EXHIBIT 3.1
LOAN AND SECURITY AGREEMENT
BETWEEN
ASSOCIATED HYGIENIC PRODUCTS LLC,
AS BORROWER,
AND
SOUTHTRUST BANK OF GEORGIA, N.A.,
AS LENDER
CLOSING DATE:
DECEMBER 16, 1996
TABLE OF CONTENTS
1. DEFINITIONS, TERMS AND REFERENCES......................................... 1
1.1 CERTAIN DEFINITIONS............................................ 1
1.2 USE OF DEFINED TERMS...........................................11
1.3 ACCOUNTING TERMS...............................................11
1.4 UCC TERMS......................................................11
1.5 TERMINOLOGY....................................................11
1.6 EXHIBITS.......................................................11
2. THE FINANCING.............................................................11
2.1 REVOLVING LINE OF CREDIT.......................................11
2.2 TERM LOAN......................................................12
2.3 ONE GENERAL OBLIGATION.........................................13
2.4 INTEREST............................................................13
2.5 METHOD OF MAKING PAYMENTS...........................................15
2.6 PREPAYMENTS; EARLY TERMINATION......................................15
2.7 USE OF PROCEEDS.....................................................16
2.8 INCREASED COSTS OR REDUCED RETURN...................................16
2.9 INDEMNIFICATION OF LENDER...........................................16
3. SECURITY INTEREST--COLLATERAL.............................................17
4. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE
TO ACCOUNTS RECEIVABLE COLLATERAL.........................................17
4.1 BONA FIDE ACCOUNTS..................................................18
4.2 GOOD TITLE; NO EXISTING ENCUMBRANCES................................18
4.3 RIGHT TO ASSIGN; NO FURTHER ENCUMBRANCES............................18
4.4 COLLECTIONS.........................................................18
4.5 POWER OF ATTORNEY...................................................18
5. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE
TO INVENTORY COLLATERAL...................................................19
5.1 SALE OF INVENTORY COLLATERAL........................................19
5.2 INSURANCE...........................................................19
5.3 GOOD TITLE; NO EXISTING ENCUMBRANCES................................19
5.4 RIGHT TO GRANT SECURITY INTEREST; NO FURTHER ENCUMBRANCES...........19
5.5 LOCATION OF INVENTORY COLLATERAL....................................20
6. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE
TO EQUIPMENT COLLATERAL...................................................20
6.1 NO SALE OF EQUIPMENT COLLATERAL.....................................20
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6.2 INSURANCE........................................................... 20
6.3 GOOD TITLE; NO EXISTING ENCUMBRANCES................................ 20
6.4 RIGHT TO GRANT SECURITY INTEREST; NO FURTHER ENCUMBRANCES........... 21
6.5 LOCATION............................................................ 21
7. GENERAL REPRESENTATIONS AND WARRANTIES.................................... 21
7.1 EXISTENCE AND QUALIFICATION......................................... 21
7.2 AUTHORITY; VALIDITY AND BINDING EFFECT.............................. 21
7.3 NO MATERIAL LITIGATION.............................................. 22
7.4 TAXES............................................................... 22
7.5 CAPITAL............................................................. 22
7.6 ORGANIZATION........................................................ 22
7.7 INSOLVENCY.......................................................... 22
7.8 TITLE............................................................... 23
7.9 MARGIN STOCK........................................................ 23
7.10 NO VIOLATIONS....................................................... 23
7.11 ERISA............................................................... 23
7.12 FINANCIAL STATEMENTS................................................ 24
7.13 DELIVERY OF CERTAIN COLLATERAL...................................... 24
7.14 PURCHASE OF COLLATERAL.............................................. 24
7.15 POLLUTION AND ENVIRONMENTAL CONTROL................................. 25
7.16 POSSESSION OF FRANCHISES, LICENSES, ETC............................. 25
7.17 DISCLOSURE.......................................................... 25
7.18 SUBSIDIARIES........................................................ 25
8. GENERAL AFFIRMATIVE COVENANTS............................................. 25
8.1 RECORDS RESPECTING COLLATERAL....................................... 25
8.2 FURTHER ASSURANCES.................................................. 26
8.3 RIGHT TO INSPECT.................................................... 26
8.4 REPORTS............................................................. 26
8.5 PERIODIC FINANCIAL STATEMENTS OF BORROWER, AHP HOLDINGS AND PARENT
......................................................................... 27
8.6 ANNUAL FINANCIAL STATEMENTS OF AHP HOLDINGS AND PARENT.............. 27
8.7 PAYMENT OF TAXES.................................................... 27
8.8 MAINTENANCE OF INSURANCE............................................ 28
8.9 MAINTENANCE OF PROPERTY............................................. 28
8.10 CERTIFICATE OF NO EVENT OF DEFAULT; COMPLIANCE CERTIFICATE; NOTICE OF
DEFAULT............................................................. 28
8.11 CHANGE OF PRINCIPAL PLACE OF BUSINESS, ETC.......................... 28
8.12 WAIVERS............................................................. 29
8.13 PRESERVATION OF EXISTENCE........................................... 29
8.14 COMPLIANCE WITH LAWS................................................ 29
8.15 ERISA............................................................... 29
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8.16 LITIGATION.......................................................... 30
8.17 LEVERAGE RATIO...................................................... 30
8.18 TANGIBLE NET WORTH.................................................. 30
8.19 NET INCOME.......................................................... 30
8.20 FIXED CHARGE COVERAGE RATIO......................................... 31
8.21 OPERATING ACCOUNT................................................... 31
8.22 ENVIRONMENTAL COMPLIANCE............................................ 31
9. NEGATIVE COVENANTS........................................................ 33
9.1 NO LIENS............................................................ 33
9.2 DEBT................................................................ 33
9.3 CONTINGENT LIABILITIES.............................................. 34
9.4 DISTRIBUTIONS....................................................... 34
9.5 REDEMPTIONS, ETC.................................................... 34
9.6 RESTRICTED INVESTMENT............................................... 35
9.7 MERGER, TRANSFER, ETC............................................... 35
9.8 ERISA............................................................... 35
9.9 TRANSACTIONS WITH AFFILIATES........................................ 35
9.10 CAPITAL EXPENDITURES AND LEASES..................................... 35
9.11 FISCAL YEAR......................................................... 35
9.12 LOANS AND ADVANCES.................................................. 36
10. EVENTS OF DEFAULT......................................................... 36
10.1 NOTES............................................................... 36
10.2 OBLIGATIONS......................................................... 36
10.3 MISREPRESENTATIONS.................................................. 36
10.4 COVENANTS........................................................... 36
10.5 DAMAGE, LOSS, THEFT OR DESTRUCTION OF COLLATERAL.................... 37
10.6 OTHER DEBTS......................................................... 37
10.7 VOLUNTARY BANKRUPTCY................................................ 37
10.8 INVOLUNTARY BANKRUPTCY.............................................. 37
10.9 ORGANIZATIONAL DOCUMENTS; DISSOLUTION............................... 37
10.10 JUDGMENTS AND SETTLEMENTS........................................... 38
10.11 ERISA............................................................... 38
10.12 CHANGE OF CONTROL................................................... 38
10.13 CHANGE OF MANAGEMENT................................................ 38
10.14 MATERIAL ADVERSE CHANGE............................................. 38
10.15 GUARANTIES.......................................................... 39
11. REMEDIES.................................................................. 39
11.1 ACCELERATION OF THE OBLIGATIONS..................................... 39
11.2 REMEDIES OF A SECURED PARTY......................................... 40
11.3 SET OFF............................................................. 40
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11.4 OTHER REMEDIES.................................................... 40
12. MISCELLANEOUS............................................................ 41
12.1 WAIVER............................................................ 41
12.2 GOVERNING LAW..................................................... 41
12.3 SURVIVAL.......................................................... 41
12.4 NO ASSIGNMENT BY BORROWER......................................... 41
12.5 COUNTERPARTS...................................................... 41
12.6 REIMBURSEMENT..................................................... 41
12.7 SUCCESSORS AND ASSIGNS............................................ 42
12.8 SEVERABILITY...................................................... 42
12.9 NOTICES........................................................... 42
12.10 ENTIRE AGREEMENT; AMENDMENTS...................................... 43
12.11 TIME OF THE ESSENCE............................................... 44
12.12 INTERPRETATION.................................................... 44
12.13 LENDER NOT JOINT VENTURER......................................... 44
12.14 JURISDICTION; WAIVER OF TRIAL BY JURY............................. 44
12.15 ACCEPTANCE........................................................ 44
12.16 PAYMENT ON NON-BUSINESS DAYS...................................... 45
12.17 UCC TERMINATIONS.................................................. 45
12.18 CURE OF DEFAULT BY LENDER......................................... 45
12.19 RECITALS.......................................................... 45
12.20 ATTORNEY-IN-FACT.................................................. 45
12.21 SOLE BENEFIT...................................................... 46
13. CONDITIONS PRECEDENT..................................................... 46
13.1 INITIAL REVOLVING ADVANCE AND THE TERM LOAN....................... 46
13.2 TERM LOAN......................................................... 47
13.3 CONDITIONS TO ALL LOANS........................................... 48
13.4 COMPLIANCE WITH CONDITIONS........................................ 48
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LOAN AND SECURITY AGREEMENT
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THIS LOAN AND SECURITY AGREEMENT (hereinafter, as it may be modified, amended
or supplemented from time to time, and together with all Exhibits attached
hereto, called this "AGREEMENT"), made, entered into and effective as of the
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16th day of December, 1996, by and between ASSOCIATED HYGIENIC PRODUCTS LLC, a
limited liability company duly organized under the laws of the State of Wyoming,
formerly known as "Associated Hygienic Products, a Limited Liability Company"
("Borrower"); and SOUTHTRUST BANK OF GEORGIA, N.A., a national banking
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association ("LENDER");
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W I T N E S S E T H:
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WHEREAS, Borrower has applied to Lender for credit or other financial
accommodations, including, specifically, a revolving line of credit and a term
loan, each as more particularly described hereinbelow; and
WHEREAS, Lender is willing to extend such financial accommodations to
Borrower in accordance with the terms hereof upon the execution of this
Agreement by Borrower, compliance by Borrower with all of the terms and
provisions of this Agreement and fulfillment of all conditions precedent to
Lender's obligations herein contained;
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants herein contained, to induce Lender to extend the financial
accommodations provided for herein, and for other good and valuable
consideration, the sufficiency and receipt of all of which are acknowledged,
Borrower and Lender agree as follows:
1. DEFINITIONS, TERMS AND REFERENCES.
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1.1 CERTAIN DEFINITIONS.
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In addition to such other terms as elsewhere defined herein, as used
in this Agreement and in any Exhibits, the following terms shall have the
following meanings, unless the context requires otherwise:
"ACCOUNTS RECEIVABLE COLLATERAL" shall mean all rights of Borrower to
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payment for goods sold or leased, or to be sold or to be leased, or for services
rendered or to be rendered, howsoever evidenced or incurred, including, without
limitation, all accounts, contract rights, instruments and chattel paper, all
returned or repossessed goods and all books, records, computer tapes, programs
and ledger books arising therefrom or relating thereto, all whether now owned or
hereafter acquired or arising.
"ACCOUNT DEBTOR" shall mean the Person who is obligated to Borrower on
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any of the Accounts Receivable Collateral.
"AFFILIATE" shall mean, with respect to any Person, any other Person
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Controlling, Controlled by or under common Control with such Person.
"AGREEMENT" shall have the meaning given to such term in the foregoing
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recitals to this Agreement.
"AHP HOLDINGS" shall mean AHP Holdings, L.P., a Georgia limited
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partnership.
"BALANCES COLLATERAL" shall mean all deposit accounts of Borrower now
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or hereafter opened with Lender, all certificates of deposit issued by Lender to
Borrower, and all drafts, checks and other items now or hereafter deposited in
or with Lender by Borrower for collection.
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code, as
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amended from time to time.
"BASE" shall mean that interest rate per annum so denominated and set
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by Lender from time to time as an interest rate basis for borrowings from
Lender. Base is one of several interest rate bases which may be used by Lender.
Lender lends at interest rates above and below Base. Any change in any rate of
interest charged hereunder as a result of any change in Base shall become
effective as of the opening of business on each date on which such change in
Base occurs.
"BASE RATE" shall mean that per annum interest rate equal to Base.
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"BASE RATE BORROWING" shall mean and refer to that portion of
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outstanding borrowings evidenced by the Revolving Note or the Term Note, as the
case may be, as to which, pursuant to Section 2.4, Borrower has elected to be
charged interest at a rate computed by reference to the Base Rate.
"BORROWER" shall have the meaning given to such term in the foregoing
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recitals to this Agreement.
"BUSINESS DAY" shall mean any day on which Lender is open for the
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conduct of banking business at its main office in the State of Georgia.
"CAPITAL EXPENDITURES" shall have the meaning given to such term in
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accordance with GAAP, and shall specifically include, in any event, any current
expenditure made by a Person for the acquisition, construction, repair,
maintenance or replacement of fixed or capital assets which, under GAAP, would
be expected to be capitalized on the books of such Person.
"CHANGE OF CONTROL" shall mean: (a) the Controlling Shareholders,
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individually or in the aggregate, shall cease to Control Parent, (b) Parent
shall cease to directly or indirectly own and Control, with power to vote
(either itself or through one or more of its Subsidiaries), one hundred percent
(100%) of the issued and outstanding shares of each of the Members or (c) either
Member
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shall transfer any or all of its ownership units in Borrower to any other Person
or shall otherwise cease to own and Control such ownership units.
"CLOSING DATE" shall mean that date on which the initial Revolving
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Advance is made available to Borrower under the Revolving Line of Credit and the
initial disbursement of the Term Loan is made available to Borrower; which date
shall be, in each case, December 16, 1996.
"COLLATERAL" shall mean the property of Borrower described in Article
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3, or any part thereof, as the context shall require, in which Lender has, or is
to have, a security interest pursuant hereto, as security for payment of the
Obligations.
"COLLATERAL LOCATIONS" shall mean (i) the New Facility, (ii) the
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Warehouse Facility and (iii) Borrower's office and manufacturing facility
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"CONTROL," "CONTROLLED", or "CONTROLLING" shall mean, with respect to
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any Person, the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities or
otherwise; provided, however, that, in any event, any Person who owns directly
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or indirectly twenty percent (20%) or more of the securities having ordinary
voting power for the election of directors or other governing body of a
corporation shall be deemed to "Control" such corporation for purposes of this
Agreement. Without limitation of the foregoing, the Members shall be deemed to
"Control" Borrower, and Parent shall be deemed to "Control" the Members and
Borrower.
"CONTROLLING SHAREHOLDERS" shall mean those shareholders of Parent
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Controlling Parent on the Closing Date.
"DEBT" means all liabilities, obligations and indebtedness of a Person
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to any other Person, of any kind or nature, now or hereafter owing, arising, due
or payable, howsoever evidenced, created, incurred, acquired or owing, whether
primary, secondary, direct, contingent, fixed or otherwise, and including,
without in any way limiting the generality of the foregoing: (i) all liabilities
and obligations to trade creditors; (ii) in the case of Borrower, all of the
Obligations; (iii) all obligations and liabilities of any Other Person secured
by any Lien on a Person's Property, even though such Person shall not have
assumed or become liable for the payment thereof; (iv) all accrued pension fund
and other employee benefit plan obligations and liabilities; (v) all Guaranteed
Obligations; (vii) deferred taxes; and (viii) all obligations under capitalized
leases.
"DEFAULT CONDITION" shall mean the occurrence of any event which,
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after satisfaction of any requirement for the giving of notice or the lapse of
time, or both, would become an Event of Default.
"DEFAULT RATE" shall mean that interest rate per annum equal to two
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percent (2%) plus the stated interest rate effective under each Note from time
to time.
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"ELIGIBLE ACCOUNTS" shall mean that portion of the Accounts Receivable
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Collateral consisting of accounts actually owing to Borrower by its Account
Debtors subject to no counter-claim, defense, setoff or deduction, excluding,
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however, in any event, but without limitation, unless otherwise waived in
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writing by Lender, any account: (i) with respect to which any portion thereof is
more than ninety (90) days past invoice date; (ii) which is owing by any Account
Debtor which is an Affiliate of Borrower; (iii) which is owing by any Account
Debtor having fifty percent (50%) or more in face value of its then existing
accounts with Borrower ineligible hereunder; (iv) the assignment of which is
subject to any requirements set forth in any Assignment of Claims Acts, unless
such requirements have been satisfied in all respects to Lender's satisfaction;
(v) which is owing by any Account Debtor whose accounts, in face amount, with
Borrower exceed ten percent (10%) of Borrower's total Eligible Accounts or such
greater percentage as may be established in writing from time to time by Lender
with respect to a particular Account Debtor, but only to the extent of such
excess; (vi) which is owing by an Account Debtor located outside the United
States, unless either (A) it is secured by an irrevocable letter of credit,
which letter of credit shall have been confirmed by a financial institution
acceptable to Lender and shall be in form and substance acceptable to Lender and
pledged to Lender, or (B) Lender has received other assurance of payment
acceptable to it, and which otherwise is payable in full in United States
Dollars; (vii) which is evidenced by a chattel paper or an instrument of any
kind or is not evidenced by an invoice or other documentation in form acceptable
to Lender; (viii) as to which Lender does not have a first priority security
interest; or (ix) which otherwise has been excluded by Lender, which it reserves
the right to do, in its sole discretion, exercised in a commercially reasonable
manner, for purposes hereof.
"ELIGIBLE INVENTORY" shall mean that portion of the Inventory
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Collateral located at a Collateral Location (and not in transit) consisting of
raw materials, work-in-process and finished goods in the possession and control
of Borrower as to which Lender has a perfected first priority security interest
and which are not damaged or obsolete and which have not been excluded by
Lender, which it reserves the right to do, in its sole discretion, exercised in
a commercially reasonable manner, for purposes hereof.
"EMPLOYEE BENEFIT PLAN" shall mean any employee welfare benefit plan
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or any employee pension benefit plan, as those terms are defined in Section 3(1)
and 3(2) of ERISA, for the benefit of employees of Borrower or any Subsidiary or
any other entity which is a member of a "controlled group" or under "common
control" with Borrower, as such terms are defined in Section 4001(a)(14) of
ERISA.
"EQUIPMENT COLLATERAL" shall mean all equipment of Borrower, or in
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which it has rights, whether now owned or hereafter acquired, located at, or
used in connection with Borrower's operations at, each of the Collateral
Locations at any time or from time to time on or subsequent to the Closing Date.
As defined herein, "EQUIPMENT COLLATERAL" at each such location shall include,
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without limitation, all machinery, fixtures, furniture, furnishings, leasehold
improvements, rolling stock, motor vehicles, plant equipment, computers and
other office equipment and office furniture, together with any and all
attachments and accessions, substitutes and replacements, and tools, spare
parts, and repair parts used or useful in connection therewith.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
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may be amended from time to time.
"EVENT OF DEFAULT" shall mean any of the events or conditions described in
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Article 10, provided that any requirement for the giving of notice or the lapse
of time, or both, has been satisfied.
"EXECUTIVE OFFICE" shall mean the business address of the New Facility.
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"FISCAL YEAR" shall mean the fiscal year of Parent, AHP Holdings and
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Borrower concluding as of December 31 in each calendar year.
"FIXED CHARGE COVERAGE RATIO" shall mean, for any fiscal period, the ratio
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which (a) the sum of the net income plus management fees and royalties paid plus
depreciation and amortization expense plus Interest Expense for AHP Holdings and
its consolidated Subsidiaries for such period, bears to (b) the sum of Interest
Expense plus the current maturities of long-term debt for AHP Holdings and its
consolidated Subsidiaries for the same such period; all as determined under
GAAP.
"GAAP" shall mean generally accepted accounting principles, consistently
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applied.
"GUARANTEED OBLIGATIONS" shall mean, with respect to any Person, all
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obligations of such Person which in any manner directly or indirectly guarantee
or assure, or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligation of any other Person or assure or in
effect assure the holder of any such obligations against loss in respect
thereof, including, without limitation, any such obligations incurred through an
agreement, contingent or otherwise: (a) to purchase such obligations or any
property constituting security therefor; (b) to advance or supply funds for the
purchase or payment of such obligations or to maintain a working capital or
other balance sheet condition; or (c) to lease Property or to purchase any debt
or equity securities or other Property or services.
"INTEREST EXPENSE", for any fiscal period of AHP Holdings, shall mean
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interest expense of AHP Holdings and its consolidated Subsidiaries during such
period on that portion of the Debt of AHP Holdings and its consolidated
Subsidiaries consisting of Debt for borrowed funds, including, without
limitation, in the case of Borrower, the Obligations.
"INTEREST PERIOD" shall mean with respect to any LIBOR Rate Borrowing, a
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period of thirty (30), sixty (60), ninety (90) or one hundred eighty (180) days,
as Borrower may elect as provided in this Agreement; provided, that (a) the
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first day of an Interest Period must be a Business Day, (b) any Interest Period
that would otherwise end on a day that is not a Business Day shall be extended
to the next succeeding Business Day, unless such Business Day falls in the next
calendar month, in which case the Interest Period shall end on the next
preceding Business Day, and (c) Borrower may not elect an Interest Period which
would extend beyond the Termination Date, in the
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case of any Revolving Loan, or beyond the final maturity date of the Term Loan,
in the case of the Term Loan.
"INVENTORY COLLATERAL" shall mean all inventory of Borrower, or in which it
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has rights, whether now owned or hereafter acquired, wherever located including
in transit, including, without limitation, all goods of Borrower held for sale
or lease or furnished or to be furnished under contracts of service, all goods
held for display or demonstration, goods on lease or consignment, returned or
repossessed goods, all raw materials, work-in-process, finished goods and
supplies used or consumed in Borrower's business, together with all documents,
documents of title, dock warrants, dock receipts, warehouse receipts, bills of
lading or orders for the delivery of all, or any portion, of the foregoing.
"LENDER" shall have the meaning given to such term in the initial recitals
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to this Agreement.
"LEVERAGE RATIO" shall mean, as of any date, the ratio which the total
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liabilities of AHP Holdings and its consolidated Subsidiaries determined under
GAAP bears to the Tangible Net Worth of AHP Holdings and its consolidated
Subsidiaries.
"LIBOR" shall mean, with respect to any Interest Period for any LIBOR Rate
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Borrowing, the rate determined by Lender to be the rate at which deposits in
United States Dollars are offered to prime banks in the London interbank market
in an amount substantially equal to such LIBOR Rate Borrowing for a period equal
to such Interest Period.
"LIBOR RATE" shall mean that interest rate per annum equal to LIBOR plus,
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either: (i) 1.75% per annum, in respect of Revolving Advances; or (ii) 2.00% per
annum, in respect of the Term Loan; provided, however, if and as long as the
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Leverage Ratio is 2.0:1 or less, the aforesaid per annum percentages specified
in clauses (i) and (ii) above shall each be reduced by .50% per annum; that is,
to 1.25% and 1.50% per annum, respectively.
"LIBOR RATE BORROWING" shall mean and refer to that portion of outstanding
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borrowings evidenced by the Revolving Note or the Term Note, as the case may be,
as to which, pursuant to Section 2.4, Borrower has elected to be charged
interest at a rate computed by reference to the LIBOR Rate.
"LIEN" shall mean any deed to secure debt, deed of trust, mortgage or
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similar instrument, and any lien, security interest, preferential arrangement
which has the practical effect of constituting a security interest, security
title, pledge, charge, encumbrance or servitude of any kind, whether by
consensual agreement or by operation of statute or other law, and whether
voluntary or involuntary, including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof.
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"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Mortgage, any
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financing statements covering portions of the Collateral, and any and all other
documents, instruments, certificates and agreements executed and/or delivered by
Borrower in connection herewith, or any one, more, or all of the foregoing, as
the context shall require.
"MARGIN" shall mean the sum of (a) an amount equal to eighty percent (80%)
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of the face dollar amount, as at the date of determination, of Eligible
Accounts; plus (b) an amount equal to fifty percent (50%) of the dollar amount,
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valued at the lower of FIFO cost or market value, as at the date of
determination, of Eligible Inventory less (c) reserves for costs, expenses and
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liabilities as to which Lender is authorized to make Revolving Advances or to
charge Borrower's loan account hereunder and such other reserves as Lender shall
establish from time to time in its sole discretion, exercised in a commercially
reasonable manner.
"MARGIN REQUIREMENT" shall have the meaning ascribed to such term in
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Section 2.1.
"MARGIN STOCK" shall have the meaning ascribed to such term in Section
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221.2(h) (or any successor provision) of Regulation U of the Board of Governors
of the Federal Reserve System.
"MEMBERS" shall mean, collectively, Elmbay Limited, an English company, and
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AHP Holdings.
"MORTGAGE" shall mean the Deed to Secure Debt, Security Agreement and
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Assignment of Leases and Rents, dated as of June 23, 1993, executed and
delivered by Borrower to Lender pursuant to the Original Loan Agreement, which
is recorded at Deed Book 8960, Page 243 et seq., Gwinnett County, Georgia
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records, as amended.
"MPPAA" shall mean the Multiemployer Pension Plan Amendments Act of 1980,
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amending Title IV of ERISA.
"MULTIEMPLOYER PLAN" shall have the meaning set forth in Section 4001(a)(3)
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of ERISA.
"NEW FACILITY" shall mean the land owned by Borrower located at 4455 River
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Green Parkway, River Green Business Park, Duluth, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, as described more particularly in the Mortgage, and all buildings,
structures or other improvements which have been, or hereafter may be,
constructed or situated thereon.
"NOTES" shall mean, collectively, the Revolving Note and the Term Note.
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"OBLIGATIONS" shall mean any and all Debts, liabilities and obligations of
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Borrower to Lender, including, without limiting the generality of the foregoing,
any indebtedness, liability or obligation of Borrower to Lender under any loan
made to Borrower by Lender prior to the date
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hereof and any and all extensions or renewals thereof in whole or in part; any
Debt, liability or obligation of Borrower to Lender arising hereunder or as a
result hereof, whether evidenced by the Notes, the other Loan Documents or
otherwise, and any and all extensions or renewals thereof in whole or in part;
any Debt, liability or obligation of Borrower to Lender under any later or
future advances or loans made by Lender to Borrower, and any and all extensions
or renewals thereof in whole or in part; any and all present and future Debt of
Borrower to other creditors which is purchased by Lender from such other
creditors; and any and all future or additional Debts, liabilities or
obligations of Borrower to Lender whatsoever and in any event, whether existing
as of the date hereof or hereafter arising, whether arising under a loan, lease,
credit card arrangements, line of credit, letter of credit or other type of
financing, and whether direct, indirect, absolute or contingent, as maker,
endorser, guarantor, surety or otherwise, and whether evidenced by, arising out
of, or relating to, a promissory note, ▇▇▇▇ of exchange, check, draft, bond,
letter of credit, guaranty agreement, bankers' acceptance, foreign exchange
contract, commitment fee, service charge or otherwise.
"OPERATING AGREEMENT" shall mean the Operating Agreement of Borrower, dated
-------------------
as of July 1, 1994, between the Members, as such agreement may be amended,
modified or restated hereafter with Lender's prior written consent (except as to
administrative or ministerial amendments or modifications).
"ORGANIZATIONAL DOCUMENTS" shall mean, collectively, the Operating
------------------------
Agreement and the Borrower's Articles of Organization, as amended to date, and
as further amended or modified hereafter, with Lender's prior written consent
(except as to administrative or ministerial amendments or modifications).
"ORIGINAL LOAN AGREEMENT" shall mean the Loan and Security Agreement, dated
-----------------------
as of June 23, 1993, between Borrower and Lender, as assignee of SouthTrust Bank
of Alabama, N.A., as amended and restated, in its entirety, by the Prior Loan
Agreement.
"PARENT" shall mean DSG International Limited, a British Virgin Islands
------
corporation.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"PERMITTED ENCUMBRANCES" shall mean (i) Liens for taxes not yet due and
----------------------
payable or being contested as permitted by Section 8.7; (ii) carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business, payment for which is not yet due or
which is being contested in good faith and by appropriate proceedings; (iii)
pledges or deposits in connection with worker's compensation, unemployment
insurance and other social security legislation; (iv) deposits to secure the
performance of utilities, leases, statutory obligations and surety and appeal
bonds and other obligations of a like nature incurred in the ordinary course of
business; (v) bankers' liens arising by statute or under customary terms
regarding depository relationships on deposits held by financial institutions
with whom Borrower has a banker-customer relationship; (vi) typical restrictions
imposed by licenses and leases of software
-8-
(including location and transfer restrictions); (vii) those Liens described on
EXHIBIT "A" attached hereto and incorporated herein by reference; and (viii) any
----------
other Liens described in, and permitted to exist under, Section 9.1 below.
"PERSON" shall mean any individual, sole proprietorship, partnership, joint
------
venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (whether territorial, national,
federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
"PLAN" shall mean any employee benefit plan or other plan for any employees
----
of Borrower and any employees of any Subsidiary or any other entity which is a
member of a controlled group or under common control with Borrower, as such
terms are defined in Section 4001(a)(14) of ERISA, and which is subject to the
provisions of Title IV of ERISA.
"PRIOR LOAN AGREEMENT" shall mean the Loan and Security Agreement, dated as
--------------------
of September 29, 1995, between Borrower and Lender, as amended through the
Closing Date.
"PROPERTY" shall mean any interest in any property or asset of any kind,
--------
whether real, personal or mixed, or tangible or intangible.
"REPORTABLE EVENT" shall mean any of the events described in Section
----------------
4043(b) of ERISA.
"RESTRICTED INVESTMENT" means any acquisition of Property by any Person in
---------------------
exchange for cash or other Property, whether in the form of an acquisition of
stock, debt security, or other Debt or obligation, or the purchase or
acquisition of any other Property, or by loan, advance, capital contribution, or
subscription, except acquisitions of the following: (a) fixed assets to be used
------
in the business of such Person so long as the costs thereof constitute Capital
Expenditures permitted hereunder; (b) goods held for sale or to be used in the
provision of services by such Person in the ordinary course of business; (c)
current assets arising from the sale of goods or the rendition of services in
the ordinary course of business of such Person; (d) direct obligations of the
United States of America, or any agency thereof, or obligations guaranteed by
the United States of America, provided, however, that such obligations mature
-----------------
within one (1) year from the date of acquisition thereof; (e) certificates of
deposit maturing within one (1) year from the date of acquisition, or overnight
bank deposits, or other, similar investments in each case issued by, created by,
or with Lender.
"REVOLVING ADVANCE" shall mean an advance made to Borrower by Lender under
-----------------
the Revolving Line of Credit, which shall be evidenced by the Revolving Note.
"REVOLVING LINE OF CREDIT" shall refer to the revolving line of credit
------------------------
opened by the Lender in favor of Borrower, pursuant to the provisions of Section
2.1.
-9-
"REVOLVING NOTE" shall mean the Revolving Promissory note, dated as of the
--------------
Closing Date, as it may be amended or supplemented from time to time, in the
maximum amount of the Revolving Line of Credit, evidencing the Revolving
Advances, together with any renewals or extensions thereof, in whole or in part.
"SUBSIDIARY" shall mean any corporation, partnership, business association
----------
or other entity (including any Subsidiary of any of the foregoing) of which
Borrower owns at any time during the term of this Agreement, directly or
indirectly, fifty percent (50%) or more of the capital stock or equity interest
having ordinary power for the election of directors or others performing similar
functions. Any representation, warranty or covenant contained in this Agreement
which includes the term "Subsidiaries" shall mean and refer to any Subsidiary
which was such as of the date of determination for purposes of such
representation, warranty or covenant.
"TANGIBLE NET WORTH" shall mean the net worth of AHP Holdings and its
------------------
consolidated Subsidiaries, determined as of the end of any fiscal period of AHP
Holdings under GAAP, minus any and all assets of AHP Holdings and its
-----
consolidated Subsidiaries constituting (i) goodwill, patents, copyrights,
trademarks, trade names and other intangible assets, (ii) write-ups of assets,
(iii) unamortized debt discount and expense, (iv) long-term deferred charges,
(v) any Debt owing by any Affiliate to AHP Holdings or any of its consolidated
Subsidiaries, and (vi) any Restricted Investments.
"TAX DISTRIBUTIONS" shall mean distributions made by Borrower to its
-----------------
Members pursuant to Section 7.2(b) of the Operating Agreement, as in effect on
the Closing Date.
"TERMINATION DATE" shall mean April 30, 1998 (or such later date as Lender
----------------
may approve in writing from time to time).
"TERM LOAN" shall mean, subject to the terms and conditions set forth
---------
herein, the term loan to be made by Lender to Borrower on the Closing Date
pursuant to Section 2.2 hereof.
"TERM NOTE" shall mean the Term Promissory Note, dated as of the Closing
---------
Date, as it may be amended or supplemented from time to time, in the principal
amount of the Term Loan, together with any renewals or extensions thereof, in
whole or in part.
"UCC" shall mean the Uniform Commercial Code-Secured Transactions of
---
Georgia (OCGA Art. 11-9), as in effect on the date hereof.
"WAREHOUSE FACILITY" shall mean the leased facility used by Borrower for
------------------
warehouse purposes located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
-10-
1.2 USE OF DEFINED TERMS.
--------------------
All terms defined in this Agreement and the Exhibits shall have the same
defined meanings when used in any other Loan Documents, unless the context shall
require otherwise.
1.3 ACCOUNTING TERMS.
----------------
All accounting terms not specifically defined herein shall have the
meanings generally attributed to such terms under GAAP.
1.4 UCC TERMS.
---------
The terms "ACCOUNTS", "CHATTEL PAPER", "INSTRUMENTS", "GENERAL
INTANGIBLES", "INVENTORY", "EQUIPMENT", "FIXTURES", "DOCUMENTS", "PRODUCTS" and
"PROCEEDS", as and when used in the Loan Documents, shall have the same meanings
given to such terms under the UCC.
1.5 TERMINOLOGY.
-----------
All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the singular.
Titles of Articles and Sections in this Agreement are for convenience only, and
neither limit nor amplify the provisions of this Agreement, and all references
in this Agreement to Articles, Sections, Subsections, paragraphs, clauses,
subclauses or Exhibits shall refer to the corresponding Article, Section,
Subsection, paragraph, clause, subclause of, or Exhibit attached to, this
Agreement, unless specific reference is made to the articles, sections or other
subdivisions divisions of, or Exhibit to, another document or instrument.
1.6 EXHIBITS.
--------
All Exhibits attached hereto are by reference made a part hereof.
2. THE FINANCING.
-------------
Upon execution of this Agreement and compliance with its terms, including,
without limitation, the conditions precedent set forth in Sections 13.1, 13.2
and 13.3 hereof, Lender agrees to make available to Borrower the Revolving Line
of Credit and to make the Term Loan, in each case, on the following terms and
conditions:
2.1 REVOLVING LINE OF CREDIT.
------------------------
(a) On the Closing Date, Lender agrees to open a Revolving Line of Credit
in favor of Borrower in the maximum aggregate principal amount of Ten Million
Dollars ($10,000,000), reducing to Five Million Dollars ($5,000,000), effective
on December 31, 1997.
-11-
Subject to the fulfillment of the conditions precedent set forth in Sections
13.1 and 13.3 hereof, during the period commencing on the Closing Date and
ending on the earliest to occur of (i) the Termination Date and (ii) the date of
--------
termination of the Revolving Line of Credit pursuant to Section 2.6 or Section
11 below, Borrower may borrow and repay and reborrow up to a maximum aggregate
principal amount of the Revolving Line of Credit; provided, however, that (A)
-----------------
each Revolving Advance must be in the amount of One Hundred Thousand Dollars
($100,000) or an integral multiple thereof, (B) Revolving Advances will be made
by Lender to Borrower only on the first and the fifteenth of each calendar month
(or, in each instance, the next succeeding Business Day, as the case may be),
(C) any Revolving Advances constituting LIBOR Rate Borrowings must be obtained
and paid in accordance with Section 2.4 below, and (D) repayments of Revolving
Advances shall be made in accordance with Section 2.6(a) below; and, provided,
---------
further, that at no time shall the aggregate principal amount outstanding under
-------
the Revolving Line of Credit exceed the Margin (such requirement being referred
to herein as the "MARGIN REQUIREMENT"). If at any time hereafter the Margin
------------------
Requirement is not satisfied, Borrower agrees to repay immediately the then
principal balance of the Revolving Note by that amount necessary to satisfy the
Margin Requirement.
(b) The Debt arising from the disbursement of any and all Revolving
Advances shall be evidenced by the Revolving Note, which shall be executed and
delivered by Borrower simultaneously herewith. Each request for a Revolving
Advance shall be made by Borrower to Lender in such manner as Lender may request
from time to time hereafter (including, without limitation, by telephone,
confirmed promptly in writing, or by facsimile transmission) and shall specify
the requested amount thereof together with the duration of the initial Interest
Period with respect thereto (if a LIBOR Rate Borrowing is requested) and such
other data as Lender, in its credit judgment, may request in connection
therewith. The principal amount of the Revolving Note shall be due and payable
in full on the earliest to occur of (i) the Termination Date and (ii) the date
--------
of any termination of the Revolving Line of Credit pursuant to Section 2.6 or
Section 11 below. Borrower hereby authorizes Lender to cause each Revolving
Advance to be disbursed by crediting the amount thereof to Borrower's demand
deposit account maintained with Lender pursuant to Section 8.21 below.
2.2 TERM LOAN.
---------
(a) Subject to the fulfillment of all of the conditions precedent set
forth in Sections 13.1, 13.2 and 13.3 hereof, Lender agrees to make the Term
Loan to Borrower on the Closing Date in an amount not in excess of Fifteen
Million Dollars ($15,000,000).
(b) Borrower shall obtain the Term Loan in one (1) disbursement on the
Closing Date.
(c) The Term Loan shall be evidenced by the Term Note. The principal
amount of the Term Note (or so much thereof as shall be disbursed to or on
behalf of Borrower) shall be payable in equal, consecutive, monthly installments
(based on an assumed ten-year principal amortization schedule) on the first day
of each calendar month, commencing on February 1, 1997,
-12-
each to be in the amount of One Hundred Twenty-Five Thousand Dollars ($125,000),
followed by one final installment, constituting a balloon payment, in an amount
equal to the then unpaid principal balance of the Term Note, which shall be due
and payable on December 1, 1999.
(d) The Term Loan shall be further subject to mandatory prepayment on
April 1 of each year, beginning on April 1, 1998, by that amount equal to fifty
percent (50%) of "excess cash flow" (as defined) for the preceding Fiscal Year,
as determined by Lender from the annual audit report of AHP Holdings and its
consolidated subsidiaries delivered to Lender pursuant to Section 8.6, with the
proceeds of such mandatory prepayment to be applied to the Term Note in the
reverse order of installments thereof then remaining to be paid, starting with
the balloon payment. For purposes hereof, "excess cash flow" shall mean the sum
of the following, for AHP Holdings and its consolidated subsidiaries: (i) net
income, plus (ii) decreases in working capital, less (iii) increases in working
---- ----
capital, plus (iv) depreciation, amortization and other non-cash charges, less
---- ----
(v) Capital Expenditures (to the extent permitted hereby), less (vi) scheduled
----
payments of principal on the Term Loan, less (vii) dividends permitted hereby
----
(excluding the one-time $21,000,000 dividend) all determined with respect to
such period, and computed according to generally accepted accounting principles.
2.3 ONE GENERAL OBLIGATION.
----------------------
All extensions of credit by Lender to Borrower under this Agreement shall
constitute one general obligation of Borrower, secured by Lender's Lien on the
Collateral and by the Mortgage; provided that upon termination of the Revolving
--------
Line of Credit and payment in full of all Revolving Advances, Lender shall
release its Lien on the Accounts Receivable Collateral and the Inventory
Collateral.
2.4 INTEREST.
--------
Borrower agrees to pay to Lender interest on the Revolving Advances and the
Term Loan (in each case computed based on a 360-day year and the actual number
of days elapsed) in accordance with the following provisions:
(a) Revolving Advances. Interest on the principal amount of each
------------------
Revolving Advance shall be payable, at Borrower's option, either at (i) a
fluctuating rate per annum equal to the Base Rate, or (ii) a fluctuating rate
per annum equal to the LIBOR Rate, for Interest Periods of thirty (30), sixty
(60), ninety (90) or one hundred eighty (180) days, as selected by Borrower, as
hereinafter set forth. Borrower shall select the initial interest rate
applicable to each Revolving Advance in connection with its request for such
Revolving Advance pursuant to Section 2.1 above. Each such request shall
include, if a LIBOR Rate Borrowing is selected by Borrower, a reference to the
Interest Period selected by Borrower corresponding thereto. Thereafter, to the
extent that any Revolving Advance which constitutes a LIBOR Rate Borrowing is
not to be paid on the last day of an Interest Period, at least two (2) Business
Days prior to the last day of such Interest Period, Borrower shall notify Lender
in writing of its intent to continue such Revolving Advance as a LIBOR Rate
-13-
Borrowing for an Interest Period of either thirty (30), sixty (60), ninety (90)
or one hundred eighty (180) days. If Borrower fails to do so on a timely basis,
then such LIBOR Rate Borrowing shall be converted to a Base Rate Borrowing at
the end of such Interest Period. In any event, however, shall more than five (5)
LIBOR Rate Borrowings with varying Interest Periods shall be in effect at any
one time in respect of Revolving Advances and each such LIBOR Rate Borrowing
shall be in integral multiples of One Hundred Thousand Dollars ($100,000).
(b) TERM LOAN.
---------
(i) Except as set forth in clause (ii) below concerning the
availability of a fixed interest rate option, interest on the outstanding
principal balance of the Term Loan shall be payable at Borrower's option, either
at (i) a fluctuating rate per annum equal to the Base Rate, or (ii) a
fluctuating rate per annum equal to the LIBOR Rate, for Interest Periods of
thirty (30), sixty (60), ninety (90) or one hundred eighty (180) days, as
selected by Borrower, as hereinafter set forth. Borrower shall have the right to
elect at any time to have up to four (4) Interest Periods in effect with respect
to the Term Loan provided that the minimum amount of the Term Loan to which each
Interest Period shall apply shall be One Million Dollars ($1,000,000) or an
integral multiple thereof. On the Closing Date, Borrower shall notify Lender in
writing as to the applicable interest rate or rates selected by Borrower with
respect to the Term Loan and, for any LIBOR Rate Borrowings, if more than one
Interest Period is selected, as to the amount of the Term Loan attributable to
each such Interest Period. Thereafter, at least two (2) Business Days prior to
the last day of each Interest Period, Borrower shall notify Lender in writing of
its intent to continue the portion of the Term Loan attributable to such
Interest Period at the LIBOR Rate for an Interest Period or Periods, as
applicable, of either thirty (30), sixty (60), ninety (90) or one hundred eighty
(180) days. If Borrower fails to do so on a timely basis, then each such LIBOR
Rate Borrowing shall be converted to a Base Rate Borrowing at the end of such
Interest Period.
(ii) At any time after the Closing Date, so long as no Default
Condition or Event of Default then exists, Borrower shall have the right to
request that Lender offer a fixed interest rate in respect of all or any portion
(in whole increments of One Million Dollars ($1,000,000) however) of the then
unpaid principal balance of the Term Loan if Lender is then offering fixed rates
for loans of the size, type and tenor of all or such portion of the Term Loan
outstanding at such time. Any such offer, by Lender, to be valid, must be
contained in a writing signed by an authorized officer of Lender making specific
reference to this provision. If Lender's offer of a fixed rate in respect of all
or any such portion of the Term Loan is accepted by Borrower (as evidenced by
its written acceptance thereof on the Business Day on which the offer is made),
then, such fixed interest rate shall become the applicable interest rate as of
the first day of the succeeding calendar quarter for all or such portion of the
Term Loan and remain effective thereafter until the Term Loan or such portion
thereof is paid in full.
(c) PAYMENT. Interest on any Base Rate Loan shall be payable monthly in
-------
arrears on the first day of each calendar month hereafter (for the preceding
calendar month), commencing on February 1, 1997 (for the period from the Closing
Date through such date). Interest on any
-14-
LIBOR Rate Loan shall be payable at the end of the Interest Period corresponding
thereto, if such Interest Period is ninety (90) days or less, but otherwise at
intervals not to exceed ninety (90) days.
(d) Limitations on LIBOR Rate Borrowings. Notwithstanding any other term of
------------------------------------
this Agreement, Borrower shall not be able to obtain or continue LIBOR Rate
Borrowings or convert Base Rate Borrowings into LIBOR Rate Borrowings if: (i) a
Default Condition or Event of Default has occurred and during its continuance;
or (ii) Borrower has received notice from Lender that it has become illegal or
commercially impracticable for Lender to make or maintain any borrowings
hereunder as LIBOR Rate Borrowings, so long as such notice remains effective; in
either such case, then and thereafter all such borrowings shall be made, or
continued as, or converted into, Base Rate Borrowings.
2.5 METHOD OF MAKING PAYMENTS.
-------------------------
All payments owing under or pursuant to this Agreement, whether of
principal, interest, fees or otherwise, shall be made without defense, set-off
or counterclaim to Lender not later than 1:00 p.m. Atlanta, Georgia time on the
date when due and shall be made in lawful money of the United States of America
in immediately available funds at the office of Lender in Atlanta, Georgia. If
and to the extent that any such payment is not made by Borrower when due,
Borrower hereby authorizes and directs Lender to charge Borrower's demand
deposit account maintained with Lender pursuant to Section 8.21 hereof for the
amount of any such payment or, in lieu thereof or in addition thereto, so long
as the Revolving Line of Credit remains in effect, as necessary, to debit any
such payment as a Revolving Advance (whether or not an overadvance is created
thereby). Whenever any payment to be made hereunder or pursuant hereto shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest thereon shall be payable at the applicable rate
during such extension.
2.6 PREPAYMENTS; EARLY TERMINATION.
------------------------------
(a) Revolving Advances may be repaid (without penalty or premium) and re-
borrowed from time to time as provided in Section 2.1 hereof; provided that no
--------
Revolving Advance then constituting a LIBOR Rate Borrowing shall be repaid on
any day other than the last day of the Interest Period then applicable thereto
or on the Termination Date, as applicable. The principal amount of the Term Loan
(if made) may be prepaid in full or in part at any time or from time to time
after the first anniversary of the Closing Date, without penalty or premium;
provided, however, that (i) any such prepayment must be preceded by at least ten
-------- -------
(10) days prior written notice thereof to the Lender, (ii) any such prepayment
must be accompanied by the payment of all then accrued interest on the principal
amount to be prepaid together with all accrued fees and expenses, (iii) any such
prepayment (other than a prepayment in full) must be in the amount of at least
One Hundred Thousand Dollars ($100,000) or an integral multiple thereof and (iv)
no portion of the Term Loan then constituting a LIBOR Rate Borrowing shall be
prepaid on any day other than the last day of the Interest Period then
applicable thereto or the maturity date of the Term Loan, as applicable. Each
-15-
partial prepayment of the Term Loan shall be applied to the unpaid principal
installments thereof in the inverse order of their respective maturities.
(b) In addition to the foregoing, Borrower may at any time hereafter
terminate the Revolving Line of Credit, provided, that (a) any such termination
must be preceded by at least ten (10) days written notice to the Lender and (b)
Borrower shall be required at such time to pay in full all outstanding Revolving
Advances, together with all accrued and unpaid interest thereon and all accrued
and unpaid fees and expenses which are payable by Borrower hereunder.
2.7 USE OF PROCEEDS.
---------------
The proceeds of the initial Revolving Advance, to be made on the
Closing Date, shall be used by Borrower to pay, by extension and renewal, to the
full extent thereof, all existing Revolving Advances outstanding under the Prior
Loan Agreement. The proceeds of all subsequent Revolving Advances shall be used
by Borrower to partially fund the payment of certain distributions permitted
pursuant to Section 9.4 for working capital purposes in the ordinary course of
its business. The proceeds of the Term Loan, to be made on the Closing Date,
shall be used by Borrower to pay in full by extension and renewal, any amount of
the existing Term Loan outstanding under the Prior Loan Agreement on the Closing
Date, and, to the extent of any balance, for Borrower's business purposes in
accordance with the terms of this Agreement (which may include, without
limitation, the payment of certain distributions permitted pursuant to Section
9.4).
2.8 INCREASED COSTS OR REDUCED RETURN.
---------------------------------
If, due to either (a) the introduction of or any change in or in the
interpretation of any U.S. or foreign law or regulation, or (b) the compliance
with any guideline or request from any governmental authority, there shall be
any increase in the cost to Lender of maintaining its commitments hereunder or
agreeing to make or making, funding or maintaining any Revolving Advances or the
Term Loan or any reduction in the rate of return on Lender's capital as a
consequence of its obligations hereunder to a level below that which Lender
would have achieved but for such events described in clauses (a) and (b) above
(taking into consideration Lender's policies to comply with statutorily required
levels with respect to capital adequacy), then Borrower agrees from time to
time, upon demand by Lender to pay to Lender additional amounts sufficient to
compensate Lender for such increased costs or reduced return. A certificate
identifying with reasonable specificity the basis for and the amount of such
increased costs or reduced return shall be submitted to Borrower by Lender and
shall be conclusive and binding for all purposes, absent manifest error. In
determining such amount, Lender may use reasonable averaging and attribution
methods.
2.9 INDEMNIFICATION OF LENDER.
-------------------------
At all times prior to and after the consummation of the transactions
contemplated by this Agreement, Borrower agrees to hold Lender, its respective
directors, officers, employees, agents,
-16-
Affiliates, successors and assigns harmless from and to indemnify Lender and its
respective directors, officers, employees, agents, Affiliates, successors and
assigns against, all loss, damages, costs and expenses (including, without
limitation, reasonable attorney's fees, costs and expenses) actually incurred by
any of the foregoing, whether direct, indirect or consequential, as a result of
or arising from or relating to any "Proceedings" (as defined below) by any
Person, whether threatened or initiated, asserting a claim for any legal or
equitable remedy against any Person under any statute, case or regulation,
including, without limitation, any federal or state securities laws or under any
common law or equitable case or otherwise, arising from or in connection with
this Agreement, and any other of the transactions contemplated by this Agreement
except to the extent such losses, damages, costs or expenses are due to the
willful misconduct or gross negligence of Lender. As used herein, "PROCEEDINGS"
-----------
shall mean actions, suits or proceedings before any court, governmental or
regulatory authority. At the request of Lender, Borrower agrees to indemnify any
Person to whom Lender transfers or sells all or any portion of its interest in
the Obligations or participations therein on terms substantially similar to the
terms set forth above. Lender shall not be responsible or liable to any Person
for consequential damages which may be alleged as a result of this Agreement or
any of the transactions contemplated hereby. The obligations of Borrower under
this Section 2.9 shall survive the termination of this Agreement and payment of
the Obligations.
3. SECURITY INTEREST -- COLLATERAL
-------------------------------
As security for the payment of the Notes and all Obligations
whatsoever of Borrower to Lender and the performance by Borrower of all
covenants and requirements hereunder and under the other Loan Documents,
Borrower hereby grants to Lender a continuing, general lien upon and security
interest in and to the following described Property, wherever located, whether
now existing or hereafter acquired or arising (herein, the "COLLATERAL"),
----------
namely: (a) the Accounts Receivable Collateral; (b) the Inventory Collateral;
(c) the Equipment Collateral; (d) the Balances Collateral; and (e) all products
and/or proceeds of any and all of the foregoing, including, without limitation,
insurance or condemnation proceeds, all Property received wholly or partly in
trade or exchange for any of the foregoing, and all rents, revenues, issues,
profits and proceeds arising from the sale, lease, license, encumbrance,
collection or any other temporary or permanent disposition of any of the
foregoing or any interest therein (but the foregoing is not intended, and shall
not be construed to permit, any of the foregoing transactions to the extent
otherwise prohibited or restricted pursuant hereto or to any other Loan
Documents). The term "COLLATERAL," as used herein, shall also include the right,
----------
title and interest of Borrower in and to the New Facility in which Lender is
being granted a security title and Lien pursuant to the Mortgage.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE TO ACCOUNTS
----------------------------------------------------------------
RECEIVABLE COLLATERAL.
---------------------
With respect to the Accounts Receivable Collateral, Borrower hereby
represents, warrants and covenants to Lender as set forth below.
-17-
4.1 BONA FIDE ACCOUNTS.
------------------
Each item of the Accounts Receivable Collateral arises or will arise
under a contract between Borrower and the Account Debtor, or from the bona fide
sale or delivery of goods to or performance of services for, the Account Debtor.
4.2 GOOD TITLE: NO EXISTING ENCUMBRANCES.
------------------------------------
Borrower has good title to its Accounts Receivable Collateral free and
clear of all Liens thereon other than any Permitted Encumbrances, and no
financing statement covering the Accounts Receivable Collateral is on file in
any public office other than any evidencing Permitted Encumbrances.
4.3 RIGHT TO ASSIGN; NO FURTHER ENCUMBRANCES.
----------------------------------------
Borrower has full right, power and authority to make this assignment
of the Accounts Receivable Collateral and hereafter will not pledge,
hypothecate, grant a security interest in, sell, assign, transfer, or otherwise
dispose of the Accounts Receivable Collateral, or any interest therein.
4.4 COLLECTIONS.
-----------
At any time when an Event of Default has occurred and is continuing,
at the request of Lender, Borrower shall transfer and deliver to Lender, or to
such account as Lender shall direct, all cash, checks, drafts, items and other
instruments for the payment of money which Borrower receives in all or partial
payment for Inventory Collateral or otherwise as proceeds of Accounts Receivable
Collateral and pending such transfer and delivery, Borrower shall be deemed to
hold the same in trust for the benefit of Lender. All such amounts shall be
applied by Lender in payment of the Obligations in such order as Lender shall
elect. Lender may additionally, at any time after the occurrence and during the
continuance of an Event of Default, in its sole discretion, direct Account
Debtors to make payments on the Accounts Receivable Collateral, or portions
thereof, directly to Lender, and the Account Debtors are hereby authorized and
directed to do so by Borrower upon Lender's direction, and the funds so received
shall be applied as aforesaid.
4.5 POWER OF ATTORNEY.
-----------------
Borrower irrevocably designates and appoints Lender its true and
lawful attorney either in the name of Lender or in the name of Borrower to ask
for, demand, ▇▇▇ for, collect, compromise, compound, receive, receipt for and
give acquittances for any and all sums owing or which may become due upon any
items of the Accounts Receivable Collateral and, in connection therewith, to
take any and all actions as Lender may deem necessary or desirable in order to
realize upon the Accounts Receivable Collateral, including, without limitation,
power to endorse in the name of Borrower, any checks, drafts, notes or other
instruments received in payment of or on account of the Accounts Receivable
Collateral, but Lender shall not be under any duty to exercise
-18-
any such authority or power or in any way be responsible for the collection of
the Accounts Receivable Collateral. Lender hereby agrees that it will not
exercise the foregoing power of attorney except after the occurrence of, and
during the continuation of, an Event of Default.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE TO INVENTORY
-----------------------------------------------------------------
COLLATERAL.
----------
With respect to the Inventory Collateral, and in addition to the
covenants pertaining thereto in Sections 4.4 and 4.5, Borrower hereby
represents, warrants and covenants to Lender as set forth below.
5.1 SALE OF INVENTORY COLLATERAL.
----------------------------
Borrower will not sell, lease, exchange, or otherwise dispose of any
of the Inventory Collateral without the prior written consent of Lender, except
in the ordinary course of business for cash or on open account or on terms of
payment ordinarily extended to its customers. Upon the sale, exchange or other
disposition of the Inventory Collateral, the security interest and lien created
and provided for herein, without break in continuity and without further
formality or act, shall continue in and attach to any proceeds thereof,
including, without limitation, accounts, contract rights, shipping documents,
documents of title, bills of lading, warehouse receipts, dock warrants, dock
receipts and cash or non-cash proceeds, and in the event of any unauthorized
sale, shall continue in the Inventory Collateral itself.
5.2 INSURANCE.
---------
Borrower agrees that it will obtain and maintain insurance on the
Inventory Collateral with such companies, in an amount not less than one hundred
percent (100%) replacement cost of such Inventory and against such risks as
Lender may request, with loss payable to Lender and reflecting Lender as
additional insured, as its interests may appear. Such insurance shall not be
cancellable by Borrower, unless with the prior written consent of Lender, or by
Borrower's insurer, unless with at least thirty (30) days advance written notice
to Lender.
5.3 GOOD TITLE; NO EXISTING ENCUMBRANCES.
------------------------------------
Except with respect to any Permitted Encumbrances, Borrower owns the
Inventory Collateral free and clear of any prior Lien, and no financing
statements or other evidences of the grant of a security interest respecting the
Inventory Collateral exist on the public records as of the date hereof other
than any evidencing any Permitted Encumbrances.
5.4 RIGHT TO GRANT SECURITY INTEREST; NO FURTHER ENCUMBRANCES.
---------------------------------------------------------
Borrower has the right to grant a security interest in the Inventory
Collateral. Borrower will pay all taxes and other charges against the Inventory
Collateral, and Borrower will not
-19-
use the Inventory Collateral illegally or allow the Inventory Collateral to be
encumbered except for the security interest in favor of Lender granted herein
and except for any Permitted Encumbrances.
5.5 LOCATION OF INVENTORY COLLATERAL.
--------------------------------
Borrower hereby represents and warrants to Lender that, as of the date
hereof, the Inventory Collateral (except for certain portions thereof in
transit) of Borrower is situated only at one or more of the Collateral Locations
and Borrower covenants with Lender not to locate the Inventory Collateral at any
location other than a Collateral Location without at least thirty (30) days
prior written notice to Lender. In addition, to the extent Borrower should
warehouse any of the Inventory Collateral at any time hereafter, Borrower
acknowledges and agrees that such warehousing may be conducted only by
warehousemen who have been pre-approved by Lender and who, in any event, shall
issue non-negotiable warehouse receipts in Lender's name to evidence any such
warehousing of goods constituting Inventory Collateral. In any event, Borrower
will not consign any Inventory Collateral except upon first obtaining Lender's
prior written consent thereto.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS APPLICABLE TO EQUIPMENT
-----------------------------------------------------------------
COLLATERAL.
----------
With respect to the Equipment Collateral, Borrower hereby represents,
warrants and covenants to Lender as set forth below.
6.1 NO SALE OF EQUIPMENT COLLATERAL.
-------------------------------
Borrower will not sell, lease, exchange, or otherwise dispose of any
of the Equipment Collateral without the prior written consent of Lender.
6.2 INSURANCE.
---------
Borrower agrees that it will obtain and maintain insurance on the
Equipment Collateral with such companies and in such amounts and against such
risks as Lender may reasonably request, with loss payable to Lender and
reflecting Lender as additional insured as its interest may appear. Such
insurance shall not be cancellable by Borrower, unless with the prior written
consent of Lender, or by Borrower's insurer, unless with at least thirty (30)
days advance written notice to Lender.
6.3 GOOD TITLE; NO EXISTING ENCUMBRANCES.
------------------------------------
Borrower owns the Equipment Collateral free and clear of any prior
Lien thereon other than with respect to any Permitted Encumbrances and no
financing statements or other evidences of the grant of a security interest
respecting the Equipment Collateral exist on the public records as of the date
hereof other than any evidencing any Permitted Encumbrances.
-20-
6.4 RIGHT TO GRANT SECURITY INTEREST; NO FURTHER ENCUMBRANCES.
---------------------------------------------------------
Borrower has the right to grant a security interest in the Equipment
Collateral. Borrower will pay all taxes and other charges against the Equipment
Collateral. Borrower will not use the Equipment Collateral illegally or allow
the Equipment Collateral to be encumbered except for the security interest in
favor of Lender granted herein and except for any Permitted Encumbrances.
6.5 LOCATION.
--------
As of the date hereof, the Equipment Collateral is located only at one
or more of the Collateral Locations and, hereafter, Borrower covenants with
Lender not to locate Equipment Collateral at any location other than a
Collateral Location.
7. GENERAL REPRESENTATIONS AND WARRANTIES.
--------------------------------------
In order to induce Lender to enter into this Agreement, Borrower
hereby represents and warrants to Lender (which representations and warranties,
together with the representations and warranties of Borrower contained in
Articles 4, 5 and 6, shall be deemed to be renewed as of the date of each
Revolving Advance) as set forth below.
7.1 EXISTENCE AND QUALIFICATION.
---------------------------
Borrower is a limited liability company duly organized and validly
existing under, and in good standing under, the laws of the State of Wyoming,
with its principal place of business, chief executive office and office where it
keeps all of its books and records being located at the Executive Office and is
duly qualified to transact business as such entity and is in good standing in
any other state wherein the conduct of its business or the ownership of its
Property requires such qualification. Borrower has as its name, as registered
with the secretary of state of the state of its organization, the words first
inscribed hereinabove as its name.
7.2 AUTHORITY; VALIDITY AND BINDING EFFECT.
--------------------------------------
Borrower has the power to make, deliver and perform under the Loan
Documents, and to borrow and grant Liens in the Collateral hereunder, and has
taken all necessary and appropriate action to authorize the execution, delivery
and performance of the Loan Documents. This Agreement constitutes, and the
remainder of the Loan Documents, when executed and delivered for value received,
will constitute, the valid obligations of Borrower, legally binding upon it and
enforceable against it in accordance with their respective terms. The
undersigned representatives of Borrower are duly authorized and empowered to
execute, attest and deliver this Agreement and the remainder of the Loan
Documents for and on behalf of Borrower, and to bind Borrower accordingly
thereby.
-21-
7.3 NO MATERIAL LITIGATION.
----------------------
There are no proceedings pending or, so far as Borrower knows,
threatened, before any court or administrative agency which might materially
adversely affect the financial condition or operations of Borrower.
7.4 TAXES.
-----
Borrower has filed or caused to be filed any tax returns required to
be filed by it and has paid all taxes shown to be due and payable by it on said
returns or on any assessments made against it, the nonpayment of which could
reasonably be expected to have a material adverse effect on the Borrower's
financial condition or business operations, unless and to the extent only that
(x) such taxes are being contested in good faith and by appropriate proceedings
by Borrower, and (y) Borrower maintains reasonable reserves on its books
therefor in accordance with GAAP.
7.5 CAPITAL.
-------
All membership units, capital stock, debentures, bonds, notes and all
other securities of Borrower presently issued and outstanding are validly and
properly issued in accordance with all applicable laws, including, but not
limited to, the "blue sky" laws of all applicable states and the federal
securities laws.
7.6 ORGANIZATION.
------------
The Organizational Documents of Borrower are in full force and effect
under the laws of the State of Wyoming and all amendments to said Organizational
Documents have been duly and properly made under and in accordance with all
applicable laws.
7.7 INSOLVENCY.
----------
After giving effect to the funding of the Revolving Advances to be
made on the Closing Date, and the other transactions contemplated by this
Agreement and the uses by Borrower of the proceeds of the such advances as
provided hereunder, (a) the fair value and present fair saleable value of
Borrower's assets are in excess of the total amount of Borrower's liabilities,
including known contingent liabilities; (b) Borrower will not have incurred
debts, nor will it intend to incur debts, beyond its ability to pay such debts
as they mature; and (c) Borrower does not have unreasonably small capital to
carry on Borrower's business as theretofore operated and all businesses in which
the Borrower is about to engage. As used in this Section 7.7, "debt" means any
liability on a claim, and "claim" means (i) the right to payment, whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, or (ii) the right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable
-22-
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
7.8 TITLE.
-----
Borrower has good and marketable title to all of its properties
subject to no Lien of any kind except as otherwise disclosed in writing to
Lender and as to the Collateral, except for the Permitted Encumbrances.
------
7.9 MARGIN STOCK.
------------
Borrower is not engaged principally, or as one of its important
activities, in the business of purchasing or carrying any Margin Stock and no
part of the proceeds of any borrowing made pursuant hereto will be used to
purchase or carry any Margin Stock or to extend credit to others for the purpose
of purchasing or carrying any Margin Stock, or be used for any purpose which
violates, or which is inconsistent with, the provisions of Regulation X of the
Board of Governors of the Federal Reserve System. In connection herewith, if
requested by Lender, Borrower will furnish to Lender a statement in conformity
with the requirements of Federal Reserve Form F.R. U-1 referred to in Regulation
U of said Board to the foregoing effect.
7.10 NO VIOLATIONS.
-------------
The execution, delivery and performance by Borrower of this Agreement
and the Loan Documents have been duly authorized by all necessary action and do
not and will not require any consent or approval of the Members (except to the
extent obtained), violate any provision of any law, rule, regulation (including,
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to Borrower or of the
Organizational Documents of Borrower, or result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which Borrower is a party or by which it or its
properties may be bound or affected; and Borrower is not in default under any
such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, agreement, lease or instrument.
7.11 ERISA.
-----
(i) Borrower is in compliance with the requirements of ERISA with
respect to each Employee Benefit Plan; (ii) no fact, including, but not limited
to, any Reportable Event exists in connection with any Plan which, more likely
than not, would constitute grounds for the termination of any such Plan by the
PBGC or for the appointment by the appropriate United States district court of a
trustee to administer any such Plan; (iii) Borrower does not maintain or
contribute to any Plan which has an "accumulated funding deficiency" (as defined
in Section 412 of the Internal Revenue Code); (iv) Borrower does not maintain or
contribute to any Plan which has incurred any material
-23-
liability to the PBGC (other than for premium payments due in the ordinary
course of business, which premiums will be paid when due and payable); (v)
Borrower does not maintain or contribute to any Plan which has insufficient
assets to qualify for a standard termination pursuant to Section 4041 of ERISA;
(vi) Borrower is not required pursuant to the terms of any applicable collective
bargaining agreement to pay or accrue any contributions with respect to any Plan
which is a Multiemployer Plan and there has been no complete or partial
withdrawal by Borrower from any such Multiemployer Plan within the contemplation
of MPPAA; (vii) except as concurrently herewith disclosed to Lender in writing,
(A) Borrower does not maintain or contribute to any Employee Benefit Plan which
provides medical benefits, life insurance benefits or other welfare benefits as
defined in Section 3(1) of ERISA (excluding severance pay and benefits required
under Section 601 of ERISA) for former employees of such Borrower, and (B)
Borrower does not maintain or contribute to any non-qualified, unfunded deferred
compensation plan; and (viii) neither Borrower nor any fiduciary with respect to
any Employee Benefit Plan has engaged in a "prohibited transaction" within the
meaning of Section 4975 of the Internal Revenue Code or Section 406 of ERISA
with respect to any Employee Benefit Plan.
7.12 FINANCIAL STATEMENTS.
--------------------
The audited financial statements of Borrower for the most recently
completed fiscal year of Borrower, together with the unaudited financial
statements of Borrower for that portion ended, September 30, 1996, of its
current fiscal year, copies of which have heretofore been furnished to Lender,
are complete and accurately and fairly represent the financial condition of
Borrower, the results of Borrowers operations and the transactions in Borrower's
equity accounts as of the dates and for the periods referred to therein, and
have been prepared in accordance with GAAP throughout the period involved. There
is no material Debt of Borrower as of the date of such financial statements
which is not reflected therein or in the notes thereto. There has been no
material adverse change in the financial conditions or operations of Borrower
since the respective dates of the balance sheets contained in such financial
statements.
7.13 DELIVERY OF CERTAIN COLLATERAL.
------------------------------
Borrower has delivered to the Lender all agreements, letters of
credit, promissory notes, certificates of deposit, chattel paper or anything
else the physical possession of which is necessary in order for the Lender to
perfect or preserve the priority of its security interest therein.
7.14 PURCHASE OF COLLATERAL.
----------------------
Borrower has not purchased any of the Collateral in a bulk transfer or
in a transaction which was outside the ordinary course of the business of
Borrower's seller, except that Borrower acquired certain of the Equipment
Collateral from Parent, in compliance with all applicable laws.
-24-
7.15 POLLUTION AND ENVIRONMENTAL CONTROL.
-----------------------------------
Borrower has obtained all permits, licenses and other authorizations
which are required under, and is in compliance with all Environmental Laws the
noncompliance with which would or might have a material adverse effect on its
business, financial condition or Property.
7.16 POSSESSION OF FRANCHISES, LICENSES, ETC.
---------------------------------------
Borrower possesses All franchises, certificates, licenses, permits and
other authorizations from governmental political subdivisions or regulatory
authorities, and all patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the ownership, maintenance and operation of any of its
Property and assets, and Borrower is not in violation of any thereof which would
or might have a material adverse effect on its business, financial condition or
Property.
7.17 DISCLOSURE.
----------
Neither this Agreement nor any other document, certificate or
statement furnished to Lender by or on behalf of Borrower in connection
herewith contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein not misleading. To the best of Borrower's knowledge, there is no fact
peculiar to Borrower which materially adversely affects or in the future may (so
far as Borrower can now reasonably foresee) materially adversely affect the
business, Property or assets, or financial condition of Borrower which has not
been set forth in this Agreement or in the other documents, certificates and
statements furnished to Lender by or on behalf of Borrower prior to the date
hereof in connection with the transactions contemplated hereby, when taken as a
whole.
7.18 SUBSIDIARIES.
------------
Borrower has no Subsidiaries.
8. GENERAL AFFIRMATIVE COVENANTS.
-----------------------------
Borrower covenants to Lender that from and after the date hereof, and
until such time as the Obligations have been paid in full and Lender shall have
terminated this Agreement in writing, Borrower will comply with the covenants
set forth below.
8.1 RECORDS RESPECTING COLLATERAL.
-----------------------------
All records of Borrower with respect to the Collateral will be kept at
the Executive Office (as it may be changed pursuant to Section 8.11) and will
not be removed from such address without the prior written consent of Lender.
-25-
8.2 FURTHER ASSURANCES.
------------------
Borrower shall duly execute and/or deliver (or cause to be duly
executed and/or delivered) to Lender any instrument, invoice, document, document
of title, dock warrant, dock receipt, warehouse receipt, ▇▇▇▇ of lading, order,
financing statement, assignment, waiver, consent or other writing which may be
reasonably necessary to Lender to carry out the terms of this Agreement and any
of the other Loan Documents and to perfect its security interest in and
facilitate the collection of the Collateral, the proceeds thereof, and any other
property at any time constituting security to Lender. Borrower shall perform or
cause to be performed such acts as Lender may reasonably request to establish
and maintain for Lender a valid and perfected Lien on the Collateral, free and
clear of any Liens other than in favor of Lender and other than the Permitted
Encumbrances.
8.3 RIGHT TO INSPECT.
----------------
Lender (or any person or persons designated by it) shall, in its sole
discretion, have the right to call at any place of business of Borrower at any
reasonable time during normal business hours, and, without hindrance or delay,
inspect the Collateral and inspect, audit, check and make extracts from
Borrower's books, records, journals, orders, receipts and any correspondence and
other data relating to the Collateral, to Borrower's business or to any other
transactions between the parties hereto. Without limiting the foregoing, Lender
shall be entitled to perform periodic field audits of Borrower's operations.
Lender shall hold in confidence Borrower's confidential or proprietary
information obtained pursuant to this Agreement and shall not disclose the same
to any third party, except: (i) as required by law or by judicial or
------
administrative process or to appropriate regulatory authorities or as such
information is or becomes public knowledge other than by virtue of Lender's
disclosure, (ii) to Lender's attorneys and accountants, and (iii) otherwise to
the extent that Lender needs to disclose such information in order to protect
its own interests or to collect all or any part of the Obligations.
8.4 REPORTS.
-------
Borrower shall, as soon as practicable, but in any event on or before
the respective dates specified below furnish or cause to be furnished to Lender:
(i) within ten (10) days after the end of each calendar month, a status report,
certified by a duly authorized officer on behalf of Borrower, showing the
aggregate dollar value of the items comprising the Accounts Receivable
Collateral and the age of each individual item thereof from invoice date as of
the last day of the preceding calendar month (segregating such items in such
manner and to such degree as Lender may reasonably request), and (ii) within
forty-five (45) days after the end of each calendar quarter, an inventory status
report, certified by a duly authorized officer of Borrower, in such detail as
Lender shall request, but to include in any event a description of the type,
dollar value and location of the Inventory Collateral as at the end of the
preceding month, valued at the lower of cost or market. Additionally, Lender
may, at any time, request that Borrower verify the individual account balances
of the individual Account Debtors by such means as Borrower and Lender then
mutually agree, provided that, after any Event of Default has occurred and while
it is continuing Lender shall have
-26-
the further right to verify such balances directly. In any event, upon request
from Lender, made at any time hereafter but in any event no less often than
every three (3) months, Borrower shall furnish Lender with a then current
Account Debtor address list for Borrower.
8.5 PERIODIC FINANCIAL STATEMENTS OF BORROWER AHP HOLDINGS AND
----------------------------------------------------------
PARENT.
------
Borrower shall, as soon as practicable, and in any event within forty-
five (45) days after the end of each fiscal quarter of Borrower, AHP Holdings
and Parent, respectively, furnish to Lender, unaudited financial statements of
Borrower, AHP Holdings and Parent (the latter two on a consolidated basis),
including a balance sheet, a cash flow statement and an income statement, for
the fiscal quarter then ended and the fiscal year to date, certified as to truth
and accuracy by Borrower's chief executive officer or chief financial officer.
8.6 ANNUAL FINANCIAL STATEMENTS OF AHP HOLDINGS AND PARENT.
------------------------------------------------------
Borrower shall, as soon as practicable, and in any event within one
hundred twenty (120) days after the end of each Fiscal Year, furnish to Lender
the annual audit report of Parent and its consolidated Subsidiaries and,
separately, AHP Holdings and its consolidated Subsidiaries, including a balance
sheet, income statement and statement of cash flow, certified without material
qualification (and Lender reserves the right to determine whether qualifications
arising out of uncertainty or due to an accounting change are material for
purposes of this covenant), by independent certified public accountants of
recognized national (or international) standing, and prepared in accordance with
GAAP; provided, however, that (i) Parent or AHP Holdings may make a change in
-----------------
its accounting methods in any Fiscal Year provided (A) such change or changes
are clearly reflected in its annual audit report, (B) any new method has been
concurred in by its independent certified public accountants and is in
accordance with GAAP and (C) this Agreement has been amended to the extent
necessary to reflect such changes in the financial covenants and other terms and
conditions of this Agreement; and (ii) Lender shall have the right, in response
to any change in GAAP occurring hereafter, to require that this Agreement be
amended to the extent necessary to reflect changes in the financial covenants
and other terms and conditions to this Agreement caused by such change in GAAP.
8.7 PAYMENT OF TAXES.
----------------
Borrower shall pay and discharge all taxes, assessments and
governmental charges upon it, its income and its Property, the non-payment of
which could reasonably be expected to have a material adverse effect on the
Borrower's financial condition or business operations, prior to the date on
which penalties attach thereto, unless and to the extent only that (x) such
taxes, assessments and governmental charges are being contested in good faith
and by appropriate proceedings by Borrower and (y) Borrower maintains reasonable
reserves on its books therefor in accordance with GAAP.
-27-
8.8 MAINTENANCE OF INSURANCE.
------------------------
In addition to and cumulative with any other requirements imposed on
Borrower with respect to insurance herein or under the other Loan Documents,
Borrower shall maintain insurance with responsible insurance companies on such
of its Property, in such amounts and against such risks as is customarily
maintained by similar businesses operating in the same vicinity, but in any
event to include public liability, worker's compensation, loss, damage, flood,
windstorm, fire, theft, extended coverage and product liability insurance in
amounts satisfactory to Lender, which such insurance shall not be cancellable by
Borrower, unless with the prior written consent of Lender, or by Borrower's
insurer, unless with at least thirty (30) days advance written notice to Lender
thereof. Borrower shall file with Lender on or before the Closing Date and
annually upon Lender's request thereafter copies of insurance policies,
certified by an officer of Borrower's insurance company, to Lender's
satisfaction, of such insurance then in effect stating the names of the
insurance companies, the amounts and rates of insurance, the date of expiration
thereof, the properties and risks covered thereby and the insured with respect
thereto, and, within thirty (30) days after notice in writing from Lender,
obtain such additional insurance as Lender may reasonably request.
8.9 MAINTENANCE OF PROPERTY.
-----------------------
Borrower shall maintain its Properties in good working condition.
8.10 CERTIFICATE OF NO EVENT OF DEFAULT; COMPLIANCE CERTIFICATE; NOTICE OF
---------------------------------------------------------------------
DEFAULT.
-------
Borrower shall, on a quarterly basis not later than forty-five (45) days
after the close of each of its first three (3) fiscal quarters and not later
than one hundred twenty (120) days after the close of its Fiscal Year, certify
to Lender, in a statement executed by Borrower's chief executive officer or
chief financial officer, that no Event of Default and no Default Condition
exists or has occurred and is existing, or, if an Event of Default or Default
Condition exists, specifying the nature and period of existence thereof and
setting forth the action which Borrower proposes to take with respect thereto.
Such certificate shall be accompanied by the certificate of the chief financial
officer on behalf of Borrower showing, in reasonable detail, compliance with
Sections 8.17 through 8.20, inclusive, and Section 9.10, by Borrower for the
immediately preceding fiscal quarter. In addition, promptly upon its becoming
aware of the occurrence of any Default Condition or Event of Default, Borrower
will notify Lender thereof in writing, specifying the nature and period of
existence thereof and the action which Borrower proposes to take with respect
thereto.
8.11. CHANGE OF PRINCIPAL PLACE OF BUSINESS, ETC.
------------------------------------------
Borrower hereby understands and agrees that if, at any time hereafter,
Borrower elects either (i) to move its Executive Office, except as described in
the definition thereof, (ii) to change its name, identity or its structure to
other than a limited liability company or (iii) to add any Collateral Location,
Borrower will notify Lender in writing at least thirty (30) days prior thereto
and
-28-
take such action in regard thereto as Lender may reasonably request to continue
the perfection of the Lender's security interest in the Collateral in respect of
such change.
8.12 WAIVERS.
-------
With respect to each of the Collateral Locations, Borrower will obtain such
waivers of lien, estoppel certificates or subordination agreements as Lender may
reasonably require to insure the priority of its security interest in that
portion of the Collateral situated at such locations.
8.13 PRESERVATION OF EXISTENCE.
-------------------------
Borrower shall preserve and maintain its existence as a limited liability
company and its rights, franchises and privileges in the jurisdictions of its
organization, and qualify and remain qualified as a foreign limited liability
company in each Collateral Location state and each jurisdiction in which such
qualification is necessary or desirable in view of its business and operations
or the ownership of its Property.
8.14 COMPLIANCE WITH LAWS.
--------------------
Borrower shall comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority, noncompliance with which
would materially adversely affect its businesses or credit. Without limiting the
foregoing, Borrower shall obtain and maintain all permits, licenses and other
authorizations which are required under, and otherwise comply with, all
Environmental Laws.
8.15 ERISA.
-----
Borrower shall: (i) make prompt payments of contributions required by the
terms of each Employee Benefit Plan or to meet the minimum funding standards set
forth under ERISA with respect to each Employee Benefit Plan to which such
standards apply; (ii) notify Lender immediately of any fact, including, but not
limited to, any Reportable Event, arising in connection with any Plan which,
more likely than not, would constitute grounds for the termination thereof by
the PBGC or for the appointment by the appropriate United States district court
of a trustee to administer the Plan; (iii) notify Lender immediately of
Borrower's intent to terminate any Plan; (iv) notify Lender immediately of the
adoption of an amendment to any Plan (or of any other event) which causes any
Plan to fail to have sufficient assets to qualify for a standard termination
under Section 4041 of ERISA; (v) notify Lender immediately if the aggregate
unfunded liability with regard to all Plans increases to an amount in excess of
Fifty Thousand Dollars ($50,000); (vi) notify Lender immediately if Borrower
obtains information indicating that the aggregate withdrawal liability with
regard to all Plans increases to an amount in excess of Fifty Thousand Dollars
($50,000); (vii) notify Lender immediately of any filing of a request for a
waiver of the minimum funding standard with regard to any Employee Benefit Plan
to which such standard applies; (viii) promptly after receipt thereof, furnish
to Lender a copy of any notice received by Borrower from the PBGC relating to
the
-29-
intention of the PBGC to terminate any Plan or to appoint a trustee to
administer any Plan; (ix) promptly after receipt thereof furnish to Lender a
copy of any notice received by Borrower from the Internal Revenue Service
relating to the intention of the Internal Revenue Service to disqualify any
Employee Benefit Plan or to refuse to grant a favorable determination letter
with regard to any Employee Benefit Plan; (x) notify Lender immediately of any
lawsuit, claim for damages or administrative proceeding in which an Employee
Benefit Plan or a fiduciary with respect thereto is a defendant, wherein the
amount of damages claimed exceeds, either alone or in the aggregate with all
other such lawsuits, claims and administrative proceedings, Fifty Thousand
Dollars ($50,000); and (xi) furnish to Lender, promptly upon its request
therefor, such additional information concerning each and every Employee Benefit
Plan, including, but not limited to, the annual report required to be filed
under ERISA, as may be reasonably requested.
8.16 LITIGATION.
----------
Promptly, upon its receipt of notice or knowledge thereof, Borrower
will report to Lender any lawsuit or administrative proceeding in which Borrower
or any of its Subsidiaries is a defendant wherein the amount of damages claimed
against Borrower or any of its Subsidiaries exceeds Fifty Thousand Dollars
($50,000).
8.17 LEVERAGE RATIO.
--------------
The Leverage Ratio shall be not more than (i) 6.00:1, starting with
the Fiscal Quarter ending December 31, 1997, and continuing through the fiscal
quarter ending September 30, 1998; (ii) 3.00:1, starting with the Fiscal Quarter
ending December 31, 1997, the Fiscal Quarter ending September 30, 1999; and
(iii) 2.00:1, for each Fiscal Quarter ending thereafter.
8.18 TANGIBLE NET WORTH.
------------------
Tangible Net Worth shall be at least equal to One Million Dollars
($1,000,000), which minimum amount shall increase annually concurrently with
Borrower's delivery to Lender of the audited financial statements of AHP
Holdings and its consolidated Subsidiaries for each Fiscal Year, commencing with
the Fiscal Year ending December 31, 1997, as required by Section 8.6 hereof (but
in no event more than one hundred twenty (120) days after the end of any Fiscal
Year), by an amount equal to Two Million Dollars ($2,000,000).
8.19 NET INCOME.
----------
The minimum annual net income of AHP Holdings and its consolidated
Subsidiaries, determined in accordance with GAAP for each Fiscal Quarter,
starting with the Fiscal Quarter ended December 31, 1996, shall be One Hundred
Thousand Dollars ($100,000).
-30-
8.20 FIXED CHARGE COVERAGE RATIO.
---------------------------
The Fixed Charge Coverage Ratio of AMP Holdings and its consolidated
Subsidiaries as of the end of each fiscal quarter in each Fiscal Year shall be
at least 1.25:1, as determined under GAAP on a rolling four (4) quarters' basis,
starting with the fiscal quarter ending December 31, 1996.
8.21 OPERATING ACCOUNT.
-----------------
Borrower shall maintain an operating account with Lender to which Lender
may credit disbursements of Revolving Advances and charge payments due hereunder
as provided in Sections 2.1(b) and 2.5, respectively.
8.22 ENVIRONMENTAL COMPLIANCE.
------------------------
(a) DEFINITIONS. The following definitions shall apply for purposes of this
-----------
Section 8.22:
(i) "Environmental Law" shall mean any federal, state or local
-----------------
statute, regulation or ordinance or any judicial or administrative decree
or decision now or hereafter promulgated with respect to any "Hazardous
Substance" (as hereinafter defined), drinking water, ground water,
landfills, open dumps, storage tanks, underground storage tanks, solid
waste, waste water, storm water runoff; waste emissions, or ▇▇▇▇▇. Without
limiting the generality of the foregoing, the term Environmental Law shall
encompass each of the following statutes, as may be amended from time to
time, and all regulations from time to time promulgated thereunder: the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 (codified in scattered sections of 26 U.S.C.; 33 U.S.C.; 42 U.S.C. and
42 U.S.C. (S) 9601 et seq.), the Clean Water Act of 1977(33 U.S.C. (S) 1251
------
et seq.), the Clean Air Act (42 U.S.C. (S) 7401 et seq.), the Resource
------ ------
Conservation and Recovery Act of 1976 (42 U.S.C. (S) 6901 et seq.), the
------
Safe Drinking Water Act (21 U.S.C. (S) 349; 42 U.S.C. (S)(S) 201 and 300f
through 300j-9) and the Toxic Substances Control Act (15 U.S.C. (S) 2601 et
--
seq.).
---
(ii) "RELEASE" shall mean any spilling, leaking, pumping, emitting,
-------
emptying, discharging, injecting, storing, escaping, leaching, dumping, or
discharging, burying, abandoning, or disposing into the environment by
Borrower or any predecessor in interest of Borrower.
(iii) "HAZARDOUS SUBSTANCE" shall mean each and every element,
-------------------
compound, chemical mixture, petroleum and gas product, substance,
contaminant, pollutant, including, without limitation, substances which are
toxic, carcinogenic, ignitable, corrosive or otherwise dangerous to human,
plant or animal health or well-
-31-
being, and any other substance defined as a "hazardous substance,"
"hazardous waste," "hazardous material," "toxic material," "toxic waste,"
or "special waste" under any Environmental Law and any other substance
which by law requires special handling in its collection, storage,
treatment or disposal.
(b) ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower
--------------------------------------------------------
represents and warrants to Lender that (i) no condition, activity or conduct
exists on or in connection with any Collateral Location which constitutes a
violation of any Environmental Law;(ii) there has been no Release of any
Hazardous Substance on any Collateral Location; (iii) there are no existing or
closed underground storage tanks on any Collateral Location; (iv) there are no
existing or closed sanitary landfills, solid waste disposal sites, or hazardous
waste treatment, storage or disposal facilities on or affecting any Collateral
Location; (v) there exists no investigation, action, proceeding, or claim by any
agency, authority, or unit of government or by any third party which could
result in any liability, penalty, sanction, or judgment under any Environmental
Law with respect to any condition, use or operation of any Collateral Location;
and (vi) there has been no claim by any party that any use, operation, or
condition of any Collateral Location has caused any nuisance or any other
liability or adverse condition on any other property.
(c) INDEMNITY FOR BREACH OF ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES
--------------------------------------------------------------------
AND FOR LIABILITIES. Borrower shall indemnify Lender and hold Lender harmless
-------------------
from and against any and all claims, demands, losses, liabilities, strict
liabilities, damages, sanctions, penalties, fines, injuries, expenses, costs
(including attorney's fees), settlements, or judgments of any and every kind
whatsoever paid incurred or suffered by, or asserted against, Lender by any
person or entity or governmental agency arising out of, in connection with or
related in any way to (a) the Release or presence at, from, on, in or under any
Collateral Location of any Hazardous Substance, or (b) any act, omission,
condition, conduct, transaction or occurrence at, from, on or under any
Collateral Location in violation of any Environmental Law, regardless of whether
or not caused by or within the control of Borrower, or (c) the breach of any of
the representations or warranties contained in this Section 8.22.
(d) NOTICE TO LENDER. If Borrower receives any notice of (i) Release of any
----------------
Hazardous Substance, notification of which must be given to any governmental
agency under any Environmental Law, or notification of which has, in fact, been
given to any governmental agency, or (ii) any complaint, order, citation or
notice with regard to air emissions, water discharges, or any other
environmental health or safety matter affecting Borrower or any Collateral
Location from any person or entity (including, without limitation, the
Environmental Protection Agency), then Borrower shall immediately notify Lender
orally and in writing of said Release, complaint, order, citation or notice.
(e) ENVIRONMENTAL AUDIT. Lender shall have the right, after the occurrence
-------------------
of any event required to be reported to Lender pursuant to Section 8.22(d)
hereof, in its sole discretion, to require Borrower to perform, at Borrower's
expense using an environmental consultant selected by Borrower and acceptable to
Lender, an environmental audit and, if deemed necessary by Lender,
-32-
an environmental risk assessment, each of which must be satisfactory to Lender.
Should Borrower fail to order any such environmental audit or risk assessment
within thirty (30) days after Lender's written request, Lender shall have the
right but not the obligation to retain an environmental consultant to perform
any such environmental audit or risk assessment. All costs and expenses incurred
by Lender in the exercise of such rights shall be payable by Borrower to Lender
on demand, shall bear interest at the Default Rate and, if occurring at a time
when the Revolving Line of Credit remains in effect, may be charged by Lender to
Borrower as Revolving Advances.
(f) SURVIVAL, ASSIGNABILITY, AND TRANSFERABILITY. The warranties,
--------------------------------------------
representations and indemnity set forth in subsections (b) and (c) of this
Section 8.22 shall survive any exercise by Lender or Lender of any remedies
under this Agreement or any Loan Document, including without limitation any
power of sale, and shall not merge with any deed or ▇▇▇▇ of sale given by
Borrower to Lender in lieu of foreclosure or any deed or ▇▇▇▇ of sale given
pursuant to a foreclosure. It is agreed and intended by Borrower and Lender that
the warranties, representations, and indemnity set forth above in subsections
(b) and (c) of this Section 8.22 may be assigned or otherwise transferred by
Lender to its successors and assigns and to any subsequent purchasers of all or
any portion of any Collateral by, through or under Lender, without notice to
Borrower and without any further consent of any other Person. To the extent
consent to any such assignment or transfer is required by applicable law,
advance consent to any such assignment or transfer is hereby given by Borrower
in order to maximize the extent and effect of the warranties, representations,
and indemnity given hereby.
9. NEGATIVE COVENANTS.
------------------
Borrower covenants to Lender that from and after the date hereof and
until such time as the Obligations have been paid in full and Lender shall have
terminated this Agreement in writing, Borrower will NOT, without the prior
written consent of Lender, do or permit to be done any of the things or acts set
forth below.
9.1 NO LIENS.
--------
Create, assume, or suffer to exist any Lien of any kind in or on any
of its Property except for: (i) Liens in favor of Lender; and (ii) Permitted
------ ---
Encumbrances.
9.2 DEBT.
----
Incur, assume, or suffer to exist any Debt, except for: (i) Debt for
------ ---
borrowed funds existing on the date of this Agreement; (ii) Debt for borrowed
funds incurred pursuant to financial contractual agreements made and entered
into, and disclosed in writing to Lender, prior to the date of this Agreement;
(ii) Debt for borrowed funds owing to Lender; (iii) trade payables and
contractual obligations to suppliers and customers incurred in the ordinary
course of business; (iv) accrued pension fund and other employee benefit plan
obligations and liabilities (provided, however, that such Debt does not result
in the existence of any Event of Default or Default Condition under any
-33-
other provision of this Agreement); (v) deferred taxes; (vi) Debt resulting from
endorsements of negotiable instruments received in the ordinary course of its
business; (vii) Debt described in, and permitted within the definition of
"Permitted Encumbrances"; and (viii) Debt owing by Borrower to Parent or to the
Members which does not exceed (net of Debt owing by Parent or then Members to
Borrower) Five Million Dollars ($5,000,000) in aggregate principal amount, as to
all such Debt outstanding at any one time.
9.3 CONTINGENT LIABILITIES.
----------------------
Guarantee, endorse, become surety with respect to or otherwise become
directly or contingently liable for or in connection with the obligations of any
other Person, except guarantees in favor of Lender and endorsements of
negotiable instruments for collection in the ordinary course of business.
9.4 DISTRIBUTIONS.
-------------
Pay any dividend, make any capital distribution, redeem or retire any
capital stock of, take any action which would have an effect equivalent to any
of the foregoing, except that (i) unless an Event of Default or Default
------
Condition then exists and is continuing or would result from the payment of such
distributions and so long as the payment of such distributions is otherwise made
in accordance with applicable law and Borrower's Organizational Documents, (i)
Borrower may make Tax Distributions to its Members at such times as are provided
in the Operating Agreement, (ii) Borrower may make annual distributions to its
Members in each Fiscal Year, payable at any time ten (10) days or more after
Lender's receipt of Borrower's audited financial statements for the preceding
Fiscal Year, in an amount not in excess of seventy-five percent (75%) of
Borrower's net income for the preceding Fiscal Year minus Tax Distributions paid
-----
with respect to the preceding Fiscal Year, determined in accordance with GAAP;
provided, however, that the Leverage Ratio as of the end of such Fiscal Year
-------- -------
(after giving pro forma effect to the payment of any such dividend as if made in
such year) was not more than 2.01:1; and (iii) Borrower may make one or more
special distributions to the Parent between the Closing Date and December 31,
1997, in an aggregate amount not to exceed Twenty-One Million Dollars
($21,000,000), in addition to those specified in clauses (i) and (ii) above.
9.5 REDEMPTIONS, ETC.
----------------
Purchase, redeem, or otherwise acquire for value any of its membership
units.
-34-
9.6 RESTRICTED INVESTMENT.
---------------------
Make any Restricted Investment, except that Ordinary Shares of Parent
may be purchased up to an amount in value not to exceed Five Hundred Thousand
Dollars ($500,000) in any one Fiscal Year.
9.7 MERGER, TRANSFER, ETC.
---------------------
Dissolve or otherwise terminate its status as a limited liability
company; or enter into any merger, reorganization or consolidation; or make any
material change in the type of business conducted by Borrower as of the date
hereof, or create any Subsidiary; or sell, assign, lease or otherwise dispose of
(whether in one transaction or a series of transactions) all, substantially all
or a substantial part of its property or assets, other than sales in the
ordinary course of business.
9.8 ERISA.
-----
Permit any Plan to become underfunded such that it would not have
sufficient assets in order to qualify for a standard termination under Section
4041 of ERISA.
9.9 TRANSACTIONS WITH AFFILIATES.
----------------------------
Enter into, or be a party to, any transaction with any Affiliate of
Borrower, except (i) in the ordinary course of and pursuant to the reasonable
------
requirements of its business and upon fair and reasonable terms that are no less
favorable to Borrower or said Subsidiary than would be obtained in a comparable
arm's length transaction with a Person not an Affiliate, (ii) as permitted under
Sections 9.2 and 9.12 hereof or (iii) as otherwise may be approved in writing by
Lender from time to time hereafter, upon full disclosure to Lender.
9.10 CAPITAL EXPENDITURES AND LEASES.
-------------------------------
Expend, on a consolidated basis with AHP and its other consolidated
Subsidiaries, in Capital Expenditures or other leases of personal or real
property, other than as contracted for as of the date hereof, or contract for
any future Capital Expenditures or leases, which in the aggregate represent an
amount exceeding the sum of Three Million Five Hundred Thousand Dollars
($3,500,000) during each Fiscal Year of Borrower, starting with the Fiscal Year
ending December 31, 1996.
9.11 FISCAL YEAR.
-----------
Change its Fiscal Year end from December 31 (or consent to any such
change by the Parent or AMP Holdings in its Fiscal Year).
-35-
9.12 LOANS AND ADVANCES.
------------------
Make any loans or other advances of money or any other property, to
any Person, including without limitation, any officer, director, stockholder,
employee or Affiliate of Borrower except for (i) loans to officers and employees
that do not exceed Twenty-Five Thousand Dollars ($25,000) in aggregate principal
amount, as to all such Persons, at any one time outstanding, and (ii) loans to
Parent and the Members, the aggregate amount of which (net of loans from Parent
and the Members to Borrower described in Section 9.2 above) does not exceed Five
Million Dollars ($5,000,000) at any time outstanding.
10. EVENTS OF DEFAULT.
-----------------
The occurrence of any events or conditions described below shall
constitute an Event of Default hereunder, provided that any requirement for the
giving of notice or the lapse of time, or both, has been satisfied.
10.1 NOTES.
-----
Borrower shall fail to make any payment of principal of or interest on
any Note within five (5) calendar days after the date when due.
10.2 OBLIGATIONS.
-----------
Borrower shall fail to make any payments of principal of or interest
on any of the Obligations (other than the Notes) or any other Obligations to
Lender, within five (5) calendar days after the date when due (or after
satisfaction of any shorter or longer requirement for the giving of notice or
the lapse of time, or both, contained in the applicable agreement pertaining to
such Obligations).
10.3 MISREPRESENTATIONS.
------------------
Borrower shall make any representations or warranties in any of the
Loan Documents or in any certificate or statement furnished at any time
hereunder or in connection with any of the Loan Documents which, when taken as a
whole, proves to have been untrue or misleading in any material respect when
made or furnished.
10.4 COVENANTS.
---------
Borrower shall default in the observance or performance of any
covenant or agreement contained herein or in any of the other Loan Documents
(other than a failure described in Sections 10.1 or 10.2), unless such default
is cured within ten (10) days after Borrower's receipt of notice from Lender of
such Default Condition.
-36-
10.5 DAMAGE, LOSS, THEFT OR DESTRUCTION OF COLLATERAL.
------------------------------------------------
There shall have occurred material uninsured damage to, or loss, theft
or destruction of, any part of the Collateral having a then current value in
excess of Fifty Thousand Dollars ($50,000).
10.6 OTHER DEBTS.
-----------
Borrower shall default in connection with any agreement evidencing,
securing or relating to any other Debt to, or under any operating lease with,
either Lender or with any creditor other than a Lender.
10.7 VOLUNTARY BANKRUPTCY.
--------------------
Borrower (or any guarantor) shall file a voluntary petition in
bankruptcy or a voluntary petition or answer seeking liquidation,
reorganization, arrangement, readjustment of its debts, or for any other relief
under the Bankruptcy Code, or under any other act or law pertaining to
insolvency or debtor relief, whether state, federal, or foreign, now or
hereafter existing; Borrower (or any guarantor) shall enter into any agreement
indicating its consent to, approval of, or acquiescence in, any such petition
or proceeding; Borrower (or any guarantor) shall apply for or permit the
appointment by consent or acquiescence of a receiver, custodian or trustee of
Borrower (or any guarantor) for all or a substantial part of its Property;
Borrower (or any guarantor) shall make an assignment for the benefit of
creditors; or Borrower (or any guarantor) shall be unable or shall fall to pay
its debts generally as such debts become due; or Borrower (or any guarantor)
shall admit, in writing, its inability or failure to pay its debts generally as
such debts become due.
10.8 INVOLUNTARY BANKRUPTCY.
----------------------
There shall have been filed against Borrower (or any guarantor) an
involuntary petition in bankruptcy or seeking liquidation, reorganization,
arrangement, readjustment of its debts or for any other relief under the
Bankruptcy Code, or under any other act or law pertaining to insolvency or
debtor relief, whether State, federal or foreign, now or hereafter existing,
which has not been dismissed within sixty (60) days of the date the petition is
filed; Borrower (or any guarantor) shall suffer or permit the involuntary
appointment of a receiver, custodian or trustee of Borrower (or any guarantor)
or for all or a substantial part of its Property; or Borrower (or any guarantor)
shall suffer or permit the issuance of a warrant of attachment, execution or
similar process against all or any substantial part of the Property of Borrower
(or any guarantor).
10.9 ORGANIZATIONAL DOCUMENTS; DISSOLUTION.
-------------------------------------
Either of the Organizational Documents shall be amended, amended and
restated or otherwise modified (other than administrative or ministerial
amendments and modifications) or shall be cancelled or terminated, in each case
without Lender's prior written consent; an event of
-37-
dissolution, as referenced in Section 9.1 of the Operating Agreement, shall
occur; or Borrower shall be dissolved.
10.10 JUDGMENTS AND SETTLEMENTS.
-------------------------
Final judgments or orders for the payment of money are rendered
against Borrower or Borrower settles any claim or lawsuit in the aggregate
amount of Fifty Thousand Dollars ($50,000) or more (exclusive of amounts covered
by insurance) which are not paid in frill within ten (10) Business Days.
10.11 ERISA.
-----
The occurrence of any of the following events: (i) the termination of
any Plan in a distress termination under Section 4041(c) of ERISA or an
involuntary termination under Section 4042 of ERISA; (ii) the filing of a
request for a waiver of the minimum funding standard with regard to any Employee
Benefit Plan: (iii) the occurrence of any event which causes any Plan to cease
to have sufficient assets at all times so as to qualify for a standard
termination under Section 4041 of ERISA; (iv) the occurrence of any event which
causes the unfunded liability with regard to all such Plans in the aggregate to
become an amount in excess of Fifty Thousand Dollars ($50,000); (v) the
occurrence of any event which causes the withdrawal liability with regard to all
Plans to become an amount in excess of Fifty Thousand Dollars ($50,000); (vi)
the appointment of a trustee by an appropriate United States district court to
administer any Plan; or (vii) the institution of any proceedings by the PBGC to
terminate any such Plan or to appoint a trustee to administer any such Plan
10.12 CHANGE OF CONTROL.
-----------------
A Change of Control shall occur.
10.13 CHANGE OF MANAGEMENT.
--------------------
There shall occur a change in the chief executive officer of Borrower
which, as of the Closing Date, is ▇▇▇▇▇ ▇▇▇▇▇.
10.14 MATERIAL ADVERSE CHANGE.
-----------------------
The occurrence of any material change in the business, financial
condition, results of operations or business prospects of Borrower which Lender
reasonably determines, in good faith, materially and adversely affects the
ability of Borrower to pay and perform its Obligations to Lender.
-38-
10.15 GUARANTIES.
----------
Any default shall occur under, or in respect of, any guaranty issued
in favor of Lender in respect of the Obligations, or any guarantor thereunder
shall repudiate, or seek to repudiate, its liability thereon.
11. REMEDIES.
--------
Upon the occurrence and during the continuation of any Default
Condition or Event of Default, if prior to the Conversion Date, Lender's
obligation to extend financing under the Revolving Line of Credit and to make
the Term Loan shall immediately cease and the Revolving Line of Credit shall
terminate; provided, however, that if such obligations have ceased and
-------- -------
commitments terminated due to the occurrence of a Default Condition, and such
Default Condition does not become an Event of Default due to its having been
cured or waived before it has matured into an Event of Default, then such
obligation shall be reinstated as of the date such Default Condition is cured or
waived. Upon the occurrence or existence of any Event of Default, or at any time
thereafter, without prejudice to the rights of Lender to enforce its claims
against Borrower for damages for failure by Borrower to fulfill any of its
obligations hereunder, subject only to prior receipt by Lender of payment in
full of all Obligations then outstanding in a form acceptable to Lender, Lender
shall have all of the rights and remedies described below, and Lender may
exercise any one, more, or all of such remedies, in its sole discretion, without
thereby waiving any of the others.
11.1 ACCELERATION OF THE OBLIGATIONS.
-------------------------------
Lender, at its option, may by written notice, effective upon receipt,
declare all of the Obligations (including but not limited to that portion
thereof evidenced by either of the Notes) to be immediately due and payable (and
in the event a voluntary or involuntary case is commenced under the Bankruptcy
Code by or against Borrower as a debtor, all Obligations automatically will be
due and payable without any notice or declaration by Lender), whereupon the same
shall become immediately due and payable without presentment, demand, protest,
notice of nonpayment or any other notice required by law relative thereto, all
of which are hereby expressly waived by Borrower, anything contained herein to
the contrary notwithstanding and, in connection therewith, Lender shall have the
right to increase the rate of interest charged on the Revolving Note or the Term
Note, as applicable, without further notice, to a rate per annum equal to the
Default Rate. If any note of Borrower to Lender constituting Obligations,
including, without limitation, the Notes, shall be a demand instrument, as to
all or any parties thereof, however, the recitation of the right of Lender to
declare any and all Obligations to be immediately due and payable, whether such
recitation is contained in such note or in this Agreement, as well as the
recitation of the above events permitting Lender to declare all Obligations due
and payable, shall not constitute an election by Lender to waive its right to
demand payment under a demand at any time and in my event, as such Lender in its
discretion may deem appreciate. Thereafter, Lender, at its option, may, but
shall not be obligated to, accept less than the entire amount of Obligations
due, if tendered, provided, however, that unless
-39-
then agreed to in writing by Lender, no such acceptance shall or shall be deemed
to constitute a waiver of any Event of Default or a reinstatement of any
commitments of Lender hereunder.
11.2 REMEDIES OF A SECURED PARTY.
---------------------------
Lender shall thereupon have the rights and remedies of a secured party
under the UCC in effect on date thereof (regardless of whether the same has been
enacted in the jurisdiction where the rights or remedies are asserted),
including, without limitation, the right to take the Collateral or any portion
thereof into its possession, by such means (without breach of the peace) and
through agents or otherwise as it may elect (and, in connection therewith,
demand that Borrower assemble the Collateral at a place or places and in such
manner as the Lender shall prescribe), and sell, lease or otherwise dispose of
the Collateral or any portion thereof in its then condition or following any
commercially reasonable preparation or processing, which disposition may be by
public or private proceedings, by one or more contracts, as a unit or in
parcels, at any time and place and on any terms, so long as the same are
commercially reasonable. Lender may apply the proceeds of any such sale or
disposition to any of the Obligations in such order as Lender, in its sole
discretion, may elect. Lender shall give Borrower written notices of the time
and place of any public sale of the Collateral or the time after which any other
intended disposition thereof is to be made, except where the Collateral is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market. The requirement of sending reasonable notice shall
be met if such notice is given to Borrower pursuant to Section 12.9 at least ten
(10) calendar days before such disposition. Expenses of retaking, holding,
insuring, preserving, protecting, preparing for sale or selling or the like with
respect to the Collateral shall include, in any event, reasonable attorneys'
fees and other legally recoverable collection expenses, all of which shall
constitute Obligations.
11.3 SET OFF.
-------
In addition to such other rights and remedies with respect to the Balances
Collateral as may exist from time to time hereafter in favor of Lender, whether
by way of setoff, banker's lien, consensual security interest or otherwise, upon
the occurrence of any Event of Default hereunder, Lender may charge any part or
all of the obligations of Lender to Borrower represented by items constituting
the Balances Collateral in the possession and control of Lender against the
Obligations, without prior notice to or demand upon Borrower.
11.4 OTHER REMEDIES.
--------------
Unless and except to the extent expressly provided for to the contrary
herein, the rights of the Lender specified herein shall be in addition to, and
not in limitation of, Lender's rights under the UCC, as amended from time to
time, or any other statute or rule of law or equity, or under any other
provision of any of the Loan Documents, or under the provisions of any other
document, instrument or other writing executed by Borrower or any third party in
favor of the Lender, all of which may be exercised successively or concurrently.
-40-
12. MISCELLANEOUS.
-------------
12.1 WAIVER.
------
Each and every right granted to Lender under this Agreement, or any of
the other Loan Documents, or any other document delivered hereunder or in
connection herewith or allowed it by law or in equity, shall be cumulative and
may be exercised from time to time. No failure on the part of Lender to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof, nor shall any single or partial exercise by Lender of any right
preclude any other or future exercise thereof or the exercise of any other
right. No waiver by Lender of any Default Condition or Event of Default shall
constitute a waiver of any subsequent Default Condition or Event of Default.
12.2 GOVERNING LAW.
-------------
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
12.3 SURVIVAL.
--------
All representations, warranties and covenants made herein shall
survive the execution and delivery of all of the Loan Documents. The terms and
provisions of this Agreement shall continue in full force and effect,
notwithstanding the payment of one or more of the Notes or the termination of
the Revolving Line of Credit, until all of the Obligations have been paid in
full and Lender have terminated this Agreement in writing.
12.4 NO ASSIGNMENT BY BORROWER.
-------------------------
No assignment hereof shall be made by Borrower without the prior
written consent of Lender. Lender may assign, or sell participations and
undivided ownership interests in, its rights, title and interest herein and in
the Loan Documents at any time hereafter without notice to, or consent from,
Borrower.
12.5 COUNTERPARTS.
------------
This Agreement may be executed in two or more counterparts, each of
which when fully executed shall be an original, and all of said counterparts
taken together shall be deemed to constitute one and the same agreement.
12.6 REIMBURSEMENT.
-------------
Borrower agrees to pay to the Lender on demand all out-of-pocket costs
and expenses that Lender pays or incurs in connection with the negotiation,
preparation, consummation,
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enforcement and termination of this Agreement and the other Loan Documents,
including, without limitation: (a) reasonable attorneys' fees and disbursements;
(b) costs and expenses (including reasonable attorneys' fees and disbursements)
for any amendment, supplement, waiver, consent or subsequent closing in
connection with the Loan Documents and the transactions contemplated thereby;
(c) costs and expenses of lien and title searches and title insurance; (d)
actual taxes, fees and other charges for recording any deeds to secure debt,
deeds of trust, mortgages, filing financing statements and continuations, and
other actions to perfect, protect and continue the Lien of Lender in the
Collateral; (e) sums paid or incurred to pay for any amount or to take any
action required of Borrower under the Loan Documents that Borrower fails to pay
or take; (f) costs of appraisals, inspections, and verifications of the
Collateral, including, without limitation, costs of travel, lodging, and meals
for inspections of the Collateral and Borrower's operations by Lender; (g) costs
and expenses of preserving and protecting the credit or the Collateral; and (h)
costs and expenses (including reasonable attorneys' and paralegals' fees and
disbursements) paid or incurred to obtain payment of the Obligations, enforce
the Lien in the Collateral, sell or otherwise realize upon the Collateral, and
otherwise enforce the provisions of the Loan Documents or to defend any claims
made or threatened against Lender arising out of the transactions contemplated
hereby (including, without limitation, preparations for and consultations
concerning any such matters). Borrower agrees to reimburse Lender for its actual
out-of-pocket costs and expenses incurred in conducting field examinations and
inspections of Borrower and its Property in addition to the foregoing. The
foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by Borrower. All of the
foregoing costs and expenses may, in the discretion of Lender, be charged to
Borrower's account as Revolving Advances. Borrower will pay all expenses
incurred by it in the transaction. In the event Borrower becomes a debtor under
the Bankruptcy Code, Lender's secured claim in such case shall include interest
on the Obligations and all fees, costs and charges provided for herein
(including, without limitation, reasonable attorneys' fees) all for the extent
allowed by the Bankruptcy Code.
12.7 SUCCESSORS AND ASSIGNS.
----------------------
This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties hereto.
12.8 SEVERABILITY.
------------
If any provision of any of the Loan Documents or the application
thereof to any party thereto or circumstances shall be invalid or unenforceable
to any extent, the remainder of such Loan Documents and the application of such
provisions to any other party thereto or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
12.9 NOTICES.
-------
All notices, requests and demands to or upon the respective parties
hereto shall be deemed to have been properly given or made when personally
delivered or 5 calendar days after
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being deposited in the mail, registered or certified mail, return receipt
requested, with sufficient postage prepaid, addressed as follows or to such
other address as may be designated hereafter in writing by the respective
parties hereto:
Borrower:
Associated Hygienic Products LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇▇ ▇▇▇▇▇
President
Lender:
SouthTrust Bank of Georgia, N.A.
One Georgia Center, 22nd Floor
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
With a copy to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
except in cases where it is expressly provided herein or by applicable law that
such notice, demand or request is not effective until received by the party to
whom it is addressed in which instance rejection or other refusal to accept or
the inability to deliver because of changed address of which no notice was given
shall be deemed to be receipt of the notice, demand or request sent. By giving
at least thirty (30) days written notice thereof, Borrower and Lender shall have
the right from time to time and at any time to change their respective addresses
and each shall have the right to specify any other address within the
continental United States of America.
12.10 ENTIRE AGREEMENT; AMENDMENTS.
----------------------------
This Agreement, together with the Loan Documents executed in
connection therewith, collectively constitute the entire agreement between the
parties hereto with respect to the subject matter hereof. This Agreement also
constitutes an amendment and restatement of the Prior Loan Agreement the terms
of which shall be superseded and replaced, in their entirety, hereby, it being
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understood and agreed, however, that the foregoing is not intended by the
parties as a novation but, instead, a continuation of the financing originally
obtained by Borrower pursuant to the Prior Loan Agreement (albeit on different
terms) and the security therefor. Neither this Agreement or any Loan Document
nor any provision hereof or thereof may be changed, waived, discharged, modified
or terminated orally, but only by an instrument in writing signed by the party
against whom enforcement is sought.
12.11 TIME OF THE ESSENCE.
-------------------
Time is of the essence in this Agreement and the other Loan Documents.
12.12 INTERPRETATION.
--------------
No provision of this Agreement shall be construed against or
interpreted to the disadvantage of any party hereto by any court or other
governmental or judicial authority by reason of such party having or being
deemed to have structured or dictated such provision.
12.13 LENDER NOT JOINT VENTURER.
-------------------------
Neither this Agreement nor any agreements, instruments, documents or
transactions contemplated hereby (including the Loan Documents) shall in any
respect be interpreted, deemed or construed as making Lender a partner or joint
venturer with Borrower or as creating any similar relationship or entity, and
Borrower agrees that it will not make any contrary assertion, contention, claim
or counterclaim in any action, suit or other legal proceeding involving Lender
or Borrower.
12.14 JURISDICTION; WAIVER OF TRIAL BY JURY.
----------------------- -------------
BORROWER AGREES THAT ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
GEORGIA OR THE UNITED STATES DISTRICT COURT, NORTHERN DISTRICT OF GEORGIA,
ATLANTA DIVISION, ALL AS LENDER MAY ELECT. BY EXECUTION OF THIS AGREEMENT,
BORROWER HEREBY SUBMITS TO EACH SUCH JURISDICTION, HEREBY EXPRESSLY WAIVING
WHATEVER RIGHTS MAY CORRESPOND TO IT BY REASON OF ITS PRESENT OR FUTURE
DOMICILE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION OR
TO SERVE PROCESS IN ANY MANNER PERMITTED OR REQUIRED BY LAW. EACH OF BORROWER
AND LENDER HEREBY FURTHER WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDINGS WITH RESPECT TO THIS AGREEMENT OR ANY LOAN AGREEMENT.
12.15 ACCEPTANCE.
----------
This Agreement, together with the other Loan Documents, shall not
become effective unless and until delivered to Lender at its office in Atlanta,
Georgia and accepted in writing by
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Lender thereafter at such office as evidenced by its execution hereof (notice of
which delivery and acceptance is hereby waived by Borrower).
12.16 PAYMENT ON NON-BUSINESS DAYS.
----------------------------
Whenever any payment to be made hereunder or under any Note shall be
stated to be due on a day which is not a Business Day, such payment may be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest hereunder or under
the Notes.
12.17 UCC TERMINATIONS.
----------------
EXCEPT AS PROVIDED IN SECTION 2.3 HEREOF, BORROWER AGREES THAT LENDER
SHALL NOT BE REQUIRED TO FILE ANY UCC TERMINATION STATEMENTS WITH RESPECT TO ANY
COLLATERAL UNLESS AND UNTIL ALL OBLIGATIONS HAVE BEEN PAID IN FULL AND LENDER
SHALL HAVE TERMINATED THIS AGREEMENT IN WRITING, WHICH LENDER SHALL DO WITHIN A
REASONABLE AMOUNT OF TIME AFTER THE OBLIGATIONS HAVE BEEN PAID IN FULL.
12.18 CURE OF DEFAULT BY LENDER.
-------------------------
If, hereafter, Borrower defaults in the performance of any duty or
obligation to Lender hereunder or under any Loan Document or to any other Person
(including, without limitation, any lessor, licensor, vendor, processor,
shipper, carrier or warehouseman), Lender may, at its option, but without
obligation, in order to protect or preserve Lender's credit or the Collateral,
cure such default and any costs, fees and expenses incurred by Lender in
connection therewith including, without limitation, for the purchase of
insurance, the payment of taxes and the removal or settlement of liens and
claims, shall bear interest at the Default Rate, shall be payable on demand and
if Lender elects prior to the Conversion Date shall be deemed to be Revolving
Advances, whether or not this creates an over-advance hereunder.
12.19 RECITALS.
--------
All recitals contained herein are hereby incorporated by reference
into this Agreement and made part thereof.
12.20 ATTORNEY-IN-FACT.
----------------
Borrower hereby designates, appoints and empowers Lender irrevocably
as its attorney-in-fact, at Borrower's cost and expense, to do in the name of
Borrower any and all actions which Lender may reasonably deem necessary or
advisable to protect, preserve or enforce its rights hereunder (including,
without limitation, its rights in and to the Collateral) upon the failure,
refusal or inability of Borrower to do so within ten (10) days after notice by
Lender to Borrower, and Borrower hereby agrees to indemnify and hold Lender
harmless from any costs, damages, expenses
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or liabilities arising against or actually incurred by Lender in connection
therewith, except those arising from the willful misconduct or gross negligence
of Lender. This power of attorney, being coupled with an interest, shall be
irrevocable, shall continue until all Obligations have been satisfied in full
and this Agreement has been terminated by Lender in writing and shall be in
addition to Lender's other rights, powers and remedies.
12.21 SOLE BENEFIT.
------------
The rights and benefits set forth in this Agreement and in all the
other Loan Documents are for the sole and exclusive benefit of the parties
thereto and may be relied upon only by them.
13. CONDITIONS PRECEDENT.
--------------------
13.1 INITIAL REVOLVING ADVANCE AND THE TERM LOAN
-------------------------------------------
The conditions precedent set forth below shall constitute express
conditions precedent to any obligation of Lender to make the initial Revolving
Advance.
(a) MANAGEMENT COMMITTEE RESOLUTIONS AND INCUMBENCY CERTIFICATE OF
--------------------------------------------------------------
BORROWER. Receipt by Lender of a certificate from the Secretary (or Assistant
--------
Secretary) of Borrower, certifying to Lender that appropriate resolutions have
been entered into by the Management Committee of Borrower incident hereto and
that the representatives of Borrower whose signatures appear hereinbelow, on the
other Loan Documents, and on any and all other documents, instruments and
agreements executed in connection herewith, are duly authorized by the
Management Committee of Borrower for and on behalf of Borrower to execute and
deliver this Agreement, the other Loan Documents and such other documents,
instruments and agreements, and to bind Borrower accordingly thereby.
(b) CERTIFICATES OF GOOD STANDING OF BORROWER. Receipt by Lender of a
-----------------------------------------
certificate of good standing or valid existence or other appropriate equivalent
with respect to Borrower from the Secretary of State of Wyoming and of any other
state in which a Collateral Location is situated and as to which such
certificates are available with respect to limited liability companies, dated
within ten (10) days of the date hereof.
(c) ORGANIZATIONAL DOCUMENTS OF BORROWER. Receipt by Lender of copies
------------------------------------
of the Organizational Documents of Borrower as in effect on date hereof,
certified as to truth and accuracy by the secretary or assistant secretary of
Borrower.
(d) LOAN DOCUMENTS. Receipt by Lender of the Revolving Note, the Term
--------------
Note and all other Loan Documents not elsewhere more particularly described
herein, duly executed in form and substance acceptable to Lender.
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(e) TITLE INSURANCE ENDORSEMENTS. Receipt by Lender of a commitment from a
----------------------------
title insurer satisfactory to Lender to issue an endorsement to Lender's
mortgagee's title insurance policy obtained pursuant to the Prior Loan Agreement
insuring the First priority lien of the Mortgage in respect of both Notes,
subject only to those exceptions as shall be satisfactory to Lender and
otherwise in form and substance satisfactory to Lender in all respects.
(f) HAZARD INSURANCE CERTIFICATE. Receipt by Lender of a certificate
----------------------------
respecting all hazard insurance required hereunder, in form and substance
acceptable to Lender.
(g) FINANCING STATEMENTS. Receipt by Lender of any Uniform Commercial Code
--------------------
financing statements, or amendments thereto, respecting the Collateral, in form
and substance acceptable to Lender.
(h) GUARANTY OF PARENT AND AHP HOLDINGS. Receipt by Lender of the
-----------------------------------
unsecured guaranty of each of the Parent and AMP Holdings in respect of the
Obligations, together with appropriate certifications of organization,
authorization and incumbency; each to be in form and substance satisfactory to
Lender.
(i) ARRANGEMENT FEE. Receipt by Lender of a non-refundable arrangement fee
---------------
OF $50,000.
(j) MISCELLANEOUS. Receipt by Lender of such other documents, certificates,
-------------
instruments and agreements as shall be required hereunder or provided for herein
or as Lender or Lender's counsel may require in connection herewith.
13.2 TERM LOAN.
---------
The conditions precedent set forth below shall constitute additional
express conditions precedent to any obligation of Lender to make the Term Loan.
(a) APPRAISAL; OTHER INFORMATION. Lender shall have received an appraisal
----------------------------
of the improvements at the new facility performed by an appraiser, and using a
methodology satisfactory to Lender in all respects, and the results thereof
shall be satisfactory to Lender in all respects. In addition Lender shall have
received copies of such invoices, certificates of completion and other documents
as it may request in order to permit it to determine the New Facility Loanable
Value.
(b) MORTGAGE AMENDMENT. The Mortgage shall have been amended to reflect
------------------
that it secures the Term Note, and the amendment shall have been recorded with
all intangible taxes payable thereon upon recording remitted by Borrower.
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(c) MISCELLANEOUS. Lender shall have received such other documents,
-------------
certificates, instruments and agreements as shall be required hereunder or
provided for herein or as Lender or Lender's counsel may require in connection
herewith.
13.3 CONDITIONS TO ALL LOANS.
-----------------------
At the time of the making of each Revolving Advance and the Term Loan, the
following conditions shall exist (before as well as after giving effect to such
financial accommodation then being made and the proposed use of the proceeds
thereof):
(a) NO DEFAULT. There shall exist no Default Condition or Event of Default;
----------
(b) REPRESENTATIONS TRUE. All representations and warranties contained
--------------------
herein shall be true and correct in all material respects with the same effect
as though such representations and warranties had been made on and as of the
date of such Revolving Advance or the Term Loan; and
(c) DOCUMENTS RECEIVED. Lender shall have received such other documents in
------------------
connection therewith as shall be required hereunder or provided for herein, all
in form and substance satisfactory to Lender.
13.4 COMPLIANCE WITH CONDITIONS.
--------------------------
Each request by Borrower for any Revolving Advance or for disbursement of
the Term Loan, and the acceptance by Borrower of the proceeds thereof, shall
constitute a representation and warranty by Borrower, as of the date of any such
Revolving Advance or disbursement of the Term Loan, that the applicable
conditions specified in Sections 13.1, 13.2 and 13.3 have been fully satisfied.
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IN WITNESS WHEREOF, Borrower and Lender each have set their hands and
Borrower has affixed its seal, all as of the day and year first above written.
ASSOCIATED HYGIENIC PRODUCTS LLC, (SEAL)
a Limited Liability Company
By /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
President
Attest /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
Secretary
SOUTHTRUST BANK OF GEORGIA, N.A.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
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EXHIBIT "A"
PERMITTED LIENS
---------------
1. Financing Statement number 91-498 filed by Clarklift of Atlanta, Inc. on
January 22, 1991 in the office of the Clerk of Superior Court of Gwinnett
County, Georgia against DSG International, Inc., d/b/a Associated Hygienic
Products covering one forklift.
2. Financing Statement number 89-8891 filed by Clarklift of Atlanta, Inc. on
December 4, 1989 in the office of the Clerk of Superior Court of Gwinnett
County, Georgia against DSG International, Inc., d/b/a Associated Hygienic
Products covering one forklift.
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