thereafter (each a "Renewal Term"), unless terminated as
provided in Section 5.2 hereof.
5.2. TERMINATION.
5.2.1. Termination by Lender. Upon at least 90 days prior
written notice to APB, Lender may terminate this Agreement as of the last day of
the Original Term or the then current Renewal Term, and Lender may terminate
this Agreement without notice upon or after the occurrence of an Event of
Default. This Agreement shall automatically terminate as provided herein.
5.2.2. Termination by Borrowers. Upon at least 90 days prior
written notice to Lender, Borrowres may, at their option, terminate this
Agreement in its entirety; provided, however, no such termination by Borrowers
shall be effective until Borrowers have satisfied all of the Obligations and
executed in favor of and delivered to Lender a general release of all Claims
that Borrowers may have against Lender. For purposes of this Agreement, the
Obligations shall not be deemed to have been satisfied until all Obligations for
the payment of money have been paid to Lender in same day funds and all
Obligations that are at the time in question contingent (including any LC
Obligations) have been fully cash collateralized in favor and to the
satisfaction of Lender or Lender has received as beneficiary a direct pay letter
of credit in form and from an issuing bank acceptable to Lender and providing
for direct payment to Lender of all such contingent Obligations at the time they
become fixed. Any notice of termination given by Borrowers shall be irrevocable
unless Lender otherwise agrees in writing. Borrowers may elect to terminate this
Agreement in its entirety only; no section of this Agreement or Type of Loan
available hereunder may be terminated singly.
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5.2.3. Termination Charges. On the effective date of
termination of this Agreement for any reason, Borrowers shall jointly and
severally pay to Lender (in addition to the then outstanding principal, accrued
interest, fees and other charges owing under the terms of this Agreement and any
of the other Loan Documents), as liquidated damages for the loss of the bargain
and not as a penalty, an amount equal to 2% of the highest of the Average
Monthly Loan Balances prior to the effective date of termination if termination
occurs during the first Loan Year; 1% of the highest of the Average Monthly Loan
Balances prior to the effective date of termination if termination occurs during
the second Loan Year; and .5% of the highest of the Average Monthly Loan
Balances prior to the effective date of termination if termination occurs during
the third Loan Year. Notwithstanding anything to the contrary contained in this
Section 5.2.3, no termination charges shall be payable by Borrowers if APB shall
terminate this Agreement prior to the end of the first or second Loan Year and
the reason for APB's termination is that (i) Lender has refused to give its
consent to a Restrictive Investment consisting of a Borrower's acquisition of
all or substantially all of the capital stock (or other Equity Interests) or
assets of another Person which requires financing by Lender of not less than
$1,000,000, (ii) Lender consented to such Restricted Investment but declined to
finance such Restricted Investment, or (iii) Lender was unwilling to provide
such financing on terms at least as competitive with respect to amount, pricing
and repayment as those proposed in writing to be provided, and actually
provided, by another financial institution.
5.2.4. Effect of Termination. All of the Obligations shall be
immediately due and payable upon the effective date of termination by Lender or,
in the case of a termination by a Borrower, upon the date specified in such
Borrower's notice of termination of this Agreement as the effective date of such
termination. On the effective date of any termination (whether by Lender or a
Borrower), Lender shall have no obligation to make any Loans, join in any LC
Application or issue any LC Guaranty or otherwise to extend credit to or for the
direct or indirect benefit of any Borrower. All undertakings, agreements,
covenants, warranties and representations of each Borrower contained in the Loan
Documents shall survive any such termination, and Lender shall retain its Liens
in the Collateral and all of its rights and remedies under the Loan Documents
notwithstanding such termination, until Borrowers have satisfied all of the
Obligations in the manner described in Section 5.2.2. Notwithstanding the
payment in full of the Obligations, Lender shall not be required to terminate
its security interests in the Collateral unless, with respect to any loss or
damage Lender may incur as a result of dishonored Payment Items received by
Lender from any Borrower or any Account Debtor and applied to the Obligations,
Lender has either (at its option) (i) received a written agreement, executed by
Borrowers and by any Person whose loans or other advances to Borrowers are used
in whole or in part to satisfy the Obligations, indemnifying Lender from any
such loss or damage; or (ii) retained such monetary reserves and Liens on the
Collateral for such period of time as Lender, in its reasonable discretion, may
deem necessary to protect Lender from any such loss or damage. The provisions of
Section 4.5 hereof and all obligations of Borrowers to this Agreement to
indemnify Lender shall be joint and several and shall in all events survive any
termination of this Agreement.
SECTION 6 COLLATERAL SECURITY
6.1. GRANT OF SECURITY INTEREST. To secure the prompt payment and
performance to Lender of all of the Obligations, each Borrower hereby grants to
Lender a continuing security interest in and Lien upon all of such Borrower's
assets, including all of the following Property and interests in Property of
such Borrower, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located:
(i) All Accounts;
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(ii) All Inventory;
(iii) All Equipment;
(iv) All Instruments;
(v) All Chattel Paper;
(vi) All Documents;
(vii) All General Intangibles;
(viii) All Investment Property, including Securities,
whether certificated or uncertificated (but excluding any portion thereof that
constitutes Margin Stock), and all securities entitlements;
(ix) All monies now or at any time or times
hereafter in the possession or under the control of Lender or a bailee or
Affiliate of Lender, including any Cash Collateral in the Cash Collateral
Account;
(x) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (i) through (ix) above,
including proceeds of and unearned premiums with respect to insurance policies
insuring any of the Collateral and claims against any Person for loss of, damage
to or destruction of any of the Collateral; and
(xi) All books and records (including customer lists,
files, correspondence, tapes, computer programs, print-outs, and other
computer materials and records) of such Borrower pertaining to any of (i)
through (x) above.
6.2. LIEN ON DEPOSIT ACCOUNTS. As additional security for the payment
and performance of the Obligations, each Borrower grants to Lender a security
interest in and assigns to Lender all of such Borrower's right, title and
interest in and to each Deposit Account of Borrower and in and to any deposits
or other sums at any time credited to each such Deposit Account, including any
sums in any blocked account or any special lockbox account and in the accounts
in which sums are deposited and such blocked accounts and special lockbox
accounts. In connection with the foregoing, each Borrower hereby authorizes and
directs each such bank or other depository to pay or deliver to Lender upon its
written demand therefor made at any time upon the occurrence and during the
continuation of an Event of Default and without further notice to such Borrower
(such notice being hereby expressly waived), all balances in each Deposit
Account maintained by Borrower with such depository for application to the
Obligations then outstanding, and the rights given Lender in this Section shall
be cumulative with and in addition to Lender's other rights and remedies in
regard to the foregoing Property as proceeds of Collateral. Each Borrower hereby
irrevocably appoints Lender as its attorney to collect any and all such balances
to the extent any such payment is not made to Lender by such bank or other
depository after demand thereon is made by Lender pursuant hereto.
6.3. LIEN ON REAL ESTATE. The due and punctual payment and performance
of the Obligations shall also be secured by the Lien created by the Mortgages
upon the Real Estate described therein. The Mortgages shall be executed on or
about the Closing Date and shall be duly recorded, at Borrowers' expense, in
each office where such recording is required to constitute a fully perfected
Lien on the Real Estate covered thereby.
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6.4. OTHER COLLATERAL. In addition to the items of Property referred to
above, the obligations shall also be secured by the Cash Collateral to the
extent provided herein and all of the other items of Property from time to time
described in any of the Security Documents as security for the payment of the
Obligations.
6.5. LIEN PERFECTION; FURTHER ASSURANCES. Promptly after Lender's
request therefor, Borrowers shall execute and deliver to Lender such
instruments, assignments or documents as are necessary under the UCC or other
Applicable Law to perfect (or continue the perfection of) Lender's Lien upon the
Collateral and shall take such other action as may be requested by Lender to
give effect to or carry out the intent and purposes of this Agreement. Unless
prohibited by Applicable Law, each Borrower hereby authorizes Lender to execute
and file any such financing statement on such Borrower's behalf. The parties
agree that a carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement and may be filed in any appropriate
office in lieu thereof.
SECTION 7 COLLATERAL ADMINISTRATION
7.1. GENERAL
7.1.1. Location of Collateral. All tangible items of
Collateral, other than Inventory in transit and motor vehicles, shall at all
times be kept by Borrowers and their Subsidiaries at one or more of the business
locations set forth in SCHEDULE 7.1.1 hereto and shall not be moved therefrom,
without the prior written approval of Lender, except that prior to an Event of
Default and Lender's acceleration of the maturity of the Obligations in
consequence thereof, (i) Borrowers may make sales of Inventory in the ordinary
course of business and (ii) dispose of Equipment to the extent authorized by
Section 7.4.2 hereof.
7.1.2. Insurance of Collateral; Condemnation Proceeds.
(i) Each Borrower shall maintain and pay for
insurance upon all Collateral, wherever located, covering casualty, hazard,
public liability, theft, malicious mischief, and such other risks in such
amounts and with such insurance companies as are reasonably satisfactory to
Lender. All proceeds payable under each such policy shall be payable to Lender
for application to the Obligations. Each Borrower shall deliver the originals or
certified copies of such policies to Lender with satisfactory lender's loss
payable endorsements reasonably satisfactory to Lender, naming Lender as sole
loss payee, assignee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Lender in the event of
cancellation of the policy for any reason whatsoever and a clause specifying
that the interest of Lender shall not be impaired or invalidated by any act or
neglect of any Borrower or the owner of the Property or by the occupation of the
premises for purposes more hazardous than are permitted by said policy. If any
Borrower fails to provide and pay for such insurance, Lender may, at its option,
but shall not be required to, procure the same and charge each Borrower
therefor. Each Borrower agrees to deliver to Lender, promptly as rendered, true
copies of all reports made in any reporting forms to insurance companies. For so
long as no Event of Default exists, each Borrower shall have the right to
settle, adjust and compromise any claim with respect to any insurance maintained
by each Borrower provided that all proceeds thereof are applied in the manner
specified in this Agreement, and Lender agrees promptly to provide any necessary
endorsement to any checks or drafts issued in payment of any such claim. At any
time that an Event of Default exists, only Lender shall be authorized to settle,
adjust and compromise such claims. Lender shall have all rights and remedies
with respect to such policies of insurance as are provided for in this Agreement
and the other Loan Documents.
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(ii) Any proceeds of insurance referred to in
this Section 7.1.2 and any condemnation awards that are paid to Lender in
connection with a condemnation of any of the Collateral shall be paid to Lender
and (a) in the case of proceeds that relate to Inventory, applied first to the
payment of the Revolver Loans and then to any other Obligations outstanding, and
(b) in the case of proceeds of Equipment or real Property applied first to the
Term Loan or Equipment Loans, as specified by Lender, and then to any other
Obligations outstanding, provided that if requested by any Borrower in writing
within 5 days after Lender's receipt of such proceeds and if no Default or Event
of Default exists, each Borrower may apply such proceeds to repair or replace
the damaged or destroyed Equipment or Real Estate so long as (1) such repair or
replacement is promptly undertaken and concluded, (2) replacements of buildings
are constructed on the sites of the original casualties and are of comparable
size, and quality and utility to the destroyed buildings, (3) the repaired or
replaced Property is at all times free and clear of Liens other than Permitted
Liens, (4) each Borrower complies with such disbursement procedures for such
proceeds as Lender may reasonably impose for repair or replacement and (5) the
amount of proceeds from any single casualty affecting Equipment or Real Estate
does not exceed $100,000.
7.1.3. Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, all Taxes imposed by any Applicable Law on any of the Collateral or
in respect of the sale thereof, and all other payments required to be made by
Lender to any Person to realize upon any Collateral shall be borne and paid by
Borrowers. If Borrowers fail to promptly pay any portion thereof when due,
Lender may, at its option, but shall not be required to, pay the same and charge
Borrowers therefor. Lender shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto (except
for reasonable care in the custody thereof while any Collateral is in Lender's
actual possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other Person
whomsoever, but the same shall be at Borrowers' sole risk.
7.1.4. Defense of Title to Collateral. Borrowers shall at all
times defend their title to the Collateral and Lender's Liens therein against
all Persons and all claims and demands whatsoever other than Permitted Liens.
7.2. ADMINISTRATION OF ACCOUNTS.
7.2.1. Records, Schedules and Assignments of Accounts. Each
Borrower shall keep accurate and complete records of its Accounts and all
payments and collections thereon and Borrowers shall submit to Lender on such
periodic basis as Lender shall request a Borrowing Base Certificate for the
preceding period. Each Borrower shall also provide to Lender on or before the
20th day of each month, a detailed aged trial balance of all of its Accounts
existing as of the last day of the preceding month, specifying the names,
addresses, face value, dates of invoices and due dates for each Account Debtor
obligated on an Account so listed ("Schedule of Accounts"), and, upon Lender's
request therefor, copies of proof of delivery and the original copy of all
documents, including repayment histories and present status reports relating to
the Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Lender shall reasonably request. In
addition, if Accounts in an aggregate face amount in excess of $100,000 cease to
be Eligible Accounts in whole or in part, Borrowers shall notify Lender of such
occurrence promptly (and in any event within 2 Business Days) after any
Borrower's having obtained knowledge of such occurrence and the Borrowing Base
shall thereupon be adjusted to reflect such occurrence. Upon Lender's request,
each Borrower shall deliver to Lender copies of invoices or invoice registers
related to all of its Accounts.
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7.2.2. Discounts, Allowances, Disputes. If any Borrower grants
any discounts, allowances or credits that are not shown on the face of the
invoice for the Account involved, Borrowers shall report such discounts,
allowances or credits, as the case may be, to Lender as part of the next
required Schedule of Accounts. If any amounts due and owing in excess of $50,000
are in dispute between any Borrower and any Account Debtor, Borrowers shall
provide Lender with written notice thereof at the time of submission of the next
Schedule of Accounts, explaining in detail the reason for the dispute, all
claims related thereto and the amount in controversy. Upon and after the
occurrence of an Event of Default, Lender shall have the right to settle or
adjust all disputes and claims directly with the Account Debtor and to
compromise the amount or extend the time for payment of the Accounts upon such
terms and conditions as Lender may deem advisable, and to charge the
deficiencies, costs and expenses thereof, including attorneys' fees, to
Borrowers.
7.2.3. Taxes. If an Account of any Borrower includes a charge
for any Taxes payable to any governmental taxing authority, Lender is
authorized, in its sole discretion, to pay the amount thereof to the proper
taxing authority for the account of such Borrower and to charge Borrowers
therefor; provided, however, that Lender shall not be liable for any Taxes that
may be due by any Borrower.
7.2.4. Account Verification. Whether or not a Default or an
Event of Default has occurred, any of Lender's officers, employees or agents
shall have the right, at any time or times hereafter, in the name of Lender, any
designee of Lender or any Borrower, to verify the validity, amount or any other
matter relating to any Accounts of any Borrower by mail, telephone, telegraph or
otherwise. Borrowers shall cooperate fully with Lender in an effort to
facilitate and promptly conclude any such verification process.
7.2.5. Maintenance of Dominion Account. Each Borrower, jointly
with APB, shall maintain a Dominion Account pursuant to a lockbox or other
arrangement acceptable to Lender and with such banks as may be selected by
Borrowers and be acceptable to Lender. Each Borrower shall issue to each such
bank an irrevocable letter of instruction directing such banks to deposit all
payments or other remittances received in the lockbox to the Dominion Account
for application on account of the Obligations. All funds deposited in a Dominion
Account shall immediately become the property of Lender and each Borrower shall
obtain the agreement by such banks in favor of Lender to waive any offset rights
against the funds so deposited. Lender assumes no responsibility for any such
lockbox arrangement, including any claim of accord and satisfaction or release
with respect to deposits accepted by any bank thereunder.
7.2.6. Collection of Accounts; Proceeds of Collateral. To
expedite collection, Borrowers shall endeavor in the first instance to make
collection of their Accounts for Lender. All Payment Items received by any
Borrower in respect of its Accounts, together with the proceeds of any other
Collateral, shall be held as Lender's property by such Borrower as trustee of an
express trust for Lender's benefit, and such Borrower shall immediately deposit
same in kind in a Dominion Account. Lender retains the right at all times after
the occurrence of a Default or an Event of Default to notify Account Debtors
that Accounts have been assigned to Lender and to collect Accounts directly in
its own name and to charge to Borrowers the collection costs and expenses,
including attorneys' fees.
7.3. Administration of Inventory.
7.3.1. Records and Reports of Inventory. Each Borrower shall
keep accurate and complete records of its Inventory. Borrowers shall furnish
Lender Inventory reports in form and detail satisfactory to Lender at such times
as Lender may request, but at least once each month, not later than the 20th day
of such month. Borrowers shall conduct a physical inventory no less frequently
than
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annually and shall provide to Lender a report based on each such physical
inventory promptly thereafter, together with such supporting information as
Lender shall request.
7.3.2. Returns of Inventory. No Borrower shall return any of
its Inventory to a supplier or vendor thereof, or any other Person, whether for
cash, credit against future purchases or then existing payables, or otherwise,
unless (i) such return is in the ordinary course of business of such Borrower
and such Person, (ii) no Default or Event of Default exists or would result
therefrom, (iii) the return of such Inventory will not result in an
Out-of-Formula Condition, (iv) if the aggregate Value of all Inventory returned
in any month exceeds $50,000, Borrowers promptly notifies Lender thereof, and
(v) any payment received by any Borrower in connection with any such return is
promptly turned over to Lender for application to the Obligations.
7.4. ADMINISTRATION OF EQUIPMENT.
7.4.1. Records and Schedules of Equipment. Each Borrower shall
keep accurate records itemizing and describing the kind, type, quality, quantity
and value of its Equipment and all dispositions made in accordance with Section
7.4.2 hereof, and shall furnish Lender with a current schedule containing the
foregoing information on at least an annual basis and more often if requested by
Lender. Immediately on request therefor by Lender, Borrowers shall deliver to
Lender any and all evidence of ownership, if any, of any of the Equipment.
7.4.2. Dispositions of Equipment. No Borrower will sell, lease
or otherwise dispose of or transfer any of its Equipment or any part thereof
without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate as to
all Borrowers during any consecutive 12-month period, has a fair market value or
book value, whichever is more, of $50,000 or less, provided that all Net
Proceeds thereof are remitted to Lender for application to the Loans (which
application shall be first to the Term Loan or Equipment Loans in accordance
with Section 4.3.4 hereof,, to the extent of the Net Proceeds thereof, and the
balance, if any, to any other Obligations outstanding), or (ii) replacements of
Equipment that is substantially worn, damaged or obsolete with Equipment of like
kind, function and value, provided that the replacement Equipment shall be
acquired prior to or concurrently with any disposition of the Equipment that is
to be replaced, the replacement Equipment shall be free and clear of Liens other
than Permitted Liens that are not Purchase Money Liens. Borrowers shall give
Lender prior written notice of any disposition of Equipment that is authorized
pursuant to this Section 7.4.2 at least 5 Business Days prior to the date of
such disposition.
7.4.3. Condition of Equipment. The Equipment is in good
operating condition and repair, and all necessary replacements of and repairs
thereto shall be made so that the value and operating efficiency of the
Equipment shall be maintained and preserved, reasonable wear and tear excepted.
No Borrower will permit any of the Equipment to become affixed to any real
Property leased to such Borrower so that an interest arises therein under the
real estate laws of the applicable jurisdiction unless the landlord of such real
Property has executed a landlord waiver or leasehold mortgage in favor of and in
form acceptable to Lender, and no Borrower will permit any of the Equipment to
become an accession to any personal Property that is subject to a Lien unless
the Lien is a Permitted Lien (other than a Purchase Money Lien).
7.5. PAYMENT OF CHARGES. All amounts chargeable to Borrowers under this
Section 7 shall be Obligations secured by all of the Collateral and shall be
payable ON DEMAND.
SECTION 8 REPRESENTATIONS AND WARRANTIES
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8.1. GENERAL REPRESENTATIONS AND WARRANTIES. To induce Lender to enter
into this Agreement and to make advances hereunder, each Borrower warrants and
represents to Lender and covenants with Lender that:
8.1.1. Organization and Qualification. Each Borrower and each
of its Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization. Each Borrower
and each of its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on SCHEDULE 8.1.1 hereto and in all other states and jurisdictions where
the character of its Properties or the nature of its activities make such
qualification necessary unless failure to so qualify could not reasonably be
expected to have a Material Adverse Effect.
8.1.2. Corporate Power and Authority. Each Borrower and each
of its Subsidiaries is duly authorized and empowered to enter into, execute,
deliver and perform this Agreement and each of the other Loan Documents to which
it is a party. The execution, delivery and performance of this Agreement and
each of the other Loan Documents have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or approval of
the shareholders of any Borrower or any of its Subsidiaries; (ii) contravene any
Borrower's or any of its Subsidiaries' charter, articles or certificate of
incorporation or by-laws; (iii) violate, or cause any Borrower or any of its
Subsidiaries to be in default under, any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award in effect
having applicability to such Borrower or any of its Subsidiaries; (iv) result in
a breach of or constitute a default under any indenture or loan or credit
agreement or any other material agreement, lease or instrument to which any
Borrower or any of its Subsidiaries is a party or by which it or its Properties
may be bound or affected; or (v) result in, or require, the creation or
imposition of any Lien (other than Permitted Liens) upon or with respect to any
of the Properties now owned or hereafter acquired by any Borrower or any of its
Subsidiaries.
8.1.3. Legally Enforceable Agreement. This Agreement is, and
each of the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each Borrower and each of its
Subsidiaries enforceable against it in accordance with its respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws of general application affecting the enforcement of
creditors' rights.
8.1.4. Capital Structure. As of the date hereof, SCHEDULE
8.1.4 hereto states (i) the correct name of each Subsidiary of each Borrower,
its jurisdiction of incorporation and the percentage of its Voting Stock owned
by such Borrower, (ii) the name of each Borrower's corporate or joint venture
Affiliates and the nature of the affiliation, (iii) the number, nature and
holder of all outstanding Equity Interests of each Borrower (other than APB) and
each of its Subsidiaries, (iv) each shareholder of APB that owns more than 5% of
the issued and outstanding shares of stock of APB, and (v) the number of
authorized and issued Equity Interests (and treasury shares) of each Borrower
and each of its Subsidiaries. Each Borrower has good title to all of the shares
it purports to own of the Equity Interests of each of its Subsidiaries, free and
clear in each case of any Lien other than Permitted Liens. All such Equity
Interests have been duly issued and are fully paid and non-assessable. Except as
set forth on SCHEDULE 8.1.4 hereto, there are no outstanding options to
purchase, or any rights or warrants to subscribe for, or any commitments or
agreements to issue or sell, or any Equity Interests or obligations convertible
into, or any powers of attorney relating to, shares of the capital stock of any
Borrower or any of its Subsidiaries. Except as set forth on SCHEDULE 8.1.4
hereto, there are no outstanding agreements or instruments binding upon any
Borrower's shareholders relating to the ownership of its shares of capital
stock.
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8.1.5. Corporate Names. No Borrower nor any of its
Subsidiaries has been known as or used any corporate, fictitious or trade names
except those listed on SCHEDULE 8.1.5 hereto. Except as set forth on SCHEDULE
8.1.5, no Borrower nor any of its Subsidiaries has been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person.
8.1.6. Business Locations. As of the date hereof, each
Borrower's and each of its Subsidiaries' chief executive office and other places
of business are as listed on SCHEDULE 7.1.1 hereto. During the preceding
five-year period, no Borrower nor any of its Subsidiaries has had an office or
place of business other than as listed on SCHEDULE 7.1.1. Except as shown on
SCHEDULE 7.1.1, no Inventory is stored with a bailee, warehouseman or similar
Person, nor is any Inventory consigned to any Person.
8.1.7. Title to Properties; Priority of Liens. Each Borrower
and each of its Subsidiaries has good, indefeasible and marketable title to and
fee simple ownership of, or valid and subsisting leasehold interests in, all of
its real Property, and good title to all of the Collateral and all of its other
Property, in each case free and clear of all Liens except Permitted Liens. Each
Borrower has paid or discharged all lawful claims when due which, if unpaid when
due, might become a Lien against such Borrower's Properties that is not a
Permitted Lien. The Liens granted to Lender under Section 6 hereof are first
priority Liens, subject only to those Permitted Liens which are expressly stated
to have priority over the Liens of Lender.
8.1.8. Accounts. Lender may rely, in determining which
Accounts are Eligible Accounts, on all statements and representations made by
a Borrower with respect to any Account. Unless otherwise indicated in writing
to Lender, with respect to each Account:
(i) It is genuine and in all respects what it
purports to be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and
delivery of goods or rendition of services by a Borrower in the ordinary
course of its business and in accordance with the terms and conditions of all
purchase orders, contracts or other documents relating thereto and forming a
part of the contract between a Borrower and the Account Debtor;
(iii) It is for a liquidated amount maturing as
stated in the duplicate invoice covering such sale or rendition of services, a
copy of which has been furnished or is available to Lender;
(iv) Such Account, and Lender's security interest
therein, is not, and will not (by voluntary act or omission of a Borrower)
be in the future, subject to any offset, Lien, deduction, defense, dispute,
counterclaim or any other adverse condition except for disputes resulting in
returned goods where the amount in controversy is reasonably deemed by Lender to
be immaterial, and each such Account is absolutely owing to a Borrower and is
not contingent in any respect or for any reason;
(v) Such Borrower has made no agreement with any
Account Debtor for any extension, compromise, settlement or modification of
any such Account or any deduction therefrom, except discounts or allowances
which are granted by a Borrower in the ordinary course of its business for
prompt payment and which are reflected in the calculation of the net amount of
each respective invoice related thereto and are reflected in the Schedules of
Accounts submitted to Lender pursuant to Section 7.2.1 hereof;
(vi) To the best of such Borrower's knowledge, there
are no facts, events or occurrences which in any way impair the validity or
enforceability of any Accounts or tend to reduce the
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amount payable thereunder from the face amount of the invoice and statements
delivered to Lender with respect thereto;
(vii) To the best of such Borrower's knowledge, the
Account Debtor thereunder (1) had the capacity to contract at the time any
contract or other document giving rise to the Account was executed and (2)
such Account Debtor is Solvent;
(viii) To the best of such Borrower's knowledge,
there are no proceedings or actions which are threatened or pending against any
Account Debtor which might result in any material adverse change in such
Account Debtor's financial condition or the collectibility of such Account;
(ix) Except as set forth on SCHEDULE 8.1.8
hereto, there are no restrictions on such Borrower's right to assign to Lender
the right to payment represented by the Account or any Lien upon the Account.
8.1.9. Financial Statements; Fiscal Year. The Consolidated and
consolidating balance sheets of Borrowers (other than Potter's) as of December
31, 1997, and the related statements of income, changes in stockholder's equity,
and changes in financial position for the periods ended on such dates, have been
prepared in accordance with GAAP, and present fairly the financial positions of
Borrowers (other than Potter's) at such dates and the results of Borrowers'
operations (other than the operations of Potter's) for such periods. Since
December 31, 1997, there has been no material change in the condition, financial
or otherwise, of any Borrower whose financial position was included in the
Consolidated and consolidating financial statements as of December 31, 1997, and
no change in the aggregate value of Equipment and real Property owned by any
such Borrower, except changes in the ordinary course of business, none of which
individually or in the aggregate has been materially adverse. The Pro Forma
presents fairly and accurately in all material respects Borrowers' financial
condition as of such date as if the transactions contemplated by the Acquisition
Documents and this Agreement have occurred on such date and the Closing Date had
been such date.
8.1.10. Full Disclosure. The financial statements referred to
in Section 8.1.9 hereof do not, nor does this Agreement or any other written
statement of any Borrower to Lender, contain any untrue statement of a material
fact or omit a material fact necessary to make the statements contained therein
or herein not misleading. There is no fact or circumstances which any Borrower
has failed to disclose to Lender in writing and which may reasonably be expected
to have a Material Adverse Effect.
8.1.11. Solvent Financial Condition. Each Borrower and each of
its Subsidiaries is now and, after giving effect to the Acquisition, the Loans
to be made hereunder and all Letters of Credit to be issued on the Closing Date,
at all times will be, Solvent.
8.1.12. Surety Obligations. No Borrower nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or obligation of any
Person, except that APB is a guarantor of certain obligations of its
Subsidiaries under certain Equipment leases.
8.1.13. Taxes. The federal tax identification numbers of each
Borrower and each of its Subsidiaries are shown on SCHEDULE 8.1.13 hereto. Each
Borrower and each of its Subsidiaries has filed all federal, state and local tax
returns and other reports it is required by law to file and has paid,
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or made provision for the payment of, all Taxes upon it, its income and
Properties as and when such Taxes are due and payable, except to the extent
being Properly Contested. The provision for Taxes on the books of Borrowers and
their Subsidiaries are adequate for all years not closed by applicable statutes,
and for their current Fiscal Year.
8.1.14. Brokers. There are no claims for brokerage
commissions, finder's fees or investment banking fees in connection with the
transactions contemplated by this Agreement, except ABN AMRO.
8.1.15. Patents, Trademarks, Copyrights and Licenses. Each
Borrower and each of its Subsidiaries owns or possesses all Intellectual
Property necessary for the present and planned future conduct of its business
without any conflict with the rights of others; there is no objection to or
pending Intellectual Property Claim with respect to any Borrower's right to use
any such Intellectual Property and no Borrower is aware of any grounds for
challenge or objection thereto; and, except as may be described on SCHEDULE
8.1.15, no Borrower pays any royalty or other compensation to any Person for the
right to use any Intellectual Property. All such Intellectual Property and other
similar rights are listed on SCHEDULE 8.1.15 hereto.
8.1.16. Governmental Approvals. Each Borrower and each of its
Subsidiaries has, and is in good standing with respect to all material
Governmental Approvals necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate its
Properties as now owned or leased by it.
8.1.17. Compliance with Laws. Each Borrower and each of its
Subsidiaries has duly complied with, and its Properties, business operations and
leaseholds are in compliance in all material respects with, the provisions of
all Applicable Law (except to the extent that any such noncompliance with
Applicable Law would not reasonably be expected to have a Material Adverse
Effect) and there have been no citations, notices or orders of noncompliance
issued to any Borrower or any of its Subsidiaries under any such law, rule or
regulation. No Inventory has been produced in violation of the Fair Labor
Standards Act (29 U.S.C. Section 201 et seq.). With respect to matters arising
under any Environmental Laws, the representations and warranties contained in
the Environmental Certificate are true and correct on the date hereof.
8.1.18. Restrictions. Neither Borrower nor any of its
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which has or could be reasonably expected to have a
Material Adverse Effect. Neither Borrower nor any of its Subsidiaries is a party
or subject to any contract or agreement which restricts its right or ability to
incur the Obligations, other than as set forth on SCHEDULE 8.1.18 hereto, none
of which prohibit the execution of or compliance with this Agreement or the
other Loan Documents by Borrower or any of its Subsidiaries, as applicable.
8.1.19. Litigation. Except as set forth on SCHEDULE 8.1.19
hereto, there are no actions, suits, proceedings or investigations pending, or
to the knowledge of any Borrower, threatened, against or affecting any Borrower
or any of its Subsidiaries, or the business, operations, Properties, prospects,
profits or condition of any Borrower or any of its Subsidiaries, which if
resolved adversely to any Borrower or its Subsidiaries would have Material
Adverse Effect. No Borrower or any of its Subsidiaries is in default with
respect to any order, writ, injunction, judgment, decree or rule of any court,
governmental authority or arbitration board or tribunal.
8.1.20. No Defaults. No event has occurred and no condition
exists which would, upon or after the execution and delivery of this Agreement
or Borrowers' performance hereunder,
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constitute a Default or an Event of Default. No Borrower or any of its
Subsidiaries is in default, and no event has occurred and no condition exists
which constitutes or which with the passage of time or the giving of notice or
both would constitute a default, under any Material Contract or in the payment
of any Debt to any Person for Money Borrowed. No default exists int the
performance by any Borrower of any of its obligations under any of the
Acquisition Documents.
8.1.21. Leases. SCHEDULE 8.1.21 hereto is a complete listing
of all capitalized and operating leases of each Borrower and each of its
Subsidiaries on the date hereof. Each Borrower and each of its Subsidiaries is
in full compliance with all of the terms of each of its respective capitalized
and operating leases.
8.1.22. Pension Plans. Except as disclosed on SCHEDULE 8.1.22
hereto, no Borrower nor any of its Subsidiaries has any Plan on the date hereof.
Each Borrower and each of its Subsidiaries is in full compliance with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. No fact or situation that could result in a Material Adverse Effect
on the financial condition of any Borrower or any of its Subsidiaries exists in
connection with any Plan. No Borrower nor any of its Subsidiaries has any
withdrawal liability in connection with a Multiemployer Plan.
8.1.23. Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between any Borrower or any of its Subsidiaries and
any Person or any group of Persons whose accounts individually or in the
aggregate are material to the business of any Borrower or any of its
Subsidiaries, or with any material supplier, and there exists no condition or
state of facts or circumstances which would have a Material Adverse Effect upon
any Borrower or any of its Subsidiaries or prevent any Borrower or any of its
Subsidiaries from conducting such business after the consummation of the
transactions contemplated by this Agreement in substantially the same manner in
which it has heretofore been conducted.
8.1.24. Labor Relations. Except as described on SCHEDULE
8.1.24 hereto, no Borrower nor any of its Subsidiaries is a party to any
collective bargaining agreement on the date hereof. On the date hereof, there
are no material grievances, disputes or controversies with any union or any
other organization of any Borrower's or any of its Subsidiaries' employees, or
threats of strikes, work stoppages or any asserted pending demands for
collective bargaining by any union or organization.
8.1.25. Investment Company Act; Public Utility Holding Company
Act. No Obligor is an "investment company" or a "person directly or indirectly
controlled by or acting on behalf of an investment company" within the meaning
of the Investment Company Act of 1940, or a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935.
8.1.26. Margin Stock. No Borrower nor any Subsidiary of a
Borrower is 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.
8.2. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be deemed to be reaffirmed by each Borrower upon each delivery
of a Notice of Borrowing to Lender in accordance with Section 3.1 of this
Agreement, except for changes in the nature of a Borrower's or, if applicable,
any of its Subsidiaries' business or operations that may occur after the date
hereof in the ordinary course of business so long as
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Lender has consented to such changes or such changes are not violative of any
provision of this Agreement. Notwithstanding the foregoing, representations and
warranties which by their terms are applicable only to a specific date shall be
deemed made only at and as of such date.
8.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Borrowers contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION 9 COVENANTS AND CONTINUING AGREEMENTS
9.1. AFFIRMATIVE COVENANTS. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, each Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall and
shall cause each of its Subsidiaries to:
9.1.1. Visits and Inspections. Permit representatives of
Lender, from time to time, as often as may be reasonably requested, but only
during normal business hours, to visit and inspect its Properties and the
Properties of each of its Subsidiaries, inspect, audit and make extracts from
such Borrower's books and records, and discuss with such Borrower's officers,
employees and independent accountant, such Borrower's and each of its
Subsidiary's business, assets, liabilities, financial condition, business
prospects and results of operations.
9.1.2. Notices. Notify Lender in writing promptly after
Borrower's obtaining knowledge thereof (i) of the occurrence of any event or the
existence of any fact which renders any representation or warranty in this
Agreement or any of the other Loan Documents inaccurate, incomplete or
misleading; (ii) of the commencement of any litigation affecting any Borrower or
any of its Properties, whether or not the claim is considered by Borrowers to be
covered by insurance, and of the institution of any administrative proceeding
which, if determined adversely to any Borrower, would have a Material Adverse
Effect; (iii) at least sixty (60) days prior thereto, of any Borrower's opening
of any new office or place of business or any Borrower's closing of any existing
office or place of business; (iv) of any labor dispute to which any Borrower may
become a party, any strikes or walkouts relating to any of its plants or other
facilities, and the expiration of any labor contract to which it is a party or
by which it is bound; (v) of any default by any Obligor under or termination of
any Material Contract or any note, indenture, loan agreement, mortgage, lease,
deed, guaranty or other similar agreement relating to any Debt of any Borrower
exceeding $$100,000; (vi) of the existence of any Default or Event of Default;
(vii) of any default by any Person under any note or other evidence of Debt
payable to any Borrower; (viii) of any judgment rendered against any Obligor in
an amount exceeding $100,000; (ix) of the receipt by any Borrower of a notice
from a seller of "livestock" (as defined in PASA) that such Borrower has not
made timely payment therefor or that any instrument of payment therefor has been
dishonored, delivered by such unpaid seller to such Borrower pursuant to PASA,
or the receipt by any Borrower of any complaint, citation or order from the
Secretary of Agriculture alleging violations by such Borrower of the provisions
of PASA; and (x) of the receipt of any notice of default or termination or
threat of termination with respect to any material Distribution Agreement, and
of the commencement of any Insolvency Proceeding against any distributor who is
a party to any Distribution Agreement.
9.1.3. Financial Statements and Other Information. Keep
adequate records and books of account with respect to its business activities in
which proper entries are made in accordance with GAAP reflecting all its
financial transactions; and cause to be prepared and furnished to Lender the
following (all to be prepared in accordance with GAAP applied on a consistent
basis, unless Borrowers'
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certified public accountants concur in any change therein and such change is
disclosed to Lender and is consistent with GAAP):
(i) not later than 90 days after the close of
each Fiscal Year of Borrowers, unqualified audited financial statements
of Borrowers and their Subsidiaries as of the end of such year, on a
Consolidated and consolidating basis, certified by a firm of independent
certified public accountants of recognized standing selected by Borrowers but
acceptable to Lender (except for a qualification for a change in accounting
principles with which the accountant concurs);
(ii) not later than 30 days after the end of each
month hereafter (except the months of March, June, September and December),
and 45 days after the end of the months of March, June, September and December,
unaudited interim financial statements of Borrowers and their Subsidiaries as of
the end of such month and of the portion of Borrowers' fiscal year then elapsed,
on a Consolidated and consolidating basis, certified by the principal financial
officer of Borrowers as prepared in accordance with GAAP and fairly presenting
the Consolidated financial position and results of operations of Borrowers and
their Subsidiaries for such month and period subject only to changes from audit
and year-end adjustments and except that such statements need not contain notes;
provided, that, such statements need not include cash flow statements except for
the months coinciding with the end of a Fiscal Quarter.
(iii) promptly after the sending or filing thereof,
as the case may be, copies of any proxy statements, financial statements or
reports which any Borrower has made available to its shareholders and copies of
any regular, periodic and special reports or registration statements which any
Borrower files with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or any national securities
exchange;
(iv) promptly after the filing thereof, copies of any
annual report to be filed in accordance with ERISA in connection with each Plan;
(v) not later than 30 days after the end of each
month hereafter, a detailed report of all accounts payable of each Borrower
for the purchase of "livestock" (as defined in PASA) that have been outstanding
more than 48 hours, as of the last day of the preceding month, specifying the
name, address and amount of each such account payable; and
(vi) such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request, bearing
upon or related to the Collateral or any Borrower's and any of its Subsidiaries'
financial condition or results of operations.
Concurrently with the delivery of the financial statements described in
clause (i) of this Section 9.1.3, Borrowers shall forward to Lender a copy of
the accountants' letter to Borrowers' management that is prepared in connection
with such financial statements and shall also cause to be prepared a certificate
of the aforesaid certified public accountants prepared by such accountants that
states, based upon their examination of the financial statements of Borrowers
and their Subsidiaries performed in connection with their examination of said
financial statements, they are not aware of any Default or Event of Default, or,
if they are aware of such Default or Event of Default, specifying the nature
thereof, and acknowledging that they are aware that Lender is relying on such
financial statements in making its decisions with respect to the Loans.
Concurrently with the delivery of the financial statements described in clauses
(i) and (ii) of this Section 9.1.3, or more frequently if requested by Lender,
Borrowers shall cause to be prepared and furnished to Lender a Compliance
Certificate executed by the chief financial officer of Borrowers.
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9.1.4. Landlord and Storage Agreements. Provide Lender with
copies of all agreements between any Borrower or any of its Subsidiaries and any
landlord or warehouseman which owns any premises at which any Inventory may,
from time to time, be kept.
9.1.5. Projections. No later than 30 days after the end of
each Fiscal Year of Borrowers, deliver to Lender Projections of Borrowers for
the forthcoming Fiscal Year, month by month.
9.1.6. Taxes. Pay and discharge all Taxes prior to the date on
which such Taxes become delinquent or penalties attach thereto, except and to
the extent only that such Taxes are being Properly Contested.
9.1.7. Compliance with Laws. Comply with all Applicable Law,
including all laws, statutes, regulations and ordinances regarding the
collection, payment and deposit of Taxes, and all ERISA and Environmental Laws,
and obtain and keep in force any and all Governmental Approvals necessary to the
ownership of its Properties or to the conduct of its business, which violation
or failure to obtain might have a Material Adverse Effect. Without limiting the
generality of the foregoing, if any Environmental Release shall occur at or on
any of the Properties of Borrower or any Subsidiary, Borrower shall, or shall
cause the applicable Subsidiary to, act immediately to investigate and report to
Lender and, to the extent required by Applicable Law, all appropriate
governmental authorities, the extent of, and to make appropriate remedial action
to eliminate, such Environmental Release, whether or not ordered or otherwise
directed to do so by any governmental authority.
9.1.8. Insurance. In addition to the insurance required herein
with respect to the Collateral, maintain with financially sound and reputable
insurers, insurance with respect to its Properties and business against such
casualties and contingencies of such type (including product liability, business
interruption, larceny, embezzlement, or other criminal misappropriation
insurance) and in such amounts as is customary in the business of Borrowers or
as otherwise required by Lender.
9.1.9. Potter's Inventory. Implement a perpetual inventory
system that enables Potter's to generate daily Inventory reports on or before
September 20, 1998.
9.1.10. Distribution Agreements. Provide Lender with copies of
all material Distribution Agreements, comply with all terms of each such
Distribution Agreement, and keep all such Distribution Agreements in full force
and effect.
9.1.11. Year 2000 Compatibility. Each Borrower shall (i)
promptly and in no event later than December 31, 1998, take all action necessary
to ensure that all computer based systems of Borrowers and their Subsidiaries
are capable of the following: (a) handling date information involving all and
any dates before, during and/or after January 1, 2000, including accepting
input, providing output and performing date calculations in whole or in part;
(b) operating, accurately without interruption on and in respect of any and all
dates before, during and/or after January 1, 2000, and without any change in
performance; (c) responding to and processing two digit year input without
creating any ambiguity as to the century; (d) storing and providing date input
information without creating any ambiguity as to the century; and (ii) promptly
and in no event later than December 31, 1998, take all action necessary to
ensure that all computer based systems of each of their vendors, suppliers and
customers are capable of (a) through (d) above, where noncompliance could have a
Material Adverse Effect. In addition, at the request of Lender, Borrowers shall
provide Lender assurances in form and substance satisfactory to Lender of the
Borrowers' and each of their Subsidiaries' year 2000 compatibility.
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9.1.12. Survey. On or before April 3, 1998, Borrowers shall
deliver to Lender a survey with respect to Borrowers' Real Estate located in
Durant, Oklahoma which complies with the requirements of Section 10.1.7 hereof.
9.2. NEGATIVE COVENANTS. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, each Borrower
covenants that, unless Lender has first consented thereto in writing, it shall
not and shall not permit any Subsidiary to:
9.2.1. Fundamental Changes. Except as may be contemplated by
the Acquisition Documents, enter into any transaction to merge, reorganize,
consolidate or amalgamate with any Person, or liquidate, wind up or dissolve
itself, except for mergers or consolidations of any Subsidiary with another
Subsidiary.
9.2.2. Loans. Make any loans or other advances of money to any
Person other than to an officer or employee of such Borrower or a Subsidiary for
salary, travel advances, advances against commissions and other similar advances
in the ordinary course of business.
9.2.3. Total Debt. Create, incur, assume, or suffer to exist
any Debt, except: (i) the Obligations; (ii) Subordinated Debt existing on the
Closing Date; (iii) Debt of any Subsidiary of such Borrower to such Borrower;
(iv) accounts payable to trade creditors and current operating expenses (other
than for Money Borrowed), in each case incurred in the ordinary course of
business; (v) obligations to pay Rentals permitted by Section 9.2.12; (vi)
Permitted Purchase Money Debt; (vii) contingent letter of credit obligations
owing to LaSalle National Bank for so long as such letter of credit obligations
are fully secured by Cash Collateral; (viii) Debt not included in paragraphs (i)
through (vii) above which does not exceed at any time, in the aggregate, the sum
of $50,000.
9.2.4. Affiliate Transactions. Enter into, or be a party to
any transaction with any Affiliate or stockholder, except: (i) the transactions
contemplated by the Loan Documents; (ii) payment of customary directors' fees
and indemnities; (iii) transactions with Affiliates that were consummated prior
to the date hereof and have been disclosed to Lender prior to the Closing Date;
(iv) in the ordinary course of and pursuant to the reasonable requirements of
such Borrower's or such Subsidiary's business and upon fair and reasonable terms
which are fully disclosed to Lender and are no less favorable to such Borrower
or such Subsidiary than would obtain in a comparable arm's length transaction
with a Person not an Affiliate or stockholder of such Borrower or such
Subsidiary; (v) management fees payable to Sterling Advisors and Elfman pursuant
to the Consulting Agreement up to $425,000 in the aggregate (as the same may be
increased in accordance with the terms of such Consulting Agreement as in effect
on the date hereof) during each Fiscal Year, provided that no Default or Event
of Default exists at the time of or immediately after giving effect to any such
payment; and (vi) any payments due from any Borrower to another Borrower in
accordance with the terms of the Tax Sharing Agreement as in effect on the date
hereof.
9.2.5. Limitation on Liens. Create or suffer to exist any Lien
upon any of its Property, income or profits, whether now owned or hereafter
acquired, except:
(i) Liens at any time granted in favor of
Lender;
(ii) Liens for Taxes (excluding any Lien imposed
pursuant to any of the provisions of ERISA) incurred in the ordinary course
of such Borrower's business and not yet due or being Properly Contested;
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(iii) Liens arising in the ordinary course of such
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 or the Debt secured by
any such Lien is being Properly Contested and such Liens do not materially
detract from the value of the Property of such Borrower or materially impair the
use thereof in the operation of such Borrower's business;
(iv) Purchase Money Liens securing Permitted
Purchase Money Debt;
(v) Liens securing Debt of a Subsidiary of any
Borrower to such Borrower or to another such Subsidiary;
(vi) Liens arising by virtue of the rendition, entry
or issuance against such Borrower or any of its Subsidiaries, or any
Property of such Borrower or any of its Subsidiaries, of any judgment, writ,
order, or decree for so long as each such Lien (a) is either in existence for
less than 20 consecutive days after it first arises or is being Properly
Contested and (b) is at all times junior in priority to the Liens in favor of
Lender;
(vii) Liens in existence immediately prior to the
Closing Date that are satisfied in full and released on the Closing Date as
a result of the application of Borrower's cash on hand at the Closing Date or
the proceeds of the Loans to be made on the Closing Date;
(viii) Easements, rights-of-way, restrictions,
covenants or other agreements of record and other similar charges and
encumbrances on Real Estate of Borrower or a Subsidiary that do not interfere
with the ordinary conduct of the business of Borrower or such Subsidiary;
(ix) such other Liens as appear on SCHEDULE
9.2.5 hereto; and
(x) such other Liens as Lender may hereafter approve
in writing.
9.2.6. Subordinated Debt. Make any principal payment of all or
any part of any Subordinated Debt, unless at the time of, and after giving
effect to, any such payment, Availability is not less than $1,000,000; or make
any payment of all or any part of any Subordinated Debt, or take any other
action or omit to take any other action in respect of any Subordinated Debt,
except in accordance with the Debt Subordination relative thereto.
9.2.7. Distributions. Declare or make any Distributions.
9.2.8. Capital Expenditures. Make Capital Expenditures
(including, expenditures by way of capitalized leases) which, in the aggregate,
as to all Borrowers and their Subsidiaries, exceed $1,300,000 during any Fiscal
Year of Borrowers.
9.2.9. Disposition of Assets. Sell, lease or otherwise dispose
of any of its Properties, including any disposition of Property as part of a
sale and leaseback transaction, to or in favor of any Person, except (i) sales
of Inventory in the ordinary course of business for so long as no Event of
Default exists hereunder, (ii) dispositions of Equipment to the extent
authorized by Section 7.4.2 hereof, (iii) a transfer of Property to such
Borrower by its Subsidiary or (iv) other dispositions expressly authorized by
other provisions of the Loan Documents.
9.2.10. Equity Interests of Subsidiaries. Permit any of its
Subsidiaries to issue any additional Equity Interests except director's
qualifying shares.
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9.2.11. Restricted Investment. Make or have any Restricted
Investment.
9.2.12. Tax Consolidation. File or consent to the filing of
any consolidated income tax return with any Person other than a Borrower or a
Subsidiary of a Borrower.
9.2.13. Fiscal Year. Establish a fiscal year different from
the Fiscal Year.
9.2.14. Organization Documents. Amend, modify or otherwise
change any of the terms or provisions and any of its corporate charter, Articles
or Certificate of Incorporation, Bylaws, or other governing documents as in
effect on the date hereof, (i) except that (A) Potter's may make such amendments
and changes as necessary to reflect the change in its corporate name from
Potter's Acquisition Corp. to Potter's Sausage Co. and (B) APB may make such
amendments as are necessary to authorize the distribution of non-voting stock
and (ii) except for changes that do not affect in any way such Borrower's or any
of its Subsidiaries' rights and obligations to enter into and to perform the
Loan Documents to which it is a party and to pay all of the Obligations and that
do not otherwise have a Material Adverse Effect.
9.2.15. Conduct of Business. Engage in any business other than
the business engaged in by it on the Closing Date and any business or activities
which are substantially similar, related or incidental thereto.
9.2.16. Purchases of Certain Inventory. Purchase inventory
consisting of "livestock" (as defined in PASA) for cash, unless payment is made
therefor by such Borrower before the close of the Business Day following the day
on which the purchase of livestock and transfer of possession thereof occurred,
or on credit unless in connection therewith the seller of such livestock has
executed and delivered in favor of such Borrower a written waiver of the
benefits of the statutory trust provided for in Section 196(a) of PASA.
9.3. SPECIFIC FINANCIAL COVENANTS. During the term of this Agreement,
and thereafter for so long as there are any Obligations outstanding, Borrowers
covenant that, unless otherwise consented to by Lender in writing, they shall:
9.3.1. Minimum Fixed Charge Coverage Ratio. Borrowers shall
maintain a Fixed Charge Coverage Ratio of not less than the ratio set forth
below for the period corresponding thereto:
Period Ratio
------ -----
From the Closing Date through the
end of 1st Fiscal Quarter of 1998 1.30 to 1
From the Closing Date through the
end of 1st two Fiscal Quarters of 1998 1.30 to 1
From the Closing Date through the
end of 1st three Fiscal Quarters of 1998 1.30 to 1
From the Closing Date through
Fiscal Year End 1998 1.35 to 1
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On a four Fiscal Quarter rolling basis, 1.35 to 1
tested at the end of each Fiscal Quarter
after Fiscal Year 1998
9.3.2. Minimum Senior Fixed Charge Coverage Ratio.
Borrowers shall maintain a Senior Fixed Charge Coverage Ratio of not less
than the ratio set forth below for the period corresponding thereto:
Period Ratio
------ -----
From the Closing Date through the
end of 1st Fiscal Quarter of 1998 1.65 to 1
From the Closing Date through the
end of 1st two Fiscal Quarters of 1998 1.65 to 1
From the Closing Date through the
end of 1st three Fiscal Quarters of 1998 1.70 to 1
From the Closing Date through
Fiscal Year End 1998 1.75 to 1
On a four Fiscal Quarter rolling basis, 1.75 to 1
tested at the end of each Fiscal Quarter
after Fiscal Year 1998
9.3.3. Minimum Consolidated Interest Coverage
Ratio. Borrowers and their Subsidiaries on a combined and Consolidated
basis, shall maintain an Interest Coverage Ratio of not less than the ratio set
forth below for the period corresponding thereto:
Period Ratio
------ -----
From the Closing Date through the
end of 1st Fiscal Quarter of 1998 2.25 to 1
From the Closing Date through the
end of 1st two Fiscal Quarters of 1998 2.25 to 1
From the Closing Date through the
end of 1st three Fiscal Quarters of 1998 2.30 to 1
From the Closing Date through
Fiscal Year End 1998 2.40 to 1
On a four Fiscal Quarter rolling basis, 2.40 to 1
tested at the end of each Fiscal Quarter
after Fiscal Year 1998
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9.3.4. Senior Debt EBITDA Ratio. Borrowers and
their Subsidiaries, on a combined and Consolidated basis, shall maintain a
Senior/Debt EBITDA Ratio of not less than the ratio set forth below for the
period corresponding thereto:
Period Ratio
------ -----
From the Closing Date through the
end of 1st Fiscal Quarter of 1998 14.50 to 1
From the Closing Date through the
end of 1st two Fiscal Quarters of 1998 6.85 to 1
From the Closing Date through the
end of 1st three Fiscal Quarters of 1998 4.60 to 1
From the Closing Date through the
Fiscal Year End 1998 3.15 to 1
On a four Fiscal Quarter rolling basis, 3.15 to 1
tested at the end of each Fiscal Quarter
after Fiscal Year 1998
9.3.5. Minimum Effective Net Worth. Borrowers and
their Subsidiaries, on a combined and consolidated basis, shall achieve a
level of Effective Net Worth of not less than the amount set forth below for the
period corresponding thereto:
Period Amount
------ ------
First Fiscal Quarter of 1998 $16,361,000
Second Fiscal Quarter of 1998 $16,757,000
Third Fiscal Quarter of 1998 $17,119,000
Fourth Fiscal Quarter of 1998 $17,585,000
First Fiscal Quarter of 1999 $17,966,000
Second Fiscal Quarter of 1999 $18,362,000
Third Fiscal Quarter of 1999 $18,724,000
Fourth Fiscal Quarter of 1999 $19,191,000
First Fiscal Quarter of 2000 $19,572,000
Second Fiscal Quarter of 2000 $19,968,000
Third Fiscal Quarter of 2000 $20,330,000
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Fourth Fiscal Quarter of 2000 $20,795,000
First Fiscal Quarter of 2001 $19,887,000
Second Fiscal Quarter of 2001 $20,272,000
Third Fiscal Quarter of 2001 $19,813,000
Fourth Fiscal Quarter of 2001 $20,267,000
First Fiscal Quarter of 2002 $20,714,000
Second Fiscal Quarter of 2002 $21,099,000
Third Fiscal Quarter of 2002 $21,450,000
Fourth Fiscal Quarter of 2002 $21,904,000
First Fiscal Quarter of 2003 $22,273,000
Second Fiscal Quarter of 2003 $22,658,000
Third Fiscal Quarter of 2003 $23,010,000
Fourth Fiscal Quarter of 2003 $23,463,000
SECTION 10 CONDITIONS PRECEDENT
10.1. CONDITIONS PRECEDENT TO INITIAL LOANS. Notwithstanding any other
provision of this Agreement or any of the other Loan Documents, and without
affecting in any manner the rights of Lender under the other sections of this
Agreement, Lender shall not be required to fund any Loan requested by Borrowers
unless, on or before March 20, 1998, each of the following conditions has been
and continues to be satisfied:
10.1.1. Documentation. Lender shall have received, in form and
substance satisfactory to Lender and its counsel, a duly executed counterpart of
this Agreement and the other Loan Documents, together with such additional
documents, instruments and certificates as Lender and its counsel shall require
in connection therewith from time to time, all in form and substance
satisfactory to Lender and its counsel.
10.1.2. Availability. Lender shall have determined that
immediately after Lender has made the initial Loans and Bank has issued the
Letters of Credit to be issued on the Closing Date, contemplated hereby or
requested by Borrowers hereunder, and paid (or made provision for payment of)
all closing costs incurred in connection with the transactions contemplated
hereby, Availability shall not be less than $2,000,000.
10.1.3. Evidence of Perfection and Priority of Liens in
Collateral. Lender shall have received copies of all filing receipts or
acknowledgments issued by any governmental authority to evidence any filing or
recordation necessary to perfect the Liens of Lender in the Collateral and
evidence in form satisfactory to Lender that such Liens constitute valid and
perfected security interests and Liens, and that there are no other Liens upon
any Collateral except for Permitted Liens.
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10.1.4. Organization Documents. Lender shall have received a
copy of the Articles or Certificate of Incorporation of each Borrower, and all
amendments thereto, certified by the Secretary of State or other appropriate
official of the jurisdiction of such Borrower's incorporation.
10.1.5. Good Standing Certificates. Lender shall have received
good standing certificates for each Borrower, issued by the Secretary of State
or other appropriate official of such Borrower's jurisdiction of organization
and each jurisdiction where the conduct of such Borrower's business activities
or ownership of its Property necessitates qualification.
10.1.6. Title Insurance Policies. Lender shall have received,
had at least 3 days to review and found acceptable fully paid mortgagee title
insurance policies (or binding commitments to issue title insurance policies,
marked to Lender's satisfaction to evidence the form of such policies to be
delivered after the Closing Date), in standard ALTA form, issued by a title
insurance company satisfactory to Lender, each in an amount equal to not less
than the fair market value of the real Property or leasehold interest, as the
case may be, subject to the Mortgages, insuring each of the Mortgages to create
a valid Lien on all real Property and valid Liens on the leasehold interest
described therein with no exceptions which Lender shall not have approved in
writing and no survey exceptions.
10.1.7. Survey. Lender shall have received, had at least 3
days to review and, found acceptable an as-built survey with respect to each
parcel of real Property comprising a part of the Collateral, which survey shall
indicate the following: (i) an accurate metes and bounds or lot, block and
parcel description of such Property; (ii) the correct location of all buildings,
structures and other improvements on such Property, including all streets,
easements, rights of way and utility lines; (iii) the location of ingress and
egress from such Property, and the location of any set-back or other building
lines affecting such Property; and (iv) a certification by a registered land
surveyor in form and substance acceptable to Lender, certifying to the accuracy
and completeness of such survey and to such other matters relating to such real
Property and survey as Lender shall require.
10.1.8. Dominion Accounts. Lender shall have received the duly
executed agreements establishing each Dominion Account with a financial
institution acceptable to Lender for the collection or servicing of the
Accounts.
10.1.9. Opinion Letters. Lender shall have received favorable,
written opinions of ▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C., counsel to Borrowers, as to the
transactions contemplated by this Agreement and the matters set forth in EXHIBIT
G attached hereto, together with written opinions or reliance letters from
counsel to Seller in connection with the transactions contemplated by the
Acquisition Documents.
10.1.10. Insurance. Lender shall have received copies of the
casualty insurance policies of Borrowers, together with loss payable
endorsements on Lender's standard form of loss payee endorsement naming Lender
as loss payee and copies of each Borrower's liability insurance policies,
including product liability policies, together with endorsements naming Lender
as a co-insured.
10.1.11. Disbursement Letter. Lender shall have received
written instructions from Borrowers directing application of proceeds of the
initial Loans made pursuant to this Agreement.
10.1.12. Landlord Agreements. Lender shall have received all
landlord or warehouseman agreements with respect to all premises leased by any
Borrower and which are disclosed on SCHEDULE 7.1.1 hereto.
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10.1.13. Acquisition. Lender shall have reviewed and found
acceptable the Acquisition Documents and obtained Seller's consent to an
assignment of all of Borrower's rights under the Acquisition Documents, and the
Acquisition shall have been consummated substantially in accordance with the
terms of the Acquisition Documents.
10.1.14. Environmental Matters. Lender shall have received,
reviewed and found satisfactory the Environmental Certificate and a phase 1
study of the Real Estate conducted by an environmental consulting firm
acceptable to Lender.
10.1.15. Banc One Subordinated Debt. Borrower and Banc One
shall have executed and delivered the Banc One Documents evidencing the Banc One
Subordinated Debt, and consummated all of the transactions contemplated thereby.
10.1.16. Intercreditor Agreements. Lender shall have
received the Intercreditor Agreements signed by Banc One, in form and substance
satisfactory to Lender.
10.1.17. Debt Subordinations. Lender shall have
received all Debt Subordinations, in form and substance satisfactory to Lender.
10.1.18. Appraisals. Lender shall have received and found
acceptable in all respects appraisals of the value of the Equipment, the Real
Estate, the Intellectual Property and certain other Property of Borrowers,
including Equipment, Real Estate and Intellectual Property to be acquired in
connection with the Acquisition.
10.2. CONDITIONS PRECEDENT TO PROCUREMENT OF LETTERS OF CREDIT.
Notwithstanding any other provision of this Agreement or any of the other Loan
Documents, and without affecting in any manner the rights of Lender under other
sections of this Agreement, Lender shall not be required to procure any Letter
of Credit requested by any Borrower, unless and until each of the following
conditions has been and continues to be satisfied:
10.2.1. Letter of Credit Documentation. Bank shall have
received, in form and substance satisfactory to Bank and its counsel, duly
executed LC Documents with respect to the Letters of Credit requested to be
issued by Bank and an LC Guaranty with respect to each such Letter of Credit.
10.2.2. LC Request. Lender shall have received an LC Request
from a Borrower.
10.2.3. LC Conditions. Each of the LC Conditions shall have
been satisfied.
10.2.4. Satisfaction of Other Conditions. Each of the
conditions set forth in Section 10.1 hereof shall have been satisfied.
10.3. CONDITIONS PRECEDENT TO ALL LOANS. Notwithstanding any other
provision of this Agreement or any of the other Loan Documents, and without
affecting in any manner the rights of Lender under the other sections of this
Agreement, Lender shall not be required to make any Loan or otherwise extend any
credit or other financial accommodations to or for the benefit of any Borrower,
unless and until each of the following conditions has been and continues to be
satisfied:
10.3.1. No Default. No Default or Event of Default shall exist
at the time of, or shall result from, the funding of any such Loan or other
extension.
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10.3.2. Satisfaction of Conditions in Other Loan Documents.
Each of the conditions precedent set forth in any other Loan Document shall have
been and shall remain satisfied.
10.3.3. No Litigation. 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 damages in respect of, or which is related to or arises
out of this Agreement or any of the other Loan Documents or the consummation of
the transactions contemplated hereby or thereby.
10.3.4. No Material Adverse Effect. No event shall have
occurred and no condition shall exist which has or may be reasonably likely to
have a Material Adverse Effect.
10.4. LIMITED WAIVER OF CONDITIONS PRECEDENT. If Lender shall make any
Loans or otherwise extend any credit to Borrowers under this Agreement at a time
when any of the foregoing conditions precedent are not satisfied (regardless of
whether the failure of satisfaction of any such conditions precedent was known
or unknown to Lender), the funding of such Loans or the extension of such credit
shall not operate as a waiver of the right of Lender to insist upon the
satisfaction of all conditions precedent with respect to each subsequent
Borrowing requested by Borrowers or a waiver of any Default or Event of Default
as a consequence of the failure of any such conditions to be satisfied, unless
Lender, in writing waives the satisfaction of any condition precedent in which
event such waiver shall only be applicable for the specific instance given and
only to the extent and for the period of time expressly stated in such written
waiver.
SECTION 11 EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
11.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events or conditions shall constitute an "Event of Default" (each of
which Events of Default shall be deemed to exist and be continuing unless and
until waived by Lender in writing):
11.1.1. Payment of Notes. Borrowers shall fail to pay any
installment of principal, interest or premium, if any, owing on the Term Note or
the Equipment Note on the due date of such installment
11.1.2. Payment of Other Obligations. Borrowers shall fail to
pay on the due date thereof any of the Revolver Loans or any other Obligations
that are not evidenced by the Term Notes or the Equipment Note (whether due at
stated maturity, on demand, upon acceleration or otherwise).
11.1.3. Misrepresentations. Any representation, warranty or
other statement made or furnished to Lender by or on behalf of any Borrower in
this Agreement, any of the other Loan Documents or any instrument, certificate
or financial statement furnished in compliance with or in reference thereto
proves to have been false or misleading in any material respect when made or
furnished or when reaffirmed pursuant to Section 8.2 hereof.
11.1.4. Breach of Specific Covenants. Any Borrower shall fail
or neglect to perform, keep or observe any covenant contained in Sections 6.2,
6.3, 7.1.1, 7.2, 9.1.1, 9.1.3, 9.2 or 9.3 hereof on the date that such Borrower
is required to perform, keep or observe such covenant.
11.1.5. Breach of Other Covenants. Any Borrower shall fail or
neglect to perform, keep or observe any covenant contained in this Agreement
(other than a covenant which is dealt with specifically elsewhere in Section
11.1 hereof) and the breach of such other covenant is not cured to
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Lender's satisfaction within 30 days after the sooner to occur of such
Borrower's receipt of notice of such breach from Lender or the date on which
such failure or neglect first becomes known to any officer of such Borrower;
provided, however, that such notice and opportunity to cure shall not apply in
the case of any failure to perform, keep or observe any covenant which is not
capable of being cured at all or within such 30 day period, or which has been
the subject of a prior failure within the preceding 180 days, or which is a
willful and knowing breach by a Borrower.
11.1.6. Default Under Security Documents/Other
Agreements/Acquisition Documents. Any event of default shall occur under, or any
Borrower shall default in the performance or observance of any term, covenant,
condition or agreement contained in, any of the Security Documents or any of the
Other Agreements or any of the Acquisition Documents and such default shall
continue beyond any applicable grace period.
11.1.7. Banc One Default. Any default or event of default
shall occur under the Bank One Documents.
11.1.8. Other Defaults. There shall occur any default or event
of default on the part of any Borrower under any agreement, document or
instrument to which a Borrower is a party or by which a Borrower or any of its
Property is bound, creating or relating to any Debt for Money Borrowed in an
outstanding principal amount in excess of $100,000 (other than the Obligations)
if (i) such Debt is Subordinated Debt or (ii) the payment or maturity of such
Debt is accelerated in consequence of such event of default or demand for
payment of such Debt is made.
11.1.9. Uninsured Losses. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
11.1.10. Solvency. Any Borrower shall cease to be Solvent.
11.1.11. Insolvency Proceedings. Any Insolvency Proceeding
shall be commenced by or against any Borrower (and, if against a Borrower, the
continuation of such Insolvency Proceeding for more than 60 days), or any
Borrower shall make an offer of settlement, extension or composition to its
unsecured creditors generally.
11.1.12. Business Disruption; Condemnation. There shall occur
a cessation of a substantial part of the business of any Borrower, any
Subsidiary of a Borrower or any Guarantor for a period which may be reasonably
expected to have a Material Adverse Effect; or Borrower, any Subsidiary of a
Borrower or any Guarantor shall suffer the loss or revocation of any license or
permit now held or hereafter acquired by such Borrower or such Guarantor which
is necessary to the continued or lawful operation of its business; or any
Borrower or any Guarantor shall be enjoined, restrained or in any way prevented
by court, governmental or administrative order from conducting all or any
material part of its business affairs; or any material lease or agreement
pursuant to which any Borrower or any Guarantor leases, uses or occupies any
Property shall be canceled or terminated prior to the expiration of its stated
term; or any part of the Collateral shall be taken through condemnation or the
value of such Property shall be materially impaired through condemnation.
11.1.13. Change of Ownership. APB shall cease to own and
control, beneficially and of record all of the issued and outstanding capital
stock of each of the other Borrowers.
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11.1.14. ERISA. A Reportable Event shall occur which Lender,
in its sole discretion, shall determine in good faith constitutes grounds for
the termination by the Pension Benefit Guaranty Corporation of any Plan or for
the appointment by the appropriate United States district court of a trustee for
any Plan, or if any Plan shall be terminated or any such trustee shall be
requested or appointed, or if any Obligor is in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting
from such Obligor's complete or partial withdrawal from such Plan.
11.1.15. Challenge to Loan Documents. Any Borrower, or any
Affiliate of any Borrower, shall challenge or contest in any action, suit or
proceeding the validity or enforceability of this Agreement or any of the other
Loan Documents, the legality or enforceability of any of the Obligations or the
perfection or priority of any Lien granted to Lender.
11.1.16. Repudiation of or Default Under Guaranty Agreement.
Any Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, shall repudiate such Guarantor's liability thereunder, or shall
be in default under the terms thereof, or shall fail to confirm in writing,
promptly after receipt of Lender's written request therefor, such Guarantor's
ongoing liability under the Guaranty Agreement in accordance with the terms
thereof.
11.1.17. Criminal Forfeiture. Any Obligor shall be
criminally indicted or convicted under any law that could lead to a forfeiture
of any Property of any Obligor.
11.1.18. Judgments. One or more judgments or orders for the
payment of money totaling an amount that exceeds the uncontested insurance
available therefor by $100,000 or more shall be entered against any Borrower by
any court and such judgment or order shall result in the creation of a Lien upon
any asset of any Borrower that is not a Permitted Lien.
11.2. ACCELERATION OF THE OBLIGATIONS. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with this Agreement, upon or at any time after the
occurrence of an Event of Default and for so long as such Event of Default shall
exist, Lender may in its discretion declare the principal of and any accrued
interest on the Loans and all other Obligations to be, whereupon the same shall
become without further notice or demand (all of which further notice and demand
Borrowers expressly waive), forthwith due and payable and Borrowers shall
forthwith pay to Lender the entire principal of and accrued and unpaid interest
on the Loans and other Obligations plus reasonable attorneys' fees and expenses
if such principal and interest are collected by or through an attorney-at-law.
Notwithstanding the foregoing, upon the occurrence of an Event of Default
specified in Section 11.1.10 hereof all of the Obligations shall become
automatically due and payable without declaration, notice or demand by Lender
and this Agreement shall automatically terminate as if terminated by Lender
pursuant to Section 5.2.1 and with the effect set forth in Section 5.2.4 hereof.
11.3. OTHER REMEDIES. Upon and after the occurrence of an Event of
Default, and for so long as such Event of Default shall exist, Lender shall have
and may exercise from time to time the following rights and remedies:
11.3.1. General Remedies.
All of the rights and remedies of a secured party under the
UCC or under other Applicable Law, and all other legal and equitable rights to
which Lender may be entitled under any of the Loan Documents, all of which
rights and remedies shall be cumulative and shall be in addition to any
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other rights or remedies contained in this Agreement or any of the other Loan
Documents, and none of which shall be exclusive.
(i) The right to collect all amounts at any time
payable to any Borrower from any Account Debtor or other Person at any time
indebted to any Borrower.
(ii) The right to take immediate possession of
the Collateral, and to (i) require Borrowers to assemble the Collateral, at
Borrowers' expense, and make it available to Lender at a place designated by
Lender which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the Property of
a Borrower, then such Borrower agrees not to charge Lender for storage thereof).
(iii) The right to sell or otherwise dispose of
all or any Collateral in its then condition, or after any further manufacturing
or processing thereof, at public or private sale or sales, with such notice as
may be required by Applicable Law, in lots or in bulk, for cash or on credit,
all as Lender, in its sole discretion, may deem advisable. Borrowers agree that
any requirement of notice to Borrowers or any other Obligor of any proposed
public or private sale or other disposition of Collateral by Lender shall be
deemed reasonable notice thereof if given at least 10 days prior thereto, and
such sale may be at such locations as Lender may designate in said notice.
Lender shall have the right to conduct such sales on any Borrower's premises,
without charge therefor, and such sales may be adjourned from time to time in
accordance with Applicable Law. Lender shall have the right to sell, lease or
otherwise dispose of the Collateral, or any part thereof, for cash, credit or
any combination thereof, and Lender may purchase all or any part of the
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Obligations. If Lender shall dispose of any Inventory by foreclosure
sale to any supplier having repurchase rights with respect thereto under any
Distribution Agreement for an amount that is equal (or approximately equal) to
the repurchase price set forth in such Distribution Agreement, then such
foreclosure sale shall be deemed to be commercially reasonable as between Lender
and all Obligors. The proceeds realized from the sale or other disposition of
any Collateral may be applied, after allowing 2 Business Days for collection,
first to the costs, expenses and attorneys' fees incurred by Lender in
collecting the Obligations, in enforcing the rights of Lender under the Loan
Documents and in collecting, retaking, completing, protecting, removing,
storing, advertising for sale, selling and delivering any Collateral, second to
interest accrued with respect to any of the Obligations; and third, to the
principal of the Obligations. If any deficiency shall arise, each Borrower and
each Guarantor shall remain jointly and severally liable to Lender therefor.
(iv) The right to exercise all of Lender's rights
and remedies under the Mortgages with respect to any Real Estate.
11.3.2. Louisiana Remedies. Certain of the
Collateral described in this Agreement is located in the State of Louisiana or
may be subject to the laws of the State of Louisiana (provided, however, the
parties by this Section in no way intend to derogate from the choice of law
contained in Section 12.15 hereof). With respect to such Collateral, the
following shall apply:
(i) Each Borrower confesses judgment in favor
of Lender for the full amount of the Obligations. Each Borrower agrees
that, during the existence of an Event of Default, Lender may, without making
further demand and without further notice or putting in default (which are
hereby expressly waived), cause the Collateral, or any portion of it, to be
seized and sold with or without appraisal (at Lender's option) by executory
process issued by any competent court or enforce this
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Agreement in any other manner provided by law. Lender may exercise the rights
and remedies set forth in this Section in addition to (and whether or not) it
also exercises its rights under any other provision of this Agreement or any
other agreements among Borrowers and Lender with respect to the Obligations. If
any proceedings (by executory process or otherwise) are commenced, all
declarations of fact made by authentic act by a person declaring that he or she
has personal knowledge of the facts shall constitute authentic evidence of the
facts for all purposes.
(ii) Each Borrower recognizes that Lender shall have
the right to cause the Collateral to be seized and sold by executory
process without any prior court hearing at which any or all of the Borrowers
could appear and make objection. Each Borrower specifically waives any right
that it may have to a court hearing prior to the seizure and sale of the
Collateral.
(iii) Each Borrower expressly waives: (a) the
benefit of appraisement, as provided in articles 2332, 2336, 2723 and 2724
of the Louisiana Code of Civil Procedure, and all other Applicable Laws
conferring the same; (b) the demand and 3 days' delay provided by articles 2331,
2639, 2721 and 2722 of the Louisiana Code of Civil Procedure and all other
Applicable Laws conferring the same; (c) the notice of seizure as provided in
articles 2293 and 2721 of the Louisiana Code of Civil Procedure. Each Borrower
expressly agrees to the immediate seizure of the Collateral in the event of suit
to enforce this Agreement. Lender shall not be obligated to take advantage of
the waiver of appraisal or any other waiver set forth herein but may at its
option cause the Collateral to be appraised upon foreclosure in accordance with
law and observe the statutory provisions referred to in this Section.
(iv) Each Borrower and Lender designate Lender
or any agent or nominee of Lender as keeper of the Collateral and also
authorize Lender to name another keeper of the Collateral or any portion thereof
at the time of seizure in any action for the recognition or enforcement of this
Agreement, but Lender shall not be required to seek the appointment of a keeper.
This agreement is made pursuant to La. R.S. 9: Section 5136 et seq., the
provisions of which shall govern the powers and duties of the keeper. The
keeper shall be paid as compensation for its services an amount equal to $500
per day. All sums paid by Lender as keeper's fees and related costs and
expenses, with interest thereon at the Default Rate, shall be Obligations
secured by this Agreement.
(v) If it becomes necessary for Lender to search
for all or any of the Collateral at the time of foreclosure, Lender may do
so and Borrowers shall be jointly and severally obligated to Lender, ON DEMAND,
for the reasonable expenses incurred by Lender in doing so with interest at the
Default Rate, and this amount shall be obligations secured by this Agreement.
(vi) Each Borrower waives in favor of Lender all
homestead exemptions and other exemptions from seizure to which it may be
entitled.
(vii) The grant of authority contained in this
Section 11.3.2 is intended by each Borrower to be an irrevocable power of
attorney, coupled with an interest, as permitted by Louisiana law, including,
but not limited to, the provisions of La. R.S. 9:Section 5388.
Lender is hereby granted a license or other right to use, without charge, each
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, tradenames, trademarks and advertising matter, or any Property of a
similar nature, as it pertains to the Collateral, in advertising for sale and
selling any Collateral and each Borrower's rights under all licenses and all
franchise agreements shall inure to Lender's benefit.
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11.4. SETOFF. In addition to any Liens granted under any of the Loan
Documents and any rights now or hereafter available under Applicable Law, Lender
is hereby authorized by Borrowers at any time that an Event of Default exists,
without notice to Borrowers or 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 (including Debt evidenced by certificates of
deposit whether matured or unmatured (but not including trust accounts)) and any
other Debt at any time held or owing by Lender or its Affiliates to or for the
credit or the account of any Borrower against and on account of the Obligations
of Borrowers arising under the Loan Documents to Lender, including all Loans and
all claims of any nature or description arising out of or in connection with
this Agreement, irrespective of whether or not (i) Lender shall have made any
demand hereunder, (ii) Lender shall have declared the principal of and interest
on the Loans and other amounts due hereunder to be due and payable as permitted
by this Agreement and even though such Obligations may be contingent or
unmatured or (iii) the Collateral for the Obligations is adequate.
11.5. REMEDIES CUMULATIVE; NO WAIVER.
11.5.1. All covenants, conditions, provisions, warranties,
guaranties, indemnities, and other undertakings of Borrowers contained in this
Agreement and the other Loan Documents, or in any document referred to herein or
contained in any agreement supplementary hereto or in any schedule or in any
Guaranty Agreement given to Lender or contained in any other agreement between
Lender and any or all Borrowers, heretofore, concurrently, or hereafter entered
into, shall be deemed cumulative to and not in derogation or substitution of any
of the terms, covenants, conditions, or agreements of Borrowers herein
contained.
11.5.2. The failure or delay of Lender to require strict
performance by Borrowers of any provision of this Agreement or to exercise or
enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies, but
all such requirements, Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and all other Obligations owing or to
become owing from Borrowers to Lender shall have been fully satisfied. None of
the undertakings, agreements, warranties, covenants and representations of
Borrowers contained in this Agreement or any of the other Loan Documents and no
Event of Default by any Borrower under this Agreement or any other Loan
Documents shall be deemed to have been suspended or waived by Lender, unless
such suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by a duly authorized representative of Lender
and directed to Borrowers.
11.5.3. If Lender shall accept performance by a Borrower, in
whole or in part, of any obligation that a Borrower is required by any of the
Loan Documents to perform only when a Default or Event of Default exists, or if
Lender shall exercise any right or remedy under any of the Loan Documents that
may not be exercised other than when a Default or Event of Default exists,
Lender's acceptance of such performance by a Borrower or Lender's exercise of
any such right or remedy shall not operate to waive any such Event of Default or
to preclude the exercise by Lender of any other right or remedy, unless
otherwise expressly agreed in writing by Lender.
SECTION 12 MISCELLANEOUS
12.1. POWER OF ATTORNEY. Each Borrower hereby irrevocably designates,
makes, constitutes and appoints Lender (and all Persons designated by Lender) as
such Borrower's true and lawful attorney (and agent-in-fact) and Lender, or
Lender's agent, may, without notice to such Borrower and in either such
Borrower's or Lender's name, but at the cost and expense of Borrowers:
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12.1.1. At such time or times as Lender or said agent, in its
sole discretion, may determine, endorse such Borrower's name on any checks,
notes, acceptances, drafts, money orders or any other evidence of payment or
proceeds of the Collateral which come into the possession of Lender or under
Lender's control.
12.1.2. At such time or times upon or after the occurrence of
an Event of Default as Lender or its agent in its sole discretion may determine:
(i) demand payment of the Accounts from the Account Debtors, enforce payment of
the Accounts by legal proceedings or otherwise, and generally exercise all of
such Borrower's rights and remedies with respect to the collection of the
Accounts; (ii) settle, adjust, compromise, discharge or release any of the
Accounts or other Collateral or any legal proceedings brought to collect any of
the Accounts or other Collateral; (iii) sell or assign any of the Accounts and
other Collateral upon such terms, for such amounts and at such time or times as
Lender deems advisable; (iv) take control, in any manner, of any item of payment
or proceeds relating to any Collateral; (v) prepare, file and sign such
Borrower's name to a proof of claim in bankruptcy or similar document against
any Account Debtor or to any notice of lien, assignment or satisfaction of lien
or similar document in connection with any of the Collateral; (vi) receive, open
and dispose of all mail addressed to such Borrower and to notify postal
authorities to change the address for delivery thereof to such address as Lender
may designate; (vii) endorse the name of such Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to the
account of Lender on account of the Obligations; (viii) endorse the name of such
Borrower upon any chattel paper, document, instrument, invoice, freight ▇▇▇▇,
▇▇▇▇ of lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (ix) use such Borrower's stationery and sign
the name of such Borrower to verifications of the Accounts and notices thereof
to Account Debtors; (x) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Accounts, Inventory, Equipment and any other Collateral; (xi) make and adjust
claims under policies of insurance; and (xii) do all other acts and things
necessary, in Lender's determination, to fulfill Borrowers' obligations under
this Agreement.
12.2. INDEMNITY. Each Borrower hereby agrees to indemnify and defend
Lender and hold Lender harmless from and against any Claims against Lender as
the result of any Borrower's failure to observe, perform or discharge any of
such Borrower's duties hereunder. In addition, each Borrower shall indemnify and
defend Lender against and save Lender harmless from all Claims of any Person
arising out of, related to or with respect to, any of the transactions entered
into pursuant to this Agreement or any of the other Loan Documents or Lender's
Liens upon the Collateral. Without limiting the generality of the foregoing,
this indemnity shall extend to any Claims asserted against Lender by any Person
under any Environmental Laws or similar laws by reason of a Borrower's or any
other Person's failure to comply with laws applicable to solid or hazardous
waste materials or other toxic substances. Additionally, if any Taxes (excluding
Taxes imposed upon or measured solely by the net income of Lender, but including
any intangibles tax, stamp tax, recording tax or franchise tax) shall be payable
by Lender or any Obligor on account of the execution or delivery of this
Agreement, or the execution, delivery, issuance or recording of any of the other
Loan Documents, or the creation of any of the Obligations hereunder, by reason
of any existing or hereafter enacted federal, state, foreign or local statute,
rule or regulation, Borrowers will pay (or will promptly reimburse Lender for
the payment of) all such Taxes, including any interest and penalties thereon,
and will indemnify and hold Lender harmless from and against all liability in
connection therewith. Notwithstanding any contrary provision in this Agreement,
the obligation of Borrowers under this Section 12.2 shall survive the payment in
full of the Obligations and the termination of this Agreement.
12.3. MODIFICATION OF AGREEMENT; SALE OF INTEREST. This Agreement
may not be modified, altered or amended, except by an agreement in writing
signed by Borrowers and Lender. No Borrower
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may sell, assign or transfer any interest in this Agreement, any of the other
Loan Documents, or any of the Obligations, or any portion thereof, including
such Borrower's rights, title, interests, remedies, powers, and duties hereunder
or thereunder. Each Borrower hereby consents to Lender's participation, sale,
assignment, transfer or other disposition, at any time or times hereafter, of
the Obligations, this Agreement and any of the other Loan Documents, or of any
portion hereof or thereof, including Lender's rights, title, interests,
remedies, powers, and duties hereunder or thereunder. In the case of an
assignment, the assignee shall have, to the extent of such assignment, the same
rights, benefits and obligations as it would if it were "Lender" hereunder and
Lender shall be relieved of all obligations hereunder upon any such assignment.
Each Borrower further agrees that Lender may disclose credit information
regarding such Borrower and its Subsidiaries to any potential participant or
assignee.
12.4. SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
12.5. SUCCESSORS AND ASSIGNS. This Agreement, the Other Agreements and
the Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of each Borrower and Lender permitted under Section 12.3
hereof.
12.6. CUMULATIVE EFFECT; CONFLICT OF TERMS. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
12.7. EXECUTION IN 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 and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
12.8. NOTICE. All notices, requests and demands to or upon a party
hereto shall be in writing and shall be sent by certified or registered mail,
return receipt requested, personal delivery against receipt or by telecopier or
other facsimile transmission and shall be deemed to have been validly served,
given or delivered when delivered against receipt or 3 Business Days after
deposit in the U.S. mail, postage prepaid, or, in the case of facsimile
transmission, when received at the office where the noticed party's telecopier
is located, in each case, addressed as follows:
If to Lender: Fleet Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Loan Administration Manager
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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54
With a copy to: Parker, Hudson, Rainer & ▇▇▇▇▇
1500 Marquis Two Tower
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrowers: Atlantic Premium Brands, Ltd.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.8; provided, however, that any notice,
request or demand to or upon Lender pursuant to Section 3.1.1 or 5.2.2 hereof
shall not be effective until received by Lender. Any notice to APB shall be
deemed to constitute notice to all Borrowers and any notice (including a Notice
of Borrowing) from APB shall be deemed to constitute a notice from all
Borrowers. Any written notice or demand that is not sent in conformity with the
provisions hereof shall nevertheless be effective on the date that such notice
is actually received by the noticed party.
12.9. LENDER'S CONSENT. Whenever Lender's consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Lender shall be authorized to give or withhold such consent in its sole and
absolute discretion and to condition its consent upon the giving of additional
collateral security for the Obligations, the payment of money or any other
matter.
12.10. CREDIT INQUIRIES. Each Borrower hereby authorizes and permits
Lender (but Lender shall have no obligation) to respond to usual and customary
credit inquiries from third parties concerning such Borrower or any of its
Subsidiaries.
12.11. TIME OF ESSENCE. Time is of the essence of this Agreement,
the Other Agreements and the Security Documents.
12.12. ENTIRE AGREEMENT; APPENDIX A AND EXHIBITS. This Agreement and
the other Loan Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or with reference
thereto, embody the entire understanding and agreement between the parties
hereto and thereto with respect to the subject matter hereof and thereof and
supersede all prior agreements, understandings and inducements, whether express
or implied, oral or written. Appendix A and each of the Exhibits attached hereto
are incorporated into this Agreement and by this reference made a part hereof.
12.13. INTERPRETATION. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other
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55
governmental or judicial authority by reason of such party having or being
deemed to have structured, drafted or dictated such provision.
12.14. GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
ATLANTA, GEORGIA. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA: PROVIDED, HOWEVER, THAT IF ANY
OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN GEORGIA, THE
LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF
LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE
LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF
GEORGIA. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF
ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF A BORROWER OR
LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE SUPERIOR COURT OF
▇▇▇▇▇▇ COUNTY, GEORGIA, OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA, ATLANTA DIVISION, SHALL HAVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWERS AND LENDER
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
BORROWER HEREBY WAIVES ANY OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWERS AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF APB'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR
ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
12.15. WAIVERS BY BORROWER. EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL
BY JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH SUCH BORROWER MAY IN ANY WAY BE LIABLE AND
HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD; (iii) NOTICE
PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY
WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. EACH BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS
AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWERS. EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
12.16. WAIVER OF DTPA. EACH BORROWER WAIVES ALL PROVISIONS OF THE TEXAS
DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, TEXAS BUSINESS AND COMMERCE
CODE SECTIONS 17.41, ET SEQ. ("DTPA") OTHER THAN SECTION 17.555 (PERTAINING TO
CONTRIBUTION AND INDEMNITY) OF THE DPTA, AND WARRANTS AND
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REPRESENTS THAT IT (i) HAS ASSETS HAVING A VALUE OF $5,000,000 OR MORE, (ii) HAS
KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE IT TO
EVALUATE THE MERITS AND RISKS OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS, (iii) IS NOT IN A SIGNIFICANTLY DISPARATE
BARGAINING POSITION RELATIVE TO LENDER AND (iv) HAS BEEN REPRESENTED BY LEGAL
COUNSEL IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
12.17. CONFIDENTIALITY. Lender agrees to exercise reasonable efforts
(and, in any event, with at least the same degree of care as it ordinarily
exercises with respect to confidential information of its other customers) to
keep confidential any information delivered or made available by Borrower to it,
including confidential information obtained by Lender by reason of a visit or
investigation by any Person contemplated in Section 9.1.1 hereof or confidential
information from any Person other than individuals employed or retained by
Lender who are or are expected to become engaged in evaluating, approving,
structuring, administering or otherwise giving professional advice with respect
to any of the Loans or Collateral; provided, however, that nothing herein shall
prevent Lender from disclosing such confidential information (i) to any party to
this Agreement from time to time, (ii) pursuant to an order of any court or
administrative agency (subject to Borrower's right to seek a protected order to
bar any disclosure of such information), (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over Lender (subject to
Borrower's right to seek a protected order to bar any disclosure of such
information), (iv) which has been publicly disclosed other than by an act or
omission of Lender except as permitted herein, (v) to the extent reasonably
required in connection with any litigation with respect to any of the Loan
Documents or any of the transactions contemplated thereby to which Lender or its
respective Affiliates may be a party, (vi) to the extent reasonably required in
connection with the exercise of any remedies hereunder, (vii) to Lender's legal
counsel and independent auditors, and (viii) to any actual or proposed
Participant, assignee or other transferee of all or part of a Lender's rights
hereunder so long as such transferee has agreed in writing to be bound by the
provisions of this Section 12.17.
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IN WITNESS WHEREOF, this Agreement has been duly executed in Atlanta,
Georgia, on the day and year specified at the beginning of this Agreement.
ATLANTIC PREMIUM BRANDS, LTD.
ATTEST: ("Borrower")
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ------------------------
Secretary Title: Chairman
[CORPORATE SEAL]
CARLTON FOODS CORP.
ATTEST: ("Borrower")
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ------------------------
Secretary Title: Chairman
[CORPORATE SEAL]
PREFCO CORP.
ATTEST: ("Borrower")
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ------------------------
Secretary Title: Chairman
[CORPORATE SEAL]
[Signatures continued on following page]
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▇▇▇▇▇▇'▇ FARM, INC.
ATTEST: ("Borrower")
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ------------------------
Secretary Title: Chairman
[CORPORATE SEAL]
▇▇▇▇▇▇▇▇ CAJUN FOODS CORP.
ATTEST: ("Borrower")
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ------------------------
Secretary Title: Chairman
[CORPORATE SEAL]
POTTER'S ACQUISITION CORP.
ATTEST: ("Borrower")
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ------------------------
Secretary Title: Chairman
[CORPORATE SEAL]
ACCEPTED IN ATLANTA, GEORGIA:
FLEET CAPITAL CORPORATION
("Lender")
By:
----------------------------
Title:
----------------------
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APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated March 20, 1998, by
and among FLEET CAPITAL CORPORATION, ATLANTIC PREMIUM BRANDS, LTD., CARLTON
FOODS CORP., PREFCO CORP., ▇▇▇▇▇▇'▇ FARM, INC., ▇▇▇▇▇▇▇▇ CAJUN FOODS CORP. AND
POTTER'S ACQUISITION CORP., the following terms shall have the following
meanings (terms defined in the singular to have the same meaning when used in
the plural and vice versa):
Account - shall have the meaning given to "account" in the
UCC.
Account Debtor - any Person who is or may become obligated
under or on account of an Account.
Accounts Formula Amount - on any date of determination
thereof, an amount equal to 85% of the net amount of Eligible Accounts
on such date. As used herein, the phrase "net amount of Eligible
Accounts" shall mean the face amount of such Accounts on any date less
any and all returns, rebates, discounts (which may, at Lender's option,
be calculated on shortest terms), credits, allowances or Taxes
(including sales, excise or other taxes) at any time issued, owing,
claimed by Account Debtors, granted, outstanding or payable in
connection with, or any interest accrued on the amount of, such
Accounts at such date.
Acquisition - the purchase by Potter's of substantially all of
the assets of Sellers, pursuant to the Acquisition Documents.
Acquisition Agreement - the Asset Purchase Agreement dated
March 6, 1998, among Potter's and Seller.
Acquisition Documents - the Acquisition Agreement and any and
all other documents, agreements or instruments executed by in
connection with the Acquisition.
Adjusted LIBOR Rate - with respect to each Interest Period for
a LIBOR Loan, an interest rate per annum (rounded upwards, to the next
1/16th of 1%) equal to the quotient of (a) the LIBOR Rate in effect for
such Interest Period divided by (b) a percentage (expressed as a
decimal) equal to 100% minus Statutory Reserves.
Affiliate - a Person (other than a Subsidiary): (i) which
directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, another Person; (ii)
which beneficially owns or holds 10% or more of any class of the Equity
Interest of a Person; or (iii) 10% or more of the Equity Interests with
power to vote of which is beneficially owned or held by another Person
or a Subsidiary of another Person.
Agreement - the Loan and Security Agreement referred to in the
first sentence of this Appendix A, all Exhibits and Schedules thereto
and this Appendix A.
Applicable Law - all laws, rules and regulations applicable to
the Person, conduct, transaction, covenant or Loan Documents in
question, including all applicable common law and equitable principles;
all provisions of all applicable state and federal constitutions,
statutes, rules, regulations and orders of governmental bodies; and
orders, judgments and decrees of all courts and arbitrators.
60
Applicable Margin - a percentage equal to 2.5% with respect to
LIBOR Loans and 1% with respect to Base Rate Loans; provided that,
commencing December 31, 1998, if there exists no Default or Event of
Default, then the Applicable Margin shall be increased or decreased,
based upon the Leverage Ratio, as follows:
Applicable Margin Applicable Margin
Leverage Ratio for Base Rate Loans for LIBOR Loans
-------------- ------------------- -----------------
(i) If the Leverage Ratio
is equal to or greater
than 5 to 1 1.25% 2.75%
(ii) If the Leverage Ratio
is less than 5 to 1
but is equal to or greater
than 4 to 1 1.00% 2.50%
(iii) If the Leverage Ratio
is less than 4 to 1
but is equal to or greater
than 3.5 to 1 1.00% 2.375%
(iv) If the Leverage Ratio
is less than 3.5 to 1
but is equal to or greater
than 3 to 1 1.00% 2.25%
(v) If the Leverage Ratio
is less than 3 to 1
but is equal to or greater
than 2.5 to 1 .75% 2.125%
(vi) If the Leverage Ratio
is less than 2.5 to 1
but is equal to or greater
than 2 to 1 .75% 2.0%
(vii) If the Leverage Ratio
is less than 2 to 1 .50% 1.75%
The Applicable Margin shall be subject to reduction or increase, as
applicable and as set forth in the table above, on a quarterly basis
according to the performance of Borrowers as measured by the Leverage
Ratio for the immediately preceding 4 Fiscal Quarters of Borrowers.
Except as set forth in the last sentence hereof, any such increase or
reduction in the Applicable Margin provided for herein shall be
effective 3 Business Days after receipt by Lender of the applicable
financial statements and corresponding Compliance Certificate,
beginning with the final quarter of 1998; provided, however, that any
reduction in the Applicable Margin shall not apply to any LIBOR Loans
outstanding on the effective date of such reduction that have an
Interest Period commencing prior to the effective date of such
reduction. If the financial statements and the Compliance Certificate
of Borrowers setting forth the Leverage Ratio are not received by
Lender by the date required pursuant to Section 9.1.3 of the Agreement,
the Applicable Margin shall be
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determined as if the Leverage Ratio exceeds 5 to 1 until such time as
such financial statements and Compliance Certificate are received and
any Event of Default resulting from a failure timely to deliver such
financial statements or Compliance Certificate is waived in writing by
Lender; provided, however, that nothing herein shall be deemed to
prohibit Lender from changing interest at the Default Rate for so long
as any Event of Default exists. For the final quarter of any fiscal
year of Borrowers, Borrowers may provide the unaudited financial
statements of Borrowers, subject only to year-end adjustments, for the
purpose of determining the Applicable Margin; provided, however, that
if, upon delivery of the annual audited financial statements required
to be submitted by Borrowers to Lender pursuant to Section 9.1.3(i) of
the Agreement, Borrowers have not met the criteria for reduction of the
Applicable Margin pursuant to the terms hereinabove for the final
Fiscal Quarter of the Fiscal Year of Borrowers then ended, then (a)
such Applicable Margin reduction shall be terminated and, effective on
the first day of the month following receipt by Lender of such audited
financial statements, the Applicable Margin shall be the Applicable
Margin that would have been in effect if such reduction had not been
implemented based upon the unaudited financial statements of Borrowers
for the final Fiscal Quarter of the Fiscal Year of Borrowers then
ended, and (b) Borrower shall pay to Lender, on the first day of the
month following receipt by Lender of such audited financial statements,
an amount equal to the difference between the amount of interest that
would have been paid on the principal amount of the Obligations using
the Applicable Margin determined based upon such audited financial
statements and the amount of interest actually paid during the period
in which the reduction of the Applicable Margin was in effect based
upon the unaudited financial statements for the final Fiscal Quarter of
the Fiscal Year of Borrowers then ended.
Availability - the amount that Borrowers are entitled to
borrow from time to time as Revolver Loans, such amount being the
difference derived when the sum of the principal amount of Revolver
Loans then outstanding (including any amounts which Lender may have
paid for the account of Borrowers pursuant to any of the Loan Documents
and which have not been reimbursed by Borrowers) is subtracted from the
Borrowing Base. If the amount outstanding is equal to or greater than
the Borrowing Base, Availability is 0.
Availability Reserve - on any date of determination thereof,
an amount equal to the sum of the following on such date: (i) a reserve
for general inventory shrinkage, whether as a result of theft or
otherwise, that is determined by Lender from time to time in its
reasonable credit judgment based upon Borrowers' historical losses due
to such shrinkage; (ii) all amounts of past due rent or other charges
owing by Borrowers to any landlord of any premises where any of the
Collateral is located; (iii) any amounts which any Borrower is
obligated to pay pursuant to the provisions of the Loan Documents but
does not pay when due and which Lender elects to pay pursuant to any of
the Loan Documents for the account of Borrowers; (iv) $140,000, for
advertising rebates granted to Account Debtors; (v) $500,000, until
such time as Borrowers deliver to Lender a satisfactory real estate
survey that satisfies the requirements set forth in Section 10.1.7 of
the Agreement and which indicates no items which could reasonably be
expected to have a Material Adverse Effect; (vi) the LC Reserve; (vii)
any amounts received by Lender from the Business Interruption Insurance
Assignment; and (viii) such additional reserves as Lender in its sole
and absolute discretion may elect to impose from time to time.
Average Monthly Loan Balance - for any period, the amount
obtained by adding the unpaid balance of Loans outstanding at the end
of each day for the period in question and by dividing such sum by the
number of days in such period.
Average Revolver Loan Balance - for any period, the amount
obtained by adding the aggregate of the unpaid balance of Revolver
Loans outstanding, at the end of each day during the
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62
period in question and by dividing such sum by the number of days in
such period that the Agreement is in effect.
Average LC Obligations - for any period, the amount obtained
by adding the LC Obligations outstanding at the end of each day during
the period in question and by dividing such sum by the number of days
in such period that the Agreement is in effect.
Banc One - Banc One Partners II, LLC, a Delaware limited
liability company..
Banc One Documents - that certain Senior Subordinated Note and
Warrant Purchase Agreement to be executed on or about the Closing Date
between Banc One and Borrowers, that certain Senior Subordinated Note
due March 31, 2005, payable to Banc One in the original principal
amount of $6,500,000, and any and all other documents, agreements and
instruments executed in connection with or related thereto.
Banc One Debt Subordination - the Debt Subordination Agreement
dated on or about the date hereof between Banc One and Lender
Banc One Lien Subordination - the Lien Subordination Agreement
to be executed on or about the Closing Date by Banc One and Lender.
Banc One Subordinated Debt - the Debt of Borrowers to Banc One
under and pursuant to the Banc One Documents.
Bank - Fleet National Bank and its successors.
Bankruptcy Code - title 11 of the United States Code.
Base Rate - the rate of interest announced or quoted by Bank
from time to time as its prime rate, which rate might not be the lowest
rate charged by Bank; and, if such prime rate for commercial loans is
discontinued by Bank as a standard, a comparable reference rate
designated by Bank as a substitute therefor shall be the Base Rate.
Base Rate Loan - a Loan, or portion thereof, during any period
in which it bears interest at a rate based upon the Base Rate.
Board of Governors - the Board of Governors of the Federal
Reserve Board.
Borrowing - a borrowing consisting of Loans of one Type made
on the same day by Lender or a conversion of a Loan or Loans of one
Type from Lender on the same day.
Borrowing Base - on any date of determination thereof, an
amount equal to the lesser of: (a) $15,000,000 minus the sum of (i) all
LC Obligations outstanding on such date and (ii) the amount by which
the aggregate unpaid principal balance of the Term Loan and all
Equipment Loans outstanding on such date exceed $11,000,000, or (b) an
amount equal to (i) the sum of the Accounts Formula Amount plus the
Inventory Formula Amount on such date minus (ii) the Availability
Reserve on such date.
Borrowing Base Certificate - with respect to any date, a
certificate of Borrowers in form and substance satisfactory to Lender
setting forth (i) a schedule of the net amount of Eligible Accounts of
Borrowers, (ii) a schedule of all Eligible Inventory of Borrowers and
(iii)
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calculations of the Borrowing Base, all as of the close of business on
the preceding Business Day and in such detail as shall be reasonably
satisfactory to Lender.
Business Day - any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of Georgia or is a
day on which banking institutions located in such state are closed;
provided, however, that when used with reference to a LIBOR Loan
(including the making, continuing, prepaying or repaying of any LIBOR
Loan), the term "Business Day" shall also exclude any day on which
banks are not open for dealings in Dollar deposits on the London
interbank market.
Capital Expenditures - expenditures made or liabilities
incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful
life of more than one year, including the total principal portion of
Capitalized Lease Obligations.
Capitalized Lease Obligation - any Debt represented by
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Cash Collateral - cash or Cash Equivalents, and any interest
earned thereon, that is deposited with Lender in accordance with the
Agreement as security for any of the Obligations to the extent provided
in the Agreement.
Cash Collateral Account - a demand deposit, money market or
other account established by Lender at such financial institution as
Lender may select in its discretion, which account shall be in Lender's
name and subject to Lender's Lien.
Cash Equivalents - (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed
by the full faith and credit of the United States government having
maturities of not more than 12 months from the date of acquisition;
(ii) domestic certificates of deposit and time deposits having
maturities of not more than 12 months from the date of acquisition,
bankers' acceptances having maturities of not more than 12 months from
the date of acquisition and overnight bank deposits, in each case
issued by any commercial bank organized under the laws of the United
States, any state thereof or the District of Columbia, which at the
time of acquisition are rated A-1 (or better) by Standard & Poor's
Corporation or P-1 (or better) by ▇▇▇▇▇'▇ Investors Services, Inc., and
(unless issued by a Lender) not subject to offset rights in favor of
such bank arising from any banking relationship with such bank; (iii)
repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clauses (i) and (ii)
entered into with any financial institution meeting the qualifications
specified in clause (ii) above; and (iv) commercial paper having at the
time of investment therein or a contractual commitment to invest
therein a rating of A-1 (or better) by Standard & Poor's Corporation or
P-1 (or better) by ▇▇▇▇▇'▇ Investors Services, Inc., and having a
maturity within 9 months after the date of acquisition thereof.
Cash Interest Expense - with respect to any Person, for any
period, total interest expense, whether paid or accrued (including the
interest component of Capital Leases), of such Person, including all
commissions, discounts and other fees and charges owed with respect to
letters of credit, but excluding, however, interest expense not payable
in cash (including amortization of discount), all as determined in
accordance with GAAP.
Chattel Paper - shall have the meaning ascribed to the term
"chattel paper" in the UCC.
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Claims - any and all claims, demands, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
awards, remedial response, costs, expenses or disbursements of any kind
or nature whatsoever (including reasonable attorneys', accountants' or
consultants' fees and expenses), whether arising under or in connection
with the Loan Documents, under any Applicable Law (including any
Environmental Law) or otherwise, that may now or hereafter be suffered
or incurred by a Person.
Closing Date - the date on which all of the conditions
precedent in Section 10 of the Agreement are satisfied and the initial
Loan is made under the Agreement.
Collateral - all of the Property and interests in Property
described in Section 6 of the Agreement, and all other Property and
interests in Property that now or hereafter secure the payment and
performance of any of the Obligations.
Compliance Certificate - a Compliance Certificate to be
provided by Borrower to Lender in accordance with, and in the form
annexed as EXHIBIT E to, the Agreement.
Consolidated - the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies.
Consulting Agreement - the Consulting Agreement dated
March 15, 1996, among Borrowers, Sterling Advisors and Elfman, as
amended.
Current Assets - at any date, the amount at which all of the
current assets of a Person would be properly classified as current
assets shown on a balance sheet at such date in accordance with GAAP
except that amounts due from Affiliates and investments in Affiliates
shall be excluded therefrom.
Debt - as applied to a Person means, without duplication: (i)
all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Debt is to be
determined, including Capitalized Lease Obligations; (ii) all
obligations of other Persons which such Person has guaranteed; (iii)
all reimbursement obligations in connection with letters of credit or
letter of credit guaranties issued for the account of such Person; and
(iv) in the case of Borrowers (without duplication), the Obligations.
Debt Subordinations - collectively, the Banc One Debt
Subordination, the Seller Debt Subordinations and any other Debt
Subordination Agreement executed in favor of Lender by the holder of
Subordinated Debt.
Default - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an
Event of Default.
Default Rate - a fluctuating rate per annum which, on any
date, is equal to 2% plus the otherwise applicable interest rate.
Deposit Accounts - all of a Person's demand, time, savings,
passbook, money market or other depository accounts, and all
certificates of deposit, maintained by such Person with any bank,
savings and loan association, credit union or other depository
institution.
Deposit Account Assignment - the Collateral Assignments of
Deposit Accounts to be executed by Borrowers on the Closing Date in
favor of Lender as security for the Obligations.
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Distribution - in respect of any entity, (i) any payment of
any dividends or other distributions on Equity Interests of the entity
(except distributions in such Equity Interests) and (ii) any purchase,
redemption or other acquisition or retirement for value of any Equity
Interests of the entity or any Affiliate of the entity unless made
contemporaneously from the net proceeds of the sale of Equity
Interests.
Distribution Agreements - all distribution agreements between
APB and any other Person, pursuant to which APB is granted distribution
rights with respect to goods subject to, and licenses for the use of,
trademarks (or other Intellectual Property) of such Person.
Document - shall have the meaning ascribed to the term
"document" in the UCC.
Dollars and the sign "$" - lawful money of the United States
of America.
Dominion Account - a special account of Lender that may be
established by a Borrower pursuant to the Agreement at a bank selected
by a Borrower, but acceptable to Lender, and over which Lender shall
have sole and exclusive access and control for withdrawal purposes.
DTPA - as defined in Section 12.17 of the Agreement.
EBITDA - with respect to any Person, for any period, the sum
of the amounts for such period, of (i) Net Income, plus (ii)
depreciation and amortization expense, plus (iii) Cash Interest
Expense, plus (iv) federal and state income taxes actually payable,
plus (v) extraordinary losses (determined in accordance with GAAP which
have been included in the determination of Net Income), plus (vi)
without duplication, interior expense deducted in determining Net
Income in respect of the "Warrants" and the "Put Option" (as such terms
are defined in the Bank One Documents), minus (vii) extraordinary gains
(determined in accordance with GAAP which have been included in the
determination of Net Income).
Effective Net Worth - on any date, the sum of the
stockholders' equity plus Subordinated Debt of Borrowers and their
Subsidiaries on such date, on a combined and Consolidated basis.
Elfman - Elfman Venture Partners, Inc., an Illinois
corporation.
Eligible Account - an Account arising in the ordinary course
of a Borrower's business from the sale of goods which is payable in
Dollars and which Lender, in its reasonable and customary credit
judgment, deems to be an Eligible Account. Without limiting the
generality of the foregoing, no Account shall be an Eligible Account
if: (i) it arises out of a sale made by a Borrower to a Subsidiary or
an Affiliate of such Borrower or to a Person controlled by an Affiliate
of such Borrower; (ii) in the case of APB, it is unpaid for more than
60 days after the original due date shown on the invoice, or it is due
or unpaid more than 90 days after the original invoice date; (iii) in
the case of all Borrowers other than APB, it is unpaid for more than 14
days after the original due date shown on the invoice, or it is due and
unpaid more than 28 days after the original invoice date; (iv) 25% or
more of the Accounts from the Account Debtor are not deemed Eligible
Accounts hereunder; (v) the total unpaid Accounts of the Account Debtor
exceed 20% of the net amount of all Eligible Accounts or exceeds a
credit limit established by Lender for such Account Debtor, in each
case, to the extent of such excess; (vi) any covenant, representation
or warranty contained in the Agreement with respect to such Account has
been breached; (vii) the Account Debtor is also a Borrower's creditor
or supplier, or the Account Debtor has disputed liability with respect
to such Account, or the Account Debtor has made any claim with respect
to any other Account due from such Account Debtor to a Borrower, or the
Account otherwise is or may become subject to any right of setoff,
counterclaim, reserve or
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chargeback, provided that, the Accounts of such Account Debtor
shall be ineligible only to the extent of such offset, counterclaim,
disputed amount, reserve or chargeback; (viii) an Insolvency
Proceeding has been commenced by or against the Account Debtor or the
Account Debtor has failed, suspended business or ceased to be Solvent;
(ix) it arises from a sale to an Account Debtor with its principal
office, assets or place of business outside the United States, unless
the sale is backed by an irrevocable letter of credit that is issued
or confirmed by a bank acceptable to Lender and that is in form and
substance acceptable to Lender and payable in the full amount of the
Account in freely convertible Dollars at a place of payment within the
United States; (x) it arises from a sale to the Account Debtor on a
▇▇▇▇-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; (xi) the Account
Debtor is the United States of America or any department, agency or
instrumentality thereof, unless such Borrower assigns its right to
payment of such Account to Lender, in a manner satisfactory to Lender,
so as to comply with the Assignment of Claims Act of 1940 (31 U.S.C.
Section 3727 and 41 U.S.C. Section 15), or is a state, county or
municipality, or a political subdivision or agency thereof and
Applicable Law disallows or restricts an assignment of Accounts on
which it is the Account Debtor; (xii) the Account Debtor is located in
New Jersey, Minnesota or any other state imposing similar conditions
on the right of a creditor to collect accounts receivable unless such
Borrower has either qualified to transact business in such state as a
foreign entity or filed a Notice of Business Activities Report or
other required report with the appropriate officials in those states
for the then current year; (xiii) the Account Debtor is located in a
state in which such Borrower is deemed to be doing business under the
laws of such state and which denies creditors access to its courts in
the absence of qualification to transact business in such state or of
the filing of any reports with such state, unless such Borrower has
qualified as a foreign entity authorized to transact business in such
state or has filed all required reports; (xiv) the Account is subject
to a Lien other than a Permitted Lien; (xv) the goods giving rise to
such Account have not been delivered to and accepted by the Account
Debtor or the services giving rise to such Account have not been
performed by such Borrower and accepted by the Account Debtor or the
Account otherwise does not represent a final sale; (xvi) the Account
is evidenced by Chattel Paper or an Instrument of any kind, or has
been reduced to judgment; (xvii) such Borrower has made any agreement
with the Account Debtor for any deduction therefrom, except for
discounts or allowances which are made in the ordinary course of
business for prompt payment and which discounts or allowances are
reflected in the calculation of the face value of each invoice related
to such Account; (xviii) the Account arises out of a contract or order
which, by its terms, purports to forbid, restrict or make void or
unenforceable the assignment by such Borrower to Lender of such
Account; or (xix) such Borrower has made an agreement with the Account
Debtor to extend the time of payment thereof.
Eligible Equipment - new manufacturing equipment which has
been purchased by a Borrower from the manufacturer or a representative
or distributor thereof; has been delivered to and accepted by a
Borrower and installed at premises owned or leased by such Borrower, is
subject to Lender's duly perfected Lien and no other Lien that is not a
Permitted Lien; does not and will not, after delivery to and
installation at a Borrower's premises, constitute a fixture under
applicable law unless each landlord and mortgagee in respect of such
premises has executed in favor or Lender a landlord or mortgagee waiver
in form and content satisfactory to Lender; and does not and will not,
after delivery to and installation at a Borrower's premises, constitute
an accession to other equipment that is subject to any Lien (whether or
not a Permitted Lien) in favor of any Person other than Lender unless
the holder of any such Lien agrees in writing to disclaim any interest
in the Eligible Equipment.
Eligible Inventory - such Inventory of a Borrower (other than
packaging materials, labels and supplies) which Lender, in its credit
judgment, deems to be Eligible Inventory. Without limiting the
generality of the foregoing, no Inventory shall be Eligible Inventory
unless: (i) it is
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raw materials or finished goods; (ii) it is in good, new and saleable
condition; (iii) it is not slow-moving, obsolete or unmerchantable;
(iv) it meets all standards imposed by any governmental agency or
authority; (v) it conforms in all respects to the warranties and
representations set forth in the Agreement; (vi) it is at all times
subject to Lender's duly perfected, first priority security interest
and no other Lien except a Permitted Lien; (vii) it is in Borrower's
possession and control, situated at a location in compliance with the
Agreement and is not in transit or outside the continental United
States; and (viii) it is not subject to any license or other agreement
(including a Distribution Agreement) that limits, conditions or
restricts such Borrower's or Lender's right to sell or otherwise
dispose of such Inventory; and (ix) it is not the subject of an
Intellectual Property Claim.
Eligible Licensed Inventory - Inventory which, except for the
fact that it is sold under and subject to the terms of a Distribution
Agreement, would constitute Eligible Inventory, but such Inventory
shall cease to be Eligible Licensed Inventory during any period that a
Borrower is in default in the performance of its obligations under such
Distribution Agreement or any other party thereto has sent to such
Borrower notice of claimed default thereunder or notice of cancellation
or termination thereof.
Environmental Laws - all federal, state and local laws, rules,
regulations, codes, ordinances, programs, permits, guidances, orders
and consent decrees, now or hereafter in effect and relating to health,
safety or environmental matters, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
("CERCLA").
Environmental Certificate - the Certificate Regarding
Environmental Matters to be executed by Borrowers in favor of Lender on
or about the Closing Date.
Environmental Release - a release as defined in CERCLA or
under any applicable Environmental Laws.
Equipment - all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory) of every kind and description used in a
Borrower's operations or owned by a Borrower or in which a Borrower has
an interest, whether now owned or hereafter acquired by a Borrower and
wherever located, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements
therefor.
Equipment Loan - the Loans to be made by Lender to Borrowers
pursuant to Section 1.3 of the Agreement.
Equipment Loan Conditions - with respect to each Equipment
Loan requested by Borrowers pursuant to Section 1.3 hereof, the
following conditions: (i) Borrowers have given to Lender written notice
of a request for such Equipment Loan at least 5 days prior to the date
on which such Borrowers desire for such Equipment Loan to be funded, in
which notice such Borrowers have described in detail the Eligible
Equipment, the amount of the purchase price, the identity, address and
phone number of the seller, and the expected delivery date;(ii) the
amount of the Equipment Loan that is requested, together with all other
Equipment Loans previously made to Borrowers by Lender during such
Fiscal Year, shall not exceed the limitation on Capital Expenditures
for such Fiscal Year as set forth in Section 9.2.8 of the Agreement;
and (iii) no Out-of-Formula Condition exists at the time of the funding
of such Equipment Loan nor after giving effect thereto.
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Equipment Note - the Master Equipment Note to be executed by
Borrowers in favor of Lender on or about the Closing Date as provided
in Section 1.3 of the Agreement, which shall be in the form of EXHIBIT
A-2 to the Agreement.
Equipment Purchase Price - the invoice price, exclusive of any
applicable sales tax, inspection, installation, transportation or
freight costs, of Eligible Equipment purchased by a Borrower after the
Closing Date and separate from the Acquisition.
Equity Interest - the interest of a (i) shareholder in a
corporation, (ii) a partner (whether general or limited) in a
partnership (whether general, limited or limited liability), (iii) a
member in a limited liability company, or (iv) any other Person having
any other form of equity security.
ERISA - the Employee Retirement Income Security Act of 1974,
as amended, and all rules and regulations from time to time promulgated
thereunder.
Eurocurrency Liabilities - as defined in Regulation D.
Event of Default - as defined in Section 11.1 of the
Agreement.
Fiscal Quarter - each quarter of a Fiscal Year, ending
March 31, June 30, September 30 and December 31 of each year.
Fiscal Year - the fiscal year of Borrowers and their
Subsidiaries for accounting and tax purposes, which ends on December 31
of each year.
Fixed Charge Coverage Ratio - for any period, the ratio of (i)
EBITDA minus federal and state income taxes actually payable during
such period, minus Capital Expenditures of Borrowers on a combined and
consolidated basis net of Purchase Money Debt and Capitalized Lease
Obligations with respect thereto, to the extent permitted hereunder and
made during the period for which the Fixed Charge Coverage Ratio is to
be calculated, to (ii) Fixed Charges during the period for which the
Fixed Charge Coverage Ratio is to be calculated.
Fixed Charges - with respect to any Person, for any period,
the amount for such period of (i) Cash Interest Expense, plus (ii)
payments of principal due on the Term Loan and any Equipment Loan and
other Debt (including the principal component of Capitalized Lease
Obligations).
Funded Debt - all Debt which would, in accordance with GAAP,
constitute long term Debt, including (i) any Debt with a maturity more
than 1 year after the creation thereof and (ii) any Debt that is
renewable or extendable at the option of a Borrower for a period of
more than 1 year from the date of creation of such Debt.
Funding Account - a bank account established by APB at a bank
acceptable to Lender to which Lender shall remit the proceeds of all
Loans, unless otherwise instructed by APB.
GAAP - generally accepted account principles in the United
States of America in effect from time to time.
General Intangibles - all general intangibles of a Borrower,
whether now owned or hereafter created or acquired by a Borrower,
including all choses in action, causes of action, company or other
business records, deposit accounts, inventions, blueprints, designs,
patents,
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patent applications, trademarks, trademark applications, trade names,
trade secrets, service marks, goodwill, brand names, copyrights,
registrations, licenses, franchises, customer lists, tax refund claims,
computer programs, operational manuals, all claims under guaranties,
security interests or other security held by or granted to a Borrower
to secure payment of any of the Accounts by an Account Debtor, all
rights to indemnification and all other intangible property of every
kind and nature (other than Accounts).
Governmental Approvals - means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with,
and reports to, all national state or local government (whether
domestic or foreign) and any political subdivisions thereof in any
other governmental, quasi-governmental, judicial, administrative,
public or statutory instrumentality, authority, body, agency, bureau or
entity.
Guarantors - each Borrower and any other Person who may
hereafter guarantee payment or performance of the whole or any part of
the Obligations.
Guaranty Agreement - a guaranty that is at any time executed
by a Guarantor in favor of Lender.
Insolvency Proceeding - any action, case or proceeding
commenced by or against a Person, or any agreement of such Person, for
(a) the entry of an order for relief under any chapter of the
Bankruptcy Code or other insolvency or debt adjustment law (whether
state, federal or foreign), (b) the appointment of a receiver, trustee,
liquidator or other custodian for such Person or any part of its
Property, (c) an assignment or trust mortgage for the benefit of
creditors of such Person, or (d) the liquidation, dissolution or
winding up of the affairs of such Person.
Instrument - shall have the meaning ascribed to the term
"instrument" in the UCC.
Intellectual Property - Property constituting under any
Applicable Law a patent, patent application, copyright, trademark,
service ▇▇▇▇, tradename or mask work, or license or other right to use
any of the foregoing.
Intellectual Property Claim - the assertion by any Person of a
claim (whether asserted in writing, by action, suit or proceeding or by
other means) that a Borrower's ownership, use, marketing, sale or
distribution of any Inventory, Equipment, Intellectual Property or
other Property is violative of any ownership, patent, copyright,
trademark or other rights of such Person.
Intercreditor Agreements - collectively, the Banc One Debt
Subordination and Banc One Lien Subordination.
Interest Coverage Ratio - for any period, the ratio of (i)
EBITDA for such period to (ii) Cash Interest Expense for such period.
Interest Period - shall have the meaning ascribed to it in
Section 2.1.3 of the Agreement.
Inventory - all of a Borrower's inventory, whether now owned
or hereafter acquired, including all goods intended for sale or lease
by a Borrower, or for display or demonstration; all work in process;
all raw materials and other materials and supplies of every nature and
description used or which might be used in connection with the
manufacture, printing, packing, shipping, advertising, selling, leasing
or furnishing of such goods or otherwise used or consumed
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in Borrower's business; and all documents evidencing and General
Intangibles relating to any of the foregoing, whether now owned or
hereafter acquired by a Borrower.
Inventory Formula Amount - on any date of determination
thereof, an amount equal to the lesser of (i) $6,000,000 or (ii) the
sum of (a) 65% of the Value of Eligible Inventory on such date, plus
(b) the Licensed Inventory Formula Amount.
Investment Property - all Securities (whether certificated or
uncertificated), security entitlements, securities, accounts, commodity
contracts and commodity accounts.
LC Application - an application to Bank, in the form approved
by Bank and duly executed by a Borrower and Lender as co-applicants,
for the issuance of a Letter of Credit.
LC Conditions - the following conditions, the satisfaction of
each of which is required before Lender shall be obligated to execute
any LC Application in connection with a request to Bank for the
issuance of a Letter of Credit: (i) no Default or Event of Default
exists; (ii) after giving effect to the issuance of the requested
Letter of Credit and each Letter of Credit to be issued and for which
an LC Application has been signed by Lender, the LC Obligations would
not exceed $2,000,000, no Out-of-Formula Condition would exist, and, if
no Revolver Loans are outstanding, the LC Obligations do not exceed the
Borrowing Base; (iii) the expiry date of the Letter of Credit does not
extend beyond the earlier to occur of 365 days from the date of
issuance or 10 days prior to the last day of the Original Term or of
any effective Renewal Term; and (iv) the currency in which payment is
to be made under the Letter of Credit is Dollars.
LC Documents - any and all agreements, instruments and
documents (other than an LC Application or an LC Guaranty) required by
Bank to be executed by a Borrower or any other Person and delivered to
Bank for the issuance of a Letter of Credit.
LC Guaranty - a guaranty executed by Lender in favor of Bank
pursuant to which Lender shall guarantee the payment or performance by
Borrowers of Borrowers' reimbursement obligation under each Letter of
Credit in respect of which Lender has joined with one or more of the
Borrowers in executing an LC Application.
LC Obligations - on any date of determination thereof, an
amount (in Dollars) equal to the sum of (i) all amounts then due and
payable by any Obligor on such date by reason of any payment made on or
before such date by Lender under any LC Guaranty, plus (ii) the
aggregate undrawn amount of all Letters of Credit then outstanding or
to be issued by Bank under an LC Application theretofore submitted to
Bank.
LC Request - a written request from Borrower to Lender for
Lender to join with one or more of the Borrowers in the execution of an
LC Application for the issuance of a Letter of Credit, which shall be
in the form of EXHIBIT G to the Agreement.
LC Reserve - on any date of determination thereof, an amount
equal to the aggregate LC Obligations at such time with respect to
Letters of Credit, exclusive of any LC Obligations that are fully
secured by Cash Collateral.
Letter of Credit - a standby letter of credit issued by Bank
for the account of a Borrower.
Leverage Ratio - with respect to any fiscal period of
Borrowers, the ratio of Borrowers' total Funded Debt as of the last day
of such period to EBITDA for such period.
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LIBOR Loan - a Loan, or portion thereof, during any period in
which it bears interest at a rate based upon the applicable Adjusted
LIBOR Rate.
LIBOR Rate - with respect to an Interest Period, the rate per
annum determined by Lender at which deposits of Dollars approximately
equal in principal amount to or comparable to the amount of the LIBOR
Loan to which such Interest Period relates and for a term comparable to
such Interest Period are offered to Bank by prime banks in the London
interbank foreign currency deposits market at approximately 11:00 a.m.,
London time, 2 Business Days prior to the commencement of such Interest
Period. Each determination by Lender of any LIBOR Rate, in the absence
of any manifest error, shall be conclusive.
Licensed Inventory Formula Amount - on any date of
determination thereof, an amount equal to the lesser of (i) $1,000,000
or (ii) 65% of the Value of Eligible Licensed Inventory on such date.
Lien - any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on common law, statute or contract. The
term "Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting Property. For the
purpose of the Agreement, a Borrower shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes.
Loan Account - the loan account established on the books of
Lender pursuant to Section 4.7 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the
Security Documents.
Loans - all loans and advances of any kind made by Lender
pursuant to the Agreement, including all Revolver Loans, the Term Loan
and the Equipment Loans.
Loan Year - a period commencing each calendar year on the same
month and day as the date of the Agreement and ending on the same month
and day in the immediately succeeding calendar year, with the first
such period (i.e., the first Loan Year) to commence on the date of this
Agreement.
Margin Stock - as such term is defined in Regulation U and
Regulation G of the Board of Governors.
Material Adverse Effect - the effect of any event or condition
which, alone or when taken together with other events or conditions
occurring or existing concurrently therewith, (a) has a material
adverse effect upon the business, operations, Properties, condition
(financial or otherwise) or business prospects of any Borrower, any
Guarantor or any Subsidiary; (b) has any material adverse effect
whatsoever upon the validity or enforceability of the Agreement or any
of the other Loan Documents; (c) has or may be reasonably expected to
have any material adverse effect upon the value of the whole or any
part of the Collateral, the Liens of Lender with respect to the
Collateral or any part thereof or the priority of such Liens; (d)
materially impairs the ability of any Borrower or other Obligor to
perform its obligations under this Agreement, any Guaranty Agreement or
any of the other Loan Documents, including repayment of the Obligations
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when due; or (e) materially impairs the ability of Lender to enforce or
collect the Obligations or realize upon any of the Collateral in
accordance with the Loan Documents and Applicable Law.
Material Contract - an agreement to which an Obligor is a
party (other than the Loan Documents) for which breach, termination,
cancellation, nonperformance or failure to renew could reasonably be
expected to have a Material Adverse Effect.
Maximum Rate - the maximum non-usurious rate of interest
permitted by Applicable Law that at any time, or from time to time, may
be contracted for, taken, reserved, charged or received on the Debt in
question or, to the extent that at any time Applicable Law may
thereafter permit a higher maximum non-usurious rate of interest, then
such higher rate. Notwithstanding any other provision hereof, the
Maximum Rate shall be calculated on a daily basis (computed on the
actual number of days elapsed over a year of 365 or 366 days, as the
case may be).
Minimum Loan Amount - as defined in Section 2.2.3 of the
Agreement.
Money Borrowed - means (i) Debt arising from the lending of
money by any Person to a Borrower; (ii) Debt, whether or not in any
such case arising from the lending by any Person of money to a
Borrower, (A) which is represented by notes payable or drafts accepted
that evidence extensions of credit, (B) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (C)
upon which interest charges are customarily paid (other than accounts
payable) or that was issued or assumed as full or partial payment for
Property; (iii) Debt that constitutes a Capitalized Lease Obligation;
(iv) reimbursement obligations with respect to letters of credit or
guaranties of letters of credit, and (v) Debt of a Borrower under any
guaranty of obligations that would constitute Debt for Money Borrowed
under clauses (i) through (iii) hereof, if owed directly by a Borrower.
Mortgages - collectively, the (i) mortgage to be executed by
▇▇▇▇▇▇▇▇ on or about the Closing Date in favor of Lender and by which
▇▇▇▇▇▇▇▇ shall grant and convey to Lender, as security for the
Obligations, a Lien upon the real Property of ▇▇▇▇▇▇▇▇ located in
Acadia Parish, Louisiana, (ii) the mortgage to be executed by ▇▇▇▇▇▇'▇
on or about the Closing Date in favor of Lender and by which ▇▇▇▇▇▇'▇
shall grant and convey to Lender, as security for the Obligations, a
Lien upon the real Property of ▇▇▇▇▇▇'▇ located in Carlisle County,
Kentucky, and (iii) the mortgages to be executed by Potter's on or
about the Closing Date in favor of Lender and by which Potter's shall
grant and convey to Lender, as security for the Obligations, a lien
upon the real Property of Potter's located in each of ▇▇▇▇▇ County,
Oklahoma and Hot Spring County, Arkansas.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Net Income - with respect to any Person, for any period, the
net earnings (or loss) after taxes of such Person for such period taken
as a single accounting period determined in accordance with GAAP.
Net Proceeds - proceeds (including cash receivable (when
received) by way of deferred payment) received by a Borrower from the
sale, lease, transfer or other disposition of any Property, including
insurance proceeds and awards of compensation received with respect to
the destruction or condemnation of all or part of such Property, net
of: (i) the reasonable and customary costs of such sale, lease,
transfer or other disposition; and (ii) amounts applied to repayment of
Debt (other than the Obligations) secured by a Permitted Lien on the
Property disposed of that is senior in priority to Lender's Liens.
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Notes - collectively, the Term Note, the Equipment Note and
any other promissory note executed by a Borrower at Lender's request to
evidence any of the Obligations.
Notice of Borrowing - as defined in Section 3.1.1(i) of the
Agreement.
Notice of Conversion/Continuation - as defined in Section
2.1.2(ii) of the Agreement.
Obligations - all debts, liabilities, obligations, covenants
and duties now or at any time or times hereafter owing by any or all of
the Borrowers to Lender, howsoever evidenced or arising, and whether
direct or indirect, absolute or contingent, due or to become due,
primary or secondary, or joint or several, including all of the Loans,
and all interest payable in connection therewith and all other sums
chargeable to or payable by any Borrower under the Loan Documents, any
other agreement heretofore or hereafter entered into by any Borrower
with or executed by any Borrower in favor of Lender, or Applicable Law.
Obligor - each Borrower, each Guarantor and each other Person
who is at any time liable for the payment of the whole or any part of
the Obligations.
Original Term - as defined in Section 5.1 of the Agreement.
Other Agreements - any and all agreements, instruments and
documents (other than the Agreement and the Security Documents),
heretofore, now or hereafter executed by any Borrower, any Subsidiary
of a Borrower or any other Person and delivered to Lender in respect of
the transactions contemplated by the Agreement, including the Debt
Subordinations, and the Intercreditor Agreements.
Out-of-Formula Condition - as defined in Section 1.1.2 of the
Agreement.
Out-of-Formula Loan - a Revolver Loan made when an
Out-of-Formula Condition exists or the amount of any Revolver Loan
which, when funded, results in an Out-of-Formula Condition.
Participant - each Person who shall be granted the right by
Lender to participate in any of the Loans described in the Agreement
and who shall have entered into a participation agreement in form and
substance satisfactory to Lender.
PASA - the Packers and Stockyards Act of 1921, 7 U.S.C.
Section 181 et seq (1995).
Payment Account - an account maintained by Lender (currently
at ▇▇▇▇▇▇ Bank & Trust in Chicago, Illinois) to which all monies from
time to time deposited to a Dominion Account shall be transferred and
all other payments shall be sent in immediately available federal
funds.
Payment Items - all checks, drafts, or other items of payment
payable to a Borrower, including proceeds of any of the Collateral.
Pending Loans - at any time, the aggregate principal amount of
all Revolving Loans requested in any Notice(s) of Borrowing previously
received by the Lender but not yet advanced at such time.
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Permitted Lien - a Lien of a kind specified in Section 9.2.5
of the Agreement.
Permitted Purchase Money Debt - Purchase Money Debt of a
Borrower which is incurred after the date of the Agreement which is
secured by no Lien or only by a Purchase Money Lien and which, when
aggregated with the principal amount of all other such Debt and
Capitalized Lease Obligations of all Borrowers at the time outstanding,
does not exceed $100,000. For the purposes of this definition, the
principal amount of any Purchase Money Debt consisting of capitalized
leases shall be computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited
liability company, limited liability partnership, joint stock company,
land trust, business trust, unincorporated organization or other form
of business entity, or a government or agency or political subdivision
thereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of a Borrower that is covered by Title IV of ERISA.
Pro Forma - the pro forma Consolidated and consolidating
balance sheet of Borrowers as of March __, 1998, which gives effect to
the transactions contemplated by the Acquisition Documents and the
Agreement.
Projections - Borrowers' forecasted Consolidated and
consolidating (a) balance sheets, (b) profit and loss statements, (c)
cash flow statements, and (d) capitalization statements, all prepared
on a consistent basis with Borrowers' historical financial statements,
together with appropriate supporting details and a statement of
underlying assumptions.
Properly Contested - in the case of any Debt of an Obligor
(including any Tax) that is not paid as and when due or payable by
reason of such Obligor's bona fide dispute concerning its liability to
pay same or concerning the amount thereof, (i) such Debt and any Liens
securing same are being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted; (ii) such
Obligor has established appropriate reserves as shall be required in
conformity with GAAP; (iii) the non-payment of such Debt during the
period being contested by such Obligor will not have a Material Adverse
Effect and does not and will not result in a forfeiture of, foreclosure
upon or loss of any assets of such Obligor; (iv) no Lien is imposed
upon any of such Obligor's assets with respect to such Debt unless such
Lien is at all times junior and subordinate in priority to the Liens in
favor of Lender (except only with respect to property taxes that have
priority as a matter of applicable state law) and enforcement of such
Lien is stayed during the period prior to the final resolution or
disposition of such dispute; (v) if the Debt results from or is
determined by the entry, rendition or issuance against a Obligor or any
of its assets of a judgment, writ, order or decree, such judgment,
writ, order or decree is stayed pending a timely appeal or other
judicial review and such Obligor shall have established adequate
reserves in accordance with GAAP for such judgment, writ, order or
decree or the same is either fully insured against by an insurer that
has not denied or reserved rights with respect to coverage or has been
bonded to Lender's satisfaction; and (vi) if such dispute or contest is
abandoned, settled or determined adversely to such Obligor, such
Obligor forthwith pays such Debt and all penalties and interest in
connection therewith.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
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75
Purchase Money Debt - means and includes (i) Debt (other than
the Obligations) for the payment of all or any part of the purchase
price of any fixed assets, (ii) any Debt (other than the Obligations)
incurred at the time of or within 10 days prior to or after the
acquisition of any fixed assets for the purpose of financing all or any
part of the purchase price thereof, and (iii) any renewals, extensions
or refinancings thereof, but not any increases in the principal amounts
thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Debt, but only if such Lien shall at all times be
confined solely to the fixed assets acquired through the incurrence of
the Purchase Money Debt secured by such Lien.
Regulation D - Regulation D of the Board of Governors.
Real Estate - all parcels or tracts of real Property of a
Borrower, including the real Property of ▇▇▇▇▇▇▇▇ located in Acadia
Parish, Louisiana, the real Property of ▇▇▇▇▇▇'▇ located in Carlisle
County, Kentucky and the real Property of Potter's located in ▇▇▇▇▇
County, Oklahoma and in Hot Spring County, Arkansas.
Rentals - as defined in Section 9.2.13 of the Agreement.
Renewal Term - as defined in Section 5.1 of the Agreement.
Reportable Event - any of the events set forth in Section
4043(b) of ERISA.
Restricted Investment - any acquisition of Property by a
Borrower or any of its Subsidiaries in exchange for cash or other
Property, whether in the form of an acquisition of Equity Interests or
Debt, or the purchase or acquisition by a Borrower or any of its
Subsidiaries of any other Property, or a loan, advance, capital
contribution or subscription, except acquisitions of the following: (a)
fixed assets to be used in the business of a Borrower or any of its
Subsidiaries so long as the acquisition costs thereof constitute
Capital Expenditures permitted hereunder; (b) goods held for sale or
lease or to be used in the manufacture of goods or the provision of
services by a Borrower or any of its Subsidiaries in the ordinary
course of business; (c) Current Assets arising from the sale or lease
of goods or the rendition of services in the ordinary course of
business of a Borrower or any of its Subsidiaries; (d) investments in
Subsidiaries to the extent existing on the Closing Date; and (e) Cash
Equivalents.
Revolver Loan - a Loan made by Lender as provided in Section
1.1 of the Agreement.
Security - shall have the same meaning as in Section 2(1) of
the Securities Act of 1933.
Security Documents - each Guaranty Agreement, the Mortgages,
the Deposit Account Assignments, the Stock Pledge Agreements, the
Trademark Security Agreements and all other instruments and agreements
now or at any time hereafter securing the whole or any part of the
Obligations.
Seller- collectively, ▇.▇. ▇▇▇▇▇▇ Sausage Co., Potter's Farm,
Inc., Potter Rendering Co., each an Oklahoma corporation, and Potter
Leasing Co., Ltd., an Oklahoma limited partnership.
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Seller Debt Subordination - each of the Debt Subordination
Agreements dated the date hereof, between each holder of the Seller
Notes and Lender.
Seller Notes - collectively, that certain (i) 9% Subordinated
Non-Negotiable Promissory Note dated as of January 1, 1996, in the
original principal amount of $1,400,000, executed by APB and payable to
and for the benefit of ▇▇▇▇▇▇▇▇ ▇▇▇▇, in his capacity as representative
for himself and ▇▇▇▇▇ ▇▇▇▇▇, as replaced by the 9% Subordinated
Non-Negotiable Promissory Note dated as of August ___, 1996, in the
original principal amount of $700,000 executed by APB and payable to
and for the benefit of ▇▇▇▇▇▇▇▇ ▇▇▇▇, and the 9% Subordinated
Non-Negotiable Promissory Note dated as of August ___, 1996, in the
original principal amount of $700,000 executed by APB and payable to
and for the benefit of ▇▇▇▇▇ ▇▇▇▇▇; (ii) 6.35% Subordinated
Non-Negotiable Promissory Note due July 31, 2001, dated August 1, 1996,
made by ▇▇▇▇▇▇▇▇ and APB to ▇.▇. ▇▇▇▇▇▇▇ in the original principal
amount of $850,000; (iii) 8% Subordinated Non-Negotiable Promissory
Note dated as of October 1, 1998, made by Grogans to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in the original principal amount of $200,000; and
(iv) 8% Subordinated Non-Negotiable Promissory Note dated as of
November 15, 1996, made by Grogans in favor of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇, in the original principal amount of $219,593.
Senior Debt - at any time, with respect to any Borrower and
its Subsidiaries, (i) combined and consolidated total Debt (including
the Term Loan, any outstanding Equipment Loans, the outstanding
Revolving Loans, the LC Obligations, and any Capitalized Lease
Obligations), minus (ii) combined and consolidated current liabilities,
minus (iii) Subordinated Debt, minus (iv) noncurrent Debt (determined
in accordance with such Borrower's practice as to such items on the
Closing Date) for income taxes, plus (v) any unamortized debt expense.
Senior Debt/EBITDA Ratio - the ratio of Senior Debt
outstanding at the end of any period to EBITDA for such period.
Senior Fixed Charge Coverage Ratio - for any period, the ratio
of (i) EBITDA minus actual state and federal income taxes payable
during such period, minus Capital Expenditures of the Borrowers on a
combined and consolidated basis net of Purchase Money Debt and
Capitalized Lease Obligations with respect thereto, to the extent
permitted hereunder and made during the period for which the Senior
Fixed Charge Coverage Ratio is to be calculated, to (ii) the sum of (a)
Cash Interest Expense attributable to Senior Debt, plus (b) payments of
principal due on the Term Loan or any Equipment Loan and other Senior
Indebtedness (including the principal component of Capitalized Lease
Obligations) for the period for which the Senior Fixed Charge Coverage
Ratio is to be calculated.
Senior Officer - the chairman of the board of directors, the
president or the chief financial officer of, or in-house legal counsel
to, Borrower.
Solvent - as to any Person, such Person (i) owns Property
whose fair saleable value is greater than the amount required to pay
all of such Person's probable liability with respect to its Debts
(including contingent debts), (ii) is able to pay all of its Debts as
such Debts mature, (iii) has capital sufficient to carry on its
business and transactions and all business and transactions in which it
is about to engage; and (iv) is not "insolvent" within the meaning of
Section 101(32) of the Bankruptcy Code.
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Statutory Reserves - on any date, the percentage (expressed as
a decimal) established by the Board of Governors which is the then
stated maximum rate for all reserves (including, any emergency,
supplemental or other marginal reserve requirements) applicable to any
member bank of the Federal Reserve System in respect to Eurocurrency
Liabilities (or any successor category of liabilities under Regulation
D). Such reserve percentage shall include, without limitation, those
imposed pursuant to said Regulation D. The Statutory Reserve shall be
adjusted automatically on and as of the effective date of any change in
such percentage.
Sterling Advisors - Sterling Advisors L.P., a Delaware limited
partnership.
Stock Pledge Agreements - the Stock Pledge Agreements to be
executed by APB on or about the Closing Date in favor of Lender by
which APB shall pledge to Lender all of the issued and outstanding
shares of capital stock of Carlton, Prefco, Grogans, Richards, Potter's
and Snack Foods as security for the Obligations.
Subordinated Debt - Debt of Borrowers evidenced by the Seller
Notes, the Banc One Subordinated Debt and any other Debt of a Borrower
that is subordinated to the Obligations in a manner satisfactory to
Lender.
Subsidiary - any Person a majority of the Equity Interests of
which is at the time owned, directly or indirectly, by a Borrower or by
one or more other Subsidiaries or by a Borrower and one or more other
Subsidiaries.
Tax Sharing Agreement - the Tax Sharing Agreement dated as of
February 1, by and among all Borrowers.
Taxes - any present or future taxes, levies, imposts, duties,
fees, assessments, deductions, withholdings or other charges of
whatever nature, including income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise
taxes now or hereafter imposed or levied by the United States, or any
state, local or foreign government or by any department, agency or
other political subdivision or taxing authority thereof or therein and
all interest, penalties, additions to tax and similar liabilities with
respect thereto.
Term Loan - the Loan described in Section 1.2.1 of the
Agreement.
Term Note - the Secured Promissory Note to be executed by
Borrowers on or about the Closing Date in favor of Lender to evidence
the Term Loan, which shall be in the form of EXHIBIT A-1 to the
Agreement.
Termination Date - the date on which the Agreement is
terminated pursuant to Section 5.2 of the Agreement.
Trademark Security Agreements - the Trademark Security
Agreements to be executed by Borrowers on or about the Closing Date in
favor of Lender and by which each Borrower shall grant and convey, as
security for the Obligations, a Lien upon the trademarks, and other
rights relating thereto, described therein.
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Type - any type of a Loan determined with respect to the
interest option applicable thereto, which shall be either a LIBOR Loan
or a Base Rate Loan.
UCC - the Uniform Commercial Code (or any successor statute)
as adopted and in force in the State of Georgia or, when the laws of
any other state govern the method or manner of the creation or
perfection of any security interest in any of the Collateral, the
Uniform Commercial Code (or any successor statute) of such state.
Value - with reference to the value of Eligible Inventory,
value determined on the basis of the lower of cost or market of such
Eligible Inventory, with the cost thereof calculated on a first-in,
first-out basis, determined in accordance with GAAP.
Voting Stock - Securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors
(or Persons performing similar functions).
ACCOUNTING TERMS. Unless otherwise specified herein, all terms of an
accounting character used in the Agreement shall be interpreted, all accounting
determinations under the Agreement shall be made, and all financial statements
required to be delivered under the Agreement shall be prepared, in accordance
with GAAP, applied on a basis consistent with the most recent audited
Consolidated financial statements of Borrowers and their Subsidiaries heretofore
delivered to Lender and using the same method for inventory valuation as used in
such audited financial statements, except for any change in which Borrowers'
independent public accountants concur or as required by GAAP unless (i)
Borrowers shall have objected to determining such compliance on such basis at
the time of delivery of such financial statements or (ii) Lender shall so object
in writing within 30 days after the delivery of such financial statements, in
either of which events such calculations shall be made on a basis consistent
with those used in the preparation of the latest financial statements as to
which such objection shall not have been made. In the event of any change in
GAAP that occurs after the date of the Agreement and that is material to
Borrowers, Lender shall the right to require either that conforming adjustments
be made to any financial covenants set forth in the Agreement, or the components
thereof, that are affected by such change or that Borrowers report their
financial condition based on GAAP as in effect immediately prior to the
occurrence of such change.
OTHER TERMS. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the UCC to the
extent the same are used or defined therein.
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the Agreement. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any Person
shall mean and include the successors and permitted assigns of such Person. All
references to any of the Loan Documents shall include any and all amendments or
modifications thereto and any and all restatements, extensions or renewals
thereof. Wherever the phrase "including" shall appear in the Agreement, such
word shall be understood to mean "including, without limitation." All references
to the time of day shall mean the time
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of day on the day in question in Atlanta, Georgia, unless otherwise expressly
provided in the Agreement. A Default or an Event of Default shall be deemed to
exist at all times during the period commencing on the date that such Default or
Event of Default occurs to the date on which such Default or Event of Default is
waived in writing by Lender pursuant to this Agreement or, in the case of a
Default, is cured within any period of cure expressly provided in this
Agreement; and an Event of Default shall "continue" or be "continuing" until
such Event of Default has been waived in writing by Lender. Whenever the phrase
"to the best of any Borrower's knowledge" or words of similar import relating to
the knowledge or the awareness of any Borrower are used herein, such phrase
shall mean and refer to (i) the actual knowledge of a Senior Officer of a
Borrower or (ii) the knowledge that a Senior Officer would have obtained if they
had engaged in good faith and the diligent performance of their duties,
including the making of such reasonable specific inquiries as may be necessary
of the officers, employees or agents of any Borrower and a good faith attempt to
ascertain the existence or accuracy of the matter to which such phrase relates.
Wherever in the Agreement and the other Loan Documents reference is made to
attorneys' fees and expenses that are incurred by Lender and that are to be
reimbursed to Lender by Borrowers, such reference shall be understood to mean
the reasonable attorneys' fees and expenses which are incurred by Lender for
services actually rendered by attorneys selected by Lender on Lender's behalf.
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IN WITNESS WHEREOF, this Appendix has been duly executed in Atlanta,
Georgia, on March 20, 1998.
ATLANTIC PREMIUM BRANDS, LTD.
ATTEST: ("Borrower")
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ------------------------------
Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
[CORPORATE SEAL]
CARLTON FOODS CORP.
ATTEST: ("Borrower")
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ------------------------------
Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
[CORPORATE SEAL]
PREFCO CORP.
ATTEST: ("Borrower")
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ------------------------------
Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
[CORPORATE SEAL]
▇▇▇▇▇▇'▇ FARM, INC.
ATTEST: ("Borrower")
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ------------------------------
Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
[CORPORATE SEAL]
▇▇▇▇▇▇▇▇ CAJUN FOODS CORP.
ATTEST: ("Borrower")
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ------------------------------
Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
[CORPORATE SEAL]
[Signatures continued on the following page]
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POTTER'S ACQUISITION CORP.
ATTEST: ("Borrower")
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ------------------------------
Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
[CORPORATE SEAL]
ACCEPTED IN ATLANTA, GEORGIA:
----------------------------
FLEET CAPITAL CORPORATION
("Lender")
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Title: Vice President
----------------------
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