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Exhibit 10.1
LOAN AGREEMENT
among
COMERICA BANK-TEXAS
(LENDER)
SUN COAST HOLDINGS, INC.
(BORROWER)
and
SUN COAST INDUSTRIES, INC.
SUN COAST CLOSURES, INC.
PLASTICS MANUFACTURING COMPANY
CUSTOM LAMINATES, INC.
and
SUN COAST ACQUISITION, INC.
(GUARANTORS)
As of December 20, 1995
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of December ___, 1995, is among SUN
COAST INDUSTRIES, INC., a Delaware corporation, SUN COAST CLOSURES, INC., a
Florida corporation, PLASTICS MANUFACTURING COMPANY, a Nevada corporation,
CUSTOM LAMINATES, INC., a Nevada corporation, SUN COAST ACQUISITION, INC., a
Nevada corporation, SUN COAST HOLDINGS, INC., a Nevada corporation, and
COMERICA BANK-TEXAS, a Texas banking association.
RECITALS:
The Borrower (as defined below) has requested that the Lender (as
defined below) extend credit to the Borrower in the form of (i) revolving
credit advances in an aggregate principal amount not to exceed $15,000,000.00,
(ii) two separate one-time term advances in an aggregate principal amount not
to exceed $6,672,600.00 and (iii) multiple term advances in an aggregate
principal amount not to exceed $14,000,000.00.
The Lender has agreed to make such loans to the Borrower, to be
guaranteed by the Guarantors (as defined below), upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Borrower and the Lender hereby agree as
follows:
SECTION 1. DEFINITIONS
1.1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"ACCOUNTS," "CHATTEL PAPER," "DOCUMENTS," "EQUIPMENT,"
"FIXTURES," "GENERAL INTANGIBLES," "GOODS," and "INSTRUMENTS" shall
have the meanings assigned to them in the UCC on the date of this
Agreement, as such definitions may be supplemented by the Security
Agreement, provided that "Equipment" shall not include any equipment
which is part of the "Project", as defined in the Loan, Mortgage, and
Security Agreement dated as of December 1, 1985, between Manatee
County, Florida and Sun Coast Plastics, Inc., for so long as such
equipment is part of such "Project".
"ADJUSTED CD RATE" means, for any CD Advance for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by the Lender to be
equal to the sum of (a) the CD Rate for such CD Advance for such
Interest Period divided by 1 minus the Reserve Requirement for such CD
Advance for such Interest Period plus (b) the Assessment Rate in
effect at the commencement of such Interest Period.
"ADJUSTED LIBOR RATE" means, for any LIBOR Advance for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100
LOAN AGREEMENT - Page 1
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of 1%) determined by the Lender to be equal to the LIBOR Rate for such
LIBOR Advance for such Interest Period divided by 1 minus the Reserve
Requirement for such LIBOR Advance for such Interest Period.
"ADVANCE" means a Loan or an advance of funds by the Lender
to the Borrower pursuant to this Agreement.
"ADVANCE REQUEST FORM" means a certificate, in the form of
Exhibit "A" hereto, properly completed and signed by the Borrower
requesting an Advance.
"AGREEMENT" shall mean this Loan Agreement.
"APPLICABLE RATE" means: (a) during the period that an
Advance is a Prime Rate Advance, the Prime Rate plus the Applicable
Margin; (b) during the period that an Advance is a LIBOR Advance, the
Adjusted LIBOR Rate plus the Applicable Margin; and (c) during the
period that an Advance is a CD Advance, the Adjusted CD Rate plus the
Applicable Margin.
"APPLICABLE MARGIN" shall mean the following respective
percentages, each to be (i) applicable on the first day of each
respective Interest Period and continuing until the expiration of such
Interest Period and (ii) based upon the most recent Financial
Statements available to the Lender as of the first day of each
respective Interest Period:
Leverage Ratio Applicable Margin Applicable Margin Applicable Margin
of the Borrower For Prime Rate Advances For CD Advances For LIBOR Advances
--------------- ----------------------- ------------------ ------------------
Greater than 3:1 0% 2.25% 2.25%
Less than or equal to 3:1
but greater than 2.5 0% 1.75% 1.75%
Less than or equal to 2.5:1
but greater than 2:1 0% 1.50% 1.50%
Less than or equal to 2:1 0% 1.25% 1.25%
"ASSESSMENT RATE" means, at any time, the rate (rounded
upwards, if necessary, to the nearest 1/100 of 1%) then charged by the
Federal Deposit Insurance Corporation (or any successor) to the Lender
for deposit insurance for Dollar time deposits with the Lender at its
principal office in Dallas, Texas as determined by the Lender.
"AUTHORIZED OFFICER" shall mean each officer of the Borrower
who has been authorized by the Borrower to request Loans hereunder and
who has been furnished by the Borrower with the Security Code. The
Borrower shall provide the Lender with a list of Authorized Officers.
"BANKRUPTCY CODE" shall mean Title 11 of the United States
Code, as amended, or any successor act or code.
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"BORROWER" shall mean Sun Coast Holdings, Inc., a Nevada
corporation.
"BORROWING BASE" shall mean, at any particular time and as
determined on the basis of information furnished in the most recent
Borrowing Base Certificate, an amount equal to the sum of (a)
eighty-five percent (85%) of the aggregate principal balance of the
Borrower's Eligible Accounts, plus (b) sixty-five percent (65%) of the
lesser of the book or fair market value of the Borrower's Eligible
Inventory.
"BORROWING BASE CERTIFICATE" shall mean a certificate in the
form of Exhibit "B" to this Agreement, completed in all appropriate
respects and executed by the chief executive officer, chairman, vice
chairman, or chief financial officer of the Borrower or of Industries
and setting forth Borrower's computation of the Borrowing Base as of
the date of such certificate.
"BUSINESS DAY" shall mean each day on which the Lender is
open to carry on its normal commercial lending business.
"CD ADVANCES" means Advances the interest rates on which are
determined on the basis of the rates referred to in the definition of
"Adjusted CD Rate" in this Section 1.1.
"CD RATE" means, for any CD Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by the Lender to be the average of the
bid rates quoted by the Lender (or its funding affiliate) at
approximately 11:00 A.M. Dallas, Texas time (or as soon thereafter as
practicable) on the first day of such Interest Period to three (3) or
more certificate of deposit dealers of recognized national standing
selected by the Lender for the purchase at face value of certificates
of deposit of the Lender having a term comparable to such Interest
Period and in an amount comparable to the principal amount of the CD
Advance to which such Interest Period relates.
"COLLATERAL" shall mean all of Borrower's and Guarantors'
Accounts, Chattel Paper, Documents, Equipment, General Intangibles,
Goods, Instruments and Inventory (including all spare parts and all
attachments and accessions related to any Inventory or Goods),
wherever located and whether now owned or hereafter acquired, together
with all replacements thereof, substitutions therefor and all proceeds
and products thereof, the Real Property, and any securities pledged
under any Pledge Agreement.
"COMMITMENTS" shall mean the Facility A Commitment, the
Facility B Commitment, the Facility C Commitment and the Facility D
Commitment. "COMMITMENT" shall mean any one of the Commitments.
"COMPLIANCE CERTIFICATE" shall mean a certificate in the
form of Exhibit "J", completed and signed by the chairman or vice
chairman or a senior financial officer of the Borrower.
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"CONSOLIDATED FINANCIAL DEBT" means the Financial Debt of
Industries and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"CONTINUE," "CONTINUATION," and "CONTINUED" shall refer to
the continuation pursuant to Section 6 of a Fixed Rate Advance as a
Fixed Rate Advance of the same Type from one Interest Period to the
next Interest Period.
"CONTRACT RATE" shall mean, as of any date of determination,
the Applicable Rate.
"CONVERT," "CONVERSION," and "CONVERTED" shall refer to a
conversion pursuant to Section 6 of one Type of Advance into another
Type of Advance.
"DEBT" shall mean, as of any applicable date of
determination, all items of indebtedness, obligation or liability of a
Person, whether matured or unmatured, liquidated or unliquidated,
direct or indirect, absolute or contingent, joint or several, that
should be classified as balance sheet liabilities in accordance with
GAAP.
"DEED OF TRUST" shall mean a Deed of Trust in the form of
Exhibit "C," executed by the Borrower for the benefit of the Lender.
"DEFAULT" shall mean a condition or event which, with the
giving of notice or the passage of time, or both, would become an
Event of Default.
"DEFAULT RATE" shall mean the Maximum Legal Rate, or if no
Maximum Legal Rate exists, the sum of the Prime Rate in effect from
day to day plus four percent (4%), but in no event more than the
Maximum Legal Rate.
"EBITDA" shall mean, as of any date of determination and as
determined in accordance with GAAP, the sum of (i) the consolidated
net income of Industries and the Subsidiaries for the preceding
twelve-month period, plus (ii) the consolidated interest expense of
Industries and the Subsidiaries for such period, plus (iii) their
consolidated depreciation, amortization, taxes, and provision for
deferred taxes for such period.
"ELIGIBLE ACCOUNTS" shall mean those Accounts of the
Borrower and the Guarantors for which each of the warranties set forth
in Section 10.19 of this Agreement shall be true (as of any applicable
date of determination) and which has been represented to be an
"Eligible Account" on a Borrowing Base Certificate.
"ELIGIBLE INVENTORY" shall mean that inventory of the
Borrower and the Guarantors for which each of the warranties set forth
in Section 10.16 of this Agreement shall be true (as of any applicable
date of determination) and which has been represented by the Borrower
to be an item of "ELIGIBLE INVENTORY" on a Borrowing Base Certificate.
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"ENVIRONMENTAL LAWS" means any and all federal, state, and
local laws, regulations, and requirements pertaining to the
environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42
U.S.C. 9601 et seq., the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. 6901 et seq., the Occupational Safety and Health
Act, as amended, 29 U.S.C. 651 et seq., the Clean Air Act, 42 U.S.C.
7401 et seq., the Clean Water Act as amended, 33 U.S.C. 1251 et seq.,
the Toxic Substances Control Act, as amended, 15 U.S.C. et seq., and
all similar laws, regulations, and requirements of any governmental
authority or agency having jurisdiction over Borrower or any of its
properties or assets, as such laws, regulations, and requirements may
be amended or supplemented from time to time.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, or any successor act or code.
"EVENT OF DEFAULT" shall mean any of those conditions or
events listed in Section 11.1 of this Agreement.
"FACILITY A COMMITMENT" shall mean the obligation of the
Lender to make Facility A Loans to the Borrower in an aggregate
principal amount at any time outstanding up to but not to exceed
Fifteen Million Dollars ($15,000,000).
"FACILITY A LOANS" shall mean each Advance of funds made by
the Lender to the Borrower pursuant to Section 2. "Facility A Loan"
shall mean any one of the Facility A Loans.
"FACILITY A NOTE" shall mean the promissory note of Borrower
payable to the order of the Lender, in substantially the form of
Exhibit "D" hereto, and all extensions, renewals and modifications
thereof and substitutions therefor.
"FACILITY B COMMITMENT" shall mean the obligation of the
Lender to make the Facility B Loan to the Borrower in the principal
amount up to but not to exceed Three Million Four Hundred Sixty-Four
Thousand Three Hundred Dollars ($3,464,300.00).
"FACILITY B LOAN" shall mean the single Advance of funds
made by the Lender to the Borrower pursuant to Section 3.
"FACILITY B NOTE" shall mean the promissory note of the
Borrower payable to the order of the Lender, in substantially the form
of Exhibit "E" hereto, and all extensions, renewals and modifications
thereof and substitutions therefor.
"FACILITY C COMMITMENT" shall mean the obligation of the
Lender to make the Facility C Loan to the Borrower in the principal
amount up to but not to exceed Three Million Two Hundred Eight
Thousand Three HundredDollars ($3,208,300.00).
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"FACILITY C LOAN" shall mean the single Advance of funds
made by the Lender to the Borrower pursuant to Section 4.
"FACILITY C NOTE" shall mean the promissory note of the
Borrower payable to the order of the Lender, in substantially the form
of Exhibit "F" hereto, and all extensions, renewals and modifications
thereof and substitutions therefor.
"FACILITY D COMMITMENT" shall mean the obligation of the
Lender to make the Facility D Loans to the Borrower in the principal
amount at any time outstanding up to but not to exceed Fourteen
Million Dollars ($14,000,000).
"FACILITY D LOANS" shall mean each Advance of funds made by
the Lender to the Borrower pursuant to Section 5. "Facility D Loan"
shall mean any one of the Facility D loans.
"FACILITY D NOTES" shall mean the promissory notes of the
Borrower payable to the order of the Lender, each in substantially the
form of Exhibit "G" hereto, and all extensions, renewals and
modifications thereof and substitutions therefor. "Facility D Note"
shall mean any one of the Facility D Notes.
"FINANCIAL DEBT" shall mean, with respect to any Person,
without duplication, the principal component of:
(a) its liabilities for borrowed money
or for other Debt evidenced by notes, bonds, debentures or
similar instruments;
(b) its liabilities for the deferred
purchase price of property acquired by such Person
(excluding accounts payable arising in the ordinary course
of business but including, without limitation, all
liabilities created or arising under any conditional sale or
other title retention agreement with respect to any such
property);
(c) its obligations under capitalized
leases;
(d) all liabilities of other Persons of
a type described in clauses (a), (b) or (c) of this
definition which are secured by any Lien burdening its
property (whether or not it has assumed or otherwise become
liable for such liabilities); and
(e) any guaranty by it or another
Person's liabilities of a type described in clauses (a)
through (d) of this definition.
"FINANCIAL STATEMENTS" shall mean all those balance sheets,
earnings statements and other financial data (whether of the Borrower,
the Guarantors, any other guarantor or otherwise) which have been
furnished or will be furnished to the Lender
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for the purpose of, or in connection with, this Agreement and the
transactions contemplated hereby.
"FINANCING STATEMENTS" shall mean UCC financing statements
describing the Lender as secured party and any of the companies making
up the Borrower and the Guarantors as debtor covering the Collateral
and otherwise in such form, for filing in such jurisdictions and with
such filing offices as the Lender shall reasonably deem necessary or
advisable.
"FIXED CHARGES" shall mean, as of any date of determination,
(i) the aggregate principal amount of Long-Term Debt that is payable
during the twelve-month period that succeeds the date of
determination, plus (ii) the consolidated interest expense of
Industries and the Subsidiaries during the twelve-month period that
precedes the date of determination, plus (iii) the aggregate amount of
all cash dividends actually paid by Industries during the twelve-month
period that precedes the date of determination.
"FIXED CHARGE COVERAGE RATIO" shall mean, as of any date of
determination, an amount equal to the ratio resulting as the quotient
of the Borrower's EBITDA divided by Fixed Charges.
"FIXED RATE ADVANCES" means CD Advances and LIBOR Advances.
"GAAP" shall mean, as of any applicable date of
determination, generally accepted accounting principles consistently
applied, as in effect on the date hereof except as otherwise agreed by
Industries and the Lender.
"GUARANTORS" shall mean Industries, Sun Coast Closures,
Inc., a Florida corporation, Plastics Manufacturing Company, a Nevada
corporation, Custom Laminates, Inc., a Nevada corporation and Sun
Coast Acquisition, Inc., a Nevada corporation.
"GUARANTY" shall mean a guaranty in the form of Exhibit "H"
hereto.
"HAZARDOUS SUBSTANCE" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other
material which is or becomes listed, regulated, or addressed under any
Environmental Law, including, without limitation, asbestos, petroleum,
and polychlorinated biphenyls.
"INDEBTEDNESS" shall mean all loans, advances and
indebtedness of the Borrower or Guarantor to the Lender under this
Agreement, together with all other indebtedness, obligations and
liabilities whatsoever of the Borrower to the Lender, whether matured
or unmatured, liquidated or unliquidated, direct or indirect, absolute
or contingent, joint or several, due or to become due, now existing or
hereafter arising.
"INDUSTRIES" shall mean Sun Coast Industries, Inc., a
Delaware corporation.
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"INTEREST PERIOD" means:
(a) With respect to Prime Rate Advances,
each period commencing on the date such Advances are made or
converted from Advances of another Type and ending on the
date of payment or Conversion of such Advances.
(b) With respect to any LIBOR Advances,
each period commencing on the date such Advances are made or
Converted from Advances of another Type or, in the case of
each subsequent, successive Interest Period applicable to a
LIBOR Advance, the last day of the next preceding Interest
Period with respect to such Advance, and ending on the
numerically corresponding day in the first, second, third,
sixth, ninth or twelfth calendar month thereafter, as the
Borrower may select as provided in this Agreement hereof,
except that each such Interest Period which commences on the
last Business Day of a calendar month (or on any day for
which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last
Business Day of the appropriate subsequent calendar month.
(c) With respect to any CD Advances,
each period commencing on the date such Advances are made or
Converted from Advances of another Type or, in the case of
each subsequent, successive Interest Period applicable to a
CD Advance, the last day of the next preceding Interest
Period with respect to such Advance, and ending on the day
30, 60, 90, 120, 180 or 360 days thereafter, as the Borrower
may select as provided in this Agreement.
Notwithstanding the foregoing: (a) each interest period which would
otherwise end on a day which is not a Business Day shall end on the
next succeeding Business Day (or, in the case of an Interest Period
for LIBOR Advances if such succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day); (b)
any Interest Period which would otherwise extend beyond the
Termination Date shall end on the Termination Date; (c) no more than
five (5) Interest Periods shall be in effect at the same time for any
Facility A Loan, for any Facility B Loan, for any Facility C Loan, or
for any Facility D Loan3 (d Inn shall be used by the Borrower to repay
certain indebtedness owed by Borrower to Bank of America Texas, N.A.
SECTION 2. FACILITY D LOANS
2.1. Facility D Commitment. Subject to the terms and conditions
of this Agreement, the Lender hereby agrees to make one or more Facility D
Loans to the Borrower from time to time from the date hereof until the
Termination Date for retirement of certain Debt owed to Bank of America Texas,
N.A. and for up to eighty percent (80%) of the invoice cost to the Borrower or
any Guarantor for equipment, molds and dies, and computer equipment
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(exclusive of freight, discounts and other similar charges), but in an
aggregate outstanding principal amount for all outstanding Advances thereunder
which at no time exceeds the Facility D Commitment; provided, however that the
Lender shall not be obligated to make any Facility D Loan on a day other than a
Business Day, or if the making of such an Advance would cause the principal
balance of all outstanding Facility D Loans to exceed the Facility D
Commitment.
2.2. Facility D Notes. The obligation of the Borrower to repay
each Facility D Loan and interest thereon shall be evidenced by a separate
Facility D Note executed by the Borrower, payable to the order of the Lender in
the principal amount of such Facility D Loan and dated the date of each such
Facility D Loan. Each such Facility D Note shall be payable as provided in
Section 5.3, but shall be subject to prior acceleration.
2.3. Repayment of Facility D Loans. Unless sooner accelerated
pursuant to the terms of any Facility D Note (and subject to Section 6.9 of
this Agreement), the Borrower shall repay each Facility D Loan as follows:
(a) In the case of Facility D Loans made for
purchases of equipment, other than molds and dies or computer
equipment, the principal amount of each such Loan (and the Facility D
Note representing the same) shall be payable in equal quarterly
payments, for a period of twenty-eight (28) consecutive quarters
(except for the first such Loan, which shall be payable in eighteen
(18) equal quarterly payments), commencing on the first day of the
calendar quarter next following the date of such Facility D Loan or,
if such day is not at least thirty (30) days after the making of such
Loan, the first day of the subsequent calendar quarter, and continuing
on the first day of each calendar quarter thereafter until all
principal and accrued interest is paid in full.
(b) In the case of Facility D Loans made for
purchases of molds and dies, the principal amount of all such Loans
outstanding in the aggregate shall never exceed $4,000,000.00, and the
principal amount of each such Loan (and the Facility D Note
representing the same) shall be payable in equal quarterly payments,
for a period of nine (9) consecutive quarters, commencing on the first
day of the calendar quarter next following the date of such Facility D
Loan or, if such day is not at least thirty (30) days after the making
of such Loan, the first day of the subsequent calendar quarter, and
continuing on the first day of each calendar quarter thereafter until
all principal and accrued interest is paid in full.
(c) In the case of Facility D Loans made for
purchases of computer equipment (including hardware and software), all
such Loans in the aggregate principal amount outstanding shall not
exceed $500,000.00, and the principal amount of each such Loan (and
the Facility D Note representing the same) shall be payable in equal
quarterly payments, for a period of twelve (12) consecutive quarters,
commencing on the first day of the calendar quarter next following the
date of such Facility D Loan or, if such day is not at least thirty
(30) days after the making of such Loan, the first day of the
subsequent calendar quarter and continuing on the first day of each
calendar quarter until all principal and accrued interest is paid in
full.
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(d) Interest on all Facility D Loans shall be
payable in accordance with Section 6.1.
2.4. Use of Proceeds. Proceeds of Facility D Loans shall be used
by the Borrower to repay certain Indebtedness to Bank of America Texas, N.A.,
and for equipment purchases.
SECTION 3. GENERAL - ALL LOANS
3.1. Interest. The unpaid principal amount of the Advances shall
bear interest prior to maturity at a varying rate per annum equal from day to
day to the lesser of (a) the Maximum Rate, or (b) the Applicable Rate. If at
any time the Applicable Rate for any Advance shall exceed the Maximum Rate,
thereby causing the interest accruing on such Advance to be limited to the
Maximum Rate, then any subsequent reduction in the Applicable Rate for such
Advance shall not reduce the rate of interest on such Advance below the Maximum
Rate until the aggregate amount of interest accrued on such Advance equals the
aggregate amount of interest which would have accrued on such Advance if the
Applicable Rate had at all times been in effect. Accrued and unpaid interest
on the Advances shall be due and payable as follows:
(a) in the case of Prime Rate Advances, (i) for the
Facility A Note, on the first day of each month commencing January 1,
1996 and continuing on the same day of each successive month
thereafter up to and including the Termination Date and (ii) for all
other Notes, on the first day of each January, April, July and October
until a Conversion occurs, or until maturity whether by acceleration
or otherwise (whichever first occurs);
(b) in the case of each LIBOR Advance, on the last
day of the Interest Period with respect thereto and, in the case of an
Interest Period with a duration greater than three months, at
three-month intervals after the first day of such Interest Period;
(c) in the case of each CD Advance, on the last day
of the Interest Period with respect thereto and, in the case of an
Interest Period with a duration greater than 90 days, at 90-day
intervals after the first day of such Interest Period;
(d) upon the payment or prepayment of any Advance or
the Conversion of any Advance to an Advance of another Type (but only
on the principal amount so paid, prepaid, or Converted);
(e) on the Termination Date, in the case of the
Facility A Note, and in the case of all other Notes if the same shall
have become due and payable on the Termination Date as provided in
this Agreement; and
(f) on the date on which the final respective
installment of principal is due on the Facility B Note, the Facility C
Note and the Facility D Notes.
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Notwithstanding the foregoing, any outstanding principal of any Advance and (to
the fullest extent permitted by law) any other amount payable by the Borrower
under this Agreement or any other Loan Document that is not paid in full when
due (whether at stated maturity, by acceleration, or otherwise) shall bear
interest at the Default Rate for the period from and including the due date
thereof to but excluding the date the same is paid in full. Interest payable
at the Default Rate shall be payable from time to time on demand.
3.2. Borrowing Procedure. The Borrower shall give the Lender
notice by means of an Advance Request Form of each requested Advance, at least
three (3) Business Days before the requested date of each CD Advance, at least
three (3) Business Days before the requested date of each LIBOR Advance, no
later than the date of any request Prime Rate Advance, in each case specifying:
(a) the requested date of such Advance (which shall be a Business Day), (b) the
amount of such Advance, (c) the Type of the Advance, and (d) in the case of a
Fixed Rate Advance, the duration of the Interest Period for such Advance. The
Lender at its option may accept telephonic Advance requests by an Authorized
Officer who provides the Lender with the Security Code, provided that such
acceptance shall not constitute a waiver of the Lender's right to delivery of
an Advance Request Form in connection with subsequent Advances. Any telephonic
request for an Advance by the Borrower shall be promptly confirmed by
submission of a properly completed Advance Request Form to the Lender. Each
Advance shall be in a minimum principal amount of $100,000. The aggregate
principal amount of LIBOR Advances having the same Interest Period shall be at
least equal to $500,000 and the aggregate amount of CD Advances having the same
Interest Period shall be at least equal to $500,000. Subject to the terms and
conditions of this Agreement, each Advance shall be made available to the
Borrower by depositing the same, in immediately available funds, in an account
of the Borrower maintained with the Lender at the Principal Office designated
by the Borrower. All notices under this Section shall be irrevocable and shall
be given not later than 11:00 A.M. Dallas, Texas, time on the day which is not
less than the number of Business Days specified above for such notice.
3.3. Conversions and Continuations. The Borrower shall have the
right from time to time to Convert all or part of one Type of Advance
outstanding under any Note into another Type of Advance or to Continue all or
part of any Fixed Rate Advance by giving the Lender written notice at least one
(1) Business Day before Conversion into a Base Rate Advance, at least three (3)
Business Days before Conversion into or Continuation of a CD Advance, and at
least three (3) Business Days before Conversion into or Continuation of a LIBOR
Advance, specifying: (a) the Conversion or Continuation date, (b) the amount of
the Advance to be Converted or Continued, (c) in the case of Conversions, the
Type of Advance to be Converted into, and (d) in the case of a Continuation of
or Conversion into a Fixed Rate Advance, the duration of the Interest Period
applicable thereto; provided, that (a) Fixed Rate Advances may only be
Converted on the last day of the Interest Period, and (b) except for
Conversions to Prime Rate Advances, no Conversions shall be made while an Event
of Default has occurred and is continuing. All notices given under this
Section shall be irrevocable and shall be given not later than 11:00 A.M.
Dallas, Texas time on the day which is not less than the number of Business
Days specified above for such notice. If the Borrower shall fail to give the
Lender the notice as specified above for Continuation or Conversion of a Fixed
Rate Advance prior
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to the end of the Interest Period with respect thereto, such Fixed Rate Advance
shall automatically be Converted into a Prime Rate Advance on the last day of
the Interest Period for such Fixed Rate Advance.
3.4. Unused Availability Fee. As of each March 31, June 30,
September 30 and December 31 during the term of this Agreement (commencing with
March 31, 1996), the Lender shall compute the average daily principal balance
of the Facility A Loans for the 90-day period which immediately precedes such
designated date of computation. If such average daily balance is less than
$7,500,000, the Borrower shall immediately pay to the Lender an amount equal to
(a) 0.375%, multiplied by the amount by which $15,000,000 exceeds the average
daily principal balance of the Facility A Loans for such 90-day period, divided
by (b) four (4). In the event of any acceleration or termination of the
Facility A Loan, this fee shall be due and payable on the date of such
acceleration or termination.
3.5. Payment. All payments of principal, interest, and other
amounts to be paid by the Borrower under this Agreement or any other Loan
Document shall be paid to the Lender at the address set forth herein for the
delivery of notices to the Lender, in immediately available funds, without
setoff or counterclaims at or before 2:00 p.m. (Dallas, Texas time) on the
date on which such payment shall become due (each such payment made after such
time on such due date to be deemed to have been made on the next succeeding
Business Day). The Borrower shall, at the time of making each such payment,
specify to the Lender the sums payable by the Borrower under this Agreement and
the other Loan Documents to which such payment is to be applied (and in the
event the Borrower fails to so specify, or if an Event of Default has occurred
and is continuing, the Lender may apply such payment to the Indebtedness in
such order and manner as it may elect in its sole discretion). Whenever any
payment under this Agreement or any other Loan Document shall be stated to be
due on a day that is not a Business Day, such payment shall be deemed due on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of the payment of interest.
3.6. Maximum Legal Rate. The following provisions shall control
this Agreement and each Note:
(a) No agreements, conditions, provision or
stipulations contained in this Agreement or in any other Loan
Document, or the occurrence of an Event of Default, or the exercise by
the Lender of the right to accelerate the payment of the maturity of
principal and interest on any Note, or to exercise any option
whatsoever contained in this Agreement or any other Loan Document, or
the arising of any contingency whatsoever, shall entitle the Lender to
collect, in any event, interest exceeding the maximum rate of
nonusurious interest allowed from time to time by applicable state or
federal laws as now or as may hereinafter be in effect (the "Maximum
Legal Rate") and in no event shall the Borrower be obligated to pay
interest exceeding such Maximum Legal Rate, and all agreements,
conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel the
Borrower to pay a rate of interest exceeding the Maximum Legal Rate
shall be without binding force
LOAN AGREEMENT - Page 12
14
or effect, at law or in equity, to the extent only of the excess of
interest over such Maximum Legal Rate. In the event any interest is
charged in excess of the Maximum Legal Rate (the "Excess"), the
Borrower acknowledges and stipulates that any such charge shall be the
result of an accidental and bona fide error, and such Excess shall be,
first, applied to reduce the principal of any obligations due, and,
second, returned to the Borrower, it being the intention of the
parties hereto not to enter at any time into an usurious or otherwise
illegal relationship. The parties hereto recognize that with
fluctuations in the prime commercial interest rate from time to time
announced by the Lender such an unintentional result could
inadvertently occur. By the execution of this Agreement, the Borrower
covenants that (a) the credit or return of any Excess shall constitute
the acceptance by the Borrower of such Excess, and (b) the Borrower
shall not seek or pursue any other remedy, legal or equitable, against
the Lender based, in whole or in part, upon the charging or receiving
of any interest in excess of the Maximum Legal Rate. For the purpose
of determining whether or not any Excess has been contracted for,
charged or received by the Lender, all interest at any time contracted
for, charged or received by the Lender in connection with the
Borrower's obligations shall be amortized, prorated, allocated and
spread during the entire term of this Agreement. If at any time the
rate of interest payable hereunder shall be computed on the basis of
the Maximum Legal Rate, any subsequent reduction in the Contract Rate
shall not reduce such interest thereafter payable hereunder below the
amount computed on the basis of the Maximum Legal Rate until the
aggregate amount of such interest accrued and payable under this
Agreement equals the total amount of interest which would have accrued
if such interest had been at all times computed solely on the basis of
the Contract Rate.
(b) Unless preempted by federal law, the rate of
interest from time to time in effect hereunder shall not exceed the
"indicated rate ceiling" from time to time in effect under Chapter 1
of the Texas Credit Code (Vernon's Texas Civil Statutes), Section
(a)(1), Article 5069-1.04, as amended.
(c) The provisions of this Section shall be deemed
to be incorporated into every document or communication relating to
the Indebtedness which sets forth or prescribes any account, right or
claims or alleged account, right or claim of the Lender with respect
to the Borrower (or any other obligor in respect of the Indebtedness),
whether or not any provision of this Section is referred to therein.
All such documents and communications and all figures set forth
therein shall, for the sole purpose of computing the extent of the
obligations asserted by the Lender thereunder, be automatically
recomputed by the Borrower or any other obligor, and by any court
considering the same, to give effect to the adjustments or credits
required by this Section.
(d) If the applicable state or federal law is
amended in the future to allow a greater rate of interest to be
charged under this Agreement than is presently allowed by applicable
state or federal law, then the limitation of interest hereunder shall
be increased to the maximum rate of interest allowed by applicable
state or federal law,
LOAN AGREEMENT - Page 13
15
as amended, which increase shall be effective hereunder on the
effective date of such amendment, and all interest charges owing to
the Lender by reason thereof shall be payable upon demand.
(e) The provisions of Chapter 15 of the Texas Credit
Code (Vernon's Texas Civil Statutes), Article 5069-15, as amended, are
specifically declared by the parties hereto not to be applicable to
this Agreement or any other Loan Document or to the transactions
contemplated hereby or thereby.
3.7. Basis of Computation. The amount of all interest payable
hereunder shall be computed for the actual number of days elapsed on the basis
of a year consisting of 360 days.
3.8. Prepayments.
3.8.1. Mandatory Prepayments. The Borrower shall,
within five (5) days after notice thereof from the Lender, pay to the
Lender as a payment on the Facility A Note the amount, if any, by
which the principal balance of the Facility A Note outstanding from
time to time exceeds the Borrowing Base, together with all interest
accrued and unpaid on the amount of such excess.
3.8.2. Optional Prepayments. The Borrower may, upon at
least one (1) Business Day prior notice to the Lender in the case of
Prime Rate Advances, at least three (3) Business Days prior notice to
the Lender in the case of CD Advances, and at least three (3) Business
Days prior notice to the Lender in the case of LIBOR Advances prepay
the Advances in whole at any time or from time to time in part without
premium or penalty but with accrued interest to the date of prepayment
on the amount so prepaid, provided that compensation under Section 7.5
hereof shall be due if (a) Fixed Rate Advances are prepaid prior to
the last day of the Interest Period for such Advances, and (b) each
partial prepayment shall be in the principal amount of $100,000.00 or
an integral multiple thereof. All notices under this Section shall be
irrevocable and shall be given not later than 11:00 A.M. Texas time,
on the day which is not less than the number of Business Days
specified above for such notice.
3.9. Upon Termination. The Lender, at its sole discretion, may
upon thirty (30) days prior written notice to the Borrower declare any or all
of the Facility B Note, Facility C Note or the Facility D Note due and payable
in full at any time after the Termination Date or (without prior notice) at any
time upon or after an acceleration of the Facility A Note.
SECTION 4. YIELD PROTECTION AND ILLEGALITY
4.1. Additional Costs.
(a) The Borrower shall pay to the Lender from time
to time such amounts as the Lender may reasonably determine to be
necessary to compensate it for any costs incurred by the Lender which
the Lender determines are attributable to its
LOAN AGREEMENT - Page 14
16
making or maintaining of any Fixed Rate Advances hereunder or its
obligation to make any of such Advances hereunder, or any reduction in
any amount receivable by the Lender hereunder in respect of any such
Advances or such obligation (such increases in costs and reductions in
amounts receivable being herein called "Additional Costs"), resulting
from any Regulatory Change which:
(i) changes the basis of taxation of any
amounts payable to the Lender under this Agreement or the
Note in respect of any of such Advances (other than taxes
imposed on the overall net income of the Lender or its
Applicable Lending Office for any of such Advances by the
jurisdiction in which the Lender has its principal office or
such Applicable Lending Office);
(ii) imposes or modifies any reserve,
special deposit, minimum capital, capital ratio, or similar
requirement relating to any extensions of credit or other
assets of, or any deposits with or other liabilities or
commitments of, the Lender (including any of such Advances
or any deposits referred to in the definition of "LIBOR
Rate" or "CD Rate" in Section 1.1 hereof; or
(iii) imposes any other condition
affecting this Agreement or such Advances or any of such
extensions of credit or liabilities or commitments.
The Lender will notify the Borrower of any event occurring after the
date of this Agreement which will entitle the Lender to compensation
pursuant to this Section as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation. The
Lender will furnish the Borrower with a certificate setting forth the
basis and the amount of each request of the Lender for compensation
under this Section. If the Lender requests compensation from the
Borrower under this Section, the Borrower may, by notice to the Lender
suspend the obligation of the Lender to make or Continue making, or
Convert Advances into, Advances of the Type with respect to which such
compensation is requested until the Regulatory Change giving rise to
such request ceases to be in effect (in which case the provisions of
Section 7.4 hereof shall be applicable).
(b) Without limiting the effect of the foregoing
provisions of this Section, in the event that, by reason of any
Regulatory Change, the Lender either (a) incurs Additional Costs based
on or measured by the excess above a specified level of the amount of
a category of deposits or other liabilities of the Lender which
includes deposits by reference to which the interest rate on LIBOR
Advances or CD Advances is determined as provided in this Agreement or
a category of extensions of credit or other assets of the Lender which
includes LIBOR Advances or CD Advances or (b) becomes subject to
restrictions on the amount of such a category of liabilities or assets
which it may hold, then, if the Lender so elects by notice to the
Borrower the obligation of the Lender to make or Continue making, or
Convert Advances into, Advances of
LOAN AGREEMENT - Page 15
17
such Type hereunder shall be suspended until such Regulatory Change
ceases to be in effect (in which case the provisions of Section 7.4
hereof shall be applicable).
(c) Determinations and allocations by the Lender for
purposes of this Section of the effect of any Regulatory Change on its
costs of maintaining its obligations to make Advances or of making or
maintaining Advances or on amounts receivable by it in respect of
Advances, and of the additional amounts required to compensate the
Lender in respect of any Additional Costs, shall be conclusive,
provided that such determinations and allocations are made on a
reasonable basis.
4.2. Limitation on Types of Advances. Anything herein to the
contrary notwithstanding, if with respect to any Fixed Rate Advances for any
Interest Period therefor:
(a) The Lender reasonably determines (which
determination shall be conclusive) that quotations of interest rates
for the relevant deposits referred to in the definition of "LIBOR
Rate" or "CD Rate" in Section 1.1 hereof are not being provided in the
relative amounts or for the relative maturities for purposes of
determining the rate of interest for such Advances as provided in this
Agreement; or
(b) The Lender determines (which determination shall
be conclusive) that the relevant rates of interest referred to in the
definition of "LIBOR Rate" or "CD Rate" in Section 1.1 hereof on the
basis of which the rate of interest for such Advances for such
Interest Period is to be determined do not accurately reflect the cost
to the Lender of making or maintaining such Advances for such Interest
Period;
then the Lender shall give the Borrower prompt notice thereof specifying the
relevant Type of Advances and the relevant amounts or periods, and so long as
such condition remains in effect, the Lender shall be under no obligation to
make additional Advances of such Type or to Convert Advances of any other Type
into Advances of such Type and the Borrower shall, on the last day(s) of the
then current Interest Period(s) for the outstanding Advances of the affected
Type, either prepay such Advances or Convert such Advances into another Type of
Advance in accordance with the terms of this Agreement.
4.3. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for the Lender to (a) honor
its obligation to make LIBOR Advances hereunder or (b) maintain LIBOR Advances
hereunder, then the Lender shall promptly notify the Borrower thereof and the
Lender's obligation to make or maintain LIBOR Advances and to Convert other
types of Advances into LIBOR Advances hereunder shall be suspended until such
time as the Lender may again make and maintain LIBOR Advances (in which case
the provisions of Section 4.04 hereof shall be applicable).
4.4. Substitute Prime Rate Advances. If the obligation of the
Lender to make either Type of Fixed Rate Advance shall be suspended pursuant to
Section 7.1, 7.2 or 7.3 hereof (Advances of such Type being herein called
"Affected Advances" and such Type being herein called the "Affected Type"), all
Advances which would be otherwise made by the Lender as
LOAN AGREEMENT - Page 16
18
Advances of the Affected Type shall be made instead as Prime Rate Advances and
all Advances which would otherwise be Converted into Advances of the Affected
Type shall be converted instead into (or shall remain as) Prime Rate Advances
(and, if an event referred to in Section 7.1, 7.2 or 7.3 hereof has occurred
and the Lender so requests by notice to the Borrower, all Affected Advances of
the Lender then outstanding shall be automatically Converted into Prime Rate
Advances on the date specified by the Lender in such notice) and, to the extent
that Affected Advances are so made as (or Converted into) Prime Rate Advances,
all payments and prepayments of principal which would otherwise be applied to
the Lender's Affected Advances shall be applied instead to its Prime Rate
Advances.
4.5. Compensation. The Borrower shall pay to the Lender, upon
the request of the Lender, such amount or amounts as shall be sufficient (in
the reasonable opinion of the Lender) to compensate it for any loss, cost, or
expense incurred by it as a result of:
(a) Any payment, prepayment or conversion of a Fixed
Rate Advance for any reason (including, without limitation, the
acceleration of outstanding Advances pursuant to this Agreement) on a
date other than the last day of an Interest Period for such Advance;
or
(b) Any failure by the Borrower for any reason
(including, without limitation, the failure of any conditions
precedent specified in this Agreement to be satisfied) to borrow,
Convert, or prepay a Fixed Rate Advance on the date for such
borrowing, Conversion, or prepayment, specified in the relevant notice
of borrowing, prepayment, or Conversion under this Agreement.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion, or
failure to borrow to the last day of the Interest Period for such Advance (or,
in the case of a failure to borrow, the Interest Period for such Advance which
would have commenced on the date specified for such borrowing) at the
applicable rate of interest for such Advance provided for herein, less the
Applicable Margin, over (ii) the interest component of the amount the Lender
would have bid in the London interbank market (if such Advance is a LIBOR
Advance) or the certificate of deposit market (if such Advance is a CD Advance)
for Dollar deposits of leading banks and amounts comparable to such principal
amount and with maturities comparable to such period.
4.6. Capital Adequacy. If after the date hereof, the Lender
shall have determined that any Regulatory Change has or would have the effect
of reducing the rate of return on the Lender's (or its parent's) capital as a
consequence of its obligations hereunder or the transactions contemplated
hereby to a level below that which the Lender (or its parent) could have
achieved but for such Regulatory Change (taking into consideration the Lender's
policies with respect to capital adequacy) by an amount deemed by the Lender to
be material, then from time to time, within ten (10) Business Days after demand
by the Lender, the Borrower shall pay to the Lender (or its parent) such
additional amount or amounts as will compensate the
LOAN AGREEMENT - Page 17
19
Lender for such reduction. A certificate of the Lender claiming compensation
under this Section and setting forth the additional amount or amounts to be
paid to it hereunder shall be conclusive, provided that the determination
thereof is made on a reasonable basis. In determining such amount or amounts,
the Lender may use any reasonable averaging and attribution methods.
SECTION 5. SECURITY
5.1. Collateral. To secure the full and timely performance of
the Borrower's covenants set out in this Agreement and the other Loan Documents
and to secure the repayment of each of the Notes and all other Indebtedness
whatsoever of the Borrower to the Lender, the Borrower and the Guarantors agree
to grant and assign a lien upon and security interest in the Collateral
pursuant to the Security Agreement, the Pledge Agreement(s), the Financing
Statements and other instruments and agreements required by and satisfactory to
the Lender.
5.2. Setoff. If an Event of Default shall have occurred and be
continuing, the Lender shall have the right to set off and apply against any
Indebtedness then due in such manner as the Lender may determine, at any time
and without notice to the Borrower, any and all deposits (general or special,
time or demand, provisional or final) or other sums at any time credited by or
owing from the Lender to the Borrower. As further security for the
Indebtedness, the Borrower hereby grants to the Lender a security interest in
all money, instruments, and other property of the Borrower now or hereafter
held by the Lender, including, without limitation, property held in
safekeeping. In addition to the Lender's right of setoff and as further
security for the Indebtedness, the Borrower hereby grants to the Lender a
security interest in all deposits (general or special, time or demand,
provisional or final) and other accounts of the Borrower now or hereafter on
deposit with or held by the Lender and all other sums at any time credited by
or owing from the Lender to the Borrower. The rights and remedies of the
Lender hereunder are in addition to other rights and remedies (including,
without limitation, other rights or setoff) which the Lender may have.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF LENDER
6.1. Conditions to First Loan. The obligations of the Lender
under this Agreement are subject to the occurrence, prior to or on the date of
the initial Loan hereunder, of each of the following conditions, any or all of
which may be waived in whole or in part by the Lender in writing:
6.1.1. Documents Executed and Filed. The Borrower
(and/or the Guarantors, as required by the terms of each such
document) shall have executed (or caused to be executed) and delivered
to the Lender and, as appropriate, there shall have been signed for
filing with such filing offices as the Lender shall deem appropriate,
the following:
(a) The Facility A Note;
LOAN AGREEMENT - Page 18
20
(b) The Facility B Note;
(c) The Facility C Note;
(d) The Facility D Note(s), if Advances
are to be made thereunder as of the date of this Agreement;
(e) The Security Agreement;
(f) The Financing Statements;
(g) The Deed of Trust;
(h) The Guaranty; and
(i) The Pledge Agreement(s).
6.1.2. Certified Resolutions. The Borrower shall have
furnished to the Lender a copy of resolutions of the board of
Directors of each of the companies making up the Borrower and the
Guarantors authorizing the execution, delivery and performance of this
Agreement, the borrowing hereunder, the Notes and all other Loan
Documents, which shall have been certified by the Secretary or
Assistant Secretary of the relevant company as of the date hereof.
6.1.3. Certified Articles. The Borrower shall have
furnished to the Lender a copy of the Articles of Incorporation of
each of the companies making up the Borrower and the Guarantors,
including all amendments thereto, and all other charter documents of
the Borrower and the Guarantors, all of which shall have been
certified by the secretary of such company as of a date reasonably
near the date hereof.
6.1.4. Certified Bylaws. The Borrower shall have
furnished to the Lender a copy of the Bylaws of each of the companies
making up the Borrower and the Guarantors , which shall have been
certified by the Secretary or Assistant Secretary of the relevant
company as of the date hereof.
6.1.5. Certificate of Good Standing. The Borrower
shall have furnished to the Lender a certificate of good standing with
respect to each of the companies making up the Borrower and the
Guarantors, which shall have been certified by the state agency
issuing the same as of a date reasonably near the date hereof.
6.1.6. Certificate of Incumbency. The Borrower shall
have furnished to the Lender a certificate of the Secretary or
Assistant Secretary of each of the companies making up the Borrower
and the Guarantors, certified as of the date hereof, as to the
incumbency and signatures of the officers of the relevant company
signing this Agreement, the Notes and the other Loan Documents.
LOAN AGREEMENT - Page 19
21
6.1.7. UCC Lien Search. The Lender shall have received
UCC record and copy searches, disclosing no notice of any liens or
encumbrances filed against any of the Collateral in any relevant
jurisdiction other than the Financing Statements and other than as
relate to Permitted Liens or to liens securing indebtedness to Bank of
America Texas, N.A. which are to be released concurrently with the
making of the first Advances hereunder.
6.1.8. Hazard Insurance. The Borrower shall have
furnished to the Lender, in form and amounts and with companies
satisfactory to the Lender, evidence of hazard insurance policies
naming the Lender as "mortgagee," and relating to the assets and
properties (including, but not limited to, the Collateral and the Real
Property) of the Borrower and the Guarantors.
6.1.9. Releases. The Borrower shall have obtained and
filed, or caused to be filed, (i) UCC-3 termination or assignment
statements for each UCC financing statement on file with all
jurisdictions in favor of Bank of America Texas, N.A. and any other
Person claiming a lien in any of the Collateral.
6.1.10. Payment of Fees. Evidence that the costs and
expenses (including reasonable attorneys' fees) incurred by the Lender
in connection with the preparation of this Agreement and the other
Loan Documents shall have been paid in full by the Borrower.
6.1.11. Approval of Lender Counsel. All actions,
proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and
all other related legal matters shall have been satisfactory to and
approved by legal counsel for the Lender, and said counsel shall have
been furnished with such certified copies of actions and proceedings
and such other instruments and documents as they shall have reasonably
requested.
6.1.12. Other Information and Documentation. The Lender
shall have received such other information, certificates and executed
documents as it shall have reasonably requested.
6.1.13. Landlord Waivers. Landlord waivers providing
for the waiver of liens, in a form acceptable to the Lender, executed
by the owners of the real estate for the Borrower's Tennessee business
locations.
6.1.14. Workmen's Compensation and Liability Insurance.
Evidence of adequate (in the sole opinion of the Bank) workmen's
compensation programs and liability insurance (including liability
insurance) coverage for the Borrower's operations.
6.1.15. Pledge Agreement(s). Pledge Agreement(s) shall
be executed (and all stock pledged thereunder delivered with executed
stock powers), pledging to the
LOAN AGREEMENT - Page 20
22
Lender by the record and beneficial owner thereof, all capital voting
stock of Borrower and Guarantors (excluding Industries).
6.2. Conditions to All Loans. The obligation of the Lender to
make any Loan (including any initial Advance) is subject to the occurrence,
prior to or on the requested date of each such Loan, of each of the following
conditions, any or all of which may be waived in whole or in part by the Lender
in writing:
6.2.1. Loan Request. The Lender shall have received a
written Advance Request Form, executed by the appropriate officer of
the Borrower and timely delivered as required by this Agreement.
Additionally, all Facility D Loan requests must be accompanied by an
invoice, ▇▇▇▇ of sale, auction receipt or other evidence acceptable to
the Lender of the purchase price of the Equipment to be purchased with
the proceeds to the requested Loan, together with a description of
such Equipment.
6.2.2. No Default. As of such date:
(a) No Default or Event of Default shall
have then occurred and be continuing; and
(b) Each warranty or representation set
forth in Section 10 of this Agreement shall be true and
correct.
SECTION 7. WARRANTIES AND REPRESENTATIONS
The Borrower represents and warrants to the Lender, as to the
Borrower, and the Guarantors represents and warrants to the Lender, as to the
Guarantors, that:
7.1. Corporate Existence and Power. (a) Each corporation which
comprises the Borrower and the Guarantors (i) is a corporation duly organized,
validly existing and in good standing under the laws of its respective state of
incorporation, (ii) has the corporate power and authority to own its properties
and assets and to carry out its business as now being conducted and is
qualified to do business and in good standing in every jurisdiction wherein
such qualification is necessary and (iii) has the corporate power and authority
to execute and perform this Agreement, to borrow money in accordance with its
terms, to execute and deliver each of the Notes and the other Loan Documents to
be executed by each respective entity and to grant to the Lender liens and
security interest in the Collateral and the Real Property as hereby
contemplated and to do any and all other things required of it hereunder.
7.2. Authorization and Approvals. As to each of the companies
making up the Borrower and the Guarantors, the execution, delivery and
performance of this Agreement, the borrowing hereunder and the execution and
delivery of each of the other Loan Documents contemplated hereby (a) have been
duly authorized by all requisite corporate action, (b) do not require
registration with or consent or approval of, or other action by, any federal,
state or other governmental authority or regulatory body, or, if such
registration, consent or approval
LOAN AGREEMENT - Page 21
23
is required, the same has been obtained and disclosed in writing to the Lender,
(c) will not violate any provision of law, any order of any court or other
agency of government, the articles of incorporation or bylaws of the Borrower,
any provision of any indenture, agreement or other instrument to which the
Borrower is a party, or by which it or any of its properties or assets are
bound, (d) will not be in conflict with, result in a breach of or constitute
(with or without notice or passage of time) a default under any indenture,
agreement or other instrument, and (e) will not result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of its properties or assets other than in favor of the Lender and as
contemplated hereby.
7.3. Valid and Binding Agreement. This Agreement is, and each of
the other Loan Documents will be, when delivered, valid and binding obligations
of the Borrower and the Guarantors, in each case enforceable in accordance with
their respective terms except as limited by insolvency, bankruptcy or similar
laws and equitable principles affecting the enforcement of creditors' rights
generally.
7.4. Actions, Suits or Proceedings. Except as disclosed on
Schedule 10.4 or otherwise disclosed in writing to the Lender, there are no
actions, suits or proceedings, at law or in equity, and no proceedings before
any arbitrator or by or before any governmental commission, board, bureau or
other administrative agency, pending, or, to the best knowledge of the
Borrower, threatened against or affecting the Borrower or the Guarantors, or
any properties or rights of the Borrower or the Guarantors, which, if adversely
determined, could materially impair the right of the Borrower to carry on
business substantially as now conducted or could have a material adverse effect
upon the financial condition of the Borrower or the Guarantors.
7.5. Subsidiaries. Industries is the ultimate parent corporation
of the Borrower and it has no other subsidiaries, direct or indirect, except as
disclosed on Schedule 10.5.
7.6. No Liens, Pledges, Mortgages or Security Interests. Except
for Permitted Liens or liens securing indebtedness to Bank of America Texas,
N.A. which are to be released concurrently with the making of the first
Advances hereunder, none of the Borrower's or the Guarantors' assets and
properties, including the Collateral and the Real Property, is subject to any
mortgage, pledge, lien, security interest or other encumbrance of any kind or
character.
7.7. Accounting Principles. The Financial Statements have been
prepared on a consolidated basis in accordance with GAAP and fairly present the
financial condition of Industries and the Subsidiaries as of the dates, and the
results of its operations for the periods, for which the same are furnished to
the Lender. To the best of Borrower's and the Guarantors' knowledge and
belief, neither the Borrower nor the Guarantors has any material contingent
obligations, liabilities for taxes, long-term leases or unusual forward or
long-term commitments not disclosed by, or reserved against in, the Financial
Statements or otherwise disclosed in writing to the Lender.
LOAN AGREEMENT - Page 22
24
7.8. No Adverse Changes. There has been no material adverse
change in the business, properties or condition (financial or otherwise) of the
Borrower or the Guarantors since the date of the latest of the Financial
Statements or otherwise disclosed in writing to the Lender.
7.9. Conditions Precedent. As of the date of each Loan
hereunder, all appropriate conditions precedent referred to in Section 7 hereof
shall have been satisfied (or waived in writing by the Lender).
7.10. Taxes. The Borrower and the Guarantors have filed by the
due date therefor all federal, state and local tax returns and other reports
required by law to be filed and which are material to the conduct of their
businesses, have paid or caused to be paid all taxes, assessments and other
governmental charges that are shown to be due and payable under such returns,
and have made adequate provision for the payment of such taxes, assessments or
other governmental charges which have accrued but are not yet payable. Neither
the Borrower nor the Guarantors has knowledge of any deficiency or assessment
in a material amount in connection with any taxes, assessments or other
governmental charges not adequately disclosed in the Financial Statements or
otherwise disclosed in writing to the Lender.
7.11. Compliance with Laws. The Borrower and the Guarantors have
complied with all applicable laws, to the extent that failure to comply would
materially interfere with the conduct of their respective businesses.
7.12. Material Agreements. Except as disclosed on Schedule 10.12
or otherwise disclosed in writing to the Lender, neither the Borrower nor the
Guarantors has any Financial Debt or any material contracts or commitments for
Financial Debt; to the best knowledge of the Borrower and the Guarantors, all
parties thereto (including the Borrower and the Guarantors) have complied with
the provisions of such contracts or commitments; and to the best knowledge of
Borrower and the Guarantors, no party to such agreements (including the
Borrower and the Guarantors) is in default thereunder, nor has there occurred
any event which with notice or the passage of time, or both, would constitute
such a default.
7.13. Margin Stock. The Borrower is not engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, and no
part of the proceeds of any Loan hereunder will be used, directly or
indirectly, to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock or for any other
purpose which might violate the provisions of Regulation G, T, U or X of the
said Board of Governors. The Borrower does not own any margin stock.
7.14. Pension Funding. Neither the Borrower nor the Guarantors
has incurred any material accumulated funding deficiency within the meaning of
ERISA or any material liability to the PBGC in connection with any employee
benefit plan established or maintained by the
LOAN AGREEMENT - Page 23
25
Borrower and no presently existing reportable event or presently existing
prohibited transaction, as defined in ERISA, has occurred with respect to such
plans.
7.15. Misrepresentation. No warranty or representation by the
Borrower or the Guarantors contained herein or in any certificate or other
document furnished by the Borrower or the Guarantors pursuant hereto contains
any untrue statement of material fact or omits to state a material fact
necessary to make such warranty or representation not misleading in light of
the circumstances under which it was made.
7.16. Eligible Inventory. As to each item of Inventory
represented by the Borrower to be "Eligible Inventory" on a Borrowing Base
Certificate, as of the date of each such Borrowing Base Certificate:
(a) Such item of Inventory does not represent work
in process (other than granular material, melamine or urea compounds,
and other materials which may either be used for the production of
finished goods or sold in its present form to third parties) and is of
good and merchantable quality and is usable or salable by Borrower or
a Guarantor in the ordinary course of its business, and is not
obsolete.
(b) The Borrower or a Guarantor, as applicable, has
granted to the Lender a perfected security interest in such item of
Inventory (as an item of the Collateral) prior in right to all other
Persons (other than Permitted Liens), and such item of Inventory has
not been sold, transferred or otherwise assigned by the Borrower or
the Guarantors, as applicable, to any Person, other than the Lender
and other than sales in the ordinary course of business occurring
after the date of such Borrowing Base Certificate.
(c) Such item of Inventory (other than Inventory
being transported) is located within the United States of America at
such location or locations as Borrower shall have represented in the
Security Agreement or on the most recent Borrowing Base Report.
7.17. Shares and Shareholders. The Borrower owns all of the
issued and outstanding capital voting stock of Custom Laminates, Inc., Sun
Coast Acquisition, Inc., Sun Coast Closures, Inc. and Plastics Manufacturing
Company. Industries owns all of the issued and outstanding capital voting
stock of the Borrower. There are no outstanding options, warrants or rights to
purchase, nor any agreement for the subscription, purchase or acquisition of,
any shares of the capital stock of any entity which comprises the Borrower or
the other Subsidiaries.
7.18. Loans and Representations. At the time of each Loan
request, the Borrower and the Guarantors, unless otherwise disclosed to the
Lender in writing, shall be deemed to represent and warrant to the Lender, as
an inducement to having the Lender make the requested Loan, that as of the date
of such Loan request (a) all representations and warranties contained in this
Agreement are true and correct in all respects, (b) no Default or Event of
Default exists
LOAN AGREEMENT - Page 24
26
and (c) the Lender will have a first priority security interest and lien on the
Collateral covered by the invoice or ▇▇▇▇ of sale (or similar document), if
any, to which the Loan request relates.
7.19. Eligible Accounts. As to each Account represented by the
Borrower to be an "Eligible Account" on a Borrowing Base Certificate, as of the
date of each such Borrowing Base Certificate:
(a) Such Account arose in the ordinary course of the
business of the Borrower or a Guarantor out of either (i) a bona fide
sale of Inventory by the Borrower or such Guarantor, and in such case
such Inventory has in fact been shipped to, and accepted and retained
by, the appropriate account debtor or the sale has otherwise been
consummated in accordance with such order, or (ii) services performed
by the Borrower or such Guarantor under an enforceable contract, and
in such case such services have in fact been performed for the
appropriate account debtor in accordance with such contract.
(b) Unless otherwise approved in writing by the
Lender on a case-by-case basis, such Account represents a legally
valid and enforceable claim which is due and owing to the Borrower or
such Guarantor by such account debtor in at least such amount as is
represented by the Borrower to the Bank on such Borrowing Base
Certificate, such Account is due and payable not more than sixty (60)
days from the delivery of the related Inventory, or the performance of
the related services, giving rise to such Account and, unless the Bank
otherwise allows, such Account has not been due for more than ninety
(90) days (from the date of invoice).
(c) The unpaid balance of such Account as
represented by the Borrower to the Lender on such Borrowing Base
Certificate is not subject to any defense, counterclaim, set-off,
credit, allowance or adjustment by the account debtor because of
returned, inferior or damaged Inventory or services, or for any other
reason, except for customary discounts allowed by Borrower or such
Guarantor in the ordinary course of business for prompt payment or as
otherwise indicated by credit memos disclosed in such Borrowing Base
Certificate, and there is no agreement between Borrower or such
Guarantor, the related account debtor and any other person for any
rebate, discount, concession or release of liability, in whole or in
part.
(d) The transactions leading to the creation of such
Account comply with all applicable state and federal laws and
regulations.
(e) The Borrower or such Guarantor has granted to
the Bank a perfected security interest in such Account (as an item of
the Collateral) prior in right to all other persons (other than
Permitted Liens), and such Account has not been sold, transferred or
otherwise assigned by the Borrower or such Guarantor to any Person,
other than the Bank.
LOAN AGREEMENT - Page 25
27
(f) Such Account is not represented by any note,
trade acceptance, draft or other negotiable instrument or by any
chattel paper, except any such as constitute an item of Collateral and
have been endorsed and delivered by the Borrower or such Guarantor to
the Bank on or prior to such Account's inclusion on such Borrowing
Base Certificate.
(g) The Borrower or such Guarantor has not received,
with respect to such Account, any notice of the death of the related
account debtor, nor of the dissolution, liquidation, termination of
existence, insolvency, business failure, appointment of a receiver for
any part of the property of, assignment for the benefit of creditors
by, or the filing of a petition in bankruptcy or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against,
such account debtor.
(h) The account debtor on such Account is not:
(i) an affiliate of the Borrower or the
Guarantors,
(ii) the United States of America or any
department, agency or instrumentality thereof unless the
grant of a security interest therein has been made to the
Lender in compliance with applicable federal assignment of
claims laws and regulations,
(iii) a citizen or resident of any
jurisdiction other than one of the United States or Canada,
or
(iv) an account debtor whom the Bank has,
in the reasonable exercise of such Bank's sole discretion,
determined to be (based on such factors relating to such
account debtor as the Bank deems appropriate) an ineligible
account debtor and as to which the Bank has notified the
Borrower, provided, however, that any such notice shall not
apply as to any Account of such account debtor which has
been included on a Borrowing Base Certificate by the
Borrower prior to the giving of such notice by the Bank and
which meets each and every other requirement under this
Agreement for the denomination of such Account as an
"Eligible Account."
SECTION 8. AFFIRMATIVE COVENANTS
From the date hereof until the Indebtedness is paid in full, the
Borrower covenants and agrees that as to the Borrower, and each Guarantor
covenants and agrees that as to such Guarantor, it will:
LOAN AGREEMENT - Page 26
28
8.1. Financial and Other Information.
8.1.1. Annual Financial Reports. Furnish to the Lender
in form satisfactory to the Lender not later than ninety (90) days
after the close of each fiscal year of Industries, beginning with the
fiscal year ending June 30, 1996, on a consolidated and consolidating
basis, a balance sheet as at the close of each such fiscal year,
statements of income and statements of cash flows for each such fiscal
year of Industries and the Subsidiaries, and such other comments and
financial details as are usually included in similar reports. Such
consolidated reports shall be audited in accordance with GAAP by
independent certified public accountants of recognized standing
selected by Industries and acceptable to the Lender and shall contain
unqualified opinions as to the fairness of the statements therein
contained.
8.1.2. Monthly Financial Statements. Furnish to the
Lender not later than thirty (30) days after the close of each month,
beginning with reports for the month ending December 31, 1995,
financial statements containing the consolidated and consolidating
balance sheet of Industries and the Subsidiaries as of the end of each
month, consolidated and consolidating statements of income of
Industries and the Subsidiaries up to the end of each month. These
statements shall be prepared on substantially the same accounting
basis as the statements required in Section 11.1.1 of this Agreement
and shall be in such detail as the Lender may require, and the
accuracy of the statements (subject to year-end adjustments) shall be
certified by the chief executive or financial officer of Industries.
8.1.3. Financial Projections. Furnish to the Lender no
later than 120 days after the end of each fiscal year of Industries,
financial projections of Industries and the Subsidiaries for the next
succeeding three-year period, in the form reasonably satisfactory to
the Lender, setting forth management's projections for each fiscal
quarter for the next succeeding fiscal year and on a yearly basis
thereafter.
8.1.4. Borrowing Base Certificate. Furnish to the
Lender monthly by the 30th day of each month a Borrowing Base
Certificate for the last day of the prior month, on behalf of the
Borrower, confirming that the outstanding principal balance of the
Facility A Note does not exceed the lesser of the Facility A
Commitment Amount or the Borrowing Base, as then in effect (or, if
such is not the case, accompanied by a mandatory prepayment in
accordance with this Agreement.
8.1.5. Quarterly Compliance Certificate. Furnish to
the Lender not later than thirty (30) days after the close of each
March, June, September, and December (beginning March 31, 1996) a
Compliance Certificate dated as of the end of the three-month period
ending immediately prior to the due date for such Compliance
Certificate.
8.1.6. Adverse Events. Promptly inform the Lender of
the occurrence of any Event of Default or Default, or of any
occurrence which has or could reasonably
LOAN AGREEMENT - Page 27
29
be expected to have a materially adverse effect upon the Borrower's or
the Guarantors' business, properties, financial condition or ability
to comply with their respective obligations hereunder.
8.1.7. Securities Reports. Furnish to the Lender,
promptly upon filing of the same, all form 10-K's, 10-Q's and, S-8's
as to the Borrower and the Guarantors for filing with the Securities
and Exchange Commission.
8.1.8. Management Letters. Furnish to the Lender,
promptly upon receipt thereof, copies of all management letters
submitted to the Borrower by independent certified public accountants
in connection with any annual or interim audit of the books of the
Borrower and the Guarantors.
8.1.9. ERISA. Certify to the Lender annually on or
about each January 1, that the filings referred to in Section 11.8(c)
have been made.
8.1.10. Other Information as Requested. Promptly
furnish to the Lender such other information regarding the operations,
business affairs and financial condition of the Borrower and the
Guarantors as the Lender may reasonably request from time to time and
permit the Lender, its employees, attorneys and agents, to inspect all
of the books, records and properties of the Borrower and the
Guarantors at any reasonable time.
8.2. Insurance. As to each of the Borrower and the Guarantors,
keep its insurable properties (including, but not limited to, the Collateral
and the Real Property) adequately insured and maintain (a) insurance against
fire and other risks customarily insured against by companies engaged in the
same or a similar business to that of the Borrower and the Guarantors, (b)
necessary worker's compensation insurance, (c) public liability and product
liability insurance, and (d) such other insurance as may be required by law or
as may be reasonably required in writing by the Lender, all of which insurance
shall be in such amounts, containing such terms, in such form, for such
purposes and written by such companies as may be satisfactory to the Lender in
the reasonable exercise of its judgment. All such policies shall contain a
provision whereby they may not be canceled except upon thirty days' prior
written notice to the Lender. The Borrower will deliver to the Lender, at the
Lender's request, evidence satisfactory to the Lender that such insurance has
been so procured and, with respect to casualty insurance covering the
Collateral, names the Lender as "mortgagee". If the Borrower or the Guarantors
fails to maintain satisfactory insurance as herein provided, the Lender shall
have the option to do so, and the Borrower agrees to repay the Lender, with
interest at three percent (3%) per annum plus the Prime Rate, all amounts so
expended by the Lender.
8.3. Taxes. As to each of the Borrower and the Guarantors, pay
promptly and within the time that they can be paid without interest or penalty
all taxes, assessments and similar imposts and charges of every kind and nature
lawfully levied, assessed or imposed upon them and their property, except to
the extent being contested in good faith and for which
LOAN AGREEMENT - Page 28
30
adequate reserves have been established on the balance sheet of the Borrower,
or the Guarantors, as the case may be. If the Borrower or the Guarantors shall
fail to pay such taxes and assessments by their due date, the Lender shall have
the option to do so, and the Borrower agrees to repay the Lender, with interest
at three percent (3%) per annum plus the Prime Rate, all amounts so expended by
the Lender.
8.4. Maintain Corporation and Business. As to each of the
Borrower and the Guarantors, do or cause to be done all things necessary to
preserve and keep in full force and effect their corporate existence, rights
and franchise and comply with all applicable laws; continue to conduct and
operate its business substantially as conducted and operated during the present
and preceding calendar year; at all times maintain, preserve and protect all
franchise and trade names and preserve all the remainder of their respective
property used or useful in the conduct of its business and keep the same in
good repair, working order and condition; and from time to time make, or cause
to be made, all needed and proper repairs, renewals, replacements, betterments
and improvements thereto so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
8.5. Tangible Net Worth. Maintain Tangible Net Worth in an
amount not less than the following amounts at all times during each of the
following respective periods:
Periods Amount
------- ------
(a) From the date of this Agreement $15,200,000
through December 31, 1995
(b) Commencing January 1, 1996, and continuing thereafter on the
last day of each consecutive three-month period, the initial
$15,200,000 required minimum Tangible Net Worth shall
increase by an amount equal to seventy-five percent (75%) of
Industries and the Subsidiaries' consolidated net income (as
computed in accordance with GAAP) for the same three-month
period, with no adjustments to Tangible Net Worth for
operating or other net losses.
8.6. Leverage Ratio. Maintain as of the end of each month a
Leverage Ratio of not more than the following respective ratios:
Maximum
Periods Ratios
------- ------
(a) From the date of this Agreement through June 29, 3:00:1.0
1996
(b) From June 30, 1996 through June 29, 1997 2.75:1.0
(c) From and after June 30, 1997 2.50:1.0
8.7. Fixed Charge Coverage. Maintain as of the end of each
quarterly period (commencing with the quarter ending March 31, 1996) a Fixed
Charge Coverage Ratio of not
LOAN AGREEMENT - Page 29
31
less than (a) 1.30:1.00 through June 30, 1996 and (b) 1.50 to 1.00 at the end
of all quarterly periods thereafter.
8.8. ERISA. (a) At all times meet the minimum funding
requirements of ERISA with respect to the Borrower's and the Guarantors'
employee benefit plans subject to such minimum funding requirements; (b)
promptly after the Borrower knows or has reason to know (i) of the occurrence
of any event, which would constitute a reportable event or prohibited
transaction under ERISA, or (ii) that the PBGC, the Borrower or the Guarantors
has instituted or will institute proceedings to terminate an employee pension
plan, deliver to the Lender a certificate of the chief financial officer of the
Borrower and the Guarantors setting forth details as to such event or
proceedings and the action which the Borrower proposes to take with respect
thereto, together with a copy of any notice of such event which may be required
to be filed with the PBGC; and (c) a copy of the annual return (including all
schedules and attachments) for each plan covered by ERISA, and filed with the
Internal Revenue Service by the Borrower, not later than ten (10) days after
receipt of a written request from the Bank for such report.
8.9. Use of Loan Proceeds. Use the proceeds of the Loans
hereunder for the purposes set forth herein.
SECTION 9. NEGATIVE COVENANTS
From the date hereof until the Indebtedness is paid in full, the
Borrower covenants and agrees, as to the Borrower, and each Guarantor covenants
and agrees, as to such Guarantors, that they will not:
9.1. Dividends. Except for dividends and distributions among
Industries and its wholly-owned Subsidiaries, declare or pay any dividend
(other than dividends payable solely in shares of its capital stock) on, or
make any other distribution with respect to (whether by reduction of capital or
otherwise), any shares of its capital stock.
9.2. Stock Issuance. Issue any additional shares of its capital
stock, or any warrant, right or option relating thereto or any security
convertible into any of the foregoing, except that the restrictions in this
Section 12.2 shall not apply to (a) any issuance by Industries of its own
securities, or (b) any issuance of its own securities by any of the
Subsidiaries to Industries or any of its wholly-owned Subsidiaries.
9.3. Stock Acquisition. Purchase, redeem, retire or otherwise
acquire any of the shares of its capital stock, or make any commitment to do
so, unless all consideration therefor is paid to Industries or any of its
wholly-owned Subsidiaries.
9.4. Liens and Encumbrances. Create, incur, assume or suffer to
exist any mortgage, pledge, encumbrance, security interest, lien or charge of
any kind (including any charge upon property purchased or acquired under a
conditional sales or other title-retaining
LOAN AGREEMENT - Page 30
32
agreement or lease required to be capitalized under GAAP) upon any of its
property or assets, whether now owned or hereafter acquired, other than
Permitted Liens.
9.5. Indebtedness. Incur, create, assume or permit to exist any
Financial Debt, except for (a) the Indebtedness, (b) indebtedness subordinated
to the prior payment in full of the Indebtedness upon terms and conditions
approved in writing by the Lender, (c) existing indebtedness to the extent set
forth on Schedule 10.12 and, (d) indebtedness secured by Permitted Liens.
9.6. Extension of Credit. Make loans, advances or extensions of
credit to any Person, except for sales on open account, travel advances and
other advances to employees in the ordinary course of business, and loans,
advances, or extensions of credit among Borrower and the Guarantors.
9.7. Guarantee Obligations. Guarantee or otherwise, directly or
indirectly, in any way be or become responsible for obligations of any other
Person, (other than Borrower or a Guarantor) whether by agreement to purchase
the indebtedness of any other Person, agreement for the furnishing of funds to
any other Person through the furnishing of goods, supplies or services, by way
of stock purchase, capital contribution, advance or loan, for the purpose of
paying or discharging (or causing the payment or discharge of) the indebtedness
of any other Person, or otherwise, except for the endorsement of negotiable
instruments by the Borrower or the Guarantors in the ordinary course of
business for deposit or collection.
9.8. Subordinate Indebtedness. Subordinate any indebtedness due
to it from a Person to indebtedness of other creditors of such Person.
9.9. Property Transfer, Merger or Lease-Back. (a) Sell, lease,
transfer or otherwise dispose of all or, except as to the sale of Inventory or
unneeded Equipment in the ordinary course of business, any material part of its
properties and assets (whether in one transaction or in a series of
transactions, it being agreed that Plastics Manufacturing Company's facility on
Platinum Way is not material), (b) change its name, consolidate with or merge
into any other corporation, permit another corporation to merge into it,
acquire all or substantially all the properties or assets of any other Person,
enter into any reorganization or recapitalization or reclassify its capital
stock, or (c) enter into any sale-leaseback transaction, provided that Borrower
and the Guarantors may make transfers of assets among themselves so long as the
liens and security interests of the Lender in the Collateral at all times
remain perfected and in full force and effect. Notwithstanding anything to the
contrary contained in this Agreement or in any other Loan Documents, Plastics
Manufacturing Company may transfer up to $500,000 (book value) of equipment to
any of its affiliates.
9.10. Acquire Securities. Purchase or hold beneficially any stock
or other securities of, or make any investment or acquire any interest
whatsoever in, any other Person except for investments:
LOAN AGREEMENT - Page 31
33
(a) in commercial paper, maturing within 270 days
after acquisition thereof, which has the highest or second highest
credit rating given by either Standard & Poor's Corporation or ▇▇▇▇▇'▇
Investors Service, Inc.;
(b) in obligations, maturing within 12 months after
acquisition thereof, issued or unconditionally guaranteed by the
United States of America or an instrumentality or agency thereof and
entitled to the full faith and credit of the United States of America;
(c) in demand deposits, and time deposits (including
certificates of deposit) maturing within 12 months from the date of
deposit thereof, with any office of the Lender, any of the Lender's
affiliates, or any national or state bank or trust company which is
organized under the laws of the United States of America or any state
therein and which has capital, surplus and undivided profits of at
least $100,000,000; and
(d) in repurchase obligations of any bank or trust
company described in the above subsection (c) which relate to the
repurchase of obligations described in the above subsection (b).
9.11. Pension Plans. (a) Allow any fact, condition or event to
occur or exist with respect to an employee pension plan which would constitute
grounds for termination by the PBGC of any such plan or for the appointment by
a United States District Court of a trustee to administer any such plan, or (b)
permit any such plan to be the subject of termination proceedings (whether
voluntary or involuntary) from which termination proceedings there results a
liability of the Borrower to the PBGC which will have a materially adverse
effect upon the operations, business, property, assets, financial condition or
credit of the Borrower.
9.12. Misrepresentations. Furnish the Lender with any certificate
or other document that contains any untrue statement of a material fact or
omits to state a material fact necessary to make such certificate or document
not misleading in light of the circumstances under which it was furnished.
9.13. Margin Stock. Apply any of the proceeds of the Notes to the
purchase or carrying of any "margin stock" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, or any regulations,
interpretations or rulings thereunder.
9.14. Compliance with Environmental Laws. Neither the Borrower
nor the Guarantors will (i) use (or permit any tenant to use) any of its real
property for the handling, processing, storage, transportation, or disposal of
any Hazardous Substance except in all respects in compliance with Environmental
Laws, (ii) generate any Hazardous Substance except in all respects in
compliance with Environmental Laws, (iii) conduct any activity which is likely
to cause a release of any Hazardous Substance in violation of Environmental
Law, or (iv) otherwise conduct any activity or use any of its real property or
assets in any manner that is likely to violate any Environmental Law.
LOAN AGREEMENT - Page 32
34
9.15. Capital Expenditures. Make any expenditures for fixed
assets which exceed $5,000,000 for any fiscal year of Industries (calculated
for the consolidated group which includes Industries and the Subsidiaries).
SECTION 10. EVENTS OF DEFAULT - ENFORCEMENT - APPLICATION OF PROCEEDS
10.1. Events of Default. The occurrence of any of the following
events shall constitute an Event of Default hereunder:
10.1.1. Failure to Pay Monies Due. If any principal of
or interest on any of the Indebtedness shall not be paid within one
Business Day after becoming due.
10.1.2. Misrepresentation. If any warranty or
representation of the Borrower or the Guarantors in connection with or
contained in this Agreement, or if any financial data or other
information now or hereafter furnished to the Lender by or on behalf
of the Borrower or the Guarantors, shall prove to be false or
misleading in any material respect.
10.1.3. Noncompliance with Lender Agreement. If the
Borrower or the Guarantors shall fail to perform any of its
obligations and covenants under, or shall fail to comply with any of
the provisions of, this Agreement or any other Loan Document or any
other agreement with the Lender to which it may be a party, and such
failure is not remedied within thirty (30) days after the Lender gives
notice thereof to the Borrower.
10.1.4. Other Defaults.
(a) If the Borrower or the Guarantors
shall default in the due payment of any of its Indebtedness
(other than under the Loan Documents) or in the observance
or performance of any term, covenant or condition in any
agreement or instrument evidencing, securing or relating to
such Indebtedness, provided such indebtedness is in an
aggregate principal amount of $50,000 or more and such
default shall be continued for a period sufficient to permit
acceleration of the indebtedness; or
(b) If the Borrower or the Guarantors
shall default in the due payment of any of its Financial
Debt (other than the Indebtedness) or in the observance or
performance of any term, covenant or condition in any
agreement or instrument evidencing, securing or relating to
such Financial Debt, provided such indebtedness is in an
aggregate principal amount of $1,000,000 or more and such
default shall be continued for a period sufficient to permit
acceleration of the indebtedness.
LOAN AGREEMENT - Page 33
35
10.1.5. Judgments. If there shall be rendered against
the Borrower or the Guarantors, one or more judgments or decrees
involving an aggregate liability of $1,000,000 or more as to any of
them, which has or have become nonappealable and shall remain
undischarged, unsatisfied by insurance and unstayed for more than 30
days; or of a writ of attachment or garnishment against the property
of the Borrower or the Guarantors shall be issued and levied in an
action claiming $1,000,000 or more as to any of them and within thirty
(30) days thereafter is neither released nor stayed nor appealed and
bonded in a manner satisfactory to the Lender.
10.1.6. Business Suspension, Bankruptcy, Etc. If the
Borrower or the Guarantors shall voluntarily suspend transaction of
its business; or if the Borrower or the Guarantors shall not pay their
respective debts as they mature or shall make a general assignment for
the benefit of creditors; or proceedings in bankruptcy, or for
reorganization or liquidation of the Borrower, under the Bankruptcy
Code or under any other state or federal law for the relief of debtors
shall be commenced by the Borrower or the Guarantors or shall be
commenced against the Borrower or the Guarantors and shall not be
discharged within thirty (30) days of commencement; or a receiver,
trustee or custodian shall be appointed for the Borrower or the
Guarantors or for any substantial portion of its respective properties
or assets.
10.1.7. Inadequate Funding or Termination of
Employee/Benefit Plan(s). If the Borrower or the Guarantors shall
fail by $100,000 or more to meets its minimum funding requirements
under ERISA (after giving effect to any valid waiver of such
requirements) with respect to any employee benefit plan established or
maintained by the Borrower or the Guarantors, or if any such plan
shall be the subject of termination proceedings (whether voluntary or
involuntary) and there shall result from such termination proceedings
a liability of Borrower or the Guarantors (or any subsidiary) to the
PBGC of $1,000,000 or more.
10.1.8. Occurrence of Certain Reportable Events. If
there shall occur, with respect to any pension plan maintained by the
Borrower or the Guarantors, any reportable event (within the meaning
of section 4043(b) of ERISA) which the Lender shall determine in good
faith constitutes a ground for the termination by the PBGC of any such
plan, and if such event continues for 60 days after the Lender gives
written notice to the Borrower or the Guarantors, provided that
termination of such plan or appointment of such trustee would, in the
opinion of the Lender, have a materially adverse effect upon the
operations, business, property, assets, financial condition or credit
of the Borrower or the Guarantors.
10.1.9. Change of Control of Industries. If the
individuals who, as of the date of this Agreement, constitute the
members of Industries' board of directors (for purposes of this
Section 13.1.9, the "INCUMBENT BOARD") do not constitute or cease for
any reason to constitute at least 66 2/3% of:
(a) Industries' board of directors; or
LOAN AGREEMENT - Page 34
36
(b) The surviving corporation's board of
directors in the event of any merger or consolidation (if
permitted by this Agreement) involving Industries; or
(c) The controlling entity's board of
directors, comparable body if there is no board of
directors, or voting control if there is no comparable body,
in the event that the surviving corporation under clause (b)
above is directly or indirectly controlled by that entity.
For purposes of this Section 13.1.9, any individual who becomes a
member of the board of directors or comparable body or who obtains a
voting interest, as applicable under clauses (a), (b), or (c) above,
after the date of this Agreement and whose election, or nomination for
election, was approved by a vote of the individuals comprising at
least 66 2/3% of the incumbent board -- other than an election or
nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest, as those
terms are used in Rule 14a-11 of Regulation 14A under the Securities
and Exchange Act of 1934) -- shall be deemed to be a member of the
incumbent board.
10.2. Acceleration of Indebtedness. Upon the occurrence of any of
the Events of Default described in Section 13.1, all Indebtedness may be
declared due and payable in full forthwith at the option of the Lender without
presentation, demand, protest, notice of dishonor or other notice of any kind,
all of which are hereby expressly waived. Unless all of the Indebtedness is
then fully paid, the Lender shall have and may exercise any one or more of the
rights and remedies for which provision is made for a secured party under the
UCC, under the Security Agreement, the Deed of Trust or under any other
document contemplated hereby, including, without limitation, the right to take
possession and sell, lease or otherwise dispose of any or all of the Collateral
and to setoff against the Indebtedness any amount owing by the Lender to the
Borrower. The Borrower and the Guarantors agree, upon request of the Lender,
to assemble the Collateral and make it available to the Lender at any place
designated by the Lender which is reasonably convenient to the Lender and the
Borrower or the Guarantors, in the case of Collateral relative to the
Guarantors.
10.3. Application of Proceeds. The proceeds of any sale or other
disposition of the Collateral authorized by this Agreement shall be applied by
the Lender, first upon all expenses authorized by the UCC and all reasonable
attorneys' fees and legal expenses incurred by the Lender; the balance of the
proceeds of such sale or other disposition shall be applied in the payment of
the Indebtedness, first to interest, then to principal; and the surplus, if
any, shall be paid over to the Borrower or to such other Person or Persons as
may be entitled thereto under applicable law. The Borrower and the Guarantors
shall remain liable for any deficiency, which the Borrower shall pay to the
Lender immediately upon demand.
10.4. Cumulative Remedies. The remedies provided for herein are
cumulative to the remedies for collection of the Indebtedness as provided by
law or by any mortgage, security agreement or other document contemplated
hereby. Nothing herein contained is intended, nor
LOAN AGREEMENT - Page 35
37
should it be construed, to preclude the Lender from pursuing any other remedy
for the recovery of any other sum to which the Lender may be or become entitled
for the breach of this Agreement by the Borrower or the Guarantors.
SECTION 11. MISCELLANEOUS
11.1. Independent Rights. No single or partial exercise of any
right, power or privilege hereunder, or any delay in the exercise thereof,
shall preclude other or further exercise of the rights of the parties to this
Agreement.
11.2. Covenant Independence. Each covenant in this Agreement
shall be deemed to be independent of any other covenant, and an exception in
one covenant shall not create an exception in another covenant.
11.3. Waivers and Amendments. No forbearance on the part of the
Lender in enforcing any of its rights under this Agreement, nor any renewal,
extension or rearrangement of any payment or covenant to be made or performed
by the Borrower hereunder, shall constitute a waiver of any of the terms of
this Agreement or of any such right. No Default or Event of Default shall be
waived by the Lender except in writing signed and delivered by an officer of
the Lender, and no waiver of any Default or Event of Default shall operate as a
waiver of any other Default or Event of Default or of the same Default or Event
of Default on a future occasion. No other amendment, modification or waiver
of, or consent with respect to, any provision of this Agreement or the Note or
other documents contemplated hereby shall be effective unless the same shall be
in writing and signed and delivered by an officer of the Lender.
11.4. GOVERNING LAW. THIS AGREEMENT, AND EACH AND EVERY TERM AND
PROVISION HEREOF, SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE
STATE OF TEXAS. IF ANY PROVISIONS OF THIS AGREEMENT SHALL FOR ANY REASON BE
HELD INVALID OR UNENFORCEABLE, SUCH INVALIDITY OR UNENFORCEABILITY SHALL NOT
AFFECT ANY OTHER PROVISION HEREOF, BUT THIS AGREEMENT SHALL BE CONSTRUED AS IF
SUCH INVALID OR UNENFORCEABLE PROVISION HAD NEVER BEEN CONTAINED HEREIN.
11.5. Survival of Warranties, Etc. All of the Borrower's
covenants, agreements, representations and warranties made in connection with
this Agreement and any document contemplated hereby shall survive the making of
Advances and the delivery of the Notes hereunder and shall be deemed to have
been relied upon by the Lender, notwithstanding any investigation heretofore or
hereafter made by the Lender. All statements contained in any certificate or
other document delivered to the Lender at any time by or on behalf of the
Borrower or the Guarantors pursuant hereto or in connection with the
transactions contemplated hereby shall constitute representations and
warranties by the Borrower or the Guarantors in connection with this Agreement.
LOAN AGREEMENT - Page 36
38
11.6. Attorneys' Fees. The Borrower or the Guarantors agree that
they will, jointly and severally, pay all reasonable costs and expenses of the
Lender in connection with the enforcement of the Lender's rights and remedies
under this Agreement and in connection with the preparation or making of any
amendments, modifications, waivers or consents with respect to this Agreement.
11.7. Payments on Saturdays, Etc. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a Saturday, Sunday or
any other day which is not a Business Day, such payment shall be due on the
next succeeding Business Day, and such extension, if any, shall be included in
computing interest in connection with such payment.
11.8. Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the parties hereto and their respective successors
and assigns; provided, however, neither the Borrower nor the Guarantors may
assign or transfer any rights or obligations hereunder without the prior
written consent of the Lender.
11.9. Maintenance of Records. The Borrower and the Guarantors
will keep all of its respective records concerning the Collateral at its
principal place of business or at Industries' principal place of business. The
Borrower and the Guarantors will give the Lender prompt written notice of any
change in its respective principal place of business, or in the location of
said records.
11.10. Notices. All notices and communications provided for herein
or in any document contemplated hereby or required by law to be given shall be
effective when received or, upon sending by registered or certified mail,
postage prepaid, addressed as follows: (a) If to the Borrower, to: ▇▇▇ ▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ of America Plaza, Suite 1100, Las Vegas, Nevada 89101,
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, with a copy to Industries at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and (b) If to the Lender,
to: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, or to such other address as a party shall have designated to the other
in writing.
11.11. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures were upon the same
instrument.
11.12. Headings. Article and section headings in this Agreement
are included for the convenience of reference only and shall not constitute a
part of this Agreement for any purpose.
11.13. INDEMNIFICATION BY THE BORROWER AND THE GUARANTORS. THE
BORROWER AND THE GUARANTORS HEREBY COVENANT AND AGREE TO INDEMNIFY, DEFEND AND
HOLD HARMLESS THE LENDER AND ITS OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS FROM
AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LIABILITIES, COSTS AND EXPENSES
(INCLUDING WITHOUT LIMITATION, THE FEES AND OUT-OF-POCKET EXPENSES OF COUNSEL)
WHICH MAY BE INCURRED BY OR ASSERTED
LOAN AGREEMENT - Page 37
39
AGAINST THE LENDER OR ANY SUCH OTHER INDIVIDUAL OR ENTITY IN CONNECTION WITH:
(a) ANY INVESTIGATION, ACTION OR PROCEEDING ARISING
OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT, THE NOTES, OR ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS OR ANY COLLATERAL,
OR ANY ACT OR OMISSION RELATING TO ANY OF THE FOREGOING;
(b) ANY TAXES (OTHER THAN FEDERAL OR STATE INCOME
TAXES), LIABILITIES, CLAIMS OR DAMAGES RELATING TO THE COLLATERAL OR
THE LENDER'S LIENS THEREON; OR
(c) THE CORRECTNESS, VALIDITY OR GENUINENESS OF ANY
INSTRUMENTS OR DOCUMENTS THAT MAY BE RELEASED OR ENDORSED TO BORROWER
BY THE LENDER (WHICH SHALL AUTOMATICALLY BE DEEMED TO BE WITHOUT
RECOURSE TO THE LENDER IN ANY EVENT), OR THE EXISTENCE, CHARACTER,
QUANTITY, QUALITY, CONDITION, VALUE OR DELIVERY OF ANY GOODS
PURPORTING TO BE REPRESENTED BY ANY SUCH DOCUMENTS.
11.14. NO ORAL AGREEMENTS. THIS AGREEMENT, TOGETHER WITH THE OTHER
LOAN DOCUMENTS AS WRITTEN, REPRESENT THE FINAL AGREEMENTS BETWEEN THE LENDER,
THE BORROWER AND THE GUARANTORS AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE LENDER, THE BORROWER AND THE
GUARANTORS.
11.15. Gender. Throughout this Agreement, the masculine shall
include the feminine and vice versa and the singular shall include the plural
and vice versa, unless the context of this Agreement indicates otherwise.
11.16. Cross Collateral. The Borrower and the Guarantors hereby
agree that the Collateral under this Agreement secures the obligations now or
hereafter outstanding under all other agreements between Borrower and the
Lender (and the Guarantors and the Lender) or any of their affiliates and the
collateral pledged under any other agreement with the Lender or any of its
affiliates secures the obligations under this Agreement.
11.17. Severability of Provisions. Any provision of this
Agreement, the Notes or any other documents relating thereto that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, such Notes or such
other documents or affecting the validity or enforceability of such provision
in any other jurisdiction.
LOAN AGREEMENT - Page 38
40
11.18. Assignment. The Lender shall have the absolute and
unrestricted right to sell, assign, transfer, or grant participation in, all or
any portion of the Loans and any Collateral, guaranties or other security
relating thereto without the consent of the Borrower or the Guarantors to any
federal or state agency, or to any bank affiliate of the Bank, or, with the
Borrower's consent (which shall not be unreasonably withheld and shall not be
required during the existence of an Event of Default), to any commercial bank
or to any other financial institution or holding company of any of the
foregoing; provided, however, no such action on the part of the Lender shall
have the effect of changing any of the Borrower's or the Guarantors' respective
obligations hereunder without the respective written consent or the Borrower or
the Guarantors.
11.19. Waiver of Jury Trial. The Borrower, the Guarantors and the
Lender hereby irrevocably waive the right to trial by jury with respect to any
and all actions or proceedings at any time in which Borrower and Lender are
parties arising out of this Agreement.
11.20. Survival of Agreement. Notwithstanding anything to the
contrary contained in this Agreement, the provisions of this Agreement shall
remain in full force and effect until such time as all Indebtedness is paid in
full.
IN WITNESS WHEREOF, the Borrower, the Guarantors and the Lender have
caused this Agreement to be executed by their duly authorized officers as of
the day and year first written above.
BORROWER:
SUN COAST HOLDINGS, INC.
By:
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice Chairman of the Board
GUARANTORS:
SUN COAST INDUSTRIES, INC.
By:
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
LOAN AGREEMENT - Page 39
41
SUN COAST CLOSURES, INC.
By:
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
PLASTICS MANUFACTURING COMPANY
By:
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
CUSTOM LAMINATES, INC.
By:
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
SUN COAST ACQUISITION, INC.
By:
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
LOAN AGREEMENT - Page 40
42
LENDER:
COMERICA BANK-TEXAS
By:
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
LOAN AGREEMENT - Page 41
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SCHEDULE OF EXHIBITS
Exhibit A Advance Request Form
Exhibit B Borrowing Base Certificate
Exhibit C Deed of Trust
Exhibit D Facility A Note
Exhibit E Facility B Note
Exhibit F Facility C Note
Exhibit G Facility D Note
Exhibit H Guaranty
Exhibit I Security Agreement
Exhibit J Compliance Certificate
Exhibit K Pledge Agreement
LIST OF SCHEDULES
Schedule 10.4 Actions, Suits or Proceedings
Schedule 10.5 Subsidiaries
Schedule 10.6 Liens
Schedule 10.12 Financial Debt
44
Exhibit "A"
to
Loan Agreement
Form of Advance Request Form
45
Exhibit "B"
to
Loan Agreement
Form of Borrowing Base Certificate
46
Exhibit "C"
to
Loan Agreement
Form of Deed of Trust
47
Exhibit "D"
to
Loan Agreement
Form of Facility A Note
48
Exhibit "E"
to
Loan Agreement
Form of Facility B Note
49
Exhibit "F"
to
Loan Agreement
Form of Facility C Note
50
Exhibit "G"
to
Loan Agreement
Form of Facility D Note
51
Exhibit "H"
to
Loan Agreement
Form of Guaranty
52
Exhibit "I"
to
Loan Agreement
Form of Security Agreement
53
Exhibit "J"
to
Loan Agreement
Form of Compliance Certificate
54
Exhibit "K"
to
Loan Agreement
Form of Pledge Agreement
