EXHIBIT 10.15
05/08/96
LOAN AND SECURITY AGREEMENT
DATED: MAY 10, 1996
$24,500,000
BY AND BETWEEN
FLEET CAPITAL CORPORATION,
AS LENDER
AND
EAGLE PLASTICS, INC.,
PACIFIC PLASTICS, INC.,
AND
ARROW PACIFIC PLASTICS, INC.
AS BORROWERS
WITH
EAGLE PACIFIC INDUSTRIES, INC.,
AS GUARANTOR
TABLE OF CONTENTS PAGE
----------------- ----
SECTION 1. CREDIT FACILITY.................................................. 1
1.1 Revolving Credit Loans.................................. 1
1.2 Term Loan............................................... 2
SECTION 2. INTEREST, FEES AND CHARGES....................................... 2
2.1 Interest................................................ 2
2.2 Computation of Interest and Fees........................ 5
2.3 Closing Fee............................................. 5
2.4 Unused Line Fee......................................... 5
2.5 Collection Charges...................................... 5
2.6 Audit and Appraisal Fees................................ 5
2.7 Reimbursement of Expenses............................... 5
2.8 Bank Charges............................................ 6
SECTION 3. LOAN ADMINISTRATION.............................................. 6
3.1 Manner of Borrowing Revolving Credit Loans.............. 6
3.2 Payments................................................ 7
3.3 Mandatory Prepayments................................... 8
3.4 Application of Payments and Collections................. 8
3.5 All Loans to Constitute One Obligation.................. 9
3.6 Loan Account............................................ 9
3.7 Statements of Account................................... 9
SECTION 4. TERM AND TERMINATION.............................................. 9
4.1 Term of Agreement....................................... 9
4.2 Termination............................................. 9
SECTION 5. SECURITY INTERESTS...............................................11
5.1 Security Interest in Collateral.........................11
5.2 Lien Perfection; Further Assurances.....................11
5.3 Lien on Realty..........................................12
SECTION 6. COLLATERAL ADMINISTRATION........................................12
6.1 General.................................................12
6.2 Administration of Accounts..............................13
6.3 Administration of Inventory.............................15
6.4 Administration of Equipment.............................15
6.5 Payment of Charges......................................16
SECTION 7. REPRESENTATIONS AND WARRANTIES...................................16
7.1 General Representations and Warranties..................16
7.2 Continuous Nature of Representations and Warranties.....22
7.3 Survival of Representations and Warranties..............22
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS..............................22
8.1 Affirmative Covenants...................................22
8.2 Negative Covenants......................................24
8.3 Specific Financial Covenants............................29
SECTION 9. CONDITIONS PRECEDENT.............................................31
9.1 Documentation...........................................32
9.2 No Default..............................................32
9.3 Other Loan Documents....................................32
9.4 Equity..................................................32
9.5 Subordinated Debt.......................................32
9.6 Availability............................................32
9.7 No Litigation...........................................32
9.8 Net Operating Carry Forward.............................32
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT...............33
10.1 Events of Default.......................................33
10.2 Acceleration of the Obligations.........................35
10.3 Other Remedies..........................................35
10.4 Remedies Cumulative; No Waiver..........................36
SECTION 11. MISCELLANEOUS...................................................37
11.1 Power of Attorney.......................................37
11.2 Indemnity...............................................38
11.3 Modification of Agreement; Sale of Interest.............38
11.4 Severability............................................38
11.5 Successors and Assigns..................................39
11.6 Cumulative Effect; Conflict of Terms....................39
11.7 Execution in Counterparts...............................39
11.8 Notice..................................................39
11.9 Lender's Consent........................................40
11.10 Credit Inquiries........................................40
11.11 Time of Essence.........................................40
11.12 Entire Agreement........................................40
11.13 Interpretation..........................................41
11.14 GOVERNING LAW; CONSENT TO FORUM.........................41
11.15 WAIVERS BY BORROWER.....................................42
11.16 Publicity...............................................42
11.17 Reimbursement...........................................42
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 10th day of May 1996, by
and between FLEET CAPITAL CORPORATION ("Lender"), a Rhode Island
corporation with an office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and EAGLE PLASTICS, INC. ("EPI"), a Nebraska
corporation with its chief executive office and principal place of
business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
PACIFIC PLASTICS, INC. ("PPI"), an Oregon corporation with its chief
executive office and principal place of business at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ARROW PACIFIC PLASTICS
("APP"), a Utah corporation with its chief executive office and
principal place of business at ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
EPI, PPI and APP are hereinafter sometimes referred to individually as
"Borrower" and collectively as "Borrowers." Capitalized terms used in
this Agreement have the meanings assigned to them in Appendix A,
General Definitions. Accounting terms not otherwise specifically
defined herein shall be construed in accordance with GAAP consistently
applied.
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
Twenty-Four Million Five Hundred Thousand Dollars ($24,500,000)
available upon Borrowers' request therefor, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Lender agrees, for so long
as no Default or Event of Default exists, to make Revolving
Credit Loans to EPI from time to time, as requested by EPI in
the manner set forth in subsection 3.1.1 hereof, up to a
maximum principal amount at any time outstanding equal to the
EPI Borrowing Base at such time. Lender agrees, for so long as
no Default or Event of Default exists, to make Revolving
Credit Loans to PPI from time to time, as requested by PPI in
the manner set forth in Section 3.1.1 hereof, up to a maximum
principal amount at any time outstanding equal to the PPI
Borrowing Base at such time. Lender agrees, for so long as no
Default or Event of Default exists, to make Revolving Credit
Loans to APP from time to time, as requested by APP in the
manner set forth in subsection 3.1.1 hereof up to a maximum
principal amount at any time outstanding equal to the APP
Borrowing Base at such time. Lender shall have the right to
establish reserves in such amounts, and with respect to such
matters, as Lender shall deem necessary or appropriate,
against the amount of Revolving Credit Loans which Borrowers
may otherwise request under this subsection 1.1.1, including,
without limitation, with respect to (i) other sums chargeable
against Borrowers' Loan Account as Revolving Credit Loans
under any section of this Agreement; (ii) amounts owing by any
Borrower to any Person to the extent secured by a Lien on, or
trust over, any Property of any Borrower and Borrowers have
not already established funded reserves over which Lender has
a security interest; and (iii) such other matters, events,
conditions or contingencies as to which Lender, in its sole
credit judgment, determines reserves should be established
from time to time hereunder.
1.1.2 Use of Proceeds. The Revolving Credit Loans
shall be used solely for the satisfaction of existing
Indebtedness of EPI to FirsTier Bank, National Association,
for the satisfaction of existing Indebtedness of PPI and/or
APP to Bank of America Oregon, for the purpose of paying
transaction costs related to this transaction in an amount not
to exceed $700,000, for the purpose of paying a dividend to
Company to permit Company to repay a portion of its
Indebtedness for Money Borrowed owed to ▇▇▇▇▇, to permit
Company to purchase shares of stock of EPI and to permit
Company to pay professional fees, and for Borrowers' general
operating capital needs in a manner consistent with the
provisions of this Agreement and all applicable laws.
1.2 Term Loan.
1.2.1 Term Loan. Lender agrees to make (i) a term
loan to EPI on the Closing Date in the principal amount of
Three Million Two Hundred Seventy-Five Thousand Dollars
($3,275,000) which shall be repayable in accordance with the
terms hereof and the terms of the EPI Term Note and shall be
secured by all of the Collateral, (ii) a term loan to PPI on
the Closing Date in the principal amount of Three Million
Seven Hundred Seventy-Five Thousand Dollars ($3,775,000) which
shall be repayable in accordance with the terms hereof and the
PPI Term Note and shall be secured by all of the Collateral,
and (iii) a term loan to APP on the Closing Date in the
principal amount of Nine Hundred Fifty Thousand Dollars
($950,000) which shall be repayable in accordance with the
terms hereof and the APP Term Note and shall be secured by all
of the Collateral. The proceeds of the EPI Term Loan, the PPI
Term Loan and the APP Term Loan shall be used solely for
purposes for which the proceeds of the Revolving Credit Loans
are authorized to be used.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rates of Interest.
(A) Interest. (i) Interest shall accrue on the Prime
Portion outstanding at the end of each day (computed
on the basis of a calendar year of 360 days and
actual days elapsed) at a fluctuating rate per annum
equal to the sum of one-quarter of one percent (1/4%)
plus the Base Rate. After the date hereof, the
foregoing rate of interest 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. The Base Rate in effect on
the date hereof shall be the Base Rate effective on
the opening of business on the date hereof, but if
this Agreement is executed on a day that is not a
Business Day, the Base Rate in effect on the date
hereof shall be the Base Rate effective as of the
opening of business on the last Business Day
immediately preceding the date hereof.
(ii) Interest shall accrue on each LIBOR
Revolving Loan Portion outstanding at the
end of each day (computed on the basis of a
calendar year of 360 days and actual days
elapsed) at rates equal to the sum of the
LIBOR Rate applicable to each such LIBOR
Revolving Loan Portion plus two and one-half
percent (2 1/2%).
(iii) Interest shall accrue on each LIBOR
Term Portion outstanding at the end of each
day (computed on the basis of a calendar
year of 360 days and actual days elapsed) at
rates equal to the sum of the LIBOR Rate
applicable to each such LIBOR Term Portion
plus two and three-quarters percent (2
3/4%).
(B) LIBOR Option.
(i) Conditions for Basing Interest on the
LIBOR Rate. Upon the condition that:
(a) Lender shall have received a LIBOR
Request from EPI (in respect to the Term Loan and
Revolving Credit Loan made to EPI) or PPI (in respect
to Revolving Credit Loans made to PPI and APP) at
least 3 Business Days prior to the first day of the
LIBOR Period requested:
(_)(b) There shall have occurred no change
in applicable law which would make it unlawful for
Lender to obtain deposits of U.S. dollars in the
London interbank foreign currency deposits market;
(c) As of the date of the LIBOR Request and
the first day of the LIBOR Period, there shall exist
no Default or Event of Default which has not been
waived by Lender; and
(d) Lender shall have determined in good
faith that it is able to determine the LIBOR Rate in
respect of the requested LIBOR Period and that Lender
is able to obtain deposits of U.S. dollars in the
London interbank foreign currency deposits market in
the applicable amounts and for the requested LIBOR
Period;
then interest on the LIBOR Portion requested during the LIBOR Period
requested will be based on the applicable LIBOR Rate. The foregoing
notwithstanding, Borrowers acknowledge that there may not be more than
three LIBOR Portions outstanding at any one time.
(ii) Indemnification for Funding and Other Losses.
Each LIBOR Request shall be irrevocable and binding on Borrowers.
Borrowers shall indemnify Lender against any expense or loss suffered
by Lender as a result of any failure on the part of Borrowers to
fulfill, on or before the date specified in any LIBOR Request, the
applicable conditions set forth in this Agreement or as a result of the
prepayment of the applicable LIBOR Portion prior to the last day of the
applicable LIBOR Period, including, without limitation, any loss
(including loss of anticipated profits) or expense incurred by reason
of the liquidation or redeployment of deposits or other funds acquired
by Lender to fund or maintain the requested LIBOR Portion, when, as a
result of such failure on the part of Borrowers or prepayment by
Borrowers, interest on such LIBOR Portion is not based on the
applicable LIBOR Rate for the requested LIBOR Period.
(iii) Change in Applicable Laws, Regulations, etc. If
any Legal Requirement shall make it unlawful for Lender to fund through
the purchase of U.S. dollar deposits any LIBOR Portion, or otherwise to
give effect to its obligations as contemplated under this Section
2.1.1(B), or shall impose on Lender any costs based on or measured by
the excess above a specified level of the amount of a category of
deposits or other liabilities of Lender which includes deposits by
reference to which the LIBOR Rate is determined as provided herein or a
category of extensions of credit or other assets of Lender which
includes any LIBOR Portion, or shall impose on Lender any restrictions
on the amount of such a category of liabilities or assets which Lender
may hold, (i) Lender may by notice thereof to Borrowers terminate the
LIBOR Option, with respect to the Term Loan and the Revolving Credit
Loans made or to be made by Lender, (ii) any LIBOR Portion subject
thereto shall immediately bear interest thereafter at the rate provided
for in Section 2.1.1(A) payable on the dates provided for in Section
3.2.2 and (iii) Borrowers shall indemnify Lender against any
out-of-pocket loss, penalty or expense incurred by Lender by reason of
the liquidation or redeployment of deposits or other funds acquired by
Lender to fund or maintain such LIBOR Portion.
(iv) Taxes. It is the understanding of Borrowers and
Lender that Lender shall receive payments of amounts of principal of
and interest on the Revolving Credit Loans and the Term Loan with
respect to the LIBOR Portions from time to time subject to a LIBOR
Option free and clear of, and without deduction for, any Taxes. If (i)
Lender shall be subject to any such Tax in respect of any such LIBOR
Portion or any part thereof or (ii) Borrowers shall be required to
withhold or deduct any such Tax from any such amount, the LIBOR Rate
applicable to such LIBOR Portion shall be adjusted by Lender to reflect
all additional costs incurred by Lender in connection with the payments
by Lender or the withholding by Borrowers of such Tax and Borrowers
shall provide Lender with a statement detailing the amount of any such
Tax actually paid by Borrowers. Determination by Lender of the amount
of such costs shall, in the absence of manifest error, be conclusive,
and at Borrowers' request, Lender shall demonstrate the basis of such
determination. If after any such adjustment, any part of any Tax paid
by Lender is subsequently recovered by Lender, Lender shall reimburse
Borrowers to the extent of the amount so recovered. A certificate of an
officer of Lender setting forth the amount of such recovery and the
basis therefor shall, in the absence of manifest error, be conclusive.
2.1.2 Default Rate of Interest. Upon and during the
continuance of an Event of Default, and during the
continuation thereof, the principal amount of all Loans shall
bear interest at a rate per annum equal to two percent (2%)
above the interest rate otherwise applicable thereto (the
"Default Rate").
2.1.3 Maximum Interest. In no event whatsoever shall
the aggregate of all amounts deemed interest hereunder or
under the Term Note and charged or collected pursuant to the
terms of this Agreement or pursuant to the Term Note exceed
the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem
applicable hereto. If any provisions of this Agreement, or the
Term Note are in contravention of any such law, such
provisions shall be deemed amended to conform thereto.
2.2 Computation of Interest and Fees. Interest, unused line fees
and collection charges hereunder 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
hereunder, all items of payment 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 receipt by Lender of such items in Lender's account
located in Chicago, Illinois.
2.3 Closing Fee. Borrowers shall pay to Lender a closing fee of
One Hundred Twenty-Five Thousand Dollars ($125,000), which
shall be fully earned and nonrefundable on the Closing Date
and shall be paid concurrently with the initial Loan
hereunder.
2.4 Unused Line Fee. Borrowers shall pay to Lender a fee equal to
one-half of one percent (1/2%) per annum of the average
monthly amount by which Sixteen Million Five Hundred Thousand
Dollars ($16,500,000) exceeds the sum of the outstanding
principal balance of the Revolving Credit Loans. The unused
line fee shall be payable monthly in arrears on the first day
of each calendar month hereafter.
2.5 Collection Charges. If items of payment are received by Lender
at a time when there are no Revolving Credit Loans
outstanding, such items of payment shall be subject to a
collection charge equal to one days' interest on the amount
thereof at the rate then applicable to Revolving Credit Loans,
which collection charges shall be payable by Borrowers to
Lender on the first Business Day of each month.
2.6 Audit and Appraisal Fees. Borrowers shall pay to Lender audit
and appraisal fees in the amount of $2,500 for each calendar
quarter or portion thereof within the Original Term hereof
plus all out-of-pocket expenses incurred by Lender in
connection with such audits and appraisals. Such fees shall be
payable on the first day of the month following the date of
issuance by Lender of a request for payment thereof to
Borrower which request shall itemize such fees and expenses in
reasonable detail.
2.7 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, Borrowers or any other Person)
in any way relating to the Collateral, this Agreement or any
of the other Loan Documents or Borrowers' affairs; (iv) any
attempt to enforce any rights of Lender or any Participating
Lender against Borrowers or any other Person which may be
obligated to Lender by virtue of this Agreement or any of the
other Loan Documents, including, without limitation, the
Account Debtors provided that Borrowers shall not be required
to reimburse Participating Lenders for the cost of more than
one counsel in connection with any such enforcement action; or
(v) any attempt to inspect, verify, protect, preserve,
restore, collect, sell, liquidate or otherwise dispose of or
realize upon the Collateral; then all such reasonable legal
and accounting expenses, other costs and out of pocket
expenses of Lender shall be charged to Borrowers. All amounts
chargeable to Borrowers under this Section 2.7 shall be
Obligations secured by all of the Collateral, shall be payable
on demand to Lender or to such Participating Lender, as the
case may be, and shall bear interest from the date such demand
is made until paid in full at the rate applicable to Revolving
Credit Loans from time to time. Borrowers shall also reimburse
Lender for expenses incurred by Lender in its administration
of the Collateral to the extent and in the manner provided in
Section 6 hereof. The foregoing notwithstanding, (i) Lender
agrees that Borrowers shall not be required to reimburse
Lender for legal fees and out-of-pocket expenses incurred in
connection with the preparation and negotiation of this Loan
Agreement and the other Loan Documents executed on or about
the Closing Date in excess of $60,000, and (ii) Borrowers
shall not be required to reimburse Lender or any Participating
Lender for any costs or expenses incurred in any action in
which Borrowers, pursuant to a final non-appealable court
order, are the prevailing party. Lender acknowledge prior
receipt of Seventy-Five Thousand Dollars ($75,000) from
Company or Borrowers. Said amount shall be applied towards
expenses owed Lender pursuant to this Section 2.7 and any
excess shall be refunded to Borrowers.
2.8 Bank Charges. Borrowers shall pay to Lender, on demand, any
and all fees, costs or expenses which Lender pays to a bank or
other similar institution arising out of or in connection with
(i) the forwarding to Borrowers or any other Person on behalf
of Borrowers, by Lender, of proceeds of loans made by Lender
to Borrowers pursuant to this Agreement and (ii) the
depositing for collection, by Lender, of any check or item of
payment received or delivered to Lender on account of the
Obligations.
SECTION 3. LOAN ADMINISTRATION.
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under
the credit facility established pursuant to Section 1 hereof
shall be as follows:
3.1.1 Loan Requests. A request for a Revolving Credit
Loan shall be made, or shall be deemed to be made, in the
following manner: (i) EPI on behalf of itself, PPI on behalf
of itself or APP on behalf of itself, may give Lender notice
of its intention to borrow, in which notice EPI, PPI or APP,
as applicable, shall specify the amount of the proposed
borrowing and the proposed borrowing date, no later than 11:00
a.m. Chicago time on the proposed borrowing date, provided,
however, that no such request may be made at a time when there
exists a Default or an Event of Default; and (ii) the becoming
due of any amount required to be paid under this Agreement or
the Term Note, whether as interest or for any other
Obligation, shall be deemed irrevocably to be a request for a
Revolving Credit Loan on the due date in the amount required
to pay such interest or other Obligation. As an accommodation
to Borrowers, Lender may permit telephonic requests for loans
and electronic transmittal of instructions, authorizations,
agreements or reports to Lender by EPI, PPI or APP. Unless
EPI, PPI or APP, as applicable, specifically directs Lender in
writing not to accept or act upon telephonic or electronic
communications from either EPI, PPI or APP, Lender shall have
no liability to Borrowers for any loss or damage suffered by
any Borrower 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
Borrowers and Lender shall have no duty to verify the origin
of any such communication or the authority of the person
sending it.
3.1.2 Disbursement. Borrowers hereby irrevocably
authorize Lender to disburse the proceeds of each Revolving
Credit Loan requested, or deemed to be requested, pursuant to
this subsection 3.1.2 as follows: (i) the proceeds of each
Revolving Credit Loan requested under subsection 3.1.1(i)
shall be disbursed by Lender in lawful money of the United
States of America in immediately available funds, in the case
of the initial borrowing, in accordance with the terms of the
written disbursement letter from Borrowers, and in the case of
each subsequent borrowing, by wire transfer to such bank
account as may be agreed upon by EPI, PPI or APP, as
applicable, and Lender from time to time or elsewhere if
pursuant to a written direction from EPI, PPI or APP, as
applicable; and (ii) the proceeds of each Revolving Credit
Loan requested under subsection 3.1.1(ii) shall be disbursed
by Lender by way of direct payment of the relevant interest or
other Obligation.
3.1.3 Authorization. Borrowers hereby irrevocably
authorize Lender, in Lender's sole discretion, to advance to
Borrowers, and to charge to Borrowers' Loan Account hereunder
as a Revolving Credit Loan, a sum sufficient to pay all
interest accrued on the Obligations during the immediately
preceding month and to pay all costs, fees and expenses at any
time owed by Borrower to Lender hereunder. Lender shall
promptly give Borrowers notice of such advance.
3.2 Payments. Except where evidenced by notes or other instruments
issued or made by Borrowers to Lender specifically containing
payment provisions which are in conflict with this Section 3.2
(in which event the conflicting provisions of said notes or
other instruments shall govern and control), the Obligations
shall be payable as follows:
3.2.1 Principal. Principal payable on account of
Revolving Credit Loans shall be payable by Borrowers to Lender
immediately upon the earliest of (i) the receipt by Lender or
any Borrower of any proceeds of any of the Collateral other
than Equipment or real Property, to the extent of said
proceeds, (ii) the occurrence of an Event of Default in
consequence of which Lender elects to accelerate the maturity
and payment of the Obligations, or (iii) termination of this
Agreement pursuant to Section 4 hereof; provided, however,
that if an Overadvance shall exist at any time, Borrowers
shall, on demand, repay the Overadvance. Principal payable on
account of the Term Loan shall be payable by Borrowers to
Lender in accordance with the terms and conditions of the Term
Note and the provisions of this Agreement.
3.2.2 Interest. Interest accrued on the Prime Portion
and the LIBOR Portions shall be due on the earliest of (i) the
first day of each month (for the immediately preceding month),
computed through the last calendar day of the preceding month,
(ii) the occurrence of an Event of Default in the consequence
of which Lender elects to accelerate the maturity and payment
of the Obligations or (iii) termination of this Agreement
pursuant to Section 4 hereof; provided, however, the Borrowers
hereby irrevocably authorize Lender, in Lender's sole
discretion, to advance to Borrowers and to charge to
Borrowers' Loan Account hereunder as a Revolving Credit Loan,
a sum sufficient each month to pay all interest accrued on the
Prime Portion and the LIBOR Portions during the immediately
preceding month. Lender shall promptly give Borrowers notice
of such advance.
3.2.3 Costs, Fees and Charges. Costs, fees and
charges payable pursuant to this Agreement shall be payable by
Borrowers as and when provided in Section 2 hereof, to Lender
or to any other Person designated by Lender in writing.
3.2.4 Other Obligations. The balance of the
Obligations requiring the payment of money, if any, shall be
payable by Borrowers to Lender as and when provided in this
Agreement, the Other Agreements or the Security Documents, or
on demand, whichever is later.
3.3 Mandatory Prepayments.
3.3.1 Proceeds /of Sale, Loss, Destruction or
Condemnation of Collateral. Except as provided in subsection
6.4.2 hereof, if any Borrower sells any of the Equipment or
real Property, or if any of the Collateral is lost or
destroyed or taken by condemnation, Borrowers shall pay to
Lender, unless otherwise agreed by Lender, as and when
received by Borrowers and as a mandatory prepayment of the
Term Loan, a sum equal to the proceeds (including insurance
payments) received by any Borrower from such sale, loss,
destruction or condemnation. Any such mandatory prepayment of
the Term Loan shall be applied against regularly scheduled
installment payments due under the Term Note in inverse order
maturity, and shall be applied, pro rata, to the outstanding
principal balance of the EPI Term Note, the PPI Term Note and
the PPI Term Note.
3.4 Application of Payments and Collections. All items of payment
received by Lender by 12:00 noon, Chicago time, on any
Business Day shall be deemed received on that Business Day.
All items of payment received after 12:00 noon, Chicago time,
on any Business Day shall be deemed received on the following
Business Day. For the purpose of computing interest hereunder,
all items of payment 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
receipt of such item in immediately good funds. Borrowers
irrevocably waive 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 Borrowers,
and after the occurrence and during the continuation of an
Event of Default, Borrowers do 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. If as the result of collections of Accounts as
authorized by subsection 6.2.6 hereof a credit balance exists
in the Loan Account, such credit balance shall not accrue
interest in favor of Borrowers, but shall be available to
Borrowers at any time or times for so long as no Default or
Event of Default exists. Such credit balance shall not be
applied or be deemed to have been applied as a prepayment of
the Term Loan, except that Lender may, at its option, offset
such credit balance against any of the Obligations upon and
during the continuation of an Event of Default.
3.5 All Loans to Constitute One Obligation. The Loans shall
constitute one general Obligation of Borrowers, and shall be
secured by Lender's Lien upon all of the Collateral.
3.6 Loan Account. Lender 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.
3.7 Statements of Account. Lender will account to Borrowers
monthly with a statement of Loans, charges and payments made
pursuant to this Agreement, and such account 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 of the date each accounting is
mailed to Borrowers. Such notice shall only be deemed an
objection to those items specifically objected to therein.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Lender's right to cease making
Loans to Borrowers upon or during the continuation of any
Default or Event of Default, this Agreement shall be in effect
for a period of three (3) years from the date hereof, through
and including May 9, 1999 (the "Original Term"), unless
terminated as provided in Section 4.2 hereof.
4.2 Termination.
4.2.1 Termination by Lender. Upon at least 90 days
prior written notice to Borrowers, Lender may terminate this
Agreement as of the last day of the Original Term and Lender
may terminate this Agreement without notice upon or during the
continuation of an Event of Default.
4.2.2 Termination by Borrower. Upon at least 90 days
prior written notice to Lender, Borrowers may, at their
option, terminate this Agreement; provided, however, no such
termination (either pursuant to Section 4.2.1 above or this
Section 4.2.2) shall be effective until Borrowers have paid
all of the Obligations in immediately available funds. Any
notice of termination given by Borrowers shall be irrevocable
unless Lender otherwise agrees in writing, and Lender shall
have no obligation to make any Loans on or after the
termination date stated in any such termination notice given
pursuant to this Section 4.2.2 or pursuant to Section 4.2.1
above. 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.
4.2.3 Termination Charges. At the effective date of
termination of this Agreement for any reason, Borrowers shall
pay to Lender (in addition to the then outstanding principal,
accrued interest 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 (i) the sum of one percent of the
lesser of the principal balance of the Term Loan or Four
Million Dollars ($4,000,000) less the amount of any prior
prepayments of the Term Loan plus three percent (3%) of the
remaining portion of the Total Credit Facility less the amount
of principal paid on the Term Loan as of such date, if
termination occurs during the first twelve-month period of the
Original Term (May 10, 1996 through May 9, 1997); (ii) the sum
of one percent (1%) of the lesser of the principal balance of
the Term Loan or Four Million Dollars ($4,000,000) less the
amount of any prior prepayments of the Term Loan plus two
percent (2%) of the remaining portion of the Total Credit
Facility less the amount of principal paid on the Term Loan as
of such date, if termination occurs during the second 12-month
period of the Original Term (May 10, 1997 through May 9,
1998); and one percent (1%) of the Total Credit Facility less
the amount of principal paid on the Term Loan as of such date
if termination occurs during the third 12-month period of the
Original Term (May 10, 1998 through May 8, 1999). If
termination occurs on the last day of the Original Term, no
termination charge shall be payable. Any other prepayment of
the Term Loan shall be subject to a prepayment fee equal to
(i) the sum of (x) one percent of the lesser of the amount of
the prepayment or Four Million Dollars ($4,000,000) less the
amount of any prior prepayments of the Term Loan plus (y)
three percent (3%) of the remainder (if any) of the
prepayment, if the prepayment occurs during the first
twelve-month period of the Original Term; the sum of (x) one
percent (1%) of the lesser of the amount of the prepayment or
($4,000,000) less the amount of any prior prepayments of the
Term Loan, plus (y) two percent (2%) of the remainder (if any)
of the prepayment if the prepayment occurs within the second
twelve month period of the Original Term; and one percent of
the amount of the prepayment, if the prepayment occurs during
the third 12-month period of the Original Term. No prepayment
fee shall be due in respect to any prepayment made after May
8, 1999.
4.2.4 Effect of Termination. All of the Obligations
shall be immediately due and payable upon the termination date
stated in any notice of termination of this Agreement. All
undertakings, agreements, covenants, warranties and
representations of Borrowers 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 paid the Obligations to Lender, in full,
in immediately available funds, together with the applicable
termination charge, if any. 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 checks or other items of payment received
by Lender from Borrowers or any Account Debtor and applied to
the Obligations, Lender shall, at its option, (i) have
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) have 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.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment
and performance to Lender of the Obligations, Borrowers hereby
grant to Lender a continuing Lien upon all of Borrowers'
assets, including all of the following Property and interests
in Property of Borrowers, whether now owned or existing or
hereafter created, acquired or arising and wheresoever
located:
(i) Accounts;
(ii) Inventory;
(iii) Equipment;
(iv) General Intangibles;
(v) Investment Property;
(vi) All monies and other Property of any kind
now or at any time or times hereafter in the possession or under the
control of Lender or a bailee or Affiliate of Lender;
(vii) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (i) through
(vi) above, including, without limitation, proceeds of and unearned
premiums with respect to insurance policies insuring any of the
Collateral; and
(viii) All books and records (including, without
limitation, customer lists, credit files, computer programs,
print-outs, and other computer materials and records) of Borrower
pertaining to any of (i) through (vii) above.
5.2 Lien Perfection; Further Assurances. Borrowers shall execute
such UCC-1 financing statements as are required by the Code
and such other instruments, assignments or documents as are
necessary to perfect Lender's Lien upon any of the Collateral
and shall take such other action as may be required to perfect
or to continue the perfection of Lender's Lien upon the
Collateral. Unless prohibited by applicable law, Borrowers
hereby authorize Lender to execute and file any such financing
statement on Borrowers' 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. At Lender's
request, Borrowers shall also promptly execute or cause to be
executed and shall deliver to Lender any and all documents,
instruments and agreements reasonably deemed necessary by
Lender to give effect to or carry out the terms or intent of
the Loan Documents.
5.3 Lien on Realty. The due and punctual payment and performance
of the Obligations shall also be secured by the Lien created
by the Mortgages. If any Borrower shall acquire at any time or
times hereafter any interest in other real Property (other
than leasehold interests in sales offices), such Borrower
agrees promptly to execute and deliver to Lender, as
additional security and Collateral for the Obligations, deeds
of trust, security deeds, mortgages or other collateral
assignments satisfactory in form and substance to Lender and
its counsel (herein collectively referred to as "New
Mortgages") covering such real Property. The Mortgages and
each New Mortgage shall be duly recorded (at Borrowers'
expense) in each office where such recording is required to
constitute a valid Lien on the real Property covered thereby.
In respect to each Mortgage and each New Mortgage, such
Borrower shall deliver to Lender, at Borrowers' expense,
mortgagee title insurance policies issued by a title insurance
company satisfactory to Lender insuring Lender, as mortgagee;
such policies shall be in form and substance satisfactory to
Lender and shall insure a valid first Lien in favor of Lender
on the Property covered thereby, subject only to those
exceptions acceptable to Lender and its counsel. Said policies
shall be in form and substance satisfactory to Lender. Such
Borrower shall also deliver to Lender such other documents,
including, without limitation, ALTA Surveys of the real
Property, as Lender and its counsel may reasonably request
relating to the real Property subject to any such New
Mortgage.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General
6.1.1 Location of Collateral. All Collateral, other
than Inventory in transit and motor vehicles, will at all
times be kept by Borrowers and their respective Subsidiaries
at one or more of the business locations set forth in Exhibit
B hereto and shall not, without the prior written approval of
Lender, be moved therefrom except, prior to an Event of
Default and Lender's acceleration of the maturity of the
Obligations in consequence thereof, for (i) sales of Inventory
in the ordinary course of business; and (ii) removals in
connection with dispositions of Equipment that are authorized
by subsection 6.4.2 hereof.
6.1.2 Insurance of Collateral. Borrowers shall
maintain and pay for insurance upon all Collateral wherever
located and with respect to Borrowers' business, covering
casualty, hazard, public liability and such other risks in
such amounts and with such insurance companies as are
reasonably satisfactory to Lender. Borrowers shall deliver the
originals of such policies to Lender with satisfactory
lender's loss payable endorsements, 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 Borrowers or the owner of the Property
or by the occupation of the premises for purposes more
hazardous than are permitted by said policy. If Borrowers fail
to provide and pay for such insurance, Lender may, at its
option, but shall not be required to, procure the same and
charge Borrowers therefor. Borrowers agree to deliver to
Lender, promptly as rendered, true copies of all reports made
in any reporting forms to insurance companies.
6.1.3 Protection of Collateral. All expenses of
protecting, storing, warehousing, insuring, handling,
maintaining and shipping the Collateral, any and all excise,
property, sales, and use taxes imposed by any state, federal,
or local authority on any of the Collateral or in respect of
the sale thereof 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.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts.
EPI shall execute and deliver to Lender a Borrowing Base
Certificate in the form attached hereto as Exhibit C on a
monthly basis or, if requested by Lender, more frequently. PPI
and APP shall execute and deliver to Lender a Borrowing Base
Certificate in the form attached hereto as Exhibit C-1 on a
monthly basis or, if requested by Lender, more frequently.
Each Borrower shall keep accurate and complete records of
their Accounts and all payments and collections thereon and
shall submit to Lender on such periodic basis as Lender shall
request a sales and collections report for the preceding
period, in form satisfactory to Lender. On or before the
fifteenth day of each month from and after the date hereof,
each Borrower shall deliver to Lender, in form acceptable to
Lender, 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, without limitation, 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. If requested by Lender, each Borrower
shall execute and deliver to Lender formal written assignments
of all of its Accounts weekly or daily, which shall include
all Accounts that have been created since the date of the last
assignment, together with copies of invoices or invoice
registers related thereto.
6.2.2 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 $25,000 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
during the continuation 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 reasonable
attorney's fees, to Borrowers.
6.2.3 Taxes. If an Account includes a charge for any
tax 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 Borrowers
and to charge Borrowers therefor, provided, however, that
Lender shall not be liable for any taxes to any governmental
taxing authority that may be due by any Borrower. Borrowers
will be given notice of, and will be consulted with respect
to, such payment if no Event of Default has occurred and is
continuing.
6.2.4 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
Borrowers, to verify the validity, amount or any other matter
relating to any Accounts by mail, telephone, telegraph or
otherwise. Borrowers shall cooperate fully with Lender in an
effort to facilitate and promptly conclude any such
verification process. So long as no Event of Default has
occurred and is continuing, the Lender will verify accounts
using an anonymous name or some third party service.
6.2.5 Maintenance of Dominion Account. Borrowers
shall maintain a Dominion Account(s) pursuant to a lockbox
arrangement acceptable to Lender with such banks as may be
selected by Borrowers and be acceptable to Lender. Borrowers
shall issue to any such banks 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 the Dominion Account shall immediately
become the property of Lender and Borrowers 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 such lockbox arrangement, including,
without limitation, any claim of accord and satisfaction or
release with respect to deposits accepted by any bank
thereunder.
6.2.6 Collection of Accounts, Proceeds of Collateral.
To expedite collection, Borrowers shall endeavor in the first
instance to make collection of their respective Accounts for
Lender. All remittances received by such Borrower on account
of Accounts, together with the proceeds of any other
Collateral, shall be held as Lender's property by Borrowers as
trustee of an express trust for Lender's benefit and Borrowers
shall immediately deposit same in kind in the Dominion
Account. Lender retains the right at all times during the
continuance 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 the
collection costs and expenses, including attorneys' fees to
Borrowers.
6.3 Administration of Inventory.
6.3.1 Records and Reports of Inventory. Borrowers
shall keep accurate and complete records of its Inventory.
Each Borrower 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
fifteen day of such month. Borrowers shall conduct a physical
inventory no less frequently than 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.
6.3.2 Returns of Inventory. If at any time or times
hereafter any Account Debtor returns any Inventory to
Borrowers the shipment of which generated an Account on which
such Account Debtor is obligated in excess of $35,000,
Borrowers shall immediately notify Lender of the same,
specifying the reason for such return and the location,
condition and intended disposition of the returned Inventory.
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrowers
shall keep accurate records itemizing and describing the kind,
type, quality, quantity and value of its Equipment and all
dispositions made in accordance with subsection 6.4.2 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.
6.4.2 Dispositions of Equipment. No Borrower will
sell, lease or otherwise dispose of or transfer any of the
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 during any consecutive twelve-month
period, has a fair market value or book value, whichever is
less, of $250,000 or less, provided that all proceeds thereof
are remitted to Lender for application to the outstanding
principal balance of the Term Loan (which proceeds shall be
applied to regularly schedule installments of principal in
inverse order of maturity), 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, and Borrowers shall have given Lender at least 5
days prior written notice of such disposition.
6.5 Payment of Charges. All amounts chargeable to Borrowers under
Section 6 hereof shall be Obligations secured by all of the
Collateral, shall be payable on demand and shall bear interest
from the date such advance was made until paid in full at the
rate applicable to Revolving Credit Loans from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Lender to
enter into this Agreement and to make advances hereunder,
Borrowers warrant, represent and covenant to Lender that:
7.1.1 Organization and Qualification. Each Borrower
and each of their respective Subsidiaries is a corporation
duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. Each
Borrower and each of their respective 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 Exhibit D hereto and in all other
states and jurisdictions in which the failure of such Borrower
or such Subsidiaries to be so qualified would have a material
adverse effect on the financial condition, business or
Properties of such Borrower or such Subsidiaries.
7.1.2 Corporate Power and Authority. Each Borrower
and each of their respective 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 their respective
Subsidiaries; (ii) contravene any Borrower's or any of their
respective Subsidiaries' charter, articles or certificate of
incorporation or by-laws; (iii) violate, or cause any Borrower
or any of their respective 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 any Borrower or any of their
respective Subsidiaries; (iv) result in a breach of or
constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which
any Borrower or any of their respective Subsidiaries is a
party or by which any such Borrower of Subsidiary 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
their respective Subsidiaries.
7.1.3 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 their respective Subsidiaries (to
the extent a party thereto) enforceable against each of them
in accordance with its respective terms.
7.1.4 Capital Structure. Exhibit E hereto states (i) the
correct name of each of the Subsidiaries of each Borrower, its
jurisdiction of incorporation and the percentage of its Voting
Stock owned by each 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 Securities of each Borrower and each Subsidiary of
each Borrower and (iv) the number of authorized, issued and
treasury shares of each Borrower and each Subsidiary of each
Borrower. Each Borrower has good title to all of the shares it
purports to own of the stock of each of its Subsidiaries, free
and clear in each case of any Lien other than Permitted Liens.
All such shares have been duly issued and are fully paid and
non-assessable. Except as disclosed on Exhibit E 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 Securities or obligations convertible
into, or any powers of attorney relating to, shares of the
capital stock of any Borrower or any of their respective
Subsidiaries. There are no outstanding agreements or
instruments binding upon any of Borrower's shareholders
relating to the ownership of its shares of capital stock.
7.1.5 Corporate Names. No Borrower or any of
Borrowers' respective Subsidiaries has been known as or used
any corporate, fictitious or trade names except those listed
on Exhibit F hereto. Except as set forth on Exhibit F, no
Borrower or any of Borrowers' Subsidiaries has been the
surviving corporation of a merger or consolidation or acquired
all or substantially all of the assets of any Person.
7.1.6 Business Locations; Agent for Process. Each
Borrower's and each of their respective Subsidiaries' chief
executive office and other places of business are as listed on
Exhibit B hereto. During the preceding one-year period,
neither Borrowers nor any of their respective Subsidiaries has
had an office, place of business or agent for service of
process other than as listed on Exhibit B. Except as shown on
Exhibit B, no inventory is stored with a bailee, warehouseman
or similar party, nor is any Inventory consigned to any
Person.
7.1.7 Title to Properties; Priority of Liens. Each
Borrower and each of their respective 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. Borrowers have paid or
discharged all lawful claims which, if unpaid, might become a
Lien against any of Borrower's Properties that is not a
Permitted Lien. The Liens granted to Lender under Section 5
hereof are first priority Liens, subject only to Permitted
Liens.
7.1.8 Accounts. Lender may rely, in determining which
Accounts are Eligible Accounts, on all statements and
representations made by Borrowers with respect to any Account
or Accounts. 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 such
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 any
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 deemed by Lender to be immaterial, and each such Account
is absolutely owing to such Borrower and is not contingent in any
respect or for any reason;
(v) Borrowers have made no agreement with any Account
Debtor thereunder 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 subsection 6.2.1 hereof;
(vi) There are no facts, events or occurrences which
in any way impair the validity or enforceability of any Accounts or
tend to reduce the amount payable thereunder from the face amount of
the invoice and statements delivered to Lender with respect thereto;
(vii) To the best of each 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; and
(viii) To the best of each Borrower's knowledge,
there are no proceedings or actions which are threatened or pending
against any Account Debtor thereunder which might result in any
material adverse change in such Account Debtor's financial condition or
the collectibility of such Account.
7.1.9 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. Borrowers will not permit
any of the Equipment to become affixed to any real Property
leased to any 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
other than Equipment that is subject to first priority (except
for Permitted Liens) Liens in favor of Lender.
7.1.10 Financial Statements; Fiscal Year. The
Consolidated and consolidating balance sheets of Company and
such other Persons described therein (including the accounts
of all Subsidiaries of Company for the respective periods
during which a Subsidiary relationship existed) as of December
31, 1995, 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 Company and such Persons at such dates and the
results of Company's operations for such periods. Since
December 31, 1995, there has been no material change in the
condition, financial or otherwise, of Company and such other
Persons as shown on the Consolidated balance sheet as of such
date and no change in the aggregate value of Equipment and
real Property owned by Borrowers or such other Persons, except
changes in the ordinary course of business, none of which
individually or in the aggregate has been materially adverse.
The fiscal year of Company, Borrowers and each of their
respective Subsidiaries ends on December 31st of each year.
7.1.11 Full Disclosure. The financial statements
referred to in subsection 7.1.10 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
which any Borrower has failed to disclose to Lender in writing
which materially affects adversely or, so far as any Borrower
can now foresee, will materially affect adversely the
Properties, business, prospects, profits or condition
(financial or otherwise) of any Borrower or any of their
respective Subsidiaries or the ability of any Borrower or any
of their respective Subsidiaries to perform this Agreement or
the other Loan Documents.
7.1.12 Solvent Financial Condition. Each Borrower and
each of their respective Subsidiaries is now and, after giving
effect to the Loans and the provisions of Section 11.17 of
this Agreement and the applicable reimbursement provisions of
the Subordinated Debt Documents, at all times will be,
Solvent.
7.1.13 Surety Obligations. No Borrower or any of such
Borrower's respective 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.
7.1.14 Taxes. Company's federal tax identification
number is ▇▇-▇▇▇▇▇▇▇. EPI's federal tax identification number
is ▇▇-▇▇▇▇▇▇▇. PPI's federal tax identification number is
▇▇-▇▇▇▇▇▇▇. APP's federal tax identification number is
▇▇-▇▇▇▇▇▇▇. The federal tax identification number of each of
Borrowers' Subsidiaries is shown on Exhibit G hereto. Company,
Borrowers and each of their respective Subsidiaries have filed
all federal, state and local tax returns and other reports any
of them is required by law to file and has paid, or made
provision for the payment of, all taxes, assessments, fees,
levies and other governmental charges upon any of them, any of
their income and Properties as and when such taxes,
assessments, fees, levies and charges that are due and
payable, unless and to the extent any thereof are being
actively contested in good faith and by appropriate
proceedings and Company and Borrowers maintains reasonable
reserves on their books therefor. The provision for taxes on
the books of Company and Borrowers and their respective
Subsidiaries are adequate for all years not closed by
applicable statutes, and for its current fiscal year.
7.1.15 Brokers. Except for fees payable to BA
Securities, Inc. in an amount not to exceed $345,000, there
are no claims for brokerage commissions, finder's fees or
investment banking fees in connection with the transactions
contemplated by this Agreement.
7.1.16 Patents, Trademarks, Copyrights and Licenses.
Each Borrower and each of their respective Subsidiaries owns
or possesses all the patents, trademarks, service marks, trade
names, copyrights and licenses necessary for the present and
planned future conduct of its business without any known
conflict with the rights of others. All such patents,
trademarks, service marks, tradenames, copyrights, licenses
and other similar rights are listed on Exhibit H hereto.
7.1.17 Governmental Consents. Each Borrower and each
of their respective Subsidiaries has, and is in good standing
with respect to, all governmental consents, approvals,
licenses, authorizations, permits, certificates, inspections
and franchises 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.
7.1.18 Compliance with Laws. Each Borrower and each
of their respective Subsidiaries has duly complied with, and
its Properties, business operations and leaseholds are in
compliance in all material respects with, the provisions of
all federal, state and local laws, rules and regulations
applicable to such Borrower or such Subsidiary, as applicable,
its Properties or the conduct of its business and there have
been no citations, notices or orders of noncompliance issued
to such Borrower or any of their respective Subsidiaries under
any such law, rule or regulation. Each Borrower and each of
their respective Subsidiaries has established and maintains an
adequate monitoring system to insure that it remains in
compliance with all federal, state and local laws, rules and
regulations applicable to it. No Inventory has been produced
in violation of the Fair Labor Standards Act (29 U.S.C.
ss 201 et seq.) as amended.
7.1.19 Restrictions. No Borrower or any of Borrowers'
Subsidiaries are or is a party or subject to any contract,
agreement, or charter or other corporate restriction, which
materially and adversely affects its business or the use or
ownership of any of its Properties. No Borrower or any of
their respective Subsidiaries are or is a party or subject to
any contract or agreement which restricts its right or ability
to incur Indebtedness, other than as set forth on Exhibit I
hereto, none of which prohibit the execution of or compliance
with this Agreement or the other Loan Documents by Borrowers
or any of their respective Subsidiaries, as applicable.
7.1.20 Litigation. Except as set forth on Exhibit J
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 their
respective Subsidiaries, or the business, operations,
Properties, prospects, profits or condition of any Borrower or
any of their respective Subsidiaries. No Borrower or any of
Borrowers' respective Subsidiaries are or is in default with
respect to any order, writ, injunction, judgment, decree or
rule of any court, governmental authority or arbitration board
or tribunal.
7.1.21 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, constitute a Default or an Event of Default. No
Borrower or any of Borrowers' respective Subsidiaries are or
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 in
the payment of any Indebtedness to any Person for Money
Borrowed.
7.1.22 Leases. Exhibit K hereto is a complete listing
of all capitalized leases of Borrowers and their respective
Subsidiaries and Exhibit L hereto is a complete listing of all
operating leases of Borrowers and their respective
Subsidiaries. Each Borrower and each of their respective
Subsidiaries is in full compliance with all of the terms of
each of its respective capitalized and operating leases.
7.1.23 Pension Plans. Except as disclosed on Exhibit
M hereto, no Borrower or any of Borrowers' Subsidiaries has
any Plan. Each Borrower and each of their respective
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 change in the financial condition of
Borrowers or any of their respective Subsidiaries exists in
connection with any Plan. No Borrower or any of Borrowers'
respective Subsidiaries has any withdrawal liability in
connection with a Multiemployer Plan.
7.1.24 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 their respective Subsidiaries and any
customer or any group of customers whose purchases
individually or in the aggregate are material to the business
of any Borrower or any of their respective Subsidiaries, or
with any material supplier, and there exists no present
condition or state of facts or circumstances which would
materially affect adversely any Borrower or any of their
respective Subsidiaries or prevent any Borrower or any of
their respective Subsidiaries from conducting such business
after the consummation of the transaction contemplated by this
Agreement in substantially the same manner in which it has
heretofore been conducted.
7.1.25 Labor Relations. Except as described on
Exhibit N hereto, neither Borrowers nor any of their
respective Subsidiaries are or is a party to any collective
bargaining agreement. There are no material grievances,
disputes or controversies with any union or any other
organization of Borrowers' or any of their respective
Subsidiaries' employees, or threats of strikes, work stoppages
or any asserted pending demands for collective bargaining by
any union or organization.
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and
the other Loan Documents shall be continuous in nature and
shall remain accurate, complete and not misleading at all
times during the term of this Agreement, except for changes in
the nature of Borrowers' or their respective Subsidiaries'
business or operations that would render the information in
any exhibit attached hereto either inaccurate, incomplete or
misleading, so long as Lender has consented to such changes or
such changes are expressly permitted by this Agreement.
7.3 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 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender,
Borrowers covenant that, unless otherwise consented to by
Lender in writing, they each shall:
8.1.1 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 the Properties of Borrowers and each of their
respective Subsidiaries, inspect, audit and make extracts from
its books and records, and discuss with its officers, its
employees and its independent accountants, Borrowers' and each
of their respective Subsidiaries' business, assets,
liabilities, financial condition, business prospects and
results of operations.
8.1.2 Notices. Promptly notify Lender in writing 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.
8.1.3 Financial Statements. Keep, and cause each of their
respective Subsidiaries to 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
Company's or Borrowers' certified public accountants concur in
any change therein and such change is disclosed to Lender and
is consistent with GAAP):
(i) not later than 105 days after the close of each
fiscal year of Company, unqualified audited (in respect to the
Consolidated financial statements only) financial statements of Company
and its Subsidiaries (including, without limitation, EPI PPI and APP)
as of the end of such year, on a Consolidated and consolidating basis,
certified (in respect to the Consolidated financial statements only) by
a firm of independent certified public accountants of recognized
standing selected by Company 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, including the last month of Company's fiscal year,
unaudited interim financial statements of Company and its respective
Subsidiaries (including, without limitation, EPI, PPI and APP) as of
the end of such month and of the portion of Company's financial year
then elapsed, on a Consolidated and consolidating basis, certified by
the principal financial officer of Company as prepared in accordance
with GAAP and fairly presenting the Consolidated financial position and
results of operations of Company and its Subsidiaries (including,
without limitation, EPI, PPI and APP) for such month and period subject
only to changes from audit and year-end adjustments and except that
such statements need not contain notes;
(iii) promptly after the sending or filing thereof,
as the case may be, copies of any proxy statements, financial
statements or reports which Company or Borrowers has or have made
available to its shareholders and copies of any regular, periodic and
special reports or registration statements which Company or Borrowers
files or file 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 with ERISA in connection with each Plan; and
(v) 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 Borrowers' and each of
their respective Subsidiaries' financial condition or results of
operations.
Concurrently with the delivery of the financial statements
described in clause (i) of this subsection 8.1.3, Borrowers
shall forward to Lender a copy of the accountants' letter to
Borrowers' or Company's management that is prepared in
connection with such financial statements and also shall cause
to be prepared and shall furnish to Lender a certificate of
the aforesaid certified public accountants certifying to
Lender that, based upon their examination of the financial
statements of Company and its 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, in
a manner satisfactory to Lender, 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 subsection 8.1.3, or more frequently if
requested by Lender, Borrowers shall cause to be prepared and
furnished to Lender a Compliance Certificate in the form of
Exhibit O hereto executed by the Chief Financial Officer of
Company.
Borrowers authorize Lender or its designated representatives
to communicate directly with their independent certified
public accountants and authorize those accountants to disclose
to Lender any and all financial statements and other
supporting financial documents and schedules. At or before the
initial Closing Date, Borrowers' shall cause Company to
deliver a letter addressed to such accountants instructing
them to comply with the provisions of this Section 8.1.3.
Further within five (5) days after the earlier of the last day
of each fiscal year of Company and the date Company engaged
independent certified public accountants to audit Company's
financial statements, Borrowers shall cause Company to deliver
to such independent certified public accountants a letter from
Company addressed to such independent certified public
accountants indicating that it is a primary intention of
Company in engaging such accountants that Lender relies upon
such financial statements of Company and its Subsidiaries,
including without limitation, EPI, PPI and APP.
8.1.4 Landlord and Storage Agreements. Provide Lender
with copies of all agreements between any Borrower or any of
their respective Subsidiaries and any landlord or warehouseman
which owns any premises at which any Inventory may, from time
to time, be kept.
8.1.5 Projections. No later than 30 days prior to the
end of each fiscal year of Borrowers, deliver to Lender
Projections of Company and each Borrower on a Consolidated and
unconsolidated basis for the forthcoming 3 years, year by
year, and for the forthcoming fiscal year, month by month.
8.2 Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender,
Borrowers covenant that, unless Lender has first consented
thereto in writing, they will not:
8.2.1 Mergers; Consolidations; Acquisitions. Merge or
consolidate, or permit any Subsidiary of any Borrower to merge
or consolidate, with any Person; nor acquire, nor permit any
of its Subsidiaries to acquire, all or any substantial part of
the Properties of any Person, unless prior to the consummation
of any such merger, consolidation or acquisition, Lender has
consented in writing to such transaction, which consent shall
not be unreasonably withheld or delayed.
8.2.2 Loans. Except as provided in Section 8.2.7
hereof, make, or permit any Subsidiary of any Borrower to
make, any loans or other advances of money (other than for
salary, travel advances, advances against commissions and
other similar advances in the ordinary course of business) to
any Person, except that if after giving effect to any such
loan or advance, there is no existing and continuing Default
or Event of Default and Availability exceeds One Million
Dollars ($1,000,000), then EPI may make loans and advances to
PPI and/or APP and PPI and/or APP may make loans and advances
to EPI.
8.2.3 Total Indebtedness. Create, incur, assume, or
suffer to exist, or permit any Subsidiary of any Borrower to
create, incur or suffer to exist, any Indebtedness, except:
(i) Obligations owing to Lender;
(ii) Subordinated Debt outstanding in respect to
and the Subordinated Debt Documents;
(iii) Indebtedness of any Subsidiary of any
Borrower to such Borrower;
(iv) accounts payable to trade creditors and current
operating expenses (other than for Money Borrowed) which are not aged
more than 30 days from the due date, in each case incurred in the
ordinary course of business and paid within such time period, unless
the same are being actively contested in good faith and by appropriate
and lawful proceedings; and the applicable Borrowers or such Subsidiary
shall have set aside such reserves, if any, with respect thereto as are
required by GAAP and deemed adequate by the applicable Borrower or such
Subsidiary and its independent accountants;
(v) Obligations to pay Rentals permitted by
subsection 8.2.13;
(vi) Permitted Purchase Money Indebtedness;
(vii) contingent liabilities arising out of
endorsements of checks and other negotiable instruments for deposit or
collection in the ordinary course of business;
(viii) Indebtedness of EPI to PPI and/or APP
or Indebtedness of PPI and/or APP to EPI, to the extent any such
Borrower was permitted to make such loan or advance pursuant to Section
8.2.2. above;
(ix) Indebtedness outstanding under the Hastings
Documents;
(x) Indebtedness outstanding under the Promissory
Note and Stock Pledge Agreement;
(xi) Indebtedness under Capitalized Leases listed on
Exhibit K;
(xii) Indebtedness incurred in connection with the
acquisition of approximately 30 acres of vacant land in ▇▇▇▇▇▇▇,
Oregon, in a principal amount not to exceed One Hundred Three Thousand
Dollars ($103,000); and
(xiii) Indebtedness not included in paragraphs (i)
through (xii) above which does not exceed at any time, in the
aggregate, the sum of $250,000.
8.2.4 Affiliate Transactions. Enter into, or be a
party to, or permit any Subsidiary of any Borrower to enter
into or be a party to, any transaction with any Affiliate of
any Borrower or stockholder, except 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 than what would be obtainable in a
comparable arm's length transaction with a Person not an
Affiliate or stockholder of any Borrower or such Subsidiary.
8.2.5 Limitation on Liens. Create or suffer to exist,
or permit any Subsidiary of any Borrower to 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) not yet due, or being
contested in the manner described in subsection 7.1.14 hereto, but only
if in Lender's judgment such Lien does not adversely affect Lender's
rights or the priority of Lender's Lien in the Collateral;
(iii) Liens arising in the ordinary course of any
Borrower's business by operation of law or regulation, but only if
payment in respect of any such Lien is not at the time required and
such Liens do not, in the aggregate, materially detract from the value
of the Property of any Borrower or materially impair the use thereof in
the operation of any Borrower's business;
(iv) Purchase Money Liens securing Permitted Purchase
Money Indebtedness;
(v) Liens securing Indebtedness of one of the
Borrowers' Subsidiaries to any Borrower or another such Subsidiary;
(vi) such other Liens as appear on Exhibit P hereto;
(vii) Liens on approximately 30 acres of vacant land
in ▇▇▇▇▇▇▇, Oregon, securing the Indebtedness described in Section
8.2.3(xii);
(viii) Liens securing Indebtedness outstanding under
that certain Redevelopment Contract between the City of Hastings,
Nebraska and EPI and related notes, documents and agreements; and
(ix) such other Liens as Lender may hereafter approve
in writing.
8.2.6 Subordinated Debt and Other Indebtedness. Make,
or permit any Subsidiary of any Borrower to make, any payment
or repurchase of any part or all 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 Intercreditor and Subordination Agreement relative thereto
or other subordination agreement relative thereto. Except for
regularly scheduled (as of the Closing Date) payments of
principal and interest, make or permit any Subsidiary of any
Borrower to make any payment or repurchase of any part or all
of any of the Indebtedness outstanding under the Hastings
Documents or the Promissory Note and Stock Pledge Agreement.
Amend or modify any of the Subordinated Debt Documents, the
Hastings Documents or the Promissory Note and Stock Pledge
Agreement in any manner adverse to Borrower or Lender. The
foregoing notwithstanding:
(i) Borrower may prepay or repurchase up to Two
Million Dollars ($2,000,000) of the principal amount of the
Indebtedness outstanding under the Subordinated Debt Documents if, (x)
after giving effect to any such prepayment or repurchase, there would
exist and be continuing no Default or Event of Default, (y) immediately
prior to such repayment or repurchase and immediately after such
prepayment or repurchase the outstanding principal balance of the
Revolving Credit Loan is $0, and (z) the funds used to effect such
prepayment or repurchase are not the proceeds of Revolving Credit
Loans; and
(ii) after effecting the prepayment or repurchase
provided for in clause (i) above, Borrowers may prepay or repurchase up
to an additional One Million Five Hundred Thousand Dollars ($1,500,000)
of the principal amount of the Indebtedness outstanding under the
Subordinated Debt Documents if (x) after giving effect to any such
prepayment or repurchase, there would exist and be continuing no
Default or Event of Default, (y) immediately prior to such prepayment
or repurchase the outstanding principal balance of the Revolving Credit
Loan is $0, (z) the funds used to effect such prepayment or repurchase
are not the proceeds of Revolving Credit Loans, and (aa) Lender has
elected in writing not to have the funds to be used to effect such
prepayment or repurchase applied to a prepayment of the outstanding
principal balance of the Term Loan. If Lender does elect to have such
funds be applied to a prepayment of the Term Loan such prepayment shall
be accompanied by the prepayment fee provided for in Section 4.2.3,
shall be applied to installments of principal in inverse order of
maturity, and shall be applied, pro rata, to the outstanding principal
balance of the EPI Term Note, the PPI Term Note and the APP Term Note.
8.2.7 Distributions. Declare or make, or permit any
Subsidiary of any Borrower to declare or make, any
Distributions; provided, however, that:
(a) immediately after the closing of the transactions
contemplated hereby, Borrowers may make Distributions to Company in an
amount not to exceed Four Million Twenty Thousand Dollars ($4,020,000)
in order to permit Company to repay Four Million Twenty Thousand
Dollars ($4,020,000) of Indebtedness owed under the Subordinated Debt
Documents;
(b) EPI may make distributions to Company to permit
Company to purchase or redeem shares of EPI's common stock, $0.01, par
value, if (i) the aggregate purchase price for all such shares of
common stock does not exceed (x) Five Hundred Seventy-Five Thousand
Dollars ($575,000) for the period ending December 31, 1996 and (y) the
lesser of the purchase price per share of such common stock multiplied
by 157,000 shares of such common stock or $1,000,000 for each of the
periods ending December 31, 1997 and December 31, 1998; and (ii) after
giving effect to any such purchase there exists and is continuing no
Default or Event of Default;
(c) Borrowers may make Distributions to the Company
to allow the Company to pay dividends on the Company's preferred stock
if after giving effect to any such Distribution there exists and is
continuing no Default or Event of Default;
(d) APP may make Distributions to PPI;
(e) Borrowers may make Distributions or loans to the
Company to (i) pay general operating expenses, provided such
Distributions do not exceed $300,000 on an annual basis, and (ii) pay
costs and expenses incurred by ▇▇▇▇▇ in completing the transactions
contemplated hereunder;
(f) If after giving effect to any such Distribution
there would exist no Default or Event of Default, EPI and PPI may make
Distributions to Company in amounts sufficient to permit Company to pay
interest due on Company's Indebtedness outstanding pursuant to the
Indebtedness outstanding pursuant to the Subordinated Debt Documents;
and
(g) Any Borrower may make Distributions to Company to
permit Company to prepay or repurchase Indebtedness outstanding under
the Subordinated Debt Documents if such repurchase or prepayment is
permitted pursuant to Section 8.2.6 above.
8.2.8 Capital Expenditures. Make Capital Expenditures
(including, without limitation, by way of capitalized leases)
which, in the aggregate, as to Borrowers and their respective
Subsidiaries during any fiscal year of Borrowers exceeds the
amount set forth opposite such fiscal year in the following
schedule:
Fiscal Year Ending Permitted Capital Expenditure
------------------ -----------------------------
December 31, 1996 $2,600,000
December 31, 1997 $1,500,000
December 31, 1998 and each $1,500,000
subsequent fiscal year
8.2.9 Disposition of Assets. Sell, lease or otherwise
dispose of any of, or permit any Subsidiary of any Borrower to
sell, lease or otherwise dispose 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) a
transfer of Property to any Borrower by a Subsidiary of such
Borrower or (iii) dispositions expressly authorized by this
Agreement.
8.2.10 Stock of Subsidiaries. Permit any of their
respective Subsidiaries to issue any additional shares of its
capital stock except director's qualifying shares.
8.2.11 ▇▇▇▇-and-Hold Sales, Etc. Make a sale to any
customer on a ▇▇▇▇-and-hold, guaranteed sale, sale and return,
sale on approval or consignment basis, or any sale on a
repurchase or return basis.
8.2.12 Restricted Investment. Except as otherwise
permitted by Section 8.2.2, make or have, or permit any
Subsidiary of any Borrower to make or have, any Restricted
Investment.
8.2.13 Leases. Become, or permit any of their
respective Subsidiaries to become, a lessee under any
operating lease (other than a lease under which any Borrower
or any of their respective Subsidiaries is lessor) of Property
if the aggregate Rentals payable during any current or future
period of 12 consecutive months under the lease in question
and all other leases under which Borrowers or any of their
respective Subsidiaries is then lessee would exceed $500,000.
The term "Rentals" means, as of the date of determination, all
payments which the lessee is required to make by the terms of
any lease.
8.2.14 Tax Consolidation. File or consent to the
filing of any consolidated income tax return with any Person
other than a Subsidiary of any Borrower or Company.
8.3 Specific Financial Covenants. During the term of this
Agreement, and thereafter for so long as there are any
Obligations to Lender, Borrower covenants that, unless
otherwise consented to by Lender in writing, it shall:
8.3.1 Minimum Consolidated Adjusted Tangible Net
Worth. Maintain at all times within each of the following
periods, a Consolidated Adjusted Tangible Net Worth of not
less than the amount shown below for the period corresponding
thereto:
Period Amount
------ ------
June 30, 1996 through and
including September 29, 1996 ($1,000,000)
September 30, 1996 through and
including December 30, 1996 ($100,000)
December 31, 1996 through and
including March 30, 1997 $200,000
March 31, 1997 through and
including June 29, 1997 $300,000
June 30, 1997 through and
including September 29, 1997 $1,300,000
September 30, 1997 through and
including December 30, 1997 $2,200,000
December 31, 1997 through and
including March 30, 1998 $2,500,000
March 31, 1998 through and
including June 29, 1998 $2,600,000
June 30, 1998 through and
including September 29, 1998 $3,600,000
September 30, 1998 through and
including December 30, 1998 $4,500,000
December 31, 1998 through and
including March 30, 1999 $4,800,000
March 31, 1999 through and
including each fiscal quarter thereafter $4,900,000
8.3.2 Consolidated Net Cash Flow. Achieve
Consolidated Net Cash Flow for each of the periods listed
below equal to or greater than the amount set forth opposite
such period:
Net Cash Flow Amount
------------- ------
January 1, 1996 through and
including June 30, 1996 $150,000
January 1, 1996 through and
including September 30, 1996 $650,000
January 1, 1996 through and
including December 31, 1996 $500,000
January 1, 1997 through and
including March 31, 1997 ($500,000)
January 1, 1997 through and
including June 30, 1997 $150,000
January 1, 1997 through and
including September 30, 1997 $650,000
January 1, 1997 through and
including December 31, 1997 $500,000
January 1, 1998 through and
including March 31, 1998 ($500,000)
January 1, 1998 through and
including June 30, 1998 $150,000
January 1, 1998 through and
including September 30, 1998 $650,000
January 1, 1998 through and
including December 31, 1998 $500,000
January 1, 1999 through and
including March 31, 1999 ($500,000)
8.3.3 Senior Interest Coverage Ratio. Achieve, at the
end of each fiscal quarter within the term hereof a Senior
Interest Coverage Ratio equal to or greater than the ratio
shown below for the quarter corresponding thereto:
Each Fiscal Quarter Ending Ratio
-------------------------- -----
March 31 1.65 to 1
June 30 3.50 to 1
September 30 4.50 to 1
December 31 2.40 to 1
SECTION 9. CONDITIONS PRECEDENT
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 under
this Agreement unless and until each of the following
conditions has been and continues to be satisfied:
9.1 Documentation. Lender shall have received, in form and
substance satisfactory to Lender and its counsel, a duly
executed copy 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, including all
documents, instruments, agreements and schedules listed in the
Schedule of Documents attached hereto and incorporated herein
as Exhibit Q, all in form and substance satisfactory to Lender
and its counsel.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent set
forth in the other Loan Documents shall have been satisfied.
9.4 Equity. Lender shall have received evidence satisfactory to it
that not less than One Million Five Hundred Thousand Dollars
($1,500,000) in cash has been contributed as common equity to
the capital of Company.
9.5 Subordinated Debt. Lender shall have received evidence
satisfactory to it that ▇▇▇▇▇, Company and Borrowers have
executed and delivered the Amendment Agreement and that the
Amendment Agreement will be in full force and effect upon the
payment contemplated by Section 8.2.7 hereof. The terms and
conditions of the Amendment Agreement shall be acceptable to
Lender. Lender shall have received evidence satisfactory to it
that, as of the Closing Date, at least Four Million Five
Hundred Thousand Dollars ($4,500,000) shall remain outstanding
under the Subordinated Debt Documents.
9.6 Availability. Lender shall have determined that immediately
after Lender has made the initial Loans contemplated hereby,
and paid all closing costs incurred in connection with the
transactions contemplated hereby, Availability shall not be
less than Two Million Dollars ($2,000,000).
9.7 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 the consummation of the transactions
contemplated hereby.
9.8 Net Operating Carry Forward. Lender shall have received
evidence satisfactory to it from the Company and its counsel
that Company's net operating loss carry forward shall be
available to be applied against Company's and Borrowers'
consolidated taxable income for each tax year within the term
hereof in a manner consistent with projections provided to
Lender prior to the Closing.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the
following events shall constitute an "Event of Default":
10.1.1 Payment of Interest, Principal and Fees.
Borrowers shall fail to pay any interest or principal due in
respect to outstanding Revolving Credit Loans, the Term Loan
or any fees payable in respect to unused Revolving Credit
Loans on the due date thereof (whether due at stated maturity,
on demand, upon acceleration or otherwise).
10.1.2 Payment of Other Obligations. Borrowers shall
fail to pay any of the Obligations (other than interest and
principal due in respect to outstanding Revolving Credit
Loans, the Term Loan or any fees payable in respect to unused
Revolving Credit Loans) on or within five (5) days after the
due date for such Obligation (whether due at stated maturity,
on demand, upon acceleration or otherwise).
10.1.3 Misrepresentations. Any representation,
warranty or other statement made or furnished to Lender by or
on behalf of Company, Borrowers, any Subsidiary 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 7.2 hereof.
10.1.4 Breach of Specific Covenants. Borrowers shall
fail or neglect to perform, keep or observe any covenant
contained in Sections 5.2, 5.3, 6.1.1, 6.2, 8.1.1, 8.1.3, 8.2
or 8.3 hereof on the date that Borrowers are required to
perform, keep or observe such covenant.
10.1.5 Breach of Other Covenants. Borrowers 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 10.1 hereof) and
the breach of such other covenant is not cured to Lender's
satisfaction within five (5) days after the sooner to occur of
any 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 any Borrower; provided, however, that if a
cure cannot be effected within such five (5) day period,
Borrowers shall have ten (10) additional days to effect such
cure if during such ten-day period Borrowers are diligent in
pursuing such a cure.
10.1.6 Default Under Security Documents/Other
Agreements. 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 the Other Agreements and such
default shall continue beyond any applicable grace period.
10.1.7 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 any Borrower is a
party or by which any Borrower or any of its Property is
bound, creating or relating to any Indebtedness (other than
the Obligations) if the payment or maturity of such
Indebtedness is accelerated in consequence of such event of
default or demand for payment of such Indebtedness is made.
10.1.8 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.
10.1.9 Intentionally Omitted.
10.1.10 Insolvency and Related Proceedings. Any
Borrower or Company shall cease to be Solvent or shall suffer
the appointment of a receiver, trustee, custodian or similar
fiduciary, or shall make an assignment for the benefit of
creditors, or any petition for an order for relief shall be
filed by or against any Borrower or Company under the
Bankruptcy Code (if against any Borrower or Company, the
continuation of such proceeding for more than 30 days), or any
Borrower or Company shall make any offer of settlement,
extension or composition to their respective unsecured
creditors generally.
10.1.11 Business Disruption: Condemnation. There
shall occur a cessation of a substantial part of the business
of any Borrower, any Subsidiary of any Borrower or Company for
a period which significantly affects any Borrower's or
Company's capacity to continue its business, on a profitable
basis; or any Borrower, any Subsidiary of any Borrower or
Company shall suffer the loss or revocation of any license or
permit now held or hereafter acquired by any Borrower or
Company which is necessary to the continued or lawful
operation of its business; or any Borrower or Company 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 Company
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 impaired through
condemnation.
10.1.12 Change of Ownership. PPI shall cease to own
and control, beneficially and of record, all of the issued and
outstanding capital stock of APP; Company shall cease to own
and control, beneficially and of record, all of the issued and
outstanding capital stock of PPI and at least ninety-two
percent (92%) of the issued and common stock of EPI; or The
Spell Group shall cease to own and control, beneficially and
of record, at least ten percent (10%) of the issued and
outstanding capital stock of Company, on a fully diluted basis
after giving effect to the exercise of all options and
warrants and the conversion of the common stock of EPP and
warrants and options for the common stock of EPI into common
stock of the Company.
10.1.13 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 Borrower, any
Subsidiary of any Borrower or Company is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to
payments to a Multiemployer Plan resulting from any
Borrower's, such Subsidiary's or Company complete or partial
withdrawal from such Plan.
10.1.14 Challenge to Agreement. Any Borrower, any
Subsidiary of any Borrower or Company, or any Affiliate of any
of them, 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.
10.1.15 Criminal Forfeiture. Any Borrower, any
Subsidiary of any Borrower or Company shall be criminally
indicted or convicted under any law that could lead to a
forfeiture of any Property of any Borrower, any Subsidiary of
any Borrower or Company.
10.1.16 Judgments. Final judgment or judgments (after
the expiration of all times to appeal therefrom) for the
payment of money in excess of $50,000 in the aggregate shall
be rendered against any Borrower or Company and the same shall
not (i) be fully covered by insurance or other comparable
bond, or (ii) within thirty days after the entry thereof, have
been discharged or execution thereof stayed pending appeal, or
shall not have been discharged within five days after the
expiration of any such stay.
10.2 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 Section 3.2
hereof, upon or at any time during the continuance of an Event
of Default, all or any portion of the Obligations shall, at
the option of Lender and without presentment, demand protest
or further notice by Lender, become at once due and payable
and Borrowers shall forthwith pay to Lender, the full amount
of such Obligations, provided, that upon the occurrence of an
Event of Default specified in subsection 10.1.10 hereof, all
of the Obligations shall become automatically due and payable
without declaration, notice or demand by Lender.
10.3 Other Remedies. Upon and during the continuance of an Event of
Default, Lender shall have and may exercise from time to time
the following rights and remedies:
10.3.1 All of the rights and remedies of a secured
party under the Code or under other applicable law, and all
other legal and equitable rights to which Lender may be
entitled, all of which rights and remedies shall be cumulative
and shall be in addition to any other rights or remedies
contained in this Agreement or any of the other Loan
Documents, and none of which shall be exclusive.
10.3.2 The right to take immediate possession of the
Collateral, and to (i) require Borrower 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 any Borrower, Borrowers agree not
to charge Lender for storage thereof).
10.3.3 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 law, in lots
or in bulk, for cash or on credit, all in a commercially
reasonable manner. Borrowers agree that 10 days written notice
to Borrowers of any public or private sale or other
disposition of Collateral shall be reasonable notice thereof,
and such sale shall 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. The proceeds realized
from the sale 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 the interest due upon any
of the Obligations; third, to the principal of the
Obligations; and fourth to the Borrowers or as otherwise
directed by a court of competent jurisdiction. If any
deficiency shall arise, Borrowers shall remain liable to
Lender therefor.
10.3.4 Lender is hereby granted a license or other
right to use, without charge, Borrower's labels, patents,
copyrights, rights of use of any name, trade secrets,
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 Borrower's
rights under all licenses and all franchise agreements shall
inure to Lender's benefit.
10.4 Remedies Cumulative; No Waiver. 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 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. 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 Borrowers 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
Borrower.
SECTION 11. MISCELLANEOUS
11.1 Power of Attorney. Borrowers hereby irrevocably designate,
make, constitute and appoint Lender (and all Persons
designated by Lender) as Borrowers' true and lawful attorney
(and agent-in-fact) and Lender, or Lender's agent, may,
without notice to Borrowers and in any Borrowers' or Lender's
name, but at the cost and expense of Borrowers:
11.1.1 At such time or times upon or during the
continuation of a Default or an Event of Default as Lender or
said agent, in its sole discretion, may determine, endorse
Borrowers' 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; provided that Lender may at any time
endorse any Borrower's name on any checks, notes, acceptance,
drafts, money orders or other evidence of payment in order to
effect the deposit of such items in a Dominion Account.
11.1.2 At such time or times upon or during the
continuation 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 Borrowers' 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 Borrowers' 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 deal with all mail addressed to Borrowers
and to notify postal authorities to change the address for
delivery thereof to such address as Lender may designate;
(vii) endorse the name of Borrowers 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 Borrowers 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 any Borrower's
stationery and sign the name of any 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.
11.2 Indemnity. Borrowers hereby agree to indemnify Lender and hold
Lender harmless from and against any liability, loss, damage,
suit, action or proceeding ever suffered or incurred by Lender
(including reasonable attorneys fees and legal expenses) as
the result of Borrowers' failure to observe, perform or
discharge Borrowers' duties hereunder; provided, however,
Borrowers shall have no obligation to indemnify Lender for any
losses, costs, damages, penalties, forfeitures, claims or
expenses arising from Lender's gross negligence or wilful
misconduct. In addition, Borrowers shall defend Lender against
and save it harmless from all claims of any Person with
respect to the Collateral. Without limiting the generality of
the foregoing, these indemnities shall extend to any claims
asserted against Lender by any Person under any Environmental
Laws or similar laws by reason of Borrowers' or any other
Person's failure to comply with laws applicable to solid or
hazardous waste materials or other toxic substances.
Notwithstanding any contrary provision in this Agreement, the
obligation of Borrowers under this Section 11.2 shall survive
the payment in full of the Obligations and the termination of
this Agreement.
11.3 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. Borrowers
may not 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, without
limitation, Borrowers' rights, title, interests, remedies,
powers, and duties hereunder or thereunder. Borrowers hereby
consent to Lender's participation, sale, assignment, transfer
or other disposition, at any time or times hereafter, of this
Agreement and any of the other Loan Documents, or of any
portion hereof or thereof, including, without limitation,
Lender's rights, title, interests, remedies, powers, and
duties hereunder or thereunder [and any such participation,
sale, assignment, transfer or other disposition shall be at
Lender's sole cost and expense.] 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 assignments. Borrowers
agree that they will use their best efforts to assist and
cooperate with Lender in any manner reasonably requested by
Lender to effect the sale of participations in or assignments
of any of the Loan Documents or any portion thereof or
interest therein, including, without limitation, assisting in
the preparation of appropriate disclosure documents at no
out-of-pocket cost to Borrowers. Borrowers further agree that
Lender may disclose credit information regarding Borrowers and
their respective Subsidiaries to any potential participant or
assignee.
11.4 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.
11.5 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 Borrowers and
Lender permitted under Section 11.3 hereof.
11.6 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.
11.7 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.
11.8 Notice. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto, to be
effective, shall be in writing and shall be sent by certified
or registered mail, return receipt requested, by personal
delivery against receipt, by overnight courier or by facsimile
and, unless otherwise expressly provided herein, shall be
deemed to have been validly served, given or delivered
immediately when delivered against receipt, one Business Day
after deposit in the mail, postage prepaid, or with an
overnight courier or, in the case of facsimile notice, when
sent, addressed as follows:
If to Lender: Fleet Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrowers: Eagle Pacific Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, President and COO
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copies to: Eagle Plastics, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ West and
▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; provided, however, that
any notice, request or demand to or upon Lender pursuant to
subsection 3.1.1 or 4.2.2 hereof shall not be effective until
received by Lender.
11.9 Lender's Consent. Except as may be otherwise expressly
provided, 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.
11.10 Credit Inquiries. Borrowers hereby authorize and permit Lender
to respond to usual and customary credit inquiries from third
parties concerning Borrowers or any of its Subsidiaries.
11.11 Time of Essence. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
11.12 Entire Agreement. This Agreement and 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 and written.
11.13 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
governmental or judicial authority by reason of such party
having or being deemed to have structured or dictated such
provision.
11.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO
HAVE BEEN MADE IN CHICAGO, ILLINOIS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS: PROVIDED, HOWEVER, THAT IF ANY OF THE
COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN
ILLINOIS, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE
METHOD, MANNER AND PROCEDURE AND 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 ILLINOIS. AS PART OF THE CONSIDERATION FOR
NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE
DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWERS OR
LENDER, BORROWERS HEREBY CONSENT AND AGREE THAT THE CIRCUIT
COURT OF ▇▇▇▇ COUNTY, ILLINOIS, OR, AT LENDER'S OPTION, THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE 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. BORROWERS
EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
BORROWERS HEREBY WAIVE ANY OBJECTION WHICH BORROWERS MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENT TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY
SUCH COURT. BORROWERS HEREBY WAIVE PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
OR SUIT AND AGREE 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 ACTUAL RECEIPT THEREOF. 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.
11.15 WAIVERS BY BORROWER. BORROWERS WAIVE (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 BORROWERS MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD
(OTHER THAN IN RESPECT OF LENDER'S ACTS OF GROSS NEGLIGENCE OR
WILFUL MISCONDUCT); (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. BORROWERS ACKNOWLEDGE 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. BORROWERS WARRANT AND
REPRESENT THAT THEY HAVE REVIEWED THE FOREGOING WAIVERS WITH
THEIR 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.
11.16 Publicity. Borrowers hereby consent to Lender's use of the
name or tradestyle of Borrowers in any announcements or
advertisements relating to the completion of the transactions
contemplated hereby and the role played by Lender in providing
financing to Borrowers hereunder in such media and in such
manner as Lender, in its sole discretion, determines.
11.17 Reimbursement. The undertaking by Borrowers to repay the
Obligations and each representation, warranty or covenant of
Borrowers are and shall be joint and several. To the extent
that any Borrower shall be required to pay a portion of the
Obligations which shall exceed the amount of loans, advances
or other extensions of credit received by any such Borrower
and all interest, costs, fees and expenses attributable to
such loans, advances or other extensions of credit, then such
Borrower shall be reimbursed by the other Borrower for the
amount of such excess pro rata, based on their respective net
worths as of the date hereof. This Section 11.17 is intended
only to define the relative rights of the Borrowers, and
nothing set forth in Section 11.17 is intended or shall impair
the obligations of each Borrower, jointly and severally, to
pay Lender the Obligations as and when the same shall become
due and payable in accordance with the terms hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed in Chicago,
Illinois, on the day and year specified at the beginning of
this Agreement.
EAGLE PLASTICS, INC.
By:
Name:
Title:
PACIFIC PLASTICS, INC.
By:
Name:
Title:
ARROW PACIFIC PLASTICS, INC.
By:
Name:
Title:
ACCEPTED IN CHICAGO, ILLINOIS:
FLEET CAPITAL CORPORATION
("Lender")
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of May 10, 1996,
by and among Fleet Capital Corporation and Eagle Plastics,
Inc., Pacific Plastics, Inc. and Arrow Pacific Plastics, Inc.,
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 Debtor - any Person who is or may become obligated
under or on account of an Account.
Accounts - all accounts, contract rights, chattel paper,
instruments and documents, whether now owned or hereafter created or
acquired by any Borrower or in which any Borrower now has or hereafter
acquired any interest.
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, a Person; (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock
of a Person; or (iii) 5% or more of the Voting Stock (or in the case of
a Person which is not a corporation, 5% or more of the equity interest)
of which is beneficially owned or held by a Person or a Subsidiary of a
Person.
Agreement - the Loan and Security Agreement referred to in the
first sentence of this Appendix A, all Exhibits thereto and this
Appendix A.
ALTA Survey - a survey prepared in accordance with the
standards adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1986, known as the
"Minimum Standard Detail Requirements of Land Title Surveys". The ALTA
Survey shall be in sufficient form to satisfy the requirements of
Chicago Title Insurance Company to provide extended coverage over
survey defects and shall also show the location of all easements,
utilities, and covenants of record, dimensions of all improvements,
encroachments from any adjoining property, and certify as to the
location of any flood plain area affecting the subject real estate. The
ALTA Survey shall contain the following certification: "To [Name of
Applicable Borrower], Fleet Capital Corporation and Chicago Title
Insurance Company. This is to certify that this map of plat and the
survey on which it is based were made in accordance with the "Minimum
Standard Detail Requirements for Land Title Surveys" jointly
established and adopted by ALTA and ACSM in 1986. (signed (SEAL)
License No. __________".
Amendment Agreement - shall have the meaning contained in the
definition of Subordinated Debt Documents.
APP Borrowing Base - as at any date of determination thereof,
an amount equal to the lesser of:
(i) the remainder of Sixteen Million Five Hundred
Thousand Dollars ($16,500,000) minus the outstanding principal
balance of Revolving Credit Loans made to EPI and PPI; or
(ii) an amount equal to:
(a) up to eighty-five percent 85%, of the
net amount of Eligible Accounts of APP outstanding at
such date;
PLUS
(b) the lesser of (1) Eight Million Dollars
($8,000,000) minus the outstanding principal amount
of Revolving Credit Loans made to EPI and PPI based
on EPI's and PPI's Eligible Inventory; or (2) up to
fifty-five percent (55%), of the value of Eligible
Inventory of APP at such date calculated on the basis
of the lower of cost or market with the cost of raw
materials and finished goods calculated on a
first-in, first-out basis.
For purposes hereof, the net amount of Eligible Accounts of
APP at any time shall be the face amount of such Eligible
Accounts less any and all returns, rebates, discounts (which
may, at Lender's option, be calculated on shortest terms),
credits, allowances or excise taxes of any nature at any time
issued, owing, claimed by Account Debtors, granted,
outstanding or payable in connection with such Accounts at
such time.
APP Term Loan - shall have the meaning contained in Section
1.2.1 of the Agreement.
APP Term Note - the Secured Promissory Note to be executed by
APP on or about the Closing Date in favor of Lender to evidence the APP
Term Loan, which shall be in the form of Exhibit A-3 to the Agreement.
Availability - the aggregate amount of money which Borrowers
are entitled to borrow from time to time as Revolving Credit Loans,
such amount being the difference derived when the sum of the principal
amount of Revolving Credit 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 sum of (x) the EPI
Borrowing Base plus (y) and the PPI Borrowing Base plus (z) the APP
Borrowing Base. If the amount outstanding is equal to or greater than
the sum of (x) the EPI Borrowing Base plus (y) the PPI Borrowing Base
plus (z) the APP Borrowing Base, Availability is 0.
Bank - Fleet National Bank.
Base Rate - the rate of interest announced or quoted by Bank
from time to time as its prime rate for commercial loans, whether or
not such rate is the lowest rate charged by Bank to its most preferred
borrowers; 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.
▇▇▇▇▇ - ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mezzanine Capital Fund, L.P.
Board - the Board of Governors of the Federal Reserve System
of the United States of America.
Borrower Guaranties - The Continuing Guaranty Agreements which
are to be executed by each Borrower in form and substance satisfactory
to Lender.
Business Day - (i) when used with respect to the LIBOR Option,
shall mean a day on which dealings may be effected in deposits of
United States dollars in the London interbank foreign currency deposits
market and on which the Lender is conducting business and on which
banks may conduct business in London, England, Chicago, Illinois, and
New York, New York and (ii) when used with respect to the other
provisions of this Agreement, shall mean any day that is not a
Saturday, a Sunday or a day on which banks are required or permitted to
be closed either in the State of Illinois or in the State of Wisconsin.
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 Indebtedness represented by
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Closing Date - the date on which all of the conditions
precedent in Section 9 of the Agreement are satisfied and the initial
Loan is made under the Agreement.
Code - the Uniform Commercial Code as adopted and in force in
the State of Illinois, as from time to time in effect.
Collateral - all of the Property and interests in Property
described in Section 5 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.
Commitment Termination Date - the earliest of (i) May 9, 1999;
(ii) the date of termination of the Commitment to make further
Revolving Credit Loan pursuant to Section 4.2.1 or 4.2.2 hereof; and
(iii) the date of termination of the Commitment to make further
Revolving Credit Loans pursuant to Section 10.2 hereof.
Company - Eagle Pacific Industries, Inc., a Minnesota
corporation.
Consolidated - the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies.
Consolidated Adjusted Net Earnings From Operations - with
respect to any fiscal period, means the Consolidated net earnings (or
loss) after provision for income taxes for such fiscal period of
Company as reflected on the financial statement of Company supplied to
Lender pursuant to subsection 8.1.3 of the Agreement, but excluding:
(i) any gain or loss arising from the sale of capital
assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of Company or any
Borrower accrued prior to the date it became a Subsidiary;
(iv) earnings of any corporation, substantially all
the assets of which have been acquired in any manner by Company or any
Borrower, realized by such corporation prior to the date of such
acquisition;
(v) net earnings of any business entity (other than a
Subsidiary of any Borrower) in which Company or any Borrower has an
ownership interest unless such net earnings shall have actually been
received by Company or any Borrower in the form of cash distributions;
(vi) any portion of the net earnings of any
Subsidiary of Company or any Borrower which for any reason is
unavailable for payment of dividends to Company or any Borrower;
(vii) the earnings of any Person to which any assets
of Company or any Borrower shall have been sold, transferred of
disposed of, or into which any Borrower shall have merged, or been a
party to any consolidation or other form of reorganization, prior to
the date of such transaction;
(viii) any gain arising from the acquisition or
disposition of any Securities of Company or any Borrower; and
(ix) any gain arising from extraordinary or
non-recurring items.
Consolidated Adjusted Tangible Assets - all Consolidated
assets of Company except: (i) any surplus resulting from any write-up
of assets subsequent to December 31, 1995; (ii) deferred assets,
including all prepaid expenses; (iii) patents, copyrights, trademarks,
trade names, non-compete agreements, franchises and other similar
intangibles; (iv) goodwill, including any amounts, however designated
on a Consolidated balance sheet of a Person or its Subsidiaries,
representing the excess of the purchase price paid for assets or stock
over the value assigned thereto on the books of such Person; (v)
Restricted Investments; (vi) unamortized debt discount and expense;
(vii) assets located outside the United States of America or Mexico and
notes and receivables due from obligors outside of the United States of
America; and (viii) Accounts, notes and other receivables due from
Affiliates or employees.
Consolidated Adjusted Tangible Net Worth - at any date means a
sum equal to:
(i) the net book value (after deducting related
depreciation, obsolescence, amortization, valuation, and other proper
reserves) at which the Consolidated Adjusted Tangible Assets of Company
would be shown on a balance sheet at such date in accordance with GAAP,
minus
(ii) the amount at which Company's Consolidated
liabilities (other than capital stock and surplus) would be shown on
such balance sheet in accordance with GAAP, and including as
liabilities all reserves for contingencies and other potential
liabilities.
Current Assets - at any date means 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.
Current Liabilities - at any date means the amount at which
all of the current liabilities of a Person would be properly classified
as current liabilities on a balance sheet at such date in accordance
with GAAP excluding the Loans and current maturities of any long-term
Indebtedness.
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 - as defined in subsection 2.1.2 of the
Agreement.
Distribution - in respect of any corporation means and
includes: (i) the payment of any dividends or other distributions on
capital stock of the corporation (except distributions in such stock)
and (ii) the redemption or acquisition of Securities unless made
contemporaneously from the net proceeds of the sale of Securities.
Dominion Account - a special account of Lender established by
Borrowers pursuant to the Agreement at a bank selected by Borrowers,
but acceptable to Lender in its reasonable discretion, and over which
Lender shall have sole and exclusive access and control for withdrawal
purposes.
EBIT - with respect to any fiscal period, the sum of Company's
Consolidated net earnings (or loss) before interest expense and taxes
for said period as determined in accordance with GAAP.
Eligible Account - an Account arising in the ordinary course
of Borrowers' business from the sale of goods or rendition of services
which Lender, in its reasonable 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 Borrower or to a Person
controlled by an Affiliate of a Borrower; or
(ii) it is unpaid for more than 30 days after the
original due date shown on the invoice; or
(iii) it is due or unpaid more than 210 days after
the original invoice date; or
(iv) 25% or more of the Accounts from the Account
Debtor are not deemed Eligible Accounts hereunder; or
(v) the total unpaid Accounts of the Account Debtor
exceed 20% of the net amount of all Eligible Accounts, to the
extent of such excess; or
(vi) any covenant, representation or warranty
contained in the Agreement with respect to such Account has
been breached; or
(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 any Borrower, or the Account otherwise
is or may become subject to any right of setoff by the Account
Debtor; or
(viii) the Account Debtor has commenced a voluntary
case under the federal bankruptcy laws, as now constituted or
hereafter amended, or made an assignment for the benefit of
creditors, or a decree or order for relief has been entered by
a court having jurisdiction in the premises in respect of the
Account Debtor in an involuntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or
any other petition or other application for relief under the
federal bankruptcy laws has been filed against the Account
Debtor, or if the Account Debtor has failed, suspended
business, ceased to be Solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for
it or for all or a significant portion of its assets or
affairs; or
(ix) it arises from a sale to an Account Debtor
outside the United States or Canada (other than Quebec),
unless the sale is on letter of credit, guaranty or acceptance
terms in each case acceptable to Lender in its sole
discretion; or
(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; or
(xi) the Account Debtor is the United States of
America or any department, agency or instrumentality thereof,
unless 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. '203 et
seq., as amended); or
(xii) the Account is subject to a Lien other than a
Permitted Lien; or
(xiii) 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 the applicable Borrower and accepted by the Account Debtor
or the Account otherwise does not represent a final sale; or
(xiv) the Account is evidenced by chattel paper or an
instrument of any kind, or has been reduced to judgment; or
(xv) Any 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; or
(xvi) Any Borrower has made an agreement with the
Account Debtor to extend the time of payment thereof.
Eligible Inventory - such Inventory of Borrowers (other than
packaging materials and supplies) which Lender, in its reasonable
credit judgments deems to be Eligible Inventory. Without limiting the
generality of the foregoing, no Inventory shall be Eligible Inventory
if:
(i) it is not raw materials or finished goods that
is, in Lender's opinion, readily marketable in its current
form; or
(ii) it is not in good, new and saleable condition;
or
(iii) it is slow-moving, obsolete or unmerchantable;
or
(iv) it does not meet all standards imposed by any
governmental agency or authority; or
(v) it does not conform in all respects to the
warranties and representations set forth in the Agreement,
(vi) it is not at all times subject to Lender's duly
perfected, first priority security interest and no other Lien
except a Permitted Lien;
(vii) it is not situated at a location in compliance
with the Agreement or is in transit; or
(viii) is not situated at a location in the United
States of America.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and
consent decrees relating to health, safety and environmental matters.
EPI Borrowing Base - as at any date of determination thereof,
an amount equal to the lesser of:
(i) the remainder of Sixteen Million Five Hundred
Thousand Dollars ($16,500,000) minus the outstanding principal
balance of the Revolving Credit Loans made to PPI and APP; or
(ii) an amount equal to:
(a) up to eighty-five percent 85%, of the
net amount of Eligible Accounts of EPI outstanding at
such date;
PLUS
(b) the lesser of (1) the remainder of Eight
Million Dollars ($8,000,000) minus the outstanding
principal of Revolving Credit Loans made to PPI and
APP based on PPI's and APP's Eligible Inventory; or
(2) up to fifty-five percent (55%), of the value of
Eligible Inventory at such date calculated on the
basis of the lower of cost or market with the cost of
raw materials and finished goods calculated on a
first-in, first-out basis.
For purposes hereof, the net amount of Eligible Accounts of EPI at any
time shall be the face amount of such Eligible Accounts less
any and all returns, rebates, discounts (which may, at
Lender's option, be calculated on shortest terms), credits,
allowances or excise taxes of any nature at any time issued,
owing, claimed by Account Debtors, granted, outstanding or
payable in connection with such Accounts at such time.
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
Borrowers' operations or owned by Borrowers or in which any Borrower
has an interest, whether now owned or hereafter acquired by any
Borrower and wherever located, and all parts, accessories and special
tools and all increases and accessions thereto and substitutions and
replacements therefor.
EPI Term Loan - shall have the meaning contained in Section
1.2.1 of the Agreement.
EPI Term Note - the Secured Promissory Note to be executed by
EPI on or about the Closing Date in favor of Lender to evidence the EPI
Term Loan, which shall be in the form of Exhibit A-1 to the Agreement.
ERISA - the Employee Retirement Income Security Act of 1974,
as amended, and all rules and regulations from time to time promulgated
thereunder.
Event of Default - as defined in Section 10.1 of the
Agreement.
GAAP - generally accepted accounting principles in the United
States of America in effect from time to time.
General Intangibles - all general intangibles of Borrowers,
whether now owned or hereafter created or acquired by Borrowers,
including, without limitation, all choses in action, causes of action,
corporate or other business records, deposit accounts, inventions,
designs, patents, patent applications, trademarks, trade names, trade
secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, tax refund claims, computer programs, all claims under
guaranties, security interests or other security held by or granted to
Borrowers 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).
Guaranty - the Continuing Guaranty Agreement which is to be
executed by Company in form and substance satisfactory to Lender.
Hastings Documents - that certain Redevelopment Contract
between the City of Hastings, Nebraska, and EPI and related Promissory
Notes.
Indebtedness - 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 Indebtedness is to be determined, including,
without limitation, 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.
Intercreditor and Subordination Agreement - the Intercreditor
and Subordination Agreement to be dated on or about the Closing Date by
and between Lender and ▇▇▇▇▇ and acknowledged by Company and Borrowers
in respect to the Indebtedness evidenced by the Subordinated Debt
Documents.
Inventory - all of Borrowers' inventory, whether now owned or
hereafter acquired including, but not limited to, all goods intended
for sale or lease by Borrowers, 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 in Borrowers' business; and all documents evidencing and
General Intangibles relating to any of the foregoing, whether now owned
or hereafter acquired by Borrowers.
Investment Property - all of Borrowers' investment property,
whether now owned or hereinafter acquired by Borrowers, including,
without limitation, all securities (certificated or uncertificated),
securities accounts, securities entitlements, commodity accounts and
contracts.
Legal Requirement - any requirement imposed upon Lender or any
Participating Lender by any law of the United States of America or the
United Kingdom or by any regulation, order, interpretation, ruling of
official directive (whether or not having the force of law) of the
Board, the bank of England or any other board, central bank or
governmental or administrative agency, institution or authority of the
United States of America, the United Kingdom or any political
subdivision of either thereof.
LIBOR Interest Payment Date - with respect to any LIBOR
Portion, the last day of the applicable LIBOR Period.
LIBOR Option - the option granted pursuant to Section 3.1(B)
to have the interest on all or any portion of the principal amount of
the Term Loan or Revolving Credit Loans based on a LIBOR Rate.
LIBOR Period - any period, selected as provided in Section
3.1(B) of 1 month, 2 months or 3 months, commencing on any Business
Day, subject to the provisions of Section 3.1(B); provided, however,
that no LIBOR Period shall extend beyond the last day of the Original
Term, unless Borrowers and Lender have agreed to an extension of the
Original Term beyond the expiration of the LIBOR Period in question. If
any LIBOR Period so elected shall end on a date that is not a Business
Day, such LIBOR Period shall instead end on the next preceding or
succeeding Business Day as determined by Lender in accordance with the
then current banking practice in London. Each determination by the
Lender of LIBOR Period shall, in the absence of manifest error, be
conclusive, and at Borrower's request, Lender shall demonstrate the
basis for such determination.
LIBOR Portion - that portion of the Revolving Credit Loans or
of the Term Loan specified in a LIBOR Request (including any portion of
Revolving Credit Loans which is being borrowed by Borrower concurrently
with such LIBOR Request) which is not less than $1,000,000, which does
not exceed the outstanding balance of Revolving Credit Loan and/or Term
Loan not already subject to a LIBOR Option and, which, as of the date
of the LIBOR Request specifying such LIBOR Portion, has met the
conditions for basing interest on the LIBOR Rate in Section 2.1.1(B)
hereof and the LIBOR Period of which was commenced and not terminated.
LIBOR Rate - with respect to any LIBOR Portion for the related
LIBOR Period, an interest rate per annum (rounded upwards, if
necessary, to the next higher 1/8 of 1%) equal to the product of (a)
the Base LIBOR Rate ( as hereinafter defined) and (b) Statutory
Reserves. For purposes of this definition, the term "Base LIBOR Rate"
shall mean the rate (rounded to the nearest 1/8 of 1% or, if there is
no nearest 1/8 of 1%, the next higher 1/8 of 1%) at which deposits of
U.S. dollars approximately equal in principal amount to the LIBOR
Portion specified in the applicable LIBOR Request are offered to Bank,
in the London interbank foreign currency deposits market at
approximately 11:00 a.m., London time, two (2) Business Days prior to
the commencement of such LIBOR Period, for delivery on the first day of
such LIBOR Period. Each determination by Lender of any LIBOR Rate shall
in the absence of manifest error, be conclusive, and at Borrower's
request, Lender shall demonstrate the basis of such determination.
LIBOR Request - a notice in writing (or by telephonic
communication confirmed by telex, telecopy or other facsimile
transmission on the same day as the telephone request) from Borrower to
Lender requesting that interest on all or a portion of the Revolving
Credit Loan and/or Term Loan be based on the LIBOR Rate, specifying:
(i) the first day of the LIBOR Period, (ii) the length of the LIBOR
Period consistent with the definition of that term, and (iii) a dollar
amount of the LIBOR Portion consistent with the definition of such
term.
LIBOR Revolving Loan Portion - that portion of the Revolving
Credit Loans specified in a LIBOR Request (including any portion of
Revolving Credit Loans which is being borrowed by Borrower concurrently
with such LIBOR Request) which is not less than $1,000,000, which does
not exceed the outstanding balance of Revolving Credit Loan not already
subject to a LIBOR Option and, which, as of the date of the LIBOR
Request specifying such LIBOR Portion, has met the conditions for
basing interest on the LIBOR Rate in Section 2.1.1(B) hereof and the
LIBOR Period of which was commenced and not terminated.
LIBOR Term Portion - that portion of the Term Loan specified
in a LIBOR Request which is not less than $1,000,000, which does not
exceed the outstanding balance of Term Loan not already subject to a
LIBOR Option and, which, as of the date of the LIBOR Request specifying
such LIBOR Portion, has met the conditions for basing interest on the
LIBOR Rate in Section 2.1.1(B) hereof and the LIBOR Period of which was
commenced and not terminated.
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, 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 3.6 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.
Money Borrowed - means (i) Indebtedness arising from the
lending of money by any Person to Borrowers or any one of them; (ii)
Indebtedness, whether or not in any such case arising from the lending
by any Person of money to Borrowers or any one of them, (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) Indebtedness that constitutes a Capitalized Lease Obligation;
(iv) reimbursement obligations with respect to letters of credit or
guaranties of letters of credit and (v) Indebtedness of Borrowers under
any guaranty of obligations that would constitute Indebtedness for
Money Borrowed under clauses (i) through (iii) hereof, if owed directly
by Borrowers.
Mortgages - the mortgages, deeds of trust, security deeds
and/or leasehold mortgages to be executed by a Borrower on or about the
Closing Date in favor of Lender and by which a Borrower shall grant and
convey to Lender, as security for the Obligations, a Lien upon the real
Property of Borrowers located in or at (i) Hastings, Nebraska and (ii)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Net Cash Flow - for any period, means Company's (i)
Consolidated Adjusted Net Earnings from Operations for such period,
plus (ii) Consolidated depreciation and amortization expenses for such
period, plus (iii) Consolidated deferred taxes for such period, all as
determined in accordance with GAAP minus (iv) Consolidated Capital
Expenditure minus (v) all principal payments (other than principal
payments made in respect to the Revolving Credit Loans and in respect
to Indebtedness for Money Borrowed owed to FirsTier Bank, National
Association, Bank of America, Oregon or payments made in respect to
outstanding Indebtedness under the Subordinated Loan Debt Documents on
the Closing Date to the extent permitted by Section 8.2.7(a) of the
Agreement) made within such period in respect of Indebtedness for Money
Borrowed.
New Mortgages - as defined in Section 5.3 of the Agreement.
Obligations - all Loans and all other advances, debts,
liabilities, obligations, covenants and duties, together with all
interest, fees and other charges thereon, owing, arising, due or
payable from Borrowers to Lender of any kind or nature, present or
future, whether or not evidenced by any note, guaranty or other
instrument, whether arising under the Agreement or any of the other
Loan Documents or otherwise whether direct or indirect (including those
acquired by assignment), absolute or contingent, primary or secondary,
due or to become due, now existing or hereafter arising and however
acquired.
Original Term - as defined in Section 4.1 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 any Borrower or any other third party and delivered to Lender in
respect of the transactions contemplated by the Agreement.
Overadvance - the amount, if any, by which the outstanding
principal amount of Revolving Credit Loans exceeds the sum of the EPI
Borrowing Base, the PPI Borrowing Base and the APP Borrowing Base.
Participating Lender - 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.
Permitted Liens - any Lien of a kind specified in subsection
8.2.5 of the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money
Indebtedness of any Borrower incurred after the date hereof which is
secured by a Purchase Money Lien and which, when aggregated with the
principal amount of all other such Indebtedness and Capitalized Lease
Obligations of Borrower at the time outstanding, does not exceed One
Million Two Hundred Fifty Thousand Dollars ($1,250,000). For the
purposes of this definition, the principal amount of any Purchase Money
Indebtedness consisting of capitalized leases shall be computed as a
Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited
liability company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of Borrower that is covered by Title IV of ERISA.
PPI Borrowing Base - as at any date of determination thereof,
an amount equal to the lesser of:
(i) the remainder of Sixteen Million Five Hundred
Thousand Dollars ($16,500,000) minus the outstanding principal
balance of Revolving Credit Loans made to EPI and APP; or
(ii) an amount equal to:
(a) up to eighty-five percent 85%, of the
net amount of Eligible Accounts of PPI outstanding at
such date;
PLUS
(b) the lesser of (1) Eight Million Dollars
($8,000,000) minus the outstanding principal amount
of Revolving Credit Loans made to EPI and APP based
on EPI's and APP's Eligible Inventory; or (2) up to
fifty-five percent (55%), of the value of Eligible
Inventory of PPI at such date calculated on the basis
of the lower of cost or market with the cost of raw
materials and finished goods calculated on a
first-in, first-out basis.
For purposes hereof, the net amount of Eligible Accounts of PPI at any
time shall be the face amount of such Eligible Accounts less
any and all returns, rebates, discounts (which may, at
Lender's option, be calculated on shortest terms), credits,
allowances or excise taxes of any nature at any time issued,
owing, claimed by Account Debtors, granted, outstanding or
payable in connection with such Accounts at such time.
PPI Term Loan - shall have the meaning contained in Section
1.2.1 of the Agreement.
PPI Term Note - the Secured Promissory Note to be executed by
PPI on or about the Closing Date in favor of Lender to evidence the PPI
Term Loan, which shall be in the form of Exhibit A-2 to the Agreement.
Prime Portion - that portion of the Revolving Credit Loans and
the Term Loan not subject to a LIBOR Option.
Projections - Company's 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 Company's historical financial statements,
together with appropriate supporting details and a statement of
underlying assumptions.
Promissory Note and Stock Pledge Agreement - that certain
Promissory Note and Stock Pledge Agreement dated as of July 10, 1995
between Company, Pacific Acquisition Corp., PPI and the selling
shareholder signatories thereto, as in effect on the Closing Date.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i)
Indebtedness (other than the Obligations) for the payment of all or any
part of the purchase price of any fixed assets, (ii) any Indebtedness
(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 Indebtedness, but only if such Lien shall at all times
be confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness
secured by such Lien.
Rentals - as defined in subsection 8.2.12 of the Agreement.
Reportable Event - any of the events set forth in Section
4043(b) of ERISA.
Restricted Investment - any investment made in cash or by
delivery of Property to any Person, whether by acquisition of stock,
Indebtedness or other obligation or Security, or by loan, advance or
capital contribution, or otherwise, or in any Property except the
following:
(i) investments in one or more Subsidiaries of
Borrowers to the extent existing on the Closing Date;
(ii) Property to be used in the ordinary course of
business;
(iii) Current Assets arising from the sale of goods
and services in the ordinary course of business of Borrowers
and their respective Subsidiaries;
(iv) investments in direct obligations of the United
States of America, or any agency thereof or obligations
guaranteed by the United States of America, provided that such
obligations mature within one year from the date of
acquisition thereof;
(v) investments in certificates of deposit maturing
within one year from the date of acquisition issued by a bank
or trust company organized under the laws of the United States
or any state thereof having capital surplus and undivided
profits aggregating at least $100,000,000; and
(vi) investments in commercial paper given the
highest rating by a national credit rating agency and maturing
not more than 270 days from the date of creation thereof.
Revolving Credit Loan - a Loan made by Lender as provided in
Section 2.1 of the Agreement.
Schedule of Accounts - as defined in subsection 6.4.1 of the
Agreement.
Security - shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
Security Documents - the Mortgages, any New Mortgage, the
Patent Assignment, the Trademark Assignments and all other instruments
and agreements now or at any time hereafter securing the whole or any
part of the Obligations.
Senior Interest Coverage Ratio - with respect to any period of
determination, the ratio of Consolidated (i) EBIT for such period to
(ii) Senior Interest Expense for such period, all as determined in
accordance with GAAP.
Senior Interest Expense - with respect to any fiscal period,
the interest expense incurred by Borrowers for such period in respect
to all Indebtedness for Money Borrowed (other than Indebtedness
outstanding pursuant to the Subordinated Debt Documents) as determined
in accordance with GAAP owing by Borrowers to Lender for such period.
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 Indebtedness (including contingent debts), (ii) is
able to pay all of its Indebtedness as such Indebtedness matures and
(iii) has capital sufficient to carry on its business and transactions
and all business and transactions in which it is about to engage.
Spell Group - shall mean collectively ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, any of their spouses or
any family trust which is controlled by any of the foregoing.
Statutory Reserves - a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is
the number one minus the aggregate of the maximum reserve percentages
(including, without limitation, any marginal, special, emergency or
supplemental reserves), expressed as a decimal, established by the
Board and any other banking authority to which Bank or Lender is
subject for Eurocurrency Liabilities (as defined in Regulation D of the
Board or any successor thereto). Such reserve percentages shall
include, without limitation, those imposed under such Regulation D.
LIBOR Portions shall be deemed to constitute Eurocurrency Liabilities
and as such shall be deemed to be subject to such reserve requirements
without benefit of or credit for proration, exceptions or offsets which
may be available from time to time to bank or Lender under such
Regulation D. Statutory Reserves shall be adjusted automatically on and
as of the effective date of any change in any reserve percentage,
provided that no adjustment shall reduce Statutory Reserves below the
amount in effect on the Closing Date. At the Borrower's request, the
Lender shall provide Borrowers with Lender's calculations of Statutory
Reserves.
Subordinated Loan Agreement - shall mean the Debenture
Acquisition Agreement (as defined in the definition of Subordinated
Debt Documents) together with all amendments and modifications thereto,
including without limitation, the Amendment Agreement.
Subordinated Debt Documents - that certain Debenture
Acquisition Agreement ("Debenture Acquisition Agreement") dated as of
▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ and Company with any notes,
documents, instruments, agreements, guaranties, exhibits or schedules
executed and/or delivered in connection therewith, and all amendments
and modifications thereto, including without, limitation, that certain
Amendment Agreement ("Amendment Agreement") of even date herewith by
and among ▇▇▇▇▇, EPI, PPI, APP and Company.
Subordinated Debt - Indebtedness of Borrowers that is
subordinated to the Obligations in a manner satisfactory to Lender,
including, without limitation, Indebtedness outstanding pursuant to the
Subordinated Debt Documents.
Subsidiary - any corporation of which a Person owns, directly
or indirectly through one or more intermediaries, more than 50% of the
Voting Stock at the time of determination.
Tax - in relation to any LIBOR Portion and the applicable
LIBOR Rate, any tax, levy, impost, duty, deduction, withholding or
charges of whatever nature required by any Legal Requirement (i) to be
paid by Lender and/or (ii) to be withheld or deducted from any payment
otherwise required hereby to be made by Borrowers to Lender; provided,
that the term "Tax" shall not include any taxes imposed upon the net
income of Lender.
Term Loan - collectively, the EPI Term Loan, the PPI Term Loan
and the APP Term Loan.
Term Note - collectively, the EPI Term Note, the PPI Term Note
and the APP Term Note.
Trademark Assignment - the Trademark Security Agreement to be
executed by Borrowers on or about the Closing Date in favor of Lender
and by which Borrowers shall assign to Lender, and grant to Lender a
security interest in, as security for the Obligations all of Borrowers'
right, title and interest in and to all of its trademarks.
Total Credit Facility - Twenty-Four Million Five Hundred
Thousand Dollars ($24,500,000).
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).
Warrants - shall have the meaning contained in the Amendment
Agreement.
OTHER TERMS. All other terms contained in the Agreement shall
have, when the context so indicates, the meanings provided for
by the Code 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. 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 of the Loan Documents shall
include any and all modifications thereto and any and all
extensions or renewals thereof.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning
customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed, unless
otherwise specifically provided herein, in accordance with
GAAP consistently applied. That certain terms or computations
are explicitly modified by the phrase "in accordance with
GAAP" shall in no way be construed to limit the foregoing.
EXHIBIT A-1
SECURED PROMISSORY NOTE
$3,275,000 May 10, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, the undersigned (hereinafter "Borrower"), hereby
promises to pay to the order of FLEET CAPITAL CORPORATION, a Connecticut
corporation (hereinafter "Lender"), in such coin or currency of the United
States which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, the principal sum of Three Million Two Hundred
Seventy-Five Thousand Dollars ($3,275,000), together with interest from and
after the date hereof on the unpaid principal balance outstanding from time to
time.
This Secured Promissory Note (the "Note") is the EPI Term Note referred
to in, and is issued pursuant to, that certain Loan and Security Agreement
between Borrower, Pacific Plastics, Inc. ("PPI") and Arrow Pacific Plastics,
Inc. ("APP") and Lender dated the date hereof (hereinafter, as amended from time
to time, the "Loan Agreement"), and is entitled to all of the benefits and
security of the Loan Agreement. All of the terms, covenants and conditions of
the Loan Agreement and the Security Documents are hereby made a part of this
Note and are deemed incorporated herein in full. All capitalized terms used
herein, unless otherwise specifically defined in this Note, shall have the
meanings ascribed to them in the Loan Agreement.
For so long as no Event of Default shall have occurred the principal
amount and accrued interest of this Note shall be due and payable on the dates
and in the manner hereinafter set forth:
(a) Interest on the unpaid principal balance outstanding from
time to time shall be paid at such interest rates and at such times as
are specified in the Loan Agreement;
(b) Principal shall be due and payable monthly commencing on
June 1, 1996, and continuing on the first day of each month thereafter
to and including the first day of the month in which the Commitment
Termination occurs, in installments of Thirty-Nine Thousand Dollars
($39,000) each; and
(c) The entire remaining principal amount then outstanding,
together with any and all other amounts due hereunder, shall be due and
payable on the Commitment Termination Date.
Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on this Note shall be due and payable immediately upon any termination
of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to mandatory prepayment in accordance with
the provisions of Section 3.3 of the Loan Agreement. Borrower, PPI and APP may
also terminate the Loan Agreement and, in connection with such termination,
prepay this Note in the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence of an Event of Default, Lender shall have all of
the rights and remedies set forth in Section 10 of the Loan Agreement.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waive presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence in collection, and the benefit
of any exemption or insolvency laws.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any collateral securing this Note without
enforcing its rights against Borrower, any guarantor of the indebtedness
evidenced hereby or any other property or indebtedness due or to become due to
Borrower. Borrower agrees that, without releasing or impairing Borrower's
liability hereunder, Lender may at any time release, surrender, substitute or
exchange any collateral securing this Note and may at any time release any party
primarily or secondarily liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois.
IN WITNESS WHEREOF, Borrowers have caused this Note to be duly executed
and delivered in Chicago, Illinois, on the date first above
written.
EAGLE PLASTICS, INC.,
a Nebraska corporation ("Borrower")
By:
Name:
Title:
EXHIBIT A-2
SECURED PROMISSORY NOTE
$3,775,000 May 10, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, the undersigned (hereinafter "Borrower"), hereby
promises to pay to the order of FLEET CAPITAL CORPORATION, a Connecticut
corporation (hereinafter "Lender"), in such coin or currency of the United
States which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, the principal sum of Three Million Seven
Hundred Seventy-Five Thousand Dollars ($3,775,000), together with interest from
and after the date hereof on the unpaid principal balance outstanding from time
to time.
This Secured Promissory Note (the "Note") is the PPI Term Note referred
to in, and is issued pursuant to, that certain Loan and Security Agreement
between Borrower, Eagle Plastics, Inc. ("EPI") and Arrow Pacific Plastics, Inc.
("APP") and Lender dated the date hereof (hereinafter, as amended from time to
time, the "Loan Agreement"), and is entitled to all of the benefits and security
of the Loan Agreement. All of the terms, covenants and conditions of the Loan
Agreement and the Security Documents are hereby made a part of this Note and are
deemed incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Loan Agreement.
For so long as no Event of Default shall have occurred the principal
amount and accrued interest of this Note shall be due and payable on the dates
and in the manner hereinafter set forth:
(a) Interest on the unpaid principal balance outstanding from time to
time shall be paid at such interest rates and at such times as are specified in
the Loan Agreement;
(b) Principal shall be due and payable monthly commencing on June 1,
1996, and continuing on the first day of each month thereafter to and including
the first day of the month in which the Commitment Termination occurs, in
installments of Forty-Five Thousand Dollars ($45,000) each; and
(c) The entire remaining principal amount then outstanding, together
with any and all other amounts due hereunder, shall be due and payable on the
Commitment Termination Date.
Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on this Note shall be due and payable immediately upon any termination
of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to mandatory prepayment in accordance with
the provisions of Section 3.3 of the Loan Agreement. Borrower, EPI and APP may
also terminate the Loan Agreement and, in connection with such termination,
prepay this Note in the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence of an Event of Default, Lender shall have all of
the rights and remedies set forth in Section 10 of the Loan Agreement.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waive presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence in collection, and the benefit
of any exemption or insolvency laws.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any collateral securing this Note without
enforcing its rights against Borrower, any guarantor of the indebtedness
evidenced hereby or any other property or indebtedness due or to become due to
Borrower. Borrower agrees that, without releasing or impairing Borrower's
liability hereunder, Lender may at any time release, surrender, substitute or
exchange any collateral securing this Note and may at any time release any party
primarily or secondarily liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois.
IN WITNESS WHEREOF, Borrowers have caused this Note to be duly executed
and delivered in Chicago, Illinois, on the date first above
written.
PACIFIC PLASTICS, INC.,
an Oregon corporation ("Borrower")
By:
Name:
Title:
EXHIBIT A-3
SECURED PROMISSORY NOTE
$950,000 May 10, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, the undersigned (hereinafter "Borrower"), hereby
promises to pay to the order of FLEET CAPITAL CORPORATION, a Connecticut
corporation (hereinafter "Lender"), in such coin or currency of the United
States which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, the principal sum of Nine Hundred Fifty
Thousand Dollars ($950,000), together with interest from and after the date
hereof on the unpaid principal balance outstanding from time to time.
This Secured Promissory Note (the "Note") is the APP Term Note referred
to in, and is issued pursuant to, that certain Loan and Security Agreement
between Borrower, Eagle Plastics, Inc. ("EPI") and Pacific Plastics, Inc.
("PPI") and Lender dated the date hereof (hereinafter, as amended from time to
time, the "Loan Agreement"), and is entitled to all of the benefits and security
of the Loan Agreement. All of the terms, covenants and conditions of the Loan
Agreement and the Security Documents are hereby made a part of this Note and are
deemed incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Loan Agreement.
For so long as no Event of Default shall have occurred the principal
amount and accrued interest of this Note shall be due and payable on the dates
and in the manner hereinafter set forth:
(a) Interest on the unpaid principal balance outstanding from time
to time shall be paid at such interest rates and at such times
as are specified in the Loan Agreement;
(b) Principal shall be due and payable monthly commencing on June
1, 1996, and continuing on the first day of each month
thereafter to and including the first day of the month in
which the Commitment Termination occurs, in installments of
Eleven Thousand Three Hundred Dollars ($11,300) each; and
(c) The entire remaining principal amount then outstanding,
together with any and all other amounts due hereunder, shall
be due and payable on the Commitment Termination Date.
Notwithstanding the foregoing, the entire unpaid principal balance and
accrued interest on this Note shall be due and payable immediately upon any
termination of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to mandatory prepayment in accordance with
the provisions of Section 3.3 of the Loan Agreement. Borrower, EPI and PPI may
also terminate the Loan Agreement and, in connection with such termination,
prepay this Note in the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence of an Event of Default, Lender shall have all of
the rights and remedies set forth in Section 10 of the Loan Agreement.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waive presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence in collection, and the benefit
of any exemption or insolvency laws.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any collateral securing this Note without
enforcing its rights against Borrower, any guarantor of the indebtedness
evidenced hereby or any other property or indebtedness due or to become due to
Borrower. Borrower agrees that, without releasing or impairing Borrower's
liability hereunder, Lender may at any time release, surrender, substitute or
exchange any collateral securing this Note and may at any time release any party
primarily or secondarily liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois.
IN WITNESS WHEREOF, Borrowers have caused this Note to be duly executed
and delivered in Chicago, Illinois, on the date first above
written.
ARROW PACIFIC PLASTICS, INC.,
a Utah corporation ("Borrower")
By:
Name:
Title: