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EXHIBIT 10.64
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, is entered into
as of May 14, 1998, by and among FOOTHILL CAPITAL CORPORATION, a California
corporation ("Foothill"), with a place of business located at ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and ▇▇▇▇▇▇▇▇▇
INDUSTRIES, INC., a Delaware corporation ("Inc."), ▇▇▇▇▇▇▇▇▇ INDUSTRIES, L.P.,
a Texas limited partnership ("L.P."), and NBF, INC., a Georgia corporation
("NBF"), jointly and severally (collectively, "Borrower"), with their chief
executive office located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, Inc., L.P. and NBF and Foothill are party to a Loan and
Security Agreement, dated as of August 16, 1996 (as heretofore amended,
modified, supplemented and in effect immediately prior to the Closing Date (as
defined below), the "Existing Loan and Security Agreement"), providing, subject
to the terms and conditions thereof, for extensions of credit by Foothill to
Borrower in the form of revolving loans, the issuance of letters of credit in
favor of third parties and certain guaranties of payment to third parties;
WHEREAS, the Borrower and Foothill now wish to amend and restate in
its entirety the Existing Loan and Security Agreement by extending the maturity
thereof and amending certain of the covenants and other provisions thereof;
WHEREAS, Inc., L.P. and NBF are interrelated entities which,
collectively, constitute an integrated entity;
WHEREAS, the shareholders and directors of Inc. and NBF and the
partners of L.P. view the three entities as sufficiently dependent upon each
other and so interrelated that any advances made by Foothill hereunder to one
of these constituent entities would benefit the other of these constituent
entities as a result of their consolidated operations and identity of
interests;
WHEREAS, Inc., L.P. and NBF have each requested that Foothill treat
them as co-borrowers hereunder, as a single, consolidated business enterprise,
jointly and severally responsible for the Obligations hereunder, so as to
permit advances to be allocated among the constituent entities as may be, from
time to time, in the best interest of the combined group;
WHEREAS, Foothill is willing to proceed on the basis of treating all
of the borrowing entities as a single, consolidated business enterprise, and
view their operations on a consolidated basis as requested by Inc., L.P. and
NBF; and
WHEREAS, Foothill is willing to make such loans and provide such
financial accommodations on the terms and conditions set forth herein.
Amended and Restated Loan and Security Agreement--Page 1
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NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account.
"Accounts" means all currently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods or the rendition of services by
Borrower, irrespective of whether earned by performance, and any and all credit
insurance, guaranties, or security therefor.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For purposes of this definition, "control" as applied to
any Person means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Agreement" means this Amended and Restated Loan and Security
Agreement, as the same may be hereafter amended, supplemented or modified in
accordance with the terms hereof, together with any extensions, riders, notes,
instruments or other documents made or entered into from time to time in
connection with this Amended and Restated Loan and Security Agreement.
"Applicable Margin" means one and one-half percent (1_%) from
and after the date hereof. The Applicable Margin may be reduced to (a) one and
one-quarter percent (1 1/4%) from and after April 1, 1999, and (b) one percent
(1%) from and after April 1, 2000, so long as the following conditions are met:
(i) no Event of Default, or an event that, with notice or
passage of time or both, would constitute an Event of Default, shall exist as
of April 1, 1999, or April 1, 2000, as applicable; and
(ii) Borrower shall deliver a certificate executed by an
Authorized Officer stating that the foregoing condition has been met.
Notwithstanding the foregoing, the Applicable Margin shall be
increased to the Applicable Margin in effect immediately prior to the most
recent reduction if the Borrower's audited net operating income (as set forth
in the audited financial statements delivered to Foothill pursuant to Section
6.4(b) hereof) for either Borrower's fiscal year ended March 31, 1999, or its
Amended and Restated Loan and Security Agreement--Page 2
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fiscal year ended March 31, 2000, shall be less than the estimated net
operating income set forth in the Operating Income Projections for the
corresponding fiscal year. The foregoing increase in the Applicable Margin
shall be effective as of the earlier of the actual date of delivery or the
required date of delivery to Foothill of the financial statements required to
be delivered to Foothill pursuant to Section 6.4(b) hereof.
In the event the Applicable Margin shall be increased pursuant to the
immediately preceding paragraph: (a) Borrower shall immediately pay to Foothill
an amount equal to the difference between the amount of interest actually paid
to Foothill and the amount of interest that would have been paid hereunder
applying the Applicable Margin as increased pursuant to the foregoing
adjustment provision for the period from and after April 1, 1999, or April 1,
2000, as applicable, to the earlier of the actual date of delivery or the
required date of delivery to Foothill of the financial statements required to
be delivered to Foothill pursuant to Section 6.4(b) hereof; and (b) no further
reductions to the Applicable Margin shall be made without Foothill's prior
written consent.
"Authorized Officer" means any officer, partner or officer of
any partner of Borrower.
"Average Unused Portion of Maximum Amount" means, as of any
date of determination, (a) the Maximum Amount, less (b) the sum of: (i) the
average Daily Balance of Revolving Advances that were outstanding during the
immediately preceding month, plus (ii) the average Daily Balance of the undrawn
L/Cs and L/C Guaranties issued by Foothill under Section 2.2 hereof that were
outstanding during the immediately preceding month.
"Bankruptcy Code" means the United States Bankruptcy Code (11
U.S.C. Section 101 et seq.), as amended, and any successor statute.
"Borrower" has the meaning set forth in the preamble to this
Agreement.
"Borrower's Books" means all of Borrower's books and records
including: ledgers; records indicating, summarizing, or evidencing Borrowers
properties or assets (including the Collateral or the Real Property) or
liabilities; all information relating to Borrower's business operations or
financial condition; and all computer programs, disc or tape files, printouts,
runs, or other computer prepared information.
"Borrowing Base" has the meaning set forth in Section 2.1.
"Business Day" means any day which is not a Saturday, Sunday,
or other day on which national banks are authorized or required to close.
"Change of Control" shall be deemed to have occurred at such
time as a "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly
or indirectly, of more than twenty-five percent (25%) of the total voting
Amended and Restated Loan and Security Agreement--Page 3
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power of all classes of stock then outstanding or of partnership interests of
Borrower normally entitled to vote in the election of directors or a vote of
partners; provided, however, no Change of Control shall be deemed to occur
solely as a result of increases in the number of shares of stock or percentage
of partnership interests beneficially owned by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇.
"Closing Date" means May 14, 1998.
"Code" means the California Uniform Commercial Code.
"Collateral" means each of the following: the Accounts;
Borrower's Books; the Equipment; the General Intangibles; the Inventory; the
Negotiable Collateral; the Real Property; any money, or other assets of
Borrower which now or hereafter come into the possession, custody, or control
of Foothill; and the proceeds and products, whether tangible or intangible, of
any of the foregoing including proceeds of insurance covering any or all of the
Collateral, and any and all Accounts, Borrower's Books, Equipment, General
Intangibles, Inventory, Negotiable Collateral, money, deposit accounts, or
other tangible or intangible property resulting from the sale, exchange,
collection, or other disposition of any of the foregoing, or any portion
thereof or interest therein, and the proceeds thereof.
"Consolidated Current Assets" means, as of any date of
determination, the aggregate amount of all current assets of Borrower and its
subsidiaries calculated on a consolidated basis that would, in accordance with
GAAP, be classified on a balance sheet as current assets.
"Consolidated Current Liabilities" means, as of any date of
determination, the aggregate amount of all current liabilities of Borrower and
its subsidiaries, calculated on a consolidated basis that would, in accordance
with GAAP, be classified on a balance sheet as current liabilities. For
purposes of this definition, all Revolving Advances outstanding under this
Agreement shall be deemed to be current liabilities without regard to whether
they would be deemed to be so under GAAP.
"Corporate Guarantors" means ▇▇▇▇▇▇▇▇▇ Operating Corp.,
▇▇▇▇▇▇▇▇▇ Holding Corp., and C.G. Products, Inc.
"Daily Balance" means the amount of an Obligation owed at the
end of a given day.
"Debtor" has the meaning set forth in Section 11.4.
"Dilution" means, in each case based on the experience of the
immediately prior three (3) months, the result of dividing the dollar amount of
(a) all chargebacks, returns, advertising claims, discounts, contra accounts,
write-offs in favor of or held by Account Debtors and any other item that could
reduce or otherwise impair the full and timely collection of
Amended and Restated Loan and Security Agreement--Page 4
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Accounts by (b) Borrower's cash collections (excluding extraordinary items)
plus the dollar amount of the preceding clause (a).
"Dilution Reserve" means, as of any date of determination, an
amount sufficient to reduce Foothill's advance rate against Eligible Account by
one percentage point for each percentage point by which Dilution is in excess
of twelve percent (12%).
"Early Termination Premium" has the meaning set forth in
Section 3.5.
"Eligible Accounts" means those Accounts created by Borrower
in the ordinary course of business that arise out of Borrower's sale of goods
or rendition of services, that strictly comply with all of Borrower's
representations and warranties to Foothill, and that are and at all times shall
continue to be acceptable to Foothill in all respects; provided, however, that
standards of eligibility may be fixed and revised from time to time by Foothill
in Foothill's reasonable credit judgment. Eligible Accounts shall not include
the following:
(a) Accounts with respect to which the Account Debtor has
failed to pay within one hundred twenty (120) days of invoice date or sixty
(60) days past due, Accounts with selling terms of more than seventy-five (75)
days (or, in the case of Sportsmart, Inc. and Service Merchandise, ninety (90)
days), and all Accounts owed by an Account Debtor that has failed to pay fifty
percent (50%) or more of its Accounts owed to Borrower within one hundred
twenty (120) days of invoice date;
(b) Accounts with respect to which the Account Debtor is
an officer, employee, Affiliate, or agent of Borrower;
(c) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, ▇▇▇▇ and hold,
or other terms by reason of which the payment by the Account Debtor may be
conditional, except as otherwise approved by Foothill;
(d) Accounts with respect to which the Account Debtor is
not a resident of the United States or Canada, and which are not either (i)
covered by credit insurance in form and amount, and by an insurer, satisfactory
to Foothill, or (ii) supported by one or more letters of credit that are
assignable by their terms and have been delivered to Foothill in an amount, of
a tenor, and issued by a financial institution, acceptable to Foothill;
(e) Accounts with respect to which the Account Debtor is
the United States or any department, agency, or instrumentality of the United
States;
(f) Accounts with respect to which Borrower is or may
become liable to the Account Debtor for goods sold or services rendered by the
Account Debtor to Borrower;
(g) Accounts owing, as of any date of determination, by
the three Account Debtors with the greatest obligations owing to Borrower,
which in the aggregate exceed eighty
Amended and Restated Loan and Security Agreement--Page 5
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percent (80%) of all Eligible Accounts, to the extent that the obligations
owing by such three Account Debtors are in excess of such percentage;
(h) Accounts with respect to an Account Debtor (other
than the three Account Debtors subject to the preceding clause (g) as of the
date of determination) whose total obligations owing to Borrower exceed ten
percent (10%) of all Eligible Accounts, to the extent that the obligations
owing by such Account Debtor are in excess of such percentage;
(i) Accounts with respect to which the Account Debtor
disputes liability or makes any claim with respect thereto, or is subject to
any Insolvency Proceeding, or becomes insolvent, or goes out of business;
(j) Accounts, the collection of which Foothill, in its
reasonable credit judgment, believes to be doubtful by reason of the Account
Debtor's financial condition;
(k) Accounts that are payable in other than United States
Dollars; and
(l) Accounts that represent progress payments or other
advance ▇▇▇▇▇▇▇▇ that are due prior to the completion of performance by
Borrower of the subject contract for goods or services.
"Eligible Inventory" means Inventory (net of reserves for
obsolescence and reserves for restructuring charges as determined in Foothill's
reasonable discretion) consisting of first quality finished goods held for sale
in the ordinary course of Borrower's business and raw materials for such
finished goods, that are located at Borrower's premises identified on Schedule
E-1, are acceptable to Foothill in all respects, and strictly comply with all
of Borrower's representations and warranties to Foothill. Eligible Inventory
shall not include slow moving or obsolete items, restrictive or custom items,
work-in-process, components that are not part of finished goods, spare parts,
packaging and shipping materials, supplies used or consumed in Borrower's
business, Inventory at any location other than those set forth on Schedule E-1,
Inventory subject to a security interest or lien in favor of any third Person,
▇▇▇▇ and hold goods, Inventory that is not subject to Foothill's perfected
security interests, Inventory the sale of which by or on behalf of Foothill may
be restricted by any Person claiming a right or interest in such Inventory (or
any trademark, license, copyright, patent or other right or interest relating
to such Inventory), defective goods, "seconds," and Inventory acquired on
consignment. Eligible Inventory shall be valued at the lower of Borrower's
cost or market value; provided, however, that standards of eligibility may be
fixed and revised from time to time by Foothill in Foothill's reasonable credit
determination. All references to Eligible Inventory, other than such
references in Section 2.1(a), shall be deemed to include Inventory In-Transit.
"Equipment" means all of Borrower's present and hereafter
acquired machinery, machine tools, motors, equipment, furniture, furnishings,
fixtures, vehicles (including motor vehicles and trailers), tools, parts, dies,
jigs, goods (other than consumer goods, farm products, or Inventory), wherever
located, and any interest of Borrower in any of the foregoing, and all
Amended and Restated Loan and Security Agreement--Page 6
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attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any predecessor, successor, or
superseding laws of the United States of America, together with all regulations
promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which, within the meaning of Section 414 of the IRC, is: (i)
under common control with Borrower; (ii) treated, together with Borrower, as a
single employer; (iii) treated as a member of an affiliated service group of
which Borrower is also treated as a member; or (iv) is otherwise aggregated
with the Borrower for purposes of the employee benefits requirements listed in
IRC Section 414(m)(4).
"ERISA Event" means any one or more of the following: (i) a
Reportable Event with respect to a Qualified Plan or a Multiemployer Plan; (ii)
a Prohibited Transaction with respect to any Plan; (iii) a complete or partial
withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan; (iv)
the complete or partial withdrawal of Borrower or an ERISA Affiliate from a
Qualified Plan during a plan year in which it was, or was treated as, a
"substantial employer" as defined in Section 4001(a)(2) of ERISA; (v) a failure
to make full payment when due of all amounts which, under the provisions of any
Plan or applicable law, Borrower or any ERISA Affiliate is required to make;
(vi) the filing of a notice of intent to terminate, or the treatment of a plan
amendment as a termination, under Sections 4041 or 4041A of ERISA; (vii) an
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Qualified Plan or Multiemployer Plan; (viii) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA
Affiliate; and (ix) a violation of the applicable requirements of Sections 404
or 405 of ERISA, or the exclusive benefit rule under Section 403(c) of ERISA,
by any fiduciary or disqualified person with respect to any Plan for which
Borrower or any ERISA Affiliate may be directly or indirectly liable.
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to:
(a) the lesser of (i) the Borrowing Base (based on the
applicable advance rates set forth in Section 2.1(a) hereof), subject to the
sublimits and availability reserves from time to time established by Foothill
hereunder, minus the sum of the aggregate amount of all undrawn or unreimbursed
L/Cs and L/C Guaranties (exclusive of Inventory Letters of Credit), together
with the Inventory L/C Reserve Amount, and (ii) the Maximum Amount minus the
aggregate amount of all undrawn or unreimbursed L/Cs and L/C Guaranties
(including Inventory Letters of Credit); plus
Amended and Restated Loan and Security Agreement--Page 7
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(b) unrestricted cash of Borrower; minus
(c) the amount of all then outstanding and unpaid
Obligations.
"FEIN" means Federal Employer Identification Number.
"Foothill" has the meaning set forth in the preamble to this
Agreement.
"Foothill Expenses" means all: costs or expenses (including
taxes, photocopying, notarization, telecommunication and insurance premiums)
required to be paid by Borrower under any of the Loan Documents that are paid
or advanced by Foothill; documentation, filing, recording, publication,
appraisal (including periodic Collateral or Real Property appraisals), real
estate survey, environmental audit, and search fees assessed, paid, or incurred
by Foothill in connection with Foothill's transactions with Borrower; costs and
expenses incurred by Foothill in the disbursement of funds to Borrower (by wire
transfer or otherwise); charges paid or incurred by Foothill resulting from the
dishonor of checks; costs and expenses paid or incurred by Foothill to correct
any default or enforce any provision of the Loan Documents, or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral or the Real Property,
or any portion thereof, irrespective of whether a sale is consummated; costs
and expenses paid or incurred by Foothill in examining Borrower's Books; costs
and expenses of third party claims or any other suit paid or incurred by
Foothill in enforcing or defending the Loan Documents; and Foothill's
reasonable attorneys' fees and expenses incurred in advising, structuring,
drafting, reviewing, administering, amending, terminating, enforcing (including
attorneys fees and expenses incurred in connection with a "workout," a
"restructuring," or an Insolvency Proceeding concerning Borrower or any
guarantor of the Obligations), defending, or concerning the Loan Documents,
irrespective of whether suit is brought.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's present and
future general intangibles and other personal property (including contract
rights, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due
or recoverable from pension funds, route lists, rights to payment and other
rights under any royalty or licensing agreements, infringements, claims,
computer programs, computer discs, computer tapes, literature, reports,
catalogs, deposit accounts, insurance premium rebates, tax refunds, and tax
refund claims), other than goods, Accounts, and Negotiable Collateral.
"Hazardous Materials" means all or any of the following: (a)
substances that are defined or listed in, or otherwise classified pursuant to,
any applicable laws or regulations as "hazardous substances," "hazardous
materials," "hazardous wastes," "toxic substances," or any other formulation
intended to define, list, or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
reproductive toxicity, or
Amended and Restated Loan and Security Agreement--Page 8
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"EP toxicity"; (b) oil, petroleum, or petroleum derived substances, natural
gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and
other wastes associated with the exploration, development, or production of
crude oil, natural gas, or geothermal resources; (c) any flammable substances
or explosives or any radioactive materials; and (d) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty (50) parts per million.
"Indebtedness" means: (a) all obligations of Borrower for
borrowed money; (b) all obligations of Borrower evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other obligations
of Borrower in respect of letters of credit, letter of credit guaranties,
bankers acceptances, interest rate swaps, controlled disbursement accounts, or
other financial products; (c) all obligations under capital leases; (d) all
obligations or liabilities of others secured by a lien or security interest on
any property or asset of Borrower, irrespective of whether such obligation or
liability is assumed; and (e) any obligation of Borrower guaranteeing or
intended to guarantee (whether guaranteed, endorsed, co-made, discounted, or
sold with recourse to Borrower) any indebtedness, lease, dividend, letter of
credit, or other obligation of any other Person.
"Individual Guarantors" means ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any
other bankruptcy or insolvency law, including assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally
with its creditors, or proceedings seeking reorganization, arrangement, or
other similar relief.
"In-Transit Inventory Reserve" means a reserve in an amount
acceptable to Foothill to cover the costs of freight, duty, customs and other
costs relating to the importation of inventory.
"Inventory" means all present and future inventory in which
Borrower has any interest, including goods held for sale or lease or to be
furnished under a contract of service and all of Borrower's present and future
raw materials, work in process, finished goods, and packing and shipping
materials, wherever located, and any documents of title representing any of the
above.
"Inventory Advance Rate" as of the Closing Date, shall mean
forty-eight percent (48%). Following each appraisal of Inventory that produces
an orderly liquidation value of the Eligible Inventory, Foothill shall increase
or decrease the Inventory Advance Rate to the percentage obtained by
multiplying 80% times the percentage that results from dividing the orderly
liquidation value of Eligible Inventory by the fair market value of such
Eligible Inventory, in each case using the valuations determined by the most
recent Inventory appraisal conducted by Foothill; provided, however, the
Inventory Advance Rate shall never exceed fifty-five percent (55%). The
effective date of adjustments to the Inventory Advance Rate and the foregoing
calculations shall be determined by Foothill in its reasonable discretion.
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"Inventory In-Transit" means all Inventory that would
otherwise qualify as Eligible Inventory, but that is in-transit for direct
delivery to Borrower, to the extent that Borrower holds good legal title to
such Inventory and such Inventory is adequately insured for full replacement
value, and is not located at a port of shipping for more than thirty (30) days
prior to shipment.
"Inventory L/C Reserve Amount" means the sum of (i)
forty-eight percent (48%) of the aggregate Inventory Letters of Credit plus
(ii) an amount sufficient to reserve for associated freight, duty, customs and
other related costs.
"Inventory Letter of Credit" means a documentary L/C issued to
support the purchase by Borrower of Inventory prior to transit to a location
set forth on Schedule E-1, that satisfy the following conditions: (a) all
draws thereunder must require presentation of customary documentation
(including, if applicable, commercial invoices, packing list, certificate of
origin, ▇▇▇▇ of lading or airway ▇▇▇▇, customs clearance documents, quota
statement, inspection certificate, beneficiaries statement, and ▇▇▇▇ of
exchange, bills of lading, dock warrants, dock receipts, warehouse receipts, or
other documents of title) in form and substance reasonably satisfactory to
Foothill and reflecting the passage to Borrower of title to Inventory
conforming to Borrower's contract with the seller thereof, (b) the Inventory
covered by such L/C would, but for its not being located at a location set
forth on Schedule E-1, be Eligible Inventory, (c) the Inventory shall be fully
insured, and (d) such L/C shall cease to be an "Inventory Letter of Credit" at
such time, if any, as the goods purchased thereunder become Eligible Inventory.
"IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
"L/C" has the meaning set forth in Section 2.2(a).
"L/C Guaranty" has the meaning set forth in Section 2.2(a).
"Loan Documents" means this Agreement, the Lockbox Agreements,
the Mortgages, any other note or notes executed by Borrower and payable to
Foothill, and any other agreement entered into in connection with this
Agreement.
"Lockbox Account" shall mean the depository account
established pursuant to the respective Lockbox Agreement.
"Lockbox Agreements" means those certain Lockbox Operating
Procedural Agreements and those certain Depository Account Agreements, in form
and substance satisfactory to Foothill, each of which is among Borrower,
Foothill, and the Lockbox Bank.
"Lockbox Bank" means Bank One, Texas, N.A.
"Maximum Amount" means Fifteen Million Dollars ($15,000,000).
Amended and Restated Loan and Security Agreement--Page 10
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"Maximum Rate" means the maximum rate of interest permitted by
applicable law as the same exists from day to day during the term of this
Agreement, including, to the extent that Texas law may apply to the rights of
the parties hereunder notwithstanding the choice of California law contained in
Section 13 hereof (and without any intent of the parties to diminish or negate
the intent or effect of the provisions of Section 13 hereof), the greatest of
either (i) the applicable "weekly ceiling" as defined in Chapter 1D of the
Texas Credit Title (Tex. Rev. Civ. Stat. ▇▇▇. art. 5069 Sections 1.01 et seq.;
Tex. Fin. Code ▇▇▇. Sections 303.001 et seq.) (the "Act"), with said weekly
ceiling being adjusted weekly as permitted under the Act, as the Act may be
amended, modified, codified or supplemented and in effect from time to time,
(ii) the "annual ceiling" or the "quarterly ceiling" from time to time in
effect as referred to and defined in the Act, upon the giving of notice by
Foothill of its election to utilize the "annual ceiling" or the "quarterly
ceiling" to the extent permitted by the Act and with the effect provided
therein, (iii) the rate permitted by any federal law if such federal law
applies or may be applied to this transaction and when and for so long as the
rate permitted thereunder is greater than that permitted under clause (i) or
clause (ii) hereof, or (iv) the maximum rate permitted by law when and as the
law changes to permit a greater maximum rate that stated in clauses (i), (ii)
or (iii) above.
"Mortgages" means one or more mortgages, deeds of trust, or
deeds to secure debt, executed by Borrower in favor of Foothill, the form and
substance of which shall be satisfactory to Foothill, that encumber the Real
Property and the related improvements thereto.
"Multiemployer Plan" means a multiemployer plan as defined in
Sections 3(37) or 4001(a)(3) of ERISA or Section 414 of the IRC in which
employees of Borrower or an ERISA Affiliate participate or to which Borrower or
any ERISA Affiliate contribute or are required to contribute.
"Negotiable Collateral" means all of Borrower's present and
future letters of credit, notes, drafts, instruments, certificated and
uncertificated securities (including the shares of stock of subsidiaries of
Borrower), documents, personal property leases (wherein Borrower is the
lessor), chattel paper, and Borrower's Books relating to any of the foregoing.
"Obligations" means all loans, Revolving Advances, debts,
principal, interest (including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued), contingent reimbursement obligations
owing to Foothill under any outstanding L/Cs or L/C Guaranties, premiums
(including Early Termination Premiums), liabilities (including all amounts
charged to Borrower's loan account pursuant to any agreement authorizing
Foothill to charge Borrower's loan account), obligations, fees, lease payments,
guaranties, covenants, and duties owing by Borrower to Foothill of any kind and
description (whether pursuant to or evidenced by the Loan Documents, by any
note or other instrument or pursuant to any other agreement between Foothill
and Borrower, and irrespective of whether for the payment of money), whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including any debt, liability, or obligation owing
from Borrower to others that Foothill may have obtained by assignment or
otherwise, and further including all interest not paid when due
Amended and Restated Loan and Security Agreement--Page 11
12
and all Foothill Expenses that Borrower is required to pay or reimburse by the
Loan Documents, by law, or otherwise.
"Operating Income Projections" means the Borrower's 1998 and
1999 Income Projections dated the Closing Date, prepared by Borrower and
delivered to, and approved by, Foothill on the Closing Date, including the
one-time charges set forth therein but only to the extent specified therein.
For all periods after fiscal year 1999, the Operating Income Projections for
any period shall mean projections to be delivered to, and approved by, Foothill
pursuant to Section 6.4 hereof.
"Overadvance" has the meaning set forth in Section 2.3.
"Participant" means any Person, other than Foothill, that has
committed to provide a portion of the financing contemplated herein.
"PBGC" means the Pension Benefit Guaranty Corporation as
defined in Title IV of ERISA, or any successor thereto.
"Permitted Investment" shall mean, at any time at which there
are no outstanding Obligations due and payable by Borrower, any Corporate
Guarantor or Individual Guarantor to Foothill: (a) direct obligations of the
United States, or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States, or of any agency thereof, in
either case maturing not more than one year from the date of acquisition
thereof; (b) direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition thereof and, at the time
of such acquisition, having one of the three highest ratings obtainable from
either Standard & Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc. ("S&P")
or ▇▇▇▇▇'▇ Investors Services, Inc. ("Moody's"); (c) certificates of deposit or
repurchase agreements (relating to interests in obligations described in the
preceding clause (a)) issued by any bank or trust company organized under the
laws of the United States or any state thereof and having capital, surplus and
undivided profits of at least $500,000,000, maturing not more than six months
from the date of acquisition thereof; (d) commercial paper rated A-1 or better
or P-1 by S&P or Moody's, respectively, maturing not more than six months from
the date of acquisition thereof; and (e) eurodollar time deposits issued by an
affiliate of a bank or trust company meeting the requirements set forth in the
preceding clause (c) and maturing not more than six months from the date of
acquisition thereof.
"Permitted Liens" means: (a) liens and security interests
held by Foothill; (b) liens for unpaid taxes that are not yet due and payable;
(c) liens and security interests set forth on Schedule P- 1 attached hereto;
(d) purchase money security interests and liens of lessors under capital leases
to the extent that the acquisition or lease of the underlying asset was
permitted under Section 7.10, and so long as the security interest or lien only
secures the purchase price of the asset; (e) easements, rights of way,
reservations, covenants, conditions, restrictions, zoning variances, and other
similar encumbrances that do not materially interfere with the use or value of
the property subject thereto; (f) obligations and duties as lessee under any
lease existing on the
Amended and Restated Loan and Security Agreement--Page 12
13
date of this Agreement or that may be entered into with the approval of
Foothill in accordance with the terms hereof; (g) mechanics', materialmen's,
warehousemen's, or similar liens that arise by operation of law; and (h)
exceptions listed in the title insurance or commitment therefor to be delivered
by Borrower hereunder in respect of the Real Property; and (i) pledges or
deposits made in the ordinary course of business to secure non-delinquent
obligations (not in excess of $25,000) existing under statutory requirements
consisting of worker's compensation unemployment insurance, and similar
legislation.
"Permitted Protest" means the right of Borrower to protest any
lien, tax, rental payment, or other charge, other than any such lien or charge
that secures the Obligations, provided (i) a reserve with respect to such
obligation is established on the books of Borrower in an amount that is
reasonably satisfactory to Foothill, (ii) any such protest is instituted and
diligently prosecuted by Borrower in good faith, and (iii) Foothill is
satisfied that, while any such protest is pending, there will be no impairment
of the enforceability, validity, or priority of any of the liens or security
interests of Foothill in and to the property or assets of Borrower.
"Person" means and includes natural persons, corporations,
limited partnerships, limited liability companies, general partnerships, joint
ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which Borrower or any ERISA Affiliate sponsors or maintains or
to which Borrower or any ERISA Affiliate makes, is making, or is obligated to
make contributions, including any Multiemployer Plan or Qualified Plan.
"Prohibited Transaction" means any transaction described in
Section 406 of ERISA which is not exempt by reason of Section 408 of ERISA, and
any transaction described in Section 4975(c) of the IRC which is not exempt by
reason of Section 4975(c) of the IRC.
"Qualified Plan" means a pension plan (as defined in Section
3(2) of ERISA) intended to be tax-qualified under Section 401(a) of the IRC
which Borrower or any ERISA Affiliate sponsors, maintains, or to which any such
person makes, is making, or is obligated to make, contributions, or, in the
case of a multiple-employer plan (as described in Section 4064(a) of ERISA),
has made contributions at any time during the immediately preceding period
covering at least five (5) plan years, but excluding any Multiemployer Plan.
"Real Property" means the parcel or parcels of real property
and the related improvements thereto identified on Schedule R-1, and any
parcels of real property hereafter acquired by Borrower.
"Reference Rate" means the highest of the variable rates of
interest, per annum, most recently announced by Norwest Bank Minnesota,
National Association, or any successor thereto, as its "base rate,"
irrespective of whether such announced rate is the best rate available from
such financial institution.
Amended and Restated Loan and Security Agreement--Page 13
14
"Renewal Date" has the meaning set forth in Section 3.3.
"Reportable Event" means any event described in Section 4043
(other than Subsections (b)(7) and (b)(9)) of ERISA.
"Revolving Advances" has the meaning set forth in Section
2.1(a).
"Solvent" means, with respect to any Person on a particular
date, that on such date (a) at fair valuations, all of the properties and
assets of such Person are greater than the sum of the debts, including
contingent liabilities, of such Person, (b) the present fair salable value of
the properties and assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person is able to realize upon its
properties and assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it
will, incur debts beyond such Person's ability to pay as such debts mature, and
(e) such Person is not engaged in business or a transaction, and is not about
to engage in business or a transaction, for which such Person's properties and
assets would constitute unreasonably small capital after giving due
consideration to the prevailing practices in the industry in which such Person
is engaged. In computing the amount of contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount that, in light
of all the facts and circumstances existing at such time, represents the amount
that reasonably can be expected to become an actual or matured liability.
"Tangible Net Worth" means, as of the date any determination
thereof is to be made, the difference of: (a) the sum of (i) Borrower's total
stockholder's or partner's equity (deficit); (ii) all Foothill Expenses; (iii)
the one-time charges set forth in the Operating Income Projections, but only to
the extent actually incurred; and (iv) the minority interest in any subsidiary
shareholder's or partner's equity; minus (b) the sum of (i) all intangible
assets of Borrower; (ii) all of Borrower's prepaid expenses; and (iii) all
amounts due to Borrower from Affiliates; in each case, calculated on a
consolidated basis.
"Unfunded Benefit Liability" means the excess of a Plan's
benefit liabilities (as defined in Section 4001(a)(16) of ERISA) over the
current value of such Plan's assets, determined in accordance with the
assumptions used by the Plan's actuaries for funding the Plan pursuant to
Section 412 of the IRC for the applicable plan year.
"Voidable Transfer" has the meaning set forth in Section 15.8.
"Working Capital" means the result of subtracting Consolidated
Current Liabilities from Consolidated Current Assets.
1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein,
the term "financial statements" shall include the notes and schedules thereto.
Whenever the term "Borrower" is used in respect of a
Amended and Restated Loan and Security Agreement--Page 14
15
financial covenant or a related definition, it shall be understood to mean
Borrower on a consolidated basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in
the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein.
1.4 CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references
to the singular include the plural, the term "including" is not limiting, and
the term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Section,
subsection, clause, schedule, and exhibit references are to this Agreement
unless otherwise specified. Any reference in this Agreement or in the Loan
Documents to this Agreement or any of the Loan Documents shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, and supplements, thereto and thereof, as
applicable.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVING ADVANCES.
(a) Subject to the terms and conditions of this
Agreement, Foothill agrees to make revolving advances (the "Revolving
Advances") to Borrower in an amount at any one time outstanding not to exceed
the Borrowing Base, less: (i) the undrawn or unreimbursed amount of L/Cs and
L/C Guaranties outstanding hereunder for all L/Cs and L/C Guaranties that are
not Inventory Letters of Credit, and (ii) the Inventory L/C Reserve Amount
regarding Inventory Letters of Credit. For purposes of this Agreement,
"Borrowing Base," as of any date of determination, shall mean the sum of:
(i) an amount equal to the lesser of: (y) seventy-five
percent (75%) of the amount of Eligible Accounts, and (z) an amount
equal to Borrower's collections with respect to Accounts for the
immediately preceding sixty (60) day period; provided, however, that
the foregoing initial advance rate of seventy-five percent (75%) shall
be reduced by the Dilution Reserve; and
(ii) an amount equal to the lowest of:
(x) the sum of (a) the Inventory Advance Rate times
the amount of Eligible Inventory, excluding Inventory
In-Transit, and (b) the lesser of the Inventory Advance Rate
times the amount of Inventory In-Transit (valued at the lower
of cost or market value as determined by Foothill) and Three
Million Dollars ($3,000,000) minus (c) the In-Transit
Inventory Reserve;
Amended and Restated Loan and Security Agreement--Page 15
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(y) the amount of credit availability created by
Section 2.1(a)(i) above multiplied by one hundred thirty three
percent (133%); and
(z) Seven Million Five Hundred Thousand Dollars
($7,500,000).
(b) Anything to the contrary in Section 2.1(a) above
notwithstanding, Foothill may reduce its advance rates based upon Eligible
Accounts or Eligible Inventory or establish availability reserves without
declaring an Event of Default if it determines, in its reasonable discretion,
that there is a material impairment of the prospect of repayment of all or any
portion of the Obligations or a material impairment of the value or priority of
Foothill's security interests in the Collateral.
(c) Foothill shall have no obligation to make Revolving
Advances hereunder to the extent they would cause the outstanding Obligations
to exceed the Maximum Amount.
(d) Foothill is authorized to make Revolving Advances
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Officer of Borrower, or without
instructions if pursuant to Section 2.4(d). Borrower agrees to establish and
maintain a single designated deposit account for the purpose of receiving the
proceeds of the Revolving Advances requested by Borrower and made by Foothill
hereunder. Unless otherwise agreed by Foothill and Borrower, any Revolving
Advances requested by Borrower and made by Foothill hereunder shall be made to
such designated deposit account. Amounts borrowed pursuant to this Section 2.1
may be repaid and, subject to the terms and conditions of this Agreement,
reborrowed at any time during the term of this Agreement.
2.2 LETTERS OF CREDIT AND LETTER OF CREDIT GUARANTIES.
(a) Subject to the terms and conditions of this
Agreement, Foothill agrees to issue commercial or standby letters of credit for
the account of Borrower (each, an "L/C") or to issue standby letters of credit
or guaranties of payment (each such letter of credit or guaranty, an "L/C
Guaranty") with respect to commercial or standby letters of credit issued by
another Person for the account of Borrower in an aggregate face amount not to
exceed the lesser of: (i) the Borrowing Base, less the sum of (A) the amount
of Revolving Advances outstanding pursuant to Section 2.1, (B) the undrawn and
unreimbursed amount of L/Cs and L/C Guaranties for L/Cs and L/C Guaranties,
which are not Inventory Letters of Credit, and (C) the Inventory L/C Reserve
Amount regarding Inventory Letters of Credit, and (ii) Four Million Dollars
($4,000,000). Borrower expressly understands and agrees that Foothill shall
have no obligation to arrange for the issuance by other financial institutions
of letters of credit that are to be the subject of L/C Guaranties. Borrower
and Foothill acknowledge and agree that certain of the letters of credit that
are to be the subject of L/C Guaranties may be outstanding on the Closing Date.
Each L/C and each letter of credit that is the subject of an L/C Guaranty shall
have an expiry date no later than sixty (60) days prior to the date on which
this Agreement is scheduled to terminate under Section 3.3 (without regard to
any potential renewal term); and all such L/Cs and letters of credit (and the
applicable L/C Guaranties) shall be in form and substance acceptable to
Foothill in its sole
Amended and Restated Loan and Security Agreement--Page 16
17
discretion. Foothill shall not have any obligation to issue L/Cs, L/C
Guaranties or Inventory Letters of Credit to the extent that the face amount of
all outstanding such instruments, plus the amount of Revolving Advances
outstanding pursuant to Section 2.1, would exceed the Maximum Amount. The L/Cs
and the L/C Guaranties issued under this Section 2.2 shall be used by Borrower,
consistent with this Agreement, for its general working capital purposes or to
support its obligations with respect to workers' compensation premiums or other
similar obligations. If Foothill is obligated to advance funds under an L/C or
L/C Guaranty, the amount so advanced immediately shall be deemed to be a
Revolving Advance made by Foothill to Borrower pursuant to Section 2.1 and,
thereafter, shall bear interest at the rates then applicable under Section 2.4.
(b) Borrower hereby agrees to indemnify, save, defend,
and hold Foothill harmless from any loss, cost, expense, or liability,
including payments made by Foothill, expenses, and reasonable attorneys' fees
incurred by Foothill arising out of or in connection with any L/Cs or L/C
Guaranties. Borrower agrees to be bound by the issuing bank's regulations and
interpretations of any letters of credit guarantied by Foothill and opened to
or for Borrower's account or by Foothill's interpretations of any L/C issued by
Foothill to or for Borrower's account, even though this interpretation may be
different from Borrower's own, and Borrower understands and agrees that
Foothill shall not be liable for any error, negligence, or mistakes, whether of
omission or commission, in following Borrower's instructions or those contained
in the L/Cs or any modifications, amendments, or supplements thereto. Borrower
understands that the L/C Guaranties may require Foothill to indemnify the
issuing bank for certain costs or liabilities arising out of claims by Borrower
against such issuing bank. Borrower hereby agrees to indemnify, save, defend,
and hold Foothill harmless with respect to any loss, cost, expense (including
attorneys' fees), or liability incurred by Foothill under any L/C Guaranty as a
result of Foothill's indemnification of any such issuing bank.
(c) Borrower hereby authorizes and directs any bank that
issues a letter of credit guarantied by Foothill to deliver to Foothill all
instruments, documents, and other writings and property received by the issuing
bank pursuant to such letter of credit, and to accept and rely upon Foothill's
instructions and agreements with respect to all matters arising in connection
with such letter of credit and the related application. Borrower may or may
not be the "applicant" or "account party" with respect to such letter of
credit.
(d) Any and all service charges, commissions, fees, and
costs as established from time to time by Foothill relating to the letters of
credit guaranteed by Foothill shall be considered Foothill Expenses for
purposes of this Agreement and immediately shall be reimbursable by Borrower to
Foothill. On the first day of each month, Borrower will pay Foothill a fee
equal to two percent (2%) per annum times the average Daily Balance of the L/Cs
and L/C Guaranties that were outstanding during the immediately preceding
month. Service charges, commissions, fees, and costs may be charged to
Borrower's loan account at the time the service is rendered or the cost is
incurred.
(e) Immediately upon the termination of this Agreement,
Borrower agrees to either: (i) provide cash collateral to be held by Foothill
in an amount equal to the maximum amount of Foothill's obligations under L/Cs
plus the maximum amount of Foothill's obligations
Amended and Restated Loan and Security Agreement--Page 17
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to any Person under outstanding L/C Guaranties, or (ii) cause to be delivered
to Foothill releases of all of Foothill's obligations under its outstanding
L/Cs and L/C Guaranties. At Foothill's discretion, any proceeds of Collateral
received by Foothill after the occurrence and during the continuation of an
Event of Default may be held as the cash collateral required by this Section
2.2(e).
2.3 OVERADVANCES. If, at any time or for any reason, the amount
of Obligations owed by Borrower to Foothill pursuant to Sections 2.1 and 2.2 is
greater than either the dollar or percentage limitations set forth in Sections
2.1 or 2.2 (an "Overadvance"), Borrower immediately shall pay to Foothill, in
cash, the amount of such excess to be used by Foothill first, to repay
non-contingent Obligations and, thereafter, to be held by Foothill as cash
collateral to secure Borrower's obligation to repay Foothill for all amounts
paid pursuant to L/Cs or L/C Guaranties.
2.4 INTEREST: RATES, PAYMENTS, AND CALCULATIONS.
(a) Interest Rate. From and after the date hereof all
Obligations, except for undrawn L/Cs and L/C Guaranties, shall bear interest on
the average Daily Balance, at a per annum rate equal to the lesser of (i) the
sum of the Reference Rate and the Applicable Margin then in effect or (ii) the
Maximum Rate.
(b) Default Rate. (i) All Obligations, except for
undrawn L/Cs and L/C Guaranties, shall bear interest, from and after the
occurrence and during the continuance of an Event of Default, at a per annum
rate equal to the lesser of four and three-quarters (4.75%) percentage points
above the Reference Rate or the Maximum Rate. (ii) From and after the
occurrence and during the continuance of an Event of Default, the fee provided
in Section 2.2(d) shall be increased to a fee equal to five percent (5%) per
annum times the average Daily Balance of the undrawn L/Cs and L/C Guaranties
that were outstanding during the immediately preceding month.
(c) Minimum Interest. In no event shall the rate of
interest chargeable hereunder be less than eight percent (8%) per annum.
(d) Payments. Interest hereunder shall be due and
payable, in arrears, on the first day of each month during the term hereof.
Borrower hereby authorizes Foothill, at its option, without prior notice to
Borrower, to charge such interest, all Foothill Expenses (as and when
incurred), and all installments on any other note or other Loan Document to
Borrower's loan account, which amounts thereafter shall accrue interest at the
rate then applicable hereunder. Any interest not paid when due shall be
compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder.
(e) Computation. The Reference Rate as of the date of
this Agreement is eight and one-half percent (8 1/2%) per annum. In the event
the Reference Rate is changed from time to time hereafter, the applicable rate
of interest hereunder automatically and immediately shall be increased or
decreased by an amount equal to such change in the Reference Rate. All
Amended and Restated Loan and Security Agreement--Page 18
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interest and fees chargeable under the Loan Documents shall be computed on the
basis of a three hundred sixty (360) day year for the actual number of days
elapsed.
(f) However, if at any time the applicable interest rate
shall exceed the Maximum Rate and thereafter the applicable interest rate shall
become less than the Maximum Rate, the rate of interest payable hereunder
shall, at the option of Foothill, be the Maximum Rate until the total interest
paid by Borrower equals the amount which would have been paid but for the
applicable interest rate having been in excess of the Maximum Rate. If at
maturity of final payment of the Obligations the total amount of interest paid
or accrued on the Obligations under the provisions of Sections 2.4(a) and (b)
is less than the total amount of interest which would have accrued if the
applicable interest rate had at all times been in effect, then Borrower to the
fullest extent permitted by law, shall pay to Foothill an amount equal to the
difference between (a) the amount of interest which would have accrued on the
Obligations if the applicable interest rate had at all times been in effect,
and (b) the amount of interest accrued in accordance with the provisions of
Sections 2.4 (a) and (b).
(g) Interest Savings. It is the intention of the parties
hereto to conform strictly to all usury laws applicable to this transactions
contemplated hereby would be usurious under applicable law (including the laws
of the United States of America or any jurisdiction whose laws may be
mandatorily applicable notwithstanding the other provisions of the Agreement),
then, notwithstanding anything to the contrary in the Agreement or in any other
instrument or agreement entered into in connection herewith, it is agreed as
follows: (i) the aggregate of all consideration which constitutes interest
under applicable law that is contracted for, taken, reserved, charged, or
received under this Agreement or under any other instruments or agreements or
otherwise in connection herewith shall under no circumstances exceed the
maximum amount allowed by such applicable law, and any excess shall be credited
on the principal amount of the Obligations (or, if the principal amount of the
Obligations shall have been paid in full, refunded to Borrower); and (ii) in
the event that the maturity of the Obligations is accelerated for any reason
under this Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under applicable
law may never include more than the maximum amount allowed by such applicable
law, and excess interest, if any, provided for in this Agreement or otherwise
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on the principal amount
of the Obligations (or, if the principal amount of the Obligations shall have
been repaid in full, refunded to Borrower). In determining whether or not the
interest paid or payable with respect to any indebtedness of Borrower to
Foothill, under any specific contingency, exceeds the Maximum Rate, Borrower
and Foothill shall, to the maximum extent permitted by applicable law, (i)
characterize any non-principal payment as an expense, fee, or premium rather
than as interest, (ii) exclude voluntary prepayments and the effects thereof,
(iii) amortize the applicable interest on the Obligations so that the actual
rate of interest on account of such indebtedness does not exceed the maximum
amount permitted by applicable law, and/or (iv) allocate interest between
portions of such indebtedness, so that no such portion shall bear interest at a
rate greater than that permitted by applicable law.
Amended and Restated Loan and Security Agreement--Page 19
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2.5 CREDITING PAYMENTS; APPLICATION OF COLLECTIONS. The receipt
of any wire transfer of funds, check, or other item of payment by Foothill
(whether from transfers to Foothill by the Lockbox Bank pursuant to the Lockbox
Agreements or otherwise) immediately shall be applied to provisionally reduce
the Obligations, but shall not be considered a payment on account unless such
wire transfer is of immediately available federal funds and is made to the
appropriate deposit account of Foothill or unless and until such check or other
item of payment is honored when presented for payment. From and after the
Closing Date, Foothill shall be entitled to charge Borrower for one and one-
half (1.5) Business Days of 'clearance' at the rate set forth in Section
2.4(a)(i) or Section 2.4(b)(i), as applicable, on all collections, checks, wire
transfers, or other items of payment that are received by Foothill (regardless
of whether forwarded by the Lockbox Bank to Foothill, whether provisionally
applied to reduce the Obligations, or otherwise). This across-the-board one
and one-half (1.5) Business Day clearance charge on all receipts is
acknowledged by the parties to constitute an integral aspect of the pricing of
Foothill's facility to Borrower, and shall apply irrespective of the
characterization of whether receipts are owned by Borrower or Foothill, and
irrespective of the level of Borrower's Obligations to Foothill. Should any
check or item of payment not be honored when presented for payment, then
Borrower shall be deemed not to have made such payment, and interest shall be
recalculated accordingly. Anything to the contrary contained herein
notwithstanding, any wire transfer, check, or other item of payment shall be
deemed received by Foothill only if it is received into Foothill's Operating
Account (as such account is identified in the Lockbox Agreements) on or before
11:00 a.m. Los Angeles time. If any wire transfer, check, or other item of
payment is received into Foothill's Operating Account (as such account is
identified in the Lockbox Agreements) after 11:00 a.m. Los Angeles time, it
shall be deemed to have been received by Foothill as of the opening of business
on the immediately following Business Day.
2.6 STATEMENTS OF OBLIGATIONS. Foothill shall render monthly
statements to Borrower of the Obligations, including principal, interest, fees,
and including an itemization of all charges and expenses constituting Foothill
Expenses owing, and such statements shall be conclusively presumed to be
correct and accurate and constitute an account stated between Borrower and
Foothill unless, within sixty (60) days after receipt thereof by Borrower,
Borrower shall deliver to Foothill by registered or certified mail at its
address specified in Section 12, written objection thereto describing the error
or errors contained in any such statements.
2.7 FEES. Borrower shall pay to Foothill the following fees:
(a) Unused Line Fee. On the first day of each month
during the term of this Agreement, a fee in an amount equal to one-half of one
percent (1/2%) per annum times the Average Unused Portion of the Maximum
Amount (including on any increases in the Maximum Amount);
(b) Financial Examination, Documentation, and Appraisal
Fees. Foothill's customary fee of Six Hundred Fifty Dollars ($650) per day per
examiner up to an aggregate of $30,000 during any fiscal year, other than any
such year during which an Event of Default shall have occurred, plus
out-of-pocket expenses for each financial analysis and examination of Borrower
performed by Foothill or its agents; Foothill's customary appraisal fee of One
Amended and Restated Loan and Security Agreement--Page 20
21
Thousand Five Hundred Dollars ($1,500) per day per appraiser, plus
out-of-pocket expenses for each appraisal of the Collateral performed by
Foothill, plus the cost of third party Inventory appraisals, which will be
conducted no less frequently than annually; and, on each anniversary of the
Closing Date, Foothill's customary fee of One Thousand Dollars ($1,000) per
year for its loan documentation review; and
(c) Servicing Fee. On the first day of each month during
the term of this Agreement, and thereafter so long as any Obligations are
outstanding, a servicing fee in an amount equal to Three Thousand Five Hundred
Dollars ($3,500) per month; provided, however, that such fee will be reduced to
Two Thousand Five Hundred Dollars ($2,500) per month for each month commencing
on or after September 1, 1998. In the event Borrower fails to meet or exceed
its Operating Income Projections for fiscal year 1999 or in the event there
shall occur an Event of Default, the servicing fee shall be increased to Three
Thousand Five Hundred Dollars ($3,500) per month for all subsequent periods.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE, L/C, OR L/C
GUARANTEE. The obligation of Foothill to make the initial advance or to
provide the initial L/C or L/C Guarantee is subject to the fulfillment, to the
satisfaction of Foothill and its counsel, of each of the following conditions
on or before the Closing Date:
(a) the Closing Date shall occur on or before May 15,
1998;
(b) Foothill shall have received searches reflecting the
filing of any financing statements to be filed in connection herewith;
(c) Foothill shall have received each of the following
documents, duly executed, and each such document shall be in full force and
effect:
(i) a limited guarantee from each of the
Individual Guarantors; and
(ii) a consent and reaffirmation of each of the
continuing guaranties and security agreements from the Corporate Guarantors,
together with such UCC filings and searches as Foothill may require;
(d) Foothill shall have received a certificate from the
Secretary or General Partner of each Borrower, as appropriate, attesting to the
resolutions of Borrower's Board of Directors or partners, authorizing the
execution and delivery of this Agreement and the other Loan Documents to which
such Borrower is a party and authorizing specific officers or partners of
Borrower to execute same;
(e) Foothill shall have received copies of each
Borrower's Bylaws and Articles of Incorporation or Partnership Agreement, as
appropriate, in each case, as amended,
Amended and Restated Loan and Security Agreement--Page 21
22
modified, or supplemented to the Closing Date, certified by the Secretary or a
partner of Borrower;
(f) Foothill shall have received a certificate of
corporate status with respect to Borrower, dated as of a recent date, by the
Secretary of State of the state of incorporation of Borrower, which certificate
shall indicate that Borrower is in good standing in such state;
(g) Foothill shall have received certificates of
corporate or partnership status, as appropriate, with respect to Borrower, each
dated as of a recent date of the Closing Date, such certificates to be issued
by the Secretary of State of the states in which its failure to be duly
qualified or licensed would have a material adverse effect on the financial
condition or properties and assets of Borrower, which certificates shall
indicate that Borrower is in good standing;
(h) Foothill shall have received landlord waivers from
the lessors of the locations where the Inventory or Equipment is located;
(i) Foothill shall have received an opinion of Borrower's
counsel in form and substance satisfactory to Foothill in its sole discretion;
(j) Foothill shall have received satisfactory evidence
that all returns required to be filed by Borrower have been timely filed and
all taxes upon Borrower or its properties, assets, income and franchises
(including Real Property taxes and payroll taxes) have been paid prior to
delinquency, except such taxes that are the subject of a Permitted Protest; and
(k) all other documents and legal matters in connection
with the transactions contemplated by this Agreement shall have been delivered
or executed or recorded and shall be in form and substance satisfactory to
Foothill and its counsel.
3.2 CONDITIONS PRECEDENT TO ALL REVOLVING ADVANCES, L/CS, OR L/C
GUARANTIES. The following shall be conditions precedent to all Revolving
Advances, L/Cs, or L/C Guaranties hereunder:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all
respects on and as of the date of such advance, L/C, or L/C Guaranty, as though
made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Event of Default or event which with the giving of
notice or passage of time would constitute an Event of Default shall have
occurred and be continuing on the date of such advance, L/C, or L/C Guaranty,
nor shall either result from the making thereof; and
(c) no injunction, writ, restraining order, or other
order of any nature prohibiting, directly or indirectly, the making of such
advance or the issuance of such L/C or L/C Guaranty shall have been issued and
remain in force by any governmental authority against Borrower, Foothill, or
any of their Affiliates.
Amended and Restated Loan and Security Agreement--Page 22
23
3.3 TERM. This Agreement shall become effective upon the
execution and delivery hereof by Borrower and Foothill and shall continue in
full force and effect until August 20, 2002 (the "Renewal Date"), unless sooner
terminated pursuant to the terms hereof. The foregoing notwithstanding,
Foothill shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.4 EFFECT OF TERMINATION. On the date of termination, all
Obligations (including contingent reimbursement obligations under any
outstanding L/Cs or L/C Guaranties) immediately shall become due and payable
without notice or demand. No termination of this Agreement, however, shall
relieve or discharge Borrower of Borrower's duties, Obligations, or covenants
hereunder, and Foothill's continuing security interests in the Collateral and
the Real Property shall remain in effect until all Obligations have been fully
and finally discharged and Foothill's obligation to provide Revolving Advances
hereunder is terminated.
3.5 EARLY TERMINATION BY BORROWER. The provisions of Section 3.3
that allow termination of this Agreement by Borrower only on the Renewal Date
notwithstanding, Borrower has the option, at any time upon ninety (90) days
prior written notice to Foothill, to terminate this Agreement by paying to
Foothill, in cash, the Obligations (including an amount equal to the full
amount of the L/Cs or L/C Guaranties), together with a premium (the "Early
Termination Premium") equal to:
Period of Time During Which
Termination Occurs Percent of Maximum Amount
---------------------------------- -------------------------
Prior to August 21, 1998 4.0%
August 21, 1998 to August 20, 1999 2.5%
August 21, 1999 to August 20, 2000 2.0%
August 21, 2000 to August 20, 2001 1.5%
After August 20, 2001 1.0%
3.6 TERMINATION UPON EVENT OF DEFAULT. If Foothill terminates
this Agreement upon the occurrence of an Event of Default, in view of the
impracticability and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Foothill's
lost profits as a result thereof, Borrower shall pay to Foothill upon the
effective date of such termination, a premium in an amount equal to the Early
Termination Premium. The Early Termination Premium shall be presumed to be the
amount of damages sustained by Foothill as the result of the early termination;
and Borrower agrees that it is reasonable under the circumstances currently
existing. The Early Termination Premium provided for in this Section 3.6 shall
be deemed included in the Obligations.
Amended and Restated Loan and Security Agreement--Page 23
24
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to
Foothill a continuing security interest in all currently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and
all Obligations and in order to secure prompt performance by Borrower of each
of its covenants and duties under the Loan Documents. Foothill's security
interests in the Collateral shall attach to all Collateral without further act
on the part of Foothill or Borrower. Anything contained in this Agreement or
any other Loan Document to the contrary notwithstanding, except for the sale of
Inventory to buyers in the ordinary course of business, Borrower has no
authority, express or implied, to dispose of any item or portion of the
Collateral or the Real Property.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Borrower shall, immediately upon the request of Foothill, endorse and assign
such Negotiable Collateral to Foothill and deliver physical possession of such
Negotiable Collateral to Foothill.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, NEGOTIABLE
COLLATERAL. On or before the Closing Date, Foothill, Borrower, and the Lockbox
Bank shall enter into the Lockbox Agreements, in form and substance
satisfactory to Foothill in its sole discretion, pursuant to which all of
Borrower's cash receipts, checks, and other items of payment (including,
insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds)
will be forwarded to Foothill on a daily basis. At any time, Foothill or
Foothill's designee may: (a) notify customers or Account Debtors of Borrower
that the Accounts, General Intangibles, or Negotiable Collateral have been
assigned to Foothill or that Foothill has a security interest therein; and (b)
collect the Accounts, General Intangibles, and Negotiable Collateral directly
and charge the collection costs and expenses to Borrower's loan account.
Borrower agrees that it will hold in trust for Foothill, as Foothill's trustee,
any cash receipts, checks, and other items of payment (including, insurance
proceeds, proceeds of cash sales, rental proceeds, and tax refunds) that it
receives and immediately will deliver said cash receipts, checks, and other
items of payment to Foothill in their original form as received by Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time
upon the request of Foothill, Borrower shall execute and deliver to Foothill
all financing statements, continuation financing statements, fixture filings,
security agreements, chattel mortgages, pledges, assignments, endorsements of
certificates of title, applications for title, affidavits, reports, notices,
schedules of accounts, letters of authority, and all other documents that
Foothill may reasonably request, in form satisfactory to Foothill, to perfect
and continue perfected Foothill's security interests in the Collateral and the
Real Property, and in order to fully consummate all of the transactions
contemplated hereby and under the other the Loan Documents.
4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes,
constitutes, and appoints Foothill (and any of Foothill's officers, employees,
or agents designated by Foothill) as Borrower's true and lawful attorney, with
power to: (a) if Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of Borrower on
Amended and Restated Loan and Security Agreement--Page 24
25
any of the documents described in Section 4.4; (b) at any time that an Event of
Default has occurred and is continuing or Foothill deems itself insecure (in
accordance with Section 1208 of the Code), sign Borrower's name on any invoice
or ▇▇▇▇ of lading relating to any Account, drafts against Account Debtors,
schedules and assignments of Accounts, verifications of Accounts, and notices
to Account Debtors; (c) send requests for verification of Accounts; (d) endorse
Borrower's name on any checks, notices, acceptances, money orders, drafts, or
other item of payment or security that may come into Foothill's possession; (e)
at any time that an Event of Default has occurred and is continuing or Foothill
deems itself insecure (in accordance with Section 1208 of the Code), notify the
post office authorities to change the address for delivery of Borrower's mail
to an address designated by Foothill, to receive and open all mail addressed to
Borrower, and to retain all mail relating to the Collateral and forward all
other mail to Borrower as soon as reasonably practicable; (f) at any time that
an Event of Default has occurred and is continuing or Foothill deems itself
insecure (in accordance with Section 1208 of the Code), make, settle, and
adjust all claims under Borrower's policies of insurance and make all
determinations and decisions with respect to such policies of insurance; and
(g) at any time that an Event of Default has occurred and is continuing or
Foothill deems itself insecure (in accordance with Section 1208 of the Code),
settle and adjust disputes and claims respecting the Accounts directly with
Account Debtors, for amounts and upon terms which Foothill determines to be
reasonable, and Foothill may cause to be executed and delivered any documents
and releases which Foothill determines to be necessary. The appointment of
Foothill as Borrower's attorney, and each and every one of Foothill's rights
and powers, being coupled with an interest, is irrevocable until all of the
Obligations have been fully and finally repaid and performed and Foothill's
obligation to extend credit hereunder is terminated.
4.6 RIGHT TO INSPECT. Foothill (through any of its officers,
employees, or agents) shall have the right, from time to time hereafter to
inspect Borrower's Books and to check, test, and appraise the Collateral or the
Real Property in order to verify Borrower's financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral
or the Real Property.
5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Foothill as follows:
5.1 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible
title to the Collateral and the Real Property, free and clear of liens, claims,
security interests, or encumbrances, except for Permitted Liens.
5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are, at the time of
the creation thereof and as of each date on which Borrower includes them in a
Borrowing Base calculation or certification, bona fide existing obligations
created by the sale and delivery of Inventory or the rendition of services to
Account Debtors in the ordinary course of Borrower's business, unconditionally
owed to Borrower without defenses, disputes, offsets, counterclaims, or rights
of return or cancellation. The property giving rise to such Eligible Accounts
has been delivered to the Account Debtor, or to the Account Debtor's agent for
immediate shipment to and
Amended and Restated Loan and Security Agreement--Page 25
26
unconditional acceptance by the Account Debtor. At the time of the creation of
an Eligible Account and as of each date on which Borrower includes an Eligible
Account in a Borrowing Base calculation or certification, Borrower has not
received notice of actual or imminent bankruptcy, insolvency, or material
impairment of the financial condition of any applicable Account Debtor
regarding such Eligible Account.
5.3 ELIGIBLE INVENTORY. All Eligible Inventory is now and at all
times hereafter shall be of good and merchantable quality, free from defects.
5.4 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and
Equipment are not stored with a bailee, warehouseman, or similar party (without
Foothill's prior-written consent) and are located only at the locations
identified on Schedule 6.14 or otherwise permitted by Section 6.14.
5.5 INVENTORY RECORDS. Borrower now keeps, and hereafter at all
times shall keep, correct and accurate records itemizing and describing the
kind, type, quality, and quantity of the Inventory, and Borrower's cost
therefor.
5.6 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive
office of Borrower is located at the address indicated in the preamble to this
Agreement. Inc.'s FEIN is ▇▇-▇▇▇▇▇▇▇, L.P.'s FEIN is ▇▇-▇▇▇▇▇▇▇, and NBF's FEIN
is ▇▇-▇▇▇▇▇▇▇.
5.7 DUE ORGANIZATION AND QUALIFICATION; NO SUBSIDIARIES. Borrower
is duly organized and existing and in good standing under the laws of its
jurisdiction of formation, and is qualified and licensed to do business in, and
in good standing in, each state where the failure to be so licensed or
qualified could reasonably be expected to have a material adverse effect on the
business, operations, condition (financial or otherwise), finances, or
prospects of Borrower or on the value of the Collateral or the Real Property to
Foothill. Borrower has no subsidiaries other than as described in Schedule
5.7.
5.8 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance of the Loan Documents are within Borrower's corporate powers, have
been duly authorized, and are not in conflict with nor constitute a breach of
any provision contained in Borrower's articles, certificate of incorporation,
by-laws, organizational documents, partnership agreements or certificate of
limited partnership, nor will they constitute an event of default under any
material agreement to which Borrower is a party or by which its properties or
assets may be bound.
5.9 LITIGATION. There are no actions or proceedings pending by or
against Borrower before any court or administrative agency, and Borrower does
not have knowledge or belief of any pending, threatened, or imminent
litigation, governmental investigations, or claims, complaints, actions, or
prosecutions involving Borrower or any guarantor of the Obligations, except
for: (a) ongoing collection matters in which Borrower is the plaintiff; (b)
matters disclosed on Schedule 5.9, and (c) and matters arising after the date
hereof that, if decided adversely to Borrower, would not materially impair the
prospect of repayment of the Obligations
Amended and Restated Loan and Security Agreement--Page 26
27
or materially impair the value or priority of Foothill's security interests in
the Collateral or the Real Property.
5.10 NO MATERIAL ADVERSE CHANGE IN FINANCIAL CONDITION. All
financial statements relating to Borrower or any Corporate Guarantor or
Individual Guarantor of the Obligations that have been delivered by Borrower to
Foothill have been prepared in accordance with GAAP, (except as to the
Individual Guarantors) and fairly present Borrower's (or such Corporate
Guarantor or Individual Guarantor, as applicable) financial condition as of the
date thereof and Borrower's results of operations for the period then ended.
There has not been a material adverse change in the financial condition of
Borrower (or such Corporate Guarantor or Individual Guarantor, as applicable)
since the date of the latest financial statements submitted to Foothill on or
before the Closing Date.
5.11 SOLVENCY. Borrower and each Corporate Guarantor are Solvent.
No transfer of property is being made by Borrower or any Corporate Guarantor
and no obligation is being incurred by Borrower or any Corporate Guarantor in
connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Borrower.
5.12 EMPLOYEE BENEFITS. Each Plan is in compliance in all material
respects with the applicable provisions of ERISA and the IRC. Each Qualified
Plan and Multiemployer Plan has been determined by the Internal Revenue Service
to qualify under Section 401 of the IRC, and the trusts created thereunder have
been determined to be exempt from tax under Section 501 of the IRC, and, to the
best knowledge of Borrower, nothing has occurred that would cause the loss of
such qualification or tax-exempt status. There are no outstanding liabilities
under Title IV of ERISA with respect to any Plan maintained or sponsored by
Borrower or any ERISA Affiliate, nor with respect to any Plan to which Borrower
or any ERISA Affiliate contributes or is obligated to contribute which could
reasonably be expected to have a material adverse effect on the financial
condition of Borrower. No Plan subject to Title IV of ERISA has any Unfunded
Benefit Liability which could reasonably be expected to have a material adverse
effect on the financial condition of Borrower. Neither Borrower nor any ERISA
Affiliate has transferred any Unfunded Benefit Liability to a person other than
Borrower or an ERISA Affiliate or has otherwise engaged in a transaction that
could be subject to Sections 4069 or 4212(c) of ERISA which could reasonably be
expected to have a material adverse effect on the financial condition of
Borrower. Neither Borrower nor any ERISA Affiliate has incurred nor reasonably
expects to incur (x) any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan, or
(y) any liability under Title IV of ERISA (other than premiums due but not
delinquent under Section 4007 of ERISA) with respect to a Plan, which could, in
either event, reasonably be expected to have a material adverse effect on the
financial condition of Borrower. No application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the IRC has
been made with respect to any Plan. No ERISA Event has occurred or is
reasonably expected to occur with respect to any Plan which could reasonably be
expected to have a material adverse effect on the financial condition of
Borrower.
Amended and Restated Loan and Security Agreement--Page 27
28
Borrower and each ERISA Affiliate have complied in all material respects with
the notice and continuation coverage requirements of Section 4980B of the IRC.
5.13 ENVIRONMENTAL CONDITION. Except as disclosed in writing to
Foothill, none of Borrower's properties or assets has ever been used by
Borrower or, to the best of Borrower's knowledge, by previous owners or
operators in the disposal of, or to produce, store, handle, treat, release, or
transport, any Hazardous Materials. To the best of Borrower's knowledge after
due inquiry, none of Borrower's properties or assets has ever been designated
or identified in any manner pursuant to any environmental protection statute as
a Hazardous Materials disposal site, or a candidate for closure pursuant to any
environmental protection statute. No lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned or operated by Borrower. Borrower has not received a summons,
citation, notice, or directive from the Environmental Protection Agency or any
other federal or state governmental agency concerning any action or omission by
Borrower resulting in the releasing or disposing of Hazardous Materials into
the environment.
5.14 PATENTS, COPYRIGHTS AND TRADEMARKS. Borrower has no
registered trademarks or copyrights and has not applied for or been issued any
patents by any governmental authority or instrumentality thereof other than
those listed on Schedule 5.14.
5.15 MATERIAL AGREEMENTS. Each agreement that is material to the
Borrower, taken as a whole, is in full force and effect and no default or event
that, with the giving of notice, or the passage of time, would constitute a
default, has occurred and is continuing under any such agreement.
5.16 RELIANCE BY FOOTHILL; CUMULATIVE. Each warranty and
representation contained in this Agreement automatically shall be deemed
repeated (except to the extent such warranty or representation relates solely
to an earlier date) with each advance or issuance of an L/C or L/C Guaranty and
shall be conclusively presumed to have been relied on by Foothill regardless of
any investigation made or information possessed by Foothill. The warranties
and representations set forth herein shall be cumulative and in addition to any
and all other warranties and representations that Borrower now or hereafter
shall give, or cause to be given, to Foothill.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, and
unless Foothill shall otherwise consent in writing, Borrower shall do all of
the following:
6.1 ACCOUNTING SYSTEM. Borrower shall maintain a standard and
modern system of accounting in accordance with GAAP with ledger and account
cards or computer tapes, discs, printouts, and records pertaining to the
Collateral which contain information as from time to time may be requested by
Foothill. Borrower also shall keep proper books of account showing all sales,
claims, and allowances on its Inventory.
Amended and Restated Loan and Security Agreement--Page 28
29
6.2 COLLATERAL REPORTS. Borrower shall deliver to Foothill, no
later than the tenth (10th) day of each month during the term of this
Agreement, a detailed aging, by total, of the Accounts, a reconciliation
statement, and a summary aging, by vendor, of all accounts payable and any book
overdraft. Original sales invoices evidencing daily sales shall be mailed by
Borrower to each Account Debtor with, at Foothill's request, a copy to
Foothill, and, at Foothill's direction, the invoices shall indicate on their
face that the Account has been assigned to Foothill and that all payments are
to be made directly to Foothill. Borrower shall deliver to Foothill, as
Foothill may from time to time require, collection reports, sales journals,
invoices, original delivery receipts, customer's purchase orders, shipping
instructions, bills of lading, and other documentation respecting shipment
arrangements. Absent such a request by Foothill, copies of all such
documentation shall be held by Borrower as custodian for Foothill. In
addition, from time to time, Borrower shall deliver to Foothill such other and
additional information or documentation as Foothill may request.
6.3 SCHEDULES OF ACCOUNTS. With such regularity as Foothill shall
require, Borrower shall provide Foothill with schedules describing all
Accounts. Foothill's failure to request such schedules or Borrower's failure
to execute and deliver such schedules shall not affect or limit Foothill's
security interests or other rights in and to the Accounts.
6.4 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower agrees
to deliver to Foothill: (a) as soon as available, but in any event within
thirty (30) days after the end of each month during each of Borrower's fiscal
years, a company prepared balance sheet, income statement, and cash flow
statement covering Borrower's operations during such period; (b) as soon as
available, but in any event within ninety (90) days after the end of each of
Borrower's fiscal years, financial statements of Borrower for each such fiscal
year, audited by independent certified public accountants reasonably acceptable
to Foothill and certified, without any qualifications, by such accountants to
have been prepared in accordance with GAAP, together with a certificate of such
accountants addressed to Foothill stating that such accountants do not have
knowledge of the existence of any event or condition constituting an Event of
Default, or that would, with the passage of time or the giving of notice,
constitute an Event of Default; (c) as soon as available, but in any event
within ninety (90) days after the end of each fiscal year, a business plan,
including a description of the bonus plan for executive officers and senior
managers of the Borrower; and (d) as soon as available, but in any event within
ninety (90) days after the end of each fiscal year commencing after March 31,
1998, a budget for the following fiscal year, including projections of net
operating income for such fiscal year, in each case in such form and detail as
Foothill may reasonably request. The audited financial statements to be
delivered pursuant to this Section 6.4 shall include a balance sheet, profit
and loss statement, and cash flow statement, and, if prepared, such
accountants' letter to management. If Borrower is a parent company of one or
more subsidiaries, or Affiliates, or is a subsidiary or Affiliate of another
company, then, in addition to the financial statements referred to above,
Borrower agrees to deliver financial statements prepared on a consolidating
basis so as to present Borrower and each such related entity separately, and on
a consolidated basis.
Together with the above, Borrower and each Corporate Guarantor
also shall deliver to Foothill Borrower's Form 10-Q Quarterly Reports, Form
10-K Annual Reports, and
Amended and Restated Loan and Security Agreement--Page 29
30
Form 8-K Current Reports, and any other filings made by Borrower with the
Securities and Exchange Commission, if any, as soon as the same are filed, or
any other information that is provided by Borrower to its shareholders or
partners, and any other report reasonably requested by Foothill relating to the
Collateral, the Real Property, or the financial condition of Borrower.
Each month, together with the financial statements provided
pursuant to Section 6.4(a), Borrower shall deliver to Foothill a certificate
signed by its chief financial officer or individual responsible for the
financial affairs of Borrower to the effect that: (i) all reports, statements,
or computer prepared information of any kind or nature delivered or caused to
be delivered to Foothill hereunder have been prepared in accordance with GAAP
and fairly present the financial condition of Borrower; (ii) Borrower is in
timely compliance with all of its covenants and agreements hereunder; (iii) the
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents are true and correct in all material respects on and as of
the date of such certificate, as though made on and as of such date (except to
the extent that such representations and warranties relate solely to an earlier
date); and (iv) on the date of delivery of such certificate to Foothill there
does not exist any condition or event that constitutes an Event of Default (or,
in each case, to the extent of any non-compliance, describing such
non-compliance as to which he or she may have knowledge and what action
Borrower has taken, is taking, or proposes to take with respect thereto).
Borrower shall have issued written instructions to its
independent certified public accountants authorizing them to communicate with
Foothill and to release to Foothill whatever financial information concerning
Borrower that Foothill may request. Borrower hereby irrevocably authorizes and
directs all auditors, accountants, or other third parties to deliver to
Foothill, at Borrower's expense, copies of Borrower's financial statements,
papers related thereto, and other accounting records of any nature in their
possession, and to disclose to Foothill any information they may have regarding
Borrower's business affairs and financial conditions.
6.5 TAX RETURNS. Borrower agrees to deliver to Foothill copies of
each of Borrower's future federal income tax returns, and any amendments
thereto, within thirty (30) days of the filing thereof with the Internal
Revenue Service.
6.6 DESIGNATION OF INVENTORY. Borrower shall now and from time to
time hereafter, but not less frequently than monthly, execute and deliver to
Foothill a designation of Inventory specifying Borrower's cost and the
wholesale market value of Borrower's raw materials, work in process, and
finished goods, and further specifying such other information as Foothill may
reasonably request.
6.7 RETURNS. Returns and allowances, if any, as between Borrower
and its Account Debtors shall be on the same basis and in accordance with the
usual customary practices of Borrower, as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of
Default has occurred and is continuing, any Account Debtor returns any
Inventory to Borrower, Borrower promptly shall determine the reason for such
return and, if Borrower accepts such return, issue a credit memorandum (with a
copy to be sent to Foothill) in the appropriate amount to such Account Debtor.
If, at a time when an Event of Default has
Amended and Restated Loan and Security Agreement--Page 30
31
occurred and is continuing, any Account Debtor returns any Inventory to
Borrower, Borrower promptly shall determine the reason for such return and, if
Foothill consents (which consent shall not be unreasonably withheld), issue a
credit memorandum (with a copy to be sent to Foothill) in the appropriate
amount to such Account Debtor. On a daily basis or such other basis as
Foothill and Borrower may hereafter agree, Borrower shall notify Foothill of
all returns and recoveries and of all disputes and claims.
6.8 TITLE TO EQUIPMENT. Upon Foothill's request, Borrower
immediately shall deliver to Foothill, properly endorsed, any and all evidences
of ownership of, certificates of title, or applications for title to any items
of Equipment.
6.9 MAINTENANCE OF EQUIPMENT. Borrower shall keep and maintain
the Equipment in good operating condition and repair (ordinary wear and tear
excepted), and make all necessary replacements thereto so that the value and
operating efficiency thereof shall at all times be maintained and preserved.
Borrower shall not permit any item of Equipment to become a fixture to real
estate or an accession to other property, and the Equipment is now and shall at
all times remain personal property.
6.10 TAXES. All assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower
or any of its property have been paid, and shall hereafter be paid in full,
before delinquency or before the expiration of any extension period. Borrower
shall make due and timely payment or deposit of all federal, state, and local
taxes, assessments, or contributions required of it by law, and will execute
and deliver to Foothill, on demand, appropriate certificates attesting to the
payment thereof or deposit with respect thereto. Borrower will make timely
payment or deposit of all tax payments and withholding taxes required of it by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Foothill with proof satisfactory to Foothill indicating that Borrower
has made such payments or deposits.
6.11 INSURANCE.
(a) Borrower, at its expense, shall keep the Collateral
and the Real Property insured against loss or damage by fire, theft, explosion,
sprinklers, and all other hazards and risks, and in such amounts, as are
ordinarily insured against by other owners in similar businesses. Borrower
also shall maintain business interruption, public liability, product liability,
and property damage insurance relating to Borrower's ownership and use of the
Collateral and the Real Property, as well as insurance against larceny,
embezzlement, and criminal misappropriation.
(b) All such policies of insurance shall be in such form,
with such companies, and in such amounts as may be reasonably satisfactory to
Foothill. All such policies of insurance (except those of public liability and
property damage) shall contain a 438BFU lender's loss payable endorsement, or
an equivalent endorsement in a form satisfactory to Foothill, showing Foothill
as sole loss payee thereof, and shall contain a waiver of warranties, and shall
specify that
Amended and Restated Loan and Security Agreement--Page 31
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the insurer must give at least ten (10) days prior written notice to Foothill
before canceling its policy for any reason. Borrower shall deliver to Foothill
certified copies of such policies of insurance and evidence of the payment of
all premiums therefor. All proceeds payable under any such policy shall be
payable to Foothill to be applied on account of the Obligations.
6.12 FINANCIAL COVENANTS. Borrower shall maintain:
(a) Current Ratio. A ratio of Consolidated Current
Assets divided by Consolidated Current Liabilities of at least one and one-half
to one (1.50:1.0), measured on a fiscal quarter-end basis;
(b) Total Liabilities to Tangible Net Worth Ratio. A
ratio of Borrower's total liabilities divided by Tangible Net Worth of not more
than two to one (2.00:1.00), measured on a fiscal quarter-end basis; and
(c) Tangible Net Worth. Tangible Net Worth of at least
Seven Million Dollars ($7,000,000), measured on a fiscal quarter-end basis.
6.13 NO SETOFFS OR COUNTERCLAIMS. All payments hereunder and under
the other Loan Documents made by or on behalf of Borrower shall be made without
setoff or counterclaim and free and clear of, and without deduction or
withholding for or on account of, any federal, state, or local taxes.
6.14 LOCATION OF INVENTORY AND EQUIPMENT. Borrower shall keep the
Inventory and Equipment only at the locations identified on Schedule 6.14;
provided, however, that Borrower may amend Schedule 6.14 so long as such
amendment occurs by written notice to Foothill not less than thirty (30) days
prior to the date on which the Inventory or Equipment is moved to such new
location, so long as such new location is within the continental United States,
and so long as, at the time of such written notification, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected Foothill's security interests in such assets and also provides to
Foothill a landlord's waiver in form and substance satisfactory to Foothill.
6.15 COMPLIANCE WITH LAWS. Borrower shall comply with the
requirements of all applicable laws, rules, regulations, and orders of any
governmental authority, including the Fair Labor Standards Act and the
Americans With Disabilities Act, other than laws, rules, regulations, and
orders the non-compliance with which, individually or in the aggregate, would
not have and could not reasonably be expected to have a material adverse effect
on the business, operations, condition (financial or otherwise), finances, or
prospects of Borrower or on the value of the Collateral and the Real Property
to Foothill.
6.16 EMPLOYEE BENEFITS.
(a) Borrower shall deliver to Foothill a written
statement by the chief financial officer of Borrower specifying the nature of
any of the following events and the actions which Borrower proposes to take
with respect thereto promptly, and in any event within ten (10) days
Amended and Restated Loan and Security Agreement--Page 32
33
of becoming aware of any of them, and when known, any action taken or
threatened by the Internal Revenue Service, PBGC, Department of Labor, or other
party with respect thereto: (i) an ERISA Event with respect to any Plan; (ii)
the incurrence of an obligation to pay additional premium to the PBGC under
Section 4006(a)(3)(E) of ERISA with respect to any Plan; and (iii) any lien on
the assets of Borrower arising in connection with any Plan.
(b) Borrower shall also promptly furnish to Foothill
copies prepared or received by Borrower or an ERISA Affiliate of: (i) at the
request of Foothill, each annual report (Internal Revenue Service Form 5500
series) and all accompanying schedules, actuarial reports, financial
information concerning the financial status of each Plan, and schedules showing
the amounts contributed to each Plan by or on behalf of Borrower or its ERISA
Affiliates for the most recent three (3) plan years; (ii) all notices of intent
to terminate or to have a trustee appointed to administer any Plan; (iii) all
written demands by the PBGC under Subtitle D of Title IV of ERISA; (iv) all
notices required to be sent to employees or to the PBGC under Section 302 of
ERISA or Section 412 of the IRC; (v) all written notices received with respect
to a Multiemployer Plan concerning (x) the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA, (y) a termination described in
Section 4041A of ERISA, or (z) a reorganization or insolvency described in
Subtitle E of Title IV of ERISA; (vi) the adoption of any new Plan that is
subject to Title IV of ERISA or Section 412 of the IRC by Borrower or any ERISA
Affiliate; (vii) the adoption of any amendment to any Plan that is subject to
Title IV of ERISA or Section 412 of the IRC, if such amendment results in a
material increase in benefits or Unfunded Benefit Liability; or (viii) the
commencement of contributions by Borrower or any ERISA Affiliate to any Plan
that is subject to Title IV of ERISA or Section 412 of the IRC.
6.17 LEASES. Borrower shall pay when due all rents and other
amounts payable under any leases to which Borrower is a party or by which
Borrower's properties and assets are bound, unless such payments are the
subject of a Permitted Protest. To the extent that Borrower fails timely to
make payment of such rents and other amounts payable when due under its leases,
Foothill shall be entitled, in its discretion, and without the necessity of
declaring an Event of Default, to reserve an amount equal to such unpaid
amounts from the loan availability created under Section 2.1 hereof.
6.18 MATERIAL AGREEMENTS. Borrower shall duly observe and perform
all material terms and conditions of each agreement to which it is party and
that is material to Borrower, taken as a whole. Borrower shall promptly notify
Foothill of all material notices or communications in respect of any such
material agreement and provide Foothill with copies of the same.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations,
Borrower will not do any of the following without Foothill's prior written
consent:
Amended and Restated Loan and Security Agreement--Page 33
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7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement;
(b) Indebtedness set forth in the latest financial
statements of Borrower submitted to Foothill on or prior to the Closing Date;
(c) Indebtedness secured by Permitted Liens; and
(d) refinancings, renewals, or extensions of Indebtedness
permitted under clause (b) of this Section 7.1 (and continuance or renewal of
any Permitted Liens associated therewith) so long as: (i) the terms and
conditions of such refinancings, renewals, or extensions do not materially
impair the prospects of repayment of the Obligations by Borrower, (ii) the net
cash proceeds of such refinancings, renewals, or extensions do not result in an
increase in the aggregate principal amount of the Indebtedness so refinanced,
renewed, or extended, (iii) such refinancings, renewals, refundings, or
extensions do not result in a shortening of the average weighted maturity of
the Indebtedness so refinanced, renewed, or extended, and (iv) to the extent
that Indebtedness that is refinanced was subordinated in right of payment to
the Obligations, then the subordination terms and conditions of the refinancing
Indebtedness must be at least as favorable to Foothill as those applicable to
the refinanced Indebtedness.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any lien on or with respect to any of its property or assets, of
any kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced
under Section 7.1(d) and so long as the replacement liens secure only those
assets or property that secured the original Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES. Enter into any
acquisition, merger, consolidation, reorganization, or recapitalization, or
reclassify its capital stock, or liquidate, wind up, or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, assign, lease,
transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its business, property, or assets,
whether now owned or hereafter acquired, or acquire by purchase or otherwise
all or substantially all of the properties, assets, stock, partnership
interests or other evidence of beneficial ownership of any Person.
7.4 EXTRAORDINARY TRANSACTIONS AND DISPOSAL OF ASSETS. Enter into
any transaction not in the ordinary and usual course of Borrower's business,
including the sale, lease, or other disposition of, moving, relocation, or
transfer, whether by sale or otherwise, of any of Borrower's properties or
assets (other than sales of Inventory to buyers in the ordinary course of
Borrower's business as currently conducted).
7.5 CHANGE NAME. Change Borrower's name, FEIN, business
structure, or identity, or add any new fictitious name.
Amended and Restated Loan and Security Agreement--Page 34
35
7.6 GUARANTEE. Guarantee or otherwise become in any way liable
with respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrower or which
are transmitted or turned over to Foothill.
7.7 RESTRUCTURE. Make any change in Borrower's financial
structure, the principal nature of Borrower's business operations, or the date
of its fiscal year, which ends on March 31 of each year.
7.8 PREPAYMENTS. Except in connection with a refinancing
permitted by Section 7.1(d), prepay any Indebtedness owing to any third Person.
7.9 CHANGE OF CONTROL. Cause, permit or suffer, directly or
indirectly, any Change of Control.
7.10 CAPITAL EXPENDITURES. Make any capital expenditure, or any
commitment therefor where the aggregate amount of such capital expenditures,
made or committed for in any fiscal year is in excess of Seven Hundred Fifty
Thousand Dollars ($750,000).
7.11 CONSIGNMENTS. Consign any Inventory or sell any Inventory on
▇▇▇▇ and hold, sale or return, sale on approval, or other conditional terms of
sale, except as provided in Schedule 6.14.
7.12 DISTRIBUTIONS. Except for distributions or dividends from NBF
to Inc., make any distribution or declare or pay any dividends or partnership
distributions (in cash or otherwise) on, or purchase, acquire, redeem, or
retire any of Borrower's capital stock, of any class, or any partnership
interest, whether now or hereafter outstanding.
7.13 ACCOUNTING METHODS. Modify or change its method of accounting
or enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into with any third party accounting firm or service
bureau for the preparation or storage of Borrower's accounting records without
said accounting firm or service bureau agreeing to provide Foothill information
regarding the Collateral or Borrower's financial condition. Borrower waives
the right to assert a confidential relationship, if any, it may have with any
accounting firm or service bureau in connection with any information requested
by Foothill pursuant to or in accordance with this Agreement, and agrees that
Foothill may contact directly any such accounting firm or service bureau in
order to obtain such information.
7.14 INVESTMENTS. During the effectiveness of this Agreement,
directly or indirectly make or acquire any beneficial interest in (including
stock, partnership interest, or other securities of), or make any loan,
advance, or capital contribution to, one or more Persons in excess of One
Hundred Thousand Dollars ($100,000) in the aggregate, other than Permitted
Investments.
Amended and Restated Loan and Security Agreement--Page 35
36
7.15 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter
into or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms, that are fully disclosed to Foothill, and that
are no less favorable to Borrower than would be obtained in arm's length
transaction with a non-Affiliate.
7.16 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.17 COMPENSATION. (i) Increase the annual fee or per-meeting fees
paid to directors during any year by more than fifteen percent (15%) over the
prior year; (ii) pay or accrue base salary (including all cash compensation,
other than bonuses covered by Section 7.17(iii)), during any year, to executive
officers (as defined in Borrower's Form 10-K) and senior management employees
in an aggregate amount in excess of one hundred fifteen percent (115%) of the
base salary paid or accrued in the prior year; (iii) pay or accrue any bonus or
other incentive compensation, during any year, to executive officers (as
defined in Borrower's Form 10-K) and senior management employees in an
aggregate amount in excess of one hundred fifteen percent (115%) of the bonus
plan referenced in the business plan provided to, and approved, by Foothill
pursuant to Section 6.4 hereof.
7.18 USE OF PROCEEDS. Use the proceeds of the Revolving Advances
made hereunder for any purpose other than: (a) to pay transactional costs and
expenses incurred in connection with this Agreement; and (b) thereafter,
consistent with the terms and conditions hereof, for its lawful and permitted
corporate or partnership purposes.
7.19 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Borrower covenants and agrees that it will not,
without thirty (30) days prior written notification to Foothill, relocate its
chief executive office to a new location and so long as, at the time of such
written notification, Borrower provides any financing statements or fixture
filings necessary to perfect and continue perfected Foothill's security
interests and also provides to Foothill a landlord's waiver in form and
substance satisfactory to Foothill. The Inventory and Equipment shall not at
any time now or hereafter be stored with a bailee, warehouseman, or similar
party without Foothill's prior written consent.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrower fails to pay when due and payable or when declared
due and payable, any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due Foothill,
reimbursement of Foothill Expenses, or other amounts constituting Obligations);
Amended and Restated Loan and Security Agreement--Page 36
37
8.2 If Borrower fails or neglects to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in this Agreement,
in any of the Loan Documents, or in any other present or future agreement
between Borrower and Foothill;
8.3 If there is a material impairment of the prospect of repayment
of any portion of the Obligations owing to Foothill or a material impairment of
the value or priority of Foothill's security interests in the Collateral or the
Real Property;
8.4 If any material portion of Borrower's properties or assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any third Person;
8.5 If an Insolvency Proceeding is commenced by Borrower;
8.6 If an Insolvency Proceeding is commenced against Borrower and
any of the following events occur: (a) Borrower consents to the institution of
the Insolvency Proceeding against it; (b) the petition commencing the
Insolvency Proceeding is not timely controverted; (c) the petition commencing
the Insolvency Proceeding is not dismissed within forty-five (45) calendar days
of the date of the filing thereof; provided, however, that, during the pendency
of such period, Foothill shall be relieved of its obligation to make additional
Revolving Advances or issue additional L/Cs or L/C Guaranties hereunder; (d) an
interim trustee is appointed to take possession of all or a substantial portion
of the properties or assets of, or to operate all or any substantial portion of
the business of' Borrower; or (e) an order for relief shall have been issued or
entered therein;
8.7 If Borrower is enjoined, restrained, or in any way prevented
by court order from continuing to conduct all or any material part of its
business affairs;
8.8 If a notice of lien, levy, or assessment is filed of record
with respect to any of Borrower's properties or assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, or if any taxes or debts
owing at any time hereafter to any one or more of such entities becomes a lien,
whether ▇▇▇▇▇▇ or otherwise, upon any of Borrower's properties or assets and
the same is not paid on the payment date thereof;
8.9 If a judgment or other material claim becomes a lien or
encumbrance upon any portion of Borrower's properties or assets;
8.10 If there is a default in any material agreement to which
Borrower is a party with one or more third Persons resulting in a right by such
third Persons, irrespective of whether exercised, to accelerate the maturity of
Borrower's obligations thereunder;
8.11 If Borrower makes any payment on account of Indebtedness that
has been contractually subordinated in right of payment to the payment of the
Obligations, except to the
Amended and Restated Loan and Security Agreement--Page 37
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extent such payment is permitted by the terms of the subordination provisions
applicable to such Indebtedness;
8.12 If any misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or report made to
Foothill by Borrower or any partner, officer, employee, agent, or director of
Borrower, or if any such warranty or representation is withdrawn;
8.13 If the obligation of any Individual Guarantor or Corporate
Guarantor or other third Person under any Loan Document is limited or
terminated by operation of law or by the guarantor or other third Person
thereunder, or any such guarantor or other third Person becomes the subject of
an Insolvency Proceeding;
8.14 If (a) with respect to any Plan, there shall occur any of the
following which could reasonably be expected to have a material adverse effect
on the financial condition of Borrower: (i) the violation of any of the
provisions of ERISA; (ii) the loss by a Plan intended to be a Qualified Plan of
its qualification under Section 401(a) of the IRC; (iii) the incurrence of
liability under Title IV of ERISA; (iv) a failure to make full payment when due
of all amounts which, under the provisions of any Plan or applicable law,
Borrower or any ERISA Affiliate is required to make; (v) the filing of a notice
of intent to terminate a Plan under Sections 4041 or 4041A of ERISA; (vi) a
complete or partial withdrawal of Borrower or an ERISA Affiliate from any Plan;
(vii) the receipt of a notice by the plan administrator of a Plan that the PBGC
has instituted proceedings to terminate such Plan or appoint a trustee to
administer such Plan; (viii) a commencement or increase of contributions to, or
the adoption of or the amendment of, a Plan; and (ix) the assessment against
Borrower or any ERISA Affiliate of a tax under Section 4980B of the IRC; or (b)
the Unfunded Benefit Liability of all of the Plans of Borrower and its ERISA
Affiliates shall, in the aggregate, exceed Twenty Five Thousand Dollars
($25,000); or
8.15 If any writing, document, aging, certificate or other evidence
of the Accounts or Inventory shall be materially incomplete, incorrect, or
misleading at the time the same is furnished to Foothill.
8.16 If any Individual Guarantor or Corporate Guarantor fails to
comply with the terms or provisions of the guaranty to which such Individual or
Corporate Guarantor is a party or if there is otherwise a default under any
such guaranty.
9. FOOTHILL'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default Foothill may, at its election, without
notice of its election and without demand, do any one or more of the following,
all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due
and payable;
Amended and Restated Loan and Security Agreement--Page 38
39
(b) Cease advancing money or extending credit to or for
the benefit of Borrower under this Agreement, under any of the Loan Documents,
or under any other agreement between Borrower and Foothill;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of Foothill, but without
affecting Foothill's rights and security interests in the Collateral or the
Real Property and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with
Account Debtors for amounts and upon terms which Foothill considers advisable,
and in such cases, Foothill will credit Borrower's loan account with only the
net amounts received by Foothill in payment of such disputed Accounts after
deducting all Foothill Expenses incurred or expended in connection therewith;
(e) Cause Borrower to hold all returned Inventory in
trust for Foothill, segregate all returned Inventory from all other property of
Borrower or in Borrower's possession and conspicuously label said returned
Inventory as the property of Foothill;
(f) Without notice to or demand upon Borrower or any
guarantor, make such payments and do such acts as Foothill considers necessary
or reasonable to protect its security interests in the Collateral. Borrower
agrees to assemble the Collateral if Foothill so requires, and to make the
Collateral available to Foothill as Foothill may designate. Borrower
authorizes Foothill to enter the premises where the Collateral is located, to
take and maintain possession of the Collateral, or any part of it, and to pay,
purchase, contest, or compromise any encumbrance, charge, or lien that in
Foothill's determination appears to conflict with its security interests and to
pay all expenses incurred in connection therewith. With respect to any of
Borrower's owned premises, Borrower hereby grants Foothill a license to enter
into possession of such premises and to occupy the same, without charge, for up
to one hundred twenty (120) days in order to exercise any of Foothill's rights
or remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to Borrower (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of Section 9505 of the Code),
set off and apply to the Obligations any and all (i) balances and deposits of
Borrower held by Foothill (including any amounts received in the Lockbox
Accounts), or (ii) indebtedness at any time owing to or for the credit or the
account of Borrower held by Foothill;
(h) Hold, as cash collateral, any and all balances and
deposits of Borrower held by Foothill, and any amounts received in the Lockbox
Accounts, to secure the full and final repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Foothill is hereby granted a license or other
right to use, without charge, Borrower's labels, patents, copyrights, rights of
use of any name, trade secrets, trade names, trademarks, service marks, and
advertising
Amended and Restated Loan and Security Agreement--Page 39
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matter, or any property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral
and Borrower's rights under all licenses and all franchise agreements shall
inure to Foothill's benefit;
(j) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as
Foothill determines is commercially reasonable. It is not necessary that the
Collateral be present at any such sale;
(k) Foothill shall give notice of the disposition of the
Collateral as follows:
(1) Foothill shall give Borrower and each holder
of a security interest in the Collateral who has filed with Foothill a written
request for notice, a notice in writing of the time and place of public sale,
or, if the sale is a private sale or some other disposition other than a public
sale is to be made of the Collateral, then the time on or after which the
private sale or other disposition is to be made;
(2) The notice shall be personally delivered or
mailed, postage prepaid, to Borrower as provided in Section 12, at least five
(5) days before the date fixed for the sale, or at least five (5) days before
the date on or after which the private sale or other disposition is to be made;
no notice needs to be given prior to the disposition of any portion of the
Collateral that is perishable or threatens to decline speedily in value or that
is of a type customarily sold on a recognized market. Notice to Persons other
than Borrower claiming an interest in the Collateral shall be sent to such
addresses as they have furnished to Foothill;
(3) If the sale is to be a public sale, Foothill
also shall give notice of the time and place by publishing a notice one time at
least five (5) days before the date of the sale in a newspaper of general
circulation in the county in which the sale is to be held;
(l) Foothill may credit bid and purchase at any public
sale; and
(m) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower. Any excess
will be returned, without interest and subject to the rights of third Persons,
by Foothill to Borrower.
9.2 REMEDIES CUMULATIVE. Foothill's rights and remedies under
this Agreement, the Loan Documents, and all other agreements shall be
cumulative. Foothill shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by
Foothill of one right or remedy shall be deemed an election, and no waiver by
Foothill of any Event of Default shall be deemed a continuing waiver. No delay
by Foothill shall constitute a waiver, election, or acquiescence by it.
Amended and Restated Loan and Security Agreement--Page 40
41
10. TAX AND EXPENSES.
If Borrower fails to pay any monies (whether taxes, rents,
assessments, insurance premiums, or otherwise) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all
as required under the terms of this Agreement, then, to the extent that
Foothill determines that such failure by Borrower could have a material adverse
effect on Foothill's interests in the Collateral, in its discretion and without
prior notice to Borrower, Foothill may do any or all of the following: (a) make
payment of the same or any part thereof; (b) set up such reserves in Borrower's
loan account as Foothill deems necessary to protect Foothill from the exposure
created by such failure; or (c) obtain and maintain insurance policies of the
type described in Section 6.12, and take any action with respect to such
policies as Foothill deems prudent. Any such amounts paid by Foothill shall
constitute Foothill Expenses. Any such payments made by Foothill shall not
constitute an agreement by Foothill to make similar payments in the future or a
waiver by Foothill of any Event of Default under this Agreement. Foothill need
not inquire as to, or contest the validity of, any such expense, tax, security
interest, encumbrance, or lien and the receipt of the usual official notice for
the payment thereof shall be conclusive evidence that the same was validly due
and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Except as otherwise provided in this
Agreement, Borrower waives demand, protest, notice of protest, notice of
default or dishonor, notice of intention to accelerate, notice of acceleration,
notice of payment and nonpayment, notice of any default, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guaranties at any time held by
Foothill on which Borrower may in any way be liable.
11.2 FOOTHILL'S LIABILITY FOR COLLATERAL. So long as Foothill
complies with its obligations, if any, under Section 9207 of the Code, Foothill
shall not in any way or manner be liable or responsible for: (a) the
safekeeping of the Collateral; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any diminution in the
value thereof; or (d) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person. All risk of loss, damage, or destruction
of the Collateral shall be borne by Borrower.
11.3 INDEMNIFICATION. Except with respect to matters arising
solely from the gross negligence or willful misconduct of Foothill, Borrower
agrees to defend, indemnify, save, and hold Foothill and its officers,
employees, and agents harmless against: (a) all obligations, demands, claims,
and liabilities claimed or asserted by any other Person arising out of or
relating to the transactions contemplated by this Agreement or any other Loan
Document, and (b) all losses (including attorneys fees and disbursements) in
any way suffered, incurred, or paid by Foothill as a result of or in any way
arising out of, following, or consequential to the transactions contemplated by
this Agreement or any other Loan Document. This provision shall survive the
termination of this Agreement. PURSUANT TO THE FOREGOING PROVISIONS,
Amended and Restated Loan and Security Agreement--Page 41
42
FOOTHILL MAY BE INDEMNIFIED BY BORROWER FOR FOOTHILL'S OWN NEGLIGENCE.
11.4 SURETYSHIP WAIVERS AND CONSENTS. Inc., L.P. and NBF (for the
purposes of this Section 11.4, each a "Debtor") each acknowledge that the
obligations of such Debtor undertaken herein might be construed to consist, at
least in part, of the guaranty of obligations of Persons other than such Debtor
(including the other Debtor party hereto) and, in full recognition of that
fact, each Debtor consents and agrees that Foothill may, at any time and from
time to time, without notice or demand, whether before or after any actual or
purported termination, repudiation or revocation of this Agreement by any one
or more Debtors, and without affecting the enforceability or continuing
effectiveness hereof as to each Debtor: (a) supplement, extend, renew,
accelerate or otherwise change the time for payment or the terms of the
Obligations or any part thereof, including any increase or decrease of the
rate(s) of interest thereon; (b) supplement, restate, modify, amend, increase,
decrease or waiver, or enter into or give any agreement, approval or consent
with respect to, the Obligations or any part thereof, or any of the Loan
Documents or any additional security or guaranties, or any condition, covenant,
default, remedy, right, representation or term thereof or thereunder; (c)
accept new or additional instruments, documents or agreements in exchange for
or relative to any of the Loan Documents or the Obligations or any part
thereof; (d) accept partial payments on the Obligations; (e) receive and hold
additional security or guaranties for the Obligations or any part thereof; (f)
release, reconvey, terminate, waive, abandon, fail to perfect, subordinate,
exchange, substitute, transfer or enforce any security or guaranties, and apply
any security and direct the order or manner of sale thereof as Foothill in its
sole and absolute discretion may determine; (g) release any Person from any
personal liability with respect to the Obligations or any part thereof; (h)
settle, release on terms satisfactory to Foothill or by operation of applicable
laws or otherwise liquidate or enforce any Obligations and any security
therefor or guaranty thereof in any manner, consent to the transfer of any
security and bid and purchase at any sale; or (i) consent to the merger, change
or any other restructuring or termination of the corporate, partnership or
other form of existence of any Debtor or any other Person, and correspondingly
restructure the Obligations, and any such merger, change, restructuring or
termination shall not affect the liability of any Debtor or the continuing
effectiveness hereof, or the enforceability hereof with respect to all or any
part of the Obligations.
Upon the occurrence and during the continuance of any Event of
Default, Foothill may enforce this Agreement independently as to each Debtor
and independently of any other remedy or security Foothill at any time may have
or hold in connection with the Obligations, and it shall not be necessary for
Foothill to marshal assets in favor of any Debtor or any other Person or to
proceed upon or against or exhaust any security or remedy before proceeding to
enforce this Agreement. Each Debtor expressly waives any right to require
Foothill to marshal assets in favor of any Debtor or any other Person or to
proceed against any other Debtor or any collateral provided by any Person, and
agrees that Foothill may proceed against Debtors or any collateral in such
order as it shall determine in its sole and absolute discretion.
Foothill may file a separate action or actions against any
Debtor, whether action is brought or prosecuted with respect to any security or
against any other Person, or whether any
Amended and Restated Loan and Security Agreement--Page 42
43
other Person is joined in any such action or actions. Each Debtor agrees that
Foothill and any Debtor and any Affiliate of any Debtor may deal with each
other in connection with the Obligations or otherwise, or alter any contracts
or agreements now or hereafter existing between any of them, in any manner
whatsoever, all without in any way altering or affecting the continuing
efficacy of this Agreement.
Foothill's rights hereunder shall be reinstated and revived,
and the enforceability of this Agreement shall continue, with respect to any
amount at any time paid on account of the Obligations which thereafter shall be
requested to be restored or returned by Foothill, all as though such amount had
not been paid. The rights of Foothill created or granted herein and the
enforceability of this Agreement at all times shall remain effective to cover
the full amount of all the Obligations even though the Obligations, including
any part thereof or any other security or guaranty therefor, may be or
hereafter may become invalid or otherwise unenforceable as against any Debtor
and whether or not any other Debtor shall have any personal liability with
respect thereto.
To the maximum extent permitted by applicable law, each Debtor
expressly waives any and all defenses now or hereafter arising or asserted by
reason of (a) any disability or other defense of any other Debtor with respect
to the Obligations, (b) the unenforceability or invalidity of any security or
guaranty for the Obligations or the lack of perfection or continuing perfection
or failure of priority of any security for the Obligations, (c) the cessation
for any cause whatsoever of the liability of any other Debtor (other than by
reason of the full payment and performance of all Obligations), (d) any failure
of Foothill to marshal assets in favor of any Debtor or any other Person, (e)
any failure of Foothill to give notice of sale or other disposition of
Collateral to any Debtor or any other Person or any defect in any notice that
may be given in connection with any sale or disposition of Collateral, (f) any
failure of Foothill to comply with applicable law in connection with the sale
or other disposition of any Collateral or other security for any Obligation,
including any failure of Foothill to conduct a commercially reasonable sale or
other disposition of any Collateral or other security for any Obligation, (g)
any act or omission of Foothill or others that directly or indirectly results
in or aids the discharge or release of any Debtor or the Obligations or any
security or guaranty therefor by operation of law or otherwise, (h) any law
which provides that the obligation of a surety or guarantor must neither be
larger in amount nor in other respects more burdensome than that of the
principal or which reduces a surety's or guarantor's obligation in proportion
to the principal obligation, (i) any failure of Foothill to file or enforce a
claim in any bankruptcy or other proceeding with respect to any Person, (j) the
election by Foothill of the application or non-application of Section
1111(b)(2) of the United States Bankruptcy Code, (k) any extension of credit or
the grant of any lien under ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code,
(1) any use of cash collateral under Section 363 of the United States
Bankruptcy Code, (m) any agreement or stipulation with respect to the provision
of adequate protection in any bankruptcy proceeding of any Person, (n) the
avoidance of any lien in favor of Foothill for any reason, or (o) any action
taken by Foothill that is authorized by this Section or any other provision of
any Loan Document. Until such time as all of the Obligations have been fully,
finally, and indefeasibly paid in full in cash: (i) each Debtor hereby waives
and postpones any right of subrogation it has or may have as against any other
Debtor with respect to the Obligations; and (ii) in addition, each Debtor also
hereby waives and
Amended and Restated Loan and Security Agreement--Page 43
44
postpones any right to proceed or to seek recourse against or with respect to
any property or asset of any other Debtor. Each Debtor expressly waives all
setoffs and counterclaims and all presentments, demands for payment or
performance, notices of nonpayment or nonperformance, protests, notices of
protest, notices of dishonor and all other notices or demands of any kind or
nature whatsoever with respect to the Obligations, and all notices of
acceptance of this Agreement or of the existence, creation or incurring of new
additional Obligations.
In the event that all or any part of the Obligations at any
time are secured by any one or more deeds of trust or mortgages or other
instruments creating or granting liens on any interests in real property, each
Debtor authorizes Foothill on Foothill's behalf, upon the occurrence of and
during the continuance of any Event of Default, at its sole option, without
notice or demand and without affecting the obligations of any Debtor, the
enforceability of this Agreement, or the validity or enforceability of any
liens of, or for the benefit of, Foothill on any Collateral, to foreclose any
or all of such deeds of trust or mortgages or other instruments by judicial or
nonjudicial sale. Without limiting the foregoing and without waiving the
benefits of California Commercial Code Section 9501, each Debtor specifically
agrees that action maintained by Foothill for the appointment of any receiver,
trustee or custodian to collect rents, issues or profits or to obtain
possession of any property shall not constitute an "action" within the meaning
of Section 726 of the California Code of Civil Procedure.
To the fullest extent permitted by applicable law, each Debtor
expressly waives any defenses to the enforcement of this Agreement or any
rights of Foothill created or granted hereby or to the recovery by Foothill
against any Debtor or any other Person liable therefor of any deficiency after
a judicial or nonjudicial foreclosure or sale, even though such a foreclosure
or sale may impair the subrogation rights of Debtors and may preclude Debtors
from obtaining reimbursement or contribution from other Debtors. Each Debtor
expressly waives (i) any suretyship defenses or benefits that it otherwise
might or would have under applicable law, and (ii) the right, if any, to
require Foothill to disclose to such Debtor any information it may now have or
hereafter acquire concerning the other Debtor's character, credit, Collateral,
financial condition or other matters. Each Debtor has established adequate
means to obtain from the other Debtor on a continuing basis financial and other
information pertaining to such Debtor's business and affairs, and assumes the
responsibility for being and keeping itself informed of the financial and other
conditions of the other Debtor and of all circumstances bearing upon the risk
of nonpayment of the Obligations which diligent inquiry would reveal. Each
Debtor expressly waives any right to receive notice of any judicial or
nonjudicial foreclosure or sale of any real property or interest therein of
another Debtor that is subject to any such deeds of trust or mortgages or other
instruments and any Debtor's failure to receive any such notice shall not
impair or affect such Debtor's obligations or the enforceability of this
Agreement or any rights of Foothill created or granted hereby. WITHOUT
LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN
THIS SECTION, EACH DEBTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN
ELECTION OF REMEDIES BY FOOTHILL, EVEN THOUGH THAT ELECTION OF REMEDIES, SUCH
AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR THE OBLIGATIONS, HAS
DESTROYED SUCH DEBTOR'S RIGHTS OF SUBROGATION AND REIMBURSEMENT AGAINST THE
PRINCIPAL DEBTOR BY
Amended and Restated Loan and Security Agreement--Page 44
45
THE OPERATION OF LAW, INCLUDING, BUT NOT LIMITED TO, SECTION 580D OF THE
CALIFORNIA CODE OF CIVIL PROCEDURE, OR OTHERWISE. FURTHER, BORROWER EXPRESSLY
WAIVES ANY RIGHT, DEFENSE OR BENEFIT UNDER CALIFORNIA CIVIL CODE SECTIONS 2809,
2810, 2819, 2845, 2849, 2850 AND 2855, AND CALIFORNIA CODE OF CIVIL PROCEDURE
SECTIONS 337, 580A AND 580B, AND MY AMENDMENTS THERETO.
Foothill need not inquire into the powers of any of the
Debtors or the authority of any of their respective officers, directors,
partners or agents acting or purporting to act in their behalf, and any
obligations created in reliance upon the purported exercise of such power or
authority is hereby guaranteed. All obligations of Debtors to Foothill
heretofore, now or hereafter created shall be deemed to have been granted at
Debtors' special insistence and request and in consideration of and in reliance
upon this Agreement.
Debtors and each of them warrant and agree that each of the
waivers and consents set forth herein are made after consultation with legal
counsel and with full knowledge of their significance and consequences, with
the understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which Debtors otherwise
may have against other Debtors, Foothill or others, or against Collateral. If
any of the waivers or consents herein are determined to be contrary to any
applicable law or public policy, such waivers and consents shall be effective
to the maximum extent permitted by law.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other Loan Document shall be in
writing and (except for financial statements and other informational documents
which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail, postage prepaid, return
receipt requested, or by prepaid telex, telefacsimile, or telegram (with
messenger delivery specified) to Borrower or to Foothill, as the case may be,
at its address set forth below:
If to Borrower: ▇▇▇▇▇▇▇▇▇ Industries, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telefacsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Foothill: FOOTHILL CAPITAL CORPORATION
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: Business Finance Division Manager
Telefacsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Amended and Restated Loan and Security Agreement--Page 45
46
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other. All notices or demands sent in accordance with this Section 12, other
than notices by Foothill in connection with Sections 9504 or 9505 of the Code,
shall be deemed received on the earlier of the date of actual receipt or three
(3) days after the deposit thereof in the mail. Borrower acknowledges and
agrees that notices sent by Foothill in connection with Sections 9504 or 9505
of the Code shall be deemed sent when deposited in the mail or transmitted by
telefacsimile or other similar method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
GIVING EFFECT TO ITS CONFLICT OF LAWS PRINCIPLES. THE PARTIES AGREE THAT ALL
ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF FOOTHILL, IN ANY OTHER
COURT IN WHICH FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH
HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF
BORROWER AND FOOTHILL WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 13. BORROWER AND FOOTHILL HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
OR STATUTORY CLAIMS. BORROWER AND FOOTHILL REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY
OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
All documents, schedules, invoices, agings, or other papers delivered
to Foothill may be destroyed or otherwise disposed of by Foothill four (4)
months after they are delivered to or
Amended and Restated Loan and Security Agreement--Page 46
47
received by Foothill, unless Borrower requests, in writing, the return of said
documents, schedules, or other papers and makes arrangements, at Borrower's
expense, for their return.
15. GENERAL PROVISIONS.
15.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrower and Foothill.
15.2 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure
to the benefit of the respective successors and assigns of each of the parties;
provided, however, that Borrower may not assign this Agreement or any rights or
duties hereunder without Foothill's prior written consent and any prohibited
assignment shall be absolutely void. No consent to an assignment by Foothill
shall release Borrower from its Obligations. Foothill may assign this
Agreement and its rights and duties hereunder and no consent or approval by
Borrower is required in connection with any such assignment. Foothill reserves
the right to sell, assign, transfer, negotiate, or grant participations in all
or any part of, or any interest in Foothill's rights and benefits hereunder.
In connection with any such assignment or participation, Foothill may disclose
all documents and information which Foothill now or hereafter may have relating
to Borrower or Borrower's business. To the extent that Foothill assigns its
rights and obligations hereunder to a third Person, Foothill thereafter shall
be released from such assigned obligations to Borrower and such assignment
shall effect a novation between Borrower and such third Person.
15.3 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each section applies equally to this entire Agreement.
15.4 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Foothill or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.
15.5 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
15.6 AMENDMENTS IN WRITING. This Agreement can only be amended by
a writing signed by both Foothill and Borrower.
15.7 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one
and the same Agreement. Delivery of an executed counterpart of this Agreement
by telefacsimile shall be equally as effective as delivery of a manually
executed counterpart of this
Amended and Restated Loan and Security Agreement--Page 47
48
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile also shall deliver a manually executed counterpart of this
Agreement but the failure to deliver a manually executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement.
15.8 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence
or payment of the Obligations by Borrower or any guarantor of the Obligations
or the transfer by either or both of such parties to Foothill of any property
of either or both of such parties should for any reason subsequently be
declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, and other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
Foothill is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its
counsel, then, as to any such Voidable Transfer, or the amount thereof that
Foothill is required or elects to repay or restore, and as to all reasonable
costs, expenses, and attorneys' fees of Foothill related thereto, the liability
of Borrower or such guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
15.9 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
15.10 INTENTION OF PARTIES. Notwithstanding anything contained
herein to the contrary, it is the intention of the parties hereto that this
Agreement and the commitments and extensions of credit provided hereunder
represent a supplement to, but not a novation or discharge of, the credit
facilities provided by the Existing Loan and Security Agreement; and the
Borrower hereby represents and warrants to Foothill that after giving effect to
the transactions contemplated hereby, the security interests created by the
Existing Loan and Security Agreement and set forth herein continue to
constitute valid, perfected and first priority (subject only to Permitted
Liens) security interests securing all obligations purported to be secured
thereby, and each of the Loan Documents, including each security interest
provided for therein, continue in full force and effect.
Schedules:
Schedule E-1 (Eligible Inventory Locations)
Schedule P-1 (Permitted Liens)
Schedule R-1 (Real Estate)
Schedule 5.7 (Subsidiaries)
Schedule 5.9 (Litigation)
Schedule 5.14 (Intellectual Property)
Amended and Restated Loan and Security Agreement--Page 48
49
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be
executed in Los Angeles, California.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By:
----------------------------------
Name:
---------------------------------
Title:
--------------------------------
▇▇▇▇▇▇▇▇▇ INDUSTRIES, L.P.,
a Texas limited partnership
By: ▇▇▇▇▇▇▇▇▇ Operating Corp.,
its General Partner
By:
----------------------------------
Name:
---------------------------------
Title:
--------------------------------
▇▇▇▇▇▇▇▇▇ INDUSTRIES, INC.,
a Delaware corporation
By:
----------------------------------
Name:
---------------------------------
Title:
--------------------------------
NBF, Inc.
a Georgia corporation
By:
----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Signature Page to Amended and Restated Loan and Security Agreement--Page 49
50
FOOTHILL CAPITAL CORPORATION
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
May 13, 1998
▇▇▇▇▇▇▇▇▇ Industries, Inc.
▇▇▇▇▇▇▇▇▇ Industries, L.P.
NBF, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Waiver of compliance with certain negative covenants
Gentlemen:
Reference is made to the Loan and Security Agreement, dated as of
August 16, 1996 (as amended, modified, supplemented and in effect on the date
hereof, the "Loan Agreement"), by and among Foothill Capital Corporation, a
California corporation ("Foothill"), ▇▇▇▇▇▇▇▇▇ Industries, Inc., a Delaware
corporation ("BII"), ▇▇▇▇▇▇▇▇▇ Industries, L.P., a Texas limited partnership
("BILP"), and NBF, Inc., a Georgia corporation ("NBF"). BII, BILP and NBF are
hereinafter referred to collectively as the "Borrower." Unless otherwise
indicated, all capitalized terms used but not defined herein shall have the
meanings assigned to them in the Loan Agreement.
Borrower and Foothill have determined that the following transactions
have resulted in covenant violations under the Loan Agreement (collectively, the
"Prohibited Transactions"):
(i) incurring capital expenditures in excess of $750,000 during
Borrower's fiscal year ended March 31, 1998, which
expenditures have resulted in a violation of Section 7.10 of
the Loan Agreement;
(ii) repayment of Subordinated Debt in an aggregate amount equal to
$166,000, which repayment has resulted in a violation of
Section 7.20 of the Loan Agreement;
(iii) payment of bonuses to executive officers and senior management
employees in excess of 115% of the salary and bonuses paid to
such executive officers and senior management employees in the
immediately preceding year, which payments have resulted in a
violation of Section 7.17 of the Loan Agreement;
(iv) the sale of Inventory with a fair market value of
approximately $371,136.58 at March 31, 1998, for "barter
credits" rather than cash, which sale of Inventory has
resulted in a violation of Section 7.4 of the Loan Agreement;
and
51
▇▇▇▇▇▇▇▇▇ Industries, Inc.
▇▇▇▇▇▇▇▇▇ Industries, L.P.
NBF, Inc.
May 13, 1998
Page 2
(v) a deposit of $200,000 with First Fidelity Acceptance
Corporation, which investment has resulted in a violation of
Section 7.14 of the Loan Agreement.
Subject to Borrower's satisfaction of the terms and conditions set
forth herein, Foothill hereby waives: (i) Borrower's violation of the
above-referenced negative covenants of the Loan Agreement, and (ii) each Event
of Default under the Loan Agreement caused solely by Borrower's violation of the
above-referenced covenants.
The effectiveness of the waivers set forth in the preceding paragraph
of this letter agreement is subject to the satisfaction of the following
conditions precedent, unless specifically waived in writing by Foothill:
(a) Borrower shall have delivered to Foothill an executed
counterpart of this letter agreement, together with such
additional documents, instruments and information as Foothill
or its legal counsel may request; and
(b) no other Event of Default shall have occurred and be
continuing under the Loan Agreement or any other Loan
Document, unless such Event of Default has been specifically
waived in writing by Foothill.
The waivers set forth in this letter agreement apply only to the
Prohibited Transactions as described herein; and nothing contained in this
letter agreement or any other communication between Foothill and Borrower shall
be a waiver of any other present or future violation or Event of Default under
the Loan Agreement or any other Loan Document (collectively, the "Other
Violations"). Similarly, nothing contained in this letter agreement shall
directly or indirectly in any way: (i) impair, prejudice or otherwise adversely
affect Foothill's right at any time to exercise any right, privilege or remedy
in connection with the Loan Agreement or any other Loan Document with respect to
any Other Violations, (ii) amend or alter any provision of the Loan Agreement,
any other Loan Document or any other contract or instrument, or (iii) constitute
any course of dealing or other basis for altering any obligation of Borrower
under the Loan Agreement or any other Loan Document or any right, privilege or
remedy of Foothill under the Loan Agreement, any other Loan Document or any
other contract or instrument with respect to the Other Violations. Nothing in
this letter agreement shall be construed to be a consent by Foothill to any
Other Violations.
This letter agreement may be executed in any number of 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 one and the same
instrument.
52
▇▇▇▇▇▇▇▇▇ Industries, Inc.
▇▇▇▇▇▇▇▇▇ Industries, L.P.
NBF, Inc.
May 13, 1998
Page 3
This letter agreement is executed as of May 13, 1998.
Very truly yours,
FOOTHILL CAPITAL CORPORATION
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
AGREED AND ACKNOWLEDGED:
▇▇▇▇▇▇▇▇▇ INDUSTRIES, INC.
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
▇▇▇▇▇▇▇▇▇ INDUSTRIES, L.P.
By: ▇▇▇▇▇▇▇▇▇ Operating Corp.
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
NBF, Inc.
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
53
FOOTHILL CAPITAL CORPORATION
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
May 14, 1998
▇▇▇▇▇▇▇▇▇ Industries, Inc.
▇▇▇▇▇▇▇▇▇ Industries, L.P.
NBF, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Post-Closing Matters Letter Agreement (this "Letter
Agreement")
Gentlemen:
Reference is made to the Amended and Restated Loan and Security
Agreement, dated as of May 14, 1998 (as amended, modified, supplemented and in
effect on the date hereof, the "Loan Agreement"), by and among Foothill Capital
Corporation, a California corporation ("Foothill"), ▇▇▇▇▇▇▇▇▇ Industries, Inc.,
a Delaware corporation ("BII"), ▇▇▇▇▇▇▇▇▇ Industries, L.P., a Texas limited
partnership ("BILP"), and NBF, Inc., a Georgia corporation ("NBF"). BII, BILP
and NBF are hereinafter referred to collectively as the "Borrower." Unless
otherwise indicated, all capitalized terms used but not defined herein shall
have the meanings assigned to them in the Loan Agreement.
In order to facilitate the timely closing of the transaction
contemplated by the Loan Agreement, Foothill hereby waives the requirement that
the Borrower obtain warehousemen's letters from the operators of the following
warehouses (each, an "Eligible Warehouse"):
(i) Expeditors International, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇;
(ii) Trimodal, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; and
(iii) Universal Warehouse, ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
Foothill and Borrower hereby agree that the net amount otherwise
available to Borrower in the form of Revolving Advances under Section 2.1 of the
Loan Agreement shall be reduced, from time to time, as a result of the failure
to obtain warehousemen's letters with respect to the Eligible Warehouses. In
addition to reserves previously established by Foothill with respect to other
matters, the net amount available to Borrower in the form of Revolving Advances
shall be reduced by an amount equal to $75,000 for each Eligible Warehouse.
From time to time, Foothill at its option may increase or decrease the
reserves established pursuant to this Letter Agreement as a result of increases
or decreases (a) in the value of the
54
▇▇▇▇▇▇▇▇▇ Industries, Inc.
▇▇▇▇▇▇▇▇▇ Industries, L.P.
NBF, Inc.
May 14, 1998
Page 2
Eligible Inventory located in the Eligible Warehouses or (b) the outstanding
obligations owing by Borrower to the owner or operator of the Eligible
Warehouses.
Upon receipt of a warehouseman's letter in form and substance
acceptable to Foothill at its option, the reserves herein described shall be
eliminated for the Eligible Warehouse for which such warehouseman's letter has
been received.
Nothing contained in this Letter Agreement shall be construed as
limiting, modifying or in any manner restricting the authority of Foothill to
create other or additional reserves pursuant to and in accordance with the terms
and conditions of the Loan Agreement.
This Letter Agreement may be executed in any number of 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 one and the same
instrument.
This Letter Agreement is executed as of May 14, 1998.
Very truly yours,
FOOTHILL CAPITAL CORPORATION
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
AGREED AND ACKNOWLEDGED:
▇▇▇▇▇▇▇▇▇ INDUSTRIES, INC.
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
55
▇▇▇▇▇▇▇▇▇ Industries, Inc.
▇▇▇▇▇▇▇▇▇ Industries, L.P.
NBF, Inc.
May 14, 1998
Page 3
▇▇▇▇▇▇▇▇▇ INDUSTRIES, L.P.
By: ▇▇▇▇▇▇▇▇▇ Operating Corp.
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
NBF, Inc.
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
56
AMENDED AND RESTATED
LIMITED
CONTINUING GUARANTY
(▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇)
THIS AMENDED AND RESTATED LIMITED CONTINUING GUARANTY ("Guaranty"),
dated as of May 14, 1998, is executed and delivered by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an
individual residing in the State of Texas ("Guarantor"), in favor of Foothill
Capital Corporation, a California corporation ("Foothill"), and in light of the
following:
FACT ONE: On August 16, 1996, Guarantor executed a Continuing Guaranty
in favor of Foothill (the "Original Guaranty"), and Guarantor and Foothill
desire to amend and restate the Original Guaranty as set forth below;
FACT TWO: ▇▇▇▇▇▇▇▇▇ Industries, Inc., a Delaware corporation, ▇▇▇▇▇▇▇▇▇
Industries, L.P., a Texas limited partnership, and NBF, Inc., a Georgia
corporation (collectively, the "Borrower") and Foothill are, contemporaneously
herewith, entering into the Loan Documents (as defined below); and
FACT THREE: In order to induce Foothill to amend, renew, revise and
extend its financing arrangements with Borrower pursuant to the Loan Documents,
and in consideration thereof, and in consideration of any loans or other
financial accommodations heretofore or hereafter extended by Foothill to
Borrower, whether pursuant to the Loan Documents or otherwise, Guarantor has
agreed to guarantee the Obligations, subject to the limitations set forth
herein.
NOW, THEREFORE, in consideration of the foregoing, Guarantor hereby
agrees, in favor of Foothill, as follows:
1. Definitions and Construction.
(a) Definitions. The following terms, as used in this
Guaranty, shall have the following meanings:
"Bankruptcy Code" means The Bankruptcy Reform Act of
1978 (11 U.S.C. Sections 101-1330), as amended or supplemented from time to
time, and any successor statute, and any and all rules issued or promulgated in
connection therewith.
"Loan Documents" shall mean that certain Amended and
Restated Loan and Security Agreement of even date herewith, between Foothill and
Borrower, any promissory notes issued by Borrower in connection therewith, and
those documents, instruments, and agreements which either now or in the future
exist among Borrower, Guarantor, or any affiliate of Borrower, on the one hand,
and Foothill, on the other hand.
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57
"Obligations" means any and all obligations,
indebtedness, or liabilities of any kind or character owed by Borrower to
Foothill now existing or hereafter arising out of or in connection with the
extension of financial accommodations pursuant to the Loan Documents, including
all such obligations, indebtedness, or liabilities, whether for principal,
interest (including any interest which, but for the application of the
provisions of the Bankruptcy Code, would have accrued on such amounts), premium,
reimbursement obligations, fees, costs, expenses (including attorneys' fees), or
indemnity obligations, whether heretofore, now, or hereafter made, incurred, or
created, whether voluntarily or involuntarily made, incurred, or created,
whether secured or unsecured (and if secured, regardless of the nature or extent
of the security), whether absolute or contingent, liquidated or unliquidated,
determined or indeterminate, whether Borrower is liable individually or jointly
with others, and whether recovery is or hereafter becomes barred by any statute
of limitations or otherwise becomes unenforceable for any reason whatsoever,
including any act or failure to act by Foothill.
(b) Construction. Unless the context of this Guaranty clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, and the term "including" is not limiting. The
words "hereof," "herein," "hereby," "hereunder," and other similar terms refer
to this Guaranty as a whole and not to any particular provision of this
Guaranty. Any reference herein to any of the Loan Documents includes any and all
alterations, amendments, extensions, modifications, renewals, or supplements
thereto or thereof, as applicable. Neither this Guaranty nor any uncertainty or
ambiguity herein shall be construed or resolved against Foothill or Guarantor,
whether under any rule of construction or otherwise. On the contrary, this
Guaranty has been reviewed by Guarantor, Foothill, and their respective counsel,
and shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of Foothill
and Guarantor.
2. Guaranty of the Obligations. Guarantor hereby irrevocably and
unconditionally guarantees to Foothill, as and for his own debt, until final and
indefeasible payment thereof has been made: (a) payment of the Obligations, in
each case when and as the same shall become due and payable, whether at
maturity, pursuant to a mandatory prepayment requirement, by acceleration, or
otherwise; it being the intent of Guarantor that the guaranty set forth herein
shall be a guaranty of payment and not a guaranty of collection; and (b) the
punctual and faithful performance, keeping, observance, and fulfillment by
Borrower of all of the agreements, conditions, covenants, and obligations of
Borrower contained in the Loan Documents.
3. Continuing Guaranty. This Guaranty includes Obligations arising
under successive transactions continuing, compromising, extending, increasing,
modifying, releasing, or renewing the Obligations, changing the interest rate,
payment terms, or other terms and conditions thereof, or creating new or
additional Obligations after prior Obligations have been satisfied in whole or
in part. To the maximum extent permitted by law, Guarantor hereby waives any
right to revoke this Guaranty as to future indebtedness. If such a revocation is
effective notwithstanding the foregoing waiver, Guarantor acknowledges and
agrees that (a) no such revocation shall be effective until written notice
thereof has been received by Foothill, (b) no such revocation shall apply to any
Obligations in existence on such date (including, any subsequent continuation,
extension, or renewal thereof, or change in the interest rate, payment
2
58
terms, or other terms and conditions thereof), (c) no such revocation shall
apply to any Obligations made or created after such date to the extent made or
created pursuant to a legally binding commitment of Foothill in existence on the
date of such revocation, (d) no payment by Guarantor, Borrower or from any other
source, prior to the date of such revocation shall reduce the maximum obligation
of Guarantor hereunder, and (e) any payment by Borrower or from any source other
than Guarantor, subsequent to the date of such revocation, shall first be
applied to that portion of the Obligations as to which the revocation is
effective and which are not, therefore, guaranteed hereunder, and to the extent
so applied shall not reduce the maximum obligation of Guarantor hereunder.
4. Performance Under This Guaranty. In the event that Borrower fails to
make any payment of any Obligations on or before the due date thereof, or if
Borrower shall fail to perform, keep, observe, or fulfill any other obligation
referred to in clause (b) of Section 2 hereof in the manner provided in the Loan
Documents, Guarantor immediately shall cause such payment to be made or each of
such obligations to be performed, kept, observed or fulfilled.
5. Primary Obligations. This Guaranty is a primary and original
obligation of Guarantor, is not merely the creation of a surety relationship,
and is an absolute, unconditional, and continuing guaranty of payment and
performance which shall remain in full force and effect without respect to
future changes in conditions. Guarantor agrees that he is directly, jointly and
severally with any other guarantor of the Obligations, liable to Foothill, that
the obligations of Guarantor hereunder are independent of the obligations of
Borrower or any other guarantor, and that a separate action may be brought
against Guarantor whether such action is brought against Borrower or any other
guarantor or whether Borrower or any such other guarantor is joined in such
action. Guarantor agrees that his liability hereunder shall be immediate and
shall not be contingent upon the exercise or enforcement by Foothill of whatever
remedies it may have against Borrower or any other guarantor, or the enforcement
of any lien or realization upon any security Foothill may at any time possess.
Guarantor agrees that any release which may be given by Foothill to Borrower or
any other guarantor shall not release Guarantor. Guarantor consents and agrees
that Foothill shall be under no obligation to marshal any assets of Borrower or
any other guarantor in favor of Guarantor, or against or in payment of any or
all of the Obligations.
6. Waivers.
(a) To the maximum extent permitted by law, Guarantor hereby
waives: (1) notice of acceptance hereof, (2) notice of any loans or other
financial accommodations made or extended under the Loan Documents or the
creation or existence of any Obligations; (3) notice of the amount of the
Obligations, subject, however, to Guarantor's right to make inquiry of Foothill
to ascertain the amount of the Obligations at any reasonable time; (4) notice of
any adverse change in the financial condition of Borrower or of any other fact
that might increase Guarantor's risk hereunder; (5) notice of presentment for
payment, demand, protest, and notice thereof as to any promissory notes or other
instruments among the Loan Documents; (6) notice of any event of default under
the Loan Documents; and (7) all other notices (except if such notice is
specifically required to be given to Guarantor hereunder or under any Loan
Document to which Guarantor is a party) and demands to which Guarantor might
otherwise be entitled.
3
59
(b) To the maximum extent permitted by law, Guarantor hereby
waives the right by statute or otherwise to require Foothill to institute suit
against Borrower or to exhaust any rights and remedies which Foothill has or may
have against Borrower. In this regard, Guarantor agrees that he is bound to the
payment of all Obligations, whether now existing or hereafter accruing, as fully
as if such Obligations were directly owing to Foothill by Guarantor. Guarantor
further waives any defense arising by reason of any disability or other defense
(other than the defense that the Obligations shall have been fully and finally
performed and indefeasibly paid) of Borrower or by reason of the cessation from
any cause whatsoever of the liability of Borrower in respect thereof.
(c) To the maximum extent permitted by law, Guarantor hereby
waives: (1) any rights to assert against Foothill any defense (legal or
equitable), set-off, counterclaim, or claim which Guarantor may now or at any
time hereafter have against Borrower or any other party liable to Foothill; (2)
any defense, set-off, counterclaim, or claim, of any kind or nature, arising
directly or indirectly from the present or future lack of perfection,
sufficiency, validity, or enforceability of the Obligations or any security
therefor; (3) any defense arising by reason of any claim or defense based upon
an election of remedies by Foothill including any defense based upon an election
of remedies by Foothill under the provisions of Sections 580d and 726 of the
California Code of Civil Procedure, or any similar law of California or any
other jurisdiction; (4) the benefit of any statute of limitations affecting
Guarantor's liability hereunder or the enforcement thereof, and any act which
shall defer or delay the operation of any statute of limitations applicable to
the Obligations shall similarly operate to defer or delay the operation of such
statute of limitations applicable to Guarantor's liability hereunder.
(d) To the maximum extent permitted by law, Guarantor hereby
waives any right of subrogation Guarantor has or may have as against Borrower
with respect to the Obligations until the Obligations are fully paid and finally
discharged. In addition, Guarantor hereby waives any right to proceed against
Borrower, now or hereafter, for contribution, indemnity, reimbursement, and any
other suretyship rights and claims, whether direct or indirect, liquidated or
contingent, whether arising under express or implied contract or by operation of
law, which Guarantor may now have or hereafter have as against the Borrower with
respect to the Obligations until the Obligations are fully paid and finally
discharged. Guarantor also hereby waives any rights of recourse to or with
respect to any asset of Borrower until the Obligations are fully paid and
finally discharged.
(e) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR
OTHER PROVISION SET FORTH IN THIS GUARANTY, GUARANTOR HEREBY WAIVES, TO THE
MAXIMUM EXTENT PERMITTED BY LAW, ANY AND ALL BENEFITS OR DEFENSES ARISING
DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE SECTIONS
2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2848,
2849, AND 2850, CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a, 580b, 580c,
580d, AND 726, AND CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE.
4
60
7. Releases. Guarantor consents and agrees that, without notice to or
by Guarantor and without affecting or impairing the obligations of Guarantor
hereunder, Foothill may, by action or inaction:
(a) compromise, settle, extend the duration or the time for the
payment of, or discharge the performance of, or may refuse to
or otherwise not enforce the Loan Documents;
(b) release all or any one or more parties to any one or more of
the Loan Documents or grant other indulgences to Borrower in
respect thereof;
(c) amend or modify in any manner and at any time (or from time to
time) any of the Loan Documents; or
(d) release or substitute any other guarantor, if any, of the
Obligations, or enforce, exchange, release, or waive any
security for the Guaranteed Obligations or any other guaranty
of the Obligations, or any portion thereof.
8. No Election. Foothill shall have the right to seek recourse against
Guarantor to the fullest extent provided for herein, and no election by Foothill
to proceed in one form of action or proceeding, or against any party, or on any
obligation, shall constitute a waiver of Foothill's right to proceed in any
other form of action or proceeding or against other parties unless Foothill has
expressly waived such right in writing. Specifically, but without limiting the
generality of the foregoing, no action or proceeding by Foothill under any
document or instrument evidencing the Obligations shall serve to diminish the
liability of Guarantor under this Guaranty except to the extent that Foothill
finally and unconditionally shall have realized indefeasible payment by such
action or proceeding.
9. Indefeasible Payment. The Obligations shall not be considered
indefeasibly paid for purposes of this Guaranty unless and until all payments to
Foothill are no longer subject to any right on the part of any person, including
Borrower, Borrower as a debtor in possession, or any trustee (whether appointed
under the Bankruptcy Code or otherwise) of Borrower's assets to invalidate or
set aside such payments or to seek to recoup the amount of such payments or any
portion thereof, or to declare same to be fraudulent or preferential. Upon such
full and final performance and indefeasible payment of the Obligations whether
by Guarantor or Borrower, Foothill shall have no obligation whatsoever to
transfer or assign its interest in the Loan Documents to Guarantor. In the event
that, for any reason, any portion of such payments to Foothill is set aside or
restored, whether voluntarily or involuntarily, after the making thereof, then
the obligation intended to be satisfied thereby shall be revived and continued
in full force and effect as if said payment or payments had not been made, and
Guarantor shall be liable for the full amount Foothill is required to repay plus
any and all costs and expenses (including attorneys' fees) paid by Foothill in
connection therewith.
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61
10. Financial Condition of Borrower. Guarantor represents and warrants
to Foothill that Guarantor is currently informed of the financial condition of
Borrower and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Guarantor further
represents and warrants to Foothill that Guarantor has read and understands the
terms and conditions of the Loan Documents. Guarantor hereby represents and
covenants that (i) Guarantor will continue to keep informed of Borrower's
financial condition, and (ii) Guarantor has not, and will not, rely upon the
financial condition of any other guarantor of the Obligations.
11. Payments; Application. All payments to be made hereunder by
Guarantor shall be made in lawful money of the United States of America at the
time of payment, shall be made in immediately available funds, and shall be made
without deduction (whether for taxes or otherwise) or offset. Subject to the
provisions of Section 20 below, all payments made by Guarantor hereunder shall
be applied as follows: first, to all costs and expenses (including attorneys'
fees) incurred by Foothill in enforcing this Guaranty or in collecting the
Obligations; second, to all accrued and unpaid interest, premium, if any, and
fees owing to Foothill constituting Guaranteed Obligations; and third, to the
balance of the Guaranteed Obligations.
12. Attorneys Fees and Costs. Guarantor agrees to pay, on demand, all
reasonable attorneys' fees and all other costs and expenses which may be
incurred by Foothill in the enforcement of this Guaranty.
13. Notices. All notices or demands by Guarantor or Foothill to the
other relating to this Guaranty shall be in writing and either personally served
or sent by registered or certified mail, postage prepaid, return receipt
requested, or by prepaid telex, telefacsimile, or telegram, and shall be deemed
to be given for purposes of this Guaranty on the day that such writing is
received by the party to whom it is sent. Unless otherwise specified in a notice
sent or delivered in accordance with the provisions of this section, such
writing shall be sent, if to Guarantor, at Guarantor's address set forth on the
signature page hereof, and if to Foothill, then as follows:
Foothill Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Business Finance Division Manager
Telefacsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
14. Cumulative Remedies. No remedy under this Guaranty or under any
Loan Document is intended to be exclusive of any other remedy, but each and
every remedy shall be cumulative and in addition to any and every other remedy
given hereunder or under any Loan Document, and those provided by law or in
equity. No delay or omission by Foothill to exercise any right under this
Guaranty shall impair any such right nor be construed to be a waiver thereof. No
failure on the part of Foothill to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.
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62
15. Books and Records. Guarantor agrees that Foothill's books and
records showing the account between Foothill and Borrower shall be admissible in
any action or proceeding.
16. Severability of Provisions. Any provision of this Guaranty which is
prohibited or unenforceable under applicable law, shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
17. Entire Agreement; Amendments. This Guaranty constitutes the entire
agreement between Guarantor and Foothill pertaining to the subject matter
contained herein. This Guaranty may not be altered, amended, or modified, nor
may any provision hereof be waived or noncompliance therewith consented to,
except by means of a writing executed by both Guarantor and Foothill. Any such
alteration, amendment, modification, waiver, or consent shall be effective only
to the extent specified therein and for the specific purpose for which given. No
course of dealing and no delay or waiver of any right or default under this
Guaranty shall be deemed a waiver of any other, similar or dissimilar right or
default or otherwise prejudice the rights and remedies hereunder.
18. Successors and Assigns. The death of Guarantor shall not terminate
this Guaranty. This Guaranty shall be binding upon Guarantor's heirs, executors,
administrators, representatives, successors, and assigns and shall inure to the
benefit of the successors and assigns of Foothill; provided, however, Guarantor
shall not assign this Guaranty or delegate any of his duties hereunder without
Foothill's prior written consent. Any assignment without the consent of Foothill
shall be absolutely void. In the event of any assignment or other transfer of
rights by Foothill, the rights and benefits herein conferred upon Foothill shall
automatically extend to and be vested in such assignee or other transferee.
19. Separate Property. Any married individual who signs this Guaranty
in his or her individual capacity hereby expressly agrees that recourse may be
had against his or her separate property for all Obligations hereunder.
20. Limit of Liability.
(a) It is expressly agreed and acknowledged that
notwithstanding anything contained in this Guaranty to the contrary, the
liability of Guarantor under this Guaranty shall be limited to an amount equal
to the sum of the following:
(i) Five Hundred Thousand and No/100 Dollars
($500,000.00) (the "Guaranteed Obligations"); plus
(ii) all costs and expenses of any kind incurred by
Foothill in enforcing this Guaranty (hereinafter referred to
as the "Collection Expenses"); plus
(iii) interest that accrues on the outstanding, unpaid
amount of the Guaranteed Obligations and Collection Expenses,
at the default rate specified at Section 2.4(b) of the Amended
and Restated Loan Security Agreement of even
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date herewith by and among Foothill, NBF, Inc., ▇▇▇▇▇▇▇▇▇
Industries, Inc. and ▇▇▇▇▇▇▇▇▇ Industries, L.P., from and
after the date Foothill demands performance and/or payment by
Guarantor hereunder until payment in full by Guarantor of all
sums owing hereunder.
(b) Any and all existing and future indebtedness and/or
obligations of Borrower to Foothill and all extensions, renewals and
replacements thereof, whether now existing or hereafter incurred, whether
direct, primary, absolute, secondary, contingent, secured, matured or unmatured,
whether from time to time reduced and thereafter increased, or entirely
extinguished and thereafter reincurred, whether originally contracted with
Foothill or with another or others, whether or not evidenced by a negotiable or
non-negotiable instrument or any other writing, and whether contracted by
Borrower along or jointly or severally with another or others, other than the
Guaranteed Obligations, are hereinafter referred to as the "Unguaranteed
Obligations". If at any time there exist any Unguaranteed Obligations, then (i)
Foothill may at its option, without impairing its rights hereunder, exercise
rights of offset by applying, first, to the Unguaranteed Obligations any deposit
balances to the credit of Borrower, and (ii) apply all amounts realized by
Foothill from collateral or security held by Foothill for payment of the
Obligations against the amount of the Collection Expenses, the Guaranteed
Obligations or the Unguaranteed Obligations in such order or manner as Foothill
shall determine at its option.
(c) In the event that Foothill makes demand on Guarantor under
this Guaranty prior to indefeasible payment of the Obligations, in full, to
Foothill, then this Guaranty will terminate, and Guarantor's liability will be
satisfied, only upon payment, in full, to Foothill by Guarantor of the
Guaranteed Obligations, the Collection Expenses, if any, and accrued interest
thereon, if any.
21. Choice of Law and Venue. THE VALIDITY OF THIS GUARANTY, ITS
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF GUARANTOR AND
FOOTHILL, SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. TO THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR HEREBY
AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS GUARANTY
SHALL BE TRIED AND DETERMINED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN
THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, OR, AT THE SOLE OPTION OF
FOOTHILL, IN ANY OTHER COURT IN WHICH FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE
PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN
CONTROVERSY. TO THE EXTENT PERMITTED BY LAW, GUARANTOR HEREBY EXPRESSLY WAIVES
ANY RIGHT HE MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION.
22. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, GUARANTOR
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
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ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING ARISING UNDER OR WITH
RESPECT TO THIS GUARANTY, OR IN ANY WAY CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE DEALINGS OF GUARANTOR AND FOOTHILL WITH RESPECT TO THIS
GUARANTY, OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO
THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR HEREBY AGREES THAT ANY SUCH
ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING SHALL BE DECIDED BY A
COURT TRIAL WITHOUT A JURY AND THAT FOOTHILL MAY FILE AN ORIGINAL COUNTERPART OF
THIS SECTION WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT
OF GUARANTOR TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
23. Covenant of Guarantor. Guarantor hereby agrees to deliver to
Foothill: (a) annual financial statements at the same time Borrower provides its
audited financial statements to Foothill pursuant to the Loan Documents, and (b)
copies of all federal income tax returns as soon as the same are available and
in any event no later than thirty (30) days after the same are required to be
filed by law.
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty
as of the date set forth in the first paragraph hereof.
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
an individual
Guarantor's Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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AMENDMENT, CONSENT AND REAFFIRMATION
The undersigned, ▇▇▇▇▇▇▇▇▇ HOLDING CORP., a Delaware corporation, has
executed that certain Continuing Guaranty and Security Agreement, dated August
16, 1996 (the "Guaranty"), in favor of Foothill Capital Corporation, a
California corporation (the "Lender"). The undersigned hereby (i) consents and
agrees to the continued extension of credit evidenced by that certain Amended
and Restated Loan Agreement of even date herewith, executed by ▇▇▇▇▇▇▇▇▇
Industries, Inc., a Delaware corporation, ▇▇▇▇▇▇▇▇▇ Industries, L.P., a Texas
limited partnership, and NBF, Inc., a Georgia corporation (collectively, the
"Borrower"), amending and restating that certain Loan and Security Agreement
dated August 16, 1996, by and between Borrower and Lender (as previously amended
and currently amended and restated, the "Loan Agreement") and (ii) agrees that
the Guaranty remains in full force and effect and shall continue to be the
legal, valid and binding obligation of the undersigned enforceable against it in
accordance with the terms therein. Furthermore, the undersigned hereby agrees
and acknowledges that (a) the obligations, indebtedness and liabilities arising
in connection with the Loan Agreement comprise some, but not all, of the
"Guaranteed Obligations" as such term is used in the Guaranty, (b) the Guaranty
is a "Loan Document" as such term is defined in the Loan Agreement, (c) the
Guaranty is not subject to any claims, defenses or offsets, (d) nothing
contained in the Loan Agreement or any other Loan Document shall adversely
affect any right or remedy of Lender under the Guaranty, (e) the execution and
delivery of the Loan Agreement shall in no way reduce, impair or discharge any
obligations of the undersigned as guarantor pursuant to the Guaranty and shall
not constitute a waiver by Lender of any of Lender's rights against the
undersigned, (f) the undersigned's consent is not required to the effectiveness
of the Loan Agreement and (g) no consent by the undersigned is required for the
effectiveness of any future amendment, modification, forbearance or other action
with respect to the Loan Agreement or any present or future Loan Document (other
than the Guaranty). In addition, the undersigned hereby amends the Guaranty to
require that the undersigned deliver to Lender, except to the extent the same
are included in the consolidated financial statements of Borrower: (1) annual
financial statements at the same time Borrower provides its audited financial
statements to Lender pursuant to the Loan Agreement and (2) copies of all its
federal income tax returns as soon as the same are available and, in any event,
no later than thirty (30) days after the same are required to be filed by law.
▇▇▇▇▇▇▇▇▇ HOLDING CORP.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Date: May 14, 1998
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AMENDMENT, CONSENT AND REAFFIRMATION
The undersigned, ▇▇▇▇▇▇▇▇▇ OPERATING CORP., a Nevada corporation, has
executed that certain Continuing Guaranty and Security Agreement, dated August
16, 1996 (the "Guaranty"), in favor of Foothill Capital Corporation, a
California corporation (the "Lender"). The undersigned hereby (i) consents and
agrees to the continued extension of credit evidenced by that certain Amended
and Restated Loan Agreement of even date herewith, executed by ▇▇▇▇▇▇▇▇▇
Industries, Inc., a Delaware corporation, ▇▇▇▇▇▇▇▇▇ Industries, L.P., a Texas
limited partnership, and NBF, Inc., a Georgia corporation (collectively, the
"Borrower"), amending and restating that certain Loan and Security Agreement
dated August 16, 1996, by and between Borrower and Lender (as previously amended
and currently amended and restated, the "Loan Agreement") and (ii) agrees that
the Guaranty remains in full force and effect and shall continue to be the
legal, valid and binding obligation of the undersigned enforceable against it in
accordance with the terms therein. Furthermore, the undersigned hereby agrees
and acknowledges that (a) the obligations, indebtedness and liabilities arising
in connection with the Loan Agreement comprise some, but not all, of the
"Guaranteed Obligations" as such term is used in the Guaranty, (b) the Guaranty
is a "Loan Document" as such term is defined in the Loan Agreement, (c) the
Guaranty is not subject to any claims, defenses or offsets, (d) nothing
contained in the Loan Agreement or any other Loan Document shall adversely
affect any right or remedy of Lender under the Guaranty, (e) the execution and
delivery of the Loan Agreement shall in no way reduce, impair or discharge any
obligations of the undersigned as guarantor pursuant to the Guaranty and shall
not constitute a waiver by Lender of any of Lender's rights against the
undersigned, (f) the undersigned's consent is not required to the effectiveness
of the Loan Agreement and (g) no consent by the undersigned is required for the
effectiveness of any future amendment, modification, forbearance or other action
with respect to the Loan Agreement or any present or future Loan Document (other
than the Guaranty). In addition, the undersigned hereby amends the Guaranty to
require that the undersigned deliver to Lender, except to the extent the same
are included in the consolidated financial statements of Borrower: (1) annual
financial statements at the same time Borrower provides its audited financial
statements to Lender pursuant to the Loan Agreement and (2) copies of all its
federal income tax returns as soon as the same are available and, in any event,
no later than thirty (30) days after the same are required to be filed by law.
▇▇▇▇▇▇▇▇▇ OPERATING CORP.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Date: May 14, 1998
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AMENDMENT, CONSENT AND REAFFIRMATION
The undersigned, C. G. PRODUCTS, INC., a California corporation, has
executed that certain Continuing Guaranty and Security Agreement, dated August
16, 1996 (the "Guaranty"), in favor of Foothill Capital Corporation, a
California corporation (the "Lender"). The undersigned hereby (i) consents and
agrees to the continued extension of credit evidenced by that certain Amended
and Restated Loan Agreement of even date herewith, executed by ▇▇▇▇▇▇▇▇▇
Industries, Inc., a Delaware corporation, ▇▇▇▇▇▇▇▇▇ Industries, L.P., a Texas
limited partnership, and NBF, Inc., a Georgia corporation (collectively, the
"Borrower"), amending and restating that certain Loan and Security Agreement
dated August 16, 1996, by and between Borrower and Lender (as previously amended
and currently amended and restated, the "Loan Agreement") and (ii) agrees that
the Guaranty remains in full force and effect and shall continue to be the
legal, valid and binding obligation of the undersigned enforceable against it in
accordance with the terms therein. Furthermore, the undersigned hereby agrees
and acknowledges that (a) the obligations, indebtedness and liabilities arising
in connection with the Loan Agreement comprise some, but not all, of the
"Guaranteed Obligations" as such term is used in the Guaranty, (b) the Guaranty
is a "Loan Document" as such term is defined in the Loan Agreement, (c) the
Guaranty is not subject to any claims, defenses or offsets, (d) nothing
contained in the Loan Agreement or any other Loan Document shall adversely
affect any right or remedy of Lender under the Guaranty, (e) the execution and
delivery of the Loan Agreement shall in no way reduce, impair or discharge any
obligations of the undersigned as guarantor pursuant to the Guaranty and shall
not constitute a waiver by Lender of any of Lender's rights against the
undersigned, (f) the undersigned's consent is not required to the effectiveness
of the Loan Agreement and (g) no consent by the undersigned is required for the
effectiveness of any future amendment, modification, forbearance or other action
with respect to the Loan Agreement or any present or future Loan Document (other
than the Guaranty). In addition, the undersigned hereby amends the Guaranty to
require that the undersigned deliver to Lender, except to the extent the same
are included in the consolidated financial statements of Borrower: (1) annual
financial statements at the same time Borrower provides its audited financial
statements to Lender pursuant to the Loan Agreement and (2) copies of all its
federal income tax returns as soon as the same are available and, in any event,
no later than thirty (30) days after the same are required to be filed by law.
C. G. PRODUCTS, INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Date: May 14, 1998
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AMENDED AND RESTATED
LIMITED
CONTINUING GUARANTY
(▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇)
THIS AMENDED AND RESTATED LIMITED CONTINUING GUARANTY ("Guaranty"),
dated as of May 14, 1998, is executed and delivered by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an
individual residing in the State of Texas ("Guarantor"), in favor of Foothill
Capital Corporation, a California corporation ("Foothill"), and in light of the
following:
FACT ONE: On August 16, 1996, Guarantor executed a Continuing Guaranty
in favor of Foothill (the "Original Guaranty"), and Guarantor and Foothill
desire to amend and restate the Original Guaranty as set forth below;
FACT TWO: ▇▇▇▇▇▇▇▇▇ Industries, Inc., a Delaware corporation, ▇▇▇▇▇▇▇▇▇
Industries, L.P., a Texas limited partnership, and NBF, Inc., a Georgia
corporation (collectively, the "Borrower") and Foothill are, contemporaneously
herewith, entering into the Loan Documents (as defined below); and
FACT THREE: In order to induce Foothill to amend, renew, revise and
extend its financing arrangements with Borrower pursuant to the Loan Documents,
and in consideration thereof, and in consideration of any loans or other
financial accommodations heretofore or hereafter extended by Foothill to
Borrower, whether pursuant to the Loan Documents or otherwise, Guarantor has
agreed to guarantee the Obligations, subject to the limitations set forth
herein.
NOW, THEREFORE, in consideration of the foregoing, Guarantor hereby
agrees, in favor of Foothill, as follows:
1. Definitions and Construction.
(a) Definitions. The following terms, as used in this
Guaranty, shall have the following meanings:
"Bankruptcy Code" means The Bankruptcy Reform Act of 1978 (11
U.S.C. Sections 101-1330), as amended or supplemented from time to time, and any
successor statute, and any and all rules issued or promulgated in connection
therewith.
"Loan Documents" shall mean that certain Amended and Restated
Loan and Security Agreement of even date herewith, between Foothill and
Borrower, any promissory notes issued by Borrower in connection therewith, and
those documents, instruments, and agreements which either now or in the future
exist among Borrower, Guarantor, or any affiliate of Borrower, on the one hand,
and Foothill, on the other hand.
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"Obligations" means any and all obligations, indebtedness, or
liabilities of any kind or character owed by Borrower to Foothill now existing
or hereafter arising out of or in connection with the extension of financial
accommodations pursuant to the Loan Documents, including all such obligations,
indebtedness, or liabilities, whether for principal, interest (including any
interest which, but for the application of the provisions of the Bankruptcy
Code, would have accrued on such amounts), premium, reimbursement obligations,
fees, costs, expenses (including attorneys' fees), or indemnity obligations,
whether heretofore, now, or hereafter made, incurred, or created, whether
voluntarily or involuntarily made, incurred, or created, whether secured or
unsecured (and if secured, regardless of the nature or extent of the security),
whether absolute or contingent, liquidated or unliquidated, determined or
indeterminate, whether Borrower is liable individually or jointly with others,
and whether recovery is or hereafter becomes barred by any statute of
limitations or otherwise becomes unenforceable for any reason whatsoever,
including any act or failure to act by Foothill.
(b) Construction. Unless the context of this Guaranty clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, and the term "including" is not limiting. The
words "hereof," "herein," "hereby," "hereunder," and other similar terms refer
to this Guaranty as a whole and not to any particular provision of this
Guaranty. Any reference herein to any of the Loan Documents includes any and all
alterations, amendments, extensions, modifications, renewals, or supplements
thereto or thereof, as applicable. Neither this Guaranty nor any uncertainty or
ambiguity herein shall be construed or resolved against Foothill or Guarantor,
whether under any rule of construction or otherwise. On the contrary, this
Guaranty has been reviewed by Guarantor, Foothill, and their respective counsel,
and shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of Foothill
and Guarantor.
2. Guaranty of the Obligations. Guarantor hereby irrevocably and
unconditionally guarantees to Foothill, as and for his own debt, until final and
indefeasible payment thereof has been made: (a) payment of the Obligations, in
each case when and as the same shall become due and payable, whether at
maturity, pursuant to a mandatory prepayment requirement, by acceleration, or
otherwise; it being the intent of Guarantor that the guaranty set forth herein
shall be a guaranty of payment and not a guaranty of collection; and (b) the
punctual and faithful performance, keeping, observance, and fulfillment by
Borrower of all of the agreements, conditions, covenants, and obligations of
Borrower contained in the Loan Documents.
3. Continuing Guaranty. This Guaranty includes Obligations arising
under successive transactions continuing, compromising, extending, increasing,
modifying, releasing, or renewing the Obligations, changing the interest rate,
payment terms, or other terms and conditions thereof, or creating new or
additional Obligations after prior Obligations have been satisfied in whole or
in part. To the maximum extent permitted by law, Guarantor hereby waives any
right to revoke this Guaranty as to future indebtedness. If such a revocation is
effective notwithstanding the foregoing waiver, Guarantor acknowledges and
agrees that (a) no such revocation shall be effective until written notice
thereof has been received by Foothill, (b) no such revocation shall apply to any
Obligations in existence on such date (including, any subsequent continuation,
extension, or renewal thereof, or change in the interest rate, payment
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70
terms, or other terms and conditions thereof), (c) no such revocation shall
apply to any Obligations made or created after such date to the extent made or
created pursuant to a legally binding commitment of Foothill in existence on the
date of such revocation, (d) no payment by Guarantor, Borrower or from any other
source, prior to the date of such revocation shall reduce the maximum obligation
of Guarantor hereunder, and (e) any payment by Borrower or from any source other
than Guarantor, subsequent to the date of such revocation, shall first be
applied to that portion of the Obligations as to which the revocation is
effective and which are not, therefore, guaranteed hereunder, and to the extent
so applied shall not reduce the maximum obligation of Guarantor hereunder.
4. Performance Under This Guaranty. In the event that Borrower fails to
make any payment of any Obligations on or before the due date thereof, or if
Borrower shall fail to perform, keep, observe, or fulfill any other obligation
referred to in clause (b) of Section 2 hereof in the manner provided in the Loan
Documents, Guarantor immediately shall cause such payment to be made or each of
such obligations to be performed, kept, observed or fulfilled.
5. Primary Obligations. This Guaranty is a primary and original
obligation of Guarantor, is not merely the creation of a surety relationship,
and is an absolute, unconditional, and continuing guaranty of payment and
performance which shall remain in full force and effect without respect to
future changes in conditions. Guarantor agrees that he is directly, jointly and
severally with any other guarantor of the Obligations, liable to Foothill, that
the obligations of Guarantor hereunder are independent of the obligations of
Borrower or any other guarantor, and that a separate action may be brought
against Guarantor whether such action is brought against Borrower or any other
guarantor or whether Borrower or any such other guarantor is joined in such
action. Guarantor agrees that his liability hereunder shall be immediate and
shall not be contingent upon the exercise or enforcement by Foothill of whatever
remedies it may have against Borrower or any other guarantor, or the enforcement
of any lien or realization upon any security Foothill may at any time possess.
Guarantor agrees that any release which may be given by Foothill to Borrower or
any other guarantor shall not release Guarantor. Guarantor consents and agrees
that Foothill shall be under no obligation to marshal any assets of Borrower or
any other guarantor in favor of Guarantor, or against or in payment of any or
all of the Obligations.
6. Waivers.
(a) To the maximum extent permitted by law, Guarantor hereby
waives: (1) notice of acceptance hereof, (2) notice of any loans or other
financial accommodations made or extended under the Loan Documents or the
creation or existence of any Obligations; (3) notice of the amount of the
Obligations, subject, however, to Guarantor's right to make inquiry of Foothill
to ascertain the amount of the Obligations at any reasonable time; (4) notice of
any adverse change in the financial condition of Borrower or of any other fact
that might increase Guarantor's risk hereunder; (5) notice of presentment for
payment, demand, protest, and notice thereof as to any promissory notes or other
instruments among the Loan Documents; (6) notice of any event of default under
the Loan Documents; and (7) all other notices (except if such notice is
specifically required to be given to Guarantor hereunder or under any Loan
Document to which Guarantor is a party) and demands to which Guarantor might
otherwise be entitled.
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(b) To the maximum extent permitted by law, Guarantor hereby
waives the right by statute or otherwise to require Foothill to institute suit
against Borrower or to exhaust any rights and remedies which Foothill has or may
have against Borrower. In this regard, Guarantor agrees that he is bound to the
payment of all Obligations, whether now existing or hereafter accruing, as fully
as if such Obligations were directly owing to Foothill by Guarantor. Guarantor
further waives any defense arising by reason of any disability or other defense
(other than the defense that the Obligations shall have been fully and finally
performed and indefeasibly paid) of Borrower or by reason of the cessation from
any cause whatsoever of the liability of Borrower in respect thereof.
(c) To the maximum extent permitted by law, Guarantor hereby
waives: (1) any rights to assert against Foothill any defense (legal or
equitable), set-off, counterclaim, or claim which Guarantor may now or at any
time hereafter have against Borrower or any other party liable to Foothill; (2)
any defense, set-off, counterclaim, or claim, of any kind or nature, arising
directly or indirectly from the present or future lack of perfection,
sufficiency, validity, or enforceability of the Obligations or any security
therefor; (3) any defense arising by reason of any claim or defense based upon
an election of remedies by Foothill including any defense based upon an election
of remedies by Foothill under the provisions of Sections 580d and 726 of the
California Code of Civil Procedure, or any similar law of California or any
other jurisdiction; (4) the benefit of any statute of limitations affecting
Guarantor's liability hereunder or the enforcement thereof, and any act which
shall defer or delay the operation of any statute of limitations applicable to
the Obligations shall similarly operate to defer or delay the operation of such
statute of limitations applicable to Guarantor's liability hereunder.
(d) To the maximum extent permitted by law, Guarantor hereby
waives any right of subrogation Guarantor has or may have as against Borrower
with respect to the Obligations until the Obligations are fully paid and finally
discharged. In addition, Guarantor hereby waives any right to proceed against
Borrower, now or hereafter, for contribution, indemnity, reimbursement, and any
other suretyship rights and claims, whether direct or indirect, liquidated or
contingent, whether arising under express or implied contract or by operation of
law, which Guarantor may now have or hereafter have as against the Borrower with
respect to the Obligations until the Obligations are fully paid and finally
discharged. Guarantor also hereby waives any rights of recourse to or with
respect to any asset of Borrower until the Obligations are fully paid and
finally discharged.
(e) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR
OTHER PROVISION SET FORTH IN THIS GUARANTY, GUARANTOR HEREBY WAIVES, TO THE
MAXIMUM EXTENT PERMITTED BY LAW, ANY AND ALL BENEFITS OR DEFENSES ARISING
DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE SECTIONS
2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2848,
2849, AND 2850, CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a, 580b, 580c,
580d, AND 726, AND CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE.
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7. Releases. Guarantor consents and agrees that, without notice to or
by Guarantor and without affecting or impairing the obligations of Guarantor
hereunder, Foothill may, by action or inaction:
(a) compromise, settle, extend the duration or the time for the
payment of, or discharge the performance of, or may refuse to
or otherwise not enforce the Loan Documents;
(b) release all or any one or more parties to any one or more of
the Loan Documents or grant other indulgences to Borrower in
respect thereof;
(c) amend or modify in any manner and at any time (or from time to
time) any of the Loan Documents; or
(d) release or substitute any other guarantor, if any, of the
Obligations, or enforce, exchange, release, or waive any
security for the Guaranteed Obligations or any other guaranty
of the Obligations, or any portion thereof.
8. No Election. Foothill shall have the right to seek recourse against
Guarantor to the fullest extent provided for herein, and no election by Foothill
to proceed in one form of action or proceeding, or against any party, or on any
obligation, shall constitute a waiver of Foothill's right to proceed in any
other form of action or proceeding or against other parties unless Foothill has
expressly waived such right in writing. Specifically, but without limiting the
generality of the foregoing, no action or proceeding by Foothill under any
document or instrument evidencing the Obligations shall serve to diminish the
liability of Guarantor under this Guaranty except to the extent that Foothill
finally and unconditionally shall have realized indefeasible payment by such
action or proceeding.
9. Indefeasible Payment. The Obligations shall not be considered
indefeasibly paid for purposes of this Guaranty unless and until all payments to
Foothill are no longer subject to any right on the part of any person, including
Borrower, Borrower as a debtor in possession, or any trustee (whether appointed
under the Bankruptcy Code or otherwise) of Borrower's assets to invalidate or
set aside such payments or to seek to recoup the amount of such payments or any
portion thereof, or to declare same to be fraudulent or preferential. Upon such
full and final performance and indefeasible payment of the Obligations whether
by Guarantor or Borrower, Foothill shall have no obligation whatsoever to
transfer or assign its interest in the Loan Documents to Guarantor. In the event
that, for any reason, any portion of such payments to Foothill is set aside or
restored, whether voluntarily or involuntarily, after the making thereof, then
the obligation intended to be satisfied thereby shall be revived and continued
in full force and effect as if said payment or payments had not been made, and
Guarantor shall be liable for the full amount Foothill is required to repay plus
any and all costs and expenses (including attorneys' fees) paid by Foothill in
connection therewith.
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10. Financial Condition of Borrower. Guarantor represents and warrants
to Foothill that Guarantor is currently informed of the financial condition of
Borrower and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Guarantor further
represents and warrants to Foothill that Guarantor has read and understands the
terms and conditions of the Loan Documents. Guarantor hereby represents and
covenants that (i) Guarantor will continue to keep informed of Borrower's
financial condition, and (ii) Guarantor has not, and will not, rely upon the
financial condition of any other guarantor of the Obligations.
11. Payments; Application. All payments to be made hereunder by
Guarantor shall be made in lawful money of the United States of America at the
time of payment, shall be made in immediately available funds, and shall be made
without deduction (whether for taxes or otherwise) or offset. Subject to the
provisions of Section 20 below, all payments made by Guarantor hereunder shall
be applied as follows: first, to all costs and expenses (including attorneys'
fees) incurred by Foothill in enforcing this Guaranty or in collecting the
Obligations; second, to all accrued and unpaid interest, premium, if any, and
fees owing to Foothill constituting Guaranteed Obligations; and third, to the
balance of the Guaranteed Obligations.
12. Attorneys Fees and Costs. Guarantor agrees to pay, on demand, all
reasonable attorneys' fees and all other costs and expenses which may be
incurred by Foothill in the enforcement of this Guaranty.
13. Notices. All notices or demands by Guarantor or Foothill to the
other relating to this Guaranty shall be in writing and either personally served
or sent by registered or certified mail, postage prepaid, return receipt
requested, or by prepaid telex, telefacsimile, or telegram, and shall be deemed
to be given for purposes of this Guaranty on the day that such writing is
received by the party to whom it is sent. Unless otherwise specified in a notice
sent or delivered in accordance with the provisions of this section, such
writing shall be sent, if to Guarantor, at Guarantor's address set forth on the
signature page hereof, and if to Foothill, then as follows:
Foothill Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Business Finance Division Manager
Telefacsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
14. Cumulative Remedies. No remedy under this Guaranty or under any
Loan Document is intended to be exclusive of any other remedy, but each and
every remedy shall be cumulative and in addition to any and every other remedy
given hereunder or under any Loan Document, and those provided by law or in
equity. No delay or omission by Foothill to exercise any right under this
Guaranty shall impair any such right nor be construed to be a waiver thereof. No
failure on the part of Foothill to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.
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15. Books and Records. Guarantor agrees that Foothill's books and
records showing the account between Foothill and Borrower shall be admissible in
any action or proceeding.
16. Severability of Provisions. Any provision of this Guaranty which is
prohibited or unenforceable under applicable law, shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
17. Entire Agreement; Amendments. This Guaranty constitutes the entire
agreement between Guarantor and Foothill pertaining to the subject matter
contained herein. This Guaranty may not be altered, amended, or modified, nor
may any provision hereof be waived or noncompliance therewith consented to,
except by means of a writing executed by both Guarantor and Foothill. Any such
alteration, amendment, modification, waiver, or consent shall be effective only
to the extent specified therein and for the specific purpose for which given. No
course of dealing and no delay or waiver of any right or default under this
Guaranty shall be deemed a waiver of any other, similar or dissimilar right or
default or otherwise prejudice the rights and remedies hereunder.
18. Successors and Assigns. The death of Guarantor shall not terminate
this Guaranty. This Guaranty shall be binding upon Guarantor's heirs, executors,
administrators, representatives, successors, and assigns and shall inure to the
benefit of the successors and assigns of Foothill; provided, however, Guarantor
shall not assign this Guaranty or delegate any of his duties hereunder without
Foothill's prior written consent. Any assignment without the consent of Foothill
shall be absolutely void. In the event of any assignment or other transfer of
rights by Foothill, the rights and benefits herein conferred upon Foothill shall
automatically extend to and be vested in such assignee or other transferee.
19. Separate Property. Any married individual who signs this Guaranty
in his or her individual capacity hereby expressly agrees that recourse may be
had against his or her separate property for all Obligations hereunder.
20. Limit of Liability.
(a) It is expressly agreed and acknowledged that
notwithstanding anything contained in this Guaranty to the contrary, the
liability of Guarantor under this Guaranty shall be limited to an amount equal
to the sum of the following:
(i) Five Hundred Thousand and No/100 Dollars ($500,000.00)
(the "Guaranteed Obligations"); plus
(ii) all costs and expenses of any kind incurred by Foothill
in enforcing this Guaranty (hereinafter referred to as the
"Collection Expenses"); plus
(iii) interest that accrues on the outstanding, unpaid amount
of the Guaranteed Obligations and Collection Expenses, at the
default rate specified at Section 2.4(b) of the Amended and
Restated Loan Security Agreement of even
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date herewith by and among Foothill, NBF, Inc., ▇▇▇▇▇▇▇▇▇
Industries, Inc. and ▇▇▇▇▇▇▇▇▇ Industries, L.P., from and after
the date Foothill demands performance and/or payment by Guarantor
hereunder until payment in full by Guarantor of all sums owing
hereunder.
(b) Any and all existing and future indebtedness and/or
obligations of Borrower to Foothill and all extensions, renewals and
replacements thereof, whether now existing or hereafter incurred, whether
direct, primary, absolute, secondary, contingent, secured, matured or unmatured,
whether from time to time reduced and thereafter increased, or entirely
extinguished and thereafter reincurred, whether originally contracted with
Foothill or with another or others, whether or not evidenced by a negotiable or
non-negotiable instrument or any other writing, and whether contracted by
Borrower along or jointly or severally with another or others, other than the
Guaranteed Obligations, are hereinafter referred to as the "Unguaranteed
Obligations". If at any time there exist any Unguaranteed Obligations, then (i)
Foothill may at its option, without impairing its rights hereunder, exercise
rights of offset by applying, first, to the Unguaranteed Obligations any deposit
balances to the credit of Borrower, and (ii) apply all amounts realized by
Foothill from collateral or security held by Foothill for payment of the
Obligations against the amount of the Collection Expenses, the Guaranteed
Obligations or the Unguaranteed Obligations in such order or manner as Foothill
shall determine at its option.
(c) In the event that Foothill makes demand on Guarantor under
this Guaranty prior to indefeasible payment of the Obligations, in full, to
Foothill, then this Guaranty will terminate, and Guarantor's liability will be
satisfied, only upon payment, in full, to Foothill by Guarantor of the
Guaranteed Obligations, the Collection Expenses, if any, and accrued interest
thereon, if any.
21. Choice of Law and Venue. THE VALIDITY OF THIS GUARANTY, ITS
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF GUARANTOR AND
FOOTHILL, SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. TO THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR HEREBY
AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS GUARANTY
SHALL BE TRIED AND DETERMINED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN
THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, OR, AT THE SOLE OPTION OF
FOOTHILL, IN ANY OTHER COURT IN WHICH FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE
PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN
CONTROVERSY. TO THE EXTENT PERMITTED BY LAW, GUARANTOR HEREBY EXPRESSLY WAIVES
ANY RIGHT HE MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION.
22. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, GUARANTOR
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
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ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING ARISING UNDER OR WITH
RESPECT TO THIS GUARANTY, OR IN ANY WAY CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE DEALINGS OF GUARANTOR AND FOOTHILL WITH RESPECT TO THIS
GUARANTY, OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO
THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR HEREBY AGREES THAT ANY SUCH
ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING SHALL BE DECIDED BY A
COURT TRIAL WITHOUT A JURY AND THAT FOOTHILL MAY FILE AN ORIGINAL COUNTERPART OF
THIS SECTION WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT
OF GUARANTOR TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
23. Covenant of Guarantor. Guarantor hereby agrees to deliver to
Foothill: (a) annual financial statements at the same time Borrower provides its
audited financial statements to Foothill pursuant to the Loan Documents, and (b)
copies of all federal income tax returns as soon as the same are available and
in any event no later than thirty (30) days after the same are required to be
filed by law.
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty
as of the date set forth in the first paragraph hereof.
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
an individual
Guarantor's Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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