LOAN AGREEMENT
THIS LOAN AGREEMENT (as it may be amended, this "Agreement") is made as
of this ___ day of ____________, 200__, between SWEETHEART CUP COMPANY INC., a
Delaware corporation (the "Borrower"), and DEPARTMENT OF BUSINESS AND ECONOMIC
DEVELOPMENT, a principal department of the State of Maryland (the "Lender").
RECITALS
1. The Borrower is indebted to the Lender in the principal amount not
to exceed $2,000,000, plus interest thereon (the "Loan"), which will be advanced
to the Borrower pursuant to this Agreement. The Loan is evidenced by a
Promissory Note dated the date hereof in the original principal amount of
$2,000,000 made by the Borrower and payable to the Lender (as it may be amended
or replaced, the "Note").
2. The Loan was made pursuant to the provisions of the Maryland
Economic Development Assistance Authority and Fund ("MEDAAF"), codified as
Sections 5-1401 through 5-1411 of Article 83A of the Annotated Code of Maryland
(as amended, the "Act").
3. The Loan proceeds will be used by the Borrower in connection with
the following activities (collectively, the "Project"): (a) construction of
improvements to the Borrower's facility, located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the "Facility"), that is used to manufacture single-use
disposable products for the food and beverage industry and for offices,
including the Corporate Headquarters (defined below); and (b) the acquisition
and installation of equipment into the Facility.
4. The Board of Directors of the Borrower approves the Project and the
terms of this Agreement by its resolution and execution of this Agreement.
NOW, THEREFORE, for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
All accounting terms not specifically defined herein shall have the
meanings determined by generally accepted accounting principles, consistently
applied. All terms previously defined are incorporated in this Agreement by
reference. Capitalized terms used in this Agreement have the meanings defined
below:
"Application" means the Application from the Borrower to the
Lender dated January 22, 2002, as it may be amended.
"Borrower's Contribution" means the Borrower's provision of at
least $3,000,000 towards the costs of the Project, in addition to the Loan.
"Claim" means any action or other claim for liability, loss,
expense, or other cost, including fees, costs and expenses of attorneys,
consultants, contractors, and experts.
"Completion Date" means December 31, 2002.
"Corporate Headquarters" means the Borrower's corporate
headquarters where the president and other executive officers of the Borrower
conduct substantially all of the operations of the Borrower.
"Default" means any default under Article IV of this
Agreement.
"Employees" means employees who (a) are employed by the
Borrower at the Facility for at least 1800 hours per year, without a fixed term
of employment, (b) are eligible for an employer subsidized health care benefits
package, (c) are eligible for similar other benefits as other employees of the
Borrower and any subsidiary or affiliate of the Borrower, and (d) make an hourly
wage of at least 150% of the federal minimum wage. An Employee shall not include
(i) an employee of a company acquired by the Borrower after the date hereof, if
the employee's place of employment immediately prior to the acquisition was in
the State or (ii) an employee of the Borrower who is transferred to the
Facility, if the employee's place of employment immediately prior to the
transfer was in the State.
"Environmental Requirement" means any Law or other
restriction, whether public or private, that in any way pertains to human
health, safety or welfare, Hazardous Materials, Hazardous Materials
Contamination or the environment (including any Law or restriction dealing with
ground, air, water or noise pollution or contamination, and underground or above
ground tanks).
"Expenses" means all reasonable costs and expenses incurred by
the Lender (whether before or after a Default) in connection with, or in
exercising or enforcing any rights, powers and remedies provided in, any of the
Financing Documents.
"Fifth Period" means from January 1, 2006 to December 31,
2006.
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"First Period" means from the date of this Agreement to
December 31, 2002.
"Final Report" means a completed and executed final report in
substantially the form of Exhibit B attached to this Agreement.
"Financing Documents" means all documents executed and
delivered in connection with the Loan and the Obligations, including this
Agreement, the Note and any other document, evidencing or securing the Loan, as
any of them may be amended.
"Fourth Period" means from January 1, 2005 to December 31,
2005.
"Governmental Authority" means the United States, the State,
or any of their political subdivisions, agencies, or instrumentalities,
including any local authority having jurisdiction over any aspect of the
Project.
"Hazardous Materials" means any hazardous or toxic substances,
wastes or materials, including any substance that contains asbestos, radon,
polychlorinated biphenyls, urea formaldehyde, explosives, radioactive materials,
or petroleum products, that, because of their quantity, concentration, or
physical, chemical, or infectious characteristics, may pose a present or
potential hazard or nuisance to human health, safety or welfare or to the
environment.
"Hazardous Materials Contamination" means the present or
future contamination of (a) any part of the Facility, including soil, ground
water, and air, by Hazardous Materials, or (b) any part of any other property
(including soil, ground water, and air) or improvement as a result of Hazardous
Materials emanating from the Facility.
"Hydric Soils" means any soil category upon which building
could be prohibited or restricted under any applicable Law, including any
restrictions imposed by the Army Corps of Engineers based upon its guidelines
concerning soil, vegetation, and effect on the ecosystem.
"Laws" means any current or future federal, state and local
laws, statutes, rules, ordinances, regulations, codes, orders, or decrees of any
court or other Governmental Authority having jurisdiction.
"Obligations" means all duties of payment, performance, and
completion owed by the Borrower to the Lender under the Financing Documents and
by law, including the obligations to:
(a) Pay all sums of money owed in connection
with the Loan and any of the Financing Documents, including all funds and all
sums of
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principal, interest, and premium, if any, due or to become due, and past,
present, and future advances under any of the Financing Documents, all money
advanced or expended by the Lender as provided for in any of the Financing
Documents, and all Expenses; and
(b) Strictly observe and perform all of the
provisions of the Financing Documents, time being of the essence.
"Regulations" means the regulations in COMAR 24.05.02.01
through 24.05.02.16, as they may be amended.
"Second Period" means from January 1, 2003 to December 31,
2003.
"State" means the State of Maryland.
"Taxes" means all taxes, water rents, sewer rents,
assessments, utility charges (whether public or private), and other governmental
or municipal or public dues, charges, and levies.
"Third Period" means from January 1, 2004 to December 31,
2004.
ARTICLE II
TERMS OF THE LOAN AND DISBURSEMENT
Section 2.01. The Loan.
Subject to the terms and conditions of all of the Financing Documents,
the Lender agrees to extend the Loan to the Borrower.
Section 2.02. Repayment and Interest.
All sums advanced under the Loan shall be evidenced by the Note and
shall be repaid with interest in accordance with the provisions of the Note.
Section 2.03. Disbursement.
(a) In General. Subject to the compliance by the Borrower with all
of the terms of all of the Financing Documents, the satisfaction of all
conditions precedent to disbursing Loan proceeds under this Agreement, and the
non-existence of a Default or any event, circumstance, act or omission which
with the giving of notice, the passage of time, or both, would constitute a
Default, the Lender shall advance to the Borrower the full amount of the Loan
pursuant to a completed Request for Disbursement, the form of which is attached
hereto as Exhibit A.
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(b) Disbursement. The Request for Disbursement shall be made to
the Lender at the address specified in Section 5.01, or at any other place that
the Lender designates.
(c) Disbursement to the Borrower. The disbursement shall be
made directly to the Borrower by check. The Lender shall only disburse Loan
proceeds upon presentation by the Borrower of invoices, bills, or other
satisfactory proof of payments to reimburse the Borrower for payments made for
up to 70% of the costs of the Project.
(d) Conditions for Disbursement. The obligation of the Lender to
disburse the proceeds of the Loan is subject to the satisfaction of the
following conditions as of the date the disbursement is made:
(i) Receipt of Request for Disbursement. The Lender shall
have received a completed Request for Disbursement.
(ii) Representations True. No representation or warranty
of the Borrower contained in this Agreement shall be or have become materially
incorrect or inaccurate.
(iii) No Defaults. There shall be no default, or event of
default under the terms of any of the Financing Documents, or any Default
hereunder and no event, circumstance, act, or omission shall exist which with
the giving of notice, the passage of time, or both, would constitute an event of
default (including a Default) under any of the Financing Documents or a Default
hereunder.
(iv) Solvency Certifications. If requested by the Lender,
the Borrower shall deliver to the Lender satisfactory evidence that no (1)
petition in bankruptcy, voluntary or otherwise, (2) assignment for the benefit
of creditors, (3) petition seeking reorganization or arrangement under
bankruptcy laws of the United States or of any state, or (4) other similar
action brought under any bankruptcy laws, is pending against the Borrower. The
Lender may request such a certification at any time during the Loan term.
(v) No Adverse Change. There has been no materially
adverse change in the Borrower's financial condition from that reflected in the
Borrower's financial statements most recently submitted to the Lender prior to
the closing.
(e) The Borrower's right to borrow under this Agreement shall
terminate 1 month after the date of this Agreement.
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(f) Availability of Funds. Disbursement of Loan proceeds are
subject to the continuing availability of funds for such purpose, and compliance
with all applicable Laws.
Section 2.04. Conditions Precedent to Disbursement.
Before disbursing any Loan proceeds, the Lender shall receive all of the items
set forth on the Pre-Closing and Closing Checklist attached hereto as Exhibit C,
in form and substance acceptable to the Lender.
Section 2.05. Completion.
Within 30 days after the Completion Date, the Borrower shall submit to
the Lender the following:
(a) Evidence that the Project is completed; and
(b) A Final Report, together with any additional
information reasonably required by the Lender.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE BORROWER
Section 3.01. Representations and Warranties.
The Borrower represents and warrants as follows:
(a) Organization. The Borrower:
(i) Is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware;
(ii) Has the power to own its property and to
carry on its business as now being conducted;
(iii) Is duly qualified to do business and is in
good standing in the State and in each jurisdiction in which the character of
properties owned by it or the transaction of its business makes qualification
necessary; and
(iv) Has delivered a complete copy of its
articles of incorporation and by-laws, together with all amendments thereto, to
the Lender.
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(b) Due Authorization. The Borrower has the full
corporate power and authority to enter into this Agreement, to borrow the Loan
as contemplated by the Financing Documents, to execute and deliver all of the
Financing Documents to which it is a party, and to comply with the terms set
forth in all of the Financing Documents, all of which have been duly authorized
by all necessary corporate action of the Borrower. No approval of any other
person or public authority or regulatory body is required as a condition to the
validity of any of the Financing Documents, or, if required, the approval has
been obtained.
(c) Validity of Financing Documents. All of the
Financing Documents have been properly executed by the Borrower and Borrower's
execution and delivery of the Financing Documents will:
(i) Not violate any Laws, or any provision of
the Borrower's articles of incorporation or by-laws;
(ii) Not violate any provision, or result in a
breach, of any document or agreement binding on the Borrower or affecting its
property; or
(iii) Constitute the valid and legally binding
obligations of the Borrower, fully enforceable against the Borrower, in
accordance with their respective terms.
(d) Legal Actions. There is no (1) Claim pending or, to
the best of the Borrower's knowledge, threatened in any court or before any
governmental agency, and (2) investigation by or before any Governmental
Authority, that:
(i) Questions the validity or enforceability of
any of the Financing Documents, or any action taken, or to be taken, under any
of them; or
(ii) Is likely to result in any material adverse
change in the authority, properties, assets, liabilities, or conditions
(financial or otherwise) of the Borrower that would materially impair the
Borrower's ability to perform any of its obligations under any of the Financing
Documents; or
(e) Borrower's Financial Statements. The Borrower's
financial statements, copies of which have been furnished to the Lender, were
prepared in accordance with generally accepted accounting principles
consistently applied (other than with respect to the interim financial
statement, the absence of footnotes and being subject to normal year-end
adjustments) and are complete and correct and fairly and accurately present in
all material respects the financial condition of the Borrower as of their date
and the results of its operations for the period(s) then ended. There has been
no material adverse change in the financial
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condition of the Borrower or the results of its operations since the date(s) of
such financial statements.
(f) Taxes. All Taxes due and payable imposed upon the
Borrower and its properties have been paid prior to the date when any interest
or penalty would accrue for nonpayment, except for those Taxes being contested
in good faith and by appropriate proceedings by the Borrower.
(g) Accuracy of Statements. All information contained
in any financial statement, report, or other document given by the Borrower or
by any other person on behalf of the Borrower in connection with the Loan is
true and accurate in all material respects, and the Borrower and each other
person has not omitted to state any material fact or any fact necessary to make
the information not misleading.
(h) Application. All information in the Application was
true and complete in all material respects as of the date of the Application.
The Borrower is aware of no event that would require any amendment to the
Application in order to make any information in the Application true and
complete in all material respects and not misleading in any material respect as
of the date of this Agreement, and the Borrower is aware of no event or other
fact that should have been, and has not been, reported in the Application as
material information.
(i) Financing Document Defaults. There is no event of
default or default on the part of the Borrower under any of the Financing
Documents and no Default under this agreement, and no event has occurred or is
continuing that, with notice, or the passage of time, or both, would constitute
an event of default or default under any of the Financing Documents or a Default
under this Agreement.
(j) Compliance With Laws. The Borrower has complied with
all Laws in effect.
(k) State Drug Policy. The Borrower is in compliance
with the State's policy concerning drug and alcohol free workplaces, as set
forth in COMAR 01.01.1989.18 and 21.11.08.
(l) Approvals. The Borrower has obtained, or expects to
obtain prior to the commencement of construction of the Project:
(i) All approvals from and reviews by all
Governmental Authorities of the Laws applicable to the Project and the Facility
or has reasonable assurances that such approvals will be obtained; and
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(ii) All necessary building permits for the
Project.
(m) Utilities and Roads. The Facility is serviced by all
utility services and roads necessary for the intended operation of the Facility.
(n) Zoning. The intended use of the Facility will not
violate any zoning or other Law, or any restrictive covenant or agreement of the
Borrower (now in existence or known by the Borrower to be proposed) applicable
to the Facility or its use, and all requirements for such use have been
satisfied.
(o) Environmental Conditions. The Facility, including
the land, surface water, ground water on which the Facility is constructed: (i)
Is free of any substantial amounts of waste or debris; (ii) Is free of any
Hazardous Materials and Hazardous Materials Contamination; (iii) To the best of
Borrower's knowledge, has never been used as a manufacturing, storage, or dump
site for Hazardous Materials; (iv) Is in compliance with all Environmental
Requirements; and (v) Contains no Hydric Soils.
(p) Priority Funding Area. The Property is located in
"Priority Funding Area" as that term is defined in Title 5-7B of the State
Finance and Procurement Article of the Annotated Code of Maryland.
(q) Corporate Headquarters. The Borrower represents and
warrants that the Corporate Headquarters are located at the Facility.
Section 3.02. Borrower's Covenants.
The Borrower covenants as follows:
(a) Repayment and Performance. The Borrower shall
promptly pay and perform all of the Obligations in the manner provided in the
Financing Documents.
(b) Use of Loan Proceeds. The Borrower shall use the
Loan proceeds for the costs of the Project approved by the Lender.
(c) Financial Information. The Borrower shall furnish
the Lender with:
(i) As soon as available, but in no event more
than 120 calendar days after the close of each of the Borrower's fiscal years, a
copy of the Borrower's annual financial statement in reasonable detail
satisfactory to the Lender, prepared in accordance with generally accepted
accounting principles, consistently applied, and audited by an independent,
certified public accountant; and
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(ii) Any additional information reasonably
requested by the Lender.
(d) Good Standing. The Borrower shall maintain its
existence as a Delaware corporation and its good standing and qualification to
do business in the State.
(e) State Drug Policy. The Borrower will comply with
the State's policy concerning drug and alcohol free workplaces, as set forth in
COMAR 01.01.1989.18 and 21.11.08, for the term of this Agreement. Specifically,
the Borrower shall:
(i) Make a good faith effort to eliminate
illegal drug use and alcohol and drug abuse from its workplaces during the term
of this Agreement;
(ii) Prohibit the unlawful manufacture,
distribution, dispensation, possession, or use of drugs in its workplaces;
(iii) Prohibit its employees from working under
the influence of alcohol or drugs;
(iv) Not hire or assign to work on an activity
funded in whole or part with State funds, anyone whom it knows, or in the
exercise of due diligence it should know, currently abuses alcohol or drugs and
is not actively engaged in a bona fide rehabilitation program;
(v) Promptly inform the appropriate law
enforcement agency of every drug related crime that occurs in any of its
workplaces if any of its employees has observed the violation or otherwise has
reliable information that a violation has occurred; and
(vi) Notify employees that drug and alcohol
abuse are banned in the workplaces, impose sanctions on employees who abuse
drugs and alcohol in the workplaces, and institute steps to maintain drug and
alcohol free workplaces.
(f) Completion. The Borrower shall:
(i) Cause the Project to be completed by the
Completion Date;
(ii) Cause the Project to be completed in
accordance with the terms of this Agreement; and
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(iii) Satisfy all applicable Laws for the
operation of the Facility by the Completion Date.
(g) Payment of Contractors. The Borrower will promptly
pay all contractors and materialmen the amounts due them.
(h) Maintenance of the Project. The Borrower shall, at
its sole cost and expense: (i) Keep, or cause to be kept, the Facility in good
condition, working order, and repair; (ii) Make, or cause to be made, all
replacements to any of the Facility so that the Facility will always be in good
condition; (iii) Operate, or cause to be operated, the Facility in the manner in
which similar property is operated by persons operating a first-class business
of a similar nature.
(i) Insurance.
(i) During the term of this Agreement, the
Borrower shall obtain and maintain, except as provided below, the following
insurance coverages:
(1) During any period of construction
on the Facility, builder's all-risk insurance of the type customarily carried in
the case of similar construction for the full replacement cost of work in place
and materials stored in connection with such construction;
(2) Comprehensive general public
liability and property damage insurance in amounts usually carried by similar
operations against claims for bodily injury, death, or damage to property
occurring on the Facility;
(3) "All risk" coverage for the Facility
in amounts necessary to prevent the application of any co-insurance provisions
up to the full replacement value of the Facility;
(4) Workers' compensation insurance for
all employees of the Borrower employed at the Facility in the State; and
(5) If the Facility is,or is later found
to be, in an area that has been identified by the Federal Insurance
Administration as having special flood and mudslide hazards, and in which the
sale of flood insurance is available under the National Flood Insurance Act of
1968, a flood insurance policy satisfactory to the Lender. If the Facility is
not in an area having special flood and mudslide hazards, the Borrower shall
deliver to the Lender a certificate or letter issued by its insurance company
stating that the Facility is not in a special flood and mudslide hazard area.
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(ii) All insurance policies shall be with
responsible companies reasonably acceptable to the Lender and shall each bear an
endorsement that it shall not be canceled, terminated, endorsed, or amended
without 30 days written notice to the Lender.
(iii) Upon request, the Borrower shall file with
the Lender a detailed list of the insurance then in effect covering the
Facility, stating the names of the insurance companies, the amounts and rates of
insurance, dates of the expiration thereof and the properties and risks covered
thereby.
(iv) The Borrower shall cause certificates
of insurance, evidencing that the Borrower maintains the insurance required
under this subsection, to be delivered annually to the Lender.
(v) The Borrower shall give the Lender prompt
notice of any loss covered by the builders all-risk or the all-risk insurance
required under this Agreement.
(j) Notification of Claims. The Borrower shall promptly
notify the Lender of any (i) material action or prospective claims or
litigation, including tax deficiencies, that may be asserted against the
Borrower, and (ii) default or event of default under the terms of any bond,
debenture, note, or other evidence of indebtedness of the Borrower.
(k) Access. Any duly authorized representative of the
Lender shall, at all reasonable times, have access to all portions of the
Facility.
(l) Books and Records. The Borrower shall keep any
books, records, and other documents that may be required under the rules and
procedures now or hereafter applicable to MEDAAF loans made by the Lender, and
as may be reasonably necessary to disclose fully the amount and disposition of
the Loan, the total costs incurred to complete the Project, and the source of
all funds expended towards the costs of the Project. All books, records and
other documents shall be maintained at the offices of the Borrower for
inspection, copying, audit and examination at all reasonable times by any duly
authorized representative of the Lender. All books, records and other documents
shall be maintained until the first to occur of (i) three years after completion
of the Project, or (ii) the completion of an audit of the Project by the State.
(m) Taxes. The Borrower shall promptly pay all Taxes due
and payable imposed on the Borrower and its properties prior to the date when
any interest or penalty would accrue for non-payment, except for those Taxes
being contested in good faith by appropriate proceedings by the Borrower.
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(n) Press Releases. Without the prior consent of the
Lender, the Borrower may not issue any press releases in connection with the
Loan, the State, or the Lender.
(o) Further Assurances. At any time, upon request by
the Lender, the Borrower, at its sole expense, will make, execute, and deliver,
or cause to be made, executed, and delivered, any additional documents that may,
in the opinion of the Lender, be necessary or desirable to effectuate, complete,
perfect, continue, or preserve the Obligations. Upon any failure by the Borrower
to do so, the Lender may make and execute any such documents in the name of the
Borrower, and at the sole expense of the Borrower, and the Borrower hereby
irrevocably appoints the Lender the agent and attorney-in-fact of the Borrower
to do so, this appointment being coupled with an interest. The Lender may, at
its option, advance the Expenses incurred in making and executing any such
documents and the Borrower shall reimburse the Lender for any sums advanced with
interest at a rate equal to 12% per annum if such Expenses are not reimbursed
within 30 days of receipt by the Borrower of a request by Lender for
reimbursement. Any such Expenses, together with interest, same shall be part of
the Obligations.
(p) Indemnification. The Borrower releases the State and
the Lender from, and agrees to protect, indemnify and save each of them harmless
against, any Claims and Expenses incurred by, or asserted against, any of them,
arising in connection with the Loan, the Project, or the Facility. All money
expended by the State or the Lender as a result of such Claims and Expenses,
together with interest at a rate equal to 12% per annum 30 days from the date of
receipt by the Borrower of a request by the Lender for reimbursement, shall
constitute an additional indebtedness of the Borrower and shall be immediately
due and payable by the Borrower to the State and the Lender. Nothing contained
in this Section 3.02(p) or in the Financing Documents shall be construed as a
limit on the Obligations. This Section 3.02(p) shall survive termination of this
Agreement and repayment of the Loan and Note in full.
(q) Contractor's Non-Discrimination. The Borrower shall
not discriminate on the basis of race, color, sex, religion, or national or
ethnic origin in its hiring of contractors to carry out any portion of the
Project. Borrower shall prohibit its contractors from engaging in such
discrimination in the hiring of subcontractors to carry out any portion of the
Project.
(r) Expenses. All Expenses incurred by the Lender shall
become part of the Obligations and shall be repaid by the Borrower on demand,
together with interest at a rate equal to 12% per annum 30 days from the date of
receipt by the Borrower of a request by the Lender for reimbursement.
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(s) Compliance With Laws. The Borrower will comply with
all Laws.
(t) Borrower's Contribution. The Borrower covenants to
expend the Borrower's Contribution by the Completion Date.
(u) Corporate Headquarters. The Borrower covenants to
maintain the Corporate Headquarters at the Facility. By January 31st each year,
the Borrower shall submit to the Lender a certification executed by an
authorized officer of the Borrower stating that the Corporate Headquarters are
located at the Facility.
ARTICLE IV
DEFAULT AND REMEDIES
Section 4.01. Defaults.
The following events shall constitute a Default under this Agreement:
(a) The Borrower fails to pay the principal amount of the
Loan and interest thereon according to the terms of the Note or any other
payment required by any of the Financing Documents, including the Obligations;
(b) The Borrower ceases to use the Facility for
manufacturing of single-use disposable products for the food and beverage
industry and offices, including the Corporate Headquarters;
(c) Any Loan proceeds are used for any purpose other
than for the costs of the Project as approved by the Lender;
(d) Except for the obligations of the Borrower to repay
the amounts due under the terms of the Note and the obligations as specified in
subsection (a) above, the breaches of the covenants, conditions or agreements
specified in subsection (e) below and the other Defaults enumerated under this
Section 4.01, the Borrower fails to duly and promptly perform, comply with or
observe any of the terms, covenants, conditions or agreements contained in
Sections 3.01(c) and 3.02(c) and (e) of this Agreement, which failure remains
unremedied for 15 days after written notice thereof shall have been given to the
Borrower by the Lender;
(e) The Borrower fails to duly and promptly perform,
comply with or observe any of the terms, covenants, conditions or agreements
contained in Sections 3.02, (a), (b), (d), (f), (g), (h), (i), (j), (k), (l),
(m), (n), (o), (r), (s), (t), (u) and Sections 6.01, 6.02, 6.03 and 6.04 of this
Agreement;
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(f) Any representation, or warranty made herewith or any
other statement or representation made in any certificate, report or opinion
(including legal opinions), financial statement, or other document furnished in
connection with the Loan was incorrect in any material respect when made;
(g) Any change in any zoning ordinance or any other
public restriction is enacted which limits or defines the uses that may be made
on any part of the Facility, so that the use of the Facility would be in
violation of the restriction or zoning change and the Facility would not be
useable for offices and the manufacturing of single-use disposable products for
the food and beverage industry;
(h) Any portion of, or interest in, the Facility is
sold, leased, subleased, or transferred, encumbered, or otherwise conveyed,
without the prior written consent of the Lender;
(i) The Borrower fails to comply with any requirement of
any Governmental Authority within 30 days after written notice of the
requirement is made or within any other time period set by the Governmental
Authority; or if any proceeding is commenced or action taken to enforce any
remedy for a violation of any requirement of a Governmental Authority or any
restrictive covenant affecting any part of the Facility;
(j) The Project is not completed, as determined in the
sole discretion of the Lender, by the Completion Date;
(k) A default or event of default occurs under the terms
of any bond, debenture, note, or other evidence of indebtedness of the Borrower
and remains uncured beyond any applicable grace or cure period;
(l) Final judgment for the payment of money in excess
of $1,000,000 is rendered against the Borrower and is not discharged or a stay
of execution thereon or a bond is not procured within 30 days from the date of
entry thereof, or if thereafter the judgment remains unsatisfied for a period of
30 days after the termination of any such stay of execution thereon or bond;
(m) Any court of competent jurisdiction makes a final
order (i) adjudicating the Borrower a bankrupt, (ii) appointing a trustee or
receiver of a substantial part of the property of the Borrower, (iii) approving
a petition for, or affecting an arrangement in, bankruptcy, a reorganization
pursuant to federal bankruptcy law, or any other judicial modification or
alterations of the rights of the Lender or of other creditors of the Borrower,
(iv) assuming custody or sequestering any substantial part of the property of
the Borrower, or (v) attaching or garnishing any substantial part of the
property of the Borrower; or if the Borrower (A) files such petition, or (B)
takes or consents to any other actions
15
seeking any such judicial order, or (C) makes an assignment for the benefit of
creditors, or (D) fails to pay debts generally as they become due, or (E) makes
an admission in writing of inability to pay debts generally as they become due;
(n) A permanent or preliminary injunction is issued that
lasts for more than 90 days, that prohibits the Borrower from using the Facility
for offices and the manufacturing of single-use disposable products for the food
and beverage industry;
(o) Without the prior written consent of the Lender
(which consent will not be unreasonably withheld), the Borrower (i) sells or
transfers all or substantially all of its business assets, (ii) begins any
proceeding to dissolve or liquidate, (iii) changes the form of business entity
through which it presently conducts its business, or (iv) merges or
consolidates;
(p) Without the prior written consent of the Lender,
the Borrower is dissolved by operation of law or in any other manner;
(q) The Lender makes a good faith determination that a
material adverse change has occurred in the financial condition of the Borrower
from the condition set forth in the most recent financial statement of the
Borrower furnished to the Lender, or from the financial condition of the
Borrower as most recently disclosed to the Lender in any other manner;
(r) The Lender makes a good faith determination that the
prospect of payment of the outstanding principal and accrued interest under the
Note is impaired for any reason;
(s) The Borrower moves any portion of its Facility or any
of its operations from the Facility.
(t) By the Completion Date, the Borrower fails to expend
the amount of the Borrower's Contribution towards the costs of the Project, as
approved by the Lender;
(u) A default or event of default occurs under the terms
of any of the other Financing Documents; or
(v) The Borrower employs less than 1400 Employees at any
time.
Section 4.02. Remedies.
(a) Upon the occurrence of any Default, the Lender may:
16
(i) Require the immediate repayment of the entire
outstanding principal indebtedness, together with all accrued interest, under
the Note and any Obligations;
(ii) At any time proceed to protect and enforce all rights
and remedies available to the Lender under this Agreement or by Law, by any
other proceedings, whether for specific performance of any agreement contained
in this Agreement, damages, or other relief; and
(iii) Suspend or terminate the Borrower's authority to
receive any undisbursed Loan proceeds at any time by notice to the Borrower.
(b) All remedies provided for in this Agreement or by Law are
cumulative and are in addition to any other rights and remedies available to the
Lender under any Law. The exercise of any right or remedy by the Lender shall
not constitute a cure or waiver of any Default by the Borrower, nor invalidate
any act done pursuant to any notice of Default, nor prejudice the Lender in the
exercise of those rights.
(c) The failure of the Lender to insist upon performance of any
term of this Agreement shall not constitute a waiver of any term of this
Agreement. No act of the Lender shall be construed as an election to proceed
under any one provision in this Agreement to the exclusion of any other
provision.
(d) If the Lender suspends or terminates this Agreement, the
rights and remedies available to the Lender shall survive the suspension or
termination.
Section 4.03. Setoff.
The Lender may set off against and apply any funds of the Borrower on
deposit with, or under the control of, the Lender to the payment of the
Obligations, without notice and without resort to any judicial proceeding.
ARTICLE V
MISCELLANEOUS
Section 5.01. Notices.
(a) All communications between the parties made pursuant to
this Agreement shall be in writing.
(b) Any communication shall (a) when mailed, be effective
three business days after it is deposited in the mails, (b) when mailed for next
day delivery by a reputable overnight courier service, be effective one business
day
17
after mailing, and (c) when sent by fax, be effective when it is faxed and
receipt of the communication is confirmed. Communications shall be delivered to
the office of the addressee, as follows:
(i) Communications to the Lender shall be mailed to:
Department of Business and Economic Development
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Loan Administration Unit
FAX Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to the Counsel to the Lender, on the 11th
Floor at the same address, or if by fax, to
▇▇▇-▇▇▇-▇▇▇▇.
(ii) Communications to the Borrower shall be mailed to:
Sweetheart Cup Company Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
FAX Number: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to the Counsel to the Borrower:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
FAX Number: (▇▇▇) ▇▇▇-▇▇▇▇
(c) The Borrower and the Lender may change their notice addresses
by sending written notice to the other party.
Section 5.02. Assignment.
No benefit or burden imposed on the Borrower under this Agreement may
be assigned without the prior written consent of the Lender.
Section 5.03. Successors Bound.
This Agreement shall inure to the benefit of, and shall be binding
upon, each of the parties and their successors and permitted assigns.
18
Section 5.04. Severability.
The invalidity of any part of this Agreement shall not affect the
validity of the remaining provisions of this Agreement.
Section 5.05. Entire Agreement.
This Agreement constitutes the entire agreement between the Borrower
and the Lender and supersedes all prior oral and written agreements,
representations, and negotiations between the parties concerning the Loan and
the Obligations.
Section 5.06. Amendment of Agreement.
This Agreement may be amended only in writing executed by the Lender
and the Borrower.
Section 5.07. Headings.
The headings used in this Agreement are for convenience only and do not
constitute a part of this Agreement.
Section 5.08. Disclaimer of Relationships.
The Borrower acknowledges that the obligation of the Lender is limited
to making the Loan on the terms set forth in this Agreement. Nothing in this
Agreement, and no act of the Lender or the Borrower, shall be deemed to create
any relationship of third-party beneficiary, principal and agent, limited or
general partnership, joint venture, or any other relationship between the
Borrower and the Lender. In addition, by inspecting any part of the Facility or
by accepting or approving any action of the Borrower under any of the Financing
Documents, the Lender shall not be considered to warrant the condition,
legality, or sufficiency of any part of the Facility or any action taken or not
taken by the Borrower.
Section 5.09. Governing Law.
This Agreement and all of the other Financing Documents shall be
governed by the laws of the State.
Section 5.10. Term of Agreement.
Except as otherwise provided in this Agreement, unless sooner
terminated by the mutual consent of the Borrower and the Lender, this Agreement
shall remain in full force and effect until the Loan and the Obligations,
together with interest and all other sums due and owing in connection with this
Agreement,
19
the Obligations or the Loan, have been paid in full to the satisfaction of the
Lender.
Section 5.11. Illegality.
If performance of any obligation under any of the Financing Documents
would require the performing party to violate the Law, then the performance
shall be reduced to the level permitted by Law, and if (1) any provision of this
Agreement, other than provisions requiring the Borrower to pay interest,
principal, principal and interest, or any other of the Obligations, operates, or
would operate, to invalidate any part of this Agreement, then such provision
only shall be void as though not set forth in this Agreement, and the remainder
of this Agreement shall remain in full force and effect, (2) any provision of
this Agreement requires the Borrower to pay interest, principal, principal and
interest, or any other of the Obligations, then at the option of the Lender, the
entire unpaid sum under the Loan, with all unpaid interest accrued thereon, and
all other unpaid Obligations shall become due and payable.
Section 5.12. WAIVER OF JURY TRIAL.
THE BORROWER HEREBY VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER AND IN CONNECTION WITH THE LOAN OR ANY OF THE
FINANCING DOCUMENTS.
Section 5.13. Expenses.
The Borrower shall pay all Expenses in connection with the execution
and delivery of any of the Financing Documents.
Section 5.14. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be an original, but all of which, when taken together, shall
constitute one document.
20
ARTICLE VI
EMPLOYMENT, INTEREST RATE AND
EMPLOYMENT REPORTING
Section 6.01. Maintenance of Employees.
(a) Representation and Warranty-Employees. The Borrower
represents and warrants that as of the date of this Agreement, the Borrower
employs at least 1400 Employees.
(b) The Grantee covenants that at all times during the term of
this Agreement, it will continuously employ at least 1400 Employees. Pursuant to
Section 6.03(d) of this Agreement, the Lender may request employment information
at any time during the term of this Agreement to confirm whether the Grantee is
in compliance with this covenant.
Section 6.02. Calculation of Employees.
1. The Lender's determination of the number of Employees as of the
date of closing and December 31, 2002 shall be based on the actual number of
Employees employed as of those dates, which numbers shall be set forth in the
reports required in Section 6.03(a) and (b) of this Agreement, respectively.
2. The Lender's determination of the number of Employees as of December
31st of 2003, 2004, 2005 and 2006 shall be based on an average of the actual
number of Employees as of June 30 and December 31 of the Second Period, Third
Period, Fourth Period and Fifth Period, respectively, which numbers will be set
forth in the reports required in Sections 6.03(c) of this Agreement.
3. The Lender's determination of whether the Borrower has employed at
least 1400 Employees at all times shall be determined each calendar year
beginning 2003 by averaging the actual number of Employees as of June 30 and
December 31 of each year. Provided, however, that if the Lender requests
employment information pursuant to Section 6.03(d) of this Agreement to confirm
that the Borrower is in compliance with Section 6.01 (b), the Lender's
determination of whether the Borrower has employed at least 1400 Employees shall
be based on the actual number of Employees as of the date specified by the
Lender.
Section 6.03. Employee Reporting Requirement.
1. At or prior to closing of the Loan, the Borrower shall submit to the
Lender (i) a list of the names of all of the Employees employed at the Facility
as of the month prior to closing, and (ii) the social security number, the
average hours worked, or expected to be worked, for the year, the hourly or
annual pay
21
rate, and a general description of available benefits for each listed Employee.
An officer of the Borrower shall certify to the Lender that (1) the list is true
and accurate, (2) the employees listed meet the definition of Employees, and (3)
each of the Employees listed is employed at the Facility.
2. By January 31, 2003, the Borrower shall submit to the Lender (i) a
list of the names of all of the Employees employed at the Facility as of
December 31, 2002, and (ii) the social security number, the average hours
worked, or expected to be worked, for the year, the hourly or annual pay rate,
and a general description of available benefits for each listed Employee. An
officer of the Borrower shall certify to the Lender that (1) the list is true
and accurate, (2) the employees listed meet the definition of Employees, and (3)
each of the Employees listed is employed at the Facility.
3. By January 31st of each year, beginning 2004 and continuing through
2007, the Borrower shall submit to the Lender for the Second Period, Third
Period, Fourth Period and Fifth Period, a report that contains (i) the names of
all of the Employees, and (ii) the social security number, the average hours
worked, or expected to be worked, for the year, the hourly or annual pay rate,
and a general description of available benefits for each listed Employee. Each
report shall contain the information as of June 30 and December 31st of the
applicable one-year period. An officer of the Borrower shall certify to the
Lender that (1) the list is true and accurate, (2) the employees listed meet the
definition of Employees, and (3) each of the Employees listed is employed at the
Facility.
4. Upon the request of the Lender, the Borrower covenants to provide
the Lender with any information and reports that the Lender determines, in its
discretion, are needed to confirm or verify the employment information submitted
by the Borrower. The Borrower shall permit the Lender to inspect the employee
records of the Borrower to confirm the employee information submitted by
Borrower to the Lender.
Section 6.04. Determination of Interest Rate.
1. First Period.
(i) During the First Period, the interest rate on the
Loan shall be 3% per annum, if the Lender has determined that as of December 31,
2002, the Borrower employed at least 1600 Employees.
(ii) During the First Period, the interest on the Loan
shall be 4% per annum, if the Lender has determined that as of December 31,
2002, the Borrower employed at least 1550 but not more than 1599 Employees.
22
(iii) During the First Period, the interest rate on the
Loan shall be 5% per annum, if the Lender has determined that as of December 31,
2002, the Borrower employed at least 1500 but not more than 1549 Employees.
(iv) During the First Period, the interest rate on the
Loan shall be 6% per annum, if the Lender has determined that as of December 31,
2002, the Borrower employed at least 1450 but not more than 1499 Employees.
(v) During the First Period, the interest rate on the
Loan shall be 8% per annum, if the Lender has determined that as for December
31, 2002, the Borrower employed at least 1400 but not more than1449 Employees.
2. Second Period.
(i) During the Second Period, the interest rate on the
Loan shall be 3% per annum, if the Lender has determined that during the Second
Period at least 1600 Employees were employed.
(ii) During the Second Period, the interest on the Loan
shall be 4% per annum, if the Lender has determined that during the Second
Period on average at least 1550 but not more than 1599 Employees were employed.
(iii) During the Second Period, the interest rate on the
Loan shall be 5% per annum, if the Lender has determined that during the Second
Period on average at least 1500 but not more than 1549 Employees were employed.
(iv) During the Second Period, the interest rate on the
Loan shall be 6% per annum, if the Lender has determined that during the Second
Period on average at least 1450 but not more than 1499 Employees were employed.
(v) During the Second Period, the interest rate on the
Loan shall be 8% per annum, if the Lender has determined that during the Second
Period on average at least 1400 but not more than 1449 Employees were employed.
3. Third Period.
(i) During the Third Period, the interest rate on the
Loan shall be 3% per annum, if the Lender has determined that during the Third
Period at least 1600 Employees were employed.
(ii) During the Third Period, the interest on the Loan
shall be 4% per annum, if the Lender has determined that during the Third Period
on average at least 1550 but not more than 1599 Employees were employed.
23
(iii) During the Third Period, the interest rate on the
Loan shall be 5% per annum, if the Lender has determined that during the Third
Period on average at least 1500 but not more than 1549 Employees were employed.
(iv) During the Third Period, the interest rate on the
Loan shall be 6% per annum, if the Lender has determined that during the Third
Period on average at least 1450 but not more than 1499 Employees were employed.
(v) During the Third Period, the interest rate on the
Loan shall be 8% per annum, if the Lender has determined that during the Third
Period on average at least 1400 but not more than 1449 Employees were employed.
4. Fourth Period.
(i) During the Fourth Period, the interest rate on the
Loan shall be 3% per annum, if the Lender has determined that during the Fourth
Period at least 1600 Employees were employed.
(ii) During the Fourth Period, the interest on the Loan
shall be 4% per annum, if the Lender has determined that during the Fourth
Period on average at least 1550 but not more than 1599 Employees were employed.
(iii) During the Fourth Period, the interest rate on the
Loan shall be 5% per annum, if the Lender has determined that during the Fourth
Period on average at least 1500 but not more than 1549 Employees were employed.
(iv) During the Fourth Period, the interest rate on the
Loan shall be 6% per annum, if the Lender has determined that during the Fourth
Period on average at least 1450 but not more than 1499 Employees were employed.
(v) During the Fourth Period, the interest rate on the
Loan shall be 8% per annum, if the Lender has determined that during the Fourth
Period on average at least 1400 but not more than 1449 Employees were employed.
5. Fifth Period.
(i) During the Fifth Period, the interest rate on the
Loan shall be 3% per annum, if the Lender has determined that during the Fifth
Period at least 1600 Employees were employed.
(ii) During the Fifth Period, the interest on the Loan
shall be 4% per annum, if the Lender has determined that during the Fifth Period
on average at least 1550 but not more than 1599 Employees were employed.
24
(iii) During the Fifth Period, the interest rate on the
Loan shall be 5% per annum if the Lender has determined that during the Fifth
Period on average at least 1500 but not more than 1549 Employees were employed.
(iv) During the Fifth Period, the interest rate on the
Loan shall be 6% per annum, if the Lender has determined that during the Fifth
Period on average at least 1450 but not more than 1499 Employees were employed.
(v) During the Fifth Period, the interest rate on the
Loan shall be 8% per annum, if the Lender has determined that during the Fifth
Period on average at least 1400 but not more than 1449 Employees were employed.
[Signatures appears on the next page.]
25
IN WITNESS WHEREOF, the Borrower and the Lender have caused this
Agreement to be executed and delivered as of the date first above written.
WITNESS: DEPARTMENT OF BUSINESS AND
ECONOMIC DEVELOPMENT
By: (SEAL)
--------------------------- ----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: Secretary
----------------------
WITNESS: Sweetheart Cup Company Inc.
By: (SEAL)
--------------------------- ----------------------------
Name:
-----------------------
Name: Title:
---------------------- -----------------------
STATE OF MARYLAND, CITY/COUNTY OF , TO WIT:
----------------
I HEREBY CERTIFY that on this day of , 200 , before
--- ------------- --
me, a Notary Public in the State of Maryland, personally appeared ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, who acknowledged himself to be the Secretary of Business and Economic
Development, known or satisfactorily proven to me to be the person whose name is
subscribed to this document, and acknowledged that he executed it on behalf of
Business and Economic Development as its duly authorized Secretary.
AS WITNESS my hand and Notarial Seal.
-----------------------------
Notary Public
My Commission expires:
------------
26
STATE OF MARYLAND, CITY/COUNTY OF , TO WIT:
----------------
I HEREBY CERTIFY that on this day of , 200 , before
--- ------------- --
me, a Notary Public in the State of Maryland, personally appeared
, who acknowledged himself/herself to be the of
----------------- ----------
sWEETHEART CUP COMPANY iNC., known or satisfactorily proven to me to be the
person whose name is subscribed to this document, and acknowledged that she/he
executed it on behalf of the , as its duly authorized
----------------
.
-------------
AS WITNESS my hand and Notarial Seal.
----------------------------
Notary Public
My Commission expires:
------------
27
LOAN AGREEMENT
EXHIBIT A
REQUEST FOR DISBURSEMENT
1. Project Name:
---------------
2. Applicant:
------------------------------------------------------
3. Request No. (number consecutively):
-----------------------------
4.
------------------------------------- -------------------------- -------------------------- --------------------------
Activity Actual Cost (& Contract Amount Requested from Cumulative Amount
# if applicable) Department in this Requested from
Request Department to date
------------------------------------- -------------------------- -------------------------- --------------------------
------------------------------------- -------------------------- -------------------------- --------------------------
------------------------------------- -------------------------- -------------------------- --------------------------
------------------------------------- -------------------------- -------------------------- --------------------------
------------------------------------- -------------------------- -------------------------- --------------------------
------------------------------------- -------------------------- -------------------------- --------------------------
Total:
------------------------------------- -------------------------- -------------------------- --------------------------
Instructions:
(1) Cost figures must be supported by adequate documentation
(invoices, bills, vouchers, etc.).
(2) The Department will not honor requests for disbursement which
exceed 70% of the Project costs.
28
Certification:
SWEETHEART CUP COMPANY INC. (the "Borrower") hereby certifies that:
1. The attached request is for funds to reimburse the
Borrower for a portion of the costs incurred in connection with the Project as
approved by the Department of Business and Economic Development (the "Lender").
2. This request is not for previously requested funds.
3. The conditions to be satisfied prior to the
disbursement of MEDAAF funds as set forth in the Loan Agreement between the
Lender and Sweetheart Cup Company Inc. (the "Agreement") have been met.
4. No default exists under the Agreement or the
Promissory Note executed in connection with the Agreement.
5. The representations and warranties made by the
Borrower in the Agreement are true and correct in all material respects.
WITNESS: SWEETHEART CUP COMPANY INC.
By: (SEAL)
--------------------------- ----------------------------
Name: Name:
---------------------- ----------------------
Title:
----------------------
Date:
----------------------
29
LOAN AGREEMENT
EXHIBIT B
Maryland Economic Development Assistance Authority and Fund ("MEDAAF")
Final Report and Certification of Completion Costs
1. Project Name:
-----------------------------------------------
2. Borrower:
-----------------------------------
3. Period Covered: to
------------------ -----------------------
4. Activity:
---------------------------------------- --------------------- -------------------- -------------------- -------------------
Costs of Project Costs Paid by MEDAAF Other Source Other Source Other Source
---------------------------------------- --------------------- -------------------- -------------------- -------------------
---------------------------------------- --------------------- -------------------- -------------------- -------------------
---------------------------------------- --------------------- -------------------- -------------------- -------------------
---------------------------------------- --------------------- -------------------- -------------------- -------------------
---------------------------------------- --------------------- -------------------- -------------------- -------------------
---------------------------------------- --------------------- -------------------- -------------------- -------------------
---------------------------------------- --------------------- -------------------- -------------------- -------------------
TOTAL:
---------------------------------------- --------------------- -------------------- -------------------- -------------------
*(Please specify in parenthesis the entity which paid each particular cost.)
30
CERTIFICATION:
1. Attached hereto as Exhibit A is a true and correct summary of
charges incurred by the Borrower for work actually performed in conjunction with
the Project.
2. All invoices referenced on Exhibit A have been paid in full by the
Borrower.
All capitalized terms used in this certification that are not otherwise defined
herein shall have the meanings assigned to them in the Loan Agreement, dated as
of , 2002, between the Borrower and Department of Business and
------------
Economic Development (the "Lender").
WITNESS: SWEETHEART CUP COMPANY INC
By: (SEAL)
--------------------------- ----------------------------
Name: Name:
---------------------- -----------------------
Title:
-----------------------
Date:
-----------------------
31
LOAN AGREEMENT
EXHIBIT C
PRE-CLOSING AND CLOSING CHECKLIST
32